AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION JANUARY 5, 2000
REGISTRATION NO. 000-1102267
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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EURO CAP CORPORATION
(Exact Name of Registrant as specified in its Governing Instruments)
Stony Hill Plaza
71 Stony Hill Road, 2nd Flr.
Bethel, Connecticut 06801
(203) 798-1889
(Address of Principal Executive Offices)
Baik Suk Kim COPIES TO:
PRESIDENT Corporate Services Group
EURO CAP CORPORATION Bernabe Diaz, ESQ.
Stony Hill Plaza Stony Hill Plaza
71 Stony Hill Road, 2nd Flr. 71 Stony Hill Road, 2nd Flr.
Bethel, Connecticut 06801 Bethel, Connecticut 06801
(Name and Address of Agent for Service) (203) 798-1889
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after the Registration Statement becomes
effective.
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
registrations statement number of the earlier effective registration statement
for the same offering. [ ]
<PAGE> 1
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective 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 (1)
<TABLE>
<CAPTION>
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Proposed Maximum
Title of Each Class Amount Offering Aggregate Amount of
of Securities to be to be Price Offering Registration
to Registered Registered Per Unit Price Fee.
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock, with par
value of $0.000025(1) 2,000,000 $1.00 $2,000,000 $ 556.00
Floating Rate
Subordinated Notes
due 2009(2) $2,000,000 100% $2,000,000 $ 556.00
Guarantees(3) $2,000,000 (3) (3) None
Totals $4,000,000 $1,112.00
===============================================================================
</TABLE>
(1) Represents 2,000,000 shares of common stock to be issued to the public
by the Corporation. Presently there is no market for these shares.
(2) Estimated solely for purposes of calculating the registration fee.
(3) Pursuant to Rule 457(n), no separate filing fee is required to be
paid.
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 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE> 2
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.
PROSPECTUS
SUBJECT TO COMPLETION, DATED: JANUARY 5, 2000
Euro Cap Corporation
(a New York Corporation)
2,000,000 Shares of Common Stock, with a Par Value of $0.000025
$2,000,000 Subordinated Notes with Interest at a
floating rate of Libor + 1/2 percent per anum, maturing in 2009,
and secured by a fixed and floating debenture over the assets
of Bon Hyang, Inc., the subsidiary of the Offeror.
This offering involves the sale of 2,000,000 Shares in the Common
Stock of Euro Cap Corporation, and the sale of $2,000,000 of a total of
$500,000,000 of Subordinated Notes with a floating interest rate of LIBOR +
1/2 maturing on December 31, 2009.The notes are secured by a fixed and floating
debenture over the assets of Bon Hyang, Inc., the sole subsidiary of Euro
Cap Corporation. Euro Cap Corporation (the"Company") is a holding corporation
with one wholly owned subsidiary, Bon Hyang, Inc.(BHI), organized pursuant
to the laws of New York in February, 1999, and involved, worldwide, in the
purchase, and Management of office buildings and resort properties. There is
at present no market for these securities. SEE RISK FACTORS ON PAGE_____.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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TOTAL NUMBER PRICE PER AGGRAGATE PRICE EXPENSES & PROCEEDS TO
OF SHARES SHARE TO PUBLIC COMMISSIONS COMPANY
==============================================================================
2,000,000 (1) Unknown (1) Unknown (2) Unknown (3) Unknown
==============================================================================
(1) The price per Share to the public of the Shares will be based on the
bid price for the Company's common stock on the dates of specific sales,
unless shares are sold in private transactions. Consequently, no
determination can be made as to actual pricing matters.
(2) The Company has no brokerage agreements or other agreements for the
sale of its shares, and will be selling treasury stock via private placement.
The costs of selling the stock, by the most conservative estimate, should not
exceed ten percent of the gross value of the stock. The Company estimates
that it will pay approximately $50,000 in fixed expenses pertaining to the
offering, including accounting fees, fees to Securities and Exchange
Commission, National Association of Securities Dealers, Inc., printing
expenses, transfer agent fees and expenses and miscellaneous costs.
(3) No determination can be made as to the proceeds to the Company as the
selling price per share has not been determined.
It is anticipated by management that the Notes will be sold at face value
with a cost associated with the said sale not to exceed 10% of the face value.
This means that the Company anticipates the sale of the Notes at $500,000,000
with $450,000,000 being the net proceeds to the Company. Of this amount,
$2,000,000 are being sold to the public via this offering, and the remainder
will be sold through private placement to institutions and not being offered
to the public as part of this offering.
<PAGE> 03
TABLE OF CONTENTS PAGE
<TABLE>
<S> <C>
THE OFFERING 1,10
TABLE OF CONTENTS 2
ADDITIONAL INFORMATION 3
GLOSSARY OF TERMS 4
PROSPECTUS SUMMARY 5
RISK FACTORS 6
Possible Loss of Entire Investment 6
Potential Future Sales Pursuant To Rule 144 6
Absence of a Trading Market 6
Adverse effects of Penny Stock Regulations 6
Absence of Underwriter 7
Concentration of Share Ownership 7
Financial Risks 7
BUSINESS RISKS 7
No Dividends 7
Material Reliance Upon Officers 7
No Operating History 7
INTEREST RATE, CURRENCY, AND ALLIED RISKS 7
Interest Rate Changes 7
Foreign Exposure 8
Issuer-Specific Changes 8
PRINCIPAL INVESTMENT RISKS 8
Interest Rate Changes 8
Foreign Exposure 9
INVESTMENT IN KOREA 9
Investment and Repatriation Restrictions 9
Transfer of funds from Korea to Foreign Countries 9
Currency Fluctuations 9
LACK OF PUBLIC MARKET 9
FORWARD-LOOKING STATEMENTS 9
THE NOTES-Detailed Description 10
THE SHARE OFFERING (Determination of Offering Price) 12
RATIO OF EARNINGS TO FIXED CHARGES 13
SECURITIES OUTSTANDING 14
CURRENT STOCKHOLDERS 14
DEFINITION OF TERMS 14
PLAN OF DISTRIBUTION 14
USE OF PROCEEDS 14
SELLING SHAREHOLDERS 15
MARKET FOR COMMON EQUITY 15
DIVIDENDS 15
SELECTED FINANCIAL INFORMATION 15
THE COMPANY 17
POLICY WITH RESPECT TO CERTAIN ACTIVITIES 18
INVESTMENT POLICIES OF THE COMPANY 19
Investment or Interest in Real Estate 19
Investment in Real Estate Mortgages 19
Securities of or interests in persons primarily engaged
in real estate activities 19
Investment in other securities 19
DESCRIPTION OF REAL ESTATE 20
TAX TREATMENT OF SECURITY HOLDERS 24
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION,
CHANGES IN FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 25
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION,
CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Discussion of Financial Information 25
Material Events 26
Liquidity 27
Current Plans 27
Selection ,Management and Custody of
Company's investmentsAccounting Policies and Procedures 27
CONFLICTS OF INTEREST 27
MANAGEMENT 28
Directors and Executive Officers 28
Involvement in Certain Legal Proceedings 29
COMPENSATION 29
CERTAIN TRANSACTIONS 30
PRINCIPAL STOCKHOLDERS 31
SECURITY OWNERSHIP OF MANAGEMENT 32
COMMON STOCK 32
OTHER SECURITIES 32
TRANSFER AGENT 32
SHARES ELIGIBLE FOR FUTURE SALE 33
ADDITIONAL INFORMATION 33
INDEMNIFICATION ARRANGEMENTS 34
LITIGATION 34
LEGAL OPINIONS 34
EXPERTS 34
FINANCIAL STATEMENTS 35
<PAGE> 4
EURO CAP CORPORATION
71 Stony Hill Road, 2nd Floor
Bethel, CT 06801
(203) 798-1889
SUBJECT TO COMPLETION
The date of this Prospectus is December 2, 1999.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form S-11 (adopted
under authority of the Securities Act of 1933, as amended) with respect to
the securities offered hereby, with the United States Securities and Exchange
Commission (S. E. C.). This Prospectus does not contain all the information
set forth in the Registration Statement and the exhibits and schedules
attached thereto. For further information, reference is hereby made to the
Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete, and
in each instance reference is made to the copy of such contract filed as an
exhibit to the Registration Statement, each such statement may be inspected
without charge at the Public Reference Section of the Commission in its
Washington, D.C. office and copies of all or any part thereof may be obtained
from the Commission at prescribed rates, and may be perused at the S. E. C.'s
Web Site, whose address is http://www.sec.gov. Copies of the Registration
Statement and the Exhibits appended thereto will be provided without charge
upon written or oral request addressed to Mr. Baik Suk Kim; Euro Cap Corp.,
71 Stony Hill Road, 2nd Floor, Bethel CT 06801, or by calling (203) 798-1889.
The Company currently does not furnish its stockholders with annual
reports containing financial statements certified by its independent public
accountants and quarterly reports containing unaudited financial information
for the first three quarters of each fiscal year. Prior to the sale of the
Registered Securities, the Company was not subject to the informational
requirements of the Securities Exchange Act of 1934 since its securities
were not registered with the Commission pursuant to the requirements of
Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended.
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. Any information or representation not contained herein, if
given or made, must not be relied upon as having been authorized by
Euro Cap Corporation (the "Company"). Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create
any implication that there has been no change in the affairs of the Company
since the date hereof. This Prospectus does not constitute an offer or a
solicitation of any offer to buy any securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such an offer
or solicitation in such jurisdiction.
Until December 31, 2001, 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
obligation of dealers to deliver a Prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
<PAGE> 5
GLOSSARY OF TERMS
AS USED HEREIN, THE FOLLOWING HAVE THE MEANINGS SET FORTH BELOW:
Bon Hyang or BHI Bon Hyang, Inc, the sole subsidiary of Euro Cap
Corporation.
Bond or Note(s) The generic term for the $500,000,000 in Subordinated
Notes being offered by the Company, $2,000,000 of which is being offered to
the public in this Prospectus.
Capital Stock. The generic term for the Company's Common Stock.
Common Stock. The shares of the Company's common stock, with a par
value of $0.000025, of which 40,000,000 shares are authorized and 10,000,500
are issued and outstanding prior to this offering(see "DESCRIPTION OF
SECURITIES").
Commission or SEC. Securities and Exchange Commission of the United States.
Korea The Republic of Korea, also known as South Korea.
LIBOR The annual LIBOR rate is defined as the arithmetic mean
rate of the 12 preceding monthly LIBOR rates, calculated from the date on which
the annual interest payment is due, as published on the LIBO page on the
Reuters Monitor Money Rates Services.
NASD. National Association of Securities Dealers, Inc. The
self-regulatory body registered under the Securities Exchange Act of 1934,
as amended, responsible for regulation of securities brokers and dealers, and
the operator of the NASDAQ inter-dealer automated quotation system's bulletin
board over which Company securities are traded.
Registered Securities. The generic and collective term for the 2,000,000
shares offered herein, and the $2,000,000 in Subordinated Notes offered in
this Prospectus.
The Company or Euro Cap Corporation, a New York Corporation and the
The Corporation. issuer of the securities offered hereby.
<PAGE> 6
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
Prospectus and is qualified in its entirety by the more detailed information
and financial statements (including notes thereto) appearing elsewhere herein.
THE COMPANY AND THE OFFERING
The Company was incorporated in the State of New York on February 5,
1999. It was organized as a purchaser of Bon Hyang, Inc. (BHI), and
purchased 100% of the outstanding common shares of BHI on July 1, 1999,
in exchange for 10,000,000 million shares in the common stock of the Company.
Currently the Company is a holding company with one subsidiary, BHI. BHI was
Organized pursuant to the laws of the Republic of Korea. Neither company has
ever been a party to any material reclassification, merger, consolidation, or
purchase or sale of a significant amount of assets not in the ordinary course
of business, other than with respect to BHI's acquisition by the Company.
For purposes of this prospectus, the Company's subsidiary is sometimes
referred to as "BHI".
BHI, a Korean corporation was formed on July 29, 1998, to purchase and
operate, worldwide, downtown office complexes and resort properties. The
company currently has 2 resort properties and a downtown office complex, all
in Korea, under contract to purchase for the total sum of $500,000,000.
The Company plans to use the proceeds from the sale of the Notes to
purchase the building and resorts mentioned above. (See 'Use of Proceeds",
"The Company", and "Description of Real Estate", below).
The offering consists of (1) 2,000,000 common shares in the Company. There
are currently 10,000,500 common shares issued to 6 shareholders, said shares
subject to Rule 144 of the SEC.; and, (2) the issuance of Notes maturing in
2009 bearing interest at LIBOR (See Glossary for definition of LIBOR)+1\2% per
anum.The Notes bear interest from the issuing date of the Notes. Interest shall
continue to accrue after as before maturity and both before and after default.
Interest shall be payable in arrears on December 31 in each year with a final
interest payment, together with the outstanding principal, to be made on Decem-
ber 31, 2009. Whenever it is necessary to complete the amount of interest in
respect of any Note for a period of less than a full year, such interest will
be calculated on the basis of a 360 day year consisting of 12 months of 30
days each, in the case of an incomplete month, the number of days elapsed. The
Notes are secured by a fixed and floating debenture issued by BHI to secure the
said Notes. The proceeds from the sale of the Notes will be held in escrow by
Continental Stock Transfer and Trust Company, 2 Broadway, New York NY, until
sufficient funds are collected to close on the abovementioned properties (See
"Description of Property","Use of Proceeds"). In the event that the property
closings cannot be concluded on or before June 30, 2000, all funds will be
returned to the Noteholders. In the event that, as management believes, the
property closings occur as anticipated, the Noteholders will be paid as
mentioned above. For more complete information regarding the Notes,
including definitions of certain capitalized terms used above, see "Description
of Notes."
<PAGE> 7
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A
DEGREE OF RISK. THEY SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO
LOSE THEIR INVESTMENT IN THE COMPANY WITHOUT A MATERIALLY ADVERSE IMPACT ON
THEIR STANDARD OF LIVING OR FINANCIAL SECURITY. THEREFORE, PRIOR TO PURCHASE
EACH PROSPECTIVE INVESTOR SHOULD CONSIDER THE FOLLOWING RISK FACTORS, AS WELL
AS ALL OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS.
RISKS OF THE OFFERING
Possible Loss of Entire Investment
Prospective investors should be aware that if the Company is not
successful in its endeavors, their entire investment in the Company could
become worthless. Even if the Company is successful in its programs there
can be no assurances that investors will derive a profit from their investment.
The Company has only one operating subsidiary, and as of yet has no
significant operating history. It is possible that there will never be any
Purchases or Operations, in which case the total investment of investors may
be lost.
Potential Future Sales Pursuant To Rule 144
Generally, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period may, under certain
circumstances, sell within any three month period a number of shares which
does not exceed the greater of one percent (1%) of the then outstanding
Common Stock or the average weekly trading volume during the four calendar
weeks prior to such sale. Rule 144 also permits, under certain circumstances,
the sale of shares without any quantity limitation by a person who has not
been an affiliate of the Company for at least 90 days and who has satisfied a
one year holding period.
The one year holding period for all the Company's currently
outstanding restricted shares required by Rule 144 will expire during January
of 2001 and thereafter, the holders may periodically sell their Company
securities, subject to applicable volume limitations, restrictions on the
manner of sale and applicable reporting.
Absence of a Trading Market
At present, there is no market for the securities of the Company,
and there can be no assurance that an established trading market or any
public market will develop in the future, or that if developed, it could be
sustained, or the securities of the Company resold at any price. Any market
the Company may develop will, in all likelihood, be a substantially limited
one.
Adverse effects of Penny Stock Regulations
Securities, generally, with a price $5.00 per share or less are
referred to as penny stock. These securities are unsuitable for investors
with low fixed incomes and limited net worth, or for accounts held in a
fiduciary or custodial capacity. As well, they are not suitable for investors
who are risk aversive or have income as their sole investment objective.
Investment broker/dealers must satisfy special sales practice requirements,
including making written suitability determinations regarding any persons
wishing to invest in penny stock; written consent of the purchaser prior to
purchasing penny stock; delivery of a disclosure statement outlining the
risks associated with penny stock prior to any transaction; a written current
bid and ask quotation and commissions to be earned by the broker/dealer in the
transaction; and monthly statements stating the market value of any penny
stock held in a portfolio. These requirements, if applicable to the Company,
may adversely effect any market for the Registrant's shares.
<PAGE> 8
Absence of Underwriter
The Shares and Notes will be sold directly by the Company,
consequently, no underwriter is expected to be involved therewith. The
absence of an underwriter means that there will be less due diligence in
conjunction with this offering than would be performed in an underwritten
offering, and furthermore, that there are no brokers committed to stabilizing
the market for the Company's securities.
Concentration of Share Ownership
Where approximately 86% of the shares in the Company are currently
held by 6 persons, who are also the Officers and Directors of the Company
and of its sole Subsidiary, BHI, the effective control of the Registrant
rests with these parties.
Financial Risks
No assurance can be given that the Company's future performance will
meet the Company's expectations or that the Company will be able to operate
profitably. The Company has a history of operating losses, and lacking future
profitable operations, will need additional capital, which the Company has no
assurance whatsoever of being able to obtain. The inability to obtain such
financing would have a material adverse effect on the Company's results of
operations. (See "Financial Statements", "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION, CHANGES IN FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.")
BUSINESS RISKS
No Dividends
The Company has never paid dividends on its Common Stock. The
Company does not anticipate paying dividends for the foreseeable future and
intends to devote earnings, if any, to the development of the Company's
business. The payment of dividends in the future rests within the discretion
of the Company's Board of Directors and will depend on the existence of
substantial earnings, the Company's financial requirements and other factors.
The Company has paid no substantial dividends in the past; and earnings for the
foreseeable future are expected to be retained to finance corporate business
expansion.
Material Reliance Upon Officers
The Company is wholly dependent upon the personal efforts and
abilities of its officers and directors. The loss of or unavailability to
the Company of the services of any of its officers or directors would have a
materially adverse effect on the Company's business prospects and potential
earning capacity. The Company does not carry any insurance to compensate
for any such loss, nor does it intend to obtain "key man" life insurance
covering its officers or directors.
Lack of Operating History
Neither the Company nor BHI have any operating history, and there is no
assurance that either company will be successful. If the companies fail to
raise the capital needed to support their activities, either or both companies
may fail, the result of which would be the loss of all or substantially all of
investment.
INTEREST RATE, CURRENCY, AND ALLIED RISKS
Interest Rate Changes
Interest rate increases can cause the price of a debt security to
decrease. This is offset, somewhat, by the floating nature of the Notes,
but the overall rate may be lower at any given time than that of like
securities offered to the public.
<PAGE> 9
Foreign Exposure
Entities located in foreign countries can be affected by adverse
political, regulatory, market or economic developments in those countries.
Where the property to be owned by the Company's subsidiary is in Korea,
Any political or economic instability will adversely effect the Company,
and therefor directly impact on the value of the securities being offered.
Issuer-Specific Changes
The value of an individual security or particular type of security can be
more volatile than the market as a whole and can perform differently than the
value of the market as a whole. An investment in the Notes is not a deposit
of a bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. When you sell your Notes, they
could be worth more or less than what you paid for them.
PRINCIPAL INVESTMENT RISKS
The Notes are subject to the following principal investment risks:
Interest Rate Changes
Interest rate increases can cause the price of a debt security to
decrease.
Interest Rate Changes
Debt securities have varying levels of sensitivity to changes in interest
rates. In general, the price of a debt security can fall when interest rates
rise and can rise when interest rates fall. Securities with longer maturities
and mortgage securities can be more sensitive to interest rate changes. In
other words, the longer the maturity of a security, the greater the impact
a change in interest rates could have on the security's price. In addition,
short-term and long-term interest rates do not necessarily move in the same
amount or the same direction. Short-term securities tend to react to changes
in short-term interest rates, and long-term securities tend to react to
changes in long-term interest rates.
Foreign Exposure
Foreign securities and securities issued by U.S. entities with substantial
foreign operations can involve additional risks relating to political,
economic or regulatory conditions in foreign countries. All of these factors
can make foreign investments more volatile than U.S. investments.
INVESTMENT IN KOREA
Investing in securities of Korean companies involves certain risks not
typically associated with investing in securities of United States companies
or the United States government, in addition to those discussed in the
sections above.
Investment and Repatriation Restrictions
Until recently, Korean security regulations limited the percentage of any
class of equity shares of an issuer that may be held by a particular foreign
investor to 3% and to 12% by all foreign investors as a group. Currently, the
limit on direct foreign investment has been removed by the Korean Government.
Upon due notification to the Government both direct investment and long term
Loans may be made to Korean companies, and profits expatriated up to the level
of the original investment plus a suitable return on investment. The specific
definition of suitable return creates a risk in that the government may at any
time define the return at a level which will negatively impact on the share
value of the Company's shares. Further, Foreign companies require government
approval prior to investing in Korea. Bon Hyang, Inc. has approval for up to
$500,000,000 in foreign investment. It does not currently have specific
approval for issuing long term debt. Management believes that the approval
will be forthcoming before the effective date of this Prospectus.
<PAGE> 10
Transfer of funds from Korea to Foreign Countries
Funds invested in Korea are subject to certain regulatory approvals
pursuant to foreign exchange control laws and regulations.
Generally, as long as the original investment was approved or allowed
under the applicable laws and regulations of Korea, the conversion and
remittance of cash or cash equivalents into U.S. dollars in relation to such
investment will be freely allowed upon receipt of the appropriate payment
approvals from the Bank of Korea or a designated Class A foreign exchange bank.
Currency Fluctuations
The Note proceeds will be invested primarily in property in Korea (See
"Use of Proceeds"), the market value of which is determined in Won, and
substantially all of its income will be received or realized in the Korean Won.
The Company will be required, however, to compute its net asset value and
income, and to distribute its income, in U.S. dollars. As a result, the net
asset value and its distribution amounts will be subject to foreign exchange
rate fluctuations.
The Korean Won was devalued against the US dollar in 1999 to 1200 Won
to the dollar as compared to 1100 won in late 1998, and between 800 and 900 won
over two previous years.
The Company expects to incur certain transaction costs in connection with
its conversions between currencies and, in light of the history of fluctuating
currency values of the Korean Won relative to the dollar, it is impossible to
predict what effect currency conversion costs may have on the operations of the
Company.
LACK OF PUBLIC MARKET
There will not be a public market for the shares and Notes and their
liquidity is therefore limited.
FOR ALL OF THE AFORESAID REASONS, AND OTHERS SET FORTH HEREIN, THESE
SECURITIES INVOLVE A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING AN
INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE AWARE OF THESE AND
OTHER FACTORS SET FORTH IN THIS PROSPECTUS. THESE SECURITIES SHOULD ONLY BE
PURCHASED BY PERSONS WHO CAN AFFORD A TOTAL LOSS OF THEIR INVESTMENT IN THE
COMPANY AND HAVE NO IMMEDIATE NEED FOR A RETURN ON THEIR INVESTMENT.
FORWARD LOOKING STATEMENTS
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS: THIS PROSPECTUS INCLUDES
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995(SECTION 27A OF THE SECURITIES ACT AND SECTION 21E
OF THE EXCHANGE ACT). THE COMPANY WISHES TO ENSURE THAT ALL SUCH
FORWARD-LOOKING STATEMENTS ARE ACCOMPANIED BY MEANINGFUL CAUTIONARY STATEMENTS
PURSUANT TO THE SAFE HARBOR ESTABLISHED IN SUCH ACT. ALL STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS PROSPECTUS, INCLUDING WITHOUT
LIMITATION, CERTAIN STATEMENTS UNDER "SUMMARY," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "THE BUSINESS,"
MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS INCLUDE
THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE COMPANY AND MEMBERS OF
ITS SENIOR MANAGEMENT TEAM. ALL FORWARD-LOOKING STATEMENTS ARE INHERENTLY
UNCERTAIN AS THEY ARE BASED ON VARIOUS EXPECTATIONS AND ASSUMPTIONS CONCERNING
FUTURE EVENTS AND THEY ARE SUBJECT TO NUMEROUS KNOWN AND UNKNOWN RISKS AND
UNCERTAINTIES WHICH COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY
FROM THOSE PROJECTED. DUE TO THOSE UNCERTAINTIES AND RISKS, PROSPECTIVE
PARTICIPANTS IN THE OFFER ARE URGED NOT TO PLACE UNDUE RELIANCE ON SUCH
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PROSPECTUS. ALTHOUGH THE COMPANY
BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL
PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THE COMPANY'S EXPECTATIONS ("CAUTIONARY STATEMENTS")
ARE DISCLOSED IN THIS PROSPECTUS, INCLUDING, WITHOUT LIMITATION, IN CONJUNCTION
WITH THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS PROSPECTUS AND UNDER "RISK
FACTORS." ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY
QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS. THE COMPANY
UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE THIS "SAFE-HARBOR COMPLIANCE
STATEMENT FOR FORWARD-LOOKING STATEMENTS" TO REFLECT FUTURE DEVELOPMENTS.
<PAGE> 11
THE NOTES
The Company is tendering for sale $500,000,000 in Subordinated Debt,
secured by a fixed and floating debenture over the assets of its subsidiary,
BHI. $2,000,000 of the said debt is being sold to the public, the remainder
is being placed institutionally, with rights of registration being granted
to the institutional holders. The proceeds of the offer are being used in
conjunstion with the purchase in Korea of a downtown office building, and
two resort properties (See: "Use of Proceeds", and "Description of Property").
Currently, the assets of BHI consist primarily of $4.5 million in cash, and
$211,000 in deposits and automobile. However, the closing on the property
will, in management's opinion, increase the asset position of BHI to at least
equal to the total principal of the debt owed pursuant to the issue of the
Notes. All funds collected will be held in escrow by Continental Stock Transfer
and Trust Company in New York, pending the closing, on or before June 30,
2000, of the purchases abovementioned.
The terms of the offer are as follows:
THE OFFER............... Up to $500,000,000 aggregate principal amount of
Notes are being offered bearing interest both
before as well as after maturity at the rate of
LIBOR plus 1\2 of one per centum per anum, with
interest payable on December 31 of each year to
maturity, maturity being defined as December 31,
2009.
The Notes are being offered in denominations of
$10,000, and are not redeemable before maturity.
The Notes are secured by a debenture (see below)
issued by Bon Hyang, Inc. The proceeds will be
held in escrow (see "Escrow", below) pending the
closing on properties to be purchased with the
proceeds in Korea (see "Use of Proceeds").
EXPIRATION DATE............ 5:00 P.M., New York City time, on
June 30, 2000, unless the Offer is extended
by the Company (in which case the
Expiration Date will be the latest date and time
to which the Offer is extended).
CONDITIONS TO THE
OFFER.................... The Offer is subject to raising sufficient capital
to close on one or more of the properties in Korea
(see "Use of Proceeds) and is not conditioned upon
any minimum principal amount of Notes being
sold, except as stated above.
MATURITY DATE.............. December 31, 2009.
INTEREST RATE; PAYMENT
DATES...................... The New Notes will bear interest at the rate of
LIBOR plus 1/2% per annum from the date of
issuance, payable annually on December 31 of each
year, commencing December 31, 2000.
GUARANTEES................. The New Notes will be guaranteed by BHI through
the issue of a fixed and floating debenture over
its assets. The terms of the debenture do not
allow, the sale of any assets worth over $250,000
without replacement by like assets or cash or
cash equivelent, such that the minimum value of
the assets of BHI shall always exceed the amount
due and owing on the Notes plus one year's
interest thereon.
<PAGE> 12
RANKING.................... The Notes will be subordinated in right of
payment to future Senior Debt issued by the
Company. The guarantees of BHI, the
Subsidiary Guarantor (the "Guarantees") will be
subordinated to the prior payment in full of all
Senior Debt of the Company and BHI.
As of June 30, 1999 the company and BHI
have had outstanding an aggregate
principal amount of approximately $1 million of
Senior Debt which would rank senior in right of
payment to the Notes and guarantees, respectively
OPTIONAL REDEMPTION........ Except as described below, the Notes will not
be redeemable by the Company prior to December 31,
2009. On or after that date, the Notes are
subject to retirement.
CHANGE OF CONTROL.......... Upon an occurrence of a Change of Control, the
Company will be required to make an offer to
repurchase the Notes at a price equal to 101% of
the aggregate principal amount thereof plus
accrued and unpaid interest thereon, if any, to
the date of purchase.
CERTAIN COVENANTS.......... The Indenture contains certain covenants that
impose limitations on, among other things:
(i) the incurrence of additional indebtedness;
(ii) the issuance of Disqualified Capital Stock
by the Company and its subsidiaries;
(iii) the making of certain Restricted Payments.
the Indenture permits Investments
in (i) non-guarantor subsidiaries that are
Wholly Owned Foreign Subsidiaries engaged
in a Related Business and (ii) other
non-guarantor subsidiaries; provided that,
after giving effect to the Investment in
such other non-guarantor subsidiary, (1)
no event of default shall have occurred
under the Indenture, (2) the aggregate of
all Restricted Investments made under the
Indenture to the date of the proposed
Investment, with certain exceptions, does
not exceed the sum of (x) $50.0 million,
and (y) BHI have such assets available to
meet its debenture obligations.
(iv) the imposition of restrictions on the
payments of dividends and other payment
restrictions affecting subsidiaries,
except as to minimum asset levels to
be maintained by BHI.
(v) the incurrence of liens;
(vi) transactions with affiliates.
EVENTS OF DEFAULT AND
REMEDIES................... The Indenture provides that upon the occurrence of
an event of default thereunder (including, without
limitation, upon the failure to retire the
Notes when required upon the occurrence of a
Change of Control or an Asset Sale), either the
trustee under the Indenture or holders of at least
25% in aggregate principal amount of the out-
standing Notes may, subject to certain limitations
related to Senior Debt, declare all principal and
interest on the Notes immediately due and payable.
<PAGE> 13
Likewise, certain defaults under the Indenture
(primarily those defaults related to the
failure to pay indebtedness under the Indenture or
defaults resulting in the acceleration of the
maturity of indebtedness under the Indenture) will
result in an Event of Default.
USE OF PROCEEDS............ See "Use of Proceeds."
NO PERSONAL LIABILITY OF
DIRECTORS, OFFICERS,
EMPLOYEES AND
STOCKHOLDERS............... The Indenture provides that no direct or indirect
stockholder, employee, officer or director, as
such, past, present or future of the Company, BHI
or any successor entity shall have any
personal liability in respect of the obligations of
the Conpany and BHI under the Indenture or the
Notes solely by reason of his or its status as such
stockholder, employee, officer or director.
The Company has been advised that it is the
opinion of the Commission that the indemnification
described in the preceding sentence may be
unenforceable in that it is against public policy.
ESCROW AGENT............. The ESCROW AGENT with respect to the
Offer is Continental Stock Transfer and Trust
Company, 2 Broadway, New York NY.
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS........... See"Certain Federal Income Tax
Consequences" prior to purchasing Notes in the
Offer.
THE SHARE OFFERING AND DETERMINATION OF OFFERING PRICE
Euro Cap Corporation has authorized Capital of 40,000,000 shares with a
par value of $0.0000025, of which 10,000,500 shares are currently outstanding
and held by 6 shareholders. The offering is for 2,000,000 shares to be sold to
the public at a price to be determined by the bid price for the shares. As the
company is relatively new with no operating history, no determination of the
offering price can be made until a bid price has been established. There is at
present no market for the shares, nor can it be assumed that there will ever be
a market for the shares. The Company does, however, plan to register the shares
as a NASDAQ Small Cap issue within 90 days of the effective date of this
Prospectus.
The Company plans to use no broker dealers in the initial sale of the
shares, but shall act as its own selling agent.
As a result of the foregoing, until a quantity of shares have been sold,
The Company cannot determine the offering price of the shares.
The proceeds from the sale of the shares shall be used as additional
capital for the purchase of as of yet not determined property and as working
capital. (See, "Use of Proceeds")
<PAGE> 14
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the fixed charges of the Company and its
sole subsidiary, BHI. The fixed charges are broken down by property. The
figures presented for Seoul Finance Center are solely pro-forma as the building
has never been occupied. The pro-forma data for interest payments with respect
to the NOTES is calculated based on an increase in LIBOR of 2% from the rate
on December 31, 1999 of ____%. The increase is arbitrary and set merely to
utilize a conservative approach in the calculations.
TABLE
<PAGE> 15
SECURITIES OUTSTANDING
As of the date of this Prospectus, 10,000,500 shares of Common stock
were issued and outstanding. (see "CAPITALIZATION", "PLAN OF DISTRIBUTION"
and "PRINCIPAL STOCKHOLDERS")
CURRENT STOCKHOLDERS
Approximately 6 individuals own shares of the Company's Common Stock
(see "CERTAIN TRANSACTIONS" and "PRINCIPAL STOCKHOLDERS").
DEFINITION OF TERMS
Certain terms used in this Prospectus, usually identified by initial
capital letters, are defined in the section of this Prospectus captioned
"GLOSSARY OF TERMS."
PLAN OF DISTRIBUTION
The Company plans to sell the stock and Notes being issued privately,
to accredited investors (As the term is defined in the Securities Act of
1933, and the Exchange Act of 1934). The Company has no underwriting
Agreement with any Broker, nor does it plan to enter into any.
The Company undertakes to file a post effective amendment to the
Registration Statement identifying any underwriter who may agree to sell
any shares of any Selling Stockholder or Company, and to set forth the terms
of any underwriting agreement or arrangement. The said underwriter shall
also deliver a market making prospectus. As far as the Company is aware,
there exists no past, present, or future plans, proposals, or undertakings
with respect to any underwriter and any selling stockholder.
Although there is no current market for the shares, and they are
not currently traded in the public market, it is anticipated that the shares
will be registered and sold on the NASDAQ Small Cap System within 3
months of the effective date of the Registration Statement of which this
Prospectus forms a part.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock by the Company as follows: (i) the first $400,000 will be
utilized for working capital and other general corporate purposes (ii) the
remainder will be used for acquisition of property in the United States
in the New York City metropolitan area.
From time to time, in the ordinary course of business, the Company evaluates
possible acquisitions of, or investments in, businesses, products and
technologies that are complementary to those of the Company. A portion of the
net proceeds are therefore to fund acquisitions or investments.
With respect to the proceeds from the sale of the notes, the following
Table shows the planned utilization of Funds:
Year 2000
Fund Usage Total
Cheju JoongMoon Complex
(include Golf Course) 20,000,000
Song Hyun-Dong Project 25,000,000
Seoul Finance Center 350,000,000
Kyungju Chosun Hotel 100,000,000
Purchase, Legal,
and filing expenses 5,000,000
<PAGE> 16
In the event that less than the total amount is raised, the Company
reserves the right to choose among the abovementioned projects for most
appropriate use of the funds. In the event that a minimum of $25,000,000
is not raised, the escrow agent will return the funds to the investors.
Subject to Completion as Specific information is received about
each project, including cash flows, detailed descriptions, and
specific Agreements of Purchase and Sale. The only actual executed
purchase and sale agreement presently available is that of Seoul
Financial Center.
SELLING SHAREHOLDERS
The Company is registering 2,000,000 shares of Treasury Stock
for sale to the general public. There are no other Selling Stockholders.
MARKET FOR COMMON EQUITY
At present, there is no market, public or private, for the trading of
the Company's common stock. The Company anticipates registering its shares
on the NASDAQ Small Cap System within 180 days of the effective date of
the Registration Statement on Form S-11, of which this Prospectus forms a
part.
DIVIDENDS
There have been no cash dividends declared or paid since the
inception the Company and no dividends are contemplated to be paid in the
foreseeable future. No dividends were paid by the Company's subsidiaries,
prior to their acquisition by the Company; however, it is anticipated that
for the foreseeable future, the Company's profits (if any) will be reinvested
in the Company rather than distributed as dividends.
SELECTED FINANCIAL INFORMATION
Set forth below is selected consolidated financial information of
the Company. The provided information is derived from the more detailed
audited consolidated financial statements as of September 30, 1999, and
should be read in conjunction with the audited consolidated financial
statements included elsewhere in this Prospectus and are qualified in their
entirety by reference thereto (see "FINANCIAL STATEMENTS").
Cumulative 6 Months Annual
Since Ended Ended
Inception June December
30, 1999 31, 1998
($) ($) ($)
Operating Results:
Revenues 0 0 0
General and
Administration 194,860 173,138 21,721
<PAGE> 17
INCOME FROM
OPERATIONS
BEFORE INCOME
TAXES (194,850) (173,139) (21,821)
Interest Income 254,881 251,818 3,063
Other Expenses (16,503) (11,126) (5,407)
NET INCOME 42,518 66,653 (24,135)
Earnings (Loss) per
share-Common Stock 0.0067 (0.0033)
ASSETS:
Current Assets:
Cash 4,561,379 1,111,875
Total Current Assets 5,023,107 4,890,583
Total Fixed Assets 211,174 111,292
TOTAL ASSETS 5,234,281 5,001,875
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities 21,757 26,010
Long-term Liabilities 198,533 42,953
TOTAL LIABILITIES 863,930 833,343
Common Stock, $0.000025 par value-
authorized 40,000,000 shares;
issued and outstanding 10,000,500 250 250
Additional Paid-In-Capital 4,319,905 4,186,417
Gain Accumulated during
the development stage 28,439 (24,135)
TOTAL STOCKHOLDERS'
EQUITY 4,348,594 4,142,532
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 5,234,281 5,001,875
CAPITALIZATION
The following table sets forth the capitalization of the Company as
of June 30, 1999.
June
Title of Class 30, 1999
Stockholders' Equity $4,348,594
Debt
Total Liabilities $885,687
<PAGE> 18
THE COMPANY
The Company was incorporated in the State of New York on February 5,
1999. It was organized as a purchaser of Bon Hyang, Inc. (BHI), and
purchased 100% of the outstanding common shares of BHI on July 1, 1999,
in exchange for 10,000,000 million shares in the common stock of the Company.
Currently the Company is a holding company with one subsidiary, BHI. BHI was
Organized pursuant to the laws of the Republic of Korea. Neither company has
ever been a party to any material reclassification, merger, consolidation, or
purchase or sale of a significant amount of assets not in the ordinary course
of business, other than with respect to BHI's acquisition by the Company.
For purposes of this prospectus, the Company's subsidiary is sometimes
referred to as "BHI".
BHI, a Korean corporation was formed on July 29, 1998,
to purchase and operate, worldwide downtown office complexes and resort
properties. The company currently has 2 resort properties and a downtown
office complex, all in Korea, under contract to purchase for the total sum
of $500,000,000, including the costs of the purchase (See "Description of
Property").
The Company plans to incorporate a second wholly owned subsidiary that
will operate the properties owned by BHI. The Company also plans to incorporate
subsidiaries in Europe, China, and the United States to purchase other
properties. The strategy of the Company is to utilize local subsidiaries to
purchase properties which will be operated by the Company, or other local
wholly owned subsidiaries. The key to the Company's strategy is that it intends
to allow its holdings to gain value through capital appreciation, and to derive
its income from the judicious management of the property, and from property
rental income.
Initially, the company will be highly leveraged (See "Management's
Discussion and Analysis of Financial Conditions and Results of Operations").
However, the Company plans its long term growth on equity investment and
the reinvestment of profits. It is the Company's goal to have a debt to asset
ratio of no more than 60% by the end of its tenth year of operation.
Management feels that this is a reasonable goal, given that the Seoul
Financial Center will likely carry the Notes and build up a reserve to
retire them at maturity, leaving the remainder of the properties to generate
working capital and profits for investment.
Management feels that the abovementioned strategy will provide a solid
basis for growth, and at the same time minimize the effect of any global or
local recession. Management has assembled what it believes to be a successful,
responsible, and cost conscious management team (See "Biographies of Key
Executives")
Currently, the Company to utilize its full efforts in procuring the Seoul
Financial Center in Seoul, Korea, along with the other properties it has
Options to purchase in Korea, and to develop them into profit centers.
(See Description of Properties)
<PAGE> 19
POLICY WITH RESPECT TO CERTAIN ACTIVITIES
Except as specifically identified below, the statements in sections
(a)-(i) are forward looking policy statements as the Company was formed on
February, 1999, and its only sole business activities to date have been the
purchase of BHI. The policies of the Company outlined below are also the
policies of its sole subsidiary, BHI. These policies may be changed by
by a unanimous vote of the Board of Directors without any voting rights
by the security holders.
The policy of the Registrant with respect to the specific activities
outlined below are as follows:
(a) To issue Senior Security. The Company requires the unanimous consent
of its Board of directors to issue Senior Securities. Other than the issue of
the debenture by BHI to secure the Notes, the Company has decided that it will
not issue Senior Securities in the future, except to property owners for the
purchase of their real property (see (g) below).
(b) To Borrow Money. The Company, except for lines of credit utilized in
the day to day running of its business for an aggregate sum of less than
$5,000,000, does not plan to borrow money in the future. The exception is the
Notes which were deemed necessary to purchase the Korean properties (See
Description of Property). The Company requires the unanimous consent of its
Board of Directors to borrow any sum of money greater than $100,000.
(c) To make loans to other persons. It is the strict policy of the Company
that it will make no loans to third parties except for intercompany loans, with
and without interest, to its subsidiary or, in the future, subsidiaries.
(d) To invest in the securities of other issuers for the purpose of
exercising control. The Company requires the unanimous consent of its Board
of Directors to invest in any other company. The does not intend to purchase
any debt instruments, but may, if it is deemed by the Board of Directors
to be in the best interest of the Company, invest in other companies for the
purpose of gaining control of the said company.
(e) To underwrite securities of other issuers. Except for its subsidiaries
it is the firm policy of the company not to underwrite the securities of other
issuers.
(f) To engage in the purchase (or turnover) of investments. The policy
of the Company is to look to long term growth through the development and
operation of its real estate interests. Except as is consistent with the
foregoing, the Company's policy is not to engage in the purchase of general
investments, and not to turn over its assets. Any investment over $100,000
requires the unimous consent of the Board of Directors.
(g) To offer securities in exchange for properties. It is the policy of
the Company to, where possible, offer securities in the form of common shares
in exchange for properties it wishes to purchase. Unanimous consent of the Board
of Directors is required to effect any such transaction. The Company may also,
with the unanimous consent of its Board of Directors, offer debt instruments
in exchange for properties it wishes to acquire.
(h) To repurchase or otherwise reacquire its shares or securities. It is
the Company's general policy not to reacquire its shares or securities. It
would require the unanimous consent of the Board of Directors and a Special
meeting of Security Holders to change this policy.
(i) Subsequent to the effective date of the Report on Form S-11 of which
this Prospectus forms a part, the Company will be a fully reporting Public
Company and will file all Reports required to be filed by the Securities Act of
1933, as amended, and the Exchange Act of 1934, as amended, including the
filing of quarterly Reports on Form 10-Q, with accompanying unaudited financial
statements, and of annual Reports on Form 10-K, with accompanying audited
statements, certified by independent public accountants, with the SEC.
<PAGE> 20
INVESTMENT POLICIES OF THE COMPANY
(a) Investment or Interest in Real Estate. The Company plans investment
activity in real estate solely for income and not for capital gain. Until the
Notes are retired, the Company must replace any real estate sold by BHI with
Assets of at least equal value. Neither shareholder nor securityholder approval
is required for either the purchase or sale of property. However, unanimous
shareholder approval is required for either the purchase or sale of property.
The Company plans to concentrate its efforts in both Korea and the
New York metropolitan area for the initial acquisition of property. The Company
plans to purchase only resort property, including golfing facilities where
Possible, and large office buildings in urban areas. The key factor in
deciding on a building or resort is its operating profitibility, not its
Capital Gains potential. As well, the Company views each property as an
independent profit center, and operates it as such.
The Company plans to manage its own properties. It plans, where
possible to keep as many of the local property staff as is possible to
run each facility under the supervision of the head office and regional
senior management personnel.
The Company has no specific policy regarding the amount of assets to
be invested in any particular property.
Financing of properties will, generally, be through standard mortgage
financing coupled with property specific securities issued to the property
owner. Where possible, it is the policy of the Company to reduce the overall
leverage on its total portfolio to a ratio of 60% financing to equity.
Initially, the Notes are being used to purchase the first properties in Korea.
Subsequently, the company will endeaver to reduce its leveraged position over
a 10 year period to the ratio previously mentioned.
(b) Investment in Real Estate Mortgages. The Company does not plan any
activity in this area. Having said this, the Company will purchase property
that is subject to mortgages, provided that the properties can be profitably
operated after debt service.
(c) Securities of or interests in persons primarily engaged in real
estate activities. The Company's basic policy is to invest in its or its
subsidiaries' properties only, and not purchase securities of other companies
involved in real estate and real estate associated businesses.
(d) Investment in other securities. The Company does not plan to invest
in other securities, except in the event that it may wish control of a company
owning a particular property the Company wishes to purchase. In this case the
investment in the company would be anciliary to the purchase of the said
property.
<PAGE> 21
DESCRIPTION OF REAL ESTATE
Currently the Company and its sole subsidiary own no property, but have
the option of purchasing two resort properties and a development site in
downtown Seoul Korea, and a purchase and sale agreement executed for the
purchase of the Seoul Financial Center, a 30 story office complex in downtown
Seoul.
Below are the detailed descriptions and operating data for each property:
(A) SEOUL FINANCIAL CENTER.
1) BUILDING LOCATION
#63, Mukyo-Dong, Choong-Ku, Seoul, Korea
2) OVERVIEW OF LOCATION
Optimal location for office building, as neighbored by a main
crossroad of Kanghwamoon in Seoul, it is at the center of Korean politics,
administration, economics, culture, finance, and shopping.
Main street in front of the building, maintains largest traffic
capacity in Seoul and is 2.2km long with 20 street lanes, making access to the
building readily available. The building is adjascent bus and subway stops,
and is in the heart of the Seoul business core and government centers.
Located next to the subway stations of Line 1, Line 2, and Line 5.
It takes 30 minutes to Kimpo Int'l Airport, and 70% of Seoul bus
routes passes through Kwanghwamoon Street.
(3) The Building
The building has 30 floors above ground, and eight floors of below
grade parking. The structure is of steel reinforced concrete, and covers
8,600 square meters.
The building has 119,765 sq. meters in rentable floor space, with
71,972 sqm above ground, and 47,793 sqm of parking below ground. There is
an additional 14,858 sqm in common space and for building operations. The
building has 21 elevators.
The building is currently under foreclosure due to cost overruns,
and the current owners have entered into a purchase and sales agreement with
BHI for the purchase of the building for the sum of $350,000,000 as a
turnkey operation.
Buildings in the area are over 95% occupied (source- Seoul Real Estate
Data Agency)
(4) Pro-Forma Financial Information
Rental income by year
( unit :1,000 won )
Classification 1st year 2nd year 3rd year
Key money 78,969,500 90,303,944 95,320,830
Interest earned 7,896,950 9,030,394 9,532,083
by Key Money
Rental 26,218,950 29,982,138 31,647,812
Increase rate 8% 8%
__________
NOTES:
Calculation basis of Rents:
projected lease area by year x rental x 12 months x increase rate
Interest income : 10% of Key money
1) 1st yea'sr projected lease area : (85% of total area
available for lease)
2) 2nd year's projected lease area : (90% of total area
available for lease)
3) 3rd year's projected lease area : (95% of total area
available for lease)
Maintenance Costs
(unit: 1,000 won)
Classification 1st year 2nd year 3rd year
Maintenance costs 11,825,280 13,522,360 14,273,832
Increase rate 8% 8%
Parking Charge
(unit :1,000 won)
Classification 1st year 2nd year 3rd year
Parking charge 2,056,320 2,351,462 2,482,099
Increase rate 8% 8%
* Calculation basis of Parking charge
No. of fixed parking cars x occupancy rate by year x parking charge x
l2 months x increase rate
* Parking lot for 600 cars is used by tenants free of charge. (1,200
cars parking lot)
* Fixed parking charge : 210,000 won / a car
* Fixed parking charge : 600 vehicles x 85%(Occupancy rate) x 210,000 x
12 months -1,285,200,000 won
* Parking charge per hour :771,120,000 won( 60% of fixed parking charge)
* Annual parking charge : 2,056,320,000 won(Fixed parking + parking by
the hour)
<PAGE> 22
Projected General Administrative Expenses (1st Year)
(unit 1,000 won)
Description Amount
Personnel
Expenses 302,770
Administrative
Services 2,400,000
Water, light and
heating 3,622,913
Taxes and Dues 991,082
Supplies 217,374
Commissions 181,145
Insurance 54,343
Travel 18,114
Total 7,787,741
Taxes and Dues by Year (unit: 1,000 won)
Description 1st Year 2nd Year 3rd Year
Property Tax (Building) 397,996 417,896 438,791
Land Tax 249,004 261,454 274,527
VAT on key money
interest 344,082 421,156 508,360
Total 991,082 1,100,506 1,221,678
Calculation Basis
Property Tax (Building)
- - Annual 5% increase applied
92,650,730 won x 29,329.1 pyong (SFC) /7,169 pyong (Kwanghwamoon) x 1.05
= 397,996,000 won
(2nd year's Property Tax)
397,996,000 won x 1.05 = 417,896,000 won
(3rd year's Property Tax)
417,896,000 won x 1.05 = 438,791,000 won
Land Tax
5,547.5m2 (Land) x 13,700,000 won
76,000,750,000 won (assessed Land Price)
76,000,750,000 won (assessed Land Price) x 35%
26,600,262,500 won(Tax basis)
(1st year's Land Tax)
82,400,000 won + (16,600,262,500 won x 15/1000) = 249,003,938 won
(2nd Land Tax)
249,003,938 won x 1.05 = 261,454, 135 won
(3rd Land Tax)
261,454,135 won x 1.05 = 274,526, 842 won
VAT on Key Money Interest (annual 10% increase from 2 nd year)
Total Key Money x 9/100 x 10% =
1st year: 38,231,367,000won x 9/100 x 10% = 344,082,303 won
2nd year: 46,795,193,000won x 9/100 x 10% = 421,156,737 won
3rd year: 56,484,551,000won x 9/100 x 10% = 508,360,959 won
Projected Income Statement (1999. 10.1 - 2002.9.30)
(unit :1,000 won)
Year
Description 1st year 2nd year 3rd year
(1999 10.1- (2000 10.1- (2001 10.1-
2000.930) 2001.9.30) 2002.10.1)
Sales 47,997,500 54,886,354 57,935,826
Rent 26,218,950 29,982,138 31,647,812
Maintainance costs 11,825,280 13,522,360 14,273,832
Parking charge 2,056,320 2,351,462 2,482,099
Interest on Key money 7,896,950 9,030,394 9,532,083
General Administrative
expenses 7,787,741 8,236,999 8,714,995
Personnel expenses 302,770 317,909 333,804
Administrative
Services 2,400,000 2,520,000 2,646,000
Water, light and
heating 3,622,913 3,804,059 3,994,262
Taxes & Dues 991,082 1,100,506 1,221,678
(VAT on
Key money interest) (344,082) (421,156) (508,360)
(Property Tax) (647,000) (679,350) (713,318)
Insurance 54,343 57,060 59,913
Supplies 217,374 228,243 239,655
Commissions 181,145 190,202 199,712
Travel 18,114 19,020 19,971
Operating income 40,209,759 46,649,355 49,220,831
Income Taxes 11,258,733 13,061,819 13,781,833
Net Income 28,951,028 33,587,536 35,438,998
Key Money 78,969,500 90,803,944 95,320,830
<PAGE> 23
V. Rentals of Buildings in Neighborhood
(as of 1999/rent per pyong)
Building
S.F.C Koram Bank Kyobo Youngpoon Dong-A Samsung Naewee
Description O Fire
Insurance
Location Mukyodong Kongpyongd Chongrol Chonggak Front of Yulgiro Yulgiro
ong ga SEC
Scale
(above/under) 30/8 12/4 22/3 23/5 19/6 20/6 15/3
Total Floor
Area 36,207 12,000 22,300 22,300 11,200 16,690 10,120
Lease Area
per floor 960 380 993 650 378 544 500
Key Money 8,300,000 9,000,000 9,000,000 8,500,000 9,500,000 10,000,000 9,500,000
Key Money for
Monthly
rent 850,000 800,000 710,000 830,000 900,000 915,000 820,000
Rental 90,000 85,000 91,600 89,000 90,000 91,500 93,000
Maintenance
costs 32,000 30,000 31,800 30,000 30,000 37,000 31,000
Parking
charge 210,000 200,000 200,000 200,000 180,000 200,000 200,000
Occupancy
rate 95% 96% 96% 90% 99% 92%
<PAGE> 24
(B) Kyungju Chosun Hotel
Location
1) Address- #410-2 Sinpyung-Dong City Kyungsang Bokdo Province
2) Land ; 2,220,678 Square Meters
3) Hotel area ; 43,854 Square Meter
4) Benefits of location
The whole area around Hotel is a year round tourist area whose main
attractions are the hot springs. The area is under constant development
with a race track complex to be completed in the near future. Construction
has begun on a high speed train, bringing the property within 1 1\2 hours
commuter distance from Seoul and other major urban centers.
BHI has an option to purchase the property for $100,000,000.
Cheju Joon Moon Complex
BHI has an option to purchase this property for $20,000,000.
.Location ; #2100 Saekdal- Dong, Seoguipo Cit, Cheju Province, Korea
.Total Area ; 954,767m2
.Construction Area ; 4,400m2
.General Inf. ; 18 holes, 1 unit of club house, 86 bunkers, 2 resting area,
Total length 6,820m
This is an international resort complex, and is located on Cheju
Island, a one hour flight fron Seoul. The island has a temperate climate
year round, and is very heavily visited by foreign nationals as well as
Koreans year round. President Clinton, on his visit to Korea stayed at this
resort.
BHI has an option to purchase the resort for $20,000,000.
(C) Song Hyun-Dong Property
BHI has an option to purchase this property for $25,000,000.
Location - ;#49-1 Songhyun-dong, Chongro-ku, Seoul, Korea
Total Land Area ; 35,876,6 m2
Construction Area ; 221,266 m2will be developed later)
This property is in the heart of Seoul Korea, within walking distance
of the Presidential Palace, and the Company intends to inventory the
property and construct an international convention center on the
property at a later date.
The operating history of each of the properties is presented below:
TABLE
<PAGE> 25
TAX TREATMENT OF SECURITY HOLDERS
SECURITY HOLDERS
The following discussion summarizes certain United States Federal income
tax considerations associated with the the ownership and disposition of Notes.
This summary applies only to beneficial owners of Notes who acquire such Notes
at the initial offering from the Company for the original offering price
therefor. This summary is based upon existing United States Federal income tax
law, which is subject to change,possibly with retroactive effect. This summary
does not discuss all aspects of United States Federal income taxation that
may be relevant to particular holders in the context of their specific
investment circumstances or certain types of holders subject to special
treatment under such laws (including, for example, financial institutions,
insurance companies, broker-dealers, persons having a functional currency
other than the United States dollar, United States expatriates, tax-exempt
organizations, controlled foreign corporations related to Corporate Express
through stock ownership and holders (whether actual or constructive) of 10%
or more of the total combined voting power of all classes of stock of the
Company). In addition, this summary does not discuss any foreign, state or
local tax considerations and assumes that holders of the Notes will hold the
Notes as "capital assets" (generally, property held for investment).
Prospective holders of Notes should consult their tax advisors
regarding the United States Federal, State, Local, and Foreign Income and
other tax considerations of the ownership and disposition of the Notes.
For purposes of this summary, a "United States holder" is an individual who
is a citizen or resident of the United States, a corporation or partnership
created or organized under the laws of the United States or any state or
political subdivision thereof, or a person or other entity who is otherwise
subject to United States Federal income taxation on a net income basis in
respect of income derived from the Notes.
United States Holders
Interest payable on the Notes will be included in the income of a
United States holders at the time accrued or received in accordance with such
holder's regular method of accounting for United States Federal income tax
purposes.
A United States holder will recognize a capital gain or loss upon the sale
or other disposition of a Note in an amount equal to the difference between
the amount realized from such disposition (exclusive of any amount paid for
accrued interest not previously included in income, which amount will be
taxable as ordinary income) and the holder's adjusted tax basis in the Note.
Such capital gain or loss will be long-term capital gain or loss if the holder
has held the Note for more than one year at the time of disposition. Holders of
Notes that are individuals are generally entitled to preferential treatment
for net long-term capital gains.
Non-United States Holders
An investment in the Notes by a non-United States holder generally will
not give rise to any United States Federal income tax consequences, unless the
interest received or any gain recognized on the sale or other disposition of
the Notes by such holder is treated as effectively connected with the conduct
by such holder of trade or business in the United States, or, in the case of
gains derived by an individual, such individual is present in the United
States for 183 days or more and certain other requirements are met.
In order to avoid back-up withholding of 31% on payments of interest and
principal made by United States payors, a non-United States holder of the Notes
must generally complete, and provide the payor with, an Internal Revenue
Service Form W-8 ("Certificate of Foreign Status"), or other documentary
evidence, certifying that such holder is an exempt foreign person.
<PAGE> 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION,
CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis relate to factors which have
affected the financial condition and results of operations of the Company for
the six months ended June 30, 1999 and the fiscal year ending
December 31, 1999.
On July 1, 1999 the Company purchased 100% of all the outstanding
shares of BHI, as fully described in Material Events, below. As a result of
the aforementioned transaction, the Company gained BHI, whose activities are
fully described herein.
Discussion of Financial Information
BHI is the active operating entity, producing, marketing,
manufacturing, and supporting the products of the Company. The Company has no
active income save for the activities of BHI. Therefore, the financial
information regarding the parent company and its subsidiary are presented on
a consolidated basis. The data (pro-forma) for the period ending
December 31, 1998 is solely that of the Subsidiary, as the Company was formed
in February of 1999.
<PAGE> 27
BHI is a development stage company, anticipating becoming an active
Operating company in the current fiscal year upon the purchase of the
properties in Korea with the proceeds of the sale of the Notes. In the event
that the Notes are not sold in sufficient numbers to permit the purchase of the
properties in Korea (See "Description of Properties"), the Company will attempt
to find suitable property in Korea and purchase the same with its cash reserves
(See "Liquidity"). This discussion is based on the Financial Statements found
elsewhere in this Prospectus, and the reader is directed to these (See,
"Financial Statements").
For the fiscal year ended December 31, 1998, and the six month period
ended June 30, 1999, there were no revenues.
The overall profit during the development period to the end of
June 30, 1999 was $28,439, with profits during the 6 month period ending
June 30, 1998 being $53,461 as compared to a loss of $24,135 for the
fiscal year ended December 31, 1998. As there was no operating income for
either period, the Company's income is a reflection solely of interest income.
Expenses since inception were $194,860 for the period ending June 30, 1999.
Expenses for the fiscal year ended December 31, 1998 were $173,139 as compared
to $21,721 for the six months ended June 30,1999. The increase is reflective
of the efforts of the Company to become an operating Company, and is mainly
due to the increase of salary and benefits related expenses.from $11,812
for the fiscal year ended December 31, 1998 to $148,225 for the six months
ending June 30, 1999.
The cash and investment certificate position of the company was
$5,023,107 on June 30, 1999 as compared to $4,890,583 on December 31, 1998.
Material Events
Acquisition of BHI
On July 1, 1999, in exchange for 10,000,500 shares in the common
stock of Company, 100% of the stock in BHI was sold by the owners of the stock
to the Company. The transaction resulted in the 6 shareholders of BHI owning
99.9 percent of the Company.
<PAGE> 28
Liquidity
Management believes that the Company has the cash funds and necessary
liquidity to meet the needs of the Company over the next year.
Primarily, liquidity needs will be met through the utilization of the cash
reserves.
However, to fully maximize the potential presented by the purchase and sale
contract for Seoul Financial Center, and the options to purchase the remaining
properties, the Company will need a cash infusion of $500,000,000. The funds
will be primarily used to purchase the properties and for the costs of closing.
In the event insufficient funds are raised for all or any of the closings
the Company will use its cash reserves to purchase property in Korea for
generating operating capital.
Current Plans
The key events that are anticipated by management to occur over the
next year are the closings on one or more properties and the transition
from a development stage company to an active operating one.
Selection, Management and Custody of Company's investments
The Company will manage all of its properties and finances, and not
rely on any outside managers and consultants.
It is the strict policy of the Company that no officer, director, or
employee have any ownership interest in any property purchased or operated by
the Company. The Company will not purchase any property in which a Director
or senior management personnel have an interest.
Accounting Policies and Procedures
The Company follows generally accepted accounting principles in
preparing its financial statements, and has audited statements produced
annually, with its quarterly statements produced by its management and
accountants.
Revenue Recognition
Revenue is recognized using the accrual method of accounting.
Statements of Cash Flows
Statements of Cash Flow are prepared quarterly, on a consolidated
basis, using generally accepted accounting principles and guidelines.
Inventory
The Company keeps no inventory except office supplies and sundry.
<PAGE> 29
Fixed Assets
Fixed assets are valued based on their depreciated value. Depreciation
is calculated using the straight line method.
Principles of Consolidation
All Financial Statements are produced on a consolidated basis, as the
subsidiary, BHI, accounts for all operating revenue of the Company.
Income/Loss Per Share
The Computation of loss per share of common stock is based on the
weighted average number of shares outstanding during the periods presented.
Statement Re Computation of Earnings Per Share
The Company has a simple capital structure as defined by APB Opinion
Number 15. Accordingly, earnings per share is calculated by dividing net
income by the weighted average shares outstanding.
Provision for Income Taxes
Provisions for income tax are computed quarterly using the guidelines
as defined in the Federal and State Statutes.
The Company's Immediate Capital Requirements
The Company requires about $500,000,000 to close on the properties
in Korea presently under contract or on which the Company has options
to purchase. (See "Description of Properties").
CONFLICTS OF INTEREST
Baik Suk Kim is an Executive Officer and director of the Company,
and as such exerts great influence on all matters on which the Board will
vote at the next annual meeting of the Company's Stockholders. He
also holds or controls a definitive major interest in the
Company's outstanding common stock. Because the Company's officers and
directors will be voting upon matters of personal interest to him (e.g.,
salaries, bonuses and other benefits), the outcome of such votes will not be
based on arm's length negotiations. While the Company's current officers
intend to exercise fairness in determining their compensation and all other
matters, there can be no assurance that the Company would not have negotiated
more favorable arrangements had persons other than its current officers been
responsible for ultimate determinations.
<PAGE> 29
MANAGEMENT
Directors and Executive Officers
The following sets forth the names and ages of all the Directors and
Executive Officers of the Company, positions held by such person, length of
service, when first elected or appointed and term of office.
First Elected
Name Age or Appointed/Term Position
Baik Suk Kim 59 February 5, 1999 CEO, Chairman
of the Board
Jin Ho Kim 32 July 1, 1999 President
Jeong Ja Yoon 59 July 1, 1999 Chief Financial Officer
Yong Ho Kim 34 July 1, 1999 Director
Biographies of Directors, Officers and Director Nominees
Baik Suk Kim, Chairman/CEO
Mr. Kim's responsibilities include long term vision and business
development. He was the founder of both the Company and BHI.
He directly manages the acquisition of properties and investment strategy
of the Company and BHI.
For the 5 years prior to becoming full time CEO of the Corporation and
BHI, Mr. Kim was president of Korea RAIS Chemical Ltd.
Mr. Kim is a graduate of Chung Nam University.
Jin Ho Kim, President
Mr. Kim's duties include the overseeing of all day to day
operations, and the implementation of Corporate Strategy into the Company.
For the five years prior to coming to the Company, Mr. Kim was a senior
manager with Mang Hyang, Ltd.
Mr. Kim is a graduate of Kyeong Ki University.
Jeong Ja Yoon, Chief Financial Officer
Mr.Yoon's duties include the supervision of the accounting department
and the analysis of prospective properties for purchasing. He oversees all
financial aspects of the Company's operations.For the five years prior to
coming to the Company he was a senior manager with Mang Hyang, Ltd.
Mr. Yoon is a graduate of Kyong Ki University.
Yong Ho Kim, Director
Mr. Kim works full time with the Company as a managing director.
He works with the Chairman in the areas of Property procurement and
operations of purchased properties. Prior to coming to the Company,
Mr. Kim was a senior manager with Mang Hyang, Ltd. for the preceeding five
years.
Mr. Kim is a graduate of Methodist University.
<PAGE> 30
Involvement in Certain Legal Proceedings
During the past five years no current director, person nominated to
become a director, executive officer, promoter or control person of the
Company has been a party to or the subject of:
(1) Any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of
the bankruptcy or within two years prior to that time;
(2) Any conviction in a criminal proceeding or has been subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) Any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoying, barring suspending or otherwise limiting his
involvement in any type of business, securities or banking activities; and
(4) Been found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgement has not
been reversed, suspended, or vacated.
Compensation
Compensation of Directors
Standard Arrangements
All members of the Company's board of directors are paid a per diem
fee of for attendance at meetings of the board of directors and committees
thereof. In addition, if required, they are reimbursed for travel expenses
and lodging is arranged for them, at the Company's expense. At such time as
adequate funds are available, all director (and officers) of the Company will
be covered by liability insurance. Directors are reimbursed for all out of
pocket expenses incurred in the performance of their roles, subject to
provision of receipts in form and substance adequate to satisfy Internal
Revenue Service audit requirements (e.g., long distance telephone, postage,
etc.).
Other Arrangements
Neither the Company nor any of its subsidiaries have any other
arrangements to compensate its directors.
Employment contracts, termination of employment & change-in-control
arrangements
The Company does not have any compensatory plan or arrangement,
including payments to be received from the Company, with respect to a named
executive officer that results or will result from the resignation,
retirement or any other termination of such executive officer's employment
with the Company and its subsidiaries or from a change-in-control of the
Company or a change in the name executive officer's responsibilities
following a chance-in-control, which, including all periodic payments or
installments, exceeds $100,000.
<PAGE> 31
It is anticipated that the CEO, Mr. Kim will draw a salary of $50,000
during the fiscal year ending December 31, 2000, although no salary was drawn
in the past.
Each of the other directors and executives receive a salary of $36,000
per year.
SUMMARY, COMPENSATION TABLE
Annual Compensation Awards Payouts
Other Rest-
Annual ricted
Compen Stock Aw- SU SA
Name and sation ards OP RS LTIP Other
Position Year Salary ($) Bonus ($) (#) ($) __ ($) __($)
Baik Kim 1999 0++ 0 0 0 0 0 0 0 0
Jin Ho Kim 1999 0++ 0 0 0 0 0 0 0 0
Jeong Yoon 1999 0++ 0 0 0 0 0 0 0 0
Yong Ho Kim 1999 0++ 0 0 0 0 0 0 0 0
++ Baik Suk Kim, CEO of the Company drew no salaries prior to January 1, 2000.
It is anticipated that he will draw a salary of $50,000 in
2000.
Jin Ho Kim, President of the Company drew no salary prior to January 1
2000. It is anticipated he will draw a salary of $36,000 in
2000.
Jeong Ja Yoon, CFO of the Company drew no salary prior to January 1
2000. It is anticipated he will draw a salary of $36,000 in
2000.
Yong Ho Kim, Director of the Company drew no salary prior to January 1
2000. It is anticipated he will draw a salary of $36,000 in
2000.
CERTAIN TRANSACTIONS
The following information pertains to all transaction during the
last two year, or proposed transactions, to which the Company was or is to be
a party, in which any of the following persons had or is to have a direct or
indirect material interest: any director or executive officer of the
Company: any nominee for election as a director; any principal security
holder listed below; and, any member of the immediate family (including
spouse, parents, children, siblings, and in-laws) of any of the foregoing
persons.
Relationship Nature of Interest Amount of Fiscal
Name to Company in the Transaction Interest Year Ending
Baik Suk Kim CEO, Chairman
of the Board Purchase of BHI 25% (1) December 31, 1999
Jin Ho Kim President Purchase of BHI 12.5% (1) December 31, 1999
Jeong Ja Yoon Chief Financial Purchase of BHI 25% (1) December 31, 1999
Officer
Yong Ho Kim Director Purchase of BHI 12.5% (1) December 31, 1999
_____________
(1) as a result of the purchase of BHI by the Company, Baik Suk Kim received
2,500,000 shares, as did Jeong Ja Ho. Jin Ho Kim and Yong Ho Kim each received
1,250,000 shares. Baik Suk Kim held 500 shares in the Company prior to the
purchase.
<PAGE> 32
Parents of the Company
The following table discloses all persons who are parent of the
Company (as such term is defined in Securities and Exchange Commission
Regulation C), showing the basis of control and as to each parent, the
percentage of voting securities owned or other basis of control by its
immediate parent if any.
Percentage Other
of Voting Basis
Basis for Securities For
Name Control Owned Control
Baik Suk Kim Share Ownership 25.00 none
Jin Ho Kim Share Ownership 12.5 none
Jeong Ja Share Ownership 25.00 none
Yong Ho Kim Share Ownership 12.5 none
Mi Kyung Kim Share Ownership 12.5 none
Jang Ho Kim Share Ownership 12.5 none
Transaction with Promoters, if Organized Within the Past Five Years
There have been no transactions with Promoters over the past five
years.
PRINCIPAL STOCKHOLDERS
The following sets forth the security ownership of Management of the
Company and any holders of the Company's common stock known to own 5% or more
of the Company's issued and outstanding common stock, as of September 30,
1997.
PRINCIPAL STOCKHOLDERS
As of the date of this Prospectus, the following persons (including
any "group" are, based on information available to the Company, beneficial
owners of more than five percent of the Company's common stock (its only
class of voting securities):
Name and Amount and
Title Address of Nature of Percent
of Beneficial Beneficial of
Class Owner Owner Class
Common Baik Suk Kim 2,500,500 Shares 25.0
Stock 237 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Jeong Ja Yoon 2,500,000 Shares 25.0
Stock 237 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Yong Ho Kim 1,250,000 Shares 12.5
Stock 237 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Jin Ho Kim 1,250,000 Shares 12.5
Stock 240 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Mi Kyung Kim 1,250,000 Shares 12.5
Stock 109 Tong Ui-Dong
Jongro-Ku, Seoul, Korea
Common Jang Ho Kim 1,250,000 Shares 12.5
Stock 684 Yungkwon-Ri, MU Jeong
Jeon Nam, IN Korea
_______________
NOTE: The principal shareholders held the same percentage of Bon Hyang Common
Shares as they now do of the Corporation. They received 20 shares in the
Company for every share they had held in BHI. There was a total of 500,000
shares in BHI sold by the shareholders to the Company.
<PAGE> 33
SECURITY OWNERSHIP OF MANAGEMENT
As of the date of this Prospectus, the following table discloses, as
to each class of equity securities of the registrant or any of its parents
or subsidiaries other than directors' qualifying shares, beneficially owned
by all directors and nominees, the names of each executive officer (as
defined in Item 402[a][2] of Securities and Exchange Commission regulation
S-B), and directors and executive officers of the registrant as a group, the
total number of shares beneficially owned and the percent of class so owned.
Of the number of shares shown, the associated footnotes indicate the amount
of shares with respect to which such persons have the right to acquire
beneficial ownership as specified in Securities and Exchange Commission Rule
13(d)(1).
Name and Amount and
Title Address of Nature of Percent
of Beneficial Beneficial of
Class Owner Owner Class
Common Baik Suk Kim 2,500,500 Shares 25.0
Stock 237 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Jeong Ja Yoon 2,500,000 Shares 25.0
Stock 237 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Yong Ho Kim 1,250,000 Shares 12.5
Stock 237 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Jin Ho Kim 1,250,000 Shares 12.5
Stock 240 Narsu Dong
Jongro-Ku, Seoul, Korea
COMMON STOCK
The Company is authorized to issue 40,000,000 shares of Common Stock,
with a par value of $.000025. Immediately prior to this offering 10,000,500
shares of Common Stock were outstanding and held of record by 6
persons as of December 31, 1999. The holders of Common Stock have one vote
per share on all matters (including election of directors) without provision
for cumulative voting. Thus, holders of more than fifty percent (50%) of the
shares voting for the election of directors can elect all of the directors,
if they choose to do so. The Common Stock currently is not redeemable and
has no conversion or pre-emptive rights. The Common Stock currently
outstanding is (and the Shares being issued pursuant to this prospectus will
be) validly issued, fully paid and non-assessable.
In the event of liquidation of the Company's assets available for
Common Stock will share equally in any balance of the Company's assets
available for distribution to them after satisfaction of creditors and the
holders of the Company's senior securities. The Company may pay dividends,
in cash or in securities or other property when and as declared by the board
of directors from funds legally available therefor, but has paid no cash
dividends on its Common Stock.
OTHER SECURITIES
The Company issued, on December 1, 1999, $500,000,000 of Subordinated
Notes with a floating interest rate of LIBOR +1/2 percentum per anum, maturing
on December 31, 2009. The notes are secured by a fixed and floating
debenture over the assets of Bon Hyang, Inc., the sole subsidiary of Euro
Cap Corporation. Of the total Notes to be issued, $2,000,000 worth are being
registered in the Registration Statement of which this Prospectus forms a part
for sale to the public (See "The Offering")
TRANSFER AGENT
The transfer agent for the Company's Capital Stock is Continental
Stock Transfer and Trust Company of New York.
<PAGE> 34
SHARES ELIGIBLE FOR FUTURE SALE
Generally, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period may, under certain
circumstances, sell within any three month period a number of shares which
does not exceed the greater of one percent (1%) of the then outstanding
Common Stock or the average weekly trading volume during the four calendar
weeks prior to such sale. Rule 144 also permits, under certain circumstances,
the sale of shares without any quantity limitation by a person who has not
been an affiliate of the Company for at least 90 days and who has satisfied a
one year holding period.
There are 6 shareholders holding 10,000,500 shares which will be
eligible for sale in January of 2001, pursuant to fulfilling the terms as set
down in Rule 144.
ADDITIONAL INFORMATION
The foregoing statement is a summary of the rights and privileges of
the holders of the Company's Stock. It does not purport to be complete and
is subject to the provisions of the New York Corporation Act, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and, the rules, regulations and bylaws of the National Association
of Securities Dealers, Inc.. The foregoing statements are qualified in
their entirely by such references.
<PAGE> 35
INDEMNIFICATION ARRANGEMENTS
The Company's articles of incorporation and bylaws provide for
indemnification of the Company's officers, directors and agents to the fullest
extent permitted by law. The Company's articles of incorporation also
limit the right of stockholders to sue Company officers, directors and agents.
In addition, the Company's employment agreements with its officers
all require the Company to defend the contracting parties against all
liabilities resulting from their association with the Company, to the
greatest extent legally permitted.
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, the
Company has been informed that in the opinion of the United States Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
LITIGATION
The Company is not a party to any material pending legal proceedings.
LEGAL OPINIONS
Bernabe Diaz, Esquire, Attorney at Law, has rendered his opinion
that the shares of Common Stock reserved as described herein when issued
will be validly issued, fully paid and non-assessable, and that future
purchasers thereof will not be subject to personal liability as a result of
their ownership thereof.
EXPERTS
The audited financial statements of the Company appearing in this
Prospectus and in the Registration Statement have been examined by independent
public accountants, as set forth in their report appearing elsewhere herein,
and are included in reliance upon such report the authority of such firm as
expert in auditing and accounting.
FINANCIAL STATEMENTS
(See following pages)
<PAGE> 36
Bon Hyang Inc.
Financial Statements and
Accountant's Audit Report
For the period beginning July 29 and ended December 31, 1998
And for the two quarters ended June 30, 1999
Euro Cap Corporation
Financial Statements and
Accountant's Audit Report
For the two quarters ended June 30, 1999
Euro Cap Corporation
Consolidated Pro Forma
Financial Statements and
Accountant's Audit Report
For the period beginning July 29 and ended December 31, 1998
And for the two quarters ended June 30, 1999
<PAGE> 37
Bon Hyang Inc.
FINANCIAL STATEMENTS
For the period beginning July 29 and ended December 31, 1998
And for the two quarters ended June 30, 1999
TABLE OF CONTENTS
______________________________________________________________________________
Page
Accountant's Audit Report 3
Financial Statements:
Balance Sheets F4
Statements of Operations and Deficit F5
Statements of Stockholders' Equity F6
Statements of Cash Flows F7
Notes to Financial Statements F16
______________________________________________________________________________
<PAGE> 38
Euro Cap Corporation
FINANCIAL STATEMENTS
For the two quarters ended June 30, 1999
TABLE OF CONTENTS
______________________________________________________________________________
Page
Financial Statements:
Balance Sheets F8
Statements of Operations and Deficit F9
Statements of Stockholders' Equity F10
Statements of Cash Flows F11
Notes to Financial Statements F16
______________________________________________________________________________
<PAGE> 39
Euro Cap Corporation
Consolidated Pro- Forma
FINANCIAL STATEMENTS
For the period beginning July 29 and ended December 31, 1998
And for the two quarters ended June 30, 1999
TABLE OF CONTENTS
______________________________________________________________________________
Page
Financial Statements:
Balance Sheets F12
Statements of Operations and Deficit F13
Statements of Stockholders' Equity F14
Statements of Cash Flows F15
Notes to Financial Statements F16
______________________________________________________________________________
<PAGE> 40
DMHD Hamilton Clark & Co.
www.dmhd-cpa.com
Stan J.H. Lee, CPA, CMA
Tel) 201-944-7246
440 West St. Suite 300
Fax) 201-944-7759
Fort Lee, NJ 07024-5058
e-mail) [email protected]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and
Shareholders of
Bon Hyang Incorporation
Naesu-Dong Jongro-Ku
Seoul, Korea
We have audited the accompanying balance sheets of Bon Hyang Inc. as
of December 31, 1998, and for the two quarters ended June 30, 1999, the
related statement of operations, statements of stockholders'
equity and statements of cash flows for the periods then ended. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We have also audited the accompanying balance sheet of Euro Cap Corporation
as of June 30, 1999, the related statement of operations,
statement of stockholders' equity and statement of cash flows for the
periods then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
Utilizing the audited data we prepared the consolidated pro-forma balance sheet
and accompanying Statements of Operations, shareholders' equity, and cash flow.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
<PAGE> 41
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bon Hyang Inc.
at December 31, 1998, and for the two quarters ended June 30, 1999 and the
results of its operations and its cash flows for the periods then ended
in conformity with generally accepted accounting principles.
In our opinion, the financial statements referred to above also present fairly,
in all material respects, the financial position of Euro Cap Corporation
at June 30, 1999 and the results of its operations and its cash flows for the
two quarters then ended in conformity with generally accepted accounting
principles. In our opinion, the financial statements referred to above also
present fairly, in all material respects, the consolidated pro forma financial
position of Euro Cap Corporation on December 31,1998, and at June 30, 1999 and
the results of its operations and its cash flows for the periods then ended in
conformity with generally accepted accounting principles.
/s/Stan J.H. Lee, CPA/s/
December 29, 1999
Fort Lee, N.J.
<PAGE> 42
BON HYANG INC.
BALANCE SHEETS
AS OF JUNE 30, 1999 AND DECEMBER 31, 1998
6/30/99 12/31/98
ASSETS
Current Assets:
Cash $4,561,379 1,111,875
Prepaid expenses 461,728 3,778,708
5,023,107 4,890,583
Fixed Assets:
Automobile 72,112 60,388
Furniture and fixtures 16,699 10,446
Security deposits 103,671 27,500
Organizational costs 18,692 12,958
211,174 111,292
TOTAL ASSETS $5,234,281 $5,001,875
LIABILITIES
Current Liabilities:
Notes payables 21,757 26,010
21,757 26,010
Long-Term Debt:
Notes payable 863,930 833,333
863,930
TOTAL LIABILITIES 885,687 859,343
SHAREHOLDERS' EQUITY
Capital Stock 4,319,655 4,166,667
authorized capital of
2,000,000 shares of
common stock with a
par value of 10,000
WON per share; 500,000
Shares issued and
outstanding
Retained earnings 28,939 (24,135)
4,348,594 4,142,532
$5,234,281 $5,001,875
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 43
BON HYANG INC.
STATEMENTS OF EARNINGS AND RETAINED EARNINGS
FOR THE TWO QUARTERS ENDED JUNE 30, 1999
AND
FOR THE PERIOD OF JULY 29, 1998-DECEMBER 31, 1998
CUMULATIVE
SINCE
INCEPTION 12/31/97 12/31/98
REVENUE $- $- $-
GENERAL AND
ADMINISTRATIVE
EXPENSES
Salaries 140,510 129,823 10,687
Employee benefits 19,527 18,402 1,125
Communications 3,166 2,376 790
Office 1,664 1,227 437
Advertising 12,746 8,639 4,107
Travel 10,831 7,826 3,005
Automotive 4,555 3,422 1,133
Professional fees 1,361 924 437
TOTAL GENERAL AND
ADMINISTRATIVE EXPENSES 194,360 172,639 21,721
INCOME (LOSS) FROM
OPERATIONS (194,360) (172,639) (21,721)
Other revenues and gains
Interest Income 254,881 251,818 3,063
Other Expenses and
losses Amortization on
deferred assets (15,639) (10,368) (5,271)
Miscellaneous loss (1,864) (1,658) (206)
INCOME (LOSS) BEFORE
INCOME TAX 43,018 67,153 (24,135)
Income taxes (13,192) (13,192) -
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM 29,826 53,961 (24,135)
Extraordinary items
Gain (Loss) currency
conversion (887) (887) -
NET INCOME (LOSS) 28,939 53,074 (24,135)
RETAINED EARNINGS,
beginning - (24,135) -
RETAINED EARNINGS,
end 28,939 28,939 (24,135)
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 44
BON HYANG INC,
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE TWO QUARTERS ENDED JUNE 30, 1999
AND
FOR THE PERIOD OF JULY 29-DECEMBER 31, 1998
Common Stock Total
Numbers of Shares Amount Retained earnings Stockholders'
(Deficits) Equity
07/29/98 500,000 $4,166,667 $- $4,166,667
Shares Issued
in years 1998 - - - -
Net Income-
7/29-12/31/98 - - (24,135) (24,135)
BALANCE AS OF
12/31/98 500,000 $4,166,667 (24,135) 4,142,532
BALANCE AS OF
01/01/99 500,000 4,166,667 (24,135) 4,142,532
Net gain (Loss) -
currency conversion - 152,988 - 152,988
Net Income- 6/30/99 - - 53,074 53,074
BALANCE AS OF
6/30/99 500,000 $4,319,655 $28,939 $4,348,594
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 45
BON HYANG INC.
STATEMENT OF CASH FLOWS
FOR THE TWO QUARTERS ENDED JUNE 30, 1998
AND
FOR THE PERIOD OF JULY 29-DECEMBER 31, 1998
CUMULATIVE
SINCE
INCEPTION 6/30/99* 12/31/98
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Income $29,826 $53,961 $(24,135)
$29,826 $53,961 $(24,135)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Collection of prepayments 3,455,723 3,455,723 -
Prepaid expenses (3,778,708) - (3,778,708)
Lease deposits (102,662) (75,162) (27,500)
Acquisition of automobile (69,896) (9,508) (60,388)
Acquisition of furniture
and equipment (16,314) (5,868) (10,446)
Deferred assets (18,216) (5,258) (12,958)
(530,073) 3,359,927 (3,890,000)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds of short-term
debt 833,333 833,333
Proceeds of long-term
debt 26,010 26,010
Proceeds from issuance
of common stock 4,166,667 4,166,667
Notes payables (5,208) (5,208) -
5,020,802 (5,208) 5,026,010
Net Increase(Decrease)
in Balance of Cash 4,520,555 3,408,680 1,111,875
Cash at Beginning
of Period 1,152,699 1,152,699 -
Cash at End
of Period $5,673,254 $4,561,379 $1,111,875
* Adjusted for currency appreciation
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 46
EURO CAP CORPORATION
BALANCE SHEETS
AS OF JUNE 30, 1999
6/30/99
ASSETS
Current Assets:
Cash $-
-
TOTAL ASSETS $-
LIABILITIES
Current Liabilities: $-
Accounts payables -
-
Long-Term Debt:
Notes payable -
TOTAL LIABILITIES -
SHAREHOLDERS' EQUITY
Capital Stock $ 500
40,000,000 shares of Common Stock
authorized at a par value of
$0.000025 each, 500 issued
Retained earnings (500)
-
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $-
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 47
EURO CAP CORPORATION
STATEMENTS OF EARNINGS
FOR THE QUARTERS ENDED JUNE 30, 1999
6/30/99
REVENUE $-
GENERAL AND ADMINISTRATIVE EXPENSES
Registration fees 500
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES 500
OPERATING INCOME (LOSS) (500)
NET INCOME (LOSS) (500)
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 48
EURO CAP CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE TWO QUARTERS ENDED JUNE 30, 1999
Common Stock Total
Numbers of Shares Amount Retained earnings Stockholders'
(Deficits) Equity
BALANCE AS OF
01/01/99 500 $500 $- $500
Shares Issued
in years 1999 - - - -
Net Income-
01/01/99-06/30/99 - - (500) (500)
BALANCE AS OF
06/30/99 500 $500 (500) -
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 49
EURO CAP CORPORATION
STATEMENT OF CASH FLOWS
FOR THE TWO QUARTERS ENDED JUNE 30, 1999
6/30/99
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $(500)
(500)
CASH FLOWS FROM INVESTING ACTIVITIES:
-
-
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 500
500
Net Increase(Decrease) in Balance of Cash -
Cash at Beginning of Period -
Cash at End of Period $-
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 50
EURO CAP CORPORATION
CONSOLIDATED PRO-FORMA BALANCE SHEETS
AS OF JUNE 30, 1999 AND DECEMBER 31, 1998
6/30/99 12/31/98
ASSETS
Current Assets:
Cash $4,561,379 1,111,875
Prepaid expenses 461,728 3,778,708
5,023,107 4,890,583
Fixed Assets:
Automobile 72,112 60,388
Furniture and fixtures 16,699 10,446
Security deposits 103,671 27,500
Organizational costs 18,692 12,958
211,174 111,292
TOTAL ASSETS $5,234,281 $5,001,875
LIABILITIES
Current Liabilities:
Notes payables 21,757 26,010
21,757 26,010
Long-Term Debt:
Notes payable 863,930 833,333
863,930
TOTAL LIABILITIES 885,687 859,343
SHAREHOLDERS' EQUITY
Capital Stock 4,320,155 4,166,667
Retained earnings 28,439 (24,135)
4,348,594 4,142,532
$5,234,281 $5,001,875
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 51
EURO CAP CORPORATION
CONSOLIDATED PRO-FORMA STATEMENTS OF EARNINGS AND RETAINED EARNINGS
FOR THE TWO QUARTERS ENDED JUNE 30, 1999
AND
FOR THE PERIOD OF JULY 29, 1998-DECEMBER 31, 1999
CUMULATIVE
SINCE
INCEPTION 06/30/99 12/31/98
REVENUE $- $- $-
GENERAL AND
ADMINISTRATIVE EXPENSES
Salaries 140,510 129,823 10,687
Employee benefits 19,527 18,402 1,125
Communications 3,166 2,376 790
Office 1,664 1,227 437
Advertising 12,746 8,639 4,107
Travel 10,831 7,826 3,005
Registration fees 500 500 -
Automotive 4,555 3,422 1,133
Professional fees 1,361 924 437
TOTAL GENERAL AND
ADMINISTRATIVE EXPENSES 194,860 173,139 21,721
INCOME (LOSS) FROM
OPERATIONS (194,860) (173,139) (21,721)
Other revenues and gains
Interest Income 254,881 251,818 3,063
Other Expenses and losses
Amortization on deferred
assets (15,639) (10,368) (5,271)
Miscellaneous loss (1,864) (1,658) (206)
INCOME (LOSS) BEFORE
INCOME TAX 42,518 66,653 (24,135)
Income taxes (13,192) (13,192) -
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM 29,326 53,461 (24,135)
Extraordinary items
Gain (Loss) currency
conversion (887) (887) -
NET INCOME (LOSS) 28,439 52,574 (24,135)
RETAINED EARNINGS,
beginning - (24,135) -
RETAINED EARNINGS,
end 28,439 28,439 (24,135)
EARNINGS PER SHARE $0.0028 ($0.0024)
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 52
EURO CAP CORPORATION
CONSOLIDATED PRO-FORMA STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE TWO QUARTERS ENDED JUNE 30, 1999
AND
FOR THE PERIOD OF JULY 29-DECEMBER 31, 1999
Common Stock Total
Numbers of Shares Amount Retained earnings Stockholders'
(Deficits) Equity
BALANCE AS OF
07/29/98 10,000,000 $4,166,667 $- $4,166,667
Shares Issued
in years 1998 - - - -
Net Income-
7/29-12/31/98 - - (24,135) (24,135)
BALANCE AS OF
12/31/98 10,000,000 $4,166,667 (24,135) 4,142,532
BALANCE AS OF
01/01/99 10,000,000 4,166,667 (24,135) 4,142,532
Shares Issued
in years 1999 500 500 500
Net gain (Loss) -
currency conversion 152,988 152,988
Net Income- 6/30/99 - - 52,574 52,574
BALANCE AS OF
6/30/99 10,000,500 $4,320,155 $28,439 $4,348,594
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 53
EURO CAP CORPORATION
CONSOLIDATED PRO-FORMA STATEMENT OF CASH FLOW
FOR THE QUARTERS ENDED JUNE 30, 1999
FOR THE PERIOD OF JULY 29,-DECEMBER 31, 1998
CUMULATIVE
SINCE
INCEPTION 6/30/99* 12/31/98
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Income $29,326 $53,461 $(24,135)
$29,326
$53,461 $(24,135)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Collection of prepayments 3,455,723 3,455,723 -
Prepaid expenses (3,778,708) - (3,778,708)
Lease deposits (102,662) (75,162) (27,500)
Acquisition of automobile (69,896) (9,508) (60,388)
Acquisition of furniture
and equipment (16,314) (5,868) (10,446)
Deferred assets (18,216) (5,258) (12,958)
(530,073) 3,359,927 (3,890,000)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds of short-term debt 833,333 833,333
Proceeds of long-term debt 26,010 26,010
Proceeds from issuance of
common stock 4,167,167 500 4,166,667
Notes payables (5,208) (5,208) -
5,021,302 (4,708) 5,026,010
Net Increase(Decrease)
in Balance of Cash 4,520,555 3,408,680 1,111,875
Cash at
Beginning of Period 1,152,699 1,152,699 -
Cash at
End of Period $5,673,254 $4,561,379 $1,111,875
* Adjusted for currency appreciation
See Accompanying Notes Which are an Integral Part of Financial Statements
<PAGE> 54
EURO CAP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Period Ended JUNE 30, 1999
and December 31, 1998
1. Incorporation and Business Activity
Euro Cap Corporation was incorporated pursuant to the laws of New York
on February 5, 1999. Euro Cap Corporation (Euro Cap), On July 1, 1999,
purchased Bon Hyang Inc.(BHI), in exchange for 10,000,000 shares.
As a result of the foregoing transaction, Euro Cap, a holding Company
with no assets, obtained a wholly owned subsidiary, which will become the
operating entity, with Euro Cap being solely a holding company with the
one operating subsidiary.
Bon Hyang Inc. was incorporated under the laws of The Republic of Korea
on July 29, 1998.
Bon Hyang Inc. is in the business of purchasing and operating real estate
properties. Currently all operations are run from the head office
facilities in Seoul, Korea.
2. Summary of Significant Accounting Policies
a) Principles of Consolidations
Euro Cap is a Holding Company with no asset except for its single
operating subsidiary (see financial statements for Euro Cap).
Bon Hyang Inc., the only subsidiary of Euro Cap and has been included in
the consolidated pro-forma financial statements, as it is the operating
entity, with Bon Hyang, a non-operating holding company.
In accordance with the reverse takeover method of accounting, the
consolidated financial statements of the Company include the accounts of
Euro Cap together with the results BHI for the six-month period ended June
30, 1999 (See Consolidated Pro-Forma Statements). The Individual
statements for BHI and Euro Cap have been prepared for comparative
purposes.
b) Revenue and Expense Recognition
The Company prepares its financial statements on the accrual
accounting basis. Consequently, certain revenue and related assets are
recognized when earned rather than when received, and certain expenses
are recognized when the obligation is incurred or the asset consumed,
rather than when paid.
c) Accounting Method
The Company recognizes income and expenses on accrual basis.
d) Depreciation
Depreciation is computed by using the straight-line method for
financial reporting purposes and the modified accelerated cost
recovery method for federal income tax purposes.
See Accompanying Accountant's Audit Report, which is an Integral Part of
Financial Statements.
<PAGE> 55
EURO CAP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Period Ended JUNE 30, 1999
and December 31, 1998
e) Income Taxes
Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred
taxes related primarily to differences between the bases of certain assets
and liabilities for financial and tax reporting. The deferred taxes
represent the future tax return consequences of those differences, which
will either be taxable when the assets and liabilities are recovered or
settled.
2. Summary of Significant Accounting Policies - Continued
f) Net Operating Loss Carry-forward
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus
deferred taxes for operating losses that are available to offset
future taxable income.
g) Intangible Assets
Intangible assets subject to amortization include organization costs,
loan closing costs, and in-force leasehold costs. Organization costs
and in-force leasehold costs are being amortized using the interest
method over the life of the related loan.
h) Reclassifications
Certain accounts in the prior-year financial statements have been
reclassified for comparative purposes to conform with the presentation
in the current-year financial statements.
i) Property and Equipment
Property and equipment are carried at cost. Depreciation of property
and equipment is provided using the straight-line method for financial
reporting purposes at rates based on the following estimated useful
lives:
Machinery and equipment 3-10
Furniture and fixtures 3-10
Engineering equipment 3-10
For federal income tax purposes, depreciation is computed using the
modified accelerated cost recovery system. Expenditures for major
renewals and betterment that extend the useful lives of property and
equipment are capitalized. Expenditures for maintenance and repairs
are charged to expense as incurred.
j) Inventories
Inventories are stated at the lower of cost (determined on the first-
in, first-out basis) or market.
See Accompanying Accountant's Audit Report, which is an Integral Part of
Financial Statements
<PAGE> 56
EURO CAP CORPORATOION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Period Ended JUNE 30, 1999
and December 31, 1998
3. Business Combination
Pursuant to an Agreement dated July 1, 1999, and effective on that date,
Euro Cap issued 10,000,000 common shares in exchange for 500,000
outstanding shares in the capital of Bon Hyang Inc. As a result of this
transaction, control of the combined companies passed to the former
shareholders of Bon Hyang, Inc.
This business combination situation is referred to as a "Reverse
Takeover". Legally, Euro Cap is the parent or continuing corporation;
however, Generally Accepted Accounting Principles require that the former
shareholders of BHI be identified as the acquirer and that BHI be treated
as the acquired company. Accordingly, control of the assets and business
of Bon Hyang, Inc. has been acquired by Euro Cap in consideration for the
issuance of common shares.
4. Loans
The Notes Payable are unsecured, non-interest bearing with non-set terms
of repayment. They will be retired as the company has surplus funds to
repay these loans. The Note Holder is Baik Suk Kim, CEO of both Euro Cap
and BHI.
5. Common Stocks
The Company is authorized to issue 40,000,000 at $ 0.000025 par value
share, and, as of June 30, 1999, 500 voting common shares are issued and
outstanding. However, to show the effect of the transaction which took
place the next day, the capital of the Company has been retroactively
restated in the Consolidated pro-forma statements to show the effect of
the transaction.
6. Related Party Transaction
There were significant non arm's-length basis transactions between the
Company and any related party during the Period Ended June 30, 1999.
13. Earnings Per Shares
Earnings (Loss) per share are calculated using the weighted-average
number of common shares outstanding and common shares equivalents. The
average number of shares outstanding under these assumptions would be 500
as of December 31, 1998 and 500 as of June 30, 1999. However, to show the
effect of the reverse takeover, the weighted average was adjusted to
10,000,500 for both periods in the consolidated pro forma statements.
See Accompanying Accountant's Audit Report, which is an Integral Part of
Financial Statements.
<PAGE> 57
BLANK PAGE
<PAGE> 59
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 34: INDEMNIFICATION OF OFFICERS AND DIRECTORS
In accordance with the General Corporation Laws of the State of
New York which were in effect at the time the Registrant was incorporated,
the Registrant's Board of Directors adopted by resolution, as further set
forth in the Registrant's by laws, provisions relative to indemnification
of its Officers and Directors against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with the defense of any proceeding or threatened proceeding to which such
person was or is a party, or is threatened to be made a party by reason of
the fact that such person was or is an officer or director, provided that,
(i) such director or officers acted in good faith or in a manner reasonably
believed by him to be in the best interests of the corporation to procure a
judgment in its favor. In the latter case, the power to indemnify extends
to expenses actually or reasonably incurred in connection with the defense
or settlement of any proceeding if such person (i) acted
in good faith, and (ii) the manner such officer and director believed to
be in the best interest of the corporation and with such care, including
reasonable inquiry, as an ordinary prudent person would use under similar
circumstances. No indemnification will be made in respect of any claim,
issue or matter, as to which such person shall have been adjudged to be
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 such
action or suit was brought shall determine upon an application of that,
despite the adjudication of liability, but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for
such expenses which the court shall deem proper. Otherwise, indemnification
for an officer and director meeting the applicable standards of conduct is
determined by a majority of the disinterested directors or shareholders or
upon application by the corporation, such officer or director or his
attorney, to the court in which such proceeding was pending.
The Securities & Exchange Commission is of the opinion that
Indemnification of Company officers or directors for matters involving
violation of securities laws is against public policy and that agreements
therefor are consequently unenforceable.
ITEM 31: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with distribution of the securities of
the Company being Registered hereby, other than commissions and
non-accountable expense allowances, will be borne directly by the
Company rather than by the selling stockholder. Such expenses are
estimated to be $50,000.
Item Amount
United States Securities and Exchange Commission filing fee $ 700
Printing Expenses 4,000
Fees and expenses of counsel for the Company 22,000
Accounting fees and expenses 20,000
Transfer agent fees and expenses 3,000
Miscellaneous 300
TOTAL $50,000
<PAGE> 60
Part II, Page 2
ITEM 33 RECENT SALES OF UNREGISTERED SECURITIES
Acquisition of Bon Hyang Inc.
On July 1, 1999, in exchange for 10,000,000 shares in the common
stock of Company, 100% of the stock in BHI was sold by the owners
thereof, to the Company. They received 20 shares in the Company
for every share they had held in BHI. There was a total of 500,000 shares
in BHI sold by the shareholders of BHI to the Company. (See-"PRINCIPAL
SHAREHOLDERS","Security Ownership of Management", for the names and addresses
of the shareholders of BHI who received shares in the Company). These shares
were restricted, subject to Rule 144, and exempt from registration through
reliance on Section 4 (2) of the Securities Act of 1933 as the purchasers
are deemed sophisticated purchasers.
<PAGE> 61
Part II, Page 3
ITEM 27: EXHIBITS
Exhibit
Number Description
Page
1. Constituent Document:
.1 Original Article of Incorporation 68
.2 Bylaws 72
5.1 Opinion of Counsel 84
10. Material Contracts:
.1 Purchase and Sale Agreement,
Seoul Finance Center 85
.2 Indenture, Euro Cap Corporation 90
.3 Debenture, Bon Hyang, Inc. 99
<PAGE> 62
Part II, Page 4
.4 Stock Purchase Agreement 109
22. Subsidiaries of the Registrant 134
24.6 Consent of Auditors 135
ITEM 28: UNDERTAKINGS
A. Certificates
The Company hereby undertakes to provide its transfer agent with
certificates in such denominations and registered in such names as
required to permit delivery thereof to each purchaser of the Selling
Stockholders' stock offered hereby, from time to time, as required,
starting as of the close of business on the day immediately following
the date of this Registration Statement.
B. Liabilities
Insofar as indemnification of liabilities arising under the
securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the Company pursuant to the
foregoing provisions or otherwise, the Company has been advised that
in the opinion of the Securities and Exchange Commission such
otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission 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 payment by the Company of expenses incurred
or paid by a director, officer or controlling person of the Company
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 Company 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 of 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. Further Undertakings
The Company undertakes to file a post effective amendment to the
Registration Statement identifying any underwriter who may agree to sell any
shares of any Selling Stockholder, and to set forth the terms of any
underwriting agreement or arrangement. The said underwriter shall also
deliver a market making prospectus. As far as the Company is aware, there
exists no past, present or future plans, proposals, or undertakings with
respect to any underwriter and any selling stockholder.
<PAGE> 63
Part II, Page 5
The Company further undertakes to:
1. File during any period in which it offers or sells securities, a post
effective amendment to this Registration Statement to:
a) Include any prospectus required by Section 10 (a)(3) of the
Securities Act;
b) Reflect in the prospectus any facts or events which,
individually or together represent a fundamental change
in the information in the Registration Statement; and,
c) Include any additional or changed material information
on the Plan of Distribution.
2. For determining liability under the Securities Act of 1933, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
3. File a post effective amendment to remove from registration any
securities that remain unsold at the end of the offering.
<PAGE> 64
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-11 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Bethel, State of Connecticut, as of the 3rd day
of January, 2000.
EURO CAP CORPORATION
/s/Baik Suk Kim______
by: Baik Suk Kim,
Chairman of the Board
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on
the dates indicated:
NAME: TITLE: DATE SIGNED SIGNATURE:
BAIK SUK KIM Director, Chairman of the
Board of Directors, Chief
Executive Officer January 3, 2000 /s/Baik Suk Kim
JIN HO KIM President, Director January 3, 2000 /s/Jin Ho Kim
JEONG JA YOON Chief Financial Officer January 3, 2000 /s/Jeong Ja Yoon
YONG HO KIM Director January 3, 2000 /s/Yong Ho Kim
<PAGE> 65
BLANK PAGE
<PAGE> 66
Registration Number 000-1102267
SECURITIES & EXCHANGE COMMISSION
Washington, D.C 20549
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
EURO CAP CORPORATION
EXHIBITS
January 5, 1999
<PAGE> 67
</TABLE>
(Cover Page) Filing Receipt Sealed By Secretary of State, stating that the
date of incorporation is February 5, 1999.
EURO CAP CORPORATION
Under Section 402 of the Business Corporation Law
The undersigned, for the purpose of forming a corporation pursuant to
Section 402 of the Business Corporation Law of the State of New York,
does hereby certify and set forth:
FIRST: The name of the corporation is EURO CAP CORPORATION
SECOND: The purposes for which the corporation is formed are:
To engage in any lawful act or activity for which corporations may be
organized under the business corporation law, provided that the
corporation is not formed to engage in any act or activity which
requires the act or approval of any state official, department, board,
agency or other body without such approval or consent first being
obtained.
To carry on a general mercantile, industrial, investing and trading
business in all its branches; to devise, invent, manufacture, fabricate,
assemble, install, service, maintain, alter, buy, sell, import, export,
license as licensor or licensee, lease as lessor or lessee, distribute,
job, enter into, negotiate, execute, acquire, and assign contracts in
respect of, acquire, receive, grant, and assign licensing arrangements,
options, franchises, and other rights in respect of and generally deal
in and with at wholesale and retail, as principal, and as sales,
business, special, or general agent, representative, broker, factor,
merchant, distributor, jobber, advisor, or in any other lawful capacity,
goods, wares, merchandise, commodities, and unimproved, improved,
finished, processed and other real, personal and mixed property of any
and all kinds, together with the components, resultants, and by-
products thereof.
<PAGE> 68
To create, manufacture, contract for, buy, sell, import, export,
distribute, job and generally deal in and with, whether at wholesale or
retail, and as principal, agent, broker, factor, commission merchant,
licensor, licensee or otherwise, any and all kinds of goods, wares, and
merchandise, and in connection therewith or independent thereof, to
establish and maintain, by any manner or means, buying offices,
distribution centers, specialty and other shops, stores, mail - order
establishments, concessions, leased departments, and any and all other
departments, sites and locations necessary, convenient or useful in the
furtherance of any business of the corporation.
To develop, experiment with, manufacture, fabricate, produce, assemble,
buy, lease or otherwise acquire, hold, own, operate, use, install,
equip, maintain, service, process, possess, repossess, remodel
recondition, transport, import, export, sell, lease or otherwise dispose
of and generally to deal in and with any and all kinds of raw materials,
products, manufactured articles and products, equipment, machinery,
devices, systems, parts, tools and implements, apparatus, and goods,
wares, merchandise and tangible property of every kind, used or capable
of being used for any purpose whatsoever, and wheresoever located.
To acquire by purchase, subscription, underwriting or otherwise, and to
own, hold for investment, or otherwise, and to use, sell, assign,
transfer, mortgage, pledge, exchange or otherwise dispose of real and
personal property of every sort and description and wheresoever
situated, including shares of stock, bonds, debentures, notes, scrip,
securities, evidences of indebtedness, contracts or obligations of any
corporation or association, whether domestic or foreign, or of any firm
or individual or of the United States or any state, territory or
dependency of the United States or any foreign country, or any
municipality or local authority within or without the United States, and
also to issue in exchange therefor, stocks, bonds or other securities or
evidences of indebtedness of this corporation and, while the owner or
holder of any such property, to receive, collect and dispose of the
interest, dividends and income on or from such property and to possess
and exercise in respect thereto all of the rights, powers and privileges
of ownership, including all voting powers thereon.
To construct, build, purchase, lease or otherwise acquire, equip, hold,
own, improve, dev~op, manage, maintain, control, operate, lease,
mortgage, create liens upon, sell, convey or otherwise dispose of and
turn to account, any and all plants, machinery, works, implements and
things or property, real and personal, of every kind and description,
incidental to, connected with, or suitable, necessary or convenient for
any of the purposes enumerated herein, including all or any part or
parts of the properties, assets, business and goodwill of any persons,
firms, associations or corporations.
<PAGE> 69
The powers, rights and privileges provided in this certificate are not
to be deemed to be in limitation of similar, other or additional powers,
rights and privileges granted or permitted to a corporation by the
Business Corporation Law, it being intended that this corporation shall
have all rights, powers and privileges granted or permitted to a
corporation by such statute.
THIRD: The office of the corporation is to be located in the County
of Queens, State of New York.
FOURTH. The aggregate number of shares which the corporation shall have
the authority to issue is Forty million (40,000,000), all of which shall be
with par value of $0.000025.
FIFTH: The Secretary of State is designated as the agent of the
corporation upon whom process against it may be served. The post office
address to which the Secretary of State shall mail a copy of any process
against the corporation served on him is:
c/o Corporate Services Group LLC
71 Stony Hill Road
Second Floor
Bethel, Connecticut 06801
SIXTH: The personal liability of directors to the corporation or its
shareholders for damages for any breach of duty in such capacity is
hereby eliminated except that such personal liability shall not be
eliminated if a judgment or other final adjudication adverse to such
director establishes that his acts or omissions were in bad faith or
involved intentional misconduct or a knowing violation of law or that he
personally gained in fact a financial profit or other advantage to which
he was not legally entitled or that his acts violated Section 719 of the
Business Corporation Law.
IN WITNESS WHEREOF, this certificate has been subscribed to this 4th day
of February, 1999 by the undersigned who affirms that the statements
made herein are true under the penalties of perjury.
<PAGE> 70
(Signed)
GERALD WEINBERG
90 State Street
Albany, New York
CERTIFICATE OF INCORPORATION
<PAGE> 71
BY-LAWS
ARTICLE I
OFFICES
SECTION 1.1. REGISTERED OFFICE. The registered office of the
Corporation within the State of New York shall be located at the principal
place of business.
SECTION 1.2. OTHER OFFICES. The Corporation may also have other
offices and places of business, either within or without the State of New
York, at such place or places as the Board of Directors may from time to
time appoint or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. PLACE. The annual meeting of the stockholders for the
election of directors and for any other proper business, and all special
meetings of stockholders for that or for any other purpose, may be held at
such time(subject to Section 2.2 hereof) and place within or without the
State of New York as shall be stated in the notice of the meeting, or in a
duly executed waiver of notice thereof.
SECTION 2.2. ANNUAL MEETINGS. The annual meeting of stockholders
shall be held on the first Tuesday of March of each year, or at such time in
March or April as may be fixed from time to time by the Board of Directors,
the first such meeting to be held in 2000.
SECTION 2.3. SPECIAL MEETINGS. Special meetings of the stockholders,
for any purpose or purposes, may be called at any time by a majority of the
Board of Directors or by the Chairman of the Board or by the President, and
shall be called by the President or the Secretary at the request in writing
of a majority of the Board or at the request in writing of stockholders
owning not less than thirty percent (30%) of all shares of common stock
issued and outstanding. Any such request shall state the purpose or purposes
of the proposed meeting. Whenever a special meeting shall be called by
request of the stockholders as described above, such meeting must be held
not more than fifteen (15) days after the making of the request. Business
transacted at a special meeting shall be confined to the purposes stated in
the notice, except upon the unanimous consent of all the stockholders
entitled to such notice.
<PAGE> 72
SECTION 2.4. NOTICE. Written notice of the place, date and hour of
any annual or special meeting of the stockholders shall be given in accordance
with Article V hereof to each stockholder entitled to vote thereat, not less
than ten (10) nor more than sixty (60) days prior to the meeting except that
when the matter to be acted on is a merger or consolidation of the
Corporation or a sale, lease or exchange of all or substantially all of its
assets, such notice shall be given not less than twenty (20) nor more than
sixty (60) days prior to such meeting.
The notice of any meeting shall state, in addition, the purpose or purposes
for which the meeting is called and, if a special meeting, by or at whose
direction it is being called.
When a meeting is adjourned to another time or place, for any reason other
than because of the absence of a quorum, it shall not be necessary to give
any notice of the adjourned meeting if the time and place of adjourned
meeting are announced at the meeting at which the adjournment is taken, and
at the adjourned meeting any business may be transacted that might have been
transacted at the original meeting. However,
<PAGE> 73
if the adjournment is for more than thirty (30) days, or if after adjournment
the Board of Directors fixes a new record date for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
SECTION 2.5. STOCKHOLDERS LIST. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the
name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder who is present.
SECTION 2.6. QUORUM. The presence, in person or by proxy, of
stockholders holding a majority of the shares of the Corporation entitled to
vote shall constitute a quorum at all meetings of the stockholders for the
transaction of business. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have power to adjourn the meeting to
some future time not less than six nor more than twenty days later, and the
Secretary shall thereupon give at least three days' notice by mail to each
stockholder entitled to vote who was absent from such meeting. At any such
adjourned meeting at which the requisite amount of shares entitled to
vote shall be represented, any business may be transacted which might have
been transacted at the meeting as originally noticed. When a quorum is once
present to organize a meeting, it is not broken by the subsequent withdrawal
of any stockholders.
SECTION 2.7. VOTING. Each stockholder entitled to vote shall be
entitled to one vote, in person or by proxy, for each share entitled to vote
held by such stockholder. All elections for directors and, except as
otherwise provided by law or by the Certificate of Incorporation or these
By-Laws, all other matters shall be determined by vote of a majority of the
shares present or represented at such meeting and voting on such question.
No vote on any questions upon which a vote of the stockholders may be taken
need be by ballot, unless the Chairman of the Meeting shall order that such
vote be taken by ballot.
SECTION 2.8. PROXIES. Every proxy must be executed in writing, dated
and signed by the stockholder or by his attorney-in-fact and filed with the
Secretary. No proxy shall be valid after the expiration of three (3) years
from the date thereof, unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the stockholder executing it or of his
legal representatives or assigns, except in those cases where an irrevocable
proxy is permitted by law.
SECTION 2.9. ACTION WITHOUT MEETING. Whenever a vote of
stockholders at a meeting thereof is required or permitted to be taken in
connection with any corporate action by any provision of law or of the
Certificate of Incorporation or these By-laws, the meeting, prior notice
thereof and vote of stockholders may be dispensed with if the holders of
all outstanding shares entitled to vote thereon shall consent in writing to
the taking of such action.
<PAGE> 74
ARTICLE III
DIRECTORS
SECTION 3.1. NUMBER AND TERM. The number of directors which shall
constitute the whole Board shall initially be one and may be changed from
time to time by vote of the stockholders. No decrease shall have the effect
of shortening the term of any incumbent director. Directors need not be
stockholders of the Corporation. Except as provided in Section 3.4, the
directors shall be elected at the annual meeting of the stockholders and each
director shall be elected to serve until their successor has been elected
and shall qualify or until their prior resignation or removal.
SECTION 3.2. RESIGNATIONS. Any director, member of a committee or
other officer may resign at any time. Such resignation shall be made in
writing, and shall take effect at the time specified therein, and if no time
be specified, at the time of its receipt by the President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective.
SECTION 3.3. REMOVAL OF DIRECTORS. Any or all of the directors may be
removed for cause by vote of the stockholders or by action of the Board of
Directors. Directors may be removed without cause only by vote of all the
stockholders holding a majority of the shares then outstanding at any special
meeting called for that purpose or at any annual meeting.
SECTION 3.4. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the Board for any reason except the
removal of directors may be filled by a vote of a majority of the directors
then in office, although less than a quorum exists. Vacancies occurring by
reason of the removal of directors shall be filled by vote of the
stockholders. A director elected to fill a vacancy caused by resignation
death or removal shall be elected to hold office for the unexpired term of
his predecessor.
SECTION 3.5. POWERS. The affairs, property and business of the
Corporation shall be managed by or under the direction of the Board of
Directors which may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by statute, by the Certificate of
Incorporation or by these By-laws directed or required to be exercised or
done by or reserved to the stockholders.
<PAGE> 75
ARTICLE IV
MEETINGS OF THE BOARD
SECTION 4.1. PLACE. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
New York.
SECTION 4.2. MEETINGS OF THE BOARD.
4.2.1. The annual meeting of the Board shall be held within ten (10)
days of each annual meeting of stockholders at such time and place as shall be
fixed from time to time by resolution of the Board of Directors. Other
regular meetings of the Board of Directors shall be held at such time and
place and upon such notice as the Board shall from time to time by resolution
prescribe.
4.2.2. Special meetings of the Board may be called by the President or
Chairman of the Board at any time. Upon the written request of two directors,
the President, Chairman of the Board or Secretary must call a special
meeting to be held not more than ten days after receipt of such request.
Notice of a special meeting shall be served upon each director at least
three days before the day therein designated for such meeting. The notice
of meeting need not set forth the purpose or purposes of the meeting.
4.2.3. A majority of directors present whether or not a quorum is
present may adjourn any meeting to another time and place. Notice of the
adjournment shall be given to all directors who were absent at the time of
the adjournment and, unless such time and place are announced at the
meeting, to the other directors.
SECTION 4.3. QUORUM: ACT OF THE BOARD OF DIRECTORS. At all
meetings of the Board of Directors a majority of the entire Board shall
be necessary to be and constitute a quorum for the transaction of business.
Except as otherwise required by law or the Certificate of Incorporation, the
vote of a majority of the directors present at a meeting at which a quorum
is present shall be the act of the Board of Directors. If a quorum shall
not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, until a
quorum shall be present. Notice of any such adjournment shall be given to
any directors who were not present and, unless announced at the meeting, to
the other directors. For purposes of the foregoing, any director who
participates in any meeting of the Board of Directors by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other shall be deemed to be
present in person at such meeting.
SECTION 4.4. EXECUTIVE, FINANCE AND OTHER COMMITTEES. The
Board of Directors, by resolution adopted by a majority of the entire
Board, may designate from among its members an Executive Committee, a
Finance and Administration Committee and such other committees as the Board
may from time to time determine, each committee to consist of three or more
directors, and each of which Committees shall, to the extent provided in the
applicable resolution, have all the authority of the Board to the fullest
extent permitted by law. The Board may designate one or more directors as
alternate members of any such Committee who may replace any absent member or
members at any meeting of any such Committee. Each such Committee or any
member thereof shall serve at the pleasure of the Board. For purposes of the
foregoing, any member who participates in any meeting of the committee
concerned by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can
hear each other shall be deemed to be present in person at such meeting.
<PAGE> 76
SECTION 4.5. COMPENSATION. Directors, as such, shall not receive any
stated salary for their services. However, by resolution of the Board of
Directors a fixed fee and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board of Directors or of
any committee of the Board of Directors, provided that nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
SECTION 4.6. ACTION WITHOUT MEETING. Whenever any action is required
or permitted to be taken at a meeting of the Board of Directors, such action
may be taken without a meeting if, prior or subsequent to the taking of such
action, all members of the Board of Directors consent thereto in writing
and such written consent or consents are filed with the minutes of the
proceedings of the Board; and such written consent or consents shall have
the same effect as a unanimous vote at a meeting of the Board of Directors
at which all members thereof were present and voted.
ARTICLE V
NOTICES
SECTION 5.1. FORM; DELIVERY. Notices to directors and stockholders
shall be in writing and may be delivered personally or by mail (airmail if
over 200 kilometers distance) or by fax. Notice by mail shall be deemed to
be given at the time when deposited in the mail, postage prepaid, and
directed to directors or stockholders at their addresses appearing on the
records of the Corporation.
SECTION 5.2. WAIVER. Whenever a notice is required to be given by any
law or these By-laws, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to such notice. Attendance of a person at
a meeting of stockholders, directors or any committee of directors, as the
case may be, shall constitute a waiver of notice of such meeting, except
where the person is attending for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of
stockholders, directors or committee of directors need be specified in any
written waiver of notice.
ARTICLE VI
OFFICERS
SECTION 6.1. OFFICERS. The officers of the Corporation shall include
a President and a Secretary, who shall be appointed by the Board of Directors
and shall hold office until their successors are appointed. In addition, the
Board of Directors may elect a Chairman of the Board of Directors, a Vice
Chairman of the Board, one or more Executive Vice Presidents, one or more
Senior Vice Presidents, one or more Vice Presidents, one or more Assistant
Vice Presidents, a Treasurer, and such Assistant Secretaries, Assistant
Treasurers and Assistant Controllers as they may deem proper. None of the
officers of the Corporation (other than the Chairman and Vice-Chairman of
the Board) need be directors. Except as otherwise provided in
these By-laws or by resolution of the Board of Directors, all officers
having the same general title shall be equal to each other in rank and
authority. The officers shall be elected at the meeting of the Board of
Directors following each annual meeting of stockholders. Should more than
two persons be nominated for the same office, and on the first vote no
nominee shall receive a vote of a majority of the entire Board, then a
second vote shall be taken, with only the two nominees who received the
first and second highest number of votes on the first voting remaining as
candidates for such office. Any number of offices may be held by the same
person, except that the offices of President and Secretary shall be held by
different persons. Any officer elected or appointed by the Board of Directors
may be removed with or without cause at any time by the Board of Directors.
<PAGE> 77
SECTION 6.2. OTHER OFFICERS AND AGENTS. The Board of Directors may
appoint such other officers, agents and holders of powers of attorney as it
may deem advisable, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors.
SECTION 6.3. COMPENSATION. The compensation of Senior Vice Presidents
and above shall be fixed by the Board of Directors, and the compensation of
other officers and agents shall either be so fixed or shall be fixed by
officers thereunto duly authorized. The fact that any officer is a director
shall not preclude him from receiving a salary or from being present and
being counted to make up a quorum in voting upon a resolution by which such
salary is fixed.
SECTION 6.4. VACANCIES. If an office becomes vacant for any reason,
the Board of Directors may fill such vacancy. Any officer so appointed or
elected by the Board of Directors shall serve only until such time as the
unexpired term of his predecessor shall have expired, unless reappointed by
the Board of Directors.
SECTION 6.5. TRANSFER OF PROPERTY POSSESSED BY OFFICER ON RESIGNATION
OR REMOVAL. In case any officer shall resign or be removed from office as
provided by these By-laws, or in the event his term of office otherwise
expires, such officer shall forthwith deliver all property of the Corporation
in his possession or under his control to some person to be designated by
the Board of Directors or by the President of the Corporation.
SECTION 6.6. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors (if any) shall preside at all meetings of the stockholders and of
the Board of Directors and he shall have and perform such other duties as
from time to time may be assigned to him by the Board of Directors.
SECTION 6.7. VICE-CHAIRMAN OF THE BOARD. In the absence or incapacity
of the Chairman (if any), the Vice-Chairman of the Board of Directors shall
preside at all meetings of the stockholders and of the Board of Directors
and he shall have and perform such other duties as from time to time may be
assigned to him by the Board of Directors or the Chairman of the Board.
SECTION 6.8. PRESIDENT. The President shall be chief executive
officer of the Corporation and shall have general and active management of
the Corporation and shall see that all orders and resolutions of the Board
of Directors are carried into effect. In the absence of the Chairman or
Vice-Chairman of the Board (if any), the President shall preside at all
meetings of the stockholders and the Board of Directors. The President shall
cause to be called regular and special meetings of the stockholders and
directors in accordance with the requirements of law and of these By-laws.
He shall present at each annual meeting of the stockholders and directors a
report of the condition of the business of the Corporation.
SECTION 6.9. EXECUTIVE VICE PRESIDENT(S). The Executive Vice
President(s), acting under the direction of the President, shall manage the
business and affairs of the Corporation and shall have such other powers and
duties as may from time to time be assigned to him or them by the Board of
Directors or the President.
SECTION 6.10. SENIOR VICE PRESIDENT(S); VICE PRESIDENT(S);
ASSISTANT VICE PRESIDENT(S). Each Senior Vice President, Vice President,
and Assistant Vice President shall be the head of such group or unit as the
Board of Directors shall from time to time determine and shall have such
powers, duties and responsibilities as the Board of Directors or the
President may prescribe.
<PAGE> 78
SECTION 6.11. THE SECRETARY AND ASSISTANT SECRETARY(IES).
The Secretary shall attend all meetings of the Board of Directors and all
meetings of the stock-holders and record all the proceedings of the meetings
of the Corporation and of the Board of Directors in a book to be kept for
that purpose and shall perform like duties for any committees, if required.
He shall give, or cause to be given, notice of all meetings of the
stockholders and meetings of the Board of Directors, and shall perform such
other duties as may be prescribed by the Board of Directors or the President,
under whose supervision he shall be. He shall have custody of the Seal of the
Corporation and he or an Assistant Secretary shall have authority to affix
the same to any instrument requiring it and when so affixed, it may be attested
by his signature or by the signature of such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the
Seal of the Corporation and to attest the affixing by his signature. He
shall keep in safe custody the certificate books and stockholder records and
such other books and records as the Board of Directors may direct and
shall perform all other duties incident to the office of Secretary.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors (or if there
be no such determination, then in the order of their election), shall in the
absence of the Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall
perform such other duties and have such other powers as the Board of
Directors or the President may from time to time prescribe.
SECTION 6.12. THE TREASURER OR SENIOR FINANCIAL OFFICER; AND
ASSISTANT TREASURER(S). The Treasurer, or the senior financial officer of
the Corporation if there be no Treasurer, shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit
of the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered
by the President or Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors,
at its regular meetings, or when the Board of Directors so requires, an
account of all his transactions as Treasurer (or as senior financial
officer) and of the financial condition of the Corporation. If required by
the Board of Directors, he shall give the Corporation a bond (which shall be
renewed from time to time) in such sum and with such surety or sureties as
shall be
<PAGE> 79
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
He shall exhibit his books of account to any director of the Corporation
upon application at the office of the Corporation during business hours and
shall further perform all other duties incident to the office of Treasurer.
The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors (or
if there be no such determination, then in the order of their election),
shall, in the absence of the Treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the Treasurer
and shall perform such other duties and have such other powers as the Board
of Directors or the President may from time to time prescribe.
SECTION 6.13. THE CONTROLLER AND ASSISTANT CONTROLLER(S).
The Controller shall be one of the principal accounting officers having
supervision over the accounting books, accounting records and forms of the
Corporation. The Controller shall have such duties as the President or the
Board of Directors may from time to time determine or assign to him, which
duties may include the signing of checks, drafts and orders for the payment
of money when so authorized by the Board of Directors.
The Assistant Controller, or if there shall be more than one, the Assistant
Controllers in the order determined by the Board of Directors (or if there be
no such determination, then in the order of their election), shall, in the
absence of the Controller or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Controller and shall
perform such other duties and have such other powers as the Board of
Directors or the President may from time to time prescribe.
ARTICLE VII
CERTIFICATES OF STOCK
SECTION 7.1. FORM; SIGNATURE. The certificates for shares of stock of
the Corporation shall be in such form as shall be determined by the Board of
Directors and shall be numbered consecutively and entered in the books of
the Corporation as they are issued. Each certificate shall exhibit the
registered holder's name and the number and class of shares, the designation
of the series, if any, the date of issue and shall be signed by, or in the
name of the Corporation by, (i) the Chairman of the Board of Directors, the
President or an Executive Vice President and (ii) the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by him in the Corporation. Each
certificate shall be sealed with the Seal of the Corporation, which may be
affixed by any of the above named officers after the same has been signed,
as above provided. All certificates exchanged or returned to the Corporation
shall be marked "Canceled" with the date of the cancellation by the Secretary
and shall be immediately affixed in the certificate book opposite the
memorandum of their issue.
SECTION 7.2. LOST CERTIFICATES. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against
the Corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
<PAGE> 80
SECTION 7.3. TRANSFER OF SHARES. The shares of the Corporation shall
be assignable and transferable on the books of the Corporation only by the
person in whose name they appear on said books or by his legal
representative, upon surrender of the certificate properly endorsed. In case
of transfer by power of attorney, the power of attorney, duly executed and
acknowledged, shall be deposited with the Secretary. In all cases of
transfer the former certificate must be surrendered and canceled before a
new certificate will be issued. No share shall be transferred until all
previous calls thereon shall have been fully paid in. No transfer shall be
made upon the books of the Corporation within ten days next preceding the
annual meeting of the stockholders.
SECTION 7.4. REGISTERED STOCKHOLDERS. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its
books as the owner of shares, and to hold liable for calls and assessments a
person registered on its books as such owner, and shall not be bound to
recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of New
York.
SECTION 7.5. RECORD DATE. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to or dissent from any
proposal without a meeting, or for the purpose of determining stockholders
entitled to receive payment of any dividend or the allotment of any rights,
or for the purpose of any other action affecting the interests of
stockholders, the Board of Directors may fix, in advance, a record date.
Such date shall not be more than sixty (60) nor less than ten (10) days
before the date of any such meeting, nor more than sixty (60) days prior
to any other action.
In each such case, except as otherwise provided by law, only such
persons as shall be stockholders of record on the date so fixed shall be
entitled to notice of, and to vote at, such meeting and any adjournment
thereof, or to express such consent or dissent, or to receive payment of
such dividend, or such allotment of rights, or otherwise to be recognized as
stockholders for the purpose of any other action, notwithstanding any
registration of transfer of stock on the books of the Corporation after
any such record date so fixed.
If no record date is fixed: (1) the record date for determining the
stockholders entitled to notice of or to vote at a meeting shall be at the
close of business on the day next preceding the date on which notice is
given, or, if no notice is given, the day next preceding the day on which
the meeting is held; (2) the record date for determining the stockholders
entitled to express written consent to the taking of any corporate action
without a meeting, when no prior action of the Board of Directors is
necessary, shall be the day on which the first written consent is expressed;
and (3) the record date for determining stockholders for any purpose other
than those specified in subparagraphs (1) and (2) shall be at the close of
business on the day on which the resolution of the Board of Directors
relating thereto is adopted.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. DIVIDENDS. Dividends upon the shares of stock of the
Corporation may be declared by the Board of Directors at any regular or
special meeting pursuant to law. Dividends may be paid in cash, in property,
or in shares of stock, subject to the provisions of the Certificate of
Incorporation and the provisions of the New York General Corporation Law.
SECTION 8.2. RESERVES. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for dividends such
sum or sums as the Board of Directors, in its absolute discretion, thinks
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation,
or for such other purpose as
<PAGE> 81
the directors shall think conducive to the interests of the Corporation, and
the directors may modify or abolish any such reserve in the manner in which
it was created.
SECTION 8.3. CHECKS. All checks, drafts or other orders for the
payment of money, notes or other evidence of indebtedness of the Corporation
shall be signed by such officer or officers or such other person or persons
as the Board of Directors may from time to time designate.
SECTION 8.4. EXECUTION OF INSTRUMENTS All corporate instruments and
documents shall be signed or countersigned, executed, verified or
acknowledged by the President or a Vice President, or by such other officer
or officers as the Board of Directors or the President may from time to time
designate.
SECTION 8.5. CERTAIN RESTRICTIONS ON AUTHORITY OF OFFICERS.
In addition to any provisions of these By-laws regarding the authority of the
various officers of the Corporation, the stockholders, or the Board of
Directors subject to the control of the stockholders, may by resolution
impose monetary or other restrictions on the authority of various officers
of the Corporation to enter into contracts or other transactions on behalf
of the Corporation.
SECTION 8.6. FISCAL YEAR. The fiscal year of the Corporation shall
be the calendar year.
SECTION 8.7. SEAL. The Seal of the Corporation shall be circular in
form and bear the name of the Corporation, and the year of its incorporation.
The Seal may be used by causing it to be impressed directly on the instrument
or writing to be sealed or upon adhesive substance affixed thereto. The Seal
of the certificates for shares or on any corporate obligation for the payment
of money may be a facsimile, engraved or printed.
ARTICLE IX
INDEMNIFICATION AND INSURANCE
SECTION 9.1. INDEMNIFICATION. The Corporation shall (a) indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that
such person is or was a director or officer of the Corporation, or
is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit, and (b) indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation), by reason of the fact that such person is or was a
director or officer of the Corporation, or served at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in
connection with any such action, suit or proceeding, in each case to the
fullest extent permissible under Section 145(a) through (e) of the New York
General Corporation Law or the indemnification provisions of any successor
statute. Expenses incurred by a director or officer in defending a civil or
criminal action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized in Section
145 of the New York General Corporation Law. The foregoing rights of
indemnification and advancement of expenses shall in no way be exclusive
of any other rights of indemnification or advancement of expenses to which
any such person may be entitled
<PAGE> 82
under any By-law, agreement, vote of stockholders or disinterested directors
or otherwise, and shall inure to the benefit of the heirs, executors and
administrators of such a person.
SECTION 9.2. INSURANCE The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, to the full extent
allowable under Section 145(g) of the New York General Corporation Law.
ARTICLE X
AMENDMENTS
SECTION 10.1. POWER OF STOCKHOLDERS TO AMEND. These By-laws may be
altered, amended, repealed or added to by the affirmative vote of
stockholders representing a majority of the entire outstanding capital stock
having voting power at an annual meeting or at a special meeting called for
that purpose, provided that a written notice shall have been given to each
stockholder of record entitled to vote at such meeting, which notice shall
state the alterations, amendments or changes which are proposed to be made
in such By-laws. Only such changes shall be made as have been specified in
the notice. If, however, all the stockholders shall be present at any annual
or special meeting, these By-laws may be amended by a unanimous vote,
without any previous notice.
<PAGE> 83
EXHIBIT 5.1
Opinion of Selling Stockholders' Counsel
January 4, 2000
Securities and Exchange Commission
Washington, D.C. 20549
RE: Euro Cap Corporation
Registration Number: 000-1102267
Gentlemen:
This opinion is given in connection with the filing of a Registration
Statement on Form S-11 by Euro Cap Corporation (the Company), registration
number 000-1102267 ( the "Registration Statement"), filed with the United
States Securities and Exchange Commission, as it pertains to 2,000,000
shares in the common stock of the "Company, with par value of $0.000025
per share held in treasury and to be sold to the public (as defined and
described in the Registration Statement Statement of which this opinion forms
a part. This opinion is also given in respect of $500,000,000 in Notes to
be issued by the Company as described in the Registration Statement.
Certain terms used in this opinion characterized by initial capital
letters have the meaning set forth in the Prospectus which constitutes a
portion of the Registration.
We have examined the originals and copies of corporate instruments,
certificates and other documents of the Company and interviewed represent-
atives of the Company to the extent we deemed it necessary, in order to
form the basis for the opinion hereinafter set forth.
In such examination we have assumed the genuineness of all signatures
and authenticity of all documents submitted to us as certified or photostatic
copies. As to all questions of fact material to this opinion which have
not been independently established, we have relied upon statements or
certificates of officers or representatives of the Company.
According to the records maintained by the Company, there were, as of
the date of this opinion, 40,000,000 shares of common stock authorized, with
a par value of $0.000025 per share, of which 10,000,000 shares of common
stock were issued.
Based upon the foregoing, we are of the opinion that:
The 10,000,000 shares of Common Stock of the Company heretofore issued
are fully paid and non- assessable and there is no personal liability to the
owners thereof.
The 2,000,000 shares of Common Stock of the Company to be sold to the
public will, upon issuance thereof and payment in full thereof, be fully paid
and non-assessable and with no personal liability to the owners thereof.
The Notes, when issued by the Company will form a valid subordinated
unsecured charge against the company, ranking below Senior Notes (of which
there are none at present), priority lien claimants, and any secured Notes
or obligations (of which there are none at present). The Notes will rank
pari passu with any other usecured obligations of the Company, and in
priority to common shares. THIS OPINION DOES NOT ENCOMPASS THE DEBENTURE
ISSUED BY B0N HYANG, INC., THE KOREAN SUBSIDIARY OF THE COMPANY. NO OPINION
IS RENDERED ON THE VALIDITY OF THE SAID DEBENTURE UNDER AMERICAN OR KOREAN
LAWS.
This law firm hereby consents to the filing of this opinion as an
exhibit to the Registration Statement; however, this opinion is limited to
the facts set forth herein and is not to be interpreted as an opinion that
the Registration Statement has been properly prepared, or provides all
required disclosure.
Very truly yours,
/s/Bernabe Diaz/s/
Bernabe Diaz, Esq.
Corporate Counsel for the
Company
71 Stony Hill Rd., 2nd Flr.
Bethel CT 06801
<PAGE> 84
EXHIBIT 10.1
Purchase and Sale Agreement for Purchase of Seoul Financial
Center
Contract Agreement
for
Purchasing Stocks
<PAGE> 85
Contract Agreement for Purchasing Stock
This Agreement is made between Kee Byung Kim, Representative Director
(hereinafter referred to as "First Party") of Yoojin Tourist Co. Ltd
(hereinafter referred to as "Company") as located at #63 Mukyu-dong,
Chung-ku, Seoul, Korea and Bonhyang Inc. (hereinafter referred to as
Second Party) as located at #1 Naesu-dong, Jongro-ku, Seoul Korea per
"Solicitation for Investment in Seoul Finance Center through Inducement of
foreign Capital" to transfer all stocks owned by the "First Party" to the
"Second Party", as follows:
Article 1. Stocks to be transferred.
1) Kind of Stock: Common Stock
2) Number of Stocks issued: 2,290,598 stocks
- Taeheung Construction Co., Ltd.: 990,685 stocks
- Donghwa Duty Free Shop: 658,456 stocks
- Lotte Tourist Co., Ltd.: 171,005 stocks
- Kee Byung Kim: 344,379 stocks
- Jung Hee Shin: 125,983 stocks
Total: 2,290,598 stocks
3) Par Value: 10,000 Won Per Stock
(Total Amount: 22,905,980,000 Won)
Article 2. Purchase Price Stocks
The purchase price of stocks shall be Four Hundred and Twenty
Billion Won (W420,000,000,000). (However, this price shall include the
cost for the completed construction portion of the building and the park
under new construction, the cost for the remaining construction portion of
the building, the registration cost for preservation of the building the
acquisition tax and the commission as set forth in the loan agreement or
any other annexes thereto as made by the "Second Party" for borrowing the
purchase fund).
Article 3. Deposit of Purchase
1) The "First Party" shall deem that when the "Second Party" issues the
foreign currency security (US$ Bond) on which CUSIP Number is written and
any amount more than the amount equivalent to the purchase price is
denominated and deposits it in the bank with which it has a prime business
relationship, and further submits the "report on Issue of Foreign Security"
to Minister of Finance and Economy and receives a receipt thereof from the
Minister of Finance and Economy, and presents the receipt to the "First
Party", the "Second Party" will make payments for the purchase price
without any problem.
2) The "Second Party" shall commence payment of the purchase price
after the assets and the debts of the "First Party" are determined and
they have been completely put to pledge together with the stocks in favor
of the "Second Party" or the person designated by the "Second Party".
Article 4. Determination of Assets and Debts
1) The "First Party" shall provide the "Second Party" with the financial
statement, the assets list and the debt status (including any off-book
debts) as of 1999... when this Agreement is executed.
2) The "First Party" and the "Second Party" shall separately receive
reports in respect of not only the debts but also the off-books debts of
the "First Party" through the notification therefor in any newspaper.
3) The "Second Party" or any person designated by the "Second Party"
Shall conduct an actual investigation into the assets and the debt status
of the "First Party" and determine the values of the assets and the debts
against the purchase price. Then, the "Second Party" shall inform the
"First Party" has a business relationship thereof.
4) The "First Party" shall be responsible for its debts so that any other
debt may not take place in addition to the debts included in the debt
status provided by the "First Party".
<PAGE> 86
Article 5. Guarantee for the Settlement of Debts
All banks having the business relationship with the "First Party",
including Choheung Bank, the bank with which the "First Party" has a prime
business relationship, shall guarantee the "Second Party" acquisition of
the "Company" and the stocks without any problem by settling the debts, the
guarantee debts and the off-book debts of the "First Party" as set forth in
Article 4.3) in such purchase money as deposited by the "Second Party".
Article 6. Payment of Purchase Price
1) The "First Party" or the person designated by the "First
Party" shall settle the guarantee debts and the off books debt of the
"First Party" in the purchase money to be deposited in the bank with which
the "Second Party" has a prime business relationship, and further, the
"First Party" shall provide the "Second Party" with the evidential
documents of such settlement.
2) Prior to such settlement, the "First Party" shall put the
land of the re-development project plot to pledge in favor of the
"Second Party" or the person designated by the "Second Party", and the
"First Party" shall transfer the stocks to the "Second Party" through the
resolution by the General Meeting of Stockholders and the Board of Directors.
Also, the existing Directors shall be replaced with new Directors
recommended by the "Second Party", and any alterations in the name and
the purpose of the "Company" and the like shall be registered.
3) The "First Party" and the bank with which the "First Party"
has a prime business relationship shall complete the remaining construction
works within 20 days from the contract date so that the approval for
provisional use of the building may be obtained, and further the "First
Party" and the said bank shall reimburse the debts of the "First Party" in
any remaining amount that 50 billion Won is excluded from the balance after
reimbursing the guarantee debts and the off-book debts, and cancel the
pledge.
4) Within 3 months from the approval date for the provisional
use of the building, the "First Party" shall obtain the approval of
completion to construct the building and have the certificate of preservation
registration of the Seoul Finance Center building issued, and at the same
time that any remaining pledge is released, the "Second Party" shall pay
the balance, 50 Billion Won to the "First Party".
Article 7. Operation of the "Company"
1) The "First Party" shall have the "Second Party" operate
the "Company" from the approval date for provisional use of the building,
and the date when the registration for preservation of ownership of the
building is completed shall be defined as the hand-over date thereof.
2) The matters relating to some land owned by Doosan
Construction Co., Ltd. And Doosan Development Co., who are joint project
owners of the re-development project owner, shall be settled before
completion of the said re-development project under the responsibility of
the "First Party".
3) Upon completion of construction of the building, the
building shall be registered with it being divided by floors, and the land
shall be registered with it being integrated into one plot at #18,
Taepyungro-1 ga, Chung-ku, Seoul, Korea.
4) The remaining construction works of the "Company" shall be
completed by Taeheung Construction Co., Ltd. As located at #27-1, Supyo-dong,
Chung-ku, Seoul, Korea, which have executed the construction works of the
project so far.
5) The "First Party" shall cooperate with the "Second Party"
in taking over any necessary personnel among the existing Directors and
any required books so the "Second Party" may operate the "Company"
smoothly, and the "Second Party" shall take over all related matters
required for operation of the "Company".
<PAGE> 87
Article 8. Variation in Assets and Debts
The "First Party" shall guarantee the "Second Party" that it
will cause no variation in the assets and the debts of the "Company" by any
other dividend than the usual dividend such as the commemorative dividend,
and any other activities than usual business activities, such as payment of
salary for Directors, increase in compensation for Directors, guarantee for
debts, etc.
Article 9. Off-Book Debts
1) In case any off-book debt, which is not detected in the
course of investigating into the assets and the debts of the "First Party"
as set forth in Article 4.3), or not included in the settlement based on
the actual investigation for the reason that it is impossible to investigate
into it, is found in addition to the debt status as provided to the "Second
Party", the "First Party" shall be entirely responsible therefor.
2) The "First Party" shall be entirely responsible for any off-
book debts caused by activities of the "First Party" and operation under
responsibility of the "First Party" as made by the date when the right of
management is handed over.
3) In case there is any tax amount that the "First Party"
should have paid during the period for which it operated the "Company"
(including any tax amount notified upon any tax investigation after the
contract date), and in case any additional tax burden is brought about to
the "Company" or the "Second Party" after taking over the right management,
the "First Party" shall be responsible therefor. However, in case any tax
investigation is made later, the "Second Party" shall cooperate with the
"First Party" in good faith through close consultation with the
"First Party" so that the "First Party" might not have any disadvantage
therein.
4) After settlement of the balance, the "First Party" shall
put a bank bill amounting 30 Billion Won as issued by Donghwa Investment
and Development Co., Ltd., an affiliated company of the "First Party" to
pledge in preparation for any off-book debt and any defect in the
construction work that might take place later. In case it is confirmed
that there is not any other off-book debt and any defect in the
construction work, the said bank bill shall be returned to the "First Party".
The
guarantee period for maintenance shall be three years.
Article 10. Responsibility for any Law Suit
1) In case the "Company" is involved in any current lawsuit, the
"First Party" shall inform the "Second Party" thereof in details. Also, the
"First Party" shall guarantee the "Second Party" that the "Company"
is neither involved in any other lawsuit as plaintiff or defendant, nor
in any provisional seizure case or any provisional disposition case as
creditor or debtor.
Article 11. Tax and Expense Burden
1) All taxes on transfer of the stocks and acquisition of
the building incidental to this contract shall be borne by the "First
Party", and the other expenses shall be borne by the "First Party" and
the "Second Party" by a half respectively.
2) The "First Party" shall provide the "Second Party" with the
tax data including any unpaid tax amount as of the contract date, any tax
notification pending a claim for adjudgment (sic) and any tax expected to
be notified after the contract date, and the "First Party" shall perform
its legal obligation to pay such tax.
<PAGE> 88
Article 12. Effectuation of Contract
This Agreement shall come into effect from the date both parties
have executed this Agreement.
Article 13. Entire Agreement
This Agreement shall contain the entire matters to which both
parties have agreed in relation to the contents of the contract.
Article 14. Force Majeure
In case any contractual obligation of the Agreement fails to be
performed due to any force majeure, neither parties shall be responsible
therefor. Force majeure means acts of God, war and other similar causes
beyond any parties control.
Article 15. Trust of Contractual Activity
Until the Agreement is completed under the responsibility of the
"Second Party", the funding matter relating to this Agreement shall be
entrusted to the "Second Party", or the person designated by the
"Second Party".
Article 16. Breach of Contract
1) The "First Party" and the bank with which the "First Party" has a
prime business relationship shall agree to settlement of the debts in
the purchase money as set forth in Article 2 within 45 days from the
execution of this contract Agreement.
2) Neither the "First Party" nor the "Second Party" shall cancel this
Agreement except the case that any party fails to perform its obligation
to the effect of this Agreement. When one party breaches this Agreement,
it shall indemnify the other party against all losses that the other party
may suffer therefrom.
Article 17. Joint Responsibility
The "First Party" and the "Second Party" shall be jointly
responsible for performance and obligation of the Agreement.
Article 18. Consultation
The "First Party" shall be entrusted with only the matters relating
to the international contract for which the "Second Party" shall be
responsible that is required for funding to make payment of the above
purchase price to the "First Party", signature and the like, and the "First
Party" shall perform the entrusted matters under the promise that the
"Second Party" should use the performance by the "First Party" only for
performing the above matters until the "Second Party" makes the total
payment for the purchase price completely.
In the event that any matter as not set forth herein or any dispute
on interpretation of this Agreement takes place, both parties shall consult
mutually about it in good faith and amicably.
Article 19. Jurisdiction
Any legal action relating to this Agreement shall be brought before
the Seoul Civil District Court.
In witness whereof, the "First Party" and the "Second Party" have executed
this Agreement in Korean and English in duplicate respectively and have set
their hands or their names and seals. Then, they shall keep the respective
one copy of the Agreement in Korean and in English in custody.
Nov. 5, 1999
- -----------------------------------------------------------------------------
First Party Second Party
Transferer Transferee
Kee Byung Kim Baik Suk Kim
Representative Director Representative Director
Yoojin Tourist Co., Ltd. Bonhyang Inc.
#63 Mukyu-dong #1 Naesu-dong
Chung-ku, Seoul Jongro-ku, Seoul
<PAGE> 89
Euro Cap Corporation
A Corporation Incorporated Under the
Laws of New York.
INDENTURE
MADE: December 01, 1999 Principal Sum: $500,000,000
DUE: December 31, 2009
Debt
1. Euro Cap Corporation, a corporation incorporated under the
laws of the State of New York (the "Borrower"), for value received, hereby
acknowledges itself indebted and promises to pay on the first day of July,
2009 (the "Due Date") to or to the order of the bearer of the Notes(the
"Notes") attached hereto, said notes fully divisible and assignable
(the "Holders") and their respective successors and assigns, the sum of Five
Hundred Million Dollars ($500,000,000) in lawful money of the United States
at such place as the Borrower may designate by notice in writing to the
Holder together with outstanding interest calculated at a rate per annum of
one half percent above LIBOR, the annual LIBOR rate being defined as the
arithmetic mean rate of the 12 preceding monthly LIBOR rates, calculated
from the date on which the annual interest payment is due, as published on
the LIBO page on the Reuters Monitor Money Rates Services. Interest shall
continue to accrue after as before maturity and both before and after
default. Interest payments shall be paid as follows:
INTEREST calculated at the aforesaid rate shall become due and
payable annually on the Thirty First day of December, each and every year,
from and including the First day of December, 1999 to and including the 30th
day of June, 2009, and the BALANCE OF $500,000,000 or such other amount of
principal as may be outstanding on that date together with interest
thereon at the aforesaid rate shall become due and payable on the Thirty
First day of December, 2009. The first payment of interest to be computed
from the First day of December, 1999, becomes due and payable on the 31st
day of December, 2000.
<PAGE> 90
NOTWITHSTANDING the reference herein to the interest rate on a per annum
basis and notwithstanding any other provision herein contained, the parties
hereto acknowledge that it is their intention and agreement that the
interest rate herein shall at all times be payable and calculated annually
at the rate hereinabove set, and the Holders shall not be deemed to
reinvest any payment received by them hereunder.
Security
2. As security for the due payment of all moneys payable
hereunder as evidenced by the Bond attached hereto, the Borrower hereby
pledges an unsecured general charge of the following:
(a) a general charge to and in favour of the Holders and their
respective successors and assigns of all lands and premises now owned by the
Borrower, and described or referred to in schedule "A" hereto, including all
appurtenances, buildings and fixtures now or hereafter situate thereon, and
all other lands and premises, including buildings and fixtures, hereafter
acquired by the Borrower;
(b) charges as and by way of a general charge to and in favour of
the Holders and their respective successors and assigns all machinery,
equipment, plant, vehicles, goods and chattels now owned by the Borrower,
and all other machinery, equipment, vehicles, goods and chattels hereafter
acquired by the Borrower; and
(c) charges as and by way of a general floating charge to and in
favour of the Holders and their respective successors and assigns, all its
undertaking, property and assets, both present and future, of every nature
and kind and wherever situate (other than such as are at all times validly
subject to the first fixed and specific mortgage and charge hereby created),
including, without limiting the generality of the foregoing, its franchises,
uncalled capital, goodwill, leases, rents, inventories, book debts,
contracts and agreements;
such general charges hereby constituted being sometimes collectively called
the "Security" and the subject matter of the security being sometimes called
the "Charged Premises".
The Notes
2A. The Bond will be registered with the transfer agent (See
paragraph 6(b)), and divided into Notes evidencing the ownership interest
in the divisible, transferable, and assignable Bond. A copy of the Bond and
a Sample Note are attached here as Schedule "B".
<PAGE> 91
Covenants of Borrower
3. The Borrower hereby covenants and agrees that it will at all
times do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered all such further acts, deeds, mortgages,
hypothecs, transfers, assignments and assurances in law or equity as the
Holders may reasonably require for the better assuring, mortgaging,
hypothecating, charging, transferring, assigning and confirming unto the
Holders and for perfecting the security interests hereby created in the
undertaking, property and assets hereby mortgaged and charged or intended
so to be or which the Borrower may hereafter become bound to mortgage,
hypothecate, transfer, assign and charge in favour of the Holders and for
the better accomplishing and effectuating of this Indenture.
4. Until the Security becomes enforceable, the Borrower may pay
dividends out of moneys of the Borrower properly applicable therefor and may
in any way dispose of or deal with the subject matter of the floating charge
in the ordinary course of their business and for the purpose of carrying on
the same provided that it will not and the Borrower covenants that it will
not, without the prior written consent of the Holders, dispose of or deal
with the Charged Premises out of the ordinary course of their business. The
Holder may, however, create, assume or have outstanding any mortgage, charge,
security interest or other encumbrance on any part of the Charged Premises
ranking or purporting to rank or capable of being enforced by any person in
priority to or pari passu with the Security.
5. The Borrower hereby covenants and agrees with the Holders
that until all moneys owing hereunder are paid in full:
(a) it will maintain its corporate existence and carry
on and conduct its business in a proper, efficient and business-like manner
and in accordance with good business practice;
(b) it will keep or cause to be kept proper books of
account in accordance with sound accounting practice and, when requested by
the Holders, will furnish the Holders, on reasonable notice, with copies of
all its audited or unaudited financial statements available to it;
(c) it will pay or cause to be paid all taxes, rates,
government fees and dues levied, assessed or imposed upon it and its property
and assets or any part thereof as and when the same shall become due and
payable (save and except where and so long as the validity of any
such taxes, rates, fees, dues, levies, assessment or imposts is in good
faith contested by it) and to pay all amounts owing in respect of the
Charged Premises including rent as the same shall become due and
payable;
(d) it will duly observe and conform to all valid
requirements of any government authority relative to any of their
undertakings, property or assets;
<PAGE> 92
(e) it will insure and keep insured the buildings,
erections, improvements, machinery, stock in trade, and all other insurable
property and assets hereby charged against loss or damage by fire and other
such insurable hazards and in such amounts as may be usual and prudent
with persons carrying on a similar business or holding similar and will
provide copies of such policies to the Holders on demand;
(f) it will keep the Charged Premises in good condition
and repair according to the nature and description thereof, and, without
limitation, will not do any act to impair the collectability of their book
debts except in accordance with paragraph 4, and will allow the Holders,
whenever the Holders deem necessary, either in person or by agent, to enter
upon and inspect the Charged Premises and records thereof;
(g) it will not, without the prior written consent of the
Holders, permit or be a party to any sale or change of ownership of a
controlling interest in the shares of the Borrower;
(h) subject to paragraph 4 above, it will not without the
prior written consent of the Holders incur or create any further or
additional trade indebtedness except to the Holders and except such normal
trade indebtedness as may be incidental to the ordinary course of its
business;
(i) it will furnish within ten (10) days of request to
the Holders such information respecting the Charged Premises and the
insurance on the Charged Premises as the Holders may reasonably require from
time to time;
(j) it will give written notice to the Holders of all
litigation before any court, administrative board or other tribunal that has
been brought against the Borrower that might affect the Charged Premises of
the Borrower; and
(k) it will not redeem, purchase for cancellation, or
otherwise pay off or make any repayment of paid-up capital on any shares in
its capital stock.
Escrow and Note Transfer
6. (a) All proceeds of the issue will be held in escrow by
Continental Stock Transfer and Trust Company, 2 Broadway, New York,
New York, until there is collected sufficient funds to purchase one or more
of the properties listed in Schedule "A" attached hereto. In the event
sufficient funds are not raised, or the closings on one or more of the
properties do not occur, the funds, or portions thereof as may remain
unused, will be returned to the holders on a para passu basis.
(b) Continental Stock Transfer and Trust Company will also
act as registrar and transfer agent for the Notes.
<PAGE> 93
Discharge
7. The Holders or any other holder hereof pursuant to paragraph
16 below is the person entitled to receive the money payable hereunder and to
give a discharge hereof.
Events of Default
8. Notwithstanding anything to the contrary herein contained,
the principal, interest and other moneys hereby secured shall become
immediately payable and the Security shall become immediately enforceable in
each and every of the following events:
(a) if the Borrower makes default in the payment of the
principal of this Indenture on the Due Date or fails to pay any interest
provided for in this Indenture for more than seven (7) days after the same
falls due, or makes default in the observance or performance of any other
covenant, term or condition hereby required to be observed or
performed and, except for paragraph 4 or subparagraphs (g) or (h) of
paragraph 5 above, fails to remedy such default within ten (10) days
after notice of such default is given to the Borrower by the Holders;
(b) if the Borrower makes default in the observance or
performance of any of the covenants, terms or conditions required to be
observed or performed by paragraph 4 or subparagraphs (g) or (h) of
paragraph 5 above;
(c) if a petition is filed or a resolution is passed or
an order is made for the winding up, liquidation or dissolution of the
Borrower;
(d) if the Borrower ceases or threatens to cease to
carry on its business, or makes or agrees or threatens to make a bulk sale of
its assets or a substantial part thereof, or commits or threatens to commit
any act of bankruptcy, or becomes insolvent or bankrupt or makes an
authorised assignment, or if a bankruptcy petition is filed or presented
against it or if proceedings with respect to it are commenced under the
Bankruptcy Act, which petition or proceedings are not discharged or settled
within thirty (30) days of the filing or presentation thereof;
(e) if any execution, sequestration, extent or any other
process of any court becomes enforceable against the Borrower or if a
distress or analogous process is levied upon the property of the Borrower or
any part thereof;
(f) if the Borrower makes default under any obligation to
pay money and, with respect to borrowed money, such default shall have
continued for a period sufficient to permit the acceleration of the maturity
of such obligation;
<PAGE> 94
(g) if for any reason an encumbrancer shall take
possession of the Charged Premises or any part thereof;
(h) if the Borrower makes default in payment or discharge
of any indebtedness or liability to the Holders when the same fall dues
whether secured hereby or not,
(i) if at any time or times after written notice to the
Borrower, the Holders believe, in good faith, the prospect of payment of the
moneys payable hereunder or performance by the Borrower of the terms hereof
is impaired; or
(j) if there is or is about to be, without the prior
written consent of the Holders, any reorganisation of the Borrower or any
consolidation, merger or amalgamation of the Borrower with any other company
or companies, or any change in the beneficial ownership of the
borrower's issued capital which results in any change of effective
control of the Borrower to any person or group of persons.
Enforcement
9. Whenever the Security has become enforceable, the Holders may
realize upon the Security and enforce their rights by entering into
possession; by taking proceedings in any court of competent jurisdiction for
the appointment of a receiver (which term as used in this Indenture includes
a receiver and manager) of all or any part of the Charged Premises or for
sale or foreclosure of all or any part of the Charged Premises; by appointing
by instrument in writing a receiver of all or any part of the Charged
Premises and removing or replacing from time to time any such receiver; by
filing proofs of claim and other documents to establish their claims in any
proceeding relative to the Borrower; or by exercising any other remedies
or taking any other proceedings authorised or permitted hereby or by law or
equity. Such remedies may be exercised from time to time separately or in
combination and are in addition to and not in substitution for any other
rights of the Holders however created.
<PAGE> 95
10. Any receiver appointed by instrument in writing shall have
power to take possession of, collect and get in all or any part of the
Charged Premises; and, for that purpose, to take proceedings in the name of
the Borrower or otherwise and to make any arrangement or compromise in
connection therewith; to sell or to concur in selling all or any part of the
Charged Premises with or without notice and in such manner and on such terms
and conditions as may seem advisable to the receiver, and to effect such sale
by conveying in the name and on behalf of the Borrower or otherwise; to carry
on or concur in carrying on all or any part of the business of the Borrower;
and to borrow or to raise money on all or any part of the Charged Premises
in priority to this Indenture or otherwise for such purposes as may be
approved by the Holders. The receiver shall be vested with such other
discretions and powers as are granted in the instrument of appointment
and any supplement thereto. The receiver shall for all purposes be deemed to
be the agent of the Borrower and not of the Holders and the Borrower shall
be solely responsible for the acts or defaults of the receiver and for his or
its remuneration and expenses and the Holders shall not be in any way
responsible for any misconduct or negligence on the part of any such
receiver or receivers. All moneys from time to time received by the receiver
may be applied as follows: first, in discharge of all operating expenses and
other outgoings affecting the Charged Premises; second, in keeping in good
standing all charges and liens on the Charged Premises having priority over
the Security; third, in payment of the remuneration and disbursements of the
receiver; fourth, in payment to the Holders of the moneys payable hereunder;
and the balance, if any, shall be paid to the Borrower or as otherwise
required by law.
11. The Borrower agrees to pay to the Holders forthwith upon
demand all reasonable costs, charges and expenses including, without
limitations, solicitors' costs and legal expenses) of or incurred by the
Holders in connection with the recovery or enforcement of payment of any of
the moneys owing hereunder, including all such costs, charges and expenses
in connection with taking possession, protecting, preserving, collecting or
realising upon any part of the Charged Premises, together with interest
thereon at the above-mentioned rate per annum from the date of incurring
such costs, charges and expenses. The Borrower agrees to pay to the Holders
forthwith upon demand all solicitors' costs and legal expenses incurred by
the bank in connection with the creation and registration of this Indenture,
or any other security held by the Holders on the Charged Premises or any part
thereof. All sums payable pursuant to this section shall be added to the
indebtedness secured by this Indenture and shall also be secured hereby.
Miscellaneous Provisions
12. The Security is in addition to and not in substitution for
any other security now or hereafter held by the Holders.
13. This Indenture may be deposited with or pledged by the
Borrower as collateral security for its indebtedness and liabilities from
time to time to the Holders.
14. No consent or waiver by the Holders shall be effective
unless made in writing and signed by an authorised officer of each Holder.
Guarantee
15. This Indenture is Guaranteed by the Debenture issued by Bon
Hyang, Inc. attached hereto.
<PAGE> 96
16. Any notice, demand, request, consent or approval which is
required or permitted to be given or made by one party to any other pursuant
to any provision of this Indenture shall be given or made in writing and
shall be served personally or sent by prepaid registered mail addressed to
the respective parties as follows:
(a) the Holders:
At the last address of record on the books of Continental Stock Transfer and
Trust Company, 2 Broadway, New York, New York.
- and -
(b) the Borrower:
71 Stony Hill Road, Second Floor, Bethel Connecticut 06801
Attention: Baik Suk Kim, Chairman of the Board
or to such other address as any party may from time to time advise the other
parties hereto by notice in writing. Every such notice so given shall be
deemed to be received on the date of delivery, if served personally, or on
the second day of business following the day of mailing, if sent by mail;
provided that in the event of an interruption of postal service at any
time prior to the deemed receipt of any notice sent by mail, then such
notice, unless earlier delivered or actually received, shall be deemed to be
received on the second business day following the date of resumption of
normal postal service.
17. This Indenture is to be treated as a negotiable instrument
and all persons are invited by the Borrower to act accordingly and any holder
hereof may exercise all rights created hereunder. This Indenture and all its
provisions shall inure to the benefit of the Holders, and their respective
successors and assigns.
<PAGE> 97
18. The Holders shall, in addition to any other powers given to
them, have the following powers, namely:
(a) power to release any property of the Borrower from
the fixed and floating charges created by this Indenture; and
(b) power to agree to any modification, compromise,
release or waiver of the rights of the Holders against the Borrower or
against its property, whether the rights shall arise under this Indenture or
otherwise.
19. This Indenture is governed by the law and procedure of the
State of New York, as amended, re-enacted and in force from time to time.
20. In this Indenture words importing the singular number only
shall include the plural and vice-versa and words importing the masculine
gender shall include the feminine and neuter genders and vice-versa and
words importing persons shall include firms and corporations.
21. The headings of the paragraphs hereof are inserted for
convenience of reference only and shall not affect the interpretation or
construction of this Indenture.
IN WITNESS WHEREOF the Borrower has caused this Indenture to
be executed this 1st day of December, 1999.
EURO CAP CORPORATION
Per:/s/Baik Suk Kim/s/
Baik Suk Kim, CEO
<PAGE> 98
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BON HYANG, INC.
A corporation incorporated under the
Laws of Korea
DEBENTURE
MADE: December 1, 1999 Principal Sum: $500,000,000
DUE: ON DEMAND UPON THE DEFAULT OF EURO CAP CORPORATION UPON ITS
OBLIGATIONS PURSUANT TO AN INDENTURE ENTERED INTO ON DECEMBER 1, 1999, SAID
INDENTURE ATTACHED HERETO, AND FORMING PART OF THIS DEBENTURE AS IF THE
BORROWER AS DEFINED THEREIN WERE THE BORROWER HEREIN.
Debt
1. Bon Hyang, Inc., a corporation incorporated under the laws
of Korea (the "Borrower"), for value received, hereby acknowledges itself
indebted and promises to pay ON DEMAND UPON THE DEFAULT OF EURO CAP
CORPORATION UPON ITS OBLIGATIONS PURSUANT TO AN INDENTURE ENTERED INTO ON
DECEMBER 1, 1999(the"Indenture"), SAID INDENTURE ATTACHED HERETO, AND FORMING
PART OF THIS DEBENTURE AS IF THE BORROWER AS DEFINED THEREIN WERE THE
BORROWER HEREIN. (the "Due Date") to or to the order of the holders of Notes
pursuant to the Indenture entered into between Euro Cap Corporation, a New
York Corporation, and the holders of the said Notes(as defined in the
Indenture) (the "Holders") and their respective successors and assigns, the
sum of FIVE HUNDRED MILLION DOLLARS ($500,000,000.00) OR such other sum as
may be outstanding to the holders from time to time in lawful money of the
United States of America at such place as the Holders may designate by
notice in writing to the Borrower together with interest, costs and fees.
Security
2. As security for the due payment of all moneys payable
hereunder, the Borrower hereby:
(a) charges as and by way of a fixed and floating charge to and
in favour of the Holders and their respective successors and assigns all
lands and premises now owned or in the future owned, wholly or in part, by
the Borrower, including all appurtenances, buildings and fixtures
now or hereafter situate thereon, and all other lands and premises, including
buildings and fixtures, hereafter acquired by the Borrower;
(b) charges as and by way of a fixed and floating charge to and
in favour of the Holders and their respective successors and assigns all
machinery, equipment, plant, vehicles, goods and chattels now owned or in
the future purchased and owned or partially owned by the Borrower, and all
other machinery, equipment, vehicles, goods and chattels hereafter acquired
by the Borrower; and
<PAGE> 99
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(c) charges as and by way of a first floating charge to and in
favour of the Holders and their respective successors and assigns, all its
undertaking, property and assets, both present and future, of every nature
and kind and wherever situate (other than such as are at all times validly
subject to the first fixed and specific mortgage and charge hereby created),
including, without limiting the generality of the foregoing, its franchises,
uncalled capital, goodwill, leases, rents, inventories, book debts, contracts
and agreements;
such charges hereby constituted being sometimes collectively called the
"Security".
Covenants of Borrower
3. The Borrower hereby covenants and agrees that it will at all
times do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered all such further acts and assurances in law or
equity as the Holders may reasonably require for the better assuring and
confirming unto the Holders and for perfecting the security interests hereby
created in the undertaking, property and assets hereby charged or intended
so to be or which the Borrower may hereafter become bound to charge in
favour of the Holders and for the better accomplishing and effectuating of
this debenture.
4. Until the Security becomes enforceable, the Borrower may pay
dividends out of moneys of the Borrower properly applicable therefor and may
in any way dispose of or deal with the subject matter of the floating charge
in the ordinary course of their business and for the purpose of carrying on
the same provided that it will not and the Borrower covenants that it will
not, without the prior written consent of the Holders, dispose of or deal
with the Security out of the ordinary course of their business or to replace
it with property, goods, and chattels of equal or greater value.
<PAGE> 100
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5. The Borrower hereby covenants and agrees with the Holders
that until all moneys owing hereunder are paid in full:
(a) it will maintain its corporate existence and carry
on and conduct its business in a proper, efficient and business-like manner
and in accordance with good business practice;
(b) it will keep or cause to be kept proper books of
account in accordance with sound accounting practice and, when requested by
the Holders, will furnish the Holders with copies of all its audited or
unaudited financial statements available to it;
(c) it will pay or cause to be paid all taxes, rates,
government fees and dues levied, assessed or imposed upon it and its
property and assets or any part thereof as and when the same shall become
due and payable (save and except where and so long as the validity of any
such taxes, rates, fees, dues, levies, assessment or imposts is
in good faith contested by it) and to pay all amounts owing in respect of
the Security including rent as the same shall become due and payable;
(d) it will duly observe and conform to all valid
requirements of any government authority relative to any of their
undertakings, property or assets;
(e) it will insure and keep insured the buildings,
erections, improvements, machinery, stock in trade, and all other insurable
property and assets hereby mortgaged and charged against loss or damage by
fire and other such insurable hazards and in such amounts as may be usual
and prudent with persons carrying on a similar business or holding similar
assets and will show the interest of the Holders in the relevant policies of
insurance and will provide copies of such policies to the Holders;
(f) it will keep the Security, where applicable, in good
condition and repair according to the nature and description thereof, and,
without limitation, will not do any act to impair the collectability of their
book debts except in accordance with paragraph 4, and will allow the Holders,
whenever the Holders deem necessary, either in person or by
<PAGE> 101
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agent, to enter upon and inspect the Charged Premises
and records thereof;
(g) it will not, without the prior written consent of
the Holders, permit or be a party to any sale or change of ownership of a
controlling interest in the shares of the Borrower;
(h) subject to paragraph 4 above, it will not without
the prior written consent of the Holders incur or create any further or
additional trade indebtedness except to the Holders and except such normal
trade indebtedness as may be incidental to the ordinary course of its
business;
(i) it will furnish within ten (10) days of request to
the Holders such information respecting the Security and the insurance on the
Security as the Holders may reasonably require from time to time;
(j) it will give written notice to the Holders of all
litigation before any court, administrative board or other tribunal that has
been brought against the Borrower that might affect the Security of the
Borrower; and
(k) it will not redeem, purchase for cancellation, or
otherwise pay off or make any repayment of paid-up capital on any shares in
its capital stock.
Exceptions
6. The last day of the term of any lease, verbal or written, or
any agreement therefor, now held or hereafter acquired by the Borrower, is
hereby excepted out of any charge created hereby or by any other instrument
supplemental hereto and does not and shall not form part of the property
hereby or by any such other instrument charged so as to be charged with the
moneys intended to be secured hereby, but the Borrower shall stand possessed
of the reversion remaining in the Borrower of any leasehold premises, for
the time being demised, as aforesaid, upon trust to assign and dispose
thereof as the Holders shall direct; and upon any sale of the leasehold
premises or any part thereof, the Holders, for the purpose of vesting the
aforesaid reversion of any such term or any renewal thereof in any purchaser
or purchasers thereof, shall be entitled by deed or writing to appoint such
purchaser or purchasers or any other person or persons a new trustee or
trustees of the aforesaid reversion of any such term or renewal thereof in
the place of the Borrower and to vest the same accordingly in the new trustee
or trustees so appointed freed and discharged from any obligation respecting
the same.
<PAGE> 102
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Discharge
7. The Holders or any other holder hereof pursuant to paragraph
16 below is the person entitled to receive the money payable hereunder and
to give a discharge hereof.
Events of Default
8. Notwithstanding anything to the contrary herein contained,
the principal, interest and other moneys hereby secured shall become
immediately payable and the Security shall become immediately enforceable in
each and every of the following events:
(a) if the Borrower makes default in the payment of the
principal of this debenture on the Due Date or fails to pay any interest
provided for in this debenture for more than seven (7) days after the same
falls due, or makes default in the observance or performance of any other
covenant, term or condition hereby required to be observed or performed and,
except for paragraph 4 or subparagraphs (g) or (h) of paragraph 5 above,
fails to remedy such default within ten (10) days after notice of
such default is given to the Borrower by the Holders;
(b) if the Borrower makes default in the observance or
performance of any of the covenants, terms or conditions required to be
observed or performed by paragraph 4 or subparagraphs (g) or (h) of
paragraph 5 above;
(c) if a petition is filed or a resolution is passed or
an order is made for the winding up, liquidation or dissolution of the
Borrower;
(d) if the Borrower ceases or threatens to cease to
carry on its business, or makes or agrees or threatens to make a bulk sale
of its assets or a substantial part thereof, or commits or threatens to
commit any act of bankruptcy, or becomes insolvent or bankrupt or makes an
authorized assignment, or if a bankruptcy petition is filed or presented
against it or if proceedings with respect to it are commenced under any
Companies Creditors Arrangement Acts, which petition or proceedings are
not discharged or settled within thirty (30) days of the filing or
presentation thereof;
<PAGE> 103
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(e) if any execution, sequestration, extent or any other
process of any court becomes enforceable against the Borrower or if a
distress or analogous process is levied upon the property of the Borrower or
any part thereof;
(f) if the Borrower makes default under any obligation
to pay money and, with respect to borrowed money, such default shall have
continued for a period sufficient to permit the acceleration of the maturity
of such obligation;
(g) if for any reason an encumbrancer shall take
possession of the Charged Premises or any part thereof;
(h) if the Borrower makes default in payment or
discharge of any indebtedness or liability to the Holders when the same
fall dues whether secured hereby or not,
(i) if at any time or times after written notice to the
Borrower, the Holders believe, in good faith, the prospect of payment of the
moneys payable hereunder or performance by the Borrower of the terms hereof
is impaired; or
(j) if there is or is about to be, without the prior
written consent of the Holders, any reorganization of the Borrower or any
consolidation, merger or amalgamation of the Borrower with any other company
or companies, or any change in the beneficial ownership of the borrower's
issued capital which results in any change of effective control of the
Borrower to any person or group of persons.
Enforcement
9. Whenever the Security has become enforceable, the Holders
may realize upon the Security and enforce their rights by entering into
possession; by taking proceedings in any court of competent jurisdiction for
the appointment of a receiver (which term as used in this debenture includes
a receiver and manager) of all or any part of the Security or for sale or
foreclosure of all or any part of the Security; by appointing by instrument
in writing a receiver of all or any part of the Security and removing or
replacing from time to time any such receiver; by filing proofs of claim and
other documents to establish their claims in any proceeding relative to the
Borrower; or by exercising any other remedies or taking any other proceedings
authorized or permitted hereby or by law or equity. Such remedies may be
exercised from time to time separately
<PAGE> 104
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or in combination and are in addition to and not in substitution for any
other rights of the Holders however created.
10. Any receiver appointed by instrument in writing shall have
power to take possession of, collect and get in all or any part of the Security,
for that purpose, to take proceedings in the name of the Borrower or
otherwise and to make any arrangement or compromise in connection therewith;
to sell or to concur in selling all or any part of the Security with or
without notice and in such manner and on such terms and conditions as may
seem advisable to the receiver, and to effect such sale by conveying in the
name and on behalf of the Borrower or otherwise; to carry on or concur in
carrying on all or any part of the business of the Borrower; and to borrow
or to raise money on all or any part of the Security in priority to this
debenture or otherwise for such purposes as may be approved by the Holders.
The receiver shall be vested with such other discretion and powers as are
granted in the instrument of appointment and any supplement thereto. The
receiver shall for all purposes be deemed to be the agent of the Borrower
and not of the Holders and the Borrower shall be solely responsible for the
acts or defaults of the receiver and for his or its remuneration and
expenses and the Holders shall not be in any way responsible for any
misconduct or negligence on the part of any such receiver or receivers.
All moneys from time to time received by the receiver may be applied as
follows: first, in discharge of all operating expenses and other outgoings
affecting the Security; second, in keeping in good standing all charges and
liens on the Security having priority over the Security; third, in payment
of the remuneration and disbursements of the receiver; fourth, in payment
to the Holders of the moneys payable hereunder; and the balance, if any,
shall be paid to the Borrower or as otherwise required by law.
11. The Borrower agrees to pay to the Holders forthwith upon
demand all reasonable costs, charges and expenses including, without
limitations, solicitors' costs and legal expenses of or incurred by the
Holders in connection with the recovery or enforcement of payment of any of
the moneys owing hereunder, including all such costs, charges and expenses
in connection with taking possession, protecting, preserving, collecting or
realizing upon any part of the Security, together with interest thereon at
the above-mentioned rate per annum from the date of incurring such costs,
charges and expenses. The Borrower agrees to pay to the Holders forthwith
upon demand all solicitors' costs and legal expenses incurred by the bank
in connection with the creation and registration of this debenture, or any
other security held by the Holders on the Security or any part thereof. All
sums payable pursuant to this section shall be added to the indebtedness
secured by this debenture and shall also be secured hereby.
<PAGE> 105
- 8 -
Miscellaneous Provisions
12. The Security is in addition to and not in substitution for
any other security now or hereafter held by the Holders.
13. This debenture may be deposited with or pledged by the
Borrower as collateral security for its indebtedness and liabilities from
time to time to the Holders.
14. No consent or waiver by the Holders shall be effective
unless made in writing and signed by an authorized officer of each Holder.
Guarantee
15. This Debenture is a guarantee of payment by Euro Cap
Corporation to its Note holders of all payments due pursuant to the
Indenture entered into by Euro Cap Corporation with the said Note holders
on December 1, 1999, and a the Borrower herein shall be deemed to be the
Borrower in the said indenture for any and all actions by the Holders
therein for any default by the Borrower therein. rs.
16. Any notice, demand, request, consent or approval which is
required or permitted to be given or made by one party to any other pursuant
to any provision of this debenture shall be given or made in writing and
shall be served personally or sent by prepaid registered mail addressed to
the respective parties as follows:
(a) the Holders: at the addresses provided in
the Indenture
<PAGE> 106
- 9 -
(b) the Borrower: at the address for the
Borrower in the Indenture.
or to such other address as any party may from time to time advise the other
parties hereto by notice in writing. Every such notice so given shall be
deemed to be received on the date of delivery, if served personally, or on
the second day of business following the day of mailing, if sent by mail;
provided that in the event of an interruption of postal service at any time
prior to the deemed receipt of any notice sent by mail, then such notice,
unless earlier delivered or actually received, shall be deemed to be
received on the second business day following the date of resumption of
normal postal service.
17. This debenture is to be treated as a negotiable instrument
and all persons are invited by the Borrower to act accordingly and any
holder hereof may exercise all rights created hereunder. This debenture
and all its provisions shall enure to the benefit of the Holders, and their
respective successors and assigns and any holder hereof and shall be binding
upon the Borrower, its successors and assigns and the Guarantor,
and his respective heirs, executors, administrators, successors and assigns.
18. The Holders shall, in addition to any other powers given to
them, have the following powers, namely:
(a) power to release any property of the Borrower from
the fixed and floating charges created by this debenture; and
(b) power to agree to any modification, compromise,
release or waiver of the rights of the Holders against the Borrower or
against its property, whether the rights shall arise under this debenture or
otherwise.
19. This debenture is governed by the law and procedure of the
State of New York, as amended, re-enacted and in force from time to time.
20. In this debenture words importing the singular number only
shall include the plural and vice-versa and words importing the masculine
gender shall include the feminine and neuter genders and vice-versa and
words importing persons shall include firms and corporations.
<PAGE> 107
- 10 -
21. The headings of this paragraphs hereof are inserted for
convenience of reference only and shall not affect the interpretation or
construction of this debenture.
IN WITNESS WHEREOF the Borrower and the Guarantor have
caused this debenture to be executed this First day of December 1999.
Bon Hyang, Inc.
(SEAL) Per: /s/ Baik Suk Kim/s/
BAIK SUK KIM -CEO
<PAGE> 108
STOCK PURCHASE AGREEMENT
MEMORANDUM OF AGREEMENT made as of the First day of July, 1999
BETWEEN:
Baik Suk Kim,
for and on behalf of the Shareholders of Bon Hyung, Inc.
(hereinafter called the "Seller")
OF THE FIRST PART
A N D:
Euro Cap Inc.
a corporation incorporated under the laws of the State of New York
(hereinafter called the "Purchaser")
OF THE SECOND PART
WHEREAS, the Seller controls and represents all of the authorized issued
and outstanding interest of all the shareholders of Bon Hyang Inc.,
(herein referred to as the "Corporation"), and;
WHEREAS, the Purchaser desires to acquire all of the outstanding
shares of the Corporation's Common Stock, and;
NOW, THEREFORE, THIS AGREEMENT WITNESSETH THAT, in
consideration of the covenants, agreements, warranties, and payments herein
set out and provided for, the parties hereby respectively covenant and
agree as follows:
<PAGE> 109
ARTICLE 1.00 - DEFINED TERMS
1.1 When used herein or in any amendments hereto, the following terms
shall have the following meanings respectively.
"Agreement" means this agreement and all schedules attached to this
agreement. The term includes each case where it may be supplemented or
amended from time to time. The expressions "hereof", "herein", "hereto",
"Hereunder", "hereby" and similar expressions refer to this agreement, and
"Article", "section" and "subsection" mean and refer to the specified
Article, section, and subsection of this agreement.
"books and records" means the accounting books of original entry including
the general ledger, record of cash receipts and disbursements, purchase
journal and banking records.
"Business" means the business presently and heretofore carried on by the
Corporation, namely the purchase and operation of real estate interests in
Korea and such other ventures as the directors of the Corporation may
from time to time deem appropriate.
"Business day" means a day other than a Saturday, Sunday or a day that is a
statutory holiday.
"Closing" means the closing of the transaction for purchase and sale
contemplated herein.
"Closing Date" or "Date of Closing" means July 1, 1999 or such other
date as may be mutually agreed upon in writing by the parties hereto.
"Closing Financial Statements" has the meaning ascribed to it in section
4.1.1.
"Common Shares" means the issued and outstanding common shares in the
capital of the Corporation.
"Corporation" means the companies listed hereinabove as the Seller.
"EBIT" means net earnings before income taxes, as determined by the auditors,
in accordance with GAAP.
<PAGE> 110
"Exchange Shares" means 10,000,000 common.
"Financial statements" means, collectively, the Closing Financial Statements
defined hereinabove.
"Intercompany Transactions" means, collectively, all transactions of any
nature between the Corporation and any Person associated with or related to
the Corporation or otherwise not dealing with the Corporation on an arms-
length basis.
"GAAP" means generally accepted accounting principles in the United States,
as appropriate and as in effect from time to time, consistently applied.
"NASDAQ" means the National Association of Securities Dealers and
Quotations.
"Non Arm's Length Person" means any shareholder director, officer, employee,
affiliate, or associate (as defined in the Securities Act of 1933, as
amended) of the Corporation. This term includes any one or more of the Seller
or any other Person who does not deal at arm's length with the Corporation
or any one or more of the Seller within the meaning of such concept as used
in the Income Tax Act (USA).
"Person" includes an individual, a corporation, a joint venture, a
partnership, a trust or trustee, any unincorporated organization, an
association, or any other entity (including any governmental,
administrative, or regulatory authority).
"Permitted Liens" means, at any time, such Liens as the Purchaser may agree,
in writing, shall constitute a Permitted Lien for the purpose of this
Agreement.
"Purchased Shares" shall have the meaning attributed thereto in section 3.1
hereof.
"Requirements of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational, governing documents of
such Person. This term includes any law, treaty, regulation or rule, or
determination of an arbitrator or a court or other governmental authority or
agency, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
<PAGE> 111
"Rule 144" means rule 144 of the United States Securities and Exchange
Commission.
"SEC" means the Securities and Exchange Commission of the United States.
"Seller" shall mean, specifically for purposes of this agreement and
identifying the parties thereto, all of the shareholders of the Corporation.
"Subsidiary", in relation to any body corporate, means any corporation of
which issued and outstanding securities are held, other than by way of
security only, by such body corporate, and includes any corporation in like
relation to a Subsidiary.
"this agreement", "this agreement", "herein", "hereto", "hereunder", "hereof"
and similar expressions refer to the within agreement and not to any
particular portion thereof, and include the schedules referred to in
Article 2.00.
"Time of Closing" means two o'clock in the afternoon on the Closing Date.
ARTICLE 2.00 - SCHEDULES
2.1 The following schedules, at time of closing, shall be delivered and
attached to and incorporated in this Agreement by reference and deemed to be
part hereof:
Schedule 4.2.1 - Financial Statements of Corporation
Schedule 4.2.6 - Corporation's Shareholders
Schedule 4.2.22 - Outstanding Obligations of Corporation
Schedule 4.2.23 - Leases of Corporation
Schedule 4.2.26 - Insurance Policies of Corporation
Schedule 4.2.34 - Accounts List of Corporation
Schedule 5.2.1 - Financial Statements of Purchaser
Schedule 5.2.7 - Outstanding Rights to Securities of Purchaser
Schedule 5.2.22 - Outstanding Obligations of Purchaser
<PAGE> 112
Schedule 5.2.33 - Accounts List of Purchaser
Schedule 5.2.37 - Shareholder Credit Facility to Purchaser
Schedule 6.2.4 - Power of Attorney
Schedule 9.9 - Indemnification Agreement
ARTICLE 3.00 - PURCHASE AND SALE
3.1 Subject to the terms and conditions hereof, the Seller hereby agree to
sell, assign, and transfer to the Purchaser a 100% interest in the
Corporation ("the Purchased Shares"). The Purchaser covenants and agrees to
purchase from the Seller the Purchased Shares for an amount equal in the
aggregate to the Purchase Price of $5,000,000 dollars ($5,000,000), payable
as hereinafter set out. At time of Closing, the Purchased Shares will
constitute 100% of the interst of all members of the Corporation.
3.2 Subject to the hereinafter described conditions, the Purchaser
hereby agrees to exchange the equivalent of 10,000,000 shares of its Common
Shares on the Closing Date, provided, however that 2.0 million common shares
arereserved for raising capital for the Corporation, (providing the Seller, on
a fully diluted basis including shares reserved for sale to the public for
raising Capital, shall have a total of 7/10 interest in the Purchaser),
with $0.000025 par value (the "Exchange Shares"), with the Seller for all of
the Purchased Shares as follows:
(A) at Closing, the Purchaser will issue and deliver 10,000,000 shares of
its common stock to the Seller on a pari passu basis, and;
(B) at Closing and immediately following completion of the exchange
described in Section 3.2(A), the Purchaser shall call a special meeting of
its stockholders for the following purposes:
(1) new directors shall be elected and new bylaws shall
be adopted;
(2) Purchaser's entry into this agreement shall be ratified, provided,
however, that such ratification shall not be a condition subsequent but a
condition precedent to this agreement and that by executing this Agreement,
the Purchasers declare such ratification has been effected.
<PAGE> 113
3.3 The Seller hereby represent, warrant, covenant, and acknowledge the
following.
3.3(A) The Purchased Shares are being transferred without registration
under the provisions of Section 5 of the Act.
3.3(B) All of the Purchased Shares will bear legends restricting the
transfer, sale, conveyance, and hypothecation within the jurisdictional
boundaries of the United States. This provision is exclusive of when such
Exchange Shares are registered under the provisions of Section 5 of the act
and under applicable state and provincial securities laws. Moreover, an
opinion of legal counsel may be provided by the Purchaser to certify that
such registration is not required as a result of applicable exemptions
therefrom.
3.3(C) The Seller shall not transfer any of the Exchanged Shares except
in compliance with all applicable laws.
3.3(D) The Seller is acquiring the Exchanged Shares for their own
account, for investment purposes only and not with a view to further sale
or distribution, except as permitted by law.
3.3(E) The Seller have made themselves fully and completely familiar
with all aspects of the Purchaser's business, operations, and financial
statements and, immediately following closing on this Agreement, will assume
operational control thereof.
3.4 The Purchaser hereby represents, warrants, covenants and acknowledges
the following.
3.4(A) The Exchange Shares are being transferred without Registration
under the provisions of Section 5 of the Securities Exchange Act of 1934, as
amended (the "Act") or New York Blue Sky Law.
3.4(B) All of the Exchange Shares will bear legends restricting the
transfer, sale, conveyance, and hypothecation within the jurisdictional
boundaries of the United States. This provision is exclusive of when such
Exchange Shares are registered under the provisions of Section 5 of the act
and under applicable state and provincial securities laws. Moreover, an
opinion of legal counsel may be provided by the Purchaser to certify that
such registration is not required as a result of applicable exemptions
therefrom.
<PAGE> 114
3.4(C) The Purchaser shall not transfer any of the Purchased Shares
except in compliance with all applicable laws.
3.4(D) The Purchaser is acquiring the Purchased Shares for its own
account, for investment purposes only and not with a view to further sale or
distribution.
3.4.1 The Purchaser has 40,000,000 shares of capital stock, $0.000025 par
value, authorized, 500 of which will be the total outstanding and fully
diluted amount immediately prior to conclusion of this.
3.4.2 Except as described herein, the Purchaser has no other, outstanding
securities of any class or of any kind or character. There are no
outstanding subscriptions, options, warrants, or other agreements or
commitments obligating the Purchaser to issue or sell any additional shares
or options or rights with respect thereto or any securities convertible into
any shares of Stock of any class.
3.5 The Purchase Price shall be paid and satisfied in full by the delivery
of the issued Exchange Shares at the Times of Closing.
3.6 The certificates representing the shares being exchanged shall each bear
the following legend:
"THESE SHARES HAVE NEITHER BEEN REGISTERED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION OR WITH THE
SECURITIES REGULATORY AUTHORITIES OF ANY STATE, PROVINCE, OR
NATIONAL AUTHORITY). CONSEQUENTLY, THESE SHARES MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THEY ARE
FIRST REGISTERED UNDER APPLICABLE STATE, PROVINCIAL AND
FEDERAL SECURITIES LAWS OR THE TRANSACTION'S EXEMPTION
THEREFROM IS DEMONSTRATED TO THE FULL SATISFACTION OF THE
CORPORAITON'S LEGAL COUNSEL."
ARTICLE 4.00 - COVENANTS, REPRESENTATIONS, AND WARRANTIES OF AND THE
CORPORATION
4.1 The Shareholders of the Seller hereby covenant, represent, and warrant,
and the Seller, jointly and severally, represent to the best of their
knowledge, as follows:
4.2.1 Delivered at Closing, warranted to be true and correct to the best
knowledge of the Seller, and made a part hereof as Schedule 4.2.1 are the
following:
(A) unaudited balance sheet of the Corporation to be acquired as of July 31,
1999, with the related statement of operations and unaudited statement of
<PAGE> 115
cash flow for the period ending June 30, 1999 (such balance sheets,
statements of operations, and other statements are referred to herein as
the "Corporation's Financial Statements").
4.2.2 Corporation has been duly incorporated and organized and is validly
subsisting and in good standing under the laws of Korea.
4.2.3 Corporation has the corporate power to own or lease its property and
carry on the Business. The Corporation is duly qualified as a corporation to
do business under the laws of Colorado, being the only jurisdictions in which
the nature of its business or the property owned or leased by it makes such
qualification necessary.
4.2.4 At Time of Closing, the authorized capital of the Corporation shall
consist of 2,000,000 shares with a par value of 10,000 Won per share.
4.2.5 At Time of Closing, the paid up capital of the said corporation
shall be 500,000 shares and will have been duly and validly
allotted and issued and outstanding as fully paid and non-assessable and
beneficially owned by the Seller.
4.2.6 All of the Purchased Shares are owned by the shareholders of the
Corporation as the beneficial owners of record as listed at Schedule 4.2.6.
Such listed shareholders have good and marketable title thereto, free and
clear of all mortgages, liens, charges, security interests, adverse claims,
pledges, encumbrances, and demands whatsoever. This provision includes
voting trusts, shareholders' agreements, options, or other agreements of
any kind. The Seller represent that said listed shareholders have the
absolute right to transfer the Purchased Shares, and they shall be enjoyed
by the Purchaser free from any interruption or disturbance subject only to
the terms and conditions herein.
4.2.7 The Corporation has no subsidiaries and owns no shares in the capital
of any other corporation and has not agreed to acquire any subsidiary or
any shares of the capital of any other corporation or to acquire or lease
any other business operations.
4.2.8 No person, firm, or corporation has any agreement, option, or any
right or privilege (whether by law, pre-emptive, or contractual) for the
purchase, subscription, allotment, or issuance of either any of the
authorized stock in the capital of the Corporation or of any securities of
<PAGE> 116
the Corporation. This provision includes convertible securities, warrants,
and convertible obligations of any nature.
4.2.9 Except with respect to product warranties provided by the
Corporation in the ordinary course of business, the Corporation is not a
party to or bound to any person, firm, or corporation. This provision
includes any agreement of guarantee, indemnification, assumption,
endorsement, or any other like commitment of obligations or liabilities
(contingent or otherwise) or indebtedness of any person, firm, or
corporation.
4.2.10 There are not now, nor will there be on Closing, any material
claims or potential or contingent claims against the Corporation for
product liability in respect of goods manufactured and/or sold by the
Corporation.
4.2.11 The Corporation's Financial Statements have been prepared in
accordance with GAAP and present fairly to include:
4.2.11(A) all the assets, liabilities (whether accrued, absolute,
contingent, or otherwise), and the financial condition of the Corporation
as at the respective dates of the Corporation's Financial Statements; and
4.2.11(B) the sales, earnings, and results of the operations of the
Corporation during the periods covered by the Corporation's
Financial Statements.
4.2.12 The corporate records and minute books of the Corporation
contain complete and accurate minutes of all meetings of and copies of all
by-laws and resolutions passed by the directors and shareholders of the
Corporation since the incorporation of the Corporation. All such meetings
have been duly called and held. The share certificate book with register of
shareholders, register of transfers, register of directors, and other
corporate registers of the Corporation are complete and accurate in all
material respects.
4.2.13 The Business has been carried on in the ordinary course since
January 1999. Since then, there has been no change in the business
operations, affairs, or condition of the Corporation, financial or
otherwise. This provision includes changes arising as a result of any
legislative or regulatory change, revocation of any license or right to do
business,fire, explosion, accident, casualty, labor trouble, flood,
drought, riot, storm, condemnation, act of God, or otherwise. This provision
<PAGE> 117
excludes changes occurring in the ordinary course of business, which changes
have not materially aversely affected and will not materially aversely
affect the organization, business, properties, prospects, and financial
condition of the Corporation or the ability of the Corporation to carry on
Business.
4.2.14 The books and records, financial and otherwise, of the
Corporation fairly and correctly set out and disclose, in all material
respects, the financial position and result of operations of the Corporation
as at the date hereof. All material, financial transactions of the
Corporation are accurately recorded in such books and records.
4.2.15 Execution of this Agreement by the Seller and delivery of the
Agreement by them to the Purchaser and their performance hereunder has been
duly authorized. No further action is necessary on the part of the Seller
to make this agreement valid and binding in accordance with its terms upon
the Seller.
4.2.16 The execution and the consummation of this transaction for
purchase and sale contemplated by this Agreement will not result in a breach
of any term or provision of or constitute any default under the constituting
documents, by-laws, or resolutions of the Corporation. This provision
includes any indenture, agreement, instrument, license, permit, or
understanding to which the Corporation or any one or more of the Seller
is a party or by which any one or more of them is bound. Nor will the
consummation of this transaction accelerate any commitment or obligation of
the Corporation or result in the creation of any lien or encumbrance upon
any of the assets or property of the Corporation.
4.2.17 This agreement and the consummation of the transactions
contemplated hereby will not result in the violation of any law or regulation
or any applicable order of any court, arbitrator, or governmental authority
having jurisdiction over the Corporation, the Seller, or their respective
properties or businesses.
4.2.18 No consent, authorization, license, franchise, permit, approval,
or order of any court, governmental agency or body, of any lessor, or of any
person is required for the acquisition by the Purchaser of the Purchased
Shares, including completion of any of the other transactions contemplated
hereby. This provision also includes the continuance of any rights of the
Corporation pursuant to any agreement affecting its assets or the Business
following closing.
<PAGE> 118
4.2.19 The Corporation will not, prior to the Closing Date, hire any new
employees, terminate any employee, or increase the salary or remuneration of
any employee except in the normal course of business.
4.2.20 The aggregate amount of salaries, pension, bonuses, rents, or
other remuneration of any nature paid or payable by the Corporation, subsequent
to the execution of this Agreement and up to the Time of Closing, will be
made only at the regular rates heretofore paid.
4.2.21 No capital expenditures, except in the ordinary course of
business, will be made or authorized by the Corporation after the date hereof
and up to the Time of Closing without the prior written consent of the
Purchaser.
4.2.22 Annexed hereto as Schedule 4.2.22 is a complete list of all
outstanding bonds, debentures, mortgages, notes or other evidence of
indebtedness or other security instruments of the Corporation. None of
which are presently in default, and the Corporation is not under any
agreement to and shall not create or issue any bonds, debentures, mortgages,
notes, or other evidence of indebtedness or other security agreements from
the date hereof until Closing without the written consent of the Purchaser.
4.2.23 The Corporation is not a party to any lease or agreement in the
nature of a lease, whether as lessor or lessee, except those leases
described in Schedule 4.2.23 hereto. The schedule specifies the parties
to each of such leases, their dates of execution and expiry dates, any
options to renew, any consents required, the locations of any leased lands
and premises, and the rental payable thereunder. Each of such leases is in
good standing and in full force and effect without amendment thereto, and
the Corporation is not in breach of any of the covenants, conditions, or
agreements contained in each such lease. There are no consents required
from or on behalf of any persons to the transaction contemplated by this
Agreement.
4.2.24 The Corporation is not a party to any conditional sales contract,
hire-purchase agreement, or other title retention agreement.
4.2.25 The Corporation is not, and will not be at the Time of Closing, a
party to any agreement to acquire or to acquire any beneficial interest in
any real or immovable property.
4.2.26 The Corporation maintains appropriate policies of insurance,
given the nature of the Business, and such insurance coverage will be continued
in full force and effect to and including the Date of Closing. The
Corporation is not in default with respect to any of the provisions
contained in any such insurance policy, and it has not failed to give any
notice or present any claim under any such insurance policy in due and
timely fashion.
<PAGE> 119
Schedule 4.2.26 hereto lists all insurance policies of the Corporation,
specifying the insurance company, insurance agent, policy number, type of
coverage, and amount of coverage.
4.2.27 There are no actions, suits, or proceedings, including product
warranty claims, pending or threatened against or affecting the
Corporation, at law or in equity or before or by any federal, provincial,
municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality, domestic or foreign. The Seller are not
aware of any existing ground on which any such action, suit, or proceeding
might be commenced with any reasonable likelihood of success.
4.2.28 Except for agreements, contracts, and commitments in the ordinary
course of business, the Corporation is not a party to any outstanding
agreement, contract, or commitment, whether written or oral.
4.2.29 All vacation pay, bonuses, commissions, and other emoluments are
accurately reflected and have been accrued in the books of account of the
Corporation.
4.2.30 The Corporation is and at Closing will be in substantial
compliance in all jurisdictions in which it employs persons, with legislation
governing hours of work, termination and severance pay, vacation pay and
similar employee rights, the Worker's Compensation Act, and all such similar
statutes.
4.2.31 The uses of the real properties owned or leased by the
Corporation referred to in this agreement or the schedules hereto are not in
material breach of any statute, by-law, ordinance, regulation, covenant,
restriction, or official plan.
4.2.32 The Corporation owns, possesses, and has a good and marketable
title to its undertaking, property, and assets, being free and clear of any and
all mortgages, liens, pledges, charges, security interests, encumbrances,
actions, claims, or demands of any nature whatsoever or howsoever arising
except as listed at Schedule 4.2.22; the purchase price is based on and
directly correlates to the net tangible worth (being assets less liabilities)
of the Corporation, which the Corporation represents to be approximately
$7,000,000 upon audit.
<PAGE> 120
4.2.33 The conduct of the Business does not infringe upon the patents,
trade marks, trade names, or copyrights (domestic or foreign) of any other
person, firm, or corporation.
4.2.34 Annexed hereto as Schedule 4.2.34 is a true and complete list
showing the name of each bank, trust company, or similar institution in
which the Corporation has accounts or safe deposit boxes and the names of
all persons authorized to draw thereon or to have access thereto.
4.2.35 The Corporation is conducting the Business in compliance with all
applicable laws, rules and regulations of each jurisdiction in which the
Business is carried on, is not in breach of any such laws, rules or
regulations, except for breaches which in the aggregate are immaterial.
Also the Corporation is duly licensed, registered, or qualified in each
jurisdiction in which it owns or leases property or carries on the Business.
To enable the business to be carried on as now conducted and its property
and assets to be owned, leased, and operated, all such licenses,
registrations and qualifications are valid and subsisting and in good
standing. None of the same will be canceled or amended by virtue of the
transaction for purchase and sale provided for herein.
4.2.36 All facilities and equipment owned and used by the Corporation in
connection with the Business are in good operating condition and are in a
state of good repair and maintenance.
4.2.37 There are not now any loans or other indebtedness outstanding
between the Corporation and the Seller or either any current or former
directors, officers, shareholders, or employees of the Corporation or any
Non Arms Length Persons. This provision is exclusive of normal salaries,
bonuses, fringe benefits, and the obligation to reimburse for expense
incurred on behalf of the Corporation in the normal course of business or
otherwise disclosed in the Corporation's Financial Statements.
4.2.38 To the best of the Seller' knowledge, there are no liabilities of
the Corporation of any kind whatsoever, whether or not accrued and whether
or not determined or determinable, in respect of which the Corporation or
the Purchaser may become liable before, on, or after the Closing. This
provision is exclusive of liabilities disclosed on, reflected in, or
provided for in the Financial Statements or incurred in the ordinary course
of business. This provision is also exclusive of those liabilities
attributable to the period from the Corporation's Financial Statements
to the actual time of Closing and are not materially adverse, individually
or in the aggregate, to the Business, operations, affairs or financial
condition of the Corporation.
4.2.39 There is not now nor will there be at the Time of Closing any
application pending for the issuance of articles of amendment to the
originating documents of the Corporation.
<PAGE> 121
4.2.40 The Corporation is not in default in the filing of any corporate
return or report that may be required under any federal, provincial and/or
municipal law or regulation.
4.2.41 The Corporation has duly and timely filed all tax returns
required and has paid all taxes and installments of taxes which are due and
payable. This provision includes all assessments, reassessments, and all
other taxes, governmental charges, penalties, interest, and fines due and
payable by it on or before the date hereof. The income tax liability of the
corporation has been not reviewed or determined by the IRS or the applicable
State for all fiscal years up to and including the fiscal year to date.
Adequate provision has been made for taxes payable for the current period
of which tax returns are not yet required to be filed. There are no
agreements, waivers, or other arrangements providing for an extension of
time with respect to the filing of any tax return by, or payment of any tax,
governmental charge, or deficiency against the Corporation in respect of
taxes, governmental charges, or assessments, asserted by such authority.
The Corporation has withheld from each payment made to any of its officers,
directors, employees, former directors, officers, and employees the amount
of all taxes, including but not limited to income tax, and other deductions
required to be withheld therefrom. The Corporation has paid the same to
the proper tax or other receiving officers within the time required under
the applicable tax legislation.
4.2.42 The Seller have no information or knowledge of any facts relating to
the Seller, the Business, the Corporation, or the Purchased Shares which, if
known to the Purchaser, might reasonably be expected to deter the Purchaser
from completing the transaction of purchase and sale herein contemplated.
4.2.43 The Corporation shall prepare and file all documents and forms
necessary to effect the filing and registration of the combined companies
(with Euro Cap Corporation as the parent holding corporation) so as to
complete and receive approval of an effective registration statement for
NASDAQ SmallCap listing as soon as reasonable (i.e., within 90 days) from
the date of closing.
/s/ All items requested have been examined, and approved. BSK /s/
ARTICLE 5.00 - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1 The Purchaser covenants, represents, and warrants as follows and
acknowledges that the Seller are relying upon such covenants,
representations, warranties, and covenants in connection with the sale
by the Seller of the Purchased Shares.
<PAGE> 122
5.2.1 Delivered at Closing, warranted to be true and correct to the best
knowledge of the Purchaser, and made a part hereof as Schedule 5.2.1 are the
following:
(A) unaudited balance sheet of the Purchaser to be acquired for the fiscal
6 months of 1999, with the related statement of operations and
unaudited statement of cash flow for the same years, and;
(B) unaudited balance sheet of the Purchaser to be acquired as of March 31,
1999 (the "Purchaser's Interim Balance Sheet") with the related unaudited
statement of income and unaudited statement of cash flow for the one month
ended June 30, 1999 (such balance sheets, statements of operations, and
other statements are referred to herein as the "Purchaser's Financial
Statements").
5.2.2 Purchaser has been duly incorporated and organized and is validly
subsisting and in good standing under the laws of New York.
5.2.3 Purchaser has the corporate power to own or lease its property and
carry on the Business. The Corporation is duly qualified as a corporation
to do business under the laws of New York, being the only jurisdiction in
which the nature of its business or the property owned or leased by it makes
such qualification necessary.
5.2.4 At time of Closing, the authorized capital of the Purchaser shall
consist of 40,000,000 shares with a par value of $0.000025.
5.2.5 At time of Closing, the authorized issued capital of the Purchaser
shall be500 shares of its common stock (and no more) and will have
been duly and validly allotted and issued and outstanding as fully paid and
non-assessable and beneficially owned by the Purchaser.
5.2.6 The Purchaser has no subsidiaries and owns no shares in the capital
of any other corporation and has not agreed to acquire any subsidiary or any
shares of the capital of any other corporation or to acquire or lease any
other business operations.
5.2.7 Except as listed at Schedule 5.2.7, no person, firm, or corporation
has any agreement, option, or any right or privilege (whether by law, pre-
emptive, or contractual) for the purchase, subscription, allotment, or
issuance of either any of the authorized stock in the capital or any
securities of the Purchaser. This provision includes convertible securities,
warrants, and convertible obligations of any nature.
5.2.8 The Purchaser is not a party to or bound to any person, firm, or
corporation. This provision includes any agreement of guarantee,
indemnification, assumption, endorsement, or any other like commitment of
obligations or liabilities (contingent or otherwise) or indebtedness of any
<PAGE> 123
person, firm, or corporation.
5.2.9 There are not now, nor will there be on Closing, any material claims or
potential or contingent claims against the Purchaser for product liability.
5.2.10 The Purchaser's Financial Statements have been prepared in accordance
with GAAP and present fairly to include:
(A) all the assets, liabilities (whether accrued, absolute, contingent, or
otherwise), and the financial condition of the Purchaser as at the respective
dates of the Purchaser's Financial Statements, and;
(B) the sales, earnings, and results of operations during the periods covered
by the Corporation's Financial Statements.
5.2.11 The corporate records and minute books of the Purchaser contain
complete and accurate minutes of all meetings of and copies of all by-laws
and resolutions passed by the directors and shareholders of the Purchaser
since the incorporation of the Purchaser. All such meetings have been duly
called and held. The share certificate book with register of shareholders,
register of transfers, register of directors, and other corporate registers
of the Purchaser are complete and accurate in all material respects.
5.2.12 The Purchaser does not have an active business or operations.
5.2.13 The Purchaser has no inventory.
5.2.14 The books and records, financial and otherwise, of the Purchaser
fairly and correctly set out and disclose, in all material respects, the
financial position and result of operations of the Purchaser as at the date
hereof. All material, financial transactions of the Purchaser are
accurately recorded in such books and records.
5.2.15 The execution and delivery of this Agreement by the Purchaser as well
as the performance by the Purchaser hereunder have been duly authorized.
No further action will be necessary on the part of the Purchaser to make
this Agreement valid and binding in accordance with its terms upon the
Purchaser.
<PAGE> 124
5.2.16 The execution and the consummation of this transaction for purchase
and sale contemplated by this Agreement will not result in a breach of any
term or provision of or constitute any default under the constituting
documents, by-laws, or resolutions of the Purchaser. This provision
includes any indenture, agreement, instrument, license, permit, or
understanding to which the Purchaser is a party or by which any one or more
of them is bound. Nor will the consummation of this transaction accelerate
any commitment or obligation of the Purchaser or result in the creation of
any lien or encumbrance upon any of the assets or property of the Purchaser.
5.2.17 This agreement and the consummation of the transactions contemplated
hereby will not result in the violation of any law or regulation or any
applicable order of any court, arbitrator, or governmental authority having
jurisdiction over the Purchaser.
5.2.18 No consent, authorization, license, franchise, permit, approval, or
order of any court, governmental agency or body, of any lessor, or of any
person is required for the acquisition by the Purchaser of the Purchased
Shares, including completion of any of the other transactions contemplated
hereby. This provision also includes the continuance of any rights of the
Purchaser pursuant to any agreement affecting its assets or the Business
following closing.
5.2.19 The Purchaser will not, prior to the Closing Date, hire any new
employees, terminate any employee, or increase the salary or remuneration
of any employee except in the normal course of business.
5.2.20 The aggregate amount of salaries, pension, bonuses, rents, or other
remuneration of any nature paid or payable by the Purchaser, subsequent to
the execution of this Agreement and up to the Time of Closing, will be made
only at the regular rates heretofore paid.
5.2.21 No capital expenditures, except in the ordinary course of business,
will be made or authorized by the Purchaser after the date hereof and up to
the Time of Closing without the prior written consent of the Seller.
5.2.22 Annexed hereto as Schedule 5.2.22 is a complete list of all
outstanding bonds, debentures, mortgages, notes or other evidence of
indebtedness or other security instruments of the Purchaser. None of which
are presently in default, and the Purchaser is not under any agreement to
and shall not create or issue any bonds, debentures, mortgages, notes, or
other evidence of indebtedness or other security agreements from the date
hereof until Closing without the written consent of the Seller.
<PAGE> 125
5.2.23 The Purchaser is not a party to any lease or agreement in the nature
of a lease, whether as lessor or lessee.
5.2.24 The Purchaser is not a party to any conditional sales contract, hire-
purchase agreement, or other title retention agreement.
5.2.25 The Purchaser is not, and will not be at the Time of Closing, a party
to any agreement to acquire or to acquire any beneficial interest in any
real or immovable property.
5.2.26 The Purchaser does not maintain any insurance policies.
5.2.27 There are no actions, suits, or proceedings, including product
warranty claims, pending or threatened against or affecting the Purchaser,
at law or in equity or before or by any federal, provincial, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign. The Purchaser is not aware of any
existing ground on which any such action, suit, or proceeding might be
commenced with any reasonable likelihood of success.
5.2.28 Except for agreements, contracts, and commitments in the ordinary
course of business, the Purchaser is not a party to any outstanding
agreement, contract, or commitment, whether written or oral, except for the
Agreement of Purchase and Sale for all the outstanding shares of Bon Hyang
Inc. said Agreement as executed on or before July 1, 1999.
5.2.29 All vacation pay, bonuses, commissions, and other emoluments are
accurately reflected and have been accrued in the books of account of the
Purchaser.
5.2.30 The Purchaser is and at Closing will be in substantial compliance in
all jurisdictions in which it employs persons, with legislation governing
hours of work, termination and severance pay, vacation pay and similar
employee rights, the Worker's Compensation Act, and all such similar
statutes.
5.2.31 The Purchaser does not lease any real properties.
5.2.32 The Purchaser owns, possesses, and has a good and marketable title
to its undertaking, property, and assets, being free and clear of any and
all mortgages, liens, pledges, charges, security interests, encumbrances,
actions, claims, or demands of any nature whatsoever or howsoever arising.
5.2.33 The conduct of business does not infringe upon the patents, trade
marks, trade names, or copyrights (domestic or foreign) of any other person,
firm, or corporation.
<PAGE> 126
5.2.34 Annexed hereto as Schedule 5.2.33 is a true and complete list showing
the name of each bank, trust company, or similar institution in which the
Purchaser has accounts or safe deposit boxes and the names of all persons
authorized to draw thereon or to have access thereto.
5.2.35 The Purchaser exists in compliance with all applicable laws, rules
and regulations of each jurisdiction in which the Business is carried on,
is not in breach of any such laws, rules or regulations, except for breaches
in the aggregate are immaterial. Also the Purchaser is duly licensed,
registered, or qualified in each jurisdiction in which it owns or leases
property or carries on the Business. To enable the business to be carried
on as now conducted and its property and assets to be owned, leased, and
operated, all such licenses, registrations and qualifications are valid and
subsisting and in good standing. None of the same will be canceled or
amended by virtue of the transaction for purchase and sale provided for
herein.
5.2.36 All facilities and equipment owned or used by the Purchaser are in
good operating condition and are in a state of good repair and maintenance.
5.2.37 Except as specified at Schedule 5.2.37, there are not any loans or
other indebtedness outstanding between the Purchaser and either the Seller
or either any current or former directors, officers, shareholders, or
employees of the Purchaser or any Non-Arms Length Persons. This provision
is exclusive of normal salaries, bonuses, fringe benefits, and the
obligation to reimburse for expense incurred on behalf of the Purchaser
in the normal course of business.
5.2.38 There are no liabilities of the Purchaser of any kind whatsoever,
whether or not accrued and whether or not determined or determinable, in
respect of which the Purchaser may become liable before, on, or after the
Closing. This provision is exclusive of liabilities disclosed on, reflected
in, or provided for in the Financial Statements or incurred in the ordinary
course of business. This provision is also exclusive of those liabilities
attributable to the period from the Purchaser's Financial Statements to the
actual time of Closing and are not materially adverse, individually or in
the aggregate, to the Business, operations, affairs or financial condition
of the Purchaser.
5.2.39 There is not now nor will there be at the time of Closing any
application pending for the issuance of articles of amendment to the
originating documents of the Purchaser.
5.2.40 The Purchaser is not in default in the filing of any corporate return
or report that may be required under any federal, provincial and/or
municipal law or regulation.
<PAGE> 127
5.2.41 The Purchaser has duly and timely filed or has pending all tax
returns required and has paid all taxes and installments of taxes which are
due and payable. This provision includes all assessments, reassessments,
and all other taxes, governmental charges, penalties, interest, and fines
due and payable by it on or before the date hereof. The income tax
liability of the Purchaser has been not reviewed or determined by the IRS
or the applicable State for all fiscal years up to and including the fiscal
year to date.
5.2.42 The Purchaser has no information or knowledge of any facts relating
to the Purchaser which if known to the Seller might reasonably be expected
to deter the Seller from completing the transaction and sale herein
contemplated.
/s/ all items supplied, examined and approved /s/BSK
ARTICLE 6.00 - COVENANTS OF THE SELLER
6.1 The Seller covenant and agree with the Purchaser that on or before
the Closing Date they will do or cause to be done the following.
6.2.1 Take all necessary steps and proceedings required for all of the
Purchased Shares to be duly and regularly transferred to the Purchaser.
6.2.2 Until the time of Closing, continue to operate the business of the
Corporation prudently and in such a manner as to preserve and maintain the
goodwill of the Corporation.
6.2.3 All necessary corporate actions and proceedings by the Purchaser
shall have been taken to permit the due execution and delivery of this
Agreement and the valid transfer of the Purchased Shares to the Purchaser
ARTICLE 7.00 - COVENANTS OF THE PURCHASER
7.1 The Purchaser covenants and agrees with the Seller that, on or before
the Closing Date, it will do or cause to be done the following.
7.2.1 All necessary corporate actions and proceedings by the Purchaser shall
have been taken to permit the due execution and delivery of this Agreement
and the valid transfer of the Exchange Shares to the Seller.
7.2.2 Provide the Seller, at least four (4) days prior to the Closing Date,
with a list of all persons in possession of all of the keys, credit cards,
books, records, files, and other properties of the Purchaser. The Purchaser
<PAGE> 128
shall deliver to the Seller custody of all such keys, credit cards, books,
records, files, and other property in the possession of the Purchaser.
7.2.3 Cause such directors and officers of the Purchaser as the Seller may
specify to resign in favor of nominees of the Seller, such resignations to
be effective as at the time of Closing.
7.2.4 Up to the Time of Closing, continue to operate the businesses of the
Purchaser prudently and in such a manner as to preserve and maintain the
goodwill of the Purchaser.
ARTICLE 8.00 - SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES
8.1 The covenants, representations, and warranties of the Seller contained
in this Agreement and contained in any document or certificate given
pursuant hereto shall survive the Closing herein. Notwithstanding Closing,
this survival is inclusive of any investigation made by or on behalf of the
Purchaser and shall continue in full force and effect for the benefit of the
Purchaser following the Closing Date.
8.2 The covenants, representations and warranties of the Purchaser contained
in this Agreement and contained in any document or certificate given
pursuant hereto shall survive the Closing herein. Notwithstanding Closing,
this survival is inclusive of any investigation made by or on behalf of the
Seller and shall continue in full force and effect for the benefit of the
Seller following the Closing Date.
ARTICLE 9.00 - CONDITIONS OF CLOSING
9.1 The sale and purchase of the Purchase Shares is subject to the following
terms and conditions, each of which is hereby declared to be for the
exclusive benefit of the Purchaser to be fulfilled and performed at or
prior to the time of Closing.
9.2 The covenants, representations, and warranties of the Seller contained
in this Agreement or any schedule hereto or certificate or other document
delivered or given to the Purchaser pursuant to this Agreement, including
without limitation the representations and warranties contained in Article
4.00, shall be true and correct on and as of the Closing Date with the same
force and effect as if they had been made as of the date hereof, each and
every one of which is hereby deemed to be a condition.
9.3 The Seller shall provide at the time of Closing a certificate, dated the
Closing Date, to the effect that the covenants, representations, and
warranties of the Seller contained herein are true and correct on and as
of the Closing Date, with the same force and effect as though made on and
<PAGE> 129
as of such date, provided that the acceptance of such certificate and the
closing of the transaction herein provided for shall not be a waiver of the
said covenants, representations, and warranties, which shall continue in
full force and effect as provided herein.
9.4 The Seller shall have complied with all covenants and agreements herein
agreed to be performed or caused to be performed by them.
9.5 At the Closing Date, there shall have been no material adverse change
in the affairs, assets, liabilities, financial condition, or business of the
Corporation from that shown on or reflected in the Financial Statements.
9.6 Any consent, authorization, licence, franchise, permit, approval, or
order of any court or governmental agency or regulatory body required for
the acquisition by the Purchaser of the Purchased Shares shall have been
obtained.
9.7 The Purchaser shall provide at the time of Closing a certificate, dated
the Closing Date, to the effect that the covenants, representations, and
warranties of the Purchaser contained herein are true and correct on and
as of the Closing Date. This certificate shall have the same force and
effect as though made on and as of such date provided that the acceptance
of such certificate and the closing of the transaction herein provided for
shall not be a waiver of the said covenants, representations, and warranties
which shall continue in full force and effect as provided herein.
9.8 The Purchaser shall have complied with all covenants and agreements
herein agreed to be performed or caused to be performed by it.
9.9 The parties shall execute and deliver an indemnification agreement to be
annexed hereto as Schedule 9.9.
9.10 The parties shall not close and complete this transaction unless both
Seller and Purchaser have signed a written acknowledgement that the
exchange of shares between them does not create a taxable event for
either party.
9.11 The parties hereby agree that the scheduled closing shall be
conditional upon shareholder approval by the shareholders of both companies.
ARTICLE 10.00-CLOSING ARRANGEMENTS
10.1 The closing is scheduled to take place on July 1, 1999 and at the
Time of Closing at such offices as are agreed to in writing among the
parties hereto at least 24 hours prior to the said Closing.
<PAGE> 130
10.2 At the Time of Closing and upon fulfillment of all the conditions set
out in this Agreement, which have not been waived in writing by the Seller
or the Purchaser, the Seller shall deliver to the Purchaser proper
certificates for all the Purchased Shares.
ARTICLE 11.00-NOTICE
11.1 Any notice or other document to be given by any party hereto to any
other party shall be in writing and may be given by personal delivery or
by registered mail. Any notice directed to any party shall be addressed
to it as follows:
To the Purchaser:
At the address to be given for service, in writing
To the Seller and the Corporation:
Bon Hyang Inc.,
71 Stony Hill Road
Second Floor
Bethel, Connecticut 06801
11.2 Any notice or other document aforesaid, if delivered, shall be deemed
to have been given or made on the date on which it was delivered or, if
mailed, shall be deemed to have been given and received on the fourth (4th)
business day following the date on which it was mailed. Provided that if
there exists at the time of mailing of a notice hereunder or within four (4)
business days thereafter a labor dispute or other event which would affect
the normal delivery of the notice by an express or postal service, then such
notice will only be effective if actually delivered.
11.3 The parties hereto may change any address for notices hereunder, from
time to time, by notice given in accordance with the foregoing.
ARTICLE 12.00 - GENERAL
12.1 Time shall be of the essence of this Agreement.
12.2 This Agreement may be executed in one or more counterparts, each of
which when so executed shall constitute an original, and all of which
together shall constitute one and the same agreement.
<PAGE> 131
12.3 This Agreement, including the schedules hereto, constitutes the entire
agreement between the parties hereto. There are not and shall not be any
verbal statements, representations, warranties, undertakings, or agreements
between the parties, and this Agreement may not be amended or modified in
any respect except by written instrument signed by the parties hereto.
12.4 This Agreement shall be construed and enforced in accordance with and
the rights of the parties shall be governed by the laws of the State of
New York. Any and all disputes arising under this Agreement, whether as to
interpretation, performance or otherwise, shall be subject to the exclusive
jurisdiction of the Courts of the State of New York. Each of the parties
hereto irrevocably submit to the jurisdiction of the Courts of the State of
New York.
12.5 The headings used herein are inserted for convenience of reference
only and shall not affect the construction of or interpretation of this
Agreement.
12.6 Except as otherwise set out in this Agreement, each of the parties
hereto shall pay all of its own costs and expenses of the transaction of
purchase and sale, including all fees and expenses of its accountants,
counsel, and officers.
12.7 In the event that any Article or section of this Agreement is held to
be invalid or unenforceable by a court of competent jurisdiction, such
invalidity or unenforceability shall not affect the remainder of the
provisions hereof. Any such part shall be fully severable, and this
Agreement shall be construed and enforced as if such invalid or
unenforceable part had not been inserted herein. The parties hereby agree
that they would have signed this Agreement without such invalid or
unenforceable part included herein.
12.8 In this Agreement, words importing the singular number only include
the plural and vice versa; words importing the masculine gender include the
feminine and vice versa.
12.9 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal personal representatives,
successors, and permitted assigns.
12.10 Where the date either for the expiration of any time period or for
the closing of anything hereunder expires or falls upon a day which is not a
Business Day, the time so limited extends to and the thing shall be done on
the day next following that is a Business Day.
12.11 The parties hereto agree that no disclosure or public announcement
with respect to this Agreement, or any of the transactions contemplated by
this Agreement, shall be made by any party hereto without the prior written
consent of the other parties hereto.
<PAGE> 132
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of )
) /s/Baik Suk Kim/s/
) SELLER
)
)
)
)
)
) /s/Baik Suk Kim/s/
PURCHASER
<PAGE> 133
EXHIBIT 22
Subsidiaries of the Registrant
Bon Hyang, Inc., a Korean Corporation
<PAGE> 134
EXHIBIT 24.6
Consent of Registrant's Auditors
January 3, 2000
Securities and Exchange Commission
Washington, D.C. 20549
RE: EURO CAP CORPORATION
Registration Number: 000-1102267
Gentlemen:
We have audited the balance sheet and accompanying statements of the
Registrant, as found in the Prospectus which forms part of this Registration
Statement for the 6 month periods ending June 30, 1999, and the 1998 fiscal
year, ending on December 31, and consent to the Auditor's reports,
statements, and notes being filed with the S-11 Registration Statement of
which this exhibit forms a part, and with any amendment thereto.
This accounting firm hereby consents to the filing of this
consent as an exhibit to the Registration Statement.
/s/Stan J. H. Lee/s/
Stan J. H. Lee, CPA
440 West St., 3rd Fl.
Fort Lee, NJ 07024-5058
<PAGE> 135
BLANK PAGE
<PAGE> 136
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<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> JUN-30-1999 DEC-31-1998
<PERIOD-END> DEC-31-1999 DEC-31-1998
<CASH> 4,561,379 1,111,875
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 461,728 3,778,708
<INVENTORY> 0 0
<CURRENT-ASSETS> 5,023,107 4,890,583
<PP&E> 72,111 60,388
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 5,234,281 5,001,875
<CURRENT-LIABILITIES> 21,757 26,010
<BONDS> 0 0
0 0
0 0
<COMMON> 4,320,155 4,166,667
<OTHER-SE> 28,439 (24,135)
<TOTAL-LIABILITY-AND-EQUITY> 5,234,281 5,001,875
<SALES> 0 0
<TOTAL-REVENUES> 251,818 3,036
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> (185,165) (27,198)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 66,653 (24,135)
<INCOME-TAX> (13,192) 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> (887) 0
<CHANGES> 0 0
<NET-INCOME> 52,574 (24,135)
<EPS-BASIC> 0.003 (0.002)
<EPS-DILUTED> 0.003 (0.002)
</TABLE>
