-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KNHmMIF21RGvlXS2uhoNEXRkKUxgMmSiTuvCCZZQIxRqo5zPg8MLuaKEt5cpZKps raZQnp6Hw2AiAuMDc4+63Q== 0001005150-04-001663.txt : 20040625 0001005150-04-001663.hdr.sgml : 20040625 20040625163634 ACCESSION NUMBER: 0001005150-04-001663 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20040625 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIRCLE GROUP HOLDINGS INC CENTRAL INDEX KEY: 0001052257 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 364197173 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-116874 FILM NUMBER: 04882509 BUSINESS ADDRESS: STREET 1: 1011 CAMPUS DRIVE STREET 2: 310-556-0080 CITY: MUNDELEIN STATE: IL ZIP: 60060 BUSINESS PHONE: 847-549-60 MAIL ADDRESS: STREET 1: 1011 CAMPUS DRIVE CITY: MUNDELEIN STATE: IL ZIP: 60060 FORMER COMPANY: FORMER CONFORMED NAME: CIRCLE GROUP INTERNET INC DATE OF NAME CHANGE: 19980512 S-3 1 s3.txt FORM S-3 REGISTRATION NO. 333- _________ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------------ CIRCLE GROUP HOLDINGS, INC. (Name of small business issuer in its charter) ILLINOIS 7389 36-4197173 (State or Jurisdiction (Primary Standard (IRS Employer of Organization) Industrial Code) Identification No.) 1011 CAMPUS DRIVE MUNDELEIN, ILLINOIS 60060 (847) 549-6002 (Address and telephone number of principal executive offices and principal place of business) GREGORY J. HALPERN CHIEF EXECUTIVE OFFICER 1011 CAMPUS DRIVE MUNDELEIN, ILLINOIS 60060 (847) 549-6002 (Name, address and telephone number of agent for service) ----------------------------------- Copy to: ROBERT B. MURPHY, ESQ. PEPPER HAMILTON LLP 600 FOURTEENTH STREET, N.W. WASHINGTON, D.C. 20005-2004 (202) 220-1200 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the "Securities Act"), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] -1- If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------- Proposed Maximum Amount of Title of Each Class of Amount To Be Proposed Maximum Offering Aggregate Offering Registration Securities To Be Registered Registered(1) Price Per Security(2) Price Fee - ----------------------------------------------------------------------------------------------------------------- Common Stock (par value 2,297,605 shares $6.00 $ 13,785,630.00 $ 1,746.64 $.00005 per share) - -----------------------------------------------------------------------------------------------------------------
(1) Pursuant to Rule 416(a) of the Securities Act of 1933, as amended, this registration statement shall be deemed to cover additional securities that may be offered or issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. (2) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based on the average of the high and low prices reported for shares of common stock of the Registrant, as reported on the American Stock Exchange. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ================================================================================ -2- SUBJECT TO COMPLETION, DATED JUNE 25, 2004 PROSPECTUS CIRCLE GROUP HOLDINGS, INC. COMMON STOCK ------------------ This prospectus relates to 2,297,605 shares of our common stock that we may offer for sale from time to time in one or more offerings. We may offer these shares of common stock through public or private transactions, on or off of the American Stock Exchange, at prevailing market prices or at privately negotiated prices. We will provide the specific terms of any shares of common stock we actually offer for sale in supplements to this prospectus. These supplements may add, update or change information contained in this prospectus. You should read this prospectus and the supplements carefully before you decide to invest in any of these securities. Our common stock is listed on the American Stock Exchange under the symbol "CXN." The last reported sale price of our common stock on the American Stock Exchange on June 22, 2004 was $5.27 per share. INVESTING IN THE COMMON STOCK INVOLVES RISKS. WE URGE YOU TO READ CAREFULLY THE "RISK FACTORS" BEGINNING ON PAGE 6 BEFORE MAKING YOUR INVESTMENT DECISION. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL AND COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE COMPANY MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. THE DATE OF THIS PROSPECTUS IS JUNE 25, 2004 TABLE OF CONTENTS ----------------- Page ---- Prospectus Summary 2 Risk Factors 6 Use Of Proceeds 9 Plan Of Distribution 10 Legal Matters 12 Experts 12 Incorporation Of Certain Documents By Reference 13 Where You Can Get More Information 14 PROSPECTUS SUMMARY ABOUT THIS PROSPECTUS You should rely only on the information contained or incorporated by reference in this prospectus and any applicable prospectus supplements. We have not authorized any other person to provide you with different information. We will not make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the cover page. THE COMPANY In this prospectus, the terms "we," "us," and "our" refer to Circle Group Holdings, Inc. and include all of our consolidated subsidiaries unless the context requires otherwise. The phrase "this prospectus" refers to this prospectus and any applicable prospectus supplement, unless the context otherwise requires. We are a pioneer of emerging technology companies. We provide small business infrastructure, funding and substantial intellectual capital to bring important and timely life-changing technologies to the marketplace through all phases of the commercialization process. We were founded by Gregory J. Halpern, our Chairman and Chief Executive Officer, as an Illinois corporation in May 1994 under the original name, Circle Group Entertainment Ltd. In 1997, we changed our name to Circle Group Internet, Inc., and in 2002, we changed our name to Circle Group Holdings, Inc. We had no business operations except for research and development activities between May 1994 and January 1997. Since then, we have participated in several public and private offerings and have expanded our business. In 2002, we reorganized our business units into three reportable segments: food product development, security product development, and e-tailor. In the same year, we also acquired FiberGel Technologies, Inc. ("FiberGel"), which owns an exclusive license to Z-Trim, an all-natural, corn-based fat replacement. We have four operating wholly-owned subsidiaries: FiberGel Technologies, Inc., thebraveway.com, Inc., operating as The Brave Way Training Systems, On-Line Bedding Corp., and Z-aMaize Technologies, Inc., and have exclusive worldwide licenses to the Nutrition Analysis Tool website, Mini-Raman Lidar System, and ThraxVac technology. Fibergel Technologies, Inc. We acquired FiberGel Technologies, Inc. ("FiberGel") as a wholly-owned subsidiary on August 27, 2002 from Utek Corporation ("Utek") in a stock exchange transaction whereby we issued 2,800,000 shares of our common stock and a warrant to purchase 500,000 shares of our common stock to Utek for all of the issued and outstanding capital stock of FiberGel. FiberGel is currently our primary focus. FiberGel owns the exclusive, worldwide license for all fields of use to Z-Trim, an all-natural, corn-based fat replacement developed by the Agricultural Research Service of the United States Department of Agriculture "USDA". Z-Trim can be used to -2- decrease fat and calories and increase insoluble healthy fiber in foods. The target markets for Z-Trim include: dairy (cheeses, dips, spreads) baked goods & confectionary (breads, cookies, candies, cakes, pies), cereals, pasta, snack foods (chips, crackers, energy bars), meats (burgers, lunch meats, deli meats, sausages and hot dogs), beverages (energy drinks, shakes, beers, weight loss drinks) and face and hand lotions. We have received over 300 inquiries since September 2002 relating to the manufacture, food processing, distribution and sale of Z-Trim. FiberGel has entered into non-disclosure agreements, sample agreements, and discussions with many food industry companies to pursue potential opportunities for Z-Trim. FiberGel has been shipping Z-Trim samples to many of these companies since July 2003. FiberGel is planning on expanding from its current contract manufacturing facility to its own wholly owned facility in Summer 2004. We are also planning to launch a direct response campaign to the retail market using commercial television by July 2004. Nat Tools For Good Health We acquired the worldwide exclusive license to the NAT Web, the Nutrition Analysis Tool ("NAT") Web site developed by the Department of Food Science and Human Nutrition at the University of Illinois. The University of Illinois' NAT Web site is an interactive, web-based system designed to empower individuals to select a nutrient-rich diet. This fully functional nutrient analysis program utilizes the USDA nutrient database, including over 6,000 foods as well as information from food companies. NAT provides information on the relative composition of food and could aid consumers in their quest to achieve or maintain good health via nutritious eating. Using data provided by the USDA, and most brand name food companies, NAT's users can keep track every day of the foods, calories, fats, proteins, carbohydrates and other nutrients they consume. We have re-engineered the NAT Web site so that it is now available to the commercial marketplace as a resource of information about Z-Trim and other compatible products we have launched or will launch in the future to our users. The NAT Web site has as many as two million consumer hits per month from 92 countries and, in more than one million web pages, appears in the first four relevancy positions in most search engines including Google.com under the popular keywords "nutritional analysis" and "diet analysis". Z-aMaize Technologies, Inc. On October 21, 2003, we incorporated Z-Amaize Technologies, Inc. ("Z-Amaize") as a wholly owned subsidiary, to market a new line of industrial adhesive products for the plywood manufacturing industry called Z-Bind. Z-Bind is an adhesive extending component that emerged from research performed by the FiberGel product development group. In their research for Z-Trim functional fat substitutes the group identified a number of co-products which were derived from corn-based raw materials. It was discovered that every pound of Z-Trim that we manufacture produced 13 gallons of waste which could be used to make Z-bind. Rather than discarding this by-product, we are focusing on opportunities for maximizing its value in the marketplace. Z-Bind products represent an affordable alternative to plywood manufacturers -3- seeking superior and environmentally friendlier adhesives, especially in light of significant cost pressures due to U.S. Environmental Protection Agency ("EPA") emission regulations regarding manufacture of such adhesives. We have successfully tested Z-Bind at Forintek, a Canadian wood product research institute, and are in preliminary discussion with several large companies regarding the purchasing of our Z-Bind waste stream. Mini-Raman Lidar System We have also acquired the worldwide exclusive rights to all fields of use of the Mini-Raman Lidar System. The Mini-Raman Lidar System was patented and developed by the U.S. Department of Energy at Brookhaven National Laboratory. It is a short-range tool to screen unknown biological, chemical, narcotic and hazardous substances without having to come in contact with them. When commercially developed, this tool will give first responders the ability to detect substances on surfaces as well as in bulk quantity from a distance of three to fifteen feet. The Mini-Raman Lidar is a standoff technology that, unlike other typical devices, does not require physical collection of toxic materials to identify their composition. ThraxVac Technology In June 2003 we acquired the worldwide exclusive rights to all fields of use of ThraxVac technology, which provides a way to capture ambient anthrax or clostridial endospores and simultaneously trigger activation of the spore, which marks the beginning of the spores' loss of high resistivity. By using heat and moisture to activate the spore, the dormancy is broken and the spore begins to germinate thereby becoming vulnerable to injury. The stream of newly activated spores are then exposed to alpha particle bombardment via a polonium source, which damages the DNA-containing protoplast causing spore death and an inability to complete germination and produce toxin. The collection devices will be both portable and as part of an HVAC system using a HEPA filtering system with polonium 210 inserts to provide a "continuous killing repository" for the collected spores. We are currently working with an engineering company to manufacture this type of HVAC system for commercial buildings. The Brave Way Training Systems Thebraveway.com, Inc., a wholly owned subsidiary of ours, which operates as The Brave Way Training Systems (the "Brave Way"), is a security training and product company. The Brave Way offers proven, highly effective, low-cost self-defense courses and videos with a uniquely targeted curriculum focusing on personal safety and self-defense including rape prevention. Courses are offered by experienced instructors through The Brave Way's state certified law enforcement training program for police officers and security personnel, students and teachers, individuals, airline personnel and hospital personnel. On-Line Bedding Corp. On-Line Bedding Corp. ("On-Line Bedding"), another wholly-owned subsidiary of ours, was founded in 1981 and is a distributor of pillows, blankets and other bedding products to airlines, hospitals, government, and other commercial and institutional customers. On-Line Bedding subcontracts the production of pillows, blankets and other bedding products to -4- manufacturers. On-Line Bedding's customers include hospitals, nursing homes, hotels and motels, and transportation-based companies such as airlines, railroads and motor coach companies. On-Line Bedding's primary accounts include AMTRAK, as well as certain domestic and international airlines. On-Line Bedding participates in an electronic invoice system with the United States military for a specialty pillow, which has been regularly purchased by the U.S. Armed Forces. On-Line Bedding is also an authorized pillow and related product vendor for a hospital purchasing group of over 500 members in eight states. THE OFFERING This prospectus relates to 2,297,605 shares of our common stock that we may offer for sale from time to time in one or more offerings. We may offer these shares of common stock through public or private transactions, on or off of the American Stock Exchange, at prevailing market prices or at privately negotiated prices. We will provide the specific terms of any securities we actually offer for sale in supplements to this prospectus. These supplements may add, update or change information contained in this prospectus. You should read this prospectus and the supplements carefully before you decide to invest in any of these securities. USE OF PROCEEDS Except as may otherwise be described in the prospectus supplement relating to an offering of securities, the net proceeds from the sale of the securities included in this prospectus will be used for general corporate purposes, including, but not limited to working capital, capital expenditures and acquisitions, if any. Any specific allocation of the net proceeds of an offering of securities to a specific purpose will be determined at the time of such offering and will be described in the related prospectus supplement. CORPORATE INFORMATION Our executive offices are located at 1011 Campus Drive, Mundelein, Illinois, 60060. Our phone number is (847) 549-6002. Our website is http://www.crgq.com. Information on our web site is not intended to be incorporated into this prospectus. -5- RISK FACTORS You should consider the following risk factors in addition to the other information in this prospectus before investing in the Shares. An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors, other information included in this prospectus and information in our periodic reports filed with the Securities and Exchange Commission. If any of the following risks actually occur, our business, financial condition or results of operations could be materially and adversely affected and you may lose some or all of your investment. WE HAVE A HISTORY OF OPERATING LOSSES AND CANNOT GUARANTEE PROFITABLE OPERATIONS IN THE FUTURE. ANY FAILURE ON OUR PART TO ACHIEVE PROFITABILITY MAY CAUSE US TO REDUCE OR EVENTUALLY CEASE OPERATIONS. We reported a net loss of $2,827,821 for the twelve months ending December 31, 2003 and a net loss of $2,910,055 for the twelve months ending December 31, 2002. At December 31, 2003 and 2002, respectively, we reported accumulated deficits of $2,910,055 and $20,082,234. If we continue to incur significant losses our cash reserves may be depleted earlier than currently anticipated, and we may have to limit our future growth objectives to levels corresponding with our then available cash reserves and may eventually have to cease operations. OUR SUCCESS IS DEPENDENT ON MARKET ACCEPTANCE OF OUR PRODUCT. We have not conducted, nor have others made available to us, results of market research indicating how much market demand exists for Z-Trim, our fat replacement product. We are relying on the current concerns over obesity, weight-health issues, and the rising cost of health care to drive demand for Z-Trim in the marketplace. Consequently, we cannot assure you that we will be able to gain the market acceptance necessary to achieve profitability. WE MAKE NO PROJECTIONS REGARDING THE VIABILITY OF OUR FAT REPLACEMENT PRODUCT AND WE CANNOT ASSURE YOU THAT WE WILL ACHIEVE THE RESULTS DESCRIBED. We make no projection with respect to our future income, assets or business. No expert has reviewed our business plan for accuracy or reasonableness. It is possible that our actual business and results of operations may differ from those presented herein. WE MAY NEED ADDITIONAL FUNDING AND SUCH FUNDING MAY NOT BE AVAILABLE. IF SUCH FUNDING IS AVAILABLE, IT MAY NOT BE OFFERED ON SATISFACTORY TERMS. We may require additional financing to fund ongoing operations if our sales and revenue growth are insufficient to meet our operating costs. Our inability to obtain necessary capital or financing to fund these needs will adversely affect our ability to fund operations and continue as a going concern. Our inability to obtain necessary capital or financing to fund these needs could adversely affect our business, results of operations and financial condition. Additional financing may not be available when needed or may not be available on terms acceptable to us. If adequate -6- funds are not available, we may be required to delay, scale back or eliminate one or more of our business segments, which may affect our overall business, results of operations and financial condition. THE LOSS OF SERVICE OF KEY MANAGEMENT COULD HAVE A NEGATIVE IMPACT ON OUR PERFORMANCE. Our success depends to a significant degree upon the performance of our founder and Chief Executive Officer, Gregory J. Halpern. The loss of service of Mr. Halpern could have a material adverse effect on our operating performance and viability as a going concern. Further, we are dependent upon our ability to attract and retain highly skilled managerial personnel. We believe that our future success in developing marketable products and achieving profitability will depend in large part upon whether we can attract and retain skilled personnel. OUR MANAGEMENT CURRENTLY BENEFICIALLY OWNS A SIGNIFICANT PERCENTAGE OF OUR COMMON STOCK. Ownership of Circle Group is concentrated in management. As of June 1, 2004, Gregory J. Halpern, our Chairman and Chief Executive Officer, owns approximately 34% of the Company's common stock and all of the directors and officers collectively own approximately 39%. Consequently, holders of our common stock can be out-voted by management in most circumstances and thereby management can control the composition of our board of directors and our policies. WE MAY EXPAND OUR OPERATIONS BY MAKING ACQUISITIONS WHICH COULD SUBJECT US TO A NUMBER OF OPERATIONAL RISKS. In order to grow our business, we may expand our operations by acquiring other businesses in the future. We cannot predict whether or when any acquisitions will occur. Acquisitions commonly involve certain risks, and we cannot assure you that any acquired business will be successfully integrated into our operations or will perform as we expect. Any future acquisitions could involve certain other risks, including the assumption of additional liabilities, potentially dilutive issuances of equity securities and diversion of management's attention from other business concerns We may also enter into joint venture transactions. Joint ventures have the added risk that the other joint venture partners may have economic, business or legal interests or objectives that are inconsistent with our interests and objectives. OUR INABILITY TO SECURE AND PROTECT OUR INTELLECTUAL PROPERTY MAY RESULT IN COSTLY AND TIME-CONSUMING LITIGATION AND COULD IMPEDE US FROM EVER ATTAINING MARKET SUCCESS. We hold several patents as well as copyrights and trademarks with respect to our products and expect to continue to file applications in the future as a means of protecting our intellectual property. In addition, we seek to protect our proprietary information and know-how through the use of trade secrets, confidentiality agreements and other similar security measures. With respect to patents, there can be no assurance that any applications for patent protection will be granted, or, if granted, will offer meaningful protection. Additionally, there can be no assurance that competitors will not develop, patent or gain access to similar know-how and technology, or reverse engineer our products, or that any confidentiality agreements upon which -7- we rely to protect our trade secrets and other proprietary information will be adequate to protect our proprietary technology. The occurrence of any such events could have a material adverse effect on our results of operations and financial condition. OUR STOCK PRICE MAY DROP UNEXPECTEDLY DUE TO SHORT SELLING OF OUR COMMON STOCK IN THE MARKET. We have experienced and may continue to experience unexpected decline in our stock price due to manipulation of the market by individuals who profit by short selling our common stock. Short selling occurs when an individual borrows shares from an investor through a broker and then sells those borrowed shares at the current market price. The "short seller" profits when the stock price falls because he or she can repurchase the stock at a lower price and pay back the person they borrowed, thereby making a profit. We cannot assure you that individuals will not continue to engage in the short selling of our common stock in the future, causing decline in the value of your investment. THE FLUCTUATION IN OUR STOCK PRICE MAY RESULT IN A DECLINE IN THE VALUE OF YOUR INVESTMENT. The price of our common stock may fluctuate widely, depending upon many factors, including the differences between our actual financial and operating results and those expected by investors and analysts, changes in analysts' recommendations or projections, short selling of our stock in the market, changes in general economic or market conditions and broad market fluctuations. Companies that experience volatility in the market price of their securities often are subject to securities class action litigation. This type of litigation, if instituted against us, could result in substantial costs and divert management's attention and resources away from our business. -8- USE OF PROCEEDS Except as may otherwise be described in the prospectus supplement relating to an offering of securities, the net proceeds from the sale of the securities included in this prospectus will be used for general corporate purposes, including, but not limited to working capital, capital expenditures and acquisitions, if any. Any specific allocation of the net proceeds of an offering of securities to a specific purpose will be determined at the time of such offering and will be described in the related prospectus supplement. -9- PLAN OF DISTRIBUTION We may sell shares of our common stock in any of three ways: o through underwriters or dealers; o directly to a limited number of institutional purchasers or to a single purchaser; or o through agents. Any such dealer or agent, in addition to any underwriter, may be deemed to be an underwriter within the meaning of the Securities Act of 1933, as amended, and any discounts or commissions they receive from us and any profit on the resale of the offered securities by them may be treated as underwriting discounts and commissions under the Securities Act. The terms of the offering of the securities with respect to which this prospectus is being delivered will be set forth in the applicable prospectus supplement and will include: o the name or names of any underwriters, dealers or agents; o the purchase price of such securities and the proceeds to us from such sale; o any underwriting discounts and other items constituting underwriters' compensation; o the public offering price; and o any discounts or concessions which may be allowed or reallowed or paid to dealers and any securities exchanges on which the securities may be listed. If underwriters are used in the sale of shares of our common stock, such shares will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The shares may be offered to the public either through underwriting syndicates represented by managing underwriters or directly by one or more underwriters acting alone. Unless otherwise set forth in the applicable prospectus supplement, the obligations of the underwriters to purchase the shares described in the applicable prospectus supplement will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all such shares if any are so purchased by them. Any public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. The shares may be sold directly by us or through agents designated by us from time to time. Any agents involved in the offer or sale of the shares in respect of which this prospectus is being delivered, and any commissions payable by us to such agents, will be set forth in the applicable prospectus -10- supplement. Unless otherwise indicated in the applicable prospectus supplement, any such agent will be acting on a best efforts basis for the period of its appointment. If dealers are utilized in the sale of any shares, we will sell the shares to the dealers, as principals. Any dealer may resell the shares to the public at varying prices to be determined by the dealer at the time of resale. The name of any dealer and the terms of the transaction will be set forth in the prospectus supplement with respect to the shares being offered. Shares may also be offered and sold, if so indicated in the applicable prospectus supplement, in connection with a remarketing upon their purchase, in accordance with a redemption or repayment pursuant to their terms, or otherwise, by one or more firms, which we refer to herein as the "remarketing firms," acting as principals for their own accounts or as our agents, as applicable. Any remarketing firm will be identified and the terms of its agreement, if any, with us and the firm's compensation will be described in the applicable prospectus supplement. Remarketing firms may be deemed to be underwriters, as that term is defined in the Securities Act of 1933, as amended, in connection with the securities remarketed thereby. If so indicated in the applicable prospectus supplement, we will authorize agents, underwriters or dealers to solicit offers by certain specified institutions to purchase the shares to which this prospectus and the applicable prospectus supplement relates from us at the public offering price set forth in the applicable prospectus supplement, plus, if applicable, accrued interest, pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts will be subject only to those conditions set forth in the applicable prospectus supplement, and the applicable prospectus supplement will set forth the commission payable for solicitation of such contracts. Underwriters will not be obligated to make a market in the shares of our common stock. No assurance can be given regarding the activity of trading in, or liquidity of, our shares of common stock. Agents, dealers, underwriters and remarketing firms may be entitled, under agreements entered into with us to indemnification by us against certain civil liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribution to payments they may be required to make in respect thereof. Agents, dealers, underwriters and remarketing firms may be customers of, engage in transactions with, or perform services for, us in the ordinary course of business. The place, time of delivery and other terms of the offered shares of common stock will be described in the prospectus supplement. -11- LEGAL MATTERS The validity of the common stock registered hereunder has been passed upon for us by Pepper Hamilton LLP, Washington, D.C. EXPERTS The financial statements incorporated in this prospectus by reference to the Annual Report on Form 10-K for the Year ended December 31, 2003 have been so incorporated in reliance on the report of Spector & Wong LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. MATERIAL CHANGES On June 16, 2003, we announced that we had entered into an agreement in princpiple to settle a lawsuit we had filed against our former counsel, Atlas, Pearlman, Trop & Borkson, PA in August 2001. Pursuant to the terms of the agreement, we have agreed to release each other of all claims in exchange for a payment to us in the amount of $950,000. We expect to sign this agreement before the end of June 2004. -12- INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Commission allows us to "incorporate by reference" the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this prospectus, and information that we file later with the Commission will automatically update and supersede that information. We incorporate by reference the documents filed with the Commission listed below: (a) Our Annual Report on Form 10-K for the year ended December 31, 2003; (b) Our Quarterly Reports on Form 10-Q for the quarterly period ended March 31, 2004; (c) The description of the common stock contained in our Registration Statement on Form 10SB filed with the Commission on August 21, 2000, together with each of Amendment No. 1 on Form 10SB/A filed with the Commission on December 10, 2002, Amendment No. 2 on Form 10SB/A filed with the Commission on January 7, 2002 and Amendment No. 3 on Form 10SB/A filed with the Commission on January 24, 2002 and including any amendments or reports filed for the purpose of updating such description in which there is described the terms, rights and provisions applicable to our common stock; and (d) All documents we have filed with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the initial registration statement and prior to the effectiveness of the registration statement, as well as subsequent to the date of this prospectus and prior to the termination of this offering, shall be deemed to be incorporated by reference into this prospectus and to be a part of this prospectus from the date of the filing of the documents. You may request a copy of any one or more of these filings, at no cost, by contacting us at: Circle Group Holdings, Inc. 1011 Campus Drive Mundelein, Illinois 60060 (847) 549-6002 -13- WHERE YOU CAN GET MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). You may read and copy any reports, statements or other information that we file with the Commission at the Commission's public reference room at 450 Fifth Street, NW, Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the public reference room. The Commission maintains a Web site at "www.sec.gov" that contains reports, proxy and information statements and other information regarding companies that file electronically with the Commission, including Circle Group's. You may also find copies of reports, proxy and information statements we file electronically with the Commission via a link to "Investor Relations" from our website at "www.crgq.com." The information on our Internet Web site is not incorporated in this prospectus by reference and you should not consider it a part of this prospectus. -14- PROSPECTUS CIRCLE GROUP HOLDINGS, INC. 2,297,605 SHARES OF COMMON STOCK JUNE 25, 2004 You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information that is different from that contained in this prospectus. We are offering to sell shares of common stock and seeking offers to buy shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock. -15- PART II ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the estimated expenses to be incurred in connection with the issuance and resale of the securities offered by this prospectus. We are responsible for the payment of all expenses set forth below. Registration fee $ 1,744.34 Blue Sky filing fees and expenses $ * Printing and engraving expenses $ * Legal fees and expenses $ 10,000.00 Accounting fees and expenses $ 2,000.00 Miscellaneous $ * ----------- Total $ * - ---------------------- (*) To be provided in an amendment to this registration statement. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Company's bylaws authorize the Company to indemnify directors and officers and other corporate agents to the fullest extent permitted under the laws of Illinois. Because indemnification of liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers or controlling persons by these provisions or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission this indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable. In the event that a claim for indemnification against liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers or controlling persons in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether indemnification by us is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of the issue. -16- ITEM 16. EXHIBITS The following documents are filed as exhibits to this Registration Statement, including those exhibits incorporated herein by reference to a prior filing of Circle Group Holdings, Inc. under the Securities Act of 1933 or the Securities Exchange Act of 1934 as indicated in paranthesis. EXHIBIT NO. DESCRIPTION - ----------- ----------- 3.1 Articles of Incorporation of Circle Group Holdings, Inc. [Incorporated by reference to Exhibit 2.1 to Circle Group's Form 10-SB, as amended, filed on August 21, 2000] 3.2 Bylaws of Circle Group Holdings, Inc. [Incorporated by reference to Exhibit 2.2 to Circle Group's Form 10-SB, as amended, filed on August 21, 2000] 4.1 Specimen Certificate for common stock [Incorporated by reference to Exhibit 3.1 to Circle Group's Form 10-SB, as amended, filed on August 21, 2000] 5.1 Opinion of Pepper Hamilton LLP* 10.1 Gregory J. Halpern Employment Agreement, dated January 2, 1999 and Addendum [Incorporated by reference to Exhibit 6.1 to Circle Group's Form 10-SB, as amended, filed on August 21, 2000] 10.2 Michael Theriault Employment Agreement, dated June 1, 1999 [Incorporated by reference to Exhibit 6.3 to Circle Group's Form 10-SB, as amended, filed on August 21, 2000] 10.3 Dana Dabney Employment Agreement, dated January 2, 1999 [Incorporated by reference to Exhibit 6.4 to Circle Group's Form 10-SB, as amended, filed on August 21, 2000] 10.5 Circle Group Holdings, Inc. 2004 Equity Incentive Plan* 10.6 Industrial Lease Agreement between CLO Enterprises and Circle Group Holdings, Inc., dated May 20, 1999 [Incorporated by reference to Exhibit 6.6 to Circle Group's Form 10-SB, as amended, filed on August 21, 2000] 10.7 Industrial Lease Agreement between CLO Enterprises and Circle Group Holdings, Inc., dated June 18, 1999 [Incorporated by reference to Exhibit 6.7 to Circle Group's Form 10-SB, as amended, filed on August 21, 2000] 10.8 Stock Purchase Agreement, dated December 20, 2002, by and between CGI Capital and Rothschild Owens Hayes & Partners, Inc. [Incorporated by reference to Exhibit 6.8 to Circle Group's Form 10-KSB filed on April 14, 2003] 10.9 Promissory Note, Dated November 30, 2002, delivered by Circle Group Holdings, Inc. in favor of Edward L. Halpern Incorporated by reference to Exhibit 6.11 to Circle Group's 10-KSB filed on April 14, 2003] 10.10 Asset Purchase Agreement, dated August 27, 2002, by and between Circle Group Holdings, Inc. and Utek Corporation [Incorporated by reference to Circle Group's Current Report on Form 8-K filed on September 11, 2002] 10.11 Promissory Note dated June 2004 delivered by Nurieel Akhamzadeh in favor of Circle Group Holdings, Inc.* 23.1 Consent of Spector and Wong, LLP* 23.2 Consent of Pepper Hamilton LLP (included in Exhibit 5.1)* - ------------------------ *Filed herewith. -17- ITEM 28. UNDERTAKINGS (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act. (ii) To reflect in the prospectus any facts or events arising after the effective date f the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not appy if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) For purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securiteis Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. -18- (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby further undertakes that: (1) For purposes of determining any liability under the Securities Act, treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act as part of this registration statement as of the time it was declared effective. (2) For determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities. -19- SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to be believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mundelein, State of Illinois, on June 25, 2004. CIRCLE GROUP HOLDINGS, INC. By: /s/ Gregory J. Halpern ----------------------------------------------- Gregory J. Halpern Chairman, President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregory J. Halpern as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. In accordance with the requirements of the Securities Act of 1933, as amended, this registration statement has been signed on June 25, 2004 by the following persons in the capacities indicated. /s/ Gregory J. Halpern ----------------------------------------------- Gregory J. Halpern Chairman, President and Chief Executive Officer (Principal Executive Officer) /s/ Dana L. Dabney ----------------------------------------------- Dana L. Dabney Director and Chief Financial Officer (Principal Accounting Officer) /s/ Edward L. Halpern ----------------------------------------------- Edward L. Halpern Director -20- /s/ Stanford J. Levin ----------------------------------------------- Stanford J. Levin Director /s/ Alan G. Orlowsky ----------------------------------------------- Alan G. Orlowsky Director /s/ Steve H. Salgan ----------------------------------------------- Steve H. Salgan Director -21- INDEX OF EXHIBITS EXHIBIT NUMBER DESCRIPTION OF EXHIBITS - ------ ----------------------- 5.1 Opinion of Pepper Hamilton LLP 10.5 Circle Group Holdings, Inc. 2004 Equity Incentive Plan 10.11 Promissory Note dated June 2004 delivered by Nurieel Akhamzadeh in favor of Circle Group Holdings, Inc. 22.1 Consent of Spector and Wong, LLP 22.2 Consent of Pepper Hamilton LLP (included in Exhibit 5.1) -22- EX-5 2 ex5-1.txt EXHIBIT 5-1 EXHIBIT 5.1 PEPPER HAMILTON LLP 600 Fourteenth Street, NW Washington, DC 20005-2004 (202) 220-1200 Fax (202) 220-1665 June 25, 2004 Circle Group Holdings, Inc. 1011 Campus Drive Mundelein, Illinois 60060 Re: Registration Statement on Form S-3 ---------------------------------- Ladies and Gentlemen: We are acting as counsel to Circle Group Holdings, Inc, an Illinois corporation (the "Company"), in connection with the registration of 2,297,605 shares (the "Shares"), of its Common Stock, par value $.00005 per share ("Common Stock"), pursuant to a Registration Statement on Form S-3 (the "Registration Statement"), filed on the date hereof, with the Securities and Exchange Commission under the Securities Act of 1933, as amended. Such Shares will be sold from time to time by the Company. As counsel for the Company, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments as we have deemed necessary for the purposes of rendering this opinion. In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. As to various questions of fact material to such opinion, we have relied, to the extent we deemed appropriate, upon representations, statements and certificates of officers and representatives of the Company and others. Based upon the foregoing, we are of the opinion that the Shares to be registered for sale by the Company have been duly authorized, by the Company and when sold will be fully paid and non-assessable, and, in the case of Shares to be issued under certain outstanding warrants or other rights to acquire Common Stock referred to in the Registration Statement, when issued, delivered and paid for in accordance with the terms of such warrants, will be, validly issued, fully paid and non-assessable. We consent to the use of this opinion as an exhibit to the Registration Statement, and we consent to the use of our name under the caption "Experts" in the Prospectus forming a part of the Registration Statement. Very truly yours, /s/ Pepper Hamilton LLP EX-10 3 ex10-5.txt EXHIBIT 10-5 EXHIBIT 10.5 CIRCLE GROUP HOLDINGS, INC. 2004 EQUITY INCENTIVE PLAN SECTION 1. PURPOSE; DEFINITIONS. The purposes of the Circle Group Holdings, Inc. 2004 Equity Incentive Plan (the "Plan") are to: (a) enable Circle Group Holdings, Inc. (the "Company") and its affiliated companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees, directors and consultants with an incentive for productivity; and (c) provide those employees, directors and consultants with an opportunity to share in the growth and value of the Company. For purposes of the Plan, the following initially capitalized words and phrases will be defined as set forth below, unless the context clearly requires a different meaning: (a) "Affiliate" means, with respect to a Person, a Person that directly or indirectly controls, or is controlled by, or is under common control with such Person. For this purpose, "control" means ownership of 50% or more of the total combined voting power or value of all classes of stock or interests of the Person. (b) "Award" means a grant of Options, SARs, Restricted Shares or Restricted Share Units pursuant to the provisions of the Plan. (c) "Award Agreement" means, with respect to any particular Award, the written document that sets forth the terms of that particular Award. (d) "Board" means the Board of Directors of the Company; provided, however, that if the Board appoints a Committee to perform some or all of the Board's administrative functions hereunder pursuant to Section 2, references in the Plan to the "Board" will be deemed to also refer to that Committee in connection with administrative matters to be performed by that Committee. (e) "Cause," with respect to a particular Participant, means, except to the extent specified otherwise by the Committee, a finding by the Board that the Participant: (i) has breached his or her employment or service contract with the Company, if any; (ii) has breached any obligation or duty to the Company or any of its Affiliates (whether arising by statute, common law, contract or otherwise); (iii) has engaged in disloyalty to the Company, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his or her employment or service; (iv) has disclosed trade secrets or confidential information of the Company to persons not entitled to receive such information; or (v) has engaged in such other behavior detrimental to the interests of the Company as the Board determines. Notwithstanding the foregoing, if a Participant and the Company (or any of its Affiliates) have entered into an employment agreement, consulting agreement or other similar agreement that specifically defines "cause," then with respect to such Participant, "Cause" shall have the meaning defined in that employment agreement, consulting agreement or other agreement. (f) "Change in Control" means if (i) the acquisition (other than from the Company) in one or more transactions by any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, other than employee benefit plans sponsored or maintained by the Company and corporations controlled by the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of (A) the then outstanding shares of the securities of the Company, or (B) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the "Company Voting Stock"); (ii) the closing of a sale or other conveyance of all or substantially all of the assets of the Company; (iii) the effective time of any merger, share exchange, consolidation, or other business combination of the Company if immediately after such transaction persons who hold a majority of the outstanding voting securities entitled to vote generally in the election of directors of the surviving entity (or the entity owning 100% of such surviving entity) are not persons who, immediately prior to such transaction, held the Company Voting Stock; provided, however, that a Change in Control shall not include a public offering of capital stock of the Company; or (iv) a liquidation or dissolution of the Company. (g) "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. (h) "Committee" means a committee appointed by the Board in accordance with Section 2 of the Plan. (i) "Director" means a member of the Board. (j) "Disability" means a Grantee's becoming disabled within the meaning of Section 22(e)(3) of the Code. (k) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (l) "Fair Market Value" means, as of any date: (i) the closing price of the Shares as reported on the principal nationally recognized stock exchange on which the Shares are traded on such date, or if no Share prices are reported on such date, the closing price of the Shares on the last preceding date on which there were reported Share prices; or (ii) if the Shares are not listed or admitted to unlisted trading privileges on a nationally recognized stock exchange, the closing price of the Shares as reported by The Nasdaq Stock Market on such date, or if no Share prices are reported on such date, the closing price of the Shares on the last preceding date on which there were reported Share prices; or (iii) if the Shares are not listed or admitted to unlisted trading privileges on a nationally recognized stock exchange or traded on The Nasdaq Stock Market, the Fair Market Value will be determined by the Board acting in its discretion, which determination will be conclusive. 2 (m) "Incentive Stock Option" means any Option intended to be and designated as an "Incentive Stock Option" within the meaning of Section 422 of the Code. (n) "Non-Employee Director" will have the meaning set forth in Rule 16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission; provided, however, that the Board or the Committee may, to the extent that it deems necessary to comply with Section 162(m) of the Code or regulations thereunder, require that each "Non-Employee Director" also be an "outside director" as that term is defined in regulations under Section 162(m) of the Code. (o) "Non-Qualified Stock Option" means any Option that is not an Incentive Stock Option. (p) "Option" means any option to purchase Shares (including Restricted Shares, if the Committee so determines) granted pursuant to Section 5 hereof. (q) "Participant" means an employee, consultant or Director of the Company or any of its Affiliates to whom an Award is granted. (r) "Person" means an individual, partnership, corporation, limited liability company, trust, joint venture, unincorporated association, or other entity or association. (s) "Plan Effective Date" means the date the Plan is approved by the Company's stockholders. (t) "Predecessor Plan" means the Circle Group Holdings Inc. Stock Incentive Plan. (u) "Restricted Shares" means Shares that are subject to restrictions pursuant to Section 8 hereof. (v) "Restricted Share Unit" means a right granted under and subject to restrictions pursuant to Section 9 of the Plan. (w) "SAR" means a share appreciation right granted under the Plan and described in Section 6 hereof. (x) "Share" means a share of the Company's common stock, par value $0.00005, subject to substitution or adjustment as provided in Section 3(d) hereof. (y) "Subsidiary" means, in respect of the Company, a subsidiary company, whether now or hereafter existing, as defined in Sections 424(f) and (g) of the Code. SECTION 2. ADMINISTRATION. The Plan will be administered by the Board of Directors; provided, however, that the Board may at any time appoint a Committee to perform some or all of the Board's administrative functions hereunder; and provided further, that the authority of any Committee appointed pursuant to this Section 2 will be subject to such terms 3 and conditions as the Board may prescribe and will be coextensive with, and not in lieu of, the authority of the Board hereunder. Any Committee established under this Section 2 will be composed of not fewer than two members, each of whom will serve for such period of time as the Board determines; provided, however, that if the Company has a class of securities required to be registered under Section 12 of the Exchange Act, all members of any Committee established pursuant to this Section 2 will be Non-Employee Directors. From time to time the Board may increase the size of the Committee and appoint additional members thereto, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan. The Board will have full authority to grant Awards under this Plan. In particular,subject to the terms of the Plan, the Board will have the authority: (a) to select the persons to whom Awards may from time to time be granted hereunder (consistent with the eligibility conditions set forth in Section 4); (b) to determine the type of Award to be granted to any person hereunder; (c) to determine the number of Shares, if any, to be covered by each such Award; (d) to establish the terms and conditions of each Award Agreement; (e) to determine whether and under what circumstances an Option may be exercised without a payment of cash under Section 5(d); and (f) to determine whether, to what extent and under what circumstances Shares and other amounts payable with respect to an Award may be deferred either automatically or at the election of the Participant; provided, however, that Awards granted to California residents must also comply with the terms of Appendix A attached hereto. The Board will have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it, from time to time, deems advisable; to establish the terms of each Award Agreement; to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement); and to otherwise supervise the administration of the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent it deems necessary to carry out the intent of the Plan. All decisions made by the Board pursuant to the provisions of the Plan will be final and binding on all persons, including the Company and Participants. No Director will be liable for any good faith determination, act or omission in connection with the Plan or any Award. 4 SECTION 3. SHARES SUBJECT TO THE PLAN. (a) Shares Subject to the Plan. The Shares to be subject to awards under the Plan will be authorized and unissued Shares of the Company, whether or not previously issued and subsequently acquired by the Company. Subject to this Section 3(a) and subject to adjustment from time to time in accordance with the provisions of Section 3(d), the maximum number of Shares that may be subject initially to Awards under the Plan is 20,000,000, and the Company will reserve for the purposes of the Plan, out of its authorized and unissued Shares, such number of Shares. Such initial share reserve is comprised of 7,452,000 Shares, which represents the sum of the number of shares which remained for issuance, as of the Plan Effective Date, under the Predecessor Plan as last approved by the Company's stockholders, plus the number of Shares subject to outstanding options under the Predecessor Plan as of the Plan Effective Date that will only become available under the Plan if and to the extent that the options to which such Shares are subject expire or are forfeited prior to being exercised. (b) Individual Limit. In no event shall the aggregate number of Shares for which any one individual participating in the Plan may be granted Awards for any given year exceed 1,000,000 Shares. (c) Effect of the Expiration or Termination of Awards. If and to the extent that an Option, SAR or Restricted Share Unit expires, terminates or is canceled or forfeited for any reason without having been exercised in full, the Shares associated with that Option, SAR or Restricted Share Unit will again become available for grant under the Plan. Similarly, if and to the extent any Restricted Share is canceled, forfeited or repurchased for any reason, or if any Share is withheld pursuant to Section 15(d) in settlement of a tax withholding obligation associated with an Award, that Share will again become available for grant under the Plan. Finally, if any Share subject to an Option is withheld by the Company in satisfaction of the exercise price payable upon exercise of that Option, that Share will again become available for grant under the Plan. (d) Other Adjustment. In the event of any recapitalization, stock split or combination, stock dividend or other similar event or transaction affecting the Shares, equitable substitutions or adjustments may be made by the Board, in its sole and absolute discretion, to the aggregate number, type and issuer of the securities reserved for issuance under the Plan, to the number, type and issuer of Shares subject to outstanding Options and SARs, to the exercise price of outstanding Options or SARs, to the number, type and issuer of Restricted Shares outstanding under the Plan and to the number of Restricted Share Units outstanding under the Plan and/or the type of securities referenced for determining payment in respect thereof. (e) Change in Control. Notwithstanding anything to the contrary set forth in this Plan, upon or in anticipation of any Change in Control, the Board may, in its sole and absolute discretion and without the need for the consent of any Participant, take one or more of the following actions contingent upon the occurrence of that Change in Control: (i) cause any or all outstanding Options and SARs held by Participants affected by the Change in Control to become fully vested and immediately exercisable, in whole or in part; 5 (ii) cause any or all outstanding Restricted Shares held by Participants affected by the Change in Control to become non-forfeitable, in whole or in part; (iii) cancel any Option held by a Participant affected by the Change in Control in exchange for an option to purchase common stock of any successor corporation, which new option satisfies the requirements of Treas. Reg. ss.1.425-1(a)(4)(i) (notwithstanding the fact that the original Option may never have been intended to satisfy the requirements for treatment as an Incentive Stock Option); (iv) cancel any or all Restricted Shares or Restricted Share Units held by Participants affected by the Change in Control in exchange for restricted shares of or restricted share units in respect of the common stock of any successor corporation; (v) redeem any or all Restricted Shares held by Participants affected by the Change in Control for cash and/or other substitute consideration with a value equal to the (a) the number of Restricted Shares to be redeemed multiplied by (b) the Fair Market Value of an unrestricted Share on the date of the Change in Control; (vi) cancel any Option or SAR held by a Participant affected by the Change in Control in exchange for cash and/or other substitute consideration with a value equal to (a) the number of Shares subject to that Option or SAR, multiplied by (b) the difference between the Fair Market Value per Share on the date of the Change in Control and the exercise price of that Option or SAR; (vii) cancel any Restricted Share Unit held by a Participant affected by the Change in Control in exchange for cash and/or other substitute consideration with a value equal to (a) the number of Restricted Share Units, multiplied by (b) the Fair Market Value per Share on the date of the Change in Control. SECTION 4. ELIGIBILITY. Employees, Directors, consultants, and other individuals who provide services to the Company or its Affiliates are eligible to be granted Awards under the Plan; provided, however, that only employees of the Company or a Subsidiary are eligible to be granted Incentive Stock Options. SECTION 5. OPTIONS. Options granted under the Plan may be of two types: (i) Incentive Stock Options or (ii) Non-Qualified Stock Options. Without limiting the generality of Section 3(a), any number of the maximum number of Shares provided for in Section 3(a) may be subject to Incentive Stock Options or Non-Qualified Options or any combination thereof. The Award Agreement evidencing any Option will incorporate the following terms and conditions and will contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Board deems appropriate in its sole and absolute discretion: (a) Option Price. The exercise price per Share purchasable under a Non-Qualified Stock Option will be determined by the Board. The exercise price per Share purchasable under an Incentive Stock Option will be not less than 100% of the Fair Market 6 Value of a Share on the date of the grant. However, any Incentive Stock Option granted to any Participant who, at the time the Option is granted, owns more than 10% of the voting power of all classes of shares of the Company or of a Subsidiary will have an exercise price per Share of not less than 110% of Fair Market Value per Share on the date of the grant. (b) Option Term. The term of each Option will be fixed by the Board, but no Incentive Stock Option will be exercisable more than 10 years after the date the Option is granted. However, any Incentive Stock Option granted to any Participant who, at the time such Option is granted, owns more than 10% of the voting power of all classes of shares of the Company or of a Subsidiary may not have a term of more than five years. No Option may be exercised by any person after expiration of the term of the Option. (c) Exercisability. Options will vest and be exercisable at such time or times and subject to such terms and conditions as determined by the Board at the time of grant. If the Board provides, in its discretion, that any Option is exercisable only in installments, the Board may waive such installment exercise provisions at any time at or after grant, in whole or in part, based on such factors as the Board determines, in its sole and absolute discretion. (d) Method of Exercise. Subject to the exercisability provisions of Section 5(c), the termination provisions set forth in Section 7 and the applicable Award Agreement, Options may be exercised in whole or in part at any time and from time to time during the term of the Option, by the delivery of written notice of exercise by the Participant to the Company specifying the number of Shares to be purchased. Such notice must be accompanied by payment in full of the purchase price, either by certified or bank check, or such other means as the Board may accept. As determined by the Board, in its sole discretion, at or after grant, payment in full or in part of the exercise price of an Option may be made(i) in the form of previously acquired Shares based on the Fair Market Value of the Shares on the date the Option is exercised and/or (ii) to the extent the Option is exercised for vested shares, through a special sale and remittance procedure described below; provided, however, that, in the case of an Incentive Stock Option, the right to make a payment by either of the foregoing methods may be authorized only at the time the Option is granted. In order to use the "special sale and remittance procedure" mentioned in the preceding sentence, a Participant must concurrently provide irrevocable written instructions (A) to a Company-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable federal, state and local income and employment taxes required to be withheld by the Company by reason of such purchase and (B) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction. No Shares will be issued upon exercise of an Option until full payment therefor has been made. A Participant will not have the right to distributions or dividends or any other rights of a stockholder with respect to Shares subject to the Option until the Participant has given written notice of exercise, has paid in full for such Shares, and, if requested, has given the representation described in Section 15(a) hereof. 7 (e) Incentive Stock Option Limitations. In the case of an Incentive Stock Option, the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year under the Plan and/or any other plan of the Company or any Subsidiary will not exceed $100,000. For purposes of applying the foregoing limitation, Incentive Stock Options will be taken into account in the order granted. To the extent any Option does not meet such limitation, that Option will be treated for all purposes as a Non-Qualified Stock Option. (f) Termination of Employment. Unless otherwise specified in the applicable Award Agreement, Options will be subject to the terms of Section 7 with respect to exercise upon or following termination of employment. (g) Transferability of Options. Except as may otherwise be specifically determined by the Board with respect to a particular Non-Qualified Stock Option, no Option will be transferable by the Participant other than by will or by the laws of descent and distribution, and all Options will be exercisable, during the Participant's lifetime, only by the Participant or, in the event of his Disability, by his personal representative. SECTION 6. STOCK APPRECIATION RIGHTS. (a) Grant. The grant of an SAR provides the holder the right to receive the appreciation in value of Shares between the date of grant and the date of exercise. An SAR may be exercised by a Participant's giving written notice of intent to exercise to the Company, provided that all or a portion of such SAR has become vested and exercisable as of the date of exercise. Upon the exercise of an SAR, a Participant will be entitled to receive, in either cash and/or Shares (as determined by the Board or the Committee), an amount equal to the excess, if any, of (A) the Fair Market Value, as of the date such SAR (or portion of such SAR) is exercised, of the Shares covered by such SAR (or portion of such SAR) over (B) the Fair Market Value of the Shares covered by such SAR (or a portion of such SAR) as of the date such SAR (or a portion of such SAR) was granted. (b) Terms and Conditions. The Award Agreement evidencing any SAR will incorporate the following terms and conditions and will contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Board deems appropriate in its sole and absolute discretion: (i) Term of SAR. Unless otherwise specified in the Award Agreement, the term of an SAR will be ten years. (ii) Exercisability. SARs will vest and become exercisable at such time or times and subject to such terms and conditions as will be determined by the Board at the time of grant. 8 (iii) Termination of Service. Unless otherwise specified in the Award Agreement, SARs will be subject to the terms of Section 7 with respect to exercise upon termination of service. SECTION 7. TERMINATION OF SERVICE. Unless otherwise specified with respect to a particular Award, Options or SARs granted hereunder will remain exercisable after termination of service only to the extent specified in this Section 7. (a) Termination by Reason of Death. If a Participant's service with the Company or any Affiliate terminates by reason of death, any Option or SAR held by such Participant may thereafter be exercised, to the extent then exercisable or on such accelerated basis as the Board may determine, at or after grant, by the legal representative of the estate or by the legatee of the Participant under the will of the Participant, for a period expiring (i) at such time as may be specified by the Board at or after the time of grant, or (ii) if not specified by the Board, then 12 months from the date of death, or (iii) if sooner than the applicable period specified under (i) or (ii) above, then upon the expiration of the stated term of such Option. (b) Termination by Reason of Disability. If a Participant's service with the Company or any Affiliate terminates by reason of Disability, any Option or SAR held by such Participant may thereafter be exercised by the Participant or his personal representative, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Board may determine at or after grant, for a period expiring (i) at such time as may be specified by the Board at or after the time of grant, or (ii) if not specified by the Board, then 12 months from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, then upon the expiration of the stated term of such Option or SAR. (c) Cause. If a Participant's service with the Company or any Affiliate is terminated for Cause: (i) any Option or SAR not already exercised will be immediately and automatically forfeited as of the date of such termination, and (ii) any Shares for which the Company has not yet delivered share certificates will be immediately and automatically forfeited and the Company will refund to the Participant the Option exercise price paid for such Shares, if any. (d) Other Termination. If a Participant's service with the Company or any Affiliate terminates for any reason other than death, Disability or Cause, any Option or SAR held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such termination, or on such accelerated basis as the Board may determine at or after grant, for a period expiring (i) at such time as may be specified by the Board at or after the time of grant, or (ii) if not specified by the Board, then 90 days from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, then upon the expiration of the stated term of such Option or SAR. SECTION 8. RESTRICTED SHARES. (a) Issuance. Restricted Shares may be issued either alone or in conjunction with other Awards. The Board will determine the time or times within which Restricted Shares may be subject to forfeiture, and all other conditions of such Awards. 9 (b) Awards and Certificates. The Award Agreement evidencing the grant of any Restricted Shares will contain such terms and conditions, not inconsistent with the terms of the Plan, as the Board deems appropriate in its sole and absolute discretion. The prospective recipient of an Award of Restricted Shares will not have any rights with respect to such Award, unless and until such recipient has executed an Award Agreement and has delivered a fully executed copy thereof to the Company, and has otherwise complied with the applicable terms and conditions of such Award. The purchase price for Restricted Shares may, but need not, be zero. A share certificate will be issued in connection with each Award of Restricted Shares. Such certificate will be registered in the name of the Participant receiving the Award, and will bear the following legend and/or any other legend required by this Plan, the Award Agreement, the Company's stockholders' agreement, if any, or by applicable law: THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE CIRCLE GROUP HOLDINGS, INC. 2004 EQUITY INCENTIVE PLAN AND AN AGREEMENT ENTERED INTO BETWEEN THE PARTICIPANT AND CIRCLE GROUP HOLDINGS, INC. (WHICH TERMS AND CONDITIONS MAY INCLUDE, WITHOUT LIMITATION, CERTAIN TRANSFER RESTRICTIONS, REPURCHASE RIGHTS AND FORFEITURE CONDITIONS). COPIES OF THAT PLAN AND AGREEMENT ARE ON FILE IN THE PRINCIPAL OFFICES OF CIRCLE GROUP HOLDINGS, INC., AND WILL BE MADE AVAILABLE TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON REQUEST TO THE SECRETARY OF CIRCLE GROUP HOLDINGS, INC. Share certificates evidencing Restricted Shares will be held in custody by the Company or in escrow by an escrow agent until the restrictions thereon have lapsed. As a condition to any Restricted Shares award, the Participant may be required to deliver to the Company a share power, endorsed in blank, relating to the Shares covered by such Award. (c) Restrictions and Conditions. The Restricted Shares awarded pursuant to this Section 8 will be subject to the following restrictions and conditions: (i) During a period commencing with the date of an Award of Restricted Shares and ending at such time or times as specified by the Board (the "Restriction Period"), the Participant will not be permitted to sell, transfer, pledge, assign or otherwise encumber Restricted Shares awarded under the Plan. The Board may condition the lapse of restrictions on Restricted Shares upon the continued employment or service of the recipient, the 10 attainment of specified individual or corporate performance goals, or such other factors as the Board may determine, in its sole and absolute discretion. (ii) Except as provided in this Paragraph (ii) or Section 8(c)(i), once the Participant has been issued a certificate or certificates for Restricted Shares, the Participant will have, with respect to the Restricted Shares, all of the rights of a stockholder of the Company, including the right to vote the Shares, and the right to receive any cash distributions or dividends. The Board, in its sole discretion, as determined at the time of award, may permit or require the payment of cash distributions or dividends to be deferred and, if the Board so determines, reinvested in additional Restricted Shares to the extent Shares are available under Section 3 of the Plan. Any distributions or dividends paid in the form of securities with respect to Restricted Shares will be subject to the same terms and conditions as the Restricted Shares with respect to which they were paid, including, without limitation, the same Restriction Period. (iii) Subject to the applicable provisions of the Award Agreement, if a Participant's service with the Company terminates prior to the expiration of the Restriction Period, all of that Participant's Restricted Shares which then remain subject to forfeiture will then be forfeited automatically. (iv) If and when the Restriction Period expires without a prior forfeiture of the Restricted Shares subject to such Restriction Period (or if and when the restrictions applicable to Restricted Shares lapse pursuant to Sections 3(e)), the certificates for such Shares will be replaced with new certificates, without the restrictive legends described in Section 8(b) applicable to such lapsed restrictions, and such new certificates will be promptly delivered to the Participant, the Participant's representative (if the Participant has suffered a Disability), or the Participant's estate or heir (if the Participant has died). SECTION 9. RESTRICTED SHARE UNITS. Subject to the other terms of the Plan, the Board may grant Restricted Share Units to eligible individuals and may impose conditions on such units as it may deem appropriate. Each granted Restricted Share Unit shall be evidenced by an Award Agreement in the form that is approved by the Board and that is not inconsistent with the terms and conditions of the Plan. Each granted Restricted Share Unit shall entitle the Participant to whom it is granted to a distribution from the Company in an amount equal to the Fair Market Value (at the time of the distribution) of one Share. Distributions may be made in cash and/or Shares. All other terms governing Restricted Share Units, such as vesting, time and form of payment and termination of units shall be set forth in the Award Agreement. SECTION 10. AMENDMENTS AND TERMINATION. The Board may amend, alter or discontinue the Plan at any time. However, except as otherwise provided in Section 3(e) of the Plan, no amendment, alteration or discontinuation will be made which would impair the rights of a Participant with respect to an Award without that Participant's consent or which, without the approval of such amendment within one year (365 days) of its adoption by the Board, by the Company's stockholders in a manner consistent with the requirements of Section 422(b)(1) of the Code and related regulations would: (i) increase the total number of Shares reserved for the purposes of the Plan (except as otherwise provided in Section 3(d)), or (ii) change the persons or class of persons eligible to receive Awards. 11 SECTION 11. UNFUNDED STATUS OF PLAN. The Plan is intended to be "unfunded." With respect to any payments not yet made to a Participant by the Company, nothing contained herein will give any such Participant any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Board may authorize the creation of grantor trusts or other arrangements to meet the obligations created under the Plan to deliver Shares or payments in lieu of Shares or with respect to Awards. SECTION 12. EFFECTIVE DATE OF PLAN. The Plan was adopted by the Board on March , 2004 and will become effective on the Plan Effective Date. SECTION 13. TERM OF PLAN. The Plan will continue in effect until the earliest of (i) the date on which it is terminated by the Board in accordance with Section 10, (ii) the date on which no Shares remain available for issuance under the Plan terminated in accordance with Section 10, and (iii) the 10th anniversary of the Plan Effective Date (or, if the stockholders approve an amendments that increases the number of shares subject to the Plan, the 10th anniversary of the date of such approval); provided, however, that Options granted prior to the Plan's termination may extend beyond that termination. SECTION 14. BOARD ACTION. Notwithstanding anything to the contrary set forth in the Plan, any and all actions of the Board or Committee, as the case may be, taken under or in connection with the Plan and any agreements, instruments, documents, certificates or other writings entered into, executed, granted, issued and/or delivered pursuant to the terms hereof, will be subject to and limited by any and all votes, consents, approvals, waivers or other actions of all or certain stockholders of the Company or other persons required by: (a) the Company's Articles of Incorporation (as the same may be amended and/or restated from time to time); (b) the Company's Bylaws (as the same may be amended and/or restated from time to time); and (c) any other agreement, instrument, document or writing now or hereafter existing, between or among the Company and its stockholders or other persons (as the same may be amended from time to time). SECTION 15. GENERAL PROVISIONS. (a) Representations. The Board may require each Participant to represent to and agree with the Company in writing that the Participant is acquiring securities of the Company for investment purposes and without a view to distribution thereof and as to such other matters as the Board believes are appropriate. The certificate evidencing any Award and any securities issued pursuant thereto may include any legend which the Board deems appropriate to reflect any restrictions on transfer and compliance with securities laws. All certificates for Shares or other securities delivered under the Plan will be subject to such share-transfer orders and other restrictions as the Board may deem advisable under the rules, regulations, and other requirements of the Securities Act of 1933, as 12 amended, the Exchange Act, any stock exchange upon which the Shares are then listed, and any other applicable federal or state securities laws, and the Board may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. (b) Other Compensation. Nothing contained in the Plan will prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases. (c) No Right To Continued Service. Neither the adoption of the Plan nor the execution of any document in connection with the Plan will (i) confer upon any person any right to continued employment or engagement with the Company or such Affiliate, or (ii) interfere in any way with the right of the Company or such Affiliate to terminate the employment of any of its employees at any time. (d) Withholding. No later than the date as of which an amount first becomes includible in the gross income of the Participant for federal income tax purposes with respect to any Award under the Plan, the Participant will pay to the Company, or make arrangements satisfactory to the Board regarding the payment of any federal, state or local taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Board, the minimum required withholding obligations may be settled with Shares, including Shares that are part of the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan will be conditioned on such payment or arrangements and the Company will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. (e) Invalid Provisions. In the event that any provision of this Plan is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability will not be construed as rendering any other provisions contained herein as invalid or unenforceable, and all such other provisions will be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein. (f) Governing Law. The Plan and all Awards granted hereunder will be governed by and construed in accordance with the laws and judicial decisions of the State of Illinois, without regard to the application of the principles of conflicts of laws. (g) Notices. Any notice to be given to the Company pursuant to the provisions of the Plan will be addressed to the Company in care of its Secretary (or such other person as the Company may designate from time to time) at its principal executive office, and any notice to be given to a Participant will be delivered personally or addressed to him or her at the address given beneath his or her signature on his or her Award Agreement, or at such other address as such Participant may hereafter designate in writing to the Company. Any such notice will be deemed duly given on the date and at the time delivered via personal, courier or recognized overnight delivery service or, if sent via telecopier, on the date and at the time telecopied with confirmation of delivery or, if mailed, on the date five days after the date of the mailing (which will be by regular, registered or certified mail). Delivery of a notice by telecopy 13 (with confirmation) will be permitted and will be considered delivery of a notice notwithstanding that it is not an original that is received. 14 EX-10 4 ex10-11.txt EXHIBIT 10-11 EXHIBIT 10.11 FULL RECOURSE PROMISSORY NOTE This Full Recourse Promissory Note (the "Note") is hereby tendered by Nurieel Akhamzadeh, ("Promissor") an individual whose address is 4020 Moorpark Avenue, Suite #117, San Jose, CA 95117 to Circle Group Holdings, Inc., an Illinois corporation (the "Company"). 1. OBLIGATION. For value received, (453,333 shares of common stock of Circle Group Holding, Inc.), receipt of which is hereby acknowledged, Promissor hereby promises to pay to the order of the Company on or before June 30, 2004 (the "Due Date") at the Company's principal place of business located at 1011 Campus Drive, Mundelein, Illinois 60060, or at such other place as the Company may direct, the principal sum of Two Million Forty Thousand Dollars and No Cents ($2,040,000.00). Except as provided in Section 3 below, no interest will accrue or be payable by Promissor on the principal sum. Payments hereunder shall be made in lawful tender of the United States. 2. EVENTS OF DEFAULT. Promissor will be deemed to be in default under this Note upon the occurrence of any of the following events (each an "EVENT OF DEFAULT"): (i) upon Promissor's failure to make any payment when due under this Note; which failure shall continue for a period of ten (10) days after such due date; (ii) the failure of any representation or warranty in the Agreement to have been true, the failure of Promissor to perform any obligation under the Agreement, or upon any other material breach by the Promissor of the Agreement; (iii) upon the filing by Promissor of any voluntary or involuntary petition for relief under the United States Bankruptcy Code or the initiation of any proceeding under federal law or law of any other jurisdiction for the general relief of debtors; or (v) upon the execution by Promissor of an assignment for the benefit of creditors or the appointment of a receiver, custodian, trustee or similar party to take possession of Promissor's assets or property. 3. ACCELERATION; REMEDIES ON DEFAULT. Upon the occurrence of any Event of Default, at the option of the Company, all amounts owed under this Note shall become due and payable, without notice or demand on the part of the Company, thirty (30) days from the occurrence of the Event of Default (the "Accelerated Due Date"). The Company will have, in addition to its rights and remedies under this Note, full recourse against any real, personal, tangible or intangible assets of Promissor, and may pursue any legal or equitable remedies that are available to it. Interest shall accrue from the Accelerated Due Date on all unpaid amounts at the rate of the lower of ten percent (10%) per annum, compounded monthly or the highest rate permitted by law. 4. PREPAYMENT. Prepayment of principal and/or other amounts owed under this Note may be made at any time without penalty. Unless otherwise agreed in writing by the Company, each payment will be applied to the extent of available funds from such payment in the following order: (i) first to the accrued and unpaid costs and expenses under the Note Agreement, (ii) then to accrued but unpaid interest, and (iii) lastly to the outstanding principal. 5. WAIVER. Promissor hereby waives presentment, notice of non-payment, notice of dishonor, protest, demand and diligence. 6. GOVERNING LAW; WAIVER. The validity, construction and performance of this Note will be governed by the internal laws of the State of Illinois, excluding that body of law pertaining to conflicts of law. 7. SUCCESSORS AND ASSIGNS. This Note is personal to Promissor and may not be transferred or assigned by Promissor. This Note will inure to the benefit of the permitted heirs, personal representatives, successors and assigns of the parties hereto. 8. MODIFICATION; ENTIRE AGREEMENT. This Note will not be amended without the written consent of both parties hereto. This Note, together with the Letter Agreement, constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings related to such subject matter. 9. ATTORNEYS' FEES. If suit is brought for collection of this Note, Purchaser agrees to pay all reasonable expenses, including attorneys' fees, incurred by the holder in connection therewith whether or not such suit is prosecuted to judgment. IN WITNESS WHEREOF, Promissor and the Company have each executed this Note as of the date and year first above written. Circle Group Holdings, Inc. Promissor /s/ Gregory J. Halpern - CEO /s/ Nurieel Akhamzadeh - ---------------------------- ------------------------ Gregory J. Halpern - CEO Nurieel Akhamzadeh EX-22 5 ex22-1.txt EXHIBIT 22-1 EXHIBIT 22.1 [LETTERHEAD] CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated February 23, 2004, relating to the consolidated financial statements and financial schedule of Circle Group Holdings, Inc. and subsidiaries, which appears in Circle Group Holding's Annual Report on Form 10-KSB for the year ended December 31, 2003. We also consent to the reference to us under the heading "Experts" in such Registration Statement. Spector & Wong, LLP Pasadena, California June 25, 2004 -----END PRIVACY-ENHANCED MESSAGE-----