U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
ALLIANCE TECHNOLOGIES, INC.
(Name of small business issuer in its charter)
Nevada 06-1469654
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
130 Highway 33 West, Manalapan, New Jersey 07726
(Address of principal executive offices) ( Zip Code)
Issuer's telephone number (732) 617-1350
Securities to be registered under Section
12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
N/A N/A
Securities to be registered under Section
12(g) of the Act:
Common Stock, par value $.001 per share
(Title of class)
<PAGE>
Registration Statement
ALLIANCE TECHNOLOGIES, INC.
Common Stock, Par Value $.001
This Registration Statement is being furnished to shareholders of Alliance
Technologies, Inc., a Nevada corporation ("Alliance" or the "Company"), in
connection with the filing of this Form 10-SB.
There is currently a limited public market for the Common Stock Alliance,
and there can be no assurance that an increase in the public market will develop
or be maintained after the filing date. The shares of Alliance Common Stock are
traded on the Electronic Bulletin Board under the symbol "ALTL".
THIS REGISTRATION STATEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES. ANY SUCH OFFERING MAY
ONLY BE MADE BY MEANS OF A SEPARATE PROSPECTUS PURSUANT TO AN EFFECTIVE
REGISTRTION STATEMENT AND OTHERWISE IN COMPLIANCE WITH APPLICABLE LAW.
The date of this Registration Statement is November 6, 1998.
Alliance has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form 10SB (the "Registration
Statement") under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), with respect to the Alliance Common Stock described herein. This
Information Statement does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information, reference is made hereby to the Registration Statement, exhibits
and schedules. Statements contained herein concerning any documents are not
necessarily complete and, in each instance, reference is made to the copies of
such documents filed as exhibits to the Registration Statement. Each such
statement is qualified in its entirety by such reference. Copies of these
documents may be inspected without charge at the principal office of the
Commission at 450 5th Street, N.W., Washington, D.C. 20549, and at the Regional
Offices of the Commission at 7 World Trade Center, Suite 1300, New York, New
York 10048, at Citicorp Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661, and at 5670 Wilshire Boulevard, Suite 1100, Los Angeles,
California 90036, and copies of all or any part thereof may be obtained from the
Commission upon payment of the charges prescribed by the Commission. Copies of
such material may also be obtained from the Commission's Web Site
(http://www.sec.gov).
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Following the registration, Alliance will be required to comply with the
reporting requirements of the Exchange Act and will file annual, quarterly and
other reports with the Commission. Alliance will also be subject to the proxy
solicitation requirements of the Exchange Act and, accordingly, will furnish
audited financial statements to its stockholders in connection with its annual
meetings of stockholders. Alliance will also file with Nasdaq copies of such
reports, proxy statements and other information which then can be inspected at
the offices of Nasdaq at 1735 K Street, N.W., Washington, D.C. 20006
No person is authorized by Alliance to give any information or to make any
representations other than those contained in this Registration Statement, and,
if given or made, such information or representations must not be relied upon as
having been authorized.
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INTRODUCTION
Alliance sells high-end home theater systems through both the internet and
through its retail establishment.
The Company's two wholly-owned subsidiaries, American Buyers Club
International, Inc ("ABC") and Alpha Sound and Vision, Inc., ("Alpha") operate
in a 1,600 square foot retail store located in Manalapan, New Jersey. From this
facility ABC and Alpha sell and ship products through the country. ABC sells
these products through the internet and print media advertising, while Alpha
sells the products only through the Company's retail store.
RISK FACTORS
Shareowners should carefully consider and evaluate all of the information
set forth in this Information Statement, including the risk factors listed
below. Alliance also cautions readers that, in addition to the historical
information included herein, this Information Statement includes certain
forward-looking statements and information that are based on management's
beliefs as well as on assumptions made by and information currently available to
management. When used in this Information Statement, the words "expect",
"anticipate", "intend", "plan", "believe", "seek", "estimate", and similar
expressions are intended to identify such forward-looking statements. Such
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions, including but not limited to the following
factors, which could cause Alliance future results and stockholder values to
differ materially from those expressed in any forward-looking statements made by
or on behalf of Alliance. Many of such factors are beyond Alliance's ability to
control or predict. Readers are cautioned not to put undue reliance on
forward-looking statements Alliance disclaims any intent or obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Forward Looking Statements".
Shareholders should carefully consider the following information in
addition to the other information contained in this Statement in evaluating the
Common Stock.
Competition and Changes in Industry conditions. The home theater equipment
industry is intensely competitive with respect to price, service, location and
quality, and there are many well-established competitors with substantially
greater financial and other resources than the Company. Some of the Company's
competitors have been in existence for a substantially longer period than
Alliance and may be better established in the markets where the Company's
facilities are or may be located. In addition, factors such as economic
conditions, inflation, increased prices, labor and benefits costs and
availability of experienced management and hourly employees may adversely affect
the industry in general and the Company's business in particular. See "Business
- - Competition".
Dependence on Senior Management. The Company's business will to be highly
dependent upon the continued availability of Messrs. Steven Wise and David
Bannon. Although the Company does not believe that the loss of the services of
any one of these persons would have a material adverse effect upon its business,
the loss of the services of both of them could have a materially adverse effect
upon the Company's business and development.
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Continued Control by Management and Principal Shareholders. The directors
and officers of the Company will beneficially own approximately 51% of the
outstanding shares of common stock. Accordingly, these persons will likely
retain effective control over the Board of Directors and policies of the Company
for an indefinite period of time.
Lack of Dividends. The Company has not paid any dividends on its Common
Stock and does not intend to do so in the foreseeable future. See "Dividend
Policy".
Low-Priced Stocks. The Commission adopted rules ("penny stock rules") that
regulate broker-dealer practices in connection with transactions in "penny
stocks". The Common Stock of the Company presently falls within the Commission's
definition of a penny stock. Penny Stocks generally are equity securities with a
price of less than $5.00 (other than securities registered on certain national
securities exchanges or quoted on the Nasdaq system, provided that current price
and volume information with respect to transactions in such securities is
provided by the exchange or system). The penny stock rules require a
broker-dealer, prior to effecting a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document
prepared by the Commission that provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction,
and monthly account statements showing the market value of each penny stock held
in the customer's account. The bid and offer quotations, and the broker-dealer
and salesperson compensation information must be given to the customer orally or
in writing prior to effecting the transaction and must be given to the customer
in writing before or with the customer's confirmation. In addition, the penny
stock rules require that prior to a transaction in a penny stock not otherwise
exempt from such rules, the broker-dealer must receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for a stock
that is subject to the penny stock rules. At any time when the Company's common
stock is subject to the penny stock rules, shareholders may find it more
difficult to sell their shares.
Absence of Public Market and Possible Volatility of Stock Prices. The
Common Stock of the Company commenced public trading under the symbol ALTL on
January 14, 1997 Since such date there has been a limited and sporadic public
trading market for the Common Stock and there can be no assurance that an active
trading market will develop or that, if developed, it will be sustained. The
market price for the Common Stock may be volatile and may be significantly
affected by such factors as the Company's operating results and other factors,
over which the Company will have no control.
Future Capital Requirements. The Company expects to require additional
capital and at the present time has no definitive plans but is exploring various
opportunities. There can be no assurance of the ability of the Company to raise
such capital. The Company has no agreements or commitments with any person or
entity to raise such capital. The Company has a negative working capital of
approximately $350,000 at September 30, 1998 which raises substantial doubt
about the Company's ability to continue as a going concern. The Company believes
that upon obtaining proceeds from additional financing the substantial doubt
about the Company's ability to continue as a going concern will be reduced.
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Listing and Trading of Alliance Common Stock. There is currently a limited
public market for Alliance Common Stock. Alliance Common Stock is listed on the
Electronic Bulletin Board under the symbol "ALTL". There can be no assurance as
to whether a substantial trading market will develop or, if it does, whether a
trading market can be maintained or sustained or at what prices the Alliance
Common Stock will trade. Furthermore, even if a more active trading market were
to develop, the prices for the Common Stock may fluctuate significantly.
The prices at which Alliance Common Stock trades will be determined by the
marketplace and may be influenced by many factors, including, among others,
Alliance's performance and prospects, the depth and liquidity of the market for
Alliance Common Stock, investor perception of Alliance, the industry in which it
operates, Alliance's dividend policy, general financial and other market
conditions. In addition, financial markets, including the Electronic Bulletin
Board, have experienced extreme price and volume fluctuations that have affected
the market price of many industry stocks and that, at times, could be viewed as
unrelated or disproportionate to the operating performance of such companies.
Such fluctuations have also affected the share prices of many newly public
issuers. Such volatility and other factors may materially adversely affect the
market price of Alliance Common Stock.
Alliance has approximately 40 stockholders of record, based on the number
of record holders of the Common Stock on the Filing Date. The Transfer Agent and
Registrar for the Common Stock is Signature Stock Transfer, Dallas, Texas.
DIVIDEND POLICY
Alliance does not anticipate the payment of any cash dividends on Alliance
Common Stock in the foreseeable future. Payment of dividends on Alliance Common
Stock will also be subject to such limitations as may be imposed by Alliance's
credit facilities from time to time. The declaration of dividends will be
subject to the discretion of the Board of Directors of Alliance.
DESCRIPTION OF BUSINESS
Alliance Technologies, Inc. ("Alliance" or the "Company") was incorporated
on June 8, 1988 as a corporate shell developed to generate capital resources
which were to be used to acquire or participate in a business or business
entity. The Company began as a Development Stage Company, and on April 17, 1997
acquired 100% of the outstanding shares of American Buyers Club International,
Inc., ("ABC") in a business combination accounted for as a pooling of interests.
ABC became a wholly owned subsidiary of the Company through the exchange of
732,000 shares of the Company's common stock for all of the outstanding shares
of ABC.
ABC sells its products via the internet and through print media
advertising, and in addition through its subsidiary, Alpha Sound and Vision,
Inc., ("Alpha") which operates a retail store in Manalapan, New Jersey.
References herein the "Alliance" or "the Company" unless otherwise indicated
include Alliance, ABC, and Alpha.
Products. Although ABC and Alpha sell through different media, the majority
of the products which they sell are identical. The Company sells products such
as amplifiers, receivers, televisions, speakers, CD players, DVD players,
satellite systems, home automation, and cassette players.
The Company offers a broad range of name brands for each of the products
listed above, at several different price points, with a greater product depth at
higher price levels than most of the Company's competitors. The products are
manufactured by companies such as: JVC, Panasonic, Sony, Yamaha, Denon, Krix,
Klipsch, Hitachi, Aiwa, Apature, Rotel, NHT, Wharfedale, Thornberg, and Kenwood.
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ABC Business - ABC derives revenues from two principal activities: the sale
of home theater systems, individual components, speakers and cables to customers
on a call in basis and via the internet.
ABC generates approximately 35% of its revenues via leads developed through
the internet, and the balance through print advertising. All orders are paid for
by check or credit card at the time of shipment.
Alpha Business - Alpha sells the same products as ABC through its retail
store in Manalapan, New Jersey.
Alpha and ABC's sales force includes employees who are paid a base salary
plus a commission on gross sales.
New Products and Expansion. The Company is continuously evaluating new
products to expand its product line. Alliance is currently reviewing plasma
televisions, high definition televisions, and enhanced digital audio and video
products as potential sales items.
Product Line Exclusivity License & Trademark Agreements. The Company does
not have exclusive licenses or trademark agreements with any of its suppliers.
Government Regulations. The costs and effects of compliance with
governmental regulations are not material to the Company's operation.
Research & Development. The Company depends on the manufacturers of the
products it sells for the research and development of new products or enhanced
products.
Cost and Effects of Compliance with Environmental Laws. The costs and
effects of compliance with environmental laws are not material to the Company's
operation.
Current Employees. The Company currently employs 10 persons, of whom 7 are
full time. None of the Company's employees are members of unions.
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Growth Strategy. Management believes that the future growth of the Company
will be the result of three efforts; (1) increased sales through existing
channels, (2) increased advertising in the existing markets and developing new
markets, and, (3) controlling and containing operating and administrative costs.
(1) Increased sales through existing channels. - Management is
presently concentrating on improving sales lead follow-ups and customer
service in an attempt to increase sales.
The Company's product line is continuously being updated to provide
the most complete line of products available.
(2) Increased advertising in the Company's existing markets and
developing new markets. - The Company plans to expand its advertising base
by adding new publications, as well as increasing the size of currents ads.
The Company also has plans to dramatically increase its presence on the
internet, through enhanced web page designs, better placement in search
engines, and advertising in several browsers.
(3) Controlling costs. - At the end of the third quarter of 1998 the
Directors of the Company, recognizing certain inefficiencies in its
operation, undertook a management reorganization, cost reduction and profit
improvement program. Substantial cuts in administrative and middle
management personnel, changes in delivery methods, procedures, and a
substantial reduction in overhead costs have been made. Controls have been
implemented to assure that cost containment is maintained.
The current trend in the Company indicates an increase in revenue coupled
with a reduction in costs. Management believes that the results of future
operations will show a substantial improvement in results over the historical
financial data contained herein.
DESCRIPTION OF PROPERTY. Alliance leases 1,600 square feet of office,
warehouse and retail space in Manalapan, New Jersey. The terms are on a month to
month basis requiring monthly payments of $1,600.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Audited Consolidated Financial
Statements and related notes which are contained elsewhere in this Registration
Statement.
Results of operations for Alliance Technologies and subsidiary are being
presented on a consolidated basis. Results of operations for the year ended
December 31, 1996 are being presented on a pro-forma basis as if ABC had been
owned by the Company for the entire year.
Year Ended December 31, 1997 Compared to Pro-forma Year Ended December 31, 1996
Net sales for the year ended December 31,1997 increased 76.2% to $2,148,308
from $1,219,272 for the year ended December 31, 1996. The increase was the
result of significant sales staff and infrastructure changes since the
acquisition of ABC.
Gross profit for the year ended December 31, 1997 increased 78.6% to
$492,699 from $275,860 for the year ended December 31, 1996. As a percentage of
net sales, gross profit increased to 22.9% in the 1997 period compared to 22.6%
in the 1996 period. The increase was primarily the result of a change in product
sales mix between 1997 and 1996.
Selling, general and administrative expenses for year ended December 31,
1997 increased 39.6% to $591,823 from $423,856 for the year ended December 31,
1996. The increase in selling, general and administrative expenses consisted
primarily of added administrative staff, computerization of accounting
functions, and installation of internal control systems which are in the process
of being put in place to enable the Company to grow.
Net income for the year ended December 31, 1997 increased to a loss of
($99,724) compared to a loss of ($147,996) for the year ended December 31, 1996.
This increase was due primarily to the substantial increase in sales.
Nine Months Ended September 30, 1998 Compared to the nine months Ended
September 30, 1997
Net sales for the nine months ended September 30, 1998 increased 28.4% to
$1,847,142 from $1,438,640 for the nine months ended September 30, 1997. This
increase was due primarily to a continuing effort to build revenues through
increased marketing efforts and a larger presence on the internet.
Gross profit for the nine ended September 30, 1998 increased 14.6% to
$377,476 from $329,448 for the prior years same period. As a percentage of net
sales, gross profit for the nine months ended September 30, 1998 decreased to
20.4% compared to 22.9% in 1997, due to adjustments made to prior periods.
Selling, general and administrative expenses for the nine months ended
September 30, 1998 increased 2.5% to $454,150 from $443,260 for the nine months
ended September 30, 1997. This increase is the result of increased overhead and
advertising in an attempt to generate and support additional revenues.
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Net loss for the nine months ended September 30, 1998 decreased $37,138 to
($76,674) from ($113,812). This decrease was primarily due to increased
revenues.
Liquidity and Capital Resources
At September 30, 1998 and December 31, 1997 the Company had a negative
working capital of ($349,957) and ($298,283), respectively.
The Company has historically financed its business through cash flow from
operations and borrowings from executives, which may be utilized from time to
time.
The Company expects to require additional capital and at the present time
has no definitive plans but is exploring various opportunities. There can be no
assurance of the ability of the Company to raise such capital. The Company has
no agreements or commitments with any person or entity to raise such capital.
The Company has a negative working capital of approximately $350,000 at
September 30, 1998 which raises substantial doubt about the Company's ability to
continue as a going concern. The Company believes that upon obtaining proceeds
from additional financing the substantial doubt about the Company's ability to
continue as a going concern will be reduced.
While no specific acquisitions are presently under consideration, the
Company is actively seeking acquisitions and anticipates it may require
additional capital in order to fund any acquisitions or substantial growth in
its current business. To this end, the Company plans to pursue both debt and
equity financing from both private institutions and the public markets to
finance acquisitions as required. No assurance can be given that sufficient
capital will be available when needed.
Forward Looking Statements
Management's Discussion and Analysis of Financial Condition and Results of
Operations contains information regarding management's planned growth, financing
and prospective business acquisitions and opportunities. These statements are
forward looking statements that involve risks and uncertainties. The following
is a list of factors, among others, that could cause actual results to differ
materially from the forward looking statements: business conditions and growth
in the Company's market and industry and in the general economy; competitive
factors including increased competition and price pressures; availability of raw
materials and purchased products at competitive prices; and inadequate or
unsatisfactory financing sources.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock that
will be owned by (i) each person (including any "group," as that term is
defined in Section 13(d) (3) of the Securities Exchange Act of 1934, as
amended) known by the Company to be the beneficial owner of more than 5%
of the outstanding shares of Common Stock, (ii) each director of the
Company and (iii) all directors and executive officers of the Company as
a group. Each individual has an address c/o the Company, 522 Highway 9
North, Suite 144, Manalapan, New Jersey 07726.
<TABLE>
<CAPTION>
Name and address Number of Percentage of Out-
of Beneficial Owner Shares Owned standing Shares Owned
<S> <C> <C>
Steven Wise 366,000 14.2%
Scott G. Halperin 852,083 33.0%
David Bannon 366,000 14.2%
Bernard F. Lillis, Jr. 100,000 3.9%
Kagel Family Trust 370,000 14.3%
All directors and executive
officers as a group
(3 persons) 1,318,083 51.0%
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
The following are directors and officers of the Company:
Name Age Title
Scott G. Halperin 36 Director
Steven Wise 37 President and Director
Bernard F. Lillis, Jr. 55 Chief Financial Officer and Director
SCOTT G. HALPERIN has been a director of the Company since April 17,
1997. Since August 1994 Mr. Halperin has been Chief Executive Officer of
Saratoga Brands Inc. a company traded on the NASDAQ Small Cap Market
System, and engaged in a non-competitive business. On July 1, 1997 he was
elected Chairman of the Board of directors of Saratoga. Since July 1993
to the present, Mr. Halperin has been President and Chief Executive
Officer of Agama, Inc., a private company that pursues mergers and
acquisitions.
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STEVEN WISE has been President and a director of the Company since April
17, 1997. He entered the electronics industry in 1984 working for various
retail establishments. In 1988, he joined Sixth Avenue Electronics as
Vice President of the mail order division. Mr. Wise developed the mail
order division and drove sales from $150,000 in 1988 to $7.8 million in
1994. In 1994 he became a principal in a newly formed electronics retail
and mail order outlet, and in 1997 he entered into an agreement with
Alliance Technologies, Inc.
BERNARD F. LILLIS, JR. has been Chief Financial Officer and a director
of the Company since April 17, 1997. Additionally, he serves as Chief
Financial Officer, Chief Operating Office, and a director of Saratoga
Brands Inc. Prior to joining Saratoga he served for fourteen years as
Chief Financial Officer of one of the largest suppliers of construction
aggregate in the New York Metropolitan Area. Prior thereto he was Vice
President Finance & Administration of a Princeton (NJ) management
consulting firm for seven years. Mr. Lillis also served as Deputy City
Manager-Finance of Rochester, New York, and began his career with
Deloitte & Touche (previously Haskins & Sells), Certified Public
Accountants. He is a Certified Public Accountant, a recipient of the New
York State Society of CPA's Award for Outstanding Scholastic Achievement
in Accounting, and a member of the New York, New Jersey and Pennsylvania
Societies of CPA's, and the Institute of Management Accountants.
EXECUTIVE COMPENSATION
The following table sets forth the compensation that the Company paid
during its last three fiscal years to its chief executive officer and
four most highly compensated executive officers.
Other Annual
Name and Title Year Salary Compensation
Steven Wise, President 1997 $91,077 -
1996 - -
1995 - -
Stock Option Plan
On September 1, 1998, the Company established an incentive and
non-qualified stock option plan (the "Stock Option Plan"). The Stock Option Plan
is administered by the Board of Directors. A total of 300,000 shares of Common
Stock are reserved for issuance under the Stock Option Plan.
The purpose of the Stock Option Plan is to advance the Company's interests
by enhancing its ability to attract and retain key employees. All grants will be
made at the discretion of the Board to such individuals and in such amounts as
the Board deems advantageous for compensation and incentive purposes. The
Company's employees are all eligible for the grant of options.
The Stock Option Plan provides for the grant of both incentive stock
options as defined in Section 422 of the Internal Revenue Code and non-qualified
options subject Section 83 of the Code. No options may be granted under the
Stock Option Plan more than ten years after the date of its establishment. All
options under the Stock Option Plan will be non-transferable except upon death.
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The exercise price of a stock option granted under the Stock Option Plan may not
be less than 100% (110% in the case of incentive stock options granted to
officers, directors, and owners of more than 10% of the total combined voting
power of all classes of stock of the Company and its subsidiaries) of the fair
market value of the underlying stock at the time of grant.
The term of each option will be set by the Board but cannot exceed ten
years from the date of grant (five years from grant, in the case of an incentive
stock option granted to officers, directors, and owners of more than 10% of the
total combined voting power of all classes of stock of the Company and its
subsidiaries). Each option will become exercisable in cumulative installments:
on the first anniversary of the date of grant as to 25% of the shares covered by
the option, and on each of the second, third and fourth anniversaries of the
grant date an additional 25% of such shares. The exercise price of an option may
be paid either in cash, certified check, bank draft or money order or, if the
Board so permits, by delivery of previously owned Common Stock or a promissory
note or a combination of the foregoing.
If a participant's employment with the Company terminates by reason of
death, each option held by the participant immediately prior to death will be
exercisable, to the extent it was then exercisable, for 12 months after death or
until the end of the option period if earlier. The options which were not
exercisable at the time of death will immediately terminate upon death. If a
participant's employment terminates for any other reason, all of the
participant's options that are not then exercisable will immediately terminate.
The participant's options that were then exercisable will continue to be
exercisable for 30 days, unless the participant is discharged for cause, as
determined in the Board's sole discretion. In such a case, all previously vested
options shall be forfeited immediately.
In the Board's sole discretion, options granted under the Stock Option Plan
will also terminate in the event of certain mergers, consolidations or sale of
assets or public or private Common Stock offerings of the Company. However, in
such instances, the Stock Option Plan also provides that at least 20 days in
advance of such an event all outstanding vested and non-vested options shall
become exercisable for a limited period of time. Options not exercised during
that time period shall be forfeited.
The Board retains the right to amend the Stock Option Plan or any
outstanding option. An amendment adversely affecting the rights of an employee
under a previously granted option requires the employee's consent, and certain
Stock Option Plan amendments, including any increase in the number of shares
available under the Stock Option Plan, a change in the group of eligible
employees, a reduction in the minimum option price for incentive stock options,
an extension of the term of the Stock Option Plan, or amendments affecting the
status of already granted incentive stock options, require shareholder approval.
The number of shares reserved for issuance under the Stock Option Plan, as
well as the number of shares subject to outstanding options, option price, and
other option provisions, including where relevant the kind of shares subject to
options, is subject to adjustment in the event of a stock dividend, stock split
or similar capital change or to take into consideration material changes in
accounting practice or principles or certain corporate transactions. The Board
may, at any time, discontinue granting options under the Stock Option Plan.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On April 17, 1997 Steven Wise was elected to the board of directors of
the Company. Mr. Wise was one of the principal shareholders of American
Buyers Club international, Inc., which was acquired by the Company
effective January 1, 1997.
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 10,000,000 shares of Common Stock, par
value $.001 per share. As of the date of filing, approximately 2,585,176 shares
of Common Stock are outstanding, held of record by approximately 40 persons. The
holders of Common Stock are entitled to one vote for each share held of record
on all matters to be voted on by stockholders. There is no cumulative voting
with respect to the election of directors, with the result that the holders of
more than 50% of the shares voting for the election of directors can elect all
of the directors. The holders of Common Stock are entitled to receive dividends
when, as and if declared by the Board of Directors out of the funds legally
available therefor. In the event of the liquidation, dissolution or winding up
of the Company, the holders of Common Stock are entitled to share ratably in all
assets remaining available for distribution after payment of liabilities and
after provision has been made for each class of stock, if any, having preference
over the Common Stock. Holders of shares of Common Stock, as such, have no
conversion, preemptive or other subscription rights, and there are no redemption
provisions applicable to the Common Stock. All of the outstanding shares of
Common Stock are, and the shares of Common Stock to be issued in this offering,
when issued against payment therefor, will be, validly authorized and issued,
fully paid and nonassessable.
The common stock of Alliance Technolgies, Inc. is currently traded on the
Electronic Bulletin Board under the symbol ALTL.
Dividends
The Company has never paid any dividends. Future dividends, if any, will be
contingent upon the Company's revenues and earnings, if any, capital
requirements and general financial condition subsequent to the consummation of a
Business Combination. The payment of dividends is within the discretion of the
Company's Board of Directors. The Company presently intends to retain all
earnings, if any, for use in the Company's business operations and accordingly,
the Board does not anticipate declaring any dividends in the foreseeable future.
However, there are no current restrictions on the payment of dividends either by
contract or regulation.
Transfer Agent
The transfer agent for the Common Stock is Signature Stock Transfer,
Dallas, Texas.
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PART II
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS.
At the time of filing for the registration of the shares to be registered
herein, only a limited market existed for common shares of the Company. Upon the
effective date of this registration statement, the Company will have outstanding
approximately 2,585,176 shares of common stock with a par value of $.001 per
share. There are approximately 40 shareholders of record for the common shares
to be registered by this Registration Statement. There are no outstanding
options or warrants to purchase or convert to common stock.
LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has had no disagreements with its accountants regarding
accounting or financial disclosure matters.
RECENT SALE OF UNREGISTERED SECURITIES.
In 1998, the Company sold 60,000 shares of its common stock in private
transactions. The transactions were exempt from registration under the
Securities Act of 1933, as amended (the "Act") in accordance with Rule 504 of
Regulation D under the Act.
15
<PAGE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated in Nevada. Under Section 78.75 of the Nevada
Revised Statutes, a Nevada corporation may, under specified circumstances,
indemnify its directors, officers, employees and agents in connection with
actions, suits or proceedings brought against them by any person, except an
action by or in the right of the Corporation, by reason of the fact that they
were or are such directors, officers, employees or agents, against expenses
incurred in any action, suit or proceedings.
Section 78.75 of the Nevada Revised Statutes provides that a certificate of
incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct of a
knowing violation of law.
16
<PAGE>
PART F/S
Pages
Consolidated Financial Statements of Alliance Technologies,
Inc. and Subsidiary
Unaudited financial statements for the three and nine
months ended September 30,1998 18-24
Audited financial statements for the years ended
December 31, 1997 25-33
Audited financial statements for the years ended
December 31, 1996 34-41
Unaudited proforma financial statements for the year
ended December 31, 1996 42-48
17
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
18
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED UNAUDITED BALANCE SHEET
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash $ 29,642
Charge card receivables, net 19,093
Inventories (Note 2) 131,299
Other current assets 340
-------
Total Current Assets 180,374
-------
Property and Equipment - Net (Note 3) 17,961
-------
TOTAL ASSETS $ 198,335
=======
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
LIABILITIES
Current Liabilities:
Accounts payable $ 196,796
Customer deposits and other advances 319,814
Loans payable 17,765
Payroll and sales tax payable 5,520
Accrued expenses 8,397
-------
Total Current Liabilities $ 548,292
-------
Commitments and Contingencies (Note 4)
STOCKHOLDERS' DEFICIENCY
Common Stock
Par value $.001 - 10,000,000 shares authorized,
2,585,176 shares issued and outstanding 2,585
Additional paid in capital 32,415
Deficit (384,957)
-------
Total Stockholders' Deficency (349,957)
-------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 198,335
=======
</TABLE>
The accompanying notes to the consolidated unaudited financial
statements are an integral part hereof.
19
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED UNAUDITED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1998 1997 1998 1997
-----------------------------------------
<S> <C> <C> <C> <C>
Net Sales $795,143 $589,015 $1,847,142 $1,438,640
Cost of sales 594,870 462,645 1,469,666 1,109,192
----------------------------------------
Gross profit 200,273 126,370 377,476 329,448
Selling, General and Administrative 161,383 206,332 454,150 443,260
----------------------------------------
Earnings (Loss) before income taxes 38,890 (79,962) (76,674) (113,812)
Income taxes -- -- -- --
----------------------------------------
Net Earnings (Loss) $38,890 $(79,962) $(76,674) $(113,812)
========================================
EARNINGS (LOSS) PER COMMON SHARE
Net Earnings (Loss) $0.02 $(0.03) $(0.03) $(0.05)
Weighted average number of
shares used in computation 2,585,176 2,439,462 2,488,033 2,439,462
</TABLE>
The accompanying notes to the consolidated unaudited financial
statements are an integral part hereof.
20
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Issued and
Out-
Authorized standing Additional
Common Common Paid-in
Stock Stock Amount Capital Deficit Total
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1996 10,000,000 300,000 $ 300 $ 9,700 $ (9,575) $ 425
Excess of
liabilities assumed
over assets acquired
in acquisition (201,123) $(201,123)
Issuance of common
stock 2,139,462 $ 2,139 (2,139)
Net Loss (97,585) (97,585)
-------------------------------------------------------------
Balance at
December 31, 1997 10,000,000 2,439,462 2,439 7,561 (308,283) (298,283)
Common Stock Issued 145,714 146 24,854 25,000
Net Loss for nine
months ended
September 30, 1998 (76,674) (76,674)
------------------------------------------------------------
Balance at
September 30, 1998 10,000,000 2,585,176 $ 2,585 $ 32,415 $(384,957) $(349,957)
============================================================
</TABLE>
The accompanying notes to the consolidated unaudited financial
statements are an integral part hereof.
21
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED UNAUDITED STATEMENT OF CASH FLOWS
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
1998 1997
-----------------------
<S> <C> <C>
Cash Flows from operating activities:
Net loss $ (76,674) $(113,812)
Adjustments to reconcile net loss to net cash:
Depreciation and amortization 2,977 4,404
Decrease in charge card receivables 34,373 (42,607)
(Increase) in inventories (36,217) (42,555)
Decrease in other current assets 7,035 3,512
Increase in accounts payable 37,598 36,486
Increase in customer deposits and advances 55,378 135,358
(Decrease) in payroll and sales taxes payable (4,377) (7,464)
(Decrease) in accrued expenses (2,203) 7,598
--------- ---------
Net cash provided by (used in) operating activities 17,890 (19,080)
--------- ---------
Cash flow from investing activities:
Purchase of fixed assets (5,818) (11,469)
--------- ---------
Net cash provided by (used in) investing activities (5,818) (11,469)
--------- ---------
Cash flow from financing activities:
Sales of Common Stock 25,000 --
Proceeds from loan payable -- 35,000
Reduction in loans payable (32,337) --
--------- ---------
Net cash (used in) provided by financing activities (7,337) 35,000
--------- ---------
Increase (decrease) in cash 4,735 4,451
Cash at beginning of period 24,907 4,619
--------- ---------
Cash at end of period $ 29,642 $ 9,070
========= =========
Supplemental disclosure of cash flow information:
Interest Paid $ 5,242 $ 1,749
Summary of non-cash investing activities:
Common Stock issued for acquisitions (shares) -- 732,000
</TABLE>
The accompanying notes to the consolidated unaudited financial
statements are an integral part hereof.
22
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Alliance Technologies, Inc. (the "Company") was established in 1988 under
the name Alliance Health Enterprises, Inc. In April 1997 the name was changed to
Alliance Technologies, Inc. at which time the Company acquired American Buyers
Club International, Inc. ("ABC") In April, 1997 ABC formed Alpha Sound and
Vision, Inc. as a wholly owned subsidiary.
The Company is located in Manalapan, New Jersey and sells high quality home
entertainment equipment. Substantially all business is obtained through
advertising in trade magazines and via the Internet.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiary. All significant intercompany transactions are eliminated in
the consolidated statements.
ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the reporting
period. Actual results could differ from those estimates.
INVENTORIES
Inventories are stated at the lower of cost, determined by the first-in,
first-out method, or market.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization are computed on the straight-line and
accelerated methods over the estimated useful lives of the related assets, which
range between three and five years.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's assets and liabilities which constitute
financial instruments as defined in Statement of Financial Accounting Standards
No. 107 approximate their recorded value.
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-lived Assets and the Long-lived Assets to
be Disposed of" (SFAS 121), was issued. This statement, which was adopted in
1996, established accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used for long-lived assets and certain identifiable intangibles to be
disposed of. The Company believes that the adoption of SFAS 121 has not had a
material impact on the financial statements.
23
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
INCOME TAXES
The Company has adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires a company to
recognize deferred tax liabilities and assets for the expected future tax
consequences of events that have been recognized in a company's financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statement
carrying amounts and tax bases of assets and liabilities using exact tax rates.
Since the book Net Operating Loss ("NOL") equals the tax NOL, no carry-forward
difference has arisen. The company's current NOL is approximately $ 99,700 and
begins to expire in the year 2003.
ADVERTISING
The Company expenses the production cost of advertising the first time the
advertising takes place. Advertising expense for the nine months ended September
30, 1998 was $ 82,627.
Note 2: INVENTORIES
The inventories consist entirely of finished goods suitable for retail sale
as of September 30, 1998.
Note 3: PROPERTY AND EQUIPMENT
Property and equipment consist of the following as of September 30, 1998:
<TABLE>
<CAPTION>
<S> <C>
Furniture and fixtures $ 6,198
Hardware and software costs 20,187
----------
26,385
Less-accumulated depreciation ( 8,424)
----------
Property and equipment-Net $ 17,961
==========
</TABLE>
Note 4: COMMITMENTS AND CONTINGENCIES
LEASING ACTIVITIES
The company leases space for its retail operation on a month-to-month basis
in a strip-mall in Manalapan, New Jersey. Rent expense for the retail operation
totaled $ 14,400 in the nine months ended September 30, 1998.
24
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
25
<PAGE>
(Ehrenkrantz Sterling & Co. LLC letterhead)
Certified Public Accountants and Consultants
6 Regent Street, Livingston, New Jersey 07039
(973)994-7777 Fax: (973)994-3444
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Alliance Technologies Inc. and subsidiary
Manalapan, New Jersey
We have audited the accompanying consolidated balance sheet of Alliance
Technologies, Inc. and subsidiary as of December 31, 1997, and the related
consolidated statements of operations, stockholders' deficiency and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on the
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Alliance
Technologies Inc. and subsidiary as of December 31, 1997, and the results of its
operations and cash flows for the year then ended in conformity with generally
accepted accounting principles.
Certain conditions indicate that the Company may be unable to continue as a
going concern. As discussed in Note 3 to the financial statements, the Company
has suffered losses from operations and has a working capital deficiency. These
conditions raise substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty. Management's plans with regard to
this matter are discussed in Note 3.
/s/ Ehrenkrantz Sterling & Co., LLC
Certified Public Accountants
Livingston, New Jersey
June 22, 1998
26
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current Assets:
Cash $ 24,907
Charge card receivables, net of allowance for
chargebacks of $100,000 53,466
Inventory 95,082
Other current assets 7,500
---------
Total Current Assets 180,955
---------
Property and Equipment,net 14,995
---------
$ 195,950
=========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
LIABILITIES
Current Liabilities:
Accounts payable $ 159,198
Customer deposits and other advances 264,436
Loans payable 20,102
Loan payable, Director 30,000
Payroll and sales tax payable 9,897
Accrued expenses 10,600
---------
Total Current Liabilities 494,233
---------
Commitments
STOCKHOLDERS' DEFICIENCY
Common Stock
Authorized 10,000,000 shares at $.001 par value
2,439,462 shares issued and outstanding 2,439
Additional Paid in Capital 9,700
Deficit (310,422)
---------
(298,283)
---------
$ 195,950
=========
</TABLE>
See notes to the consolidated financial statements.
27
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
SALES $ 2,148,308
COST OF SALES 1,655,609
-----------
GROSS PROFIT 492,699
-----------
EXPENSES:
SELLING 126,809
GENERAL AND ADMINISTRAIVE 465,014
-----------
591,823
-----------
LOSS BEFORE INCOME TAXES (99,124)
INCOME TAXES 600
-----------
NET LOSS $ (99,724)
===========
LOSS PER SHARE OF COMMON STOCK $ (0.04)
===========
WEIGHTED AVERAGE NUMBER SHARES OUTSTANDING 2,439,462
</TABLE>
See notes to the consolidated financial statements.
28
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Common Stock Additional
------------------------ Paid-in
Shares Amount Capital Deficit
-----------------------------------------------
<S> <C> <C> <C> <C>
BALANCE-DECEMBER 31, 1996 300,000 $ 300 $ 9,700 $(210,698)
ISSUANCE OF COMMON STOCK 2,139,462 2,139 -- --
NET LOSS -- -- -- (99,724)
----------------------------------------------
BALANCE-DECEMBER 31, 1997 2,439,462 $ 2,439 $ 9,700 $(310,422)
==============================================
</TABLE>
See notes to the consolidated financial statements.
29
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Cash Flows from operating activities:
<S> <C>
Net Loss $ (99,724)
Adjustments to reconcile net loss to net cash:
Depreciation and amortization 5,872
(Increase) decrease in operating assets:
charge card receivables (53,466)
inventory (95,082)
other current assets (7,375)
Increase (decrease) in operating liabilities:
accounts payable (41,925)
customer deposits and other advances 264,436
sales taxes payable 9,897
accrued expenses 10,600
---------
Net cash used in operating activities (6,767)
---------
Cash flow from investing activities:
Purchase of fixed assets (20,567)
---------
Net cash used in investing activities (20,567)
---------
Cash flow from financing activities:
Issuance of capital stock 2,139
Proceeds from loans payable 50,102
---------
Net cash provided by financing activities 52,241
---------
Net increase in cash 24,907
Cash at beginning of year -0-
---------
Cash at end of year $ 24,907
=========
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 6,144
Income taxes $ 600
</TABLE>
See notes to the consolidated financial statements
30
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Alliance Technologies, Inc. was established in 1988 under the name Alliance
Health Enterprises, Inc. In April 1997 the name was changed to Alliance
Technologies, Inc. ("The Company") at which time the Company acquired American
Buyers Club International, Inc. ("ABC"). In April 1997 ABC formed Alpha Sound
and Vision, Inc. as a wholly owned subsidiary.
The Company is located in a retail store in Manalapan, New Jersey and sells
high quality home entertainment equipment. A substantial amount of business is
sold through mail order and on the Internet.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary. All significant Intercompany transactions are
eliminated in the consolidated statements.
ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INVENTORY
Inventory is stated at the lower of cost, determined by the first-in,
first-out method, or market.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization are computed on the straight-line and
accelerated methods over the estimated useful lives of the related assets, which
range between three and five years.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's assets and liabilities which constitute
financial instruments as defined in Statement of Financial Accounting Standards
No. 107, approximate their recorded value.
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed of." The provisions of SFAS No. 121 require the Company to
review its long-lived assets for impairment on an exception basis whenever
events or changes in circumstances indicate that the carrying amount of the
assets may not be recoverable through future cash flows. If it is determined
that an impairment loss has occurred based on expected future cash flows, then
the loss is recognized in the statement of operations. There were no impairment
losses recorded in these financial statements.
31
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ADVERTISING
The Company expenses the cost of advertising as incurred. Advertising
expense for 1997 totaled $61,708.
Note 2: BUSINESS COMBINATION
In April 1997, the Company acquired American Buyers Club International,
Inc. in a business combination accounted for as a pooling of interests. American
Buyers Club International, Inc., which engages in sales of high quality home
entertainment equipment, became a wholly owned subsidiary of the Company through
the exchange of 732,000 shares of the Company's common stock for all of the
outstanding stock of American Buyers Club International, Inc
Note 3: GOING CONCERN
The financial statements have been prepared assuming the Company will
continue as a going concern. The Company had a net loss of approximately
$100,000, a working capital deficiency and a deficiency in assets of
approximately $ 298,000 at December 31, 1997 which raises substantial doubt
about the Company's ability to continue as a going concern. The Company intends
to raise additional capital through short term or long term borrowings, a
private placement or a public offering. The Company believes that upon obtaining
proceeds from additional financing the substantial doubt about the Company's
ability to continue as a going concern will be eliminated.
Note 4: INVENTORY
The inventory consists of merchandise held for retail sale as of December
31, 1997.
Note 5: PROPERTY AND EQUIPMENT, at cost
Property and equipment consist of the following as of December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Furniture and fixtures $ 6,198
Store fixtures and computer equipment 14,369
----------
20,567
Less-accumulated depreciation ( 5,572)
-----------
$ 14,995
===========
</TABLE>
Note 6: RELATED PARTY TRANSACTION
In 1997 the Company received a non-interest-bearing loan of $30,000, due on
demand, from the Chairman of the Board of Directors. See notes 8 and 9 for other
related party transactions.
Note 7: FEDERAL AND STATE INCOME TAXES
The Company has available net operating loss carryforwards of approximately
$108,000 for Federal and State income taxes expiring between 2003 and 2112 to
offset future taxable income.
A deferred tax asset results from the benefit ofutilizing net operating
loss carryforwards in future years. A valuation allowance has been provided for
the entire benefit which is not anticipated to be used before the expiration
dates of the loss carryforwards.
Income tax expense is comprised of current state income taxes.
32
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8: COMMITMENTS
LEASING ACTIVITY
The company leases space for its retail operation in a strip-mall in
Manalapan, New Jersey on a month-to-month basis requiring monthly payments of
$1,600. Rent expense totaled $ 17,333 in 1997.
EMPLOYMENT CONTRACT
An employment contract between the Company's wholly owned subsidiary and an
executive officer and Director of the Company provides for an annual salary of
$100,000 and is automatically renewed for one year intervals expiring December
1999.
Note 9: CAPITAL TRANSACTIONS
The following occurred in 1997:
1. The Company issued 732,000 shares of common stock for the acquisition of
ABC, of which 366,000 shares were issued to an executive officer and
Director of the Company.
2. Two Directors, one of whom is an executive officer of the Company, were
issued 886,079 shares at par value for services rendered.
3. The Company issued 521,383 shares at par value to unrelated parties for
services rendered.
Note 10: CONCENTRATION OF CREDIT RISK
The Company maintains cash balances in financial institutions located in
New Jersey. These balances are insured by the Federal Deposit Insurance
Corporation up to $100,000.
33
<PAGE>
ALLIANCE HEALTH ENTERPRISES, INC.
* * * * * * * *
FINANCIAL STATEMENTS
* * * * * * * *
FOR THE YEAR ENDED DECEMBER 31, 1996
WITH ACCOMPANYING AUDITORS' REPORT
* * * * * * * *
H O F F S K I & P I S A N O
Certified Public Accountants and Consultants
34
<PAGE>
(Hoffski & Pisano letterhead)
Certified Public Accountants and Consultants
A Professional Corporation
Independent Auditors' Report
Board of Directors
Alliance Health Enterprises, Inc.
Orange, California
We have audited the accompanying balance sheet of Alliance Health
Enterprises, Inc. (a Nevada Corporation and Development Stage Company) as of
December 31, 1996 and the related statements of operations, stockholders'
equity, and cash flows for the years then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 audit provides 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 Alliance Health Enterprises,
Inc. at December 31 1996 and the results of their operations and their cash
flows for the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As shown in the financial statements,
the Company is a Development Stage Company and as such is devoting substantial
efforts toward establishing new business. The Company has incurred accumulated
losses since inception of $9,575. Such losses raise substantial doubt about the
Company's ability to continue as a going concern. As indicated in Note A, the
Company has plans in process to acquire a new business and obtain equity
capital. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Hoffski & Pisano
Irvine, California
June 30 1997
2201 Dupont Drive o Suite 400 o Irvine, CA 92612
(714) 752-0300 o Fax (714) 752-0310
35
<PAGE>
Alliance Health Enterprises, Inc.
Balance Sheet
As of December 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Other Assets
Organization Costs (Note A) $ 3,000
Less: Accumulated Amortization (2,575)
-------
Total Other Assets 425
-------
Total Assets $ 425
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities $ --
Stockholders' Equity
Common Stock, $.001 par value, 10,000,000 authorized,
300,000 shares issued, and outstanding $ 300
Additional Paid-in Capital 9,700
Accumulated Deficit (9,575)
-------
Total Stockholders' Equity $ 425
-------
Commitments --
Total Liabilities and Stockholders' Equity $ 425
=======
</TABLE>
See accompanying notes and independent auditors' report.
36
<PAGE>
Alliance Health Enterprises, Inc.
Statement of Operations
For the Years Ended December 31, 1996
<TABLE>
<CAPTION>
1996
--------------
<S> <C>
Revenues $ --
Expenses
Amortization $ 300
---------
Net Loss $ (300)
=========
Net Loss Per Common Share $ (0.001)
=========
Weighted Average Shares Outstanding 300,000
=========
</TABLE>
See accompanying notes and independent auditors' report.
37
<PAGE>
Alliance Health Enterprises
Statements of Stockholders' Equity
For The Years Ended December 31, 1995 and December 31, 1996
<TABLE>
<CAPTION>
Common Stock Issued
------------------------- Total
Paid-in Net Stockholders'
Shares Amount Capital Losses Equity
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances, at
December 31, 1995 100,000 $ 1,000 $ 9,000 $ (9,275) $ 725
Net Loss (300) (300)
Balances, at
December 31, 1996 300,000 $ 300 $ 9,700 $ (9,575) $ 425
===========================================================
</TABLE>
See accompanying notes and independent auditors' report.
38
<PAGE>
Alliance Health Enterprises, Inc.
Statement of Cash Flows
For the Years Ended December 31, 1996
<TABLE>
<CAPTION>
1996
--------
<S> <C>
Cash Flows From Operating Activities:
Net Loss $(300)
Non Cash Items Included In Net Income:
Amortization 300
-----
Net Cash Provided By Operating Activities --
Net Change In Cash --
Cash at Beginning of Year --
-----
Cash at End of Year $--
=====
Supplemental Cash Flow Information:
Interest Paid $--
=====
Income Taxes Paid $--
=====
</TABLE>
See accompanying notes and independent auditors' report.
39
<PAGE>
Alliance Health Enterprises, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(1) Nature of Business
Alliance Health Enterprises, Inc. (the Company) is a corporate shell
developed to generate capital resources which are to be used to acquire or
participate in a business or business opportunity.
(2) Development Stage Company
The Company is a Development Stage Company as defined under Statement of
Financial Accounting Standards No. 7. The Company is devoting substantially all
of its present efforts to acquiring a new business.
The Company's continued existence as a going concern is ultimately
dependent upon the success of future operations and its ability to secure
additional funding for capital, marketing, and other expenditures. Upon the
acquisition of a new business, the Company is planning a public offering to
secure additional capital. These can be no assurance that the Company will be
able to obtain additional funding through either a private placement or public
offering.
(3) Organization Costs
Organization costs incurred at the inception of the corporation in the
amount of $3,000 are amortized in amounts sufficient to relate the cost of the
amortizable asset to operations over its estimated service life, principally on
a straight-line basis. These costs are amortized over a ten year period.
(4) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
40
<PAGE>
Alliance Health Enterprises, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
(5) Income Taxes
The Company has adopted Statements of Financial Accounting Standards No.
109, "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires a company to
recognize deferred tax liabilities and assets for the expected future tax
consequences of events that have been recognized in a company's financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statement
carrying amounts and tax bases of assets and liabilities using enacted tax
rates.
However, since the book Net Operating Loss (NOL) equals the tax NOL, no
carry-forward differences have arisen. The company's current NOL is $9,575 and
begins to expire in the year 2003.
41
<PAGE>
ALLIANCE TECHNOLOGIES, INC. & SUBSIDIARY
CONSOLIDATED UNAUDITED PROFORMA FINANCIAL STATEMENTS
DECEMBER 31, 1996
42
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED UNAUDITED PROFORMA BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash $ 4,619
Charge card receivables 9,379
Inventory 18,659
Other current assets 425
---------
Total Current Assets 33,082
---------
Property and Equipment,net 4,243
---------
$ 37,325
=========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
LIABILITIES
Current Liabilities:
Accounts payable and accrued expenses $ 114,479
Customer deposits and other advances 70,117
---------
Total Current Liabilities 184,596
---------
Commitments
STOCKHOLDERS' DEFICIENCY
Common Stock
Authorized 10,000,000 shares at $.001 par value
2,439,462 shares issued and outstanding 2,439
Additional Paid in Capital 7,561
Deficit (157,271)
---------
(147,271)
---------
$ 37,325
=========
</TABLE>
See notes to the consolidated unaudited proforma financial statements.
43
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED UNAUDITED PROFORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
SALES $ 1,219,272
COST OF SALES 943,412
-----------
GROSS PROFIT 275,860
-----------
EXPENSES:
SELLING 90,011
GENERAL AND ADMINISTRATIVE 333,845
-----------
423,856
-----------
LOSS BEFORE INCOME TAXES (147,996)
INCOME TAXES --
-----------
NET LOSS $ (147,996)
===========
</TABLE>
See notes to the consolidated unaudited proforma financial statements.
44
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED UNAUDITED PROFORMA STATEMENT OF STOCKHOLDERS' DEFICIENCY
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Authorized Common Stock Additional
Common ------------------ Paid-in
Shares Shares Amount Capital Deficit Total
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31, 1995 10,000,000 2,439,462 $2,439 $ 7,561 $ (9,275) $ 725
NET LOSS (147,996) (147,996)
--------------------------------------------------------------
DECEMBER 31, 1996 10,000,000 2,439,462 $2,439 $ 7,561 $(157,271) $(147,271)
==============================================================
</TABLE>
See notes to the consolidated unaudited proforma financial statements.
45
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED UNAUDITED PROFORMA STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Cash Flows from operating activities:
Net Loss $(147,996)
Adjustments to reconcile net loss to net cash:
Depreciation and amortization 5,572
(Increase) decrease in operating assets:
charge card receivables (9,379)
inventory (18,659)
other current assets
Increase (decrease) in operating liabilities:
accounts payable and accrued expenses 114,479
customer deposits and other advances 70,117
---------
Net cash used in operating activities 14,134
---------
Cash flow from investing activities:
Purchase of fixed assets (9,515)
---------
Net cash used in investing activities (9,515)
---------
Net increase in cash 4,619
Cash at beginning of year --
---------
Cash at end of year $ 4,619
=========
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ --
Income taxes $ --
</TABLE>
See notes to the consolidated unaudited proforma financial statements.
46
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED UNAUDITED PROFORMA FINANCIAL STATEMENTS
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Alliance Technologies, Inc. was established in 1988 under the name Alliance
Health Enterprises, Inc. In April 1997 the name was changed to Alliance
Technologies, Inc. ("The Company") at which time the Company acquired American
Buyers Club International, Inc. ("ABC"). In April 1997 ABC formed Alpha Sound
and Vision, Inc. as a wholly owned subsidiary.
The Company is located in a retail store in Manalapan, New Jersey and sells
high quality home entertainment equipment. A substantial amount of business is
sold through mail order and on the Internet.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and it's wholly owned subsidiary. All significant Intercompany transactions are
eliminated in the consolidated statements.
ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INVENTORY
Inventory is stated at the lower of cost, determined by the first-in,
first-out method, or market.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization are computed on the straight-line and
accelerated methods over the estimated useful lives of the related assets, which
range between three and five years.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's assets and liabilities which constitute
financial instruments as defined in Statement of Financial Accounting Standards
No. 107, approximate their recorded value.
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed of." The provisions of SFAS No. 121 require the Company to
review its long-lived assets for impairment on an exception basis whenever
events or changes in circumstances indicate that the carrying amount of the
assets may not be recoverable through future cash flows. If it is determined
that an impairment loss has occurred based on expected future cash flows, then
the loss is recognized in the statement of operations. There were no impairment
losses recorded in these financial statements.
ADVERTISING
The Company expenses the cost of advertising as incurred. Advertising
expense for 1996 totaled $ 34,523 .
47
<PAGE>
ALLIANCE TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED UNAUDITED PROFORMA FINANCIAL STATEMENTS
Note 2: BUSINESS COMBINATION
In April 1997, the Company acquired American Buyers Club International,
Inc. in a business combination accounted for as a pooling of interests. American
Buyers Club International, Inc., which engages in sales of high quality home
entertainment equipment, became a wholly owned subsidiary of the Company through
the exchange of 732,000 shares of the Company's common stock for all of the
outstanding stock of American Buyers Club International, Inc
Note 3: INVENTORY
The inventory consists of merchandise held for retail sale as of December
31, 1996.
Note 4: PROPERTY AND EQUIPMENT, at cost
Property and equipment consist of the following as of December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Furniture and fixtures $ 6,198
Store fixtures and computer equipment 3,617
-----------
9,815
Less-accumulated depreciation ( 5,572)
-----------
$ 4,243
===========
</TABLE>
Note 5: COMMITMENTS
LEASING ACTIVITY
The company leases space for its retail operation in a strip-mall in
Manalapan, New Jersey on a month-to-month basis requiring monthly payments of
$1,600. Rent expense totaled $ 19,200 in 1996.
EMPLOYMENT CONTRACT
An employment contract between the Company's wholly owned subsidiary and an
executive officer and Director of the Company provides for an annual salary of
$100,000 and is automatically renewed for one year intervals expiring December
1999.
Note 6: CONCENTRATION OF CREDIT RISK
The Company maintains cash balances in financial institutions located in
New Jersey. These balances are insured by the Federal Deposit Insurance
Corporation up to $100,000.
48
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
3.1 Certificate of Incorporation, as amended
3.2 By-laws, as amended
10.1 1998 Incentive and Non-Qualified Stock Option Plan
10.2 Acquisition Agreement for American Buyers Club Int'l, Inc.
10.3 Employment Agreement for Steve Wise
10.4 Employment Agreement for David Bannon
21 Subsidiaries of the Registrant
23.1 Consent of Independent Auditor
23.2 Consent of Independent Auditor
49
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant authorized this Registration Statement to be signed on its behalf
by the undersigned, in the Township of Manalapan, State of New Jersey, on the
5th day of November, 1998.
ALLIANCE TECHNOLOGIES, INC.
BY:/s/ STEVEN WISE
----------------------
STEVEN WISE, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Steven Wise his true and lawful
attorney-in-fact, each acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments, including any post-effective
amendments, to this registration statement, and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorney-in-fact or his substitutes, each acting along, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Steven Wise President November 5, 1998
- -------------------------- (Principal
STEVEN WISE Executive
Officer)
Director
/s/ Bernard F. Lillis, Jr. Chief November 5, 1998
- -------------------------- Financial
BERNARD F. LILLIS, JR. Officer
(Principal
Financial
and Accounting
Officer)
Director
/s/ Scott G. Halperin Director November 5, 1998
- --------------------------
SCOTT G. HALPERIN
50
EXHIBIT 3.1
ARTICLES OF INCORPORATION
AND AMENDMENTS
51
<PAGE>
AMENDED ARTICLES
OF INCORPORATION
OF ALLIANCE HEALTH ENTERPRISES INC.
Pursuant to the provisions of Chapter 78 et Seq. Of the Nevada Revised
statutes, the undersigned corporation adopts the following article of amendment
to its Articles of Incorporation:
Amendment II
FIRST Article I, of the Articles of Incorporation as now filed is stricken
in its entirety and the following Article I substituted therefor as if it had
been a part of the original Articles of Incorporation;
ARTICLE I
The complete name of the Corporation is Alliance Technologies, Inc.
SECOND: The date of adoption of this amendment by the shareholders of this
corporation is September 6 1996.
THIRD: The number of shares of the corporation outstanding at the time of
adoption of this amendment was 100,000, and the number of shares entitled to
vote thereon was 100,000. All 100,000 shares are of the same class.
FOURTH: The number of outstanding shares voted for amendment of Article I
was 70,000 and the number of shares voted against amendment was zero.
IN WITNESS WHEREOF the undersigned, President and Secretary of the
Corporation have executed this agreement to the Articles of Incorporation this
17th day of April, 1997.
/s/ Gene Manning /s/ Martha Kreider
----------------------- -------------------------
Gene Manning, President Martha Kreider, Secretary
52
<PAGE>
AMENDED ARTICLES
OF INCORPORATION
OF ALLIANCE HEALTH ENTERPRISES INC.
Pursuant to the provisions of Chapter 78 et Seq. Of the Nevada Revised
statutes, the undersigned corporation adopts the following article of amendment
to its Articles of Incorporation:
Amendment I
FIRST: Article IV, of the Articles of Incorporation as now filed is stricken
in its entirety and the following Article IV substituted therefor as if it had
been part of the original Articles of Incorporation;
ARTICLE IV
The number of shares which the Corporation shall have the authority to
issue is 10,000,000 shares which shall be designated Common stock with a par
value of $.001 per share.
SECOND: the date of adoption of this amendment by the shareholders of this
corporation is: September 6, 1996.
THIRD: The number of shares of the corporation outstanding at the time of
adoption of this amendment was 100,000, and the number of shares entitled to
vote thereon was 100,000. All 100,000 shares are of the same class.
FOURTH: The number of outstanding shares voted for amendment of Article IV
was 70,000 and the number of shares voted against amendment was zero.
IN WITNESS WHEREOF the undersigned, President and Secretary of the
Corporation have executed this agreement to the Articles of Incorporation this
16th day of February, 1997.
/s/ Gene Manning /s/ Martha Kreider
----------------------- -------------------------
Gene Manning, President Martha Kreider, Secretary
53
<PAGE>
ARTICLES
OF
INCORPORATION
OF
ALLIANCE HEALTH ENTERPRISES INC.
ARTICLE I
The Complete name of the Corporation is to be:
ALLIANCE HEALTH ENTERPRISES INC.
ARTICLE II
Its principal office in the state of Nevada is to be located at 1200 South
Eastern Avenue, in the City of Las Vegas, County of Clark. The registered agent
in charge thereof is Kelly H. Swanson, Esq.
ARTICLE III
The purpose of this Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the general corporation laws of
Nevada.
ARTICLE IV
The total amount of authorized capital stock of this Corporation is 100,000
shares having a par value of $.01 per share. Each share shall be entitled to the
same dividend, liquidations, and voting rights.
ARTICLE V
The members of the governing board of this Corporation shall be styled
directors and the number thereof at the inception of this Corporation shall be
one (1). The Directors need not be Shareholders of this Corporation, nor
residents of the State of Nevada. The number of Directors may from time to time
be increased or decreased in such manner as shall be provided for by the By-Laws
of this Corporation. The name and post office address of the first Board of
Directors who shall hold office until his successor is duly elected, is as
follows:
Name Address
Michael J. Anthony 1200 S. Eastern Avenue
Las Vegas, Nevada 90104
54
<PAGE>
ARTICLE VI
The Capital Stock of this Corporation, after the amount of the subscription
price has been paid in, shall never be assessable, or assessed to pay debts of
this Corporation.
ARTICLE VII
The name and address of the Incorporator signing these Articles of
incorporation is as follows:
Name Address
Michael J. Anthony 1200 S. Eastern Avenue
Las Vegas, Nevada 90104
ARTICLE VIII
The period of duration of this Corporation shall be perpetual unless
otherwise amended by the Shareholders.
ARTICLE IX
The Directors shall have the power to make and to alter or amend the
By-Laws; to fix the amount to be reserved as working capital and to authorize
and cause to be executed mortgages and liens, without limit as to amount, upon
the property and franchise of this Corporation.
With the consent in writing, and pursuant to a vote of the majority of the
holders of the capital stock issued and outstanding, the Directors shall have
the authority to dispose of , in any manner, the whole property of this
Corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this Corporation, or any of them shall be open to the inspection of the
Shareholders; and no shareholder shall have any right of inspection of any
account book, or document of this Corporation, except as conferred by the law or
By-Laws or by resolution of the Shareholders.
The Shareholders and directors shall have the power to hold meetings and to
keep the books, documents and papers of the Corporation outside of the State of
Nevada, at such places as may be from time to time designated by the By-Laws or
by resolution of the Shareholders and Directors, except as otherwise required by
the laws of Nevada.
It is the intention that the objects, purposes and powers specified in
Article III hereof shall, except where otherwise specified in Article III, be
nowise limited or restricted by reference to or inference from the terms of any
other clause or Article in this Certificate of Incorporation, but that the
object, purpose and powers specified in Article III and each of the clauses or
Articles of this Charter shall be regarded as independent objects purposes, and
powers.
55
<PAGE>
ARTICLE X
After the formation of this Corporation, each Shareholder shall be entitled
to purchase and/or subscribe for the number of shares of this Corporation which
may hereafter be authorized and issued for money. Each Shareholder shall have
the same rights as any individual to purchase said stock, but shall not have any
pre-emptive rights as that term is defined under NRS 78.265.
IN WITNESS WHEREOF, I, the undersigned constituting the sole incorporator
and intended Shareholder, being less than three Shareholders, for the purpose of
forming a Corporation under the laws of the state of Nevada, do make, file and
record these Articles of Incorporation, and do certify that the facts herein are
true and I have accordingly hereunto set my hand this 3rd day of May 1988.
Michael J. Anthony
Incorporator
COUNY OF ORANGE )
) SS
STATE OF CALIFORNIA )
On this 3rd day of May 1988 before me, a Notary Public in and for said
County and State, personally appeared Michael J. Anthony Known to me to be the
person whose name is subscribed to the foregoing instrument, who duly
acknowledged to me that he executed the same for the purpose therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in said
County and State this 3rd day of May 1988.
By: /s/ Marion S. Tirtlot
-----------------------
Notary Public
56
EXHIBIT 3.2
ALLIANCE HEALTH ENTERPRISE INC.
BY-LAWS
57
<PAGE>
BY-LAW
OF
ALLIANCE HEALTH ENTERPRISE INC.
ARTICLE I - OFFICES
The principal office of the corporation in the State of Nevada shall be located
at 1200 South Eastern Avenue, in the City of Las Vegas, county of Clark. The
corporation may have such other officer, wither within or without the State of
incorporation as the board of directors may designate or as the business of the
corporation may from time to time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING. The annual meeting of the stockholders shall be held on the
2nd Wednesday of March in each year, beginning with the year 1989 at the hour of
1 o'clock P.M. local time for the purpose of the election of directors and for
the transaction of such other business as may come before the meeting. If the
day fixed for the annual meeting shall be a legal holiday such meeting shall be
held on the next succeeding business day.
2. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute, may be called by the president
or by a director, and shall be called by the president at the request of holders
of not less than fifty one (51) percent of all the outstanding shares of the
corporation entitled to vote at the meeting.
3. PLACE OF MEETING. The directors may designate a place, either within or
without the state unless otherwise prescribed by statute, as the place of
meeting for any annual meeting or for any special meeting called by the
directors. A waiver of notice signed by all stockholders entitled to vote at a
meeting may designate any place, either within or without the state unless
otherwise prescribed by statute, as the place for holding such meeting. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the corporation.
4. NOTICE OF MEETING. Written or printed notice stating the place, day and hour
of the meeting and, in the case of a special meeting is called, shall be
delivered not less than ten (10) days nor more than twenty (20) days before the
date of the meeting, either personally or by mail, by the direction of the
president, or secretary, or the director calling the meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the stockholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the purpose of
determining stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or stockholders entitled to receive
payment of any dividend, or in order to make a determination of stockholders for
any other proper purpose, the directors of the corporation may provide that the
stock transfer books shall be closed for a stated period but not to exceed, in
any case twenty (20) days. If the stock transfer books be closed for the purpose
of determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least twenty (20) days
immediately preceding such meeting. In lieu of closing the stock transfer books,
58
<PAGE>
the directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not more than twenty
(20) days and, in case of a meeting of stockholders, not less than ten (10) days
prior to the date on which the particular action requiring such determination of
stockholders entitled to notice of or to vote at a meeting of stockholders, or
stockholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of stockholders. When a determination of stockholders
entitled to vote at any meeting of stockholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.
6. VOTING LIST. The officer or agent having charge of the stock transfer books
for the shares of the corporation shall make, at least ten (10) days before each
meeting of stockholders, a complete list of stockholders entitled to vote at
such meeting, or any adjournment thereof, arranging in alphabetical order, with
the address of any number of shares held by each, which list, for a period of
the (10) ten days prior to such meeting, shall be kept on file at the principal
office of the corporation and shall be subject to inspection by any stockholder
at any time during usual business ours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any stockholder during the whole time of the meeting. The original
transfer book shall be prima facie evidence as to who are the stockholders
entitled to examine such list or transfer books or to vote at the meeting of
stockholders.
7. QUORUM. At any meeting of stockholders fifty one (51) percent of the
outstanding shares of the corporation entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of stockholders. If less than
said number of the outstanding shares are represented at a meeting, a majority
of the outstanding shares so represented may adjourn the meeting from time to
time without further notice. At such adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which might have been
transacted at the meeting originally noticed. The stockholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
8. PROXIES. At all meetings of the stockholders, a stockholder may vote by proxy
executed in writing by the stockholder or by his duly authorized attorney in
fact. Such proxy shall be filed with the secretary of the corporation before or
at the time of the meeting.
9. VOTING. Each shareholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled to
vote held by such shareholder. Upon thee demand of any stockholder, the vote for
directors and upon any question before the meeting shall be by ballot. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of Nevada.
10. ORDER OF BUSINESS. The order of business at all meetings of the
stockholders, shall be as follows:
59
<PAGE>
a. Roll Call.
b. Proof of notice of meeting or waiver of notice.
c. Reading of minutes of preceding meeting.
d. Report of Officers
e. Reports of Committees
f. Election of Directors
g. Unfinished Business
h. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS. Unless otherwise provided by law, any
action required to be taken at a meeting of the stockholder, or any other action
which may be taken at a meeting of the stockholders, may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the stockholders entitled to vote with respect to the subject
matter thereof.
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS. The business and affairs of the corporation shall be managed
by its board of directors. The directors shall in all cases act as a board, and
they may adopt such rules and regulations for the conduct of their meetings and
the management of the corporation, as they may deem proper not inconsistent with
these by-laws and the laws of the State of Nevada.
2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of the corporation
shall be a minimum of three (3) and a maximum of nine (9). Each director shall
hold office until the next annual meeting of stockholders and until his
successor shall have been elected and qualified.
3. REGULAR MEETINGS. A regular meeting of the directors, shall be held without
other notice than this by-law immediately after, and at the same place as, the
annual meeting of stockholders. The directors may provide, by resolution, the
time and place for holding of additional regular meetings without other notice
than such resolution.
4. SPECIAL MEETINGS. Special meetings of the directors may be called by or at
the request of the president or any two directors. The person or persons
authorized to call special meetings of the directors may fix the place for
holding any special meeting of the directors called by them.
5. NOTICE. Notice of any special meeting shall be given at least one day
previously thereto by written notice delivered personally, or by telegram or
mailed to each director at his business address. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail so addressed,
with postage thereon prepaid. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
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6. QUORUM. At any meeting of the directors fifty (50) percent shall constitute a
quorum for the transaction of business, but if less than said number is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice.
7. MANNER OF ACTING. The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Newly created directorships
resulting from an increase in the number of directors and vacancies occurring on
the board for any reason except the removal of directors without cause may be
filled by a vote of the majority of the directors then in office, although less
than a quorum exists. Vacancies occurring by reason of the removal of directors
without cause shall be filled by vote of the stockholders. A director elected to
fill a vacancy caused by resignation, death or removal shall be elected to hold
office for the unexpired term of his predecessor.
9. REMOVAL OF DIRECTORS. Any or all of the directors may be removed for cause by
vote the stockholders or by action of the board. Directors may be removed
without cause only by vote of the stockholders.
10. RESIGNATION. A director may resign at any time by giving written notice to
the board, the president or the secretary of the corporation. Unless otherwise
specified in the notice, the resignation shall take effect upon receipt thereof
by the board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
11. COMPENSATION. No compensation shall be paid to directors, as such for their
services, but by resolution of the board a fixed sum and expenses for actual
attendance at each regular or special meeting of the board may be authorized.
Nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
12. EXECUTIVE AND OTHER COMMITTEES. The board, by resolution, may designate from
among its members an executive committee and other committees, each consisting
of one (1) or more directors. Each such committee shall serve at the pleasure of
the board.
ARTICLE IV - OFFICERS
1. NUMBER. The officers of the corporation shall be the president, a secretary
and a treasurer, each of whom shall be elected by the directors. Such other
officers and assistant officers as may be deemed necessary may be elected or
appointed by the directors.
2. ELECTION AND TERM OF OFFICE. The officers of the corporation to be elected by
the directors shall be elected annually at the first meeting of the
stockholders. Each officer shall hold office until his successor shall have been
duly elected an shall have qualified or until his death or until he shall resign
or shall have been removed in the manner hereinafter provided.
3. REMOVAL. Any officer or agent elected or appointed by the directors whenever
in their judgement the best interest of the corporation would be served thereby,
but such removal shall be without prejudice to contract rights, if any, of the
person so removed.
4. VACANCIES. A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be billed by the directors for the unexpired
portion of the term.
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5. PRESIDENT. The president shall be the principal executive officer of the
corporation and, subject to the control of the directors, shall in general
supervise and control all of the business and affairs of the corporation. He
shall when present, preside at all meetings of the stockholders and of the
director. He may sign, with the secretary or any proper officer of the
corporation thereunto authorized by the directors, certificates for shares of
the corporation, and deeds, mortgages, bonds, contracts or other instruments
which the directors have authorized to be executed, except in cases where the
directors or by these by-laws to some other officer or agent of the corporation,
or shall be required by law to be otherwise signed or executed; and in general
shall perform all duties incident to the office of president and such other
duties as may be prescribed by the directors from time to time.
6. CHAIRMAN OF THE BOARD. In the absence of the president or in the event of his
death, inability or refusal to act, the chairman of the board of directors shall
assume the duties of the president, and when so acting, shall have all the
powers of and be subject to al the restrictions upon the president. The chairman
of the board of directors shall perform such other duties as from time to time
may be assigned to him by the directors.
7. SECRETARY. The secretary shall keep the minutes of the stockholders' and of
the directors' meetings in one or more books provided for that purpose, see that
all notices are duly given in accordance with the provisions of these by-laws or
as required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform all
the duties incident to the office of secretary and such other duties as from
time to time may be assigned to him by the president or by the directors.
8. TREASURER. If required by the directors, the treasurer shall give a bond for
the faithful discharge of his duties in such sum and with such surety or
sureties as the directors shall determine. He shall have charge and custody of
and be responsible for all funds and securities of the corporation; receive and
give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such money in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
9. SALARIES. The salaries of the officers shall be fixed from time to time by
the directors and no officer shall be prevented from receiving such salary by
reason of fact that he is also a director of the corporation.
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ARTICLE V - STOCK
1. CERTIFICATES. The shares of stock shall be represented by consecutively
numbered certificates signed in the name of the Corporation by its President or
Vice President and Secretary or an Assistant Secretary, and shall be sealed with
the seal of the Corporation, or with a facsimile thereof. The signatures of the
Corporation's officers on such certificates may also be facsimiles if the
certificate is countersigned by a transfer agent, or registered by a registrar
other than the Corporation itself or an employee of the Corporation. In case any
officer who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be an 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. Certificates of stock shall be in such
form consistent with law as shall be prescribed by the Board of Directors. No
certificate shall be issued until the shares represented thereby are fully paid.
2. New Certificates. No new certificates evidencing shares shall be issued
unless and until the old certificate or certificates, in lieu of which the new
certificates is issued, shall be surrendered for cancellation, except as
provided in paragraph 2 of this Article V.
3. Restrictions of transfer. No certificate shall be issued or re-issued without
a restriction of transferability clearly imprinted thereupon unless registered
as required by law or an exemption from registration is available.
ARTICLE VI - CONTRACTS, LOANS, CHECKS, AND DEPOSITS
1. CONTRACTS. The directors may authorize any officer or officers, agent or
agents, to enter into any contract or execute and deliver any instrument in the
name of and on behalf of the corporation, and such authority may be general or
confined to specific instances.
2. LOANS. No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the directors. Such authority may be general or confined to
specific instances.
3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for payment of money,
notes or other evidences of indebtedness issued on the name of the corporation,
shall be signed by such officer or officers, agent or agents of the corporation
and in such manner as shall from time to time be determined by resolution of the
directors.
4. DEPOSITS. All funds of the corporation not otherwise employed shall be
deposited from time to time to the credit of the corporation in such banks,
trust companies or other depositaries as the directors may select.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of January each
year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
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ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be circular in form and
shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, "Corporate Seal".
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be given to
any stockholder or director of the corporation under the provisions of these
by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XI - AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be adopted
by a vote of the stockholders representing a majority of all the shares issued
and outstanding, at any annual stockholders' meeting or at any special
stockholders' meeting when the proposed amendment has been set out in the notice
of such meeting.
Read and approved by the founder of this corporation.
/s/ Michael Anthony Date: June 14, 1988
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EXHIBIT 10
ALLIANCE TECHNOLOGIES, INC.
1998 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
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ALLIANCE TECHNOLOGIES, INC.
1998 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
1. Purposes of Plan. The purposes of the Alliance Technologies, Inc. 1998
Incentive and Non-Qualified Stock Option Plan (hereinafter referred to as the
"Plan") are to provide to employees of Alliance Technologies, Inc. (hereinafter
referred to as the "Corporation"), as well as employees of subsidiary or parent
corporations which may currently exist or be formed or acquired in the future,
an opportunity for investment in the Corporation's common stock (hereinafter
referred to as the "Shares"), as an inducement for such individuals to remain
with the Corporation, and to encourage them to increase their efforts to make
the Corporation's business more successful.
2. Effective Date and Termination of Plan. The effective date of the Plan
is September 1, 1998, the date on which the Plan was adopted by the Board of
Directors of the Corporation. The Plan shall terminate on, and no option shall
be granted hereunder, after August 31, 2008; provided, however, that the Board
of Directors may at any time prior to that date terminate the Plan; and provided
further that any option granted hereunder prior to the termination of the Plan
shall remain exercisable in accordance with its terms as then in effect.
3. Administration of Plan. The Plan shall be administered by the Board of
Directors of the Corporation. The Board of Directors may, however, to the extent
permissible under the Corporation's Articles of Organization, By-laws and
applicable law, delegate any of its functions under this Plan to a committee of
the Board of Directors or any other committee. Wherever in this Plan the term
"Board of Directors" is used it shall be construed to mean such committee to the
extent that the Board of Directors may have delegated any of its functions to
said committee and only to the extent of any such delegation. The acts of a
majority of the members present at any meeting of the Board of Directors at
which a quorum is present, or acts approved in writing by a majority of the
entire Board, shall be the acts of the Board of Directors for purposes of the
Plan.
4. Eligibility and Grant of Options. Subject to the provisions of the Plan,
the Board of Directors shall (i) authorize the granting of incentive stock
options, non-qualified stock options or a combination of incentive stock options
and non-qualified stock options (hereinafter collectively referred to as
"options" unless otherwise stated); (ii) determine and designate from time to
time those employees (from the group consisting of all employees of the Company)
to whom options are to be granted and the number of Shares to be optioned to
each employee; (iii) determine the number of Shares subject to each option; and
(iv) determine the time or times when and the manner in which each option shall
be exercisable and the duration of the exercise period. In determining the
eligibility of an individual to receive an option, as well as in determining the
number of Shares to be optioned to any individual, the Board of Directors shall
consider the position and responsibilities of the employee, the nature and value
to the Corporation, parent or subsidiary of his services and accomplishments,
his present and potential contribution to the success of the Corporation, parent
or subsidiary, and such other factors as the Board may deem relevant. To be
eligible to receive an incentive stock option or non-qualified stock option an
individual must be an employee of the Corporation, parent or subsidiary. A
Director shall abstain from voting on the grant of any options to himself, his
spouse, his children, grandchildren and parents. The grant of each option shall
be confirmed by a Stock Option Agreement (in the form prescribed by the Board of
Directors) which shall be executed by the Corporation and the optionee as
promptly as practicable after such grant. More than one option may be granted to
an individual.
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Incentive stock options shall be those options which satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended and
which the Board of Directors has specifically identified as incentive stock
options in the Stock Option Agreement executed by the Corporation and the
optionee. In the case of incentive stock options, the aggregate fair market
value, determined at the time incentive stock options are granted, of the stock
with respect to which the incentive stock options are exercisable for the first
time by such individual during any calendar year (under all such plans the
Corporation may adopt) shall not exceed one hundred thousand dollars
($100,000.00). In the event that an incentive stock option granted pursuant to
the terms of this Plan is granted to an employee who, prior to the grant, holds
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation, its parent or a subsidiary ("10% Shareholder") the
option price under such grant shall be at least one hundred ten percent (110%)
of the fair market value, and such option, by its terms, shall not be
exercisable more than five (5) years from the date of grant.
Nothing in the Plan or in any option granted pursuant to the Plan shall
confer on any individual any right to continue in the employ of the Corporation
or any parent or subsidiary or interfere in any way with the right of the
Corporation to terminate his employment at any time.
5. Number of Shares Subject to Options. The Board of Directors, prior to
the time options under the Plan become exercisable, shall reserve for the
purposes of the Plan a total of three hundred thousand (300,000) Shares, which
Shares may be either authorized and unissued Shares, or previously issued Shares
held in the treasury of the Corporation, or both. Shares as to which an option
granted under the Plan shall remain unexercised at the expiration or termination
thereof, and Shares subject to options which are cancelled, may be the subject
of the grant of further options. Shares reserved pursuant to this paragraph may
be adjusted to reflect changes in the Corporation's capital structure as
discussed in paragraph 19 hereof.
6. Option Price. The option price per Share shall be determined in each
case by the Board of Directors and shall not be less than one hundred percent
(100%) (one hundred ten percent (110%) in the case of an incentive stock option
granted to a 10% Shareholder) of the fair market value thereof as determined by
the Board by any reasonable method using market quotations on the date the
option is granted.
7. Period of Option and When Exercisable. No option may be granted under
this Plan whose exercise date is later than ten (10) years after the date of the
grant or five (5) years after the date of grant in the case of an incentive
stock option granted to a 10% Shareholder. Generally, an option may be exercised
only by the optionee and subject to the rules set forth below only if, at all
times during the period beginning on the date of the granting of such option and
ending with the date of exercise of such option, the optionee is an employee of
the Corporation, its parent or a subsidiary.
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(i) Except as otherwise provided herein, in the case of an employee who
terminates employment, options which are vested but unexercised as of the date
of termination of employment must be exercised within three (3) months of
termination. In the case of an employee who is discharged for cause, as
determined in the sole discretion of the Board of Directors, all previously
vested but unexercised options shall be forfeited immediately.
(ii) In the case of an employee who dies during the three (3) month period
discussed in (i) above, options which are vested but unexercised as of the date
of termination of employment must be exercised within twelve (12) months of
death.
(iii) Options which are vested but unexercised as of the date of
termination of employment due to death, must be exercised within twelve (12)
months after the death of an optionee.
(iv) In the event that the employee becomes disabled as defined in Section
22(e)(3) of the Internal Revenue Code of 1986, as amended, options which are
vested but unexercised as of the date of termination of employment due to
disability must be exercised within twelve (12) months following the date of
termination of the optionee's said employment.
(v) In the event an optionee's employment is terminated for any reason
(including but not limited to, voluntary or involuntary termination or
termination resulting from the death or disability of the optionee), all
unvested options shall be immediately forfeited.
Notwithstanding the foregoing, options may not be exercised after the
original five (5) or ten (10) year term. Options may be exercised on behalf of
the estate of a former employee by the person or persons entitled to do so under
the optionee's will or, if the optionee shall have failed to make testamentary
disposition of such option or shall have died intestate, by the optionee's legal
representative or representatives. Such person, persons, representative, or
representatives are hereinafter referred to as the "Successors of an Optionee."
8. Vesting. Options granted to a participant shall be exercisable in
accordance with the following schedule:
Cumulative Percentage
of Aggregate Number of
Shares of Stock Covered
by an Option Which May
Exercise Period be Exercised
--------------- ------------------------
Beginning on the one year anniversary
date from date of grant 33 1/3%
Beginning on the second anniversary
date from date of grant 66 2/3%*
Beginning on the third anniversary
date from date of grant 100%*
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*less, in the case of each exercise period, the number of Shares, if any,
previously purchased under the option. Non-vested options shall be immediately
forfeited upon the termination of employment for any reason. Vested options
shall be forfeited upon the termination of employment as provided in paragraph 7
hereof.
Notwithstanding the foregoing, the Board of Directors or its designees
shall have the right to grant options with shorter vesting schedules under the
Plan.
9. Exercise of Options. Subject to Plan restrictions and vesting, an option
may be exercised, and payment in full of the option price made, by an optionee
only by written notice (in the form prescribed by the Board of Directors) to the
Corporation specifying the number of Shares to be so purchased. Such notice
shall state that the option price will be paid in full in cash (which in the
discretion of the Board of Directors may be obtained through a loan from the
Corporation or from a third party and guaranteed by the Corporation) or other
property, in the discretion of the Corporation. If the Corporation accepts a
request to pay in stock of the Corporation in satisfaction of the exercise
price, the fair market value of said stock shall at least equal the option
price, and, in the case of incentive stock options, prior to such acceptance the
Corporation must be furnished with evidence that the acquisition of said stock
and its transfer in payment of the option price satisfies the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended and other
applicable law. As soon as practicable after receipt by the Corporation of such
notice and of payment in full of the option price of all the Shares with respect
to which an option has been exercised, a certificate or certificates
representing such Shares shall be registered (subject to the provisions of
paragraph 16 hereof) in the name of the optionee or the Successors of an
Optionee as defined under this Plan and delivered to the optionee or to the
Successors of an Optionee.
10. Sale of the Corporation. In the case of a Sale of the Corporation as
herein defined, in the discretion of the Board of Directors options granted but
unexercised shall become fully vested (100%) and exercisable for a period of
twenty (20) days from the date notice of such Sale is given to the optionees.
Upon the expiration of the twenty (20) day period, all then unexercised options
shall be permanently cancelled. For purposes of this paragraph, a Sale or Public
Offering shall be deemed to occur upon the happening of any one of the
following:
(i) A sale of all or substantially all of the Corporation's assets outside
the ordinary course of business;
(ii) An offer to purchase at least a majority of the Corporation's issued
and outstanding common stock or an offer to the Corporation's shareholders to
tender for sale at least a majority of the Corporation's issued and outstanding
common stock, which offer is accepted or tender made with respect to at least a
majority of the Corporation's issued and outstanding shares of common stock;
(iii) The merger or consolidation of the Corporation with another
corporation or entity; or
(iv) A dissolution or liquidation of the Corporation.
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11. Employer Withholding. In the case of non-qualified stock options, the
Corporation shall be required to withhold additional income taxes attributable
to that amount which is considered compensation includible in the optionee's
gross income by reason of the exercise of such options. The Corporation in its
discretion shall determine the method and amount of withholding.
12. Exercise by Successors and Payment in Full. An option may be exercised,
and payment in full of the option price made, by the Successors of an Optionee
only by written notice (in the form prescribed by the Board of Directors) to the
Corporation specifying the number of Shares to be purchased. Such notice shall
state that the option price will be paid in full in cash (which in the
discretion of the Board of Directors may be obtained through a loan from the
Corporation or from a third party and guaranteed by the Corporation), property
or stock of the Corporation in conformance with paragraph 9 hereof. As soon as
practicable after receipt by the Corporation of such notice and of payment in
full of the option price of all the Shares with respect to which an option has
been exercised, a certificate or certificates representing such Shares shall be
registered (subject to the provisions of paragraph 16 hereof) in the name or
names of such Successors of an Optionee and shall be delivered to him.
13. Non-Transferability of Option. Each option granted under the Plan shall
by its terms be nontransferable by the optionee except by will or the laws of
descent and distribution of the state wherein the optionee is domiciled at the
time of his death.
14. Other Terms of Options. Options granted pursuant to the Plan shall
contain such terms, provisions, and conditions not inconsistent herewith as
shall be determined by the Board of Directors.
15. Registration of Certificates. Certificates representing Shares may be
registered either in the name of the Optionee or in the name or names of the
Successors of an Optionee. Designation of the appropriate form of registration
of certificates shall be made in the written notice given to the Corporation
upon exercise of an option.
16. Listing and Registration of Shares. If at any time the Board of
Directors of the Corporation shall determine, in its discretion, that the
listing, registration, or qualification of any of the Shares subject to options
under the Plan upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body is necessary or
desirable as a condition of or in connection with the granting of options or the
purchase or issue of Shares thereunder, no further options may be granted and
outstanding options may not be exercised in whole or in part unless and until
such listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors. The Board of Directors shall have the authority to cause the
Corporation at its expense to take any action related to the Plan which may be
required in connection with such listing, registration, qualification, consent,
or approval. The Board of Directors may require that any person exercising an
option hereunder shall make such representations and agreements and furnish such
information as it deems appropriate to assure compliance with the foregoing or
any other applicable legal requirement.
17. Interpretation and Amendments. The Board of Directors may make such
rules and regulations and establish such procedures for the administration of
the Plan as it deems appropriate. In the event of any dispute or disagreements
as to the interpretation of this Plan or of any rule, regulation, or procedure,
or as to any question, right or obligation arising from or related to the Plan,
the decision of the Board of Directors shall be final and binding upon all
persons. The Board of Directors may amend this Plan as it shall deem advisable.
However, in no event shall any such amendment adversely affect the rights of an
optionee under any existing stock option agreement without the consent of such
optionee.
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18. Indemnification and Exculpation.
(a) Each person who is or shall have been a member of the Board of
Directors shall be indemnified and held harmless by the Corporation against and
from any and all loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him in connection with or resulting from any claim,
action, suit, or proceeding to which he may be or become a party or in which he
may be or become involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him in settlement
thereof (with the Corporation's written approval) or paid by him in satisfaction
of a judgment in any such action, suit, or proceeding, except a judgment in
favor of the Corporation based upon a finding of his lack of good faith;
subject, however, to the condition that upon the institution of any claim,
action, suit, or proceeding against him, he shall in writing give the
Corporation an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The foregoing
right of indemnification shall not be exclusive of any other right to which such
person may be entitled as a matter of law or otherwise, or any power that the
Corporation may have to indemnify him or hold him harmless.
(b) Each member of the Board of Directors, and each officer and employee of
the Corporation shall be fully justified in relying or acting in good faith upon
any information furnished in connection with the administration of the Plan by
any appropriate person or persons other than himself. In no event shall any
person who is or shall have been a member of the Board of Directors, or an
officer or employee of the Corporation be held liable for any determination made
or other action taken or any omission to act in reliance upon any such
information, or for any action (including the furnishing of information) taken
or any failure to act, if in good faith.
19. Changes in Capital Structure. In the event that a dividend shall be
declared upon the Shares payable in Shares, the number of Shares then subject to
any option outstanding under the Plan and the number of Shares reserved for the
grant of options pursuant to the Plan but not yet subject to option shall be
adjusted by adding to each such Share the number of Shares which would be
distributable in respect thereof if such Shares had been outstanding on the date
fixed for determining the shareholders of the Corporation entitled to receive
such Share dividend. In the event that the outstanding Shares shall be changed
into or exchanged for a different number of Shares or other securities of the
Corporation or of another corporation, whether through reorganization,
recapitalization, split-up, combination of shares, merger, or consolidation,
then there shall be substituted for each Share subject to any such option and
for each Share reserved for the grant of options pursuant to the Plan but not
yet subject to option the number and kind of Shares or other securities into
which each outstanding Share shall have been so changed or for which each such
Share shall have been exchanged. In the event there shall be any change, other
than as specified above in this paragraph, in the number or kind of outstanding
Shares or of any shares or other securities into which such Shares shall have
been changed or for which they shall have been exchanged, then if the Board of
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Directors shall in its sole discretion determine that such change equitably
requires an adjustment in the number or kind of Shares theretofore reserved for
the grant of options pursuant to the Plan but not yet subject to option and of
the Shares then subject to an option or options, such adjustments shall be made
by the Board of Directors and shall be effective and binding for all purposes of
the Plan and of each option outstanding thereunder. In the case of any such
substitution or adjustment as provided for in this paragraph, the aggregate
option exercise price set forth for all outstanding options for all Shares
covered thereby prior to such substitution or adjustment will be the option
exercise price for all shares or other securities which shall have been adjusted
pursuant to this paragraph. No adjustment or substitution provided for in this
paragraph shall require the Corporation to sell a fractional Share, and the
total substitution or adjustment with respect to each outstanding option shall
be limited accordingly. Upon any adjustment made pursuant to this paragraph, the
Corporation will, upon request, deliver to the optionee or to his successors a
certificate setting forth the option price thereafter in effect and the number
and kind of shares or other securities thereafter purchasable on the exercise of
the option.
20. Notices. All notices under the Plan shall be in writing, and if to the
Corporation, shall be delivered to the Treasurer of the Corporation or mailed to
its principal office, addressed to the attention of the Treasurer; and if to the
optionee, shall be delivered personally or mailed to the optionee at the address
appearing in the payroll records of the Corporation. Such addresses may be
changed at any time by written notice to the other party.
72
AGREEMENT AND PLAN OF REORGANIZATION
Agreement and Plan of Reorganization ("Agreement") between Alliance Health
Enterprises, Inc., a Nevada corporation ("AHE"), and the persons executing this
Agreement as "Shareholders" (the "Shareholders"), being the owners of record of
all of the issued and outstanding shares of American Buyer's Club International,
Inc., a Delaware corporation (the "Company").
WHEREAS, AHE wishes to acquire and the Shareholders wish to transfer all of
the issued and outstanding stock of the Company in exchange for 732,000 shares
of common stock of AHE in a transaction intended to qualify as a reorganization
within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1954,
as amended.
WHEREAS, the effective date of the transaction contemplated herein shall be
January 1, 1997. NOW, THEREFORE, AHE and the Shareholders adopt this Plan of
Reorganization and agree as follows:
SECTION 1. EXCHANGE OF STOCK
1.01 Number of Shares. The Shareholders agree to transfer to AHE at the
Closing the number of shares of common stock of the Company ("Company Shares"),
shown opposite their names below in exchange for an aggregate of 732,000 shares
(the "AHE Shares") of common stock of AHE, $.001 par value per share. The AHE
Shares will be issued to the Shareholders at the Closing at the rate of 732 AHE
Shares for each Company Share in the numbers shown opposite their names as set
forth below.
1.02 Delivery of Certificates by Shareholders. The transfer of the Company
Shares by the Shareholders shall be effected by the delivery to AHE at the
Closing of certificates representing the Company Shares endorsed in blank or
accompanied by stock powers executed in blank, with all signatures guaranteed by
a national bank or broker-dealer.
1.03 Further Assistance. At the Closing and from time to time thereafter,
the Shareholders shall execute such additional instruments and take such other
action as AHE may request in order to more effectively sell, transfer and assign
the transferred Company Shares to AHE and to confirm AHE's title thereto.
1.04 Changes in AHE's Capitalization. If between the date of this Agreement
and the Closing, the outstanding shares of AHE common stock are, without the
receipt of new consideration by AHE, increased, decreased, changed into or
exchanged for a different number or kind of shares or securities of AHE through
reorganization, reclassification, stock dividend, stock split, reverse stock
split or similar change in AHE's capitalization, AHE will issue and deliver to
the Shareholders in addition to or in lieu of the AHE Shares specified in
Section 1.01, voting stock of AHE in equitably adjusted amounts. In the event of
any change in AHE's capitalization, all references to AHE Shares herein shall
refer to the number of AHE Shares as thus adjusted.
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SECTION 2. CLOSING
2.01 The closing contemplated by Section 1.01 (the "Closing") shall be held
at the offices of David L. Kagel, 1801 Century Park East, Suite 2500, Los
Angeles, California 90067, on April 1, 1997 or as soon as practical thereafter
unless another place or time is agreed upon in writing by the parties.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders hereby warrant, represent and agree as follows:
3.01 Corporate Status. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
licensed or qualified as a foreign corporation in all jurisdictions in which the
nature of its business or the character or ownership of its properties makes
such licensing or qualification necessary.
3.02 Capitalization. The authorized capital stock of the Company consists
of 1,000 shares of common stock, of which 1,000 shares are issued and
outstanding. All such shares are fully paid and non-assessable.
3.03 Financial Statements. The financial statements of the Company
furnished to AHE, consisting of an unaudited balance sheet as of March 31, 1997
and a related statement of income for the period then ended (the "Financial
Statements") will be delivered at the Closing, will be correct and fairly
present the financial condition of the Company as of the dates and for the
periods involved.
3.04 Undisclosed Liabilities. The Company has no liabilities of any nature
except to the extent reflected or reserved against in the Financial Statements,
whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities and interest due or to become due, and the Company's
accounts receivable are collectible in accordance with the terms of such
accounts, except to the extent of the reserve therefor in the Financial
Statements.
3.05 Interim Changes. Between March 31, 1997 and the date of this
Agreement, there have not been, (1) any changes in the Company's financial
condition, assets, liabilities, or business which, in the aggregate, have been
materially adverse; (2) any damage, destruction or loss of or to the Company's
property, whether or not covered by insurance; (3) any declaration or payment of
any dividends or other distribution in respect of the Company's capital stock,
or any direct or indirect redemption, purchase or other acquisition or any such
stock; or (4) any increase paid or agreed to in the compensation, retirement
benefits or other commitments to employees.
3.06 Title to Property. The Company has good and marketable title to all
properties and assets, real and personal, reflected in the Financial Statements,
except as since sold or otherwise disposed of in the ordinary course of
business, and the Company's properties and assets are subject to no mortgage,
pledge, lien or encumbrance, except for liens shown therein, with respect to
which no default exists.
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3.07 Litigation. There is no litigation or proceeding pending, or to
Shareholders' knowledge threatened, against or relating to the Company, its
properties or business.
3.08 Access to Records, etc. From the date of this Agreement to the
Closing, the Shareholders will cause the Company (1) to give to AHE and its
representatives full access during normal business hours to all of its offices,
books, records, contracts, and other corporate documents and properties so that
AHE may inspect and audit them; and (2) to furnish such information concerning
the Company's properties and affairs as AHE may reasonably request.
3.09 Confidentiality Until the Closing (and permanently if there is no
Closing), the Shareholders and their representatives will keep confidential any
information which they obtain from AHE concerning its properties, assets and
business. If the transactions contemplated by this Agreement are not consummated
by April 15, 1997 the Shareholders will return to AHE all written matter with
respect to AHE obtained by them in connection with the negotiation or
consummation of this Agreement.
3.10 Title to Shares. The Shareholders are, in the aggregate, the owners,
free and clear of any liens, claims and encumbrances, of all Company Shares.
3.11 Investment Intent. The Shareholders are acquiring the AHE Shares for
their own respective accounts, for investment purposes, and not for or with a
view to resale or distribution. The AHE shares shall bear a legend to the effect
that they represent restricted securities which may not be sold, transferred or
hypothecated in the absence of a registration statement under the Securities Act
of 1933, as amended, or an opinion of counsel that registration is not required.
3.12 Employment Agreements. At the Closing each of the Shareholders shall
execute an employment agreement with the Company in the form attached hereto as
Exhibit 3.12.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF AHE
AHE represents and warrants to, and covenants with the Shareholders as
follows:
4.01 Corporate Status. AHE is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and is
licensed or qualified as a foreign corporation in all jurisdictions in which the
nature of its business or the character or ownership of its properties makes
such licensing or qualification necessary.
4.02 Capitalization. The authorized capital stock of AHE consists of
10,000,000 shares of common stock, having a par value of $.001 per share, of
which 1,707,462 shares are issued and outstanding, fully paid and
non-assessable.
4.03 Undisclosed Liabilities. AHE has no undisclosed liabilities of any
nature.
4.04 Title to Property. AHE has good and marketable title to all properties
and assets, real and personal, and AHE's properties and assets are subject to no
mortgage, pledge, lien or encumbrance, except for liens shown therein, with
respect to which no default exists.
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4.05 Litigation. There is no litigation or proceeding pending, or to AHE's
knowledge threatened, against or relating to AHE, its properties or business.
4.06 Confidentiality. Until the Closing (and permanently if there is no
Closing), the Company and its representatives will keep confidential any
information which it obtained from the Company concerning its properties, assets
and business. If the transactions contemplated by this Agreement are not
consummated by April 30, 1997 AHE will return to the Company all written matter
with respect to the Company obtained by it in connection with the negotiation or
consummation of this Agreement.
4.07 Investment Intent. AHE is acquiring the Company Shares to be
transferred to it under this Agreement for investment and not with a view to the
sale or distribution thereof, and AHE has no commitment or present intention to
liquidate the Company or to sell or otherwise dispose of the Company Shares.
4.08 Corporate Authority. AHE has full corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder and will
deliver to the Shareholders at the Closing a certified copy of resolutions of
its Board of Directors authorizing execution of this Agreement by its officers
and performance thereunder.
4.09 Due Authorization. Execution of this Agreement and performance by AHE
hereunder has been or prior to the Closing will be duly authorized by all
requisite corporate and shareholder action on the part of AHE, and this
Agreement constitutes a valid and binding obligation of AHE and performance
hereunder will not violate any provision of AHE's Articles of Incorporation,
Bylaws, mortgages, agreements with third parties or other commitments.
SECTION 5. CONDUCT OF COMPANY PENDING THE CLOSING
The Shareholders agree that from the date of this Agreement until the
Closing the Company will conduct itself in the following manner:
5.01 Certificate of Incorporation and Bylaws. The Company will not change
its Certificate of Incorporation or Bylaws.
5.02 Capitalization, etc. The Company will not make any change in its
authorized, issued or outstanding capital stock; grant any stock option or right
to purchase shares of its capital stock; issue any security convertible into
shares of its capital stock; purchase, redeem, retire, or otherwise acquire any
shares of its capital stock; or agree to do any of the foregoing; or declare,
set aside or pay any dividend or other distribution in respect of its capital
stock.
5.03 Business in Ordinary Course. The Company will conduct its business in
the ordinary course and will (1) use its best efforts to preserve its business
organization intact, to keep available to AHE the services of its present
officers and employees and to preserve the goodwill of suppliers, customers and
others having business relations with it; (2) maintain its properties in
customary repair, working order and condition, reasonable wear and tear and
damage by casualty excepted; (3) keep in force at no less than their present
limit all policies of insurance; (4) make no material change in the customary
terms and conditions on which it extends credit to customers; and (5) enter into
no sale, lease, contract, commitment or other transaction; provided, however,
that nothing in this Section 5.03 shall prohibit compliance by the Company with,
or the Company's borrowings or repayment funds pursuant to, and agreements or
other commitments disclosed by the Company to AHE.
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5.04 Banking Arrangements; Powers of Attorney. The Company will not make
any change in its banking and safe deposit arrangements and will not grant any
powers of attorney.
5.05 Accounting Practices. Except as required by generally accepted
accounting principles, the Company will not make any changes in its accounting
methods or practices.
5.06 Merger, etc. The Company will not merge or consolidate with any other
corporation; sell or lease all or substantially all of its assets and business;
acquire all or substantially all of the stock of the business or assets or any
other person, corporation or business organization; or agree to do any of the
foregoing.
SECTION 6. COVENANTS AFTER THE CLOSING
6.01 After Closing. From and after the Closing, all parties hereto agree to
issue certificates representing the AHE Shares to the Shareholders of the
Company pursuant to Paragraph 1.01 hereof.
SECTION 7. CONDITIONS PRECEDENT - AHE
All obligations of AHE under this Agreement are subject, at AHE's option,
to the fulfillment, before or at the Closing, of each of the following
conditions:
7.01 Representations and Warranties True at Closing. The Shareholders'
representations and warranties contained in this Agreement shall be true and
correct as of the date hereof and as of the Closing in all material respects.
7.02 Due Performance. The Shareholders shall have performed and complied
with all the terms and conditions required by this Agreement to be performed or
complied with by them before the Closing.
7.03 Books and Records. The Shareholders have caused the Company to make
available to AHE all books and records of the Company, including minute books
and stock transfer records.
7.04 Acceptance by the Shareholders. The terms of this Agreement shall have
been accepted by all of the Shareholders of the Company as evidenced by their
signatures on the signature page of this Agreement.
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SECTION 8. CONDITIONS PRECEDENT - THE SHAREHOLDERS
All obligations of the Shareholders under this Agreement are subject, at
their option, to the fulfillment, before or at the Closing, of each of the
following conditions:
8.01 Representations and Warranties True at Closing. AHE's representations
and warranties contained in this Agreement shall be true and correct as of the
date hereof at and as of the Closing in all material respects.
8.02 Due Performance. AHE shall have performed and complied with all of the
terms and conditions required by this Agreement to be performed or complied with
by it before the Closing.
8.03 Revocation of Prior Authorizations. The Shareholders shall have
delivered to AHE certified copies of resolutions of the Company's Board of
Directors revoking as of the Closing all prior authorizations, powers of
attorney, designations and appointments relating to the signing of checks,
borrowing of funds, access to corporate safe deposit boxes and other similar
matters, to the extent requested by AHE.
8.04 Resignations. There shall have been delivered to AHE the signed
resignations of such directors of the Company as AHE shall request, dated as of
the Closing.
SECTION 9. INDEMNIFICATION
9.01 Indemnification of AHE. The Shareholders severally (and not jointly)
agree to indemnify AHE against any loss, damage or expense (including reasonable
attorneys' fees) suffered by AHE from (1) any breach by the Shareholders of this
Agreement; or (2) any inaccuracy in or breach of any of the representations,
warranties or covenants by the Shareholders herein; provided, however that (a)
AHE shall be entitled to assert rights of indemnification hereunder only if and
to the extent that it suffers losses, damages and expenses (including reasonable
attorneys' fees) exceeding $50,000 in the aggregate; and (b) AHE shall give
notice of any claims hereunder within the twenty-four (24) month period
beginning on the date of the Closing. No loss, damage or expense shall be deemed
to have been sustained by AHE to the extent of insurance proceeds paid to, or
tax benefits realizable by, AHE or the Company as a result of the event giving
rise to such light indemnification.
9.02 Indemnification of Shareholders. AHE agrees to indemnify the
Shareholders against any loss, damage or expense (including reasonable
attorneys' fees) suffered by any of the Shareholders from (1) any breach by AHE
of this Agreement; or (2) any inaccuracy in or breach of any of AHE's
representations, warranties or covenants herein.
9.03 Defense of Claims. Upon obtaining knowledge thereof, the indemnified
party shall promptly notify the indemnifying party of any claim which has given
or could give rise to a right of indemnification under this Agreement. If the
right of indemnification relates to a claim asserted by a third party against
the indemnified party, the indemnifying party shall have the right to employ
counsel acceptable to the indemnified party to cooperate in the defense of any
such claim. So long as the indemnifying party is defending any such claim in
good faith, the indemnified party will not settle such claim. If the
indemnifying party does not elect to defend any such claim, the indemnified
party shall have no obligation to do so.
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SECTION 10. TERMINATION
10.01 Termination. This Agreement may be terminated (1) by mutual consent
in writing; (2) by either the Shareholders or AHE if there has been a material
misrepresentation or material breach of any warranty or covenant by the other
party; or (3) by either the Shareholders of AHE if the Closing shall not have
taken place, unless adjourned to a later date by mutual consent in writing by
April 30, 1997.
SECTION 11. GENERAL PROVISIONS
11.01 Further Assurances. At any time, and from time to time, after the
Effective Date, each party will execute such additional instruments and take
such action as may be reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or otherwise to carry out
the intent and purposes of this Agreement.
11.02 Waiver. Any failure on the part of either party hereto to comply with
any of its obligations, agreements or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
11.03 Brokers. Each party represents to the other party that no broker or
finder has acted for it in connection with this Agreement, and agrees to
indemnify and hold harmless the other party against any fee, loss or expense
arising out of claims by brokers or finders employed or alleged to have been
employed by it.
11.04 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first-class registered or certified mail, return receipt requested, as
follows:
To: Alliance Health Enterprises, Inc.
c/o David L. Kagel
1801 Century Park East, #2500
Los Angeles, CA 90067
(310) 553-9009
To: Michael Chazen, Esq.
c/o Chazen & Masia
Freehold Executive Center
4400 Route 9 South
Freehold, New Jersey 07728
11.05 Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes and cancels any other agreement,
representation, or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
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11.06 Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.07 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada.
11.08 Assignment. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns; provided,
however, that any assignment by either party of its rights under this Agreement
without the written consent of the other party shall be void.
11.09 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Facsimile signatures
shall be considered as original signatures.
Executed as of this 17th day of April, 1997.
ALLIANCE HEALTH ENTERPRISES, INC.
By:____________________________
SHAREHOLDERS OF AMERICAN BUYER'S CLUB INTERNATIONAL, INC.
- ------------------ -----------------
Steven Wise David Bannon
Shares of Company: 500 Shares of Company: 500
------- -------
Shares of AHE: 366,000 Shares of AHE: 366,000
---------- ----------
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EMPLOYMENT AGREEMENT
This Agreement is made as of March 15, 1997 by and between American Buyers Club
International, Inc., a corporation duly organized and existing under the laws of
the state of Delaware ("Employer"), having an office and principal place of
business at 130 Highway 33, Manalapan, New Jersey 07726, and Steven Wise, an
individual whose address is 7 Andrea Court, Manalapan, New Jersey 07726
("Employee").
WHEREAS, Employer wishes to employ Employee and Employee is willing to accept
such employment upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Employer and Employee hereby agree
as follows:
1. Nature of Agreement:
1.1 Employment. Employer agrees to employ Employee and Employee
agrees to accept such employment by Employer upon the terms
and conditions herein provided.
1.2 Cancellation of Prior Offers. Any and all prior contracts of
employment or offers or representations with respect thereto
are hereby cancelled and void in all their terms and
conditions. Commencing with the date first above written, the
terms, covenants and conditions of Employee's employment by
Employer shall be governed solely by the provisions of this
Agreement.
2. Employment and Duties:
2.1 Employment. Commencing on March 15, 1997 and continuing
through December 31, 1998 (the "Termination Date"), Employee
shall be employed by Employer as President, reporting directly
and solely to the Board of Directors. During such period of
employment Employee shall devote his full time and effort to
the business and affairs of Employer, will use his best
efforts to promote the interests of Employer and will
discharge his responsibilities in a diligent and faithful
manner consistent with sound business practices. Employee may
engage in such other and additional activities not in conflict
with the business or activities of Employer as Employee may
desire and may serve as a consultant to or be employed or
engaged (but not on a full time basis) by any other persons or
entities provided that he shall first disclose such proposed
activities, in writing, to the board of directors and that the
board shall not object.
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2.2 Place of Employment. Employee shall occupy offices to be
provided by Employer in Manalapan, New Jersey, or such other
place as Employer shall select, to be maintained for the use
of Employee by and at the sole expense of Employer. Employer
shall supply Employee with secretarial and support services,
computer systems and other office machinery and such other
materials and services as Employee shall reasonably require,
in order to carry out his duties hereunder.
2.3 Business Opportunities. Employee shall disclose to Employer
all business opportunities of which Employee becomes aware
during the term of this Agreement, whether or not such
opportunities are directly related to the existing business of
Employer.
3. Compensation:
3.1 Employee shall receive a salary of $78,000 per annum until
April 11, 1997 and $100,000 per annum thereafter, payable in
equal weekly installments. Employee shall be entitled to two
weeks of vacation each year which, if not taken by Employee
shall be forfeited. Employee shall be entitled to sick leave
based upon policies which the Board of Directors of Employer
shall establish.
3.2 Expenses and Benefits. Employee shall receive benefits
provided by Employer for other employees at the level of
Employee.
3.3 Stock Options. Employee shall be entitled to participate in
any stock option plan established my Employer for the benefit
of Employees of the Company. Such participation and any grant
of options to Employee shall be subject in all respects to
the terms and conditions of such plan or plans and to the
discretion of the Board of Directors with respect
thereto.
4. Termination of Agreement:
4.1 Events of Termination. The employment of Employee shall
terminate prior to the end of the term of this Agreement or
any renewal term, as the case may be, under any of the
following circumstances.
(a) The death of Employee.
(b) In the event that Employee shall substantially fail to
perform his duties hereunder by reason of any medically
determinable physical or mental impairment that can be
expected to result in death or which has persisted or can be
expected to persist for a continued period of at least six
months, Employer shall have the right, by notice sent by
registered mail to Employee at Employee's residence or
business address, to terminate Employee's employment hereunder
as of a date (not less than four months after the date of the
sending of such notice) to be specified in such notice.
Employee shall be conclu-sively presumed to be so disabled
when so certified by a physician who is acceptable to Employee
and Employer.
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(c) In the event of Employee's willful and continuing gross
neglect of his duties or his willful and continuing failure to
perform his duties, which continues for more than thirty days
following his receipt of written notice from Employer that
describes such gross neglect or failure.
(d) If Employer breaches its obligations to Employee hereunder
in any material respect and Employer does not cure such breach
within thirty days of having received notice of such breach,
Employee may terminate this Agreement by giving notice to
Employer.
4.2 Employee's Entitlements Upon Termination - General. In the
event that Employee's employment hereunder shall terminate
pursuant to any of the provisions of section 4.1(a) or (b)
hereof Employee (or of his estate in the event of his death)
shall be entitled to receive all unpaid compensation which
shall have accrued through the date of termination payable as
a lump sum cash payment without any offset, not later than ten
calendar days after termination of the Employee's employment.
5. Renewal of Agreement:
5.1 Employer's Renewal Rights. This Agreement shall be
automatically renewed for two successive one year periods
commencing on January 1 of each of the two years commencing
with 1998 (each of which periods is hereinafter referred to as
a "Renewal Term"), provided however that Employer may elect to
cease such automatic renewal and terminate this Agreement at
the end of the term hereof, or the then Current Renewal Term,
as the case may be, giving written notice of such non-renewal
not less than 60 days prior to the then Current Term or
Renewal Term of this Agreement sent to Employee at his then
address of record with Employer. All of the terms, covenants
and conditions of this Agreement shall govern Employee's
employment by Employer during each Renewal Term.
6. Noncompetition, Nonsolicitation and Confidential Information:
6.1 Employee shall not disclose to any person or entity (other
than to Employer's board of directors or to others as
required, in his judgment, in the due performance of his
duties under this Agreement) any confidential or secret
information with respect to the business or affairs of
Employer or any of its subsidiaries or affiliates.
6.2 Employee agrees that for a period commencing on the date he
becomes subject to this Agreement and ending one year after
the date of termination of this Agreement he will not directly
or indirectly disturb, entice or hire away or in any other
manner persuade any employee, consultant, dealer, supplier,
vendor, or customer of Employer to discontinue that person's
or firm's relationship with or to Employer as an employee,
consultant, dealer, supplier, vendor or customer, as the case
may be.
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6.3 Notwithstanding the generality of the foregoing, nothing in
this Agreement shall be deemed to preclude Employee from
participating in other business opportunities not directly
competitive with the business of Employer provided that
Employee's activities with respect to such opportunities do
not have any material adverse effect on the performance of
Employee's duties hereunder.
6.4 The trade secrets of Employer are hereby defined as including:
a) Suppliers to Employer of any products, goods, or
services of any kind;
b) The prices paid by Employer for such products, goods
and services;
c) The customers of the Employer;
d) The methods and results of the research of Employer;
e) All information concerning sales made by Employer to
any and all customers;
f) The methods used or to be used by Employer in
connection with the conduct of its business; and
g) Any other confidential information or data relating
to the business of Employer which is not publicly
known. The trade secrets of Employer do not include
such data or information which was proprietary to the
Employee personally prior to the date of this
Agreement.
6.5 Employee agrees that he will not, either during his employment
or at any after cessation of such employment, impart or
disclose any of such trade secrets to any person, firm or
corporation other than Employer, or use any of such trade
secrets directly or indirectly for his own benefit or for the
benefit of any person, firm or corporation other than
Employer.
6.6 Employee further recognizes and agrees that any violation of
his agreement in this section 6 would cause such damage or
injury to Employer as would be irreparable and the exact
amount of which would be impossible to ascertain. Therefore,
the Employee agrees that Employer shall be entitled as a
matter of right to an injunction from any court of competent
jurisdiction restraining any further violation by the Employee
of Employee's agreements contained herein. Such rights to an
injunction shall be cumulative and in addition to and not in
limitation of any other rights and remedies Employer may have
at law or in equity.
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6.7 Employee agrees that the provisions of this section 6 are
reasonable and necessary for the protection of Employer and
that each provision herein set forth, including, without
limitation, the period of time, geographical area and types
and scope of the restrictions on his activities specified
therein are intended to be and shall be divisible. The
Employee further acknowledges the reasonableness of these
provisions as an integral part of his sale of stock of
Employer to Recorp America as of the date hereof. If any
provision contained herein, including any sentence, clause or
part thereof, shall be held contrary to law or invalid or
unenforceable in any respect the remaining provisions shall
not be affected but shall remain in full force and effect.
6.8 Employee agrees that all memoranda, notes, records, charts,
formulae, specifications, lists and other documents made,
compiled or received, held or used by the Employee which are
employed by Employer concerning any phase of Employer's
business or operations or its trade secrets shall be
Employer's property and shall be delivered by the Employee to
Employer on the termination of the Employee's employment or at
any earlier time at the request of Employer.
6.9 Employee further agrees that he will, for a period of three
years following the termination of his employment for any
reason, keep Employer informed of the names and addresses of
the persons, firms or corporations by, for or whom he may,
from time to time, be employed or act as agent and Employee
also agrees that if during such year he conducts any business
on his own account or is a partner he will keep Employer
informed of that fact and of the general nature, names and
addresses of such business conducted from time to time.
7. Entire Agreement.
This Agreement constitutes the entire understanding of the parties
hereto and supersedes any and all prior agreements and understandings
whether oral or written between the parties. This Agreement may be
modified only by an agreement in writing executed by Employee and the
Chief Executive Officer of Employer referring to the particular
provisions hereof being modified. This Agreement may not be modified by
any implied understanding or agreement notwithstanding any statements
or conduct of the parties occurring subsequent to the formation of this
Agreement.
8. Miscellaneous:
8.1 Interpretation of this Agreement. This Agreement shall be
interpreted in accordance with the plain meaning of its terms
and not strictly for or against party hereto.
8.2 Variation. Any variation in compensation or conditions which
may occur after the effective date of this Agreement shall not
constitute a new agreement but the terms and conditions of
this Agreement except as to such variation shall continue in
force.
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8.3 Unenforceability. In the event that any provision of this
Agreement shall be determined by any court of competent
jurisdiction to be unenforceable or other invalid as written
the same shall be enforced and validated to the extent
permitted by law. All provisions of this Agreement are
severable and the unenforceability or invalidity of any single
provision hereof shall not affect the remaining provisions.
8.4 Collateral Documents. Each party hereto shall make, execute
and deliver such other instruments or documents as may be
reasonably required in order to effectuate the purposes of
this Agreement.
8.5 Assignability. This Agreement shall not be assignable by
Employee. This Agreement shall not be assignable by Employer
without the prior written consent of Employee except to a
corporation which is the surviving entity in any merger
involving Employer or to a corporation which acquires all or
substantially all of the stock or assets of Employer.
8.6 No Waiver. The failure of a party to insist on any occasion
upon strict adherence to any term of this Agreement shall not
be considered to be a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term
or any other term of this Agreement. Any waiver must be in
writing.
8.7 Indemnification. The indemnification provisions for officers,
directors, employees and agents under Nevada law and the
Company's bylaws shall, to the maximum extent permitted by
law, be extended to Employee, during the period following his
termination for any reason, with respect to any and all
matters, events or transactions occurring or effected during
the Employee's period of employment with Employer. Employee
shall indemnify Employer from and against any claims, expenses
and liabilities, including attorney's fees, resulting from
Employer's breach of any of the provisions of this Agreement.
8.8 New Jersey Law to Apply. Except as provided in Paragraph 6.7
above, this Agreement shall be governed by and construed in
accordance with the laws of New Jersey applicable to contracts
between New Jersey residents entered into and to be performed
entirely within New Jersey.
8.9 Death of Employee. If the Employee should die before all
amounts payable to him under this Agreement have been paid,
such unpaid amounts shall be paid to Employee's spouse, of
living, otherwise to the personal representative of Employee's
estate.
86
<PAGE>
8.10 Notices. Any notices to be given hereunder to any party must
be in writing and must be effected by personal delivery or by
registered or certified mail, postage pre-paid with return
receipt requested. Mailed notices shall be directed to the
parties at the addresses appearing below. Either party may
change the address by giving written notice in accordance with
this section. Notices delivered personally shall be deemed
communicated as of actual receipt; mailed notices shall be
deemed communicated as of three business days after deposit
with the United States Postal Service or within one day after
deposit with a courier service such as Federal Express.
EMPLOYER:
American Buyers Club International, Inc..
130 Highway 33
Manalapan, New Jersey 07726
EMPLOYEE:
Steven Wise
7 Andrea Court
Manalapan, New Jersey 07726
8.11 Gender and Number. Whenever the context of this Agreement
permits the masculine, feminine and neuter shall each include
the other, and the singular shall include the plural.
8.12 In any action taken by either Employer or Employee to enforce
any of the provisions of this Agreement, or for compensation
or other relief as a result of the breach of this Agreement,
the attorney's fees and disbursements of the prevailing party
in such litigation shall be paid by the non-prevailing party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
"EMPLOYER"
AMERICAN BUYERS CLUB INTERNATIONAL, INC.
By:____________________________
David Bannon, Vice President
"EMPLOYEE"
- ----------------------------
Steven Wise
87
EMPLOYMENT AGREEMENT
This Agreement is made as of March 15, 1997 by and between American Buyers Club
International, Inc., a corporation duly organized and existing under the laws of
the state of Delaware ("Employer"), having an office and principal place of
business at 130 Highway 33, Manalapan, New Jersey 07726, and David Bannon, an
individual whose address is 230 Tulip Lane, Freehold, New Jersey 07728
("Employee").
WHEREAS, Employer wishes to employ Employee and Employee is willing to accept
such employment upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Employer and Employee hereby agree
as follows:
1. Nature of Agreement:
1.1 Employment. Employer agrees to employ Employee and Employee
agrees to accept such employment by Employer upon the terms
and conditions herein provided.
1.2 Cancellation of Prior Offers. Any and all prior contracts of
employment or offers or representations with respect thereto
are hereby cancelled and void in all their terms and
conditions. Commencing with the date first above written, the
terms, covenants and conditions of Employee's employment by
Employer shall be governed solely by the provisions of this
Agreement.
2. Employment and Duties:
2.1 Employment. Commencing on March 15, 1997 and continuing
through December 31, 1998 (the "Termination Date"), Employee
shall be employed by Employer as Vice President, reporting
directly and solely to the Board of Directors. During such
period of employment Employee shall devote his full time and
effort to the business and affairs of Employer, will use his
best efforts to promote the interests of Employer and will
discharge his responsibilities in a diligent and faithful
manner consistent with sound business practices. Employee may
engage in such other and additional activities not in conflict
with the business or activities of Employer as Employee may
desire and may serve as a consultant to or be employed or
engaged (but not on a full time basis) by any other persons or
entities provided that he shall first disclose such proposed
activities, in writing, to the board of directors and that the
board shall not object.
88
<PAGE>
2.2 Place of Employment. Employee shall occupy offices to be
provided by Employer in Manalapan, New Jersey, or such other
place as Employer shall select, to be maintained for the use
of Employee by and at the sole expense of Employer. Employer
shall supply Employee with secretarial and support services,
computer systems and other office machinery and such other
materials and services as Employee shall reasonably require,
in order to carry out his duties hereunder.
2.3 Business Opportunities. Employee shall disclose to Employer
all business opportunities of which Employee becomes aware
during the term of this Agreement, whether or not such
opportunities are directly related to the existing business of
Employer.
3. Compensation:
3.1 Employee shall receive a salary of $78,000 per annum until
April 11, 1997 and $100,000 per annum thereafter, payable in
weekly installments. Employee shall be entitled to two weeks
of vacation each year which, if not taken by Employee shall be
forfeited. Employee shall be entitled to sick leave based upon
policies which the Board of Directors of Employer shall
establish.
3.2 Expenses and Benefits. Employee shall receive benefits
provided by Employer for other employees at the level of
Employee.
3.3 Stock Options. Employee shall be entitled to participate in
any stock option plan established my Employer for the benefit
of Employees of the Company. Such participation and any grant
of options to Employee shall be subject in all respects to
the terms and conditions of such plan or plans and to the
discretion of the Board of Directors with respect
thereto.
4. Termination of Agreement:
4.1 Events of Termination. The employment of Employee shall
terminate prior to the end of the term of this Agreement or
any renewal term, as the case may be, under any of the
following circumstances.
(a) The death of Employee.
89
<PAGE>
(b) In the event that Employee shall substantially fail to
perform his duties hereunder by reason of any medically
determinable physical or mental impairment that can be
expected to result in death or which has persisted or can be
expected to persist for a continued period of at least six
months, Employer shall have the right, by notice sent by
registered mail to Employee at Employee's residence or
business address, to terminate Employee's employment hereunder
as of a date (not less than four months after the date of the
sending of such notice) to be specified in such notice.
Employee shall be conclu-sively presumed to be so disabled
when so certified by a physician who is acceptable to Employee
and Employer.
(c) In the event of Employee's willful and continuing gross
neglect of his duties or his willful and continuing failure to
perform his duties, which continues for more than thirty days
following his receipt of written notice from Employer that
describes such gross neglect or failure.
(d) If Employer breaches its obligations to Employee hereunder
in any material respect and Employer does not cure such breach
within thirty days of having received notice of such breach,
Employee may terminate this Agreement by giving notice to
Employer.
4.2 Employee's Entitlements Upon Termination - General. In the
event that Employee's employment hereunder shall terminate
pursuant to any of the provisions of section 4.1(a) or (b)
hereof Employee (or of his estate in the event of his death)
shall be entitled to receive all unpaid compensation which
shall have accrued through the date of termination payable as
a lump sum cash payment without any offset, not later than ten
calendar days after termination of the Employee's employment.
5. Renewal of Agreement:
5.1 Employer's Renewal Rights. This Agreement shall be
automatically renewed for two successive one year periods
commencing on January 1 of each of the two years commencing
with 1998 (each of which periods is hereinafter referred to as
a "Renewal Term"), provided however that Employer may elect to
cease such automatic renewal and terminate this Agreement at
the end of the term hereof, or the then Current Renewal Term,
as the case may be, giving written notice of such non-renewal
not less than 60 days prior to the then Current Term or
Renewal Term of this Agreement sent to Employee at his then
address of record with Employer. All of the terms, covenants
and conditions of this Agreement shall govern Employee's
employment by Employer during each Renewal Term.
90
<PAGE>
6. Noncompetition, Nonsolicitation and Confidential Information:
6.1 Employee shall not disclose to any person or entity (other
than to Employer's board of directors or to others as
required, in his judgment, in the due performance of his
duties under this Agreement) any confidential or secret
information with respect to the business or affairs of
Employer or any of its subsidiaries or affiliates.
6.2 Employee agrees that for a period commencing on the date he
becomes subject to this Agreement and ending one year after
the date of termination of this Agreement he will not directly
or indirectly disturb, entice or hire away or in any other
manner persuade any employee, consultant, dealer, supplier,
vendor, or customer of Employer to discontinue that person's
or firm's relationship with or to Employer as an employee,
consultant, dealer, supplier, vendor or customer, as the case
may be.
6.3 Notwithstanding the generality of the foregoing, nothing in
this Agreement shall be deemed to preclude Employee from
participating in other business opportunities not directly
competitive with the business of Employer provided that
Employee's activities with respect to such opportunities do
not have any material adverse effect on the performance of
Employee's duties hereunder.
6.4 The trade secrets of Employer are hereby defined as including:
a) Suppliers to Employer of any products, goods, or
services of any kind;
b) The prices paid by Employer for such products, goods
and services;
c) The customers of the Employer;
d) The methods and results of the research of Employer;
e) All information concerning sales made by Employer to
any and all customers;
f) The methods used or to be used by Employer in
connection with the conduct of its business; and
g) Any other confidential information or data relating
to the business of Employer which is not publicly
known. The trade secrets of Employer do not include
such data or information which was proprietary to the
Employee personally prior to the date of this
Agreement.
91
<PAGE>
6.5 Employee agrees that he will not, either during his employment
or at any after cessation of such employment, impart or
disclose any of such trade secrets to any person, firm or
corporation other than Employer, or use any of such trade
secrets directly or indirectly for his own benefit or for the
benefit of any person, firm or corporation other than
Employer.
6.6 Employee further recognizes and agrees that any violation of
his agreement in this section 6 would cause such damage or
injury to Employer as would be irreparable and the exact
amount of which would be impossible to ascertain. Therefore,
the Employee agrees that Employer shall be entitled as a
matter of right to an injunction from any court of competent
jurisdiction restraining any further violation by the Employee
of Employee's agreements contained herein. Such rights to an
injunction shall be cumulative and in addition to and not in
limitation of any other rights and remedies Employer may have
at law or in equity.
6.7 Employee agrees that the provisions of this section 6 are
reasonable and necessary for the protection of Employer and
that each provision herein set forth, including, without
limitation, the period of time, geographical area and types
and scope of the restrictions on his activities specified
therein are intended to be and shall be divisible. The
Employee further acknowledges the reasonableness of these
provisions as an integral part of his sale of stock of
Employer to Recorp America as of the date hereof. If any
provision contained herein, including any sentence, clause or
part thereof, shall be held contrary to law or invalid or
unenforceable in any respect the remaining provisions shall
not be affected but shall remain in full force and effect.
6.8 Employee agrees that all memoranda, notes, records, charts,
formulae, specifications, lists and other documents made,
compiled or received, held or used by the Employee which are
employed by Employer concerning any phase of Employer's
business or operations or its trade secrets shall be
Employer's property and shall be delivered by the Employee to
Employer on the termination of the Employee's employment or at
any earlier time at the request of Employer.
6.9 Employee further agrees that he will, for a period of three
years following the termination of his employment for any
reason, keep Employer informed of the names and addresses of
the persons, firms or corporations by, for or whom he may,
from time to time, be employed or act as agent and Employee
also agrees that if during such year he conducts any business
on his own account or is a partner he will keep Employer
informed of that fact and of the general nature, names and
addresses of such business conducted from time to time.
92
<PAGE>
7. Entire Agreement.
This Agreement constitutes the entire understanding of the parties
hereto and supersedes any and all prior agreements and understandings
whether oral or written between the parties. This Agreement may be
modified only by an agreement in writing executed by Employee and the
Chief Executive Officer of Employer referring to the particular
provisions hereof being modified. This Agreement may not be modified by
any implied understanding or agreement notwithstanding any statements
or conduct of the parties occurring subsequent to the formation of this
Agreement.
8. Miscellaneous:
8.1 Interpretation of this Agreement. This Agreement shall be
interpreted in accordance with the plain meaning of its terms
and not strictly for or against party hereto.
8.2 Variation. Any variation in compensation or conditions which
may occur after the effective date of this Agreement shall not
constitute a new agreement but the terms and conditions of
this Agreement except as to such variation shall continue in
force.
8.3 Unenforceability. In the event that any provision of this
Agreement shall be determined by any court of competent
jurisdiction to be unenforceable or other invalid as written
the same shall be enforced and validated to the extent
permitted by law. All provisions of this Agreement are
severable and the unenforceability or invalidity of any single
provision hereof shall not affect the remaining provisions.
8.4 Collateral Documents. Each party hereto shall make, execute
and deliver such other instruments or documents as may be
reasonably required in order to effectuate the purposes of
this Agreement.
8.5 Assignability. This Agreement shall not be assignable by
Employee. This Agreement shall not be assignable by Employer
without the prior written consent of Employee except to a
corporation which is the surviving entity in any merger
involving Employer or to a corporation which acquires all or
substantially all of the stock or assets of Employer.
8.6 No Waiver. The failure of a party to insist on any occasion
upon strict adherence to any term of this Agreement shall not
be considered to be a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term
or any other term of this Agreement. Any waiver must be in
writing.
8.7 Indemnification. The indemnification provisions for officers,
directors, employees and agents under Nevada law and the
Company's bylaws shall, to the maximum extent permitted by
law, be extended to Employee, during the period following his
termination for any reason, with respect to any and all
matters, events or transactions occurring or effected during
the Employee's period of employment with Employer. Employee
shall indemnify Employer from and against any claims, expenses
and liabilities, including attorney's fees, resulting from
Employer's breach of any of the provisions of this Agreement.
93
<PAGE>
8.8 New Jersey Law to Apply. Except as provided in Paragraph 6.7
above, this Agreement shall be governed by and construed in
accordance with the laws of New Jersey applicable to contracts
between New Jersey residents entered into and to be performed
entirely within New Jersey.
8.9 Death of Employee. If the Employee should die before all
amounts payable to him under this Agreement have been paid,
such unpaid amounts shall be paid to Employee's spouse, of
living, otherwise to the personal representative of Employee's
estate.
8.10 Notices. Any notices to be given hereunder to any party must
be in writing and must be effected by personal delivery or by
registered or certified mail, postage pre-paid with return
receipt requested. Mailed notices shall be directed to the
parties at the addresses appearing below. Either party may
change the address by giving written notice in accordance with
this section. Notices delivered personally shall be deemed
communicated as of actual receipt; mailed notices shall be
deemed communicated as of three business days after deposit
with the United States Postal Service or within one day after
deposit with a courier service such as Federal Express.
EMPLOYER:
American Buyers Club International, Inc.
130 Highway 33
Manalapan, New Jersey 07726
EMPLOYEE:
David Bannon
230 Tulip Lane
Freehold, New Jersey 07728
8.11 Gender and Number. Whenever the context of this Agreement
permits the masculine, feminine and neuter shall each include
the other, and the singular shall include the plural.
8.12 In any action taken by either Employer or Employee to enforce
any of the provisions of this Agreement, or for compensation
or other relief as a result of the breach of this Agreement,
the attorney's fees and disbursements of the prevailing party
in such litigation shall be paid by the non-prevailing party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
"EMPLOYER"
AMERICAN BUYERS CLUB INTERNATIONAL, INC.
By:____________________________
Steven Wise, President
"EMPLOYEE"
- ----------------------------
David Bannon
94
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
American Buyers Club International, Inc., a Delaware corporation
Alpha sound and Vision, Inc., a Delaware corporation (subsidiary of American
Buyers Club International, Inc.)
95
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Form 10SB of our report
dated June 22, 1998, with respect to the 1997 financial statements of Alliance
Technologies, Inc. and Subsidiary.
EHRENKRANTZ STERLING & CO. LLC
Certified Public Accountants and Consultants
Livingston, New Jersey
October 29, 1998
96
<PAGE>
EXHIBIT 23.2
CONSENT
We hereby consent to the inclusion of our reports dated June 30, 1997 with
respect to the financial statements of Alliance Health Enterprises Inc for the
year ended December 31, 1996 in the Form 10-SB of Alliance Technologies, Inc. to
which this is an exhibit.
Hoffski & Pisano
Certified Public Accountants and Consultants
Irvine, California
October 29, 1998
97
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<ARTICLE> 5
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<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-START> JAN-01-1997 JAN-01-1998
<PERIOD-END> DEC-31-1997 SEP-30-1998
<CASH> 24,907 29,642
<SECURITIES> 0 0
<RECEIVABLES> 153,466 19,093
<ALLOWANCES> (100,000) 0
<INVENTORY> 95,082 131,299
<CURRENT-ASSETS> 180,955 180,374
<PP&E> 20,567 26,385
<DEPRECIATION> (5,572) (8,424)
<TOTAL-ASSETS> 195,950 198,335
<CURRENT-LIABILITIES> 494,233 548,292
<BONDS> 0 0
0 0
0 0
<COMMON> 2,439 2,585
<OTHER-SE> (300,722) (352,542)
<TOTAL-LIABILITY-AND-EQUITY> 195,950 198,335
<SALES> 2,148,308 1,847,142
<TOTAL-REVENUES> 2,148,308 1,847,142
<CGS> 1,655,609 1,469,666
<TOTAL-COSTS> 2,247,432 1,923,816
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (99,124) (76,674)
<INCOME-TAX> 600 0
<INCOME-CONTINUING> (99,724) (76,674)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (99,724) (76,674)
<EPS-PRIMARY> (0.04) (0.03)
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