STOCK PURCHASE AGREEMENT
by and among
TELECOM COMMUICATIONS, INC.
as Acquiror
ARRAN SERVICES LIMITED
as Acquiree
and
Xxxx Xxxx Chiyuan
the Sole Shareholder of
ARRAN SERVICES LIMITED
September 30, 2003
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into this
30th day of September 2003 by and among TELECOM COMMUNICATIONS, INC., an Indiana
corporation (hereinafter referred to as "TCOM"), ARRAN SERVICES LIMITED, a
British Virgin Island corporation (hereinafter referred to as the "Company"),
and Xxxx Xxxx Chiyuan, the sole shareholder of the Company (hereinafter referred
to as the "Shareholder").
RECITALS:
A. The Shareholder owns all of the issued and outstanding shares
of the capital stock of the Company.
B. TCOM is willing to acquire all of the issued and outstanding
capital stock of the Company, making the Company a
wholly-owned subsidiary of TCOM, and the Shareholder desires
to exchange all of his shares of the Company's capital stock
for shares of TCOM authorized but unissued shares of Common
Stock as hereinafter provided.
C. The Company and its subsidiaries are doing business in China
and related territories with an address of 00 Xxxxxx Xxxx,
Xxxxx, Xxxxxxxxx, XX 000000, Xxxxx. The Company, through
Superb Quality Limited, owns 80% of StarEastNet, Limited and
directly owns 80% IC Star East MMS, Limited.
D. It is the intention of the parties hereto that: (i) TCOM shall
acquire all of the issued and outstanding capital stock of the
Company in exchange solely 1,000,000 registered shares and
22,800,000 restricted shares of TCOM authorized but unissued
Common Stock set forth below (the "Exchange"); and (ii) the
Exchange shall qualify as a transaction in securities exempt
from registration or qualification under the Securities Act of
1933, as amended, (the "Act") and under the applicable
securities laws of the state or jurisdiction where the
Shareholders reside.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
SECTION 1. EXCHANGE OF SHARES
1.1 Exchange of Shares. TCOM and the Shareholder hereby agree that the
Shareholder shall, on the Closing Date on September 30, 2003, exchange all of
his issued and outstanding shares of the capital stock of the Company (the
"Arran Shares") for 1 million registered and free trading shares and 22,800,000
newly issued shares of TCOM Common Stock, $.001 par value (the "TCOM Shares").
1.2 Delivery of Arran Shares. On the Closing Date, the Shareholder will
deliver to TCOM the certificates representing the Arran's Shares, duly endorsed
(or with executed stock powers) so as to make TCOM the sole owner thereof. TCOM
shall deliver to the Shareholder the TCOM Shares to be delivered to the
Shareholder or as the shareholder directs so as to make the Shareholder or his
nominee the sole owner thereof.
1.3 Investment Intent. 22.8 million newly issued shares of TCOM common
stock have not been registered under the Securities Act of 1933, as Amended, and
may not be resold unless the TCOM Shares are registered under the Act or an
exemption from such registration is available. The Shareholder represents and
warrants that he is acquiring the TCOM Shares for his own account, for
investment, and not with a view to the sale or distribution of such Shares. Each
certificate representing the TCOM Shares will have a legend thereon
incorporating language as follows:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"). The shares have been acquired for investment and may
not be sold or transferred in the absence of an effective
Registration Statement for the shares under the Act unless in
the opinion of counsel satisfactory to the Company,
registration is not required under the Act."
1.4. Conditions Precedent. Completion of the Exchange shall be conditional upon
(a) the Shareholder completing a review of the financial, trading and legal
position of TCOM in respect of TCOM; (b) TCOM has obtained all the necessary
consent, authorization and approval from the relevant regulatory authorities,
its board of directors and/or its shareholders; (c) receipt by the Shareholder
of a legal opinion that the Exchange qualifies as a tax-free reorganization
under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER
The Company and the Shareholder hereby represent and warrant as
follows:
2.1 Organization and Good Standing; Ownership of Shares. The Company
and its subsidiaries are corporations duly organized, validly existing and in
good standing under the laws of British Virgin Island and China, and is entitled
to own or lease its properties and to carry on its business as and in the places
where such properties are now owned, leased or operated and such business is now
conducted. The Company is duly licensed or qualified and in good standing as a
foreign corporation where the character of the properties owned by it or the
nature of the business transacted by it make such licenses or qualifications
necessary. There are no outstanding subscriptions, rights, options, warrants or
other agreements obligating either the Company or the Shareholder to issue, sell
or transfer any stock or other securities of the Company.
2.2 Ownership of Capital Stock. The Shareholder is the beneficial owner
of record and beneficially of all of the shares of capital stock of the Company,
all of which shares are free and clear of all rights, claims, liens and
encumbrances, and have not been sold, pledged, assigned or otherwise transferred
except pursuant to this Agreement.
2.3 Financial Statements, Books and Records. There has been previously
delivered to TCOM the unaudited balance sheet of the Company as at September 30,
2003 (the "Balance Sheet"). The Balance Sheet is true and accurate and fairly
represents the financial position of the Company as at such date, and has been
prepared in accordance with generally accepted accounting principles
consistently applied.
2.4 No Material Adverse Changes. Since the date of the Balance
Sheet there has not been:
(i) any material adverse change in the assets, operations,
condition (financial or otherwise) or prospective business of the Company;
(ii) any damage, destruction or loss materially affecting the
assets, prospective business, operations or condition (financial or otherwise)
of the Company, whether or not covered by insurance;
(iii) any declaration, setting aside or payment of any
dividend or distribution with respect to any redemption or repurchase of the
Company's capital stock;
(iv) any sale of an asset (other than in the ordinary course
of business) or any mortgage or pledge by the Company of any properties or
assets; or
(v) adoption of any pension, profit sharing, retirement, stock
bonus, stock option or similar plan or arrangement.
2.5 Taxes. The Company has prepared and filed all appropriate tax
returns for all periods prior to and through the date hereof for which any such
returns have been required to be filed by it and has paid all taxes shown to be
due by said returns or on any assessments received by it or has made adequate
provision for the payment thereof.
2.6 Compliance with Laws. The Company has complied with all federal,
state, county and local laws, ordinances, regulations, inspections, orders,
judgments, injunctions, awards or decrees applicable to it or its business
which, if not complied with, would materially and adversely affect the business
of the Company.
2.7 No Breach. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the Articles of Incorporation or
By-Laws of the Company;
(ii) violate, conflict with or result in the breach of any of
the terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract or other agreement to
which the Company is a party or by or to which it or any of its assets or
properties may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree
of any court, arbitrator or governmental or regulatory body against, or binding
upon, the Company, or upon the properties or business of the Company; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions contemplated herein which could have
a materially adverse effect on the business or operations of the Company.
2.8 Actions and Proceedings. There is no outstanding order,
judgment, injunction, award or decree of any court, governmental or regulatory
body or arbitration tribunal against or involving the Company.
2.9 Brokers or Finders. No broker's or finder's fee will be payable by
the Company in connection with the transactions contemplated by this Agreement,
nor will any such fee be incurred as a result of any actions by the Company or
the Shareholders.
2.10 Real Estate. The Company neither owns real property nor is a
party to any leasehold agreement.
2.11 Tangible Assets. The Company has full title and interest in all
machinery, equipment, furniture, leasehold improvements, fixtures, vehicles,
structures, owned or leased by the Company, any related capitalized items or
other tangible property material to the business of the Company (the "Tangible
Assets"). The Company holds all rights, title and interest in all the Tangible
Assets owned by it on the Balance Sheet or acquired by it after the date of the
Balance Sheet, free and clear of all liens, pledges, mortgages, security
interests, conditional sales contracts or any other encumbrances. All of the
Tangible Assets are in good operating condition and repair taking into account
the age of the tangible assets and subject to fair wear and tear, and are usable
in the ordinary course of business of the Company and conform to all applicable
laws, ordinances and governmental orders, rules and regulations relating to
their construction and operation.
2.12 Liabilities. The Company does not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued or absolute, contingent or otherwise, including,
without limitation, any liability on account of taxes, any other governmental
charge or lawsuit (all of the foregoing collectively defined to as
"Liabilities"), which were not fully, fairly and adequately reflected on the
Balance Sheet. As of the Closing Date, the Company will not have any
Liabilities, other than Liabilities fully and adequately reflected on the
Balance Sheet, except for Liabilities incurred in the ordinary course of
business.
2.13 Operations of the Company. From the date of the Balance Sheet on
August 31, 2003 and through the Closing Date on September 30, 2003 hereof the
Company has not and will not have:
(i) incurred any indebtedness for borrowed money;
(ii) declared or paid any dividend or declared or made any
distribution of any kind to any shareholder, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any shares in its
capital stock; (Note: For BVI companies, it is referred to as share capital not
capital stock which is applicable to US corporations).
(iii) made any loan or advance to any shareholder, officer,
director, employee, consultant, agent or other representative or made any other
loan or advance otherwise than in the ordinary course of business;
(iv) except in the ordinary course of business, incurred or
assumed any indebtedness or liability (whether or not currently due and
payable);
(v) disposed of any assets of the Company except in the
ordinary course of business; or
(vi) materially increased the annual rate of compensation
of any executive employee of the Company;
(vii) increased, terminated, amended or otherwise modified any
plan for the benefit of employees of the Company;
(viii) issued any equity securities or rights to acquire such
equity securities; or
(ix) except in the ordinary course of business, entered into
or modified any contract, agreement or transaction.
2.14 Capitalization. The authorized capital stock of the Company
consists of 50,000 shares of common stock, US$1.00 par value, of which 100
shares are presently issued and outstanding. Neither the Company nor the
Shareholder has granted, issued or agreed to grant, issue or make available any
warrants, options, subscription rights or any other commitments of any character
relating to the issued or unissued shares of capital stock of the Company except
the Exchange pursuant to this Agreement.
2.15 Full Disclosure. No representation or warranty by the Company or
the Shareholder in this Agreement or in any document or schedule to be delivered
by them pursuant hereto, and no written statement, certificate or instrument
furnished or to be furnished to TCOM pursuant hereto or in connection with the
negotiation, execution or performance of this Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit to state
any fact necessary to make any statement herein or therein not materially
misleading or necessary to a complete and correct presentation of all material
aspects of the businesses of the Company.
2.16 Representations and Warranties on Closing Date. The
representations and warranties contained in this Section 2 shall be true and
complete on the Closing Date on September 30, 2003 with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF TCOM
TCOM hereby represents and warrants to the Company and the Shareholders
as follows:
3.1 Organization and Good Standing. TCOM is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Indiana and is entitled to own or lease its properties and to carry on its
business as and in the places where such properties are now owned, leased, or
operated and such business is now conducted. The authorized capital stock of
TCOM consists of 80,000,000 shares of Common Stock, of which 13,399,000 shares
are presently issued and outstanding and 20,000,000 shares of preferred stock,
of which none is issued and outstanding. TCOM is duly licensed or qualified and
in good standing as a foreign corporation where the character of the properties
owned by TCOM or the nature of the business transacted by it make such license
or qualification necessary. TCOM does not have any subsidiaries.
3.2 The TCOM Shares. The TCOM Shares to be issued to the Shareholders
have been or will have been duly authorized by all necessary corporate and
stockholder actions and, when so issued in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable.
3.3 Financial Statements; Books and Records. There has been previously
delivered to the Company, the audited balance sheet of TCOM as at September 30,
2002 and the unaudited balance sheet as at June 30, 2003 (the "TCOM Balance
Sheets") and the related statements of operations for the periods then ended
(the "Financial Statements"). The Financial Statements are true and accurate and
fairly represent the financial position of the Company as at such dates and the
results of its operations for the periods then ended, and have been prepared in
accordance with generally accepted accounting principles consistently applied.
3.4 No Material Adverse Changes. Since the date of the TCOM Balance
Sheet on June 30, 2003 and except as otherwise disclosed in TCOM reports or
filings made under the Securities Exchange Act of 1934, there has not been:
(i) any material adverse change in the assets, operations,
condition (financial or otherwise) or prospective business of TCOM;
(ii) any damage, destruction or loss materially affecting the
assets, prospective business, operations or condition (financial or otherwise)
of TCOM, whether or not covered by insurance;
(iii) any declaration, setting aside or payment of any
dividend or distribution with respect to any redemption or repurchase of TCOM's
capital stock;
(iv) any sale of an asset (other than in the ordinary course
of business) or any mortgage or pledge by TCOM of any properties or assets; or
(v) adoption of any pension, profit sharing, retirement, stock
bonus, stock option or similar plan or arrangement.
3.5 Taxes. TCOM has prepared and filed all appropriate federal, state
and local tax returns of every kind and category (including, without limitation,
income taxes, estimated taxes, excise taxes, sales taxes, inventory taxes, use
taxes, gross receipt taxes, franchise taxes and property taxes) for all periods
prior to and through the date hereof for which any such returns have been
required to be filed by it or the failure to make such filings and resulting
liability would not be material relative to the results of operations of TCOM.
TCOM has paid all taxes shown to be due by the said returns or on any
assessments received by it or has made adequate provision for the payment
thereof.
3.6 Compliance with Laws. TCOM has complied with all federal, state,
county and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to their businesses, including Federal
and State securities laws, which, if not complied with, would materially and
adversely affect the business of TCOM or the trading market for the shares of
TCOM Common Stock.
3.7 No Breach. The execution, delivery and performance of this
Agreement and the consummation of The transactions contemplated hereby will not:
(i) violate any provision of the Articles of Incorporation or
By-Laws of TCOM;
(ii) violate, conflict with or result in the breach of any of
the terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract or other agreement to
which TCOM is a party or by or to which it or any of its assets or properties
may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree
of any court, arbitrator or governmental or regulatory body against, or binding
upon, TCOM or upon the properties or business of TCOM; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions contemplated herein which could have
a material adverse effect on the business or operations of TCOM.
3.8 Actions and Proceedings. There is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against or involving TCOM. Mas Financial Corp. and Xxxxx
Xxxx filed a lawsuit against the Company in August 2002 in the Vanderburgh
County alleging breach of contract. TCOM believes this lawsuit has no merits.
The suit is being strongly contested and counterclaim was filed on October 15,
2002 against Xxxxx Xxxx alleging fraud and breach of contract. TCOM warrants
that this lawsuit will not have any material impact on the operations of TCOM or
operations under the Company in China. Other than that, there is no action, suit
or claim or legal, administrative or arbitral proceeding or (whether or not the
defense thereof or liabilities in respect thereof are covered by insurance)
pending or threatened against or involving TCON or any of its properties or
assets. Except as set forth on Schedule 3.8, there is no fact, event or
circumstances that may give rise to any suit, action, claim, investigation or
proceeding.
3.9 Brokers or Finders. No broker's or finder's fee will be payable by
TCOM in connection with the transactions contemplated by this Agreement, nor
will any such fee be incurred as a result of any actions by TCOM.
3.10 Assets The Company has full title and interest in all machinery,
equipment, furniture, leasehold improvements, fixtures, vehicles, structures,
owned or leased by the Company, any related capitalized items or other tangible
property material to the business of the Company (the "Tangible Assets"). The
Company holds all rights, title and interest in all the Tangible Assets owned by
it on the Balance Sheet or acquired by it after the date of the Balance Sheet,
free and clear of all liens, pledges, mortgages, security interests, conditional
sales contracts or any other encumbrances. All of the Tangible Assets are in
good operating condition and repair taking into account the age of the tangible
assests and subject to fair wear and tear, and are usable in the ordinary course
of business of the Company and conform to all applicable laws, ordinances and
governmental orders, rules and regulations relating to their construction and
operation.
3.11 Liabilities. TCOM does not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued or absolute, contingent or otherwise, including,
without limitation, any liability on account of taxes, any other governmental
charge or lawsuit (all of the foregoing collectively defined to as
"Liabilities"), which were not fully, fairly and adequately reflected on the
Balance Sheet. As of the Closing Date, TCOM will not have any Liabilities, other
than Liabilities fully and adequately reflected on the TCOM Balance Sheet or
TCOM balance sheet dated June 30, 2003, except for Liabilities incurred in the
ordinary course of business.
3.12 Operations of TCOM. Except as set forth on Schedule 3.11 or in
TCOM reports or filings made under the Securities Exchange Act of 1934, since
the date of the TCOM Balance Sheet and through the Closing Date hereof, TCOM has
not and will not have:
(i) incurred any indebtedness for borrowed money;
(ii) declared or paid any dividend or declared or made any
distribution of any kind to any shareholder, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any shares in its
capital stock;
(iii) made any loan or advance to any shareholder, officer,
director, employee, consultant, agent or other representative or made any other
loan or advance otherwise than in the ordinary course of business;
(iv) except in the ordinary course of business, incurred or
assumed any indebtedness or liability (whether or not currently due and
payable);
(v) disposed of any assets of TCOM except in the ordinary
course of business; or
(vi) materially increased the annual level of compensation
of any executive employee of TCOM;
(vii) increased, terminated amended or otherwise modified any
plan for the benefit of employees of TCOM;
(viii) issued any equity securities or rights to acquire such
equity securities; or
(ix) except in the ordinary course of business, entered into
or modified any contract, agreement or transaction.
3.13 Authority to Execute and Perform Agreements. TCOM has the full
legal right and power and all authority and approval required to enter into,
execute and deliver this Agreement and to perform fully their obligations
hereunder. This Agreement has been duly executed and delivered and is the valid
and binding obligation of TCOM, enforceable in accordance with its terms, except
as may be limited by bankruptcy, moratorium, insolvency or other similar laws
generally affecting the enforcement of creditors' rights. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and the performance by TCOM of this Agreement, in accordance with its
respective terms and conditions will not:
(i) require the approval or consent of any governmental or
regulatory body, the Stockholders of TCOM, or the approval or consent of any
other person;
(ii) conflict with or result in any breach or violation of any
of the terms and conditions of, or constitute (or with any notice or lapse of
time or both would constitute) a default under, any order, judgment or decree
applicable to TCOM, or any instrument, contract or other agreement to which TCOM
is a party or by or to which TCOM is bound or subject; or
(iii) result in the creation of any lien or other
encumbrance on the assets or properties of TCOM.
3.14 Delivery of Periodic Reports; Compliance with 1934 Act. TCOM has
provided the Company and the Shareholder with all of its Periodic Reports filed
with the Securities and Exchange Commission since June 24, 2001. TCOM has filed
all required Periodic Reports and is in compliance with its reporting
obligations under the Securities Exchange Act of 1934. All reports filed
pursuant to such Act are complete and correct in all material respects. All
material contracts relative to TCOM are included in the Periodic Reports. All
material contracts and commitments for the provision or receipt of services or
involving any obligation on the part of TCOM are included as exhibits to such
periodic reports or are listed on Schedule 3.13 hereto.
3.15 Capitalization. The authorized capital stock of TCOM consists of
80,000,000 shares of common stock, $.001 par value, of which 13,499,00 shares
are presently issued and outstanding and 20,000,000 shares of preferred stock,
of which none is issued and outstanding. Except as indicated in Schedule 3.14
hereto, TCOM has not granted, issued or agreed to grant, issue or make available
any warrants, options, subscription rights or any other commitments of any
character relating to the issued or unissued shares of capital stock of TCOM.
3.16 Full Disclosure. No representation or warranty by TCOM in this
Agreement or in any document or schedule to be delivered by it pursuant hereto,
and no written statement, certificate or instrument furnished or to be furnished
to the Company or the Shareholders pursuant hereto or in connection with the
execution or performance of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary
to make any statement herein or therein not materially misleading or necessary
to a complete and correct presentation of all material aspects of the business
of TCOM.
3.17 Representations and Warranties on Closing Date. The
representations and warranties contained in this Section 3 shall be true and
complete on the Closing Date with the same force and effect as through such
representations and warranties had been made on and as of the Closing Date on
September 30, 2003.
SECTION 4. COVENANTS OF COMPANY AND SHAREHOLDER
The Company and the Shareholder covenant to TCOM as follows:
4.1 Conduct of Business. From the date hereof through the Closing Date,
the Shareholder and The Company shall conduct its business in the ordinary
course.
4.2 Preservation of Business. From the date hereof through the Closing
Date, the Shareholder and the Company shall use its best efforts to preserve its
business organization intact, keep available the services of its present
employees, consultants and agents, maintain its present suppliers and customers
and preserve its goodwill.
4.3 Litigation. The Company shall promptly notify TCOM of any lawsuits,
claims, proceedings or investigations which after the date hereof are threatened
or commenced against the Company or against any officer, director, employee,
consultant, agent, shareholder or other representative with respect to the
affairs of the Company.
4.4 Continued Effectiveness of Representations and Warranties. From the
date hereof through the Closing Date, the Shareholder and the Company shall
conduct its business in such a manner so that the representations and warranties
contained in Section 2 shall continue to be true and correct on and as of the
Closing Date and as if made on and as of the Closing Date, and shall:
(i) promptly give notice to TCOM of any event, condition or
circumstance occurring from the date hereof through the Closing Date which would
render any of the representations or warranties materially untrue, incomplete,
insufficient or constitute a violation or breach of this Agreement; and
(ii) supplement the information contained herein in order that
the information contained herein is kept current, complete and accurate in all
material respects.
SECTION 5. COVENANTS OF TCOM
TCOM covenants to the Company and the Shareholder as follows:
5.1 Conduct of Business. From the date hereof through the Closing Date,
TCOM shall conduct its business in the ordinary course and, without the prior
written consent of the Company, shall ensure that TCOM does not undertake any of
the actions specified in Section 3.12 hereof.
5.2 Preservation of Business. From the date hereof through the Closing
Date, TCOM shall preserve its business organization intact and use its best
efforts to preserve TCOM goodwill.
5.3 Litigation. TCOM shall promptly notify the Company of any lawsuits,
claims, proceedings or investigations that after the date hereof are threatened
or commenced against TCOM or against any officer, director, employee,
consultant, agent, or stockholder with respect to the affairs of TCOM.
5.4 Continued Effectiveness of Representations and Warranties. From the
date hereof through the Closing Date, TCOM shall conduct its business in such a
manner so that the representations and warranties contained in Section 3 shall
continue to be true and correct on and as of the Closing Date and as if made on
and as of the Closing Date, and shall:
(i) promptly give notice to the Company of any event,
condition or circumstance occurring from the date hereof through the Closing
Date which would render any of the representations or warranties materially
untrue, incomplete, insufficient or constitute a violation or breach of this
Agreement; and
(ii) supplement the information contained herein in order that
the information contained herein is kept current, complete and accurate in all
material respects.
5.5 No Other Negotiations. From the date hereof until the earlier of
the termination of this Agreement or consummation of this Agreement, TCOM will
not permit and will not authorize any officer or director of TCOM or any other
person on its behalf to, directly or indirectly, solicit, encourage, negotiate
or accept any offer from any party concerning the possible disposition of all or
any substantial portion of the capital stock by merger, sale or any other means
or any other transaction that would involve a change in control of TCOM, or any
transaction in which TCOM contemplates issuing equity or debt securities.
SECTION 6. COVENANTS
6.1 Corporate Examinations and Investigations. Prior to the Closing
Date, the parties acknowledge that they have been entitled, through their
employees and representatives, to make such investigation of the assets,
properties, business and operations, books, records and financial condition of
the other as they each may reasonably require. No investigation by a party
hereto shall, however, diminish or waive in any way any of the representations,
warranties, covenants or agreements of the other party under this Agreement.
6.2 Expenses. Each party hereto agrees to pay its own costs and
expenses incurred in negotiating this Agreement and consummating the
transactions described herein.
6.3 Further Assurances. The parties shall execute such documents and
other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. Each such party shall use its best efforts to fulfill or obtain the
fulfillment of the conditions to the Closing on September 30, 2003, including,
without limitation, the execution and delivery of any documents or other papers,
the execution and delivery of which are necessary or appropriate to the Closing.
6.4 Confidentiality. In the event the transactions contemplated by this
Agreement are not consummated, each of the parties hereto agree to keep
confidential any information disclosed to each other in connection therewith for
a period of one (1) year from the date hereof; provided, however, such
obligation shall not apply to information which:
(i) at the time of disclosure was public knowledge;
(ii) after the time of disclosure becomes public knowledge (except due to the
action of the receiving party);
(iii) the receiving party had within its possession at the
time of disclosure.
(iv) the disclosure of which is required by law, the SEC or other competent
authority;
(v) which at the time of disclosure by one party written consents have been
obtained from the other parties.
SECTION 7. CONDITIONS PRECEDENT TO THE OBLIGATION OF TCOM TO CLOSE
The obligation of TCOM to enter into and complete the Agreement is
subject, at the option of TCOM, to the fulfillment on or prior to the Closing
Date of the following conditions, any one or more of which may be waived by TCOM
in writing.
7.1 Representations and Covenants. The representations and warranties
of the Company and the Shareholders contained in this Agreement shall be true in
all material respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date. The Company and the
Shareholders shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by the Company and the Shareholders on or prior to the Closing Date. The
Company and the Shareholders shall have delivered to TCOM, if requested, a
certificate, dated the Closing Date, to the foregoing effect.
7.2 Governmental Permits and Approvals; Corporate Resolutions. Any and
all permits and approvals from any governmental or regulatory body required for
the lawful consummation of the Closing shall have been obtained. The Board of
Directors of the Company shall have approved the transactions contemplated by
this Agreement and the Company shall have delivered to TCOM, if requested by
TCOM, resolutions by its Board of Directors, certified by the Secretary of the
Company, authorizing the transactions contemplated by this Agreement.
7.3 Satisfactory Business Review. TCOM shall have satisfied itself,
after TCOM and its representatives have completed the review of the business of
the Company contemplated by this Agreement, that none of the information
revealed thereby or in the Balance Sheet has resulted in, or in the reasonable
opinion of TCOM may result in, a material adverse change in the assets,
properties, business, operations or condition (financial or otherwise) of the
Company.
7.4 Certificate of Good Standing. TCOM shall receive a certificate of
good standing dated 10 business days after the Closing Date to the effect that
the Company is in good standing under the laws of its jurisdictions of
incorporation.
7.5 Stock Certificates: At the Closing, the Shareholder will deliver
the certificates representing the Arran Shares, duly endorsed (or with executed
stock powers) so as to make TCOM the sole owner thereof within 10 business days.
7.8 Other Documents. The Company and the Shareholder shall have
delivered such other documents, instruments and certificates, if any, as are
required to be delivered pursuant to the provisions of this Agreement or which
may be reasonably requested in furtherance of the provisions of this Agreement.
SECTION 8. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY AND
SHAREHOLDERS TO CLOSE
The obligation of the Company and the Shareholder to enter into and
complete the agreement is subject, at the option of the Company and the
Shareholder, to the fulfillment on or prior to the Closing Date of the following
conditions, any one or more of which may be waived in writing by the Company.
8.1 Representations and Covenants. The representations and warranties
of TCOM contained in this Agreement shall be true in all material respects on
the Closing Date with the same force and effect as though made on and as of the
Closing Date. TCOM shall have performed and complied with all covenants and
agreements required by the Agreement to be performed or complied with by TCOM on
or prior to the Closing Date. TCOM will deliver to the Company and the
Shareholder, if requested, a certificate, dated the Closing Date and signed by
an executive officer of TCOM, to the foregoing effect within 10 business days
after the closing.
8.2 Governmental Permits and Approvals; Corporate Resolutions. Any and
all permits and approvals from any governmental or regulatory body required for
the lawful consummation of the Agreement shall have been obtained. The Board of
Directors of TCOM shall have approved the transactions contemplated by this
Agreement, and TCOM will deliver to the Company and the Shareholder, if
requested, resolutions by their Board of Directors certified by the Secretary of
TCOM authorizing the transactions contemplated by this Agreement within 10
business days after the closing.
8.3 Legal Opinion. TCOM is to provide to the Company and the Shareholder a
Legal opinion that the Exchange qualifies as a tax-free reorganization under
Section 368(1)(1)(B) of the Internal Revenue Code of 1986, as amended.
8.4 Third Party Consents. All consents, permits and approvals from
parties to any contracts, loan agreements or other agreements with TCOM which
may be required in connection with the performance by TCOM of their obligations
under such contracts or other agreements after the Closing shall have been
obtained.
8.5 Satisfactory Business Review. The Company and the Shareholder
shall have satisfied themselves, after the Company, the Shareholder and their
representatives and advisers have completed the review of business of TCOM and
the information provided hereby or in connection herewith, or following any
discussions with management or representatives of TCOM that none of the
information revealed thereby has resulted in or in the reasonable opinion of the
Company may result in a material adverse change in the assets, properties,
business, operations or condition (financial or otherwise) of TCOM.
8.6 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body or instituted or
threatened by any governmental or Regulatory body to restrain, modify or prevent
the carrying out of the transactions contemplated hereby or to seek damages or
a discovery order in connection with such Transactions, or which has or may in
the reasonable opinion of the Company and the Shareholder, have a materially
adverse effect on the assets, properties, business, operations or condition
(financial or otherwise) of TCOM.
8.7 Certificate of Good Standing. The Company and the Shareholder shall
receive a certificate of good standing within 10 business days after
the Closing Date to the effect that the Company is in good standing
under the laws of its jurisdictions of incorporation.
8.8 Stock Certificates. At the Closing, the Shareholder shall receive
certificates representing the TCOM Shares to be received pursuant hereto and
subject to the conditions previously described within 10 business days.
8.9 Other Documents. TCOM shall have delivered such other instruments,
documents and certificates, if any, as are required to be delivered pursuant to
the provisions of this Agreement or which may be reasonably requested in
furtherance of the provisions of this Agreement.
SECTION 9. PLAN OF REORGANIZATION
9.1 Board of Directors. Current Board of Directors of TCOM will
stay and Xxxx Xxxx Chiyuan, Chairman of the Company, will be
assigned as Chairman of TCOM board of directors. The Company
will appoint two more directors to the Board after the
closing.
9.2 Operation. Xxxx Xxxx Chiyuan will be responsible all China
operations under the Company. Current management of TCOM shall
remain in place and be responsible for the day-to-day
operation of the merged corporation from its present
California headquarters. Current management of TCOM will be
responsible for the SEC filing, financial reporting,
public/investor relations and fund raising. These operations
under the Company will be required to report their financial
statements on a monthly basis to TCOM financial management
team. Related supporting documents will be collected and
submitted to TCOM financial management team.
9.3 Dividend. No dividend from China operations under the Company
will be distributed without consent from management of such
said operations.
9.4 Name Change. After the closing, current management of TCOM will
change its company Name to Star East Media Corporation and move
the company registration to Nevada and increase its authorized
shares of its common stock from 80 million to 500 million shares
and 20 million preferred stock.
9.5 Further Funding Commitment TCOM has received term sheets for US$5
million funding from Era Capital Management upon such said merger.
TCOM has also received terms sheets for US$ 5 million from
vFinance, Inc. in a format of credit of Equity Line. Such fund
raise will be finished in a timely manner with assistance from the
Company.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF TCOM
Notwithstanding any right of the Company and the Shareholders fully to
investigate the affairs of TCOM, the former shall have the right to rely fully
upon the representations, warranties, covenants and agreements of TCOM contained
in this Agreement or in any document delivered by TCOM or any of its
representatives, in connection with the transactions contemplated by this
Agreement. All such representations, warranties, covenants and agreements shall
survive the execution and delivery hereof and the Closing Date hereunder for
twelve (12) months following the Closing.
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS
Notwithstanding any right of TCOM fully to investigate the affairs of
the Company, TCOM has the right to rely fully upon the representations,
warranties, covenants and agreements of the Company and the Shareholder
contained in this Agreement or in any document delivered to TCOM by the Company
or the Shareholder or any of their representatives in connection with the
transactions contemplated by this Agreement. All such representations,
warranties, covenants and agreements shall survive the execution and delivery
hereof and the Closing Date hereunder for twelve (12) months following the
Closing.
SECTION 12. INDEMNIFICATION
12.1 Obligation of TCOM to Indemnify. Subject to the limitations on the
survival of representations and warranties contained in Section 9, TCOM hereby
agrees to indemnify, defend and hold harmless the Company and the Shareholder
from and against any losses, liabilities, damages, deficiencies, costs or
expenses (including interest, penalties and reasonable attorneys' fees and
disbursements) (a "Loss") based upon, arising out of or otherwise due to any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of TCOM contained in this Agreement or in any document or other
writing delivered pursuant to this Agreement.
12.2 Obligation of the Company and the Shareholder to Indemnify. Subject to the
limitations on the survival of representations and warranties contained in
Section 10, the Company and the Shareholder agree to indemnify, defend and hold
harmless TCOM from and against any Loss, based upon, arising out of or otherwise
due to any inaccuracy in or any breach of any representation, warranty, covenant
or agreement made by any of them and contained in this Agreement or in any
document or other writing delivered pursuant to this Agreement.
SECTION 13. THE CLOSING
The Closing shall take place not later than September 30, 2003. At the
Closing, the parties shall provide each other with such documents as may be
necessary or appropriate in order to consummate the transactions contemplated
hereby including evidence of due authorization of the Agreement and the
transactions contemplated hereby.
SECTION 14. MISCELLANEOUS
14.1 Waivers. The waiver of a breach of this Agreement or the failure
of any party hereto to exercise any right under this Agreement shall in no event
constitute waiver as to any future breach whether similar or dissimilar in
nature or as to the exercise of any further right under this Agreement.
14.2 Amendment. This Agreement may be amended or modified only by an
instrument of equal formality signed by the parties or the duly authorized
representatives of the respective parties.
14.3 Assignment. This Agreement is not assignable except by
operation of law.
14.4 Notices. Until otherwise specified in writing, the mailing
addresses of both parties of this Agreement shall be as
follows:
The Company
Arran Services Limited
00 Xxxxxx Xxxx, Xxxxx, Xxxxxxxxx,
XX 000000, Xxxxx
The Shareholder:
c/o Arran Services Limited
74 Xxxxxx Xxxx,Xxxxx, Xxxxxxxxx,
XX 000000, Xxxxx
TCOM : Telecom Communication, INC.
000 X. Xxxxxxxx,
Xxx Xxxxxxx, XX 00000
Any notice or statement given under this Agreement shall be deemed to have been
given if sent by registered mail addressed to the other party at the address
indicated above or at such other address that shall have been furnished in
writing to the addressor.
14.5 Governing Law. This Agreement shall be construed, and the legal
relations be the parties determined, in accordance with the laws of the State of
Indiana, thereby precluding any choice of law rules which may direct the
applicable of the laws of any other jurisdiction.
14.6 Publicity. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued by either
party hereto at any time from the signing hereof without advance approval in
writing of the form and substance thereof by the other party except as required
to stay in compliance with the TCOM reporting obligations under the Securities
Exchange Act of 1934.
14.7 Entire Agreement. This Agreement and the collateral agreements
executed in connection with the consummation of the transactions contemplated
herein contain the entire agreement among the parties with respect to the
purchase and issuance of the TCOM' Shares and the TCOM Shares and related
transactions, and supersede all prior agreements, written or oral, with respect
thereto.
14.8 Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
14.9 Severability of Provisions. The invalidity or unenforceability of
any term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision of this Agreement shall in no way affect the validity or enforcement
of any other provision or any part thereof.
14.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed, shall constitute an original copy
hereof, but all of which together shall consider but one and the same document.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
Telecom Communications, INC.
By: /s/ Xxx Xxxxxxxx
Name: Xxx Xxxxxxxx
Its: President
Arran Services Limited
By: /s/Xxxx Xxxx
Name: Fed Xxxx
Its: President
Shareholder
Xxxx Xxxx Chiyuan
