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): October 31, 1999
BIOFARM, INC.
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(Exact name of registrant as specified in charter)
Nevada 0-20317 88-0270266
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(State or other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
1244 Main Street, Linfield, Pennsylvania 19468
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (610) 495-8413
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Item 1. Changes in Control of Registrant
Item 2. Acquisition or Disposition of Assets
Item 5. Other Events
Effective October 31, 1999, the Registrant entered into a Rescission Agreement
with Litchfield Continental, Ltd. (LCC). Pursuant to the terms of a Convertible
Debenture in the principal amount of $6,434,681 issued by the Registrant to LCC
on September 4, 1998, such Convertible Debenture was convertible at any time
thereafter into a maximum of 17,507,720 shares of Registrant's Common Stock
($.001 par value). In exchange for such Convertible Debenture, LCC transferred
to the Registrant 87% of the capital stock of Biofarm, S.A., a Romanian
pharmaceutical manufacturer. Thereafter, LCC transferred to the Registrant the
capital stock of three United Kingdom entities, control of which had been
assumed by Litchfield in July, 1998. The Rescission Agreement was approved by a
majority of the Registrant's shareholders pursuant to Section 78:320 Nevada
Revised Code.
On October 5, 1998, the nominees of LCC were elected to the Board of the
Registrant and the previous three directors resigned therefrom. Such election
was the subject of the September 21, 1998, Proxy Statement (accompanied by the
change in the name of the Registrant).
For additional information, reference is made to the following relevant
documents previously filed by the Registrant pursuant to the 1934 Act:
a) Proxy Statement, dated September 21, 1998
b) Form 8-K/A filed November 19, 1998
c) Form 10-KSB filed February 19, 1999
The effect of the Rescission Agreement is to restore the Registrant to the
situation that existed prior to September 4 and October 5, 1998. Thus:
a) Registrant's Convertible Debenture issued to LCC is cancelled and
Registrant returns to LCC the four companies transferred to the
Registrant by LCC;
b) The LCC nominees to Registrant's Board tendered their resignations
therefrom and the three directors of the Registrant who occupied such
office prior to October 5, 1998, were restored as the directors of the
Registrant; and,
c) LCC indemnified the Registrant against liabilities incurred since
October 5, 1998, except for one such indebtedness in the amount of
$200,000, and LCC issued to the registrant a five-year convertible
note of LCC in the principal amount of $439,250 (plus interest at 6%
per annum).
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The rescission of the transaction with LCC was motivated by the fiscal 1998
operating losses and the going concern opinion issued by BDO International (the
Registrant's independent auditors) on the financial statements at and for the
year ended October 31, 1998. This going concern opinion was included in the Form
10-KSB filed on February 19, 1999. Further, doubt about the viability of the
Registrant was exacerbated by the operating loss of approximately $3.6 million
for the nine months ended July 31, 1999, which losses were attributable to the
three United Kingdom entities transferred to the Registrant by LCC after October
5, 1998. In the opinion of the three directors named to replace the LCC nominees
on the Board of the Registrant, based on the continuing losses from operations
it was probable that the auditors would again issue a going concern opinion on
the financial statements for fiscal 1999, and that due to its persistent
deteriorating financial condition it was possible that the Registrant would not
be able to remain as a viable entity for a reasonable period of time, and that
it therefore would not be able to stay current in all its required 1934 filings.
Consequently, it was determined to effect the rescission of the transaction with
LCC.
Item 7. Financial Statements and Exhibits
a) Financial Statements. Financial Statements required by this Form 8-K
are not included herewith but will be filed within sixty (60) days of
November 15, 1999. The Registrant is on an October 31 fiscal period;
therefore, financial statements satisfying both Form 8-K and Form
10-KSB will be filed on or before January 15, 2000.
b) Pro forma Financial Information. It is impracticable at this time for
the Registrant to file the required pro forma financial statements
giving effect to the rescission described in Item 2 of this Form 8-K.
The Registrant anticipates that the required pro forma financial
statements will be filed on or before January 15, 2000.
c) Exhibits. Attached hereto as an Exhibit is a copy of the Rescission
Agreement effective October 31, 1999.
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:
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Allan Esrine
Principal Financial Officer
Dated: November 12, 1999
RESCISSION AGREEMENT
THIS RESCISSION AGREEMENT (the "Agreement"), effective as of the 31st day
of October, 1999, is entered into by and among Litchfield Continental, Ltd., a
British Virgin Islands corporation ("Litchfield"), Biofarm, Inc., a Nevada
corporation formerly known as Global Spill Management, Inc. ("Biofarm"), and the
shareholders owning a majority of the issued and outstanding common stock of
Biofarm (the "Majority Shareholders").
WHEREAS, Litchfield, Biofarm and Biofarm, S.A. ("Biofarm, S.A."), a
Romanian corporation, are each party to that certain Stock Purchase Agreement
dated April 1, 1998 (the "Stock Purchase Agreement"); and
WHEREAS, pursuant to the Stock Purchase Agreement, Biofarm issued to
Litchfield a convertible, non-negotiable secured debenture in the principal
amount of $6,434,681 (the "Note") in exchange for a minimum of eighty (80%)
percent of the issued and outstanding capital stock of Biofarm, S.A. (the
"Biofarm, S.A. Stock"); and
WHEREAS, pursuant to the Stock Purchase Agreement, Biofarm issued its Proxy
Statement, dated September 21, 1998, and pursuant to such Proxy Statement, the
nominees of Litchfield were elected as the sole directors of Biofarm at a
meeting of the shareholders of Biofarm duly called and held on October 5, 1998,
and such Board appointed nominees of Litchfield to all of the offices of
Biofarm; and
WHEREAS, the parties now desire to rescind the Stock Purchase Agreement and
to render null and void all actions taken pursuant thereto, such that each of
the parties shall be in all respects in the position it was immediately prior to
October 5, 1998, as more fully set forth herein; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Return of Note. Subject to the terms and conditions of this Agreement
and on the basis of the representations, warranties, covenants and agreements
contained herein, Litchfield hereby is returning, delivering, transferring and
surrendering to Biofarm, and Biofarm hereby is taking and accepting, all of
Litchfield's right, title and interest in and to the Note.
2. Return of the Biofarm, S.A. Stock and Assets. Subject to the terms and
conditions of this Agreement and on the basis of the representations,
warranties, covenants and agreements contained herein, Biofarm hereby is
returning, delivering and transferring to Litchfield, and Litchfield hereby is
taking and accepting, all of Biofarm's right, title and interest in and to the
Biofarm, S.A. Stock, the common stock of each and every subsidiary of Biofarm,
any and all assets transferred to Biofarm pursuant to the Stock Purchase
Agreement, any and all assets acquired by Biofarm from whatever source from
October 5, 1998 through the date hereof, and the right to collect all
receivables, sums and assets owed to Biofarm which relate solely to the
operation of the business of Biofarm and/or its subsidiaries during the period
from October 5, 1998 through the date hereof
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(collectively, the "Assets").
3. Assumption of Debts. Litchfield shall, except as specified otherwise
herein, assume, as of the date hereof, and thereafter pay, perform and
discharge, all debts, obligations, accounts payable, liabilities (contingent or
otherwise) and all other obligations of Biofarm, of whatever nature, which arose
or were incurred by Biofarm on or after, October 5, 1998, including, without
limitation, taxes and all debts, obligations and liabilities that have arisen or
may arise in connection with any and all actual, proposed or contingent
transactions, of whatever nature, by and between and/or among Biofarm and any
affiliates and/or third parties, including, without limitation, the entities
listed on Exhibit A hereto (collectively, the "Obligations"). Litchfield shall
not assume any obligations of Biofarm which existed as of October 5, 1998 or
which arose out of circumstances existing prior to October 5, 1998, provided
that such obligations existed or arose solely as a direct result of the actions
or inactions of the management of Biofarm as it existed prior to October 5,
1998. Moreover, Litchfield shall not assume or be liable for any taxes, of any
nature, incurred by Biofarm in connection with, or arising out of, the
performance of this Agreement and the rescission and return of the Note,
Biofarm, S.A. Stock and Assets and assumption of debt contemplated hereby.
4. Representations and Warranties of Litchfield. Litchfield hereby
represents and warrants, in addition to all the other representations and
warranties of Litchfield contained herein, as follows:
4.1 Organization, Standing and Qualification. Litchfield is a British
Virgin Islands corporation validly existing and in good standing under the laws
of the British Virgin Islands. Litchfield has all requisite power to own its
assets and to conduct its business in the manner in which such business is now
being conducted. Litchfield is duly qualified to do business in, and is in good
standing in, every jurisdiction in which its ownership of assets or the conduct
of its business makes such qualification necessary.
4.2 Power and Authority. Litchfield has full right, power and legal
capacity to execute, deliver and perform this Agreement and to deliver the Note
and take all other actions contemplated by this Agreement, and has taken all
action required by law or otherwise to authorize such execution and delivery and
to carry out the terms of this Agreement. This Agreement is a valid and binding
obligation of Litchfield in accordance with its terms.
4.3 Title to and Status of the Note. Litchfield has good title to the
Note, free and clear of all restrictions, liens, options, security interests,
encumbrances, charges, rights or other interests of any kind or nature
whatsoever. Litchfield has not sold, transferred or otherwise converted the
Note.
4.4 Rescission of Conversion of the Note. That certain transaction of
October 22, 1999 pursuant to which Litchfield exercised its right to convert the
Note and received 17,507,720 shares of Biofarm common stock has been fully and
completely rescinded in all respects.
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4.5 The Obligations. Set forth on Schedule 4.5 is a full and complete
list of the Obligations which exceed ten thousand ($10,000) dollars.
4.6 Biofarm Shares Not Issued. None of the one million two hundred
thousand (1,200,000) shares of Biofarm's common stock purportedly registered
pursuant to Form S-8, filed on or about September 29, 1999, have been issued.
4.7 Biofarm Stock. Set forth on Schedule 4.7 is a full and complete
list of the ownership of all shares of common stock of Biofarm issued on or
after October 5, 1998.
4.8 Biofarm, S.A. Litchfield is the sole and beneficial owner of the
Biofarm, S.A. Stock, and owns such Biofarm, S.A. Stock free and clear of all
liens, pledges, security interests or any other encumbrances of any nature
whatsoever. As at October 31, 1999, Biofarm, S.A. will have an audited net worth
of approximately six million ($6,000,000) dollars, and, accordingly, the
Biofarm, S.A. Stock will have a value of five million two hundred twenty
thousand ($5,220,000) dollars as at such date.
4.9 Litigation and Other Proceedings. Other than the litigations and
proceedings set forth on Schedule 4.9 (the "Litigations") and any litigations or
proceedings which existed as of October 5, 1998 or which relate to circumstances
existing prior to October 5, 1998 and which in no way relate to Litchfield or
any of its agents, there are no actions, suits, proceedings or investigations
pending or threatened against or affecting Biofarm, at law or in equity or
admiralty, or before any court or governmental or regulatory or administrative
agency or commission.
4.10 Material Contracts. Set forth on Schedule 4.10 is a full and
complete list of the material contracts entered into between Biofarm and any
third party on or after October 5, 1998 (the "Material Contracts").
4.11 Biofarm Receivables. Set forth on Schedule 4.11 is a full and
complete list of receivables and sums owed to Biofarm which exceed five thousand
($5,000) dollars and relate solely to the operation of the business of Biofarm
during the period from October 5, 1998 through the date hereof (the
"Receivables").
4.12 No Violations. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
violate any provisions of the Certificate of Incorporation or By-Laws of
Litchfield, and will not violate or conflict any agreement, order, arbitration
award, judgment or decree to which Litchfield is a party or by which it is
bound, and will not create or impose any lien, charge or encumbrance on the
Note.
4.13 Consents and Approvals. No consent or approval of any party is
required for the execution, delivery or performance of this Agreement by
Litchfield. Neither the execution of this Agreement by Litchfield nor the
consummation by Litchfield of the transactions contemplated hereby will require
the consent or approval of or any filing with any authority, agency or entity
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(governmental or otherwise).
4.14 Full Disclosure. To the best knowledge of Litchfield, no written
representation or warranty by Litchfield contained in this Agreement, any
schedule or exhibit to this agreement, or any written statement furnished or to
be furnished to Biofarm pursuant hereto, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
5. Representations and Warranties of Biofarm. Biofarm hereby represents and
warrants, in addition to all the other representations and warranties of Biofarm
contained herein, as follows:
5.1 Organization, Standing and Qualification. Biofarm is a Nevada
corporation validly existing and in good standing under the laws of the State of
Nevada. Biofarm has all requisite power to own its assets and to conduct its
business in the manner in which such business is now being conducted. Biofarm is
duly qualified to do business in, and is in good standing in, every jurisdiction
in which its ownership of assets or the conduct of its business makes such
qualification necessary.
5.2 Power and Authority. Biofarm has full right, power and legal
capacity to execute, deliver and perform this Agreement and to deliver the
Biofarm, S.A. Stock and Assets and to take all other actions contemplated by
this Agreement, and has taken all action required by law or otherwise to
authorize such execution and delivery and to carry out the terms of this
Agreement. This Agreement is a valid and binding obligation of Biofarm in
accordance with its terms.
5.3 Title to the Biofarm, S.A. Stock and Assets. Biofarm has good
title to the Biofarm, S.A. Stock and Assets.
5.4 No Violations. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
violate any provisions of the Certificate of Incorporation or By-Laws of
Biofarm, and will not violate or conflict any agreement, order, arbitration
award, judgment or decree to which Biofarm is a party or by which it is bound,
and will not create or impose any lien, charge or encumbrance on the Biofarm,
S.A. Stock or the Assets.
5.5 Consents and Approvals. No consent or approval of any party is
required for the execution, delivery or performance of this Agreement by
Biofarm. Neither the execution of this Agreement by Biofarm nor the consummation
by Biofarm of the transactions contemplated hereby will require the consent or
approval of or any filing with any authority, agency or entity (governmental or
otherwise).
5.6 Full Disclosure. To the best knowledge of Biofarm, no written
representation or warranty by Biofarm contained in this Agreement, any schedule
or exhibit to this agreement, or any written statement furnished or to be
furnished to Litchfield pursuant hereto, contains or will
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contain any untrue statement of a material fact, or omits or will omit to state
a material fact necessary to make the statements contained herein or therein not
misleading.
6. Representations and Warranties of the Majority Shareholders. The
Majority Shareholders hereby collectively represent and warrant, in addition to
all the other representations and warranties of the Majority Shareholders
contained herein, as follows:
6.1 Stock Ownership. The Majority Shareholders are the record owners
of, and have the right to vote, 2,105,965 shares of common stock of Biofarm.
Such shares constitute fifty-one (51%) percent of the issued and outstanding
common stock of Biofarm (without giving effect to any shares issuable upon
conversion of the Note or any shares issued subsequent to October 5, 1998).
6.2 Power and Authority. The Majority Shareholders have full right,
power and legal capacity to execute, deliver and perform this Agreement and to
deliver the written consent referred to in Section 7(C) hereof and to take all
other actions contemplated by this Agreement, and have taken all action required
by law or otherwise to authorize such execution and delivery and to carry out
the terms of this Agreement. This Agreement is a valid and binding obligation of
the Majority Shareholders in accordance with its terms.
6.3 Full Disclosure. To the best knowledge of the Majority
Shareholders, no written representation or warranty by the Majority Shareholders
contained in this Agreement, any schedule or exhibit to this agreement, or any
written statement furnished or to be furnished to Litchfield pursuant hereto,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading.
7. Delivery Requirements of the Parties.
A. Delivery Requirements by Litchfield. Simultaneous with the
execution of this Agreement, Litchfield shall deliver to Biofarm the following:
(i) The original copy of the Note for cancellation by
Biofarm;
(ii) All share certificates representing shares of common
stock of Biofarm issued on or after October 5, 1998 for
cancellation by Biofarm, other than the one hundred
sixty five thousand (165,000) shares issued to
Balmerino, Ltd.;
(iii) Evidence and assurances acceptable to Biofarm, in its
sole discretion, demonstrating that none of the one
million two hundred thousand (1,200,000) shares of
Biofarm's common stock purportedly registered pursuant
to a Form S-8, filed on or about September 29, 1999,
have been issued;
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(iv) The resignation, effective immediately, of each and
every current officer and director of Biofarm from all
positions which each holds;
(v) The corporate minute book and all other books and
records of Biofarm, including, without limitation, all
financial ledgers (excluding financial ledgers
principally relating to any subsidiaries of Biofarm) and
tax returns;
(vi) A copy of each and every material contract entered into
between Biofarm and any third party on or after October
5, 1998;
(vii) Any and all documents relating to the litigations and
other proceedings listed on Schedule 4.9 hereto;
(viii) A copy of any and all documents relating to warrants to
purchase shares of common stock of Biofarm, including,
but not limited to, (a) Warrant No. 001 issued to Kenn
Heeley and dated September 20, 1999; (b) Warrant No. 002
issued to Kenn Heeley and dated September 20, 1999; and
(c) Warrant No. 003 issued to Alfred Kingsnorth and
dated September 30, 1999 (the aforementioned warrants
are collectively referred to herein as the
"Heeley/Kingsnorth Warrants"); and
(ix) A convertible promissory note from Litchfield to Biofarm
in the principal amount of four hundred thirty nine
thousand two hundred fifty ($439,250) dollars in the
form annexed hereto as Exhibit B.
B. Delivery Requirements by Biofarm. Simultaneous with the execution
of this Agreement, Biofarm shall deliver to Litchfield the following:
(i) Share certificates representing the Biofarm, S.A. Stock,
duly endorsed for transfer; and
(ii) The Assets;
(iii) Share certificates representing the common stock of any
and all subsidiaries of Biofarm;
(iv) Duly executed copies of any transfer documents required
to effectuate the transfer of securities or assets to
Litchfield as contemplated in this Agreement.
C. Delivery Requirement by the Majority Shareholders. Simultaneous
with the execution of this Agreement, the Majority Shareholders shall deliver to
Litchfield a written consent executed by the Majority Shareholders (or their
duly authorized representatives) which, among other things:
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(i) approves and accepts this Agreement;
(ii) acknowledges and accepts the resignation of each and
every current officer and director of Biofarm,
including, without limitation, Beekmeyer, Mahan, Robert
W. Ferran, Jr., Peter Kelly, Paul Bartlett, Laurence
Baer, Cesare Brega, Donald M. Coon and Herbert Marcus,
III; and
(iii) elects, as of the date hereof, each of the following
persons as a Director of Biofarm: David R. Stith,
Herbert S. McDonald and Allan Esrine.
8. Covenants of Litchfield. Litchfield hereby covenants and agrees, in
addition to all the other covenants and agreements of Litchfield contained
herein, as follows:
8.1 Performance of Obligations. Litchfield will timely perform and
satisfy all of the Obligations assumed by Litchfield pursuant to Section 3
hereof. Without limitation of the foregoing, Litchfield covenants and agrees
that, not later than November 10, 1999, it will fully satisfy any and all debts
outstanding from Biofarm to each of the following: (i) American Stock Transfer
Company; (ii) Business Wire; and (iii) (ITI) Glendale, Inc. Litchfield further
covenants and agrees that, promptly after satisfaction of each of the
obligations identified in the foregoing sentence, it will provide Biofarm with
evidence thereof in such form as Biofarm, in its reasonable discretion, shall
require.
8.2 Balmerino, Ltd. Matters. Within forty-five (45) days of the date
of execution hereof, Litchfield will (i) assume any and all debts outstanding
from Biofarm to Balmerino, Ltd., including, but not limited to, that certain
debt to Balmerino, Ltd. in the principal amount of one million ($1,000,000)
dollars and any interest due in connection therewith as agreed to by Biofarm,
Litchfield and Balmerino, Ltd. in their Agreement dated October 28, 1999, a copy
of which is annexed hereto as Exhibit 8.2; and (ii) cause a general release from
Balmerino, Ltd. in favor of Biofarm to be delivered to Biofarm.
8.3 Promissory Note. In consideration of Biofarm's assumption of
certain obligations relating to Balmerino, Ltd. and JIM BV having an agreed upon
value of $439,250, as identified in Sections 9.1 and 9.2 hereof, Litchfield
shall issue to Biofarm a promissory note in the form annexed hereto as
Exhibit B.
8.4 Barclays Bank Accounts. Litchfield shall keep open the Biofarm
bank accounts currently maintained at Barclays Bank (the "Barclays Accounts") as
necessary solely for the purposes of collecting the Receivables and assets to
which it is entitled hereunder and satisfying the Obligations, and shall close
such bank accounts promptly thereafter. Neither Litchfield, nor its officers,
directors or agents (including, without limitation, the officers and directors
of Biofarm who are resigning pursuant to Section 7(A)(iv) hereof) shall cause
Biofarm to be obligated in any manner with respect to such accounts.
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8.5 Further Instruments and Assurances. Litchfield will execute and
deliver all such other and further instruments and documents as may be
necessary, in the opinion of Biofarm, to carry out the purposes of this
Agreement.
9. Covenants of Biofarm. Biofarm hereby covenants and agrees, in addition
to all the other covenants and agreements of Biofarm contained herein, as
follows:
9.1 Balmerino, Ltd. Shares. Biofarm will honor the issuance of one
hundred sixty five thousand (165,000) shares of common stock of Biofarm to
Balmerino, Ltd. for all purposes.
9.2 JIM BV Matters. Biofarm will, at its option and in its sole
discretion, (i) return to JIM BV the sum of two hundred thousand ($200,000)
dollars which was tendered to Biofarm by JIM BV, through its agent, Marc Deprez,
in connection with its subscription for sixty six thousand one hundred thirty
seven (66,137) shares of common stock of Biofarm which were never issued by
Biofarm to JIM BV; or (ii) cause Biofarm to issue to JIM BV sixty six thousand
one hundred thirty seven (66,137) shares of common stock of Biofarm.
9.3 Heeley/Kingsnorth Warrants. Biofarm will honor the
Heeley/Kingsnorth Warrants in accordance with the terms thereof.
9.4 Corporate Name. Promptly following Biofarm's receipt of its
October 31, 1999 audited financial statement, it will issue a proxy statement
for a shareholders' meeting which will include a vote to change its name from
"Biofarm, Inc." to a name which does not include the word "Biofarm," or any
derivation thereof, and Biofarm will thereafter file an amendment to its
certificate of incorporation, and take all other action necessary, to effect
such change of its corporate name.
9.5 Barclays Bank Accounts. Neither Biofarm (as reconstructed hereby),
nor its officers or directors as elected subsequent to the date hereof, nor the
Majority Shareholders will make any claim with respect to the Barclays Accounts.
9.6 Further Instruments and Assurances. Biofarm will execute and
deliver all such other and further instruments and documents as may be
necessary, in the opinion of Litchfield, to carry out the purposes of this
Agreement.
10. Covenants of the Majority Shareholders. The Majority Shareholders
hereby collectively covenant and agree, in addition to all the other covenants
and agreements of the Majority Shareholders contained herein, as follows:
10.1 Further Instruments and Assurances. The Majority Shareholders
will execute and deliver all such other and further instruments and documents as
may be reasonably necessary, in the opinion of Litchfield, to carry out the
purposes of this Agreement.
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11. Confidentiality. The parties each hereby covenant and agree to hold
inviolate all confidential knowledge or information concerning the other parties
and their respective affairs, to conceal the same from any and all other
persons, not to impart any such knowledge to anyone whosoever, and not to
utilize or commercially exploit such confidential knowledge or information
without the prior written consent of the subject party. As used herein,
"confidential knowledge or information" means: (a) all information regarding the
subject party which is not generally available to the public; (b) all
information regarding the subject party which was received from a source with
confidentiality obligations to the subject party; or (c) the terms of, and the
identity of the parties to, the Material Contracts.
Moreover, the parties hereto hereby agree to keep the terms and conditions
of this Agreement and the transactions contemplated hereby confidential, and
each represents and warrants that they will not in the future disclose to any
person or entity the details and conditions of this Agreement or the
transactions contemplated hereby, subject to the following exceptions: (a) their
respective attorneys and tax attorneys in connection with said attorneys'
representation of them; (b) their respective accountants, bookkeepers and
financial advisors in connection with said bookkeeper's, advisors' and
accountant's performance of services for them; (c) if required by any court or
other tribunal of competent jurisdiction; (d) in response to a lawful subpoena;
(e) as required by applicable federal, state and local law, including, without
limitation, the rules and regulations promulgated by the United States
Securities and Exchange Commission; and (f) for purposes of enforcing the terms
of this Agreement.
12. Indemnification by Litchfield.
12.1 Indemnification. Litchfield hereby agrees to indemnify and hold
Biofarm, its officers and directors and the Majority Shareholders harmless from
and against any and all damages or deficiencies resulting from (i) any
misrepresentation or omission on the part of Litchfield in connection with any
representation set forth herein or in any schedule, exhibit or document
furnished or to be furnished to Biofarm pursuant hereto, (ii) the
non-fulfillment of any covenant, indemnity, undertaking or agreement on the part
of Litchfield contained in this Agreement or in connection with the transactions
contemplated hereby, (iii) the Obligations, (iv) the Litigations, (v) the
Contracts, (vi) any matters arising in connection with the operation of the
business of Biofarm and its subsidiaries from and including October 5, 1998
through the date hereof and (vii) any and all actions, suits, proceedings,
demands, assessments, judgments, costs or expenses (including, but not limited
to, reasonable attorneys' fees) related to any of the foregoing.
12.2 Defense of Claims. If Biofarm and/or the Majority Shareholders
(each an "Indemnified Party," collectively referred to herein as the
"Indemnified Parties") assert that Litchfield (the "Indemnifying Party") has
become obligated to the Indemnified Parties pursuant to Section 12.1 hereof or
in the event that any suit, action, investigation, claim or proceeding is begun,
made or instituted as a result of which the Indemnifying Party may become
obligated to the Indemnified Parties hereunder, the Indemnified Parties shall
give notice thereof to the Indemnifying Party. The Indemnifying Party shall have
the right, at its expense and with counsel of its choosing,
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to defend, contest or otherwise protest against any such suit, action,
investigation, claim or proceeding. The Indemnified Parties shall have the
right, but not the obligation, to participate at their own expense in the
defense thereof by counsel of the Indemnified Parties' choice. In the event
that, within fifteen (15) days of receipt of such notice by the Indemnified
Parties to the Indemnifying Party, the Indemnifying Party fails to (i) notify
the Indemnified Parties of its intent to defend or (ii) defend, contest or
otherwise protest against such suit, action, investigation, claim or proceeding,
the Indemnified Parties shall have the right to do so and the Indemnified
Parties shall be entitled to recover, in addition to all other amounts
contemplated herein, the entire cost of such defense from the Indemnifying
Party. In any event, the Indemnifying Party shall not compromise or settle any
such suit, action, investigation, claim or proceeding without the prior written
consent of the Indemnified Parties.
13. Indemnification by Biofarm and the Majority Shareholders.
13.1 Indemnification. Biofarm and the Majority Shareholders, jointly
and severally, hereby agree to indemnify and hold Litchfield, its officers and
directors, and the officers and directors of Biofarm who are resigning pursuant
to Section 7(A)(iv) hereof harmless from and against any and all damages or
deficiencies resulting from (i) any misrepresentation or omission on the part of
Biofarm and/or the Majority Shareholders in connection with any representation
set forth herein or in any schedule, exhibit or document furnished or to be
furnished to Litchfield pursuant hereto, (ii) the non-fulfillment of any
covenant, indemnity, undertaking or agreement on the part of Biofarm and/or the
Majority Shareholders contained in this Agreement or in connection with the
transactions contemplated hereby, (iii) any obligations of Biofarm which existed
as of October 5, 1998 or which arose out of circumstances existing prior to
October 5, 1998, provided that such obligations existed or arose solely as a
direct result of the actions or inactions of the management of Biofarm as it
existed prior to October 5, 1998, (vi) any matters arising in connection with
the operation of the business of Biofarm subsequent to the date hereof, and
(vii) any and all actions, suits, proceedings, demands, assessments, judgments,
costs or expenses (including, but not limited to, reasonable attorneys' fees)
related to any of the foregoing.
13.2 Defense of Claims. If Litchfield (the "Indemnified Party")
asserts that Biofarm and/or the Majority Shareholders (each an "Indemnifying
Party," collectively referred to herein as the "Indemnifying Parties") have
become obligated to the Indemnified Party pursuant to Section 13.1 hereof or in
the event that any suit, action, investigation, claim or proceeding is begun,
made or instituted as a result of which the Indemnifying Parties may become
obligated to the Indemnified Party hereunder, the Indemnified Party shall give
notice thereof to the Indemnifying Parties. The Indemnifying Parties shall have
the right, at their expense and with counsel of their choosing, to defend,
contest or otherwise protest against any such suit, action, investigation, claim
or proceeding. The Indemnified Party shall have the right, but not the
obligation, to participate at its own expense in the defense thereof by counsel
of the Indemnified Party's choice. In the event that, within fifteen (15) days
of receipt of such notice by the Indemnified Party to the Indemnifying Parties,
the Indemnifying Parties fail to (i) notify the Indemnified Party of their
intent to defend or (ii) defend, contest or otherwise protest against such suit,
action, investigation, claim or proceeding,
- 10 -
<PAGE>
the Indemnified Party shall have the right to do so and the Indemnified Party
shall be entitled to recover, in addition to all other amounts contemplated
herein, the entire cost of such defense from the Indemnifying Parties. In any
event, the Indemnifying Parties shall not compromise or settle any such suit,
action, investigation, claim or proceeding without the prior written consent of
the Indemnified Party.
14. Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants set forth herein shall survive the
closing and the consummation of the transactions contemplated hereby
irrespective of any investigation which any party shall have made.
15. Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or upon deposit with
Federal Express (or any other courier providing evidence of delivery) with next
business day delivery charges prepaid and addressed as follows:
If to Biofarm or the Majority Shareholders:
174 East 64th Street
New York, NY 10021
Attn: Mr. Allan Esrine
With copy to:
Mintz & Gold, LLP
444 Park Avenue South
New York, New York 10016
Attn: Steven W. Gold, Esq.
If to Litchfield:
Second Floor
Salisbury House
Finsbury Circus
London, EC-2 England
Attn: Mr. Keith D. Beekmeyer
By notice complying with the foregoing provisions of this Section each party
shall have the right to change the mailing address for future notices and
communications to such party.
16. Invalidity and Severability. If any provisions of this Agreement are
held invalid or unenforceable, such invalidity or unenforceability shall not
effect the other provisions of this Agreement which are intended to be, and
shall be deemed, severable.
- 11 -
<PAGE>
17. Assignment and Binding Effect. No party shall assign this Agreement to
any extent without the written consent of the other parties hereto. Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and assigns.
18. Waiver. Any term or provision of this Agreement may be waived at any
time by the party entitled to the benefit thereof by a written instrument duly
executed by such party.
19. Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of New York as applied to
contracts made and fully performed therein.
20. Consent to Jurisdiction. Each of the parties hereto hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to or arising in connection with this Agreement to the
exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and the appellate courts of any of the foregoing;
(b) consents that any such action or proceeding may be brought in such
courts, and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effectuated by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such party at its
address as provided in Section 15 hereof; and
(d) consents, agrees and stipulates that any order, judgment or decree
issued in connection with any such action or proceeding shall be entitled to
full faith and credit in the British Virgin Islands, that no transfer of
judgment or other proceeding shall be required to be commenced in the British
Virgin Islands to effectuate the foregoing, and that the enforcement of such
order, judgment or decree in the British Virgin Islands shall not be opposed.
21. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
22. Expenses. Except as specifically provided hereby, each of the parties
shall pay all of their respective costs and expenses incurred or to be incurred
by it in negotiating and preparing this Agreement and in closing and carrying
out the transactions contemplated hereby.
23. Modification. No modification, amendment or waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed by
all parties hereto.
- 12 -
<PAGE>
24. Counterparts. This Agreement and any amendments hereto may be executed
in any number of counterparts, all of which together shall constitute a single,
original instrument.
25. Entire Agreement. This Agreement represents the entire Agreement with
respect to matters contemplated herein and supersedes any prior oral or written
agreements or undertakings between the parties with respect to such matters.
This Agreement shall not be amended to any extent except by a writing executed
by the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the date first above written.
LITCHFIELD CONTINENTAL, LTD.
By:______________________________
BIOFARM, INC.
By:______________________________
MAJORITY SHAREHOLDERS
By: Hannibal Capital Corp, their authorized
representative
By: __________________________________
- 13 -
<PAGE>
Exhibit A
1. Biofarm, S.A.
2. Britten-Norman, Ltd.
3. Kaster Bioscience, Ltd.
4. Burlington, Chamber & James Ltd.
5. Burlington and James Ltd.
6. SC Romaero S.A. Bucharest
7. The Romanian Government
8. Rocky Mountain Ginseng, Inc.
9. Balmerino, Ltd. (subject to Section 7(A)(ii) hereof)
10. Alterproof Limited
11. Suisse Capital Complex
12. Asia Equities, Inc.
13. Timothy E. Cook
14. Keith O. Beekmeyer, Kenneth A. Butterfield and/or Branch & Associates
15. Applegarth Investments, Ltd.
16. Romanian Government State Ownership Fund
17. Business Wire
18. American Stock Transfer Company
19. Celestine Financiers (Geneva)
20. Biofarm Employee Stock Option Plan
21. Life Insurance Policy issued by Allied Dunbar in favor of Biofarm, Inc.
and mortgaged by Balmerino Limited, insuring Keith D. Beekmeyer's life
for Balmerino Limited's benefit
22. Fees to Zellermayer, Pelossof & Schiffer
23. Fees to the accounting firm of B.D.O.
22. Any and all current directors and officers of Biofarm and/or their
affiliates
- 14 -
<PAGE>
Exhibit B
FORM OF CONVERTIBLE PROMISSORY NOTE
<PAGE>
LITCHFIELD CONTINENTAL, LTD.
CONVERTIBLE PROMISSORY NOTE
$439,250.00 October 31, 1999
THIS NOTE IS ISSUED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF
THE SECURITIES ACT OF 1933 (THE "ACT") AND QUALIFICATION PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS. NEITHER IT NOR THE SHARES OF COMMON STOCK INTO
WHICH IT CAN BE CONVERTED CAN BE SOLD, HYPOTHECATED OR OTHERWISE TRANSFERRED
UNLESS REGISTERED PURSUANT TO THE ACT AND QUALIFIED UNDER APPLICABLE STATE LAW
OR, IN THE OPINION OF COUNSEL TO MAKER, AN EXEMPTION THEREFROM IS AVAILABLE.
FOR VALUE RECEIVED, the undersigned, LITCHFIELD CONTINENTAL, LTD., a
British Virgin Islands corporation with offices at Second Floor, Salisbury
House, Finsbury Circus, London EC-2 England ("Maker"), promises to pay to
BIOFARM, INC., a Nevada corporation with an address at 1244 Main Street,
Linfield, Pennsylvania 19468 ("Payee"), the principal amount of Four Hundred
Thirty-Nine Thousand Two Hundred Fifty ($439,250.00) Dollars in lawful money of
the United States of America, with interest thereon at the rate of six (6%)
percent, in twelve equal quarterly payments commencing on January 1, 2003.
The Note is convertible into shares of unrestricted, freely trading common
stock of any entity acceptable to Payee, in its sole discretion, all as set
forth below.
1. Method of Payment.
Maker will pay the principal and interest due hereunder in money of the
United States that at the time of payment is legal tender for the payment of
public and private debts. Maker may, however, pay such principal and interest by
its check, subject to collection, payable in such money.
2. Conversion.
(a) Maker's Right to Convert. Maker shall have the right, at any time from
the date hereof until November 1, 2001, to repay all or part of the principal
and interest due hereunder, by issuing to Payee unrestricted, freely trading
common stock, or its equivalent, in any publicly traded company which is
acceptable to Payee, in its sole discretion (the "Conversion Stock").
(b) Valuation of the Conversion Stock. The price of the Conversion Stock
issuable to Payee pursuant to the foregoing sentence shall be deemed to be the
average of the daily closing prices for the thirty (30) consecutive trading days
immediately preceding the date of conversion. The closing price for each day
shall be the last reported sales price regular way or, in case no such
<PAGE>
reported sale takes place on such day, the closing bid price regular way, in
either case on the principal national securities exchange on which the
Conversion Stock is listed or admitted to trading or, if the Conversion Stock is
not listed or admitted to trading on any national securities exchange, the
highest reported bid price as furnished by the National Association of
Securities Dealers, Inc. through NASDAQ or similar organization if NASDAQ is no
longer reporting such information, or by the National Daily Quotation Bureau or
similar organization if the Conversion Stock is not then quoted on an
inter-dealer quotation system. If on any such date the Conversion Stock is not
quoted by any such organization, the fair value of the Conversion Stock on such
date, as mutually agreed upon by Maker and Payee. On conversion Maker shall
round to the nearest share for any fractional share so that if the fraction is
less than 0.5 no share shall be issued and if the fraction is 0.5 or higher
Maker shall issue one full share.
(c) Manner of Conversion. Maker may exercise its conversion right by giving
notice thereof to Payee identifying the issuer of the proposed Conversion Stock
and setting forth the proposed amount of the Conversion Stock to be issued and
the amount of principal and interest to be paid therewith. Within fifteen (15)
days after the giving of such notice Payee shall notify Maker whether the
proposed conversion terms are acceptable to it. In the event Payee deems such
terms to be acceptable, within ten (10) days, Maker shall cause the issuance of
the Conversion Stock to Payee in accordance with the terms set forth in the
conversion notice and the delivery to Payee of a certificate or certificates
representing the Conversion Stock, registered in Payee's name, against delivery
to Maker of this Note marked paid in full. If only a portion of the principal
and interest then outstanding hereunder is converted, Maker shall deliver to
Payee, together with the aforesaid certificate(s), a new promissory note, in
form and substance identical to this Note, except that the principal amount
thereof shall equal that portion of the principal then outstanding which has not
been converted.
3. Covenants.
Maker covenants and agrees that from and after the date hereof and until
the date of repayment in full of the obligations arising hereunder, it shall
comply with the following conditions:
(i) Maintenance of Existence and Conduct of Business. Maker shall,
and shall cause each of its subsidiaries to (a) do or cause to
be done all things necessary to preserve and keep in full force
and effect its corporate existence and rights; and (b) continue
to conduct its business so that the business carried on in
connection therewith may be properly and advantageously
conducted at all times.
(ii) Books and Records. Maker shall, and shall cause each of its
subsidiaries to, keep adequate books and records of account with
respect to its business activities.
(iii) Insurance. Maker shall, and shall cause each of its subsidiaries
to, maintain insurance policies insuring such risks as are
customarily insured against by companies engaged in businesses
similar to those operated by Maker or such subsidiaries, as the
case may be. All such policies are to be carried with reputable
insurance carriers and shall be in such amounts as are
customarily insured against by companies with similar assets and
properties engaged
<PAGE>
in a similar business.
(iv) Compliance with Law. Maker shall, and shall cause each of its
subsidiaries to, comply in all material respects with all
federal, state and local laws and regulations applicable to it
or such subsidiaries, as the case may be, which if breached
would have a material adverse effect on Maker's or such
subsidiaries', as the case may be, business or financial
condition.
4. Representations and Warranties of Maker.
Maker represents and warrants that it: (i) is a corporation duly organized,
validly existing and in good standing under the laws of the British Virgin
Island and has all requisite corporate power to carry on its business as now
conducted and to own its properties and assets it now owns; (ii) is duly
qualified or licensed to do business as a foreign corporation in good standing
in the jurisdictions in which ownership of property or the conduct of its
business requires such qualification except jurisdictions in which the failure
to qualify to do business will have no material adverse effect on its business,
prospects, operations, properties, assets or condition (financial or otherwise);
(iii) has full power and authority to execute and deliver this Note, and that
the execution and delivery of this Note will not result in the breach of or
default under, with or without the giving of notice and/or the passage of time,
any other agreement, arrangement or indenture to which it is a party or by which
it may be bound, or the violation of any law, statute, rule, decree, judgment or
regulation binding upon it; and (iv) has taken and will take all acts required,
including but not limited to authorizing the signatory hereof on its behalf to
execute this Note, so that upon the execution and delivery of this Note, it
shall constitute the valid and legally binding obligation of Maker enforceable
in accordance with the terms thereof.
5. Defaults and Remedies.
(a) Events of Default. The occurrence or existence of any one or more of
the following events or conditions (regardless of the reasons therefor) shall
constitute an "Event of Default" hereunder:
(i) Maker shall fail to make any payment of principal or interest
when due and payable or declared due and payable pursuant to the
terms hereof and such failure shall remain uncured for a period
of ten (10) days after notice thereof has been given by Payee to
Maker;
(ii) Maker shall fail at any time to be in material compliance with
any of the covenants set forth in Section 3 of this Note, or
shall fail at any time to be in material compliance with or
neglect to perform, keep or observe any of the provisions of
this Note to be complied with, performed, kept or observed by
Maker and such failure shall remain uncured for a period of
fifteen (15) days after notice thereof has been given by Payee
to Maker;
(iii) Any representation or warranty made in this Note by Maker shall
be untrue or incorrect in any material respect as of the date
when made or deemed made;
<PAGE>
(iv) A case or proceeding shall have been commenced against Maker, or
any of its subsidiaries, in a court having competent
jurisdiction seeking a decree or order in respect of Maker, or
any of its subsidiaries, (a) under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other
applicable federal, state or foreign bankruptcy or other similar
law; (b) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of Maker, or any
of its subsidiaries, or any of their respective properties; or
(c) ordering the winding-up or liquidation of the affairs of
Maker, or any of its subsidiaries, and such case or proceeding
shall remain unstayed or undismissed for a period of ninety (90)
consecutive days or such court shall enter a decree or order
granting the relief sought in such case or proceeding; or
(v) Maker, or any of its subsidiaries, shall (a) file a petition
seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other applicable
federal, state or foreign bankruptcy or other similar law; or
(b) consent to the institution of proceedings thereunder or to
the filing of any such petition or to the appointment of or the
taking of possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of
Maker, or any of its subsidiaries, or any of their respective
properties.
(b) Remedies. Upon the occurrence of an event of Default specified in
Sections 5(i) through (v) above, all principal and interest then remaining
unpaid hereunder shall immediately become due and payable without any further
notice to Maker and without presentment, demand, protest or notice of protest,
all of which are hereby waived by Maker. During the period of any Default
hereunder, interest shall accrue on the entire outstanding balance at the rate
of eighteen (18%) percent per annum.
6. Limitation of Interest Payments.
Nothing contained in this Note or in any other agreement between Maker and
Payee requires Maker to pay or Payee to accept interest in an amount which would
subject Payee to any penalty or forfeiture under applicable law. In no event
shall the total of all charges payable hereunder, whether of interest or of such
other charges which may or might be characterized as interest, exceed the
maximum rate permitted to be charged under the laws of the States of New York.
Should Payee receive any payment which is or would be in excess of that
permitted to be charged under such laws, such payment shall have been and shall
be deemed to have been made in error and shall automatically be applied to
reduce the principal outstanding on this Note.
7. Miscellaneous.
(a) Effect of Forbearance. No forbearance, indulgence, delay or failure to
exercise any right or remedy by Payee with respect to this Note shall operate as
a waiver or as an acquiescence in any default.
(b) Effect of Single or Partial Exercise of Right. No single or partial
exercise of any right or remedy by Payee shall preclude any other or further
exercise thereof or any exercise of any other right or remedy by Payee.
<PAGE>
(c) Governing Law. This Note shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the internal laws of
the State of New York as applicable to contracts made and to be performed
entirely within such State.
(d) Headings. The headings and captions of the various paragraphs herein
are for convenience of reference only and shall in no way modify any of the
terms or provisions of this Note.
(e) Loss, Theft, Destruction or Mutilation. Upon receipt by Maker of
evidence reasonably satisfactory to it of loss, theft, destruction or mutilation
of this Note, Maker shall make and deliver or caused to be made and delivered to
Payee a new Note of like tenor in lieu of this Note.
(f) Modification of Note or Waiver of Terms Thereof Relating to Payee.
No modification or waiver of any of the provisions of this Note shall be
effective unless in writing and signed by Payee and then only to the extent set
forth in such writing, nor shall any such modification or waiver be applicable
except in the specific instance for which it is given. This Note may not be
discharged orally but only in writing duly executed by Payee.
(g) Notice. All offers, acceptances, notices, requests, demands and other
communications under this Note shall be in writing and, except as otherwise
provided herein, shall be deemed to have been given only when delivered in
person, via facsimile transmission if receipt thereof is confirmed by the
recipient, or, if mailed, when mailed by certified or registered mail prepaid,
to the parties at their respective addresses first set forth above, or at such
other address as may be given in writing in future by either party to the other.
(h) Successors and Assigns. This Note may not be assigned by Maker without
the written consent of the Payee. This Note shall be binding upon Maker, its
successors and permitted assigns, and shall inure to the benefit of and be
enforceable by Payee (whether known as Biofarm, Inc. or any other name in the
event that Payee changes its corporate name) and its successors and assigns.
(i) Severability. If one or more of the provisions or portions of this Note
shall be deemed by any court to be invalid, illegal or unenforceable in any
respect, the invalidity, illegality or unenforceability of the remaining
provisions, or portions of provisions contained herein shall not in any way be
affected or impaired thereby, so long as this Note still expresses the intent of
the parties. If the intent of the parties cannot be preserved, this Agreement
shall either be renegotiated or rendered null and void.
IN WITNESS WHEREOF, Maker has caused this Note to be executed on its behalf
by an officer thereunto duly authorized as of the date set forth above.
LITCHFIELD CONTINENTAL, LTD.
By:______________________________
<PAGE>
Schedule 4.5
OBLIGATIONS
1. Undertaking to Tomen Aerospace Corporation dated January 4, 1999
to indemnify against contractual default by Britten-Norman Ltd.
2. Loan Note to Neasden Ltd. for (pound) 318,000 dated May 1, 1999
3. Sums owed to Burlington, Chamber & James Ltd. -- (pound)27,110
4. Due to Fieldstone Private Capital Group -- (pound)49,527
5. Due to Tavistock Communication Ltd. -- (pound)8,142
6. Due to Barrett Howe -- (pound)12,014
7. Fees to Zellermayer, Pelossof & Schiffer
8. Fees to the accounting firm of BDO
<PAGE>
Schedule 4.7
BIOFARM STOCK OWNERSHIP OF ALL SHARES ISSUED
ON OR AFTER OCTOBER 5, 1998
1. Balmerino Limited -- 165,000 shares of common stock
<PAGE>
Schedule 4.9
LITIGATION AND OTHER PROCEEDINGS
Pending Litigation:
Lall Singh v. Biofarm, Inc. -- Industrial Tribunal, London
Hearing date - January 7, 2000
Claim for breach of contract and
unauthorized deductions from wages
Threatened Litigation:
Tavistock Communications Ltd. -- Claim of (pound)8,142 for disputed
orders for publicity
Barrett Howe -- Claim of (pound)12,014 for disputed orders for publicity
Suisse Capital -- See attached Exhibit 4.9(a)
<PAGE>
Schedule 4.10
MATERIAL CONTRACTS
1. Fieldstone Private Capital Group
2. British Linen Finance: photocopier lease for (pound)646.25 per
quarter
3. Service Contracts to Keith D. Beekmeyer, Anil Mahan, Trevor G.
Nathan, Melanie D. James
4. Consultancy Agreement with Peter Kelly
<PAGE>
Schedule 4.11
RECEIVABLES
1. Moneys advanced to Valentia Marine Ltd. -- approximately
$350,000
2. Return of guarantee money held by College Hill Underwriters Ltd.
-- $170,000
