As filed with the Securities and Exchange Commission on December 10,
1997
Registration No. 333-38543
===================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT #1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
ASPAC COMMUNICATIONS, INC.
---------------------------------
(Exact Name of registrant as specified in its charter)
Delaware 4812 95-4652797
- --------------- ----------------- ---------------
(State or other (Primary Standard Employer Number
jurisdiction of Industrial (I.R.S.
incorporation or Classification Identification
organization) Code Number) Number)
------------
2049 Century Park East, Suite 1200
Los Angeles, California 90067
310/712-3288
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Marc F. Mayeres, President
2049 Century Park East, Suite 1200
Los Angeles, California 90067
310/712-3288
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to: Cassidy & Associates, 1504 R Street, N.W.
Washington, D.C. 20009, 202/387-5400
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / X /
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum Amount
Title of Each Amount Offering Aggregate of
Class of Securities to be Price Offering Registra-
to be Registered Registered Per Share Price tion Fee
<S> <C> <C> <C> <C>
Shares of
Common Stock,
$.0001 par value 450,000 $20.00 $9,000,000 $2,700
Shares of Common
Stock by Selling
Securityholders 9,010,000(1) N.A. N.A. N.A.
Total $9,000,000 $2,700(2)
</TABLE>
(1) There is no current market for the shares and the dollar amount of
the shares to be registered is de minimis based upon the estimated
per share book value ($.0001).
(2) Paid by electronic transfer.<PAGE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, as amended, or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
[Legend for Red Herring Prospectuses]
The information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such state.
<PAGE>
<PAGE>
PROSPECTUS
ASPAC COMMUNICATIONS, INC.
450,000 Shares of Common Stock at $20 per Share;
9,010,000 Shares of Common Stock to be Sold by the Holders Thereof
This Prospectus is being furnished by Aspac Communications, Inc., a
development stage Delaware corporation, (the "Company") for the offer and
sale of 450,000 shares of Common Stock of the Company, $.0001 par value
per share (the "Company Shares") at $20 per Company Share. SEE
"PROSPECTUS SUMMARY." The Company is offering a minimum of
100,000 Company Shares (the "Minimum Offering") and a maximum of
450,000 Company Shares (the "Maximum Offering"). All funds received
by the Company with respect to the sale of the first 100,000 Company
Shares will be deposited in a special escrow account to be established by the
Company at Wells Fargo Bank, N.A. If 100,000 Company Shares are not
sold within one hundred eighty days (180) following the effective date of
the registration statement of which this Prospectus is a part (the "Effective
Date"), the Offering will automatically terminate and all funds received
from the sale of the Company Shares will be returned to the purchasers
thereof without deductions and without interest. Once funds from the sale
of 450,000 Company Shares have been received, the Company will not
accept any further purchasers and any funds tendered therefor will be
returned. There can be no assurance that the Minimum Offering will be
sold. SEE "RISK FACTORS--If Minimum Offering Is Not Sold". The
Company Shares are being offered for sale by the officers and directors of
the Company, including Mr. Marc F. Mayeres, President, Ms. Ming
Zhang, Secretary and Mr. Liancheng Ji, director, who will not receive any
remuneration for such sales. The officers and directors are relying on the
provisions of Rule 3a4-1 of the Securities Exchange Act of 1934 (the
"Exchange Act") in the sale by them of the sale of the Company Shares.
SEE "PLAN OF DISTRIBUTION".
The Company is a recently formed development stage Delaware
corporation, with limited operations and capital and no revenues. SEE
"THE COMPANY." The Company intends to develop telecommunications
in the Far East, including China, and the United States by the construction
and development of telephone and communication systems, including
Internet services, and, possibly, the acquisition of existing
telecommunication systems and networks. SEE "BUSINESS".
The Company Shares offered for sale herein are subject to a lock-up
agreement with the Company restricting sale of such Company Shares for
up to 90 days after the Effective Date of the Registration Statement of
which this Prospectus is a part. SEE "RISK FACTORS--Trading of
Company Shares Restricted for up to 90 Days" and "DESCRIPTION OF
SECURITIES--Lock-Up Agreement".
The offering price of the Company Shares was determined arbitrarily by
the Company and is not necessarily related to asset or book value, net worth
or any other established criteria of value. SEE "PLAN OF
DISTRIBUTION" for a discussion of the factors used to determine such
offering price. There is no current public trading market for the Shares.
SEE "RISK FACTORS--No Current Trading Market for the Company's
Securities."
The registration statement of which this Prospectus is a part also relates
to the sale of 9,010,000 shares of the Company's Common Stock (the
"Selling Securityholders Shares") by the respective holders thereof (the
"Selling Securityholders"). (The Selling Securityholders' Shares and the
Company Shares are hereinafter referred to collectively as the "Shares").
The Selling Securityholders will receive the proceeds from the sale of the
securities being offered by them. The Company will not receive any of the
proceeds from such sales. The Selling Securityholders' Shares may be
offered from time to time by the Selling Securityholders through ordinary
brokerage transactions in the over-the-counter market, in negotiated
transactions or otherwise, at market prices prevailing at the time of sale or
at negotiated prices. The securities being offered by Selling Securityholders
are expected to become tradeable on or about the date of this Prospectus.
Sales of the securities being offered by Selling Securityholders, or even the
potential of such sales, may likely have an adverse effect on the market
prices of the Company Shares being offered by the Company. All costs
incurred in the registration of the Company Shares and the Selling
Securityholders' Shares are being borne by the Company.
The Selling Securityholders may be deemed to be "underwriters" as
defined in the Securities Act of 1933, as amended (the "Securities Act"). If
any broker-dealers are used by the Selling Securityholders, any commissions
paid to broker-dealers and, if broker-dealers purchase any Selling
Securityholders' Shares as principals, any profits received by such
broker-dealers on the resales of the Selling Securityholders' Shares may be
deemed to be underwriting discounts or commissions under the Securities
Act. In addition, any profits realized by the Selling Securityholders may be
deemed to be underwriting commissions. Brokerage commissions, if any,
attributable to the sale of the Selling Securityholders' Shares will be borne
by the Selling Securityholders. The Company has agreed to indemnify the
Selling Securityholders against certain liabilities, including liabilities under
the Act.
The Selling Securityholders' Shares offered by this Prospectus may be
sold from time to time by the Selling Securityholders, or by transferees,
commencing on the date of this Prospectus. No underwriting arrangements
have been entered into by the Company or, to the Company's knowledge,
the Selling Securityholders. The distribution of the Selling Securityholder's
Shares by the Selling Securityholders may be effected in one or more
privately-negotiated transaction or through sales to one or more dealers for
resale of such Selling Securityholder's Shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or negotiated prices. Usual and customary or specifically negotiated
brokerage fees or commissions may be paid by the Selling Securityholders
in connection with sales of the Selling Securityholders' Shares.
Unless otherwise specifically provided, all currency amounts in this
document are expressed in United States dollars and are preceded by "$".
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" CONTAINED IN THIS PROSPECTUS BEGINNING
ON PAGE 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE COMPANY WILL REGISTER OR QUALIFY THE OFFERING
IN THE STATES OF CALIFORNIA, NEW YORK, WASHINGTON,
FLORIDA, ILLINOIS, TEXAS AND NEVADA ONLY. PURCHASERS
OF THE SHARES IN THE OFFERING MUST BE RESIDENTS OF
THOSE STATES. SEE "RISK FACTORS--LIMITED STATE
OFFERING" AND "PLAN OF DISTRIBUTION".
<TABLE>
<CAPTION>
Underwriting
Discounts Proceeds
Price to and or Other to Company
Public Commissions(1) Persons (2)
<S> <C> <C> <C>
Per Share $20 -0- $20
Minimum Offering-- $2,000,000 -0- $2,000,000
100,000 Shares of
Common Stock
Maximum Offering-- $9,000,000 -0- $9,000,000
450,000 Shars of
Common Stock
</TABLE>
(1) The officers and directors of the Company are offering the Company
Shares for sale. The Company does not intend to use an
underwriter. If, however, an underwriter were to be used, which is
not currently anticipated, discounts or commissions would not exceed
10% of the offering price.
(2) Does not include an estimated $157,700 in expenses of issuance and
distribution of this Offering which funds have been borrowed by the
Company from a shareholder. SEE "BUSINESS--Shareholder
Loan".
The date of this Prospectus is December ____, 1997.<PAGE>
CERTAIN SECURITIES DESCRIBED HEREIN ARE OFFERED BY
THE SELLING SECURITYHOLDERS SUBJECT TO PRIOR SALE,
WITHDRAWAL, CANCELLATION OR MODIFICATION OF THE
OFFERING, WITHOUT NOTICE. IN ADDITION, THE RIGHT IS
RESERVED TO CANCEL ANY CONFIRMATION OF SALE EVEN IF
THE PURCHASE PRICE HAS BEEN PAID, IF IN THE OPINION OF
THE COMPANY OR ANY PARTICIPATING BROKER-DEALER,
COMPLETION OF SUCH SALE WOULD VIOLATE FEDERAL OR
STATE SECURITIES LAWS OR A RULE OR POLICY OF THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
FOLLOWING THE COMPLETION OF THIS OFFERING, CERTAIN
BROKER-DEALERS MAY BE THE PRINCIPAL MARKET MAKERS
FOR THE SECURITIES OFFERED HEREBY. UNDER THESE
CIRCUMSTANCES, THE MARKET BID AND ASKED PRICES FOR
THE SECURITIES MAY BE SIGNIFICANTLY INFLUENCED BY
DECISIONS OF THE MARKET MAKERS TO BUY OR SELL THE
SECURITIES FOR THEIR OWN ACCOUNT. NO ASSURANCE CAN
BE GIVEN THAT ANY MARKET MAKING ACTIVITIES OF THE
MARKET MAKERS, IF COMMENCED, WILL BE CONTINUED.
FOR A PERIOD OF AT LEAST ONE YEAR FOLLOWING
CLOSING OF THIS OFFERING, THE COMPANY WILL BE
REQUIRED BY THE SECURITIES EXCHANGE ACT OF 1934 TO FILE
PERIODIC REPORTS AND OTHER INFORMATION WITH THE
SECURITIES AND EXCHANGE COMMISSION. SUCH MATERIAL
MAY BE INSPECTED AT THE COMMISSION'S PRINCIPAL OFFICES
AT JUDICIARY PLAZA, 450 FIFTH STREET, N.W. WASHINGTON,
D.C. 20459 AND COPIES MAY BE OBTAINED ON PAYMENT OF
CERTAIN FEES PRESCRIBED BY THE COMMISSION. THE
COMPANY WILL FURNISH TO HOLDERS OF ITS COMMON STOCK
ANNUAL REPORTS CONTAINING AUDITED FINANCIAL
STATEMENTS EXAMINED AND REPORTED UPON, AND WITH AN
OPINION EXPRESSED BY AN INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANT. THE COMPANY MAY ISSUE OTHER UNAUDITED
INTERIM REPORTS TO ITS SHAREHOLDERS AS IT DEEMS
APPROPRIATE.
<PAGE>
PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere
in this Prospectus. Reference is made to, and this summary is qualified by,
the more detailed information set forth in this Prospectus, which should be
read in its entirety.
The Company Aspac Communications, Inc. is a development stage
corporation incorporated in Delaware on June 1,
1994.
The Offering The Company currently has limited operations and
assets and no revenue. The Company intends to
develop and/or construct telecommunication and
Internet networks and systems in the Far East
including the People's Republic of China ("PRC" or
"China"), and elsewhere, including the United
States. SEE "BUSINESS--Business Plan." The Company
intends to build its own systems, purchase existing
networks or systems, or enter into joint ventures
with third parties for the development, construction
or purchase of telecommunication systems or Internet
networks. The Company intends to develop and
manage such telecommunication and Internet systems.
The Company may need to raise additional capital to
construct such telecommunications systems or to
acquire existing systems. SEE "RISK FACTORS--
Need for Additional Financing to Commence of
Continue Operations Even if Minimum Offering
Sold".
Transfer Agent The transfer agent for the Company is
________________________. SEE "DESCRIPTION
OF SECURITIES -- Transfer Agent and Registrar."
Selling Securityholders
Securities 9,010,000 Shares of Common Stock registered hereby
and owned by Selling Securityholders to be offered
for sale by such securityholders. SEE "SELLING
SECURITYHOLDERS." The Selling Securityholders'
Shares constitute an aggregate of 10% of the issued
and outstanding Common Stock of the Company as of
the date hereof.
Limited State
Registration The Company anticipates that a substantial portion
of Company Shares will be sold to investors located
outside the United States. The Company will
register or qualify the Shares only in the states
of California, New York, Washington, Florida,
Illinois, Texas and Nevada. Offers and sales in the
Offering can be made only to entities resident in
those states. SEE "RISK FACTORS--Limited State
Offering" and "Plan of Distribution".
Trading Market The Company intends to apply initially for admission
to quotation of the Shares on the NASD OTC Bulletin
Board and to apply for listing on the Nasdaq Small-
Cap Market at such time, if any, as it qualifies.
However, there can be no assurance that the Shares
will be so listed. SEE "RISK FACTORS--No Current
Trading Market for the Company's Securities" and
"DESCRIPTION OF SECURITIES--Admission to
Quotation on Nasdaq SmallCap Market or NASD
OTC Bulletin Board".
SELECTED FINANCIAL DATA
The Company's fiscal year ends September 30. The following table
sets forth selected financial information concerning the Company as of
October 1, 1997:
Balance Sheet Data:
Current assets $ 200
Total assets $ 200
Stockholders' equity (deficit) $ 200
The selected financial data above is a summary only and has been
derived from and is qualified in its entirety by reference to the Company's
financial statements and the report related thereto of John MacLean,
Certified Public Accountant, included elsewhere in this Prospectus. SEE
"EXPERTS" and "FINANCIAL STATEMENTS."
THE COMPANY
The Company is a development stage company incorporated in the State
of Delaware on June 1, 1994. The Company has limited operations or no
revenue to date. The Company intends to engage in the development,
construction and operation of telecommunication systems and Internet
services. The Company intends to offer to business and residential
customers enhanced telecommunication services including, but not limited
to, local, regional, and international telephone service, fixed (land) and
cellular line systems, Internet access, and paging, mobile and facsimile
transmission capability. The Company will concentrate its services in the
Far East, including China and, as opportunities arise, in the United States.
The Company has entered into discussions for the development of certain
telecommunications systems, but as of the date hereof, no agreements have
been entered into and the Company does not own or manage any
telecommunications systems or Internet networks. The Offering herein is
considered a "blind pool". SEE "BUSINESS".
EMPLOYEES
The Company presently has two officers and one employee. The
Company does not expect to hire any additional employees before the
Effective Date of the registration statement of which this Prospectus forms a
part.
OFFICES
The United States offices of the Company are located at 2049 Century
Park East, Suite 1200, Los Angeles, California 90067. Its telephone
number is 310/712-3288 and its fax number is 310/712-3286. On August
28, 1997, the Company entered into a 6-month lease agreement with
Barrister Executive Suites, Inc. for such offices. The Company is provided
with an office suite at a rent of $1,600 per month and is provided access to
conference room facilities shared with other business tenants. The
Company does not believe that it currently needs additional space.
However, upon closing of the Offering and the addition of more employees,
of which there can be no assurance, the Company will determine whether to
remain in its current space or to move to larger office space.
<PAGE>
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN
NATURE AND INVOLVE A HIGH DEGREE OF RISK. THE
SECURITIES OFFERED HEREBY SHOULD BE PURCHASED ONLY
BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT. THEREFORE, EACH PROSPECTIVE INVESTOR
SHOULD, PRIOR TO PURCHASE, CONSIDER VERY CAREFULLY
THE FOLLOWING RISK FACTORS, AS WELL AS ALL OF THE
OTHER INFORMATION SET FORTH ELSEWHERE IN THIS
PROSPECTUS AND THE INFORMATION CONTAINED IN THE
FINANCIAL STATEMENTS, INCLUDING ALL NOTES THERETO.
RISKS RELATING TO OPERATING IN CHINA AND ELSEWHERE IN
THE FAR EAST
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES
The Company's sole director and certain of the Selling Securityholders
reside outside the United States. All of the assets of these persons are, and
the Company anticipates that a substantial portion of the assets that may
developed or acquired by the Company will be located outside the United
States. As a result, it may not be possible for investors to effect service of
process within the United States upon such persons, or to enforce against
the Company's assets or against such persons judgments obtained in United
States courts predicated upon the liability provisions, and most particularly
the civil liability provisions, of the United States securities laws or state
corporation or other law.
INVESTMENT IN FAR EAST GENERALLY
The Company anticipates that it will initially focus its development
efforts on telecommunication projects and opportunities located in China
and the Far East. Because of government controls and lack of established
information systems, information regarding projects in which the Company
may participate located in China and the Far East will be difficult for
United States investors to obtain and investors will be unable to track the
progress of the Company. In addition, if the Company begins operations in
China or the Far East it will be subject to the risks incident to the
ownership and operation of businesses therein. These risks include, among
others, the risks of internal political or civil unrest, war, or government
restrictions. These risks are dynamic and difficult to quantify. The
Company will be subject to the risks normally associated with changes in
general national economic conditions or local market conditions,
competition, patronage, changes in market rates, and the need to
periodically upgrade and replace equipment to maintain desirability, and to
pay the costs thereof. Although many of the governments of the countries
of the Far East have liberalized policies on international trade, foreign
ownership and development, investment, and currency repatriation,
increasing both international trade and investment accordingly, such policies
might change unexpectedly. The Company will be effected by the rules and
regulations regarding foreign ownership of real and personal property,
including telecommunication switching stations, land lines and other
property. Such rules may change quickly and dramatically which may have
an adverse impact on ownership and may result in a loss without recourse
of property or assets of the Company. Hong Kong is in a period of
transition from control over it by Great Britain to control by China. It is
uncertain what changes may result from such transition in regard to
business, foreign property ownership, restrictions on development, taxes or
other factors.
INVESTMENT IN CHINA IN PARTICULAR
Because the operations of the Company are expected to be based to a
substantial extent in China, the Company will be subject to the rules and
restrictions governing China's legal and economic system as well as general
economic and political conditions in that country. These include the
following:
Political and Economic Matters. Under its current leadership, the
government of the People's Republic of China ("PRC") has been pursuing
economic reform policies, which include the encouragement of private
economic activity and greater economic decentralization. There can be no
assurance, however, that the Chinese government will continue to pursue
such policies, or that such policies will be successful if pursued. Changes
in policies made by the Chinese government may result in new laws,
regulations, or the interpretation thereof, confiscatory taxation, restrictions
on imports, currency devaluations or the expropriation of private enterprise
which may, in turn, adversely affect the Company. Furthermore, business
operations in China can become subject to the risk of nationalization, which
could result in the total loss of ownership and control of any assets or
operations that may be developed by the Company in China. Also,
economic development may be limited by the imposition of austerity
measures intended to reduce inflation, the inadequate development of an
infrastructure, and the potential unavailability of adequate power and water,
transportation, communication networks, raw materials and parts.
Legal System. The PRC's legal system is a civil law system based on
written statutes. Unlike the common law system in the United States,
decided legal cases in the PRC have little value as precedents.
Furthermore, the PRC does not have a well-developed body of laws
governing foreign enterprises. Definitive regulations and policies with
respect to such matters as the permissible percentage of foreign investment
and permissible rates of equity returns have not yet been published,
statements regarding these evolving policies have been conflicting, and any
such policies, as administered, are likely to be subject to broad
interpretation and modification, perhaps on a case-by-case basis. As the
legal system in the PRC develops with respect to such new forms of
enterprise, foreign investors may be adversely affected by new laws,
changes in existing laws (or interpretation thereof) and the preemption of
provincial or local laws by national laws. The Company's operations in
China, if any are developed of which there can be no assurance, will be
subject to administrative review and approval by various national and local
agencies of the PRC government. Management intends that the Company's
operations will comply with applicable administrative requirements;
however, there is no assurance that the Company will be able to timely
obtain the necessary administrative approvals for any projects that the it
determines to develop.
Inflation/Economic Policies. In recent years, the Chinese economy has
experienced periods of rapid growth and high rates of inflation, which have,
from time to time, led to the adoption by the PRC government of various
corrective measures designed to regulate growth and contain inflation. In
1995, China's overall inflation rate was estimated to be 14.8%, compared
to 21.4% in 1994 and 13.2% in 1993. High inflation has in the past and
may in the future cause the PRC government to impose controls on prices,
or to take other action which could inhibit economic activity in China,
which in turn could affect the Company's development or operations.
Foreign Currency Exchange. The Renminbi ("Rmb"), the currency of
China, is not a freely convertible currency. Both conversion of Rmb into
foreign currencies and the remittance of Rmb abroad are subject to the PRC
government approval. The Company intends to develop telecommunication
systems in the Far East including China and anticipates that initially it may
earn revenues, if any, and incur costs, in Rmb.
Prior to January 1, 1994, Rmb earned within China were not freely
convertible into foreign currencies except with government permission, at
rates determined at swap centers, where the exchange rates often differed
substantially from the official rates quoted by the People's Bank of China.
On January 1, 1994, the People's Bank of China introduced a managed
floating exchange rate system based on the market supply and demand and
proposed to establish a unified foreign exchange inter-bank market among
designated banks. In place of the official rate and the swap center rate, the
People's Bank of China publishes a daily exchange rate for Rmb based on
the previous day's dealings in the inter-bank market. It is expected that
swap centers will be phased out. However, the unification of exchange
rates does not imply full convertability of Rmb into United States Dollars or
other foreign currencies. Payment for imported materials and remittance of
earnings outside of China are subject to the availability of foreign currency
which is dependent on the foreign currency denominated earnings of the
entity or allocated to the Company by the government at official exchange
rates.
Approval for exchange at the exchange center is granted to enterprises
in China for valid reasons such as purchases of imported goods and
remittance of earnings. While conversion of Rmb into dollars or other
foreign currencies can generally be effected at the exchange center, there is
no guarantee that it can be effected at all times. There is still uncertainty
as to how foreign enterprises will be treated under this new system or whether
the system will be changed again in the future. In the event of shortages of
foreign currency, the Company may be unable to convert sufficient
Renminbi into foreign currency to enable it to comply with foreign currency
payment obligations it may have.
PRC Regulation of the Telecommunications Industry. The Ministry of
Posts and Telecommunications (the "MPT") regulates the
telecommunications industry in China. The MPT directly or indirectly
regulates entry into the telecommunications industry, scope of permissible
business, interconnection and transmission line arrangements, technology
and equipment standards, and other aspects of the Chinese
telecommunications industry. Such regulation may limit the Company's
flexibility to respond to certain development opportunities. In addition,
changes in the regulations or policies governing such regulatory framework
could have an adverse effect on the Company. The Company may have to
obtain certain licenses, if required, from the MPT in order to commence its
proposed business. There is no assurance that it will be able to obtain such
licenses, or if obtained, that they will not be untimely revoked or
suspended. The rates that the Company will be permitted to charge for
telecommunications services, if any are developed, are subject to regulation
by the State Planning Commission, the MPT, and relevant Provincial Price
Bureaus. Once authorized by such regulatory agencies, there can be no
assurance that changes in the tariffs and rates would not have a material
adverse effect on any Company business and results of operations, if any
had been developed.
RISK FACTORS CONCERNING THE COMPANY
THE COMPANY IS A DEVELOPMENT STAGE COMPANY WITH
LIMITED OPERATING HISTORY
The Company, organized on June 1, 1994, is a development stage
company and has not begun operations as of the date of this Prospectus.
Without an operating history, there is only a limited basis upon which a
potential investor may evaluate the Company's prospects for its ability to
construct, develop and manage telecommunications systems and Internet
networks. To date, the Company's efforts have been limited to
organizational activities and the preparation of the registration statement of
which this Prospectus is a part. The Company has limited resources and
has had no revenues to date.
The Company's proposed operations are subject to all of the risks
inherent in the establishment of a new business enterprise, including the
absence of an operating history. The likelihood of the success of the
Company must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered in connection
with a new business and the competitive environment in which the Company
will operate. No assurance can be given that the operations of the
Company will result in any revenues or that the Company will be profitable.
SEE "BUSINESS."
SUCCESS OF PLAN OF OPERATIONS AND SHAREHOLDER
INFORMATION DEPENDENT ON MANAGEMENT
The ability of the Company to successfully effect its business objectives
and to develop, construct, management and acquire telecommunication
systems and Internet networks will be largely dependent upon the efforts of
its Management including Mr. Marc F. Mayeres, President of the Company
and Liancheng Ji, a director of the Company. As the Company anticipates
operations in China and elsewhere in the Far East, shareholders may have
difficulty in obtaining information from sources other than the Company,
including foreign local or national government agencies, about the
Company's activities and development of its projects in China or such other
countries in the Far East. Shareholders will be dependent upon
Management for reports of the Company's development and activities and
expenditure of proceeds. The Company has entered into an employment
agreement with Mr. Mayeres. SEE "MANAGEMENT". The Company
has not obtained any "key man" life insurance on the lives of any of its
officers or the director. The loss of the services of the key executives or
director could have a material adverse effect on the Company's ability to
successfully achieve its business objectives. The officers of the Company
will work full time on the development and operations of the Company.
Mr. Liancheng Ji will devote such time as a director as reasonably
necessary to assist the Company in developing its telecommunications
systems and Internet network in China and elsewhere in the Far East.
CONTROL BY SELLING SECURITYHOLDERS
Management does not currently own any securities of the Company and
will not own any of the securities of the Company following the Offering.
The current Selling Securityholders own 100% of the outstanding shares of
the Company, of which 10% are being offered for sale by the holders
thereof. SEE "DESCRIPTION OF SECURITIES".
LIMITED TELECOMMUNICATIONS INDUSTRY EXPERIENCE
The Company's Management has limited experience in owning,
constructing, developing or managing telecommunications and Internet
systems although the sole director of the Company has both education and
experience in such areas and has worked in the telecommunications field in
the Far East for over 30 years. Although the Company plans to hire
consultants, and professional operating technicians and specialists, there can
be no assurance that these professionals will be available on terms
acceptable to the Company. SEE "BUSINESS" and "MANAGEMENT."
In order to supplement the business experience of Management, the
Company may employ accountants, technical experts, appraisers, attorneys,
or other consultants or advisors in China, the Far East or the United States.
Furthermore, it is anticipated that such persons may be engaged by the
Company on an independent basis without a continuing fiduciary or other
obligation to the Company. As of the date of this Prospectus, the Company
has not entered into any agreements or arrangements with any such
technical support.
IF MINIMUM OFFERING IS NOT SOLD
If the Minimum Offering (100,000 Company Shares) is not sold by the
Company within 180 days of the Effective Date, all funds received by the
Company will be returned to the investors thereof without deductions or
interest. Investors should be aware that investment funds will be held in an
escrow account maintained by the Company and investors will not be
entitled to a return of their investment during such 180 day period.
Investors will not receive any interest on their funds while held in the
escrow account.
POSSIBLE NEED FOR ADDITIONAL FINANCING TO COMMENCE
OR CONTINUE OPERATIONS EVEN IF MINIMUM OFFERING SOLD
If the Minimum Offering is sold, the Company will receive $2,000,000
gross proceeds and if the Maximum Offering is sold, the Company will
receive $9,000,000 in gross proceeds. Although the Company can
commence initial operations if the Minimum Offering is sold, the Company
will be limited in implementing its business plan for the development,
construction and management of telecommunication and Internet systems
and for the acquisition of existing telecommunication systems and will likely
need to obtain additional funds in order to develop such telecommunications
or Internet systems. The Company may seek additional sources of capital,
including an additional offering of its equity securities, an offering of debt
securities or obtaining financing through a bank or other entity. The
Company has not established a limit as to the amount of debt it may incur
nor has it adopted a ratio of its equity to a debt allowance.
If the Company needs to obtain additional financing, there is no
assurance that financing will be available, from any source, or that it will
be available on terms acceptable to the Company, or that any future offering
of securities will be successful. The Company could suffer adverse
consequences if it is unable to obtain additional capital when needed. SEE
"BUSINESS" and "USE OF PROCEEDS".
The pace of the Company's development of telecommunication and
Internet systems and the possible acquisition of existing systems is directly
related to the amount of capital available to the Company for such purposes.
The greater the number of Company Shares that are sold, the greater the
amount of proceeds available to the Company to enter into development or
construction projects or to acquire existing telecommunication systems.
COMPETITION FROM OTHER MORE ESTABLISHED ENTITIES
Even if the Maximum Offering is sold, the Company will be a small
participant in the telecommunications industry and it will face competition
from well financed entities already established and actively engaged in
related or identical projects to those in which the Company plans to
participate. Many of such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the Company
and, consequently, the Company may be at a competitive disadvantage.
SEE "BUSINESS--Competition."
PURCHASERS WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL
DILUTION IN VALUE OF SHARES
Purchasers of the Company Shares offered herein will incur immediate
and substantial dilution in the pro forma net tangible book value of their
Common Stock. The unaudited estimated per share book value as of
November 30, 1997, prior to the Offering, is $(.0004). SEE
"DILUTION".
ISSUANCE OF FUTURE SHARES MAY DILUTE VALUE OF SHARES
HELD BY SHAREHOLDERS
The Certificate of Incorporation of the Company authorizes the issuance
of a maximum of 100,000,000 shares of Common Stock, $.0001 par value
and 20,000,000 shares of non-designated preferred stock. As of the date
hereof there are 90,100,000 shares of Common Stock outstanding and no
shares of preferred stock outstanding. The future issuance of all or part of
the remaining authorized Common Stock may result in dilution in the
percentage of the Company's Common Stock held by the Company's then
existing shareholders. Moreover, any Common Stock issued in the future
may be valued on an arbitrary basis by the Company. The issuance of the
Common Stock of the Company as part of the Company's participation in a
project or acquisition or for the payment for services or as compensation,
may have the effect of diluting the value of shares held by investors, and
might have an adverse effect on any trading market, should a trading market
develop for the Company's shares.
POTENTIAL ADVERSE EFFECTS OF AUTHORIZATION OF
PREFERRED STOCK
The Company has 20,000,000 authorized shares of non-designated
preferred stock of which none have been issued as of the date hereof. The
Company may, without further action or vote by shareholders of the
Company, designate and issue the shares of preferred stock. The terms of
any series of preferred stock, which may include priority claims to assets
and dividends and special voting rights, could adversely affect the rights of
holders of the Common Stock and thereby reduce the value of the Common
Stock. The designation and issuance of preferred stock favorable to current
Management or current shareholders could make the possible takeover of
the Company or the removal of Management of the Company more difficult
and discourage hostile bids for control of the Company which bids might
have provided shareholders with premiums for their shares.
NO INTENTION OF PAYING DIVIDENDS
Should the proposed operations of the Company be profitable, it is
likely that the Company would retain much or all of its earnings in order to
finance future growth and expansion. The Company has not and does not
presently intend to pay dividends and dividends are unlikely to be paid in
the foreseeable future.
FACTORS BEYOND THE COMPANY'S CONTROL
Numerous conditions beyond the Company's control may substantially
affect its success. Such conditions include, but are not limited to,
fluctuations in costs of goods and services including Internet access charges,
line use charges by third-party carriers, availability of telecommunications
equipment, import/export restrictions, weather conditions, equipment
shortages, political unrest, as well as competition from other businesses.
RISK FACTORS CONCERNING THE OFFERING
NO CURRENT TRADING MARKET FOR THE COMPANY'S
SECURITIES
There is currently no established public trading market for the Shares.
No assurance can be given that an active trading market in the Company's
securities will develop after completion of the Offering, or, if developed,
that it will be sustained. No assurance can be given that the market price of
the Company's securities will not fall below the initial public offering price.
The Company intends to apply for admission to quotation of the Shares on
the NASD OTC Bulletin Board and, if and when qualified, of which there
can be no assurance, it intends to apply for admission to quotation on the
Nasdaq SmallCap Market. SEE "DESCRIPTION OF SECURITIES". The
Company is a development stage company with limited operations and no
revenues. There can be no assurance that such a listing can now be
obtained or will be obtained once operations and revenues are established.
There can be no assurance that a regular trading market for the Common
Stock will develop or that, if developed, it will be sustained. Various
factors, such as the Company's operating results, changes in laws, rules or
regulations, general market fluctuations, changes in financial estimates by
securities analysts and other factors may have a significant impact on the
market price of the securities. The market price for the securities of public
companies often experience wide fluctuations which are not necessarily
related to the operating performance of such public companies such as high
interest rates or impact of overseas markets.
TRADING OF COMPANY SHARES RESTRICTED FOR UP TO 90
DAYS
In connection with the purchase of the Company Shares, purchasers will
enter into a lock-up agreement with the Company providing that the
Company Shares registered herein held purchased by such purchaser will
not be transferred, sold, assigned, pledged, hypothecated, distributed or
otherwise disposed of, directly or indirectly, for a period of 60 days
following the admission for trading of the Company's Common stock for
trading on any market. The Company Shares will be eligible to be
transferred, sold, assigned, pledged, hypothecated, distributed or otherwise
disposed of after expiration of such 60 day period with the Company's
approval, which permission shall not be withheld unless market conditions
so dictate. 90 days after following the admission for trading on any market
of the Company's Common Stock, the Company Shares can be transferred,
sold, assigned, pledged, hypothecated, distributed or otherwise disposed of
without the permission of the Company. In all events, the lock-up
provisions will terminate six months after the Effective Date hereof.
REGISTRATION OR QUALIFICATION OF THE SECURITIES IN A
LIMITED NUMBER OF STATES
The Company anticipates that a substantial portion of Company Shares
will be sold to investors located outside the United States. The Company
will register or qualify the offer and sale of the Shares in California, New
York, Washington, Florida, Illinois, Texas and Nevada. Purchasers of the
Shares who are residents of the United States must be residents in one of
these states. The Company will not accept purchases from residents not
located in a state in which the Shares have been qualified or registered.
The Offering may not achieve the Minimum Offering amount or the
Maximum Offering amount due to this limited registration.
RESALES OF THE SHARES UNDER STATE SECURITIES LAWS--THE
NATIONAL SECURITIES MARKET IMPROVEMENT ACT OF 1996
Currently, the Company intends to register the Offering only in
California, New York, Washington, Florida, Illinois, Texas and Nevada.
The Company will not accept shareholders who are not resident of these
states or such other state in which registration or qualification is not
required.
The National Securities Market Improvement Act of 1996 ("NMSIA")
limits the authority of states to impose restrictions upon sales of securities
made pursuant to Sections 4(1) and 4(3) of the Securities Act of companies
which file reports under Sections 13 or 15(d) of the Securities Exchange
Act. Sales of the Shares in the secondary trading market will be made
pursuant to Section 4(1) (sales other than by an issuer, underwriter or
broker). It is anticipated that the Shares will be immediately eligible for
resale in the secondary market subject to any lock up agreements thereon.
ARBITRARY DETERMINATION OF OFFERING PRICE
The initial public offering price of the Company Shares has been
arbitrarily determined by the Company and does not necessarily bear any
relationship to the Company's assets, net worth or other established criteria
of value. SEE "PLAN OF DISTRIBUTION" for a discussion of the factors
used to determine such offering price.
MANAGEMENT HAS DISCRETION IN APPLICATION OF PROCEEDS
Management of the Company has considerable discretion over the use
and expenditure of the proceeds from the sale of the Company Shares
offered herein. The Company intends to use the funds raised in this
Offering and additional capital (if such can be obtained, of which there is
no assurance) for the development of telecommunication and Internet
networks, marketing, working capital, administrative and other matters.
SEE "USE OF PROCEEDS". To the extent that the Company finds
changes are necessary or appropriate in order to address changed
circumstances and/or opportunities, Management may find it necessary to
adjust the use of the Company's capital, including the proceeds of this
Offering. As a result of the foregoing, the success of the Company may be
substantially dependent upon the discretion and judgment of the
Management with respect to the application and allocation of the net
proceeds hereof.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS
AND DIRECTORS
The Certificate of Incorporation and By-Laws of the Company provide
that the Company shall indemnify its officers and directors against losses
sustained or liabilities incurred which arise from any transaction in such
officer's or director's respective managerial capacity unless such officer or
director violates a duty of loyalty, did not act in good faith, engaged in
intentional misconduct or knowingly violated the law, approved an improper
dividend, or derived an improper benefit from a transaction. The
Company's Certificate of Incorporation and By-Laws also provide for the
indemnification by it of its officers and directors against any losses or
liabilities incurred as a result of the manner in which such officers and
directors operate the Company's business or conduct its internal affairs,
provided that in connection with these activities they act in good faith and in
a manner which they reasonably believe to be in, or not opposed to, the
best interests of the Company, and their conduct does not constitute gross
negligence, misconduct or breach of fiduciary obligations. SEE
"MANAGEMENT--Indemnification".
PENNY STOCK REGULATION
Penny stocks generally are equity securities with a price of less than
$5.00 per share other than securities registered on certain national securities
exchanges or quoted on the Nasdaq Stock Market, provided that current
price and volume information with respect to transactions in such securities
is provided by the exchange or system. The Company's securities may be
subject to "penny stock" rules that impose additional sales practice
requirements on broker-dealers who sell such securities to persons other
than established customers and accredited investors (generally those with
assets in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 together with their spouse).
Broker-dealer practices in connection with transaction in "penny stocks"
are regulated by certain penny stock rules adopted by the Securities and
Exchange Commission. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from the rules,
to deliver a standardized risk disclosure document that provides information
about penny stocks and the risks in the penny stock market. The broker-
dealer must also provide the customer with current bid and offer quotations
for the penny stock, the compensation received by the broker-dealer and its
salesperson in the transaction, and monthly account statement showing the
market value of each penny stock held in the customer's account. in
addition, the penny stock rules generally require that prior to a transaction
in a penny stock, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and 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
becomes subject to the penny stock rules. If the Company's securities
become subject to the penny stock rules, investors in this Offering may find
it more difficult to sell their securities.
ADDITIONAL SHARES ENTERING PUBLIC MARKET WITHOUT
ADDITIONAL CAPITAL PURSUANT TO RULE 144
No shares of stock of the Company were issued prior to August 1,
1997. All the issued and outstanding shares of the Company, to the extent
not sold or transferred pursuant to this Offering, are "restricted securities"
as such term is defined in Rule 144 ("Rule 144") promulgated under the
Securities Act. In general, under Rule 144, if adequate public information
is available with respect to a company, a person who has satisfied a one-
year holding period as to his restricted securities or an affiliate who holds
unrestricted securities may sell, within any three month period, a number of
that company's shares that does not exceed the greater of one percent of the
then outstanding shares of the class of securities being sold or the average
weekly trading volume during the four calendar weeks prior to such sale.
Sales of restricted securities by a person who is not an affiliate of the
company (as defined in the Securities Act) and who has satisfied a two year
holding period may be made without any volume limitation. Pursuant to
such Rule 144, after expiration of the holding period certain shares of
Common Stock now restricted for trading will become eligible for trading in
the public market without any payment therefore or increase to the
Company's capitalization. Possible or actual sales of the Company's
outstanding Common Stock by all or some of the present stockholders may
have an adverse effect on the market price of the Company's Shares should
a public trading market develop.
SHARES ELIGIBLE FOR SALE PURSUANT TO RULE 415
A Selling Securityholder may offer and sell the Selling Securityholder
Shares at a price and time determined by the particular Selling
Securityholder. The timing of such sales and the price at which the Selling
Securityholder Shares are sold by the individual Selling Securityholder
could have an adverse effect upon the public market for the Shares, should
one develop.
CERTAIN TAX CONSIDERATIONS
The Company will be subjected to taxes imposed on it in the
jurisdiction in which it operates. Further, its income is subject to United
States federal and state income taxes when distributed, deemed distributed
or otherwise attributed to, the Company, which is a United States
corporation. Complex tax rules apply for purposes of determining the
calculation of those United States taxes, the availability of a credit for
foreign taxes imposed and the timing of the imposition of United States tax.
Normally all foreign income earned by a United States multinational
corporation eventually will be subject to United States tax. In order to
relieve double taxation, the United States federal tax law generally allows
United States corporations a credit against their United States tax ability in
the year the foreign earnings become subject to United States tax in the
amount of the foreign taxes paid on those earnings. The credit is limited
under complex limitation rules. Further, complex rules exist for allocating
and apportioning interest, research and development expenses and certain
other expense deductions between the United States and foreign sources.
These rules can prevent United States multinational companies from
crediting all of the foreign taxes they pay against their United States taxes.
To the extent such credits are not allowed, foreign source income bears a
tax burden higher than the United States tax rate.
USE OF PROCEEDS
If the Maximum Offering is sold, the proceeds to the Company will be
$9,000,000 and if the Minimum Offering is sold, the proceeds to the
Company will be $2,000,000. There are no anticipated underwriting fees,
discounts or commissions to be paid. The Company anticipates that it may
utilize certain Company Shares for use in acquiring or leasing equipment or
existing telecommunications systems. Such usage will benefit the Company
by decreasing the amount of cash required to obtain such equipment or
services, but the Company will not receive any proceeds usable for other
matters directly from such use of its Company Shares.
The following table sets forth the Company's anticipated use of
proceeds from the Offering:
<TABLE>
<CAPTION>
MINIMUM OFFERING MAXIMUM OFFERING
<S> <C> <C>
Total Proceeds $ 2,000,000 $ 9,000,000
Offering Expenses (1) 157,700 157,700
Initial capitalization of
one or more of potential
projects(2) 1,500,000 5,700,000
Acquisition or
construction to be financed 2,500,000
of telecommunication
network
Working capital including
equipment, furnishings,
salaries and rent 342,300 642,300
</TABLE>
(1) The Company has obtained a loan from Finhorn Enterprises Limited,
a shareholder and Selling Securityholder, for payment of these initial
offering expenses. SEE "BUSINESS--Shareholder Loan".
(2) SEE "BUSINESS--Current Operations". If none of the projects
currently being initially discussed by the Company and generally
described in "BUSINESS--Current Operations", the Company
anticipates locating another project or projects of similar estimated
costs.
The foregoing represents the Company's best estimate of the net
proceeds of the Offering based on current planning and business conditions.
The exact allocation of the proceeds for the purposes set forth above and the
timing of the expenditures may vary significantly depending upon the exact
amount of funds raised, the time and cost involved in locating existing
telecommunication systems for purchase or obtaining necessary regulatory
approvals for construction of new telecommunication systems, the status of
competing entities, availability and delivery of supplies and equipment, and
other factors.
The Company believes that the proceeds from the Minimum Offering
would not be sufficient to fund its development for the next 12 months;
whereas, the proceeds from the Maximum Offering would be sufficient to
fund certain development for the next 12 months. If an amount less than
Maximum Offering is raised, the Company may be required to delay, scale
back or eliminate parts of its development plan or obtain funds through
additional financing, including loans or offerings of its securities.
DILUTION
Purchasers of the Company Shares will experience immediate and
substantial dilution in the value of their Shares. Dilution represents the
difference between the initial public offering price per share paid by the
purchasers in the Offering and the net tangible book value per share
immediately after completion of the Offering. Net tangible book value per
share represents the net tangible assets of the Company (total assets less
total liabilities), divided by the number of shares of Common Stock
outstanding upon closing of the Offering.
As of November 30, 1997, the Company had a net tangible book value
(on an unaudited basis) of $(38,378) or $(.0004) per share.
If the Minimum Offering is sold, the net tangible book value of the
Company would be $1,892,300 or $.02 per share. If the Maximum
Offering is sold, the net tangible book value of the Company would be
$8,892,300 or $.10 per share. This represents a per share increase of
$.0204 if the Minimum Offering is sold and $.1004 if the Maximum
Offering is sold. This represents an immediate dilution to investors in the
Offering of $19.98 per share if the Minimum Offering is sold and $19.90
per share if the Maximum Offering is sold. The following table illustrates
such effect:
Minimum Offering Maximum Offering
Initial public price per Unit $20.00 $20.00
Net tangible book value
before Offering $(.0004) $(.0004)
Increase per share
attributable to
new investors $.0204 $.1004
Pro forma net tangible
book value per share
after Offering $.0204 $.1004
Dilution per share to new investors $19.98 $19.10
The following table sets forth, on a pro forma basis, the differences
between existing shareholders and new investors in the Offering with
respect to the number of shares of Common Stock purchased from the
Company, the total consideration paid to the Company and the average
price per share paid by existing shareholders and by new investors:
MINIMUM OFFERING:
<TABLE>
<CAPTION>
Average
Outstanding Shares Total Consideration Price Per
Number % Paid % Share
<S> <C> <C> <C> <C> <C>
Existing
Shareholders 90,100,000 99.9% $ 90,100 4.3% $0.001
New Investors 100,000 0.1% 2,000,000 95.7% $20.00
Total 90,200,000 100.0% 2,090,100 100%
</TABLE>
<TABLE>
<CAPTION>
MAXIMUM OFFERING:
Average
Outstanding Shares Total Consideration Price Per
Number % Paid % Share
<S> <C> <C> <C> <C> <C>
Existing
Shareholders 90,100,000 99.5% $ 90,100 1% $0.001
New Investors 450,000 0.5% 9,000,000 99% $20.00
Total 90,550,000 100.0% 9,090,100 100%
</TABLE>
BUSINESS
GENERAL
The Company intends to engage in the development, operation,
acquisition and possible sale of telecommunications and Internet services to
offer a broad range of local and regional, international, and enhanced
telecommunication and Internet services including but not limited to cellular
and fixed line telephone service to individuals, business and residential
customers. The Company will concentrate its services in the Far East,
including China, and in the United States. The Company may locate an
existing telecommunications or Internet systems which it may acquire as
part of the development of its operating network. The Company intends to
offer local and international calling services, as well as customized
telecommunications and Internet services to its clients.
Since inception, the principal activity of the Company has been directed
to organizational efforts. As of the date hereof, the Company has hired a
fulltime President (see "MANAGEMENT") and has entered into
preliminary discussions for participation in several telecommunication
projects. The Company has not entered into any definitive agreements.
Start-up costs incurred by the Company have been provided by the initial
sale of certain securities of the Company and by loans from one or more of
its current shareholders. No other initial financing has been obtained.
There is no agreement or understanding pursuant to which the current
shareholders will continue to make such loans or purchase stock.
The Company anticipates that if the Minimum Offering is sold it will
need to raise funds in the next twelve months to develop and/or construct
telecommunications and Internet systems. Even if the Maximum Offering is
sold, the Company may determine to raise additional funds in order to
develop a greater number of telecommunication systems. Management may
use various methods to raise such funds including debt obligations such as
loans from banks or other sources or debt securities and/or investors'
equity. If financing is arranged, of which there can be no assurance,
Management anticipates that repayment of debt and debenture obligations
will be made from earnings from operations or sales of the
telecommunications and Internet systems and/or equity interest in the
Company. The Company has not established any ratio governing its equity
to debt limits nor any limit upon the debt which may be incurred.
The Company began payment of salaries to one of its officers on
September 1, 1997. On November 6, 1997, the Company entered into an
employment agreement with Marc F. Mayeres to serve as President of the
Company. SEE "MANAGEMENT--Employment Agreements". The
Company anticipates that incidental expenses of operations will be provided
by loans to the Company or purchases of stock from the Company by one
or more current shareholders. There is no binding agreement pursuant to
which the current shareholders must make such loans or purchase stock.
CURRENT OPERATIONS
The Company has begun discussions regarding several opportunities for
participation in developing certain telecommunication networks. These
discussions are all in the preliminary stages and potential investors should
be alerted that there is no assurance that the Company will finalize any of
these discussions or that agreements will be reached or conducted on any of
the terms outlined below.
Joint Venture with a China Telephone System Operator. The Company
is currently in discussion with an authorized public telephone system
operator and its affiliates for possible participation in the construction and
development of wire-line and wireless telephone networks in Hebei Province
in China. This company is AN authorized public telephone operator in
China.
The possible telecommunication construction and development in the
Hebei Province would be an expansion of the existing current wire-line and
wireless telephone network. The current wire-line telephone penetration
rate in Hebei Province is only 5.3 per 100 capita and the penetration rate
for wireless telephone is 0.52 per 100. These penetration rates are below
the international standards for developed and developing countries and the
Company believes that there is a great demand for immediate increase in
network capability and services.
If the Company were to enter into a joint venture for wireless telephone
networks in the Hebei Province, the Company would seek to establish a
joint venture company in which the Company would anticipate holding at
least a 49% interest. The joint venture would continue for approximately
25 years. Through the joint venture company, the Company would be
responsible for constructing and developing the telephone expansion
network and would also (i) assist in obtaining equipment, goods and
materials not available in China; (ii) introduce and oversee modern and
efficient operating and management techniques; (iii) recruit qualified foreign
personnel and international consultants; (iv) assist in raising capital for the
network construction; and (v) perform such other duties as deemed
necessary.
Internet Joint Venture. The Company is in preliminary discussions with
a Chinese telecommunications partner for the possible development of a
nationwide internet network in China. If the Company were to enter into
such a joint venture, the Company would form a joint venture company in
which the Company would anticipate holding at least a 49% interest. The
joint venture company would intend to provide internet access service
throughout China commencing its operations in the major metropolitan areas
providing its clients with access to the World Wide Web, electronic mail
transfer, individual web pages, research engines, news and updates, on-line
shopping and other services as are customarily available by Internet Service
Providers. The joint venture would continue for a period of 30 years and
anticipates being able to admit up to 5,000,000 customers to the network in
approximately 7 years.
Joint Venture with a California Telecommunications Company. The
Company is in preliminary discussions with a California-based
telecommunications company for the possible cooperation in developing new
telecommunication technologies and using such new technologies, as well as
those previously developed by the California company, the construction and
development of telecommunications networks in China and, possibly,
elsewhere.
The current telephone system in China (as well as many other countries
in the Far East and Europe) are based on Synchronous Digital Hierarchy
("SDH") technologies while the majority of telephone systems in the United
States, for instance, are based on Asynchronous Transfer Mode ("ATM")
technologies. Many European countries have started to transfer to the ATM
system. The Company would develop ATM access network technologies to
enhance the compatibility and efficiency of the current SDH telephone
networks and to use the new technologies in constructing and developing
telephone and internet networks to ensure those networks would be
compatible with international standards.
SHAREHOLDER LOAN
In October 2, 1997, Finhorn Enterprises Ltd, a shareholder of the
Company, loaned the Company $60,000 repayable in 12 months at an
annual interest rate of 5%. The loan is renewable upon the expiration of
the one-year term for another year at a 7% annual interest rate. The
Company anticipates that it will repay the loan from revenues generated
from operations or, if no revenues have been generated from operations at
such time that the loan is payable, then the Company will use what proceeds
from the Offering are available at such time to repay the loan. On October
27, 1997, the Company borrowed an additional $100,000 from Finhorn
Enterprises Ltd. on the same terms as the earlier loan. Proceeds from both
loans, aggregating $160,000, are for the payment of expenses of this
Offering, including legal fees, and initial working capital. SEE
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS".
BUSINESS PLAN
The Company plans to seek opportunities for the development and
construction of telecommunications and Internet networks either by itself or
in cooperation with other entities. The Company intends to establish and
develop, either through construction and development or through acquisition
of existing systems, one or more telecommunications and/or Internet
networks consisting of fixed and/or cellular line services to be selected in
specific target areas in the Far East, including China, and, if the
opportunity is available, in the United States.
The Company intends to establish a network communication system for
business and residential subscribers to provide intraconnection between
cellular and fixed line services and to provide subscribers with capability to
make domestic and international long distance calls. The Company plans to
establish and offer nationwide an Internet access system in China and
anticipates that its network systems will interconnect with the MPT Systems
which will allow the Company's subscribers to communicate with fixed line
and cellular users of other networks and to make and receive domestic and
international long distance calls.
The Company anticipates that it will commence operations by entering
into joint venture relationships with other established telecommunication
companies, either in the United States or elsewhere, for the initial
development and construction of telecommunication and Internet networks
or for the expansion and improvement of existing network. The Company
anticipates that it will participate in a series of such joint ventures while,
if funds are available therefor, initiating telecommunications projects in which
it is the sole participant. The Company anticipates that as it participates in
a growing number of such projects, it will be able to develop, in China
initially, compatible telecommunications systems and Internet access to a
wide variety of geographic locations.
The Company anticipates that it will be able to work with the MPT and
its agents to establish an interconnection arrangement to allow the Company
to utilize the existing MPT network equipment and connections. Fees
charged for such usage will be passed to the customer as part of the
utilization tariff. The Company intends to utilize current computer systems
to provide network operation management, customer service and marketing.
The Company intends to construct its own transceiver station sites or to
lease such sites from the MPT or third-party owners or acquire receiving
stations already existing.
The Company intends to focus on controlling costs and providing
efficient operations through the use of advanced management information
systems and by retaining and attracting qualified personnel. The Company
intends to focus on marketing its telecommunications system in its selected
target areas. The Company intends to offer subscribers certain value added
services such as call forwarding, call waiting, conference calling, facsimile
transmission services, and modem access to the Internet and World Wide
Web. The Company will develop its value added services package as it
identifies its target market and the demographics therein.
The Company's principal business objective is to provide
telecommunications systems, including cellular, fixed line and Internet
services, to residential and businesses customers in countries in the Far
East, including China, and in the United States. The Company intends to
reach its objectives through the development of its telecommunication
network and/or by the acquisition of existing telecommunication networks,
or both.
TELECOMMUNICATIONS IN GENERAL
The global market for telecommunications services is undergoing
significant deregulation and reform. The Company believes that the
industry is being shaped by the (i) deregulation and privatization of
telecommunication markets worldwide; (ii) diversification of services
through technological innovation; and (ii) globalization of major carriers. It
is anticipated that the industry generally will experience considerable growth
in terms of traffic volume and revenue and development of new markets.
According to the International Telecommunication Union ("ITU"), a
worldwide telecommunications organization under the auspices of the United
Nations, the international telecommunications industry accounted for $52.8
billion in revenues and 60.3 billion minutes of use in 1995. The ITU
projects that international telecommunications revenues will approach $76
billion by the year 2000 with the volume of traffic expanding to 107.0
billion minutes of use.
TELECOMMUNICATIONS INDUSTRY IN CHINA
According to the PRC Ministry of Posts and Telecommunications (the
"MPT"), with a population of 1,198,000,000 in 1994 China had 27,300,000
fixed line telephone subscribers (2.17% penetration) and 1,570,000 cellular
subscribers (.13% penetration). By 1996 with a population of
1,226,000,000 (2.28% growth) the telecommunications usage doubled to
54,950,000 fixed line telephone subscribers (4.49% penetration) and
6,950,000 cellular subscribers (.57% penetration). As the Chinese economy
shifts from a centrally planned economy to a more market-oriented
economy, the telecommunications industry has become one of the fastest
developing industries in China. Although the Chinese telecommunications
network has become one of the largest in the world in terms of number of
subscribers, the penetration rates remain relatively low indicating significant
potential for further rapid growth. The Company believes that the market
will be driven by the demand for telecommunication services from the
increase of world-competitive businesses and industries and from individual
personal use.
THE MINISTRY OF POSTS AND TELECOMMUNICATIONS AND
GOVERNMENT REGULATION
The PRC has developed its Ninth Five-Year Plan in which development
of the telecommunications industry in China will continue to be a high prior
for the government. The Five-Year Plan's goal is to double, by the year
2000, China's telecommunications capacity and business volume from that
of 1995. The MPT System has primary responsibility for implementing the
plan in regard to the telecommunications industry. The MPT System has
historically regulated all public telecommunications services in China. The
MPT directly or indirectly regulates entry into the telecommunications
industry, scope of permissible business, interconnection and transmission
line arrangements, technology and equipment standards, and other aspects
of the Chinese telecommunications industry. The Company believes that
such emphasis on growth of the telecommunications industry, coupled with
Management's familiarity with working with the MPT, will facilitate the
obtaining of support for development of the Company's operations from the
MPT.
ACQUISITION OF EXISTING TELECOMMUNICATIONS SYSTEMS
AND PURCHASES OF EQUIPMENT
In addition to constructing or developing its own telecommunications
and Internet systems by itself or in joint venture with others, the Company
may acquire existing telecommunications systems. It is possible that the
consideration paid for the acquisition of existing telecommunications
systems, if any such acquisitions are made of which there can be no
assurance, and/or the purchase of telecommunications and Internet
equipment, if any such purchases are made of which there can be no
assurance, or the payment for services of technicians, professionals or
employees, if any such services are used of which there can be no
assurance, may consist in whole or in part of the Company's Common
Stock, although the Company may also use cash and/or debt. If the
Company were to issue substantial additional securities for acquisitions,
such issuance may dilute the value of Shares, and might have an adverse
effect on any trading market that may develop in the Company's securities
in the future. If the Company were to incur indebtedness that substantially
changed the capital structure of the Company, the Company's shareholders
would most likely be exposed to a greater risk of loss of their investment in
the Company.
Securities issued in any such transaction are likely to rely on
exemptions from registration under applicable federal and state securities
laws. In some circumstances, however, as a negotiated element of such a
transaction, the Company may agree to register the securities either at the
time the transaction is consummated or at specified times thereafter. The
issuance of substantial additional securities and their potential sale into any
trading market which may develop in the Common Stock may have a
depressive effect on such market.
COMPUTER SYSTEMS REDESIGNED FOR YEAR 2000
Many existing computer programs use only two digits to identify a year
in such program's date field. These programs were designed and developed
without consideration of the impact of the change in the century for which
four digits will be required to accurately report the date. If not corrected,
many computer applications could fail or create erroneous results by or
following the year 2000. Many of the computer programs containing such
date language problems have been corrected by the companies or
governments operating such programs. In acquiring any existing
telecommunication system or Internet network, the Company will consider
the existence of a date language problem and the costs to correct such
problem as one of the factors in determining whether such acquisition would
be appropriate. Management does not know what steps, if any, have been
taken by the governments in the countries in the Far East, particularly
China, to correct or address such date language problem or if any such
steps are required. The Company anticipates that it will be leasing some
telecommunication equipment, including switching stations, landlines, etc.,
from the PRC and interconnecting with the telecommunications systems now
operated by the PRC and that any failure of the PRC's computer systems or
telecommunication delivery systems due to such computer date language
problem could have a severe impact on any operations of the Company that
have been developed.
BUSINESS ENVIRONMENT FOR OPERATIONS
The Company believes that the Far East, including Hong Kong and
China, has a vigorous economy. Foreign investment in the Far East has
grown considerably in the last 10 years. China has allowed the
establishment of foreign private enterprise and has encouraged development
of China as a manufacturing and business center. However, China remains
a Communist country with tight governmental controls. There can be no
assurance of the government's continued encouragement or permission of
private investment in China. Nor can there be any assurance as to
continued ownership of businesses by foreign entities in China.
COMPETITION
There are a great number of participants in the telecommunications and
Internet services field. Some of the participants are large international
corporations that have substantial resources and technical expertise while
there are also many start-up companies. All these companies will compete
with the Company for acquisition of existing telecommunications systems
and for development of new markets. Although the market penetration of
telecommunications services in China is small, the Company anticipates that
many international and start-up firms will begin entering the Chinese
telecommunications market. The Company will be a small participant. In
view of the Company's limited financial resources and limited Management
experience, the Company may be at a competitive disadvantage compared to
the Company's competitors. Management believes that the close familiarity
of certain of its officers and directors with business and economic
conditions in China and other areas in the Far East and elsewhere, and
knowledge of the Chinese language, as well as the familiarity of certain of
its officers and directors with the United States, the English language and,
generally, the American and international business communities, will be
useful in meeting such competition.
THE OFFERING
The Company is offering 450,000 Company Shares for sale at a per
Company Share price of $20. The Minimum Offering is 100,000 Company
Shares and the Maximum Offering is 450,000 Company Shares. The
Company Shares are being offered for sale by the officers and director of
the Company. The offering price of the Company Shares was determined
arbitrarily by the Company and is not necessarily related to asset or book
value, net worth or any other established criteria of value. There is no
current public trading market for the Shares. SEE "PLAN OF
DISTRIBUTION".
The Selling Securityholders are offering 9,010,000 Selling
Securityholder Shares for sale on a continuous or delayed basis pursuant to
Rule 415 under the Securities Act. SEE "RISK FACTORS--Shares
Available for Sale Pursuant to Rule 415" and "RISK FACTORS--Additional
Shares Entering Public Market without Additional Capital Pursuant to Rule
144. The amount of discounts or commissions, if any, which may be paid
by the Selling Securityholders on the sale of their securities registered
herein is not now known.
The Company is applying for admission to the NASD OTC Bulletin
Board for the Shares; however, there can be no assurance that the Shares
will be so listed. SEE "RISK FACTORS--No Current Trading Market for
the Company's Securities" and "DESCRIPTION OF SECURITIES--
Admission to Quotation on the Nasdaq SmallCap Market or NASD OTC
Bulletin Board".
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PLAN OF OPERATIONS
The Company is a development stage company, the objective of which
is to develop telecommunication systems and Internet networks in the Far
East, including China, and in the United States. To date, the Company's
efforts have been limited to organizational activities, including developing a
business plan, identifying and commencing discussions with potential joint
venture participants for telecommunication projects and identifying and
negotiating with qualified management necessary for the successful
implementation of the Company's business plan.
LIQUIDITY
The Company has generated no revenues to date and does not anticipate
to being able to generate revenues in the near future until that time, if ever,
that it has begun offering telecommunication and Internet services. The
Company believes that the acquisition of existing systems will provide the
Company with the quickest method to begin operations and, possibly,
receipt of revenues.
The Company has incurred a loss since inception, resulting in an
unaudited net loss as of November 30, 1997, of $128,478. The Company
anticipates that it will continue to incur losses for the foreseeable future
until such time, if ever, that the Company is able to generate sufficient
revenues to finance its operations.
In October 2, 1997, Finhorn Enterprises Ltd, a shareholder of the
Company, loaned the Company $60,000 repayable in 12 months at an
annual interest rate of 5%. The loan is renewable upon the expiration of
the 12-month term for another 12 months at a 7% annual interest rate.
The Company anticipates that it will repay the loan from revenues generated
from operations or, if no revenues have been generated from operations at
such time that the loan is payable, then the Company will use what proceeds
from the Offering are available at such time to repay the loan. On October
27, 1997, the Company borrowed an additional $100,000 from Finhorn
Enterprises Ltd. on the same terms as the earlier loan. Proceeds from both
loans, aggregating $160,000, are for the payment of expenses of this
Offering, including legal fees, and initial working capital. There are no
agreements or understandings for additional loans to be provided by Finhorn
Enterprises Ltd., or any other shareholder or entity, to the Company.
Capital Resources
Substantially all of the Company's expenditures subsequent to this
offering will be attributable to the development or acquiring
telecommunication networks. The Company may use the Company Shares
registered herein to purchase existing telecommunications systems and
equipment and other materials. The Company may also incur debt in the
development of such telecommunication systems. The Company has made
no commitments to date for any specific expenditure.
MANAGEMENT
OFFICERS AND DIRECTORS
The officers and directors of the Company are as follows:
NAME TITLE
Marc F. Mayeres President
Ming Zhang Secretary
Liancheng Ji Director
All directors of the Company hold office until the next annual meeting
of shareholders or until their successors are elected and qualified. The
By-laws permit the Board of Directors to fill any vacancy and such director
may serve until the next annual meeting of shareholders or until a successor
is elected and qualified. The Director does not receive any remuneration
for his services as a director. The Director may be reimbursed by the
Company for expenses incurred in attending meetings of the Board of
Directors.
The principal occupation and business experience for each officer and
director of the Company for at least the last five years are as follows:
Marc F. Mayeres, 56, has served as President of the Company since
November, 1997. From 1996 to 1997, Mr. Mayeres was Vice President of
Finance & Administration and Chief Financial Officer of Thomsen
Machinery, Inc., Gardena, California. Thomsen Machinery, Inc. is a
subsidiary of Putzmeister Werk AG Germany, an international supplier of
industrial and commercial cement and concrete pumping equipment. From
1994-1995, Mr. Mayeres served as a business consultant, including
developing accounting systems and preparing feasibility studies regarding
certain proposed corporate activities. From 1992-1994, Mr. Mayeres was
Vice President and Treasurer-Worldwide of SPI Pharmaceuticals, Inc.,
Costa Mesa, California. SPI Pharmaceuticals has over 3200 employees
worldwide with 7 subsidiaries. Mr. Mayeres handled worldwide treasury
functions including the global cash management, foreign exchange
management, banking contracts and negotiations, fund sourcing,
international refinancings, and repatriation of a $7.5 million dividend from
Yugoslavia. From 1989 to 1991, Mr. Mayeres was Director of
International Finance for Whirlpool Corporation, Benton Harbor, Michigan.
The Whirlpool Corporation has approximately 16,000 employees with 31
subsidiaries. From 1967 to 1989, Mr. Mayeres was employed by The
Quaker Oats Company, Chicago, Illinois in several positions, culminating
from 1983 to 1989 as Director of International Finance. The Quaker Oats
Company has approximately 9,000 employees with 28 subsidiaries. Mr.
Mayeres received his Chartered Accountant degree from the Belgian
College of Chartered Accounts in Antwerp, Belgium in 1967 and the
equivalent of a Bachelors of Science Degree in Chemistry from the Catholic
University of Louvain, Louvain, Belgium, in 1962.
Ming Zhang, 26, serves as Secretary of the Company. Ms. Zhang, a
resident of Los Angeles, was born in Hunan, China and is fluent in Chinese
and English. Ms. Zhang is a Certified Public Accountant candidate and
received her Bachelor of Science in Accounting from the University of
Kentucky in December, 1994. From 1995-1997 was employed by America
Catch, Inc., Los Angeles, California, a wholly-owned subsidiary of Beijing
Catch Telecommunication Group, as the Assistant to the President.
America Catch's primary business is to seek investment opportunities in the
United States and to expand its Beijing business and operations in the
United States.
Liancheng Ji, 58, serves as a Director of the Company. Mr. Ji is a
citizen of China and resides in Beijing, China. Since 1995, Mr. Ji has been
the Senior Engineer and Vice President of Hebei United
Telecommunications, Inc. ("Hebei Unicom"), Hebei Province, China which
specializes in telecommunication projects in Beijing and Hebei Province.
Hebei Unicom is the Hebei branch of China Unicom, the second largest
telecommunications provider in China. From 1994-1995 Mr. Ji was the
president of Beijing United Telecommunications, Inc., the Beijing branch of
China Unicom, specializing in telecommunication projects in Beijing.
From 1990-1994, Mr. Ji was the Vice President of Beijing Catch
Telecommunication Group which is the third largest telecommunication
service provider in China. From 1967 to 1989, Mr. Ji was the Senior
Engineer and Senior Operating Officer of China Institute of Electronic
System Engineering. Mr. Ji received his Bachelor of Science degree in
Telecommunication Engineering from China Northwestern Electronic
Engineering University.
EXECUTIVE COMPENSATION
Officers and directors receive compensation as determined by the
Company from time to time by vote of the Board of Directors. Such
compensation might be in the form of stock options. The Secretary of the
Company receives a salary of $3,500 per month but has agreed to defer
payment of such if requested by the Company in order to minimize cash
requirements. The President of the Company receives $7,000 per month
but has agreed to defer $3,500 per month until closing of the Offering. The
following table sets forth the total compensation paid or accrued by the
Company on behalf of the President of the Company during 1997. The
Company commenced paying salaries in September, 1997. No officer of
the Company receives a salary and/or bonus in excess of $100,000. SEE
"MANAGEMENT--Employment Agreements".
<TABLE>
[COMPENSATION]
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Long All
Other Term Other
POSITION Year Salary Bonus Awards Compen- Compen-
sation sation
<S> <C> <C> <C> <C> <C> <C>
Marc F.
Mayeres 1997 7,000/ --- --- --- ---
President Month
</TABLE>
(1) Mr. Mayeres employment begin on November 6, 1997 and he has
agreed to defer $3,500 per month of his compensation until closing
of the Offering.
EMPLOYMENT AGREEMENTS
On November 6, 1997, the Company entered into an employment
agreement with Mr. Marc F. Mayeres to serve as President of the
Company. The terms of the agreement require the fulltime services of Mr.
Mayeres to the activities of the Company and provide for compensation at
the rate of $7,000 per month, one-half of which is deferred until the closing
of the Offering. The agreement provides for medical insurance and
payment of expenses incurred on behalf of the Company. The agreement
expires at the end of six months with the option that upon the agreement of
both parties, a new agreement will be executed providing a salary of
$100,000 annually.
PAYMENT OF FEES TO DIRECTORS, ADVISORS AND AFFILIATES
Under certain circumstances, the Company may pay fees to individuals
or entities who are directors, advisors or affiliates of the Company. In the
event that an unsalaried affiliate arranged financing, or identified a
subsequently acquired telecommunications system or available equipment or
otherwise in an arms length transaction that ordinarily would generate a
"finders" fee, such a fee, calculated in a reasonable and customary manner,
might be paid. In general, an "affiliate", as defined under federal securities
law, is any person directly or indirectly controlling, controlled by, or under
common control with, such other person, including any officer, director,
partner or employee of such other person. No such payments have been
made or incurred to date by the Company to its director.
TIME DEVOTED TO COMPANY OPERATIONS
The officers of the Company devote full working time to the affairs of
the Company. Mr. Ji, a Director of the Company, anticipates devoting
substantial time to the affairs of the Company.
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS
The Certificate of Incorporation and By-laws of the Company provide
that the Company shall, to the fullest extent permitted by applicable law, as
amended from time to time, indemnify all directors of the Company, as
well as any officers or employees of the Company to whom the Company
has agreed to grant indemnification.
Section 145 of the Delaware General Corporation Law ("DGCL")
empowers a corporation to indemnify its directors and officers and to
purchase insurance with respect to liability arising out of their capacity or
status as directors and officers provided that this 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 or a
knowing violation of law, (iii) arising under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any
other rights to which the directors and officers may be entitled under the
corporation's by-laws, any agreement, vote of shareholders or otherwise.
The effect of the foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against such
persons in their official capacities if such person acted in good faith and in a
manner that he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, MAY BE
PERMITTED TO DIRECTORS, OFFICERS OR PERSONS
CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING
PROVISIONS, IT IS THE OPINION OF THE SECURITIES AND
EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS
THEREFORE UNENFORCEABLE.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Effective
Date of this Prospectus regarding the beneficial ownership of the
Company's Common Stock by each officer and director of the Company
and by each person who owns in excess of five percent of the Company's
Common Stock.
<TABLE>
<CAPTION>
Shares of
Common Stock Percentage
Name, Position Beneficially (1) Of Shares
Address Owned Owned
<S> <C> <C>
Finhorn Enterprises Limited (2) 55,100,000 61.15%
c/o East Asia Corporate Services Limited
Columbus Centre Building
Wickhams Cay
PO Box 901
Road Town, Tortola, B.V.I.
Serenadia Investment Limited (2) 20,000,000 22.20%
2555 Huntington Drive, Suite 249
Superior Gain Enterprises Limited
1108 West Valley Boulevard
Suite 438
Alhambra, California 91803-2477
Marc F. Mayeres -0- 0%
30902 Clubhouse Drive, #44F
Laguna Niguel, California 92677
Ming Zhang -0- 0%
3701 Glendon Avenue
Los Angeles, California 90034
Liancheng Ji -0- 0%
Building #2
Shizipuo Dongli
Dongcheng District
Beijing, China
All Officers, Directors -0- 0%
and Shareholders as a Group
(3 Persons)
</TABLE>
_________________
(1) Includes warrants, options or other rights to purchase common stock
exercisable within 60 days hereof.
(2) A British Virgin Islands corporation.
SALES BY SELLING SECURITYHOLDERS
The registration statement of which this Prospectus is a part also relates
to the offer and sale of up to 9,010,000 Selling Securityholders' Shares
being offered and sold by the Selling Securityholders. All of such securities
are expected to become tradeable on or about the date of this Prospectus.
Sales of the securities being offered by Selling Securityholders, or even
the potential of such sales, would likely have an adverse effect on the
market price of the Company Shares being offered for sale by the
Company. The freely tradeable Shares of the Common Stock (the "public
float") upon effectiveness of the Registration Statement of which this
Prospectus is a part and upon consummation of the transactions
contemplated herein will be 90,550,000 shares of Common Stock, of which
9,010,000 are to be sold by the Selling Securityholders.
SELLING SECURITYHOLDERS
The following table sets forth the beneficial ownership of the securities
of the Company held by each person who is a Selling Securityholder and by
all Selling Securityholders as a group.
<TABLE>
<CAPTION>
Percent of Common
Common Stock Owned Common Stock
Owned Name and Address Prior to After Prior to After
of Beneficial Offering Offering Offering Offering
Owner
<S> <C> <C> <C> <C>
Finhorn Enterprises
Limited(3 55,100,000 49,590,000 61.15% 54.8%
c/o East Asia Corporate
Services Limited
Columbus Centre Building
Wickhams Cay
PO Box 901
Road Town, Tortola, B.V.I.
Serenadia Investment
Limited(4) 20,000,000 18,000,000 20.20% 19.9%
2555 Huntington Drive
Suite 249
Superior Gain Enterprises Limited
1108 West Valley Boulevard
Suite 438
Alhambra, California 91803-2477
Gain Best International
Limited(5) 4,500,000 4,050,000 4.9% 4.5%
1 Dakengyan, Haidian
District
Beijing, China
Global Bridge Profits
Limited(6) 4,000,000 3,600,000 4.4% 4.0%
c/o Trident Trust Company
Limited
P.O. Box 146, Road Town
Tortola, B.V.I
Superior Gain Enterprises
Limited(7) 3,500,000 3,150,000 3.9% 3.5%
1108 West Valley Boulevard
Suite 438
Alhambra, California 91803-2477
Crowned Eagle
Worldwide, Ltd.(8) 3,000,000 2,700,000 3.3% 3.0%
2168 Atlantic Boulevard
Suite 125
Monterey Park, California 91754
</TABLE>
_________
(1) Based upon 90,100,000 shares of Common Stock outstanding prior
to offering.
(2) Assumes sale of all Shares offered herein including Company Shares
and Selling Securityholders' Shares resulting in 90,550,000 number
of shares of Common Stock outstanding.
(3) The named Selling Securityholder is a British Virgin Island company
engaged in investing in telecommunication networks and
telecommunication-related companies. Mr. Ma, Guang-Ming is its
beneficial owner and sole director.
(4) The named Selling Securityholder is a British Virgin Island company
engaged in researching and developing telecommunication equipment
and investing in telecommunication networks. Mr. Song, Yong-An
is its beneficial owner and sole director.
(5) The named Selling Securityholder is a British Virgin Island company
engaged in investing in researching and developing electronic
equipment and financial investment. Mr. Chen, Yan is its beneficial
owner and sole director.
(6) The named Selling Securityholder is a British Virgin Island company
engaged in developing paging technologies and manufacturing pagers
and investing in telecommunications networks. Mr. He, Yi is its
beneficial owner and sole director.
(7) The named Selling Securityholder is a British Virgin Island company
engaged in international trade and financial investment. Mr. Wang,
Li-Ping is its beneficial owner and sole director.
(8) The named Selling Securityholder is a British Virgin Island company
engaged in researching and developing electronic technologies and
financial investment. Mr. He, Lei is its beneficial owner and sole
director.
None of the Selling Securityholders nor their beneficial owners have
any relationship with each other or with officers or the director of the
Company.
The Shares owned by the Selling Securityholders are being registered
pursuant to Rule 415 of the General Rules and Regulations of the Securities
and Exchange Commission, which Rule pertains to delayed and continuous
offerings and sales of securities. In regard to the Selling Securityholders'
Shares offered under Rule 415, the Company has given certain undertakings
in Part II of the Registration Statement of which this Prospectus is a part
which, in general, commit the Company to keep this Prospectus current
during any period in which offers or sales are made pursuant to Rule 415.
The Company is bearing all expenses in connection with the registration of
the Selling Securityholders' Shares offered by this Prospectus.
DESCRIPTION OF SECURITIES
AUTHORIZED CAPITAL
The total number of authorized shares of stock of the Company is one
hundred million (100,000,000) shares of Common Stock having a par value
of $.0001 per share and twenty million (20,000,000) shares of non-
designated preferred shares.
INCORPORATION
The Company was incorporated in the state of Delaware on June 1,
1994 under the name TPG Management Corporation. The Company's
Certificate of Incorporation, By-laws and corporate governance, including
matters involving the issuance, redemption and conversion of securities, are
subject to the provisions of the Delaware General Corporation Law, as
amended and interpreted from time to time.
COMMON STOCK
The Company's Certificate of Incorporation authorizes the issuance of
100,000,000 shares of Common Stock, $.0001 value per share, of which
90,100,000 shares were outstanding prior to the commencement of this
Offering.
Holders of shares of Common Stock are entitled to one vote for each
share on all matters to be voted on by the stockholders. Holders of
Common Stock do not have cumulative voting rights. Holders of Common
Stock are entitled to share ratably in dividends, if any, as may be declared
from time to time by the Board of Directors in its discretion from funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to
share pro rata all assets remaining after payment in full of all liabilities.
All of the outstanding shares of Common Stock are, and the shares of
Common Stock offered by the Company pursuant to this offering will be,
when issued and delivered, fully paid and non-assessable.
Holders of Common Stock have no preemptive rights to purchase the
Company's Common Stock. There are no conversion or redemption rights
or sinking fund provisions with respect to the Common Stock.
All outstanding shares of Common Stock are validly issued, fully paid
and nonassessable, and all Shares to be sold and issued as contemplated
hereby will be fully paid and nonassessable when sold in accordance with
the terms hereof and pursuant to a valid and current prospectus. The Board
of Directors is authorized to issue additional shares, on such terms and
conditions and for such consideration as the Board may deem appropriate
without further stockholder action.
LOCK-UP AGREEMENT
In connection with the purchase of the Company Shares, purchasers
will enter into a lock-up agreement with the Company providing that the
Company Shares registered herein held purchased by such purchaser will
not be transferred, sold, assigned, pledged, hypothecated, distributed or
otherwise disposed of, directly or indirectly, for a period of 60 days
following admission for trading of the Company's Common Stock for
trading on any market. The Company Shares will be eligible to be
transferred, sold, assigned, pledged, hypothecated, distributed or otherwise
disposed of after expiration of such 60 day period with the Company's
approval, which permission shall not be withheld unless market conditions
so dictate. 90 days following the admission for trading on any market of
the Company's Common Stock, the Company Shares can be transferred,
sold, assigned, pledged, hypothecated, distributed or otherwise disposed of
without the permission of the Company. In all events, the lock-up
provisions will terminate six months after the Effective Date.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance of
20,000,000 shares of Preferred Stock, $.0001 par value per share, of which
no shares were issued prior to this Offering. The Board of Directors is
authorized to provide for the issuance of shares of Preferred Stock in series
and, by filing a certificate pursuant to the applicable law of the State of
Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers, preferences
and rights of the shares of each such series and the qualifications,
limitations or restrictions thereof without any further vote or action by the
shareholders. Any shares of Preferred Stock so issued would have priority
over the Common Stock with respect to dividend or liquidation rights. Any
future issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Company without further
action by the shareholders and may adversely affect the voting and other
rights of the holders of Common Stock. At present, the Company has no
plans to issue any Preferred Stock nor adopt any series, preferences or other
classification of Preferred Stock.
ADDITIONAL INFORMATION DESCRIBING STOCK
The above descriptions concerning the Common and Preferred Stock of
the Company do not purport to be complete. Reference is made to the
Company's Certificate of Incorporation and By-Laws which are included in
the registration statement of which this Prospectus is a part and which are
available for inspection at the Company's offices. Reference is also made
to the applicable statutes of the State of Delaware for a more complete
description concerning rights and liabilities of shareholders.
ADMISSION TO QUOTATION TO NASDAQ SMALLCAP MARKET OR
NASD OTC BULLETIN BOARD
To qualify for admission to quotation on the Nasdaq SmallCap Market,
an equity security must, in relevant summary, (1) be registered under the
Securities Exchange Act of 1934; (2) have at least three registered and
active market makers, one of which may be a market maker entering a
stabilizing bid; (3) for initial inclusion, be issued by a company with
$4,000,000 in net tangible assets, or $50,000,0000 in market capitalization,
or $750,000 in net income in two of the last three years (if operating
history is less than one year than market capitalization must be at least
$50,000,000); (4) have at a public float of at least 1,000,000 shares with a
value of at least $5,000,000; (5) have minimum a bid price of $4.00 per
share; and (6) have at least 300 beneficial shareholders.
If a company's securities do not qualify for admission to quotation on
the Nasdaq SmallCap Market they will trade over-the-counter until such
future time, if any, at which the securities qualify for admission to quotation
on the Nasdaq Stock Market and the Company then applies.
The Company will apply for listing of the Shares on the NASD OTC
Bulletin Board if it does not meet the requirements for admission to
quotation on the Nasdaq SmallCap Market. The over-the-counter market
differs from national and regional stock exchanges in that it (1) is not cited
in a single location but operates through communication of bids, offers and
confirmations between broker-dealers and (2) securities admitted to
quotation are offered by one or more broker-dealers rather than the
"specialist" common to stock exchanges. To qualify for listing on the
NASD OTC Bulletin Board, an equity security must have one registered
broker-dealer, known as the market maker, willing to list bid or sale
quotations and to sponsor such a Company listing.
TRADING OF SHARES
There are no outstanding options, warrants to purchase, or securities
convertible into, the shares of the Company. The Company has not agreed
with any shareholders, to register their shares for sale, other than for this
registration. The Company does not have any other public offerings in
process or proposed.
TRANSFER AGENT AND REGISTRAR
The transfer agent for the Company's securities will be selected by the
Company.
REPORTS TO SHAREHOLDERS
The Company will furnish to holders of the Shares annual reports
containing audited financial statements examined and reported upon, and
with an opinion expressed by, an independent certified public accountant.
The Company may issue other unaudited interim reports to its shareholders
as it deems appropriate.
PLAN OF DISTRIBUTION
THE OFFERING
The Company is offering 450,000 Company Shares at an offering price
of $20 per Company Share. The Company may, without liability, accept or
reject subscriptions, in whole or in part. The Company is offering a
minimum of 100,000 Company Shares ($2,000,000) and a maximum of
450,000 Company Shares ($9,000,000). Once funds from the sale of
450,000 Company Shares have been received, the Company will not accept
any further purchasers and any funds tendered therefor will be returned.
There can be no assurance that the Maximum Offering will be sold or that
the Minimum Offering will be sold.
MINIMUM OFFERING AND ESCROW ACCOUNT
All funds received by the Company with respect to the sale of the first
100,000 Company Shares will be deposited in a special escrow account to
be established by the Company at Wells Fargo Bank, N.A. If 100,000
Company Shares are not sold within one hundred eighty days (180)
following the effective date of the registration statement of which this
Prospectus is a part, the Offering will automatically terminate and all funds
received from the sale of the Company Shares will be returned to the
purchasers thereof without deductions and without interest. At the time that
the 100,000 Company Shares have been sold (the Minimum Offering) prior
to the 180-day period, the Company will release the funds from the escrow
account for deposit into the working account of the Company. Although the
Company will continue to sell the Offering to attempt to reach the
Maximum Offering (450,000 Shares), such released funds will be used at
that time by the Company as described herein. SEE "USE OF
PROCEEDS".
ARBITRARY DETERMINATION OF OFFERING PRICE
The offering price of the Company Shares has been determined
arbitrarily by the Company. Among the factors considered were the
Company's potential operations, current financial conditions and financial
requirements of the Company, estimates of the business potential and
prospects of the Company, the market demand for telecommunication and
Internet services particularly in the Far East and China, the economics of
the industry in general, the general condition of the equities market, and
other factors.
LIMITED STATE REGISTRATION
The Company anticipates that it will primarily sell the Company Shares
outside the United States. The Company will qualify or register the sales of
the Company Shares only in the states of New York, California,
Washington, Florida, Illinois, Texas and Nevada. The Company will not
accept subscriptions from investors resident in other states. SEE "RISK
FACTORS--Limited State Offering"
SALE OF THE COMPANY SHARES
The Company anticipates that the majority of its Company Shares will
be sold outside the United States. The Company Shares are being offered
through the Company's officers and director and no sales commission will
be paid to any officer or director of the Company but the Company will
reimburse its officers and director for expenses incurred in connection with
the offer and sale of the Company Shares. The officers and director of the
Company are relying on Rule 3a4-1 of the Exchange Act as a "safe harbor"
from the registration as a broker-dealer in connection with the offer and
sales of the Company Shares. In order to rely on such "safe harbor"
provisions provided by Rule 3a4-1, an officer or director must (1) not be
subject to a statutory disqualification; (2) not be compensated in connection
with such selling participation by payment of commissions or other
remuneration based either directly or indirectly on such transactions; and (3)
not be an associated person with a broker or dealer; and (4) (i) restrict
participation to transactions involving offers and sale of the securities, and
(ii) perform substantial duties for the issuer after the close of the offering
not connected with transactions in securities, and has not been associated
with a broker or dealer for the preceding 12 months, and does not
participate in selling an offering of securities for any issuer more than once
every 12 months, and (iii) restrict participation to written communications
or responses to inquiries of potential purchasers. The officers and directors
of the Company intend to comply with the guidelines enumerated in Rule
3a4-1.
COMPANY USE OF A BROKER-DEALER
The Company may locate a broker-dealer who may offer and sell the
Company Shares on terms acceptable to the Company. If the Company
determines to use a broker-dealer, such broker-dealer must be a member in
good standing of the National Association of Securities Dealers, Inc. and
registered, if required, to conduct sales in those states in which it would sell
the Company Shares. The Company anticipates that it would not pay in
excess of 10% as a sales commission for any sales of the Company Shares.
If a broker-dealer were to sell the Company Shares, it is likely that such
broker-dealer would be deemed to be an underwriter of the securities as
defined in Section 2(11) of the Securities Act and the Company would be
required to obtain a no-objection position from the National Association of
Securities Dealers, Inc. regarding the underwriting and compensation terms
entered into between the Company and such potential broker-dealer. In
addition, the Company would be required to file a post-effective amendment
to the registration statement of which this Prospectus is a part to disclose
the name of such selling broker-dealer and the agreed underwriting and
compensation terms.
SALE OF THE SELLING SECURITYHOLDER SHARES
The Company will receive the proceeds from the sale of the Company
Shares. The Company will not receive any proceeds from the sale of the
Selling Securityholders' Shares by the Selling Securityholders pursuant to
this Prospectus. The Selling Securityholders' Shares may be sold to
purchasers from time to time directly by and subject to the discretion of the
Selling Securityholders. In the event that the Selling Securityholders offer
their securities for sale, the Selling Securityholders may from time to time
offer for sale their Selling Securityholder Shares through underwriters,
dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling
Securityholders and/or the purchasers of the Shares for whom they may act
as agents. Any underwriters, dealers or agents who participate in the
distribution of the Selling Securityholders' Shares may be deemed to be
"underwriters" under the Securities Act and any discounts, commissions or
concessions received by any such underwriters, dealers or agents may be
deemed to be underwriting discounts and commissions under the Securities
Act.
At the time a particular offer is made by or on the behalf of the Selling
Securityholders, a Prospectus, including any necessary supplement thereto,
will be distributed which will set forth the number of Shares being offered
and the terms of the offering, including the name or names of any
underwriters, dealers or agents, the purchase price paid by any underwriter
for Shares purchased from the Selling Securityholders, any discounts,
commissions and other items constituting compensation from the Selling
Securityholders, any discounts, commissions or concessions allowed,
reallowed or paid to dealers, and the proposed selling price to the public.
Selling Securityholders' Shares may be sold from time to time in one or
more transactions: (i) at an offering price that is fixed or that may vary
from transaction to transaction depending upon the time of sale or (ii) at
prices otherwise negotiated at the time of sale. Such prices will be
determined by the Selling Securityholders or by agreement between the
Selling Securityholders and any underwriters.
Under applicable rules and regulations promulgated under the Exchange
Act, any person engaged in a distribution of securities may not
simultaneously bid for or purchase securities of the same class for a period
of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Securityholders will
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, in connection with transactions in Shares during the
effectiveness of the registration statement of which this Prospectus is a part.
The Company will pay all of the expenses incident to the registration of
the Shares (including registration pursuant to the securities laws of certain
states) other than commissions, expenses, reimbursements and discounts of
underwriters, dealers or agents, if any.
LEGAL MATTERS
LEGAL PROCEEDINGS
The Company is not a party to any litigation and Management has no
knowledge of any threatened or pending litigation against the Company.
LEGAL OPINION
Cassidy & Associates, Washington, D.C. has given its opinion as
attorneys-at-law that the Shares, when sold pursuant to the terms hereof,
will be fully paid and non-assessable. Excepting the above referenced legal
opinion of Cassidy & Associates, persons making any decision to acquire or
dispose of the Shares offered hereby are not entitled to, and should not, rely
upon any activities of Cassidy & Associates in connection with the
Company or this Offering.
EXPERTS
The financial statements in this Prospectus have been included in
reliance upon the report of John P. MacLean, Certified Public Accountants,
and upon the authority of such firm as expert in accounting and auditing.
The Company's fiscal year end is September 30.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement on Form S-1 (the
"Registration Statement") under the Securities Act with respect to the
securities offered hereby. This Prospectus does not contain all the
information contained in the Registration Statement. For further
information regarding the Company and the securities offered hereby,
reference is made to the Registration Statement, including all exhibits and
schedules thereto, which may be inspected without charge at the public
reference facilities of the Commission's Washington, D.C. office, 450 Fifth
Street, N.W., Washington, D.C. 20549. Each statement contained in this
Prospectus with respect to a document filed as an exhibit to the Registration
Statement is qualified by reference to the exhibit for its complete terms and
conditions.
The Company will be subject to the informational requirements of the
Exchange Act and in accordance therewith will file reports and other
information with the Commission. Reports, proxy statements and other
information filed by the Company can be inspected and copied on the
Commission's home page on the World Wide Web at http://www.sec.gov
or at the public reference facilities of the Commission, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as the following
Regional Offices: 7 World Trade Center, Suite 1300, New York, N.Y.
10048; and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois. 60661-2511. Such material can also be inspected at the
New York, Boston, Midwest, Pacific and Philadelphia Stock Exchanges.
Copies can be obtained from the Commission by mail at prescribed rates.
Request should be directed to the Commission's Public Reference Section,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements and such other reports as may be
required by law.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
ASPAC COMMUNICATIONS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
with
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Report of Independent Certified
Public Accountants F-1
Financial Statements:
Assets F-2
Stockholders' Equity F-2
<PAGE>
<PAGE>
JOHN P. MACLEAN
CERTIFIED PUBLIC ACCOUNTANT
15701 Alameda Drive
Bowie, Maryland 20716
301/249-4900
FAX 301/249-9296
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Aspac Communications, Inc.
I have audited the accompanying Balance Sheet of Aspac
Communications, Inc. as of October 2, 1997. This financial statement is
the responsibility of the Corporation's management. My responsibility is to
express an opinion on this financial statement based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statement is 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. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statement referred to above presents fairly,
in all materials respects, the financial position of Aspac Communications,
Inc. as of October 2, 1997, in conformity with generally accepted
accounting principles.
/s/ John P. MacLean, CPA, CFP
October 6, 1997
<PAGE>
<PAGE>
ASPAC COMMUNICATIONS, INC.
Balance Sheet
October 2, 1997
ASSETS
Cash $ 200
Total assets $ 200
Shareholder Equity
Common Stock (200,000 shares
outstanding, 100,000,000
shares authorized,
$.0001 par value) $ 20
Additional Paid In Capital 180
Total Equity $ 200
See Auditor's Report
<PAGE>
<PAGE>
ASPAC COMMUNICATIONS, INC.
Notes to Financial Statement
Summary of Significant Accounting Policies
A summary of the significant accounting policies consistently applied in the
preparation o fthe accompanying financial statement follows:
(A) DESCRIPTION OF BUSINESS. The Company was organized for the
purpose of engaging in any lawful business. The Company is in the
development stage and operations have not commenced. The Company has
selected the September 30 as its fiscal year.
(B) COMMON STOCK ISSUED. The Company has authorized
100,000,000 shares of Common Stock having a par value of $.0001 per
share and 20,000,000 shares of preferred stock having a par value of
$.0001 per share. As of October 2, 1997, 200,000 shares of Common
Stock had been issued and were outstanding.
(C) As of October 2, 1997, no shareholders, officers, directors or other
related parties had incurred costs on behalf of the Company.<PAGE>
<PAGE>
<PAGE>
No dealer, salesman or any other person has been
authorized to give any information or to make any
representations other than those contained in this prospectus,
and, if given or made, such information or representations
may not be relied on as having been authorized by the
Company or by any of the Underwriters. Neither the
delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create an implication that there
has been no change in the affairs of the Company since the
date hereof. This Prospectus does not constitute an offer to
sell, or solicitation of any offer to buy, by any person in any
jurisdiction in which it is unlawful for any such person to
make such offer or solicitation. Neither the delivery of this
Prospectus nor any offer, solicitation or sale made hereunder,
shall under any circumstances create any implication that the
information herein is correct as of any time subsequent to the
date of the Prospectus.
------------------------
TABLE OF CONTENTS
Page
Prospectus Summary
The Company
Use of Proceeds
Dilution
Risk Factors
Business
The Offering
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Management
Security Ownership of Certain
Beneficial Owners and Management
Sales by Selling Securityholders
Selling Securityholders
Description of Securities
Plan of Distribution
Legal Matters
Experts
Available Information
Index to Financial Statements
Until 90 days after the release of the registered securities
from the Escrow Account, all dealers effecting transactions in
the registered securities, whether or not participating in this
distribution, may be required to deliver a prospectus. This is
in addition to the obligations of dealers to deliver a
Prospectus when Acting as underwriters and with
respect to their unsold allotments or subscriptions.<PAGE>
ASPAC COMMUNICATIONS, INC.
450,000 Shares of Common Stock;
9,010,000 Shares of Common Stock
to be Sold by the Holders Thereof
----------
PROSPECTUS
----------
December ____, 1997
=======================
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with this
Registration Statement. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission.
Filing Fee - Securities and Exchange Commission $ 2,700
Fees and Expenses of Accountants 2,000
Fees and Expenses of Counsel 150,000
Blue Sky Fees and Expenses 1,000
Printing and Engraving Expenses 1,000
Miscellaneous Expenses 1,000
Total $ 157,700 (1)
(1) The Company has obtained a loan from one of the shareholders of the
Company for payment of these expenses which loan will be repaid from
proceeds of the Offering.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is incorporated in Delaware. Under Section 145 of the General
Corporation Law of the State of Delaware, a Delaware corporation has the power,
under specified circumstances, to indemnify its directors, officers, employees
and agents in connection with actions, suits or proceedings brought against
them by a third party 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 proceeding. The Certificate of
Incorporation and the By-laws of the Company provide for indemnification of
directors and officers to the fullest extent permitted by the General
Corporation Law of the State of Delaware.
The General Corporation Law of the State of Delaware provides that a
certificate of incorporation may contain a provision eliminating 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
or a knowing violation of law, (iii) under Section 174 (relating to liability
for unauthorized acquisitions or redemptions of, or dividends on, capital stock)
of the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit.
The Company's Certificate of Incorporation contains such a provision.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
As listed below, the Company issued shares of its Common Stock par value
$.0001 per share to the following entities for the consideration as listed.
These sales were not made within the United States or to United States citizens
or residents. However, such sales were made in compliance with Regulation D of
the Securities Act of 1933.
Date Shareholder Number of Shares Consideration
11/1/97 Finhorn Enterprises Limited 55,100,000 $55,100
11/1/97 Serenadia Investment Limited 20,000,000 20,000
11/1/97 Gain Best International Limited 4,500,000 4,500
11/1/97 Global Bridge Profits Limited 4,000,000 4,000
11/1/97 Superior Gain Enterprises Limited 3,500,000 3,500
11/1/97 Crowned Eagle Worldwide, Ltd. 3,000,000 3,000
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
3.1 Restated Certificate of Incorporation of the Company
3.2** By-Laws of the Company
4.1* Form of Common Stock Certificate
4.2* Lock-Up Agreement
5.1* Opinion of Cassidy & Associates
10.1 Lease Agreement
10.2 Employment agreement with Marc F. Mayeres
10.3* Promissory Note with Finhorn Enterprise Limited
24.1 Consent of Accountant
24.2* Consent of Cassidy & Associates (included in Exhibit 5)
27* Financial Data Schedule
- ---------------
* To be filed by Amendment.
** Already filed.
(b) The following financial statement schedules are included in this
Registration Statement.
None.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission is that such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(ii) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Aspac Communications, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-1 and has duly
caused this Amendment #1 to the Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Los Angeles, California on the 10th day of December, 1997.
ASPAC COMMUNICATIONS, INC.
By: /s/ Marc F. Mayeres
Marc Mayeres
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment #1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Liancheng Ji Director December 10, 1997
Liancheng Ji
RESTATED CERTIFICATE OF INCORPORATION
of
ASPAC COMMUNICATIONS, INC.
The original Certificate of Incorporation was filed on June 1, 1994.
The Corporation was originally incorporated as TPG Management
Corporation. This Restated Certificate of Incorporation has been duly
adopted in accordance with Section 245 of the Delaware General
Corporation Code and restates and integrates provisions of the
Corporation's Certificate of Incorporation and does not further amend any
such provisions.
ARTICLE ONE
Name
The name of the Corporation is Aspac Communications, Inc. (the
"Corporation").
ARTICLE TWO
Duration
The Corporation shall have perpetual existence.
ARTICLE THREE
Purpose
The purpose for which this Corporation is organized is to engage in any
lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
ARTICLE FOUR
Shares
Authorized Capital. The total number of shares of stock which the
Corporation shall have authority to issue is 120,000,000 shares, consisting
of 100,000,000 shares of Common Stock having a par value of $.0001 per
share and 20,000,000 shares of Preferred Stock having a par value of
$.0001 per share.
The Board of Directors is authorized to provide for the issuance of the
shares of Preferred Stock in series and, by filing a certificate pursuant to
the applicable law of the State of Delaware, to establish from time to time
the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each series of
Preferred Stock shall include, but not be limited to, determination of the
following:
A. The number of shares constituting that series and the distinctive
designation of that series;
B. The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on share of that series;
C. Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
D. Whether that series shall have conversion privileges, and, if so, the
terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall
determine;
E. Whether or not the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
F. Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;
G. The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, and
the relative rights of priority, if any, of payment of shares of that series;
and
H. Any other relative rights, preferences and limitations of that series.
ARTICLE FIVE
Commencement of Business
The Corporation is authorized to commence business as soon as its
certificate of incorporation has been filed.
ARTICLE SIX
Principal Office and Registered Agent
The post office address of the initial registered office of the Corporation
and the name of its initial registered agent and its business address is
The Prentice Hall Corporation System, Inc.
1013 Centre Road
Wilmington, Delaware 19805
The initial registered agent is a resident of the State of Delaware.
ARTICLE SEVEN
Incorporator
James M. Cassidy, 1504 R Street, N.W., Washington, D.C. 20009.
ARTICLE EIGHT
Pre-Emptive Rights
No Shareholder or other person shall have any pre-emptive rights
whatsoever.
ARTICLE NINE
By-Laws
The initial by-laws shall be adopted by the Shareholders or the Board of
Directors. The power to alter, amend, or repeal the by-laws or adopt new
by-laws is vested in the Board of directors, subject to repeal or change by
action of the Shareholders.
ARTICLE TEN
Number of Votes
Each share has one vote on each matter on which the share is entitled to
vote.
ARTICLE ELEVEN
Majority Votes
A majority vote of a quorum of Shareholders (consisting of the holders
of a majority of the shares entitled to vote, represented in person or by
proxy) is sufficient for any action which requires the vote or concurrence of
Shareholders, unless otherwise required or permitted by law or the by-laws
of the Corporation.
ARTICLE TWELVE
Non-Cumulative Voting
Directors shall be elected by majority vote. Cumulative voting shall not
be permitted.
ARTICLE THIRTEEN
Interested Directors, Officers and Security holders
A. Validity. If Paragraph (B) is satisfied, no contract or other
transaction between the Corporation and any of its directors, officers or
Security holders, or any corporation or firm in which any of them are
directly or indirectly interested, shall be invalid solely because of this
relationship or because of the presence of the director, officer or security
holder at the meeting of the Board of directors or committee authorizing the
contract or transaction, or his participation or vote in the meeting or
authorization.
B. Disclosure, Approval, Fairness. Paragraph (A) shall apply only if:
(1) The material facts of the relationship or interest of each such
director, officer or security holder are known or disclosed:
(a) to the Board of directors or the committee and it nevertheless
authorizes or ratifies the contract or transaction by a majority of the
directors present, each such interested director to be counted in determining
whether a quorum is present but not in calculating the majority
necessary to carry the vote; or
(b) to the Shareholders and they nevertheless authorize or ratify the
contract or transaction by a majority of the shares present, each such
interested person to be counted for quorum and voting purposes; or
(2) the contract or transaction is fair to the Corporation as of the time
it is authorized or ratified by the Board of directors, the committee or the
Shareholders.
ARTICLE FOURTEEN
Indemnification and Insurance
A. Persons. The Corporation shall indemnify, to the extent provided in
Paragraphs (B), (D) or (F):
(1) any person who is or was director, officer, agent or employee of the
Corporation, and
(2) any person who serves or served at the Corporation's request as a
director, officer, agent, employee, partner or trustee of another corporation or
of a partnership, joint venture, trust or other enterprise.
B. Extent--Derivative Suits. In case of a suit by or in the right of the
Corporation against a person named in Paragraph (A) by reason of his holding
a position named in Paragraph (A), the Corporation shall indemnify him, if he
satisfies the standard in Paragraph (C), for expenses (including attorney's fees
but excluding amounts paid in settlement) actually and reasonably incurred by
him in connection with the defense or settlement of the suit.
C. Standard--Derivative Suits. In case of a suit by or in the right of
the Corporation, a person named in Paragraph (A) shall be indemnified only if:
(1) he is successful on the merits or otherwise, or
(2) he acted in good faith in the transaction which is the subject of the
suit, and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the Corporation. However, he shall not be indemnified in
respect of any claim, issue or matter as to which he has been adjudged liable
for negligence or misconduct in the performance of his duty to the Corporation
unless (and only to the extent that) the court in which the suit was brought
shall determine, upon application, that despite the adjudication but in view of
all the circumstances, he is fairly and reasonably entitled to indemnity for
such expenses as the court shall deem proper.
D. Extent--Nonderivative Suits. In case of a suit, action or proceeding
(whether civil, criminal, administrative or investigative), other than a suit by
or in the right of the Corporation against a person named in Paragraph (A) by
reason of his holding a position named in Paragraph (A), the Corporation shall
indemnify him, if he satisfies the standard in Paragraph (E), for amounts
actually and reasonably incurred by him in connection with the defense or
settlement of the suit as
(1) expenses (including attorneys' fees),
(2) amounts paid in settlement
(3) judgments, and
(4) fines.
E. Standard--Nonderivative Suits. In case of a nonderivative suit, a
person named in Paragraph (A) shall be indemnified only if:
(1) he is successful on the merits or otherwise, or
(2) he acted in good faith in the transaction which is the subject of the
nonderivative suit, and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Corporation and , with respect to any
criminal action or proceeding, he had no reason to believe his conduct was
unlawful. The termination of a nonderivative suit by judgement, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the person failed to satisfy
this Paragraph (E) (2).
F. Determination That Standard Has Been Met. A determination that the
standard of Paragraph c or (E) has been satisfied may be made by a court of
law or equity or the determination may be made by:
(1) a majority of the directors of the Corporation (whether or not a
quorum) who were not parties to the action, suit or proceeding, or
(2) independent legal counsel (appointed by a majority of the directors of
the Corporation, whether or not a quorum, or elected by the Shareholders of
the Corporation) in a written opinion, or
(3) the Shareholders of the Corporation.
G. Proration. Anyone making a determination under Paragraph (F) may
determine that a person has met the standard as to some matters but not as to
others, and may reasonably prorate amounts to be indemnified.
H. Advance Payment. The Corporation may pay in advance any expenses
(including attorney's fees) which may become subject to indemnification under
paragraphs (A) - (G) if:
(1) the Board of directors authorizes the specific payment and
(2) the person receiving the payment undertakes in writing to repay unless
it is ultimately determined that he is entitled to indemnification by the
Corporation under Paragraphs (A) - (G).
I. Nonexclusive. The indemnification provided by Paragraphs (A) - (G)
shall not be exclusive of any other rights to which a person may be entitled by
law or by by-law, agreement, vote of Shareholders or disinterested directors,
or otherwise.
J. Continuation. The indemnification and advance payment provided by
Paragraphs (A) - (H) shall continue as to a person who has ceased to hold a
position named in paragraph (A) and shall inure to his heirs, executors and
administrators.
K. Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who holds or who has held any position named in
Paragraph (A) against any liability incurred by him in any such positions or
arising out of this status as such, whether or not the Corporation would have
power to indemnify him against such liability under Paragraphs (A) - (H).
L. Reports. Indemnification payments, advance payments, and insurance
purchases and payments made under Paragraphs (A) - (K) shall be reported in
writing to the Shareholders of the Corporation with the next notice of annual
meeting, or within six months, whichever is sooner.
ARTICLE FIFTEEN
Limitation On Director Liability
A. Scope of Limitation. No person, by virtue of being or having been a
director of the Corporation, shall have any personal liability for monetary
damages to the Corporation or any of its Shareholders for any breach of
fiduciary duty except as to the extent provided in Paragraph (B).
B. Extent of Limitation. The limitation provided for in this Article
shall not eliminate or limit the liability of a director to the Corporation or
its Shareholders (I) for any breach of the director's duty of loyalty to the
Corporation or its Shareholders (ii) for any acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law (iii) for
any unlawful payment of dividends or unlawful stock purchases or redemptions
in violation of Section 174 of the General Corporation Law of Delaware or (iv)
for any transaction for which the director derived an improper personal
benefit.
C. Amendment of Article. Any changes in the General Corporation Law
of Delaware increasing, decreasing, amending, changing or otherwise effecting
the indemnification of directors, officers, agents, or employees of the
Corporation shall be incorporated by reference in this Article as of the date of
such changes without further action by the Corporation, its Board of directors,
of Shareholders, it being the intention of this Article that directors,
officers,agents and employees of the Corporation shall be indemnified to the
maximum degree allowed by the General Corporation Law of the State of Delaware
at all times.
IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of
September, 1997.
__________________________________
Incorporator
THIS LEASE IS NOT TO BE CONSTRUED AS AN OFFER
AND IS NOT BINDING ON
BARRISTER EXECUTIVE SUITES, INC.
UNTIL IT IS SIGNED BY AN OFFICER OF
BARRISTER EXECUTIVE SUITES, INC.
LEASE AGREEMENT
THIS LEASE is made on August 28, 1997 between Barrister Executive
Suites, Inc., a California Corporation, (hereinafter referred to as "Lessor")
and
Aspac Communications, Inc.
(hereinafter referred to as "Lessee").
Lessor has entered into a master lease for the floor (the "Suite")
described below:
Floor or Suite Number: 12TH FLOOR OR SUITE 1200
Name of Building: TWO CENTURY PLAZA
Address: TWO CENTURY PARK EAST
City and State: LOS ANGELES,
CALIFORNIA 90067
This Lease is subordinate to the lease with the Building ("Master Lease"),
dated October 9, 1992 (as amended). See Paragraph 10.
Lessee desires to lease from Lessor a certain portion of the Suite for the
purpose of conducting Lessee's business together with rights in common to
the "common areas" of the Suite.
In consideration of the covenants and promises each to the other made
herein, the parties hereto agree as follows:
1. LEASED PREMISES. Lessor agrees to lease to Lessee and
Lessee agrees to lease from Lessor portions of the Suite described below
(the "Premises") and on the floor plan attached hereto as Exhibit A. In
addition to the exclusive use of the Premises, Lessee shall have the non-
exclusive right in common with Lessor's other lessees to use all common
areas and facilities available in the Suite. Except as otherwise agreed to in
writing, Lessee takes the Premises in an "as is" condition.
(a) Office No(s). 24
(b) Desk Space No(s). N/A
Lessee shall be prohibited from using or occupying any premises other
than those premises designated in the Lease as the Premises. In the event
that Lessee uses or occupies any space other than the Premises without
Lessor's written consent, Lessee shall pay Lessor a sum designated by
Lessor for the unauthorized use of said Premises.
2. TERM. Except as it may be modified by the applicable provisions
of this
Agreement, the term of this Lease shall be for a period of * year,
commencing on September 1, 1997, and expiring on February 28, 1998,
unless terminated sooner pursuant to paragraph 10.c of this Lease. If the
term commences on
a day other than the first of the month, the term shall expire on the last day
of the month
identified herein.
In the event the Premises are not ready for occupancy on the
commencement date, this Lease shall remain in full force and effect
provided Lessor makes the Premises available for occupancy with forty-five
(45) days of the scheduled commencement date. In such case, all rent shall
be abated until Lessor makes the Premises available for occupancy. Lessor
shall not be liable to Lessee for any loss or damage arising from any delays:
Lessee's sole remedy shall be the right to cancel this Lease in the event
Lessor fails to deliver possession of the Premises as set forth herein. Lessee
is advised that any floor plans provided by Lessor are not to scale, the
measurements are not always accurate, and the Premises are not always
built exactly as shown on the floor plans.
Either party may terminate this Lease at the expiration date set forth
herein by given thirty (30) days advance written notice effective on the
expiration date set forth on page one (1) of this Lease. If neither party sends
written notice of termination to the other party thirty (30) days in advance
of the expiration date, this Lease shall automatically become a month-to-
month agreement requiring at least thirty (30) days advance written notice
to terminate the Lease, effective the end of the month. If the Lease has
expired and become a month-to-month agreement, or if the original term of
the Lease is month-to-month , thirty (30) days advance written notice of
termination is required, and any such termination shall only be effective the
end of the month. For Example: If written notice of termination is received
by either party by the first working day of the month, any such notice shall
be effective at the end of that same month. If written notice of termination
is received by either party after the first working day of the month, any
such notice shall not be effective until the end of the following month.
Lessor's rent increase notice is not to be construed as a termination notice.
3. RENT, Lessee agrees to pay Lessor as rental for the Premises the
following monthly sums:
$ 1,600.00 Office(s)
$ -0- Desk Space(s)
$ 1,600.00 Total monthly rent
The above rent shall apply during the first six (6) full calendar months
of the term of this Lease only. In addition to the above rent, Lessee shall be
obligated to pay rent for any space within the Suite which Lessee occupies
but which is not included in the Premises (the "unrented space"). Lessee's
obligation for said unrented space shall be at the rate set forth in Lessor's
written notice to Lessee concerning Lessee's occupancy of the unrented
space. Lessees's obligation to pay rent for the unrented space shall be
effective as of the day in which Lessor gives Lessee written notice of the
rent to be paid for said space, and occupancy of the unrented space shall be
subject to all terms and conditions of this Lease.
The terms and conditions of this Lease are confidential, and Lessee agrees
not to reveal said terms and conditions to any third parties. Lessee's
disclosure of the terms and conditions of this Lease shall be cause for
Lessor at Lessor's sole discretion to immediately terminate this Lease, or
adjust Lessee's rental rates to Lessor's current asking price.
Rent shall be payable on or before the first day, of each and every calen-
dar month during the term hereof. If the term commences on a day other than
the first day of the calendar month, rent shall be prorated based on the
portion of the calendar month remaining. Lessee's first payment shall
include one mont's full rent plus the security deposit.
In addition to payment of the rent set forth herein, Lessee agrees to the
following: from the payment made by Lessee, Lessor shall first apply such
sums as are necessary to meet any of Lessee's outstanding obligations to
Lessor. Said obligation may arise from matters such as services Lessor
provides Lessee. Any remaining balance shall then be applied to Lessee's
rent obligation in the amount set forth above. In the event such remaining
balance is not sufficient to meet Lessee's rental obligation, Lessee shall pay
upon written demand by Lessor any remaining sums due. Failure to pay
said sums when so demanded shall constitute an event of default under this
Lease.
Any and all sums Lessee is obligated to pay under the terms of this
Lease shall be construed as rent obligations in addition to the monthly rent
set forth herein. Such additional rent shall include a service charge of
Twenty-Five Dollars ($25.00) for each of Lessee's dishonored checks
returned by the institution on which said checks are drawn. If at any time
during the term of this Lease Lessee has tendered payment by check and
Lessee's bank returns more than one such payment for any reason including
insufficient funds, Lessor may, at its option, require all future payments be
made by cashier's check. A Two Hundred Dollar ($200.00) handling charge
for each Three Day Notice or Notice of Termination of Services which
Lessor is required to serve upon Lessee due to the Lessee's failure to make
timely rent payments or breach of any other term or condition of this Lease
shall be assessed against Lessee to be paid with the monthly rent in the
event more than one of either notice is served during the term of the Lease.
Should Lessee not tender payment of the rent by the first (1st) day of each
month, a late charge shall be assessed in an amount of five cents ($0.05) for
each dollar ($1.00) so overdue for the purpose of defraying the expense
incident to handling such delinquent payment. In addition, Lessor may
discontinue any and all services provided Lessee, including, but not limited
to, use of all common areas, e.g., library and conference room, telephone
answering service, photocopying, word processing and legal research.
Lessee hereby releases Lessor, its employees, agents, principals and
contractors from any liability for damages which Lessee may suffer as a
result of Lessor's suspension of services for the reasons stated herein.
4. SECURITY DEPOSIT. Upon execution of this Lease by Lessee,
Lessee will pay a security deposit in an amount of $2,400.00 which is equal
to one and one-half (1 1/2) times the monthly rent, as security for the
performance by Lessee of its obligations under this Lease. The security
deposit will not be interest-bearing to Lessee. Lessor will retain the security
deposit during Lessee's tenancy. Lessee shall not apply the security deposit
as rent. If Lessee remains in the Premises after the expiration date of this
Lease, the security deposit will be retained by Lessor until Lessee moves
out of the Premises. Lessor may claim and retain such amount of Lessee's
security deposit as is reasonable necessary to remedy any defaults of the
Lessee in the payment of rent or services, to repair damages to the Premises
caused by the Lessee (normal wear and tear excepted) replacement of keys
any other outstanding obligations to Lessor, and Lessor may, at its option
and at any time during the term of this Lease, treat the security deposit as a
partial payment applied toward Lessee's obligation for the Premises during
Less's last month of occupancy of the same. The parties expressly agree
that the security deposit is made for all of the aforesaid specific purposes.
At all times Lessee shall maintain a security deposit with Lessor in an
amount equal to one and one-half (1 1/2) times the monthly rent paid by
Lessee for the Premises. Lessor shall bill Lessee for any such additional
security deposit as required.
5. USE. Lessee shall use the Premises solely for
TELECOMMUNICATIONS and for no other purpose. Lessee shall not do
or permit anything to be done in or about the Suite and Premises which will
in any way obstruct or interfere with the right of other tenants or occupants
of the Suite, or injure or annoy them, or use or allow the Premises to be
used for any improper, immoral, unlawful or objectionable purpose, nor
shall Lessee cause, maintain or permit any nuisance in, on or about the
Premises. Lessee shall not commit or suffer to be committed any waste in
or upon the Premises. Lessee agrees that Lessee will not offer or use
Premises to provide to others, services provided by Lessor to Lessor's other
lessees. (I.E. Fax Machine, Copiers, etc.)
6. DEFAULTS AND REMEDIES.
Lessee's Defaults. Any of the following occurrences shall constitute
a "material" default by Lessee:
(a) If Lessee fails to make any payment of rent, additional security
deposit or any other payment required to be made by Lessee hereunder as
and when due.
(b) If Lessee withholds rent, deducts or offsets from rent or services
due hereunder any amount for any reason.
(c) If Lessee occupies, uses or stores any personal property in any
unrented office in the Suite, or stores any personal property in any unrented
office in the Suite, or stores any personal property in any common area.
(d) If Lessee fails to observe or perform any of the provisions of this
Lease other than those described in this Paragraph 6, where such failure
shall continue for a period of ten (10) days after written notice thereof from
Lessor to Lessee.
If Lessee defaults under this Lease, (i) Lessor may terminate this
Lease, (ii) Lessor may recover, in addition to any rent and other charges
already due and payable, all rent for the entire unexpired balance of the
stated term of this Lease and all costs incurred by Lessor to recover such
sums from Lessee, including reasonable attorney's fees and/or Lessor may
recover damages from Lessee. All rights and remedies of Lessor under this
Lease shall be cumulative and in addition to any other rights or remedies
available at law or in equity. No failure by Lessor to exercise any right or
remedy or to insist upon strict performance following a default by Lessee
shall constitute a waiver of such default by Lessor.
7. HIRING LESSOR'S EMPLOYEES. Lessor spends a great deal
of time to hire and train employees for the operation of the Suite and other
suites. Lessee derives the benefit of Lessor's experience in operating the
Suite and of such hiring and training procedures. Lessee realizes the time
and expense Lessor incurs to obtain personnel, and Lessee therefore agrees
not to offer or accept for hire any of Lessor's employees at any time during
the term or any extension or renewal of this Lease. "Lesser's employees"
include Lessor's employees during the period of their employment with
Lessor and for a period of sixty (60) days thereafter. Lessor and Lessee
have considered the matter and have reasonably endeavored to estimate the
actual damages to Lessor in the event Lessee breaches this provision and
offers or accepts for hire any of Lessor's employees, and both realizing that
it would be impractical or extremely difficult to fix the actual damage to
Lessor resulting from such offer or hiring of Lessor's employees at any
time during the term or any extension of renewal of this Lease, or within
sixty (60) days after Lessee moves out of Lessor's offices, Lessee agrees to
pay Lessor the sum of Two Thousand Dollars ($2,000.00) for the
employees so hired to compensate Lessor for Lessor's loss in hiring and
training said employee. Said sum represents the amount agreed upon by the
parties as Lessor's liquidated damages. Notwithstanding the foregoing,
Lessee may hire any of Lessor's employees for part-time work outside the
hours of 9:00 a.m. to 6:00 p.m. normal business days.
8. INSURANCE. Lessor has blanket liability insurance coverage for
the common areas in the Suite. Lessor's insurance does not cover the
Lessee's Premises or Lessee's property in the Suite and Premises. Lessor
shall not be liable to Lessee, or to any other person, for any damages on
account of loss, damage, fire or theft of any personal or business property,
including, but not limited to, property left with the floor receptionist or
telephone operators, door lettering or other property purchased by, or
belonging to, Lessee.
Lessee shall indemnify and hold harmless Lessor and Lessor's landlord
from and against any and all claims arising from Lessee's use of the
Premises, or from the conduct of Lessee's business or from any activity,
work or things done, permitted or suffered by Lessee in the Premises and
shall further indemnify and hold harmless Lessor and Lessor's landlord
from and against any and all claims arising from any breach or default in
the performance under the terms of this Lease, or arising from any
negligence of the Lessee or any of Lessee's agents, contractors, visitors, or
employees, and from and against all costs, attorney's fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon, and in case any action or proceeding be
brought against Lessor and Lessor's landlord by reason of any such claim,
Lessee upon notice from Lessor and Lessor's landlord shall defend the same
at Lessee's expense by counsel satisfactory to Lessor and Lessor's landlord.
Lessee, as a material part of the consideration to Lessor and Lessor's
landlord, hereby assumes all risk of damage to property or injury to persons
in the Premises and Lessee hereby waives all claims in respect thereof
against Lessor and Lessor's landlord.
9. COMMON AREA. All areas not designated for exclusive use of
tenants or available for lease to prospective tenants constitute the Suite's
common areas. Lessee shall have the non-exclusive right of access and use
of the common areas and facilities contained therein. Conference room(s)
may be used on a reservation basis only subject to Lessor's rules and
regulations governing use of the same.
10. MASTER LEASE.
a. Lessee shall have no greater rights to the use and occupancy of the
Suite and Premises than Lessor has with the Building under Lessor's Master
Lease; in particular, Lessee's term under this agreement shall be no greater
than Lessor's term under the Master Lease, and is subject to any early
termination provisions contained therein. Lessee is bound to Lessor in the
same manner as Lessor is bound to the Building with respect to all standard
lease provisions (e.g., eminent domain, destruction of building, early
termination, etc.), as well as the rules and regulations of the Building
attached hereto as Exhibit C.
b. Lessor hereby irrevocably assigns to Lessor's landlord all of
Lessor's interest in all rentals and income arising from any sublease,
license, concession or other consensual arrangement for possession of all or
a portion of the suite entered into by Lessor, and Lessor's landlord may
collect such rent and income and apply same towards Lessor's obligations
under the Master Lease; provided, however, that until a default occurs in
the performance of Lessor's obligations under the Master Lease (taking into
account any applicable notice and cure periods), Lessor shall have the right
to receive and collect such amounts. Lessor's landlord shall not, by reason
of this assignments or the collection of rentals, be deemed liable to the
Lessee, licensee, concessionaire, or third party for the performance of any
of Lessor's obligations under the Lease, license, concession or other
consensual arrangement for possession of all or a portion of the premises.
Lessor hereby irrevocably authorizes and directs any Lessee, licensee,
concessionaire, or other third party, upon receipt of a written notice from
Lessor's landlord stating that an uncured default exists in the performance
of Lessor's obligations under the Master Lease, to pay to Lessor's landlord
all sums then and thereafter due under the Lease, license, concession or
other consensual arrangement for possession of all or a portion of the
premises. Lessor agrees that the Lessee, licensee, concessionaire, or other
third party may rely on that notice without any duty of further inquiry and
notwithstanding any notice or claim by Lessor to the contrary.
c. At any time, Lessor may terminate this Lease upon sixty (60) days
written notice to Lessee in the event that Lessor's interest in the Master
Lease is terminated. In the event Lessor's interest in the Master Lease is
terminated, Lessee shall, at the option of Lessor's landlord, attorn to
Lessor's landlord or Lessor's landlord's designee, and recognize Lessor's
landlord or Lessor's landlord's designee as Lessor under this Sublease.
Lessee shall execute and deliver at any time when requested by Lessor's
landlord an instrument to evidence such attornment. In no event, however,
shall Lessor's landlord or Lessor's landlord's designee be liable for any
previous act or omission by Lessor under this Sublease, or for the return of
any advance rental payments or deposits under such agreements that have
not been actually delivered to Lessor's landlord or Lessor's landlord's
designee, nor shall Lessor's landlord or Lessor's landlord's designee be
bound by any modification to any such agreements executed without
Landlord's consent, or for any advance rental payments in excess of one
month's rent. Lessee waives the provision of any law which may give
Lessee any right of election to terminate this Lease or to surrender
possession of the Premises by reason of the termination of the Master
Lease.
11. SUBLETTING. Lessee shall sublet or assign the Premises or
any part thereof for any period of time without the prior written consent of
Lessor. Any subletting or assignment of this Lease which is not in
compliance with the provisions of this paragraph shall be void and shall, at
the option of Lessor, terminate this Lease. In such event, Lessee shall be
liable for any expenses Lessor may incur in regaining possession of the
Premises or so much of the Premises as Lessee may have subleased or
assigned without Lessor's consent. The consent by Lessor to a subletting or
assignment shall not be construed as releasing Lessee from any liability or
obligation hereunder. If Lessee leases one or more desk spaces, no desk
space may be occupied by more than one person. A desk space may be
occupied by more than one person only if Lessee leases the entire room in
which the desk is located and the desk space is not within a mini-suite.
12. NOTICE TO LESSOR. Any notice regarding a breach of this
lease or termination thereof shall be in writing and sent by certified mail or
personal delivery to Barrister Executive Suites, Inc., Attention: Lease
Termination Department, 233 Wilshire Boulevard, Suite 500, Santa Monica,
California 90401 (in the case of Lessor), or to Lessee c/o the address of
the Premises (in the case of Lessee). Certified mail notice shall be deemed
given twenty-four (24) hours after the date it is placed, postage prepaid, in
a depository for United States mail. Personal delivery to the floor manager,
receptionist or telephone operator does not constitute notice to either Lessor
or Lessee. Either party may provide for a different address by notifying the
other party of said change as provided for herein.
Provided Lessee provides Lessor written notice of no less than thirty
(30) days, any termination notice shall be effective the last day of the
month. If Lessee occupies any portion of the terminated space beyond the
last calendar day of the month, Lessee will be liable for rent for the full
calendar month. If Lessee fails to vacate the premises for any reason after
the termination date or purports to rescind the termination notice after
Lessor has already leased Lessee's terminated space, Lessee will pay the
rent the new tenant had agreed to pay, plus any and all resulting damages
and losses incurred by Lessor because the new tenant cannot move into the
space previously terminated by Lessee.
13. SUCCESSORS AND ASSIGNS. The covenants and conditions
herein contained shall apply to and bind the heirs, successors, executors,
administrators and assigns of the parties hereto, except as expressly
provided to the contrary elsewhere herein. In the event of Lessee's death or
disability, Lessee's legal representative may terminate this Lease upon thirty
(30) days' written notice to Lessor (without penalty) and the security deposit
will be refunded in full, subject to the provisions of this Lease.
14. SUBSTITUTION. At any time after the execution of this Lease,
Lessor may substitute for the Leased Premises other premises elsewhere in
the suite, or in another Barrister Suite (the "New Premises") in which event
the New Premises shall be deemed to be the Leased Premises for all
purposes hereunder, provided:
(a) That New Premises shall be similar in area and
appropriateness for Lessee's purposes in Lessor's reasonable determination;
and
(b) If Lessee is occupying the Leased Premises at the time of
any such substitution, Lessor shall pay the reasonable expense of moving
Lessee, its property and equipment to the New Premises and shall, at its
sole cost, improve the New Premises with Lessor's standard improvements.
15. RULES AND REGULATIONS. Lessee shall observe at all
times Lessor's Rules and Regulations, a copy of which is attached hereto as
Exhibit D.
16. REPAIRS. The landlord which leased the Suite to the Lessor
shall maintain the structural integrity of the Building shell and make all
necessary repairs to the roof, exterior wall, exterior doors, windows,
corridors and other common areas of the Building and the Project, and
Landlord shall keep the building and the Project in a safe, clean and neat
condition, and use reasonable efforts to keep all equipment used in common
with other tenants such as elevators, plumbing, heating, air conditioning and
similar equipment, in good condition and repair. Lessor is not liable to
Lessee by reason of any defect, inadequacy or insufficiency in same. Lessee
may not deduct or offset any amount from rent due herein because of any
problem regarding construction, repairs or lack thereof. Lessor will
coordinate any repair complaint of Lessee. However, any claim by Lessee
with respect thereto shall be made solely against the Building and Lessor
hereby assigns to Lessee, solely for the purpose of making and prosecuting
any such claim, all rights which Lessor has under the Master Lease. Lessor
will coordinate all repairs for dangerous conditions existing in the common
areas within the Suite. Lessee is responsible for, and shall indemnify and
hold Lessor harmless from and against, any damage to persons or property
caused by Lessee, or Lessee's employees, agents, clients, guests or invites.
Lessee is not responsible for repairing wall holes from normal-sized nails
used to hang pictures.
17. RIGHT OF ENTRY. If Lessee has given notice to terminate or
Lessee is in default of rental payments, Lessor's employees may show the
Premises to prospective tenants between 9:00 a.m. and 6:00 p.m., Monday
through Friday. If during the last month of the term Lessee shall have
removed all or substantially all of Lessee's property, Lessor may
immediately allow anyone else to occupy the premises without relieving
Lessee of liability for rent for that period of time unless Lessor receives
rental income from Lessee's space, in which event such payment will be
credited against Lessee's rent obligation for the period of time the space is
occupied by someone else.
18. UTILITIES, SERVICES, MAINTENANCE AND
CONSTRUCTION. Under Lessor's Master lease, the Building provided
utilities, services (janitorial, heat and air conditioning) and maintenance.
Janitorial services include carpet vacuuming, but not cleaning. Heat and air
conditioning is provided during generally recognized business days and
hours. Lessee is allowed access to the Premises twenty-four (24) hours a
day, seven (7) days a week, subject to the Building's rules requiring proper
identification after normal business hours, Lessor is not liable to Lessee by
reason of any failure to provide or the inadequacy of utilities, janitorial,
heat or air conditioning services or maintenance. Lessor is not responsible
for any negligence of the Building's agents, servants or employees. Lessee
may not deduct or offset any amount from rent due herein because of any
problem regarding utilities, heat, air conditioning, janitorial services,
maintenance services or defective construction of Premises. Upon request
by Lessee, Lessor will write the Building regarding any complaint by
Lessee regarding utilities, heat, air conditioning, janitorial services,
maintenance or construction; however, any claim by Lessee with respect
thereto shall be made by Lessee directly to the Building, and Lessor hereby
assigns to Lessee, solely for the purpose of making and prosecuting any
such claim, all rights which Lessor has against the Building under the
Master Lease.
Lessor is responsible for maintaining the common areas with the Suite,
however, Lessor is not responsible for maintaining, repairing or cleaning
the floor covering, wall covering or drapes/window blinds within Lessee's
Premises, other than the normal janitorial service provided by the Building.
Non-recurring operating and capital improvements may be passed on to the
Lessee.
19. ATTORNEY'S FEES. In the event legal proceedings to regain
possession of the Premises or to collect moneys owed are instituted because
of Lessee's failure to pay rent, security deposit, cost of repair of the
Premises or to cure any breach of this Lease by Lessee, the prevailing party
shall be entitled to recover as an element of his cost of suit, and not as
damages, reasonable attorney's fees to be fixed by the court. The
"prevailing party" shall be the party who is entitled to recover his costs of
suit, whether or not the suit proceeds to final judgement. The party not
entitled to recover his costs shall not recover attorney's fees. No sum for
attorney's fees shall be counted in calculating the amount of a judgment for
purposes of determining whether a party is entitled to recover his costs of
attorney's fees.
20. ENTIRE AGREEMENT, MERGER AND WAIVER. This
Lease Agreement supersedes and cancels any and all previous negotiations,
arrangements. offers, brochures, agreements or understandings, if any,
between the parties hereto. This Lease Agreement expresses and contains
the entire agreement of the parties hereto and there are no expressed or
implied representations, warranties or agreements between them, except as
herein contained. This Lease Agreement may not be modified, amended or
supplemented except by a writing signed by both Lessor and Lessee. No
consent given or waiver made by Lessor of any breach by Lessee of any
provision of this Lease Agreement shall operate or be construed in any
manner as a waiver of any subsequent breach of the same or of any other
provision.
ASPAC COMMUNICATIONS, INC. BARRISTER EXECUTIVE SUITES, INC.
LESSEE LESSOR
/s/ Ming Zhang
MING ZHANG, SECRETARY
DATE: 8-28-97 DATE: 9-9-97
<PAGE>
<PAGE>
LEASE AGREEMENT ADDENDUM
The parties to the attached Lease hereby agree that the Lease shall be
amended or supplemented in the following respects. (All terms defined in
the Lease shall have the same meanings when used in this Addendum.)
1. Section 3: The last sentence of the third paragraph shall be amended
to read as follows: Lessee's first payment shall include one month's
full rent plus the security deposit and a set-up fee of $150.00
2. Section 7: In the fifth sentence, "the sum of Two Thousand Dollars
($2,000.00)" shall be deleted and replaced with "the sum of Five
Thousand Dollars ($5,000.00)." The last sentence of the paragraph shall
be deleted entirely.
3. First Signature Page: On the first signature page of the Lease, the
following section shall be added:
21. CONFLICT OF INTEREST.
Lessee agrees that conflict of interest would be created if Lessee were
to represent or act as Legal counsel for the employees, officers,
vendors, contractors, landlords and/or tenants of Lessor. Therefore, so
long as Lessee is a tenant of Lessor, Lessee shall be prohibited from
representing Lessor's employees, officers, vendors, contractors,
landlords and/or tenants in any legal action lawsuit which involves
Lessor, or Lessor's Managing Agent (if applicable). Failure to comply
with this provision shall constitute an event of default under the Lease
and shall be cause for Lessor to terminate this Lease.
4. Section 3, Exhibit D: The last sentence shall be deleted and replaced
with the following:
The set-up fee described on page 2 of the Lease
shall include one Lobby Directory Listing and (if applicable) one
Parking-Level Directory Listing. Lessee shall pay the building's
prevailing charge for any additional Directory Listings.
5. Section 4, Exhibit D: The following shall be inserted after the first
sentence of the paragraph.
The set-up fee described on page 2 of the
Lease shall include on standard door
sign. If Lessee requires additional
door signs, Lessee shall pay Lessor for same at
Lessor's prevailing rate.
6. Section 6, Exhibit D: The following shall be added to the end of the
paragraph: Upon termination of the Lease, whether upon expiration of the
term or sooner, Lessee agrees to pay Lessor One Hundred Dollars
($100.00) per leased office and Fifty Dollars ($50.00) per leased desk space
to cover painting and cleaning costs for each such space. The applicable
amounts for such painting and cleaning costs shall be deducted from
Lessee's security deposit should Lessee fail to pay Lessor for same upon
lease termination.
ACKNOWLEDGED AND AGREED TO:
LESSEE LESSOR
ASPAC COMMUNICATIONS, INC. BARRISTER EXECUTIVE SUITES, INC.
/s/ Ming Zhang
MING ZHANG, SECRETARY
DATE: 8-28-97 DATE: 9-9-97
JOHN P. MACLEAN
CERTIFIED PUBLIC ACCOUNTANT
15701 ALAMEDA DRIVE
BOWIE, MARYLAND 20716-1312
301/249-4900
CONSENT OF CERTIFIED PUBLIC ACCOUNTANT
I hereby consent to the use in Amendment No. 1 to the Registration
Statement on Form S-1 of my report dated October 2, 1997, relating to the
audited financial statements of Aspac Communications, Inc. and the
reference to my firm under the caption "experts" in the Prospectus.
/s/ John P. MacLean
December 9, 1997
EMPLOYMENT AGREEMENT
This Employment Agreement dated as of the 6th day of November 1997, between
ASPAC Communications, Inc., a California corporation ("Employer"), and Marc
Mayeres ("Executive").
WITNESSETH:
1. TERM.
Employer hereby employs Executive and Executive hereby accepts employment
on the terms and conditions hereinafter set forth. Subject to the provisions
of Section 7 hereof, the term of this Agreement shall be of six (6) months,
commencing on the date that the company is approved for public trading by SEC
or ninety (90) days after signing this Agreement whichever comes first
(the "Commencing Date").
2. DUTIES.
Executive agrees to serve Employer as Executive President and in such capacity
Executive agrees to render his services to the best of his ability. Executive
will report to the Chairman of the Board of the Company. During the term of
this Agreement, Executive will devote his full time and attention to, and use
his best efforts to advance, the business and welfare of Employer
subject to the direction and control of the Board of Directors.
3. CONFIDENTIAL INFORMATION AND COVENANT NOT TO COMPETE. (a)
Executive hereby agrees that, during the term of this Agreement and thereafter,
he will not disclose to any person, or otherwise use or exploit any of the
proprietary or confidential information or knowledge, including without
limitation, trade secrets, processes, records of research, proposals, reports,
methods, processes, techniques, computer software or programming, or budgets or
other financial information, regarding Employer, its business, properties or
affairs obtained by him at any time prior to or subsequent to the execution of
this Agreement.
(b)Upon termination of employment Executive will deliver to Employer all
processes, records of research, proposals, reports, memoranda, computer software
and programming, budgets and other financial information, and other materials
or records or writings of any other type (including any copies thereof) made,
used or obtained by Executive in connection with his employment by Employer.
(c) During the term of this Agreement, Executive agrees that he will:
(i) neither authorize his name to be used by, (ii) nor engage in or carry on,
directly or indirectly, for himself as a member of a partnership or as a stock-
holder (other than as a stockholder of less than five percent (5%) of the
issued and outstanding stock of a publicly held corporation having assets in
excess of $10,000,000), investor, officer, or director of a corporation
(other than Employer, or any parent, subsidiary, affiliate or successor of
Employer), or as an employee, agent, associate, or consultant of any person,
partnership, corporation or other business entity, in competition with any
business carried on, directly or indirectly, by Employer prior to the date
hereof or hereafter conducted, directly or indirectly, by Employer during
the term of this Agreement, in any country where business is then carried
on or conducted by Employer.
(d) Executive agrees that the remedy at law for any breach by him or any of
the covenants and agreements set forth in this Section 3 will inadequate and
that in the event of any such breach, Employer may, in addition to the other
remedies which may be available to it at law, obtain injunctive relief
prohibiting him (together with all those persons associated with him) from
the breach of such covenants and agreements.
(e)The parties hereto intend that the covenants and agreements contained in
this Section 3 shall be deemed to include a series of separate covenants and
agreements. If in any judicial proceeding a court shall refuse to enforce all
of the separate covenants deemed included in such action, then such unenforce-
able covenants shall be deemed eliminated from the provisions hereof for the
purposes of such proceeding to the extent necessary to permit the remaining
separate covenants to be enforced in such proceeding.
4. COMPENSATION.
4.1 Salary.
Under this Agreement, Executive will be paid Seven Thousand Dollars ($7,000.00)
per month, from which Three Thousand Five Hundred Dollars ($3,500.00) will be
payable monthly subject to income tax withholdings and other payroll deductions
as customary in respect of Employer's salaried employees in general, and the
remaining Three Thousand Five Hundred Dollars ($3,500.00) will be accrued and
deferred until the Employer completes the first offering.
4.2 Signing Bonus.
Upon execution of this Agreement, Executive shall receive a signing bonus of
five-thousand dollars, ($5,000.00). In consideration for such signing bonus,
Executive shall, at no charge to Employer, provide consulting services or work
part-time for the employer up to the Commencing Date or sixty (60) days from
signing of this Agreement, whichever comes first. If further consulting
services are requested by Employer after sixty (60) days from signing of this
Agreement and before the Commencing Date, Executive shall be paid Two Thousand
Dollars ($2,000.00) per month for such services. Performance of said consult-
ing services shall be premised upon reasonable notice of the need for such
services, and shall not exceed twenty (20) hours per week.
4.3 Medical Insurance.
During the term of this Agreement Employer shall furnish Executive with the same
medical and hospital insurance furnished to other employees of Employer.
4.4 Continuing Employment.
If both Employer and Executive wish to continue the employment at the end of
this Agreement, both party shall sign a new contract with which Executive shall
be paid $100,000.00 annually with the same vacation, bonus, medical insurance,
stock options and other benefits provided to other executives of the Employer.
5. EXPENSES.
Employer will pay or reimburse Executive for such reasonable travel, entertain-
ment, or other expenses as he may incur at the request of Employer during the
term of this Agreement in connection with the performance of his duties
hereunder. Executive shall furnish Employer with such evidence that such
expenses were incurred as Employer may from time to time reasonably require or
request.
6. DEATH OR TOTAL DISABILITY OF EXECUTIVE.
If Executive dies, or becomes totally disabled (for a period of more than
six (6) consecutive weeks), during the term of this Agreement, Executive's
employment under this Agreement shall automatically terminate and all of
Executive's benefits and all payments to Executive under this Agreement shall
immediately terminate.
7. TERMINATION FOR CAUSE.
Executive's employment under this Agreement may be terminated by Employer for
"good cause." The term "good cause" is defined as any one or more of the
following occurrences:
(a)Executive's breach of any of the covenants contained in Section 3 of this
Agreement;
(b)Executive's conviction by, or entry of a plea of guilty or nolo contendere
in, a court of competent and final jurisdiction for any crime involving moral
turpitude or punishable by imprisonment in the jurisdiction involved;
(c)Executive's commission of an act of fraud, whether prior to or subsequent to
the date hereof upon Employer;
(d)Executive's continuing failure or refusal to perform his duties as required
by this Agreement;
(e)Gross negligence, insubordination, material violation by Executive of any
duty of loyalty to Employer or any other material misconduct on the part of
Executive; or
(f)Executive's commission of any act which is detrimental to Employer's
business or goodwill.
8. MISCELLANEOUS.
8.1 Modification and Waiver of Breach.
No waiver or modification of this Agreement shall be binding unless it is in
writing signed by the parties hereto. No waiver of a breach hereof shall be
deemed to constitute a waiver of a future breach, whether of a similar of
dissimilar nature.
8.2 Complete Agreement.
This Agreement contains the entire agreement between the parties hereto with
respect to the transactions contemplated by this Agreement and supersedes all
previous oral and written and all contemporaneous oral negotiations, commit-
ments, writings, and understandings.
8.3 Legal Fees.
If any legal action, arbitration or other proceeding is brought for the enforce-
ment of this Agreement, or because of any alleged dispute, breach, default
or misrepresentation in connection with this Agreement, the successful or
prevailing party shall be entitled to recover reasonable attorneys fees and
other costs it incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.
8.4 Assignment.
This Agreement may not be assigned in any manner whatsoever.
IN WITNESS WHEROF: the undersigned have executed this Agreement on the day and
year first above written.
EXECUTIVE: EMPLOYER:
ASPAC COMMUNICATIONS, INC.
/s/ Marc Mayeres /s/ Amy Ming Zhang
Secretary
Address of Executive:
30902 Clubhouse Dr. #44F
Laguana Niguel, CA 92677
