================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): September 4, 1998
BIOFARM, INC.***
--------------------------------------------------
(Exact name of registrant as specified in charter)
Nevada 0-20317 88-0270266
- --------------- ------------------------ -------------------
(State or other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
1244 Main Street, Linfield, Pennsylvania 19468
------------------------------------------------------------
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (610) 495-8413
***Name changed from Global Spill Management, Inc. on October 7, 1998
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<PAGE>
INTRODUCTORY STATEMENT
This Form 8-K filing supplements the Form 8-K filing by Global Spill Management,
Inc. on March 6, 1998. The purpose of this supplemental filing is to render
current the responses herein to Items 1, 2, 4, 7 and 8, as well as to manifest
compliance with certain accounting matters set forth in an accounting memorandum
sent to the registrant by the Commission and dated July 28, 1998.
Additionally, the registrant requests that the report of Coopers & Lybrand,
dated November 18, 1997, for the two years and six months ended June 30, 1997,
be withdrawn from the Form 8-K filing dated March 6, 1998.
On October 5, 1998, the shareholders of the registrant voted to change the name
of the registrant to Biofarm, Inc. Such name change was filed with the state of
incorporation on October 7, 1998.
On April 1, 1998, the registrant entered into a Stock Purchase Agreement, as
amended, (the "Stock Purchase Agreement") with Litchfield Continental, Ltd., a
British Virgin Island corporation ("Litchfield"), the parent of Biofarm, S.A., a
Romanian pharmaceutical corporation. Pursuant to the Stock Purchase Agreement,
the registrant agreed to acquire approximately 87% of the issued and outstanding
shares of capital stock of Biofarm, S.A. On September 4, 1998, the Stock
Purchase Agreement was amended to waive the requirement that the registrant
obtain shareholder approval of the transaction. As a result of such amendment,
on September 4, 1998, the registrant completed the acquisition of approximately
87% of the issued and outstanding shares of Biofarm, S.A.; and, on October 5,
1998, the nominees of Litchfield were elected to the Board of Directors of the
registrant.
In consideration for the purchase of the shares of Biofarm, S.A., the registrant
issued to Litchfield a convertible non-negotiable secured debenture (the
"Debenture") in the principal sum of Six Million Four Hundred and Thirty Four
Thousand Six Hundred Eighty One Dollars ($6,434,681). Therefore, Biofarm, S.A.
is now a majority owned subsidiary of the registrant.
The Debenture provides that there is no interest due or payable on the principal
sum and is non-negotiable and non-transferable. The Debenture is non-redeemable
and does not represent a debt obligation of the registrant. The Debenture
provides that, from time to time, for a period of five (5) years from the date
of the Debenture, the holder thereof may convert a portion, but not less than
2.5%, of the original principal sum into shares of the registrant's Common
Stock. The Debenture is convertible at the rate of 2% of the then issued and
outstanding Common Stock of the registrant for each 2.5% of the principal sum of
the Debenture that is converted. Therefore, and in accordance with the terms of
the Debenture, if the entire principal sum of the Debenture is converted, the
holder will own eighty percent (80%) of the registrant's issued and outstanding
Common Stock based upon the number of shares thereof outstanding as of the date
of conversion. The registrant has a sufficient number of shares of Common Stock
authorized to permit the entire conversion. Such conversion is not permitted
prior to January 31, 1999, is permissible thereafter for a period of five years
from September 4, 1998, and is convertible only in increments of 2.5% of the
principal amount of the Debenture. An additional maximum of 10% of the
registrant's then issued and outstanding shares will be issued to Litchfield
dependent upon the realization by Biofarm, S.A. of certain earnings increases
(measured by the earnings of Biofarm, S.A. for the calendar year ended December
31, 1997).
2
<PAGE>
Item 1. Changes in Control of Registrant
Pursuant to a Proxy Statement dated September 21, 1998, the shareholders of the
registrant, on October 5, 1998, voted to elect eight nominees of Litchfield to
the Board of Directors of the registrant. The three previous directors of the
registrant were not candidates for reelection. (See Item 2 hereinafter.)
Item 2. Acquisition or Disposition of Assets
The registrant, on September 4, 1998, completed the transaction pursuant to
which it acquired approximately 87% of the issued and outstanding shares of
capital stock of Biofarm, S.A., a Romanian pharmaceutical manufacturer, from
Litchfield. The registrant issued to Litchfield a convertible non-negotiable
secured debenture in the principal sum of $6,434,681. Such Debenture is
non-convertible prior to January 31, 1999, and thereafter only in increments of
2.5%. On October 5, 1998, the nominees of Litchfield to the Board of registrant
were elected by vote of the registrant's shareholders.
Item 4. Changes in Registrant's Certifying Accountant
The registrant, on September 4, 1998, completed the transaction pursuant to
which it acquired approximately 87% of the issued and outstanding shares of
capital stock of Biofarm, S.A., a Romanian pharmaceutical manufacturer, from
Litchfield. The registrant issued to Litchfield a convertible non-negotiable
secured debenture in the principal sum of $6,434,681. Such Debenture is
non-convertible prior to January 31, 1999, and thereafter only in increments of
2.5%. On October 5, 1998, the nominees of Litchfield to the Board of registrant
were elected by vote of the registrant's shareholders.
Inasmuch as the shareholders of Litchfield obtained thereby board and management
(and potential voting) control of the registrant, for financial accounting
purposes the acquisition of Biofarm, S.A. by the registrant will be accounted
for as a reverse purchase in accordance with generally accepted accounting
principles. Accordingly, the statement of financial condition and statements of
operations and cash flow will reflect the historical balance sheet and
activities of Biofarm, S.A. for all of the required reporting periods as well as
the balance sheet of the registrant from October 5, 1998.
The then proposed acquisition of the capital stock of Biofarm, S.A. by the
registrant has previously been reported in a Form 8-K filing dated March 6,
1998, the definitive acquisition is disclosed in the Proxy Statement, dated
September 21, 1998, and the registrant is filing this additional (supplementing
the filing on March 6, 1998) Form 8-K on or before 75 days from September 4,
1998, containing the audited financial statements of Biofarm, S.A. as of and for
the nine-month period ended September 30, 1998, and as of and for the year ended
December 31, 1997, and the relevant Exhibits.
Such Proxy Statement also solicited the affirmative vote of the shareholders of
the registrant to the selection of BDO Binder GmbH as the certifying accountant
for the registrant. Previously, such certifying accountant had been BDO Seidman,
LLP (Philadelphia,
3
<PAGE>
Pennsylvania).
Pursuant to Item 304(a)(2) of Regulation S-K, the appointment of BDO
International during the interim three month period subsequent to the
registrant's two most recent fiscal years as the principal accountant to audit
the registrant's financial statements, which appointment became effective with
the affirmative vote of the shareholders of the registrant on October 5, 1998,
becomes a reportable event on this Form 8-K filing. Assuming BDO Seidman LLP to
be an affiliate of BDO International, it is to be noted that the registrant
consulted with BDO Seidman LLP prior to the definitive acquisition of 87% of
Biofarm, S.A. on September 4, 1998, and prior to the shareholders' vote on
October 5, 1998, to retain BDO International as independent Certifying
Accountant, with respect to such matters as the accounting treatment to be
accorded the acquisition of Biofarm, S.A. by the registrant; the financial
statements to be filed by the registrant with its required Form 10-QSB filing
for the quarter ended September 30, 1998 (given the September 4, 1998,
acquisition date and October 5, 1998, date of election of the Litchfield
nominees to registrant's board); the financial disclosures mandated by the
reverse acquisition described above; the effect of the reverse acquiree having a
fiscal period different from that of the former registrant; and the need to file
a Form 8-K within 75 days of September 4, 1998, containing audited financial
statements of Biofarm, S.A. for the period ended September 30, 1998. Finally,
since the closing date (September 30, 1998) for the audit of Biofarm, S.A.
preceded the selection of BDO International on October 5, 1998, and since
PricewaterhouseCoopers had audited the financial statements of Biofarm, S.A. for
the year ended December 31, 1997, it was determined that the latter should
conduct the audit for the nine-month period ended September 30, 1998.
Item 7. Financial Statements and Exhibits
a) Financial Statements of Business Acquired
There are filed herewith the unaudited financial statements of
Biofarm, S.A. as of and for the nine-month period ended September
30, 1998, and as of and for the year ended December 31, 1997.
The attached financial statements are included for informational
purposes and do not comply with all of the requirements of Form 8-K
and Regulation S-X. When the financial statements of Biofarm are
audited and the independent auditors' report on them meet all the
requirements of Rule 2-02 of Regulation S-X, the financial
statements will immediately be refiled on an amended Form 8-K.
One day prior to the required filing date for this Form 8-K, the
Registrant was advised by PricewaterhouseCoopers (PWC) that the PWC
opinion on the September 30, 1998 balance sheet and the related
statements of operations and cash flows for the nine-month period
then ended, would be qualified by virtue of a scope limitation
relating to the real property owned by Biofarm, S.A. PWC had
previously delivered to the Registrant the September 30, 1998,
financial statements and had advised the Registrant that their
opinion would be forthcoming in time to effect this 8-K filing.
The PWC scope limitation results from a decision made by the
Registrant to treat the real property owned by Biofarm, S.A. as
having a zero value (fully depreciated). Such decision was prompted
by a conference call initiated by PWC on November 12, 1998, in which
call PWC advised the Registrant that the Coopers & Lybrand (the
predecessor of PWC) audit report dated June 5, 1998, covering the
year ended December 31, 1997, could not be relied upon because the
financial statements included the appraised value of such real
property. Thereafter, PWC concluded that its opinion on the
nine-month period ended September 30, 1998, would be qualified and
its December 31, 1997, opinion would have to be withdrawn.
The Registrant, realizing that the appraisal method was used in the
December 31, 1997 financial statements, because historical cost
records relating to the real property costs and depreciation thereof
were not available (the buildings having been constructed over
thirty years ago during the period of the Communist regime in
Romania, and Biofarm S.A. having been privatized in June 1997),
advised PWC that a zero value (fully depreciated) for the real
property was acceptable to the Registrant and that the Registrant
would agree to such treatment retroactively. PWC then caused the
September 30, 1997 financial statements to be prepared on such
basis, having been apprised of the Registrant's decision on
November 13, 1998.
On November 17, 1998, when the Registrant proposed to file this Form
8-K and when the Registrant was advised by PWC that their opinion
would be qualified due to a scope limitation at and for the period
ended September 30, 1998. Additionally, PWC asked for assurance
from the Registrant that, even with a scope limitation, the
Registrant would not include the PWC audit opinion at September 30,
1998, and the Coopers & Lybrand audit opinion as of December 31,
1997, and for the year then ended, in any future 1933 Act filing by
the Registrant.(PWC alluded to the need to obtain PWC's consent to
the use of either such opinion in any future 1933 Act filing.)
Notwithstanding the Registrant's acceptance of this condition, PWC
continued to insist upon the scope limitation being included in the
September 30, 1998, and December 31, 1997 reports. At this point,
the Registrant concluded that PWC was adamant in its position that
the opinion on the December 31, 1997 audit be withdrawn and that
the September 30, 1998, audit be qualified.
PWC had, of course, been previously notified that, on October 5,
1998, the shareholders of the Registrant had voted to appoint BDO
International as auditors for the Registrant on a consolidated
basis. Such engagement is to commence effective with the December
31, 1998 consolidated financial statements of the Registrant.
Accordingly, the Registrant has determined to file this Form 8-K
with the unaudited September 30, 1998, and December 31, 1997,
financial statements and footnotes. Footnote 12 to the unaudited
September 30, 1998 financial statements states: "Previously, the
Company recorded property, plant and equipment at both historical
cost and valuation. The Company has changed its method of accounting
for property, plant and equipment to historical cost. The opening
balance of retained earnings has accordingly been restated to record
a prior period adjustment for a correction of an error."
b) Pro Forma Financial Statements
inapplicable (neither meaningful nor material)
c) Exhibits
4
<PAGE>
there are filed herewith the following conformed copies of all
relevant documents incident to the acquisition of Biofarm, S.A. by
the registrant:
Exhibits
--------
1 Stock Purchase Agreement, dated April 1, 1998
2 Addendum to Stock Purchase Agreement, dated September 3, 1998
3 Escrow Agreement, dated September 4, 1998
4 Debenture, dated September 4, 1998
5 Agreement between registrant and Suisse Capital Complex, Inc.
dated October 16, 1998
6 Reaffirmation of Representations and Warranties, dated
September 3, 1998
7 Assignment, dated September 2, 1998
8 Post-Closing Agreement, dated September 4, 1998
Item 8. Changes in Fiscal Year
On October 5, 1998, the registrant's Board of Directors approved a resolution to
change the fiscal year from June 30 to December 31, effective December 31, 1998.
The registrant's Form 10-K for the fiscal year ending December 31, 1998, will
reflect such new fiscal period. As a result of the reverse acquisition described
above, there will be no transition period included in such Form 10-K filing
because there is no change in the fiscal period of the reverse acquiree.
However, the fiscal period (June 30) of the previous registrant will change. The
Form 10-K to be filed for the fiscal year ending December 31, 1998, will,
therefore, be filed by Biofarm, Inc. (the registrant's name having also been
changed by vote of its shareholders on October 5, 1998), with the relevant
financials reflecting the historical balance sheet and activities of Biofarm,
S.A. for all of the required reporting periods and the balance sheet of the
registrant from October 5, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BIOFARM, INC.
By: /s/ Keith D. Beekmeyer
----------------------------------
Keith D. Beekmeyer
Chairman
Dated: November 18, 1998
<PAGE>
BIOFARM SA
FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1998, AND
DECEMBER 31, 1997
<PAGE>
CONTENTS Page
Balance sheets 1
Statements of income 2
Statements of cash flows 3
Statements of changes in stockholders' equity 4
Notes to the financial statements 5-13
<PAGE>
BIOFARM SA
BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
Note 1998 1997
----------------- ----------------
(In thousands of US Dollars)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents 765 145
Accounts receivable, net 3 1,292 318
Inventories 4 2,036 1,839
Prepaid expenses and other current assets 192 942
--------- --------
Total current assets 4,285 3,244
Property, plant and equipment, net 5 1,149 825
--------- --------
Total assets 5,434 4,069
========= ========
Liabilities
Current liabilities
Accounts payable 1,004 1,590
Current portion of capital lease obligation 119 -
Taxes payable - 132
Other current liabilities 42 48
--------- --------
Total current liabilities 1,165 1,770
Capital lease obligations 119 -
Other liabilities 443 -
--------- --------
Total liabilities 1,727 1,770
Commitments and contingencies 11
Stockholders' equity
Common stock $0.24 and $0.59 8,558 5,376
nominal value per share, respectively;
Authorized, issued and outstanding
35,967,878 and 9,015,200 shares, respectively
Receivable from stockholders from
issuance of common stock (2,214) -
Other additional capital 9 697 697
Accumulated deficit (3,334) (3,774)
--------- --------
Total stockholders' equity 3,707 2,299
--------- --------
Total liabilities and stockholders' equity 5,434 4,069
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements
1
<PAGE>
BIOFARM SA
STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the nine month period ended For the year ended
Note September 30, 1998 December 31, 1997
-------------------- --------------------
(In thousands of US Dollars except
for per-share amounts)
<S> <C> <C>
Net sales 6,772 6,752
Cost of sales (4,296) (4,304)
----------- ----------
Gross profit 2,476 2,448
Selling, general and administrative (1,301) (798)
Research and development (43) (41)
----------- ----------
Operating income 1,132 1,609
Non-operating expense 10 (106) -
Interest income 40 -
Interest expense (38) (50)
Net foreign exchange loss (105) (161)
----------- ----------
Income before income tax expense 923 1,398
Income tax expense 8 (483) (258)
----------- ----------
Net income 440 1,140
========== =========
Weighted average number of shares 16,687,860 9,015,200
Basic earnings per share:
As previously stated USD 0.09
Prior period adjustment USD 0.04
---------
Basic earnings per share USD 0.03 USD 0.13
========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements
2
<PAGE>
BIOFARM SA
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the nine month
period ended For the year ended
September 30, 1998 December 31, 1997
------------------ -------------------
(In thousands of US Dollars)
<S> <C> <C>
Cash flows provided by operating activities:
Net income 440 1,140
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 190 149
Provision for doubtful accounts 20 11
Changes in working capital components:
Accounts receivable (994) (122)
Inventories (197) (451)
Prepaid expenses and other current assets 750 (671)
Accounts payable 95 (97)
Other accruals (138) 82
--------- --------
Net cash provided by operating activities 166 41
Cash flows used in investing activities:
Fixed assets purchased (514) (524)
--------- --------
Net cash used in investing activities (514) (524)
Net cash provided by financing activities:
Dividends paid - (66)
Receivable from issuance of common stock (2,214) -
Issuance of common stock 3,182 -
Repayment of short-term debt - (93)
Receipt of other additional capital - 697
--------- --------
Net cash provided by financing activities 968 538
Net change in cash and cash equivalents 620 55
--------- --------
Cash and cash equivalents at
beginning of period 145 90
--------- --------
Cash and cash equivalents at
end of year 765 145
========= ========
Cash paid during the year for:
Interest 38 50
========= ========
Income taxes 637 198
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE>
BIOFARM SA
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Receivable Other
Common Stock from Stock- Additional Accumulated
Note Shares Value holders Capital Deficit Total
---- ------ ----- ------- ------- ------- -----
(In thousands of US Dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996, as
previously stated 360,608 5,376 - - (3,558) 1,818
Prior period adjustment 12 - - - - (1,356) (1,356)
---------- ----- ------ ------- ------ ------
Balance at December 31, 1996, as
restated 360,608 5,376 - - (4,914) 462
Net income - - - - 1,140 1,140
Receipt of government grant 9 - - - 697 - 697
Twenty-four-for-one
stock split 2 8,654,592 - - - - -
---------- ----- ------ ------- ------- ------
Balance at December 31, 1997 9,015,200 5,376 - 697 (3,774) 2,299
Net income - - - - 440 440
Issuance of common stock 13 26,952,678 3,182 - - - 3,182
Receivable from stockholders
from issuance of common
Stock 13 - - (2,214) - - (2,214)
---------- ----- ------ -------- ------ ------
Balance at September 30, 1998 35,967,878 8,558 (2,214) 697 (3,334) 3,707
========== ===== ====== ======== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
BIOFARM SA
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business
Biofarm S.A. (the "Company" or "Biofarm") is a pharmaceutical manufacturer
located in Bucharest, Romania. The Company's main business activity is the
production and sale of natural medicinal products, for both pharmaceutical and
veterinary use. These products are based on animal and vegetable raw materials,
and are created for domestic and international consumption.
As of September 30,1998, the Company was majority owned by Global Spill
Management, Inc., as US corporation listed on NASDAQ.
Basis of Accounting
The Company maintains its accounting records in Romanian Lei and prepares its
statutory financial statements in accordance with the Regulations on Accounting
and Reporting issued by the Ministry of Finance of Romania. The accompanying
financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America ("US GAAP").
Foreign Currency Translation
The Company's reporting currency is the United States dollar ("USD"). Due to the
highly inflationary economy of Romania the financial statements of Biofarm have
been remeasured as if the functional currency were the reporting currency.
Accordingly, non-monetary balance sheet items which are recorded in currencies
other than the USD have been remeasured at historical rates of exchange.
Monetary balance sheet items which are recorded in currencies other than the USD
have been remeasured at current rates of exchange. Exchange gains and losses
arising from the remeasurement of monetary balance sheet items have been
included in the statements of income. Exchange rates between the Romanian Lei
("ROL") and the USD were 9,378:1 and 8,023:1 as of September 30, 1998 and
December 31, 1997, respectively.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires the
use of estimates and assumptions by management that affect the reported amounts
of assets and liabilities, disclosures of contingent assets and liabilities at
the date of the financial statements and reported amount for revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
Reclassifications
Certain balances included in the comparative financial statements have been
reclassified to conform to the current year presentation.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and in the bank as well as all
highly liquid debt securities with an original maturity of less than three
months from the date of purchase.
Supplemental Cash Flow Information
5
<PAGE>
BIOFARM SA
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Non-cash investing activities for the nine months period ended September 30,
1998 related to capitalized lease obligations incurred and totalled $187,000.
There were no non-cash investing activities for the year ended 31 December 1997.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined by
using a weighted average cost method.
Property, Plant and Equipment
Property, plant and equipment are stated at cost, net of accumulated
depreciation. Retirements of property, plant and equipment are recorded in the
period they are sold or otherwise disposed of. Related gains and losses arising
from these retirements are included in income.
Depreciation is calculated on a straight-line basis over the estimated useful
lives of the assets which are as follows:
Type Years
- ---- -----
Buildings 30 to 40
Equipment 5 to 10
Motor vehicles 5
Assets held under capital lease agreements are amortized over either the
estimated useful life of the assets or the duration of the lease contract,
whichever is shorter.
Pensions and Other Post Retirement Benefits
The Company does not sponsor any pension or other postretirement benefit plans
for its employees.
All employees of the Company are members of pension plans sponsored by the
Romanian government. In the normal course of business, the Company makes
payments to the Romanian government for pensions on behalf of its employees. The
social security and pension charges recorded by the Company were $389,000 and
$363,000 for the period ended September 30, 1998 and the year ended December 31,
1997, respectively. The Company has no further obligations with respect to
pension plans.
Revenue Recognition
Revenue is recognized when products are shipped to customers.
Advertising Costs
Advertising costs are expensed as incurred. Total advertising costs expensed for
the period ended September 30, 1998 and year ended December 31, 1997 were $7,000
and $11,000, respectively.
6
<PAGE>
BIOFARM SA
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Earnings Per Share and Dividends
Basic earnings per share are calculated by dividing income attributable to
stockholders by the weighted average number of common stock outstanding for the
period. There was no potential common stock outstanding as of September 30, 1998
and December 31, 1997. On April 14, 1997, a twenty-four-for-one stock split of
the Company's common stock was effected in the form of a stock dividend, to
shareholders on record as of that date. Accordingly, all historical weighted
average share and per share amounts have been restated to reflect the stock
split.
Under Romanian law, dividends may not be paid by the Company until it has
positive retained earnings, based upon accounting records maintained in
accordance with Romanian Accounting Regulations. Any dividends paid by the
Company will be denominated in Romanian Lei.
Fair Values of Financial Instruments
The carrying values of cash and cash equivalents, accounts receivable and
payable and other current assets and liabilities approximate fair value due to
the short-term maturities of these assets and liabilities.
Deferred Taxation
The Company accounts for income taxes under the asset and liability method.
Under the asset and liability method, deferred income taxes reflect the future
tax consequences of temporary differences between the tax bases of assets and
liabilities and are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in the tax rates is recognised in income in the period that includes the
enactment date. Valuation allowances are established when necessary to reduce
deferred tax assets to the amounts expected to be realised.
The Company does not provide deferred taxes for differences related to assets
and liabilities that are remeasured from the local currency into the functional
currency using the historical exchange rates that result from changes in
exchange rates or indexing for tax purposes.
3 ACCOUNTS RECEIVABLE, NET
September 30, December 31,
1998 1997
----------------- -----------------
(In thousands of USD)
Trade accounts receivable 1,330 336
Provision for doubtful accounts (38) (18)
--------- ---------
1,292 318
======== ========
7
<PAGE>
BIOFARM SA
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4 INVENTORIES
September 30, December 31,
1998 1997
----------------- ----------------
(In thousands of USD)
Raw materials 847 693
Work in progress 334 140
Finished goods 765 635
Packaging materials 90 371
---------- ---------
2,036 1,839
========= ========
5 PROPERTY, PLANT AND EQUIPMENT, NET
<TABLE>
<CAPTION>
Assets Buildings
Under And Machinery
Capital Construction Building And
Cost Lease in progress Equipment Equipment Total
----- ----------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
At December 31, 1996 - 79 - 4,384 4,463
Disposals - (68) - - (68)
Additions - - - 592 592
----- ----- ---- ------ ------
At December 31, 1997 - 11 - 4,976 4,987
Disposals - - - (12) (12)
Additions 187 40 - 287 514
----- ----- ---- ------ ------
At September 30, 1998 187 51 - 5,251 5,489
----- ----- ---- ------ ------
Accumulated depreciation and amortization
At December 31, 1996 - - - 4,013 4,013
Charge for the year - - - 149 149
----- ----- ---- ------ ------
At December 31, 1997 - - - 4,162 4,162
Disposals - - - (12) (12)
Charge for the period 28 - - 162 190
----- ----- ---- ------ ------
At September 30, 1998 28 - - 4,312 4,340
----- ----- ---- ------ ------
Net book amount
At September 30, 1998 159 51 - 939 1,149
===== ===== ==== ====== ======
At December 31, 1997 - 11 - 814 825
===== ===== ==== ====== ======
</TABLE>
8
<PAGE>
BIOFARM SA
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6 CREDIT FACILITY
As of September 30, 1998, the Company had an unused revolving line of credit
with an international commercial bank to provide up to $300,000. Amounts
borrowed on this line of credit are secured by the accounts receivable of the
Company.
7 FINANCIAL RISK
Market Risk
The Romanian economy is in an early stage of market development, and there is a
considerable degree of uncertainty surrounding the economy's future direction.
The majority of the Company's customers, suppliers and operations are conducted
in Romania, such that market risk exists with respect to the Company's
activities in this country.
Currency Risk
The Company operates in a highly inflationary economy with significant currency
depreciation. Accordingly, currency risk exists in respect to net monetary
assets held in Romanian Lei. Material exchange restrictions and controls exist
relating to converting Romanian Lei into other currencies. At present, there is
no market for conversion of Romanian Lei into foreign currencies outside of
Romania.
Assets and liabilities denominated in ROL (stated in thousands USD) are as
follows:
September 30, December 31,
1998 1997
----------------- ----------------
Monetary assets in ROL 3,609 3,043
Monetary liabilities in ROL (1,559) (1,526)
------- -------
Net monetary position in ROL 2,050 1,517
======= =======
Credit Risk
The Company offers credit terms to its customers and is therefore exposed
to risk of bad debt. The Company does not have any significant exposure to any
single individual customer.
8 TAXATION
Income tax expense for the period ended September 30, 1998 and the year ended
December 31, 1997 relates to income taxes paid in Romania.
The amount of losses to be carried forward for tax purposes are determined on
the basis of the profit calculated in accordance with regulations issued by the
Romanian Ministry of Finance. There were no losses brought forward and available
to offset future taxable income as of September 30, 1998 and December 31, 1997.
Deferred income tax assets and liabilities as of September 30, 1998 and
December 31, 1997 consist of the tax effects of temporary differences related
to the following:
9
<PAGE>
BIOFARM SA
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, December 31,
1998 1997
------------- ------------
(In thousands of US Dollars)
Deferred tax assets:
Current:
Inventory 18 -
Accounts payable 37 9
Other current liabilities 18 -
Non-current:
Property, plant and equipment 255 319
----- -----
Total deferred tax assets 328 328
Deferred tax liabilities
Current:
Accounts receivable (7) -
Prepaid expenses and other current assets (10) -
Non-current:
Long-term receivables (3) -
----- -----
Total deferred tax liabilities (20) -
Valuation allowance (308) (328)
----- -----
Net deferred tax assets - -
----- -----
The following table summarizes the use of deferred tax assets for the period
ended September 30, 1998 and December 31, 1997:
September 30, December 31,
1998 1997
------------- ------------
(In thousands of US Dollars)
Balance, beginning of period 328 658
Net effect of temporary differences 30 9
Effect of inflation and currency depreciation (50) (339)
---- ----
Balance, end of period 308 328
==== ====
The net deferred tax asset for each period is fully offset by a valuation
allowance, due to inflation and the continuing depreciation of the Romanian Lei.
The Lei depreciated 50% during the year ended December 31, 1997, and depreciated
a further 15% during the nine-month period ended September 30, 1998. This
depreciation reflects the high rate of inflation present in the Romanian
economy. Both inflation and currency depreciation are expected to continue in
the foreseeable future, which may reduce the value of deferred tax assets.
Accordingly, the Company has recorded a full valuation allowance against
deferred tax assets for each period.
The statutory corporate income tax rate in Romania was 38% for both 1998 and
1997. The effective income tax rates recorded by the Company for the period
ended September 30, 1998 and December 31, 1997 were 52% and 18%, respectively.
The differences between the statutory and effective tax rates for each period
are due to permanent timing differences, utilization of tax loss carry forwards,
and temporary timing differences which were subject to a full valuation
allowance.
10
<PAGE>
BIOFARM SA
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
9 OTHER ADDITIONAL CAPITAL
In November 1997, the Company received a grant of ROL 5.6 billion from the State
Ownership Fund ("SOF"), representing proceeds received by the SOF in the
Company's privatization. The Company has recorded this grant as an increase in
capital, as such proceeds represent a financial incentive received from the
government. Emergency Ordinance 37/1997 required the grant to be spent in the
following priority:
i) payment of overdue debts and related interest or penalties which were
recorded in the Company's books at June 18, 1995
ii) financing of investments in progress which originated prior to June 18,
1995
iii) working capital.
10 NON-OPERATING EXPENSE
Non-operating expense of $106,000 represents penalties paid to the
Romanian government in connection with a past violation of foreign exchange
regulations.
11 COMMITMENTS AND CONTINGENCIES
Taxation
The taxation system in Romania is at an early stage of development and is
subject to varying interpretations and changes, which may be retroactive.
Although the actual tax due on a transaction may be minimal, penalties can be
significant as they may be calculated based on the value of the transaction, and
can be as high as 0.25% per day, plus interest. In Romania, tax periods remain
open for tax audits for 5 years.
Authorizations
The Company's operations require authorizations to both produce and sell
products and annual production authorizations from the Romanian Government.
Recently, certain authorizations expired for significant products. The value of
production of significant products for which authorizations had expired during
the nine-month period ended September 30, 1998 and year ended December 31, 1997
amounted to $2.0 million and $1.9 million respectively.
Management believes it has taken the appropriate steps to obtain these
authorizations, which they are confident of receiving in the near future.
Further, management does not believe that expiration of these authorizations
poses a significant operational risk to the Company in either the current or
future periods.
Year 2000
The Company has not yet formally evaluated the impact of the year 2000 on its IT
and non-IT business systems. Management has not yet determined an estimate of
these costs.
11
<PAGE>
BIOFARM SA
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Assets under Capital Lease
Future minimum lease payments as of September 30, 1998 for assets under capital
lease are as follows:
Year ended (In thousands
September 30 of US Dollars)
- ------------ --------------
1999 119
2000 119
------
238
======
12 PRIOR PERIOD ADJUSTMENT
Previously, the Company recorded property, plant and equipment at both
historical cost and valuation. The Company has changed its method of accounting
for property, plant and equipment to historical cost. The opening balance of
retained earnings has accordingly been restated to record a prior period
adjustment for a correction of an error.
13 COMMON STOCK
Subsequent to the General Meeting of Shareholders, held on April 14, 1998,
approving the issue of 27,045,600 new shares at their nominal value of ROL 1,000
each with pre-emptive subscription rights for shareholders registered as of
April 3, 1998, 26,952,678 new shares have been subscribed, with 30% of the value
of shares subscribed paid by June 15, 1998, while the balance must be paid by
December 31, 1998.
14 SUBSEQUENT EVENTS
Subsequent to year end, the National Bank of Romania rate of exchange weakened
from USD 1 = ROL 9,378 at September 30, 1998 to USD1 = ROL 9,862 as of November
6, 1998.
On September 4, 1998, Litchfield Continental, Ltd. ("Litchfield") sold its 87%
ownership interest in Biofarm to Global Spill Management, Inc. ("Global"), a US
corporation listed on NASDAQ. On October 5, 1998, as a result of this
transaction, Litchfield gained control of the board of directors and management
of Global.
12
Exhibit 1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT entered into this 1st day of April, 1998, by
and among Litchfield Continental, Ltd., a British Virgin Islands corporation
("Seller"), the parent of BIOFARM S.A., a Romanian corporation ("Company"), and
GLOBAL SPILL MANAGEMENT, INC., a Nevada corporation ("Buyer").
BACKGROUND
A. Seller and companies directly controlled by Seller ("Controlled
Companies") own shares of the issued and outstanding stock of Company and wish
to sell all of such stock ("Seller's Stock") to Buyer. Buyer wishes to buy all
of Seller's Stock from Seller on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the Background and the respective
agreements, representations, warranties and mutual covenants hereinafter set
forth and intending to be legally bound hereby, the parties agree as follows:
1. Purchase and Sale. Subject to the terms and conditions of this
Agreement and on the basis of the representations, warranties, covenants and
agreements contained herein, Seller agrees to sell and transfer, and Buyer
agrees to purchase and take, all of Seller's right, title and interest in and to
all of Seller's Stock.
2. Purchase Price.
(a) Consideration.
(1) As consideration for the purchase of such of
Seller's Stock as Seller or Controlled Companies own on the date hereof, Buyer
shall give Seller at the time of execution of this Agreement its convertible,
non-negotiable secured debenture (the "Note") in the principal sum of Six
Million Four Hundred Thirty-Four Thousand Six Hundred Eighty-One Dollars, U.S.
($6,434,681), such sum (the "Consideration") being eighty percent (80%) of the
net worth of Company as of June 30, 1997; provided, however, the Consideration
shall be reduced according to the following formula: to the extent the Seller's
Stock held in escrow pursuant to Paragraph 33 hereof at the time of the giving
of Buyer's Notice (if at all), as such term is defined in Paragraph 33 hereof,
represents more than 80% of all classes of the issued
STOCK PURCHASE AGREEMENT
PAGE 1
<PAGE>
and outstanding stock of Company (the "Stock"), the Consideration shall be
increased by a like percentage. The Note shall be placed into escrow subject to
the terms and conditions hereof and of the Escrow Agreement, the form of which
is attached hereto as Exhibit "9(i)" and is to be executed simultaneously
herewith.
(2) Upon Buyer's giving Buyer's Notice, if at all,
Buyer shall execute and deliver to Escrow Agent (as hereinafter defined) an
appropriate amendment to the Note increasing the principal amount thereof
according to the foregoing formula, taking into account the percentage of
Company's Stock held or to be transferred into escrow at such time.
Simultaneously, Seller and any other Controlled Company owning Stock shall
transfer into escrow all of Seller's or such Controlled Company's right, title
and interest in all of its Stock, such transfer to be made with appropriate
assignments or stock powers making Buyer the assignee thereof pursuant to all
the terms and conditions hereof. All of the Stock so transferred, whether at the
time of execution hereof or upon Buyer's giving Buyer's Notice, if at all, shall
be known as "Seller's Stock".
(3) It is understood that between the time of
execution hereof and the date of Buyer's giving Buyer's Notice (if at all) (such
time period, the "Initial Escrow Period"), Seller shall either acquire or obtain
the right to purchase additional Stock ("Additional Stock") in Company such that
at the time of the giving of Buyer's Notice, Seller shall own or have the
absolute and unencumbered right to purchase and transfer (or cause to be
purchased an transferred) to Buyer at least eighty percent (80%) of all of the
issued and outstanding Stock of Company of all classes thereof, inclusive of the
Stock placed into escrow at the time of execution of this Agreement. Such
Additional Stock shall likewise be placed into escrow pursuant to the terms of
Paragraph 33 hereof.
(b) Note. The Note shall be executed and delivered
substantially in the form attached to this Agreement as Exhibit "2(b)" and, in
any event, shall contain at least the following terms:
(1) no interest shall be due or payable on the
principal sum;
(2) the Note shall be non-negotiable and
non-transferable;
(3) in lieu of repayment, and subject to the
condition precedent that after a duly noticed special meeting of Buyer's
shareholders shall have occurred at which Buyer's
STOCK PURCHASE AGREEMENT
PAGE 2
<PAGE>
shareholders vote affirmatively (A) Buyer's shareholders elect Seller's nominees
to Buyer's Board of Directors, and (B) Buyer changes Buyer's corporate name to
"Biofarm, Inc.", and (C) Buyer elects to increase its number of authorized
shares of common stock to one hundred million (100,000,000), Seller may, upon
notice to Buyer, and from time to time for a period of five (5) years from the
date of the Note, convert a portion [but not less than ten percent (10%)] of the
original principal sum to Buyer's common stock. For each ten percent (10%) of
the original principal sum of the Note so converted, Seller shall receive an
amount of Buyer's common stock sufficient to provide Buyer with eight and
one-half percent (8.5%) of the then issued and outstanding common stock of
Buyer, such that in the aggregate, if the entire principal sum of the Note is
converted, Seller shall own eighty-five percent (85%) of Buyer's issued and
outstanding stock based upon the number of shares thereof outstanding as of the
date of conversion.
3. Restriction on Transfer.
(a) Seller and Company agree not to encumber, transfer, sell,
assign or otherwise dispose of all or any portion of Seller's Stock, nor to
issue or authorize the issuance of any additional shares of stock in Company,
without the express, prior written consent of Buyer, which may be withheld at
Buyer's sole discretion, except Seller and Company may take such action as is
required to permit Seller to obtain ownership of, and/or the absolute right to
transfer title to Buyer of, a minimum of eighty percent (80%) of Company,
inclusive of the Stock placed into escrow on the date hereof. An enforced or
involuntary transfer, whether under court order or in any other way, shall be
treated as a voluntary disposition for purposes of this Agreement.
(b) Company will not (1) declare, set aside, or pay any
dividend or make any distribution in respect of its capital stock; (2) directly
or indirectly purchase, redeem or otherwise acquire any shares of its capital
stock, except such action as is required to permit Seller to obtain ownership of
(and/or the absolute right to transfer title to Buyer of) a minimum of eighty
percent (80%) of Company, inclusive of the Stock placed into escrow on the date
hereof; (3) enter into any agreement obligating it to do any of the foregoing
prohibited acts.
4. Representations and Warranties of Seller and Company.
(a) Seller and Company jointly and severally represent,
warrant, covenant and agree as follows, all of which shall be true and correct
on the date of the giving of Buyer's
STOCK PURCHASE AGREEMENT
PAGE 3
<PAGE>
Notice (if at all) and on the date of Final Settlement (as such term is defined
in Paragraph 8 hereof. Seller and Company shall recertify all of the following
at each such time:
(1) (A) At the time of execution hereof, Seller and
Controlled Companies own beneficially and of record approximately fifty-one
percent (51%) of all of the issued and outstanding Stock of Company. Company has
no subsidiary. Upon execution hereof, Seller agrees to place (or cause
Controlled Companies to place) such Stock into escrow pursuant to Paragraph 33
hereof, together with appropriate stock powers or assignments to Buyer. All of
Seller's Stock is and will be at the time of the giving of Buyer's Notice (if at
all) and the Final Settlement Date (as defined in Paragraph 8), full paid and
non-assessable;
(B) As a condition precedent to Buyer giving
Buyer's Notice pursuant to Paragraph 33 hereof, during the Initial Escrow
Period, Seller shall have acquired, beneficially and of record, or have obtained
the absolute and unencumbered right to purchase, at least an additional
approximate twenty-nine percent (29%) of all issued and outstanding Company
Stock such that, inclusive of the Stock placed into escrow at execution hereof,
Seller shall own, beneficially and of record, or otherwise control the transfer
of at least eighty percent (80%) of all issued and outstanding Stock. Upon the
giving of Buyer's Notice (if at all), Seller shall cause such Additional Stock
to be placed into escrow pursuant to Paragraph 33 hereof, together with
appropriate stock powers or assignments to Buyer;
(C) Seller and Company shall certify and
provide Buyer with true, correct and complete copies of all stock books or other
appropriate documentation evidencing Seller's (or Controlled Companies)
ownership or absolute, unencumbered right to purchase and transfer Stock as
described herein, and giving the names and addresses of all other owners
thereof;
(2) Company is a corporation duly organized and
validly existing in good standing under the laws of the country of Romania.
Seller is a corporation duly organized and validly existing in good standing
under the laws of the British Virgin Islands. True, correct and complete copies
of the Certificate of Incorporation and By-Laws of Company and Seller as amended
to the date hereof are attached hereto as Exhibits "4(a)(2.1)" and "4(a)(2.2)"
respectively. Company and Seller are each qualified to do business as a foreign
corporation in every jurisdiction in which the conduct of their respective
business requires such qualification;
(3) Seller, Controlled Companies and Company all have
full corporate power and authority to own their properties
STOCK PURCHASE AGREEMENT
PAGE 4
<PAGE>
and to conduct the businesses in which they are now engaged. Company has no
subsidiaries, owns no capital stock or equity or other proprietary interest,
directly or indirectly, in any other corporation or entity and has no agreement
with any person, firm or corporation to acquire any such capital stock or equity
or other proprietary interest. Seller and Company each has full power, authority
and legal right and all necessary approvals, permits, licenses and
authorizations to own its properties and to conduct its business and to enter
into and consummate the transactions contemplated under this Agreement;
(4) (A) The authorized capital Stock of Company
consists of 9,015,200 shares of one class of common stock having a par value of
1,000 Romanian Lei per share, of which 9,015,200 shares have been issued and are
outstanding and of which approximately 51% are now owned by Seller and/or
Controlled Companies. There is no preferred Stock authorized, issued or
outstanding. No person or entity holds any preemptive or conversion rights,
stock warrants, stock options or other right to purchase from Company or cause
Company to issue additional Stock, with the exception of the Romanian State
Ownership Fund's right to have Stock issued in favor or Seller after Seller has
invoked certain preemptive rights to purchase the land on which Company
factories are located; provided further, any governmental restrictions on
Seller's ownership or transfer (or ability to cause Controlled Companies to
transfer) the Stock pursuant to this Agreement shall be removed before the time
of the giving of Buyer's Notice (if at all), and as a condition precedent
thereto;
(B) All issued and outstanding shares of
Company are duly authorized, validly issued and are fully paid and
non-assessable with no personal liability attached to the ownership thereof. All
of Seller's Stock is free and clear of all liens, encumbrances, options,
charges, security interests, claims and rights of others whatsoever. At the time
of the giving of Buyer's Notice (if at all) and as of the date of Final
Settlement, none of Seller's Stock will be subject to any restrictions or
agreements which prohibit or interfere in any manner with the sale thereof to
Buyer;
(5) Company has no outstanding option, warrant,
subscription, call or other right or agreement relating to the issuance, sale,
hypothecation, pledge, transfer or redemption of Company's Stock or permitting
or requiring Company or others to purchase, or convert any obligation into,
shares of its Stock and Company has not agreed to issue or sell any additional
shares of Stock. Any such agreement is hereby deemed null and void ab initio. At
Final Settlement, Buyer will acquire good, valid and marketable title to
Seller's Stock, free and clear of all liens,
STOCK PURCHASE AGREEMENT
PAGE 5
<PAGE>
claims and encumbrances whatsoever. No shares of Company's Stock or other
securities are reserved for any purpose;
(6) The execution and delivery by Company and Seller
of this Agreement and each other agreement or instrument contemplated hereby or
by the Note, the making and performance by Seller and Company of their
respective covenants and agreements hereunder and the consummation by Company
and Seller of the transactions contemplated hereby have been authorized by all
necessary corporate action. Assuming due execution and delivery, this Agreement
and each other agreement or instrument contemplated hereby or by the Note
constitutes the valid and legally binding obligation of Seller and Company,
enforceable against each of them in accordance with its terms, except as may be
limited by bankruptcy, moratorium or other laws affecting creditors' rights
generally and by equitable principles of general applicability;
(7) Neither the execution and delivery of this
Agreement or any of the other agreements or instruments contemplated hereby or
by the Note, nor the consummation of the transactions contemplated hereby: (A)
violates any provision of the certificate of incorporation, By-Laws or other
organizational documents of Seller or Company or any statute, ordinance, law,
regulation, order, judgment or decree of any court or governmental agency or
board; or (B) conflicts with, violates, or will result in any breach of (or
gives rise to any right of termination, cancellation or acceleration) any of the
terms of, or constitute a default under, or result in the termination of, or
result in the creation of any lien pursuant to the terms of, any note, lease,
indenture, license, permit, contract or agreement or other instrument or
obligation to which Seller or Company is a party or by which Company or any of
the assets of Company is bound (and provided Seller has no knowledge of any such
right or default which may interfere in any manner with Seller's performance of
its duties and obligations under this Agreement);
(8) The audited financial statements of Company
consisting of balance sheets for two year and six month period ending June 30,
1997 ("Company Financial Statements") previously delivered to Buyer are true and
correct in all respects, fairly reflect all liabilities of Company for the times
normally reflected in balance sheets as of the dates thereof, fairly present the
financial condition of Company and the results of its operations for the periods
covered by such financial statements and were prepared in accordance with
generally accepted United States accounting principles consistently applied.
Company has no material liabilities or obligations of any nature, whether
accrued, absolute, contingent, matured, unmatured or otherwise,
STOCK PURCHASE AGREEMENT
PAGE 6
<PAGE>
whether due or to become due, whether properly reflected under generally
accepted accounting principles as a charge or reserve against an asset or equity
account or as a liability, and whether the amount thereof is readily
ascertainable or not, except as set forth in the Company Financial Statements
and except as set forth on Exhibit 4(a)(8);
(9) Company and Seller shall assist Buyer and Buyer's
accountants in presenting such financial statements in conformity with the
accounting rules of Regulations S-X under the Securities Act of 1933 and/or any
other applicable law or regulations. True and correct copies of the Company
Financial Statements are attached hereto as Exhibit "4(a)(9)";
(10) Since June 30, 1997, and, as to the
representation by Seller, only, subject to Seller's review of an audit performed
by Coopers and Lybrand relative tot he six month period ending December 31,
1997, there has been no material adverse or prospective adverse change in the
condition (financial or otherwise), net worth business, financial position or
properties of Company. Since June 30, 1997, there has not been any:
(A) damage or destruction (whether or not
insured) affecting the properties or business operations of Company;
(B) labor dispute or threatened labor dispute
involving the employees of Company;
(C) actual or threatened disputes pertaining to
Company with any major accounts or actual or threatened loss of business from
any of the major accounts of Company; or
(D) other event or condition of any character,
known to Company or Seller, not disclosed in this Agreement pertaining to and
materially adversely affecting the Company or business (as to Seller, this
representation "D" is made to the best of Seller's knowledge and subject to the
receipt and review of the Coopers and Lybrand audit described above);
(11) Except as set forth on Exhibit 4(a)(11), since
June 30, 1997, Company has conducted its business only in the ordinary course
and consistent with past practice and has not:
(A) sold, transferred, leased to third parties
or otherwise disposed of any of its assets having a book value in excess of
$10,000 (U.S.), including the payment of any loans owed to any individual or
entity directly or indirectly
STOCK PURCHASE AGREEMENT
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<PAGE>
under common control with Company (an "Affiliate"), except for inventory sold to
customers or returned to vendors in the ordinary course of business and
consistent with past practice;
(B) canceled or compromised any debt or claim
having a value in excess of $10,000 (U.S.);
(C) waived or released any right of substantial
value, except in the ordinary course of business and consistent with past
practice in kind and amount;
(D) encountered any labor union or organizing
activity or had any actual or threatened employee strikes, work stoppages,
slow-downs or lockout;
(E) instituted any litigation, arbitration,
action or proceeding before any court, tribunal or governmental body relating to
it or its property (real or personal), except for litigation instituted in the
ordinary course of business and consistent with past practice. A list of all
litigation and arbitration proceedings to which Company is currently subject is
attached hereto as Exhibit "4(a)(11)(E)";
(F) declared or paid any dividend or made any
other payment in respect of its Stock or directly or indirectly redeemed,
purchased or otherwise acquired any of its Stock;
(G) other than as to salaries, increased the
compensation of any officer, employee or agent, directly or indirectly by any
bonus, pension plan, profit sharing, deferred compensation, savings, insurance,
retirement or other employee benefit plan of any kind or type;
(12) A list and description of all real property
owned by or leased to or by the Company or in which Company has any interest is
set forth in Exhibit "4(a)(12)". All such leased real property is held subject
to written leases or other agreements (a description of which, including the
expiration date of all leases, is set forth in Exhibit "4(a)(12)" and all of
which are valid and effective in accordance with their respective terms. There
are no existing defaults or events of default, or events which with notice or
lapse of time or both would constitute defaults thereunder on the part of
Company, except for such defaults, if any, as are not material in character,
amount or extent and do not, severally or in the aggregate, materially detract
from the value or interfere with the present use of the property subject to such
lease or affect the validity, enforceability or assignability of such lease or
otherwise materially impair Company's business or operations. Neither
STOCK PURCHASE AGREEMENT
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<PAGE>
Company nor Seller has any knowledge of any default or claimed or purported or
alleged default or state of facts which, with notice or lapse of time or both,
would constitute a default on the part of any other party in the performance of
any obligation to be performed or paid by such other party under any lease
referred to in Exhibit "4(a)(12)". Neither Company nor Seller has received any
written notice to the effect that any lease will not be renewed the termination
of the term thereof or that any such lease will be renewed only at a
substantially higher rent;
(13) Seller shall have paid or made provision to pay
all taxes (and interest, penalties, fines or assessments thereof) due and
payable by Company for all periods up to and including the date of settlement;
(14) Prior to Final Settlement, Company will have
filed with all appropriate governmental agencies (whether national, regional,
provincial, state or local) all tax returns, reports, estimates, information
returns and statements of any nature required to be filed by or on behalf of
Company by such date (collectively, "Tax Returns"). Except as may be set forth
in the Company Financial Statements (including the notes thereto) or on Exhibit
"4(a)(14)":
(A) as of the time of filing, the required Tax
Returns correctly reflected or will correctly reflect the tax liability of
Company for the relevant period and any other information required to be shown
thereon;
(B) all charges, accruals and reserves for
taxes reflected on the Company Financial Statements are adequate to cover all
tax liabilities accruing through the date of settlement (whether or not
currently due or payable);
(C) there is no action, suit, proceeding
investigation, audit or claim now pending or threatened regarding any taxes
assessed or assessable against Company or Seller's ownership of Seller's Stock;
(D) any taxes required to be withheld or
collected by Company have been duly withheld and collected and timely paid over
to the appropriate authority;
(E) Company is not party to any tax sharing
agreement or guarantee of any tax liability or obligation and Company has not
granted any power of attorney relating to any tax matter;
(F) Company has paid in full or made adequate
provisions for the payment of all taxes, interest,
STOCK PURCHASE AGREEMENT
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penalties, assessments or deficiencies shown to be due or claimed to be due on
such returns and reports;
(G) Company has paid all manner of property
taxes due and payable and levied against any of Company's assets;
(H) Company is not party to any action or
proceeding before any governmental authority for the assessment or collection of
taxes, nor has any claim for assessment or collection of taxes been asserted
against it;
(15) Except as contemplated by this Agreement, from
the date hereof until the Final Settlement Date, Company will not:
(A) incur any obligation or liability or grant
any power of attorney except in the ordinary course of business, other than as
may be necessary in order to obtain a short-term bank line of credit;
(B) declare or make any payment or distribution
to stockholders;
(C) mortgage, pledge or subject to lien or
otherwise encumber any of its assets, other than as may be necessary in order to
obtain a short-term bank line of credit; or
(D) waive any rights of substantial value or
enter into any transaction not in the ordinary course of business;
(16) Except as reflected in the Company Financial
Statements, Company has no liabilities of any nature, fixed or otherwise, except
liabilities incurred in the ordinary course of business, which alone or in the
aggregate, would not have a material adverse effect on the assets, liabilities,
earnings, net worth, or business of Company;
(17) Except for agreements with Buyer, including, but
not limited to, this Agreement and such other agreements as are described on a
list set forth in Exhibit "4(a)(17)", true and correct copies of will be
delivered to Buyer on or before the date of the giving of Buyer's Notice (if at
all), and as a condition precedent thereto, Company is not a party to nor does
it have any obligation, contingent or otherwise, under any written or oral
lease, license, arrangement, note, debenture, purchase agreement, option, or
contract of any kind, including, but not limited to, any employment contract,
any contract for the purchase of materials, supplies or equipment with respect
to which the balance due is greater than Five Thousand Dollars U.S.
STOCK PURCHASE AGREEMENT
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($5,000), any contract or commitment for capital expenditures or any contract
not cancelable on thirty (30) days' notice ("Contracts");
(18) Except as set forth in the Company Financial
Statements and as set forth in Exhibit "4(a)(18)", the form and content of which
must be acceptable to Buyer in Buyer's sole discretion and as a condition
precedent to the giving of Buyer's Notice (if at all), Company has no
outstanding indebtedness to any party and neither it nor any other person or
entity is in default in respect to any terms or conditions of any Contracts to
which Company is a party. Originals of all written Contracts have been provided
to Buyer;
(19) All accounts receivable held by Company have
arisen in the ordinary course of business and are believed to be collectible in
the amounts thereof. Company's equipment and inventory is in all respects
merchantable and fully useable in the ordinary course of business;
(20) Company has good and marketable title to all of
its real and personal property, tangible or intangible, including, but not
limited to, all properties and assets listed in the Company Financial Statements
and all of its other assets or on its corporate books free of any mortgages,
liens, encumbrances, easements, security interests, changes, encroachments or
other clouds, except customary utility easements, and such assets and property
are free and clear of any other restrictions on transfer, equities, pledges,
conditions or restrictions, except as set forth in Exhibit "4(a)(20)". All such
properties and assets (and the uses to which they are put) conform to all
applicable agreements, laws, ordinances and regulations;
(21) Company has complied with, and has received no
notice of and is not aware of any conditions which, upon the giving of notice or
otherwise would constitute, a default under any statutes, ordinances,
regulations, orders, judgments and decrees of any court or governmental entity
or agency, relating to Company, its business or the assets and properties of
Company as to which a default or failure to comply would result in any material,
adverse change in the condition, financial or otherwise, assets or properties of
Company or its business. Neither Company nor Seller has any knowledge of any
basis for assertion of any violation of the foregoing or for any claim for
compensation or damages or otherwise arising out of any violation of the
foregoing. Neither Company nor Seller has received any notification of any
asserted present or past failure to comply with any of the foregoing which has
not been satisfactorily responded to in the time period required thereunder;
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(22) (A) Provided that on or before the date of the
giving of Buyer's Notice (if at all), Seller may amend the documents
contemplated by this subparagraph to add information not included thereon at the
time of execution hereof, set forth in Exhibit "4(a)(22)" is a complete and
accurate list of all permits, licenses, approvals, franchises, notices and
authorizations issued by governmental entities or other regulatory authorities,
(collectively, the "Permits"), held by Company. The Permits set forth in Exhibit
"4(a)(22)" are all the Permits required for the conduct of Company's business.
All the Permits set forth in Exhibit "4(a)(22)" are in full force and effect;
(B) Company further represents and warrants,
and Seller, to its best knowledge, represents and warrants, that Company has not
engaged in any activity which would cause or permit renovation or suspension of
any Permit. There is neither pending nor (as to Seller, only, to its best
knowledge) threatened any action or proceeding looking to or contemplating the
revocation or suspension of any such Permit;
(C) Company further represents and warrants,
and Seller, to its best knowledge, represents and warrants, that There are no
existing defaults or events of default or event or state of facts which with
notice or lapse of time or both would constitute a default by the Company under
any Permit;
(D) Neither Company nor Seller has any
knowledge of any default or claimed or purported or alleged default or state of
facts which with notice or lapse of time or both would constitute a default on
the part of any party in the performance of any obligation to be performed or
paid by any party under any Permit. The consummation of the transactions
contemplated hereby will in no way affect the continuation, validity or
effectiveness of the Permits or require the consent of any person or entity;
(23) Except as set forth on Exhibit "4(a)(23)",
Company has complied in all material respects with all applicable laws, rules
and regulations which relate to labor practices, prices, wages, hours,
discrimination in employment and collective bargaining. Company is not liable
for any arrears of wages or wage benefits or any taxes, fines or penalties for
failure to comply with any of the foregoing;
(24) (A) Company has duly complied with, and, to the
best knowledge of Company and Seller, all real estate owned or leased by Company
and the improvements thereon (all such owned or leased real estate being
hereinafter referred to collectively
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as the "Premises") are in compliance with, the provisions of all governmental or
quasi-governmental environmental, health and safety laws, codes and ordinances
and all rules and regulations promulgated thereunder.
(B) Company has been issued, and will maintain
through the date of the Closing, all required permits, licenses, certificates
and approvals relating to (i) air emissions, (ii) discharges to surface water or
ground water, (iii) noise emissions, (iv) solid or liquid waste disposal, (v)
the use, generation, storage, transportation or disposal of toxic or hazardous
substances or wastes (intended hereby and hereafter to include any and all such
materials listed in any law, code or ordinance and all rules and regulations
promulgated thereunder, as hazardous or potentially hazardous), or (vi) other
environmental, health and safety matters;
(C) Company has not received any notice of, and
neither the Company nor Seller knows of any facts, which might constitute
violations of, any federal, national, regional, provincial, state, municipal or
local environmental, health or safety laws, codes or ordinances, and any rules
or regulations promulgated thereunder, which relate to the use, ownership or
occupancy of any of the Premises or of any premises formerly owned, leased or
occupied by the Company. To the best knowledge of Company and Seller, Company is
not in violation of any rights-of-way or restrictions affecting any of the
Premises or any rights appurtenant thereto;
(D) Based upon the law as exists at the time of
this Agreement [such to be recertified as to the prevailing law at the time of
the giving of Buyer's Notice (if at all) and at Final Settlement]:
(i) Company has not, and, to Company's
best knowledge, no third party or person has released, spilled, emitted, leaked,
pumped, injected, discharged, deposited, dispersed or allowed to migrate into
the indoor or outdoor environment or into or out of any real property
(including, but not limited to, the movement through or in the air, soil,
surface water or ground water) any Contaminant (as defined below);
(ii) The term "Contaminant" means any
waste, pollutant or substance deemed by any Governmental Authority (as defined
below) to be toxic or hazardous or otherwise require special handling under any
laws or regulations addressing the environment, as well as any petroleum or
petroleum-based product or waste, polychlorobiphenyl ("PCB") or asbestos, and
any constituent of any such substance or waste;
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(iii) The term "Governmental Authority"
means any multi-national organization or alliance, nation or government, any
national, state, provincial, district, municipal, territorial, county,
parochial, local or other political subdivision thereof and any entity
exercising legislative, executive, judicial, regulatory or administrative
functions of or pertaining to government or social security (including, but not
limited to, social security bodies);
(25) Provided that on or before the date of the
giving of Buyer's Notice (if at all), Seller may amend the documents
contemplated by this subparagraph to add information not included thereon at the
time of execution hereof, set forth in Exhibit "4(a)(25)" attached hereto is a
list of all agreements between Company and each person employed by or
independently contracting with Company with regard to compensation, whether
individually or collectively, and set forth in Exhibit "4(a)(25)" is a list of
all employees of Company entitled to receive annual compensation in excess of
Twenty Thousand Dollars, U.S. ($20,000), and their respective salaries. The
transactions contemplated by this Agreement will not result in any liability for
severance pay to any employee or independent contractor of Company. Neither
Company nor Seller has informed any employee or independent contractor providing
services to Company that such person will receive any increase in compensation
or benefits or any ownership interest in Company, nor is any such person
entitled to such an increase, whether as a result of the transactions
contemplated by this Agreement or otherwise;
(26) Company maintains adequate fire and extended
coverage, casualty, liability and other forms of insurance policies covering all
of its properties and assets and the various occurrences which may arise in
connection with the operations of its business. Such policies are in full force
and effect and all premiums due thereon have been paid in full. Company has
complied with all provisions of such policies. Such insurance is of comparable
amounts and coverage as that which companies engaged in similar businesses
maintain in accordance with good business practices. A complete list and brief
description of the insurance policies of Company is set forth in Exhibit
"4(a)(26)". There are no notices of any pending or threatened termination or
premium increases with respect to any of such policies. Company has not had any
casualty loss or occurrence which may give rise to any claim of any kind not
covered by insurance and neither Company nor Seller is aware of any occurrence
which may give rise to any claim of any kind not covered by insurance, subject
only to the standard deductible. No third party has filed any claim against
Company for personal injury or property damage of a kind for which liability
insurance is generally available which is not fully insured, subject only
STOCK PURCHASE AGREEMENT
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to the standard deductible. All claims against Company covered by insurance have
been reported to the insurance carrier on a timely basis. None of the insurance
policies of Company will terminate or be adversely affected by the consummation
of the transactions contemplated by this Agreement;
(27) Company is not restricted from conducting its
business in any location by law, agreement or court decree;
(28) Set forth in Exhibit "4(a)(28)" is a list and
brief description of all of the patents, registered and common law trademarks,
service marks, tradenames, copyrights, licenses and other similar rights of
Company and applications for each of the foregoing (collectively, "Patents"), as
well as where such Patents are filed and their remaining term (if any). To the
best knowledge of Company and Seller, Company owns all right, title and interest
in and to all such Patents. To the best knowledge of Company and Seller, the
Patents listed on Exhibit "4(a)(28)" are all such rights necessary to the
conduct of Company's business as currently conducted. No adverse claims have
been made and no dispute has arisen with respect to any of the said Patents, and
to the best knowledge of Company and Seller, the operations of Company's
business and the use by Company of such Patents do not involve infringement or
claimed infringement of any patent, trademark, service mark, tradename,
copyright, license or similar right;
(29) All names under which Company currently conducts
its business are listed in Exhibit "4(a)(29)". To the best knowledge of Company
and Seller, there are no other persons or businesses conducting businesses
similar to those of the Company in any country or jurisdiction where Company
conducts its business having the right to use or using the names set forth in
Exhibit "4(a)(29)" or any variants of such names. No person or business has ever
attempted to restrain Company or Seller from using such names or any variants
thereof;
(30) Company has not granted any power of attorney
(revocable or irrevocable) to any person, firm or corporation for any purpose
whatsoever;
(31) Any accounts or notes payable and accrued
expenses reflected in the Company Financial Statements, and the accounts and
notes payable and accrued expenses incurred by Company subsequent to the date of
the latest audited statement, are in all respects valid claims that arose in the
ordinary course of business;
(32) Set forth in Exhibit "4(a)(32)" is a list of all
bank accounts maintained in the name of Company and a brief
STOCK PURCHASE AGREEMENT
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description of persons having power to sign on behalf of Company with respect to
each such account;
(33) Except as set forth in Exhibit "4(a)(33)", there
are no claims, disputes, actions, suits, arbitrations, investigations or
proceedings pending or threatened against or affecting Company or any of the
properties or assets of Company, and no such claim, dispute, action, suit,
arbitration, proceeding or investigation has been pending or threatened during
the five-year period preceding the date of this Agreement and there is no basis
for any such claim, dispute, action, suit, investigation or proceeding. Neither
Seller nor Company has any knowledge of any default under any such action, suit
or proceeding. Company is not in default in respect of any judgment, order,
writ, injunction or decree of any court or of any Governmental Authority or
department, commission, bureau, agency or instrumentality or any arbitrator;
(34) Set forth in Exhibit "4(a)(34)" is each location
(specifying country and city) where Company (i) has a place of business, (ii)
owns or leases real property and (iii) owns or leases any other property,
including inventory, equipment and furniture;
(35) Except as disclosed on Exhibit "4(a)(35)" or as
reserved on the Company Financial Statements, Company's inventories of raw
materials, in-process and finished products are in good condition, conform in
all respects with applicable specifications and warranties and are not obsolete.
All in-process and finished products in such inventories have been produced in
compliance with all applicable quality control procedures. As of the date hereof
and at the time of the giving of Buyer's Notice (if at all) and at the time of
Final Settlement, the amount and mix of items in inventory of supplies,
in-process and finished products will be consistent with Company's past business
practices in kind and amount;
(36) The stock sale contemplated hereby has been
properly authorized by a vote of Seller's shareholders and directors and a
corporate minute to such effect has been duly entered on Seller's records and
Buyer shall have received copies of all resolutions pertaining to that
authorization certified respectively by the Secretary of the Company.
(b) Reaffirmation. As a condition precedent to Buyer
consummating the purchase described herein and proceeding to Final Settlement,
at the time of the giving of Buyer's Notice (if at all) and at the time of Final
Settlement, Seller and Company shall reaffirm all of their representations,
obligations and
STOCK PURCHASE AGREEMENT
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warranties contained in this Paragraph effective as of each such time.
(c) Remedies. In the event of any breach by Seller or Company
of any of their respective representations or warranties in this Paragraph 4,
Buyer shall have any and all remedies available at law or in equity, including,
but not limited to, the right to specifically enforce the same or to declare
this Agreement null and void. Failure by Buyer to exercise any remedy available
to Buyer shall not operate as a waiver thereof in any respect and Buyer may
choose between and among remedies available to Buyer at any time and from time
to time as Buyer may see fit.
(d) Disclosure. No representation or warranty made under any
Paragraph or subparagraph hereof and none of the information furnished by
Company or Seller set forth herein, in the exhibits hereto or in any document
delivered by Company or Seller to Buyer or any authorized representative of the
Buyer pursuant to this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading.
(e) Survival. This Paragraph 4 shall survive the date of the
giving of Buyer's Notice (if given) and further survive the date of Final
Settlement.
5. Representations, Warranties, Covenants and Agreements of Buyer;
Conditions Precedent to Seller's and Company's Obligations to Proceed.
(a) Representations. Buyer hereby represents and warrants to,
and covenants and agrees with Seller as of the date hereof, as of the date of
the giving of Buyer's Notice (if at all) and as of the date of Final Settlement
(if at all), as follows:
(1) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has full
corporate power and authority to own its properties and to conduct the
businesses in which it is now engaged;
(2) The execution and delivery of this Agreement by
Buyer, the performance by Buyer of its covenants and agreements hereunder and
the consummation by Buyer of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, and this Agreement constitutes a
valid and legally binding obligation of Buyer, enforceable against the Purchaser
in accordance with its terms;
STOCK PURCHASE AGREEMENT
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(3) Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
violates any provision of the certificate of incorporation or By-Laws of Buyer
or any statute, ordinance, regulation, order, judgment or decree of any court or
governmental agency, or conflicts with or will result in any breach of any of
the terms of or constitute a default under or result in the termination of or
the creation of any lien pursuant to the terms of any contract or agreement to
which Buyer is a party or by which Buyer or any of its assets is bound;
(4) Buyer is current with all filings required to be
made with the United States Securities and Exchange Commission ("SEC") and all
financial statements contained in such filings are accurate in all material
respects;
(5) As of November 30, 1997, Buyer's liabilities to
third parties totaled Fifty-eight Thousand Nine Hundred Thirteen Dollars, U.S.
($58,913). All such liabilities will be discharged by Buyer on or before the
date of the giving of Buyer's Notice (if at all) and as a condition precedent to
Buyer giving Escrow Agent the Buyer's Notice (if at all).
(b) Conditions Precedent. The following are conditions
precedent to Seller's and Company's obligations to place the Stock (including
Additional Stock) into escrow or otherwise to consummate the transactions
contemplated by this Agreement:
(1) Upon execution, Buyer shall name to Buyer's Board
of Directors Messrs. Keith Beekmeyer and Robert Ferran. Immediately after the
date of Final Settlement, all existing directors, except Messrs. Beekmeyer and
Ferran, shall resign. Seller shall provide Buyer with the names and curricula
vitae of Messrs. Beekmeyer and Ferran, together with additional nominees whose
names shall be submitted to Buyer's shareholders in accordance with Rule 14f-1
under the Securities Exchange Act of 1934 within ten days after the execution of
this Agreement by all parties, time being of the essence. Buyer shall take all
appropriate corporate action in advance of Final Settlement as may be required
to effect the provisions of this subparagraph 5(b).
(2) As soon as practicable after the date of the
giving of Buyer's Notice (if at all), Buyer shall prepare and submit to the SEC
and, if clearance is obtained, thereafter, to its shareholders for affirmative
vote (which vote is a condition precedent to Final Settlement), a proxy and
proxy statement requesting Buyer's shareholders to approve each of the
following:
STOCK PURCHASE AGREEMENT
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(A) a change in Buyer's name to "Biofarm,
Inc.";
(B) an increase in the number of authorized
shares of Buyer's common stock to one hundred million (100,000,000);
(C) approval of this Agreement, all ancillary
agreements, and the business transaction described therein;
(D) election of Messrs. Beekmeyer, Ferran and
any other Seller's nominees to Buyer's Board of Directors.
6. Conduct of the Business. Company and Seller, jointly and severally,
hereby covenant and agree with Buyer that, from and after the date of this
Agreement and until the Final Settlement Date, Company shall not:
(a) Operation of its Business. Make a purchase, sale or lease
in respect of business, or introduce any method of management, accounting or
operation in respect of its business, except in a manner consistent with prior
practice;
(b) Properties, Plant and Equipment. Fail to maintain, repair,
service, preserve, and in any way further encumber, its properties, other than
inventory sold or used, accounts receivable collected upon and supplies used, in
each case in the ordinary course of business after the date hereof, for which,
in the case of inventory and supplies, replacements have been made consistent
with prior practice;
(c) No Loans or Advances. Make loans or advances or grant pay
raises, bonuses or awards, directly or indirectly, to any management personnel,
employee, director or shareholder of Company or any relative of any such person,
or entities or persons affiliated with any such management personnel, employee,
director or shareholder of Company;
(d) No Dividends; Distributions; Payment of Certain
Indebtedness. Declare or pay any dividend or make any other distribution in
respect of its capital stock or, directly or indirectly, purchase, redeem or
otherwise acquire or dispose of any shares of its capital stock or, except in
the ordinary course of business or as may be required in order for Seller to
obtain title to or the absolute right to cause the transfer of title to the
Additional Stock, pay or discharge any outstanding indebtedness and in any event
pay or discharge any outstanding
STOCK PURCHASE AGREEMENT
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indebtedness of Seller or the affiliates of Seller or of any of the management
personnel, employees or directors of Company;
(e) Preservation of Organization, Employees and Business
Relationship. Fail to use its best efforts to: (1) preserve the present business
organization of Company intact; (2) keep available the services of the present
employees of Company; and (3) preserve present relationships with entities or
persons having business dealings with Company including, without limitation,
existing customers of Company;
(f) Books and Records. Fail to maintain the books and records
of Company in accordance with good business practices, on a basis consistent
with prior practice;
(g) Compliance with Laws. Fail to use its best efforts to
comply in all material respects with all statutes, ordinances, regulations,
orders, judgments and decrees of every court or governmental entity or agency
applicable to Company and to the conduct of its business and perform all of its
obligations with respect thereto without default;
(h) Maintenance of Insurance. Fail to maintain and pay all
premiums with respect to such policies of insurance as are currently held in the
name of Company;
(i) Contracts. Make any change adverse to the Company in the
terms of any Contract or fail to perform any of its obligations with respect
thereto without default. Enter into any Contract [as defined in Paragraph
4(a)(17)], lease, or other commitment, written or oral, other than in the
ordinary course of business;
(j) Claims. Waive, cancel, sell or otherwise dispose of for
less than the face value thereof any claim or right Company has against others;
(k) Billings; Accounts Payable. Fail to bill for products sold
or services rendered or permit any account payable of Company to be past due for
more than sixty (60) days, other than accounts payable being diligently
contested in good faith by Company and as to which Buyer shall have consented in
writing, and other than as may have been previously extended beyond sixty (60)
days by the supplier or payee; except that as of June 30, 1997, the Company was
indebted to Radet (a state-owned utility) in the amount of $693,924 (U.S.),
which amount (the "Radet Debt") is currently being negotiated for settlement and
which must be resolved as a condition precedent to the giving by Buyer of
Buyer's Notice (if at all) or otherwise waived by Buyer as such a condition
precedent;
STOCK PURCHASE AGREEMENT
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(l) Documents, etc. Fail to furnish to Buyer, its counsel,
accountants and authorized representatives, such financial, legal and other
documents, records and information relating to Company and the properties of the
Company as Buyer, its counsel, accountants and its authorized representatives
may from time to time reasonably request;
(m) Further Information. Fail to make available to Buyer the
books of account, records, tax returns, leases, contracts and other documents or
agreements material to its business as Buyer, its counsel, accountants and its
authorized representatives may from time to time reasonably request.
(n) Cooperation. Fail to cooperate fully with Buyer, do all
things reasonably necessary to assist Buyer and use its reasonable best efforts
at its own expense to obtain all consents and approvals necessary for the
transfer of Seller's Stock, including the furnishing of all financial and other
information reasonably required by the party whose consent or approval is being
sought;
(o) Banking. Change any banking relationships or incur any
additional debt; provided, however, Company is permitted to conclude
negotiations with a banking institution for a short-term bank line of credit;
(p) Corporate. Change or amend its By-Laws, articles or
incorporation or other constituent documents, except as to changes required in
order for Seller to acquire title to or the absolute right to transfer title to
the Additional Stock or to increase its managerial control of Company.
7. Additional Covenants of Seller.
(a) No Solicitation. Seller covenants and agrees that, from
and after the date of this Agreement and until the Final Settlement Date, Seller
shall not directly or indirectly: (1) take any action to solicit, initiate or
encourage any Company Acquisition Proposal (as hereinafter defined); or (2)
engage in negotiations with, or disclose any nonpublic information relating to
Company or afford access to the properties, books or records of Company to, any
person or entity that may be considering making, or has made, a Company
Acquisition Proposal. Seller shall promptly notify Buyer after receipt by Seller
of any Company Acquisition Proposal or any indication that any person or entity
is considering making a Company Acquisition Proposal or any request for
nonpublic information relating to the Company or for access to the properties,
books or records of any Company by
STOCK PURCHASE AGREEMENT
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any person or entity that may be considering making, or has made, a Company
Acquisition Proposal. For purposes of this Agreement, "Company Acquisition
Proposal" means any offer or proposal for, or any indication of interest in, a
merger or other business combination involving Company or the acquisition of any
equity interest in, or a substantial portion of the assets of, Company, other
than the transactions contemplated by this Agreement.
(b) Goodwill Preserved. Seller also covenants and agrees that
Seller will not take or omit to take any action, either before or after the
Final Settlement Date, and also represents that Seller has not taken or omitted
to take any action prior to the date hereof, which could directly or indirectly
impair the goodwill of Company or the business reputation or good name of
Company, and that any and all publicity (whether written or oral) and notices to
third parties concerning the sale of Seller's Stock and other transactions
contemplated by this Agreement shall be subject to the prior written approval of
Buyer, which approval may be withheld in the sole discretion of Buyer.
(c) Good Faith. Subject to the terms and conditions of this
Agreement, Seller will use its best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or desirable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement.
(d) No Public Announcement. Neither Seller nor Company shall,
without Buyer's prior, written approval, which Buyer may withhold in its sole
discretion, make any press release or other public announcement concerning the
transactions contemplated by this Agreement, except as may be required by law,
regulation or stock exchange rule, in which case Company and Seller shall
immediately notify Buyer before making the public release and the parties shall
use reasonable efforts to cause a mutually agreeable release or announcement to
be issued.
8. Escrow Periods; Final Settlement.
(a) Definitions. The period of time between the date of
execution of this Agreement and the date of the giving of Buyer's Notice (if at
all) shall be known as the "Initial Escrow Period". The period of time from the
date of the giving of Buyer's Notice (if at all) until Final Settlement (as
defined below) shall be known as the "Second Escrow Period".
(b) Time of Final Settlement. Provided Buyer and Seller's
representations and warranties are true; provided Buyer
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has approved of the form and content of all exhibits to this Agreement not
attached at the time of execution hereof; provided Buyer and Seller have not
defaulted in any of their obligations hereunder; provided Buyer's shareholders
have voted in favor of all items contained in the proxy statement described in
Paragraph 5(b)(2) hereof; and provided all other conditions precedent to both
Buyer's and Seller's obligations hereunder have been satisfied; final settlement
("Final Settlement") of the transactions contemplated by this Agreement shall
take place on or before ________, 1998 at the offices of Zarwin, Baum, DeVito,
Kaplan & O'Donnell, P.C., 1515 Market Street, Suite 1200, Philadelphia, PA 19102
or on such other date, and at such other time or place is agreed to by the
parties; provided, however, Buyer or Seller may extend the date of Final
Settlement by up to an additional sixty (60) days upon notice to the other. The
date of Final Settlement is herein referred to as the Settlement Date or the
Final Settlement Date.
9. Conditions Precedent to Buyer's Obligation to Proceed to Final
Settlement. The obligation of Buyer to purchase Seller's Stock and otherwise
consummate the transactions contemplated by this Agreement at the Final
Settlement is subject to the following conditions precedent, any or all of which
may be waived by Buyer in its sole discretion, and each of which Company and
Seller agree to use their best efforts to satisfy at or prior to the Final
Settlement Date:
(a) Opinion of the Company's and Seller's Counsel. Buyer shall
have received an opinion of counsel to Company and Seller, delivered to Buyer
pursuant to the instructions of Company and Seller, dated the date hereof and
thereafter amended through and including the date of the giving of Buyer's
Notice (if at all) and again through and including the date of Final Settlement,
in form and substance satisfactory to Buyer and its counsel, to the effect that:
(1) Company is a corporation duly organized and
validly existing under the laws of the country of Romania and has full corporate
power and authority to own its properties and to conduct the businesses in which
it is now engaged;
(2) Subject to the additional requirements set forth
in Paragraph 33, below, the authorized Stock of the Company consists of
9,015,200 shares of one class of common stock, of which 9,015,200 shares are
issued and outstanding and of which approximately fifty-one percent (51%) are
currently owned, legally or beneficially, by Seller or by Controlled Companies.
As of the date of the giving of Buyer's Notice, if at all, such opinion shall be
updated to reflect the percentage of issued and
STOCK PURCHASE AGREEMENT
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outstanding Stock transferred into escrow, which shall be not less than eighty
percent (80%) (including all Stock so transferred upon execution hereof) and to
reflect that certificates representing all Stock so transferred have been duly
endorsed for transfer or have had appropriate stock powers attached such that,
at Final Settlement, Buyer shall obtain full and complete thereto with all
rights of ownership. The opinion shall state there is no preferred stock
authorized, issued or outstanding.
(3) All of the issued and outstanding shares of
Company's Stock (including, but not limited to, all of Seller's Stock) have been
duly and validly authorized and issued and are fully paid and non-assessable.
(4) At the time of transfer into escrow, Seller's
Stock was owned beneficially and of record by Seller or by Controlled Companies
free and clear of any lien, encumbrance, charge, security interest, ownership
interest in any third party or claim whatsoever (including any restriction on
the right to vote, sell or otherwise dispose of such capital stock or other
ownership interests. There are no outstanding subscriptions, warrants, options,
calls, commitments or other rights or agreements to purchase or acquire shares
of capital stock or other securities of Company. No shares of capital stock of
Company are reserved for any purpose. Buyer will acquire title to Seller's Stock
free and clear of any lien, encumbrance, charge, security interest or claim
whatsoever;
(5) This Agreement has been duly authorized, executed
and delivered by Company and duly authorized, executed and delivered by Seller
and constitutes the valid and legally binding obligation of Company and Seller,
enforceable against Company and Seller in accordance with its terms;
(6) Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
violates any provision of the certificate of incorporation or By-Laws of Company
or Seller or any statute, ordinance or regulation or, to the best of such
counsel's knowledge, any order, judgment or decree of any court, Governmental
Authority or governmental agency or, to the best of the knowledge of such
counsel, conflicts with or will result in any breach of any of the terms of or
constitute a default under or result in the termination of or the creation of
any lien pursuant to the terms of any contract or agreement to which Company or
Seller is a party or by which Company or Seller or any of the assets of Company
or Seller is bound;
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<PAGE>
(7) To the best of the knowledge of such counsel,
there are no claims, disputes, actions, suits or proceedings pending or
threatened against the Company or Seller except as set forth in Exhibits
"4(a)(11)(E) and "4(a)(33)";
(8) Except as set forth in Exhibit "9(a)(6)", nothing
has come to such counsel's attention which would lead it to believe that the
representations, warranties and covenants contained in Paragraph 4 hereof are
other than as stated therein;
(9) Company has good and marketable title to all its
assets and properties, including, but not limited to, assets and properties
described in all Exhibits to this Agreement. All of such assets and properties
are free and clear of all liens, mortgages, encroachments, easements (except
customary utility easements) encumbrances and equities, conditional sales
contracts, security interests, charges and other clouds and restrictions,
(collectively, "Liens") except as set forth in this Agreement or in its
Exhibits.
(b) No Litigation. No action, suit or proceedings against
Company or Seller relating to consummation of any of the transactions
contemplated by this Agreement nor any governmental action seeking to delay or
enjoin any such transactions shall be pending or threatened.
(c) Representations and Warranties. The representations and
warranties made by Company and Seller herein shall be correct (1) as of the date
of the giving of Buyer's Notice (if at all), and (2) as of the Final Settlement
Date in all respects with the same force and effect as though such
representations and warranties had been made as of each such date. Company and
Seller shall deliver to Buyer a certificate dated each such date to such effect.
All the terms, covenants and conditions of this Agreement to be complied with
and performed by Company and Seller on or before each such date shall have been
duly complied with and performed in all material respects, and on the Final
Settlement Date, Company and Seller shall deliver to the Buyer a certificate
dated each such date to such effect.
(d) Other Certificates. Buyer shall have received such other
certificates, instruments and other documents, in form and substance
satisfactory to Buyer and counsel for Buyer, as Buyer shall have reasonably
requested in connection with the transactions contemplated hereby.
(e) Third Party Consents. Buyer shall have received all
necessary consents of third parties under the contracts, agreements, leases,
insurance policies and other instruments of
STOCK PURCHASE AGREEMENT
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<PAGE>
Company to the consummation of the transactions contemplated hereby, which
consents shall not provide for the acceleration of any liabilities or any other
detriment to the Buyer or Company.
(f) Accountant Report. BDO Seidman, LLP, shall have determined
that Final Settlement may occur in the absence of satisfactory Company Financial
Statements audited by Coopers & Lybrand for the period of time ending September
30, 1997.
(g) Escrow. Upon execution hereof, Buyer, Seller and The
Fulcrum Group ("Escrow Agent") shall have executed and delivered the Escrow
Agreement substantially in the form attached as Exhibit 9(i).
(h) Exhibits. Buyer shall have approved the form, content and
substance of all exhibits to this Agreement, whether attached at the time of
execution or delivered thereafter, which approval may be withheld by Buyer in
Buyer's sole discretion and for any reason.
(i) Proxy. After due notice and proxy solicitation, Buyer
shall have obtained the consent of its Shareholders to each of the following:
(1) a change of Buyer's corporate name to "Biofarm,
Inc.";
(2) an increase in Buyer's authorized common stock to
one hundred million (100,000,000) shares;
(3) election of Seller's nominees to Buyer's Board of
Directors (it being understood that during the Initial Escrow Period and as a
condition precedent to Buyer giving Buyer's Notice (if at all), Seller shall
provide Buyer with the names and curricula vitae of such nominees (including
Messrs. Beekmeyer and Ferran) in sufficient detail for inclusion in a proxy
statement;
(4) ratification and approval of the transaction
contemplated hereby.
10. Certain Procedures at Execution of this Agreement.
(a) Subject also to the provisions of Paragraph 33 relative to
delivery of the Additional Stock and an addendum to the Note, at the time of
execution hereof, Seller shall deliver or cause to be delivered to Escrow Agent
Company stock certificates numbered 3174117-3174275, 5409280-9015200, __________
duly endorsed in blank, or with executed stock powers
STOCK PURCHASE AGREEMENT
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<PAGE>
attached in form and substance acceptable to Buyer, without restriction
representing approximately 51% of the issued and outstanding shares of Company
Stock. Buyer shall thereupon execute and deliver the Note to Escrow Agent
subject to the provisions of Paragraph 33 hereof. Pending Final Settlement (if
at all), the stock book of Company shall reflect the cancellation of a like
number of common shares in the name of Seller with proof of payment of
applicable stock transfer taxes, if any, all of which shall be payable by
Seller.
(b) Accountants. At Final Settlement, the parties shall
appoint Coopers & Lybrand as Company's independent accountants and auditors and
Buyer shall further appoint BDO Seidman, LLP, as Buyer's independent accountants
and auditors. BDO Seidman, LLP, shall be responsible for all accountant work
required for Buyer's SEC filings, state securities law filings and reports to
stockholders.
(c) Change of Name. At the time of Final Settlement, Company
and Seller acknowledge that Buyer shall change its corporate name to "Biofarm,
Inc.", it being understood such change is a condition precedent to Seller's
conversion rights under the Note.
11. Indemnities; Right to Defend; Arbitration.
(a) Indemnity by Seller and Company.
(1) Seller and Company, jointly and severally, agree
to reimburse Buyer on demand and to indemnify Buyer and hold Buyer harmless from
all losses, judgments, costs, claims, liabilities, amounts paid in settlement of
actions or claims, expenses, costs of compliance or clean-up, suits, costs of
investigation, settlement amounts, judgments, fines, penalties, liabilities,
damages, and reasonable costs and expenses, including, but not limited to,
attorney's fees (collectively, "Damages"), accruing from or resulting by reason
of any breach of any of the representations or warranties made herein by Company
or Seller.
(2) In the event Buyer believes that Company or
Seller has breached any material representation or warranty contained herein, or
in the event Buyer shall incur or anticipate it shall incur any Damages, Buyer
shall promptly give written notice thereof to Seller stating the nature and
basis of such claim or Damage; provided, however, any delay or failure to notify
Seller shall not relieve Seller of liability unless Seller demonstrates the
delay materially prejudiced its rights.
STOCK PURCHASE AGREEMENT
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<PAGE>
(3) In the case of third party claims, Seller shall,
within ten (10) days of receipt of notice of such claim, notify Buyer of its
intention to assume the defense of such claim. If Seller shall assume the
defense of the claim, Seller shall have the right and obligation: (A) to conduct
any proceedings or negotiations in connection therewith and necessary or
appropriate to defend Buyer, (B) to take all other required steps or proceedings
to settle or defend any such claims, and (C) to employ counsel to contest any
such claim or liability in the name of Buyer or otherwise. If defendants in any
action include Seller and Buyer, and Buyer shall have been advised by its
counsel that there may be legal defenses available to Buyer which are different
from or in addition to those available to Seller, Buyer shall have the right to
employ its own counsel in such action.
(4) If Seller shall not assume the defense of any
such claim or litigation resulting therefrom, Buyer may defend against any such
claim or litigation in such manner as it may deem appropriate and may settle
such claim or litigation on such terms as Buyer may deem appropriate.
(5) In the event a dispute arises concerning the
obligation of Seller to assume the defense of a claim, or a dispute arises
concerning a claim hereunder which does not involve a third party claim, or in
the event that there is any other dispute relating to indemnification, the
parties shall submit any such dispute to arbitration pursuant to Paragraph 21
hereof; provided, however, that the parties agree to negotiate in good faith for
a period of at least ninety (90) days prior to initiating arbitration to resolve
any dispute. If it shall be finally determined that Seller failed to assume the
defense of any claim for which the Seller is liable to Buyer, then the expense
of defending the claim shall be borne by the Seller. Payment of Damages shall be
made within ten (10) days of a final determination of a claim.
(6) A final determination of a disputed claim shall
be: (A) a judgment of any court determining the validity of a disputed claim, if
no appeal is pending from such judgment or if the time to appeal therefrom has
elapsed, (B) an award of any arbitration determining the validity of such
disputed claim, if there is not pending any motion to set aside such award or if
the time within which to move to set such award aside has elapsed, (C) a written
termination of the dispute with respect to such claim signed by all of the
parties thereto or their attorneys, (D) a written acknowledgment of Seller that
Seller no longer disputes the validity of such claim, or (E) such other evidence
of final determination of a disputed claim as shall be acceptable to the
parties.
STOCK PURCHASE AGREEMENT
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<PAGE>
(b) Maintenance of Books. In connection with any defense
described above, the parties agree to cooperate with each other and to provide
each other with reasonable access to relevant books and records in their
respective possession or control, and to maintain the books and records in their
control for a reasonable period after settlement, but, in any event, not less
than five (5) years.
(c) Indemnity by Buyer. Buyer agrees to reimburse Seller and
Company on demand and to indemnify Seller and Company and hold Seller and
Company harmless from all Damages, including, but not limited to, attorney's
fees, accruing from or resulting by reason of any breach of any of the
representations or warranties made herein by Buyer.
12. Insurance. There is attached hereto an Exhibit "4(a)(26)", which is a
description of all insurance policies held by Company concerning its business
and properties. All these policies are in the respective principal amounts as
set forth in Exhibit "4(a)(26)". Company has maintained and now maintains
insurance on all its assets and business of a type customarily insured,
concerning property damage, bodily injury and loss of income by fire or other
casualty and further maintains adequate insurance protection against all
liabilities, claims and risks against which it is customary to insure for the
business of Company. Company will continue to carry its existing insurance until
the Final Settlement Date hereunder, subject to variations and amounts required
by the ordinary operations of Company's business.
13. No Legal Action. There is no suit, action, arbitration, or legal,
administrative or other proceeding, or governmental investigation pending, or to
the best knowledge of Seller or Company, threatened against or affecting or
brought by or engaged in by Company or affecting or concerning any of Company's
business, assets, or financial condition except as set forth on Exhibits
"4(a)(11)(E)" and "4(a)(13)". Company is not in default with respect to any
order, writ, injunction or decree of any Governmental Authority, department,
agency or instrumentality, nor has Company been charged with or to its knowledge
is it under investigation with respect to any charge concerning any currently
pending material violation of any provision of law or administrative regulations
in respect to its business or its assets. Neither Company nor Seller is
currently engaged in any legal actions to recover monies due to either of them
or damages sustained by any of them which in any manner would affect the
transfer of Seller's Stock. Company shall assign to Buyer at the
STOCK PURCHASE AGREEMENT
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<PAGE>
Final Settlement Date all of its right, title and interest to any such lawsuits
or other claims brought by Company as plaintiff.
14. Retention of Proceeds. Notwithstanding anything to the contrary herein
or in the Note or any other agreement between or among the parties, or any of
them, any proceeds of settlement, judgment or otherwise, monetary or
non-monetary, which may be payable or attributable to Buyer and which arise out
of a lawsuit in the Eastern District of New York at Action Number CV 96-6246 and
captioned Global Spill Management, Inc. vs. Karl Schwab, et al., shall, no
matter when due or payable, belong solely and exclusively to Buyer's
stockholders other than Seller as of the date or dates received, notwithstanding
any conversion by Seller of all or any portion of the principal of the Note into
Seller's common stock. All such proceeds of any kind or nature shall be payable
to and deposited in a special, separate account for the sole benefit of such
non-Seller stockholders.
15. Authorizations. Exhibit "15" lists (a) the names and addresses of all
persons holding a power of attorney on behalf of Company; and (b) the names and
addresses of all banks or all other financial institutions in which Company has
an account, deposit, or safe-deposit box, with account numbers and names of all
persons authorized to draw on these accounts or deposits or to have access to
these boxes.
16. Full Disclosure. None of the representations and warranties made by
Company or Seller or made in any certificate or memorandum furnished to or to be
furnished by either of them or on their behalf contains or will contain any
untrue statement of a material fact or omit any material fact, the omission of
which would be misleading.
17. Access by Buyer. Until the Final Settlement Date, Buyer and Buyer's
counsel, accountants and other representative shall have full access during
normal business hours to all properties, books, account records, contracts and
documents of or relating to Company. Company and Seller shall furnish or cause
to be furnished to Buyer and Buyer's representatives all data and information
concerning the business, finances and properties of Company that may reasonably
be requested.
18. Corporate Matters. At no time prior to the Final Settlement Date will
Company (a) amend its articles of incorporation or By-Laws, other than as may be
necessary for
STOCK PURCHASE AGREEMENT
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<PAGE>
Seller to increase its managerial control of Company, (b) issue any shares of
the capital stock, other than as may be necessary in order for Seller to obtain
the Additional Stock to be transferred to Buyer, or (c) issue or create any
warrants, obligations, subscriptions, options, convertible securities, or other
commitments under which any additional shares of Company's capital stock of any
class might be directly, or indirectly authorized, issued or transferred from
the treasury, nor shall Company or Seller agree to do any of the acts listed
above.
19. No New Transactions. Except as set forth below, Company will not,
without Buyer's prior written consent, enter into any contract, commitment or
transaction not in the usual course of Company's business. Company may engage in
the foregoing actions for the purposes of allowing Seller to obtain title to the
Additional Stock and to permit Company to obtain a short-term bank line of
credit.
20. No Modifications. Except as set forth below, Company will not modify,
amend, cancel or terminate any of its existing contracts or agreements or agree
to do any of those acts. Company may engage in the foregoing actions for the
purposes of allowing Seller to obtain title to the Additional Stock, and to
permit Company to obtain a short-term bank line of credit.
21. Arbitration. Except in the event an equitable remedy or injunction is
sought pursuant to this Agreement, any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in Indianapolis, Indiana before three arbitrators in accordance with
the then current rules of the American Arbitration Association and judgment upon
the award rendered may be entered in the highest court of the forum, country or
state, having jurisdiction.
22. Binding Effect; No Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. This Agreement and the Exhibits hereto together constitute the
entire agreement of the parties with respect to the subject matter hereof and
thereof and supersedes all prior agreements and understandings relating thereto.
Notwithstanding anything to the contrary, no party may transfer or assign any of
its rights or obligations hereunder without the prior, written consent of all
other parties, which they may withhold in their sole discretion.
STOCK PURCHASE AGREEMENT
PAGE 31
<PAGE>
23. Controlling Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York.
24. No Brokers. Each party represents and warrants to the other that it has
not dealt with and has no obligation to pay any broker's or finder's or other
fee or compensation to any person or party in connection with this Agreement and
the transactions contemplated hereby. Seller and Company, jointly and severally,
agree to indemnify and save Buyer harmless from any Damages relating to any
claim for any such fee or compensation arising out of any act or omission of
Seller or Company, and Buyer agrees to indemnify and save Seller harmless from
any Damages relating to any claim for any claim for any such fee or compensation
arising out of any act or omission of Buyer.
25. Notices. Any notice, communication, request, reply, or advice
(hereinafter severally and collectively called "notice") in this Agreement
provided or permitted to be given, made, or accepted by either party to the
other must be in writing and shall be given or be served by telex, telecopy,
facsimile, registered, certified or other form of mail requiring a return
receipt, addressed to the party to be notified, postage prepaid, or by reputable
overnight delivery service, or by delivering the same in person to such party
and obtaining a receipt for such delivery. Notice deposited in the mail in the
manner hereinabove described shall be deemed received on the earlier of the
fifth day after day after deposit in the mail or upon receipt, whichever is
earlier. Notice sent by reputable overnight courier shall be deemed received on
the next day after sending. Notices given by hand delivery shall be deemed
received when delivered. Notices may also be sent by facsimile transmission with
electronic confirmation, and shall be deemed received on the date sent or the
first business day thereafter, if sent after normal business hours or on a
non-business day.
For purposes of notice, the addresses and facsimile numbers of the
parties shall, until notice of any change is provided, be as follows:
To Buyer: 110 E. 59th Street
Eighteenth Floor
New York, NY 10022, U.S.A.
ATTENTION: Mr. Allan Esrine
Facsimile: (212) 832-3671
With required copy to: Kenneth J. Fleisher, Esq.
STOCK PURCHASE AGREEMENT
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<PAGE>
Zarwin, Baum, DeVito,
Kaplan and O'Donnell, P.C.
1515 Market Street, Suite 1200
Philadelphia, PA 19102, U.S.A.
Facsimile: (215) 569-1606
To Seller: Second Floor
Salisbury House
Finsbury Circus
London, EC-2 ENGLAND
Facsimile: 011-44-171-588-8863
Attention: Keith D. Beekmeyer
With copy to: Suisse Capital Complex, Inc.
8888 Keystone Crossing Plaza, Suite
1300 Indianapolis, IN 46240, U.S.A.
Facsimile: (317) 259-1468
To Company: 99 Logofat Tautu Street
Bucharest 3, ROMANIA
Facsimile: ( )
With copy to: Suisse Capital Complex, Inc.
8888 Keystone Crossing Plaza, Suite
1300 Indianapolis, IN 46240, U.S.A.
Facsimile: (317) 259-1468
Notice sent only to counsel shall not constitute good notice under this
Agreement.
26. Further Assurances. Each of the parties hereto shall use such party's
best efforts to take such actions as may be necessary or reasonably requested by
the other parties hereto to carry out and consummate the transactions
contemplated by this Agreement.
27. Expenses. Each of the parties hereto shall bear such party's own
expenses and attorneys' fees in connection with the negotiation and preparation
of this Agreement and the transactions contemplated hereby.
STOCK PURCHASE AGREEMENT
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<PAGE>
28. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original but all of which shall
constitute one and the same instrument.
29. Headings. The headings preceding the text of the paragraphs hereof are
inserted for convenience of reference only and shall not constitute a part of
this Agreement, nor shall they affect its meaning, construction or effect.
30. Amendments, Waivers. Any changes, amendments, waivers or additions to
this Agreement, the Escrow Agreement or the Note or any document contemplated
herein or therein to be executed or delivered by one or more of the parties,
must be made in writing by the parties hereto in order to be effective. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed as a waiver of such provision nor in any way to
affect the validity of this Agreement or any part hereof or the right of any
party thereafter to enforce each and every such provision strictly in accordance
with its terms. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
31. Invalidity. Should any provision of this Agreement be held by a court or
arbitration panel of competent jurisdiction to be enforceable only if modified,
such holding shall not affect the validity of the remainder of this Agreement,
the balance of which shall continue to be binding upon the parties hereto with
any such modification to become a part hereof and treated as though originally
set forth in this Agreement. The parties further agree that any such court or
arbitration panel is expressly authorized to modify any such unenforceable
provision of this Agreement in lieu of severing such unenforceable provision
from this Agreement in its entirety, whether by rewriting the offending
provision, deleting any or all of the offending provision, adding additional
language to this Agreement, or by making such other modifications as it deems
warranted to carry out the intent and agreement of the parties as embodied
herein to the maximum extent permitted by law. The parties expressly agree that
this Agreement as modified by the arbitration panel shall be binding upon and
enforceable against each of them. In any event, should one or more of the
provisions of this Agreement be held to be invalid, illegal or unenforceable in
any respect, such invalidity, provisions hereof, and if such provision or
provisions are not modified as provided above, this Agreement shall be construed
as if such invalid, illegal or unenforceable provisions had never been set forth
herein.
STOCK PURCHASE AGREEMENT
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<PAGE>
32. Interpretation. No provision hereof shall be construed against a party
because such party or its attorney may have been the draftsman thereof.
33. Escrow Closing; Second Escrow Period.
(a) Buyer's Notice. Notwithstanding anything to the contrary
contained herein, the parties acknowledge that the following shall be conditions
precedent to Buyer's obligation to notify Escrow Agent of Buyer's satisfaction
with certain elements of the transaction represented hereby such that Buyer
gives the notice ("Buyer's Notice") to the Escrow Agent contemplated by
Paragraph 8(b) of the Escrow Agreement attached hereto as Exhibit 9(i) and to be
executed by all parties upon execution hereof:
(1) Seller and Controlled Companies currently own
approximately fifty-one percent (51%) of the issued and outstanding Stock of
Company. It shall be a condition precedent to Buyer giving Buyer's Notice that,
on or before April 30, 1998 (as such date may be extended on one or more
occasions by notice from either party, such extension being permitted up to and
no later than June 30, 1998), Seller shall have acquired (or have obtained the
absolute and unencumbered right to purchase and/or cause the transfer of)
Additional Stock equal to at least approximately twenty-nine percent (29%) of
all issued and outstanding Company Stock, title to all of which shall be
transferred to Buyer in accordance with this Agreement, such that Seller shall
transfer in total a minimum of eighty percent (80%) of all issued and
outstanding Company Stock;
(2) Buyer shall have received from the firm of
Coopers and Lybrand an opinion and/or auditor's certificate dated as of December
31, 1997, satisfactory to Buyer and sufficient to satisfy the requirements of
SEC Regulation S-X;
(3) Seller and Company shall not be in breach of any
of their representations, warranties, duties or obligations hereunder and all of
Seller's and Company's representations and warranties described in Paragraph 4
hereof shall be true and correct;
(4) Any amendments required by Paragraphs 4(a)(22)
and/or 4(a)(25) hereof shall have been made and provided to Buyer and Buyer
shall be fully satisfied, in Buyer's sole discretion, with the contents and
information in such amendments;
STOCK PURCHASE AGREEMENT
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<PAGE>
(5) All liabilities described in Paragraph 5(e)
hereof shall be satisfied in full;
(6) There shall be a resolution satisfactory to Buyer
of the Radet Debt;
(7) Buyer shall have received an opinion from counsel
to Company and Seller that the Additional Stock meets all of the requirements of
Paragraph 9(a)(2) hereof and a certificate representing such Additional Stock
shall have been delivered to Buyer in accordance with the provisions of
Paragraph 10(a) hereof, whereupon Company's capital stock ledger shall be
appropriately updated;
(8) Seller shall have delivered a certification to
Buyer as contemplated by Paragraph 4(b) hereof;
(9) Seller shall have delivered an amendment to the
opinion of counsel contemplated by Paragraph 9 hereof to make such opinion of
counsel effective through and including the date of the giving of Buyer's Notice
(if at all).
(b) Documents; Second Escrow Period.
(1) In any event, at the time of execution hereof,
this Agreement, the Note, all certificates representing the Seller's Stock and
any other documents executed, exchanged or delivered in connection with the
execution hereof will be placed into escrow with Escrow Agent as described in
the Escrow Agreement attached hereto as Exhibit 9(i). Assuming Buyer notifies
Company, Seller and Escrow Agent of the satisfaction of all such conditions
precedent by giving Buyer's Notice, Buyer shall then promptly prepare and submit
to the SEC for clearance a proxy statement setting forth all of the items
described in Paragraph 9(i). Provided Buyer obtains such clearance, promptly
thereafter, Buyer shall provide the proxy statement (and all ancillary
documentation) to all of Buyer's Shareholders as of a date selected by Buyer in
Buyer's reasonable discretion, and further five all required notice of a special
meeting of Buyer's Shareholders at which a vote on the items described in the
proxy statement will occur. Buyer's existing Board of Directors will recommend
shareholder approval of the items to be voted upon pursuant to the proxy
statement.
(2) Provided Buyer's shareholders approve the items
set forth in the proxy statement (which approval is a condition precedent to
Seller's obligation to Proceed to Final Settlement), and provided Seller
provides Buyer with the certification contemplated by Paragraph 4 and the
addendum to the Opinion of Counsel contemplated by Paragraph 9, Buyer and Seller
STOCK PURCHASE AGREEMENT
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<PAGE>
shall notify Escrow Agent to release all documents held in escrow and to retain
same as described in Paragraph 8(c) of the Escrow Agreement. The date of such
notice shall be the Final Settlement Date.
(c) Form of Notice. Buyer's Notice shall be given, if at all,
in substantially the form attached to the Escrow Agreement as Exhibit "8(b)".
(d) Termination, Rescission. If Buyer does not give Buyer's
Notice on or before April 30, 1998, or such later date (but, in any event, no
later than June 30, 1998) as may be designated by either party pursuant to
Paragraph 8 hereof, or if Buyer notifies Seller in writing before such date that
Buyer is not satisfied with the resolution of the issues described in Paragraph
33(a), or if Buyer's current stockholders fail to vote affirmatively on the
items set forth in the proxy statement as contemplated by Paragraph 9(i), this
Agreement shall be deemed automatically terminated, null and void and upon
return to each party of all items in accordance with Paragraph 8(b) of the
Escrow Agreement, each party shall thereafter be relieved of all of its duties
and responsibilities hereunder. Neither Seller nor Company shall have, and each
of them hereby specifically waives, any claim against Buyer for damages of any
kind in the event Buyer fails to give Buyer's Notice in a timely fashion. Upon
return to each party of all items in accordance with Paragraph 8(b) of the
Escrow Agreement, each party shall thereafter be relieved of al of its duties
and responsibilities hereunder. In such event, all parties hereby waive any
claim against one another for damage of any kind.
(e) Waiver. Buyer may waive any condition precedent to its
obligation to give Buyer's Notice. The tender of an executed Buyer's Notice
shall be evidence of satisfaction of the conditions precedent. If, at such time,
Seller or any Controlled Company owns or has the right to purchase Additional
Stock so as to be able to transfer at Final Settlement more than eighty percent
(80%) of the issued and outstanding Company Stock, Seller shall transfer (or
cause Controlled Companies to transfer) all of Seller's Stock then owned to
Buyer and Buyer shall deliver an appropriate amendment to the Note increasing
its principal sum.
(f) Regarding Exhibits. Any exhibits not available or attached
to this Agreement at the time of its execution shall be delivered into escrow
with Escrow Agent during the Initial Escrow Period, subject nonetheless to
Buyer's approval of form and content thereof unless delivery is waived in
writing by the party intended as the recipient of such exhibit. Buyer's
approval, in Buyer's sole and absolute discretion, of the form and substance
STOCK PURCHASE AGREEMENT
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<PAGE>
of such exhibits shall be a condition precedent to Buyer's giving Buyer's Notice
(if at all).
(g) Effective Date. Assuming the occurrence of the Final
Settlement Date, the effective date of Buyer's ownership of Seller's Stock will
be the date of the giving of Buyer's Notice
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date first written above.
LITCHFIELD CONTINENTAL, LTD.
BY: /s/ Kenneth Butterfield (SEAL)
Its: ________________
/s/ February 17, 1998
BIOFARM S.A.
BY: /s/ Robert W. Ferran, Jr. (SEAL)
Its: President
/s/ April 22, 1998
GLOBAL SPILL MANAGEMENT, INC.
BY: /s/ Herb S. McDonald (SEAL)
Its:_________________
/s/ April 1, 1998
STOCK PURCHASE AGREEMENT
PAGE 38
<PAGE>
STATE OF ______
COUNTY OF
On the ____ day of __________, 199_ before me, the undersigned officer,
personally appeared ________________________, known to me (satisfactorily
proven) to be the ___________________ of Litchfield Continental, Ltd., a
corporation, whose name is subscribed to the within instrument, and acknowledged
that (s)he has the authority to sign on behalf of Litchfield Continental, Ltd.,
and that (s)he has executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
STATE OF ______
COUNTY OF
On the ____ day of __________, 199_ before me, the undersigned officer,
personally appeared ________________________, known to me (satisfactorily
proven) to be the ___________________ of Biofarm S.A., a corporation, whose name
is subscribed to the within instrument, and acknowledged that (s)he has the
authority to sign on behalf of Biofarm S.A., and that (s)he has executed the
same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
STOCK PURCHASE AGREEMENT
PAGE 39
Exhibit 2
ADDENDUM TO STOCK PURCHASE AGREEMENT
ADDENDUM TO STOCK PURCHASE AGREEMENT entered into this ___ day of
August, 1998, by and among Litchfield Continental, Ltd., a British Virgin
Islands corporation ("Seller"), the parent of BIOFARM S.A., a Romanian
corporation ("Company"), and GLOBAL SPILL MANAGEMENT, INC., a Nevada corporation
("Buyer").
BACKGROUND
Seller and Buyer wish to amend the Stock Purchase Agreement
("Agreement") dated April 1, 1998 relative to purchase by Buyer of all of
Seller's stock in Biofarm, S.A., a Romanian corporation. All capitalized terms
used herein shall have the same meaning as in the Agreement unless specifically
noted to the contrary.
NOW, THEREFORE, in consideration of the Background and the respective
agreements, representations, warranties and mutual covenants hereinafter set
forth and intending to be legally bound hereby, the parties agree as follows:
1. Paragraph 2(a) is amended and restated to read as follows:
"2. Purchase Price.
(a) Consideration. As consideration for the purchase of
such of Seller's Stock as Seller or Controlled Companies own
on the date hereof, Buyer shall give Seller at the time of
execution of this Agreement its convertible, non-negotiable
secured debenture (the "Note") in the principal sum of Six
Million Four Hundred Thirty-Four Thousand Six Hundred
Eighty-One Dollars, U.S. ($6,434,681), such sum (the
"Consideration") being eighty percent (80%) of the net worth
of Company as of June 30, 1997; provided, however, the
Consideration shall be changed according to the following
formula: to the extent the Seller's Stock transferred
represents more than 80% of all classes of the issued and
outstanding stock of Company (the "Stock"), the Consideration
shall be increased by a like percentage. The Note shall be
held by Suisse Capital Complex as escrow agent subject to the
terms and conditions hereof and of the Escrow
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 1
<PAGE>
Agreement, the form of which is attached hereto as Exhibit
"9(i)" and is to be executed simultaneously herewith.
Simultaneously with delivery of the Note, Seller and any other
Controlled Company owning Stock shall transfer into escrow all
of Seller's or such Controlled Company's right, title and
interest in all of its Stock, such transfer to be made with
appropriate assignments or stock powers making Buyer the
assignee thereof pursuant to all the terms and conditions
hereof. All of the Stock so transferred shall be known as
"Seller's Stock"."
2. Paragraph 2(b) of the Agreement is amended and restated as follows:
"(b) Note. The Note shall be executed and delivered
substantially in the form attached to this Agreement as
Exhibit "2(b)" and, in any event, shall contain at least the
following terms:
(1) no interest shall be due or payable on the
principal sum;
(2) the Note shall be non-negotiable and
non-transferable, and shall be non-redeemable;
(3) in lieu of repayment, and subject to the
condition precedent that after a duly noticed special meeting
of Buyer's shareholders shall have occurred at which Buyer's
shareholders vote affirmatively (A) Buyer's shareholders elect
Seller's nominees to Buyer's Board of Directors, and (B) Buyer
changes Buyer's corporate name to "Biofarm, Inc.", Seller may,
upon notice to Buyer, and from time to time for a period of
five (5) years from the date of the Note, as such time may be
extended indefinitely at Seller's request to permit Seller to
convert any remaining principal balance of the Note, convert a
portion [but not less than ten percent (10%)] of the original
principal sum to Buyer's common stock. For each ten percent
(10%) of the original principal sum of the Note so converted,
Seller shall
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 2
<PAGE>
receive an amount of Buyer's common stock sufficient to
provide Buyer with eight percent (8.0%) of the then issued and
outstanding common stock of Buyer, such that in the aggregate,
if the entire principal sum of the Note is converted, Seller
shall own eighty percent (80%) of Buyer's issued and
outstanding stock based upon the number of shares thereof
outstanding as of the date of conversion. In any event, Seller
may not exercise its right of conversion until after March 31,
1999, and Seller may do so over a period of five years and
only in increments of ten percent (10%) of the principal
amount of the Note."
3. Paragraph 3 is amended and restated to read as follows:
"3. Restriction on Transfer.
(a) Seller and Company agree not to encumber,
transfer, sell, assign or otherwise dispose of all or any
portion of Seller's Stock, nor to issue or authorize the
issuance of any additional shares of stock in Company, without
the express, prior written consent of Buyer, which may be
withheld at Buyer's sole discretion, except Seller and Company
may take such action as is required to permit Seller to obtain
ownership of, and/or the absolute right to transfer title to
Buyer of, a minimum of eighty percent (80%) of Company. An
enforced or involuntary transfer, whether under court order or
in any other way, shall be treated as a voluntary disposition
for purposes of this Agreement.
(b) Company will not (1) declare, set aside, or
pay any dividend or make any distribution in respect of its
capital stock; (2) directly or indirectly purchase, redeem or
otherwise acquire any shares of its capital stock, except such
action as is required to permit Seller to obtain ownership of
(and/or the absolute right to transfer title to Buyer of) a
minimum of eighty percent (80%) of Company; (3) enter into any
agreement obligating it to do any of the foregoing prohibited
acts."
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 3
<PAGE>
4. (A) Paragraph 4(a) (preamble) is amended and restated to read as
follows:
"(a) Seller and Company jointly and severally represent,
warrant, covenant and agree as follows, all of which shall be true
and correct on the date hereof and on the date of Final Settlement
(as such term is defined in Paragraph 8 hereof. Seller and Company
shall recertify all of the following at each such time:"
(B) Paragraph 4(a)(1)(A) is amended and restated to read as follows
(such amendment to be effective as of the date hereof):
"At the time of execution hereof, Seller and Controlled
Companies own beneficially and of record approximately eighty-seven
percent (87%) of all of the issued and outstanding Stock of Company.
Company has no subsidiary. Upon execution hereof, Seller agrees to
cause (or cause Controlled Companies to place) such Stock to be
transferred into Buyer's name and thereafter placed into escrow
pursuant to Paragraph 33 hereof. All of Seller's Stock is and will
be at the time of the Final Settlement Date (as defined in Paragraph
8), partly or fully paid and non-assessable;"
5. Paragraph 4(a)(1)(B) is deleted.
6. Paragraph 4(a)(4)(A) is amended and restated to read as follows:
"(4) (A) The authorized capital Stock of Company consists of
35,967,878 shares of one class of common stock having a par value of
1,000 Romanian Lei per share, of which 35,967,878 shares have been
issued and are outstanding and of which approximately 87% are owned
by Seller and/or Controlled Companies. There is no preferred Stock
authorized, issued or outstanding. No person or entity, holds any
preemptive or conversion rights, stock warrants, stock options or
other right to purchase from Company or cause Company to issue
additional Stock, with the
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 4
<PAGE>
exception of the Romanian State Ownership Fund's right to have stock
issued in its favor after the Company has formally received an
independent valuation approved by Company shareholders of, and
formal title to, the land on which Company factories are located.
Seller and/or Controlled Companies have the exclusive preemptive
right to acquire such stock from the State Ownership Fund. Any
governmental restrictions on Seller's ownership or transfer (or
ability to cause Controlled Companies to transfer) the Stock
pursuant to this Agreement shall be removed before Final Settlement
and as a condition precedent thereto:"
7. Paragraph 4(a)(4)(B) is amended and restated to read as follows:
"(B) All issued and outstanding shares of Company are duly
authorized, validly issued and are fully or partly paid and
non-assessable with no personal liability attached to the ownership
thereof. All of Seller's Stock is free and clear of all liens,
encumbrances, options, charges, security interests, claims and
rights of others whatsoever. As of the date of Final Settlement,
none of the Seller's Stock will be subject to any restrictions or
agreements which prohibit or interfere in any manner with the sale
thereof to Buyer;"
8. Paragraph 4(a)(17) is amended and restated to read as follows:
"(17) Except for agreements with Buyer, including, but not
limited to, this Agreement and such other agreements as are
described on a list set forth in Exhibit "4(a)(17)", true and
correct copies of will be delivered to Buyer on or before the date
of Final Settlement, and as a condition precedent thereto, Company
is not a party to nor does it have any obligation, contingent or
otherwise, under any written or oral lease, license, arrangement,
note, debenture, purchase agreement, option, or contract of any
kind, including, but not limited to, any employment contract, any
contract for the
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 5
<PAGE>
purchase of materials, supplies or equipment with respect to which
the balance due is greater than Five Thousand Dollars U.S. ($5,000),
any contract or commitment for capital expenditures or any contract
not cancelable on thirty (30) days' notice ("Contracts");"
9. Paragraph 4(a)(18) is amended and restated to read as follows:
"(18) Except as set forth in the Company Financial Statements
and as set forth in Exhibit "4(a)(18)", the form and content of
which must be acceptable to Buyer in Buyer's sole discretion and as
a condition precedent to Final Settlement, Company has no
outstanding indebtedness to any party and neither it nor any other
person or entity is in default in respect to any terms or conditions
of any Contracts to which Company is a party. Originals of all
written Contracts have been provided to Buyer;"
10. Paragraph 4(a)(22)(A) is amended and restated to read as follows:
"(22) (A) Provided that on or before the date of Final
Settlement, Seller may amend the documents contemplated by this
subparagraph to add information not included thereon at the time of
execution hereof, set forth in Exhibit "4(a)(22)" is a complete and
accurate list of all permits, licenses, approvals, franchises,
notices and authorizations issued by governmental entities or other
regulatory authorities, (collectively, the "Permits"), held by
Company. The Permits set forth in Exhibit "4(a)(22)" are all the
Permits required for the conduct of Company's business. All the
Permits set forth in Exhibit "4(a)(22)" are in full force and
effect;"
11. Paragraph 4(a)(24)(B) is amended and restated to read as follows:
"(B) Company has been issued, and will maintain through the date
of Final Settlement, all required permits, licenses,
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 6
<PAGE>
certificates and approvals relating to (i) air emissions, (ii)
discharges to surface water or ground water, (iii) noise emissions,
(iv) solid or liquid waste disposal, (v) the use, generation,
storage, transportation or disposal of toxic or hazardous
substances or wastes (intended hereby and hereafter to include any
and all such materials listed in any law, code or ordinance and all
rules and regulations promulgated thereunder, as hazardous or
potentially hazardous), or (vi) other environmental, health and
safety matters;"
12. Paragraph 4(a)(24)(D) (preamble only) is hereby amended and
restated to read as follows:
"(D) Based upon the law as exists at the time of this Agreement
[such to be recertified as to the prevailing law at the time of
Final Settlement]..."
13. Paragraph 4(a)(25) is hereby amended and restated to read as
follows:
"(25) Provided that on or before the date of Final Settlement,
Seller may amend the documents contemplated by this subparagraph to
add information not included thereon at the time of execution
hereof, set forth in Exhibit "4(a)(25)" attached hereto is a list
of all agreements between Company and each person employed by or
independently contracting with Company with regard to compensation,
whether individually or collectively, and set forth in Exhibit
"4(a)(25)" is a list of all employees of Company entitled to
receive annual compensation in excess of Twenty Thousand Dollars,
U.S. ($20,000), and their respective salaries. The transactions
contemplated by this Agreement will not result in any liability for
severance pay to any employee or independent contractor of Company.
Neither Company nor Seller has informed any employee or independent
contractor providing services to Company that such person will
receive any increase in compensation or benefits or any ownership
interest in Company, nor is any such person entitled to
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 7
<PAGE>
such an increase, whether as a result of the transactions
contemplated by this Agreement or otherwise;"
14. Paragraph 4(a)(35) is amended and restated to read as follows:
"(35) Except as disclosed on Exhibit "4(a)(35)" or as reserved
on the Company Financial Statements, Company's inventories of raw
materials, in-process and finished products are in good condition,
conform in all respects with applicable specifications and
warranties and are not obsolete. All in-process and finished
products in such inventories have been produced in compliance with
all applicable quality control procedures. As of the date hereof
and at the time of Final Settlement, the amount and mix of items in
inventory of supplies, in-process and finished products will be
consistent with Company's past business practices in kind and
amount;"
15. Paragraph 4(b) is amended and restated to read as follows:
"(b) Reaffirmation. As a condition precedent to Buyer
consummating the purchase described herein and proceeding to Final
Settlement, at the time of Final Settlement, Seller and Company
shall reaffirm all of their representations, obligations and
warranties contained in this Paragraph effective as of each such
time."
16. Paragraph 4(e) is amended and restated to read as follows:
"(e) Survival. This Paragraph 4 shall survive the date of Final
Settlement."
17. Paragraph 5(a) (preamble) is amended and restated to read as
follows:
"(a) Representations. Buyer hereby represents and warrants to,
and covenants and agrees with Seller as of the date hereof and as
of the date of Final Settlement (if at all), as follows:..."
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 8
<PAGE>
18. Paragraph 5(a)(5) is amended and restated to read as follows:
"(5) As of June 30, 1998, Buyer's current liabilities to third
parties totaled no more than Twenty-five Thousand Dollars, U.S.
($25,000). All such liabilities will be discharged by Buyer on or
before the date of the special meeting of Buyer's shareholders to
vote pursuant to the proxy and proxy statement described in
Paragraph 5(b)(2), below."
19. Seller acknowledges Buyer has previously appointed Mr. Keith
Beekmeyer to Buyer's Board of Directors and that such appointment satisfies
Seller's obligations under Paragraph 5(b)(1) of the Agreement. Furthermore,
Buyer agrees that, immediately after the date of Final Settlement, all existing
directors, except Mr. Beekmeyer, shall resign. Seller shall provide Buyer with
the curricula vitae of Mr. Beekmeyer, together with additional nominees whose
names shall be submitted to Buyer's shareholders in accordance with Rule 14f-1
and Paragraph 5(b)(2) of the Agreement, as amended hereby. Buyer shall take all
appropriate corporate action in advance of Final Settlement as may be required
to effect the provisions of subparagraph 5(b).
20. Paragraph 5(b)(2) is amended and restated to read as follows:
"(2) As soon as practicable after the date of Final Settlement,
Buyer shall prepare and submit to the SEC and, if clearance is
obtained, thereafter, to its shareholders for affirmative vote, a
proxy and proxy statement requesting Buyer's shareholders to
approve each of the following, among other things:
(A) a change in Buyer's name to "Biofarm, Inc.";
(B) election of Mr. Beekmeyer and any other Seller's
nominees to Buyer's Board of Directors."
21. Buyer acknowledges satisfactory resolution of the Radet Debt.
22. Paragraph 8 is amended and restated to read as follows:
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 9
<PAGE>
"8. Final Settlement. Provided Buyer and Seller's
representations and warranties are true; provided Buyer has
approved of the form and content of all exhibits to this Agreement
not attached at the time of execution hereof; provided Buyer and
Seller have not defaulted in any of their obligations hereunder;
and provided all other conditions precedent to both Buyer's and
Seller's obligations hereunder have been satisfied; final
settlement ("Final Settlement") of the transactions contemplated by
this Agreement shall take place on or before September 2, 1998 at
the offices of Zarwin, Baum, DeVito, Kaplan & O'Donnell, P.C., 1515
Market Street, Suite 1200, Philadelphia, PA 19102 or on such other
date, and at such other time or place is agreed to by the parties.
The date of Final Settlement is herein referred to as the
Settlement Date or the Final Settlement Date."
23. Paragraph 9(a) (preamble) is amended and restated to read as
follows:
"(a) Opinion of the Company's and Seller's Counsel. Buyer shall
have received an opinion of counsel to Company and Seller,
delivered to Buyer pursuant to the instructions of Company and
Seller, dated the date of Final Settlement, in form and substance
satisfactory to Buyer and its counsel, to the effect that:..."
24. Paragraph 9(a)(2) is amended and restated to read as follows:
"(2) Subject to the additional requirements set forth in
Paragraph 33, below, the authorized Stock of the Company consists
of 35,967,878 shares of one class of common stock, of which
35,967,878 shares are issued and outstanding and of which
approximately eighty-seven percent (87%) are currently owned,
legally or beneficially, by Seller or by Controlled Companies. Such
opinion shall reflect the percentage of issued and outstanding
Stock transferred, which shall be not less than eighty percent
(80%) and to reflect that certificates or
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 10
<PAGE>
other appropriate documents representing all Stock so transferred
have been duly endorsed for transfer or have had appropriate stock
powers attached or such other documentation as may be required has
been duly executed and delivered to all appropriate transfer agents
or other authorities such that, at Final Settlement, Buyer shall
obtain full and complete thereto with all rights of ownership. The
opinion shall state there is no preferred stock authorized, issued
or outstanding."
25. Paragraph 9(a)(3) is amended and restated to read as follows:
"(3) All of the issued and outstanding shares of Company's
Stock (including, but not limited to, all of Seller's Stock) have
been duly and validly authorized and issued and are fully or
partially paid and non-assessable."
26. In the first line of Paragraph 9(a)(4), reference to "into escrow"
is hereby deleted.
27. Paragraph 9(c)(1) is hereby deleted and of no further force or
effect.
28. Reference in Paragraph 9(g) to The Fulcrum Group as Escrow Agent is
hereby amended to reference Suisse Capital Complex, Inc. as Escrow Agent.
29. Paragraphs 9(i)(2) and 9(i)(4) are hereby deleted and of no further
force or effect.
30. Paragraph 10(a) is hereby deleted and of no further force or
effect, it being understood that at the time of Final Settlement, Seller shall
execute and deliver to all appropriate entities, transfer agents or persons all
instruments necessary or appropriate in order to transfer ownership of Seller's
Stock. Seller's Stock and all documents representing Seller's Stock, as
transferred into Buyer's name and ownership, shall thereafter be held by Escrow
Agent pursuant to the Escrow Agreement.
31. Buyer's obligations under Paragraph 10(c) relative to the change of
name are specifically understood to be subject to approval by Buyer's
shareholders pursuant to proxy vote.
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 11
<PAGE>
32. Paragraph 33(a)(1) is amended and restated to read as follows:
"(1) Seller and Controlled Companies currently own
approximately 87% of the issued and outstanding Stock of Company,
title to all of which (together with any other Company Stock owned
by Seller or Controlled Companies as of the date of Final
Settlement) shall be transferred to Buyer in accordance with this
Agreement. From the date hereof until Final Settlement, neither
Seller nor Controlled Companies shall transfer, encumber,
alternate, sell, pledge or hypothecate any Company Stock in any
fashion."
33. (a) Paragraph 33 is amended to delete all references to an Escrow
closing and/or a Second Escrow Period. The various conditions precedent listed
in Paragraph 33(a) shall henceforth be understood as conditions precedent to
Buyer's obligation to proceed to Final Settlement. Furthermore, Paragraph
33(a)(9) is deleted and of no further force or effect and, in its place, Seller
shall, at Final Settlement, and as a condition precedent to Buyer's obligations
to proceed to Final Settlement, cause Company to execute and deliver an
assignment to Buyer of all of Company's right, title and interest in and to the
lawsuits described in Paragraph 13. Furthermore, Paragraph 33(b) is amended and
restated to read as follows:
"(b) Proxy. After Final Settlement, Buyer shall promptly
prepare and submit to the SEC for clearance a proxy statement
setting forth all of the items described in Paragraph 9(i).
Provided Buyer obtains such clearance, promptly thereafter, Buyer
shall provide the proxy statement (and all ancillary documentation)
to all of Buyer's Shareholders as of a date selected by Buyer in
Buyer's reasonable discretion, and further file all required
notices of a special meeting of Buyer's Shareholders at which a
vote on the items described in the proxy statement will occur.
Buyer's existing Board of Directors will recommend shareholder
approval of the items to be voted upon pursuant to the proxy
statement."
(b) Paragraphs 33(b), (c) and (e) are hereby deleted and deemed of
no further force or effect.
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 12
<PAGE>
34. Buyer's address for Notices shall henceforth be:
c/o IDIICO
174 1/2 E. 64th Street
New York, NY 10021
ATTENTION: Mr. Allan Esrine
Facsimile: (212) 832-3671
Company's facsimile number is: ____________________
35. Items, originals of all of which are to be delivered to Buyer at
Final Settlement, are as follows:
(a) (1) Corporate Resolution of Shapiro Bancorp LLC, a Nevada
corporation, dated May 26, 1998, together with Irrevocable Stock or Bond Power
executed in blank on May 26, 1998, by K.D. Beekmeyer and assigning all of
Shapiro Bancorp, LLC's right, title and interest in and to 26,737,797 shares of
Company Stock;
(2) May 19, 1998 letter from Capital Securities addressed to
Mr. Robert Ferran, President of the Board of Directors of Company, relative to
details of the subscription for Company's new shares as a result of the
Resolution of the Extraordinary Shareholders Meeting held on April 14, 1998, and
accompanying attachment;
(b) Irrevocable Stock or Bond Power executed in blank on May 26,
1998, by K.D. Beekmeyer and assigning all of Shapiro Bancorp, LLC's right, title
and interest in and to 3,606,080 shares of Company Stock;
(c) Statement of account - Registry issued by the Romanian
Shareholders Registry for account number 10663928, providing a summary of
positions in Company held by Shapiro Bancorp LLC as of December 23, 1997 (in
English and Romanian);
(d) Corporate Resolution of Applegarth Investments Limited dated
May 26, 1998 together with Irrevocable Stock or Bond Power executed in blank on
May 26, 1998, by K.D. Beekmeyer and assigning all of Applegarth Investments
Limited's right, title and interest in and to 449,757 shares of Company Stock;
(e) May 21, 1998 letter from Capital Securities addressed to Anil
Mahan, General Counsel of Litchfield Continental Limited (BVI), relative to
confirmation of the purchase on behalf of Applegarth Investments Limited of
449,757 registered shares of Company Stock;
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 13
<PAGE>
(f) Irrevocable Stock or Bond Power executed in blank on May 26,
1998 by K. A. Butterfield and assigning all of his right, title and interest in
and to 400,207 shares of Company Stock;
(g) May 21, 1998 letter from Capital Securities addressed to Anil
Mahan, General Counsel of Litchfield Continental Limited (BVI), relative to
confirmation of the purchase on behalf of Kenneth Arthur Butterfield of 400,207
registered shares of Company Stock;
(h) Irrevocable Stock or Bond Power executed in blank on May 26,
1998 by H. S. Branch and assigning all of his right, title and interest in and
to 159,999 shares of Company Stock;
(i) May 21, 1998 letter from Capital Securities addressed to Anil
Mahan, General Counsel of Litchfield Continental Limited (BVI), relative to
confirmation of the purchase on behalf of Harbinder Singh Branch of 159,999
registered shares of Company Stock;
(j) Convertible, Secured, Non-Negotiable Debenture;
(k) Corporate Resolution of Buyer ratifying the issuance of the
Debenture, this Addendum and all other agreements executed by Buyer in
connection with the business transaction described herein.
36. Seller and Company hereby incorporate by reference, ratify,
confirm, approve, warrant and restate the statements and representations made in
an attachment to a June 10, 1998 letter to Kenneth J. Fleisher, Esq. from Anil
K. Mahan, LLB (Hons.), LLM, IBA, copy attached, including, but not limited, to
those relating to the presence or absence of certain exhibits, as well as any
information relating to the content of certain exhibits.
37. Except as modified hereby, the Agreement shall remain in full force
and effect. In the event of any conflict between the Agreement and this
Addendum, the terms of this Addendum shall control.
38. Notwithstanding anything to the contrary contained in Paragraph
8(b) of the Agreement or in this Addendum, the parties agree that the outside
date for Final Settlement shall in no case be after September 2, 1998 unless by
mutual agreement, in writing, executed by all parties.
39. Notwithstanding anything to the contrary contained in the
Agreement, including, but not limited to, Paragraphs 5(b)(2)(C) and 9(i)(4), it
shall not be a condition precedent to
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 14
<PAGE>
Final Settlement that Buyer's shareholders approve the Agreement, as amended
hereby, or the business transaction represented by the Agreement, as amended
hereby, or any increase in the authorized stock of Buyer. All of such conditions
are hereby deleted and deemed of no force or effect. Further, all references in
the Agreement to Buyer's Notice and an escrow closing before Final Settlement
are hereby deleted and deemed of no force or effect. Further, it is specifically
understood the election of Mr. Beekmeyer and any other Seller's nominees to
Buyer's Board of Directors is a requirement of Rule 14f-1 issued pursuant to the
Securities Exchange Act of 1934.
IN WITNESS WHEREOF, the parties have executed and delivered this
Addendum on the date first written above.
LITCHFIELD CONTINENTAL, LTD.
BY: /s/ Kenneth Butterfield (SEAL)
-----------------------
Its: ________________
BIOFARM S.A.
BY: /s/ Keith D. Beekmeyer (SEAL)
-----------------------
Its:_________________
GLOBAL SPILL MANAGEMENT, INC.
BY: /s/ Allan Esrine (SEAL)
-----------------------
Its: Vice-President
September 3, 1998
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 15
<PAGE>
STATE OF ______
COUNTY OF
On the ____ day of , 199_ before me, the undersigned officer,
personally appeared ________________________, known to me (satisfactorily
proven) to be the ___________________ of Litchfield Continental, Ltd., a
corporation, whose name is subscribed to the within instrument, and acknowledged
that (s)he has the authority to sign on behalf of Litchfield Continental, Ltd.,
and that (s)he has executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
STATE OF ______
COUNTY OF
On the ____ day of , 199_ before me, the undersigned officer,
personally appeared ________________________, known to me (satisfactorily
proven) to be the ___________________ of Biofarm S.A., a corporation, whose name
is subscribed to the within instrument, and acknowledged that (s)he has the
authority to sign on behalf of Biofarm S.A., and that (s)he has executed the
same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
---------------------------
Notary Public
My Commission Expires:
ADDENDUM TO STOCK PURCHASE AGREEMENT
PAGE 16
Exhibit 3
ESCROW AGREEMENT
AGREEMENT made and effective this ____ day of August, 1998, by
and among LITCHFIELD CONTINENTAL, LTD., a British Virgin Islands corporation
("Seller"), parent of Biofarm, S.A., a Romanian corporation, GLOBAL SPILL
MANAGEMENT, INC., a Nevada corporation ("Buyer") and SUISSE CAPITAL COMPLEX,
INC., a _____ corporation ("Escrow Agent").
Background
Buyer and Seller are Buyer and Seller, respectively, under a certain
Stock Purchase Agreement dated April 1, 1998, as amended by an Amendment of even
date herewith ("Stock Purchase Agreement"). At Final Settlement (as defined in
the Stock Purchase Agreement), Seller will transfer or cause to be transferred
to Buyer all right, title and interest of the owners of Seller's Stock (as
defined in the Stock Purchase Agreement) in Biofarm, S.A., a Romanian
corporation ("Company"). Simultaneously with such transfer, Buyer will give
Seller its Convertible, Non-Negotiable Secured Debenture in which Seller is
"Holder" and Buyer is "Maker" ("Note"), for which Buyer has pledged as
collateral the Seller's Stock, and all other documents executed or delivered in
connection with the closing of the transaction contemplated by the Stock
Purchase Agreement ("Closing Documents"). The Note and Seller's Stock (after
transfer into Buyer's name) (together, the "Closing Documents") shall be held by
Escrow Agent on the terms and conditions set forth below.
THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions contained herein, and intending to be legally bound,
the parties hereto agree as follows:
1. Establishment of the Escrow. Concurrently with execution hereof by
Escrow Agent, Buyer and Seller have deposited the Closing Documents with Escrow
Agent. Escrow Agent agrees to hold the Closing Documents in escrow in accordance
herewith and to act with respect to the Closing Documents in the manner
hereinafter set forth.
2. Duties of Escrow Agent. Escrow Agent agrees to act as escrow agent
for the Closing Documents, subject to the following provisions:
(a) In acting hereunder, Escrow Agent may rely upon any
writing delivered to it which it in good faith believes to be authorized. Escrow
Agent shall not be liable for any mistake of fact or error of judgment, or for
any acts or omissions of any kind
1
ESCROW AGREEMENT
<PAGE>
unless caused by Escrow Agent's own gross negligence or willful misconduct which
is proven by clear and convincing evidence.
(b) Escrow Agent may confer with counsel with respect to any
questions relating to Escrow Agent's duties or responsibilities hereunder.
Escrow Agent may act in reliance upon the advice of such counsel satisfactory to
Escrow Agent in reference to any matter connected with the escrow, and shall not
incur any liability for any action taken, or any failure to take any action, in
accordance with counsel's advice.
(c) Escrow Agent shall be protected in acting upon any
certificate, statement, notice, request, consent, agreement or other instrument
whatsoever, not only as to its due execution and validity and effectiveness of
its provisions, but also as to the truth and acceptability of any information
therein contained, which Escrow Agent shall in good faith believe to be valid
and to have been signed or presented by a proper person or persons.
3. Rights of Escrow Agent. If, before the termination of the escrow,
Escrow Agent receives or becomes aware of conflicting demands or claims with
respect to this escrow or the rights of Buyer or Seller to any funds,
securities, documents or other property or Closing Documents held in escrow,
Escrow Agent shall have the right to discontinue any or all further acts on
Escrow Agent's part until such conflict is resolved to Escrow Agent's
satisfaction. Escrow Agent shall have the further right to commence or defend
any action or proceedings for the determination of such conflict. Buyer and
Seller jointly and severally agree to pay all costs, damages, judgments and
expenses, including reasonable attorneys' fees, suffered or incurred by Escrow
Agent in connection with or arising out of the escrow, including, but without
limiting the generality of the foregoing, a suit in interpleader brought by
Escrow Agent. In the event Escrow Agent files a suit in interpleader, Escrow
Agent shall thereupon be fully released and discharged from all further
obligations to perform any and all duties or obligations imposed upon Escrow
Agent.
4. Limitations. Escrow Agent shall not be bound by any notice of, or
demand with respect to, any waiver, modification, amendment, termination or
rescission of this Escrow Agreement or Escrow Agent's duties or responsibilities
hereunder, unless Escrow Agent shall have given written consent thereto.
5. Indemnity. Buyer and Seller hereby agree, both jointly and
severally, to indemnify and hold harmless Escrow Agent against any and all
claims, damages, judgments, liabilities, costs and
2
ESCROW AGREEMENT
<PAGE>
expenses of any nature whatsoever, including, but not limited to, reasonable
costs of investigation and reasonable counsel fees and disbursements which may
be imposed upon Escrow Agent or incurred or suffered by Escrow Agent in
connection with or arising out of Escrow Agent's acceptance of appointment as
escrow agent, or the performance of Escrow Agent's duties, including any
litigation arising from this Escrow Agreement or involving the subject matter
hereof or the Closing Documents or any other items deposited in escrow. The
foregoing indemnification shall not be deemed exclusive of any of the rights, in
law or in equity, to which Escrow Agent may be entitled. Escrow Agent is hereby
given a lien on the Closing Documents or any other items held in escrow and all
right, title and interest of Buyer and Seller to the escrowed Closing Documents
or any other items to protect, indemnify, and reimburse itself for all costs,
expenses and liabilities arising out of acting as escrow agent.
6. Authority. Escrow Agent shall not have any duties except those which
are expressly set forth herein. Escrow Agent may resign at any time on two (2)
weeks' prior notice to all signatories to this Escrow Agreement, and may deposit
any escrow property with the Clerk of the Court described in Paragraph 15,
below, or as otherwise directed by Buyer and Seller.
7. Notices. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by facsimile transmission with electronic
confirmation or mailed by registered or certified mail, return receipt
requested, postage prepaid, addressed to the party intended at the address (or
facsimile number) set forth by each party's signature hereto, or to such other
address or facsimile number as the party shall have designated by written notice
prior thereto. Notices shall be deemed received on the earlier of actual receipt
(in case of hand delivery or facsimile with an electronic confirmation) or three
(3) days after mailing (in case of notice by certified or registered mail).
Notwithstanding the foregoing, in case of termination of this Escrow Agreement
under Paragraph 8(a), Escrow Agent shall be entitled to accept a facsimile
transmission of the signatures of Buyer and/or Seller, as the case may be,
provided an original signature is thereafter sent by registered or certified
mail, as above, and provided such facsimile is deemed received on or before the
close of business on the date transmitted.
8. Conduct and Termination of Escrow; Interim Actions.
3
ESCROW AGREEMENT
<PAGE>
(a) Escrow Agent shall retain the Closing Documents pursuant
to all of the terms and conditions of this Escrow Agreement, which shall remain
in full force and effect until otherwise terminated;
(b) It is understood that at Final Settlement under the Stock
Purchase Agreement, Seller shall provide Capital Securities, Romania ("Transfer
Agent"), with all documentation necessary or appropriate to effect the transfer
of title to Seller's Stock as required by the Stock Purchase Agreement.
Thereafter, Seller and Buyer shall direct Transfer Agent to deliver to Escrow
Agent all of such Seller's Stock then owned by Buyer, and the parties shall
further simultaneously deliver to Escrow Agent the Note executed by Buyer at
Final Settlement. Escrow Agent shall thereafter maintain possession of the Note
and all documentation pertaining to Buyer's ownership of Seller's Stock, all in
order to perfect Seller's security interest therein as granted by Buyer to
secure performance of its obligations in the Note. If, during the term of the
Note, Seller shall exercise its conversion rights thereunder, all of Buyer's
stock issued pursuant to any such conversion, as well as all amendments required
to the Note to reflect a decrease in its outstanding principal balance, shall be
delivered to and held by Escrow Agent. Upon receipt of an appropriate amendment,
Escrow Agent shall cause the certificate representing the appropriate amount of
Buyer's Stock to be transferred to Seller. Upon conversion of all of the
principal of the Note, Escrow Agent shall return the Note (as amended) to Buyer
marked "Canceled", together with all certificates or other documentation
representing Buyer's ownership of Seller's Stock, whereupon this Escrow
Agreement shall automatically terminate.
(c) This Escrow Agreement shall terminate if Escrow Agent
receives written notice from Buyer and Seller directing Escrow Agent to cease
performance of its duties hereunder and otherwise directing Escrow Agent how to
disburse the Closing Documents or, if it has not otherwise terminated, as of the
Maturity Date (as defined in the Note) of the Note, as such may be extended
under the provisions of the Note.
9. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and there are no other promises, understandings or
agreements between them, whether oral or written, with respect to the subject
matter thereof.
10. Amendments. No amendment or modification hereof shall be valid
unless the same shall be set forth in writing signed by all parties hereto.
4
ESCROW AGREEMENT
<PAGE>
11. Invalid Provision. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
the Agreement shall be construed in all respects as though such invalid or
unenforceable provision were omitted.
12. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, administrators,
executors, successors and assigns except that this Escrow Agreement shall not be
assignable by any party without the written consent of all other parties.
13. Authority. Each of the individuals hereto signing on behalf of the
persons warrant and represent that he is authorized to execute this Agreement on
behalf of such party and to bind such party to the terms hereof.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. Governing Law; Jurisdiction. This Agreement shall be governed by and
interpreted in accordance with the law of the State of New York and the sole
jurisdiction and venue for any action arising hereunder shall be in the United
States District Court for the Eastern District of Pennsylvania or the state
courts for Montgomery County, Pennsylvania, and each party specifically consents
to such in personam jurisdiction.
16. Headings. The section and other headings contained in this Agreement are
for reference purposes only and shall not affect the interpretation or meaning
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement and made the same effective the date and year first set forth above.
GLOBAL SPILL MANAGEMENT, INC.
5
ESCROW AGREEMENT
<PAGE>
BY: /s/ Allan Esrine (SEAL)
----------------------
Its: Vice-President
ADDRESS: 1244 Main Street
Linfield, PA 19468
FACSIMILE: 610-495-8417
6
ESCROW AGREEMENT
<PAGE>
LITCHFIELD CONTINENTAL, LTD.
BY: /s/ Kenneth Butterfield (SEAL)
------------------------
Its: _________
ADDRESS: Second Floor
Salisbury House
Finsbury Circus
London EC-2 ENGLAND
FACSIMILE: 011-44-171-588-8863
ESCROW AGENT:
-------------
SUISSE CAPITAL COMPLEX, INC.
BY: /s/ Timothy Cook (SEAL)
----------------------
Its: Chief Finanical Officer
ADDRESS: 8888 Keystone Crossing Plaza
Indianapolis, Indiana 46240
FACSIMILE: (317) 259-1468
September 4, 1998
7
ESCROW AGREEMENT
<PAGE>
STATE OF ______
COUNTY OF
On the ____ day of _________, 199_ before me, the undersigned officer,
personally appeared ________________________, known to me (satisfactorily
proven) to be the ___________________ of Litchfield Continental, Ltd., a
corporation, whose name is subscribed to the within instrument, and acknowledged
that (s)he has the authority to sign on behalf of Litchfield Continental, Ltd.,
and that (s)he has executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
STATE OF ______
COUNTY OF
On the ____ day of __________, 199_ before me, the undersigned officer,
personally appeared ________________________, known to me (satisfactorily
proven) to be the ___________________ of Global Spill Management, Inc., a
corporation, whose name is subscribed to the within instrument, and acknowledged
that (s)he has the authority to sign on behalf of Global Spill Management, Inc.,
and that (s)he has executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
8
ESCROW AGREEMENT
<PAGE>
STATE OF ______
COUNTY OF
On the ____ day of __________, 199_ before me, the undersigned officer,
personally appeared ________________________, known to me (satisfactorily
proven) to be the ___________________ of Suisse Capital Complex, Inc., a
corporation, whose name is subscribed to the within instrument, and acknowledged
that (s)he has the authority to sign on behalf of Litchfield Continental, Ltd.,
and that (s)he has executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
9
ESCROW AGREEMENT
Exhibit 4
$6,434,681
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR ANY STATE "BLUE SKY" SECURITIES LAWS OR
REGULATIONS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF A REGISTRATION STATEMENT
WITH RESPECT TO THESE SECURITIES IN EFFECT UNDER THE ACT AND ANY APPLICABLE
STATE LAWS, OR, TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR
RULE UNDER THE ACT RELATIVE TO THE DISPOSITION OF SECURITIES), OR AN OPINION OF
COUNSEL SATISFACTORY TO MAKER THAT SUCH REGISTRATION IS NOT REQUIRED.
CONVERTIBLE, SECURED, NON-NEGOTIABLE DEBENTURE
FOR VALUE RECEIVED, GLOBAL SPILL MANAGEMENT, INC., a Nevada corporation
(hereinafter called "Maker"), hereby promises to pay to LITCHFIELD CONTINENTAL,
LTD., a British Virgin Islands corporation (hereinafter called the "Holder"),
the principal sum of Six Million Four Hundred Thirty-Four Thousand Six Hundred
Eighty-One Dollars, U.S., ($6,434,681), without interest. The outstanding
principal of this Debenture and any and all other amounts due hereunder shall be
due on the fifth (5th) anniversary of the date hereof (the "Maturity Date"),
provided, however, Holder may extend the Maturity Date indefinitely in order to
permit Holder to convert the remaining principal balance hereof into Maker's
Common Stock (as defined below).
ARTICLE ONE
CONVERSION
1.1 Conversion.
(a) Subject as set forth below, Holder shall have the right,
at Holder's option, at any time or from time to time, to convert the principal
amount hereof or a stated portion thereof in increments of ten percent (10%) of
the original principal amount hereof ("Conversion Price") into fully paid and
non-assessable shares of Maker's common stock (hereinafter referred to as the
"Common Stock"), in accordance with this Article One.
(b) Each conversion of ten percent (10%) of the principal sum
hereof will entitle Holder to receive an amount of Maker's Common Stock
representing eight percent (8.0%) of all of Maker's then issued and outstanding
Common Stock excluding any shares previously issued pursuant to the exercise of
any
DEBENTURE
PAGE 1
<PAGE>
conversion rights hereunder; provided, however, no fractional shares shall
be issued. Holder may not exercise its right of conversion until after March 31,
1999, and Holder may do so over a period of five years and only in increments of
ten percent (10%) of the principal amount of this Debenture.
1.2 Exercise of Conversion Rights.
(a) In order to exercise the conversion privilege, Holder
shall notify Escrow Agent (as defined in Paragraph 4.2 hereof) in writing that
Holder elects to convert the stated principal amount hereof, or any portion
thereof constituting at least ten percent (10%) thereof. Such notice shall
include instructions to Escrow Agent as to how to surrender this Debenture.
Alternatively, if all conversion rights are not exercised simultaneously, Escrow
Agent shall retain this Debenture after the initial, partial exercise of the
conversion rights and, in order to exercise later conversion privileges, Holder
shall deliver to Escrow Agent an appropriate amendment to this Debenture
decreasing the principal sum hereof by the percentage designated in the notice
delivered therewith. Such notice shall also state the name or names (with
address) in which the certificate or certificates for shares of Common Stock
issuable upon such conversion shall be issued and the effective date of the
conversion itself. Upon surrender for conversion, this Debenture shall be
accompanied by proper assignment for transfer, unless the shares of Common Stock
issuable upon conversion are to be issued in the same name as the Holder.
(b) As promptly as practicable after the receipt of such
notice and the surrender of this Debenture, but subject to subsection 1.4
hereof, Maker shall issue and deliver or cause to be issued to Holder or, on
such Holder's written order, to such other person designated by Holder, and
delivered to Escrow Agent a certificate or certificates for the number of fully
paid and non-assessable shares of Common Stock issuable upon conversion of this
Debenture. Certificates evidencing the shares of Common Stock issued upon
conversion of this Debenture shall bear a restrictive legend (to the extent
applicable) unless such shares have been registered under the Act. Such
conversion shall be deemed to have been effected immediately prior to the close
of business on the date on which such notice shall have been received by Maker
and this Debenture shall have been surrendered (the "Conversion Date"), and at
such time the rights of Holder shall cease with respect to the portion of
principal converted and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of the shares represented unless the stock
DEBENTURE
PAGE 2
<PAGE>
transfer books of Maker shall be closed on that date, in which event such person
or persons shall be deemed to have become such holder or holders of record on
the next succeeding day on which such stock transfer books are open. In any
event, such conversion shall be at the Conversion Price and for the number of
converted shares issuable on the Conversion Date.
(c) Concurrently with the delivery of the shares of Common
Stock as provided herein, Maker shall execute and deliver to the Escrow Agent a
new Debenture (or, in lieu thereof, Holder shall execute and deliver to Escrow
Agent an amendment hereto) reflecting a change in principal amount equal to the
unconverted portion, if any, of this Debenture, but otherwise identical thereto.
Upon receipt thereof, Escrow Agent shall retain the Note and any amendments
thereto and shall deliver to Holder the Common Stock held in escrow pursuant to
Paragraph 1.2(b), above.
(d) Notwithstanding anything to the contrary contained herein,
the following shall be conditions precedent to Holder's right to exercise the
conversion rights described herein: a duly noticed special meeting of Maker's
shareholders shall have occurred at which (A) such shareholders elect Holder's
nominees to Buyer's Board of Directors, and (B) Maker's corporate name is
changed to "Biofarm, Inc.". Until satisfaction of the foregoing conditions
precedent, Holder shall have no conversion rights hereunder.
1.3 Fractional Shares. Fractional shares of Common Stock (or scrip
representing such fractional shares) will not be issued upon conversion but, in
lieu thereof, Maker will pay Holder a cash adjustment based on the Conversion
Price.
1.4 Limitation on Resale. Holder, by Holder's acceptance hereof,
acknowledges that Holder is aware that the shares of Common Stock issuable to
Holder by Maker upon conversion of the principal amount of this Debenture, or
any portion hereof, have not been registered under the Act. In this connection,
Holder represents and warrants to Maker that Holder has acquired this Debenture,
and, upon conversion of the principal amount of this Debenture, or any portion
hereof, Holder will be acquiring the shares of Common Stock, for investment and
not with a view to or for sale in connection with any distribution of this
Debenture or said shares of Common Stock, or with any intention of distributing
or selling this Debenture or said shares of Common Stock. In furtherance
thereof, Holder hereby covenants and agrees for a period of one (1) year from
the Conversion Date not to sell, assign, transfer, give, pledge, mortgage,
alienate, hypothecate, encumber, or dispose of any shares or any right or
interest in any shares of Common Stock acquired upon the conversion in whole or
in part of the principal amount of this
DEBENTURE
PAGE 3
<PAGE>
Debenture, pursuant to the
provisions hereof; provided, however, Holder may make such a transfer, etc., to
any "affiliate" or "associate", as such terms are defined in the Securities Act
of 1933.
1.5 Adjustment for Dividends and Distributions. If Maker shall, at any
time before the Conversion Date, (A) issue a dividend in shares of its Common
Stock, (B) combine the outstanding shares of the Common Stock into a smaller
number of shares, (C) subdivide the outstanding shares of the Common Stock, or
(D) reclassify the shares of its Common Stock, then, in any such event, the
number of shares of its Common Stock to be delivered to Holder after an election
to convert shall be adjusted so that Holder shall be entitled to receive such
number of shares of the Common Stock as Holder would have been entitled to
receive if the Conversion Date had occurred prior to the happening of such
event. No adjustment shall be necessary as a result of the issuance of shares of
Common Stock upon conversion hereof by Holder.
ARTICLE TWO
REGARDING COMMON STOCK
2.1 Shares Outstanding. Maker's authorized capital Stock consists of
Twenty-Five Million (25,000,000) shares of Common Stock, $.001 par value, and
Five Thousand (5,000) shares of Preferred Stock, $100.00 par value, of which
four million two hundred eleven thousand nine hundred and thirty (4,211,930)
shares of Common Stock and no Preferred Stock are outstanding as of this date.
2.2 Authorized Shares. Maker covenants that during the period the
conversion right exists, Maker will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of Stock
upon the conversion of this Debenture. Maker agrees that its issuance of this
Debenture shall constitute full authority to its officers who are charged with
the duty of executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock upon the conversion of all or any
portion of the principal amount of this Debenture.
ARTICLE THREE
EVENTS OF DEFAULT
3.1 Events of Default.
DEBENTURE
PAGE 4
<PAGE>
(a) Any one or more of the following shall constitute an Event
of Default under this Debenture:
(1) If all or any substantial part of Maker's assets
are attached, seized, subjected to a writ or distress warrant, or are levied
upon, or come into the possession of any judicial officer, receiver, custodian
or assignee and the same are not released, discharged or bonded against within
sixty (60) days thereafter;
(2) If Maker shall (i) file a petition in bankruptcy
or a petition to take advantage of any insolvency act, (ii) become insolvent,
make or send notice of a bulk sale of its assets or make an assignment for the
benefit of its creditors, (iii) consent to the appointment of a custodian or
receiver of itself or of the whole or any substantial part of its property, (iv)
file a petition or answer seeking reorganization or arrangement under the
federal bankruptcy laws or any other applicable law or statute of the United
States of America or any other jurisdiction.
(3) If a petition in bankruptcy shall be filed
against Maker which is not discharged within ninety (90) days after filing;
(4) If Maker is enjoined, restrained or in any way
prevented by court order or administrative proceeding from continuing to
conduct, and such enjoinment or restraint is not removed within ninety (90) days
or Maker otherwise ceases to conduct, all or a material part of its business; or
(5) If a notice of lien, levy or assessment is filed
of record with respect to all or any part of Maker's assets by the United States
Government, or any department, agency or instrumentality thereof, or by any
state, county, municipal or other governmental agency, or if any taxes or debts
owing at any time hereafter to any one or more of such entitles becomes a lien,
whether inchoate or otherwise, upon all or any material part of Maker's assets;
provided that this subsection shall not apply during any time period in which
Maker is contesting in good faith any lien, notice of lien, levy or assessment,
or has bonded therefor.
(b) Upon the occurrence of any such Event of Default, Holder
may at its sole option declare the entire balance of principal of this Debenture
immediately due and payable, whereupon, as Holder's sole and exclusive remedy,
Holder shall be entitled to the return of the stock of Biofarm S.A., a Romanian
corporation, which, by assignment of even date, Holder
DEBENTURE
PAGE 5
<PAGE>
transferred to Maker, and which stock ("Biofarm Stock") has been pledged by
Maker to Holder as security for this Debenture. In no event shall Holder be
entitled to seek or obtain monetary damages against Maker arising out of Maker's
default under this Debenture. Maker's liability hereunder shall be enforceable
only by return of the Biofarm Stock and the lien of any judgment against Maker
in any proceeding instituted on or in connection with this Debenture shall not
extend to any other property of Maker now or hereafter owned.
ARTICLE FOUR
SECURITY
4.1 Security. As collateral for performance of Maker's obligations
hereunder, Maker hereby grants and pledges to Holder a continuing security
interest in the Biofarm Stock, and Escrow Agent shall hold stock certificates or
other appropriate documentation of Maker's ownership of the Biofarm Stock as
collateral security for Maker's obligations hereunder. Such pledge and security
interest shall continue until this Debenture is paid in full or satisfied
according to its terms. Until an Event of Default occurs, Maker shall be
entitled to exercise all of the rights and privileges attributable to the
ownership of the Biofarm Stock.
4.2 Blank Endorsement. Prior to or contemporaneously with the execution
hereof, Maker shall cause the Biofarm Stock to be transferred to and endorsed in
blank or have a duly executed stock power attached thereto. Such stock shall be
held in escrow by Suisse Capital Complex, Inc. ("Escrow Agent"), pursuant to the
terms of an Escrow Agreement (herein so called) of even date among Escrow Agent,
Maker and Holder, the terms and conditions of which are herein incorporated by
reference, all in order to perfect Holder's security interest therein; provided
that Holder's interest therein shall be only that of a security interest until
such time as an Event of Default has occurred hereunder. Holder shall have the
continuing right to cause Escrow Agent to retain the Stock so long as any
indebtedness evidenced by the Debenture remains outstanding. Escrow Agent shall
also hold this Debenture pursuant to the terms of the Escrow Agreement.
4.3 Redelivery of Stock. Holder covenants and agrees to reassign and
deliver the Stock to Maker promptly upon conversion of the entire principal
balance hereof to Maker's Common Stock.
4.4 Legend. Upon the execution of this Debenture, the certificates of
Biofarm Stock subject hereto shall be surrendered
DEBENTURE
PAGE 6
<PAGE>
to Escrow Agent and endorsed as follows in addition to any other endorsements
appearing thereon:
"The shares of stock represented by this Certificate are
subject to, and are transferable only in compliance with, the
terms of a Convertible, Secured, Non-Negotiable Debenture
dated September ____ , 1998 by and between Global Spill
Management, Inc., a Nevada corporation, as Maker, and
Litchfield Continental, Ltd., a British Virgin Islands
corporation, as Holder.
ARTICLE FIVE
MISCELLANEOUS
5.1 No Acceleration. The principal amount due and owing hereon may not
be accelerated in the event of a sale or merger of Maker.
5.2 Voting Rights. Holder shall have no voting rights hereunder.
5.3 Notices. Any notice, communication, request, reply, or advice
(hereinafter severally and collectively called "notice") in this Debenture
provided or permitted to be given, made, or accepted by either party to the
other must be in writing and shall be given or be served by telex, telecopy,
facsimile, registered, certified or other form of mail requiring a return
receipt, addressed to the party to be notified, postage prepaid, or by reputable
overnight delivery service, or by delivering the same in person to such party
and obtaining a receipt for such delivery. Notice deposited in the mail in the
manner hereinabove described shall be deemed received on the earlier of the
fifth day after day after deposit in the mail or upon receipt, whichever is
earlier. Notice sent by reputable overnight courier shall be deemed received on
the next day after sending. Notices given by hand delivery shall be deemed
received when delivered. Notices may also be sent by facsimile transmission with
electronic confirmation, and shall be deemed received on the date sent or the
first business day thereafter, if sent after normal business hours or on a
non-business day.
For purposes of notice, the addresses and facsimile numbers of the
parties shall, until notice of any change is provided, be as follows:
To Maker: c/o IDIICO
DEBENTURE
PAGE 7
<PAGE>
174 1/2 E. 64th Street
New York, NY 10021
ATTENTION: Mr. Allan Esrine
Facsimile: (212) 832-3671
With required copy to: Kenneth J. Fleisher, Esq.
Zarwin, Baum, DeVito,
Kaplan and O'Donnell, P.C.
1515 Market Street, Suite 1200
Philadelphia, PA 19102, U.S.A.
Facsimile: (215) 569-1606
To Holder: Second Floor
Salisbury House
Finsbury Circus
London, EC-2 ENGLAND
Facsimile: 011-44-171-588-8863
Attention: Mr. Keith D. Beekmeyer
With copy to: Suisse Capital Complex, Inc.
8888 Keystone Crossing Plaza, Suite
1300 Indianapolis, IN 46240, U.S.A.
Facsimile: (317) 259-1468
Attention: Mr. Tim Cook
Notice sent only to counsel shall not constitute good notice under this
Debenture.
5.4 Severability. In case one or more of the provisions contained in
this Debenture should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
5.5 Attorney's Fees. In the event a dispute arises under this Debenture
which results in litigation or arbitration, the prevailing party shall receive
from the non-prevailing party its costs, including reasonable attorney's fees.
The prevailing party and the non-prevailing party shall be those respective
parties determined as such by the court or forum of competent and final
jurisdiction in its sole discretion. A court or forum of "final" jurisdiction
shall be a court or forum from which no appeal may be taken or from whose
decree, decision, judgment or order no appeal is take or prosecuted.
DEBENTURE
PAGE 8
<PAGE>
5.6 Choice of Law. This Debenture shall be governed by and construed in
accordance with the laws of the State of New York.
5.7. Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be settled by arbitration in
Indianapolis, Indiana before three arbitrators in accordance with the then
current rules of the American Arbitration Association and judgment upon the
award rendered may be entered in the highest court of the forum, country or
state, having jurisdiction.
5.8 Facsimile. Facsimile signatures shall be deemed original signatures
by all parties to this Debenture and any ancillary agreements.
5.9 Non-Waiver. Neither any failure nor any delay on the part of Holder
in exercising any right, power or privilege hereunder shall operate as a waiver
of any rights of Holder nor shall a single or partial exercise of any right
preclude any other or further exercise of any other right, power or privilege
accorded to Holder.
5.10 Headings. The headings contained herein are for reference purposes
only and shall not affect the meaning or interpretation of this Debenture.
5.11 Amendments. Amendments, waivers or modifications of this Debenture
shall only be effective if made in writing signed by Maker and Holder.
5.12 Non-Transferability. Neither this Debenture nor any interest
therein may be sold, transferred, pledged, alienated, encumbered, disposed of,
or conveyed, in whole or in part, by Holder.
5.13 No Redemption. Redemption of this Debenture in whole or in part,
whether for cash or other consideration, is prohibited, and any attempt to
redeem shall be deemed void ab initio.
THIS DEBENTURE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN STOCK
PURCHASE AGREEMENT BETWEEN MAKER AND HOLDER DATED APRIL 1, 1998, AS AMENDED ON
SEPTEMBER 4, 1998, WHICH STOCK PURCHASE AGREEMENT, AS AMENDED, IS INCORPORATED
HEREIN BY REFERENCE.
IN WITNESS WHEREOF, Maker has executed and delivered this Debenture
this 4th day of September, 1998.
DEBENTURE
PAGE 9
<PAGE>
GLOBAL SPILL MANAGEMENT, INC.
BY: /s/ Allan Esrine (SEAL)
---------------------------
Its: Vice-President
DEBENTURE
PAGE 10
Exhibit 5
AGREEMENT
AGREEMENT, made and effective this ___ day of October, 1998, by and
between GLOBAL SPILL MANAGEMENT, INC., a Nevada corporation ("Global") and
SUISSE CAPITAL COMPLEX, INC., a _____ corporation ("Suisse").
Background
In consideration for the assistance and services rendered by Suisse to
Global in connection with the purchase by Global of all of the stock in Biofarm,
S.A. ("Biofarm") owned by Litchfield Continental, Ltd. or its affiliates
("Litchfield"), Global agrees to the following payments to Suisse:
Upon execution hereof by both parties, Global shall issue to Suisse
200,000 shares of unregistered common stock, .001 par value, with an appropriate
restrictive legend ("Legended Stock"). All shares of Legended Stock issued under
this Agreement shall be full-paid and non-assessable as of the issue date.
This Agreement represents the entire agreement of the parties with
respect to the subject matter hereof and all prior agreements with respect to
such subject matter are deemed merged herein. No amendments to this Agreement
may be made except in writing, signed by both parties.
This Agreement shall be governed by and construed under the laws of the
State of New York. Any disputes concerning this Agreement or the duties or
obligations of the parties shall be resolved in the State or Federal Courts of
the State of New York and in the County of New York, and each party agrees to
the exclusive jurisdiction of such courts and agrees to personal jurisdiction
therein.
Each person executing this Agreement represents he or she has full
power and authority to bind the party for which he or she signs to all of the
terms and conditions hereof.
This Agreement is not assignable, in whole or in part, by either party
and any such assignment shall be deemed void ab initio.
<PAGE>
This Agreement may be executed in one or more counterparts, all of which
together shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto, by and through their authorized
officers, have executed this Agreement and made it effective this ___ day of
October, 1998.
GLOBAL SPILL MANAGEMENT, INC.
BY: /s/ Allan Esrine (SEAL)
----------------------
Vice - President
/s/ October 16, 1998
ATTEST:______________________(SEAL)
Secretary
SUISSE CAPITAL COMPLEX, INC.
BY: Tim Cook (SEAL)
----------------------
Chief Financial Officer
ATTEST:______________________(SEAL)
Secretary
/s/ October 2, 1998
Exhibit 6
CERTIFICATE OF REAFFIRMATION
AS TO
REPRESENTATIONS AND WARRANTIES
On behalf of Litchfield Continental, Ltd. ("Seller") and Biofarm, S.A.,
("Company"), respectively, the undersigned hereby certify, effective as of the
date hereinafter set forth, the following:
The representations and warranties made by the Company in that certain
Stock Purchase Agreement dated April 1, 1998, by and among the Seller, the
Company and Global Spill Management, Inc. ("Buyer"), as amended (the
"Agreement"), are true and correct in all material respects; and
There is no material breach of, or default under, or the occurrence of
any event or condition which, with the giving of notice or the lapse of time or
both, would constitute a material breach of, or default under, the Seller's or
Company's representations, warranties, covenants and agreements contained in the
Agreement; and
There is no material adverse change in the business or in the financial
condition or results of operations of the Company which affects the business
from that indicated in the Company's
<PAGE>
financial statements previously delivered to Buyer.
IN WITNESS WHEREOF, the undersigned, being duly authorized, have
executed this Certificate on behalf of the respective entities and made it
effective and binding upon such entities by their respective signatures the __
day of September, 1998.
LITCHFIELD CONTINENTAL, LTD.
BY: /s/ Kenneth Butterfield (SEAL)
------------------------
President
BIOFARM S.A.
BY: /s/ Keith D. Beekmeyer (SEAL)
--------------------------
Its:_________________
GLOBAL SPILL MANAGEMENT, INC.
BY: /s/ Allan Esrine (SEAL)
-----------------------
Its: Vice-President
/s/ September 3, 1998
2
CERTIFICATE OF REAFFIRMATION
<PAGE>
STATE OF ______
COUNTY OF
On the ____ day of __________, 199_ before me, the undersigned officer,
personally appeared ________________________, known to me (satisfactorily
proven) to be the ___________________ of Litchfield Continental, Ltd., a
corporation, whose name is subscribed to the within instrument, and acknowledged
that (s)he has the authority to sign on behalf of Litchfield Continental, Ltd.,
and that (s)he has executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
STATE OF ______
COUNTY OF
On the ____ day of __________, 199_ before me, the undersigned officer,
personally appeared ________________________, known to me (satisfactorily
proven) to be the ___________________ of Biofarm S.A., a corporation, whose name
is subscribed to the within instrument, and acknowledged that (s)he has the
authority to sign on behalf of Biofarm S.A., and that (s)he has executed the
same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
3
CERTIFICATE OF REAFFIRMATION
Exhibit 7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby assigns, transfers, sells
and sets over unto Global Spill Management, Inc. ("Buyer") all of the
undersigned's right, title and interest in all proceeds of all litigation
described in Paragraph 13 of a certain Asset Purchase Agreement dated April 1,
1998, as amended, by and among the undersigned, Buyer and Litchfield
Continental, Ltd.
IN WITNESS WHEREOF, and intending to be legally bound, the undersigned,
by and through its authorized officer, has executed and delivered this
Assignment this __ day of September, 1998.
BIOFARM S.A.
BY: /s/ Keith D. Beekmeyer (SEAL)
--------------------------
Its:_________________
/s/ September 2, 1998
STATE OF ______
COUNTY OF
On the ____ day of ____________, 199_ before me, the undersigned
officer, personally appeared ________________________, known to me
(satisfactorily proven) to be the ___________________ of Biofarm S.A., a
corporation, whose name is subscribed to the within instrument, and acknowledged
that (s)he has the authority to sign on behalf of Biofarm S.A., and that (s)he
has executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
Exhibit 8
POST-CLOSING AGREEMENT
POST-CLOSING AGREEMENT effective as of September 4, 1998, by and among
Litchfield Continental, Ltd., a British Virgin Islands corporation ("Seller"),
the parent of BIOFARM S.A., a Romanian corporation ("Company"), and GLOBAL SPILL
MANAGEMENT, INC., a Nevada corporation ("Buyer").
Background
On September 4, 1998, the parties hereto executed and exchanged
facsimile signatures (in counterparts, except as to documents requiring only one
signature) of various documents related to the acquisition by Buyer of all
Company stock owned by Seller and various affiliates of Seller. The documents
include an Addendum to Stock Purchase Agreement ("Addendum"); Escrow Agreement
("Escrow Agreement"); Certificate Of Reaffirmation as to Representations And
Warranties ("Certificate"); Convertible, Secured, Non-Negotiable Debenture
("Debenture"); and an opinion of counsel delivered to Buyer by Anil Mahan
("Opinion"). The parties wish to make certain amendments to said documents as
set forth below, all amendments to be effective as of September 4, 1998.
THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions contained below, and intending to be legally bound, the
parties hereto agree as follows:
Changes to Addendum
1. The Addendum is modified as follows:
(a) Paragraph 2 of the Addendum is amended and restated as follows:
"2. Paragraph 2(b) of the Agreement is amended and restated as
follows:
"(b) Note. The Note shall be executed and delivered
substantially in the form attached to this Agreement as Exhibit
"2(b)" and, in any event, shall contain at least the following
terms:
(1) no interest shall be due or payable on the principal
sum;
(2) the Note shall be non-negotiable and non-transferable,
and shall be non-redeemable;
1
POST-CLOSING AGREEMENT
<PAGE>
(3) in lieu of repayment, and subject to the condition
precedent that after a duly noticed special meeting of Buyer's
shareholders shall have occurred at which Buyer's shareholders vote
affirmatively (A) Buyer's shareholders elect Seller's nominees to
Buyer's Board of Directors, and (B) Buyer changes Buyer's corporate
name to "Biofarm, Inc.", Seller may, upon notice to Buyer, and from
time to time for a period of five (5) years from the date of the
Debenture, as such time may be extended indefinitely at Seller's
request to permit Seller to convert any remaining principal balance
of the Note, convert a portion [but not less than two and one half
percent 2.5%] of the original principal sum to Buyer's common stock.
For each two and one half percent (2.5%) of the original principal
sum of the Note so converted, Seller shall receive an amount of
Buyer's common stock sufficient to provide Seller with two percent
(2.0%) of the then issued and outstanding common stock of Buyer,
such that in the aggregate, if the entire principal sum of the Note
is converted on the same date, Seller shall own eighty percent (80%)
of Buyer's issued and outstanding stock based upon the number of
shares thereof outstanding as of the date of and immediately after
conversion. In any event, Seller may not exercise its right of
conversion until after January 31, 1999, and Seller may do so over a
period of five years and only in increments of two and one half
percent (2.5%) of the principal amount of the Note."
(b) New Paragraph 15(a) is added to the Addendum as follows:
15(a).
"Paragraph 4 (c) is amended and restated to read as follows:
"(c) Remedies. In the event of any intentional and material breach
by Seller or Company of any of their respective representations or
warranties in this paragraph 4, Buyer shall have any and all
2
POST-CLOSING AGREEMENT
<PAGE>
remedies available at law or in equity, including, but not limited
to, the right to specifically enforce the same. Failure by Buyer to
exercise any remedy available to Buyer shall not operate as a waiver
thereof in any respect."
(c) Paragraph 8 of the Addendum is modified to change the outside
closing date from September 2, 1998 to October 31, 1998.
Changes to Escrow Agreement
2. The first sentence of Paragraph 8(b) of the Escrow Agreement is
amended and restated as follows:
"(b) It is understood that Seller shall provide Capital Securities,
Romania or other licensed securities firm ("Transfer Agent"), with
all documentation necessary or appropriate to effect the transfer of
title to Seller's Stock as required by the Stock Purchase
Agreement."
Changes to Debenture
3. (a) Paragraph 1.1 of the Debenture is amended and restated as
follows:
3
POST-CLOSING AGREEMENT
<PAGE>
"1.1 Conversion.
(a) Subject as set forth below, Holder shall have the
right, at Holder's option, at any time or from time to time, to
convert the principal amount hereof or a stated portion thereof in
increments of two and one half percent (2.5%) of the original
principal amount hereof ("Conversion Price") into fully paid and
non-assessable shares of Maker's common stock (hereinafter referred
to as the "Common Stock"), in accordance with this Article One.
(b) Each conversion of two and one half percent (2.5%) of
the principal sum hereof will entitle Holder to receive an amount of
Maker's Common Stock representing two percent (2.0%) of all of
Maker's then issued and outstanding Common Stock on the date of and
immediately after conversion excluding any shares previously issued
pursuant to the exercise of any conversion rights hereunder;
provided, however, no fractional shares shall be issued. Holder may
not exercise its right of conversion until after January 31, 1999,
and Holder may do so over a period of five years and only in
increments of two and one-half percent (2.5%) of the principal
amount of this Debenture."
(b) The first sentence of Paragraph 1.2 of the Debenture is amended
and restated as follows:
"(a) In order to exercise the conversion privilege, Holder shall
notify Escrow Agent (as defined in Paragraph 4.2 hereof) in writing
that Holder elects to convert the stated principal amount hereof, or
any portion thereof constituting at least two and one half percent
(2.5%) thereof."
4
POST-CLOSING AGREEMENT
<PAGE>
Changes to Certificate
4. The third paragraph of the Certificate is amended and restated as
follows:
"There is no intentional and material breach of, or default under,
or the occurrence of any event or condition which, with the giving
of notice or the lapse of time or both, would constitute a material
breach of, or default under, the Seller's or Company's
representations, warranties, covenants and agreements contained in
the Agreement; and"
Changes to Opinion of Counsel
5. Numbered paragraph 2 of the Opinion is amended and restated as
follows:
"(2) The authorized Stock of Company consists of 35,967,878 shares
of one class of common stock, of which 35,967,878 shares are issued
and outstanding and of which approximately eighty-seven percent
(87%) are currently owned, legally or beneficially, by Seller or by
Controlled Companies (as such term is defined in the Agreement).
Certificates or other appropriate documentation representing all
Stock so transferred have been duly endorsed for transfer or have
had appropriate stock powers attached and, upon delivery of such
documents to the transfer agent for Company and processing of such
documents by the transfer agent, Company and the Romanian Securities
Registrar, Buyer shall obtain full and complete title thereto with
all rights of ownership. There is no preferred stock of Company
authorized, issued or outstanding;"
6. All documents referenced in the introduction to the Opinion and not
otherwise dated are hereby dated September 4, 1998.
7. Except as set forth herein, the documents amended above shall remain
in full force and effect.
5
POST-CLOSING AGREEMENT
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Addendum this ___ day of September, 1998, effective as of the date first written
above.
LITCHFIELD CONTINENTAL, LTD.
BY: /s/ Keith D. Beekmeyer (SEAL)
----------------------
Its: President
/s/ September 14, 1998
BIOFARM S.A.
BY: /s/ Keith D. Beekmeyer (SEAL)
----------------------
Its: President
/s/ September 14, 1998
GLOBAL SPILL MANAGEMENT, INC.
BY: /s/ Allan Esrine (SEAL)
----------------------
Its: Vice-President
/s/ September 5, 1998
/s/ Anil Mahan (SEAL)
-----------------------------------
ANIL MAHAN (as to change to opinion
of counsel, only)
6
POST-CLOSING AGREEMENT
<PAGE>
STATE OF ______
COUNTY OF
On the ____ day of __________, 199_ before me, the undersigned officer,
personally appeared ________________________, known to me (satisfactorily
proven) to be the ___________________ of Litchfield Continental, Ltd., a
corporation, whose name is subscribed to the within instrument, and acknowledged
that (s)he has the authority to sign on behalf of Litchfield Continental, Ltd.,
and that (s)he has executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
STATE OF ______
COUNTY OF
On the ____ day of __________, 199_ before me, the undersigned officer,
personally appeared ________________________, known to me (satisfactorily
proven) to be the ___________________ of Biofarm S.A., a corporation, whose name
is subscribed to the within instrument, and acknowledged that (s)he has the
authority to sign on behalf of Biofarm S.A., and that (s)he has executed the
same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
My Commission Expires:
