ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
October 28, 1999
INTERNET HOLDINGS, INC.
A Utah Corporation
ACQUISITION OF
Fairfax Equity Ltd
An English Corporation
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TABLE OF CONTENTS
RECITALS:....................................................................3
DEFINITIONS:.................................................................3
AGREEMENT....................................................................4
1 PLAN OF REORGANIZATION..................................................4
2 ACQUISITION OF OUTSTANDING CAPITAL OF ACQUIREE AND CONDITIONS
PRECEDENT.............................................................4
3 CONSIDERATION...........................................................5
4 DELIVERY OF SHARES......................................................5
5 TERMINATION.............................................................6
6 REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND ACQUIREE.............7
7 REPRESENTATIONS AND WARRANTIES OF ACQUIROR.............................13
8 CLOSING DATE...........................................................16
9 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACQUIREE AND THE
STOCKHOLDERS. 17
10 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACQUIROR....................17
11 INDEMNIFICATION........................................................18
12 NATURE AND SURVIVAL OF REPRESENTATIONS.................................18
13 DOCUMENTS AT CLOSING...................................................19
14 ADDITIONAL COVENANTS & UNDERTAKINGS....................................19
15 MISCELLANEOUS..........................................................20
Exhibit "A" Stockholders of Acquiror
Exhibit "B" - Consent of Stockholders
Exhibit "C" - Stockholders Certifications
Exhibit "D" - Investment Letters
Acquiree Schedules
Acquiror Schedules
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ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
This Agreement is entered into October 28, 1999, by and between Internet
Holdings, Inc., a Utah corporation, US Tax ID Number: 00-0000000 (hereinafter
"Acquiror"); and Fairfax Equity Ltd, an English Corporation with registered
Number: 3860360 (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 outstanding and issued shares of
Acquiree.
DEFINITIONS:
"Acquiree Financial Statements" Financial statements showing the balance sheet
of Acquiree as at 30th November 1999 as provided by Acquiree to Acquiror
"Acquiror Financial Statements" Financial statements showing the balance sheet
of Acquiror as at 31st October 1999 as provided by Acquiror to Acquiree
"Closing Date" The date agreed between the Acquiror and Acquiree when all the
conditions precedent set out in Clause 2 have been satisfied by the Acquiror
"XXXXX" The electronic data base for filings by reporting companies maintained
by the SEC.
"SEC" the Securities and Exchange Commission of the United States of America
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AGREEMENT
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:
1 Plan of Reorganization.
The Stockholders of Acquiree are the owners of all of the issued and outstanding
shares of all classes of stock of Acquiree ("the Stock"). It is the intention of
the parties hereto that all of the outstanding issued shares and the assets and
business of Acquiree shall be acquired by Acquiror in exchange solely for
Acquiror's voting 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 Acquisition of Outstanding Capital of Acquiree and Conditions Precedent
a) Acquiror and Stockholders agree that all of the Stock of Acquiree will
consist, at the Closing Date 10,000 shares of common stock which will
be exchanged with Acquiror for a number of shares of voting restricted
common stock of Acquiror and other payments and actions as defined
below under paragraph 3 entitled Consideration.
b) The share exchange set out above is conditional on the completion of
the following actions by Acquiror:
i) The settlement of all outstanding litigation in a form
satisfactory to the Acquiree and the Stockholders
ii) The completion of all outstanding statutory filings by Acquiror
necessary to bring the said filings up to date and in compliance
with all applicable laws, rules and regulations.
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3 Consideration
The Consideration payable by the Acquiror shall be as follows:
a) 8,640,000 (eight million six hundred and forty thousand shares) of
voting restricted common stock of Acquiror provided that:
i) The Net Asset Value of Acquiree is at least $2,160,000 (two
million one hundred and sixty thousand United States dollars) at
the Closing Date thus equating to a price of $0.25 (twenty five
cents) per share of Acquiror stock
ii) In the event that the realised value of the assets of Acquiree is
less than $2,160,000 (two million one hundred and sixty thousand
United States dollars) then STG Holdings Plc (hereinafter STG),
the majority shareholder of Acquiree, will increase the cash
element of Acquiree's assets until the Net Asset Value of
Acquiree is $2,160,000 (two million one hundred and sixty
thousand United States dollars).
b) Upon closing the Acquiror will enter into a consultancy agreement with
Oxford Capital, Inc. at the rate of $200,000 (two hundred thousand
United States dollars) per year. This will be satisfied by the issue
of shares under an S8 Registration with the shares being issued as to
$100,000 worth at $0.25 (twenty five cents per share) and $100,000
worth at $0.50 (fifty cents per share) thus giving a total amount of
shares to be issued over 12 months of 600,000 shares.
4 Delivery of Shares.
On 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.
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
shareholders of Acquiree 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. Each Stockholder herein shall sign Exhibit "C", attached hereto and by
this reference made a part hereof, evidencing his or her intent to be bound by
the terms therein.
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5 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:
i) 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
ii) The Closing shall not have occurred prior to December 31, 1999,
or such later date as shall have been approved by parties hereto,
other than for reasons set forth below.
iii) In the event of termination pursuant to this Section 5 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 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:
i) 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
ii) There shall have been any material adverse change after October
28, 1999, 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 Acquiree except any
changes disclosed in any exhibits or schedules attached hereto.
iii) In the event this Agreement is terminated pursuant to this
Section 5 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.
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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:
i) 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
ii) There shall have been any material adverse change after October
28, 1999, 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.
iii) In the event this Agreement is terminated pursuant to this
Section 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 costs incurred by Acquiree and
the Stockholders in connection with negotiation, preparation, and
execution of this Agreement and the transactions herein
contemplated.
6 Representations and Warranties of Stockholders and Acquiree
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) 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.
b) 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 of Acquiror is speculative and may remain
so for an indefinite period and acknowledge that the Stockholders are
able to bear
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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.
c) Warranties Correct at Closing The Stockholders of Acquiree and
Acquiree hereby represent and warrant that, effective this date and
the Closing Date, the representations and warranties listed herein are
true and correct.
d) 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.
e) Financial Statements. Financial statements of Acquiree have been
delivered to Acquiror ("Acquiree Financial Statements"). To the best
knowledge of Acquiree and its 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.
f) 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:
i) 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;
ii) 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 to any of its
officers or directors or any of its employees; or (8)
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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;
iii) 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 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
iv) 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.
g) Litigation and Proceedings. To the best knowledge of Acquiree and the
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 Stockholders, no
litigation, claims, assessments, or governmental investigation or
proceeding is threatened against Acquiree, its Stockholders, or
properties.
h) Organization
i) 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.
ii) To the best knowledge of Acquiree and its 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
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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.
i) Compliance with Laws, Rules and Regulations. Acquiree and its
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.
j) 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.
k) 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.
l) 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 Stockholders are a party and has been duly authorised
by all appropriate and necessary action.
m) Capitalization. The authorised capital stock of Acquiree consists of
10,000 shares of common stock (each(pound)1 shares), of which XX
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 other right of any person.
n) 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, 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
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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 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.
o) Contracts
i) 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 properties or assets are bound.
ii) 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.
iii) 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.
iv) 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; 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
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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.
p) Material Contract Defaults.
i) To the best knowledge of Acquiree and its 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.
q) 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 Stockholders, as complete, true, and correct:
i) 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;
ii) A schedule including the financial statements of Acquiree as
herein defined;
iii) 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;
iv) 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;
v) 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);
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vi) 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
vii) 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.
viii)Copies of contracts of employment agreements for all staff being
retained.
r) 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.
7 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:
a) 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.
b) 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.
c) Financial Statements. Acquiror has delivered to Acquiree financial
statements dated as December 31, 1996 and draft financial statements
as of September 30, 1999. 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.
d) Absence of Certain Changes or Events. Except as set forth in this
agreement or the Acquiror Schedules, since September 30, 1999:
i) There has not been 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;
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ii) 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 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;
iii) 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 September 30, 1999, 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).
iv) To the best knowledge of Acquiror, it has not become subject to
any law or regulation which materially and adversely affects, or
in the future may adversely affect, the business, operations,
properties, assets, or condition of Acquiror.
v) There have been no material changes to the By-laws of the
Acquiror since the date of the last filing.
e) 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.
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f) 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.
g) 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.
h) Contracts
i) 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.
ii) 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.
iii) Except as included or referred to in the Acquiror Schedules or
reflected in the latest Acquiror balance 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.
i) 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.
Page 15 of 31
j) 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.
k) 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
l) 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.
m) 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:
i) A schedule containing copies of all financial statements filed by
Acquiror with the SEC;
ii) A schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets,
or conditions of Acquiror since September 30, 1996;
iii) 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;
n) 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.
8 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 November 30,
1999, but not later than December 31, 1999. As soon as practicable after the
Closing, Acquiror shall deliver
Page 16 of 31
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
9 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:
a) 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;
b) 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 or at the Closing on the Closing Date;
c) Acquiror shall take all corporate action necessary to issue the shares
to Stockholders pursuant to this Agreement;
d) Acquiror will have complied with all matters set out in Clause 2 of
this agreement.
10 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:
a) 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;
b) 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;
Page 17 of 31
c) 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 and that they are 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.
11 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 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.
12 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.
Page 18 of 31
13 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:
i) Stock certificates for all of the issued and outstanding stock of
Acquiree being tendered and duly endorsed;
ii) 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 books, corporate seals, and other
such corporate books and records as may reasonably be requested
for review by Acquiror and its counsel;
iii) A certificate executed by the 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;
iv) 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
v) 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.
vi) Stock certificates for common stock to be issued as part of the
exchange as listed on Exhibit "A";
vii) Such other instruments and documents as are required to be
delivered pursuant to the provisions of this Agreement.
14 Additional Covenants & Undertakings
Between the date hereof and the Closing Date, except with the prior written
consent of the other party:
a) 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.
b) No change shall be made in the Articles of Incorporation or Bylaws of
Acquiror or Acquiree.
Page 19 of 31
c) No change shall be made in the authorised or issued shares of Acquiror
or Acquiree.
d) 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.
e) Neither Acquiror nor Acquiree shall make any payment or distribution
to their respective stockholders or purchase or redeem any shares or
capital stock.
f) Neither Acquiror nor Acquiree shall mortgage, pledge, or subject to
lien or encumbrance any of its assets, tangible or intangible.
g) Neither Acquiror nor Acquiree shall cancel any debts or claims or
waive any rights.
15 Miscellaneous
a) 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.
b) 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.
c) 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.
d) 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.
e) 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.
f) 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
Page 20 of 31
in accordance with isolated transaction and non-public offering
exemption.
g) 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.
h) 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.
i) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force
and effect.
Page 21 of 31
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/ X.X. Xxxxxx
President
ATTEST: Fairfax Equity Ltd
An English Company
By: /s/ X.X Xxxxxx
Managing Director
STOCKHOLDERS
ATTEST: STG Holdings, Plc
An English Company
By: /s/ X.X. Xxxxxx
Managing Director
The signing of this document has been WITNESSED by:-
Name:__Anthony Somers_______________________
Signed:_____/ S Xxxxxxx Somers_________________
Occupation:__Company Director__________________
ATTEST: T.H. Investments Ltd
A Gibraltar Company
By: /S X. Xxxxxx
Managing Director
Witnessed by:
Name:____Shirley McClymont___________________________
Signed:____/S Xxxxxxx McClymont_______________________
Occupation:___Company Executive ________________________________
Page 22 of 31
EXHIBIT "A"
Name and Address Acquiree Acquiror
of Stockholders Ordinary Shares Common Stock
--------------- --------------- ------------
STG Holdings Plc 7,500 (75%) 6,480,000
0 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxxxxxx
Xxxxxx, XX0 0XX
T.H. Investments Ltd 2,500 (25%) 2,160,000
Xxxxx 0X
Xxxxxx Xxxxx
Xxxx Xxxxxx
Xxxxxxxxx
Page 23 of 31
EXHIBIT "B"
To the Agreement dated October 28, 1999 between Internet Holdings, Inc.,
Fairfax Equity Ltd. and the Stockholders of Fairfax Equity Ltd.
CONSENT OF STOCKHOLDERS
The undersigned stockholder of Common Stock of Fairfax Equity Ltd a UK Company,
does hereby consent to the exchange of the shares of Fairfax Equity 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 6,480,000 shares of Internet Holdings, Inc., for all
of the issued and outstanding shares of Fairfax Equity Ltd which are owned by
the Undersigned.
ACCEPTANCE
Dated: October 28, 1999 By:
-----------------------------------
For & on behalf of STG Holdings Plc
Page 24 of 31
EXHIBIT "B"
To the Agreement dated October 28, 1999, between Internet Holdings, Inc.,
Fairfax Equity Ltd and the Stockholders of Fairfax Equity Ltd.
CONSENT OF STOCKHOLDERS
The undersigned stockholder of Common Stock of Fairfax Equity Ltd, a UK Limited
Company, does hereby consent to the exchange of the shares of Fairfax Equity
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 2,160,000 shares of Internet Holdings, Inc., for all
of the issued and outstanding shares of Fairfax Equity Ltd., which are owned by
the Undersigned.
ACCEPTANCE
Dated: October 28, 1999 By:
---------------------------------------
For & on behalf of T.H. Investments Ltd
Page 25 of 31
EXHIBIT "C"
STOCKHOLDER'S CERTIFICATE
The undersigned stockholder of Fairfax Equity 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 October 28, 1999.
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 October 28, 1999.
By:
-----------------------------------
For & on behalf of STG Holdings Plc
Page 26 of 31
EXHIBIT "C"
STOCKHOLDER'S CERTIFICATE
The undersigned stockholder of Fairfax Equity 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 October 28, 1999.
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 October 28, 1999.
By:
---------------------------------------
For & on behalf of T.H. Investments Ltd
Page 27 of 31
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 other than as set out in
the agreement between the Company and Fairfax Equity Ltd.
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,
By:
-----------------------------------
For & on behalf of STG Holdings Plc
Page 28 of 31
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 other than as set out in
the agreement between the Company and Fairfax Equity Ltd.
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,
By:
---------------------------------------
For & on behalf of T.H. Investments Ltd
Page 29 of 31
Acquiree Schedules
Page 30 of 31
Acquiror Schedules
Page 31 of 31
