-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WWJgIWl4s+F3hC1LTVCVc9tMUgVlG117tzi7s+i7Ky9azFEdCEubBosBD9uXCyhk w+STT5DvW2+Jq0jU1BDxTw== 0000916641-97-000575.txt : 19970603 0000916641-97-000575.hdr.sgml : 19970603 ACCESSION NUMBER: 0000916641-97-000575 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970519 ITEM INFORMATION: Changes in control of registrant ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 19970602 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHINA BIOMEDICAL GROUP INC CENTRAL INDEX KEY: 0001001601 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 133758042 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26888 FILM NUMBER: 97618079 BUSINESS ADDRESS: STREET 1: C/O ALCOTT SIMPSON & CO STREET 2: 250 PARK AVENUE STE 1930 CITY: NEW YORK STATE: NY ZIP: 10117 BUSINESS PHONE: 2126818400 MAIL ADDRESS: STREET 1: C/O ALCOTT SIMPSON & CO INC STREET 2: 250 PARK AVENUE STE 1930 CITY: NEW YORKMELVILLE STATE: NY ZIP: 10117 8-K 1 INTERNET HOLDINGS, INC. 8-K Date File: May 22, 1997 SECURITIES AND EXCHANGE COMMISSION Washington, DC 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): May 19, 1997. INTERNET HOLDINGS, INC (Exact Name of Registrant as Specified in its Charter) UTAH 0-26886 13-3758042 (State or Other (Commission (Employer Jurisdiction) File Number) Identification Number) C/o The Law Office of Lewis M. Klee, 40 Exchange Place, 8th Floor, New York, NY 10005 (Address of Principal Executive Offices) Registrant's Telephone Number, Including Area Code: (212) 271 4366 Page 1 of 6 Item 1 Changes in Control of Registrant As a result of the acquisition of Chiron Systems Ltd (CSL) which is described in Item 2 (below) the registrant has issued a total of 2,640,313 shares to the shareholders of CSL in order to acquire 100% of the issued capital of CSL. These shares account for 57% of the current issued share capital of the Registrant. The shareholders of Chiron as a group have a majority of the shares issued but no one shareholder controls more than 50%. The Managing Director of CSL has joined the board of directors of the Registrant. The existing directors and officers of the Registrant remain on the board and will continue to serve in the same positions as prior to the acquisition of CSL. Security Ownership of Certain Beneficial Owners and Management The following table sets forth information with respect to beneficial ownership of Common Stock by (i) each person known by the Registrant to own beneficially more than five percent (5%) of the outstanding Common Stock of the Registrant, (ii) each director of the Registrant, and (iii) all directors and officers of the Registrant as a group. Except as other wise indicated the named person has sole voting and investment power with respect to such person's shares.
Number of shares Name Beneficially owned Percent Christopher J. Wilkes 100,000 2.2% Chairman & President 22 Parrotts Field Hoddesdon Hertfordshire EN11 OQU, United Kingdom Lewis M. Klee 50,000 1.1% Director & Secretary The Law Office of Lewis M. Klee, 40 Exchange Place, 8th Floor New York, New York 10004 Ian M. Treddinick 1,473,293 32.1% Director Chiron Systems Ltd Wyvols Court Swallowfield Reading, Berkshire RG7 1PY, United Kingdom Page 2 of 6 Michael J. Kennedy 506,940 11.1% Chiron Systems Ltd Wyvols Court Swallowfield Reading, Berkshire RG7 1PY, United Kingdom Patricia Treddinick 406,608 8.9% Chiron Systems Ltd Wyvols Court Swallowfield Reading, Berkshire RG7 1PY, United Kingdom All executive officers and directors As a group: 1,623,293 35.4%
Item 2 Acquisition or Disposition of Assets On May 22, 1997 the company acquired the whole of the issued capital of Chiron Systems Ltd. (CSL), in exchange for 2,640,313 shares of the Company's common stock. CSL is an English company, engaged in the business of designing and developing products for the Integrated Services Digital Network (ISDN) market place. Chiron was a management buy-out from GEC-Plessey Telecommunications ("GPT") in 1993 and had transferred to it, under the terms of that buy-out, rights to certain technology developed by GPT which had a development cost in excess of $6million. The Registrant is now engaged in the business of providing hardware and software products and services for the Internet and ISDN markets. ISDN is the international digital telephony standard that has been adopted worldwide. It provides two 64kilobit channels for voice and/or data and one 8kilobit signaling channel. This provides clear digitized speech and high speed error free data communication. In Europe and Asia in particular telecommunications suppliers are moving rapidly to introduce ISDN service. The Registrant's wholly owned subsidiary, CSL, is one of the leading suppliers of ISDN converters and ISDN termination points (Anatel 4000 range) and also of ISDN "modems" (SAT 100 range) in Europe. Launched in 1996 these products are already in use by three European PTTs and have been placed on the bidding list for several more. CSL has other telephony products ready for market all based around its proprietary ISDN technology. General The Registrant operates its ISDN business through its wholly owned subsidiary (CSL). CSL was founded in March 1993, as a corporation organized under the laws of England, with the acquisition of a set of ISDN products and technology from GEC Plessey Telecommunications Ltd. (GPT). GPT Page 3 of 6 is one of the largest telecommunications companies in the world. Licenses The Registrant's wholly owned subsidiary CSL has a technology license from GPT dated January 10, 1994. This license entitles CSL to utilize certain GPT technology for which CSL pays a royalty for 4 years at 3% of net sales up to a maximum total payment of $400,000. Thereafter CSL may use the technology without further payment. Marketing ISDN is the new digital technology, which will take over from analogue in terms of all telecommunications including telephone, facsimile, answerphones etc. However for the last four years this new technology has been used mainly in niche applications in certain areas of finance, security and retail. This is now rapidly expanding with British Telecom alone installing 30,000 circuits per year. This market is expected to double every 6-10 months. CSL primarily sells its products to major telecommunications network operators such as British Telecom, Belgacom and the Netherlands PTT. These companies then sell the products to end-users. In future CSL may license some of its technology to obtain access to other world markets. Employees As of May 22, 1997 the Registrant had 6 full time employees. In addition the company operates a subcontract system both for a portion of its research and development and for all of its manufacturing and physical distribution. Of the full time employees 2 were executives, 3 were engaged in research and development or the supervision of research and development sub-contractors or production subcontractors and 1 clerical worker. None of the employees are covered by a collective bargaining agreement. The Registrant believes its employee relations are good. Properties CSL's executive offices are in Reading, England located in leased space of approximately 2,000 square feet in a multi-tenant office building. The lease is renewable annually with the consent of both parties and commenced in 1993. The current monthly rental pursuant to the lease is $2,800. On May 19, 1997 the Registrant acquired from W.F. Clarke Ltd office, factory and warehouse premises in Accra, Ghana. These are held under the Ghanaian system of leasehold title and are wholly owned by the Registrant. The Registrant purchased these premises, together with various items of equipment for $2.25million. The premises and equipment have an appraised value of $2.5million. The majority of the space in Accra is leased to the former owners of the property W.F. Clarke Ltd. The Registrant and W.F. Clarke have signed an agreement to form a joint venture to exploit Internet services in West Africa. Page 4 of 6 Item 9 Sales of Equity Pursuant to Regulation S Simultaneously with the acquisition of CSL on May, 22 1997 the company raised $2,522,689 through the issue of Common Stock. Purpose of Funding The purpose of this funding is to enable the Registrant to purchase property and assets in Accra, Ghana to facilitate the expansion of the Registrant's joint venture into Internet and related services in Africa. The funding will also be used to expand CSL and to position the Registrant to acquire other compatible companies with products or services related to the Internet and ISDN. Terms of the share issue The 1,483,935 shares were issued at $1.70 per share. After deducting placing commission of 5% and costs the net proceeds realized by the Registrant was $2,375,000. Class of Investors The subscribers to the share issue are corporations or individuals who are Accredited Investors and who are not US Persons as defined by the Securities Acts 1933 and 1934. Exemption from Registration The offering is exempt from Registration under Section 4(2) of the Securities Act of 1933, as the issue of the securities did not involve a public offering. The offering is exempt from Registration under the Regulation S exemption governing the sale of securities to individuals or entities who are not US Persons as defined by the Securities Act of 1933. Item 7 Financial Statements, Pro-Forma Financial Information and Exhibits Financial Statements Financial Statements for the Registrant as of December 31, 1996 were filed by the Registrant in its Form 10-KSB filed May 20, 1997, for the period January 1, 1996 to December 31, 1996 and are incorporated herein by reference. Audited Financial Statements for CSL for the nine months ended December 31, 1996 are attached. Page 5 of 6 Unaudited Pro-Forma Group Financial Statements showing the group after the acquisition of CSL and following the acquisition of the property in Accra is attached restated for the year to December 31, 1996. Exhibits 2. Agreement and Plan of Reorganization dated May 22, 1996 2.1 Agreement for Sale of Certain Assets and equipment dated May 19, 1997 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 thereto duly authorized. Dated this ___22nd _____ day of May, 1997 Internet Holdings, Inc. (The Registrant) By: /S Christopher Wilkes Christopher J. Wilkes President INTERNET HOLDINGS, INC. PPRO-FORMA FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 UNAUDITED INTERNET HOLDINGS, INC. PRO-FORMA GROUP CONSOLIDATED BALANCE SHEET DECEMBER 31, 1996
December 31 1996 (Unaudited) ASSETS CURRENT ASSETS: Cash $ 125,551 Accounts Receivable 102,741 Stock 160,776 ------------------ Total Current Assets $ 389,068 ------------------ FIXED ASSETS 2,296,317 INTANGIBLE ASSETS 647,717 ================== $ 3,333,102 ================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Bank Overdraft $ 99,535 Taxes payable 7,333 Accounts payable 157,083 Other liabilities 269,048 ------------------ Total current liabilities 532,999 ------------------ Long term loans due after one year 412,500 ------------------ Total liabilities 945,499 ------------------ STOCKHOLDERS' EQUITY: Common stock, $.001 par value, 50,000,000 shares authorized, 4,336,481 shares issued and outstanding 4,336 Additional paid-in capital 5,651,481 Accumulated deficit (3,268,214) ------------------ Total stockholders' Equity 2,387,603 ------------------ $ 3,333,102 ==================
The accompanying notes to financial statements are an integral part of this statement. F-1 INTERNET HOLDINGS, INC. PRO-FORMA STATEMENT OF GROUP OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996
1996 ----------------- NET SALES AND REVENUES $ 860,018 COST OF SALES 583,630 ----------------- Gross Profit from Continuing Operations 276,388 SELLING OPERATING AND ADMINISTRATIVE EXPENSES 224,332 ----------------- Profit before provision for income taxes 52,056 PROVISION FOR INCOME TAXES - ----------------- Net Profit from continuing operations 52,056 ----------------- LOSS FROM DISCONTINUED OPERATIONS (161,241) ----------------- Net Profit $ (109,185) ================= PER SHARE DATA: Profit from continuing operations $ 0.01 ================= Loss from discontinued operations $ (0.04) ================= Net loss $ (0.03) ================= Weighted average number of common shares outstanding 4,336,481 =================
The accompanying notes to financial statements are an integral part of these statements. F-2 INTERNET HOLDINGS, INC. NOTES TO PRO-FFORMA UNAUDITED FINANCIAL STATEMENTS (1) Business and organization Internet Holdings, Inc. (the "Company") was originally incorporated in the State of Utah on July 22, 1977, under the name of Western Corn Dog Factories. On May 22, 1997 the company acquired the whole of the issued capital of Chiron Systems Ltd. (CSL), in exchange for 2,640,313 shares of the Company's common stock. CSL is an English company, engaged in the business of designing and developing products for the Integrated Services Digital Network (ISDN) market place. Chiron was a management buy-out from GEC-Plessey Telecommunications ("GPT") in 1993 and had transferred to it, under the terms of that buy-out, rights to certain technology developed by GPT which had a development cost in excess of $6million. The Company is now engaged in the business of providing hardware and software products and services for the Internet and ISDN markets. ISDN is the international digital telephony standard that has been adopted worldwide. It provides two 64kilobit channels for voice and/or data and one 8kilobit signaling channel. This provides clear digitized speech and high speed error free data communication. In Europe and Asia in particular telecommunications suppliers are moving rapidly to introduce ISDN service. The Registrant's wholly owned subsidiary, CSL, is one of the leading suppliers of ISDN converters and ISDN termination points (Anatel 4000 range) and also of ISDN "modems" (SAT 100 range) in Europe. Launched in 1996 these products are already in use by three European PTTs and have been placed on the bidding list for several more. CSL has other telephony products ready for market all based around its proprietary ISDN technology. On May 19, 1997 the Company entered into an agreement whereby it acquired office and factory premises in Accra, Ghana and formed a joint venture with W.F. Clarke (Ghana) Ltd. to exploit Internet products and services in West Africa. The Company has had a series of mergers with other companies, all accounted for as reverse acquisitions, with the Company in each case changing its name to that of or similar to the reverse acquirer. In this regard, the Company's previous names were: Resources West, Inc., Magma Resources, Inc., Cellular Telecommunications & Technologies, Inc. in 1993 and most recently China Biomedical Group, Inc. in 1995. The name Internet Holdings, Inc. was adopted on July 12, 1996. In 1993, the Company acquired Cellular Payphones, Inc., ("CPI"), (a Delaware Corporation), whereby all of the issued and outstanding shares of CPI were exchanged for approximately 90% of the issued and outstanding stock of the Company. This transaction was accounted for as a reverse acquisition purchase, in which CPI was the acquiring corporation, and the Company was the acquired corporation. The Company accounted for this transaction as a recapitalization of CPI, with the issuance of 2,625,000 shares of F-3 common stock for the net assets of the Company. Following the 1993 acquisition, the Company was engaged in the business of (i) installation and servicing of cellular credit-card pay telephones in taxicabs, radio-cabs, limousines, rental cars, trains, ferries, hotels, and business conference centers, and (ii) the data processing and development of streamline software specializing in credit card authorization processing with real-time billing functions. The Company ceased such operations in October 1994 due to substantial losses. Effective April 3, 1995, the Company acquired C.B. Marketing and Investment Limited, a privately-held English corporation engaged in the business of medical market research and the manufacture of pharmaceuticals and contraceptives in the Peoples' Republic of China. On April 22, 1996, the Company entered into a divestiture agreement with respect to C.B. Marketing and Investment Limited. During 1996, the Company was reorganized to invest in internet and ISDN ("International Standard Digital Network") related technologies. (2) Summary of significant accounting policies: Revenue and cost recognition - Revenues are generally recognized as earned and expenses are recognized when incurred under the accrual basis of accounting. Net profit/loss per share - Net profit and loss per share was computed by dividing net profit or loss by the number of common shares issued and outstanding following the Company's acquisition of CSL. Income taxes - The Company has adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", to account for deferred income taxes. Deferred taxes are computed based on the tax liability or benefit in future years of the reversal of temporary differences in the recognition of income or deduction of expenses between financial and tax reporting purposes. The net difference, if any, between the provision for taxes and taxes currently payable is reflected in the balance sheet as deferred taxes. Deferred tax assets and/or liabilities, if any, are classified as current and noncurrent based on the classification of the related asset or liability for financial reporting purposes, or based on the expected reversal date for deferred taxes that are not related to an asset or liability. (3) Discontinued operations On April 22, 1996, the Company's stockholders approved a divestiture agreement whereby the Company delivered to certain stockholders who had previously owned C.B. Marketing and Investment Limited (the "Subsidiary") all the outstanding shares in this F-4 corporation. In return, the C.B. Marketing and Investment Limited shareholders transferred to the Company 540,006 shares (2,700,000 shares pre-reverse split) of the Company's common stock. The operating results for the Subsidiary have been reflected as a loss from discontinued operations for all periods presented. (See Note 5). (5) Stockholders' equity On February 8, 1995, a Special Meeting of the Company's stockholders was held and the Company's stockholders approved, among other proposals, a proposal to effect a 1-for-2 reverse stock split of the issued and outstanding shares of the Company's common stock. The reverse split was effective March 28, 1995. As a result of the reverse split and after adjustments for fractional shares, the number of shares was reduced from 3,527,769 to 1,764,343. The reverse split did not affect the number of shares of the Company's common stock authorized. On April 3, 1995, the Company acquired C.B. Marketing and Investment Limited, a privately-held English corporation in a stock-for-stock exchange. As a result of such transaction, which has been accounted for under the "pooling of interests" method for business combinations, the Company issued 2,700,000 shares of its authorized but unissued shares of common stock to the shareholders of C.B. Marketing and Investment Limited. In August 1995, the Company sold pursuant to a private placement under Regulation D Rule 504, 84,000 shares of common stock for proceeds of $270,000. The proceeds are net of $30,000 in sales commission. Also in August 1995, the Company issued 12,000 common shares in settlement of certain obligations. In December 1995, the Company issued 1,000,000 shares of common stock under Regulation S in satisfaction of two convertible loan notes held by offshore investors. On January 27, 1996, the Board of Directors approved a 1-for-5 reverse stock split of the issued and outstanding shares of the Company's common stock. On April 22, 1996, the Company's stockholders approved a divestiture agreement whereby the Company delivered to certain stockholders who had previously owned C.B. Marketing and Investment Limited all the outstanding shares in this corporation. In return, the C.B. Marketing and Investment Limited shareholders transferred to the Company 540,006 shares (2,700,000 shares pre-reverse split) of the Company's common stock. Such shares were immediately canceled. On April 25, 1996, the Board of Directors approved the issuance of 59,000 shares of the Company's common stock in satisfaction of obligations in the amount of $118,000. F-5 On July 3, 1996, the Board of Directors approved the issuance of 1,066,000 shares of the Company's common stock in satisfaction of obligations in the amount of $266,500. On May 22, 1997, the Company acquired Chiron Systems Ltd, a privately-held English corporation in a stock-for-stock exchange. As a result of such transaction, which has been accounted for under the "pooling of interests" method for business combinations, the Company issued 2,640,313 shares of its authorized but unissued shares of common stock to the shareholders of Chiron Systems Ltd. On May 22, 1997, the Company issued 1,483,935 shares were issued at $1.70 per share. After deducting placing commission of 5% and costs the net proceeds realized by the Registrant was $2,375,000. (6) Income taxes The Company has net operating loss carryforwards to offset future taxable income. As it is not more likely than not that the resulting deferred tax benefits will be realized, a valuation allowance has been recognized for such deferred tax assets. (7) Commitments and contingencies The Company has not filed federal nor state income tax returns for the past several years, and is currently working with the Internal Revenue Service and state taxing authorities to ensure filings of all requisite returns are made as soon as possible. In management's opinion, there are no material liabilities as a result of the delay in filing these returns. F-6 EX-2 2 EXHIBIT 2 1 AGREEMENT AND PLAN OF REORGANIZATION May 22nd 1997 INTERNET HOLDINGS, INC. A Utah Corporation ACQUISITION OF CHIRON SYSTEMS LTD A UK Limited Company 2 TABLE OF CONTENTS
. RECITALS:.......................................................................................................3 . AGREEMENT.......................................................................................................3 .1. PLAN OF REORGANIZATION....................................................................................3 .2. EXCHANGE OF SHARES.........................................................................................3 .3. DELIVERY OF SHARES.........................................................................................4 .4. TERMINATION................................................................................................4 .5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND ACQUIREE................................................6 .6. REPRESENTATIONS AND WARRANTIES OF ACQUIROR................................................................15 .7. CLOSING DATE..............................................................................................19 .8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACQUIREE AND THE STOCKHOLDERS..................................19 .9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACQUIROR.......................................................20 .10. INDEMNIFICATION..........................................................................................20 .11. NATURE AND SURVIVAL OF REPRESENTATIONS...................................................................21 .12. DOCUMENTS AT CLOSING.....................................................................................21 .13. ADDITIONAL COVENANTS & UNDERTAKINGS......................................................................22 .14. MISCELLANEOUS............................................................................................24 Exhibit "A" - Stockholders of Acquiror Exhibit "B" - Consent of Stockholders Exhibit "C" - Stockholders Certifications Exhibit "D" - Investment Letters
3 AGREEMENT AND PLAN OF REORGANIZATION This Agreement and Plan of Reorganisation is entered into this 22nd day of May, 1996, by and between Internet Holdings, Inc., a Utah corporation, (hereinafter "Acquiror") ; Chiron Systems Ltd, a UK Limited Company (hereinafter "Acquiree"); and the persons listed in Exhibit "A" attached hereto and by this reference made a part hereof, the stockholders of Acquiree (hereinafter "Stockholders"). RECITALS: WHEREAS, Stockholders own all of the issued and outstanding capital stock of Acquiree; and WHEREAS, Acquiror desires to acquire all of the issued and outstanding shares of capital stock of Acquiree, making Acquiree a wholly-owned subsidiary of Acquiror; and WHEREAS, Stockholders desire to make a tax-free exchange of their shares in Acquiree solely for shares of Acquiror's common stock, par value $0.001 as described herein; and NOW, THEREFORE, for the mutual consideration set out herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: AGREEMENT (1) PLAN OF REORGANIZATION. Stockholders of Acquiree are the owners of all of the issued and outstanding shares of capital stock of Acquiree. It is the intention of the parties hereto that all of the issued and outstanding shares of capital stock of Acquiree shall be acquired by Acquiror in exchange solely for Acquiror's voting restricted common stock. It is the intention of the parties hereto that this transaction qualify as a tax-free reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, and related sections thereunder. (2) EXCHANGE OF SHARES. Acquiror and Stockholders agree that all of the issued and outstanding shares of capital stock of Acquiree will consist, at the Closing Date (the "Closing Date"), of 52,000 shares of common stock which will be exchanged with Acquiror for 2,640,313 shares of voting 4 restricted common stock of Acquiror. The Acquiror shares will as soon as practicable after the Closing Date, as hereafter defined, be delivered to the Stockholders in exchange for their shares in Acquiree. Stockholders represent and warrant that they will hold such shares of common stock of Acquiror for investment purposes and not for further public distribution and agree that the shares shall be appropriately restricted. (3) DELIVERY OF SHARES. On or before the Closing Date, Stockholders will deliver certificates representing all of the issued and outstanding shares of Acquiree, duly endorsed so as to make Acquiror the sole holder thereof, free and clear of all claims and encumbrances. Such shares of Acquiree will be appropriately restricted as to transfer. As soon as practicable after the Closing Date, delivery of the Acquiror shares, which will be appropriately restricted as to transfer, will be made to the Stockholders as set forth herein. The transaction contemplated herein shall not close unless all of the issued and outstanding shares of Acquiree are delivered at the Closing and the owners thereof execute this Agreement. A list of shares of Acquiree, the owner thereof and shares of Acquiror to be received by each Stockholder is attached hereto as Exhibit "A". Each Stockholder herein shall sign Exhibit "B", attached hereto and by this reference made a part hereof, evidencing his or her intent to be a party to this Agreement and bound hereby. (4) TERMINATION [A] This Agreement may be terminated by action of the Board of Directors of Acquiror, by the Board of Directors of Acquiree or by the Stockholders of Acquiree at any time prior to the Closing Date if: (a) There shall be any actual or threatened action or proceeding by or before any court or any other governmental body which shall seek to restrain, prohibit, or invalidate the transactions contemplated by this Agreement and which, in the judgment of such Board of Directors made in good faith and based upon the advice of legal counsel, makes it inadvisable to proceed with the transactions contemplated by this Agreement; or (b) The Closing shall not have occurred prior to May 22nd, 1997, or such later date as shall have been approved by parties hereto, other than for reasons set forth in paragraph B or C below. In the event of termination pursuant to this Section 4 [A], no obligation, right, or liability shall arise hereunder and each party shall bear all of the expenses incurred by them in connection with the negotiation, drafting, and execution of this Agreement 5 and the consummation of the transactions herein contemplated. [B] This Agreement may be terminated at any time prior to the Closing Date by action of Acquiror if: (a) Acquiree or the Stockholders shall fail to comply in any material respect with any of its or their covenants or agreements contained in this Agreement or if any of the representations or warranties of Acquiree or the Stockholders contained herein shall be inaccurate in any material respect; or (b) There shall have been any material adverse change after December 31, 1996, in the assets, properties, business, or financial condition of Acquiree taken as a whole which could have a materially adverse effect on the value of the business of Acquiree except any changes disclosed in any exhibits or schedules attached hereto. In the event this Agreement is terminated pursuant to this Section 4 (B), this Agreement shall be of no further force or effect, no obligation, right, or liability shall arise hereunder, and Acquiree shall bear its own costs as well as the legal, accounting, printing, and other costs incurred by Acquiror in connection with the negotiation, preparation, and execution of this Agreement and the transactions herein contemplated. [C] This Agreement may be terminated at any time prior to the closing Date by action of the Board of Directors of Acquiree or by the Stockholders of Acquiree if: (a) Acquiror shall fail to comply in any material respect with any of its covenants or agreements contained in this Agreement or if any of the representations or warranties of Acquiror contained herein shall be inaccurate in any material respect; or (b) There shall have been any material adverse change after December 31, 1996, in the assets, properties, business, or financial condition of Acquiror as a whole which could have a materially adverse effect on the value of the business of Acquiror taken as a whole except any changes disclosed in any exhibit or schedule attached hereto. In the event this Agreement is terminated pursuant to this Section 4(C) , this Agreement shall be of no further force or effect; no obligation, right, or liability shall arise hereunder, and Acquiror shall bear its own costs as well as the legal, accounting, printing, and other 6 costs incurred by Acquiree and the Stockholders in connection with negotiation, preparation, and execution of this Agreement and the transactions herein contemplated. [D] This agreement may be terminated by the Acquiror or Acquiree post closing and for a period of not more than 6 months from the date thereof in the event that either party fails to perform in accordance with the `budget for financing' ( schedule E ) and such under-performance is not rectified within a period of 8 weeks from receipt of a written notice from one party to the other confirming the intention to break the agreement due to under-performance. In such cases monies invested by either party would not be recoverable. In the event of termination pursuant to this Section 4 (D), no obligation, right, or liability shall arise hereunder and each party shall bear all of the expenses incurred by them in connection with the negotiation, drafting, and execution of this Agreement and the consummation of the transactions herein contemplated. (5) REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND ACQUIREE [A] The Stockholders and Acquiree hereby represent and warrant that, effective this date and the Closing Date, the representations and warranties listed below are true and correct. (A 1) STOCKHOLDERS OF ACQUIREE. The Stockholders are the owners of all of the issued and outstanding shares of the capital stock of Acquiree; such shares are free from claims, liens, or other encumbrances; and, subject to compliance with applicable securities laws, Stockholders have the unqualified right to sell, transfer, and dispose of such shares subject to the laws of bankruptcy, insolvency, and general creditors' rights. Each Stockholder represents and warrants, that in regard to his, her or its shares of Acquiree, such Stockholder has the full right and authority to execute this Agreement and to transfer his, her or its shares of Acquiree to Acquiror. (A 2) RESTRICTED SHARES TO BE ISSUED. The Stockholders understand and are aware that the issuance of Acquiror shares hereunder is being made without registration under the Securities Act of 1933, as amended, (the "Act"), or any state securities laws and that the shares so issued may not be sold or transferred without registration under the Act and under applicable state securities laws, or unless an exemption from such registration is available. The Stockholders understand that the investment in the shares 7 of Acquiror is speculative and may remain so for an indefinite period and acknowledge that the Stockholders are able to bear the economic risk of their investment in the shares of Acquiror. All certificates evidencing Acquiror's common stock to be issued to Stockholders shall bear appropriate restrictive legends. [B] The Principal Stockholders of Acquiree (defined for purposes of this Agreement as all holders of more than 10% or more of Acquiree's common stock and all officers and directors of Acquiree) and Acquiree hereby represent and warrant that, effective this date and the Closing Date, the representations and warranties listed below are true and correct. (B1) CORPORATE AUTHORITY. Acquiree has the full corporate power and authority to enter into this Agreement and (subject to any requisite approval by the holders of Acquiree common shares) to carry out the transactions contemplated by this Agreement. The Board of Directors of Acquiree has duly authorized the execution, delivery, and performance of this Agreement. (B2) FINANCIAL STATEMENTS. Financial statements of Acquiree as of December 31, 1996, have been delivered to Acquiror ("Acquiree Financial Statements"). To the best knowledge of Acquiree and its Principal Stockholders, except as set forth in Acquiree's Schedules, there are no material liabilities, either fixed or contingent, not reflected in such financial statements other than contracts or obligations in the ordinary and usual course of business or, agreements constituting liens or other liabilities which, if disclosed, would alter substantially the financial condition of Acquiree as reflected in such financial statements. (B3) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in this Agreement or the Acquiree Schedules attached hereto, since the date of the Acquiree Financial Statements, December 31, 1996: (b.3.a) There has not been (1) any material adverse change in the business, operations, properties, assets, or financial condition of Acquiree taken as a whole; or (2) any damage, destruction, or loss to Acquiree (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets, or conditions of Acquiree; 8 (b.3.b) Acquiree has not (1) amended its Articles of Incorporation or Bylaws; (2) declared or made, or agreed to declare to make, any payment of dividends or distributions of any assets of any kind whatsoever to Stockholders or purchased or redeemed, or agreed to purchase or redeem any of their capital stock; (3) waived any rights of value which in the aggregate are extraordinary or material considering the business of Acquiree; (4) made any material change in its method of management, operation, or accounting; (5) entered into any other material transactions not in the ordinary course of business except as otherwise contemplated by this Agreement; (6) made any accrual or arrangement for or payment of bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or employee; (7) increased the rate of compensation payable or to become payable by it more than 10% to any of its officers or directors or any of its employees whose monthly compensation exceeds $4,000; or (8) made any increase in any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement made to, for, or with its officers, directors, or employees; (b.3.c) Acquiree has not (1) granted or agreed to grant any options, warrants, or other rights for its stocks, bonds, or other corporate securities calling for the issuance thereof except as described in the Schedules attached hereto; (2) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except liabilities incurred in the ordinary course of business; (3) paid any material obligation or liability (absolute or contingent) other than current liabilities reflected in or shown on the balance sheet contained in the Acquiree Financial Statement and current liabilities incurred since that date in the ordinary course of business; (4) sold or transferred, or agreed to sell or transfer, any of its assets, property, or rights (except assets, property, or rights held as inventory) or cancelled or agreed to cancel, any valid debts or claims (except debts or claims which in the aggregate are of a value of less than $2,000); (5) made or permitted any amendment or termination of any contract, agreement, or license to which it is a party if 9 such amendment or termination is material, considering the business of Acquiree taken as a whole; or (6) issued, delivered, or agreed to issue or deliver any stock, bonds, or other corporate securities including debentures (whether authorized and unissued or held as treasury stock); and (b.3.d) To the best knowledge of Acquiree, it has not become subject to any law or regulation which materially and adversely affects, or in the future may adversely affect, its business, operations, properties, assets, or condition. [C] LITIGATION AND PROCEEDINGS. To the best knowledge of Acquiree and Principal Stockholders, Acquiree is not involved in any pending litigation or governmental investigation or proceeding not reflected in such financial statements, or otherwise disclosed in the Acquiree Schedules and, to the best knowledge of Acquiree and Principal Stockholders, no litigation, claims, assessments, or governmental investigation or proceeding is threatened against Acquiree, its Principal Stockholders, or properties. [D] ORGANIZATION (d1) As of the Closing Date, Acquiree will be in good standing in its jurisdiction of incorporation, and will be in good standing and duly qualified to do business in each or any County, Province or, State and jurisdiction where the failure to qualify would have a material adverse effect on Acquiree. (d2) To the best knowledge of Acquiree and its Principal Stockholders, Acquiree has complied with all state, federal, local and international laws in connection with its formation, issuance of securities, capitalization, and operations, and no contingent liabilities have been threatened or claims made, and no basis for the same exists with respect to said operations, formation, or capitalization, including claims for violation of any state or federal securities laws except where any non- compliance would not materially affect the business or property of the Acquiree. 10 [E] COMPLIANCE WITH LAWS, RULES AND REGULATIONS. Acquiree and its Principal Stockholders represent and warrant that Acquiree complies with all applicable federal laws, rules and regulations, all applicable state laws, rules and regulations and all local and international laws rules and regulations relating to the operation of its business and the sale of Acquiree's products except to the extent that non-compliance would not materially and adversely affect the business, operations, properties, assets, or condition of Acquiree or except to the extent that non- compliance would not result in the incurring of any material liability for Acquiree. [F] TAX RETURNS. Acquiree has filed all federal, state, county, and local income, excise, property, sales, and other tax returns, forms, or reports, which are due or required to be filed by it prior to the date hereof and has paid or made adequate provisions for the payment of all taxes, penalty fees, or assessments which have or may become due pursuant to such returns or pursuant to any assessments received. [G] SUBSIDIARIES. Acquiree has no subsidiaries and does not own any capital stock, security, partnership interest, or other interest of any kind in any corporation, partnership, joint venture, association, or other entity except as defined in the attached schedules hereto and made a part of this Agreement. [H] NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this Agreement will not violate or breach any document, instrument, agreement, contract, or commitment material to the business of Acquiree to which Acquiree or its Principal Stockholders are a party and has been duly authorised by all appropriate and necessary action. [I] CAPITALIZATION. The authorised capital stock of Acquiree consists of 100,000 shares of common stock ( each(pound)1 shares ), of which 52,000 shares have been validly issued and are now outstanding. There are no outstanding convertible securities, warrants, options, or commitments of any nature which may cause authorised but un-issued shares to be issued to any person. All issued and outstanding shares are legally issued, fully paid, and non-assessable, and are not issued in violation of the pre-emptive or 11 other right of any person. [J] TITLE AND RELATED MATTERS. Acquiree has good and marketable title to all of its licenses, copyrights, trademarks, trade secrets, patents, patents pending, properties, inventory, interests in properties, and other assets, real and personal, ( as defined in Exhibit "F" ) which are reflected in the Acquiree Financial Statements, or acquired after that date (except properties, interest in properties, and assets sold or otherwise disposed of since such date in the ordinary course of business), free and clear of all mortgages, liens, pledges, charges, or encumbrances except (i) statutory liens or claims not yet delinquent; (ii) such imperfections of title and easements as do not and will not materially detract from or interfere with the present or proposed use of the assets or properties subject thereto or affected thereby or otherwise materially impair present business operations on such properties or in connection with such assets; and (iii) as described in Acquiree Financial Statements or in the Acquiree Schedules. Acquiree owns, free and clear of any liens, claims, encumbrances, royalty interests (save for the GPT agreement as referred to in exhibit F) , or other restrictions or limitations of any nature whatsoever, any and all procedures, techniques, business plans, methods of management, or other information utilised in the conduct of its business or operations, whether or not the value thereof is reflected in the most recent balance sheet included in the Acquiree Schedules. The plants, structures, and equipment of Acquiree that are necessary or used in the operations of its business are in good operating condition and repair, normal wear and tear excepted. [K] CONTRACTS (k1) Except as included or described in the Acquiree Schedules, there are no material contracts, agreements, franchises, license agreements, or other commitments to which Acquiree is a party or by which it or any of its 12 properties or assets are bound. (k2) Subject to the laws of bankruptcy, receivership, insolvency, general creditor's rights, and equitable principles, all contracts, agreements, franchises, license agreements, and other commitments to which Acquiree is a party or by which its properties or assets are bound and which are material to its operations taken as a whole, are valid and enforceable in all respects. (k3) Acquiree is not a party to or bound by, and the assets of Acquiree are not subject to, any contract, agreement, other commitment or instrument; any charter or other corporate restriction; or any judgment, order, writ, injunction, or decree which materially and adversely affects, or in the future may (as far as Acquiree can now foresee), materially and adversely affect, the business, operations, properties, assets, or condition of Acquiree. (k4) Except as included or described in the Acquiree Schedules or reflected in the most recent Acquiree Financial Statements, Acquiree is not a party to any oral or written (a) contract for employment of any officer or employee which is not terminable on 30 days (or less) notice; (b) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit, or retirement plan, agreement, or arrangement covered by Title IV of the Employee Retirement Income Security Act, as amended; (c) agreement, contract, or indenture relating to the borrowing of money exceeding $5,000; (d) guaranty of any obligation, other than one on which Acquiree is a primary obligor, for the borrowing of money or otherwise, excluding endorsements made for collection and other guarantees of obligations, which, in the aggregate do not exceed $5,000; (e) consulting or other similar contract with an unexpired term of more than one year or providing for payment in excess of $60,000 in the aggregate from the date of agreement; (f) collective bargaining agreement, (g) agreement with any present or former officer or director of Acquiree or its subsidiaries; or (h) contract, agreement, or other commitment involving payments by it of more than $1,000 in the aggregate. 13 [L] MATERIAL CONTRACT DEFAULTS. To the best knowledge of Acquiree and its Principal Stockholders, Acquiree is not in default in any material respect under the terms of any outstanding contract, agreement, lease, or other commitment which is material to the business, operations, properties, assets, or condition of Acquiree, and there is no event of default or other event which, with notice or lapse of time or both, would constitute a default in any material respect under any such contract, agreement, lease, or other commitment in respect of which Acquiree has not taken adequate steps to prevent such a default from occurring. [M] ACQUIREE SCHEDULES. Acquiree has delivered to Acquiror the following schedules which are collectively referred to as the "Acquiree Schedules" and which consist of separate schedules dated as of the date of execution of this Agreement and instruments and data as of such date, all certified by the chief executive officer of Acquiree and its Principal Stockholders, as complete, true, and correct: (m1) A schedule containing complete and correct copies of the Articles of Incorporation and Bylaws of Acquiree in effect as of the date of this Agreement; (m2) A schedule including the financial statements of Acquiree identified in paragraph 5(B)(2); (m3) A schedule containing a complete and correct copy of the stock ledger of Acquiree; (m4) A schedule containing a description of all real property owned or leased by Acquiree or its subsidiaries, together with a description of every mortgage, deed of trust, pledge, lien, agreement, encumbrance, claim, or equity interest of any nature whatsoever in such real property with copies of the underlying documentation; (m5) A schedule containing copies of all promissory notes issued by Acquiree; (m6) A schedule containing copies of all Warrants options 14 entitling holders thereof to acquire shares of Acquiree; (m7) Copies of all Registration Rights Agreements which entitle any person to require Acquiree to register any shares or other securities of Acquiree; (m8) A schedule containing copies of all material contracts, promissory notes, profit sharing arrangements, options, warrants, employment agreements, licenses, agreements, or other instruments to which Acquiree is a party or by which it or its properties or assets are bound; (m9) A schedule describing all governmental licenses, permits, and other governmental authorisations (or requests or applications therefor) pursuant to which Acquiree carries on or proposes to carry on its business (except those which, in the aggregate, are immaterial to the present or proposed business of Acquiree); (m10) A schedule setting forth a description of any material adverse change in the business, operations, property, inventory, assets or liabilities of Acquiree since the date of the Acquiree Financial Statements; and (m11) A schedule of all litigation or governmental investigation or proceeding which is pending or which, to the best knowledge of management, is threatened or contemplated. (m12) A schedule (F) defining all designs, patents, patents pending and, Intellectual Property rights (m13) Copies of contracts of employment for all staff being retained. [N] INFORMATION. The information concerning Acquiree set forth in this Agreement and in the Acquiree Schedules is complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made in light of the circumstances under which they were made not misleading. 15 (6) REPRESENTATIONS AND WARRANTIES OF ACQUIROR. Acquiror hereby represents and warrants that effective this date and the Closing Date, the following representations are true and correct: (1) ISSUANCE OF SHARES. As of the Closing Date, the Acquiror shares to be delivered to the Stockholders, will constitute valid and legally issued shares of Acquiror, fully-paid and non- assessable, and will be legally equivalent in all respects to the common stock of Acquiror issued and outstanding as of the date hereof. (2) AUTHORISATION. The officers of Acquiror are duly authorised to execute this Agreement and have taken all action required by law and agreements, charters, Bylaws, etc., to properly and legally execute this Agreement. (3) FINANCIAL STATEMENTS. [3a] Acquiror has delivered to Acquiree financial statements dated as December 31, 1995, and September 30, 1996. Said financial statements do fairly and accurately reflect the financial condition of the Acquiror as of the date hereof and the results of operations for the period reflected therein. Such statements have been prepared in accordance with generally accepted accounting principles, consistently applied. [3b] The Acquiror will make available upon actual completion the sum of not less that US $200,000 for use by the Acquiree in accordance with schedule `E' of this Agreement (4) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in this agreement or the Acquiror Schedules, since December 31, 1996: (4a) There has not been (a) any material adverse change in the business, operations, properties, assets, or financial condition of Acquiror (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets, or conditions of Acquiror; (4b) Acquiror has not (a) amended its Articles of Incorporation or Bylaws; (b) declared or made, or agreed to declare or make, any payment of dividends or 16 distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem any of its capital stock; (c) waived any rights or value which in the aggregate are extraordinary or material considering the business of Acquiror; (d) made any material change in its method of management, operation, or accounting; (e) entered into any other material transactions; (f) made any accrual or arrangement for or payment of bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or employee; (g) increased the rate of compensation payable or to become payable by it to any of its officers or directors of any of its employees; or (h) established or made any increase in any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement made to, for, or with its officers, directors, or employees; (4c) Acquiror has not (a) granted or agreed to grant any options, warrants, or other rights for its stocks, bonds, or other corporate securities calling for the issuance thereof; (b) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except liabilities incurred in the ordinary course of business; (c) paid any material obligation or liability (absolute or contingent) other than current liabilities reflected in or shown on the Acquiror balance sheet as of December 31, 1996, and current liabilities incurred since that date in the ordinary course of business; (d) sold or transferred, or agreed to sell or transfer, any of its assets, property, or rights, (e) made or permitted any amendment or termination of any contract, agreement, or license to which it is a party if such amendment or termination is material, considering the business of Acquiror; or (f) issued, delivered, or agreed to issue or deliver any stock, bonds, or other corporate securities including debentures (whether authorised and un-issued or held as treasury stock) , except for the agreement to issue certain shares in connection with the raising of finance under Regulation `S'. (4d) To the best knowledge of Acquiror, it has not become subject to any law or regulation which materially and 17 adversely affects, or in the future may adversely affect, the business, operations, properties, assets, or condition of Acquiror. (4e) There have been no material changes to the By-laws of the Acquiror since the date of the last filing. (5) LITIGATION AND PROCEEDINGS. To the best knowledge of Acquiror it is not involved in any pending litigation, claims, or governmental investigation or proceeding not reflected in such financial statements or otherwise disclosed in the Acquiror Schedules and there are no lawsuits, claims, assessments, investigations, or similar matters, to the best knowledge of management, threatened or contemplated against Acquiror, its management, or properties. (6) ORGANISATION. As of the Closing Date Acquiror shall be duly organised, validly existing, and in good standing under the laws of the State of Utah; it has the corporate power to own its property and to carry on its business as now being conducted and is duly qualified to do business in any jurisdiction where the failure to qualify would have a material adverse effect on Acquiror. (7) TAX RETURNS. Acquiror has filed all federal, state, county, and local income, excise, property, and other tax returns, forms, or reports, which are due or required to be filed by it prior to the date hereof. Acquiror has paid or made adequate provisions for the payment of all taxes, penalty fees, or assessments which have or may become due pursuant to such filed returns or pursuant to any assessments received. (8) CONTRACTS (8a) Subject to the laws of bankruptcy, insolvency, general creditor's rights, and equitable principles, all contracts, agreements, franchises, license agreements, and other commitments to which Acquiror is a party or by which it or its properties are bound, and which are material to the operations of Acquiror, are valid and enforceable by Acquiror in all respects. (8b) Acquiror is not a party to any contract, agreement, commitment, or instrument or subject to any charter or other corporate restriction or any judgement, order, writ, injunction, decree, which materially and adversely affects, or in the future may (as far as Acquiror can now foresee) materially and adversely affect, the business, operations, properties, assets, or condition of Acquiror. (8c) Except as included or referred to in the Acquiror Schedules or reflected in the latest Acquiror balance 18 sheet, Acquiror is not a party to any material oral or written (a) contract for the employment of any officer or employee; (b) profit sharing, bonus, deferred compensation, stock option, severance pay, pension, benefit, or retirement plan, agreement, or arrangement covered by Title IV of the Employee Retirement Income Security Act, as amended; (c) agreement, contract, or indenture relating to the borrowing of money; (d) guaranty of any obligation, other than one which Acquiror is a primary obligor, for the borrowing of money or otherwise; (e) consulting or other similar contract; (f) collective bargaining agreement; or (g) agreement with any present or former officer or director of Acquiror. (9) MATERIAL CONTRACT DEFAULTS. To the best of its knowledge, Acquiror has not materially breached, nor has it any knowledge of any pending or threatened claims or any legal basis for a claim that Acquiror has materially breached, any of the terms or conditions of any agreements, contracts, or commitments to which it is a party or is bound and the execution and performance hereof will not violate any provisions of applicable law of any agreement to which Acquiror is subject. (10) NO CONFLICT WITH OTHER INSTRUMENT. The execution of this Agreement will not violate or breach any document, instrument, agreement, contract, or commitment material to the business of Acquiror, to which Acquiror is a party. (11) SECURITIES LAWS. Acquiror represents that to the best of its knowledge it has no existing or threatened liabilities, claims, lawsuits, or basis for the same with respect to its original stock issuance to its founders, its public offering, or any dealings with its Stockholders, the public, brokers, the Securities and Exchange Commission, state agencies, or other persons (12) COMPLIANCE WITH LAWS AND REGULATIONS. To the best of its knowledge, Acquiror has complied with all applicable statutes and regulations of any federal, state, or other applicable governmental entity or agency thereof, except to the extent that non-compliance would not materially and adversely affect the business, operations, properties, assets, or condition of Acquiror or except to the extent that non-compliance would not result in the incurring of any material liability. (13) ACQUIROR SCHEDULES. Acquiror has delivered to Acquiree the following schedules, which are collectively referred to as the "Acquiror Schedules", which are dated the date of this Agreement, all certified by an officer of Acquiror and the officers of Acquiror to be complete, true, and accurate: 19 (13a) A schedule containing copies of all financial statements referred to in paragraph 6(3.a); (13b) A schedule setting forth a description of any material adverse change in the business, operations, property, inventory, assets, or conditions of Acquiror since December31, 1996; (13c) A schedule of all litigation or governmental investigation or proceeding which is pending or which, to the best knowledge of management, is threatened or contemplated; (14) INFORMATION. The information concerning Acquiror set forth in this Agreement and in the Acquiror Schedules is complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading. (7) CLOSING DATE. The Closing Date herein referred to shall be upon such date as the parties hereto may mutually agree upon, but is expected to be on or about May 22, 1997, but not later than June 30, 1996. As soon as practicable after the Closing, Acquiror shall deliver and the Stockholders will be deemed to have accepted delivery, the certificate of stock to be issued in his or her name, and in connection therewith at closing, will make delivery of his or her stock in Acquiree to Acquiror. Certain opinions, exhibits, etc., may be delivered subsequent to the Closing Date upon the mutual agreement of the parties hereto (8). CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACQUIREE AND THE STOCKHOLDERS. All obligations of Acquiree and Stockholders under this Agreement are subject to the fulfilment, by Acquiror, prior to or as of the Closing Date, of each of the following conditions: (1) The representations and warranties by or on behalf of Acquiror contained in this Agreement or in any certificate or documents delivered to Acquiree pursuant to the provisions hereof shall be true in all material respects at and as of the time of Closing as though such representations and warranties were made at and as of such time; (2) Acquiror shall have performed and complied with all covenants, agreements, and conditions required by this Agreement to be performed or complied with by it prior to 20 or at the Closing on the Closing Date; (3) Acquiror shall take all corporate action necessary to issue the shares to Stockholders pursuant to this Agreement; (9) CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACQUIROR. All obligations of Acquiror under this Agreement are subject to the fulfilment, by Acquiree and Stockholders, prior to or as of the Closing Date, of each of the following conditions: (1) The representations and warranties by Acquiree and Stockholders contained in this Agreement or in any certificate or document delivered to Acquiror pursuant to the provisions hereof shall be true at and as of the time of Closing as though such representations and warranties were made at and as of such time; (2) Acquiree and Stockholders shall have performed and complied with all covenants, agreements, and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing; including the delivery of all of the outstanding stock of Acquiree; (3) Stockholders shall deliver to Acquiror a letter commonly known as an "investment letter" agreeing that the shares of stock in Acquiror are being acquired for investment purposes, and not with a view to public resale and that the materials, including current financial statements prepared and delivered by Acquiror to Stockholders, have been read and understood by Stockholders, that he is familiar with the business of Acquiror, that he is acquiring the Acquiror shares under Section 4(2), commonly known as the private offering exemption of the Securities Act of 1933, and that the shares are restricted and may not be resold, except in reliance on an exemption under the Act. (10) INDEMNIFICATION Within the period provided in paragraph 12 herein and in accordance with the terms of that paragraph, each party to this Agreement shall indemnify and hold harmless each other party at all times after the date of this Agreement against 21 and in respect of any liability, damage, or deficiency, all actions suits, proceedings, demands, assessments, judgments, costs, and expenses which exceed $25,000 including attorney's fees incident to any of the foregoing, resulting from any misrepresentations, breach of covenant, or warranty or non-fulfilment of any agreement on the part of such party under this Agreement or from any misrepresentation in or omission from any certificate furnished or to be furnished to a party hereunder. Subject to the terms of this Agreement, the defaulting party shall reimburse the other party or parties on demand, for any reasonable payment made by said parties at any time after the Closing, in respect of any liability of claim to which the foregoing indemnity relates, if such payment is made after reasonable notice to the other party to defend or satisfy the same and such party failed to defend or satisfy the same. No liability shall arise for a party hereof regarding a settlement of any claim unless such settlement was previously approved by such party. ( 11) NATURE AND SURVIVAL OF REPRESENTATIONS. All representations warranties, and covenants made by any party in this Agreement shall survive the Closing hereunder and the consummation of the transactions contemplated hereby for two years from the date hereof. All of the parties hereto are executing and carrying out the provisions of this Agreement in reliance solely on the representations, warranties, and covenants and agreements contained in this Agreement or at the Closing of the transactions herein provided for and not upon any investigation upon which it might have made or any representations, warranty, agreement, promise, or information, written or oral, made by the other party or any other person other than as specifically set forth herein. (12) DOCUMENTS AT CLOSING At the Closing the following transactions shall occur, all of such transactions being deemed to occur simultaneously: (a) Stockholders will deliver, or cause to be delivered, to Acquiror the following: (1) Stock certificates for all of the issued and outstanding stock of Acquiree being tendered and duly endorsed; (2) All corporate records of Acquiree, including without limitation, corporate minute books (which shall contain copies of the Articles of Incorporation and Bylaws, as amended to the Closing), stock books, stock transfer 22 books, corporate seals, and other such corporate books and records as may reasonably be requested for review by Acquiror and its counsel; (3) A certificate executed by the Principal Stockholders to the effect that all representations and warranties made by Acquiree under this Agreement are true and correct as of the Closing, the same as though originally given to Acquiror on said date; (4) Certification from the Acquirees solicitors dated at the date of the Closing to the effect that Acquiree is in good standing under the laws of the UK; (5) An investment letter from the Stockholders representing that they are acquiring shares of Acquiror for investment purposes only and not with a view to further distribution; and (6) Such other instruments, documents, and certificates, if any, as are required to be delivered pursuant to the provision of this Agreement or which may be reasonably requested in furtherance of the provisions of this Agreement. (7) All Licences, Patents and Trade Marks as relate to any and all products in concept, design, production and/or sales stages at the time of closing (b) Acquiror will deliver or cause to be delivered to the Stockholders and Acquiree as soon as practicable after the closing: (1) Stock certificates for common stock to be issued as part of the exchange as listed on Exhibit "A"; (2) Such other instruments and documents as are required to be delivered pursuant to the provisions of this Agreement. (13) ADDITIONAL COVENANTS & UNDERTAKINGS Between the date hereof and the Closing Date, except with the prior written consent of the other party: 23 SECTION A (1) Acquiror and Acquiree shall conduct their business only in the usual and ordinary course and the character of such business shall not be changed nor any different business be undertaken. (2) No change shall be made in the Articles of Incorporation or Bylaws of Acquiror or Acquiree. (3) No change shall be made in the authorised or issued shares of Acquiror or Acquiree. (4) Neither Acquiror nor Acquiree shall discharge or satisfy any lien or encumbrance or obligation or liability, other than current liabilities shown on the financial statements heretofore delivered and current liabilities incurred since that date in the ordinary course of business. (5) Neither Acquiror nor Acquiree shall make any payment or distribution to their respective stockholders or purchase or redeem any shares or capital stock. (6) Neither Acquiror nor Acquiree shall mortgage, pledge, or subject to lien or encumbrance any of its assets, tangible or intangible. (7) Neither Acquiror nor Acquiree shall cancel any debts or claims or waive any rights. SECTION B UNDERTAKING 1. - MUTUAL The parties hereto jointly and severally undertake to use their best efforts for a period of not less than 2 years from the date hereof to ensure that the following individuals are nominated to the board of Internet Holdings, Inc Christopher J Wilkes President & Chairman of the Board Ian Tredinnick Chief Executive Officer Lewis M Klee Director & Company Secretary 24 UNDERTAKING 2. In the event of the Acquiror divesting the Acquiree at some future point, it is hereby agreed that the Acquiror will offer a right of first refusal to the original ( pre-acquisition ) shareholders of Chiron Systems Ltd for a period of 8 weeks from notification of the intention to divest. All negotiations as to value will be carried out on a fair `open market' basis. (14) MISCELLANEOUS (1) FURTHER ASSURANCES. At any time and from time to time, after the effective date, each party will execute such additional instruments and take such action as may be reasonably requested by the other party to confirm or perfect title to any property transferred hereunder or otherwise to carry out the intent and purposes of this Agreement. (2) WAIVER. Any failure on the part of any party hereto to comply with any of its obligations, agreements, or conditions hereunder may be waived in writing by the party to whom such compliance is owed. (3) NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been given if delivered in person or sent by prepaid first class registered or certified mail, return receipt requested. (4) HEADINGS. The section and subsection heading in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. (5) COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (6) GOVERNING LAW. This Agreement was negotiated and is being contracted for in the State of Utah and shall be governed by the laws of the State of Utah, not withstanding any Utah or other conflict-of-law provision to the contrary, and the securities being issued herein are being issued and delivered in the State of Utah in accordance with isolated transaction and non-public offering exemption. (7) BINDING EFFECT. This Agreement shall be binding upon the parties hereto and inure to the benefit of the parties, their respective heirs, administrators, executors, successors, and assigns. 25 (8) ENTIRE AGREEMENT. This Agreement contains the entire agreement between the parties hereto and supersedes any and all prior agreements, arrangements, or understandings between the parties relating to the subject matter hereof. No oral understandings, statements, promises, or inducements contrary to the terms of this Agreement exist. No representations, warranties, covenants, or conditions, express or implied, other than as set forth herein, have been made by any party. (9) SEVERABILITY. If any part of this Agreement is deemed to be unenforceable the balance of the Agreement shall remain in full force and effect. 26 IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first above written. ATTEST: INTERNET HOLDINGS, INC. a Utah corporation BY: /S Christopher Wilkes President ATTEST: CHIRON SYSTEMS LTD a UK Limited Company BY: /S Ian Tredinnick Managing Director STOCKHOLDERS (See Exhibit "B" attached hereto in counter parts.) The signing of this page has been WITNESSED BY:- Name: J.D. Wainwright Signed: /S J.D. Wainwright Occupation: Company Director 27 EXHIBIT "A"
NAME AND ADDRESS CHIRON SYSTEMS LTD INTERNET H. INC. OF STOCKHOLDERS COMMON STOCK RESTRICTED STOCK Ian R Tredinnick 29,000 (55.8%) 1,473,293 Little Poplars, Cold Ash Hill Cold Ash Nr Newbury Berkshire RG16 9PT Michael J Kennedy 10,000 (19.2%) 506,940 Landfall Wych Hill Lane Woking GU22 0AB Mrs P Tredinnick 8,000 (15.4%) 406,608 Little Poplars, Cold Ash Hill Cold Ash Nr Newbury Berkshire RG16 9PT Mrs B Taylor 2500 (4.8%) 126,736 25 Eden Way Nr Wokingham Reading Berks RG11 5PQ Mr A Sykes 2500 (4.8%) 126,736 Rock Cottage Cold Hatton Nr. Wellington North Shropshire TF6 6QU 52000 (100%) 2,640,313
28 EXHIBIT "B" To the Agreement dated May 22nd 1997, between Internet Holdings, Inc., Chiron Systems Ltd. and the Stockholders of Chiron Systems Ltd. CONSENT OF STOCKHOLDERS The undersigned stockholder of Common Stock of Chiron Systems Ltd a UK Company, does hereby consent to the exchange of the shares of Chiron Systems Ltd. owned by the undersigned, for shares of restricted Common Stock of Internet Holdings, Inc., a Utah corporation. The exchange shall be on a basis wherein the undersigned shall receive 1,473,293 shares of Internet Holdings, Inc., for all of the issued and outstanding shares of Chiron Systems Ltd and all intellectual property rights, patents and, trade marks which are owned by the Undersigned. ACCEPTANCE DATED: May 22nd 1997 BY: /S Ian R Tredinnick Ian R Tredinnick 29 EXHIBIT "B" To the Agreement dated May 22nd 1997, between Internet Holdings, Inc., Chiron Systems Ltd and the Stockholders of Chiron Systems Ltd . CONSENT OF STOCKHOLDERS The undersigned stockholder of Common Stock of Chiron Systems Ltd , a UK Limited Company, does hereby consent to the exchange of the shares of Chiron Systems Ltd. owned by the undersigned, for shares of restricted Common Stock of Internet Holdings, Inc., a Utah corporation. The exchange shall be on a basis wherein the undersigned shall receive 506,940 shares of Internet Holdings, Inc., for all of the issued and outstanding shares of Chiron Systems Ltd., which are owned by the Undersigned. and all intellectual property rights, which are owned by the Undersigned. ACCEPTANCE DATED: May 22nd 1997 BY: /S Michael Kennedy Michael Kennedy 30 EXHIBIT "B" To the Agreement dated May 22nd 1997, between Internet Holdings, Inc., Chiron Systems Ltd and the Stockholders of Chiron Systems Ltd . CONSENT OF STOCKHOLDERS The undersigned stockholder of Common Stock of Chiron Systems Ltd , a UK Limited Company, does hereby consent to the exchange of the shares of Chiron Systems Ltd. owned by the undersigned, for shares of restricted Common Stock of Internet Holdings, Inc., a Utah corporation. The exchange shall be on a basis wherein the undersigned shall receive 406,608 shares of Internet Holdings, Inc., for all of the issued and outstanding shares of Chiron Systems Ltd., which are owned by the Undersigned. and all intellectual property rights, which are owned by the Undersigned. ACCEPTANCE DATED: May 22nd 1997 BY: /S Patricia Tredinnick Patricia Tredinnick 31 EXHIBIT "B" To the Agreement dated May 22nd 1997, between Internet Holdings, Inc., Chiron Systems Ltd and the Stockholders of Chiron Systems Ltd . CONSENT OF STOCKHOLDERS The undersigned stockholder of Common Stock of Chiron Systems Ltd , a UK Limited Company, does hereby consent to the exchange of the shares of Chiron Systems Ltd. owned by the undersigned, for shares of restricted Common Stock of Internet Holdings, Inc., a Utah corporation. The exchange shall be on a basis wherein the undersigned shall receive 126,736 shares of Internet Holdings, Inc., for all of the issued and outstanding shares of Chiron Systems Ltd., which are owned by the Undersigned. and all intellectual property rights, which are owned by the Undersigned. ACCEPTANCE DATED: May 22nd 1997 BY: /S Mrs B Taylor Mrs B Taylor 32 EXHIBIT "B" To the Agreement dated May 22nd 1997, between Internet Holdings, Inc., Chiron Systems Ltd and the Stockholders of Chiron Systems Ltd . CONSENT OF STOCKHOLDERS The undersigned stockholder of Common Stock of Chiron Systems Ltd , a UK Limited Company, does hereby consent to the exchange of the shares of Chiron Systems Ltd. owned by the undersigned, for shares of restricted Common Stock of Internet Holdings, Inc., a Utah corporation. The exchange shall be on a basis wherein the undersigned shall receive 126,736 shares of Internet Holdings, Inc., for all of the issued and outstanding shares of Chiron Systems Ltd., which are owned by the Undersigned. and all intellectual property rights, which are owned by the Undersigned. ACCEPTANCE DATED May 22nd 1997 BY: /S A Sykes Mr A Sykes 33 EXHIBIT "C" STOCKHOLDER'S CERTIFICATE The undersigned stockholder of Chiron Systems Ltd. ("Acquiree") , does hereby certify that the undersigned is a principal stockholder of Acquiree, a United Kingdom Limited Company, and as such is familiar with the business affairs of said company, and is familiar with and has read the Agreement and Plan of Reorganization between Internet Holdings, Inc. ( "Acquiror") a Utah corporation, and Acquiree dated May 22nd 1997. The undersigned does hereby state that the representations and warranties made by the undersigned and Acquiree contained in said Agreement, to the best knowledge of the undersigned, are true and correct at and as of the time of closing. In addition, the undersigned hereby states that, to the best knowledge of the undersigned, Acquiree has performed and complied with all covenants, agreements, and conditions required by the Agreement to be performed or complied with by Acquiree prior to or at the closing on the closing date. IN WITNESS WHEREOF, the undersigned have hereunto duly executed this Certificate this day May 22nd 1997. /S Ian R Tredinnick Ian R Tredinnick 34 EXHIBIT "C" STOCKHOLDER'S CERTIFICATE The undersigned stockholder of Chiron Systems Ltd. ("Acquiree") , does hereby certify that the undersigned is a principal stockholder of Acquiree, a United Kingdom Limited Company, and as such is familiar with the business affairs of said company, and is familiar with and has read the Agreement and Plan of Reorganization between Internet Holdings, Inc. ( "Acquiror") a Utah corporation, and Acquiree dated May 22nd 1997. The undersigned does hereby state that the representations and warranties made by the undersigned and Acquiree contained in said Agreement, to the best knowledge of the undersigned, are true and correct at and as of the time of closing. In addition, the undersigned hereby states that, to the best knowledge of the undersigned, Acquiree has performed and complied with all covenants, agreements, and conditions required by the Agreement to be performed or complied with by Acquiree prior to or at the closing on the closing date. IN WITNESS WHEREOF, the undersigned have hereunto duly executed this Certificate this day May 22nd 1997. /S Michael J Kennedy Michael J Kennedy 35 EXHIBIT "C" STOCKHOLDER'S CERTIFICATE The undersigned stockholder of Chiron Systems Ltd. ("Acquiree") , does hereby certify that the undersigned is a principal stockholder of Acquiree, a United Kingdom Limited Company, and as such is familiar with the business affairs of said company, and is familiar with and has read the Agreement and Plan of Reorganization between Internet Holdings, Inc. ( "Acquiror") a Utah corporation, and Acquiree dated May 22nd 1997. The undersigned does hereby state that the representations and warranties made by the undersigned and Acquiree contained in said Agreement, to the best knowledge of the undersigned, are true and correct at and as of the time of closing. In addition, the undersigned hereby states that, to the best knowledge of the undersigned, Acquiree has performed and complied with all covenants, agreements, and conditions required by the Agreement to be performed or complied with by Acquiree prior to or at the closing on the closing date. IN WITNESS WHEREOF, the undersigned have hereunto duly executed this Certificate this day May 22nd 1997. /S Patricia Tredinnick Patricia Tredinnick 36 EXHIBIT "C" STOCKHOLDER'S CERTIFICATE The undersigned stockholder of Chiron Systems Ltd. ("Acquiree") , does hereby certify that the undersigned is a principal stockholder of Acquiree, a United Kingdom Limited Company, and as such is familiar with the business affairs of said company, and is familiar with and has read the Agreement and Plan of Reorganization between Internet Holdings, Inc. ( "Acquiror") a Utah corporation, and Acquiree dated May 22nd 1997. The undersigned does hereby state that the representations and warranties made by the undersigned and Acquiree contained in said Agreement, to the best knowledge of the undersigned, are true and correct at and as of the time of closing. In addition, the undersigned hereby states that, to the best knowledge of the undersigned, Acquiree has performed and complied with all covenants, agreements, and conditions required by the Agreement to be performed or complied with by Acquiree prior to or at the closing on the closing date. IN WITNESS WHEREOF, the undersigned have hereunto duly executed this Certificate this day May 22nd 1997. /S Mrs B Taylor Mrs B Taylor 37 EXHIBIT "C" STOCKHOLDER'S CERTIFICATE The undersigned stockholder of Chiron Systems Ltd. ("Acquiree") , does hereby certify that the undersigned is a principal stockholder of Acquiree, a United Kingdom Limited Company, and as such is familiar with the business affairs of said company, and is familiar with and has read the Agreement and Plan of Reorganization between Internet Holdings, Inc. ( "Acquiror") a Utah corporation, and Acquiree dated May 22nd 1997. The undersigned does hereby state that the representations and warranties made by the undersigned and Acquiree contained in said Agreement, to the best knowledge of the undersigned, are true and correct at and as of the time of closing. In addition, the undersigned hereby states that, to the best knowledge of the undersigned, Acquiree has performed and complied with all covenants, agreements, and conditions required by the Agreement to be performed or complied with by Acquiree prior to or at the closing on the closing date. IN WITNESS WHEREOF, the undersigned have hereunto duly executed this Certificate this day May 22nd 1997. /S A Sykes Mr A Sykes 38 EXHIBIT "D" INVESTMENT LETTER The undersigned hereby represents to Internet Holdings, Inc. that (1) the shares of the Company's $.001 par value common stock (the "Securities") which are being acquired by the undersigned are being acquired for his, her or its own account and for investment and not with a view to the public resale or distribution thereof; (2) The undersigned will not sell, transfer, or otherwise dispose of the Securities except in compliance with the Securities Act of 1933, as amended (the "Act"); and (3) he is aware that the Securities are "Restricted Securities" as that term is defined in Rule 144 or the general rules and regulations under the Act. The undersigned further acknowledges that he has had an opportunity to ask questions of, and receive answers from duly designated representatives of the corporation concerning the terms and conditions pursuant to which the Securities are being offered. The undersigned acknowledges that he has been afforded an opportunity to examine such documents and other information which he has requested for the purpose of verifying the information given him. The undersigned acknowledges and understands that the Securities are unregistered and must be held indefinitely unless they are subsequently registered under the Act or an exemption from such registration is available. Only the Company may register its Securities under the Act and it currently is not contemplating registering any of its Securities. Furthermore, the Company has not made any representations, warranties or covenants to the purchaser regarding the registration of the Securities. The undersigned further acknowledges that he is fully aware of the applicable limitations on the resale of the Securities. These restrictions, for the most part, are set forth in Rule 144. The rule permits sales of "Restricted Securities" upon compliance with the requirements of such rule. If the rule is available to the undersigned, the undersigned may make only routine sales of Securities, in limited amounts, in accordance with the terms and conditions of that rule. I am capable of bearing the economic risks of an investment in the Securities. I fully understand the speculative nature of the Securities and the possibility of the total loss of my investment. My present financial condition is such that I am under no present or contemplated future need to dispose of any portion of the Securities to satisfy any existing or contemplated undertaking, need, or indebtedness. Any and all certificates representing the Securities, and any and all Securities issued in replacement thereof or in exchange therefore, shall bear an investment legend which the undersigned understands. The purchaser further agrees that the Company shall have the right to issue stop-transfer instructions to its transfer agent and acknowledges that the Company has informed the undersigned of its intention to issue such instructions. Yours Sincerely, /S Ian R Tredinnick Ian R Tredinnick 39 EXHIBIT "D" INVESTMENT LETTER The undersigned hereby represents to Internet Holdings, Inc. that (1) the shares of the Company's $.001 par value common stock (the "Securities") which are being acquired by the undersigned are being acquired for his, her or its own account and for investment and not with a view to the public resale or distribution thereof; (2) The undersigned will not sell, transfer, or otherwise dispose of the Securities except in compliance with the Securities Act of 1933, as amended (the "Act"); and (3) he is aware that the Securities are "Restricted Securities" as that term is defined in Rule 144 or the general rules and regulations under the Act. The undersigned further acknowledges that he has had an opportunity to ask questions of, and receive answers from duly designated representatives of the corporation concerning the terms and conditions pursuant to which the Securities are being offered. The undersigned acknowledges that he has been afforded an opportunity to examine such documents and other information which he has requested for the purpose of verifying the information given him. The undersigned acknowledges and understands that the Securities are unregistered and must be held indefinitely unless they are subsequently registered under the Act or an exemption from such registration is available. Only the Company may register its Securities under the Act and it currently is not contemplating registering any of its Securities. Furthermore, the Company has not made any representations, warranties or covenants to the purchaser regarding the registration of the Securities. The undersigned further acknowledges that he is fully aware of the applicable limitations on the resale of the Securities. These restrictions, for the most part, are set forth in Rule 144. The rule permits sales of "Restricted Securities" upon compliance with the requirements of such rule. If the rule is available to the undersigned, the undersigned may make only routine sales of Securities, in limited amounts, in accordance with the terms and conditions of that rule. I am capable of bearing the economic risks of an investment in the Securities. I fully understand the speculative nature of the Securities and the possibility of the total loss of my investment. My present financial condition is such that I am under no present or contemplated future need to dispose of any portion of the Securities to satisfy any existing or contemplated undertaking, need, or indebtedness. Any and all certificates representing the Securities, and any and all Securities issued in replacement thereof or in exchange therefore, shall bear an investment legend which the undersigned understands. The purchaser further agrees that the Company shall have the right to issue stop-transfer instructions to its transfer agent and acknowledges that the Company has informed the undersigned of its intention to issue such instructions. Yours Sincerely, /S Michael J Kennedy Michael J Kennedy 40 EXHIBIT "D" INVESTMENT LETTER The undersigned hereby represents to Internet Holdings, Inc. that (1) the shares of the Company's $.001 par value common stock (the "Securities") which are being acquired by the undersigned are being acquired for his, her or its own account and for investment and not with a view to the public resale or distribution thereof; (2) The undersigned will not sell, transfer, or otherwise dispose of the Securities except in compliance with the Securities Act of 1933, as amended (the "Act"); and (3) he is aware that the Securities are "Restricted Securities" as that term is defined in Rule 144 or the general rules and regulations under the Act. The undersigned further acknowledges that he has had an opportunity to ask questions of, and receive answers from duly designated representatives of the corporation concerning the terms and conditions pursuant to which the Securities are being offered. The undersigned acknowledges that he has been afforded an opportunity to examine such documents and other information which he has requested for the purpose of verifying the information given him. The undersigned acknowledges and understands that the Securities are unregistered and must be held indefinitely unless they are subsequently registered under the Act or an exemption from such registration is available. Only the Company may register its Securities under the Act and it currently is not contemplating registering any of its Securities. Furthermore, the Company has not made any representations, warranties or covenants to the purchaser regarding the registration of the Securities. The undersigned further acknowledges that he is fully aware of the applicable limitations on the resale of the Securities. These restrictions, for the most part, are set forth in Rule 144. The rule permits sales of "Restricted Securities" upon compliance with the requirements of such rule. If the rule is available to the undersigned, the undersigned may make only routine sales of Securities, in limited amounts, in accordance with the terms and conditions of that rule. I am capable of bearing the economic risks of an investment in the Securities. I fully understand the speculative nature of the Securities and the possibility of the total loss of my investment. My present financial condition is such that I am under no present or contemplated future need to dispose of any portion of the Securities to satisfy any existing or contemplated undertaking, need, or indebtedness. Any and all certificates representing the Securities, and any and all Securities issued in replacement thereof or in exchange therefore, shall bear an investment legend which the undersigned understands. The purchaser further agrees that the Company shall have the right to issue stop-transfer instructions to its transfer agent and acknowledges that the Company has informed the undersigned of its intention to issue such instructions. Yours Sincerely, /S Patricia Tredinnick Patricia Tredinnick 41 EXHIBIT "D" INVESTMENT LETTER The undersigned hereby represents to Internet Holdings, Inc. that (1) the shares of the Company's $.001 par value common stock (the "Securities") which are being acquired by the undersigned are being acquired for his, her or its own account and for investment and not with a view to the public resale or distribution thereof; (2) The undersigned will not sell, transfer, or otherwise dispose of the Securities except in compliance with the Securities Act of 1933, as amended (the "Act"); and (3) he is aware that the Securities are "Restricted Securities" as that term is defined in Rule 144 or the general rules and regulations under the Act. The undersigned further acknowledges that he has had an opportunity to ask questions of, and receive answers from duly designated representatives of the corporation concerning the terms and conditions pursuant to which the Securities are being offered. The undersigned acknowledges that he has been afforded an opportunity to examine such documents and other information which he has requested for the purpose of verifying the information given him. The undersigned acknowledges and understands that the Securities are unregistered and must be held indefinitely unless they are subsequently registered under the Act or an exemption from such registration is available. Only the Company may register its Securities under the Act and it currently is not contemplating registering any of its Securities. Furthermore, the Company has not made any representations, warranties or covenants to the purchaser regarding the registration of the Securities. The undersigned further acknowledges that he is fully aware of the applicable limitations on the resale of the Securities. These restrictions, for the most part, are set forth in Rule 144. The rule permits sales of "Restricted Securities" upon compliance with the requirements of such rule. If the rule is available to the undersigned, the undersigned may make only routine sales of Securities, in limited amounts, in accordance with the terms and conditions of that rule. I am capable of bearing the economic risks of an investment in the Securities. I fully understand the speculative nature of the Securities and the possibility of the total loss of my investment. My present financial condition is such that I am under no present or contemplated future need to dispose of any portion of the Securities to satisfy any existing or contemplated undertaking, need, or indebtedness. Any and all certificates representing the Securities, and any and all Securities issued in replacement thereof or in exchange therefore, shall bear an investment legend which the undersigned understands. The purchaser further agrees that the Company shall have the right to issue stop-transfer instructions to its transfer agent and acknowledges that the Company has informed the undersigned of its intention to issue such instructions. Yours Sincerely, /S Mrs B Taylor Mrs B Taylor 42 EXHIBIT "D" INVESTMENT LETTER The undersigned hereby represents to Internet Holdings, Inc. that (1) the shares of the Company's $.001 par value common stock (the "Securities") which are being acquired by the undersigned are being acquired for his, her or its own account and for investment and not with a view to the public resale or distribution thereof; (2) The undersigned will not sell, transfer, or otherwise dispose of the Securities except in compliance with the Securities Act of 1933, as amended (the "Act"); and (3) he is aware that the Securities are "Restricted Securities" as that term is defined in Rule 144 or the general rules and regulations under the Act. The undersigned further acknowledges that he has had an opportunity to ask questions of, and receive answers from duly designated representatives of the corporation concerning the terms and conditions pursuant to which the Securities are being offered. The undersigned acknowledges that he has been afforded an opportunity to examine such documents and other information which he has requested for the purpose of verifying the information given him. The undersigned acknowledges and understands that the Securities are unregistered and must be held indefinitely unless they are subsequently registered under the Act or an exemption from such registration is available. Only the Company may register its Securities under the Act and it currently is not contemplating registering any of its Securities. Furthermore, the Company has not made any representations, warranties or covenants to the purchaser regarding the registration of the Securities. The undersigned further acknowledges that he is fully aware of the applicable limitations on the resale of the Securities. These restrictions, for the most part, are set forth in Rule 144. The rule permits sales of "Restricted Securities" upon compliance with the requirements of such rule. If the rule is available to the undersigned, the undersigned may make only routine sales of Securities, in limited amounts, in accordance with the terms and conditions of that rule. I am capable of bearing the economic risks of an investment in the Securities. I fully understand the speculative nature of the Securities and the possibility of the total loss of my investment. My present financial condition is such that I am under no present or contemplated future need to dispose of any portion of the Securities to satisfy any existing or contemplated undertaking, need, or indebtedness. Any and all certificates representing the Securities, and any and all Securities issued in replacement thereof or in exchange therefore, shall bear an investment legend which the undersigned understands. The purchaser further agrees that the Company shall have the right to issue stop-transfer instructions to its transfer agent and acknowledges that the Company has informed the undersigned of its intention to issue such instructions. Yours Sincerely, /S A Sykes Mr A Sykes EX-2 3 EXHIBIT 2.1 Page: 1 of 1 INTERNET HOLDINGS, INC W.F. CLARKE (GHANA) LTD 1. AGREEMENT FOR SALE OF PROPERTY & OTHER ASSETS AT W.F. CLARKE, ACCRA, GHANA 2. AGREEMENT TO FORM JOINT VENTURE TO EXPLOIT INTERNET RELATED OPPORTUNITTIES IN WEST AFRICA 43 Date: 19th May 1997 Parties to this Agreement: 1. Internet Holdings, Inc of 40 Exchange Place, 8th Floor, New York, NY 10005, USA ("INHI") AND 2. W.F. Clarke (Ghana) Limited of Airport House, 1 Agostino Neto Road, Airport Area, Accra, Ghana ("WFC") Definitions: 1. "The Property" means those buildings and land owned by WFC in the Accra industrial zone more particularly described in Appendix 1 hereto. Whereas: A. WFC is a long established Ghanaian company with operations and infrastructure in many parts of Ghana; B. INHI has expertise in technology related to the Internet and ISDN (Integrated Services Digital Network); C. WFC wishes to sell and INHI wishes to purchase The Property; D. WFC and INHI wish to enter into a joint venture to market Internet services in West Africa. Now it is hereby agreed as follows: 1. Obligations of WFC 1.1. WFC hereby transfers to INHI the Property as more particularly defined in Appendix 1. 1.2. WFC hereby warrants that it will take all necessary actions to transfer good and marketable title to the Property to INHI. Page 2 of 6 1.3. In the event that WFC does not fully transfer such title in a good and timely fashion then INHI may at its sole option terminate this agreement. 1.4. WFC hereby undertakes to invest 50% (fifty percent) of the proceeds of sale of the Property received by WFC into the proposed INHI/WFC joint venture. 2. Obligations of INHI 2.1. In consideration of the matters set out in Clause 1 above INHI will pay to WFC the sum of US$2,250,000 (two million two hundred and fifty thousand United States dollars) within 120 (one hundred and twenty days) of the date of this agreement. 2.2. In the event that the payment set out in this Clause 2 is not made in a timely fashion then all rights granted under this agreement and any other agreement entered into by INHI pursuant to or associated with this agreement will lapse. 2.3. At the sole discretion of WFC payment of the sum set out in this Clause 2 may be made either in cash or shares or loan stock or in some combination or variation of these and once any such payment or part of it is accepted in a particular form by WFC then this shall constitute satisfaction of that portion of INHI's pro-rata obligations under this Clause 2 of this agreement. 2.4. Within 30 days of the date of this agreement INHI will enter into a lease with WFC for the following portions of the Property as described on the site plan: 2.4.1. Factory Area 2.4.2. Car Park 2 2.4.3. Car Park 4 2.4.4. Storage Area 2.4.5. Office Numbers 1 through 4 and 6 2.4.6. Access to the common parts of the site to reach the above premises 2.5. Pending the execution of the said lease WFC shall continue to have access to the above mentioned premises on the current basis. Page 3 of 6 3. Obligations of INHI and WFC to enter into Joint Venture 3.1. By the signing of this agreement INHI and WFC hereby signify their intent to enter into a formal joint venture agreement within 120 days of the date of this agreement setting out the parties obligations to exploit the Internet in relation to Ghana and West Africa. Confidentiality 4. The Parties acknowledge that the contents of this agreement are confidential to them and are not to be disclosed to any other persons save on a need to know basis so as to allow each party to carry out its obligations under this agreement. This agreement is executed in duplicate and is not to be copied or reproduced or shown to any other party except as required by law other than with the permission of all the Parties. Governing Law 5. The construction validity and performance of this agreement shall be governed by the laws of the State of New York without giving effect to the conflict of laws principles thereof. The parties hereby submit to the jurisdiction of the courts of the State of New York, county of New York. Notice 6. The addresses for service of documents for the Parties shall be as shown under this agreement. 7. Each party shall give written notice to the other of any change in its address for service under this agreement. 8. Any notice shall be deemed well served on the party to whom it is addressed if it is served personally or sent by pre-paid recorded delivery post addressed to such party at its address for service. Warranties & Entire Agreement 9. The Parties hereby warrant that all necessary approvals and authorities have been obtained by them to enable the completion of this agreement and that the signatories hereto are authorised by their respective organisations to sign this agreement and to bind the Parties. 10. This contract contains the complete and entire agreement o the parties as to the subject matter herein. No modification or amendment shall be effective except in writing signed by the parties hereto. Signed for and on behalf of Internet Holdings, Inc /S Christopher Wilkes President Witnessed /S Lewis Mitchell Klee Signed for and on behalf of W. F. Clarke Limited /S John N. D. Carmichael Managing Director Witnessed /S Lewis Mitchell Klee Appendix 1 That property situated at the Accra Industrial Area identified as owned by W. F. Clarke (Ghana) Limited by Title Number 74698. All office and factory equipment and fixtures and fittings are included in the sale except for corporate and business records of W. F. Clarke Ltd, Agritech (Ghana) Ltd and The Bristol Bond which are identified as being in Office 4. As soon as practicable but in any event not later than thirty days after the date of this agreement INHI and WFC will enter into a lease enabling WFC to occupy those parts of the Property as set out in Clause 2.4 of this agreement and such other parts of the Property and such equipment as INHI and WFC shall jointly decide. Alan Sacks + Co. CHIRON SYSTEMS LIMITED ACCOUNTS 21 DECEMBER 1996 Alan Sacks + Co. CHIRON SYSTEMS LIMITED ACCOUNTS 31 DECEMBER 1996 CONTENTS PAGE General information 1 Statement of directors' responsibilities 2 Report of the accountants 3 Statement of accounting policies 4 Profit and loss account 5 Balance sheet 6 Notes to the accounts 7-8 GENERAL INFORMATION Directors Ian R. Tredinnick Michael R. Kennedy Company secretary and registered office B R W Daughtrey, c/o Kidd Rapinet, 35 Windsor Road, Slough SL1 2EB Registered number 2801103 Principal activity The principal activity of the company continued to be that of selling and developing digital communications products. Auditors Blackborn & Co., Chartered Accountants, Lovell House, 271 High Street, Uxbridge UB8 1LQ Reporting accountants Alan Sacks + Co., Chartered Accountants, Little Red Court, 7 St. Ronans Close, Hadley Wood, Herts EN4 0JH Solicitors Kidd Rapinet, 35 Windsor Road, Slough SL1 2EB Bankers National Westminster Bank PLC, PO Box No 78, 13 Market Place, Reading, Berks RG1 2EP 1 Alan Sacks + Co. CHIRON SYSTEMS LIMITED STATEMENT OF DIRECTORS' RESPONSIBILITIES Copmany law requires the directors to prepare accounts for each financial period which give a true and fair view of the state of affairs of the company and of the profit and loss of the company for that period. In preparing those accounts, the directors are required to: (bullet) select suitable accounting policies and then apply them consistently; (bullet) make judgments and estimates that are reasonable and prudent; (bullet) prepare the accounts on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the accounts comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 2 Alan Sacks + Co. Little Red Court 7 St. Ronans Clowe Hadley Chartered Accountants Wood Herts EN4 OJH Telephone 0181 440 5501 (Symbol of chartered accountants goes here) ACCOUNTANTS REPORT TO THE DIRECTORS OF INTERNET HOLDINGS INC. AND CHIRON SYSTEMS LIMITED In accordance with your instructions, we have audited the accounts set out on pages 4 to 8 which have been prepared under the historical cost convention and on the basis of the accounting policies set out on page 4, including in particular, those relating to the going concern basis and development expenditure. It should be noted that, in the absence of a directors' report, these accounts are incomplete for UK statutory purposes and must not be filed with the Registrar of Companies. Respective responsibilities of directors adn auditors As described on page 2, the directors of Chiron Systems Limited ("the company") are responsible for the preparation of the accounts. It is our responsibility to form an independent opinion, based on our audit, on those accounts and to report our opinion to you. Basis of opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the accounts. It also includes an assessment of the significant estimates and judgments made by the directors of the company in the preparation of the accounts, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the accounts are free from material misstatement whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of presentation of information in the accounts. Opinion In our opinion the accounts give a true and fair view of the state of affairs of the company as at 31 December 1996 and of its profit for the nine months then ended and have been properly prepared in accordance with the provisions of the Companies Act 1985 applicable to small companies. /s/ Alan Sacks Alan Sacks + Co. Chartered Accountants and Registered Auditors 24 February 1997 Alan Sacks FCA Registered to carry on audit work and authorized to carry on investment business by the Institute of Chartered Accountants in England & Wales 3 Alan Sacks + Co/ CHIRON SYSTEMS LIMITED STATEMENT OF ACCOUNTING POLICIES The principal accounting policies which have been adopted in the preparation of these accounts are as follows: Accounting convention The accounts have been prepared under the historical cost convention. The company meets its day-to-day working capital requirements through an overdraft facility which, in common with all such facilities is repayable on demand; the company also enjoys the use of invoice factoring facilities. In addition to these short-term arrangements, the company has long-term loans (see Note 9) of (pound sign)250000 which have been used in order to finance the company's software development programme (see Note 4). The directors consider that the above finance facilities will continue to be available to the company; the directors therefore believe it is appropriate to prepare the accounts on the going concern basis. If the company was unable to continue trading, notwithstanding the belief and confidence of the directors, adjustments would have to be made to reduce the value of the assets to their realisable amounts, to provide for any further liabilities which may arise and to reclassify fixed assets as current assets. Development expenditure Development expenditure relating to specific projects intended for commercial exploitation is carried forward; it is amortised over the period expected to benefit from it. Expenditure on pure and applied research is charged to the profit and loss account in the period in which it is incurred. Depreciation All fixed assets are initially recorded at cost. Depreciation is provided on all tangible fixed assets at the rate of 25% pa of cost in order to write off each asset evenly over its expected useful life. Stock Stock, which comprises raw materials and finished products, is stated at the lower of cost and net realisable value using the first-in-first-out principle. Cost includes all direct expenditure and related overheads incurred to the balance sheet date. Deferred taxation In the opinion of the directors, no provision for deferred taxation is necessary because of the improbability of any liability in the foreseeable future. Cash flow statement The company has taken advantage of the exemption in Financial Reporting Standard No. 1 from producing a cash flow statement on the grounds that it is a small company. 4 Alan Sacks + Co. CHIRON SYSTEMS LIMITED PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM 1 APRIL 1996 TO 31 DECEMBER 1996
9 months ended Year ended 31 December 31 March 1996 1996 (pound sign) (pound sign) TURNOVER 430,408 363,259 COST OF SALES 297,743 228,858 GROSS PROFIT 132,665 134,401 Administrative expenses 103,203 130,663 OPERATING PROFIT BEFORE AND AFTER TAXATION 29,372 3,738 RETAINED PROFIT (LOSS) As at beginning of period -31,002 -34,740 As at end of period -1,630 -31,002
All income in the period was derived from the continuing activities. 5 Alan Sacks + Co. CHIRON SYSTEMS LIMITED BALANCE SHEET AS AT 31 DECEMBER 1996
31 December 31 March 1996 1996 (pound sign) (pound sign) FIXED ASSETS Intangible 392,556 263,124 Tangible 28,071 38,329 CURRENT ASSETS Stock 97,440 101,173 Debtors 62,267 63,155 Cash at bank and in hand 334 0 CREDITORS: due within one year 280,208 210,783 NET CURRENT LIABILITIES -120,257 -40,455 TOTAL ASSETS LESS CURRENT LIABILITIES 300,370 260,998 CREDITORS: due after one year 260,000 250,000 CAPITAL AND RESERVES Called up share capital 52,000 42,000 Profit and loss account -1,630 -31,002
EQUITY SHAREHOLDERS' FUNDS The directors have taken advantage of special exemptions conferred by the Companies Act 1985 applicable to small companies and have done so on the grounds that, in their opinion, the company is entitled to those exemptions. Approved by the Board of Directors on 7 February 1997 I Terdinnick C. Wilkes Director Director 6 Alan Sacks + Co. CHIRON SYSTEMS LIMITED NOTES TO THE ACCOUNTS FOR THE PERIOD FROM 1 APRIL 1996 TO 31 DECEMBER 1996 1. TURNOVER Turnover, which is stated net of VAT, comprises amounts invoiced for sales. 2. OPERATING PROFIT
9 months ended Year ended 31 December 31 March 1996 1996 (pound sign) (pound sign) The operating profit is stated after charging: Directors' remuneration(a) 22,156 49,632 Depreciation 7,604 6,963 Auditor's remuneration 3,500 3,500
(a) The amount charged to profit and loss account includes consultancy fees payable to a related party (note 1)). Amounts have also been capitalised as software development (note 4) as follows: 3. TAXATION No liability to taxation is expected to arise in view of the availability of losses brought forward. 4. INTANGIBLE FIXED ASSETS Software development (pound sign) Cost As at 1 April 1996 163,124 Additions 129,432 As at 31 December 1996 392,556 Additions include capitalised interest of (pound sign) 28,607 (prior period (pound sign)25,814). Amortisation of this asset is expected to commence in 1997. In the opinion of the directors, the value of this asset is substantially greater than its stated cost. 5. TANGIBLE FIXED ASSETS Plant, mahinery, etc. (pound sign) Cost As at 1 April 1996 and 31 December 1996 54,443 Dpereciation As at 1 April 1996 16,114 Charge for period 10,258 As at 31 December 1996 26,372 Net book values As at 31 December 1996 28,071 As at 31 March 1996 38,329 The chareg for the period comprises (pound sign)7,604 (prior period: (pound sign)6,963) recorded in the profit and loss account and (pound sign)2,654 ((pound sign)3,428) capitalised in the additions to software development (note 4). 7 Alan Sacks + Co. CHIRON SYSTEMS LIMITED NOTES TO THE ACCOUNTS 6. DEBTORS
31 December 31 March 1996 1996 (pound sign) (pound sign) Trade 55,089 52,859 Other 7,178 10,296 62,267 63,155 7. CREDITORS Due within one year Bank and factoring loans and overdraft (secured) 60,324 65,800 Trade 95,202 105,329 Other taxes and special security costs 4,444 11,213 Other 120,328 28,441 280,208 210,783 Due after one year Bank loans repayable within one adn five years (secured) 260,000 250,000 8. CALLED UP SHARE CAPITAL Authorized 90000 A Ordinary shares of (pound sign)1 each 90,000 90,000 10000 B Ordinary shares of (pound sign)1 each 10,000 10,000 100,000 100,000 Issued and fully paid 52000 A Ordinary shares of (pound sign)1 each 52,000 42,000
10000 A Ordinary shares of (pound sign)1 each were issued at par during December 1996 in satisfaction of a director's loan account of (pound sign)10000. The A and B Ordinary shares each rank pari passu. 9. DIRECTORS AND THEIR INTERESTS The directors of the company throughout the period and their interests in the issued (pound sign)1 Ordinary shares were: 31 December 31 March 1996 1996 IR Tredinnick 37,000 27,000 MJ Kennedy 10,000 15,000 10. EQUITY SHAREHOLDERS' FUNDS Profit for the period 29,372 3,738 New share capital subscribed 10,000 0 Equity shareholders' funds Net increase 39,372 3,738 As at beginning of period 10,998 7,260 As at end of period 50,370 10,998 11. RELATED PARTY TRANSACTIONS Mr. IR Tredinnick is the sole proprietor of Strategic Technology Services which has rendered consultancy services to the company at normal commercial rates; the amount charged during the period was (pound sign)18,340 (prior period: (pound sign)18,952) 12. POST BALANCE SHEET EVENTS The directors and shareholders of the company have completed an agreement for the acquisition of the company by way of a share exchanges into Internet Holdings Inc., a US company quoted on the NASDAQ QTC system. 8 -----END PRIVACY-ENHANCED MESSAGE-----