EXHIBIT 6.3
SHARE EXCHANGE AGREEMENT WITH
REGENT LUCK HOLDINGS LTD.
EXECUTION COPY
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "AGREEMENT") is entered into and
effective as of April 16th, 1998, by and between XXXXX XXXX XXX XX, SINO
CONCOURSE LIMITED, a Hong Kong corporation, SINOWAY TECHNOLOGY LIMITED, a Hong
Kong corporation (collectively the "SHAREHOLDERS"), REGENT LUCK HOLDINGS
LIMITED, a Hong Kong corporation ("RLH") and GLOBAL TELEPHONE CONMUNICATION,
INC. a Utah corporation which is in the process of changing its domicile to the
State of Nevada ("GTC or the "COMPANY").
1. RECITALS
This Agreement is entered into with reference to and in contemplation of
the following facts, circumstances and representations:
1. RLH shall upon Closing have fifty-one percent (51%) ownership
and interest in a joint venture company set up in the Peoples'
Republic of China ("PRC") with SHENZHEN NEWSNET CO. LTD. ("SNC")
as a joint venture partner organized under the laws of PRC under
the name of China Global Information Internet Co. Ltd. (the "JOINT
VENTURE").
2. SNC has obtained the Telecommunication Business Operation Approval
(the "APPROVAL") (No.GDSZ P0007) which allows SNC to carry out
Computer Information Internet Service.
3. The JOINT VENTURE shall be established to act as the exclusive
agent for SNC to conduct all telecommunication and internet
business and services in Shenzhen, Guangdong Province, PRC for
SNC.
4. SNC shall enter into an Exclusive Agency Agreement (the "AGENCY
AGREEMENT") with the JOINT VENTURE for the purpose of Clause 3
above and SNC shall obtain all license, permits and approvals
necessary for the validity and implementation of the AGENCY
AGREEMENT.
5. The SHAREHOLDERS are the owners of 10,000 ordinary shares of RLH
which represent all of the issued share capital of RLH (THE "RLH
Shares").
6. GTC desires to issue a total of 5,000,000 shares of its common
stock (the "GTC Shares") to the SHAREHOLDERS in exchange for the
RLH Shares.
7. The SHAREHOLDERS desire to exchange the RLH Shares for the
GTC Shares in accordance with the terms and conditions of this
Agreement.
8. GTC desires to provide funds for the JOINT VENTURE concurrent with
its acquisition of the RLH Shares.
9. RLH desires that this transaction be consummated.
2. EXCHANGE AND ISSUANCE OF SHARES
2.1 EXCHANGE OF GTC SHARES: GTC shall exchange and deliver to the
SHAREHOLDERS, a total of 5,000,000 restricted shares of GTC common stock in
accordance with the allocation set forth in the attached Schedule "A".
2.2 EXCHANGE OF RLH SHARES: At the Closing, the SHAREHOLDERS shall
exchange and deliver to GTC a total of 10,000 ordinary shares of RLH which
represent one hundred percent (100%) of the issued share capital of RLH.
2.3 NATURE OF GTC SHARES: The SHAREHOLDERS shall be issued the GTC Shares
which unless otherwise contractually restricted, shall be subject to a one (1)
year holding period before the GTC Shares are eligible for sale to U.S. persons
or in the U.S. public market. The sale of the GTC Shares will be further limited
by the resale provisions of SEC Rule 144.
2.4 RESTRICTED NATURE OF GTC SHARES: Notwithstanding the one (1) year
holding period for the GTC Shares, each of the SHAREHOLDERS who become
"affiliates" or "control persons" of GTC will be subject to certain limitations
with respect to the sale of their respective GTC Shares. Accordingly, as a
result of such a designation, the sale of the GTC Shares will be limited by SEC
Rule 144.
2.5 PRIVATE SALE ACKNOWLEDGMENT: The parties acknowledge and agree that
the exchange and issuance of the GTC Shares is being undertaken as a private
sale pursuant to Section 4 of the Securities Act of 1933, as amended and Nevada
Revised Statutes Chapters 78 and 90 and is not being transacted via a
broker-dealer and/or in the public market place.
2.6 STATUS OF PRESENT SHARE OWNERSHIP AND CONTEMPLATED SHARE ISSUANCE BY
GTC: The parties hereto acknowledge and agree that in addition to the issuance
of the 5,000,000 GTC Shares, that the parties listed below own certain shares in
GTC and that pursuant to the share exchange contemplated by this Agreement, that
the following will be the resulting share ownership of GTC:
NAME NO. SHARES % OWNERSHIP
1. RLH Shareholders 5,000,000 42.4%
2. Present GTC
NAME NO. SHARES % OWNERSHIP
Shareholders 6,795,935 57.6%
--------- -----
TOTALS 11,795,935 100%
========== =====
2.7 ADDITIONAL SHARE ISSUANCE: The parties further acknowledge and agree
that in further addition to the GTC Shares and the shares held by the present
GTC Shareholders, additional shares will be issued by GTC pursuant to the
financing of the JOINT VENTURE by GTC (the "Additional Shares"). Accordingly,
the percentage share ownership of the parties will be diluted on a pro-rata
basis.
2.8 FUNDS FOR JOINT VENTURE: Concurrent with the exchange of the subject
shares and as a condition thereof, GTC hereby agrees to provide funds as capital
for the JOINT VENTURE in the amount of ONE MILLION THREE HUNDRED THOUSAND
DOLLARS ($1,300,000) U.S. (the "FUNDS").
2.9 DEPOSIT AND RELEASE OF FUNDS IN ESCROW: Prior to the close of the
transaction and as more specifically described herein at paragraph 6, GTC agrees
to deposit the Funds into the Client Trust Account of the named Escrow Holder.
Upon satisfaction of the conditions of the escrow, the Escrow Holder will be
instructed to release and deliver the FUNDS via wire to the account of the JOINT
VENTURE.
3. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The COMPANY represents and warrants to the SHAREHOLDERS and RLH as
follows:
3.1 ORGANIZATION: GTC is a corporation duly incorporated and validly
existing under the laws of Utah and is in good standing with respect to all of
its regulatory filings, or in the alternative with the State of Nevada.
3.2 CAPITALIZATION: The authorized capital of GTC consists of 25,000,000
common shares with a par value $.001 and of which a total of 6,795,935 common
shares are validly authorized and issued by the COMPANY. Said outstanding shares
are fully paid and non-assessable shares and have been issued in full compliance
with all federal and state securities laws. Such issued and outstanding shares
are hereinafter referred to as the "Existing GTC Shares". The authorized capital
of GTC also consists of 5,000,000 shares of preferred stares with a par value of
$.01 per share. No preferred shares are issued and outstanding.
3.3 BOOKS AND RECORDS: All material transactions of GTC have been
promptly and properly recorded or filed in or with its books and records and the
Minute Book of GTC contains records of all meetings and proceeds o the
shareholders and directors thereof.
3.4 LEGAL COMPLIANCE: To the best of its knowledge, GTC is not in breach
of any laws, ordinances, statues, regulations, by-laws, orders or decrees to
which GTC is subject or which apply to it or any of its assets.
3.5 TAX RETURNS: All tax returns and reports of GTC required by law to be
filed prior to the date hereof have been filed and are substantially true,
complete and correct and all taxes and governmental charges have been paid.
3.6 ADVERSE FINANCIAL EVENTS: GTC has not experienced nor is it aware of
any occurrence of event which has had or might reasonably be expected to have a
material adverse effect on its financial condition.
3.7 DISPUTES, CLAIMS AND INVESTIGATIONS: There are no disputes, claims,
actions, suits, judgments, investigations or proceedings outstanding or pending
or to the knowledge of GTC threatened against or affecting GTC at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, bureau or agency.
3.8 EMPLOYEE LIABILITIES: GTC has no liability to former employees or any
liability to any governmental authorities with respect to current or former
employees.
3.9 NO CONFLICTS OR AGREEMENT VIOLATIONS: The execution, delivery and
performance of this Agreement will not conflict with or be in violation of the
articles or by-laws of GTC or of any agreement to which GTC is a party and will
not vie any person or company a right to terminate or cancel any agreement or
right enjoyed by GTC and will not result in the creation or imposition of any
lien, encumbrances or restriction of any nature whatsoever in favor of a third
party upon or against the assets of GTC.
3.10 VALIDLY ISSUED AND AUTHORIZED SHARES: That the GTC Shares will be
validly authorized and issued by the COMPANY, they will be fully paid and
nonassessable and that they will be issued in full compliance with all federal
and state securities laws.
3.11 RESTRICTIVE LEGEND: That the GTC Shares will have a restrictive
legend imposed thereon identifying them as "Restricted Shares" which are subject
to the conditions and limitations of SEC Rule 144 with respect to their sale in
the U.S. public market place.
3.12 CORPORATE AUTHORITY: The officers or representatives of the COMPANY
executing this Agreement represent that they have been authorized to execute
this Agreement pursuant to a resolution of the Board of Directors of the
COMPANY.
3.13 PUBLICLY TRADED COMPANY: THE COMPANY is listed on the NASD OTC
Bulletin Board with the trading symbol "GTCI."
4. REPRESENTATIONS OF SHAREHOLDERS AND RLH
THE SHAREHOLDERS and RLH collectively and individually hereby represent
and warrant to GTC as follows:
4.1 SHARE OWNERSHIP: That the SHAREHOLDERS are the owners, beneficially
and of record, of the RLH Shares and said shares are free and clear of all
liens, encumbrances, claims, charges and restrictions.
4.2 TRANSFERABILITY OF RLH SHARES: That the SHAREHOLDERS have full power
to transfer the RLH Shares to GTC without obtaining the consent or approval of
any other person or governmental authority.
4.3 VALIDLY ISSUED AND AUTHORIZED SHARES: That the RLH Shares are validly
authorized, issued and fully paid, and the RLH Shares have been so issued in
full compliance with the laws of Hong Kong.
4.4 ORGANIZATION: RLH is a corporation duly incorporated and validly
existing under the laws of Hong Kong and is in good standing with respect to all
of its regulatory filings.
4.5 CAPITALIZATION: The authorized capital of RLH consists of 10,000
ordinary shares with a par value of HK$ 1.00 each and all are fully paid
shares.
4.6 BOOKS AND RECORDS: All material transactions of RLH have been
promptly and properly recorded or filed in or with its books and records and the
Minute Book of RLH contains records of all meetings and proceeds of the
shareholders and directors thereof. Save for the entry into the JOINT VENTURE,
RLH has not carried on any business nor incurred any liability to any person.
4.7 LEGAL COMPLIANCE: RLH is not in breach of any laws, ordinances,
statues, regulations, by-laws, orders or decrees to which RLH is subject or
which apply to it or any of its assets.
4.8 TAX RETURNS: All tax returns and reports of RLH required by law to be
filed prior to the date hereof have been filed and are subsequently true,
complete and correct and all taxes and governmental charges have been paid.
4.9 ADVERSE FINANCIAL EVENTS: RLH has not experienced nor is it aware of
any occurrence or event which has had or might reasonably be expected to have a
material adverse effect on its financial condition.
4.10 DISPUTES, CLAIMS AND INVESTIGATIONS: There are no disputes, claims,
actions, suits, judgments, investigations or proceedings outstanding or pending
or to the knowledge or RLH threatened against or affecting RLH at law or in
equity or
before or by any federal, provincial, municipal or other governmental
department, commission, board, bureau or agency.
4.11 EMPLOYEE LIABILITIES: RLH has no liability to former employees or
any liability to any government authorities with respect to current or former
employees.
4.12 NO CONFLICTS OR AGREEMENT VIOLATIONS: The execution, delivery and
performance of this Agreement will not conflict with or be in violation of the
memorandum and articles of associations of RLH or of any agreement to which RLH
is a party and will not give any person or company a right to terminate or
cancel any agreement or right enjoyed by RLH and will not result in the creation
or imposition of any lien, encumbrances or restriction of any nature whatsoever
in favor of a third party upon or against the assets of RLH.
4.13 NO LIENS: That RHL has not received a notice of any assignment,
lien, encumbrance, claim or charge against the RLH Shares.
4.14 CORPORATE AUTHORITY: The officers or representatives of RLH and the
corporate SHAREHOLDERS who are parties to this Agreement represent that they
have been authorized to execute this Agreement pursuant to resolutions of their
respective Boards of Directors.
5. REPRESENTATIONS AND WARRANTIES
OF SHAREHOLDERS ALONE
THE SHAREHOLDERS alone further represent and warrant to GTC as follows
with respect to the GTC Shares:
5.1 FINANCIALLY RESPONSIBLE: That they are financially responsible, able
to meet their obligations and acknowledge that this investment will be
speculative.
5.2 INVESTMENT EXPERIENCE: That they have had experience in the business
of investments in one or more of the following: (i) investment experience with
securities such as stock and bonds; (ii) ownership of interests in partnerships,
new ventures and start-up companies; (iii) experience in business and financial
dealings; and that they can protect their own interests in an investment of
this nature and they do not have an "Investor Representative", as that term is
defined in Regulation D of the Securities Act of 1933 and do not need such an
Investor Representative.
5.3 INVESTMENT RISK: That they are capable of bearing the high degree of
economic risk and burdens of this investment, including but not limited to the
possibility of complete loss of all its investment capital and the lack of
a liquid market, such that it may not be able to liquidate readily the
investment whenever desired or at the then current asking price.
5.4 ACCESS TO INFORMATION: That they have had access to the information
regarding the financial condition of the COMPANY and they were able to request
copies of such information, ask questions of and receive answers from the
COMPANY regarding such information and any other information they desire
concerning the GTC Shares, and all such questions have been answered to their
full satisfaction.
5.5 PRIVATE TRANSACTION: That at no time were they presented with or
solicited by any leaflet, public promotional meeting, circular, newspaper or
magazine article, radio or television advertisement or any other form of general
advertising.
5.6 INVESTMENT INTENT: The GTC Shares are not being purchased with a view
to or for the resale or distribution thereof and they have no present plans to
enter into any contract, undertaking, agreement or arrangement for such resale
or distribution.
5.7 DUE DILIGENCE: That the SHAREHOLDERS shall have completed a due
diligence review of the affairs of GTC and are satisfied with the results of
that review.
6. CLOSING, ESCROW HOLDER AND
CONDITIONS TO CLOSING
6.1 EXCHANGE CLOSING: The closing of the share exchange as
contemplated by this Agreement (the "Closing") shall take place in Hong Kong,
at such time and place as may be agreed among by the parties, but in no event
later than , unless otherwise extended in writing by the parties.
All tax and duties payable in respect of the share exchange, including but not
limited to stamp duty payable pursuant to laws of Hong Kong shall be borne by
the SHAREHOLDERS and the COMPANY in equal shares.
6.2 APPOINTMENT OF ESCROW HOLDER: The parties hereby appoint XXXXXXX X.
XXX, III, ESQ. of San Diego, California as the Escrow Holder pursuant to this
Agreement.
6.3 ESTABLISHMENT OF JOINT VENTURE: The SHAREHOLDERS and RLH shall
deliver to the COMPANY certified true copy of the following documents in
relation the JOINT VENTURE:
1 The Feasibility study;
2. Duly signed Joint Venture Contract and Joint Venture Articles;
3. Letter of Approval issued by the relevant PRC Ministry of Foreign
Trade and Economic Cooperation ("MOFTEC") approving establishment
of the JOINT VENTURE and its Joint Venture Contract and Articles;
4. Certificate of Approval issued by MOFTEC; and
5. Business License of the JOINT VENTURE.
6.4 OPINION OF COUNSEL FOR GTC: The SHAREHOLDERS AND RLH shall have
received an opinion from the legal counsel for GTC, in form and substance
reasonably satisfactory to the SHAREHOLDERS and RLH to the effect that:
1 GTC is a corporation duly organized and legally existing under the
laws of the State of Utah and is in good standing with respect to
all of its regulatory filings, or in the alternative with the
State of Nevada, and
2. This Agreement when duly executed and delivered by GTC,
constitutes a legal, valid and binding obligation of GTC
enforceable against it in accordance with its terms, and
3. The Shares delivered pursuant to the Agreement have been validly
issued are fully paid and nonassessable, and
4. The Existing GTC Shares, the Additional Shares and the GTC Shares
have been legally and validly issued and are in compliance with
all federal and state securities laws including but not limited to
Section 4 of the Securities Act of 1933, as amended, and Nevada
Revised Statutes Chapters 78 and 90.
6.5 OPINION OF COUNSEL FOR SHAREHOLDERS AND RLH WITH RESPECT TO CORPORATE
STATUS AND RLH SHARES: GTC shall have received an opinion from the legal counsel
for the SHAREHOLDERS and RLH in form and substance reasonably satisfactory to
GTC, to the effect that:
1. RLH is a corporation duly organized and legally existing under the
laws of Hong Kong and is in good standing with respect to all of
its regulatory filings.
2. the RLH Shares delivered pursuant to this Agreement have been
validly issued and fully paid and have been originally issued in
full compliance with the laws of the Hong Kong.
3. The SHAREHOLDERS have the fully power to
transfer the RLH Shares to GTC without obtaining the consent or
approval of any other person or governmental agency.
6.6 OPINION OF COUNSEL FOR SHAREHOLDERS AND RLH WITH RESPECT TO JOINT
VENTURE AND LICENSE: GTC shall have received an opinion from the legal counsel
along with the relevant supporting documentation, in form and substance
reasonably satisfactory to GTC, to the effect:
1 The JOINT VENTURE is a joint venture company duly organized and
legally existing under the laws of the Peoples Republic of China
and is in good standing with respect to all of its regulatory
filings.
2. That GTC as a foreign corporation is permitted under the laws of
Hong Kong to be the legal and beneficial owner of the RLH Shares.
3. The JOINT VENTURE has the legal ability to carry out the business
contemplated under to the AGENCY AGREEMENT in Shenzhen, Guangdong
Province, PRC.
4. That SNC is the permitted user of the APPROVAL and said APPROVAL
is free of any and all liens or encumbrances.
5. That SNC has obtained all governmental and regulatory agency
approvals to utilize the APPROVAL and to do business as an
Internet Service Provider.
6. That SNC is permitted to utilize the APPROVAL including appointing
the JOINT VENTURE as an exclusive agent to carry out the business
contemplated to be carried out by SNC under the APPROVAL.
7. That the JOINT VENTURE has obtained all governmental and
regulatory agency approvals to carry out the business as an agent
of SNC pursuant to the AGENCY AGREEMENT.
8. That the ownership of RLH as a subsidiary corporation of GTC will
not affect the ability of the JOINT VENTURE to enter into and
carry out the Agency Agreement.
6.7 ESCROW CONDITIONS AND CLOSING: Prior to the Closing, the following
will be required:
1. DELIVERY OF RLH SHARES: The SHAREHOLDERS shall deliver to the
Escrow Holder the certificate or certificates representing the
10,000 RLH Shares registered in the name of GTC, together with
instruments of transfer and bought and sold notes and such other
documents/information required for effecting transfer of the RLH
Shares as reasonably required by GTC to GTC or its nominee.
2. DELIVERY OF GTC SHARES: GTC shall deliver to the Escrow Holder a
total of 5,000,000 of the GTC Shares registered in the names of
the SHAREHOLDERS as set forth in Schedule "A".
3. DEPOSIT OF FUNDS: GTC shall cause the Funds to be deposited into
the Client Trust Account of the Escrow Holder with instructions to
the Escrow Holder to release the Funds to the JOINT VENTURE upon
the close of the transaction.
4. LEGAL OPINIONS AND DOCUMENTS: Both parties shall deliver to the
Escrow Holder such legal opinions and other documents as are
required by the terms and conditions of this Agreement.
5. REQUISITE CORPORATE RESOLUTIONS: Each party shall deliver to the
Escrow Holder certified copies of resolutions from their
respective Boards of Directors authorizing the subject transaction
and for the RLH such further resolutions for the transfer of the
RLH Shares to GTC or its nominee and for change of
directors/officers of RLH as required by GTC.
6. SHAREHOLDER APPROVAL: GTC shall deliver to the Escrow Holder
documentation evidencing the GTC shareholder approval of the
subject transaction.
6.8 Close of TRANSACTION: The subject transaction shall "close" upon the
satisfaction of the above conditions.
7. COOPERATION, ARBITRATION, INTERPRETATION,
MODIFICATION AND ATTORNEY FEES
7.1 COOPERATION OF PARTIES: The parties further agree that they will do
all things necessary to accomplish and facilitate the purpose of this Agreement
and that they will sign and execute any and all documents necessary to bring
about and perfect the purposes of this Agreement.
7.2 ARBITRATION: The parties hereby submit all controversies, claims and
maters of difference arising out of this Agreement to arbitration in Las Vegas,
Nevada according to the rules and practices of the American Arbitration
Association from time to time in force. This submission and agreement to
arbitrate shall be specifically enforceable. The Agreement shall further be
governed by the laws of the State of Nevada.
7.3 INTERPRETATION OF AGREEMENT: The parties agree that should any
provision of this Agreement be found to be ambiguous in any way, such ambiguity
shall not be resolved by construing such provisions or any part of or the entire
Agreement in favor of or against any party herein, but rather by construing the
terms of this Agreement fairly and reasonable in accordance with their generally
accepted meaning.
7.4 MODIFICATION OF AGREEMENT: This Agreement may be amended or modified
in any way at any time by an instrument in writing stating the manner in which
it is amended or modified and signed by each of the parties hereto. Any such
writing amending or modifying this Agreement shall be attached to and kept with
this Agreement.
7.5 ATTORNEY FEES: If any legal action or any arbitration or other
proceedings is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of the Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that
action of proceedings, in addition to any other relief to which it may be
entitled.
7.6 ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement and
understanding of the parties hereto with respect to the matters herein set
forth, and all prior negotiations, writings and understandings relating to the
subject matter of this Agreement are merged herein and are superseded and
canceled by this Agreement.
7.7 COUNTERPARTS: This Agreement may be signed in one or more
counterparts.
7.8 FACSIMILE TRANSMISSION SIGNATURES: A signature received pursuant to a
facsimile transmission shall be sufficient to bind a party to this Agreement.
DATED. April 16, 1998 /s/ XXXXX XXXX WAH NG
---------------------------------
XXXXX XXXX XXX XX
SINO CONCOURSE LIMITED
FOR AND ON BEHALF OF
SINO CONCOURSE LIMITED
DATED: April 20, 1998 By: /s/ LI HO SHAN
---------------------------------
Authorized Signature(s)
LI HO SHAN
Director
SINOWAY TECHNOLOGY LIMITED
FOR AND ON BEHALF OF
SINOWAY TECHNOLOGY LMITED
DATED: April 20, 1998 By: /s/ LI HO SHAN
------------------------------
Authorized Signature(s)
LI HO SHAN
Director
REGENT LUCK HOLDINGS LIMITED
DATED: April 16, 1998 By: /s/ XXXXX XXXX XXX XX
------------------------
XXXXX XXXX WAH NG
Director
GLOBAL TELEPHONE
COMMUNICATION, INC.
DATED: April 16, 1998 By: /s/ XXXXX XXXX
------------------------
XXXXX XXXX
President
SCHEDULE "A"
NAME RLH SHARES GTC SHARES
1. Xxxxx Xxxx Xxx Xx 2,500 1,250,000
2. Sino Concourse
Limited 3,750 1,875,000
3. Sinoway Technology
Limited 3,750 1,875,000
------ ---------
TOTALS 10,000 5,000,000
====== =========
