SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO 1 TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
ACCIDENT PREVENTION PLUS, INC.
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(Name of Small Business Issuer in its charter)
State of Nevada
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(State or other jurisdiction of incorporation or organization)
11-3461611
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(I.R.S. Employer Identification No.)
325 Wireless Blvd.
Hauppauge, New York 11788
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(Address of Principal Executive Offices)
(516) 360-0600
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(Issuer's telephone number)
Securities to be registered pursuant to Section 12(b) of the Act: NONE
Securities to be registered pursuant to Section 12(g) of the Act: COMMON STOCK,
$.001 PAR VALUE
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TABLE OF CONTENTS
Page
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PART I
Item 1. Description of Business. 3
Item 2. Management's Discussion and Analysis or Plan of Operation. 31
Results of Operation 32
Liquidity and Capital Resources 34
Item 3. Description of Property. 40
Item 4. Security Ownership of Certain Beneficial Owners
and Management. 40
Item 5. Directors, Executive Officers, Promoters and Control Persons. 41
Item 6. Executive Compensation. 45
Item 7. Certain Relationships and Related Transactions. 46
Item 8. Description of Securities. 47
Common Stock 47
PART II
Item 1. Market Price and Dividends on the Registrant's Common
Equity and Other Shareholder Matters. 47
Item 2. Legal Proceedings. 48
Item 3. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. 48
Item 4. Recent Sales of Unregistered Securities. 49
Item 5. Indemnification of Directors and Officers. 51
Item 6. Financial Statements 52
PART III
Item 1. Index to Exhibits. 53
Item 2. Description of Exhibits. 53
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PART I
As used in this Registration Statement, the term "Company" refers to
Accident Prevention Plus, Inc. The term "APP LLC" refers to Accident Prevention
Plus, LLC, a limited liability company organized under the laws of the State of
New York. The term "IPS-NY" refers to International Purchasing Services, Inc., a
New York corporation and a wholly-owned subsidiary of the Company.
This Registration Statement may contain forward-looking statements.
These statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those anticipated in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, those discussed in the section entitled "Risk Factors"
under "Item 1. Description of Business".
Item 1. Description of Business.
Introduction
Accident Prevention Plus, Inc. (the "Company") was incorporated under
the laws of the State of Nevada on October 28, 1998 to become the holding
company of Accident Prevention Plus, LLC, a limited liability company ("APP
LLC") and International Purchasing Services, Inc., a New York corporation
("IPS-NY").
Accident Prevention Plus, Inc. was formed during June 1993 as a
corporation under the laws of the State of New York. During February 1996,
Accident Prevention Plus, Inc. converted to a limited liability company under
the laws of the State of New York ("AAP LLC"). Since its inception in 1993, APP
LLC has been engaged in the design, marketing and distribution of onboard
computer recording and fuel monitoring systems for commercial and fleet
vehicles. .
International Purchasing Services, Inc. ("IPS-NY") was incorporated
under the laws of the State of New York on March 3, 1993 to provide general
purchasing services for large multinational companies worldwide. As of the date
of this Registration Statement, IPS-NY provides various support services to APP
LLC including, but not limited to, shipping, receiving and warehousing. IPS-NY
is also responsible for purchasing product components and providing financing
and other general overhead support for APP LLC.
The Company's principal executive offices are located at 325 Wireless
Blvd., Hauppauge, New York 11788. Its telephone number is (516) 360-0600, its
facsimile number is (516) 265-3351, and its e-mail address is
[email protected].
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Reorganization
Effective as of October 28, 1998, the Company entered into an Exchange
Agreement (the "Exchange Agreement") with all of the equity members of APP LLC
pursuant to which it was agreed that (i) the equity members would exchange their
interests in APP LLC for shares of common stock of the Company, and (ii) the
Company would issue to the equity members shares of its common stock
commensurate with their respective proportionate interests in APP LLC.
Effective as of October 28, 1998, the Company also acquired IPS-NY by
entering into an Agreement and Plan of Reorganization ("Plan of Reorganization")
with IPS-NY pursuant to which it was agreed that (i) the sole shareholder of
IPS-NY would transfer all of the issued and outstanding shares of IPS-NY to the
Company in exchange for shares of common stock of the Company, and (ii) the
Company would issue to the sole shareholder of IPS-NY 2,975,000 shares of its
common stock. The Company also simultaneously acquired KMR Telecom, Ltd., a
corporation organized under the laws of India ("KMR") by entering into an
Agreement and Plan of Reorganization with KMR pursuant to which it was agreed
that (i) all of the shareholders of KMR would transfer all of the issued and
outstanding shares of KMR to the Company in exchange for shares of common stock
of the Company, and (ii) the Company would issue to the shareholders of KMR an
aggregate of 800,000 shares of its common stock.
During June 1999, management of the Company determined that there was a
mistake of fact involving the Agreement and Plan of Reorganization with KMR.
Management discovered that the laws of India prohibited a foreign entity from
holding more than a 49% equity ownership interest in a company organized under
the laws of India. Therefore, the Agreement and Plan of Reorganization between
the Company and KMR was in violation of the laws of India. On June 21, 1999,
retroactively effective to October 28, 1998, the Company entered into a
Rescission Agreement with KMR pursuant to which it was agreed that (i) the
Agreement and Plan of Reorganization with KMR would be set aside, (ii) the
previous shareholders of KMR would return to the Company their respective stock
certificates evidencing ownership of the 800,000 shares of common stock of the
Company, and (iii) KMR would cease to be a wholly-owned subsidiary of the
Company with no further rights, duties or liabilities to the Company.
On September 13, 1999, Accident Prevention Plus (UK) Limited ("APP UK")
was formed as a private limited company under the laws of England and Wales.
Simultaneously, the Company acquired APP UK pursuant to an acquisition of all of
the issued and outstanding shares of ordinary stock. As of the date of this
Registration Statement, APP UK is a wholly-owned subsidiary of the Company and
will provide services including, but not limited to, sales and marketing,
administration, and technical support for the United Kingdom marketplace.
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Overview of Business
In accordance with the terms and provisions of the Exchange Agreement
and the Plan of Reorganization, the Company acts as the holding company of APP
LLC and IPS-NY. As used in this Registration Statement, the term "Company" will
include APP LLC unless APP LLC is otherwise individually referenced.
The Company designs, develops, manufactures and distributes a
comprehensive line of onboard computer recording systems and fuel monitoring
systems for commercial and fleet vehicles. The Company has completed the
development of three different onboard recording systems (hereinafter, called
the AP+Series), which were designed to (i) promote safe and efficient driving
practices, (ii) provide security for unauthorized operational use of a vehicle;
(iii) automatically monitor and record vehicle operational data for accident
prevention, driver training, driver evaluation and maintenance purposes; and
(iv) reduce the overall costs of maintaining and operating fleet vehicles. Each
of the AP+Series onboard recording systems are fully programmable data recorder
systems that include a data recorder for each fleet vehicle, a Smart-card for
each driver, a central card-reader with management computer software which is
compatible with Microsoft Windows.
The Company is currently in the process of developing a fourth onboard
recording system for the AP+Series, which is designed to include features and
options such as global positioning systems for vehicular tracking, mapping and
communications, in-vehicle alcohol sensor/breathalyzer units, fatigue sensor to
monitor and record driver alertness, and a fingerprint recognition system on the
Smart-card for various applications.
The Company has designed and developed a fuel monitoring system called
the Fuel Intake Monitoring System (hereinafter, called the "FIMS"), which was
designed to streamline the fueling process for any type of vehicle by using
wireless communication, such as fueling, vehicle identification and credit
authorization. As of the date of this Registration Statement, the Company has
not begun to market the FIMS pending completion of its patent research
The Company has also designed and developed a dual axis accelerometer,
which was designed to measure the sway of a vehicle.
The Company has planned new product development to meet the needs of a
consumer related low-cost system to sell to the major automobile manufacturers.
Additionally, APP LLC has developed a proprietary exhaust reading technology to
incorporate into the AP+Series. Management of the Company intends to conduct
patent research on this new technology which is designed to meet the
Environmental Protection Agency ("EPA") measurement requirements of exhaust
emission. See "Description of Business - Products -OnBoard Computers" and "
- -Other Products/Services".
The Company has primarily been engaged in the design, development and
testing of the AP+Series, the FIMS and ancillary technologies. As of the date of
this Registration Statement, the Company has generated limited revenue from
sales of AP+Series products and related products.
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Business Strategy
Industry Overview. The transportation industry has shown constant and
steady growth in terms of interstate commerce and the number of vehicles on the
highways. This growth has included all modes of transportation on the highways
including, but not limited to, trucks, buses, cars and vans. It also includes
other modes of transportation, such as railways, maritime vessels and private
aircraft. Based on management's estimates of industry manufacturers in the
United States and Canada, management believes that the transportation industry
has grown an average of 15% during the last four years. Management expects,
based on economic forecasts, that this growth will continue for the foreseeable
future.
Based on government figures for commercial vehicle registration, over
49,000,000 commercial vehicles are registered in the United States (with close
to 3 billion miles traveled annually), over 3,836,000 commercial vehicles are
registered in the United Kingdom, over 5,000,000 in France, over 500,000 in
Belgium, over 3,800,000 in Canada, over 3,000,000 in Germany, over 2,800,000 in
Italy, over 3,800,000 in Mexico, over 380,000 in Egypt, and 1,100,000 in Saudi
Arabia. This industry and these countries, including other countries globally,
represent a substantial marketplace in which the Company will be able to market
its products.
Moreover, management believes that during the past eight years, fleet
managers of trucking companies have concentrated their efforts at becoming
better educated in the performance and evaluation of the costs associated with
operating and maintaining their fleets. The trend has been to use monitoring
devices, which include tachographs (use is currently mandatory in Europe),
onboard recording devices, fuel management and monitoring systems, and global
position systems ("GPS"). Management believes that fleet managers of major
trucking companies have realized that through proper driver training, fleet
management and safety management, they are able to control and reduce costs,
thus becoming more profitable.
Moreover, the importance of driver training and accident prevention
systems has reached governmental bodies and is being considered for possible
legislation in Europe. Some states in the United States have enacted legislation
requiring the use of breathalyzers for individuals who have been convicted of
driving while intoxicated or driving under the influence.
The AP+Series and FIMS are monitoring systems using proven, reliable
technologies to promote safety on highways, prevent theft, reduce fuel
consumption, and reduce the overall costs of maintenance and operation for any
type of vehicle, whether private or commercial. They were developed to measure
and record specific information and data, which management believes will be
useful in a number of industries throughout the world. Moreover, the Company
believes that the technological superiority coupled with the unique abilities of
the AP+Series and FIMS to monitor a wide range of critical information will give
the Company a competitive advantage worldwide in a fast growing and extremely
important industry.
Sources of Funding/Revenue. During the prior fiscal years ended
December 31, 1998 and December 31, 1997, respectively, the general sources of
funding for the Company included, but was not limited to, loans made by officers
of the Company, procurement of lines of credit and/or loans from financial
institutions. See "Item 2. Management's Discussion and Analysis or Plan of
Operation." Such funding has supported the Company's research and development
efforts in the creation, development and testing of the AP+Series products and
FIMS. Management believes that the Company's continued growth and financial
success will depend on its ability to (i) strengthen and increase its customer
base by enhancing and diversifying use of the AP+Series products and related
products, (ii) increase the number of customers and expand into additional
markets, (iii) control production costs; and (iv) increase the production rate
of the AP+Series products and related products. See "Description of Business -
Products", "-Marketing", and "-Manufuacturing".
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Management believes that the Company will generate the majority of its
revenue from the sale of the AP+Series .products. Management anticipates that a
portion of such revenue will be derived from installation of the AP+Series in
driver training simulators and training vehicles. The Company has developed a
customized software system according to specifications for driver training
applications for use with the AP+Series units (the "Pilot 2001"). Pursuant to an
agreement dated February 14, 1996 between APP LLC and AFT-IFTM, the largest
driver training institute in Europe ("AFT-IFTM"), AFT-IFTM purchased from APP
LLC all rights, title and interest in the Pilot 2001 software. The Pilot 2001
software can only be used in connection with the AP+Series units, therefore,
management anticipates entering into long-term contractual relationships with
Carnegie Mellon University Driver Training and Safety Institute ("CM")and other
similar companies for installation of the AP+Series units in driver training
simulators and training vehicles.
Moreover, as of the date of this Registration Statement, the Company
has installed one, and is in the process of installing another, AP+Series unit
on driver training simulators located at CM Driver Training & Safety Institute.
Management believes that installation of the AP+Series units on these driver
training simulators creates a strategic marketing edge for the Company because
of the high visibility of such installations to governmental agencies, such as
the U.S. Department of Transportation, the American Trucking Association, other
universities and driver training schools. Marketing exposure for the Company,
the AP+Series products, and the Company's involvement with the CM Driver
Training & Safety Institute has resulted in articles written in various
newspapers. The Company is currently in the process of finalizing an agreement
with CM regarding use of the CM Driver Training Institute as a test, training
and research center. See "Description of Business - Product Development, Design
and Research".
Management believes that additional revenue may be generated through
the implementation of maintenance contracts, accessory reorders and insurance
rebates.
Products
Onboard Computers.The Company has completed development of three
different onboard recording systems called the AP+Series (the APP1000, APP2000
and APP3000), which monitor and record data for accident prevention, driver
training and evaluation, and maintenance operations for fleet vehicles
worldwide. The basic unit hardware is the same for the three series, although
the APP2000 and APP3000 series have upgrades and will perform more functions to
meet the requirements of the customer.
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The AP+Series are often dubbed "black boxes" after the ones used in
large aircraft. The AP+Series units can be custom-designed to specific
requirements by using thousands of individual operating parameters and are
efficiently upgradable to meet further needs of fleet management companies as
they adapt to a changing world. The AP+Series have the ability to monitor,
record and retrieve approximately 10,000 types of data. Some examples of the
analyzed categories for the transportation industry include, but are not limited
to, (i) driving chronologies (maximum speed, deceleration, idling, last 20
overspeedings, brake occurrences and intensities), (ii) trip chronologies
(driver identification, date and time of vehicle usage, total driving time and
distance, dangerous braking occurrences), and (iii) vehicular chronologies
(distance/speed, engine rpm, lights, water temperature, oil temperature, air
pressure, vehicular sway). This data is permanently recorded thus often
providing a record of critical information such as "near misses" and actual
accidents. The AP+Series are flexible in their monitoring and can be custom
tailored to meet required specifications.
Installation and Use. Installation and use of the AP+Series are
comprised of the following stages.
(i) Electronic sensors that normally pre-exist in each vehicle are
located and utilized whenever possible. In the event that a
vehicle is not equipped with pre-existing electronic sensors,
these components are installed in the existing electrical
system throughout various locations in the vehicle;
(ii) An AP+Series recording unit is located either on or under the
vehicle's dashboard. These units will then acquire the
information described above, which is delivered to the
recording unit from the electronic sensors located throughout
the vehicle.
(iii) A "Smart card" is given to each driver and contains all
information deemed necessary by fleet/safety management, such
as identifying the driver (name, driver's license category,
fleet number, etc.). In order to start the vehicle, the driver
must insert his "Smart card" into the "Smart card" receptacle.
The vehicle will not start without this initial step, if
programmed to do so, and will not operate in an unauthorized
vehicle or by an unauthorized driver.
(iv) The "Smart card" gives a permanent image of driver patterns
and is updated automatically each time the card is inserted
into the "Smart card" receptacle.
(v) Upon completion of the route, either daily or weekly, the
fleet or safety manager will insert the "Smart card" for a
given vehicle and/or driver into a "Smart card/memory" card
reader that is usually located at the fleet company's main
office, thus submitting to management a record of all
collected data . The reading of the "Smart card" containing
all of the data takes approximately four seconds.
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(vi) The recorded data can then be entered automatically into any
personal computer operating under the "Microsoft Windows"
programs. The collected data can then be evaluated for a
precise analysis of vehicle condition and driving performance.
A fleet manager can review a particular driver or vehicle in
connection with overall performance or for possible violations
of established company standards regarding speed, acceleration
and deceleration. A fleet manager can also review the overall
performance of drivers or vehicles by viewing performance from
any IBM compatible computer terminal.
The AP+Series are adaptable for use on all moving vehicles and
equipment including, but not limited to, trucks, school and commercial buses,
ambulances and other emergency vehicles, aircraft, boats and ships, trains,
earth moving and construction equipment, and virtually any other type of moving
vehicle. Moreover, management believes that the AP+Series are unique in the
industry due to use of the "Smart card" technology. The use of AP+ custom
software gives the AP+Series the ability to be easily upgraded and customized to
meet customer specifications and needs. It also gives the AP+Series the ability
to be utilized outside of the fleet vehicle market.
Specific Features. Features of the AP+Series onboard recording systems
provide many cost-effective benefits as described below, including reduced
insurance rates, reduced fuel consumption, reduction in the occurrence of
accidents, better preventative maintenance, reduced over-speeding by drivers,
reduced theft, easier compliance with federal and local laws, and an effective
driver training tool.
Safety/Accident Prevention. Management considers the AP+Series to be
proactive management tools designed to promote safe and efficient driving
practices. The AP+Series constantly monitors adherence by drivers to established
company driving standards, such as acceleration, deceleration, engine rpm and
speed. The AP+Series also assists drivers on the road by warning them when they
may be violating established company safety standards. It also records the
parameters of actual vehicle operation for appropriate use in driver training
programs. Furthermore, the AP+Series can educate drivers to adapt their driving
patterns to road conditions and environment and provide a powerful tool for
performance evaluation of both driver and vehicle. Management believes that not
only does the AP+Series help in preventing accidents, but it also is a
beneficial tool when accidents do occur.
Reporting. The AP+Series automatically records vehicle operational data
concurrent with sudden accelerations and decelerations, or collisions. The
AP+Series are designed to ensure that the data is secure from power failure and
tampering. Such unbaised recorded data may be used for later analysis, such as
in accident reports, or to confirm or refute claims that may be made against a
company or its drivers. All data recorded from the AP+Series can be printed from
an office printer in a variety of standard or customized reports or graphs.
These reports can be used in driver education programs, maintenance evaluation
of vehicles, and in other general fleet management programs.
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Security. The AP+Series provides security for vehicles and for vehicle
data. With use of an APP+Series, operational access to company vehicles can be
carefully, quickly and conveniently controlled by the fleet manager.
Cost-Effective Use. Management believes that by constantly monitoring
fleet vehicles, the AP+Series permits a company to more accurately schedule
preventive maintenance, increase fuel economy, and extend overall vehicle
service life. System data feedback to drivers should encourage more careful
driving habits that will serve to reduce the frequency of repairs and
replacements, as well as the occurrence accidents. Use of excessive quantities
of fuel or oil, high maintenance vehicles and other dangerous vehicle conditions
can also be identified before they become hazardous to the company's financial
status or to the general public.
The following table sets forth the approximate percentage of net
revenues derived by the Company from the sale of each of the AP+Series products
for fiscal year ended December 31, 1998:
Product Percentage
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APP1000 40%
APP2000 10%
APP3000 50%
APP4000 System. The Company is currently designing the APP4000 system.
The APP4000 system will include features such as a global positioning system
(GPS") for vehicular tracking, mapping and communications, an in-vehicle alcohol
sensor/breathalyzer unit, a fatigue sensor which will monitor and record driver
alertness, and a fingerprint application for greater security when used in
conjunction with the "Smart card". Management believes that use of these
features will also provide the Company with the opportunity to expand and
diversify into the medical and other fields. See "Description of
Business-Products-Smart Cards".
Fuel Intake Monitoring System. The Fuel Intake Monitoring System
("FIMS") was designed by the Company to automate and simplify many aspects of
the fueling process. Through the technological use of radio frequency
communication, the FIMS will provide a fleet owner with the ability to prevent
fuel theft, receive paperless billing for fuel consumed, and reduce vehicle
downtime by simplifying and speeding up the fueling process.
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Design/Usage. The design of the FIMS consists of a vehicle
unit which is capable of storing and transmitting data concerning the vehicle,
including fuel level, odometer reading, fuel type required, and the maximum
amount of fuel permitted per filling. The other components of the system include
a nozzle unit, tank inlet antenna, ground loop antenna, station controller and a
LCD display on the fuel pump at the retail filling station.
Once a vehicle pulls into a FIMS equipped filling station, the system
automatically identifies the vehicle, reads the vehicle's fuel level, fuel type,
current mileage and authorized fuel load. This identification process takes
approximately five seconds. During this process, the FIMS disables the fuel pump
until the fuel pump nozzle is placed inside the vehicle's fuel tank. In the
event the driver should attempt to remove the nozzle and fill a "gerry can", the
FIMS will no longer "see" the vehicle and will terminate fueling. This makes
pilferage of fuel or "gerry canning" virtually impossible. Gerry canning is a
common method employed by drivers whereby a driver may fuel not only the company
vehicle, but also their own private vehicle or gas can. Management estimates,
based on studies, that one major oil company in Europe with 3.5 million vehicles
under corporate contract was subjected to an approximate 6% rate of fuel
pilferage.
An additional advantage of the FIMS is the elimination of the need for
drivers to carry cash or credit cards for refueling purposes. Fueling is
completely controlled by a company using the FIMS with computerized monitoring
of all relevant vehicle data and subsequent paperless billing.
As of the date of this Registration Statement, the Company has pilot
tested the FIMS at two Shell Oil locations in France, Ruffec and St. Cloud.
Management believes that these pilot tests have proven the concept of FIMS to be
valuable and successful. The FIMS was also tested in the manufacturing
laboratories of Schlumberger, Shell Retail Petroleum Europe and Lockheed Martin.
The FIMS also received "CE" approval for sale in Europe from Emitech (the
equivalent of the Underwriters Laboratory in the United States).
Management has made a strategic business decision to hold introduction
of the FIMS into the marketplace until patent searches are completed. Management
anticipates that upon its introduction into the marketplace, the integration of
the FIMS into the AP+Series will be completed. There can be no assurance,
however, that such integration will be successful.
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Moreover, during fiscal year 1996, APP LLC entered into a grantee award
agreement with the University of South Florida ("USF") for the research,
development and design of the FIMS. USF had received a grant of approximately
$428,793 for the research, development and design of the FIMS and forwarded such
proceeds to a sub-contractor chosen jointly by USF and APP LLC. Pursuant to the
terms of the agreement, APP LLC agreed to (i) direct the research, development
and design of the FIMS and bring such technology to a saleable commercial
product, and (ii) repay to USF structured payments based on revenues generated
from the FIMS product sales . Pursuant to the terms of the agreement, in the
event no revenues were generated from sales of the FIMS within two years after
completion of the funding, all rights to the technology relating to the FIMS
will revert exclusively to USF. As of the date of this Registration Statement,
the Company has not sold FIMS products to date and, according to the terms of
the agreement, rights to the technology relating to the FIMS should have
reverted to USF. The Company intends to pursue negotiations with USF regarding
its respective percentage ownership interest in the rights to the technology
relating to the FIMS in view of the fact that the Company expended its own funds
for payment of research and development expenses prior to and after such
funding. There is no guarantee that the Company will be successful in such
negotiations and may potentially loose all rights to the technology relating to
the FIMS.
Other Products/Services. The Company has also designed and developed a
proprietary opacity sensor for incorporation into the AP+Series, which is
capable of reading vehicle emissions in real time during the operation of the
vehicle. This function will provide fleet managers with the ability to monitor
and record in real time and ensure their ability to maintain compliance with
measurement requirements of exhaust emissions established under rules and
regulations promulgated by the Environmental Protection Agency ("EPA").
Management intends to conduct patent research on this technology which has been
designed to meet such measurement requirements.
The Company has a wholly-owned subsidiary, International Purchasing
Services Inc., a New York corporation ("IPS-NY") which is primarily responsible
for providing general purchasing services to the Company for the supply of
electromechanical active and passive components to multinational original
equipment manufacturers ("OEMs") throughout the world. IPS-NY has
representatives in England, France, Israel and India. The management and staff
of IPS-NY had over twenty years of procurement experience and established
international relationships. Through IPS-NY, the Company gained procurement
expertise, component pricing advantages, a backup manufacturing source, support
staff, and international contacts.
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Smart Cards. The Company has finalized negotiations and entered into an
agreement dated May 12, 1999 with Schlumberger Technologies, Inc., which is the
second largest "Smart card" manufacturer in the world ("Schlumberger"). The
agreement generally provides the Company with the right to implement and utilize
Smart card technologies. APP LLC had previously entered into a confidentiality
agreement with Schlumberger regarding non-disclosure of the proprietary
information relating to the AP+Series. See "Manufacturing".
A Smart card is a small electronic device about the size of a credit
card that contains electronic memory and an embedded integrated circuit. The
integrated circuit laminated into the card holds information securely and
accurately. Smart cards can store information that they are programmed for. They
can be energized and accessed by many types of electronic readers and writers.
Smart cards can thus be used for a variety of purposes, including telephone
cards, electronic wallet, passports (repository for tickets and vouchers), keys
(security, passwords and access), medical records (repository of medical history
and insurance information).
Management believes, based on industry statistics, that during 1998
over 613,200,000 Smart cards were issued to applicants in Europe alone, and that
by the year 2000, over 790,200,000 Smart cards will have been issued to
applicants in Europe and over 999,300,000 to applicants world-wide.
The convergence of the Smart card and computing industries has created
numerous opportunities for potential users. Management believes that the
capabilities of its AP+Series, together with use of Smart card technology,
represents a fast growing new technology, which may enable the Company to expand
and enter into additional markets. Management further believes that potential
users of the technology will be able to specialize in developing systems to
support their applications or industries, including airlines, hospitals,
payroll, medical records, security, and use on the internet.
Use of the "Smart card" will allow the AP+Series to be utilized by
customers for non-transportation operations, such as use in the medical field
for recording and updating patient records and in a wide variety of other fields
where the monitoring, recording and tracking of information is critical. "Smart
card" technology may even be used by customers of the Company to provide
security in any area utilizing the technology including, but not limited to,
payroll, drivers' licenses, passports, medical applications, debit cards, and
student identification cards.
Management believes that it can successfully penetrate these and many
other markets as introduction of Smart card technology and adoption by consumers
in North America start to reach its maximum potential. As of the date of this
Registration Statement, management believes that it has commenced market
penetration due to recent product orders, however, the Company may never
successfully penetrate these markets. Management is currently negotiating with
medical care facilities and hospitals concerning use of its AP+Series. See
"Customers and Marketing-Long Term Planning".
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Product Development, Design and Research
Management believes that the technological capabilities of the
AP+Series will provide the Company with a technological advantage in the
industry. As a result of the Company's research and design efforts and the
successful testing of its products, the Company has received significant
interest from a number of institutions in the United States and Europe regarding
the AP+Series products, and has subsequently sold the AP+Series products to
specific clients.
As of the date of this Registration Statement, the Company has
installed the AP+Series units in over 100 vehicles pursuant to an agreement with
AFT-IFTM, the largest driver training institute in Europe. AFT-IFTM, which
generally sets the driver training standards for the European Economic
Community, has subsequently trained over 30,000 drivers using the AP+Series
products. The Company is also assisting in the actual development of standards
for new legislation. The new legislation will be designed to standardize all
onboard recording systems for the entire European Economic Community. Management
believes that its prominence as a leader in the development of onboard recording
systems will enhance the marketability of its products in other countries and
industries.
In the United States, Carnegie Mellon University/Driver Training &
Safety Institute of Pittsburgh, Pennsylvania ("CM") has delivered a letter of
intent to the Company indicating its desire to establish a long-term
relationship with the Company. It is anticipated that CM and its related
entities will cooperate in the research and development of new products,
presence at trade shows, press releases, and letters of recommendation. CM has
generally proposed that it would act as a research arm for the Company and that
the Company would act as the sales and marketing arm for new, jointly developed
onboard recording devices for the occupational driving industry. CM is also
negotiating with the Company for installation and use of the AP+Series in CM's
driver training simulators. As of the date of this Registration Statement, an
IP3000 system has been installed on a driver training simulator at the CM Driver
Training & Safety Institute in Pennsylvania. Management believes that CM has
developed one of the most technologically advanced driver training schools in
the United States, and that use of the AP+Series products on their vehicles and
simulators will establish usage of the AP+Series products as a standard feature
for the driver training industry.
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In conjunction with CM, the Company made a presentation of the
AP+Series to the National Transportation Safety Board and the American Trucking
Association. The Company has entered into a contract dated August 1, 1999 with
American Trucking Association ("ATA") pertaining to a federally funded project
administered by the Federal Highway Administration and ATA regarding use of one
of the Company's products, the Datalogger, to monitor fatigue technologies used
as part of studying fatigue in drivers. Management believes that this contract
award from an administrative agency of the federal government is significant in
that the AP+Series products would be considered a tool for use by the federal
government in analyzing various technologies.
Management also believes that the design of the AP+Series products
provides flexibility for integration with other types of technologies, such as
alcohol breathalyzers. As of the date of this Registration Statement, the
Company is in negotiations for a joint venture with Life Science, Inc., Draeger
A.G., and Life Science Corporation to integrate the alcohol breathalyzer with
the AP+Series products. Some states in North America have already enacted
legislation mandating individuals who have been convicted of driving while
intoxicated ("DWI") or driving under the influence ("DUI") to use alcohol
sensors and breathalyzers in their vehicles.
The Company is also engaging in negotiations with Digitran Corporation
of Logan, Utah ("Digitran"), which is the manufacturer of the driving training
simulators used by CM, to install the AP+Series products on all Digitran
simulators throughout the world.
In addition, APP LLC and Lockheed Martin Corporation, Inc. ("Lockheed")
entered into a manufacturing agreement dated January 24, 1997 and a
non-disclosure agreement dated January 14, 1997 relating to Lockheed's
assistance in the design and testing of the AP+Series products. See "Description
of Business - Manufacturing".
The Company has entered into a joint venture agreement dated January 4,
1999 with Software Hardware Specialists, Inc. ("SHS"), a New York based
engineering company engaged in the custom design of firmware (a specific type of
software which is required to facilitate communications between hardware and
software). Pursuant to the provisions of the joint venture agreement, SHS has
agreed to provide engineering, quality control, project management for the
Company's products, and are responsible for overseeing the manufacturing process
and establishing a repair depot for any of the Company's products. SHS has
developed a test bench capable of testing eight units simultaneously. SHS has
also designed firmware for the AP+Series according to specifications written by
the Company's engineering staff.
Pursuant to purchase orders made by the Company with Island Designers,
Inc., a New York corporation ("ID"), ID has agreed to design and develop
printed circuit board layouts for the AP+Series. In addition, ID has completed
limited production runs of the
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AP+Series products.
The Company intends to maintain research and development centers. . SHS
has established a research and development center for the Company in New York.
In addition, the Company anticipates that CM will provide a research and
development arm for the Company to assist in refining existing products and the
design and development of new products.
The Company spent approximately $236,644 during the nine month period
ended September 30, 1999 on research and development expenses, and approximately
$37,510 and $339,349 on research and development expenses during the fiscal
years ended December 31, 1998 and 1997, respectively.
Manufacturing
As of the date of this Registration Statement, the AP+Series products
are primarily manufactured by Nexus Corporation, a company located in Vermont
("Nexus"). Nexus has manufactured approximately 600 AP+Series products and the
Company currently has an order with Nexus for the manufacture of approximately
1,500 more AP+Series products.
Management anticipates that when the AP+Series products are to be
manufactured in much larger quantities, manufacturing of the FIMS will be
primarily contracted to Lockheed. APP LLC and Lockheed entered into a
manufacturing agreement dated January 24, 1997 whereby Lockheed generally agreed
to (i) manufacture the printed circuit board assemblies for the FIMS and other
product lines, (ii) provide services including, but not limited to,
qualifications testing, manufacturing engineering, test engineering, and circuit
design support; (iii) mark all products manufactured and assembled by Lockheed
for APP LLC with the Lockheed corporate name and logo; and (iv) allow APP LLC to
reflect that Lockheed manufactured such products when marketing and advertising.
Lockheed has also made two large production facilities available to the Company
to supplement the Company's manufacturing capabilities.
The Company has also established relationships with another
manufacturing company relating to the manufacture of the accelerometers.. The
Company entered into a purchase agreement dated October 16, 1998 with Asteria
Electronics SDN BHD ("Asteria"), whereby Asteria agreed to manufacture the
accelerometers. As of the date of this Registration Statement, Asteria has
manufactured approximately 100 accelerometers with an additional order pending
for approximately 200 more accelerometers. .
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Component Parts. As of the date of this Registration Statement, the
Company has finalized negotiations and entered into an agreement dated May 12,
1999 with Schlumberger Technologies, Inc., which is the second largest "Smart
card" manufacturer in the world ("Schlumberger"). The agreement with
Schlumberger generally provides the Company with the right to implement and
utilize the Smart card technologies. As a part of such negotiations,
Schlumberger agreed to transfer to APP LLC all technology data relating to the
Smart card. Henceforth, on October 17, 1996, APP LLC and Schlumberger entered
into a technology transfer agreement pursuant to which Schlumberger agreed to
provide APP LLC (i) access to all Smart card technology and associated products
for development and distribution by Schlumberger, and (ii) the ability to employ
the Smart card technology. APP LLC also entered into non-disclosure agreements
with Schlumberger. As of the date of this Registration Statement, the Company
has the software, tooling, readers and cards to program the AP+Series products
for various applications. Management anticipates that Smart card technology may
be used in a variety of industries including, but not limited to, banking,
medical, toll payment, payroll, drivers' licenses, security and postal meters.
Customers and Marketing
The Company currently sells the AP+Series and related products
primarily in Europe, Africa and the United States. Customers for the AP+Series
and related products are primarily fleet companies and driver training
institutions.
The Company's current market concentration has been in Europe due to
existing relationships with certain clients and the wide acceptance of Smart
card technology in unrelated applications and industries. Moreover, effective
early 2000, European Economic Community("EEC") legislation will mandate the use
of onboard recording devices utilizing Smart card technology in all new trucks
and buses and all vehicles with eight seats or more. Management's primary
objective is to penetrate the European marketplace and target driver training
institutions.
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As the AP+Series and related products become recognized and if the
Company establishes a prominent presence within the European, North American and
Middle Eastern markets, management intends to increase the distributorship base
by focusing on major vehicle fleet operation. The Company intends to expand the
product line to accommodate the needs of the Company's customers in the
transportation industry and in other industries as well.
The Company intends to market the AP+Series and related products
through the use of distribution agreements, joint ventures, direct sales and
Internet sales. As a result of management's experience in the international
marketplace, the Company expects that it will be able to adjust its marketing
strategy in each market in accordance with the particular customs, needs and
methods of conducting business of the particular culture. To aid in the
marketing of the AP+Series and related products, the Company intends to utilize
training seminars and advertising promotional tools, such as CD-ROMs, catalogs
and participation in trade shows. The Company intends to make its operational
software available in various languages to meet the needs of the particular
markets.
The Company has representatives and distributors in Israel, Europe,
Africa, Mexico and India. APP LLC and World Asset Management, Inc., which is
headquartered in New Milton Hampshire, United Kingdom ("WAM"), entered into an
independent contractor's installation & service agreement dated May 8, 1997
whereby WAM agreed to (i) provide APP LLC with its expertise and "know-how" in
establishing distribution and sales channels in marketplace in the United
Kingdom; (ii) establish the necessary infrastructure to make a successful
introduction of the AP+Series and related products in the United Kingdom; and
(iii) be responsible for establishing an installation and service network for
the AP+Series and related products. The agreement further provided that in
consideration therefore and the payment of $2,500 by WAM to APP LLC, WAM would
receive a 4.9% equity membership interest in APP LLC. Pursuant to the
reorganization of the Company and the Exchange Agreement in which the members of
APP LLC agreed to exchange their equity membership interests in APP LLC for
shares of common stock in the Company, the Company issued 795,000 shares of its
restricted Common Stock to WAM. Neither the Company, APP LLC nor IPS-NY own any
shares of common stock of WAM, and the agreement between the Company and WAM was
entered into pursuant to arms-length negotiations.
APP LLC and Atlantic Financial Management, Inc., which is headquartered
in Fouesnant, France ("AFM"), entered into an independent contractor's
installation and service agreement dated May 16, 1997 whereby AFM agreed to
provide expertise to APP LLC regarding the structure of sales/service and
installation of the AP+Series and related products in France. The agreement
further provided that in consideration therefore and the payment of $2,500 by
AFM to APP LLC, AFM would receive a 4.9% equity membership interest in APP LLC.
Pursuant to the reorganization of the Company and the Exchange Agreement in
which the members of APP LLC agreed to exchange their equity membership
interests in APP LLC for shares of common stock in the Company, , the Company
issued 790,000 shares of its restricted Common Stock to AFM. Neither the
Company, APP LC nor IPS-NY own any shares of common stock of AFM, and the
agreement between the Company and AFM was entered into pursuant to arms-length
negotiations.
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APP LLC and Avignon Trading, Inc., which is headquartered in Savion,
Israel ("Avignon"), entered into an independent contractor's installation and
service agreement dated June 4, 1997 whereby Avignon agreed to (i) provide its
ASIC design (which is an advanced technology that can be used in the AP+Series
and related products to reduce costs) and (ii) setup installation and technical
support for the AP+Series and related products sold throughout Israel. The
agreement further provided that in consideration therefore and the payment of
$2,500 by Avignon to APP LLC, Avignon would receive a 4.9% equity membership
interest in APP, LLC. Pursuant to the reorganization of the Company and the
Exchange Agreement in which the members of APP LLC agreed to exchange their
equity membership interests in APP LLC for shares of common stock in the
Company, the Company issued 800,000 shares of its restricted Common Stock to
Avignon. Neither the Company, APP LLC nor IPS-NY own any shares of common stock
of Avignon, and the agreement between the Company and Avignon was entered into
pursuant to arms-length negotiations.
APP LLC and Darien Partners Investments, Inc., which is headquartered
in Malaysia ("Darien"), entered into an independent contractor's installation
and service agreement dated April 11, 1997 whereby Darien agreed to (i) manage
all installation and service of the AP+Series and related products sold within
the Far Eastern and Middle Eastern countries; (ii) establish an installation and
service network for the Far Eastern and Middle Eastern countries; and (iii)
arrange distribution channels and oversee manufacturing of the APP3000 dual axis
accelerometers. The agreement further provided that in consideration therefore
and the payment of $2,500 by Darien to APP LLC, Darien would receive a 4.9%
equity membership interest in APP LLC. Pursuant to the reorganization of the
Company and the Exchange Agreement, the Company issued 795,000 shares of its
restricted Common Stock to Darien. Neither the Company, APP LLC nor IPS-NY own
any shares of common stock of Darien, and the agreement between the Company and
Darien was entered into pursuant to arms-length negotiations.
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As of the date of this Registration Statement, the contractual
arrangements with WAM, AFM, Avignon and Darien primarily provide the Company
with installation and service management in the event the Company establishes a
dominate presence in these foreign markets through the distribution and sale of
the AP+Series and related products. Management believes that this would not only
strengthen the Company's structure and potential marketability of the AP+Series
and related products, but also places the Company in a favorable position to
properly service the AP+Series and related products sold and distributed in
those foreign markets. See "Part II. Item 4. Recent Sales of Unregistered
Securities".
Moreover, APP LLC and American Overseas Corporation, an investment
company formed under the laws of British Virgin Islands ("AOC"), entered into a
distributor agreement dated August 20, 1998 pursuant to which AOC agreed to (i)
assist in the establishment of marketing and distribution services for the
AP+Series and related products worldwide, and (ii) pay APP LLC $5,000,000 within
a thirty-six (36) month period for the non-exclusive unlimited rights to
purchase the AP+Series and related products at a price of 5% above cost and to
sell those products worldwide, with an initial payment of $2,000,000 due and
owing on August 20, 1999. On July 22, 1999, the agreement was amended to provide
that (i) the $1,000,000 payment due and owing on August 20, 1999 would be due
and owing sixty days from the date that the Company's shares of common stock
commenced trading, (ii) an additional $1,000,000 would be due and owing within
twelve months from the date of commenced trading, and (iii) the balance of
$3,000,000 would be due and owing on or before 36 months from the date of the
amended contract.
Long-term Planning. The Company intends to seek to capture market
niches for long-term business planning in the fields of transportation and
medicine. Some of the proposed developments in the medical field include the use
of Smart card technology in doctors' offices, hospitals, ambulances and
insurance companies.
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Pilot programs are being considered for physician practices whereby
patients are issued a Smart card which contains relevant medical history and
insurance information. Patient use of Smart cards will cut down on fraud and
misuse of insurance cards. Data from a patient's visit can be gathered to
integrate into an electronic bill for the insurance carriers and will save time
and effort in recording data while assisting to eliminate fraud within the
medical industry. Moreover, once an individual has had their vital information
recorded on a Smart card, that individual can be identified in an emergency
while still in an ambulance. By the time the individual reaches the hospital,
their physician, insurance company and medical history have all been retrieved
from the Smart card reader in the ambulance and relayed to the hospital
administration and treating physicians.
Management believes that within the transportation industry, the
AP+Series products, coupled with Smart card technology, may be utilized in
emergency vehicles for police, fire and ambulance departments. In addition, the
AP+Series products coupled with the Smart card technology may be used by a
variety of businesses or governmental agencies to create and track drivers'
licenses, or to create passports, medical cards or insurance cards, which would
provide instant access to critical information.
The Company finalized negotiations and entered into an agreement dated
August 31, 1999 with North-Shore Long Island Jewish Health Systems ("North Shore
Hospital") regarding (i) installation of the APP4000 onboard recording system
and related products with North Shore Hospital, and (ii) provision of services
to integrate the installed APP4000 and related products with existing
technologies utilized by North Shore Hospital. The Company received an initial
payment of $125,000 with the balance due and owing of $131,000 sixty days from
the date of installation, which management anticipates will be approximately
mid-April 2000.
Competition
The onboard recording systems industry is highly competitive. The
Company's major competitors in the marketplace are primarily Cadec, a division
of Cummings Engine, Mobile Data Systems, Orpak, Qualcomm, VDO, Elextor, Rockwell
Tripmaster and Eaton Corporation. Such competition appears to be related to the
Global Positioning Systems. Data Express and Qualcomm have similar products, and
Mobile Data Systems has developed a system closely resembling the AP+Series
products. The Company may also face competition from other, similar companies
with financial resources far greater than those of the Company. However,
management believes that although there is a large degree of competition, most
competitive systems only perform a portion of the functions that the AP+Series
onboard recording systems perform, giving the Company a competitive edge within
the industry.
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Employees and Consultants
As of the date of this Registration Statement, the Company employs 17
persons on a full-time basis and no persons on a part-time basis. The Company's
President and Chief Executive Officer are primarily responsible for all
day-to-day operations of the Company. Other services are provided by outsourcing
and management contracts. As the need arises and funds become available,
however, management may seek additional employees as necessary in the best
interests of the Company. The following lists and describes certain services
performed for the Company by consultants. See "Item 5. Directors, Executive
Officers, Promoters and Control Persons - Advisors and Consultants".
(i) APP LLC and Bristol Consulting Ltd. ("Bristol") entered into a
consulting agreement dated July 30, 1998 pursuant to which Bristol
agreed for a period of five years to (i) assist in the development of
an international market for the AP+Series and related product lines,
and (ii) provide advice regarding corporate structure, capital
acquisition, contracts, equity partners and mergers and acquisitions
pertaining to the Middle East and Far East. The agreement further
provided that (i) APP LLC would pay to Bristol a monthly fee of $5,000
for the first three months of the agreement and, thereafter, a monthly
fee of $10,000 for the duration of the agreement, and (ii) Bristol
would receive an equity membership interest in APP LLC, which would be
exchanged for 837,414 shares of the Company's restricted Common Stock
pursuant to the reorganization of the Company and the Exchange
Agreement. On October 28, 1998, the Company issued to Bristol 837,414
shares of its restricted Common Stock. See "Part II. Item 4. Recent
Sales of Unregistered Securities."
During fiscal year 1998, Bristol performed certain services on behalf
of APP LLC including, but not limited to, (i) the development of
international markets and consummation of the distribution contract
with AOC; (ii) the establishment of manufacturing facilities in
Malaysia for the accelerometers, and (iii) assistance in the
negotiation and consummation of contractual arrangements with IBM in
the Far East.
(ii) APP LLC and Royce Anderson & Monroe, Inc. ("Royce Anderson") entered
into a consulting agreement dated July 30, 1998 pursuant to which
Royce Anderson agreed for a period of five years from the date of the
agreement to (i) assist with development of a market within the United
States and the Western Hemisphere for the AP+Series and related
products, and (ii) provide advice regarding corporate structure,
acquisitions, mergers and equity partners. The agreement further
provided that Royce Anderson would receive an equity membership
interest in APP LLC, which would be exchanged for 2,006,276 shares of
the Company's restricted Common Stock pursuant to the reorganization
of the Company and the Exchange Agreement. On October 28, 1998, the
Company issued to Royce Anderson 2,006,276 shares of its restricted
Common Stock. See "Part II. Item 4. Recent Sales of Unregistered
Securities."
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During fiscal year 1998, Royce Anderson performed certain services on
behalf of APP LLC including, but not limited to, (i) assistance with
the establishment of the marketing and sales structure within APP LLC;
and (ii) assistance with the negotiation and consummation of major
contractual arrangements.
The Company is not a party to any labor contract or collective
bargaining agreement. The Company has experienced no significant labor stoppages
in recent years, and management believes that such relations are satisfactory.
Patents, Licenses, Trademarks, Concessions and Royalty Agreements
Within the next six months from the date of this Registration
Statement, management intends to file an application for trademark protection
for its "AP+Series" products with the United States Department of Commerce,
Patent and Trademark Office. If a certificate of registration for the trademark
"AP+Series" is issued, such registration will remain in full force and effect
for a period of ten years, subject to satisfaction of certain requirements.
The Company has no patents, licenses, franchises, concessions or
royalty agreements that are material to its business as a whole. Management
intends to conduct a patent search on the FIMS and, based upon the results of
its search, file an application with the United States Department of Commerce,
Patent and Trademark Office for issuance of a patent covering the FIMS, if
patent protection can be obtained.
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Government Regulation
The Company's operations may be subject to a variety of laws,
regulations and licensing requirements of federal, state and local authorities.
In certain jurisdictions, the Company may be required to obtain licenses or
permits, to comply with standards governing employee selection and training, and
to meet certain standards in the design and manufacture of the AP+Series and
related products. The loss of such licenses, or the imposition of conditions to
the granting or retention of such licenses, could have a material adverse effect
on the Company.
The Company's advertising and sales practices may be regulated by both
the Federal Trade Commission and state consumer protection laws. Such
regulations may include restrictions on the manner in which the Company may
promote the sale of its products and the obligation of the Company to provide
certain of its customers with rescission rights.
The Company's manufacturing facilities, including research and
development facilities, if any, may be subject to regulation and inspection
standards established by the Occupational Safety and Health Administration
("OSHA"). As of the date of this Registration Statement, none of the Company's
facilities have been inspected for compliance with the standards established by
OSHA. .
The AP+Series and related products may be subject to regulation by
various agencies including the U.S. Department of Transportation and the Federal
Highway Administration, as well as local authorities. Each of these agencies may
regulate various aspects of licensing, permitting and operations of the
AP+Series and related products. See "Item 1. Description of Business - Risk
Factors - Government Regulation".
Political and Economic Policies in Foreign Countries
The Company intends to enter the global marketplace which includes, but
is not limited to, the marketplaces within the United Kingdom, Israel, Africa
and the Far East and Middle East. As a result, the Company's operations and sale
of the AP+Series and related products in these countries may be subject to
political, economic, legal and other uncertainties occurring within these
countries. Changes in policies by the respective governments may result in
changes in laws, regulations or the interpretation thereof, confiscatory
taxation, restrictions on imports and sources of supply, import duties,
corruption, and currency revaluation, all of which may materially and adversely
affect the Company. Moreover, economic reforms and growth in the Far East and
Middle East countries have been initiated, and success in certain countries has
been more prevalent than in others. The continuation or increase of any such
disparities regarding economic reforms and growth could affect the political and
social stability of the Far East and Middle East, and thus the operations of the
Company. Moreover, there can be no assurance that future controversies will not
arise which would threaten trade relations between the United States and the
respective country. In any of such eventualities, the business of the Company
could be adversely affected.
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Risk Factors
The shares of the Company are highly speculative and involve an
extremely high degree of risk. Shareholders of the Company should consider the
following risk factors.
History of Losses/Lack of Substantial Revenues. The Company incurred
recent losses in the amounts of $605,241 during fiscal year 1998 and $661,621
during fiscal year 1997. The Company also incurred losses in the amount of
$949,952 during the nine-month period ended September 30, 1999. These losses
reflect, among other factors, expenses associated with research and development
of the AP+Series products and related products, selling, general and
administrative and interest expenses. Such expenses, along with other expenses,
will continue to increase until the Company attains profitable operations. There
is no assurance that the Company will attain profitable operations.
The Company has had limited sales of the AP+Series and related
products. Therefore, the Company does not have any prior substantial financial
results upon which an assessment of the Company's potential for success may be
based. Furthermore, the Company had a negative working capital of approximately
$1,700,000 at September 30, 1999. Accordingly, the success of the Company will
be in part dependent on management's ability to continue financing the business
operations of the Company. The Company is subject to all the risks and
uncertainties which are characteristic of a new business enterprise, including
the problems, expenses and other difficulties typically encountered in the
course of establishing new markets, training new personnel, and organizing and
conducting operations. The Company faces all of the risks specifically inherent
in the type of business in which the Company engages. There can be no assurance
that the Company will be able to operate successfully or profitably.
Going Concern. The independent auditors of the Company, Massella,
Tomaro & Co. LLP have qualified their opinion based upon the uncertainty
associated with the Company's ability to continue as a going concern. See
"Financial Statements".
Dependence on Key Personnel. The Company is substantially dependent
upon the personal efforts and abilities of its officers and directors, Richard
J. Goodhart, Steven H. Wahrman, Jean Paul Daveau and Julius J. Valente Jr. The
loss of any of the Company's officers or directors could be detrimental to the
operations of the Company and have a materially adverse affect on the Company's
ability to operate successfully. However, certain of the officers and directors
have entered into extended employment agreements with the Company. The Company
also intends to purchase "key man" life insurance for such officers and
directors. See "Item 5. Directors, Executive Officers, Promoters and Control
Persons - Advisors and Consultants."
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The Company's current officers and directors do not engage in other
businesses for their own account. They devote their full time to the affairs of
the Company.
Need for Qualified Employees. The success of the Company is dependent
upon its ability to attract and retain qualified technical, marketing and
production personnel, either by contractual outsourcing or hiring of employees.
The Company may have to compete with other larger companies for such personnel,
and there can be no assurance that the Company will be able to attract or retain
such qualified personnel.
Competition. The Company is aware that the onboard recording systems
industry is highly competitive. Many of the Company's competitors may have
substantially greater technical, financial and marketing resources than the
Company.
Liquidity Crisis; Need for Additional Financing and Capital. As of the
date of this Registration Statement, the Company is experiencing a severe
liquidity crisis and has not generated significant revenues from sale of the
AP+Series and related products. The Company has financed itself primarily from
advances from principal shareholders, bank loans and lines of credit. The
continued development of the AP+Series and related products and expansion and
operation of the Company's business is dependent upon its ability to obtain
additional financing. Management believes that the Company will require
approximately $1,000,000 of additional financing to cover its operational
expenses for the next four months. There can be no assurance, however, that the
Company will be able to obtain financing from the sale of debt or equity
instruments, bank loans or other sources on terms acceptable to the Company. If
available, any additional equity financings may be dilutive to the Company's
shareholders and any debt financing may contain further restrictive covenants
and additional debt service requirements, which could adversely affect the
Company's operations. See "Item 2. Management's Discussion and Analysis or Plan
of Operation."
Tax Liens. As of September 30, 1999 and December 31, 1998, the Company,
the Company owes approximately $82,714 and $81,819, respectively, of payroll
taxes and related penalties and interest to the Internal Revenue Service and the
Employment Commission of the State of New York. These taxing authorities have
filed liens against the Company as a result of the unpaid payroll taxes. The
authority provided to these governmental entities may enable such taxing
authorities to seize the Company's assets to pay the respective taxes due and
owing. In the event that such taxing authorities initiate any such action or
other legal action against the Company, the results could adversely affect the
Company's ability to operate. See "Item 2. Management's Discussion and Analysis
or Plan of Operation".
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Possible Violation of Federal/State Securities Laws. The Company may
have violated federal and state securities laws in connection with the sales of
its shares of Common Stock to investors under a private placement offering that
was not registered under the federal securities laws. The offering and sale of
such shares of the Company's Common Stock pursuant to its Private Placement
Memorandum dated January 27, 1999 and April 7, 1999, respectively, was conducted
pursuant to an exemption from registration in accordance with Regulation D, Rule
504, under the Securities Act of 1933, as amended (the "1933 Securities Act").
Because the Company continued to sell its shares of Common Stock to investors
after the date the Company effectively became a reporting company under the
Securities Exchange Act of 1934, as amended (the "1934 Exchange Act"), such
exemption from registration under Regulation D may not be available to reporting
companies. As a result, the private placement may have violated federal
securities laws. Moreover, certain state securities rules and regulations may
not have been complied with to ensure availability of a private placement
transactional exemption. Therefore, because of those possibilities, the Company
has offered to certain investors in the private placements the right to resell
their shares to the Company and receive a refund of the purchase price paid by
those investors.
To date, no investor has accepted the Company's offer to resell their
respective shares of Common Stock to the Company and receive a refund of their
purchase price. However, if those investors in the private placement accept the
Company's offer, the Company would be required to pay to them approximately
$284,307. If this occurs, the Company cannot be certain that it would have
sufficient funds to repurchase the shares of Common Stock sold in the private
placements. In addition, the Company may be subject to liability and fines or
penalties under the federal securities and/or state securities laws because such
securities laws do not generally provide that liability is avoided because an
offer is made to repurchase shares sold in violation of those laws.
Product Liability. Due to the nature of the AP+Series products and
related products, it is possible that purchasers of the product could sustain or
allege injury due to or as a result of the malfunction of the product and that
the Company could be held liable for damages due to such injuries. The Company
did not maintain any products liability insurance coverage or any other form of
general insurance coverage from October 1997 through November 1999. In December
1999, the Company obtained product liability and general insurance coverage in
the amount of $1,000,000 against such liability. There can be no assurance that
the Company will not be held liable for damages not covered by or in excess of
any insurance coverage.
Control of Company. As of the date of this Registration Statement and
without taking into account the shares of Common Stock that may be acquired upon
exercise of certain stock options, three of the directors of the Company as a
group beneficially own approximately 43.7% of the outstanding shares of Common
Stock. Based upon this ownership interest, these three directors may be in a
position to effectively control the business and affairs of the Company,
including certain significant corporate actions such as the sale or purchase of
assets and the issuance and sale of the Company's securities.
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Dependence on Patents and Proprietary Technology. The Company's success
may depend, in part, on its ability to obtain patent protection for the
AP+Series products and related products and to preserve the Company's trade
secrets. As of the date of this Registration Statement, the Company is planning
on conducting a patent search regarding the FIMS. There can be no assurance that
others have not independently developed, or will not independently develop,
similar products and technologies or otherwise duplicate any of the AP+Series
products or related products and technologies.
Dependence on Existing Contractual Relations. The Company's success
will depend on the successful introduction and marketing of the AP+Series
products and related products in the global marketplaces which may, in turn, be
dependent upon the continued existence of favorable contractual relations with
its manufacturers and suppliers of integral component parts. These agreements
and the operations of the Company may be dependent on the Company's continued
favorable relationships with its manufacturers and suppliers. The Company's
operations would be materially and adversely affected by the failure of such
manufacturers and suppliers to honor these agreements. In the event of a
dispute, enforcement of these agreements could be time consuming and costly.
There is no assurance that such favorable contractual relations will continue,
and if so, that they will be in the best interests of the Company.
Risks of International Sales/Year 2000 Issues. The AP+Series products
and related products are sold by the Company in the United States and
internationally, principally in Europe and Africa, with intentions to expand
globally. International sales may be subject to political and economic risks,
including political instability, currency controls and exchange rate
fluctuations, and changes in import/export regulations, tariff and freight
rates. Changes in tariffs or other trade policies could adversely affect the
Company's customers or suppliers.
Many existing computer programs, including programs used by the
Company's distributors in certain foreign countries, use only two digits to
identify a year in the date field. These programs were designed without
considering the impact of the upcoming change in the century. If not corrected,
these computer applications and systems could failr or create erroneous results
by, at or after the year 2000 thus disrupting the distribution and sale of the
Company's products in these countries. Management believes that all of the
AP+Series products and related products are Y2K compliant. However, in the event
that the Company's significant contacts or distributors and suppliers do not
successfully and timely achieve year 2000 compliance, the Company's business or
operations could be adversely affected or interrupted in these countries.
28
<PAGE>
Government Regulation; No Assurance of Compliance. The Company's
manufacturing facilities may be subject to regulation and inspection standards
established by the Occupational Safety and Health Administration ("OSHA"). As of
the date of this Registration Statement, none of the Company's facilities have
been inspected for compliance with the standards established by OSHA. Although
the Company believes that it is in material compliance with current standards,
there can be no assurance that any inspection will not reveal that the Company
has failed to comply with the standards established by OSHA and that, as a
result, the Company may be required to expend sums, which can be costly, to
assure compliance with OSHA regulations.
The AP+Series products and related products may be subject to
regulation by various agencies, including the U.S. Department of Transportation
and the Federal Highway Administration, as well as local authorities. Each of
these agencies may regulate various aspects of licensing, permitting and
operations of the Company in connection with the design, development,
manufacture and installation of AP+Series products and related products.
Although management believes that imposition of any such regulations will not
impose great burdens upon the operation of the Company, such regulations are
subject to constant change. Unforeseen changes in such regulations may have a
significant impact on the Company.
Risks Related to High Leverage/Restrictions on the Company's
Activities. The Company has financed its operations in part by obtaining bank
loans and lines of credit. One such financing consists of a Small Business
Administration guaranteed purchase order line of credit originated by Marine
Midland Bank. In order to obtain this line of credit, the Company signed an
agreement that restricts its activities with respect to subsequent borrowing,
the structure of the Company, and its securities. In addition, the Bank of
Smithtown has required that Mr. Richard Goodhart, a director of the Company,
pledge a certain number of his shares of Common Stock. The Company will
undertake such steps as may be necessary to ensure that any and all action taken
or to be taken by the Company will be acceptable to and approved by Marine
Midland Bank in accordance with the terms of the agreement. See "Item 2.
Management's Discussion and Analysis or Plan of Operation".
Future Sales of Common Stock. As of the date of this Registration
Statement, the Company has 18,200,888 shares of its Common Stock issued and
outstanding. Of the 18,200,888 of the Company's current outstanding shares of
Common Stock, 340,498 are free trading and 17,860,390 shares are restricted as
that term is defined in Rule 144 promulgated under the Securities Act of 1933,
as amended (the "Securities Act"). The Securities Act and Rule 144 promulgated
29
<PAGE>
thereunder place certain prohibitions on the sale of such restricted securities.
Such restricted shares will not be eligible for sale in the open market without
registration except in reliance upon Rule 144 under the Securities Act. In
general, a person who has beneficially owned shares acquired in a non-public
transaction for at least one year, including persons who may be deemed
"affiliates" of the Company as that term is defined under the Securities Act,
would be entitled to sell within any three month-period a number of shares that
does not exceed the greater of 1% of the then outstanding shares or the average
weekly trading volume on all national securities exchanges and through NASDAQ
during the four calendar weeks preceding such sale, provided that certain
current public information is then available. If a substantial number of the
shares owned by the existing shareholders were sold pursuant to Rule 144 or a
registered offering, the market price of the Company's Common Stock could be
adversely affected.
Further, future sales of shares of Common Stock pursuant to offerings
could have a depressing effect on the price of the Common Stock and adversely
affect the Company's ability to raise capital in the future.
Volatility of Stock Price. The markets for equity securities have been
volatile and the price of the Company's Common Stock could be subject to wide
fluctuations in response to quarter to quarter variations in operating results,
news announcements, trading volume, sales of Common Stock by officers, directors
and principal shareholders of the Company, general market trends both
domestically and internationally, changes in the supply and demand for the
Company's shares, and other factors. These factors can be expected to affect the
market price of the Company's shares of Common Stock when the Company receives
the approval by the National Association of Securities Dealers, Inc. (the
"NASD") to trade the Company's shares of Common Stock on the OTC Bulletin Board.
Broker-Dealer Sales of the Company's Shares. The Common Stock of the
Company will be defined as "penny stocks" under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Exchange Act and such penny stock
rules and regulations promulgated thereunder generally impose additional sales
practice and disclosure requirements upon broker-dealers who sell the Company's
Common Stock to persons other than "accredited investors" (generally, defined as
institutions with assets in excess of $5,000,000 or individuals with net worth
in excess of $1,000,000 or an annual income exceeding $200,000 ($300,000 jointly
with a spouse)) or in transactions not recommended by the broker-dealer.
For transactions covered by the penny stock rules, the broker-dealer
must make a suitability determination for each purchaser and receive the
purchaser's written agreement prior to the sale. In addition, the broker-dealer
must make certain mandated disclosures in penny stock transactions, including
the actual sale or purchase price and actual bid and offer quotations, the
compensation to be received by the broker-dealer and certain associated persons,
and deliver certain disclosures required by the Securities and Exchange
Commission. Consequently, the penny stock rules may affect the willingness of
broker-dealers to make a market in or trade the common shares of the Company and
thus may also affect the ability of shareholders of the Company's Common Stock
to resell those shares in the public markets.
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<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
This section contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth under the section "Item 1. Description of Business -
Risk Factors". This section should be read in conjunction with the Company's
Consolidated Financial Statements included herein.
Certain of the financial statements and the discussion below in the
comparative fiscal year end and nine-month period sections include reference to
amounts and balances of APP LLC since the reorganization of the Company and the
acquisition of IPS-NY did not occur until October of 1998.
General
The Company was incorporated in the State of Nevada on October 28, 1998
to become the holding company of APP LLC and IPS-NY. The Company is engaged in
the design, marketing and distribution of onboard computer recording and fuel
monitoring systems for commercial and fleet vehicles.
During the prior fiscal years, the Company focused primarily on the
research, development and design of the AP+Series products and related products,
and generated little revenues. During those prior fiscal years, the principals
of the Company invested personal funds, arranged for loans and lines of credit
from financial institutions, and secured grants to support the research and
development expenses on the Company in excess of $2,000,000.
As of the date of this Registration Statement, the Company derives its
revenues principally from the marketing and sale of onboard recording systems,
called the AP+Series products, and other related products to customers generally
in the fleet management and driver training industries. The Company sells four
different onboard recording systems: the APP1000, APP2000, APP3000 and APP 4000.
The Company also sells other related products: a customized software system for
use with the AP+Series (the "DAMS"), a fuel intake monitoring system (the
"FIMS") designed to automate and simplify many aspects of the fueling process,
and an opacity sensor for incorporation into the AP+Series designed to read
vehicle emissions in real time during the operation of the vehicle .
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<PAGE>
Additional revenues are generated by the Company through the
implementation of maintenance contracts and integration contracts and its
subsidiaries.
During fiscal year ended December 31, 1998, sales of the AP+Series and
related products to the Company's customers accounted for approximately 100% of
total gross revenues. During the nine-month period ended September 30, 1999,
sales of the AP+Series and related products to the Company's customers accounted
for approximately 100% of total gross revenues. Although the Company intends to
expanding its marketing of the AP+Series and related products in
non-transportation industries, such as the medical fields, management of the
Company believes that sales of the AP+Series and related products to its
customers in the fleet management and driver training industries will continue
to be an important line of business for the Company for the next several years.
Results of Operation
For Fiscal Year Ended December 31, 1998 compared with Fiscal Year Ended December
31, 1997
The Company's net losses for fiscal year ended December 31, 1998 were
approximately $605,241 compared to a net loss of approximately $661,621 for
fiscal year ended December 31, 1997.
Net revenues for fiscal year ended December 31, 1998 and 1997 were
$237,688 and $240,680, respectively. Net revenues remained consistent during
these two fiscal years as a result of the Company's focus on product
development, raising funds through debt refinancing and commencing stronger
marketing strategy during the latter part of fiscal year 1998. Gross profit for
fiscal years ended December 31, 1998 and 1997 amounted to $90,680 and $63,764,
respectively, or a net increase of $26,916. Gross profit percentages for fiscal
year ended December 31, 1998 and 1997 were 19% and 23%, respectively, or a net
increase of 12%.
The Company's sales have been minimal since inception due to
utilization of a majority of the funds invested for research and development,
professional fees and marketing expenses. After a strong marketing campaign, the
Company has reached a point where it may commence fulfillment of major contracts
which are either executed or in the final stages of execution. The Company and
its subsidiaries have entered into various agreements with certain entities in
order to establish distribution channel, corporate structures, and contract
applications in foreign and domestic countries. The Company has also entered in
to a joint venture agreement with a non-profit corporation to perform certain
pilot tests and to develop new products. The Company is also in the final
negotiations with Carnegie Mellon University for a joint venture for certain
pilot tests and development of new products.
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<PAGE>
The slight decrease in net loss during fiscal year ended December 31,
1998 as compared to fiscal year ended December 31, 1997, however, is
attributable primarily to a substantial decrease in expenses relating to
research and development, although selling, general and administrative expenses
substantially increased. Selling, general and administrative expenses include
general corporate overhead, administration salaries, selling and consulting
expenses, and professional fees. .
Selling, general and administrative expenses for fiscal year ended
December 31, 1998 and 1997 were $565,301 and $329,168, respectively (an increase
of $230,133 or 72%). The increase in selling, general and administrative
expenses for fiscal year ended December 31, 1998 were primarily due to increased
shipping and warehousing costs and the Company's marketing efforts during the
latter part of 1998, and professional fees associated with its efforts to sell
its equity securities in 1999.
Research and development expenses for fiscal year ended December 31,
1998 were $37,510 as compared to $339,349 for fiscal year ended December 31,
1997 (a decrease of $301,510). The expenditures for research and development
expenses were reduced during fiscal year 1998 since the Company had limited
funds and utilized available funds for the anticipated marketing and sale of its
equity securities during 1999. The Company redirected its use of available funds
in order to obtain contracts and raise additional funds which were utilized for
further research and development expenses and establishment of a corporate
infrastructure.
For Nine-Month Period Ended September 30, 1999 compared with Nine-Month Period
Ended September 30, 1998
The Company's net losses for the nine month period ended September 30,
1999 were approximately $949,952 as compared to a net loss of approximately
$335,956 for the corresponding nine month period ended September 30, 1998.
Net revenues for the nine months ended September 30, 1999 and 1998 were
$356,394 and $159,019, respectively. Net revenues increased by approximately
$197,375 or 124% for the nine month period ended September 30, 1999 as compared
to the nine month period ended September 30, 1998. Gross profit for the nine
months ended September 30, 1999 and 1998 amount to $151,121 and $37,615,
respectively, or a net increase of $113,506. Gross profit percentages for the
nine months ended September 30, 1999 and 1998 were 42% and 23%, respectively, or
a net increase of 19%.
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<PAGE>
This increase in gross profit is a result of larger purchases of
systems, reduced component costs, price re-negotiations with vendors, and
redesign of the PC board layout for cost economy. The increase in sales and
gross profit during the nine month period ended September 30, 1999 as compared
to the nine months period ended September 30, 1998 is attributable to a new
contract which came into existence during 1999 as a result of the Company's
marketing efforts.
The substantial increase in net loss during the nine month period ended
September 30, 1999 as compared to the nine month period ended September 30,
1998, however, is attributable primarily to a substantial increase in selling,
general and administrative expenses and an increase in research and development
expenses. Selling, general and administration expenses include general corporate
overhead, administration salaries, shipping and warehousing costs, selling
expenses, consulting costs, and professional fees.
Selling, general and administrative expenses for the nine month period
ended September 30, 1999 were $797,442 as compared to the nine month period
ended September 30, 1998 of $305,643 (an increase of $491,799 or 161%). The
increase in selling, general and administrative expenses for the nine month
period ended September 30, 1999 is primarily due to the Company incurring costs
associated with its marketing efforts, officers salaries, professional fees
associated with the selling and registration of its equity securities and
personnel costs.
Research and development expenses for the nine month period ended
September 30, 1999 were $236,644 as compared to the nine month period ended
September 30, 1998 of $28,133 (an increase of $208,511) The increase in research
and development expenses is primarily due to the Company's perfecting and
expanding of the capabilities of its products.
Liquidity and Capital Resources
For Fiscal Year Ended December 31, 1998
The Company's financial statements have been prepared assuming that it
will continue as a going concern and, accordingly, do not include adjustments
relating to the recoverability and realization of assets and classification of
liabilities that might be necessary should the Company be unable to continue in
operations.
As of December 31, 1998, the Company's current assets were $129,880 and
its current liabilities were $1,291,939. As of December 31, 1998, the current
liabilities exceeded current assets by $1,162,059. As of December 31, 1998, the
Company's long term assets were $349,019 and its long term liabilities were
$963,849. As of December 31, 1998, long term liabilities exceed long term assets
by $614,830.
As of December 31, 1998, the Company's total assets were $495,321 and
its total liabilities were $2,255,788. As of December 31, 1998, total
liabilities exceeded total assets by $1,760,467.
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<PAGE>
The excess of current liabilities and long term liabilities over
current assets and long term assets was primarily due to the amounts due and
owing by the Company which are composed of past due accounts payable (included
in the current portion of notes payable is a $500,000 note due on demand subject
to renegotiations and debt to a financial institution which has been restructed
twice since it's initial borrowing) as follows: $1,090,883 for current and long
term notes payable; $457,803 for current accounts payable; $165,940 for current
accrued expenses; $399,134 for long term loan payable; and $81,819 for current
payroll taxes payable. The Company's assets consisted primarily of $31,736 in
current accounts receivable; $83,000 in current prepaid expenses; and $271,143
in a long term loan due and owing from KMR pursuant to the terms of the
Rescission Agreement and $75,931 due and owing from an officer of the Company.
Stockholders' equity (deficit) was ($1,760,467) for fiscal year ended
1998.
Nine Month Period Ended September 30, 1999
As of September 30, 1999, the Company's current assets were $252,221
and its current liabilities were $1,942,943. As of September 30, 1999, the
current liabilities exceeded current assets by $1,690,722. As of September 30,
1999, the Company's long term assets were $531,589 and its long term liabilities
were $957,088. As of September 30, 1999, long term liabilities exceeded long
term assets by $425,499.
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<PAGE>
As of September 30, 1999, the Company's total assets were $802,316 and
its total liabilities were $2,900,031. As of September 30, 1999, total
liabilities exceeded total assets by $2,097,715.
The excess of current liabilities and long term liabilities over
current assets and long term assets was primarily due to the amounts due and
owing by the Company as follows: $1,167,655 for current and long term notes
payable, $684,984 for current accounts payable, $322,198 for current accrued
expenses, $443,672 for long term loan payable, and $82,714 for current payroll
taxes payable. The Company's assets consisted primarily of $187,748 in current
accounts receivable, $178,362 in long term loan due and owing from an officer of
the Company, and $316,581 in long term loan due and owing from KMR pusuant to
the terms of the Rescission Agreement.
Stockholders' equity (deficit) increased from ($1,760,467) for fiscal
year ended December 31, 1998 to ($2,327,433) for nine month period ended
September 30, 1999.
The Company may have violated federal and state securities laws in
connection with the sales of its shares of Common Stock to investors under a
private placement offering that was not registered under the federal securities
laws. The offering and sale of such shares of the Company's Common Stock
pursuant to its Private Placement Memorandum dated January 27, 1999 and April 7,
1999, respectively, was conducted pursuant to an exemption from registration in
accordance with Regulation D, Rule 504, under the Securities Act of 1933, as
amended (the "1933 Securities Act"). Because the Company continued to sell its
shares of Common Stock to investors after the date the Company effectively
became a reporting company under the Securities Exchange Act of 1934, as amended
(the "1934 Exchange Act"), such exemption from registration under Regulation D
may not be available to reporting companies. As a result, the private placement
may have violated federal securities laws. Moreover, certain state securities
rules and regulations may not have been complied with to ensure availability of
a private placement transactional exemption. Therefore, because of those
possibilities, the Company has offered to certain investors in the private
placements the right to resell their shares to the Company and receive a refund
of the purchase price paid by those investors.
Material Commitments
In connection with the research and development expenses and other
overhead costs over the prior fiscal years, the Company, through its
subsidiaries and other arrangements with its officers/shareholders, borrowed
funds pursuant to various contractual arrangements representing the following
material commitments.
A significant and estimated commitment for the Company for fiscal year
2000 is the amounts due and owing under a promissory note with Bank of
Smithtown. On November 30, 1998, the Company, its subsidiaries, IPS-NY and APP
LLC, and Richard Goodhart entered into a settlement agreement with the Bank of
Smithtown in connection with a default by IPS-NY under a promissory note dated
April 13, 1995 in the amount of $100,000 and a second promissory note dated
December 24, 1996 in the amount of $500,000. Pursuant to the terms of the
settlement agreement, IPS-NY made two separate payments of $23,208 and $20,000
during November 1998 and a payment of $16,792 during March 1999. Additionally,
IPS-NY executed a new promissory note in the amount of $60,620 bearing interest
at 9% per annum and maturing in one year (representing the accrued and unpaid
interest on the original note of $500,000). In lieu of canceling the original
$500,000 note, the Company also executed a new promissory note in the amount of
$500,000 bearing interest at 2% per annum. Pursuant to the terms of the new
promissory note, the Company is required to make monthly payments of (i) $5,000
during the first year (December 1, 1998 through November 30, 1999), (ii) $10,000
during the second year (December 1, 1999 through November 30, 2000, and (iii)
$15,000 during the third year (December 1, 2000 through November 30, 2001. At
the end of the third year, the entire principal balance remaining together with
any accrued interest shall be due and payable. Such notes associated with the
settlement agreement are secured by the assets of the Company and the shares of
Common Stock owned of record by Richard Goodhart, the Company's Chief Executive
Officer. As of December 31, 1998, the principal balance on the newly issued
$500,000 note, the newly issued $60,620 note and the original $100,000 note are
$497,306, $60,620 and $58,140, respectivley. As of the date of this Registration
Statement, the Company is current with all monthly payments.
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<PAGE>
A significant and estimated commitment for the Company for fiscal year
2000 is the amounts due and owing to HSBC Bank USA (formerly Marine Midland
Bank) pursuant to a one-year promissory note dated September 17, 1996 The terms
of the promissory note require the Company to make payments of interest only at
9.75% per annum, with the principal amount of $474,817 due on demand. Such
promissory note is approximately 90% guaranteed by the Small Business
Administration. The Company is currently negotiating with HSBC Bank regarding
provisions for a long-term payout.
A significant and estimated commitment for the Company for fiscal year
2000 is the amounts due and owing to the federal and state taxing authorities
for payroll taxes. As of September 30, 1999 and December 31, 1998, the Company
owes approximately $81,714 and $81,819, respectively, for payroll taxes and
related estimated penalties and interest. The Internal Revenue Service and the
Employment Commission of the State of New York have filed liens against the
Company, respectively. Such taxing authorities have the power to generally seize
the assets of the Company to pay off such amounts due and owing. As of the date
of this Registration Statement, the Company has not entered into any formal
contractual arrangements with either taxing authority for repayment of such
taxes, penalties and interest. Management intends to continue making monthly
payments as funds are available until such arrangements are consummated.
A significant and estimated commitment for the Company for the upcoming
fiscal year 2000 pertains to the salaries of the executive officers and
directors of the Company. The Company has entered into employment agreements
dated January 1, 1999 with three of its executive officers/directors, Mr.
Richard Goodhart, Mr. Steven Wahrman and Mr. Jean Paul Deveau (collectively, the
"Employment Agreements"). Pursuant to the terms and provisions of the Employment
Agreements, commencing January 1, 1999, each officer/director will receive (i)
an annual salary of $120,000 (of which the first six months of fiscal year 1999
have been deferred and accrued without interest); (ii) an annual cash bonus
equal to one percent (1%) of the annual net profits for the preceding fiscal
year; and (iii) stock options to purchase 500,000 shares of restricted Common
Stock of the Company at $1.45 per share within five years from the effective
date of the employment agreement. Other benefits provided for in each respective
employment agreement are disability and health insurance coverage, automobile
and expense allowances and travel and entertainment allowances. As of September
30, 1999, the Company has accrued approximately $270,000 in aggregate salary and
paid $-0-. For fiscal year 2000, the Company will owe the three
officers/directors approximately an aggregate of $360,000 for payment of salary
(excluding any amounts due and owing for payment of the cash bonus.
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A significant and estimated commitment for the Company for fiscal year
2000 is the execution by the Company of a $250,000 covertible promissory note
dated December 16, 1999. Ther terms of the note are interest to be accrued at
15% per annum with interest and principal payable in full on December 31, 2001.
On January 2, 2001, the notes is payable on demand. The note is convertible at
any time into restricted shares of Common Stock at the rate of $1.45 per share.
In addition, there is a prepayment penalty provision if the Company prepays the
note in the first thirteen months.
Sources of Revenue
The Company has been able to establish and maintain open lines of
credit with Nexus Corporation, a division of Jaco Electronics, for the
manufacture of its product line. Management believes that this will enable the
Company to manufacture unlimited quanties of product through this source. As of
the date of this Registration Statement, approximately 600 units are in
production, which equate to resale revenues of approximately $1,200,000 over the
next twelve months. As of the date of this Registration Statement, the Company
has entered into contractual arrangements pertaining to installation,
maintenance and integration of its product line valued at approximately
$6,000,000.
Management's Plan of Operation
Historically, the Company's focus has been primarily on the research,
design and development of its products. During fiscal year 1999, the Company
began to emerge from the research and development phase into worldwide marketing
and distribution of its developed products.
Management intends to capture not less than approximately 1% of the
North American market potential on commercial vehicles. In addition, the
overseas markets, due to governmental mandates requiring data-recording systems
and customer acceptance of such systems, has allowed the Company to generate
immediate sales of its products.
The Company has sold the non-exclusive distribution rights for its
products to American Overseas Corporation ("AOC") for $5,000,000. This amended
agreement provides for payment of (i) $1,000,000 within sixty days from the date
that the Company's securities become publicly traded, (ii) an additional
$1,000,000 to be paid within twelve months from the date the Company's
securities become publicly traded, and (iii) $3,000,000 to be paid on or before
36 months from the date of the amended agreement. Furthermore, under the terms
of the agreement, AOC will purchase the Company's products at distributor's
cost.
Management believes that Carnegie Mellon Driver Training and Safety
Institute ("CM"), under a Federal Grant Award, has developed one of the most
technologically advanced driver schools in the world. CM has selected the
AP+Series products to be utilized on all vehicles and simulators at their
schools. Management believes that this use establishes the Company's products as
the standard products for the industry to use and follow.
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<PAGE>
In Europe, the largest driver training institute, AFT-IFTM, which sets
the driver training standards for the European Economic Community, has trained
over 130,000 drivers using the AP+Series products.
As of the date of this Registration Statement, the Company has sold
systems to Shell Oil, Chevron and NLNG for their respective oil field fleet
operations. Additional, the Company has completed negotiations and entered into
a contract with North Shore - Long Island Jewish Health Systems for their fleet
of ambulances. Management believes that the system being installed is the most
sophisticated ambulance locator and recording system available.
The AP+Series products system design gives the flexibility for
integration with other types of technology, including alcohol breathalyzers. As
of the date of this Registration Statement, the Company is in negotiations for a
joint venture with Life Science, Inc., Draeger A.G. and Life Science
Corporation, to integrate the alcohol breathalyzer with the AP+Series products.
In nine states within North America, it is now mandatory for all drivers who
have been convicted of Driving While Intoxicated to have an ignition interlock
system in their vehicle.
The Company has entered into a contract with the American Trucking
Association pertaining to the federally funded project administered by the
Federal Highway Association for the use of the APP+Series products for studying
fatigue in drivers. Management believes that this federal funded contract will
be significant in that the Company's products will be considered as a government
tool for analyzing various technologies.
Sources of Funding
The Company received approximately $747,802 in gross proceeds from
subscriptions for shares of Common Stock pursuant to the Private Placement
Memorandums dated January 27, 1999 and April 7, 1999, respectively. Management
intends to use approximately $188,000 (25%) of the net proceeds for research and
development expenses, approximately $40,000 (5%) for acquisition of equipment
and inventory, and approximately $519,802 (69%) for working capital. The Company
also has accounts receivable in the approximate amount of $187,748 (net of
allowance).
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<PAGE>
Based upon a twelve-month operational plan proposed by management, it
is anticipated that such an operation plan would require $1,000,000 of
additional financing designed to fund the Company subsequent to the four-month
period to where management believes the Company will achieve a positive cash
flow based on the sales of products and contractuial arrangements. Such
financing and net revenues will cover the major areas as follows: service of
existing debt, officers/directors' salaries, consulting fees, inventory and
hiring of additional management.
Item 3. Description of Property.
Except as described above, the Company does not own any other real
estate or other properties. The Company leases office space in the United
States. Its executive offices are located at325 Wireless Blvd., Hauppauge, New
York 11788. Management believes that the Company's offices are adequate for its
reasonable foreseeable needs. The Company does not intend to acquire any
properties.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth the name and address, as of the date of
this Registration Statement, and the approximate number of shares of Common
Stock of the Company owned of record or beneficially by each person who owned of
record, or was known by the Company to own beneficially, more than five percent
(5%) of the Company's Common Stock, and the name and shareholdings of each
officer and director, and all officers and directors as a group as of the date
of this Registration Statement.
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<TABLE>
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Title of Class Name and Address Amount and Nature (1) Percent of
of Beneficial Owner of Class of Class
________________________________________________________________________________________________
(2)
Common Stock Richard J. Goodhart 4,536,640 24.0%
325 Wireless Blvd.
Hauppauge, New York 11788
(2)
Common Stock Steven H. Wahrman 2,360,960 13.0%
- ------------------------------------------------------------------------------------------------
325 Wireless Blvd.
Hauppauge, New York 11788
(2)
Common Stock Jean Paul Daveau 1,049,680 5.8%
325 Wireless Blvd.
Hauppauge, New York 11788
(2)
Common Stock All officers and directors 7,947,280 43.7%
as a group (3 persons)
- -----------------------------------------------------------------------------------------------
</TABLE>
(1)
Does not assume the exercise of options pursuant to the terms of the
Non-Qualified Stock Option Plan to purchase an aggregate of 1,500,000 shares of
restricted Common Stock at $1.45 per share. See "Executive Compensation -
Non-Qualified Stock Option Plan."
(2)
These are all restricted shares of common stock.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Directors/Executive Officers. The directors and executive officers of
the Company are as follows:
Name Age Position with the Company
- ------------------- --- -------------------------------
Richard J. Goodhart 50 Director and Chairman of the
Board, Chief Executive Officer
Steven H. Wahrman 42 Director and President, Chief
Operating Officer
Jean Paul Daveau 43 Director and Executive Vice
President of Engineering/Design
Julius J. Valente Jr. 60 Chief Financial Officer
Ives Wahrman 75 Director
Martin Goodhart 78 Director
41
<PAGE>
RICHARD J. GOODHART has been a Director, the Chairman of the Board and
Chief Executive Officer of the Company since October of 1993. Mr. Goodhart has
had nineteen years in international sales and marketing in the electronic
component industry and ten years in purchasing management. He has received the
Small Business Association Eastern Region 1996 Exporter of the Year award and
has been nominated for the "Global Vision 2000" award for 1996. In addition, Mr.
Goodhart was elected for the "Who's Who in International Electronics" for 1994
and 1995 and was a recipient of the New York State "Export Entrepreneur of the
Year" award. Prior to his involvement in the Company, Mr. Goodhart held
positions as the Vice President of Sale and Finance for Ex-Electronics and was
International Sales and Marketing Manager for Jaco Electronics. Mr. Goodhart
holds a Bachelor of Science degree in Business Management from Western New
England College.
STEVEN H. WAHRMAN has been a Director, the President and Chief
Operating Officer of the Company since February of 1996. Mr. Wahrman is
responsible for all phases of worldwide implementation of market research,
strategic planning and promotion and the daily operations of the Company. Mr.
Wahrman has twenty years of experience in sales and marketing. For a period of
fourteen years, Mr. Wahrman was President of S.W. Intimates and was named "Who's
Who in American's Young Business" in 1992. Mr. Wahrman holds a Bachelor of
Science degree in Marketing with a minor in Advertising from The American
University.
JEAN PAUL DAVEAU has been a Director and the Executive Vice President
of Engineering and Design of the Company since October of 1993. Mr. Daveau is
responsible for establishing and overseeing the engineering and design staff and
all aspects of technical research, including the compilation of specifications
and manuals. Mr. Daveau has spent over a decade developing onboard recording
systems. He is a world renown leader of design in the onboard recording industry
and has worked with Royal Dutch Shell, Schlumberger, and Western Atlas. In
addition, Mr. Daveau is an expert in the fields of hardware and software, and in
that capacity has acted as a consultant engineer in the industrial computing
industry. For a period of five years, Mr. Daveau was the President and Managing
Director of Microsam. In 1990, he received the "Chivas de L'Exploitation
Professionelle" and the "Trophee de L'Enterprise" awards.
42
<PAGE>
JULIUS J. VALENTE, JR. has been the Chief Financial Officer of the
Company since December 1999. Mr. Valente has over three decades of experience in
accounting, lending, financial consulting and corporate management. After
graduation from Manhattan College in 1961, Mr. Valente joined the New York
accounting firm of Paterson & Ridgeway, CPA. Mr. Valente's lending career began
in 1963 when he accepted a position as a loan officer and new business
representative with James Talcott, Inc. He subsequently served as Vice President
with Walter E. Heller until 1971 when he was named Vice President of Shawmut
Credit Corporation (the de nova asset lending subsidiary of Shawmut Bank which
he assisted in establishing). In 1974, Mr. Valente established the Colonial
Business Finance Corporation, a de nova asset based lending subsidiary for the
Colonial Bank of Waterbury, Connecticut. He served as Senior Vice President with
Colonial Bank until 1979. Mr. Valente is recognized throughout the industry as a
leading financial and lending expert. He was named as a Director of the
Commercial Finance Association in 1971 and served on the Board of Directors
until 1979. In addition to his association with the financial services industry,
Mr. Valente established his own financial consulting firm in 1979 known as
United Financial Resources Corporation ("UFRC"). UFRC specializes in developing
successful recovery programs for an impressive clientele in manufacturing,
retail and service industries.
IVES WAHRMAN has been a Director of the Company since February of 1996.
Mr. Wahrman has an extensive background in the field of merchandise marketing.
His positions have included Merchandise Manager for J.M.Fields and Vice
President and Merchandise Manager for McCrory Stores. In addition, Mr. Wahrman
has served on the board of directors of the Temple Beth Israel in York,
Pennsylvania, and is currently a volunteer for York County Area Agency on Aging
at York Hospital in York, Pennsylvania. Mr. Wahrman has been retired for the
past eight years, and provides invaluable business expertise to the Company in
his role as a director.
MARTIN GOODHART has been a Director of the Company since February of
1996. Mr. Goodhart Mr. Goodhart has nearly fifty years of experience in the
commercial finance industry. He has held a position with new York Factors, was
the Assistant Vice President of Rosenthal & Rosenthal, and was the Vice
President of both Hilldun Corporation and Sterling Factors. Mr. Goodhart is well
recognized by his peers and has given numerous lectures on finance to the
Fashion Institute of Technology, Pace College and Dellotte Haskin & Sells. He
has served as President of the Finance Club of New York, whose members include
banks, large financial institutions and private owners of financial companies.
In addition, Mr. Goodhart was the President of the Empire Credit Club of New
York. Mr. Goodhart has been retired for the past six years, and provides
invaluable business expertise and contacts to the Company in his role as a
director.
As of the date of this Registration Statement, two family relationships
exist among the named directors. Mr. Martin Goodhart is the father of Mr.
Richard Goodhart and Mr. Ives Wahrman is the father of Mr. Steven Wahrman. No
other family relationships exist among any of the named directors and executive
43
<PAGE>
officers. No arrangement or understanding exists between any such director or
officer and any other persons pursuant to which any director or executive
officer was elected as a director or executive officer of the Company. The
directors of the Company are elected annually and serve until their successors
take office or until their death, resignation or removal. The executive officers
serve at the pleasure of the Board of Directors of the Company.
As of the date of this Registration Statement, no director or executive
officer of the Company is or has been involved in any legal proceeding
concerning (i) any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time; (ii) any conviction in a
criminal proceeding or being subject to a pending criminal proceeding (excluding
traffic violations and other minor offenses) within the past five years; (iii)
being subject to any order, judgment or decree permanently or temporarily
enjoining, barring, suspending or otherwise limiting involvement in any type of
business, securities or banking activity; or (iv) being found by a court, the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law (and the
judgment has not been reversed, suspended or vacated).
Advisors/Consultants. The significant advisors and consultants to the
Company are listed below. The Company has no obligation or agreement to hire or
pay any consultant or advisor other than those listed below. The Company may,
however, as the need arises retain such consultants and advisors as management
deems necessary in the best interests of the Company.
The Company has retained Royce Anderson and Monroe, Inc., a New York
corporation ("Royce Anderson"), in connection with consulting services for the
development of the North American market. Royce Anderson will assist the Company
with corporate structure, acquisitions, mergers and equity partners. Pursuant to
an amendment to the agreement between the Company and Royce Anderson and in
exchange for Royce Anderson's services, the Company issued to Royce Anderson
2,006,276 shares of its Common Stock.
The Company has also entered into a consulting agreement with Bristol
Consulting Ltd., a New York corporation ("Bristol"), for assistance in the
development of an international market for the Company's product lines. Bristol
will also assist and advise the Company in the Middle East and the Far East
regarding corporate structure, capital acquisition, contracts, equity partners
and mergers and acquisitions. Pursuant to an amendment to the agreement between
the Company and Bristol and in exchange for Bristol's services, Bristol received
compensation in the amount of $5,000 per month for the months of July, August
and September 1998, and will receive compensation in the amount of $10,000 per
month for the remaining 57 months of the agreement. All such compensation shall
be deferred and shall accrue until such time as the Company has the funds
necessary to pay same. In addition, the Company issued to Bristol 837,414 shares
of the Company's Common Stock.
44
<PAGE>
Item 6. Executive Compensation.
As of the date of this Registration Statement, none of the officers or
directors of the Company have received any compensation for their respective
roles to date or during fiscal years 1997 and 1998. On January 1, 1999, the
Company entered into employment agreements with three of its executive
officers/directors, Mr. Richard Goodhart, Mr. Steven Wahrman and Mr. Jean Paul
Daveau. Pursuant to the provisions of the employment agreements, each officer
will receive an annual salary of $120,000 (of which the first six months
commencing January 1, 1999 will be deferred and will accrue without interest).
Each officer will also receive a yearly bonus equal to 1% of the net profits for
the preceding year. Each employment agreement provides for an initial period of
one year, with the ability to be renewed on a yearly basis for a period of five
years upon majority vote of the Board of Directors. In addition, each
officer/director has been granted stock options to purchase 500,000 shares of
restricted Common Stock of the Company at $1.45 per share.The employment
agreements also provide for disability and health insurance coverage, automobile
and expense allowances and travel and entertainment allowances..
As of September 30, 1999, the Company has accrued approximately
$270,000 and paid $-0- to its executive officers/directors as executive
compensation.
Non-Qualified Stock Option Plan
On January 1, 1999, the Board of Directors of the Company adopted the
Non-Qualified Stock Option Plan (the "SOP") which provided for the grant of
options to purchase an aggregate of 6,000,000 shares of Common Stock at $1.45
per share. The purpose of the SOP is to make options available to directors,
management and significant contractors of the Company in order to encourage them
to secure an increase on reasonable terms of their stock ownership in the
Company and to remain in the employ of the Company, and to provide them
compensation for past services rendered.
45
<PAGE>
The SOP is administered by the Board of Directors which determines the
persons to be granted options under the SOP, the number of shares subject to
each option, the exercise price of each option and the option period, and the
expiration date, if any, of such options. The exercise of an option may be less
than fiar market value of the underlying shares of Common Stock. No options
granted under the SOP will be transfereable by the optionee other than by will
or the laws of descent and distribution and each option will be exercisable,
during the lifetime of the optionee, only by such optionee.
The exercise price of an option granted pursuant to the SOP may be paid
in cash, by the surrender of options, in Common Stock, in other property,
including the optionee's promissory note, or by a combination of the above.
As of the date of this Registration Statement, options have been
granted in the aggregate of 1,500,000 shares to the following individuals. All
options granted are exercisable by the respective individual from the date of
grant through the date of expiration.
<TABLE>
- ----------------------------------------------------------------------------------------------------
Number of Date of Grant Exercise Price Date of
Shares Granted Expiration
<S> <C> <C> <C> <C>
Richard Goodhart ......... 500,000 01-01-99 $ 1.45 01-01-19
Steven Wahrman ........... 500,000 01-01-99 $ 1.45 01-01-19
Jean Paul Daveau ......... 500,000 01-01-99 $ 1.45 01-01-19
TOTAL .................... 1,500,000
- ----------------------------------------------------------------------------------------------------
</TABLE>
No share options have been exercised as of the date of this
Registration Statement.
Item 7. Certain Relationships and Related Transactions.
On October 28, 1998, the Company entered into an agreement and plan of
reorganization with International Purchasing Service, Inc. ("IPS"). Pursuant to
the terms and provisions of the agreement and plan of reorganization, the
Company agreed to transfer and assign to Richard Goodhart, the then sole
shareholder of IPS, 2,975,000 shares of its Common Stock in exchange for all of
the issued and outstanding shares of common stock of IPS.
46
<PAGE>
Item 8. Description of Securities.
The Company is authorized to issue 50,000,000 shares of Common Stock,
no par value.
Common Stock
Holders of shares of Common Stock are entitled to one vote per share on
all matters submitted to a vote of the stockholders of the Company. Except as
may be required by law, holders of shares of Common Stock will not vote
separately as a class, but will vote together with the holders of outstanding
shares of other classes or capital stock. There is no right to cumulate votes
for the election of directors. A majority of the issued and outstanding Common
Stock constitutes a quorum at any meeting of stockholders and the vote by the
holders of a majority of the outstanding shares is required to effect certain
fundamental corporate changes such as liquidation, merger or an amendment to the
Articles of Incorporation.
Holders of shares of Common Stock are entitled to receive dividends if,
as and when, declared by the Board of Directors out of funds legally available
therefore. The Company's agreement with its bank lender may prohibit payment of
Common Stock dividends without the consent of the lender. Upon liquidation of
the Company, holders of shares of Common Stock are entitled to share ratably in
all assets of the Company remaining after payment of liabilities. Holders of
shares of Common Stock have no conversion, redemption or preemptive rights. The
outstanding shares of Common Stock are fully paid and nonassessable. The shares
of Common Stock issued upon exercise of options and payment therefore, will be
validly issued, fully paid and nonassessable.
PART II
Item 1. Market for Common Equity and Related Stockholder Matters
As of the date of this Registration Statement, there has been no public
market for the shares of Common Stock of the Company. It is the intention of
management that the shares of Common Stock of the Company will be traded in the
over-the-counter market and quoted on the NASDAQ. The Company must meet certain
criteria in order to qualify for inclusion on NASDAQ.
The 18,200,888 shares of Common Stock outstanding as of the date of
this Registration Statement are held by approximately 173 holders of record in
the United States.
47
<PAGE>
The Board of Directors has never authorized or declared the payment of
any dividends on the Company's Common Stock and does not anticipate the
declaration or payment of cash dividends in the foreseeable future. The Company
intends to retain future earnings, if any, to finance the development and
expansion of its business. Future dividend policies will be subject to the
discretion of the Board of Directors and will be contingent upon, among other
things, future earnings, the Company's financial condition, capital
requirements, general business conditions, level of debt, restrictions with
respect to payment of dividends with respect to bank loans, and other relevant
factors.
Transfer Agent
The transfer agent and registrar for the Common Stock is Continental
Transfer & Trust Company, 2 Broadway, New York, N.Y. 10004, telephone number
(212) 509-4000.
Item 2. Legal Proceedings.
Management is not aware of any legal proceedings contemplated by any
governmental authority or other party involving the Company or its properties.
No director, officer or affiliate of the Company is (i) a party adverse to the
Company in any legal proceedings, or (ii) has an adverse interest to the Company
in any legal proceedings. Management is not aware of any other legal proceedings
pending or that have been threatened against the Company or its properties.
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Since July 1998 and to August 1, 1999, the Company had a former
accountant. Since August 1, 1999 and to date, the Company's current principal
independent accountant has not resigned or declined to stand for re-election or
were dismissed. The Company's former principal independent accountant declined
to stand for re-election after the Company's formative and developmentive years
as his policy for providing accounting services did not extend to include the
Company's growing scale of transactions. Such decision to change accountants was
approved by the Board of Director. There were no disagreements with the former
accountant which were not resolved on any matter concerning accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
Moreover, there have been no disagreements with the Company's current
principal independent accountant which were not resolved on any matter
concerning accounting principles or practices, financial statement disclosure,
or auditing scope or procedure.
Neither the Company's current principal independent accountant nor its
former principal independent accountant have provided an adverse opinion or
disclaimer of opinion to the Company's financial statements, nor modified their
respective opinion as to uncertainty, audit scope or accounting principles.
48
<PAGE>
The Company's principal independent accountant from January 1997 to
August __, 1999 was Jeff R. Pearlman, 19 West 34th Street, Suite 1118, New York,
New York 10001. The Company's principal independent accountant from August 1,
1999 to the current date is Massella, Tomaro & Co., LLP, 375 North Broadway,
Suite 103, Jericho, New York 11753.
Item 4. Recent Sales of Unregistered Securities.
(i) On October 28, 1998, the Company entered into an exchange agreement
with the members of APP LLC, who either held an equity interest or a
right to acquire an equity interest in APP LLC, whereby the Company
issued an aggregate of 13,995,970 shares of its Common Stock to such
members in exchange for their respective proportionate interests in
APP LLC. The issuance of the Commmon Stock described herein was made
in connection with the exchange agreement not involving a public
offering. The certificates representing issuance of such shares of
Common Stock by the Company to such investors have a legend indicating
that the shares of Common Stock cannot be resold without registration
under the Securities Act of 1933, as amended (the "1933 Securities
Act") or in compliance with an available exemption from registration.
The investors acknowledged that the securities to be issued had not
been registered under the 1933 Securities Act, that the investors
understood the economic risk of an investment in the securities, and
that the investors had the opportunity to ask questions of and receive
answers from the Company's management concerning any and all matters
related to the exchange agreement and acquisition of the securities.
No underwriter was involved in the transaction, and no commissions or
other remuneration were paid in connection with the offer and sale of
the securities.
(ii) On October 28, 1998, the Company entered into an agreement and plan of
reorganization with International Purchasing Service, Inc. ("IPS"),
whereby the Company issued 2,975,000 shares of its Common Stock to
Richard Goodhart, the then sole shareholder of IPS, in exchange for
all of the issued and outstanding shares of IPS. The issuance of the
Common Stock described herein was made in connection with a plan of
reorganization transaction not involving a public offering to a single
investor. The certificate representing issuance of such shares of
Common Stock by the Company to Richard Goodhart has a legend
indicating that the shares of Common Stock cannot be resold without
registration under the 1933 Securities Act or in compliance with an
available exemption from registration.
49
<PAGE>
(iii)On December 10, 1998, the Company entered into three separate
settlement agreements with three creditors whereby the Company agreed
to issue an aggregate of 115,000 shares of its restricted Common Stock
at $0.001 per share pursuant to Section 4(2) of the Securities
Act. Under the terms of the respective settlement agreements, the (i)
creditor agreed to accept 50,000 shares of Common Stock as payment for
the approximate $44,520 debt owed to such creditor, (ii) creditor
agreed to accept 50,000 shares of Common Stock as payment for the
approximate $35,075 debt owed to such creditor, and (iii) creditor
agreed to accept 15,000 shares of Common Stock as payment for the
approximate $13,338 debt owed to such creditor. The Company issued the
shares in reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act. The creditors each
represented to the Company that he acquired the shares for his own
respective account and not with a view to distribution, and that the
Company made available to him all material information concerning the
Company.
(iv) On April 6, 1999, the Company completed an offering under its Private
Placement Memorandum dated January 27, 1999 to sell shares of its
Common Stock at $1.45 per share pursuant to Section 4(2) of the
Securities Act and Regulation D, Rule 504, thereunder. The offering
was conducted on a "all or none/best efforts" basis until the receipt
of $250,000 in gross subscriptions from investors and, thereafter,
continued on a "best efforts" basis until either the sale of 500,000
shares of Common Stock or May 25, 1999, whichever occurred earlier.
The Company sold and issued 340,498 shares of Common Stock,
representing receipt of approximately $493,722 in gross proceeds. No
underwriter was involved in the transaction, and no commissions or
other remuneration were paid, other than to registered broker-dealers,
in connection with the offer and sale of the Common Stock.
(v) The Company has completed an offering under its Private Placement
Memorandum dated April 7, 1999 to sell shares of its Common Stock at
$1.45 per share pursuant to Section 4(2) of the Securities Act and
Regulation D, Rule 504 promulgated thereunder. The Company sold and
issued 175,228 shares of Common Stock, representing receipt of
approximately $254,080 in gross proceeds. No underwriter was involved
in the transaction, and no commissions or other remuneration were paid,
other than to registered broker-dealers, in connection with the offer
and sale of the Common Stock.
As of the date of this Registration Statement, the Company has
18,200,888 shares of its Common Stock issued and outstanding. Of the 18,200,888
of the Company's current outstanding shares of Common Stock, 340,498 shares are
free trading. At such time, the holders may offer and sell these shares of
Common Stock at such times and in such amounts as they may respectively
determine in their sole discretion.
The holders of free trading Common Stock in the capital of the Company
may in the future offer these shares of Common Stock through market transactions
at prices prevailing in the OTC market or at negotiated prices which may be
fixed or variable and which may differ substantially from OTC prices, when such
prices exist. The holders have not advised the Company that they anticipate
paying any consideration, other than the usual and customary broker's
commission, in connection with the sales of these free trading shares of Common
Stock. The holders are acting independently of the Company making such decisions
with respect to the timing, manner and size of each sale.
50
<PAGE>
Of the 18,200,888 of the Company's current outstanding shares of Common
Stock, 17,860,390 shares are "restricted shares" as that term is defined in the
Securities Act of 1933 and the rules and regulations thereunder. To be eligible
for sale in the public market, the holders must comply with Rule 144. In
general, Rule 144 allows a person holding restricted shares for a period of at
least one year to sell within any three month period that number of shares which
does not exceed the greater of 1% of the Company's then outstanding shares or
the average weekly trading volume of the shares during the four calendar weeks
preceding such sale. Rule 144 also permits, under certain circumstances, sale of
shares by a person who is not an affiliate of the Company and who has satisfied
a two year holding period without any volume limitations, manner of sale
provisions or current information requirements. As defined in Rule 144, an
affiliate of an issuer is a person who, directly or indirectly, through one or
more intermediaries, controls or is controlled by, or is under common control
with, such issuer, and generally includes members of the Board of Directors.
Sales pursuant to Rule 144 or otherwise, if in sufficient volume, could have a
depressive effect on the market price of the Company's securities. Moreover, the
possibility of such sales may have a depressive effect on market prices.
To date, no sales of restricted shares of Common Stock have been made.
Item 5. Indemnification of Officers and Directors.
Section 78.751 of Chapter 78 of the Nevada Revised Statutes contains
provisions for indemnification of the officers and directors of the Company. The
Bylaws require the Company to indemnify such persons to the full extent
permitted by law. The Bylaws with certain exceptions, eliminate any personal
liability of a director to the Company or its shareholders for monetary damages
to the Company or its shareholders for gross negligence or lack of care in
carrying out the director's fiduciary duties as such. Nevada law permits such
indemnification if a director or officer acts in good faith in a manner
reasonably believed to be in, or not opposed to, the best interests of the
Company. A director or officer must be indemnified as to any matter in which he
successfully defends himself.
The officers and directors of the Company are accountable to the
shareholders of the Company as fiduciaries, which means such officers and
directors are required to exercise good faith and integrity in handling the
Company's affairs.
A shareholder may be able to institute legal action on behalf of
himself and all other similarly situated shareholders to recover damages where
the Company has failed or refused to observe the law. Shareholders may, subject
to applicable rules of civil procedure, be able to bring a class action or
derivative suit to enforce their rights, including rights under certain federal
51
<PAGE>
and state securities laws and regulations. Shareholders who have suffered losses
in connection with the purchase or sale of their interest in the Company due to
a breach of a fiduciary duty by an officer or director of the Company in
connection with such sale or purchase including, but not limited to, the
misapplication by any such officer or director of the proceeds from the sale of
any securities, may be able to recover such losses from the Company.
The Company and its affiliates may not be liable to its shareholders
for errors in judgment or other acts or omissions not amounting to intentional
misconduct, fraud or a knowing violation of the law, since provisions have been
made in the Articles of Incorporation and By-laws limiting such liability. The
Articles of Incorporation and By-laws also provide for indemnification of the
officers and directors of the Company in most cases for any liability suffered
by them or arising out of their activities as officers and directors of the
Company if they were not engaged in intentional misconduct, fraud or a knowing
violation of the law. Therefore, purchasers of these securities may have a more
limited right of action than they would have except for this limitation in the
Articles of Incorporation and By-laws. In the opinion of the Securities and
Exchange Commission, indemnification for liabilities arising under the
Securities Act of 1933 is contrary to public policy and, therefore,
unenforceable.
The Company may also purchase and maintain insurance on behalf of
directors and officers insuring against any liability asserted against such
person incurred in the capacity of director or officer or arising out of such
status, whether or not the Company would have the power to indemnify such
person.
Item 6. Financial Statements.
Reference is made to Part III, Item 1 and 2 - Index to and Description
of Exhibits for a list of all financial statements filed as part of this
Registration Statement on Form 10-SB.
PART III
Item 1 & 2. Index to and Description of Exhibits.
(a) The following Financial Statements are filed as a part of this
Registration Statement:
1. Independent Auditors' Report dated October 27, 1999.
2. Consolidated Balance Sheets for fiscal year ended December 31, 1998
and September 30, 1999 (unaudited).
3. Consolidated Statements of Operation for Years Ended December 31, 1998
and 1997 and for the Nine Months Ended September 30, 1999 and 1998
(unaudited)..
52
<PAGE>
4. Consolidated Statement Stockholders' Deficiency for Years Ended
December 31, 1998 and 1997 and for the Nine Months Ended September 30,
1999 and 1998 (unaudited)..
5. Consolidated Statements of Cash Flow for Years Ended December 31, 1998
and 1997 and for the Nine Months Ended September 30,
1999 and 1998 (unaudited).
6. Notes to Consolidated Financial Statements for Years Ended December
31, 1998 and 1997 and for the Nine Months Ended September 30, 1999 and
1998 (unaudited).
.
(b) The following Exhibits are filed as part of this Registration
Statement:
- ------------------- ------------------------------------------------------------
Exhibit No. Description
- ------------------- ------------------------------------------------------------
2 Not applicable.
3.1 Articles of Incorporation for the Company
By-laws of the Company
3.2 Articles of Incorporation for IPS-NY
4 Not Applicable
9 Not Applicable
10.1 Agreement and Plan of Reorganization dated October 28,
1998 between the Company and KMR Telecom Limited.
10.2 Agreement and Plan of Reorganization dated October 28,
1998 between the Company and International Purchasing
Service, Inc.
10.3 Consulting Agreement dated July 30, 1998 between the Company
and Royce Anderson & Monroe, Inc. and amendment thereto.
10.4 Consulting Agreement dated July 30, 1998 between the Company
and Bristol Consulting Ltd. and amendment thereto.
10.5 Exchange Agreement dated October 28, 1998 by and among the
Company and Richard Goodhart, Steven Wahrman, Jean Paul
Daveau, Darien Partners Investments, Inc., World Asset
Management, inc., Atlantic Financial Management, Inc.,
Avignon Trading, Inc., Royce Anderson Monroe, Bristol
Consulting, Frank Baker and Michael Gervis.
10.6 Rescission Agreement dated June 1, 1999, effectuated
retroactively to October 28, 1998, by and between the
Company and KMR Telecom Limited.
53
<PAGE>
10.7 Independent Contractor's Installation & Service Agreement
dated May 16, 1997 by and between the Company and Atlantic
Financial Management, Inc., and amendment thereto.
10.8 Independent Contractor's Installation & Service Agreement
dated May 8, 1997 by and between the Company and World Asset
Management, Inc., and amendment thereto.
10.9 Independent Contractor's Installation & Service Agreement
dated April 11, 1997 by and between the Company and Darien
Partners Investments, Inc., and amendment thereto.
10.10 Independent Contractor's Installation & Service Agreement
dated June 4, 1997 by and between the Company and Avignon
Trading, Inc., and amendment thereto.
10.11 Distributor Agreement dated August 20, 1998 by and between
the Company and American Overseas Corporation, and amendment
thereto.
10.12 Schlumberger Associate Program Agreement dated May 12, 1999
between the Company and Schlumberger Malco, Inc.
10.13 Manufacturing Agreement dated January 24, 1997 by and
between the Company and Lockheed Martin Corporation.
11 Not Applicable
21 Not Applicable
54
<PAGE>
24 Not Applicable
The following additional Exhibits are filed as part of this Registration
Statement:
- ------------------- -----------------------------------------------------------
Exhibit No. Description
- ------------------- -----------------------------------------------------------
None
55
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
ACCIDENT PREVENTION PLUS, INC.,
a Nevada corporation
By:/s/ Steven H. Wahrman
-----------------------------
Steven H. Wahrman, President
DATE: February 9, 2000
56
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
AND
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
<PAGE>
<TABLE>
<CAPTION>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Number
<S> <C>
Independent auditors' report F-1
Consolidated Balance Sheets at September 30, 1999 (unaudited)
and December 31, 1998 F-2
Consolidated Statements of Operations for the nine months
ended September 30, 1999 and 1998 (unaudited) and for
the years ended December 31, 1998 and 1997 F-3
Consolidated Statement of Stockholders' Deficiency for the
nine months ended September 30, 1999 (unaudited) and
for the years ended December 31, 1998 and 1997 F-4
Consolidated Statements of Cash Flows for the nine months ended September 30,
1999 and 1998 (unaudited) and
for the years ended December 31, 1998 and 1997 F-5 to F-6
Notes to Consolidated Financial Statements F-7 to F-27
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Accident Prevention Plus, Inc.
We have audited the accompanying consolidated balance sheet of Accident
Prevention Plus, Inc. and Subsidiaries (the "Company") as of December 31, 1998,
and the related statements of operations, stockholders' deficiency and cash
flows for the years ended December 31, 1998 and 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of December 31,
1998, and the results of its operations and cash flows for the years ended
December 31, 1998 and 1997 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company, as of December 31, 1998 has a working capital
deficiency of $1,162,059. In addition, for the years ended December 31, 1998 and
1997, the Company reported net losses amounting to $605,241 and $661,621,
respectively. These factors raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans in regard to these matters
are described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
Massella, Tomaro & Co., LLP
Jericho, New York
October 27, 1999, except for
note 15(c) as to which
the date is December 16, 1999
F - 1
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
September 30, December 31,
1999 1998
-------------- -------------
Current Assets:
Cash $ 200 $ 192
Accounts receivable - net 187,748 31,736
Inventory 43,600 14,952
Prepaid expenses 20,673 83,000
-------------- -------------
Total Current Assets 252,221 129,880
-------------- -------------
Property and Equipment, Net 18,506 16,422
-------------- -------------
Other Assets:
Due from officer 178,362 75,931
Due from affiliate 316,581 271,143
Other 36,646 1,945
-------------- -------------
Total Other Assets 531,589 349,019
-------------- -------------
Total Assets $ 802,316 $ 495,321
============== =============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Notes payable $ 691,739 $ 563,668
Cash overdraft 5,025 19,813
Accounts payable 684,984 457,803
Accrued expenses 322,198 165,940
Payroll taxes payable 82,714 81,819
Capital lease obligations - 2,896
Customer deposits 156,283 -
-------------- -------------
Total Current
Liabilities 1,942,943 1,291,939
-------------- -------------
Long Term Liabilities:
Notes payable 475,916 527,215
Loans payable - officers 443,672 399,134
Notes payable - director 37,500 37,500
-------------- -------------
Total Long Term
Liabilities 957,088 963,849
-------------- -------------
Total Liabilities 2,900,031 2,255,788
-------------- -------------
Common Stock Subject To
Rescission Offer,- $.001
par value, 158,426 shares
issued and outstanding
(Note 10) 229,718 -
-------------- -------------
Commitments & contingencies
(Note 9) - -
-------------- -------------
Stockholders' Deficiency:
Common Stock - $.001 par value,
50,000,000 shares authorized,
17,593,874 and 17,295,970
shares issued and outstanding,
respectively 17,594 17,296
Additional paid-in capital 606,006 223,318
Accumulated deficit (2,951,033) (2,001,081)
-------------- -------------
Total stockholders'
deficiency (2,327,433) (1,760,467)
-------------- -------------
Total Liabilities
and Stockholders'
Deficiency $ 802,316 $ 495,321
============== =============
See accompanying notes to consolidated financial statements
F -2
<PAGE>
<TABLE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR YEARS
ENDED DECEMBER 31, 1998 AND 1997 AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
(Unaudited)
For the nine months ended For the years ended
September 30, December 31,
1999 1998 1998 1997
----------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Net Sales $ 356,394 $ 159,019 $ 237,688 $ 240,680
Cost of Sales 205,273 121,404 147,008 176,916
----------- ----------- ------------ -------------
Gross Profit 151,121 37,615 90,680 63,764
----------- ----------- ------------ -------------
Expenses:
Selling, general and administrative 797,442 305,643 565,301 329,168
Research and development 236,644 28,133 37,510 339,349
----------- ----------- ------------ -------------
Total expenses 1,034,086 333,776 602,811 668,517
----------- ----------- ------------ -------------
Loss before other income (expenses)
and provision for income tax (882,965) (296,161) (512,131) (604,753)
----------- ----------- ------------ -------------
Other Income (expenses)
Interest income 25,450 - 5,610 -
Interest expense (92,437) (39,795) (98,720) (56,868)
----------- ----------- ------------ -------------
Total Other Income (Expenses) (66,987) (39,795) (93,110) (56,868)
----------- ----------- ------------ -------------
Loss Before Provision for Income Taxes (949,952) (335,956) (605,241) (661,621)
Provision for income taxes - - - -
----------- ----------- ------------ -------------
Net Loss (949,952) (335,956) (605,241) (661,621)
Other Items of Comprehensive Income - - - -
----------- ----------- ------------ -------------
Comprehensive Net Loss $ (949,952) $ (335,956) $ (605,241) $ (661,621)
=========== =========== ============ =============
Basic:
Net Loss $ (.05) $ (.02) $ (.04) $ (.04)
=========== =========== ============ =============
Weighted Average Number of Shares
Outstanding 17,524,135 17,180,970 17,195,345 17,180,970
=========== =========== ============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT STOCKHOLDERS' DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
Common Stock Additional Member's Total
------------ Paid-in Capital Accumulated Stockholders'
Shares Amount Capital (Deficiency) Deficit Deficiency
----------- ------ -------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1996 - $ - $ - $ (191,792) $ - $ (191,792)
Sale of membership interest - - - 10,000 - 10,000
Net loss for the year ended
December 31, 1997 - - - (661,621) - (661,621)
Balances at December 31, 1997 - - - (843,413) - (843,413)
Recapitalization of the LLC 14,205,970 14,206 - 843,413 (857,619) -
Purchase of subsidiary 2,975,000 2,975 - - (538,221) (535,246)
90,000 shares of common stock
contributed by officers' for
services rendered to the Company - - 130,500 - - 130,500
Issuance of common stock in
connection with settlements of
debt 115,000 115 92,818 - - 92,933
Net loss for the year ended
December 31, 1998 - - - - (605,241) (605,241)
----------- ------ -------- ----------- ------------ ----------
Balances at December 31, 1998 17,295,970 17,296 223,318 - (2,001,081) (1,760,467)
Issuance of common stock in
connection with private
placement memorandums 297,904 298 382,688 - - 382,986
Net loss for the nine months
ended September 30, 1999 - - - - (949,952) (949,952)
----------- ------ -------- ----------- ------------ ----------
Balances at September 30, 1999 17,593,874 $17,594 $606,006 - $ (2,951,033) $ (2,327,433)
========== ======= ======== =========== ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR YEARS ENDED DECEMBER 31, 1998 AND 1997 AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
(Unaudited)
For the nine months ended For the years ended
September 30, December 31,
1999 1998 1998 1997
---------------- --------------- ------------ ------------
Operating activities
<S> <C> <C> <C> <C>
Net loss $ (949,952) $ (335,956) $ (605,241) $ (661,621)
Adjustments to reconcile net loss to
net cash used for operating activities:
Depreciation and amortization 5,250 2,166 5,265 1,442
Common stock for services - - 130,500 -
Decrease (increase) in:
Inventory (28,648) (14,952) (14,952) -
Accounts receivable (156,012) (21,105) (30,365) 15,750
Prepaid expenses 62,327 - (8,250) 2,449
Other assets - - (446) -
(Decrease) increase in:
Cash overdraft (14,788) 13,670 19,813 -
Accounts payable and accrued expenses 383,599 104,663 203,031 277,339
Payroll taxes payable 895 5,705 3,346 -
Customer deposits 156,283 (13,810) (13,810) (12,290)
Net cash used for operating activities (541,046) (259,619) (311,109) (376,931)
---------------- --------------- ------------ ------------
Investing activities
Purchase of property and equipment (7,334) - (2,782) (2,400)
---------------- --------------- ------------ ------------
Net cash used for investing activities (7,334) - (2,782) (2,400)
---------------- --------------- ------------ ------------
Financing activities
Proceeds from notes payable 80,512 90,803 61,238 349,817
Repayments of capital lease contributions (6,896) - (1,698) (5,461)
Other loan advances (34,701) (385) - -
Sale of partnership interest - - - 10,000
Proceeds from sale of common stock 612,804 - - -
Advances (to) from affiliates and shareholders (103,331) 166,238 249,969 25,491
---------------- --------------- ------------ ------------
Net cash provided by financing activities 548,388 256,656 309,509 379,847
---------------- --------------- ------------ ------------
Net increase (decrease) in cash 8 (2,963) (4,382) 516
Cash and cash equivalents at beginning of year 192 2,963 4,574 2,447
---------------- --------------- ------------ ------------
Cash and cash equivalents at end of year $ 200 $ 0 $ 192 $ 2,963
================ =============== ============ ============
</TABLE>
See accompanying notes to consolidated financial
statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR YEARS ENDED DECEMBER 31, 1998 AND 1997 AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
(Unaudited)
For the nine months ended For the years ended
September 30, December 31,
1999 1998 1998 1997
------------ ----------- ------------ ------------
Supplemental disclosure of
non-cash flow information:
Cash paid during the year
for:
<S> <C> <C> <C> <C>
Interest $ 31,060 $ 23,480 $ 128,580 $ 50,868
============ =========== ========== ============
Income taxes $ 0 $ 0 $ 0 $ 0
============ =========== ========== ============
Schedule of non-cash operating activities:
Issuance of 115,000 shares of common
stock in connection with settlement
of debt $ - $ - $ (92,933) $ -
============ =========== ========== ============
Schedule of non-cash investing activities:
Issuance of 115,000 shares of common
stock in connection with settlement
of debt $ - $ - $ 92,933 $ -
============ =========== ========== ============
90,000 shares of common stock contributed
by officers' for services rendered $ - $ - $ 130,500 $ -
============ =========== ========== ============
In connection with acquisition
of IPS - NY, 2,975,000 shares of
common stock issued $ - $ - $ (535,246) $ -
============ =========== ========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
F - 6
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
NOTE 1-- ORGANIZATION
THE COMPANY
Accident Prevention Plus, Inc. (the "Company") was incorporated in the
State of Nevada on October 28, 1998 to become the holding company of
Accident Prevention Plus, LLC, a Limited Liability Company, (the
"LLC") and International Purchasing Services, NY, Inc. ("IPS-NY").
INC-NY/LLC
Accident Prevention Plus, Inc. ("Inc-NY") was incorporated during June
1993 in the State of New York as a standard corporation. During
February 1996, Inc-NY was reorganized and converted to a Limited
Liability Company. The LLC is treated as a partnership for financial
and income tax purposes. The entities are engaged in the design,
marketing and distribution of onboard computer recording and fuel
monitoring systems for commercial and fleet vehicles.
IPS-NY
IPS-NY was incorporated in the State of New York on March 3, 1993 to
provide various support services to the LLC including but not limited
to shipping, receiving and warehousing. IPS-NY was also responsible
for purchases of product components, providing financing, and other
general overhead support for the LLC and for its own business
purposes. The sole shareholder of IPS-NY was also the majority partner
of the LLC.
REORGANIZATION
During October 1998, pursuant to an Agreement and Plan of
Reorganization (the "Reorganization Agreement") the Company issued
14,205,970 shares of its common stock to the partners of the LLC for
100% of the LLC. The Company accounted for the transaction with the
LLC as a corporate reorganization and accordingly, no goodwill was
recorded. In connection with the reorganization, the founding partners
in the LLC were elected as the officers of the Company. Accordingly,
after such reorganization, the LLC became a wholly owned subsidiary of
the Company.
F - 7
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
ACQUISITION OF IPS-NY
Simultaneously with the reorganization during October 1998, the
Company acquired from IPS-NY's sole shareholder, 100% of the issued
and outstanding common stock of IPS-NY by issuing 2,975,000 shares of
its common stock. The acquisition was accounted for by the purchase
method.
KMR TELECOM, LTD.
Simultaneously with the reorganization during October 1998, the
Company also intended to acquire all of the issued and outstanding
common stock of KMR Telecom, Ltd ("KMR"), a corporation organized
under the laws of India for 800,000 shares of its common stock. During
June of 1999, it was discovered that the laws of India prohibit a
foreign entity from holding more than a 49% equity interest in a
company organized under the laws of India. Accordingly, the Company
and the shareholders of KMR entered into a rescission agreement
canceling the transaction. The financial statements do not reflect the
intended acquisition since the rescission agreement was effectuated
retroactively to October 1998.
NOTE 2 -- GOING CONCERN
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. For the
years ended December 31, 1998 and 1997, the Company generated net
losses of $605,241 and $661,621, respectively. Additionally, as of
December 31, 1998, the Company has a working capital deficiency
amounting to $1,162,059.
As of December 31, 1998, the Company owes approximately $81,819 of
payroll taxes and related penalties and interest. Certain taxing
authorities have filed liens against the Company as a result of the
unpaid payroll taxes. Should the taxing authorities take further
actions, the results could be detrimental to the Company's ability to
operate.
The Company is aggressively attempting to obtain additional contracts
in order to mitigate future losses. However, there can be no assurance
that it will be able to obtain additional contracts and pay its
payroll taxes.
These facts raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include
adjustments relating to the recoverability and realization of assets
and classification of liabilities that might be necessary should the
Company be unable to continue in operation.
F - 8
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
NOTE 3-- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Principles of consolidation
---------------------------
The accompanying consolidated balance sheet at September
30, 1999 and December 31, 1998 include the accounts of the
Company and its wholly owned subsidiaries, LLC and IPS-NY
(the "Companies") after elimination of all significant
intercompany transactions and accounts. The statements of
operations and cash flows for the year ended December 31,
1997 include the balances of the LLC since the
reorganization and the acquisition of IPS-NY did not occur
until October 1998. The statements of operations and cash
flows for the year ended December 31 1998 include the
balances of the Company and the LLC for the entire year
and from October 28, 1998, (the acquisition date) to
December 31, 1998 for IPS-NY since purchase accounting
requires the elimination of all operating transactions of
the acquired subsidiary from inception of its fiscal year
to the date of acquisition. If the operating transactions
from January 1, 1998 to October 27, 1998 were included in
the December 31, 1998 consolidated statement of
operations, the effect by major components would be as
follows:
Proforma
Net Sales $ 443,088
Cost of Sales 202,950
----------
Gross Profit 240,138
Expenses 801,424
----------
Net Loss $(561,286)
==========
b) Cash and cash equivalents
-------------------------
The Company considers highly liquid investments with
maturities of three months or less at the time of purchase
to be cash equivalents.
c) Inventory
Inventory amounting to $43,600 and $14,952 at September
30, 1999 and December 31, 1998, respectively, consists of
components and is valued at the lower of cost (using the
specific identification method) or market. All inventory
is pledged as collateral pursuant to promissory notes
payable as discussed in Note 6.
F - 9
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
d) Income Taxes
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards ("SFAS") No.
109 "Accounting for Income Taxes" which requires the use
of the "liability method" of accounting for income taxes.
Accordingly, deferred tax liabilities and assets are
determined based on the difference between the financial
statement and tax bases of assets and liabilities, using
enacted tax rates in effect for the year in which the
differences are expected to reverse. Current income taxes
are based on the respective periods' taxable income for
federal and state income tax reporting purposes.
e) Earnings per share
During 1997, the Financial Accounting Standards Board
issues SFAS No. 128, "Earnings Per Share." SFAS No. 128
replaced the previously required reporting of primary and
fully diluted earnings per share with basic and diluted
earnings per share, respectively. Unlike the previously
reported primary earnings per share, basic earnings per
share exclude the dilutive effects of stock options.
Diluted earnings per share are similar to the previously
reported fully diluted earnings per share. Earnings per
share amounts for all periods presented have been
calculated in accordance with the requirements of SFAS No.
128.
f) Use of estimates
In preparing the consolidated financial statements in
conformity with generally accepted accounting principles,
management is required to make estimates and assumptions
which affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
g) Fair value disclosure at December 31, 1998
The carrying value of cash, accounts receivable, cash
overdraft, accounts payable and accrued expenses are a
reasonable estimate of their fair value because of the
short-term maturity of these investments. The fair value
of long-term debt closely approximates its carrying value.
F - 10
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
h) Organizational costs
Organizational costs consist of legal costs incurred in
the establishment of the Company. Organizational costs are
being amortized on a straight-line basis over a five year
estimated useful life.
i) Effect of New Accounting Standards
The Company does not believe that any recently issued
accounting standards, not yet adopted by the Company, will
have a material impact on its financial position and
results of operations when adopted.
j) Property and Equipment
Property and equipment are recorded at cost less
accumulated depreciation which is provided on the straight
line basis over the estimated useful lives of the assets
which range between five and seven years. Expenditures for
maintenance and repairs are expensed as incurred.
k) Accounts Receivable
The Company utilizes the allowance method for recognizing
the collectibility of its accounts receivables. The
allowance method recognizes bad debt expense based on a
review of the individual accounts outstanding based on the
surrounding facts. As of December 31, 1998 and September
30, 1999, no allowance was deemed necessary by management.
l) Deferred Offering Costs
Deferred offering costs consist of $10,000 in professional
fees at December 31, 1998 in connection with the Company's
private placement memorandum affected during 1999, which
is included in prepaid expenses. Accordingly, all such
costs will be charged to additional paid-in capital during
1999.
m) Research and Development Costs
Research and development costs are expensed as incurred.
Such costs amounted to $236,644 and $28,133 for the nine
months ended September 30, 1999 and 1998, respectively,
and $37,510 and $339,349 for the years ended December 31,
1998 and 1997, respectively.
F - 11
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
n) Foreign Currency Translation
Financial statements of international subsidiaries are
translated into U.S. dollars using the exchange rate at
each balance sheet date for assets and liabilities and a
weighted average exchange rate for each period for
revenues, expenses, gains and losses. Where the local
currency is the functional currency, translation
adjustments are recorded as a separate component of
stockholders' deficiency. Where the U.S. dollar is the
functional currency, translation adjustments are recorded
in income.
NOTE 4-- PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
Property and equipment are as follows at:
(unaudited)
September 30, December 31,
1999 1998
----------- ------------
<S> <C> <C>
Furniture & fixtures $ 4,618 $ 1,220
Computer equipment 30,111 44,231
----------- ------------
$ 34,729 $ 45,451
Less: accumulated depreciation 16,223 29,029
----------- ------------
$ 18,506 $ 16,422
=========== ============
</TABLE>
Computer equipment amounting to $10,441 is pledged in
connection with capitalized lease obligations.
Depreciation expense for the years ended December 31, 1998 and
1997 amounted to $5,265 and $1,442, respectively. Depreciation
and amortization expense for the nine months ended September
30, 1999 and 1998 amounted to $5,250 and $2,166, respectively.
NOTE 5-- DUE FROM AFFILIATE
Due from affiliate consists of a loan receivable from KMR
Telecom, Ltd. ("KMR") a corporation organized under the laws
of India, which is affiliated with the Company through common
stock ownership with the chief executive officer of the
Company. The loan is held by IPS - NY and bears interest at
12% per annum. The Company's chief executive officer has
pledged to the Company as collateral for the loan his 49%
interest in KMR. At September 30, 1999 and December 31, 1998
the loans due from KMR were $316,581 and $271,143,
respectively. Interest income recorded by the Company related
to such loan for the nine months ended September 30, 1999 and
for the year ended December 31, 1999 were $25,450 and $5,610,
respectively.
F - 12
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
NOTE 6-- NOTES PAYABLE
a) Bank of Smithtown
On November 30, 1998, the Company, IPS-NY, LLC and the
Company's Chief Executive Officer entered into a
settlement agreement with the Bank of Smithtown
("Smithtown") in connection with a default by IPS-NY under
a U.S. Small Business Administration ("SBA") promissory
note dated April 13, 1995 in the sum of $100,000 and a
second promissory note dated December 24, 1996 in the sum
of $500,000. In accordance with the settlement, IPS-NY
made the following payments as scheduled: $23,208 and
$20,000 both in November 1998 and $16,792 in March 1999.
Additionally, IPS-NY executed a new note in the amount of
$60,620 bearing interest at 9% per annum and maturing in
one year. Such note represents the accrued and unpaid
interest on the original IPS-NY note of $500,000 dated
December 24, 1996. Lastly, in lieu of canceling the
original IPS-NY $500,000 note dated December 24, 1996, the
Company executed a new note in the amount of $500,000,
bearing interest at prime rate plus 2% per annum. Such
note shall be paid at the rate of $5,000 per month during
the first year, $10,000 per month during the second year
and $15,000 per month during the third year. At the end of
the third year, the entire principal balance remaining,
together with any accrued interest, shall be due and
payable. As of December 31, 1998 the principal balances on
the newly issued $500,000 note, the newly issued $60,620
note and the original $100,000 SBA note are $497,306,
$60,620 and $58,140, respectively.
All notes associated with the above settlement agreement
are secured by the Company's common stock owned by its
Chief Executive Officer and all assets of the Company.
As of September 30, 1999, IPS-NY and the LLC are current
with all payments associated with the settlement
agreement.
F - 13
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
b) HSBC Bank USA (formerly Marine Midland Bank)
--------------------------------------------
On September 17, 1996, the LLC borrowed $500,000 by
executing a promissory note with HSBC Bank USA (formerly
Marine Midland Bank) ("HSBC") such note being partially
guaranteed by SBA. Such note was for a term of one-year
bearing interest at 10.25% per annum. The current terms of
the note are payments of interest only at 9.75% per annum
and due on demand. The Company is currently in the process
of negotiating a long-term payout for this note with HSBC.
As of December 31, 1998 the balance due is $474,817 and is
classified as current.
Annual aggregate maturities of notes payable are as
follows as of December 31, 1998:
Year ended December 31:
1999 $ 563,668
2000 89,611
2001 146,044
2002 291,560
2003 -
Thereafter -
-----------------
$ 1,090,883
=================
NOTE 7-- CAPITAL LEASE OBLIGATIONS
During October 1995 and March 1996, the LLC acquired office
equipment with the following terms and conditions:
i) On October 25, 1995, computer equipment was acquired for
$7,051 by entering into a capital lease obligation with
interest at approximately 13% per annum, requiring 36
monthly payments of $361 which include principal and
interest. The lease is secured by the related equipment.
At December 31, 1998, the Company was in default of its
monthly payment obligations.
ii) On March 25, 1996, office equipment was acquired for
$3,390 by entering into a capital lease obligation with
interest at approximately 10% per annum, requiring 36
monthly payments of $94 which include principal and
interest. The lease is secured by the related office
equipment. At December 31, 1998, the Company was in
default of its monthly payment obligations.
F - 14
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
At December 31, 1998, the aggregate future minimum lease
payments due pursuant to the above capital lease
obligations are as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,1999
----------
<S> <C>
Total minimal lease payments $ 3,199
Less: Amounting representing interest $ 303
----------
Present value of net minimum lease payments $ 2,896
==========
</TABLE>
At December 31, 1998 computers and related office equipment
under capital leases is carried at a book value of $3,517.
NOTE 8 -- PROVISION FOR INCOME TAXES
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes
currently due plus deferred taxes related to differences
between the financial statement and tax bases of assets and
liabilities for financial statement and income tax reporting
purposes. Deferred tax assets and liabilities represent the
future tax return consequences of these temporary differences,
which will either be taxable or deductible in the year when
the assets or liabilities are recovered or settled.
Accordingly, measurement of the deferred tax assets and
liabilities attributable to the book-tax basis differentials
are computed at a rate of 34% federal and 9% state pursuant to
SFAS No. 109.
The only material tax effect of significant items comprising
the Companies' current deferred tax assets as of December 31,
1998 is the Companies' net operating losses "NOL's" which
amounted to approximately $ 71,000 and $ 585,000, respectively
for the Company and IPS-NY. The deferred tax asset associated
with the Companies' NOL's amounted to approximately $145,000
as of December 31, 1998.
A portion of IPS-NY's net operating loss carryforwards are
subject to provisions of the Internal Revenue Code, Section
382, which limits the use of net operating loss carryforwards
when changes in ownership of more than 50 percent occur during
a three year testing period.
F - 15
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
In accordance with SFAS 109, the Company has recorded a 100%
valuation allowance for such deferred tax asset since
management could not determine that it was "more likely than
not" that the deferred tax asset would be realized in the
future. The Company's NOL's amounting to approximately
$656,000 will expire in the years 2008 through 2013 if not
utilized prior.
The Company and its subsidiaries file separate tax
returns for federal and state tax purposes. As such, income
tax is based on the separate taxable income or loss of each
entity.
NOTE 9-- COMMITMENTS AND CONTINGENCIES
a) Year 2000
---------
The Companies have addressed and will continue to address
the year 2000 issue to ensure the reliability of its
operational systems. The Companies have and will continue
to make certain investments in its software systems and
applications to ensure that they are Year 2000 compliant.
These expenditures, which are expensed as incurred, are
not expected to be material. The Companies are also
working with their financial institutions with which they
conducts their business to ensure their compliance with
Year 2000 issues in order to avoid any interruptions in
their business.
b) Payroll taxes
As of September 30, 1999 and December 31, 1998, the
Company owes approximately $82,714 and $81,819,
respectively, of payroll taxes and related estimated
penalties and interest. Federal and state tax liens have
been filed against the Company in connection with unpaid
payroll taxes. Although the Company has not entered into
any formal repayment agreements with the respective tax
authorities, it has been attempting to make monthly
payments as funds become available.
F - 16
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
c) Advances from grant
In 1996, Inc-NY entered into a grantee award agreement
with the University of South Florida ("USF") for the
project entitled Fuel Intake Monitoring System ("FIMS").
USF received a grant ($428,793) for the project and
forwarded the proceeds directly to a sub-contractor chosen
by Inc - NY and USF. Inc - NY's role was to direct the
project, fund the research and development and to bring
the product technology to a saleable commercial product.
Pursuant to the agreement, USF was to receive structured
repayments based on revenues generated from the product
sales. In the event that there are no revenues within two
years after the completion of the USF funding, all rights
to the product technology which was funded will revert
exclusively to USF. At December 31, 1998, The Company has
not sold FIMS products to date.
d) 401K Employee Benefit Plan
During 1994, IPS-NY established a non-contributory 401K
employee benefit plan on behalf of its employees. As of
December 31, 1998, IPS-NY has failed to remit $5,359 to
such plan, and accordingly, such amount has been included
in accounts payable.
e) Lack of Insurance
The Companies ceased maintaining any product liability
insurance or any other form of general insurance in
October 1997. In December 1999, the Companies obtained
product liability and general insurance. Although the
Companies are not aware of any claims resulting from
product malfunctions, there is no assurance that none
exists.
f) Significant customers and vendors
For the years ended December 31, 1998 and 1997, the
Company had three and one unrelated customers,
respectively, which accounted for approximately 56 %, 17
%, and 16 %, and 95 %, respectively, of total revenues. As
of December 31, 1998, the Company had two unrelated
customers who accounted for approximately 59 % and 40 % of
accounts receivables.
For the nine months ended September 30, 1999 and 1998, the
Company had three and three unrelated customers,
respectively, which accounted for approximately 49 %, 24
%, and 22 %, and 25 %, 21 %, and 9 %, respectively, of
total revenues. As of September 30 1999, the Company had
two unrelated customers who accounted for approximately
42% and 30% of accounts receivables.
F - 17
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
g) Lease Commitments
i) Office Space
During the years ended December 31, 1998 and 1997,
both the LLC and IPS-NY shared a common office space.
Prior to April 1998, such office spaces were rented
on a month-to-month basis. In April 1998, IPS-NY
entered into a reciprocal agreement with Jaco
Electronics, Inc. ("Jaco"). The agreement stipulates
that Jaco will provide, for eighteen months, office
space valued at $1,500 per month and warehousing and
shipping support valued at $5,000 per month. In lieu
of such support, IPS-NY agreed to transfer its then
existing backlog sales orders to Jaco, which amounted
to approximately $300,000. The warehousing and
shipping services provided by Jaco have been
accounted for as services provided to the LLC. For
the year ended December 31, 1998, the Company has
recorded $42,500 of warehousing and shipping cost
related to this agreement. For the year ended
December 31, 1998 and 1997, the Company has recorded
rent expense of $19,879 and $40,009, respectively.
ii) Vehicles
The Company leases three vehicles under
non-cancelable operating leases. Total leasing
expense was approximately $18,561 and $18,561 for the
years ended December 31, 1998 and 1997, respectively.
Total lease expense was approximately $ 12,276 and $
16,710 for the nine months ended September 30, 1999
and 1998, respectively. At December 31, 1998, the
aggregate future minimum lease payments due under
these non-cancelable leases are $7,487 and $4,294 for
the years ended December 31, 1999 and 2000.
F - 18
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
h) Independent Contractors' Installation and Service
Agreements
From April 1997 through June 1997, the LLC entered into
four separate installation and service agreements (the
"Agreements") with four foreign corporations whereby such
corporations received a 4.9% partnership interest in the
LLC for $2,500. Pursuant to the agreements, the
corporations are responsible for establishing distribution
and sales channels along with the necessary infrastructure
required for the successful marketing of the LLC's
products. Lastly, the corporations are also responsible
for installation and maintenance of the LLC's products.
Pursuant to the agreements, the corporations will be
compensated based on a fixed hourly rate for any
installation and/or maintenance service.
From inception through September 30, 1999, no services
have been performed by the above four foreign entities. In
connection with the LLC's reorganization during October
1998, the four foreign corporations exchanged each of
their respective 4.9% interests in the LLC for a total of
3,180,000 shares of the Company.
i) Bristol Consulting Ltd.
On July 30, 1998, the LLC entered into a consulting
agreement with Bristol Consulting Ltd. ("Bristol") for the
assistance and advise of commercial application in Europe,
the Middle East and the Far East as to corporate
structure, capital acquisitions, contract applications,
and mergers and acquisitions. The consulting agreement is
for a period of five years requiring monthly payments of
$5,000 for the first three months and $10,000 a month for
the remaining term of the consulting agreement. For the
nine months ended September 30, 1999 and 1998, the LLC
paid $ 31,000 and $14,600, respectively, to Bristol. For
the year ended December 31, 1998, the LLC paid a total of
$14,600 to Bristol. As of September 30, 1999 and December
31, 1998, the LLC has accrued a total of $102,207 and
$20,400, respectively.
Lastly, in connection with such consulting agreement,
Bristol received 837,414 shares of common stock of the
Company upon the reorganization of the LLC in October 1998
for its 5% partnership interest in the LLC.
F - 19
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
j) Royce Anderson and Monroe, Inc.
On July 30, 1998, the LLC entered into a consulting
agreement with Royce Anderson & Monroe, Inc. ("Royce
Anderson") for the assistance and advise of
commercial application in the United States and the
rest of the Western Hemisphere as to corporate
structure, capital acquisitions, contract
applications, and mergers and acquisitions. The
consulting agreement is for a period of five years.
In connection with such consulting agreement, Royce
Anderson received 2,006,276 shares of common stock of
the Company upon the reorganization of the LLC in
October 1998 for its 10% partnership interest in the
LLC.
k) Software Hardware Specialists, Inc.
On December 17, 1998, the Company entered into a
joint venture agreement with Software Hardware
Specialists, Inc. ("Software Specialists") which
became effective on January 4, 1999. Software
Specialists will provide the engineering and
manufacturing management along with engineering
design of the Company's products. The Company will
jointly provide engineering support, manufacturing
management and engineering design to Software
Specialists for a period of three years.
The Company will pay Software Specialist for a period
of three years at established hourly rates. For the
nine months ended September 30, 1999, the Company
paid Software Specialist $137,970.
l) ATA Foundation, Inc.
During August 1999, the Company entered into a
consulting agreement with ATA Foundation, Inc.,
("ATA") a non profit corporation, whereby the Company
is to provide electronic recording and data
collection interface in a project to pilot test
fatigue management technologies. The period of
performance shall be from August 1, 1999 through
December 31, 2001. The agreement fee of $217,875 will
be earned on a cost reimbursement basis with the
Company providing monthly invoices upon completion of
services as prescribed in the agreement.
F - 20
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
As of September 30, 1999, the Company has billed a
total of $78,010 in connection with such agreement.
m) Carnegie Mellon University
On November 19, 1998, the LLC entered into a
non-disclosure agreement with Carnegie Mellon
University ("Carnegie") in connection with a letter
of intent dated January 6, 1998. The letter of intent
stipulated Carnegie's cooperation in working with the
LLC for the development of new products and research
and development of new prototypes. The non-disclosure
agreement established the terms governing the use and
protection of certain confidential information by
both Carnegie and the LLC.
As of September 30, 1999, the LLC and Carnegie have
not entered into a formal contract regarding such
joint venture. However, the LLC has made payments to
Carnegie totaling $20,000 through September 30, 1999
for research and development.
n) American Overseas Corporation
The LLC and American Overseas Corporation, ("AOC"),
an investment company formed under the laws of
British Virgin Islands, entered into a distributor
agreement dated August 20, 1998 pursuant to which AOC
agreed to (i) assist in the establishment of
marketing and distributing services for certain of
the Company's products worldwide, and (ii) pay the
LLC $5 million within a thirty-six (36) month period
for the non-exclusive unlimited rights to purchase
products at a price of 5% above cost and to sell
those products worldwide. In accordance with the
agreement on August 20, 1999, AOC was to remit $2
million to the Company.
On July 22, 1999, the LLC and AOC agreed to amend the
contract whereby the $5 million is to be paid as
follows: i) $1 million within 60 days from the date
that the Company becomes publicly traded, ii) an
additional $1 million is to be paid within twelve
(12) months of the beginning trade date and iii) the
balance of $3 million to be paid on or before
thirty-six (36) months from the date of the contract.
Lastly, AOC will purchase the Company's product at
distributor's cost.
F - 21
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
NOTE 10-- COMMON STOCK SUBJECT TO RESCISSION OFFER
Common stock sold subsequent to August 3, 1999 pursuant to the
Company's limited offering memorandums of January and April
1999, as discussed in note 15 (a), may be in violation of the
requirements of the Securities Act of 1933. In addition,
certain state securities rules and regulations may not have
been complied with to ensure availability of a private
placement transaction exemption. The Company has offered to
certain investors of the limited offerings the option which
expires April 2001 to sell back the common stock to the
Company for the original purchase price of $1.45 per share. To
date, none of the investors have exercised the option. As
such, the proceeds of $229,718 from the issuance of the
158,426 shares of common stock through September 30, 1999 have
been classified outside of equity in the September 30, 1999
balance sheet as common stock subject to rescission.
NOTE 11-- ACCRUED EXPENSES
Accrued expenses consist of the following at:
<TABLE>
<CAPTION>
(unaudited)
September 30, December 31,
1999 1998
--------------- -------------
<S> <C> <C>
Consulting $ 273,338 $ 121,474
Professional fees 30,750 23,363
Purchases - 9,575
Interest 17,212 8,896
Other 898 2,632
--------------- -------------
$ 322,198 $ 165,940
=============== =============
</TABLE>
NOTE 12-- STOCKHOLDERS' DEFICIENCY
a) Reorganization
During October 1998, pursuant to an Agreement and Plan of
Reorganization (the "Reorganization Agreement") the
Company issued 14,205,970 shares of its common stock to
the partners of the LLC for 100% of the LLC. The
transaction with the LLC was accounted for by the Company
as a corporate reorganization. In connection with the
reorganization, the founding partners in the LLC were
elected as the officers of the Company. Accordingly, after
such reorganization, the LLC became a wholly owned
subsidiary of the Company. Simultaneously with the
reorganization, during October 1998, the Company acquired
from IPS-NY's sole shareholder, 100% of the issued and
outstanding common stock of IPS-NY by issuing 2,975,000
shares of its common stock.
F - 22
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
b) Issuance of Common Stock for Settlement of Debt
During November 1998, the Company issued 115,000 shares of
common stock to certain professionals and vendors as
consideration for forgiveness of accrued expenses
associated with accounting and tax services, software
consulting, and design services. The shares issued have
been valued at the balance of the accrued expenses
amounting to $92,933.
c) Officers' Contribution
During November 1998, the officers of the Company
transferred 90,000 shares of common stock, which they had
previously held personally, to consultants, professionals
and employees of the Company in consideration for
services. Accordingly, in connection with the issuance of
such shares, the Company recorded general and
administrative expenses and additional paid-in capital of
$130,500 related to such issuances.
d) Non-qualified Stock Option Plan
Effective January 1, 1999, the Company established a
non-qualified stock option plan ("Stock Option Plan")
pursuant to which 6,000,000 shares of common stock are
reserved for issuance upon the exercise of options. The
option plan is designed to serve as an incentive for
retaining qualified and competent key employees, officers
and director of the Company. The price for each share of
common stock purchasable according to the Stock Option
Plan is a $1.45 per share.
NOTE 13-- RELATED PARTY TRANSACTIONS
a) Loans Payable - Officers
As of September 30, 1999 and December 31, 1998, loans
payable-officers amounting to $443,672 and $399,134,
respectively, represent loans made by the President and
the Chief Executive Officer of the Company as follows:
i) The loans of the President of the Company as of
September 30, 1999 and December 31, 1998 amounted
to $396,771 and $325,751, respectively, and are
comprised of the following:
A $50,000 promissory note with interest accruing
at 8% per annum, which is due on demand. (See note
13d(i)).
F - 23
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
A $240,000 loan, which the officer has secured
personally through a financial institution. The
Company has guaranteed to reimburse the officer
for all interest and the direct cost of such loan.
This loan bears interest at 9.25% per annum.
The remainder is comprised of advances to the
Company and unreimbursed expenses which are
non-interest bearing.
ii) The loans due the Chief Executive Officer
amounting to $46,901 and $73,383 at September 30,
1999 and December 31, 1998, respectively, are non-
interest bearing and represent advances to the
Company and unreimbursed expenses.
b) Due From Officer
As of September 30, 1999 and December 31, 1998, due from
officer amounting to $178,362 and $75,931, respectively,
represents advances to an officer which are non-interest
bearing and due on demand.
c) Employment agreements
Between November 1995 and January 1996, the LLC entered
into three separate employment agreements with its then
vice president of engineering, chief executive officer and
president.
The employment agreements were for a term of five years
with annual salaries of $51,600, $60,000 and $60,000
respectively. The vice president of engineering, pursuant
to his agreement, was also entitled to commissions on the
LLC's gross sales ranging from 2% to 1/2% based on certain
sales levels. In addition, all of the employment
agreements allowed for certain other fringe benefits such
as health insurance, travel and entertainment
reimbursements, full reimbursement of auto insurance, and
$500 per month each towards auto leases. In lieu of the
auto lease obligation the LLC entered into two commitments
for auto leases (see note 9gi(i)). As a result of the LLC
not generating any profits, none of the salaries pursuant
to the above agreements were paid through December 31,
1998. Accordingly, effective December 31, 1998, the three
officers of the LLC signed a release which forgave all
past consideration pursuant to the employment agreements
and entered into new agreements effective January 1, 1999
as discussed below.
F - 24
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
On January 1, 1999, the Company entered into three
separate employment agreements with its chief executive
officer, chief operating officer and executive vice
president. The employment agreements are for an initial
one-year term with renewable (5) five one-year terms based
on a majority vote of the Board of Directors. Each officer
is entitled to an annual salary of $120,000 with annual
increases based on The Consumer Price Index, along with a
cash bonus of 1% of the annual net profits of the Company.
The foregoing options are intended to qualify as incentive
stock options. Each agreement includes benefits such as
disability and health
insurance coverage, automobile and expense allowances,
travel and entertainment allowances, and options to
purchase 500,000 shares of the Company's common stock at
$1.45 per share within five years from the effective
date of the agreements.
Lastly, pursuant to the agreements, all three officers
have agreed to defer the first six months of their salary,
which will be paid at a later date. Accordingly, as of
September 30, 1999, the Company has accrued $270,000 of
salary and paid $ 0.
d) Notes Payable
i) During June 1996, the LLC borrowed $50,000 from its
president at an interest rate of 8% for a term of 180
days pursuant to a promissory and demand note. As of
September 30, 1999, such note remains unpaid as a
result of the LLC receiving a waiver of repayment
until December 31, 1999. The LLC has continued to
accrue interest on the note at the rate of 8% per
annum through September 30, 1999. As of September 30,
1999 and December 31, 1998, accrued interest on such
note amounted to $13,000 and $10,000, respectively.
ii) During August and December 1997, the LLC borrowed
$16,500 and $17,000, respectively, from a director of
the Company without interest, payable ninety days
from date of borrowing. As of September 30, 1999,
such note remains unpaid as a result of the LLC
receiving a waiver of repayment until December 31,
1999.
NOTE 14-- INDUSTRY SEGMENTS
The Company's operations have been classified into two
segments: foreign and domestic sales. Information about the
two segments for the years ended December 31, 1998 and 1997
are as follows:
F - 25
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
1998 1997
----- ----
Segment Consolidated Segment Consolidated
--------- ---------- ---------- ---------
Sales:
Foreign $ 231,688 $ 240,680
Domestic 6,000 -
--------- ----------
Total Sales $ 237,688 $ 240,680
========== =========
Gross profit:
Foreign $ 87,680 $ 63,764
Domestic 3,000 -
--------- ----------
$ 90,680 $ 63,764
========== =========
Corporate:
Selling,
general
and
administrative
expense $ 565,301 $ 329,168
--------- ----------
Interest and
finance expense 93,110 56,868
Research and
development 37,510 339,349
---------- ---------
Loss from
operations (605,241) (661,621)
Provision for
income tax - -
Net (loss) $ (605,241) $(661,621)
========== =========
Identifiable
assets:
Foreign $ 302,879 $ -
Domestic 192,442 277,223
---------- ---------
Total assets $ 495,321 $ 277,223
=========
Gross profit is total revenue less cost of sales and excludes general corporate
expenses, interest expense, and income taxes. Identifiable assets are those used
by each segment of the Company's operations.
F- 26
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
NOTE 15-- SUBSEQUENT EVENTS
a) Limited Offering Memorandums
During January and April 1999, the Company commenced
two Limited Offering Memorandums (the "Offerings")
pursuant to Rule 504 of Regulation D promulgated under
the Securities Act of 1933. The Company's first
offering was for 500,000 shares of its common stock at
$1.45 per share before a 10% selling commission. Such
offering was terminated during April 1999 with the
Company selling approximately 340,000 shares. The
second offering in April 1999 was for 408,475 shares
of its common stock at $1.45 per share before a 10%
selling commission. As of September 30, 1999, the
Company has sold an aggregate of 456,330 shares for
the two offerings, yielding net proceeds of $612,704
after offering costs.
Common stock sold subsequent to August 3, 1999
pursuant to the Company's limited offering memorandums
of January and April 1999, may be in violation of the
requirements of the Securities Act of 1933. In
addition, certain state securities rules and
regulations may not have been complied with to ensure
availability of a private placement transaction
exemption. The Company has offered to certain
investors of the limited offerings the option which
expires April 2001 to sell back the common stock to
the Company or the original purchase price of $1.45
per share. To date, none of the investors have
exercised the option. As such, the proceeds of
$229,718 from the issuance of the 158,426 shares of
common through September 30, 1999 have been classified
outside of equity in the September 30, 1999 balance
sheet as common stock subject to rescission.
b) APP U.K. Ltd.
On September 13, 1999, Accident Prevention Plus (UK)
Limited ("APP UK") was formed as a private limited
company under the laws of England and Wales to
provide sales, marketing and technical support for
the Company in Europe.
c) Convertible Promissory Note
On December 16, 1999, the Company executed a
$250,000 convertible promissory note, with an
individual, bearing interest at 15% per annum with
principal payable in full on December 31, 2001. The
promissory note contains a provision stating that
beginning January 2, 2001 that upon a 10 day notice
the note is due on demand. On June 1, 2000 the note
is convertible into common stock at the rate of
$1.45 per share. There also is a prepayment penalty
provision if the Company prepays the note in the
first thirteen months.
F - 27
Certificate of Authority
New York State Department of Taxation and Finance - Sales Tax
Identification Number
113461611
(Use this number on all returns and correspondence)
ACCIDENT PREVENTION PLUS INC. VALIDATED
145 OSER AVE. PROCESSING DIV
HAUPPAUGE, NY 11788 SALES TAX
03/10/1999
DEPT. OF TAX AND FINANCE
is authorized to collect sales and use taxes under Articles 28 and 29 of the New
York State Tax Law.
NOT TRANSFERABLE
This certificate must be prominently displayed in your
place of business listed above.
Fraudulent or other improper use of this certificate may cause it to be revoked.
This certificate may not be photocopied or reproduced.
See other side for important notice regarding liability for sales and use taxes.
<PAGE>
New York State Department of Taxation and Finance
Important Notice Regarding Liability for Sales and Use Taxes
The attached Certificate of Authority is evidence that you are authorized to
collect sales and use tax. It must be prominently displayed at you place of
business.
As a registered vendor, you must file timely quarterly* sales tax returns and
remit any sales taxes collected in accordance with the dates listed below. A
sales tax return must be filed even if you are not conducting business and do
not owe any sales tax.
Quarterly Period Filing Deadline
---------------- ---------------
December - February March 20
March - May June 20
June - August September 20
September - November December 20
(Postmark on envelope is proof of filing date)
* If taxable sales and purchases subject to use tax exceed $300,000 in any one
quarter, you must file on a monthly basis. See Publication 750, "A Guide to
Sales Tax in New York State," for more information on filing requirements.
You are responsible for filing returns until you advise us that your business is
closed and you return you Certificate of Authority.
Failure to file your return on time will result in a minimum $50 penalty even if
there is no tax due. Failure to receive tax forms is not an acceptable excuse
for late filing. It is your responsibility to file on time even if you have not
received a preaddressed form. If you do not receive your forms at least two
weeks before the due date, you can obtain the forms by calling toll free
1-800-462-8100. From areas outside U.S. and Canada, call (518) 485-6800.
All sales taxes collected or required to be collected must be reported and
remitted in the quarter in which the transaction takes place. Failure to file
returns and remit taxes when due will result in the assessment of penalty and
interest.
<PAGE>
ARTICLES OF INCORPORATION
OF
ACCIDENT PREVENTION PLUS, INC.
ARTICLE 1
---------
SECTION 1.01 CORPORATION NAME. The name of the corporation is:
ACCIDENT PREVENTION PLUS, INC.
ARTICLE 2
---------
SECTION 2.01 PRINCIPAL OFFICE. The corporation's registered office in the State
of Nevada is located at 177 East 7th Street, Carson City, County of Carson,
State of Nevada, Zip Code 89701. The mailing address is 177 East 7th Street,
Carson City, Nevada, 89701.
SECTION 2.02 ADDITIONAL OFFICES. The corporation may maintain an office, or
offices in such other place within or without the State of Nevada as may be from
time to time designated by the Board of Directors, or by the By-Laws of said
Corporation, and that this Corporation may conduct all Corporation business of
every kind and nature, including the holding of all meetings of Directors and
Stockholders, outside the State of Nevada as well as within the State of Nevada.
ARTICLE 3
---------
SECTION 3.01 NATURE OF THE BUSINESS. The Corporation may engage in any lawful
activity for which a corporation may be arranged under the General Laws of
Nevada.
SECTION 3.02 ADDITIONAL ACTIVITIES. The Corporation may engage in any lawful
activity including, but not limited to, the following:
(A) Shall have the power to make contracts.
(B) Shall have the power to purchase, hold, and sell or convey Real
Property or Personal Property in the State of Nevada or in any other
State, Territory of the United States, or any Country.
<PAGE>
(C) Shall have the power to appoint such officers or agents as the
officers of the Corporation shall require, and shall have the power to
pay compensation for he services provided.
(D) Shall have the power to borrow money and contract debts as necessary
for the benefit of the Corporation's business.
(E) Shall have the power to lend money as is necessary for the benefit of
the Corporation's business.
(F) Shall have the power to enter into General or Limited Partnerships,
Joint Ventures or other business associations.
ARTICLE 4
---------
SECTION 4.01 CAPITAL STOCK. The Corporation is authorized to issue Twenty Five
Million (25,000,000) shares of stock with a par value of one mill ($.001) per
share.
SECTION 4.02 USE OF THE STOCK. The Board of Directors may fix the use of the
stock from time to time as they deem necessary for the carrying out of the
Corporation's business.
ARTICLE 5
---------
SECTION 5.01 GOVERNING BOARD. The Governing Board of the Corporation shall
known as Directors. The Board of Directors shall be elected by the stockholders
at the annual meeting, or such other time as the bylaws may provide, and shall
hold office until their successors are respectively elected and qualified.
SECTION 5.02 NUMBER OF DIRECTORS. The initial Board of Directors shall have one
(1) director. The number of Directors may from time to time be increased or
decreased in such a manner as shall be provided by the By-Laws of this
Corporation, providing that the number of Directors conforms to the Statutes of
the Corporation Law of the State of Nevada.
SECTION 5.03 INITIAL DIRECTOR'S NAMES AND ADDRESSES. The name and post office
address of the initial Board of Directors is:
Richard Goodhart
177 East 7th Street
Carson City, NV 89701
<PAGE>
ARTICLE 6
---------
SECTION 6.01 ASSESSMENT OF STOCKHOLDERS FOR CORPORATE DEBT. The private property
of Shareholders, Directors, Officers, employees and or Agent of the Corporation
shall be forever exempt from all corporate debts of any kind whatsoever.
ARTICLE 7
---------
INCORPORATOR. The name and post office address of the incorporator signing the
articles of incorporation is:
Nevada State Incorporating Services, Inc.
177 East 7th Street
Carson City, Nev. 89701
ARTICLE 8
---------
LIFE OF THE CORPORATION. The Corporation is to have perpetual existence.
ARTICLE 9
---------
RESIDENT AGENT. The resident agent for this Corporation shall be:
NEVADA STATE INCORPORATING SERVICES, INC.
177 East 7th Street
Carson City, Nevada 89701
I hereby sign as the incorporator for the above corporation on October 28, 1998.
INCORPORATOR
/s/ John A. McQuirk
----------------------------
John A. McQuirk for
Nevada State Incorporating Services, Inc.
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock) Filed by:
Accident Prevention Plus, Inc.
------------------------------
(Name of Corporation)
We the undersigned Steven H. Wahrman (President or Vice President) and
Richard Goodhart (Secretary or Assistant Secretary) of Accident Prevention Plus,
Inc. (Name of Corporation) do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on the 11th day of November, 1998 adopted a resolution to amend the
original articles as follows:
Article 4-01 is hereby amended to read as follows:
The Corporation is authorized to issue Fifty Million (50,000,000) shares of
stock with a par value of one mill ($.001) per share.
FILED DENISE ZUROWSKI
The Office of the Notary Public, State of New York
Secretary of State of the NO. 01ZU5060497
STATE OF NEVADA Qualified in Suffolk County
MAR. 3, 1999 Commission Expires MAY 20, 2000
No. C25198-98 /s/ Denise Zurowski
/s/ Dean Heller
Secretary of State
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 18,430,000 that the said
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
DENISE ZUROWSKI /s/ Steven H. Wahrman
Notary Public, State of New York ---------------------
NO. 01ZU5060497 President or VIce President
Qualified in Suffolk County
Commission Expires MAY 20, 2000 /s/ Richard Goodhart
--------------------
State of New York Secretary or Assistant Secretary
ss.
County of Suffolk
On 1/8/99, personally appeared before me, a Notary Public, Richard Goodhart
who acknowledged...
<PAGE>
RECEIPT OF SECRETARY OF STATE
-----------------------------
<PAGE>
CERTIFICATE OF INCORPORATION
----------------------------
<PAGE>
Attorney's Copy
- - ---------------
----------------------------------
Name of Corporation
CORPORATE DETAILS
-----------------
as at , 19
Date of Incorporation:
State of Incorporation: Nevada
Principal Place of Business:
Chairperson: Director:
Director: Director:
Officers:
President
Vice-President
Secretary
Treasurer
Bank Accounts:
Fiscal Year:
Annual Meeting Date:
Attorney:
Accountant:
Registered Agent:
Shareholders: Number of Shares
------------- ----------------
LOCATION OF CORPORATE RECORDS
-----------------------------
Retained Forwarded Date/Initials
in Office to Client
[ ] Minute book [ ]
[ ] Share Certificate book [ ]
[ ] Share Ledger [ ]
[ ] Seal [ ]
File in office notebook of Corporation
<PAGE>
----------------------------------
Name of Corporation
CORPORATE DETAILS
-----------------
as at , 19
Date of Incorporation:
State of Incorporation: Nevada
Principal Place of Business:
Chairperson: Director:
Director: Director:
Officers:
President
Vice-President
Secretary
Treasurer
Bank Accounts:
Fiscal Year:
Annual Meeting Date:
Attorney:
Accountant:
Registered Agent:
Shareholders: Number of Shares
------------- ----------------
<PAGE>
BY-LAWS
-------
OF
--
Accident Prevention Plus, Inc.
------------------------
A Nevada Corporation
ARTICLE I - OFFICES
-------------------
The registered office of the Corporation in the State of Nevada shall be located
in the City and State designated in the Articles of Incorporation. The
Corporation may also maintain offices at such other places within or without the
State of Nevada as the Board of Directors may, from time to time, determine.
ARTICLE II- MEETING OF SHAREHOLDERS
- - -----------------------------------
Section 1 - Annual Meetings: (Chapter 78.310)
- - ----------------------------
The annual meeting of the shareholders of the Corporation shall be held at the
time fixed, from time to time, by the Directors.
Section 2 - Special Meetings: (Chapter 78.310)
- - -----------------------------
Special meetings of the shareholders may be called by the Board of Directors or
such person or persons authorized by the Board of Directors and shall be held
within or without the State of Nevada.
Section 3 - Place of Meetings: (Chapter 78.310)
- - ------------------------------
Meetings of shareholders shall be held at the registered office of the
Corporation, or at such other places, within or without the State of Nevada as
the Directors may from time to time fix. If no designation is made, the meeting
shall be held at the Corporations registered office in the state of Nevada.
Section 4 - Notice of Meetings: (Section 78.370)
- - -------------------------------
(a) Written or printed notice of each meeting of shareholders, whether annual or
special, signed by the president, vice president or secretary, stating the time
when and place where it is to be held, as well as the purpose or purposes for
which the meeting is called, shall be served either personally or by mail, by or
at the direction of the president, the secretary, or the officer or the person
calling the meeting, not less than ten or more than sixty days before the date
of the meeting, unless the lapse of the prescribed time shall have been waived
before or after the taking of such action, upon each shareholder of record
entitled to vote at such meeting, and to any other shareholder to whom the
giving of notice may be required by law. If mailed, such notice shall be deemed
to be given when deposited in the United States mail, addressed to the
shareholder as it appears on the share transfer records of the Corporation or to
the current address, which a shareholder has delivered to the Corporation in a
written notice.
- - ------------------------------------------------------------------------------
*Unless otherwise stated herein all references to "Sections" in these Bylaws
refer to those sections contained in Title 78 of the Nevada Private Corporations
Law.
NV Bylaws-1
<PAGE>
(b) Further notice to a shareholder is not required when notice of two
consecutive annual meetings, and all notices of meetings or of the taking of
action by written consent without a meeting to him or her during the period
between those two consecutive annual meetings; or all, and at least two payments
sent by first-class mail of dividends or interest on securities during a
12-month period have been mailed addressed to him or her at his or her address
as shown on the records of the Corporation and have been returned undeliverable.
Section 5 - Quorum: (Section 78.320)
- - -------------------
(a) Except as otherwise provided herein, or by law, or in the Articles of
Incorporation (such Articles and any amendments thereof being hereinafter
collectively referred to as the "Articles of Incorporation"), a quorum shall be
present at all meetings of shareholders of the Corporation, if the holders of a
majority of the shares entitled to vote on that matter are represented at the
meeting in person or by proxy.
(b) The subsequent withdrawal of any shareholder from the meeting, after the
commencement of a meeting, or the refusal of any shareholder represented in
person or by proxy to vote, shall have no effect on the existence of a quorum,
after a quorum has been established at such meeting.
(c) Despite the absence of a quorum at any meeting of shareholders, the
shareholders present may adjourn the meeting.
Section 6- Voting and Acting: (Section 78.320 & 78.350)
- - -----------------------------
(a) Except as otherwise provided by law, the Articles of Incorporation, or these
Bylaws, any corporate action, the affirmative vote of the majority of shares
entitled to vote on that matter and represented either in person or by proxy at
a meeting of shareholders at which a quorum is present, shall be the act of the
shareholders of the Corporation.
(b) Except as otherwise provided by statute, the Certificate of Incorporation,
or these bylaws, at each meeting of shareholders, each shareholder of the
Corporation entitled to vote thereat, shall be entitled to one vote for each
share registered in his name on the books of the Corporation.
(c) Where appropriate communication facilities are reasonably available, any or
all shareholders shall have the right to participate in any shareholders'
meeting, by means of conference telephone or any means of communications by
which all persons participating in the meeting are able to hear each other.
Section 7 - Proxies: (Section 78.355)
- - --------------------
Each shareholder entitled to vote or to express consent or dissent without a
meeting, may do so either in person or by proxy, so long as such proxy is
executed in writing by the shareholder himself, his authorized officer,
director, employee or agent or by causing the signature of the stockholder to be
affixed to the writing by any reasonable means, including, but not limited to, a
facsimile signature, or by his attorney-in-fact there unto duly authorized in
writing. Every proxy shall be revocable at will unless the proxy conspicuously
states that it is irrevocable and the proxy is coupled with an interest. A
telegram, telex, cablegram, or similar transmission by the shareholder, or a
photographic, photostatic, facsimile, shall be treated as a valid proxy, and
treated as a substitution of the original proxy, so long as such transmission is
a complete reproduction executed by the shareholder. If it is determined that
the telegram, cablegram or
NV Bylaws-2
<PAGE>
other electronic transmission is valid, the persons appointed by the Corporation
to count the votes of shareholders and determine the validity of proxies and
ballots or other persons making those determinations must specify the
information upon which they relied. No proxy shall be valid after the expiration
of six months from the date of its execution, unless otherwise provided in the
proxy. Such instrument shall be exhibited to the Secretary at the meeting and
shall be filed with the records of the Corporation. If any shareholder
designates two or more persons to act as proxies, a majority of those persons
present at the meeting, or, if one is present, then that one has and may
exercise all of the powers conferred by the shareholder upon all of the persons
so designated unless the shareholder provides otherwise.
Section 8 - Action Without a Meeting: (Section 78.320)
- - -------------------------------------
Unless otherwise provided for in the Articles of Incorporation of the
Corporation, any action to be taken at any annual or special shareholders'
meeting, may be taken without a meeting, without prior notice and without a vote
if written consents are signed by a majority of the shareholders of the
Corporation, except however if a different proportion of voting power is
required by law, the Articles of Incorporation or these Bylaws, than that
proportion of written consents is required. Such written consents must be filed
with the minutes of the proceedings of the shareholders of the Corporation.
ARTICLE III - BOARD OF DIRECTORS
--------------------------------
Section 1 - Number, Term, Election and Qualifications: (Section 78.115, 78.330)
- - ------------------------------------------------------
(a) The first Board of Directors and all subsequent Boards of the Corporation
shall consist of ( ), unless and until otherwise determined by vote of a
majority of the entire Board of Directors. The Board of Directors or
shareholders all have the power, in the interim between annual and special
meetings of the shareholders, to increase or decrease the number of Directors of
the Corporation. A Director need not be a shareholder of the Corporation unless
the Certificate of Incorporation of the Corporation or these Bylaws so require.
(b) Except as may otherwise be provided herein or in the Articles of
Incorporation, the members of the Board of Directors of the Corporation shall be
elected at the first annual shareholders' meeting and at each annual meeting
thereafter, unless their terms are staggered in the Articles of Incorporation of
the Corporation or these Bylaws, by a plurality of the votes cast at a meeting
of shareholders, by the holders of shares entitled to vote in the election.
(c) The first Board of Directors shall hold office until the first annual
meeting of shareholders and until their successors have been duly elected and
qualified or until there is a decrease in the number of Directors. Thereinafter,
Directors will be elected at the annual meeting of shareholders and shall hold
office until the annual meeting of the shareholders next succeeding his
election, unless their terms are staggered in the Articles of Incorporation of
the Corporation (so long as at least one - fourth in number of the Directors of
the Corporation are elected at each annual shareholders' meeting) or these
Bylaws, or until his prior death, resignation or removal. Any Director may
resign at any time upon written notice of such resignation to the Corporation.
NV Bylaws-3
<PAGE>
(d) All Directors of the Corporation shall have equal voting power unless the
Articles of Incorporation of the Corporation provide that the voting power of
individual Directors or classes of Directors are greater than or less than that
of any other individual Directors or classes of Directors, and the different
voting powers may be stated in the Articles of Incorporation or may be dependent
upon any fact or event that may be ascertained outside the Articles of
Incorporation if the manner in which the fact or event may operate on those
voting powers is stated in the Articles of Incorporation. If the Articles of
Incorporation provide that any Directors have voting power greater than or less
than other Directors of the Corporation, every reference in these Bylaws to a
majority or other proportion of Directors shall be deemed to refer to majority
or other proportion of the voting power of all the Directors or classes of
Directors, as may be required by the Articles of Incorporation.
Section 2 - Duties and Powers: (Section 78.120)
- - ------------------------------
The Board of Directors shall be responsible for the control and management of
the business and affairs, property and interests of the Corporation, and may
exercise all powers of the Corporation, except such as those stated under Nevada
state law, are in the Articles of Incorporation or by these Bylaws, expressly
conferred upon or reserved to the shareholders or any other person or persons
named therein.
Section 3 - Regular Meetings: Notice: (Section 78.310)
- - -------------------------------------
(a) A regular meeting of the Board of Directors shall be held either within or
without the State of Nevada at such time and at such place as the Board shall
fix.
(b) No notice shall be required of any regular meeting of the Board of Directors
and, if given, need not specify the purpose of the meeting; provided, however,
that in case the Board of Directors shall fix or change the time or place of any
regular meeting when such time and place was fixed before such change, notice of
such action shall be given to each director who shall not have been present at
the meeting at which such action was taken within the time limited, and in the
manner set forth in these Bylaws with respect to special meetings, unless such
notice shall be waived in the manner set forth in these Bylaws.
Section 4 - Special Meetings; Notice: (Section 78.310)
- - -------------------------------------
(a) Special meetings of the Board of Directors shall be held at such time and
place as may be specified in the respective notices or waivers of notice
thereof.
(b) Except as otherwise required statute, written notice of special meetings
shall be mailed directly to each Director, addressed to him at his residence or
usual place of business, or delivered orally, with sufficient time for the
convenient assembly of Directors thereat, or shall be sent to him at such place
by telegram, radio or cable, or shall be delivered to him personally or given to
him orally, not later than the day before the day on which the meeting is to be
held. If mailed, the notice of any special meeting shall be deemed to be
delivered on the second day after it is deposited in the United States mails, so
addressed, with postage prepaid. If notice is given by telegram, it shall be
deemed to be delivered when the telegram is delivered to the telegraph
NV Bylaws-4
<PAGE>
company. A notice, or waiver of notice, except as required by these Bylaws, need
not specify the business to be transacted at or the purpose or purposes of the
meeting.
(c) Notice of any special meeting shall not be required to be given to any
Director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
Section 5 - Chairperson:
- - ------------------------
The Chairperson of the Board, if any and if present, shall preside at all
meetings of the Board of Directors. If there shall be no Chairperson, or he or
she shall be absent, then the President shall preside, and in his absence, any
other director chosen by the Board of Directors shall preside.
Section 6 - Quorum and Adjournments: (Section 78.3 15)
- - ------------------------------------
(a) At all meetings of the Board of Directors, or any committee thereof, the
presence of a majority of the entire Board, or such committee thereof, shall
constitute a quorum for the transaction of business, except as otherwise
provided by law, by the Certificate of Incorporation, or these Bylaws.
(b) A majority of the directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, whether or not a quorum exists. Notice of such adjourned
meeting shall be given to Directors not present at time of the adjournment and,
unless the time and place of the adjourned meeting are announced at the time of
the adjournment, to the other Directors who were present at the adjourned
meeting.
Section 7 - Manner of Acting: (Section 78.315)
- - -----------------------------
(a) At all meetings of the Board of Directors, each director present shall have
one vote, irrespective of the number of shares of stock, if any, which he may
hold.
(b) Except as otherwise provided by law, by the Articles of Incorporation, or
these bylaws, action approved by a majority of the votes of the Directors
present at any meeting of the Board or any committee thereof, at which a quorum
is present shall be the act of the Board of Directors or any committee thereof.
(c) Any action authorized in writing made prior or subsequent to such action, by
all of the Directors entitled to vote thereon and filed with the minutes of the
Corporation shall be the act of the Board of Directors, or any committee
thereof, and have the same force and effect as if the same had been passed by
unanimous vote at a duly called meeting of the Board or committee for all
purposes.
(c) Where appropriate communications facilities are reasonably available, any or
all directors shall have the right to participate in any Board of Directors
meeting, or a committee of the Board of
NV Bylaws-5
<PAGE>
Directors meeting, by means of conference telephone or any means of
communications by which all persons participating in the meeting are able to
hear each other.
Section 8 - Vacancies: (Section 78.335)
- - ----------------------
(a) Unless otherwise provided for by the Articles of Incorporation of the
Corporation, any vacancy in the Board of Directors occurring by reason of an
increase in the number of directors, or by reason of the death, resignation,
disqualification, removal or inability to act of any director, or other cause,
shall be filled by an affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board or by a sole remaining Director, at any
regular meeting or special meeting of the Board of Directors called for that
purpose except whenever the shareholders of any class or classes or series
thereof are entitled to elect one or more Directors by the Certificate of
Incorporation of the Corporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the Directors
elected by such class or classes or series thereof then in office, or by a sole
remaining Director so elected.
(b) Unless otherwise provided for by law, the Articles of Incorporation or these
Bylaws, when one or more Directors shall resign from the board and such
resignation is effective at a future date, a majority of the directors, then in
office, including those who have so resigned, shall have the power to fill such
vacancy or vacancies, the vote otherwise to take effect when such resignation or
resignations shall become effective.
Section 9 - Resignation: (Section 78.335)
- - ------------------------
A Director may resign at any time by giving written notice of such resignation
to the Corporation.
Section 10 - Removal: (Section 78.335)
- - ---------------------
Unless otherwise provided for by the Articles of Incorporation, one or more or
all the Directors of the Corporation may be removed with or without cause at any
time by a vote of two-thirds of the shareholders entitled to vote thereon, at a
special meeting of the shareholders called for that purpose, unless the Articles
of Incorporation provide that Directors may only be removed for cause, provided
however, such Director shall not be removed if the Corporation states in its
Articles of Incorporation that its Directors shall be elected by cumulative
voting and there are a sufficient number of shares cast against his or her
removal, which if cumulatively voted at an election of Directors would be
sufficient to elect him or her. If a Director was elected by a voting group of
shareholders, only the shareholders of that voting group may participate in the
vote to remove that Director.
Section 11 - Compensation: (Section 78.140)
- - --------------------------
The Board of Directors may authorize and establish reasonable compensation of
the Directors for services to the Corporation as Directors, including, but not
limited to attendance at any annual or special meeting of the Board.
NV Bylaws-6
<PAGE>
Section 12 - Committees: (Section 78.125)
- - ------------------------
Unless otherwise provided for by the Articles of Incorporation of the
Corporation, the Board of Directors, may from time to time designate from among
its members one or more committees, and alternate members thereof, as they deem
desirable, each consisting of one or more members, with such powers and
authority (to the extent permitted by law and these Bylaws) as may be provided
in such resolution. Unless the Articles of Incorporation or Bylaws state
otherwise, the Board of Directors may appoint natural persons who are not
Directors to serve on such committees authorized herein. Each such committee
shall serve at the pleasure of the Board and, unless otherwise stated by law,
the Certificate of Incorporation of the Corporation or these Bylaws, shall be
governed by the rules and regulations stated herein regarding the Board of
Directors.
ARTICLE IV - OFFICERS
---------------------
Section 1 - Number. Qualifications, Election and Term of Office:
- - ----------------------------------------------------------------
(Section 78.130)
(a) The Corporation's officers shall have such titles and duties as shall be
stated in these Bylaws or in a resolution of the Board of Directors which is not
inconsistent with these Bylaws. The officers of the Corporation shall consist of
a president, secretary and treasurer, and also may have one or more vice
presidents, assistant secretaries and assistant treasurers and such other
officers as the Board of Directors may from time to time deem advisable. Any
officer may hold two or more offices in the Corporation.
(b) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
duly elected and qualified, subject to earlier termination by his or her death,
resignation or removal.
Section 2 - Resignation:
- - ------------------------
Any officer may resign at any time by giving written notice of such resignation
to the Corporation.
Section 3 - Removal:
- - --------------------
Any officer elected by the Board of Directors may be removed, either with or
without cause, and a successor elected by the Board at any time, and any officer
or assistant officer, if appointed by another officer, may likewise be removed
by such officer.
Section 4 - Vacancies:
- - ----------------------
(a) A vacancy, however caused, occurring in the Board and any newly created
Directorships resulting from an increase in the authorized number of Directors
may be filled by the Board of Directors.
NV Bylaws-7
<PAGE>
Section 5 - Bonds:
- - ------------------
The Corporation may require any or all of its officers or Agents to post a bond,
or otherwise, to the Corporation for the faithful performance of their positions
or duties.
Section 6 - Compensation:
- - -------------------------
The compensation of the officers of the Corporation shall be fixed from time to
time by the Board of Directors.
ARTICLE V - SHARES OF STOCK
---------------------------
Section 1 - Certificate of Stock: (Section 78.235)
- - ---------------------------------
(a) The shares of the Corporation shall be represented by certificates or shall
be uncertificated shares.
(b) Certificated shares of the Corporation shall be signed, (either manually or
by facsimile), by officers or agents designated by the Corporation for such
purposes, and shall certify the number of shares owned by him in the
Corporation. Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and by a registrar, then a
facsimile of the signatures of the officers or agents, the transfer agent or
transfer clerk or the registrar of the Corporation may be printed or
lithographed upon the certificate in lieu of the actual signatures. If the
Corporation uses facsimile signatures of its officers and agents on its stock
certificates, it cannot act as registrar of its own stock, but its transfer
agent and registrar may be identical if the institution acting in those dual
capacities countersigns or otherwise authenticates any stock certificates in
both capacities. If any officer who has signed or whose facsimile signature has
been placed upon such certificate, shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of its issue.
(c) If the Corporation issues uncertificated shares as provided for in these
Bylaws, within a reasonable time after the issuance or transfer of such
uncertificated shares, and at least annually thereafter, the Corporation shall
send the shareholder a written statement certifying the number of shares owned
by such shareholder in the Corporation.
(d) Except as otherwise provided by law, the rights and obligations of the
holders of uncertificated shares and the rights and obligations of the holders
of certificates representing shares of the same class and series shall be
identical.
Section 2 - Lost or Destroyed Certificates: (Section 104.8405)
- - -------------------------------------------
The Board of Directors may direct a new certificate or certificates to be issued
in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed if the owner:
(a) so requests before the Corporation has notice that the shares have been
acquired by a bona fide purchaser,
NV Bylaws-8
<PAGE>
(b) files with the Corporation a sufficient indemnity bond; and
(c) satisfies such other requirements, including evidence of such loss,
theft or destruction, as may be imposed by the Corporation.
Section 3 - Transfers of Shares: (Section 104.8401, 104.8406 & 104.8416)
- - --------------------------------
(a) Transfers or registration of transfers of shares of the Corporation shall be
made on the stock transfer books of the Corporation by the registered holder
thereof, or by his attorney duly authorized by a written power of attorney; and
in the case of shares represented by certificates, only after the surrender to
the Corporation of the certificates representing such shares with such shares
properly endorsed, with such evidence of the authenticity of such endorsement,
transfer, authorization and other matters as the Corporation may reasonably
require, and the payment of all stock transfer taxes due thereon.
(b) The Corporation shall be entitled to treat the holder of record of any share
or shares as the absolute owner thereof for all purposes and, accordingly, shall
not be bound to recognize any legal, equitable or other claim to, or interest
in, such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section 4 - Record Date: (Section 78.215 & 78.350)
- - ------------------------
(a) The Board of Directors may fix, in advance, which shall not be more than
sixty days before the meeting or action requiring a determination of
shareholders, as the record date for the determination of shareholders entitled
to receive notice of, or to vote at, any meeting of shareholders, or to consent
to any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividends, or allotment of any
rights, or for the purpose of any other action. If no record date is fixed, the
record date for shareholders entitled to notice of meeting shall be at the close
of business on the day preceding the day on which notice is given, or, if no
notice is given, the day on which the meeting is held, or if notice is waived,
at the close of business on the day before the day on which the meeting is held.
(b) The Board of Directors may fix a record date, which shall not precede the
date upon which the resolution fixing the record date is adopted for
shareholders entitled to receive payment of any dividend or other distribution
or allotment of any rights of shareholders entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action.
(c) A determination of shareholders entitled to notice of or to vote at a
shareholders' meeting is effective for any adjournment of the meeting unless the
Board of Directors fixes a new record date for the adjourned meeting.
Section 5 - Fractions of Shares/Scrip: (Section 78.205)
- - --------------------------------------
The Board of Directors may authorize the issuance of certificates or payment of
money for fractions of a share, either represented by a certificate or
uncertificated, which shall entitle the holder to exercise voting rights,
receive dividends and participate in any assets of the Corporation in the event
of liquidation, in proportion to the fractional holdings; or it may authorize
the
NV Bylaws-9
<PAGE>
payment in case of the fair value of fractions of a share as of the time when
those entitled to receive such fractions are determined; or it may authorize the
issuance, subject to such conditions as may be permitted by law, of scrip in
registered or bearer form over the manual or facsimile signature of an officer
or agent of the Corporation or its agent for that purpose, exchangeable as
therein provided for full shares, but such scrip shall not entitle the holder to
any rights of shareholder, except as therein provided. The scrip may contain any
provisions or conditions that the Corporation deems advisable. If a scrip ceases
to be exchangeable for full share certificates, the shares that would otherwise
have been issuable as provided on the scrip are deemed to be treasury shares
unless the scrip contains other provisions for their disposition.
ARTICLE VI - DIVIDENDS (Section 78.2 15 & 78.288)
----------------------
(a) Dividends may be declared and paid out of any funds available therefor, as
often, in such amounts, and at such time or times as the Board of Directors may
determine and shares may be issued pro rata and without consideration to the
Corporation's shareholders or to the shareholders of one or more classes or
series.
(b) Shares of one class or series may not be issued as a share dividend to
shareholders of another class or series unless:
(i) so authorized by the Articles of Incorporation;
(ii) a majority of the shareholders of the class or series to be issued
approve the issue; or
(iii)there are no outstanding shares of the class or series of shares that
are authorized to be issued.
ARTICLE VII- FISCAL YEAR
------------------------
The fiscal year of the Corporation shall be fixed, and shall be subject to
change by the Board of Directors from time to time, subject to applicable law.
ARTICLE VIII- CORPORATE SEAL (Section 78.065)
----------------------------
The corporate seal, if any, shall be in such form as shall be prescribed and
altered, from time to time, by the Board of Directors. The use of a seal or
stamp by the Corporation on corporate documents is not necessary and the lack
thereof shall not in any way affect the legality of a corporate document.
ARTICLE IX - AMENDMENTS
-----------------------
Section 1 - By Shareholders:
- - ----------------------------
All Bylaws of the Corporation shall be subject to alteration or repeal, and new
Bylaws may be made, by a majority vote of the shareholders at the time entitled
to vote in the election of Directors even though these Bylaws may also be
altered, amended or repealed by the Board of Directors.
Section 2 - By Directors: (Section 78.120)
- - -------------------------
The Board of Directors shall have power to make, adopt, alter, amend and repeal,
from time to time, Bylaws of the Corporation.
NV Bylaws-10
<PAGE>
ARTICLE X - WAIVER OF NOTICE: (Section 78.375)
-----------------------------
Whenever any notice is required to be given by law, the Articles of
Incorporation or these Bylaws, a written waiver signed by the person or persons
entitled to such notice, whether before or after the meeting by any person,
shall constitute a waiver of notice of such meeting.
ARTICLE XI- INTERESTED DIRECTORS: (Section 78.140)
---------------------------------
No contract or transaction shall be void or voidable if such contract or
transaction is between the corporation and one or more of its Directors or
Officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of its Directors or
Officers, are directors or officers, or have a financial interest, when such
Director or Officer is present at or participates in the meeting of the Board,
or the committee of the shareholders which authorizes the contract or
transaction or his, her or their votes are counted for such purpose, if:
(a) the material facts as to his, her or their relationship or interest and
as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee and are noted in the minutes of such meeting, and the
Board or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested Directors, even though the
disinterested Directors be less than a quorum; or
(b) the material facts as to his, her or their relationship or
relationships or interest or interests and as to the contract or transaction are
disclosed or are known to the shareholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
shareholders; or
(c) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee of the shareholders; or
(d) the fact of the common directorship, office or financial interest is
not disclosed or known to the Director or Officer at the time the transaction is
brought before the Board of Directors of the Corporation for such action.
Such interested Directors may be counted when determining the presence of a
quorum at the Board of Directors' or committee meeting authorizing the contract
or transaction.
ARTICLE XII - ANNUAL LIST OF OFFICERS, DIRECTORS AND REGISTERED AGENT:
----------------------------------------------------------------------
(Section 78.150 & 78.165)
The Corporation shall, within sixty days after the filing of its Articles of
Incorporation with the Secretary of State, and annually thereafter on or before
the last day of the month in which the anniversary date of incorporation occurs
each year, file with the Secretary of State a list of its president, secretary
and treasurer and all of its Directors, along with the post office box or street
address, either residence or business, and a designation of its resident agent
in the state of Nevada. Such list shall be certified by an officer of the
Corporation.
NV Bylaws-11
<PAGE>
RESOLUTIONS ADOPTED BY INCORPORATOR
-----------------------------------
OF
--
ACCIDENT PREVENTION PLUS, INC.
------------------------------
The undersigned, being the sole Incorporator of the corporation hereby
adopts the following resolutions:
(1) RESOLVED, that a copy of the Certificate of Incorporation of the
Corporation, together with the original receipt showing payment of the
statutory organization tax and filing fee, be inserted in the Minute
Book of the Corporation.
(2) RESOLVED, that the form of First By-Laws submitted to the meeting be,
and the same hereby are, adopted as and for the By-Laws of the
Corporation, and that a copy thereof be placed in the Minute Book of
the Corporation, directly following the Certificate of Incorporation.
(3) RESOLVED, that the following persons be, and they hereby are, elected
as Directors of the Corporation, to serve until the first annual
meeting of shareholders, and until their successors are elected and
qualify:
/s/ Richard J. Goodhart
- - --------------------------------
/s/ Steven H. Wahrman
- - --------------------------------
/s/ Jean-Paul DaVeau
- - --------------------------------
/s/ Ives Wahrman
- - --------------------------------
/s/ Martin Goodhart
- - --------------------------------
Dated: 10/28/98
------------------------
/s/ John A. McQuirk
------------------------------
Incorporator
-1-
<PAGE>
Instructions for Organization of a Corporation with Sole Director/Shareholder
-----------------------------------------------------------------------------
A small corporation commonly is comprised of a Sole Director/Shareholder.
One must basically follow the same procedure to organize this type of small
corporation as it would if this corporation had more than one Director and for
Shareholder. However there are some documents that are specific to this type of
organization that must be highlighted at this time. Specifically, the
"Resolution Adopted by the Sole Director/Shareholder" inserted in this booklet
as page 1. The Resolution requires close attention to detail when filling out
the following information:
1. Corporate Name;
2. Corporate officers: President, Vice President, Secretary and Treasurer.
It is important to note, that under Nevada law one individual may hold any
combination of officer positions in a corporation
3. The name of the Corporation' treasurer and the name and location of the
financial Institution where he/she is authorized to open up a bank account on
behalf of the Corporation.
4. Date;
5. Have Sole Director/Shareholder sign the resolution.
In addition, the share certificate marked "Specimen" should be removed from the
certificate book and inserted as Appendix A and a conformed copy of the Banking
resolution as Appendix B.
Instruction sheet
<PAGE>
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
LIST OF OFFICERS AND DIRECTORS
OF
Date April 26, 1999
Name: Accident Prevention Plus, Inc.
Address 145 Oser Ave, Suite 100, Hauppauge, NY 11788
Telephone Number 516-300-0600 Federal Identification No.
OFFICERS
--------
Names Addresses
----- ---------
Chairman/CEO Richard Goodhart c/o Accident Prevention Plus, Inc.
145 Oser Ave,
Hauppauge, NY 11788
President /COO Steven Wahrman 145 Oser Ave, Hauppauge, NY 11788
Exec Vice-President Jean Paul Daveau 145 Oser Ave, Hauppauge, NY 11788
Secretary Jean Paul Daveau 145 Oser Ave, Hauppauge, NY 11788
Asst. Secretary Richard Goodhart 145 Oser Ave, Hauppauge, NY 11788
Treasurer NA
Asst. Treasurer NA
DIRECTORS
---------
Names Addresses
----- ---------
Martin Goodhart 145 Oser Ave, Hauppauge, NY 11788
Ives Wahrman 145 Oser Ave, Hauppauge, NY 11788
COUNSEL
-------
Name: Seth Ben-Ezra c/o Steven J. Goldstein, P.C.,
Address: 500 N. Broadway, Suite 243, Jericho, NY 11753
Telephone No. 516-681-0022
<PAGE>
AGREEMENT AND
CERTIFIED COPY OF RESOLUTION OF
BOARD OF DIRECTORS
OF
ACCIDENT PREVENTION PLUS, INC.
145 OSER AVE., SUITE 100
HAUPPAUGE, NY 11788
Resolved:
I. That Continental Stock Transfer & Trust Company of 2 BROADWAY, NEW YORK,
NEW YORK, 10004 be and hereby is appointed Transfer Agent of the ACCIDENT
PREVENTION, PLUS INC. stock of this Corporation.
II. That the Transfer Agent be and hereby is authorized to issue and
countersign certificates of said stock of this Corporation in such names and for
such numbers of shares up to the full amount of such stock which is authorized
but unissued and to deliver such certificates as may be directed by resolution
of the Board of Directors or by order of the President or a Vice-President and
Secretary or Assistant Secretary or Treasurer and an opinion of counsel in form
and substance satisfactory to it and such other documentation as it may require.
III. That the Transfer Agent be and hereby is authorized to accept for
transfer any outstanding certificates of said stock of this Corporation properly
endorsed and stamped as required by law, and to issue and countersign new
certificates for a like number of shares of the same class of stock in place
thereof and to deliver such new certificates.
IV. That the said Transfer Agent may use its own judgment in matters
affecting its duties hereunder and shall be liable only for its own gross
negligence, and that this Corporation indemnifies and holds harmless the said
Transfer Agent for each act done by it in good faith in reliance upon any
instrument or stock certificate believed by it to be genuine and to be signed,
countersigned or executed by any person or persons authorized to sign,
countersign or execute the same.
V. That any certificates of the said stock issued and countersigned by the
Transfer Agent shall bear the actual or facsimile signature of the present or
any future President, and CHAIRMAN OF THE BOARD or SECRETARY and the actual or
facsimile seal of this Corporation. Should any officer die, resign or be removed
from office prior to the issuance of any certificates of stock which bear his
signature, the Transfer Agent may continue, until written notice to the contrary
is received, to issue and register such certificates as and for the stock
certificates of this Corporation notwithstanding such death, resignation or
removal, and such certificates when issued shall continue to be and to
constitute valid certificates of stock of this Corporation.
VI. That the Transfer Agent shall issue a new certificate or certificates
of said stock in lieu of lose, destroyed or stolen certificate or certificates
of such stock upon the order of the Corporation, evidenced by a certified copy
of a resolution of the Board of Directors, or written direction of the President
or Vice-President or Secretary or Treasurer, and upon the giving of a bond
satisfactory to the Transfer Agent and Registrar, protecting it from any loss.
VII. That the Transfer Agent is authorized and directed to open and
maintain such ledgers and other books and to keep such records as may be
required or deemed advisable in the performance of its agency.
VIII. That this appointment and the authorizations in these resolutions
contained shall cover and include any additional shares of said class of stock
which may hereafter be authorized by this Corporation.
IX. That when certificates of this Corporation's stock shall be presented
to it for transfer, the Transfer Agent is hereby authorized to refuse to
transfer the same until it is satisfied that the requested transfer is legally
in order; and that this Corporation shall indemnify and hold harmless the
Transfer Agent, and the Transfer Agent shall incur no liability for the refusal,
in good faith, to make transfers which it, in its judgment, deems improper or
unauthorized. The Transfer Agent may rely upon the Uniform Commercial Code and
generally accepted industry practice in effecting transfers, or delaying or
refusing to effect transfers.
1
<PAGE>
X. That when the said Transfer Agent deems it expedient it may apply to
this Corporation, or the counsel for this Corporation, or to its own counsel for
instructions and advice; that this Corporation will promptly furnish or will
cause its counsel to furnish such instructions and advice, and, for any action
taken in accordance with such instructions or advice, or in case such
instructions and advice shall not be promptly furnished as required by this
resolution, this Corporation will indemnify and hold harmless said Transfer
Agent from any and all liability, including attorneys fees and court costs. The
Transfer Agent may, at its discretion, but shall have no duty to prosecute or
defend any action or suit arising out of authorizations hereby granted unless
this Corporation shall, when requested, furnish it with funds or the equivalent
to defray the costs of such prosecution or defense.
XI. That the said Transfer Agent may deliver from time to time at its
discretion, to this Corporation, for safekeeping or disposition by this
Corporation in accordance with law, such records accumulated in the performance
of its duties as it may deem expedient, and this Corporation assumes all
responsibility for any failure thereafter to produce any paper, record or
document so returned if, and when, required.
XII. That this Corporation shall indemnify and hold harmless said Transfer
Agent from any and all liability, including attorneys fees and court costs, for
any action taken by the Transfer Agent in connection with its appointment and
conduct as Transfer Agent, except for said agent's own wilful misconduct or
gross negligence, and shall, at the request of said Transfer Agent, defend any
action brought against the agent hereunder.
XIII. That the Transfer Agent authorized to forward certificates of Stock,
Scrip and Warrants of this Corporation issued on transfer or otherwise by first
class mail under a blanket bond of indemnity covering the non-receipt of such
Stock, Scrip and Warrants by any of the stockholders of this Corporation, in
which bond this Corporation and the Transfer Agent are directly or indirectly
named as obligees;
That in the event of non-receipt by any stockholder of this Corporation of
certificates of Stock, Scrip and Warrants so mailed, the said Transfer Agent is
authorized to issue new certificates of said Stock, Scrip and Warrants for a
like amount in place thereof, upon receipt from the stockholders of an affidavit
and proof of loss provided for under said blanket bond and the issuance by the
Surety Company of an assumption of the loss under said blanket bond, all without
further action or approval of the Board of Directors or the officers of this
Corporation.
XIV. That the proper officers of this Corporation be and they hereby are
authorized and directed to deliver to the Transfer Agent a sufficient supply of
blank stock certificates and to renew such supply from time to time upon request
of the Transfer Agent and to pay the Transfer Agent prevailing fees and
reimburse it for disbursements incurred by it when and as the same are billed to
this Corporation which, to the extent such fees and disbursements remain unpaid,
hereby grants to the Transfer Agent a lien on the books, records and other
property of this Corporation in the custody or possession of the Transfer Agent.
XV. That the Transfer Agent is hereby authorized without any further action
on the part of this Corporation to appoint as successor Transfer Agent any
corporation or company which may succeed to the business of the Transfer Agent
by merger, consolidation or otherwise (such corporation or company being
hereinafter called the "Successor"); the Successor to have the same authority
and appointment contained in this resolution as if this Corporation itself had
appointed it Transfer Agent. The Successor shall, when appointed, be the Agent
of this Corporation and not an Agent of Continental Stock Transfer & Trust
Company.
XVI. That the Secretary or Assistant Secretary be and hereby are instructed
to certify a copy of these resolutions under the seal of this Corporation and to
lodge the same with Continental Stock Transfer & Trust Company, together with
such certified documents, opinions of counsel, certificates, specimen signatures
of officers and information as Continental Stock Transfer & Trust Company may
require in connection with its duties as Transfer Agent and immediately upon any
change therein which might affect Continental Stock Transfer & Trust Company in
its duties to give the Transfer Agent written notice thereof and to furnish such
additional certified documents, certificates, specimen signatures of officers
and information as Continental Stock Transfer & Trust Company may require, it
being understood and agreed that Continental Stock Transfer & Trust Company
shall be fully protected and held harmless for the failure of this Corporation
to give proper and sufficient notice of any such change.
XVII. That this document, when executed by the Corporation, shall
constitute the full agreement between it and Continental Stock Transfer & Trust
Company and shall not be amended or modified except in writing signed by both
parties.
XVIII. This agreement shall be interpreted under the laws of the State of
New York.
2
<PAGE>
Certificate of Secretary
I, RICHARD GOODHART (ASST), Secretary of ACCIDENT PREVENTION PLUS, INC. a
corporation duly organized and existing under the laws of the State of NEVADA DO
HEREBY CER1IFY:
A. That the foregoing is a true copy of a certain Resolution duly adopted,
in accordance with the By-Laws, by the Board of Directors of the said
Corporation at, and recorded in the minutes of a meeting of the said Board duly
held on APRIL 19, 1999, and of the whole of the said Resolution, and that the
said Resolution has not been rescinded or modified.
B. That, accompanying this Certificate are:
(1) A copy of the Charter or Certificate of Incorporation of the said
Corporation, with all amendments to date, duly certified under official
seal by the state officer having custody of the original thereof;
(2) A true and complete copy of the By-Laws of the said Corporation,
as at present in force;
(3) A signature card bearing the names and specimen signatures of all
the officers of the said Corporation;
(4) Specimens of certificates of each denomination and class of stock
of the said Corporation in the form adopted by the said Corporation; and
(5) An opinion by counsel for the Corporation covering validity of the
outstanding shares referred to in the above-mentioned Resolution and their
registration or exemption from registration under the Securities Act of
1933 as amended.
C. That the total authorized stock of the said Corporation is: 50,000,000
Shares, divided into
NA Shares of COMMON Stock of .001 Par Value each;
NA Shares of NA Stock of NA Par Value each;
NA Shares of NA Stock of NA Par Value each;
That of the said authorized stock, there are now issued:
18,377,150 Shares of the said COMMON Stock
NA Shares of the said NA Stock
NA Shares of the said NA Stock,
that such issue has been duly authorized, and that all of the said shares are
fully paid.
D. That the following data are true and correct with respect to the said
Corporation:
Names of Officers Addresses
----------------- ---------
CHAIRMAN & CEO RICHARD GOODHART 145 OSER AVE, SUITE 100
PRESIDENT & COO STEVEN WAHRMAN HAUPPAUGE, NY 11788
EXEC. VICE PRESIDENT JEAN PAUL DAVEAU
Secretary JEAN PAUL DAVEAU SAME
Asst. Secretary RICHARD GOODHART
Treasurer NA
Asst. Treasurer NA
Counsel SETH BEN-EZRA c/o STEVEN J. GOLDSTEIN, P.C.
Address 500 NORTH BROADWAY, SUITE 243 JERICHO, NY 11753
Address of the Corporation 145 OSER AVE, SUITE 100, HAUPPAUGE, NY 11780
IN WITNESS WHEREOF, I have hereunto set my hand, and affixed the seal of
the said Corporation, this 26th day of APRIL, 1999.
/s/ Richard Goodhart, Asst. Sec.
----------------------------------
ASST. Secretary
(CORP0RATE SEAL)
Agreed and accepted: Continental Stock Transfer & Trust Company
(CORPORATE SEAL) By
[Graphic Omitted] ---------------------------------------
3
<PAGE>
FIRM NAME: Accident Prevention Plus, Inc. DATE: 4/26/99
OFFICERS SIGNATURES
-------- ----------
Richard Goodhart CEO /s/ Richard Goodhart
Steven Wahrman Pres. /s/ Steven Wahrman
Jean Paul Daveau Exec. V-Pres. Signature to Follow
V-Pres.
Jean Paul Daveau Signature to Follow
Treas.
Richard Goodhart Asst. Sec'y. /s/ Richard Goodhart
AUTHORIZED SIGNATURES
FOR THE TRANSFER DEPARTMENT OF
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
<PAGE>
No. of Shares Authorized
Name: Accident Prevention Plus, Inc. Pref. 1st
(Name of association, corporation or trustee) Pref. 2nd
Address: 145 Oser Ave., Suite 100, Hauppauge, NY 11788 Common 50,000,000
- - ------------------------------------------------------------------------------
I, Steven H. Wahrman, President of Accident Prevention Plus, Inc. do hereby
certify that the said association/corporation/trust keeps a place for the
transfer of its stock at No. 2 Broadway, c/o Continental Stock Transfer & Trust
Company, in the city of New York, New York.
Incorporated or Organized 10/28/98, Laws of the State of Nevada
STATE OF NEW YORK DENISE ZUROWSKI
Notary Public, State of New York
City of ss. NO. 01ZU5060497
Qualified in Suffolk County
County of Suffolk Commission Expires MAY 20, 2000
On this 26th day of April 1999, before me the subscriber, personally came Steven
Wahrman, to me known, and who being by me duly sworn, did depose and say that he
is the President of the corporation above named and that he executed the
foregoing certificate on behalf of said corporation pursuant to authority vested
in him by a vote of the board of directors of said association.
/s/ Denise Zurowski, Notary Public Commissioner of Deeds
(Certificate to be filed with the State Tax Commission by Associations,
Corporations, and Trustees under Section 275-a Tax Law)
CERTIFICATE OF INCORPORATION
OF
INTERNATIONAL PURCHASING SERVICES, INC.
FILER:
Lester Lazarus
240 Madison Avenue
New York, NY 10016
<PAGE>
CERTIFICATE OF INCORPORATION
OF
INTERNATIONAL PURCHASING SERVICES, INC.
Under Section 402 of the Business Corporation Law
The undersigned, a natural person of the age of eighteen years or over,
desiring to form a corporation pursuant to the provisions of the Business
Corporation Law of the State of New York, hereby certifies as follows:
FIRST: The name of the corporation is:
INTERNATIONAL PURCHASING SERVICES, INC.
SECOND: The purpose for which it is formed is as follows:
To engage in any lawful act or activity for which corporations may be
formed under the Business Corporation Law provided that the corporation is not
formed to engage in any act or activity which requires the consent or approval
of any state official, department, board agency or other body, without such
approval or consent first being obtained.
For the accomplishment of the aforesaid purposes, and in furtherance
thereof, the corporation shall have and may exercise all of the powers conferred
by the Business Corporation Law upon corporations formed thereunder, subject to
any limitations contained in Article 2 of said law or in accordance with the
provisions of any other statute of the State of New York.
THIRD: The office of the corporation in the State of New York
is to be located in the County of Suffolk.
FOURTH: The aggregate number of shares which the corporation
shall have the authority to issue is 200, no par value.
<PAGE>
FIFTH: The Secretary of State is designated as agent of the corporation
upon whom process against the corporation may be served, and the address to
which the Secretary of State shall mail a copy of any process against the
corporation served upon him is:
c/o Lester Lazarus, 240 Madison Avenue, New York, NY 10016.
SIXTH: A director of the corporation shall not be liable to the
corporation or its shareholders for damages for any breach of duty in such
capacity except for liability if a judgment or other final adjudication adverse
to a director establishes that his or her acts or omissions were in bad faith or
involved intentional misconduct or a knowing violation of law or that the
director personally gained in fact a financial profit or other advantage to
which he or she was not legally entitled or that the director's acts violated
Section 719 of the Business Corporation Law; or liability for any act or
omission prior to the adoption of this provision.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the
statements made herein are true under the penalties of perjury.
Dated: March 5, 1993
/s/ Scott J. Schuster
- ---------------------------------
Scott J. Schuster, Incorporator
283 Washington Avenue
Albany, New York 12206
<PAGE>
<TABLE>
<CAPTION>
US DEPARTMENT OF STATE 162 WASHINGTON AVENUE
DIVISION OF CORPORATIONS AND STATE RECORDS ALBANY, NY 12231
FILING RECEIPT
===============================================================================================================
CORPORATION NAME: INTERNATIONAL PURCHASING SERVICES, INC.
DOCUMENT TYPE: INCORPORATION (DOM. BUSINESS) COUNTY: SUFF
SERVICE COMPANY: SERVICO
===============================================================================================================
FILED: 03/05/1993 DURATION: PERPETUAL CASH #: 930305000473 FILM#: 930305000473
ADDRESS FOR PROCESS
- ---------------------------------------------------------------------------------------------------------------
??? CORPORATION C/O LESTER LAZARUS
240 MADISON AVENUE
241 NEW YORK, NY 10016
REGISTERED AGENT
- ---------------------------------------------------------------------------------------------------------------
STOCK: 200 NPV [SEAL - STATE OF NEW YORK - DEPARTMENT OF STATE]
===============================================================================================================
<S> <C> <C> <C> <C>
FILER FEES 160.00 PAYMENTS 160.00
- -- ----- --------
LESTER LAZARUS FILING: 125.00 CASH: 0.00
240 MADISON AVENUE TAX: 10.00 CHECK: 0.00
CERT: 0.00 BILLED 160.00
NEW YORK, NY 10016 COPIES: 0.00
HANDLING: 25.00
REFUND: 0.00
-------
</TABLE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is entered into as of
this 10/28/98 by and among Accident Prevention Plus, Inc. (Nevada Corp.),
(referred to as "APP), with its offices and principal place of business at 145
Oser Avenue, Hauppauge, NY, and KMR Telecom Limited (India Corp.)with principal
place of business at Flat #3, 3-43-165 West Marredpally, Secunderabad, India,
(referred to as "KMR"), and its shareholders as approved by the Board of
Directors "Shareholder", who are the holders of the majority of the issued and
outstanding shares of common stock of APP and Richard Goodhart as the owner of
all of the issued and outstanding shares of KMR , with respect to the following
facts:
A. Richard Goodhart, who is the owner of 49% equity in KMR and has been assigned
exclusive "Power of Attorney" (see attached) for KMR, and Dinesh and Ritu Kumar,
whom jointly own 51% of KMR wish to merge and become a wholly owned subsidiary
of "APP"
B. Upon the execution hereof "KMR" shall assign such ownership and rights to
"APP".
C. This Agreement constitutes a plan or reorganization within the meaning of
Section 368 (a) (1) (B) of the Internal Revenue Code of 1986, as amended. "APP"
shall acquire pursuant hereto, 100 percent of the outstanding "KMR" shares,'in
exchange for 5 percent of the outstanding shares of "APP".
NOW, THEREFORE, the parties hereto agree as follows:
1. THE ACQUISITION
---------------
1.1. Upon the terms and conditions set forth herein, "APP" hereby agrees to
transfer and assign to Richard Goodhart 392,000 shares amounting to 49 percent
of 5 percent of the issued and outstanding shares of its common stock and Dinesh
and Ritu Kumar shall jointly receive 408,000 shares amounting to 51 percent of 5
percent of the issued and outstanding shares of "APP". Upon completion of the
transaction, "KMR" shall become a wholly owned subsidiary of "APP".
1.2. Title to shares. Concurrent herewith, Richard Goodhart and jointly, Dinesh
and Ritu Kumar, shall convey to "APP" good and marketable title to "KMR's"
shares, except such restrictions as are imposed by federal and state securities
laws, liabilities, or restrictions created, if any, by "KMR". RICHARD GOODHART
shall deliver to "APP" all certificates representing "KMR's" shares duly
endorsed for transfer.
2. EXCHANGE
---------
2.1. As consideration for the acquisition of the 1,086,900 shares of "KMR",
"APP" shall issue to and for the benefit of Richard Goodhart shareholder,
effective as of the date hereof 392,000 shares and Dinesh and Ritu Kumar joint
shareholders shall be jointly issued 408,000 shares of "APP" duly authorized,
fully paid and nonassessable common stock at $001 par value.
2.2. (a) "KMR" Shareholders shall have good and marketable title to "APP"
shares, acknowledging any debts, liabilities, obligations, claims or
restrictions, except such restrictions as are imposed by federal or
<PAGE>
state securities laws. Concurrently herewith, "AP"' shall deliver to "KMR", a
letter directed to "KMR", the Continental Transfer Agent, authorizing the
issuance of certificates representing 800,000 shares. Each Shareholder shall
execute and deliver an investment certificate to "APP" in the form of Exhibit
2.2.
(b) Except for such shares which may be registered pursuant to a
registration statement to be filed with the SEC, the 800,000 shares shall be
restricted from sale to the public and shall retain their restricted nature for
a period of two years from the closing Date. Each certificate shall bear an
appropriate legend describing the transfer restriction.
2.3. Legend. Each stock certificate representing "APP" shares shall bear the
following legends:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 ("1933 Act") nor under any
applicable state securities act and may not be offered or sold except
pursuant to (I) an effective registration statement relating to such
stock under the 1933 Act and any applicable state securities act, (II)
to the extent applicable, Rule 144 under the 1933 Act (or any similar
rule under such act or acts relating to the disposition of
securities), or (III) an opinion of counsel satisfactory to the
Corporation that an exemption from registration under such Act or Acts
is available.
3. REPRESENTATIONS AND WARRANTIES OF "APP"
---------------------------------------
"APP" represents and warrants to "KMR" that: all representation and warranties
have been waived.
4. REPRESENTATIONS AND WARRANTIES OF "KMR"
---------------------------------------
"KMR" represents and warrants to each Shareholder and "APP" that: all
representation and warrants have been waived.
5. CONDITIONS TO "KMR" OBLIGATIONS
-------------------------------
Unless waived by "APP" in writing, "KMR" obligations hereunder are subject to
the satisfaction on or prior to the date hereof.
6. CONDITIONS TO "APP" OBLIGATIONS
-------------------------------
Unless waived by "KMR" in writing, the "APP" obligations hereunder are subject
to the satisfaction on or prior to the date hereof.
7. INDEMNITY
---------
The Shareholders agree to waive any indemnification, hold harmless, reimburse
and defend "APP" and "KMR" against any claim, costs, expense, liability,
obligation, loss or damage (including legal fees) of any nature, incurred by or
imposed upon the Companies which results, arises out of or is based upon:
(a) any misrepresentation by the Shareholders or breach of any warranty by the
Shareholders in this Agreement or in any Exhibit or Schedule attached
hereto; or
(b) any breach or default in performed by each of them hereunder.
8. CLOSING
-------
The consummation of the transactions contemplated herein shall take place at the
offices of "APP" within fourteen days after the ratification of this Agreement
by "APP" Board of Directors. "APP" shall convene a special meeting of its Board
of Directors for the purpose of passing upon this agreement within fourteen days
from date.
<PAGE>
9. MISCELLANEOUS
-------------
9.1. Notice. All notices, demands or other communications required or desired to
be delivered hereunder by any party shall be in writing and shall be validly
given or made to another party if served either personally or if deposited in
the United States mail, certified or registered, postage prepaid, return receipt
requested. If such notice, demand or other communication be served personally,
service shall be conclusively deemed made at the time of such personal service.
If such notice, demand or other communication be given by mail, such notice
shall be conclusively deemed given forty-eight (48) hours after the deposit
thereof in the United States mail addressed to the party to whom such notice,
demand or other communication is to be given as hereinafter set forth:
a) Mr. Seth I. Ben-Ezra, c/o Stephen J. Goldstein, PC
500 North Broadway, Suite 243
Jericho, NY 11753
b) Richard Goodhart 99 Aspen Drive East
Woodbuzy, NY 11797
Any party hereto may change its address for the purpose of receiving notices,
demands and other communications as herein provided by written notice delivered
in the manner aforesaid to the other party or parties hereto.
9.2. Modifications or amendments. No amendment, change or modification of this
document shall be valid unless in writing and signed by all of the parties
hereto.
9.3. Waiver. No reliance upon or waiver of one or more provisions of this
Agreement shall constitute a waiver of any other provisions hereof.
9.4. Successors and Assigns. All of the terms and provisions contained herein
shall inure to the benefit of and shall be binding upon the parties hereto and
their respective heirs, representatives and successors, provided, however, that
no party shall be entitled to assign its rights hereunder or delegate its
responsibilities without the prior written consent of all other parties.
9.5. Separate Counterparts. This document may be executed in one or more
separate counterparts, each of which, when so executed, shall be deemed to be an
original. Such counterparts shall, together, constitute and shall be one and the
same instrument.
9.6. Captions. The captions appearing at the commencement of the paragraphs
hereof are descriptive only and are for convenience in reference. In the event
of a conflict between any such caption and the paragraph at the head of which it
appears, the paragraph and not such caption shall control and govern in the
construction of this document.
9.7. Exhibits and Schedules. Each fact or statement recited or contained in any
exhibit, schedule, certificate or other instrument delivered by or on behall'of
the parties hereto, or in connection with the transactions contemplated hereby,
shall be deemed a representation and a warranty hereunder.
9.8. Further Assurances. Each of the parties hereto shall execute and deliver,
if required, additional papers, documents, and other assurances, and shall do
all acts and things reasonably necessary in connection with the performance of
their obligations hereunder and to cariy out the intent of the parties and this
agreement.
<PAGE>
9.9 Applicable Law and Severability. In the event of controversy this agreement
and the exhibits forming a part hereof shall be governed by the laws of the
State of New York's conflict of laws rules applicable to agreements executed and
to be wholly performed within the State of New York. Nothing contained herein
shall be construed so as to require the commission of any act contrary to law,
and wherever there is a conflict between any provision contained herein and any
present or future statute, law, ordinance or regulation contrary to which the
parties have no legal right of contract, the latter shall prevail but the
provision of this document which is affected shall be curtailed and limited only
to extent necessary to comply with the requirements of the law.
9.10 Enforceability. It is agreed that the rights granted to the parties
hereunder are of a special unique kind and character and that, in the event of a
breach by any party of any material provision of this document, the other party
or parties would not have any adequate remedy at law. It is expressly agreed,
therefore, that the rights of the parties hereunder may be enforced by an action
for specific performance and such other equitable relief as is provided under
the laws of the State of New York.
9.11 Attorney's Fees and Cost. In the event any action is instituted by a party
hereto to enforce any of the terms or provisions hereof, the prevailing party in
such action shall be entitled to such reasonable attorneys' fees, costs and
expenses as may be fixed by the Court.
9.12 Entire Agreement. This document, together with any related documents
referred to in this Agreement constitutes the entire understanding and agreement
of the parties with respect to the subject matter of this Agreement, and all
prior agreements, understandings or representations are hereby terminated and
canceled in their entirety.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
on the day and year first above written.
Accident Prevention Plus, Inc. KMR Telecom Limited
/s/ Steven H. Wahrman /s/ Richard Goodhart
- - ------------------------------- ------------------------------
President Authorized Representative
- - ------------------------------- ------------------------------
10/28/98 10/28/98
- - ------------------------------- ------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is entered into as of
this 10/28/98 by and among Accident Prevention Plus, Inc. (Nevada Corp.),
(referred to as "APP), with its offices and principal place of business at 145
Oser Avenue, Hauppauge, NY, and International Purchasing Service Inc. (NY
Corp.), (referred to as "IPS"),and its shareholders as approved by the Board of
Directors "Shareholder", who are the holders of the majority of the issued and
outstanding shares of common stock of APP and Richard Goodhart as the owner of
all of the issued and outstanding shares of 1PS, with respect to the following
facts:
A. Richard Goodhart is the owner and exclusive holder of IPS wishes to merge and
become a wholly owned subsidiary of "APP".
B. Upon the execution hereof "IPS" shall assign such ownership and rights to
"APP".
C. This Agreement constitutes a plan or reorganization within the meaning of
Section 368 (a) (1) (B) of the Internal Revenue Code of 1986, as amended. "APP"
shall acquire pursuant hereto, 100 percent of the outstanding "IPS" shares, in
exchange for 10 percent of the outstanding shares of "APP".
NOW, THEREFORE, the parties hereto agree as follows:
1. THE ACQUISITION
---------------
1.1. Upon the terms and conditions set forth herein, "APP" hereby agrees to
transfer and assign to Richard Goodhart 1,600,000 shares amounting to 10 percent
of the issued and outstanding shares of its common stock and shall receive in
exchange for 200 of the issued and outstanding shares of"IPS". Upon completion
of the transaction, "IPS" shall become a wholly owned subsidiary of "APP Inc.".
1.2. Title to shares. Concurrent herewith, Richard Goodhart shall convey to
"APP" good and marketable title to "IPS"'s shares, except such restrictions as
are imposed by federal and state securities laws, liabilities, or restrictions
created, if any, by "IPS". RICHARD GOODHART shall deliver to "APP" all
certificates representing "IPS's Shares duly endorsed for transfer.
2. EXCHANGE
--------
2.1. As consideration for the acquisition of the 200 shares, "APP" shall issue
to and for the benefit of RICHARD GOODHART Shareholder, effective as of the date
hereof 1,600,000 shares of "APP" duly authorized, fully paid and nonassessable
common stock, $.OOl par value, as follows:
2.2. (a) Richard Goodhart shall have good and marketable title to "APP" shares,
acknowledging any debts, liabilities, obligations, claims or restrictions,
except such restrictions as are imposed by federal or state securities laws.
Concurrently herewith, "APP" shall deliver to Richard Goodhart, a letter
directed to "IPS", the Continental Transfer Agent, authorizing the issuance of
certificates representing 1,600,000 shares. Each Shareholder shall execute and
deliver an investment certificate to "APP" in the form of Exhibit 2.2.
<PAGE>
(b)Except for such shares which may be registered pursuant to a
registration statement to be filed with the SEC, the 1,600,000 shares shall be
restricted from sale to the public and shall retain their restricted nature for
a period of two years from the closing Date. Each certificate shall bear an
appropriate legend describing the transfer restriction.
2.3. Legend. Each stock certificate representing "APP" shares shall bear the
following legends:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 ("1933 Act") nor under any
applicable state securities act and may not be offered or sold except
pursuant to (I) an effective registration statement relating to such
stock under the 1933 Act and any applicable state securities act, (II)
to the extent applicable, Rule 144 under the 1933 Act (or any similar
rule under such act or acts relating to the disposition of securities),
or (III) an opinion of counsel satisfactory to the Corporation that an
exemption from registration under such Act or Acts is available.
3. REPRESENTATIONS AND WARRANTIES OF "APP"
---------------------------------------
"APP" represents and warrants to "IPS" that: all representation and warranties
have been waived.
4. REPRESENTATIONS AND WARRANTIES OF "IPS"
---------------------------------------
"IPS" represents and warrants to each Shareholder and "APP" that: all
representation and warrants have been waived.
5. CONDITIONS TO "IPS" OBLIGATiONS
-------------------------------
Unless waived by "APP" in writing, "IPS" obligations hereunder are subject to
the satisfaction on or prior to the date hereof
6. CONDITIONS TO "APP" OBLIGATIONS
-------------------------------
Unless waived by "IPS" in writing, the "APP" obligations hereunder are subject
to the satisfaction on or prior to the date hereof.
7. INDEMNITY
---------
The Shareholders agree to waive any indenmification, hold harmless, reimburse
and defend "APP" and "IPS" against any claim, costs, expense, liability,
obligation, loss or damage (including legal fees) of any nature, incurred by or
imposed upon the Companies which results, arises out of or is based upon:
(a) any misrepresentation by the Shareholders or breach of any warranty by the
Shareholders in this Agreement or in any Exhibit or Schedule attached
hereto; or
(b) any breach or default in performed by each of them hereunder.
8. CLOSING
-------
The consummation of the transactions contemplated herein shall take place at the
offices of "APP" within fourteen days after the ratification of this Agreement
by "APP" Board of Directors. "APP" shall convene a special meeting of its Board
of Directors for the purpose of passing upon this agreement within fourteen days
from date.
<PAGE>
9. MISCELLANEOUS
-------------
9.1. Notice. All notices, demands or other communications required or desired to
be delivered hereunder by any party shall be in writing and shall be validly
given or made to another party if served either personally or if deposited in
the United States mail, certified or registered, postage prepaid, return receipt
requested. If such notice, demand or other communication be served personally,
service shall be conclusively deemed made at the time of such personal service.
If such notice, demand or other communication be given by mail, such notice
shall be conclusively deemed given forty-eight (48) hours after the deposit
thereof in the United States mail addressed to the party to whom such notice,
demand or other communication is to be given as hereinafter set forth:
a) Mr. Seth I. Ben-Ezra, c/o Stephen j. Goldstein, PC
500 North Broadway, Suite 243
Jericho, NY 11753
b) Richard Goodhart 99 Aspen Drive East
Woodbury, NY 11797
Any party hereto may change its address for the purpose of receiving notices,
demands and other conununications as herein provided by written notice delivered
in the manner aforesaid to the other party or parties hereto.
9.2. Modifications or amendments. No amendment, change or modification of this
document shall be valid unless in writing and signed by all of the parties
hereto.
9.3. Waiver. No reliance upon or waiver of one or more provisions of this
Agreement shall constitute a waiver of any other provisions hereof.
9.4. Successors and Assigns. All of the terms and provisions contained herein
shall inure to the benefit of and shall be binding upon the parties hereto and
their respective heirs, representatives and successors, provided, however, that
no party shall be entitled to assign its rights hereunder or delegate its
responsibilities without the prior written consent of all other parties.
9.5. Separate Counterparts. This document may be executed in one or more
separate counterparts, each of which, when so executed, shall be deemed to be an
original. Such counterparts shall, together, constitute and shall be one and the
same instrument.
9.6. Captions. The captions appearing at the commencement of the paragraphs
hereof are descriptive only and are for convenience in reference. In the event
of a conflict between any such caption and the paragraph at the head of which it
appears, the paragraph and not such caption shall control and govern in the
construction of this document.
9.7. Exhibits and Schedules. Each fact or statement recited or contained in any
exhibit, schedule, certificate or other instrument delivered by or on behalf of
the parties hereto, or in connection with the transactions contemplated hereby,
shall be deemed a representation and a warranty hereunder.
9.8. Further Assurances. Each of the parties hereto shall execute and deliver,
if required, additional papers, documents, and other assurances, and shall do
all acts and things reasonably necessaiy in connection with the performance of
their obligations hereunder and to carry out the intent of the parties and this
agreement.
9.9. Applicable Law and Severability. In the event of controversy this agreement
and the exhibits forming a part hereof shall be governed by the laws of the
State of New York without regard to New York's conflict of laws rules applicable
to agreements executed and to be wholly performed within the State of New York.
Nothing contained herein shall be construed so as to require the commission of
any act contrary to law, and wherever there is a conflict between any provision
contained herein and any
<PAGE>
present or future statute, law, ordinance or regulation contrary to which the
parties have no legal right of contract, the latter shall prevail but the
provision of this document which is affected shall be curtailed and limited only
to extent necessary to comply with the requirements of the law.
9.10. Enforceability. It is agreed that the rights granted to the parties
hereunder are of a special and unique kind and character and that, in the event
of a breach by any party of any material provision of this document, the other
party or parties would not have any adequate remedy at law. It is expressly
agreed, therefore, that the rights of the parties hereunder may be enforced by
an action for specific performance and such other equitable relief as is
provided under the laws of the State of New York.
9.11. Attorney's Fees and Cost. In the event any action is instituted by a party
hereto to enforce any of the terms or provisions hereof, the prevailing party in
such action shall be entitled to such reasonable attorneys' fees, costs and
expenses as may be fixed by the Court.
9.12. Entire Agreement. This document, together with any related documents
referred to in this Agreement, constitutes the entire understanding and
agreement of the parties with respect to the subject matter of this Agreement,
and all prior agreements, understandings or representations are hereby
terminated and canceled in their entirety.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
on the day and year first above written.
Accident Prevention Plus, Inc. International Purchasing Service, Inc.
/s/ Steven H. Wahrman /s/ Richard Goodhart
- - ------------------------------ ----------------------------
President President
- - ------------------------------ ----------------------------
10/28/98 10/28/98
- - ------------------------------ ----------------------------
Royce Anderson & Monroe, Inc.
447 Northfield Ave.
Suite 200
West Orange, N.J. 07012
Phone: (973) 622-3023 Fax: (973) 622-3023
CONSULTING AGREEMENT dated as of the 30th day of July, 1998, between Royce
Anderson & Monroe, Inc., of La Destra Mill Neck, NY 11765, and Accident
Prevention Plus, Inc., of 145 Oser Ave. Ste 100 - Hauppauge, NY 11788
Accident Prevention Plus, Inc. desires to hire Royce Anderson & Monroe, Inc to
assist and asvise for commercial application in The United States and and the
rest of the western hemisphere as to Corporate Structure, Capital Acquisition,
Contract Application, Equity Partners and Mergers and Acquisitions. It will also
advise and coordinate procedures for geographic allocation of business resources
in areas described in this paragraph.
1. Services; Term
Royce Anderson & Monroe, Inc. hereby agrees to provide services as consultant to
Accident Prevention Plus, LLC, Inc. for a period of five years commencing on the
thirtieth of July, 1998, for five years terminating on thirtieth of July, 2003.
2. Services to be performed
(See Attachment A)
3. Compensation
a) Royce Anderson & Monroe, Inc. shall be retained as described in item number
1, above: Royce Anderson & Monroe, Inc., and its associates is to receive
10% of the stock in the new company, (Accident Prevention Plus, Inc.) to be
formed. The 10% can not be diluted by the issuance of new stock to officers
and directors for a period of five years.
4. Travel Expenses
In the event that, at Accident Prevention Plus, Inc.'s request, Royce Anderson &
Monroe, Inc. or its representatives is required to travel away from their
corporate offices in Mill Neck, New York, in the performance of their duties
hereunder, the Accident Prevention Plus, Inc. shall reimburse the corporation
for all expenses incurred by the corporation or its representatives in
connection with such travel.
5. Termination
This Agreement may be terminated prior to the end of the Term:
(a) By Accident Prevention Plus, Inc. if Royce Anderson & Monroe, Inc. does not
conform to agreed upon stipulation in this contract and as is outlined in number
2, or any other documents pertaining to said paragraph #2, above which are
mutually agreed upon and signed by both parties. Royce Anderson & Monroe, Inc.
shall retain all stock and rights prior to any termination.
<PAGE>
Royce Anderson & Monroe, Inc.
447 Northfield Aye,
Suite 200
West Orange, N.J. 07012
Phone: (973) 622-3023 Fax: (973) 622-3023
CONSULTING AGREEMENT dated as of the _________________ day of July, 1998,
between Royce Anderson & Monroe, Inc., of 447 Northfield Avenue, Suite 200, West
Orange, NJ 07012, and Accident Prevention Plus, LLC, of 145 Oser Ave. Suite 100,
Hauppauge, NY 11788.
Accident Prevention Plus, LLC desires to hire Royce Anderson & Monroe, Inc. to
assist and advise for commercial application in The United States and the rest
of the western hemisphere as to Corporate Structure, Capital Acquisition,
Contract Application, Equity Partners and Mergers and Acquisitions. It will also
advise and coordinate procedures for geographic allocation of business resources
in areas described in this paragraph.
1. Services; Term
Royce Anderson & Monroe, Inc. hereby agrees to provide services as consultant to
Accident Prevention Plus, LLC, Inc. for a period of five years commencing
_____________ on the of July, 1998, for five years terminating on the
_____________ of July, 2003.
2. Services to be performed
(See Attachment A)
3. Compensation
a) Royce Anderson & Monroe, Inc. shall be retained as described in item number
1, above: Royce Anderson & Monroe, Inc., and its associates are to receive
10% of the stock in the new company, (Accident Prevention Plus, Inc.) to be
formed. The 10% can not be diluted by the issuance of new stock to officers
and directors for a period of five years.
4. Travel Expenses
In the event that, at Accident Prevention Plus, LLC's request, Royce Anderson &
Monroe, Inc. or its representatives are required to travel away from their
corporate offices in West Orange, New Jersey, in the performance of their duties
hereunder, then Accident Prevention Plus, LLC shall reimburse the corporation
for all expenses incurred by the corporation or its representatives in
connection with such travel.
5. Termination
This Agreement may be terminated prior to the end of the Term:
(a) By Accident Prevention Plus, LLC if Royce Anderson & Monroe, Inc. does not
conform to agrged upon stipulation in this contract and as is outlined in number
2, or any other documents pertaining to said paragraph #2, above which are
mutually agreed upon and signed by both parties. Royce Anderson & Monroe, Inc.
shall retain all stock and rights prior to any termination.
<PAGE>
In the event that this Agreement is terminated in accordance with this paragraph
2, the Company shall have no further obligation to Royce Anderson & Monroe, Inc.
under this Agreement after the date of such termination, except that Royce
Anderson & Monroe, Inc. shall be entitled to receive any consideration to which
it is entitled pursuant to paragraph 2 hereof which has accrued and has not been
paid up to and including the date of termination.
6. Confidential Information
All confidential information which Royce Anderson & Monroe, Inc. may now
possess, may obtain during or after the Term, or may create prior to the end of
the Term relating to the business of the Accident Prevention Plus, Inc., shall
not be published, disclosed or made accessible by him to any other person, firm,
or corporation either during or after the Term or used by him except during the
Term in the business and for the benefit of the Accident Prevention Plus, Inc.,
without the prior written consent of the Accident Prevention Plus, Inc..
7. Binding Effect; Assignment
This Agreement shall be binding upon and inure to the benefit of the parties
hereto, the successors and assigns of the Accident Prevention Plus, Inc. and the
assigns, heirs and personal representatives of Royce Anderson & Monroe, Inc.;
provided, however, that Royce Anderson & Monroe, Inc. may assign, transfer or
otherwise convey any of its rights or delegate any of its duties under this
Agreement without the written consent of the Accident Prevention Plus, Inc..
8. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without giving effect to conflicts of law.
9. Entire Agreement
This Agreement represents the entire agreement and any other documents
pertaining to said paragraph #2, above which are mutually agreed upon and signed
by both parties with respect to matters contemplated herein and supercedes any
prior oral or written agreements or undertakings between the parties with
respect to such matters.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
Royce Anderson & Monroe, Inc. Accident Prevention Plus, Inc. by
Authorized Representative Richard Goodhart, Chairman and CEO
Alex Moskowitz
/s/ Alex Moskowitz /s/ Richard Goodhart, CEO
- - ----------------------------- -------------------------------
Steven H. Wahrman, President
/s/ Steven H. Wahrman
-----------------------------------
<PAGE>
Royce Anderson & Monroe, Inc.
447 Northfield Ave.
Suite 200
West Orange, N.J. 07012
Phone: (973) 622-3023 Fax: (973) 622-3023
Attachment A
1. Advise to
a) Commercial application
1. United States
2. Other areas of the Western Hemisphere
2. Corporate Structure
3. Capital Acquisition
4. Contract Application
5. Equity Partners
6. Mergers and Acquisitions
<PAGE>
ROYCE ANDERSON & MONROE
447 Northfield Ave.
Suite 200
West Orange, N.J. 07012
Phone: (973) 622-3023 Fax: (973) 622-3023
Under Rule 144 SEC Regulation, Accident Prevention Plus LLC or their attorney
cannot refuse a Letter of Opinion for relief in regard to taking legend off
stock in the above mentioned Corporation provided all SEC requirements are met.
Accident Prevention Plus, LLC must accept Corporation's own Counsel Letter of
Opinion.
<PAGE>
AMENDMENT TO CONSULTING AGREEMENT
THIS AMENDMENT TO CONSULTING AGREEMENT is entered into this 28th day of
October, 1998 by and between Accident Prevention Plus, Inc., a Nevada
corporation ("APP") and Royce Anderson & Monroe, Inc. (`Royce Anderson").
RECITALS
WHEREAS, Royce Anderson and Accident Prevention Plus, LLC, a limited
liability company ("APP LLC") had entered into a consulting agreement dated July
30, 1998 (the "Consulting Agreement") for a five year period pursuant to which
Royce Anderson was to perform certain duties;
WHEREAS, the terms and provisions of the Consulting Agreement provided
that Royce Anderson would receive an approximate ten percent (10%) equity
ownership interest in a new corporation to be formed as consideration for the
performance of those duties by Royce Anderson (not to be diluted by the issuance
of new stock to officers and directors for a period of five years);
WHEREAS, on October 28, 1998, Accident Prevention Plus, Inc. ("APP")
was formed under the laws of the state of Nevada, and APP and Royce Anderson
entered into an agreement (the "Exchange Agreement") whereby Royce Anderson
agreed to exchange either its equity membership interest or its right to an
equity membership interest in APP LLC for shares of restricted common stock of
APP;
WHEREAS, in accordance with the terms and provisions of the Exchange
Agreement, on October 28, 1998, 2,006,276 shares of restricted common stock of
APP were issued to Royce Anderson evidencing an approximate 11.087% equity
ownership interest in APP pursuant to the terms and provisions of the Consulting
Agreement;
WHEREAS, the board of directors of APP approved the issuance of such
shares of stock to Royce Anderson by resolution dated October 28, 1999; and
WHEREAS, the parties hereto desire to memoralize the terms and
provisions for such issuance of shares of common stock of APP.
NOW, THEREFORE, for and in consideration of the covenants and promises
set forth below, the parties agree as follows:
1. Royce Anderson agrees to accept the issuance of 2,006,276 shares of
restricted common stock of APP as settlement for any and all services performed
pursuant to the Consulting Agreement and fulfillment of the terms and provisions
of the Consulting Agreement, and that such stock- certificate issued shall be
dated as of October 28, 1998;
<PAGE>
2. APP acknowledges that such issuance of shares represents a greater
equity percentage ownership interest in APP than was originally contemplated by
the terms and conditions of the Consulting Agreement, and agrees to issue the
2,006,276 shares of restricted common stock to Royce Anderson.
3. Royce Anderson is aware that the shares of common stock are not
being registered under the Securities Act of 1933, as amended. Royce Anderson
understands that the shares of common stock are being issued in reliance on the
exemption from registration provided by Section 4(2) thereunder. Royce Anderson
represents and warrants that: (a) the shares of common stock are being acquired
solely for Royce Anderson's own account, for investment purposes only, and not
with a view to or in connection with, any resale, distribution, subdivision or
fractionalization thereof; and (b) Royce Anderson has no agreement or other
arrangement, formal or informal, with any person to sell, transfer or pledge any
of the shares of common stock or which would guarantee to Royce Anderson any
profit, or protect Royce Anderson against any loss with respect to the shares of
common stock, and Royce Anderson has no plans to enter into any such agreement
or arrangement. Royce Anderson understands that it may be required to bear the
economic risk of this investment for an indefinite period of time because there
is currently no trading market for the shares of common stock and the shares of
common stock cannot be resold or otherwise transferred unless applicable state
securities laws are complied with (which APP is not obligated to do) or
exemptions therefrom are available.
4. The issuance of 2,006,276 shares of common stock of APP to Royce
Anderson shall be valued at $0.003 for an aggregate valuation of $6,018.00 as of
October 28, 1998.
5. Royce Anderson agrees to waive any such restricted provisions
contained in paragraph 3(a) of the Consulting Agreement which does not allow for
the subsequent issuance of new shares of common stock to the officers and
directors of APP for a period of five years.
6. Each party shall indemnify, defend and hold harmless the other from
and against any and all claims, damages, liabilities, losses, costs and expenses
arising out of the Consulting Agreement and the issuance of stock pursuant to
this Amendment to the Consulting Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment on the
dates indicated below to be effective as of the date first above written.
ACCIDENT PREVENTION PLUS, INC.,
A Nevada corporation
Date: 1/10/00 By: /s/ Steven H. Wahrman
------------------------
Steven H. Wahrman
ROYCE ANDERSON & MONROE, INC.
Date: 1/07/00 By: /s/ Alex ??????
-----------------
Alex ???????
Bristol Consulting LTD.
P.O. Box 290767
Brooklyn, NY 11229
Phone: (718) 891-8101 Fax: (718) 891-0105
CONSULTING AGREEMENT dated as of the 30th day of July, 1998, between Bristol
Consulting LTD, of P.O. Box 290767 Brooklyn, NY 11229, and Accident Prevention
Plus, Inc., of 145 Oser Ave. Ste. 100 - Hauppauge, NY 11788
Accident Prevention Plus, Inc. desires to hire Bristol Consulting LTD. (Bristol
Consulting LTD.) to assist and advise for commercial application in Europe, the
Middle East and Far East, as to Corporate Structure, Capital Acquisition,
Contract Application, Equity Partners and Mergers and Acquisitions. It will also
advise and coordinate procedures, for geographic allocation of business
resources in areas described in this paragraph.
1. Services; Term
Bristol Consulting LTD. hereby agrees to provide services as consultant to
Accident Prevention Plus, LLC, Inc. for a period of five years commencing on
the thirtieth of July, 1998, for five years terminating on the thirtieth July,
2003.
2. Services to be performed
(See Attachment A)
3. Compensation
a) Bristol Consulting LTD. shall be retained as described in item number 1,
above:
i. Three months at $5000 per month.
ii. For balance of contract, Bristol Consulting LTD. will be paid $10,000
per month.
b) Bristol Consulting LTD. and its associates is to receive 5% of the stock of
the new company (APP Incorporated -- to be formed) which can not be diluted
by the issuance of new stock to officers and directors for a period of five
years except in relation to their contracts.
4. Travel Expenses
In the event that, at Accident Prevention Plus, Inc.'s request, Bristol
Consulting LTD. or its representatives is required to travel away from their
corporate offices in Brooklyn, New York, in the performance of their duties
hereunder, the Accident Prevention Plus, Inc. shall reimburse the corporation
for all expenses incurred by the corporation or its representatives in
connection with such travel.
<PAGE>
5. Termination
This Agreement may be terminated prior to the end of the Term:
(a) By Accident Prevention Plus, Inc. if Bristol Consulting LTD. does not
conform to agreed upon stipulation in this contract and as is outlined in number
2, or any other documents pertaining to said paragraph #2, above which are
mutually agreed upon and signed by both parties. Bristol Consulting LTD. shall
retain all stock and rights prior to any termination.
In the event that this Agreement is terminated in accordance with this paragraph
2, the Company shall have no further obligation to Bristol Consulting LTD. under
this Agreement after the date of such termination, except that Bristol
Consulting LTD. shall be entitled to receive any consideration to which it is
entitled pursuant to paragraph 2 hereof which has accrued and has not been paid
up to and including the date of termination.
6. Confidential Information
All confidential information which Bristol Consulting LTD. may now possess, may
obtain during or after the Term, or may create prior to the end of the Term
relating to the business of the Accident Prevention Plus, Inc., shall not be
published, disclosed or made accessible by him to any other person, firm, or
corporation either during or after the Term or used by him except during the
Term in the business and for the benefit of the Accident Prevention Plus, Inc.,
without the prior written consent of the Accident Prevention Plus, Inc..
7. Binding Effect; Assignment
This Agreement shall be binding upon and inure to the benefit of the parties
hereto, the successors and assigns of the Accident Prevention Plus, Inc. and the
assigns, heirs and personal representatives of Bristol Consulting LTD. ;
provided, however, that Bristol Consulting LTD. may assign, transfer or
otherwise convey any of its rights or delegate any of its duties under this
Agreement without the written consent of the Accident Prevention Plus, Inc..
8. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without giving effect to conflicts of law.
9. Entire Agreement
This Agreement represents the entire agreement and any other documents
pertaining to said paragraph #2, above which are mutually agreed upon and signed
by both parties with respect to matters contemplated herein and supercedes any
prior oral or written agreements or undertakings between the parties with
respect to such matters.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
Bristol Consulting LTD. Accident Prevention Plus, Inc., by
Authorized Representative Richard Goodhart, Chairman and CEO
Professor Sheldon Friedland
/s/ Sheldon Friedland /s/ Richard Goodhart, CEO
- - --------------------------- ------------------------------------
Steven H. Wahrman, President
/s/ Steven H. Wahrman
------------------------------------
<PAGE>
Bristol Consulting LTD.
P.O. Box 290767
Brooklyn, NY 11229
Phone: (718) 891-8101 Fax: (718) 891-0105
Attachment A
1. Advise to
a) Commercial application
1. Europe
2. Middle East
3. Far East
2. Corporate structure
3. Capital Acquisition
4. Contract Application
5. Equity Partners
6. Mergers and Acquisitions
<PAGE>
Bristol Consulting LTD.
P.O. Box 290767
Brooklyn, NY 11229
Phone: (718) 891-8101 Fax: (718) 891-0105
This is an amendment to the contract, dated July 30, 1998, between Bristol
Consulting, LTD and Accident Prevention Plus, LLC:
Termination:
Should either company fail to perform the services as outlined in point 2
(attachment A) The following procedure for stock issuance and consulting fees
will be amended as follows:
1. For every month that this agreement is in force Bristol Consulting shall
accrue stock holdings equal to 8,063 shares monthly for a period of 59
months with the final distribution to be 8,111 shares which equal a total
of 483,828 shares.
2. The consulting companies will accrue a fee at the rate of $5,000 per month
for the first 3 months of service and $10,000/month thereafter or until the
date of termination of this agreement.
3. All stock which has not been accrued for services will be returned to the
company. However, the consultant company will have the option to purchase
this stock at the stock option price as determined in management employment
contracts dated January 1, 1999 for a period of 60 days from the
termination of this Agreement.
4. Should Consultant Company wish to liquidate any of their holdings after the
18 month waiting period, which equates to 145,134 shares they have full
right to do so. Other stock that may be issued can only be liquidated on a
month to month accrual bases of 8,063 shares/month thereafter.
5. Should APP fault in any of their company obligations then this Agreement
will remain in full effect for the term of five years as stated in 1.
Services Term.
/s/ Sheldon Friedland
- - ---------------------------------
Sheldon Friedland, President
<PAGE>
Bristol Consulting LTD.
P.O. Box 290767
Brooklyn, NY 11229
Phone: (718) 891-8101 Fax: (718) 891-0105
This is an amendment to the contract, dated July 30, 1998, between Bristol
Consulting, LTD and Accident Prevention Plus, LLC:
Of the 787,614 shares of common stock in APP originally contracted for by
Bristol Consulting in conjunction with providing the services contracted by APP,
Bristol Consulting has distributed common stock to independent associates for
completion of the above referenced contract.
The Bristol Consulting ownership is currently 689,414 shares. All stock remains
under the same restrictions under rule 144 SEC regulations.
/s/ Sheldon Friedland
- - -------------------------------
Sheldon Friedland, President
<PAGE>
Bristol Consulting LTD.
P.O. Box 290767
Brooklyn, NY 11229
Phone: (718) 891-8101 Fax: (718) 891-0105
Under Rule 144 SEC Regulation, Accident Prevention Plus LLC or their attorney
cannot refuse a Letter of Opinion for relief in regard to taking legend off
stock in the above mentioned Corporation provided all SEC requirements are met.
Accident Prevention Plus, LLC must accept Corporation's own Counsel Letter of
Opinion.
<PAGE>
AMENDMENT TO CONSULTING AGREEMENT
THlS AMENDMENT TO CONSULTING AGREEMENT is entered into this 28th day of
October, 1998 by and between Accident Prevention Plus, Inc., a Nevada
corporation ("APP") and Bristol Consulting Ltd. ("Bristol").
RECITALS
WHEREAS, Bristol and Accident Prevention Plus, LLC, a limited liability
company ("APP LLC") had entered into a consulting agreement dated July 30, 1998
(the "Consulting Agreement") for a five year period in which APP LLC agreed to
pay Bristol $5,000 per month for the first three months and $10,000 per month
thereafter during the term of the Consulting Agreement as consideration for
certain duties to be performed by Bristol;
WHEREAS, the terms and provisions of the Consulting Agreement also
provided that Bristol would receive an approximate five percent (5%) equity
ownership interest in a new corporation to be formed as additional consideration
for certain duties to be performed by Bristol (not to be diluted by the
`issuance of new stock to officers and directors for a period of five years
except in relation to their contracts);
WHEREAS, on October 28, 1998, Accident Prevention Plus, Inc. ("APP")
was formed under the laws of the State of Nevada, and APP and Bristol entered
into an agreement (the "Exchange Agreement") whereby Bristol agreed to exchange
either its equity membership interest or its right to an equity membership
interest in APP LLC for shares of restricted common stock of APP;
WHEREAS, in accordance with the terms and provisions of the Exchange
Agreement, on October 28, 1998, 837,414 shares of restricted common stock of APP
were issued to Bristol evidencing an approximate 4.628% equity ownership
interest in APP pursuant to the terms and provisions of the Consulting
Agreement;
WHEREAS, the board of directors of APP approved the issuance of such
shares of stock to Bristol by resolution dated October 28, 1998; and
WHEREAS, the parties hereto desire to memoralize the terms and
provisions for such issuance of shares of common stock of APP.
NOW, THEREFORE, for and in consideration of the covenants and promises
set forth below, the parties agree as follows:
<PAGE>
1. Bristol agrees to accept the issuance of 837,414 shares of
restricted common stock of APP as settlement for any and all services performed
pursuant to the Consulting Agreement and fulfiIlment of the terms and provisions
of the Consulting Agreement, and that such stock certificate issued shall be
dated as of October 28, 1998;
2. Bristol is aware that the shares of common stock are not being
registered under the Securities Act of 1933, as amended. Bristol understands
that the shares of common stock are being issued in reliance on the exemption
from registration provided by Section 4(2) thereunder. Bristol represents and
warrants that: (a) the shares of common stock are being acquired solely for
Bristol's own account, for investment purposes only, and not with a view to or
in connection with, any resale, distribution, subdivision or fractionalization
thereof; and (b) Bristol has no agreement or other arrangement, formal or
informal, with any person to sell, transfer or pledge any of the shares of
common stock or which would guarantee to Bristol any profit, or protect Bristol
against any loss with respect to the shares of common stock, and Bristol has no
plans to enter into any such agreement or arrangement. Bristol understands that
it may be recquired to bear the economic risk of this investment for an
indefinite period of time because there is currently no trading market for the
shares of common stock and the shares of common stock cannot be resold or
otherwise transferred unless applicable state securities laws are complied with
(which APP is not obligated to do) or exemptions therefrom are available.
3. The issuance of 837,414 shares of common stock of APP to Bristol
shall be valued at $0.00l for an aggregate valuation of$837.00 as of October 28,
1998.
4. Bristol agrees to waive the restrictive provision contained in
paragraph 3(b) of the Consulting Agreement to be effective from the date of this
Agreement.
5. Each party shall indetnnify, delend and hold harmless the other from
and against any and all claims. damages, liabilities, losses costs and expenses
arising out of the Exchange Agreement and the issuance of stock pursuant to the
Exchange Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment on the
dates indicated below to be effective as of the date first above written.
ACCIDENT PREVENTION PLUS, INC.,
A Nevada corporation
Date: 1/10/00 By: /s/ Steven H. Wahrman
------------------------
Steven H. Wahrman
BRISTOL CONSULTING LTD.
Date: 1/07/00 By: ????????????
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT is entered into as of this 28th day of October,
1998 by and among Accident Prevention Plus, Inc., a Nevada corporation ("APP")
and Richard Goodhart ("Goodhart"), Steven Wahrman (`Wahrman"), Jean Paul Daveau
(`Daveau"), Darien Partners Investments, Inc. (`Darien"), World Asset
Management, Inc. ("WAM"), Atlantic Financial Management, Inc. ("Atlantic"),
Avignon Trading, Inc. ("Avignon"), Royce Anderson Monroe Royce Anderson"),
Bristol Consulting ("Bristol"), Frank Baker ("Baker"), and Michael Gervis
("Gervis"), each who held either an equity membership interest or a right to
acquire an equity membership interest in Accident Prevention Plus, LLC, a New
York limited liability company ("APP LLC").
RECITALS
WHEREAS, Goodhart, Wahrman and Daveau were the founders and initial
members of APP LLC, and had executed an Operating Agreement dated December 30,
1995 and an Amendment to the Operating Agreement dated March 26, 1997 (the
"Operating Agreement") reflecting certain percentages of ownership interests in
APP LLC;
WHEREAS, pursuant to the terms of the Operating Agreement, percentage
ownership interests were set forth of 51%, 25% and 24% for Goodhart, Wahrman and
Daveau, respectively, of APP LLC;
WHEREAS, APP LLC and Darien entered into an Independent Contractor's
Installation and Service Agreement dated April 11, 1997 and amended April 23,
1997 whereby Darien agreed to perform certain consulting services and APP LLC
agreed to grant Darien the right to purchase a 4,9% equity membership interest
in APP LLC for $2,500.00;
WHEREAS, APP LLC and WAM entered into an Independent Contractor's
Installation and Service Agreement dated May 8, 1997 and amended May 20, 1997
whereby WAM agreed to perform certain consulting services and APP LLC agreed to
grant WAM the right to purchase a 4.9% equity membership interest in APP LLC for
$2,500.00;
WHEREAS, APP LLC and Atlantic entered into an Independent Contractor's
Installation and Service Agreement dated May 16, 1997 and amended May 28, 1997
whereby Atlantic agreed to perform certain consulting services and APP LLC
agreed to grant Atlantic the right to purchase a 4.9% equity membership interest
in APP LLC for $2,500.00;
<PAGE>
WHEREAS, APP LLC and Avignon entered into an Independent Contractor's
Installation and Service Agreement dated June 4, 1997 and amended June 25, 1997
whereby Avignon agreed to perform certain consulting services and APP LLC agreed
to grant Atlantic the right to purchase a 4.9% equity membership interest in APP
LLC for $2,500.00;
WHEREAS, APP LLC and Bristol entered into a consulting agreement dated
July 30, 1998 whereby Bristol agreed to perform certain services and APP LLC
agreed to grant Bristol the right to 5% of the shares of common stock to be
issued upon formation of a new corporation;
WHEREAS, APP LLC and Royce entered into a consulting agreement dated
July 30, 1998 whereby Royce agreed to perform certain services and APP LLC
agreed to grant Royce the right to 10% of the shares of common stock to be
issued upon formation of a new corporation;
WHEREAS, Accident Prevention Plus, Inc., a New York corporation ("APP
NY") and Baker had entered into a consulting agreement dated June 5, 1995 and
amended November 26, 1996 in which APP NY agreed to pay Baker five percent (5%)
of the profits generated by APP LLC effective November 26, 1996;
WHEREAS, APP NY and Gervis had entered into a consulting agreement
dated November 13, 1995 and amended November 26, 1996 in which APP NY agreed to
pay Gervis five percent (5%) of the profits generated by APP LLC effective
November 26, 1996;
WHEREAS, on October 28, 1998, Accident Prevention Plus, Inc. ("APP")
was formed under the laws of the state of Nevada, and the parties hereto agreed
to exchange either their equity membership interest or right to acquire an
equity membership interest in APP LLC for shares of restricted common stock of
APP based on their respective proportionate interests;
WHEREAS, the parties desire to memoralize the terms and provisions of
such exchange in this Exchange Agreement and to confirm and set forth their
respective proportionate equity interest in APP as of October 28, 1998
NOW THEREFORE, for and in consideration of the covenants and promises
set forth below, the parties agree as follows:
1. Exchange. (a) Goodhart agrees to transfer his entire equity
membership interest in APP LLC for 2,936,640 shares of restricted common stock
of APP at $0.00 I per share for an aggregate value of approximately $2,937.00,
constituting approximately a 28.4% interest as of October 28, 1998, and to
relinquish all rights and duties as a member in APP LLC.
<PAGE>
(b) Wahrman agrees to transfer his entire equity membership
interest in APP LLC for 2,360,960 shares of restricted common stock of APP at
$0.001 per share for an aggregate value of approximately $2,361.00, constituting
approximately a 13.9% interest as of October 28, 1998, and to relinquish all
rights and duties as a member in APP LLC.
(c) Daveau agrees to transfer his entire equity membership
interest in APP LLC for 1,049,680 shares of restricted common stock of APP at
$0. 001 per share for an aggregate value of approximately $1,050.00,
constituting approximately a 13.3% interest as of October 28, 1998, and to
relinquish all rights and duties as a member in APP LLC.
(d) Darien agrees to transfer its rights to an equity
membership interest in APP LLC for 795,000 shares of restricted common stock of
APP at $0.001 per share for an aggregate value of approximately $795.00,
constituting approximately a 4.9% interest as of October 28, 1998.
(e) WAM agrees to transfer its rights to an equity membership
interest in APP LLC for 795,000 shares of restricted common stock of APP at
$0.001 per share for an aggregate value of approximately $795.00, constituting
approximately a 4.9% interest as of October 28, 1998.
(f) Atlantic agrees to transfer its rights to an equity
membership interest in APP LLC for 790,000 shares of restricted common stock of
APP at $0.001 per share for an aggregate value of approximately $790.00,
constituting approximately a 4.9% interest as of October 28, 1998.
(g) Avignon agrees to transfer its rights to an equity
membership interest in APP LLC for 800,000 shares of restricted common stock of
APP at $0.001 per share for an aggregate value of approximately $800.00,
constituting approximately a 4.9% interest as of October 28, 1998.
(h) Baker agrees to transfer his rights to an equity membership
interest in APP LLC for 820,000 shares of restricted common stock of APP at $0.
001 per share for an aggregate value of approximately $820.00, constituting
approximately a 4.9% interest as of October 28, 1998.
(i) Gervis agrees to transfer his rights to an equity membership
interest in APP LLC for 805,000 shares of restricted common stock of APP at
$0.00 I per share for an aggregate value of approximately $805.00, constituting
approximately a 4.9% interest as of October 28, 1998.
(j) Bristol agrees to transfer its rights to an equity membership
interest in APP LLC for 837,414 shares of restricted common stock of APP at
$0.001 per share for an aggregate value of approximately $837.00, constituting
approximately a 5% interest as of October 28, 1998.
<PAGE>
(k) Royce agrees to transfer its rights to an equity membership
interest in APP LLC for 2,006,276 shares of restricted common stock of APP at
$0.00 I per share for an aggregate value of approximately $2,006.00,
constituting approximately a 10% interest as of October 28, 1998.
2. Representations and Warranties. Goodhart, Wahrman, Daveau, Darien,
WAM, Atlantic, Avignon, Baker, Gervis, Bristol and Royce represent and warrant
to APP as follows:
(a) That either their respective equity ownership interest or
right to ownership interest in APP LLC is free and clear of all security
interests, liens, encumbrances, restrictions or any other burdens.
(b) That (i) complete and full opportunity and access to the
financial statements and other relevant books and records or information
concerning APP has been given, (ii) when requested and as deemed necessary for
the purposes of entering into this Exchange Agreement, such financial and other
information regarding APP has been given, and (iii) no reliance has been made on
statements or representations of any other persons associated with APP or any
director, officer, employee or agent of APP concerning the business or prospects
of APP in connection with execution of this Exchange Agreement.
(c) That the transfer of such interests pursuant to the
Exchange Agreement is at arms-length and for fair and adequate consideration.
3. Represents and Warranties of APP. APP represents and warrants as
follows:
(a) It is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada.
(b) The issuances of stock to the parties as described herein and
the execution of this Exchange Agreement has been duly and validly authorized by
the board of directors of APP.
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the dates indicated below to be effective as of the date first above written.
ACCIDENT PREVENTION PLUS, INC.,
A Nevada Corporation
Date:1/10/2000 By /s/ Steven H. Wahrman
------------------------
President
Date:1/10/2000 /s/ Richard Goodhart
------------------------
Richard Goodhart
Date:1/10/2000 /s/ Steven Wahrman
------------------------
Steven Wahrman
Date:1/10/2000 /s/ Jean Paul Daveau
------------------------
Jean Paul Daveau
Darien Partners Investments, Inc.
Date:1/14/2000 By:__________________________
World Asset Management, Inc.
Date:1/13/2000 By:__________________________
Atlantic Financial Management, Inc.
Date:1/13/2000 By:__________________________
<PAGE>
Avignon Trading, Inc.
Date:1/13/2000 By:__________________________
Date:_________ ________________________
Frank Baker
Date:_________ ________________________
Michael Gervis
Bristol Consulting, Ltd.
Date:_________ By: ________________________
Royce Anderson & Monroe, Inc.
Date:_________ By: ________________________
RESCISSION AGREEMENT
THIS RESCISSION AGREEMENT is entered into this 21st day of June, 1999,
effectuated retroactively to October 28, 1998, and is by and between Accident
Prevention Plus, Inc., a Nevada corporation ("APP") and KMR Telecom Limited, a
corporation organized under the laws of India ("KMR").
RECITALS:
WHEREAS, International Purchasing Service, Inc. is a corporation
organized under the laws of the State of New York ("IPS"), and whose sole
shareholder prior to October 28, 1998 was Richard Goodhart who held a 100%
equity ownership interest in IPS;
WHEREAS, KMR Telecom Limited is a corporation organized under the laws
of India ("KMR"), and whose shareholders prior to October 28, 1998 were Richard
Goodhart who held a 49% equity ownership interest and Dinesh and Ritu Kuman who
jointly held a 51% ownership interest in KMR;
WHEREAS, International Purchasing Services (India) Inc. is a
partnership organized under the laws of India ("`PS India") pursuant to a
Partnership Deed dated June 10, 1994, and whose partners are KMR which holds a
39% ownership interest, IPS which holds a 51% ownership interest, and Johnson
Thomas who holds a 10% ownership interest;
WHEREAS, Accident Prevention Plus, LLC is a limited liability
corporation organized under the laws of the State of New York ("APP LLC");
WHEREAS, Accident Prevention Plus, Inc. is a corporation organized
under the laws of the State of Nevada ("APP");
WHEREAS, on October 28, 1998, APP LLC and APP entered into an agreement
(the "Exchange Agreement") whereby the holders of either membership equity
interests or rights to membership equity interests in APP LLC agreed to exchange
their interests for shares of restricted common stock of APP;
WHEREAS, on October 28, 1998, APP, KMR and `PS entered into an
agreement and plan of reorganization (the `Reorganization Agreement") whereby
APP acquired (i) 100% of the issued and outstanding shares of `PS by issuing
1,600,000 shares of its restricted common stock to Richard Goodhart, which
represented 10% of APP's then issued and outstanding shares of common stock; and
(ii) 100% of the issued and outstanding shares of KMR by issuing 392,000 shares
of its restricted common stock to Richard Goodhart and 408,000 shares of its
restricted common stock to Dinesh and Ritu Kumar, jointly, which represented an
aggregate of 5% of APP's then issued and outstanding shares of common stock;
<PAGE>
WHEREAS, pursuant to the Reorganization Agreement and the Exchange
Agreement, (i) APP acts as the holding company for APP LCC, which remains as the
operational company; (ii) IPS and KMR became subsidiaries of APP; (iii) APP
through its ownership of all the issued and outstanding shares of stock of `PS
and KMR holds an aggregate 90% equity ownership interest in `PS India; and (iv)
Dinesh Kumar executed a Durable General Power of Attorney under the laws of the
State of New York authorizing Richard Goodhart to act with certain powers;
WHEREAS, at the time of execution of the Reorganization Agreement and
to date, KMR owes approximately IPS $300,000;
WHEREAS, APP has determined that (i) it is a violation of the laws of
India for APP to own more than a 49% equity interest in KMR, and (ii) a
significant difference in accounting standards exists between the United States
and India presenting many difficulties and inconsistencies within the valuation
of KMR and `PS India; and
WHEREAS, on June 21, 1999, to be effectuated retroactively to October
28, 1998, in the best interests of APP and its shareholders, the board of
directors authorized and approved (i) a transaction to rescind the
Reorganization Agreement to allow KMR to withdraw from the transaction; (ii)
Richard Goodhart and Dinesh and Ritu Kumar to return to APP their respective
stock certificates evidencing ownership of shares of common stock of APP, (iii)
revision of the financial statements of APP to accurately reflect the financial
status of APP, APP LLC and IPS; and (iv) revision of the Private Placement
Memorandum and dissemination of a letter from management of APP to its
shareholders informing them of such transaction.
THEREFORE, in consideration of the promises and covenants herein, the
parties agree as follows:
1. KMR acknowledges and represents that (i) there has been a mutual
mistake by APP and KMR regarding the laws of India which prohibits any foreign
entity from holding more than a 49% equity ownership interest in a company
organized under the laws of India; and (ii) there is a difference in the
existing accounting standards between the United States and India which makes it
difficult to consistently obtain an accurate valuation of KMR and IPS India.
2. KMR and its shareholders (i) accept the offer of APP to rescind and
set aside the Reorganization Agreement; (ii) return to APP the stock
certificates issued to Richard Goodhart in the amount of 392,000 shares of
common stock and the stock certificates issued to Dinesh and Ritu Kumar in the
amount of 408,000 shares of common stock; (iii) release APP from all obligations
to KMR and IPS India; and (iv) acknowledge the debt in the amount of $300,000
owed by KMR to IPS which will subsequently be assigned to APP.
<PAGE>
3. The contractual debt due and owing by KMR to IPS in the approximate
amount of $300,000 shall be personally guaranteed by Richard Goodhart.
4 KMR acknowledges that (i) the books and records of APP, including its
financial statements, will be revised to delete KMR as a wholly-owned subsidiary
and the 39% equity interest in `PS India held indirectly by APP through its
ownership of KMR as a subsidiary; and (ii) from the date of this Rescission
Agreement, KMR will cease to be a subsidiary of APP and will have no further
rights, liabilities or obligations with respect to APP.
5. In consideration of and subject to the return by APP to KMR of the
original stock certificates issued by KMR to Richard Goodhart and Dinesh and
Ritu Kumar, which were subsequently assigned and transferred to APP pursuant to
the Reorganization Agreement, KMR releases and discharges APP from all rights,
claims, causes of action, damages and demands that KMR and IPS India has had or
now has against APP relating to the Reorganization Agreement or the rescission
of the Reorganization Agreement.
IN WITNESS WHEREOF, the parties have executed this Rescission Agreement
to be effective as of the date first above written.
ACCIDENT PREVENTION PLUS, INC.,
A Nevada corporation
Date: June 21, 1999 By: /s/ Steven H. Wahrman
----------------------
Steven H. Wahrman, President
KMR TELECOM LIMITED,
Date: June 21, 1998 By: /s/ ?????????????
--------------------------
????????? for KMR Telecom Ltd.
A corporation organized under India
INDEPENDENT CONTRACTOR'S
INSTALLATION & SERVICE AGREEMENT
This Independent Contractor's Agreement ("Agreement") is made this 16th day of
May, 1997, by and between:
Accident Prevention Plus, LLC, ("APP") whose primary address is 700 Veterans
Memorial Highway, Hauppauge, New York 11788, United States of America, and
Atlantic Financial Management, Inc., an independent contractor ("Contractor")
whose primary address is 18 Hent Coat Huella, Fouesnant, France 29170. The
Contractor will purchase 4.9% equity in APP for US$2,500 as well as the
consideration of the mutual conditions made herein, as follows:
Article 1.
Term of Agreement
This Agreement will become effective on May 16, 1997, and will continue in
effect according to the terms and conditions specified under Article 6 Paragraph
6.1 of this Agreement.
Article 2.
Services to be Performed by Contractor
2.1. Specific Services. Contractor agrees to perform vehicular installations
and maintenance thereafter, for the APP family of products that have
been mutually agreed to as described in the "Installation Manual"
provided by APP.
Contractor agrees to perform the services specified in the `Description
of Services" attached to this Agreement as Exhibit A and incorporated
herein by this reference.
2.2. Method of Performing Services. Contractor will abide by all
installation and maintenance procedures outlined in APP's "Installation
Manual". Contractor will also offer expertise as to the best method,
details, and means of performing the above-described services.
2.3. Employment of Assistants. Contractor may, at Contractor's own expense
and with subsequent written approval from APP, employ or subcontract
additional employees or companies as deemed necessary to perform the
services required by the terms and conditions of this Agreement.
1
<PAGE>
Article 3.
Compensation
3.1. Per Diem Compensation. See Exhibit B.
3.2. Date for Payment of Compensation. For services rendered under this
Agreement, APP agrees to pay Contractor the sum set forth in Section
3.1 of this Agreement upon an itemized completion of work report with a
daily signed verification from the end user that the installation has
been performed in a satisfactory manner.
Article 4.
Obligations of Contractor
4.1. Minimum Amount of Service. Contractor agrees to devote as much time
that is required for the performance and timely completion of the
above-described services. Contractor may represent, perform services
for, and be employed by such additional clients, persons, or companies
as Contractor, in Contractor's sole discretion, sees fit provided that
the nature of the business does not conflict with that of APP.
4.2. Hours During Which Services May be Performed. Contractor agrees to
perform the above-described services at mutually acceptable locations
during mutually agreeably hours which could also include evenings and
weekends.
4.3. Tools and Instrumentation. Installation Kits will be purchased by the
End User from APP for the installation. Contractor will be required to
utilize these kits and will supply all additional tools and
instrumentation required to perform all services under this Agreement.
4.4. Worker's Compensation. Contractor agrees to provide worker's
compensation insurance for Contractor's employees and agents and agrees
to hold harmless and indemnify APP from any and all claims arising out
of any injury, disability, or death of any contractor's employees or
agents. In the event of any malfunction of systems under Article 2,
Contractor will hold APP harmless from any claims from end user due to
faulty installations or erroneous maintenance work.
4.5. Assignment. Neither this Agreement nor any duties or obligations under
this Agreement may be assigned by contractor without the subsequent
written consent of APP.
2
<PAGE>
Article 5.
Obligation of APP
5.1. Cooperation of APP. APP agrees to comply with all reasonable requests
of Contractor necessary to the performance of Contractor's duties under
this Agreement.
5.2. Furnished Materials. APP agrees to provide installation manuals and
initial instruction. Manuals will be provided in native language if
necessary. If not, English, French or Spanish will prevail. Periodic
training seminars will also take place at various locations to be
announced. A toll-free 24 hour technical hotline will also be
available.
5.3. APP's limited warranty for all supplied components and materials to
Contractor will apply for a period of one year.
Article 6.
Termination of Agreement
6.1. Termination Upon Notice. Notwithstanding any other provisions of this
Agreement, either party hereto may terminate this Agreement at any time
by giving ninety (90) days written notice to the other party. Unless
otherwise terminated as provided herein, this Agreement shall continue
in force until the services provided for herein have been fully and
completely performed. In the event that Contractor terminates service,
obligations do exist from Contractor to perform service work within
seven (7) calendar days on previously installed systems that have not
exceeded the Contractor's ninety (90) day installation warranty. This
will be free of all charges.
6.2. Termination on Occurrence of Stated Events. This Agreement shall
terminate automatically on the occurrence of (1) bankruptcy or
insolvency of either party; (2) sale of the business of either party;
or (3) assignment of this Agreement by either party without the express
written consent of the other party.
6.3. Termination by APP for Default of Contractor. Should Contractor default
in the performance of this Agreement or materially breach any of its
provisions, APP, at APP's option, may terminate this Agreement by
giving fourteen (14) days written notification to Contractor. For the
purpose of this paragraph, material breach of this Agreement shall
include, but not limited to, untimely completion of installation per
schedule, poor workmanship, and non flexible working hours.
6.4. Termination by Contractor for Default of APP. Should APP default in the
performance of this Agreement or materially breach any of its
provisions, Contractor, at Contractor's option, may terminate this
Agreement by giving fourteen (14) days written notification to APP. For
3
<PAGE>
the purpose of this paragraph, material breach of this Agreement shall
include inability to provide installation manuals and support.
6.5. Termination for Failure to Make Agreed-Upon Payments. Should APP fail
to pay Contractor all or any part of the compensation set forth in
Paragraphs 3.1 and 3.2 of this Agreement on the due date, Contractor,
at Contractor's option, may terminate this Agreement if the failure is
not remedies by APP within thirty (30) days from the date payment is
due.
Article 7
General Provisions
7.1. Contractor will not at any time, in any form or manner, either directly
or indirectly divulge, written or verbal, disclose or communicate to
any person, firm, or corporation any information relating to the
business of APP as all information concerning APP are deemed
"Proprietary".
7.2. This agreement shall be enforced under the laws of the State of New
York, United States of America.
Accident Prevention Plus, LLC Atlantic Financial Mgmt., Inc.
Steven Wahrman Phillipe Levesque
President Managing Director
/s/ Steven Wahrman /s/ Phillipe Levesque
- -------------------- ---------------------
Signature/Date Signature/Date
4
<PAGE>
Exhibit A
Description of Services
Contractor will perform all services pertaining to vehicular installations as
outlined:
I. APP SERIES
A. Installation and wiring of all sensors.
B. Installation of on board recorder.
C. Training.
D. Servicing as needed
II. FIMS
A. Installation of the Vehicle Unit
B. Configuration of the Vehicle Unit.
C. Installation of the Driver Unit.
D. Installation of the Tank Inlet Antenna.
E. Servicing as needed
5
<PAGE>
EXHIBIT B
PER DIEM COMPENSATION
Manager Time US$60.00 per hour
Straight Time Labor US$40.00 per hour
Travel Time .35 per mile
Consumable & job related items Charge back
Accommodations (if necessary) Prior arrangement
6
<PAGE>
AMENDMENT TO INDEPENDENT CONTRACTOR'S
INSTALLATION & SERVICE AGREEMENT
THIS AMENDMENT TO INDEPENDENT CONTRACTOR'S INSTALLATION & SERVICE
AGREEMENT is entered into this 28th day of October, 1998 by and between Accident
Prevention Plus, Inc., a Nevada corporation ("APP") and Atlantic Financial
Management, Inc., a ________ corporation ("Atlantic").
RECITALS
WHEREAS, Atlantic and Accident Prevention Plus, LLC, a limited
liability company ("APP LLC") had entered into an Independent Contractor's
Installation and Service Agreement dated May 16, 1997 (the "Service Agreement")
whereby Atlantic was granted a 4.9% ownership interest in APP LLC in
consideration for the performance of certain duties;
WHEREAS, on October 28, 1998, Accident Prevention Plus, Inc. ("APP")
was formed under the laws of the State of Nevada, and APP and Atlantic entered
into an agreement (the "Exchange Agreement") whereby Atlantic agreed to exchange
either its equity membership interest or right to equity membership interest in
APP LLC for shares of restricted common stock of APP;
WHEREAS, in accordance with the terms and provisions of ~e Exchange
Agreement, on October 28, 1998, 790,000 shares of restricted common stock of APP
were issued to Atlantic to be commensurate with a 4.9% ownership interest in APP
LLC pursuant to the terms and provisions of the Service Agreement; and
WHEREAS, the board of directors of APP approved the issuance of such
shares of stock to Atlantic by resolution dated October 28, 1998;
WHEREAS, the parties hereto desire to memoralize the terms and
provisions for such issuance of shares of common stock of APP.
NOW, THEREFORE, for and in consideration of the covenants and promises
set forth below, the parties agree as follows:
1. Atlantic agrees to accept the issuance of 790,000 restricted shares
of common stock of APP in exchange for its 4.9% ownership interest in APP LLC,
and that such stock certificate issued shall be dated as of October 28, 1998;
<PAGE>
2. Atlantic is aware that the shares of common stock are not being
registered under the Securities Act of 1933, as amended. Atlantic understands
that the shares of common stock are being issued in reliance on the exemption
from registration provided by Section 4(2) thereunder. Atlantic represents and
warrants that: (a) the shares of common stock are being acquired solely for
Atlantic's own account, for investment purposes only, and not with a view to or
in connection with, any resale, distribution, subdivision or fractionalization
thereof; and (b) Atlantic has no agreement or other arrangement, formal or
informal, with any person to sell, transfer or pledge any of the shares of
common stock or which would guarantee to Atlantic any profit, or protect
Atlantic against any loss with respect to the shares of common stock, and
Atlantic has no plans to enter into any such agreement or arrangement. Atlantic
understands that it may be required to bear the economic risk of this investment
for an indefinite period of time because there is currently no trading market
for the shares of common stock and the shares of common stock cannot be resold
or otherwise transferred unless applicable state securities laws are complied
with (which APP is not obligated to do) or exemptions therefrom are available.
3. The issuance of 790,000 shares of common stock of APP to Atlantic
shall be valued at $0.00 I for an aggregate valuation of $790.00 as of October
28, 1998.
4. The terms and provisions of the Service Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the
dates indicated below to be effective as of the date first above written.
ACCIDENT PREVENTION PLUS, INC.,
A Nevada corporation
Date: 1/07/00 By: /s/ Steven H. Wahrman
-------------------------
Steven H. Wahrman
ATLANTIC FINANCIAL MANAGEMENT, INC.,
A _____ corporation
Date: 1/13/00 By: ????????????????
INDEPENDENT CONTRACTOR'S
INSTALLATION & SERVICE AGREEMENT
This Independent Contractor's Agreement ("Agreement") is made this eighth day of
May, 1997, by and between:
Accident Prevention Plus, LLC, ("APP") whose primary address is 700 Veterans
Memorial Highway, Hauppauge, New York 11788, United States of America, and World
Asset Management, Inc., an independent contractor ("Contractor") whose primary
address is Fossil Bank, Barton On Sea, New, Milton, Hants BH25 7QJ, United
Kingdom. The Contractor will purchase 4.9% equity in APP for US$2,500 as well as
the consideration of the mutual conditions made herein, as follows:
Article 1.
Term of Agreement
This Agreement will become effective on May 8, 1997, and will continue in effect
according to the terms and conditions specified under Article 6 Paragraph 6.1 of
this Agreement.
Article 2.
Services to be Performed by Contractor
2.1. Specific Services. Contractor agrees to perform vehicular installations
and maintenance thereafter, for the APP family of products that have
been mutually agreed to as described in the "Installation Manual"
provided by APP.
Contractor agrees to perform the services specified in the "Description
of Services" attached to this Agreement as Exhibit A. and incorporated
herein by this reference.
2.2. Method of Performing Services. Contractor will abide by all
installation and maintenance procedures outlined in APP's "Installation
Manual". Contractor will also offer expertise as to the best method,
details, and means of performing the above-described services.
2.3. Employment of Assistants. Contractor may, at Contractor's own expense
and with subsequent written approval from APP, employ or subcontract
additional employees or companies as deemed necessary to perform the
services required by the terms and conditions of this Agreement.
1
<PAGE>
Article 3.
Compensation
3.1. Per Diem Compensation.
See Exhibit B.
3.2. Date for Payment of Compensation. For services rendered under this
Agreement, APP agrees to pay Contractor the sum set forth in Section
3.1 of this Agreement upon an itemized completion of work report with a
daily signed verification from the end user that the installation has
been performed in a satisfactory manner.
Article 4.
Obligations of Contractor
4.1. Minimum Amount of Service. Contractor agrees to devote as much time
that is required for the performance and timely completion of the
above- described services. Contractor may represent, perform services
for, and be employed by such additional clients, persons, or companies
as Contractor, in Contractor's sole discretion, sees fit provided that
the nature of the business does not conflict with that of APP.
4.2. Hours During Which Services May be Performed. Contractor agrees to
perform the above-described services at mutually acceptable locations
during mutually agreeably hours which could also include evenings and
weekends.
4.3. Tools and Instrumentation. Installation Kits will be purchased by the
End User from APP for the installation. Contractor will be required to
utilize these kits and will supply all additional tools and
instrumentation required to perform all services under this Agreement.
4.4. Worker's Compensation. Contractor agrees to provide worker's
compensation insurance for Contractor's employees and agents and agrees
to hold harmless and indemnity APP from any and all claims arising out
of any injury, disability, or death of any contractor's employees or
agents. In the event of any malfunction of systems under Article 2,
Contractor will hold APP harmless from any claims from o end user due
to faulty installations or erroneous maintenance work.
4.5. Assignment. Neither this Agreement nor any duties or obligations under
this Agreement may be assigned by contractor without the subsequent
written consent of APP.
2
<PAGE>
Article 5.
Obligation of APP
5.1. Cooperation of APP. APP agrees to comply with all reasonable requests
of Contractor necessary to the performance of Contractor's duties under
this Agreement.
5.2. Furnished Materials. APP agrees to provide installation manuals and
initial instruction. Manuals will be provided in native language if
necessary. If not, English, French or Spanish will prevail. Periodic
training seminars will also take place at various locations to be
announced. A toll-free 24 hour technical hotline will also be
available.
5.3. APP's limited warranty for all supplied components and materials to
Contractor will apply for a period of one year.
Article 6.
Termination of Agreement
6.1. Termination Upon Notice. Notwithstanding any other provisions of this
Agreement, either party hereto may terminate this Agreement at any time
by giving ninety (90) days written notice to the other party. Unless
otherwise terminated as provided herein, this Agreement shall continue
in force until the services provided for herein have been fully and
completely performed. In the event that Contractor terminates service,
obligations do exist from Contractor to perform service work within
seven (7) calendar days on previously installed systems that have not
exceeded the Contractor's ninety (90) day installation warranty. This
will be free of all charges.
6.2. Termination on Occurrence of Stated Events. This Agreement shall
terminate automatically on the occurrence of (1) bankruptcy or
insolvency of either party; (2) sale of the business of either party;
or (3) assignment of this Agreement by either party without the express
written consent of the other party.
6.3. Termination by APP for Default of Contractor. Should Contractor default
in the performance of this Agreement or materially breach any of its
provisions, APP, at APP's option, may terminate this Agreement by
giving fourteen (14) days written notification to Contractor. For the
purpose of this paragraph, material breach of this Agreement shall
include, but not limited to, untimely completion of installation per
schedule, poor workmanship, and non flexible working hours.
6.4. Termination by Contractor for Default of APP. Should APP default in the
performance of this Agreement or materially breach any of its
provisions, Contractor, at Contractor's option, may terminate this
Agreement by giving fourteen (14) days written notification to APP. For
3
<PAGE>
the purpose of this paragraph, material breach of this Agreement shall
include inability to provide installation manuals and support.
6.5. Termination for Failure to Make Agreed-Upon Payments. Should APP fail
to pay Contractor all or any part of the compensation set forth in
Paragraphs 3.1 and 3.2 of this Agreement on the due date, Contractor,
at Contractor's option, may terminate this Agreement if the failure is
not remedies by APP within thirty (30) days from the date payment is
due.
Article 7
General Provisions
7.1. Contractor will not at any time, in any form or manner, either directly
or indirectly divulge, written or verbal, disclose or communicate to
any person, firm, or corporation any information relating to the
business of APP as all information concerning APP are deemed
"Proprietary".
7.2. This agreement shall be enforced under the laws of the State of New
York, United States of America.
Accident Prevention Plus, LLC World Asset Mgmt., Inc.
Steven Wahrman Roy Allcock
President Managing Director
/s/ Steven Wahrman /s/ Roy Allcock
- ------------------- -----------------
4
<PAGE>
Exhibit A
Description of Services
Contractor will perform all services pertaining to vehicular installations as
outlined:
I. APP SERIES
A. Installation and wiring of all sensors.
13. Installation of on board recorder.
C. Training.
D. Servicing as needed
II. FIMS
A. Installation of the Vehicle Unit
13. Configuration of the Vehicle Unit.
C. Installation of the Driver Unit.
D. Installation of the Tank Inlet Antenna.
E. Servicing as needed
5
<PAGE>
EXHIBIT B
PER DIEM COMPENSATION
Manager Time US$60.00 per hour
Straight Time Labor US$40.00 per hour
Travel Time .35 per mile
Consumable & job related items Charge back
Accommodations (if necessary) Prior arrangement
<PAGE>
AMENDMENT TO INDEPENDENT CONTRACTOR'S
INSTALLATION & SERVICE AGREEMENT
THIS AMENDMENT TO INDEPENDENT CONTRACTOR'S INSTALLATION & SERVICE
AGREEMENT is entered into this 28th day of October, 1998 by and between Accident
Prevention Plus, Inc., a Nevada corporation ("APP") and World Asset Management,
Inc., a ________ corporation ("WAM").
RECITALS
WHEREAS, WAM and Accident Prevention Plus, LLC, a limited liability
company ("APP LLC") had entered into an ~dependent Contractor's Installation and
Service Agreement dated May 8, 1997 (the "Service Agreement") whereby WAM was
granted a 4.9% ownership interest in APP LLC in consideration for the
performance of certain duties;
WHEREAS, on October 28, 1998, Accident Prevention Plus, Inc. ("APP")
was formed under the laws of the State of Nevada, and APP and WAM entered into
an agreement (the "Exchange Agreement'~) whereby WAM agreed to exchange either
its equity membership interest or right to equity membership interest in APP LLC
for shares of restricted common stock of APP
WHEREAS, in accordance with the terms and provisions of the Exchange
Agreement, on October 28, 1 998, 795,000 shares of restricted common stock of
APP were issued to WAM to be commensurate with a 4.9% ownership interest in APP
LLC pursuant to the terms and provisions of the Service Agreement; and
WHEREAS, the board of directors of APP approved the issuance of such
shares of stock to WAM by resolution dated October 28, 1998;
WHEREAS, the parties hereto desire to memoralize the terms and
provisions for such issuance of shares of common stock of APP.
NOW, THEREFORE, for and in consideration of the covenants and promises
set forth below, the parties agree as follows:
1. WAM agrees to accept the issuance of 795,000 restricted shares of
common stock of APP in exchange for its 4.9% ownership interest in APP LLC, and
that such stock certificate issued shall be dated as of October 28, 1998;
<PAGE>
2. WAM is aware that the shares of common stock are not being
registered under the Securities Act of 1933, as amended. WAM understands that
the shares of common stock are being issued in reliance on the exemption from
registration provided by Section 4(2) thereunder. WAM represents and warrants
that: (a) the shares of common stock are being acquired solely for WAM's own
account, for investment purposes only, and not with a view to or in connection
with, any resale, distribution, subdivision or fractionalization thereof and (b)
WAM has 110 agreement or other arrangement, formal or informal, with any person
to sell, transfer or pledge any of the shares of common stock or which would
guarantee to WAM any profit, or protect WAM against any loss with respect to the
shares of common stock, and WAM has no plans to enter into any such agreement or
arrangement. WAM understands that it may be required to bear the economic risk
of this investment for an indefinite period of time because there is currently
no trading market for the shares of common stock and the shares of common stock
cannot be resold or otherwise transferred unless applicable state securities
laws are complied with (which APP is not obligated to do or exemptions
therefrom are available.
3. The issuance of 795,000 shares of common stock of APP to WAM shall
be valued at $0.001 for an aggregate valuation of $795.00 as of October 28,
1998.
4. The terms and provisions of the Service Agreement shall remain in
full force and effect.
IN WlTNESS WHEREOF, the parties have executed this Amendment on the
dates indicated below to be effective as of the date first above written.
ACCIDENT PREVENTION PLUS, INC.,
A Nevada corporation
Date: 1/07/00 By: /s/ Steven H. Wahrman
------------------------
Steven H. Wahrman
WORLD ASSET MANAGEMENT, INC.
A _____ corporation
Date:1/13/00 By: /s/ Roy Allcock
-------------------------
Roy Allcock
INDEPENDENT CONTRACTOR'S
INSTALLATION & SERVICE AGREEMENT
This Independent Contractor's Agreement ("Agreement") is made this eleventh day
of April, 1997, by and between:
Accident Prevention Plus, LLC, ("APP") whose primary address is 700 Veterans
Memorial Highway, Hauppauge, New York 11788, United States of America, and
Darien Partners Investments, Inc., an independent contractor ("Contractor")
whose primary address is SBN-BHD #15 Jalan, TP7/7, Sime UEP Industrial Park,
East Shashah, Alam, Selancor, Malaysia. The Contractor will purchase 4.9% equity
in APP for US$2,500 as well as the consideration of the mutual conditions made
herein, as follows:
Article 1.
Term of Agreement
This Agreement will become effective on April 11, 1997, and will continue in
effect according to the terms and conditions specified under Article 6 Paragraph
6.1 of this Agreement.
Article 2.
Services to be Performed by Contractor
2.1. Specific Services. Contractor agrees to perform vehicular installations
and maintenance thereafter, for the APP family of products that have
been mutually agreed to as described in the "Installation Manual"
provided by APP.
Contractor agrees to perform the services specified in the `Description
of Services" attached to this Agreement as Exhibit A and incorporated
herein by this reference.
2.2. Method of Performing Services. Contractor will abide by all
installation and maintenance procedures outlined in APP's Installation
Manual". Contractor will also offer expertise as to the best method,
details, and means of performing the above-described services.
2.3. Employment of Assistants. Contractor may, at Contractor's own expense
and with subsequent written approval from APP, employ or subcontract
additional employees or companies as deemed necessary to perform the
services required by the terms and conditions of this Agreement.
1
<PAGE>
Article 3.
Compensation
3.1. Per Diem Compensation.
See Exhibit B.
3.2. Date for Payment of Compensation. For services rendered under this
Agreement, APP agrees to pay Contractor the sum set forth in Section
3.1 of this Agreement upon an itemized completion of work report with a
daily signed verification from the end user that the installation has
been performed in a satisfactory manner.
Article 4.
Obligations of Contractor
4.1. Minimum Amount of Service. Contractor agrees to devote as much time
that is required for the performance and timely completion of the
above-described services. Contractor may represent, perform services
for, and be employed by such additional clients, persons, or companies
as Contractor, in Contractor's sole discretion, sees fit provided that
the nature of the business does not conflict with that of APP.
4.2. Hours During Which Services May be Performed. Contractor agrees to
perform the above-described services at mutually acceptable locations
during mutually agreeably hours which could also include evenings and
weekends.
4.3. Tools and Instrumentation. Installation Kits will be purchased by the
End User from APP for the installation. Contractor will be required to
utilize these kits and will supply all additional tools and
instrumentation required to perform all services under this Agreement.
4.4. Worker's Compensation. Contractor agrees to provide worker's
compensation insurance for Contractor's employees and agents and agrees
to hold harmless and indemnity APP from any and all claims arising out
of any injury, disability, or death of any contractor's employees or
agents. In the event of any malfunction of systems under Article 2,
Contractor will hold APP harmless from any claims from end user due to
faulty installations or erroneous maintenance work.
4.5. Assignment. Neither this Agreement nor any duties or obligations under
this Agreement may be assigned by contractor without the subsequent
written consent of APP.
2
<PAGE>
Article 5.
Obligation of APP
5.1. Cooperation of APP. APP agrees to comply with all reasonable requests
of Contractor necessary to the performance of Contractor's duties under
this Agreement.
5.2. Furnished Materials. APP agrees to provide installation manuals and
initial instruction. Manuals will be provided in native language if
necessary. If not, English, French or Spanish will prevail. Periodic
training seminars will also take place at various locations to be
announced. A toll-free 24 hour technical hotline will also be
available.
5.3. APP's limited warranty for all supplied components and materials to
Contractor will apply for a period of one year.
Article 6.
Termination of Agreement
6.1. Termination Upon Notice. Notwithstanding any other provisions of this
Agreement, either party hereto may terminate this Agreement at any time
by giving ninety (90) days written notice to the other party. Unless
otherwise terminated as provided herein, this Agreement shall continue
in force until the services provided for herein have been fully and
completely performed. In the event that Contractor terminates service,
obligations do exist from Contractor to perform service work within
seven (7) calendar days on previously installed systems that have not
exceeded the Contractor's ninety (90) day installation warranty. This
will be free of all charges.
6.2. Termination on Occurrence of Stated Events. This Agreement shall
terminate automatically on the occurrence of (l) bankruptcy or
insolvency of either party; (2) sale of the business of either party;
or (3) assignment of this Agreement by either party without the express
written consent of the other party.
6.3. Termination by APP for Default of Contractor. Should Contractor default
in the performance of this Agreement or materially breach any of its
provisions, APP, at APP's option, may terminate this Agreement by
giving fourteen (14) days written notification to Contractor. For the
purpose of this paragraph, material breach of this Agreement shall
include, but not limited to, untimely completion of installation per
schedule, poor workmanship, and non flexible working hours.
6.4. Termination by Contractor for Default of APP. Should APP default in the
performance of this Agreement or materially breach any of its
provisions, Contractor, at Contractor's option, may terminate this
Agreement by giving fourteen (14) days written notification to APP. For
3
<PAGE>
the purpose of this paragraph, material breach of this Agreement shall
include inability to provide installation manuals and support.
6.5. Termination for Failure to Make Agreed-Upon Payments. Should APP fail
to pay Contractor all or any part of the compensation set forth in
Paragraphs 3.1 and 3.2 of this Agreement on the due date, Contractor,
at Contractor's option, may terminate this Agreement if the failure is
not remedies by APP within thirty (30) days from the date payment is
due.
Article 7
General Provisions
7.1. Contractor will not at any time, in any form or manner, either directly
or indirectly divulge, written or verbal, disclose or communicate to
any person, firm, or corporation any information relating to the
business of APP as all information concerning APP are deemed
"Proprietary".
7.2. This agreement shall be enforced under the laws of the State of New
York, United States of America.
/s/ Steven H. Wahrman /s/ Limin Kamaruddin
- ----------------------- -------------------------
Signature - Date Darien Partners Invest., Inc. - Date
Steve Wahrman - President Limin Kamaruddin - Managing
Dir.
4
<PAGE>
Exhibit A
Description of Services
Contractor will perform all services pertaining to vehicular installations as
outlined:
I. APP SERIES
A. Installation and wiring of all sensors.
B. Installation of on board recorder.
C. Training.
D. Servicing as needed
II. FIMS
A. Installation of the Vehicle Unit
B. Configuration of the Vehicle Unit.
C. Installation of the Driver Unit.
D. Installation of the Tank Inlet Antenna.
E. Servicing as needed
5
<PAGE>
EXHIBIT B
PER DIEM COMPENSATION
Manager Time US$33.00 per hour
Straight Time Labor US$22.50 per hour
Travel Time .21 per mile
Consumable & job related items Charge back
Accommodations (if necessary) Prior arrangement
6
<PAGE>
AMENDMENT TO INDEPENDENT CONTRACTOR'S
INSTALLATION SERVICE AGREEMENT
THIS AMENDMENT TO INDEPENDENT CONTRACTOR' S INSTALLATION & SERVICE
AGREEMENT is entered into this 28th day of October, 1998 by and between Accident
Prevention Plus, Inc., a Nevada corporation ("APP") and Darien Partners
Investments, Inc., a __________ corporation ("Darien").
RECITALS
WHEREAS, Darien and Accident Prevention Plus, LLC, a limited liability
company ("APP LLC") had entered into an Independent Contractor's Installation
and Service Agreement dated April 11, 997 (the "Service Agreement") whereby
Darien was granted a 4.9% ownership interest in APP LLC in consideration for the
performance of certain duties;
WHEREAS, on October 28, 1998, Accident Prevention Plus, Inc. ("APP")
was formed under the laws of the State of Nevada, and APP and Darien entered
into an agreement (the "Exchange Agreement") whereby Darien agreed to exchange
either its equity membership interest or right to equity membership interest in
APP LLC for shares of restricted common stock of APP.
WHEREAS, in accordance with the terms and provisions of the Exchange
Agreement, on October 28, 1998, 795,000 shares of common stock of APP were
issued to Darien to be commensurate with a 4.9% ownership interest in APP LLC
pursuant to the terms and provisions of the Service Agreement: and
WHEREAS the board of directors of APP approved the issuance of such shares of
stock to Darien by resolution dated October 28, 1998;
WHEREAS, the parties hereto desire to memoralize the terms and
provisions for such issuance of shares of common stock of APP.
NOW, THEREFORE, for and in consideration of the covenants atid promises
set forth below, the parties agree as follows:
1. Darien agrees to accept the issuance of 795,000 restricted shares of
common stock of APP in exchange for its 4.9% ownership interest in APP LLC. and
that such stock certificate issued shall be dated as of October 28, 1998;
<PAGE>
2. Darien is aware that the shares of common stock are not being
registered under the Securities Act of 1933, as amended. Atlantic understands
that the shares of common stock are being issued in reliance on the exemption
from registration provided by Section 4(2) thereunder. Darien represents and
warrants that: (a) the shares of common stock are being acquired solely for
Darien's own account, for investment purposes only, and not with a view to or in
connection with, any resale, distribution, subdivision or fractionalization
thereof, and (b) Darien has no agreement or other arrangement, formal or
informal, with any person to sell, transfer or pledge any of the shares of
common stock or which would guarantee to Darien any profit, or protect Darien
against any loss with respect to the shares of common stock, and Darien has no
plans to enter into any such agreement or arrangement. Darien understands that
it may be required to bear the economic risk of this investment for an
indefinite period of time because there is currently no trading market for the
shares of common stock and the shares of common stock cannot be resold or
otherwise transferred unless applicable state securities laws are complied with
(which APP is not obligated to do) or exemptions therefrom are available.
3. The issuance of 795,000 shares of common stock of APP to Darien
shall be valued at $0.00 for an aggregate valuation of $795.00 as of October 28,
1998.
4. The terms and provisions of the Service Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the
dates indicated below to be effective as of the date first above written.
ACCIDENT PREVENTION PLUS, INC.,
A Nevada corporation
Date: 1/07/00 By: /s/ Steven H. Wahrman
---------------------
Steven H. Wahrman
DARIEN PARTNERS INVESTMENTMENTS, INC.
A _____________ corporation
Date: 1/13/00 By: ???????????????
INDEPENDENT CONTRACTOR'S
INSTALLATION & SERVICE AGREEMENT
This Independent Contractor's Agreement("Agreement") is made this fourth day of
June, 1997, by and between: Accident Prevention Plus, LLC, ("APP") whose primary
address is 700 Veterans Memorial Highway, Hauppauge, New York 11788, United
States of America, and Avignon Trading, Inc., an independent contractor
("Contractor") whose primary address is 26 Hagiva Street, Savion, Israel. The
contractor will purchase 4.9% equity in APP for US$2,500 as well as the
consideration of the mutual conditions made herein, as follows:
Article 1.
Term of Agreement
This Agreement will become effective on June 4, 1997, and will continue in
effect according to the terms and conditions specified under Article 6 Paragraph
6.1 of this Agreement.
Article 2.
Services to be Performed by Contractor
2.1. Specific Services. Contractor agrees to perform vehicular installations
and maintenance thereafter, for the APP family of products that have
been mutually agreed to as described in the "Installation Manual"
provided by APP.
Contractor agrees to perform the services specified in the "Description
of Services" attached to this Agreement as Exhibit A and incorporated
herein by this reference.
2.2. Method of Performing Services. Contractor will abide by all
installation and maintenance procedures outlined in APP's "Installation
Manual". Contractor will also offer expertise as to the best method,
details, and means of performing the above-described services.
2.3. Employment of Assistants. Contractor may, at Contractor's own expense
and with subsequent written approval from APP, employ or subcontract
<PAGE>
additional employees or companies as deemed necessary to perform the
services required by the terms and conditions of this Agreement.
Article 3.
Compensation
3.1. Per Diem Compensation. See Exhibit
3.2. Date for Payment of Compensation. For services rendered under this
Agreement, APP agrees to pay Contractor the sum set forth in Section
3.1 of this Agreement upon an itemized completion of work report with a
daily signed verification from the end user that the installation has
been performed in a satisfactory manner.
Article 4.
Obligations of Contractor
4.1. Minimum Amount of Service. Contractor agrees to devote as much time
that is required for the performance and timely completion of the
above- described services. Contractor may represent, perform services
for, and be employed by such additional clients, persons, or companies
as Contractor, in Contractor's sole discretion, sees fit provided that
the nature of the business does not conflict with that of APP.
4.2. Hours During Which Services May be Performed. Contractor agrees to
perform the above-described services at mutually acceptable locations
during mutually agreeably hours which could also include evenings and
weekends.
4.3 Tools and Instrumentation. Installation Kits will be purchased by the
End User from APP for the installation. Contractor will be required to
utilize these kits and will supply all additional tools and
instrumentation required to perform all services under this Agreement.
4.4. Worker's Compensation. Contractor agrees to provide worker's
compensation insurance for Contractor's employees and agents and agrees
to hold harmless and indemnify APP from any and all claims arising out
of any injury, disability, or death of any contractor's employees or
agents. In the event of any malfunction of systems under Article 2,
Contractor will hold APP harmless from any claims from end user due to
faulty installations or erroneous maintenance work.
4,5 Assignment. Neither this Agreement nor any duties or obligations under
this Agreement may be assigned by contractor without the subsequent
written consent of APP.
2
<PAGE>
Article 5.
Obligation of APP
5.1. Cooperation of APP. APP agrees to comply with all reasonable requests
of Contractor necessary to the performance of Contractor's duties under
this Agreement.
5.2. Furnished Materials. APP agrees to provide installation manuals and
initial instruction. Manuals will be provided in native language if
necessary. If not, English, French or Spanish will prevail. Periodic
training seminars will also take place at various locations to be
announced. A toll-free 24 hour technical hotline will also be
available.
5.3 APP's limited warranty for all supplied components and materials to
Contractor will apply for a period of one year.
Article 6.
Termination of Agreement
6.1. Termination Upon Notice. Notwithstanding any other provisions of this
Agreement, either party hereto may terminate this Agreement at any time
by giving ninety (90) days written notice to the other party. Unless
otherwise terminated as provided herein, this Agreement shall continue
in force until the services provided for herein have been fully and
completely performed. In the event that Contractor terminates service,
obligations do exist from Contractor to perform service work within
seven (7) calendar days on previously installed systems that have not
exceeded the Contractor's ninety (90) day installation warranty. This
will be free of all charges.
6.2. Termination on Occurrence of Stated Events. This Agreement shall
terminate automatically on the occurrence of(1) bankruptcy or
insolvency of either party; (2) sale of the business of either party;
or (3) assignment of this Agreement by either party without the express
written consent of the other party.
6.3. Termination by APP for Default of Contractor. Should Contractor default
in the performance of this Agreement or materially breach any of its
provisions, APP, at APP's option, may terminate this Agreement by
giving fourteen (14) days written notification to Contractor. For the
purpose of this paragraph, material breach of this Agreement shall
include, but not limited to, untimely completion of installation per
schedule, poor workmanship, and non flexible working hours.
6.4. Termination by Contractor for Default of APP. Should APP default in the
performance of this Agreement or materially breach any of its
provisions, Contractor, at Contractor's option, may terminate this
Agreement by giving fourteen (14) days written notification to APP. For
3
<PAGE>
the purpose of this paragraph, material breach of this Agreement shall
include inability to provide installation manuals and support.
6.5. Termination for Failure to Make Agreed-Upon Payments. Should APP fail
to pay Contractor all or any part of the compensation set forth in
Paragraphs 3.1 and 3.2 of this Agreement on the due date, Contractor,
at Contractor's option, may terminate this Agreement if the failure is
not remedies by APP within thirty (30) days from the date payment is
due.
Article 7
General Provisions
7.1. Contractor will not at any time, in any form or manner, either directly
or indirectly divulge, written or verbal, disclose or communicate to
any person, firm, or corporation any information relating to the
business of APP as all information concerning APP are deemed
"Proprietary".
7.2. This agreement shall be enforced under the laws of the State of New
York, United States of America.
Accident Prevention Plus, LLC Avignon Trading, Inc
Steven Wahrman Naftali Meisler
President Managing Director
/s/ Steven Wahrman /s/ Naftali Meisler
- --------------------- --------------------------
Signature/Date Signature date
4
<PAGE>
Exhibit A
Description of Services
Contractor will perform all services pertaining to vehicular installations as
outlined:
I. APP SERIES
A. Installation and wiring of all sensors.
B. Installation of on board recorder.
C. Training.
D. Servicing as needed
II. FIMS
A. Installation of the Vehicle Unit
B. Configuration of the Vehicle Unit.
C. Installation of the Driver Unit.
D. Installation of the Tank Inlet Antenna.
E. Servicing as needed
5
<PAGE>
EXHIBIT B
PER DIEM COMPENSATION
Manager Time US$34.00 per hour
Straight Time Labor US$23.25 per hour
Travel Time US$ .35 per mile
Consumable & job related items Charge back
Accommodations (if necessary) Prior arrangement
6
<PAGE>
AMENDMENT TO INDEPENDENT CONTRACTOR'S
INSTALLATION & SERVICE AGREEMENT
THIS AMENDMENT TO INDEPENDENT CONTRACTOR'S INSTALLATION & SERVICE
AGREEMENT is entered into this 28th day of October, 1998 by and between Accident
Prevention Plus, Inc., a Nevada corporation ("APP") and Avignon Trading, Inc., a
_______ corporation ("Avignon").
RECITALS
WHEREAS, Avignon and Accident Prevention Plus, LLC, a limited liability
company ("APP LLC") had entered into an Independent Contractor's Installation
and Service Agreement dated June 4, 1997 (the "Service Agreement") whereby
Avignon was granted a 4.9% ownership interest in APP LLC in consideration for
the performance of certain duties;
WHEREAS, on October 28, 1998, Accident Prevention Plus, Inc. ("APP")
was formed under the laws of the State of Nevada, and APP and Avignon entered
into an agreement (the "Exchange Agreement") whereby Avignon agreed to exchange
either its equity membership interest or right to equity membership interest in
APP LLC for shares of restricted common stock of APP;
WHEREAS, in accordance with the terms and provisions of the Exchange
Agreement, on October 28, 1998, 800,000 shares of restricted common stock of APP
were issued to Avignon to be commensurate with a 4.9% ownership interest in APP
LLC pursuant to the terms and provisions of the Service Agreement; and
WHEREAS, the board of directors of APP approved the issuance of such
shares of stock to Avignon by resolution dated October 28, 1998;
WHEREAS, the parties hereto desire to memoralize the terms and
provisions for such issuance of shares of common stock of APP.
NOW, THEREFORE, for and in consideration of the covenants and promises
set forth below, the parties agree as follows:
1. Avignon agrees to accept the issuance of 800,000 restricted shares
of common stock of APP in exchange for its 4.9% ownership interest in APP LLC,
and that such stock certificate issued shall be dated as of October 28, 1998;
<PAGE>
2. Avignon is aware that the shares of common stock are not being
registered under the Securities Act of 1933, as amended. Avignon understands
that the shares of common stock are being issued in reliance on the exemption
from registration provided by Section 4(2) thereunder. Avignon represents and
warrants that: (a) the shares of common stock are being acquired solely for
Avignon' 5 own account, for investment purposes only, and not with a view to or
in connection with, any resale, distribution, subdivision or fractionalization
thereof; and (b) Avignon has no agreement or other arrangement, formal or
informal, with any person to sell, transfer or pledge any of the shares of
common stock or which would guarantee to Avignon any profit, or protect Avignon
against any loss with respect to the shares of common stock, and Avignon has no
plans to enter into any such agreement or arrangement. Avignon understands that
it may be required to bear the economic risk of this investment for an
indefinite period of time because there is currently no trading market for the,
shares of common stock and the shares of common stock cannot be resold or
otherwise transferred unless applicable state securities laws are complied with
(which APP is not obligated to do) or exemptions therefrom are available.
3. The issuance of 800,000 shares of common stock of APP to Avignon
shall be valued at $0.001 for an aggregate valuation of $800.00 as of October
28, 1998.
4. The terms and provisions of the Service Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the
dates indicated below to be effective as of the date first above written.
ACCIDENT PREVENTION PLUS, INC.,
A Nevada corporation
Date: 1/07/00 By: /s/ Steven H. Wahrman
-------------------------
Steven H. Wahrman
AVIGNON TRADING, INC.
A ________ corporation
Date: 1/11/00 By:???????????????
DISTRIBUTOR AGREEMENT
THIS AGREEMENT, made this twentieth day of August, 1998 by and between
ACCIDENT PREVENTION PLUS, LLC whose primary address is 145 Oser Avenue, Suite
100, Hauppauge, New York, 11788, United States of America, (hereinafter referred
to as "Supplier") and American Overseas Corporation, whose primary address is
Kronbfrgerstrasse 8A, Steinbach/Taunus, Germany, D-61449, (hereinafter referred
to as `Distributor").
THE DISTRIBUTOR, upon the signing of this contract, agrees to pay US$5
million to Supplier for the consideration of "non-exclusive" world wide
Distribution rights. This payment will commence as of the above Agreement date
and will be completed within thirty six months. A minimum of US$2 million must
be paid within the first year.
WITNESSETH: That in consideration of mutual covenants and agreements to
be kept and performed on the part of said parties hereto, respectively as herein
stated, the said parties mutually agree as follows:
1. Products and Territory
a) Supplier hereby appoints Distributor on a non-exclusive basis as its
authorized distributor for the sale of on board recording devices defined
specifically in Appendix A, (the "Products") and the Distributor accepts that
appointment during the term of this Agreement.
b) Supplier reserves the right, in its sole and absolute discretion, at any time
upon thirty (30) days prior written notice to Distributor, to expand or reduce
in any manner the products and Territory which are covered by this Agreement.
2. Partial Obligations of the Distributor
a) Distributor agrees to use its best efforts and devote such time and expend
such funds as may be reasonably be necessary lawfully sell, promote and expand
the Products throughout the Territory.
b) All quotations made by the Distributor shall be made within parameters of the
Supplier's suggested retail price guidelines.
c) Distributor will provide copies of correspondence to customers or potential
customers if and when requested.
<PAGE>
3. Prices Purchases Delivery and Payment
a) Supplier will sell its products to Distributor at its then current cost plus
5% with an F.O.B. delivery point. The prices for Products are set forth in
Appendix A (the "Products"). Supplier reserves the right, in its sole
discretion, to change prices applicable to the Products. Supplier shall give
written notice to Distributor of any price change at least thirty (30) days
prior to the effective date thereof The price in effect as of the date of
Distributor's receipt of notice of such price change shall remain applicable to
all orders received by Supplier prior to the effective date.
b) Supplier shall supply to Distributor sufficient Products to enable
Distributor to meet the full demand for Products in the Territory. All orders
for Products transmitted by Distributor to Supplier shall be deemed to be
accepted by Supplier at the time such orders are received by Supplier to the
extent that they are in compliance with the terms of this Agreement. Supplier
shall perform in accordance will all orders accepted.
c) All Products purchased by Distributor shall be purchased solely for
commercial resale or lease, excepting those Products reasonably required by
Distributor for advertising and demonstration purposes.
d) Each order for Products issued by Distributor to Supplier under this
Agreement shall identity that it is an order and shall further set forth the
delivery date or dates and the description and quantity of Product 5 which are
to be delivered on each of such dates. An order for Products shall not provide a
delivery date less than thirty (30) days after the date the order is delivered
to Supplier.
e) All requests for cancellation of orders by Distributor shall be in writing.
Cancellation is subject to supplier review and acceptance.
f) Supplier shall, at its expense, pack all Products in accordance with
Supplier's standard packing procedure, which shall be suitable to permit
shipment of the Products to the Territory. However, if the Distributor requests
a modification of those procedures, Supplier shall make the requested
modification. Distributor shall then bear any reasonable expenses incurred by
Supplier in complying with such modified procedures which are in excess of the
expenses which Supplier would have incurred in following its standard
procedures.
g) All deliveries of Products sold by Supplier to Distributor pursuant to this
Agreement shall be made F.O.B. the Shipping Point, and title to and risk of loss
of Products shall pass from Supplier to Distributor at the Shipping Point.
Distributor shall be responsible for arranging all transportation of Products,
but if requested by Distributor, Supplier shall assist in making such
arrangements. Distributor shall also procure insurance for the transportation of
the Products, and such insurance shall be of a kind and on terms current at the
port of shipment. Distributor shall pay all charges, including customs duty and
sales tax, incurred with respect to the Products following their delivery to the
carrier or forwarder.
<PAGE>
h) Promptly upon the receipt of a shipment of Products, Distributor shall
examine the shipment to determine whether any item or items included in the
shipment are in short supply, defective, or damaged. Within seven (7) days of
receipt of the shipment, Distributor shall notify Supplier in writing of any
shortages, defects, or damage which Distributor claims existed at the time of
delivery. With fourteen (14) days after the receipt of such notice, Supplier
will investigate the claim of shortages, defects or damage, inform Distributor
of its findings, and deliver to Distributor Products to replace any which
Supplier determines, in its sole discretion, were in short supply, defective or
damaged at the time of delivery. Unless notice is given as provided in this
section, Distributor shall be deemed to have accepted such products and to have
waived all claims for shortages, defects or damages.
i) Upon shipment and acceptance of Products, Supplier will submit to Distributor
Supplier's invoice for those Products. Distributor shall pay each such proper
invoice within thirty (30) days of invoice date. Unless otherwise specifically
provided herein, all such payments from all International Distributors will be
made in United States Dollars via wire transfer to a bank account specified in
writing by Supplier to Distributor.
j) Distributor shall be responsible for any extension of credit to its customers
and collections of such accounts shall be the sole responsibility of the
Distributor. All shipping costs, duties and other charges relating to the
transport or transfer of the Products to the Distributor or to its customer
shall be the responsibility of the Distributor.
k) Supplier shall not be liable for any delay or failure to perform hereunder
due to floods, riots, strikes, freight embargoes, acts of God, acts of war or
hostilities of any nature, laws or regulations of any government (whether
foreign or domestic, federal, state, county or municipal) or any other similar
cause beyond reasonable control.
4. Export Controls Requirements
a) Supplier's obligations to sell and deliver Products shall be subject to such
United States laws and regulations as shall, from time to time, govern the sale
and delivery of goods for export from the United States.
5. Warranties
a) Supplier warrants that all new Products sold or furnished pursuant to this
Agreement by Supplier to Distributor will be free under normal use and service
from any defects in workmanship or materials, provided that any allegedly
defective Product has not been altered, misused, neglected or damaged through
causes unconnected with its manufacture. Supplier further warrants that each
Product sold to Distributor shall conform to all of the Specifications and shall
perform in the manner for which it was designed. The warranty described shall
terminate as to each Product upon the expiration of twelve (12) months from the
date of receipt of product by the Distributor.
<PAGE>
b) The Products shall be warranted by Supplier as set forth above and the
Distributor shall pass this warranty through to its customers. Supplier makes no
other warranty of any kind and any warranty of suitability for any particular
purpose is specifically disclaimed. Under no circumstances shall Supplier be
responsible for consequential damages. Distributor shall be responsible for
informing the customer of all disclaimers and limitations of liability by
Supplier.
6. Relationship of the Parties
a) Distributor shall be considered as an independent contractor. The
relationship shall not be construed to be that of employer and employee, nor to
constitute a partnership, joint venture or agency of any kind.
b) Distributor represents that it has the personnel, facilities and skill
required to act as Distributor for the Products and agrees to maintain the
appropriate sales offices.
c) Distributor agrees to pay all of its incurred expenses including but without
limitation all travel, lodging and entertainment. Supplier shall not reimburse
Distributor for any of those expenses.
d) Distributor shall have no right to enter into any contracts or commitments in
the name of; or on behalf of; Supplier, or to bind Supplier in any respect
whatsoever.
e) Distributor will conduct all of its business under its own name, except as
otherwise provided herein or authorized in writing by Supplier, in such manner
as it sees fit.
f) In addition, Distributor shall not obligate or purport to obligate Supplier
by issuing or making any warranties or guarantees with respect to the Products
to any third party, other than the warranty described above in Section 4
("Warranties").
g) Supplier shall be solely responsible for the design, development, supply,
production and performance capabilities of the Products. The Distributor shall
assist Supplier in the promotion and preservation of its trademarks and shall
not remove or alter any trademark in literature or on the supplied Products.
h) Distributor shall have the right to appoint or otherwise designate suitable
and desirable salespeople, employees, agents, and representatives (herein
collectively referred to as `Distributor's Representatives"). Distributor shall
be solely responsible for Distributor's Representatives and their acts.
<PAGE>
7. Reporting
a) Distributor shall provide Supplier with territorial written semi-annual
reports that shall include business trends, market forecasts and other reports
that might be requested by the Supplier from time to time free of charge.
b) Distributor agrees to furnish Supplier by the 1st of every other month
reports of calls on or to customers and to prospective customers on behalf of
Supplier together with its best forecast of expected orders and inventory levels
by Product including the names of the associated customers for the period.
8. Distributor Sales
a) Distributor shall, at its expense, engage and maintain a sales organization
in the Territory, staffed with such experienced personnel as are necessary to
enable distributor to perform its obligations under this Agreement.
b) As promptly as practicable after execution of this Agreement, Supplier shall
submit to Distributor information, materials, and other technical documents
necessary to enable Distributor to perform its obligations under this Agreement.
c) Prior to making any returns, the Distributor must request a Return
Authorization (RA) number from Supplier.
9 Sales Promotion and Field Assistance
a) Distributor shall be entitled, during the term of this distributorship
created by this Agreement and any extension thereof; to advertise as an
authorized Distributor of the Products.
b) Distributor shall use the Trademarks in all advertisements and other
activities conducted by Distributor to promote the sale of the Products.
c) Distributor shall not use any such advertisements or promotional materials,
which shall include any price lists, without having received prior written
consent of Supplier to do so.
d) Supplier agrees to make available to Distributor any specifications, test
results, graphics or existing mechanical free of charge to be used in
Distributor's development of sales presentations.
e) Design and production costs of all customized sales promotion materials will
be paid for by the Distributor.
f) Supplier, if necessary, will act as a consultant in sourcing of these
materials free of charge.
g) Supplier will offer all existing promotional materials to Distributor at 5%
above cost.
<PAGE>
h) Supplier will be available to provide any on site assistance as Distributor
deems necessary. Terms and conditions are to be mutually agreed upon.
10. New Products
a) Distributor may request from Supplier distribution rights for a new product
to be marketed in the Territory. Supplier shall grant such distribution rights
to the Distributor provided that the Distributor is not already supplying a
competitive product. If this should be the case, Distributor has the right to
decide to terminate relationship with competitor. Should Distributor fail to
accept such Product, Supplier may then offer the product to another party for
distribution in the Territory.
11. Confidential Information
a) Written Technical data, drawings, plans and engineering in technical
instructions pertaining to the Products are recognized by Distributor to be
secret and confidential and to be the property of Supplier. Those items shall at
all times and for all purposes be held by Distributor in a confidential capacity
and shall not, without the prior written consent of Supplier be disclosed by
Distributor to any person, firm or corporation, excepting those salaried
employees of Distributor who are required to utilize such items in connection
with the sale of Products during the term of the distributorship created by this
Agreement. Those items shall also not be disclosed to any person, firm or
corporation, or copied or used by Distributor, its employees or agents at any
time following the expiration or termination of the distributorship created by
this Agreement.
b) Supplier may require as a condition to any disclosure by Distributor pursuant
to this confidentiality that any salaried employee to whom disclosure is to be
made sign a proprietary information agreement form, enforceable by Supplier,
containing terms satisfactory to Supplier.
12. Supplier's Marketing Office in Territory
a) Supplier may from time to time maintain a marketing or sales office at one or
more locations in the Territory.
b) Personnel associated with such office or offices shall be authorized to and
be entitled to exercise all rights of Supplier under this Agreement. Such
personnel shall be entitled to all information with respect to all matters
relevant to Distributor's performance under the Agreement, and Distributor shall
at all times cooperate with such personnel with respect to all such matters.
<PAGE>
13. Indemnification
a) Distributor shall indemnity, protect and save Supplier, affiliates and all
officers, directors, employees and agents thereof (hereinafter referred to as
"Indemnities") harmless from all claims, demands, suits or actions (including
attorneys' fees incurred in connection therewith) which may be asserted against
Distributor for any kind of damages, including but without limitation, damage or
injury to property or persons, and incidental, special and consequential
damages, which may be sustained by any third party or any Indemnities occurring
out of; or incident to, the conduct of Distributor's operations under this
Agreement, including but without limitation any independent representations of
Distributor,
14. Term and Termination
a) The term of this Agreement shall commence on August 20th, 1998 and shall
continue in force and effect thereafter until it is terminated. Either party by
giving ninety (90) days written notice to the other party may terminate this
Agreement either at the completion of the first year of performance under this
Agreement or at the end of any subsequent year.
b) This Agreement will be in effect for a minimum of three years and will be
automatically renewable in one year increments based upon the fulfillment of
mutually agreed upon sales quotas.
c) Termination of this Agreement shall not affect the obligation of Distributor
to pay Supplier all amounts due as a result of Products tendered to Distributor
on or before the date of such termination, and interest thereon to the extent
any such amounts are paid after the date they became or will become due pursuant
to this Agreement.
15. Sole Agreement
a) This Agreement is intended to be the sole and complete agreement of the
obligations and rights of the parties as to all matters covered by this
Agreement, and supersedes all previous understandings, agreements, negotiations
and proposals relating thereto.
b) This Agreement is not assignable by the Distributor without reasonable
evaluation and written permission from the Supplier.
16. Governing Law
a) This Agreement shall be governed by and construed in accordance with the laws
of the State of New York in the United States.
17. Attorneys Fees and Arbitration
a) Should legal action, or the incurring of legal fees without litigation, be
necessary to enforce or interpret any of the rights or duties of the parties
herein, the prevailing party in the case of such litigation, or party in default
if no court action is instituted, shall be responsible for payment of all the
other party's attorneys' fees, including all costs reasonably related to any
litigation which may arise, including but not limited to fees for the services
of expert consultants or witnesses.
<PAGE>
18. Execution
a) Each party executing this Agreement on behalf of a corporation personally
warrants that they have full authority to execute this Agreement on behalf of
such corporation and that the Agreement is binding on that corporation.
Accident Prevention Plus, LLC American Overseas Corp.
By: /s/ Steve Wahrman 8/20/98 By: /s/ Klaus Schuermann 8/27/98
------------------------- ----------------------------
Name/Date Name/Date
By: Steven Wahrman By: Klaus Schuermann
-------------- ------------------
President Managing Director
<PAGE>
APPENDIX A
THE PRODUCTS
<PAGE>
EXHIBIT B
As pursuant to section 10.9 of the Operating Agreement, the Board of Directors
has voted to have the option of restructuring to a Corporation due to the
difficulties that frequently arise in trying to raise capital for a Limited
Liability Company.
As mandated under this Agreement, the following signatures are those of the
Members of the LLC:
/s/ Richard Goodhart 2/09/97
- --------------------------
Signature/Date
Richard Goodhart
Chief Executive Officer
/s/ Steven Wahrman 2/09/97
- -------------------------
Signature/Date
Steven Wahrman
President
/s/ Jean Paul Daveau 2/09/97
- ----------------------------
Signature/Date
Jean_Paul Daveau
Vice President
<PAGE>
ADDENDUM
TO
DlSTRIBUTOR AGREEMENT
This shall serve as an addendum to the Distributor Agreemet that went into
effect on August 20, 1998 by and between Accident Prevention Plus, LLC
(Supplier) and American Overseas Corporation (Distributor).
It has been previously agreed that Distributor will pay to Supplier US$5 million
for consideration of "non-exclusive" world wide distribution rights. This
agreement commenced as of the above date and is to be completed within thirty
six months of this date
With this Addendum, the receipt of at least US$2 million will be changed from
August 20, 1999 to commence with US$1 million being received within 60 days from
the initial stock trade date, The next US$1 million will be due no later than
eight months later. The remaining balance must be received according to the
original schedule
Accident Prevention Plus, LLC American Overseas Corp.
By: /s/ Steve Wahrman 7/22/99 By: Klaus Schuermann 7/24/99
--------------------------- -------------------------
Name/Date Name/Date
By: Steven Wahrman By: Klaus Schuermann
---------------- ------------------
President Managing Director
<PAGE>
ADDENDUM
TO
DISTRIBUTOR AGREEMENT
This shall serve as an addendum to the Distributor Agreement that went into
effect on August 20, 1998 by and between Accident Prevention Plus, LLC
(Supplier) and American Overseas Corporation (Distributor).
In reference to Heading #3 (Prices, Purchases, Delivery and Payment) and section
a)., the following will be eliminated: "Supplier will sell its products to
Distributor at its then current cost plus 5% with an F.O.B. delivery point. The
prices for products are set forth in Appendix A (the "Products")."
The remaining part of this section stays intact.
Accident Prevention Plus, LLC American Overseas Corp.
By: /s/ Steve Wahrman 7/22/99 By: Klaus Schuermann 7/24/99
-------------------------- ------------------------
Name/Date Name/Date
By: Steven Wahrman By: Klaus Schuermann
--------------- -------------------
President Managing Director
Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
SCLUMBERGER ASSOCIATE PROGRAM AGREEMENT
This Associate Program Agreement including the exhibits and addendum
attached hereto ("the Agreement") is made this 12th day of May, 1999 between
Schlumberger Malco, Inc. ("SCHLUMBERGER"), with offices located in Owings Mills,
Maryland and Accident Prevention Plus, Inc. with offices located in Hauppauge,
New York together with all subsidiary and affiliated companies which it now or
hereafter controls (hereinafter designated "ASSOCIATE").
WHEREAS, SCHLUMBERGER is engaged in the business of designing,
manufacturing, selling and licensing certain Products as defined below;
WHEREAS, ASSOCIATE is engaged in the business of designing, developing,
selling/licensing and supporting Systems which use Products;
WHEREAS, SCHLUMBERGER and ASSOCIATE desire a mutually beneficial
relationship for the sale and/or licensing of Systems and Products to Customers
in the Market as defined below.
In consideration of the foregoing and the mutual promises of the
parties made herein SCHLUMBERGER and ASSOCIATE agree as follows:
1 DEFINITIONS
The following terms will have the meanings set forth herein:
1.1 "Systems" means computer software programs and hardware
designed, developed, licensed, supported or otherwise provided
to Customers by ASSOCIATE which use Products and/or Licensed
Programs.
1.2 "Products" means the SCHLUMBERGER products listed or described
on Exhibit A attached hereto and which may contain or utilize
Licensed Programs.
1.3 "Licensed Programs" means computer software or firmware
developed by or licensed to SCHLUMBERGER for use with
Products.
1.4 "Customers" means the entities listed on Exhibit B attached
hereto to which ASSOCIATE provides Systems that use Products
or Licensed Programs. SCHLUMBERGER will notify ASSOCIATE in
the event Customers contact SCHLUMBERGER directly for the
purpose of purchasing Products or Licensed Programs.
1.5 "Market" means the industry segment(s), application type(s)
and/or geographical area described on Exhibit B, attached
hereto.
1.6 "Strategic Associate", "Preferred Associate" and "Business
Associate" are the three Associate classifications contained
in the Associate Program. Each classification is expected to
purchase or cause the purchase of Products from SCHLUMBERGER
Initials: ASSOCIATE _SHW_ SCHLUMBERGER _PTB_ Page 1
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
annually and/or holds a position in the Market or within the
smart card industry at large as described on Exhibit F
attached hereto.
1.7 "Confidential Information" means the valuable confidential and
proprietary information of SCHLUMBERGER or ASSOCIATE.
1.8 "Disclosing Part_ is used to identify SCHLUMBERGER or
ASSOCIATE when either provides Confidential Information to the
other.
1.9 "Receiving Party" is used to identify either SCHLUMBERGER or
ASSOCIATE when either receives Confidential Information from
the other.
2 REPRESENTATIONS AND AGREEMENTS
2.1 ASSOCIATE's beginning classification is "BUSINESS" Associate
which will be reevaluated at least once each year by
SCHLUMBERGER based upon volume, joint activity, and level of
participation and modified, if deemed appropriate, at the sole
discretion of SCHLUMBERGER.
2.2 ASSOCIATE represents that it has the personnel and knowledge
needed to develop magnetic stripe and/or smart card
applications for the Market, including but not limited to
integrating Products into Systems, and/or selling,
distributing and supporting Products and Systems.
2.3 During the term of this Agreement, in consideration of
SCHLUMBERGER's sale/license of Products at discounted prices
and at its sole expense, ASSOCIATE will:
2.3.1 Use reasonable efforts to promote, advertise, market
and solicit the sales/licenses of Products which are
appropriate to the Market;
2.3.2 Use reasonable efforts to sell/sublicense Products to
Customers and provide appropriate levels of support;
2.3.3 Select and cause its appropriate employees to attend
and participate in one or more of the training
sessions which are offered from time to time by
SCHLUMBERGER. Training sessions are for the purpose
of instructing ASSOCIATE's employees in the technical
data and operation of Products plus information
important to the marketing and sale of Products.
ASSOCIATE will pay all transportation, lodging, meals
and other similar miscellaneous expenses of its
employees who attend training sessions, at no cost or
expense to Schlumberger. Schlumberger will provide
ASSOCIATE with advanced notification including a
brief description of the subject(s) covered and the
time and location of training sessions. SCHLUMBERGER
will pay all expenses for instructors, materials and
equipment needed for the training sessions at
SCHLUMBERGER's facility.
2.3.3.1 SCHLUMBERGER will provide ASSOCIATES with
one training coupon per training which can
be used to enroll its employees in
SCHLUMBERGER's training sessions free of
charge. A fee of $200 will be charged for
each additional attendee. Training coupons
are not valid for Cyberflex training. The
fee is subject to change at SCHLUMBERGER's
discretion.
Initials: ASSOCIATE _SHW_ SCHLUMBERGER _PTB_ Page 2
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
2.3.4 Meet on a quarterly basis to discuss sales
opportunities and for Products with SCHLUMBERGER.
2.3.5 To the extent that a forecast is available, every [3]
months, provide SCHLUMBERGER with an up-to-date
forecast of Products which are expected to be
purchased or sub-licensed by ASSOCIATE's customers
from SCHLUMBERGER or ASSOCIATE during the subsequent
12-month period of time. Data provided by ASSOCIATE
to meet this requirement will be considered
Confidential Information; Said forecast will not be
considered a commitment to purchase by the ASSOCIATE
but will be used by SCHLUMBERGER for production
planning purposes.
2.3.6 Meet all mutually agreed upon sales goals in the
Market;
2.3.7 Comply with all rules, regulations and laws
applicable to ASSOCIATE and its performance under
this Agreement;
2.3.8 Use reasonable efforts necessary to comply with the
terms of this Agreement.
2.4 During the term of this Agreement, SCHLUMBERGER will:
2.4.1 Provide ASSOCIATE with technical and sales training
sessions from time to time on Products designed and
intended to help ASSOCIATE sell Products to Customers
and to develop or use Products in Systems;
2.4.2 Provide ASSOCIATE with advanced notification on
selected new product releases planned by SCHLUMBERGER
in the Market;
2.4.3 Provide ASSOCIATE with appropriate levels of sales
and marketing support;
2.4.4 Provide Products to ASSOCIATE under the discounting
policy defined in Exhibit C;
2.4.5 Grant ASSOCIATE the right to use SCHLUMBERGER
Trademarks as defined herein and subject to the
provisions of Section 4, below;
2.4.6 Use reasonable efforts necessary to meet the terms of
this Agreement.
2.5 This Agreement is non-exclusive, however:
2.5.1 ASSOCIATE agrees to preferably present and/or propose
SCHLUMBERGER licensed Products to its Customers in
each case where Products meet the specifications,
price, time and delivery requirements of ASSOCIATE
and Customer;
2.5.2 SCHLUMBERGER will refer, without prejudice, potential
Customers to ASSOCIATES in good standing serving
their Market.
2.5.3 SCHLUMBERGER and ASSOCIATE agree that customers
referred by one party to the other will be proposed
exclusively products from SCHLUMBERGER and the
ASSOCIATE unless agreed otherwise.
2.6 ASSOCIATE and SCHLUMBERGER will meet at least once annually
during the term of this Agreement to review and modify the
exhibits attached hereto.
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<PAGE>
Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
3 SALES OF PRODUCTS
Two types of sales are covered by this Agreement: Sales of Products to
ASSOCIATE for resale with or without added value to Customers (VAR or
Value Added Reseller Sales) and Sales of Products Directly to Customer
(Direct Sales) on behalf of ASSOCIATE.
3.1 VAR SALES
3.1.1 In a VAR sales transaction (i) ASSOCIATE purchases
Products at a discounted price from SCHLUMBERGER
according to the terms and conditions contained
herein and resells them to Customers (ii) ASSOCIATE's
full and total compensation from SCHLUMBERGER is
contained in the discounted price (iii) ASSOCIATE
assumes liability for any Customer receivable and is
financially responsible to SCHLUMBERGER regardless of
Customer's payment status.
3.1.2 The sale of Products to ASSOCIATE for subsequent
resale to Customers will be made according to the
terms and conditions contained in this Agreement and
will take precedence over any other terms and
conditions which may appear on ASSOCIATE's purchase
order or any other document unless previously
accepted in writing by SCHLUMBERGER. Purchase orders
that were submitted to and accepted by SCHLUMBERGER
prior to this Agreement are excepted.
3.1.3 ASSOCIATE will submit purchase orders for the
purchase of Products to SCHLUMBERGER and SCHLUMBERGER
will not unreasonably withhold its acceptance of said
purchase orders.
3.1.4 SCHLUMBERGER will invoice ASSOCIATE for Products when
they ship provided that ASSOCIATE's creditworthiness
was established by SCHLUMBERGER in advance. If not so
established, payment will be made prior to shipment
or COD as determined by SCHLUMBERGER at the time
ASSOCIATE's purchase order is accepted.
3.1.5 Unless otherwise agreed to in advance, all ASSOCIATE
invoices are due and payable within thirty (30) days
from the date of invoice. For any amounts that are
unpaid after the due date, SCHLUMBERGER may without
prejudice to any other rights, either suspend
delivery to ASSOCIATE, ship Products on future
purchase orders COD, or terminate the contract,
and/or charge ASSOCIATE a finance charge of 1.5% per
month on the unpaid balance.
3.1.6 No payment due to SCHLUMBERGER will in any
circumstances be offset against any sum owed by
SCHLUMBERGER to ASSOCIATE whether in respect of the
present transaction or otherwise. No discount for
early payment is authorized. In the event any
proceeding is brought by or against ASSOCIATE under
any bankruptcy or insolvency laws, SCHLUMBERGER will
be entitled to cancel any purchase order then
outstanding and will receive reimbursement for
reasonable cancellation charges.
3.1.7 All prices are inclusive of United States of America
import duty (including brokerage fees) but exclusive
of any present or future sales, revenue, or excise
taxes, or other tax applicable to the Products or
services covered by ASSOCIATE's purchase order or the
manufacture or sale thereof. Such taxes, when
applicable, will be added to the invoice and will be
paid by ASSOCIATE unless ASSOCIATE provides
SCHLUMBERGER with the proper tax exemption
certificates.
Initials: ASSOCIATE _SHW_ SCHLUMBERGER _PTB_ Page 4
<PAGE>
Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
3.1.8 Unless different terms are agreed to in writing by
SCHLUMBERGER all deliveries of Products to ASSOCIATE,
or to a location specified by ASSOCIATE, will be made
FOB SCHLUMBERGER's designated shipping point, with
freight prepaid. Freight charges will be invoiced to
ASSOCIATE.
3.1.9 Risk of loss will pass to ASSOCIATE at the point of
shipment. SCHLUMBERGER's liability for shipment and
delivery of goods ceases upon delivery of products in
good condition to shipping company or common carrier
designated by ASSOCIATE or ASSOCIATE's representative
or employee. Goods placed in segregated inventory at
the request of ASSOCIATE will be deemed to have been
shipped and invoiced to ASSOCIATE at the time such
goods are placed into segregated inventory and
ASSOCIATE will be responsible for any loss thereto,
except for losses resulting from SCHLUMBERGER's gross
negligence.
3.1.10 All stipulated delivery or shipment dates are
estimates only. SCHLUMBERGER reserves the right to
make deliveries of products in installment.
Reasonable delays in delivery of any installment of
any one or more products will not relieve ASSOCIATE
of its obligation to accept and pay for the remaining
deliveries. The parties will jointly work together to
assume timely delivery schedules for the ultimate
customer, and such a delay and does not represent a
default by either party under this agreement.
3.1.11 Card quantities specified in purchase orders for
custom-manufactured cards are for uninterrupted
production and one shipment to one destination,
unless otherwise specified and agreed to in writing.
Quantity variations of plus or minus 10% will
constitute an acceptable delivery for
custom-manufactured cards and the excess or
deficiency will be billed proportionally.
3.1.12 If materials are furnished by ASSOCIATE to be
incorporated into manufactured products, a supply of
such materials including 10% in excess of the
quantity required to complete the ASSOCIATE's
purchase order will be furnished FOB to a location
designated by SCHLUMBERGER. SCHLUMBERGER accepts no
liability for storage of ASSOCIATE-supplied
materials.
3.1.13 ASSOCIATE will inspect and accept or reject goods
within fourteen (14) days from receipt or thirty (30)
days from shipment thereof, whichever is earlier. If
ASSOCIATE fails to notify SCHLUMBERGER in writing of
its rejection and the reason therefor within such
time period the ASSOCIATE will be deemed to have
accepted such shipment and waived any right to later
reject the goods.
3.1.14 ASSOCIATE's purchase orders may not be canceled,
suspended, changed or returned without written
consent of SCHLUMBERGER. Except for
custom-manufactured cards, Products that have not
been unpacked will be accepted for return handling
charge should be waived completely if product is in
its original packaging with a 15% handling charge, if
SCHLUMBERGER is notified in writing within 10 days
after receipt of shipment by ASSOCIATE.
Custom-manufactured cards cannot be returned.
3.1.15 If ASSOCIATE requests changes to the design,
specification, or quantity of Products after a
purchase order is accepted by SCHLUMBERGER and if
such changes are accepted by SCHLUMBERGER then
SCHLUMBERGER will prepare a revised quotation. If the
revisions are accepted by ASSOCIATE, the purchase
order will, if required, be amended accordingly.
3.1.16 Prices for custom-manufactured cards are based on
electronic delivery of artwork from ASSOCIATE.
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<PAGE>
Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
3.1.17 All four-color process designs require press proofs
and ASSOCIATE approval before starting a production
run. Press proofs for other processes are not
required and will not be submitted unless requested.
Charges for proofs are not included in quoted prices
unless specified and will be invoiced separately.
3.1.18 Colors will be matched within reasonable commercial
variations.
3.1.19 Regardless of any disclosure by ASSOCIATE to
SCHLUMBERGER of the contemplated ultimate destination
of the Products, ASSOCIATE will not export, directly
or indirectly, any product acquired hereunder (or the
"direct product" of any Licensed Programs) without
first obtaining an export license from the U.S.
Department of Commerce or other agency of the U.S.
Government, as required.
3.1.20 The prices offered to ASSOCIATE under this Agreement
are based on ASSOCIATE's representation that it will
develop or has developed applications for the Market,
will or has integrated appropriate Products into
Systems, and/or will sell, distribute and support
Products in the Market.
3.1.21 ASSOCIATE's failure to pay in a timely manner for
Products shipped to it and accepted will constitute a
breach of this Agreement.
3.1.22 With thirty (30) days advanced notification,
SCHLUMBERGER has the right from time to time to
change the price, terms and conditions upon which
ASSOCIATE may purchase Products.
3.1.22.1 Prior to the effective date of a price
increase, ASSOCIATE can submit purchase
orders for Products at the price in effect
before the increase if the requested
delivery date is within ninety (90) days
from the effective date of the price
increase and SCHLUMBERGER card manufacturing
capacity can accommodate said delivery.
3.1.22.2 Products shipped under purchase orders
submitted by ASSOCIATE and accepted by
SCHLUMBERGER prior to the notification date
of a price increase will be shipped and
invoiced at the price that was in effect
when the purchase order was accepted,
providing shipment occurs within ninety (90)
days from the effective date of the price
increase otherwise price will be revised to
new price.
3.1.22.3 Products shipped under purchase orders
submitted by ASSOCIATE and accepted by
SCHLUMBERGER prior to the effective date of
a price decrease will be shipped and
invoiced at the price in effect at the time
of shipment.
3.1.22.4 Purchase orders submitted by ASSOCIATE and
accepted by SCHLUMBERGER prior to the
effective date of changes to the terms and
conditions will be shipped under the terms
and conditions in effect when the purchase
orders were accepted.
3.1.23 SCHLUMBERGER, at its sole discretion, has the right
to discontinue the manufacture and/or sale of
Products covered by this Agreement with at least
ninety (90) days advanced written notification to
ASSOCIATE.
3.1.24 SCHLUMBERGER has the right to modify or change
Products and to add new products at any time.
Initials: ASSOCIATE _SHW_ SCHLUMBERGER _PTB_ Page 6
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
3.2 DIRECT SALES
3.2.1 In a Direct Sales transaction (i) ASSOCIATE obtains
Customer's purchase order for Products and forwards
it to SCHLUMBERGER according to the terms and
conditions contained herein (ii) ASSOCIATE's full and
total compensation from SCHLUMBERGER is a commission
based on the net sales amount after payment is
received from Customer (iii) SCHLUMBERGER assumes
liability for any Customer receivable. SCHLUMBERGER
and ASSOCIATE agree to put in place a formal referral
and tracking procedure to recognize the party
referring the Customer.
3.2.2 The sale of Products directly to Customers will be
made according to the terms and conditions contained
in this Agreement and will take precedence over any
terms and conditions which may appear on Customer's
purchase order or any other document unless
previously accepted in writing by SCHLUMBERGER.
Purchase orders that were submitted to and accepted
by SCHLUMBERGER prior to this Agreement are
excepted."
3.2.3 All purchase orders obtained by ASSOCIATE will be
promptly forwarded to a designated SCHLUMBERGER sales
office and will be subject to acceptance by
SCHLUMBERGER at designated factory or home offices
upon such terms, warranties, and conditions as will
be acceptable to SCHLUMBERGER in its sole discretion.
Without limiting the foregoing, ASSOCIATE will extend
no warranties or guarantees, orally or in writing,
respecting the performance, design, quality,
merchantability, or fitness for purpose of Products,
except such warranties or guarantees as have received
prior written approval by SCHLUMBERGER, and ASSOCIATE
will not promote, advertise, or offer Products upon
any terms, conditions, or prices except as have
received prior written approval by SCHLUMBERGER.
SCHLUMBERGER will have the right at any time and from
time to time, without notice, to change the terms,
conditions, and prices on which orders will be
accepted.
3.2.4 Prices quoted for Products will be in accordance with
the price lists established from time to time by
SCHLUMBERGER and furnished to ASSOCIATE.
3.2.5 ASSOCIATE will be entitled to receive sales
commissions ("Commissions") based on the cumulative
Net Sales of SCHLUMBERGER Products sold to Customers
during the term of this Agreement in accordance with
the provisions contained herein.
3.2.6 The Commissions payable to ASSOCIATE hereunder will
be calculated in accordance with the schedule set
forth in Exhibit G attached hereto, which schedule
may be changed at any time and from time to time by
SCHLUMBERGER upon thirty (30) days written notice of
such change to ASSOCIATE. Charged commissions shall
only apply to purchases initiated after the effective
date of the new Exhibit G and should be mutually
agreed to.
3.2.7 The term Net Sales as used herein will mean an amount
equal to the product obtained by multiplying the unit
price of each Product as shown on the customer
invoice by the number of such Products actually
shipped as determined from the shipping invoices,
less allowances for trade discounts, returns and
allowances, and charges for packaging, crating,
customs fees and duties, transportation, and
handling. The determination of Net Sales to any
Customer by SCHLUMBERGER will be conclusive.
Initials: ASSOCIATE _SHW_ SCHLUMBERGER _PTB_ Page 7
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
3.2.8 Net Sales will be credited to ASSOCIATE's account
only after Products have been shipped and invoiced
and such invoice has been paid by the Customer.
SCHLUMBERGER will have the exclusive right to
determine whether a purchase order or sales contract
will be accepted and, if so, the date on which
Products will be shipped to a Customer.
3.2.9 SCHLUMBERGER will have the right to debit ASSOCIATE's
account with all or any portion of the amount of any
Commissions paid or credited to ASSOCIATE which is
allocable to refunds or allowances given to the
Customer with respect to Products for any reason.
SCHLUMBERGER will have the exclusive right to
determine if and when the account of any Customer is
to be placed with a third party for collection.
3.2.10 All Commissions due and payable to ASSOCIATE
hereunder will be paid on or before the 25th day of
the month following the month in which payment is
received by SCHLUMBERGER for shipments previously
invoiced. At the time an original invoice is mailed
to a Customer, SCHLUMBERGER will provide ASSOCIATE
with a copy thereof.
3.2.11 Payment of all ASSOCIATE's costs and expenses will be
the sole responsibility of ASSOCIATE.
4 CONFIDENTIALITY
4.1 Both SCHLUMBERGER and ASSOCIATE acknowledge that during the
term of this Agreement, each party may become privy to the
Confidential Information of the other party, whether disclosed
in writing or obtained from the other party in any other
manner, which may include but not be limited to inventions,
proprietary developments, trade secrets, price lists, cost
data, marketing information, Customer data, and manufacturing
techniques. Each party acknowledges that all Confidential
Information is and will be the sole, exclusive and valuable
property of the Disclosing Party, and that any use of any of
the Confidential Information by the Receiving Party will be
solely in connection with the performances of its obligations
under this Agreement. The covenants of this Section will
survive any cancellation or termination of this Agreement as
provided herein.
4.2 Receiving Party will maintain in confidence Disclosing Party's
Confidential Information for three (3) years from the date of
disclosure, provided that (a) when the Confidential
Information is disclosed in written form it is clearly marked
with Disclosing Party's name and the words "confidential" or
"proprietary", or substantially equivalent words; or (b), if
the Confidential Information is disclosed orally or visually
it is summarized in writing or corporeal form and is clearly
marked with Disclosing Party's name and the words
"confidential" or "proprietary", or substantially equivalent
words, and delivered to Receiving Party within thirty (30)
days following each such disclosure.
4.3 For the period of time described in Subsection 4.2, the
Receiving Party will make no use of the Confidential
Information except as expressly permitted herein. The
Receiving Party will not make Confidential Information
available to third parties without the Disclosing Party's
prior written consent. Receiving Party may disclose the
Confidential Information only to its employees on a
need-to-know basis, and will maintain adequate internal
procedures to protect the Confidential Information from
unauthorized disclosure and use. Receiving Party will notify
its employees who use the Confidential Information of the
related obligations created by this Agreement and will use the
same degree of care to avoid unauthorized disclosure as it
employs with its own confidential and/or proprietary
information of like nature, but with no less than a reasonable
standard of care.
4.4 Disclosing Party makes no warranties either expressed or
implied as to the accuracy or fitness for a particular purpose
of the Confidential Information and will have no liability for
any damages whatsoever that may result from its use.
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
4.5 Receiving Party will have no obligation for Confidential
Information that (a) is known to the Receiving Party prior to
the time of disclosure; (b) is independently developed by
Receiving Party without breaching this Agreement; (c) is
lawfully obtained from a third party without restriction on
use or disclosure; (d) is or becomes part of the public domain
through no fault of Receiving Party; (e) is disclosed with the
disclosing parties written consent; or (f) is disclosed
pursuant to any judicial or governmental requirement or order,
provided that Receiving Party takes reasonable steps to give
the Disclosing Party sufficient prior notice in order to
contest such requirement or order.
4.6 Receiving Party will not be liable for (a) inadvertent
disclosure or use of Confidential Information provided that it
uses at least the same degree of care in safeguarding the
proprietary information as it uses for its own proprietary
information of like importance, and upon discovery of the
inadvertent disclosure or use of the Confidential Information,
it will endeavor to prevent any further inadvertent disclosure
or use; and (b) unauthorized disclosure or use of Confidential
Information by persons who are or who have been in its employ,
unless it fails to safeguard it with at least the same degree
of care as it uses for its own proprietary information of like
importance.
4.7 Title to all tangible forms of the Confidential Information
and any copies thereof will be and remain with the Disclosing
Party. All Confidential Information and copies thereof will be
promptly returned to the Disclosing Party by the Receiving
Party upon written request, or destroyed at the Disclosing
Party's option.
4.8 The Receiving Party will not remove any proprietary copyright,
semiconductor chip protection, trade secret or other legend
("Proprietary Rights Legend") from any form of the
Confidential Information. The Receiving Party, when reasonably
possible and at the Disclosing Party's written request and
expense, will add to the Confidential Information any
Proprietary Rights Legend that Disclosing Party deems
necessary to protect its intellectual property rights.
4.9 Nothing contained in this Agreement will be construed as
granting or conferring by implication or otherwise, any rights
by license or otherwise, to any invention, discovery or
improvement made, conceived, or acquired prior to or after the
date of this Agreement.
5 TRADEMARKS
5.1 As used herein, the term "Trademarks" will mean and include
all trademarks, trade names, logos, and symbols respectively
owned, controlled, or adopted by SCHLUMBERGER or its
Affiliates, or ASSOCIATE or its Affiliates.
5.2 ASSOCIATE hereby grants to SCHLUMBERGER a limited license to
use the ASSOCIATE's Trademarks listed in Exhibit D attached
hereto solely for the purposes of promoting the sale or
license of Systems or Products, and SCHLUMBERGER hereby grants
to ASSOCIATE a limited license to use the SCHLUMBERGER
Trademarks listed in Exhibit D attached hereto solely for the
purposes of promoting the sale or license of Systems or
Products. Each party must submit documentation containing
usage of the other's Trademarks prior to distribution or
publication for approval by the owning party. These licenses
will terminate automatically upon termination or cancellation
of this Agreement.
5.3 Each party expressly acknowledges that the other party's
Trademarks are the exclusive property of the other party or
its Affiliates, and that all right, title, and interest in
such Trademarks remain in the name of the other party or its
Affiliates. Neither party will claim, obtain, or attempt to
obtain, nor be directly interested or concerned in claiming,
or attempting to obtain in any country during the continuance
of this Agreement or any time thereafter any right, title, or
interest by registration, use, or otherwise in or to any of
the other party's Trademarks, or confusingly similar or
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
colorable imitations thereof, or by patent, utility model, or
otherwise in any design improvements or inventions embodied in
Products or ASSOCIATE's Systems or by copyright in or to any
copyrightable matter to be supplied under this Agreement. Upon
termination of this Agreement for whatever reason, the parties
will cease immediately use of any and all Trademarks of the
other party or copyrightable material supplied hereunder.
5.4 Each party will identify the other party's Products or Systems
in the advertising, offering for sale, lease or license, or
sale, lease, license thereof only with the trademarks, trade
names, logos, and symbols used by the owning party and will
not otherwise make use of the other party's Trademarks or any
confusingly similar or colorable imitation thereof, except as
may be expressly authorized in writing by the owning party.
5.5 Neither party will use without prior expressed written consent
of the other party any of the other party's Trademarks in its
corporate name or in the name of any subsidiary or related
corporation presently existing or which it may hereafter
organize, or as part of any trade name or business style or in
any other manner except as may be expressly authorized in
writing by the owning party, and in this event, such use will
cease of any such name or business style upon the termination
of this Agreement.
6 LICENSED PROGRAMS
6.1 SCHLUMBERGER hereby grants to ASSOCIATE during the term of
this Agreement a non-exclusive, non-transferable license to
use Licensed Programs (excluding source code) within the
Market for the term of this Agreement and any renewal term, in
accordance with the following terms:
6.1.1 ASSOCIATE will have the right to demonstrate the use
of Licensed Programs to customers interested in
purchasing, licensing or leasing Products from
ASSOCIATE;
6.1.2 ASSOCIATE will also be entitled to use Licensed
Programs to the extent required to fulfill its
maintenance and service responsibilities for Products
under this Agreement;
6.1.3 ASSOCIATE will not remove any copyright or
proprietary notice included in the Licensed Programs
or Confidential Information furnished to ASSOCIATE
and will reproduce all such notices on all copies in
any form, including revised, modified, or translated
versions made by ASSOCIATE, unless otherwise directed
by Schlumberger in writing;
6.1.4 ASSOCIATE will limit use and access of all Licensed
Programs provided by SCHLUMBERGER, and copies
thereof, to such of ASSOCIATE's employees as are
directly involved in the operation and maintenance of
the Products. ASSOCIATE will require its employees to
make no disclosure of Licensed Programs or copies
which are not directly connected with the operation
and maintenance of the Products.
6.2 SCHLUMBERGER may terminate the license granted by giving
ninety-(90) days prior written notice to ASSOCIATE, upon the
failure of ASSOCIATE to perform or observe any covenant,
condition or agreement to be performed or observed by it.
6.3 In the event of the termination of the license for any reason,
or the expiration or termination of this Agreement, and in
addition to any other rights or remedies available to
SCHLUMBERGER, ASSOCIATE will return to SCHLUMBERGER or destroy
at the discretion of SCHLUMBERGER the original and all copies,
including partial copies or modifications, of the Licensed
Programs, Proprietary Data, and related materials furnished by
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
SCHLUMBERGER and SCHLUMBERGER will return to ASSOCIATE or
destroy at the discretion of ASSOCIATE Proprietary Data, and
related materials furnished by ASSOCIATE.
6.4 SCHLUMBERGER grants to ASSOCIATE during the term of this
Agreement the right to provide sublicenses to Customers for
the purpose of using the Licensed Programs (excluding source
code) applicable to those Products purchased from ASSOCIATE by
such Customers. ASSOCIATE will provide SCHLUMBERGER with a
mutually acceptable sublicense agreement it will use with all
Customers who purchase/use Licensed Programs.
6.5 If software is acquired by or on behalf of a unit or agency of
the U.S. Government, this provision applies.
6.5.1 This software (i) was developed at private expense,
and no part of it was developed with Government
funds; (ii) is a trade secret of SCHLUMBERGER for all
purposes of the Freedom of Information Act; (iii) is
"commercial computer software" subject to limited
utilization as provided in the contract between the
vendor and the governmental entity; and (iv) in all
respects is proprietary data belonging solely to
SCHLUMBERGER. When regulations of the Department of
Defense (DOD) are applicable, this software is sold
only with "Restricted Rights" as that term is defined
in the DOD Supplement to the Federal Acquisition
Regulations, 52.227-7013. Use, duplication or
disclosure is subject to restrictions of the Rights
in Technical Data and Computer Software clause at
52.227-7013, Manufacturer: Schlumberger Malco, Inc.,
9800 Reisterstown Road, Owings Mills, Maryland 21117.
6.5.2 If this software was acquired under a GSA Schedule,
the Government has agreed to refrain from changing or
removing any insignia or lettering from the software
that is provided or from producing copies of manuals
or disks (except one hard disk copy and one backup or
archival copy) and (i) title to and ownership of this
software and related documentation and any
reproductions thereof will remain with SCHLUMBERGER;
(ii) use of this software and related documentation
will be limited to the facility for which it is
acquired; and (iii) if use of the software is
discontinued at the installation specified in the
purchase order and the Government desires to use it
at another location, it may do so by giving prior
notice to SCHLUMBERGER, specifying the type of
computer and new site's location.
7 WARRANTY
7.1 SCHLUMBERGER warrants that the Products and Licensed Programs
supplied with or incorporated in the Products furnished
hereunder will, under normal and proper use, be free from
defects in material and workmanship and will conform to
SCHLUMBERGER's applicable standard written specifications or,
if appropriate, to specifications accepted in writing by
SCHLUMBERGER, for a period of one (1) year from the date of
shipment to ASSOCIATE for terminals and readers and (180) one
hundred eighty days for cards.
7.2 These obligations apply to Products for which (i) written
notice of non-conformance is received before the expiration of
the warranty period; (ii) after SCHLUMBERGER's authorization,
are returned to SCHLUMBERGER's original U.S. shipping point,
freight charges prepaid; and (iii) after examination are
disclosed, to SCHLUMBERGER's satisfaction, to be
non-conforming. Any such repair or replacement will not extend
the. period within which such warranty can be asserted.
7.3 This warranty will not apply to Products or Licensed Programs
which have been subjected to operating and/or environmental
conditions in excess of the maximum values stated in the
applicable specifications or otherwise have been subjected to
misuse, tampering, neglect, improper installation, abnormal
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
stress, repair, modification, alteration, or damage. The
Licensed Program warranty is only valid for Products in which
it has been supplied by SCHLUMBERGER and neither the Licensed
Program nor Product has been modified in any way. THIS
WARRANTY MAY BE ASSERTED BY ASSOCIATE ONLY, NOT BY ASSOCIATE's
CUSTOMERS OR USERS OF THE ASSOCIATE'S PRODUCTS AND IS IN LIEU
OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY,
INCLUDING ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE OR MERCHANTABILITY, AND OF ALL OTHER OBLIGATIONS OR
LIABILITIES ON SCHLUMBERGER's PART. SCHLUMBERGER NEITHER
ASSUMES NOR AUTHORIZES ANY OTHER PERSON TO ASSUME FOR
SCHLUMBERGER ANY OTHER LIABILITIES IN CONNECTION WITH THE
SALES OF SAID PRODUCTS.
8 LIMITATION OF LIABILITY
8.1 Except as defined herein, ASSOCIATE's exclusive remedy and
SCHLUMBERGER's total liability for any and all losses and
damages from any cause whatsoever arising from or related to
this contract (whether such cause be based in contract,
negligence, strict liability, tort, or otherwise) will in no
event exceed the purchase price of the Products and Licensed
Programs in respect to which such cause arises.
8.2 In the event of proven fraudulent use of smart cards, or any
information contained thereon, or any errors resulting from
ASSOCIATE-furnished input data including initialization and
personalization information as a result of careless,
negligent, or felonious acts of an employee or agent of
SCHLUMBERGER, the maximum liability of SCHLUMBERGER will be
$500 per card or account involved, whichever is less, with a
maximum limit of $5000 per year of proven loss per ASSOCIATE.
SCHLUMBERGER will not be held liable for damages resulting
from the use of cards personalized by SCHLUMBERGER according
to inaccurate, incomplete or out-of-date requirements from
ASSOCIATE. IN NO EVENT WILL SCHLUMBERGER OR ASSOCIATE BE
LIABLE FOR INCIDENTAL, CONSEQUENTIAL, INDIRECT OR PUNITIVE
DAMAGES OR DAMAGES FOR LOSS OF REVENUES, LOSS OF PRODUCT OR
LOSS OF DATA RESULTING FROM ANY SUCH CAUSE. SCHLUMBERGER MAY,
AT ITS SOLE OPTION, EITHER REPAIR OR REPLACE DEFECTIVE
PRODUCTS AND LICENSED PROGRAMS OR REFUND THE PURCHASE PRICE
PAID UPON RETURN OF PRODUCTS TO SCHLUMBERGER, AND WILL
THEREAFTER HAVE NO FURTHER OBLIGATION TO ASSOCIATE. THESE
LIMITATIONS WILL APPLY EVEN IF ANY LIMITED REMEDY FAILS IN ITS
ESSENTIAL PURPOSE.
9 FORCE MAJEURE
9.1 SCHLUMBERGER will not be liable to non-performance or delays
caused by acts of God, wars, riots, strikes, fires, shortages
of labor or materials, labor disputes, governmental
restrictions or any other causes beyond its reasonable
control.
9.2 In the event of any such excused delay or failure of
performance, the date of delivery will, at the request of
SCHLUMBERGER, be deferred for a period equal to time lost by
reason of the delay. SCHLUMBERGER will notify ASSOCIATE in
writing of any such event or circumstance within a reasonable
period after it learns of same.
10 PATENTS
10.1 ASSOCIATE will hold SCHLUMBERGER harmless against any expense
or loss resulting from infringement of any patent arising from
compliance with ASSOCIATE's designs, specification, or
instructions.
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
10.2 Except as provided in the preceding sentence, SCHLUMBERGER
will settle or defend any suit or proceeding brought against
ASSOCIATE insofar as based on a claim that any Product (or
part thereof) manufactured by SCHLUMBERGER and furnished under
this Agreement and not used in combination with other
products, whether or not furnished hereunder, constitutes a
direct infringement of any United States patent if notified
promptly in writing and given authority, information and
assistance (at SCHLUMBERGER's expense) for the settlement of
defense of same, and SCHLUMBERGER will pay the damages and
costs awarded therein against ASSOCIATE or agreed upon in such
settlement.
10.3 SCHLUMBERGER may (at its option and expense) either (i)
procure for ASSOCIATE the right to continue using said Product
or part, or (ii) furnish a non-infringing replacement, or
(iii) modify the Product so it becomes non-infringing or (iv)
refund the purchase price and transportation cost thereof upon
return authorized by SCHLUMBERGER. THE FOREGOING STATES THE
ENTIRE LIABILITY OF SCHLUMBERGER FOR PATENT INFRINGEMENT BY
SAID PRODUCTS OR ANY PART THEREOF.
11 RELATIONSHIP OF THE PARTIES
11.1 Nothing contained in this Agreement will be construed to
constitute that an ASSOCIATE is a partner, employee, agent, or
joint venture partner of SCHLUMBERGER, nor will either party
have any authority to represent or bind the other in any
respect.
11.2 ASSOCIATE acknowledges that it has no authority to accept
orders or any moneys from Customers on behalf of SCHLUMBERGER.
12 INDEMNIFICATION
12.1 ASSOCIATE will make no representations or warranties
concerning the quality, performance or other characteristics
of Products or Licensed Programs other than those which are
consistent in all respects with, and do not expand the scope
of, SCHLUMBERGER's representations and warranties set forth in
this Agreement and the Exhibits attached hereto. ASSOCIATE
will include in each contract of sale or lease for Products
and each license and sublicense for a Licensed Program
appropriate provisions to limit SCHLUMBERGER's warranty
liability as provided herein and will indemnify, defend and
hold SCHLUMBERGER harmless from and against any costs,
expenses (including attorneys' fees), damages or claims
incurred by SCHLUMBERGER by reason of ASSOCIATE's
representations.
12.2 ASSOCIATE agrees to indemnify SCHLUMBERGER for and against any
and all claims, demands and actions arising out of ASSOCIATE's
activities or performance under this Agreement or any breach
of ASSOCIATE's obligations. This indemnity will be conditioned
upon ASSOCIATE receiving:
12.2.1 Prompt written notice of any claims, demands or
actions made against SCHLUMBERGER by another for
which indemnity is sought hereunder by SCHLUMBERGER;
12.2.2 Cooperation in the defense by SCHLUMBERGER;
12.2.3 Control of the defense and/or settlement of such
claim, demand or action as to which indemnity is
sought.
12.3 SCHLUMBERGER agrees to indemnify ASSOCIATE for and against any
and all claims, demands and actions made against ASSOCIATE
arising out of nonconformity of Products or Licensed Programs
with the applicable SCHLUMBERGER specification or any breach
of SCHLUMBERGER's obligations under this Agreement. This
indemnity will be limited to damages awarded to a third party
claimant directly attributable to such non-conformity or
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
breach, will not include indirect or special damages or
damages for loss of revenues, loss of product or loss of data
and will be conditioned upon SCHLUMBERGER receiving:
12.3.1 Prompt written notice of any claims, demands or
actions made against ASSOCIATE by another for which
indemnity is sought hereunder by ASSOCIATE;
12.3.2 Cooperation in the defense by ASSOCIATE;
12.3.3 Control of the defense and/or settlement of such
claim, demand or action as to which indemnity is
sought.
12.4 Notwithstanding Subsections 12.2 and 12.3 above, neither party
will be liable for and each party will hold the other party
harmless from any liability for incidental, indirect, special
or consequential damages sustained by the other party,
including those arising from or measured by lost revenues or
profits under its contracts with third parties, even if the
other party has been advised of such damages.
13 TERMINATION
13.1 The term of this Agreement will commence on the date first
written above and, unless earlier terminated as hereinafter
provided, will continue until terminated by either party upon
ninety (90) days prior written notice to the other party of
its intent to do so.
13.2 The parties will have the right to terminate this Agreement
immediately by giving written notice to the other party of
such termination, if:
13.2.1 Either party becomes insolvent or makes an assignment
for the benefit of creditors, or if proceedings in
bankruptcy, for an arrangement, or for the
appointment of a receiver are filed by or against
either party;
13.2.2 Any assignment or attempted assignment of this
Agreement or any right or obligation hereunder is
made without the prior written approval of the other
party;
13.2.3 Either party will breach any of the covenants or
agreements herein contained, fail to faithfully
perform any of the services required hereunder, or is
determined by the other party to be guilty of
dishonesty or fraudulent misconduct;
13.2.5 Either party for any reason suspends or ceases its
activities.
13.3 Unless otherwise agreed between the parties, ASSOCIATE agrees
that termination of this Agreement, however caused, may result
in the cancellation of unfulfilled orders placed for Products
by ASSOCIATE with SCHLUMBERGER as of the effective date of the
termination, and that SCHLUMBERGER will be released from any
and all further liability to ASSOCIATE.
13.4 The acceptance of any order from, or the sale of any Products
to, ASSOCIATE after the termination or expiration of this
Agreement will not be construed as a renewal or extension
hereof, nor as a waiver of termination.
13.5 Neither SCHLUMBERGER nor ASSOCIATE will by reason of the
termination of this Agreement, be liable to the other for
compensation, reimbursement or damages due to the loss of
prospective profits or anticipated sales, or expenditures,
investment, leases or commitments in connection with the
business or good will of SCHLUMBERGER or ASSOCIATE, or
otherwise.
13.6 Until one year after the date on which this agreement ceases
to be in effect, neither SCHLUMBERGER nor any of its
affiliates engaged in the same principal businesses will
solicit or entice away any person in the employment of
ASSOCIATE nor any of its affiliates engaged in the same
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
principal businesses, and neither ASSOCIATE nor any of its
affiliates engaged in the same principal businesses will
solicit or entice away any person in the employment of
SCHLUMBERGER nor any of its affiliates engaged in the same
principal businesses.
14 NOTICES
14.1 Any notice herein will be deemed to have been given 48 hours
after it has been deposited in the United States mails,
registered or certified mail, proper postage prepaid,
addressed to the party for whom it is intended at the address
shown below and/or it has been dispatched using the
alternative method for notification agreed upon and described
on Exhibit E attached hereto.
14.2 If to SCHLUMBERGER, send notices to:
Schlumberger Malco, Inc.
8311 North FM 620 Road
Austin, TX 78726
Attention: Ravi Rao
14.3 If to ASSOCIATE, send notices to:
ADDRESS HERE
15 NON-ASSIGNMENT
15.1 Neither party hereto may assign this Agreement or any rights
or obligations hereunder without the prior written consent of
the other party hereto.
15.2 The provisions of this Agreement will be binding upon the
successors and assigns of the parties hereto.
16 DISPUTE RESOLUTION
16.1 Any disputes or claims arising under this Agreement will be
resolved through alternative dispute resolution means.
16.2 Initially, the parties will engage in non-binding. Mediation
will be in New York City, New York or such other site as is
mutually agreed to by the parties. The mediator will be
jointly appointed by the parties and will have expertise in
commercial dispute resolution.
16.3 In the event the dispute or claim is not satisfactorily
resolved through mediation within 90 days of notice of such
claim or dispute by a party, the parties will submit such
dispute or claim to binding arbitration. Arbitration will be
held in New York City, New York USA or such other site as is
mutually agreed to by the parties. If ASSOCIATE is a foreign
(non-US) corporation and delivery of the goods under this
agreement is to a foreign (non-US) destination, then the
commercial arbitration rules of the International Chamber of
Commerce will apply. In all other instances the commercial
arbitration rules of the American Arbitration Association will
apply. Any judgment, decision or award by the arbitrators will
be final and binding on the parties and may be enforced in any
court having jurisdiction over a party against whom any such
judgment, decision or award is to be enforced. The parties
specifically and knowingly waive any rights under State or
federal constitutions or statutes which grant a party the
right to trial by jury for any claims that might arise under
this agreement or which purports to give a party the right to
appeal an arbitrator's judgment, decision or award.
16.4 The parties will bear their own costs and expenses (including
attorney's fees) for any mediation or arbitration, unless
otherwise directed by the mediator or arbitrator.
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
17 ENTIRE AGREEMENT; SEVERABILITY
17.1 The failure of either party to enforce at any time or for any
period of time the provisions of this Agreement will not be
construed as a waiver of such provisions or of the right of
such party thereafter to enforce each and every provision
contained herein.
17.2 If any term, clause, or provision contained in this Agreement
is declared or held invalid by a court of competent
jurisdiction, such declaration or holding will not affect the
validity of any other term, clause or provision herein
contained.
17.3 This Agreement including all Exhibits attached hereto sets
forth the entire understanding of the parties and supersedes
all prior agreements, arrangements, and communications,
whether oral or written, pertaining to the SCHLUMBERGER
Associate Program.
17.4 ASSOCIATE has not relied on any representations, oral or
written, except as are made in or expressly referenced herein
and except as provided herein this Agreement will not be
modified or amended except by the mutual written agreement of
the original signers of SCHLUMBERGER and ASSOCIATE below or by
their duly authorized representatives.
18 INTERPRETATION AND CONSTRUCTION
This Agreement and all questions of its interpretation, performance,
enforcement, and the rights and remedies of the parties hereunder will
be determined in accordance with the laws of the State of New Jersey.
WITNESS the due execution of this Agreement by the parties hereto as of the date
first written above.
Schlumberger Malco, Inc. Accident Prevention Plus, LLC
Signature: /s/ Paul T. Beverly Signature: /s/ Steven H. Wahrman
------------------- ----------------------
Name: Paul T. Beverly Name: Steven H. Wahrman
Title: VP Title: President
Date: 6/11/99 Date: 5/12/99
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
Smart Cards (Category A)
EE2k 1 EE4k
T2G FE417
VisaCash Disposable
Smart Cards (Category B)
PayFlex 0.3k (Micro PayFlex) PayFlex 1k
PayFlex 4k MultiFlex 3k
MultiFlex 8k CryptoFlex 4k
VisaCash Reloadable Cyberflex 4k
Readers (Category C)
SCT SCR6O/65
Reflex 20 Reflex 60
Licensed Programs, Packaged Products (Category C)
Log ICC (may not be sublicensed) WinPractis
SafePak L210 EZ Formatter
PrivaSuite
Point of Sales Terminals (Category D)
Unattended Point of Sales Terminals (Category E)
EXHIBIT B -- CUSTOMERS AND MARKET
Customers
Market
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Schlumberger Associate Program Agreement CONFIDENTIAL Rev 6/98.D
EXHIBIT C -- DISCOUNT POLICY
ASSOCIATE may purchase Category A, B and C Products listed on Exhibit A from
SCHLUMBERGER for resale to Customers at a discount off the then current price.
The discount will be based on ASSOCIATE's cumulative dollar value (the
"Cumulative Value") of Category A, B and C Products purchased from SCHLUMBERGER
over the preceding six (6) months plus the current month. Upon signing the
Agreement, ASSOCIATE's Cumulative Value will be established at $150,000 unless a
higher value is warranted by ASSOCIATE's cumulative dollar purchases as
described above.
EXHIBIT D -- TRADEMARKS
ASSOCIATE Trademarks:
SCHLUMBERGER Trademarks:
"Schlumberger" "Delta 21" "Sigma"
"MagIC" "Payflex" "Multiflex"
"SI Mflex" "Cryptoflex" "Reflex xx"
"Cyberflex" "Solo" "Smart Village"
EXHIBIT E -- ALTERNATIVE METHOD FOR NOTIFICATION
EXHIBIT F -- ASSOCIATE CLASSIFICATIONS
A Strategic Associate is expected to purchase or cause the purchase of at least
$900,000 worth of Products from SCHLUMBERGER annually and/or it holds a
strategic position in the Market or within the smart card industry at large.
A Preferred Associate is expected to purchase or cause the purchase of at least
$600,000 worth of Products from SCHLUMBERGER annually and/or it holds a key
position in the Market.
A Business Associate is expected to purchase or cause the purchase of at least
$300,000 worth of Products from SCHLUMBERGER annually and/or it has developed a
business case and is in the process of developing Systems for the Market.
EXHIBIT G -- COMMISSION RATES
ASSOCIATE commission rates for the sale of Products directly to Customers are
defined according to the Product categories in Exhibit A as follows:
Commission Rate Product Category
--------------- ----------------
1% A
2.5% B
5% C
ADDENDUM
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MANUFACTURING AGREEMENT (MA)
BETWEEN
LOCKHEED MARTIN ELECTRONICS & MISSILES, OCALA OPERATIONS (OCALA)
AND
ACCIDENT PREVENTION PLUS, LLC. (APP)
This Manufacturing Agreement (MA) sets forth the commitment of Accident
Prevention Plus, LLC, a New York Corporation having its principal place of
business at 700 Veterans Memorial Highway, Hauppauge, NY 11778 (APP) and
Lockheed Martin Corporation, a Maryland corporation acting through its
Electronics & Missiles Business unit and having a place of business at 498 Oak
Road, Ocala, FL 34472-3099 (Ocala); to establish an MA under which Ocala shall
manufacture the printed circuit board assemblies for the Fuel Intake Monitoring
System (FIMS) as well as other mutually agreeable APP product lines. Ocala may
also provide electronic assemblies, chassis, and services including but not
limited to: qualification testing, manufacturing engineering, test engineering,
and circuit design support.
BACKGROUND:
FIMS is a wireless, completely automated system to monitor vehicle fuelling that
provides positive vehicle identification, accurate fuel delivery data,
eliminates credit card usage, and minimizes the misappropriation of fuel. This
system was initially developed by APP and was further developed by APP and
Lockheed Martin Specialty Components, Inc. (Specialty Components) under a
DOE-sponsored Technology Deployment Center (TDC) funding arrangement. APP is
endeavoring to market the FIMS to Shell France (Shell), a member of the Royal
Dutch Shell Group and others, and has entered into various agreements and
purchase orders with Specialty Components and Ocala for the development,
prototype build proof of principle, test, and future manufacturing of the FIMS.
It is anticipated that Custom Manufacturing & Engineering, Inc. (CME) will be
the successor in interest to Specialty Components and will assume the rights,
obligations, and responsibilities currently held by Specialty Components as
regards the FIMS and existing agreements and contracts between Specialty
Components and APP.
Ocala, has developed and built three (3) prototype dual axis accelerometer
printed wiring boards for use with APP's accident prevention series of Data
Recorders APP 1000 through APP 3000.
AGREEMENTS:
1. APP agrees to utilize Ocala as the manufacturer to assemble printed wiring
boards for the FIMS units and shall consider Ocala as the preferred manufacturer
for printed circuit boards for other APP products including the accident
prevention systems; provided that Ocala will maintain the capacity, facilities,
and capability to produce these items and will sell the items to APP at
competitive prices and schedules with mutually acceptable payment terms. Ocala
shall have the right of first refusal or acceptance to manufacture printed
wiring assemblies for the term of this MA, subject to APP's right to compete as
stated in paragraph 2, below.
2. In the event APP determines that Ocala has not offered to manufacture and
sell printed wiring assemblies or other designated assemblies to APP on price,
schedule, and payment terms equal to or better than APP can obtain from a second
reputable manufacturer, APP has the right to solicit proposals from alternate
manufacturers for such items. Ocala shall have the opportunity to meet the
price, schedule, or payment terms of such second manufacturer, and if it does
so, APP will continue to purchase the items from Ocala. APP agrees that it will
not solicit second manufacturer pricing more frequently than every twenty-four
(24 months) for the first two (2) years of this agreement and no more often than
once every twelve (12) months thereafter.
Rev 01/l7/97
<PAGE>
3. APP and Ocala shall enter into one or more separate contractual purchase
agreements to produce printed wiring boards and other goods or services. Each
agreement shall define the price, schedule, terms and conditions applicable to
that order.
4. This Agreement is not to be construed as changing or conflicting with
existing agreements in place between APP and Specialty Components or CME.
5. Ocala shall provide a warranty for each item manufactured for APP under this
agreement that each item shall be free from defects in workmanship and Ocala
provided materials for a period of fifteen (15) months following first delivery
to APP. This warranty shall he included in each Purchase Order or Contract for
goods.
6. Ocala's standard terms of payment are net 30 days from shipment/invoice. It
is recognized that APP may have less favorable terms of payment from its
customers for international transactions. In such circumstances, Ocala shall
accept payment terms in Purchase Orders which are no less favorable than those
which are included in APP's prime contract; however, in no event shall Ocala's
terms of payment exceed net 60 days.
7. Products manufactured or assembled by Ocala shall be marked with the Lockheed
Martin Corporate name and logo. APP may, subject to prior Ocala approval of
public releases and I or advertisements on a case by case basis, include the
fact that Lockheed Martin Corporation is the manufacturer for APP. This
agreement is applicable to advertising, public releases, or proposals for
products contemplated by and subject to this Agreement.
8. The parties to this Agreement have entered into a separate agreement defining
the terms and conditions for the exchange of Proprietary Information between the
parties. Information exchanged under this Agreement, if Proprietary, shall be
subject to the provisions of the separate Proprietary Information Agreement.
9. APP shall provide design technical information, including drawings,
schematics, component layout, specifications and bills of material, to Ocala.
Such technical information shall remain the property of APP. Ocala shall, as
non-recurring cost, develop manufacturing processes, plans, or procedures
necessary to manufacture inspect and test the items covered by this agreement.
Such manufacturing documentation shall remain the property of Ocala. Neither
party may release information which is the property of the other party, to any
third party without the prior written approval of the owner of such information.
TERM OF AGREEMENT:
The term of this agreement is a period of five (5) years from the latest date of
signature noted below. This Agreement may be terminated by either party for
cause provided however, the other party shall be notified in writing ninety (90)
days prior to the effective date of such termination. Such notice shall identify
the basis for the termination and the party alleged to have committed the breech
shall have the opportunity to remedy any breech identified by the terminating
party during such 90 day period. The rights and remedies of each party, in the
event this agreement is unilaterally terminated, may be resolved through
agreement, arbitration, or litigation in a court of competent jurisdiction. This
Agreement also may be terminated by mutual agreement of the parties at any time.
Termination of this agreement shall not affect the performance of all duties and
obligations set forth in purchase orders or contracts related to the delivery of
goods or the performance of services which are in effect as of the time of such
termination. The term of this Agreement may be extended by written amendment
executed by authorized representatives of each Party.
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ASSUMPTION OF COSTS:
Each Party shall bear its own costs, expenses, risks, and liabilities arising
out of any activities in connection with this MA unless otherwise agreed in
writing. Each Party shall hear its own costs incurred in enforcing any provision
of this agreement including termination, and neither party shall be held liable
for costs incurred by the other to enforce this Agreement. Awards for monetary
damages, if any, as a result of settlement of any dispute hereunder shall not
include legal costs or costs for employees, representatives, consultants, or
agents of the injured party.
APPLICABLE LAW I LANGUAGE:
This MA shall he governed by and shall be interpreted in accordance with the
laws of the State of Florida, USA, without reference to its Conflict of Law
rules. The English language will prevail as the language of the interpretation
of any provision of this Agreement.
ENTIRE AGREEMENT:
This Agreement contains the entire understanding between the Parties relative to
the subject matter herein and supersedes all prior and collateral
communications, reports, and understandings between the Parties in respect
thereto; except that nothing in this Agreement shall supersede or in any way
modify any of the terms and conditions, or the rights and obligations of the
Parties, included in any purchase agreement between the Parties unless said
purchase agreement so stipulates. No change, modification, alteration, or
addition to any provision hereof shall be binding unless in writing and signed
by authorized representatives of both Parties.
This Agreement does not and shall not be construed to constitute, create, give
effect to, or imply a joint venture, pooling arrangement, partnership, formal
business organization or any type of permanent arrangement of any kind. Neither
Party shall have the right to make commitments of any kind for or on behalf of
the other party without the prior written consent of the other Party.
IN WITNESS WHEREOF the Parties to this MA have caused their duly authorized
representative to execute this MA as evidenced by their signatures below:
FOR: LOCKHEED MARTIN CORPORATION FOR: ACCIDENT PREVENTION PLUS, LLC
BY: /s/ B.P. Holmes BY: /s/ Richard Goodhart
--------------------- -------------------------
B.P. Holmes Richard Goodhart
- --------------------------------- ---------------------------------
(Typed or Printed Name and Title) (Typed or Printed Name and Title)
DATE: 1/24/97 DATE: 1/24/97
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