RESCISSION AGREEMENT
THIS RESCISSION AGREEMENT is entered into this 21st day of June, 1999,
effectuated retroactively to October 28, 1998, and is by and between Accident
Prevention Plus, Inc., a Nevada corporation ("APP") and KMR Telecom Limited, a
corporation organized under the laws of India ("KMR").
RECITALS:
WHEREAS, International Purchasing Service, Inc. is a corporation
organized under the laws of the State of New York ("IPS"), and whose sole
shareholder prior to October 28, 1998 was Xxxxxxx Xxxxxxxx who held a 100%
equity ownership interest in IPS;
WHEREAS, KMR Telecom Limited is a corporation organized under the laws
of India ("KMR"), and whose shareholders prior to October 28, 1998 were Xxxxxxx
Xxxxxxxx who held a 49% equity ownership interest and Dinesh and Xxxx Xxxxx who
jointly held a 51% ownership interest in KMR;
WHEREAS, International Purchasing Services (India) Inc. is a
partnership organized under the laws of India ("`PS India") pursuant to a
Partnership Deed dated June 10, 1994, and whose partners are KMR which holds a
39% ownership interest, IPS which holds a 51% ownership interest, and Xxxxxxx
Xxxxxx who holds a 10% ownership interest;
WHEREAS, Accident Prevention Plus, LLC is a limited liability
corporation organized under the laws of the State of New York ("APP LLC");
WHEREAS, Accident Prevention Plus, Inc. is a corporation organized
under the laws of the State of Nevada ("APP");
WHEREAS, on October 28, 1998, APP LLC and APP entered into an agreement
(the "Exchange Agreement") whereby the holders of either membership equity
interests or rights to membership equity interests in APP LLC agreed to exchange
their interests for shares of restricted common stock of APP;
WHEREAS, on October 28, 1998, APP, KMR and `PS entered into an
agreement and plan of reorganization (the `Reorganization Agreement") whereby
APP acquired (i) 100% of the issued and outstanding shares of `PS by issuing
1,600,000 shares of its restricted common stock to Xxxxxxx Xxxxxxxx, which
represented 10% of APP's then issued and outstanding shares of common stock; and
(ii) 100% of the issued and outstanding shares of KMR by issuing 392,000 shares
of its restricted common stock to Xxxxxxx Xxxxxxxx and 408,000 shares of its
restricted common stock to Dinesh and Xxxx Xxxxx, jointly, which represented an
aggregate of 5% of APP's then issued and outstanding shares of common stock;
WHEREAS, pursuant to the Reorganization Agreement and the Exchange
Agreement, (i) APP acts as the holding company for APP LCC, which remains as the
operational company; (ii) IPS and KMR became subsidiaries of APP; (iii) APP
through its ownership of all the issued and outstanding shares of stock of `PS
and KMR holds an aggregate 90% equity ownership interest in `PS India; and (iv)
Xxxxxx Xxxxx executed a Durable General Power of Attorney under the laws of the
State of New York authorizing Xxxxxxx Xxxxxxxx to act with certain powers;
WHEREAS, at the time of execution of the Reorganization Agreement and
to date, KMR owes approximately IPS $300,000;
WHEREAS, APP has determined that (i) it is a violation of the laws of
India for APP to own more than a 49% equity interest in KMR, and (ii) a
significant difference in accounting standards exists between the United States
and India presenting many difficulties and inconsistencies within the valuation
of KMR and `PS India; and
WHEREAS, on June 21, 1999, to be effectuated retroactively to October
28, 1998, in the best interests of APP and its shareholders, the board of
directors authorized and approved (i) a transaction to rescind the
Reorganization Agreement to allow KMR to withdraw from the transaction; (ii)
Xxxxxxx Xxxxxxxx and Xxxxxx and Xxxx Xxxxx to return to APP their respective
stock certificates evidencing ownership of shares of common stock of APP, (iii)
revision of the financial statements of APP to accurately reflect the financial
status of APP, APP LLC and IPS; and (iv) revision of the Private Placement
Memorandum and dissemination of a letter from management of APP to its
shareholders informing them of such transaction.
THEREFORE, in consideration of the promises and covenants herein, the
parties agree as follows:
1. KMR acknowledges and represents that (i) there has been a mutual
mistake by APP and KMR regarding the laws of India which prohibits any foreign
entity from holding more than a 49% equity ownership interest in a company
organized under the laws of India; and (ii) there is a difference in the
existing accounting standards between the United States and India which makes it
difficult to consistently obtain an accurate valuation of KMR and IPS India.
2. KMR and its shareholders (i) accept the offer of APP to rescind and
set aside the Reorganization Agreement; (ii) return to APP the stock
certificates issued to Xxxxxxx Xxxxxxxx in the amount of 392,000 shares of
common stock and the stock certificates issued to Dinesh and Xxxx Xxxxx in the
amount of 408,000 shares of common stock; (iii) release APP from all obligations
to KMR and IPS India; and (iv) acknowledge the debt in the amount of $300,000
owed by KMR to IPS which will subsequently be assigned to APP.
3. The contractual debt due and owing by KMR to IPS in the approximate
amount of $300,000 shall be personally guaranteed by Xxxxxxx Xxxxxxxx.
4 KMR acknowledges that (i) the books and records of APP, including its
financial statements, will be revised to delete KMR as a wholly-owned subsidiary
and the 39% equity interest in `PS India held indirectly by APP through its
ownership of KMR as a subsidiary; and (ii) from the date of this Rescission
Agreement, KMR will cease to be a subsidiary of APP and will have no further
rights, liabilities or obligations with respect to APP.
5. In consideration of and subject to the return by APP to KMR of the
original stock certificates issued by KMR to Xxxxxxx Xxxxxxxx and Xxxxxx and
Xxxx Xxxxx, which were subsequently assigned and transferred to APP pursuant to
the Reorganization Agreement, KMR releases and discharges APP from all rights,
claims, causes of action, damages and demands that KMR and IPS India has had or
now has against APP relating to the Reorganization Agreement or the rescission
of the Reorganization Agreement.
IN WITNESS WHEREOF, the parties have executed this Rescission Agreement
to be effective as of the date first above written.
ACCIDENT PREVENTION PLUS, INC.,
A Nevada corporation
Date: June 21, 1999 By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, President
KMR TELECOM LIMITED,
Date: June 21, 1998 By: /s/ ?????????????
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????????? for KMR Telecom Ltd.
A corporation organized under India
