Exhibit 10.21 FTL Stock Purchase Agreement
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is entered into on the 17th day of August, 1999, by and between
The Hartcourt Companies, Inc., a Utah corporation, or its assignee ("BUYER")
with principal offices located at 0000 X. Xxxxxx Xx., Xxxx Xxxxx, XX 00000, XXX;
and Financial Telecom Limited, ("SELLER") a Hong Kong corporation with principal
office at 308 Hang Bong Commercial Centre, 28 Shanghai Street, Kowloon, Hong
Kong. BUYER and SELLER are referred to collectively herein as the "Parties"
PRELIMINARY STATEMENTS
SELLER desires to sell and BUYER desires to purchase 4,964,990 shares of common
capital stock to be issued by SELLER and any and all options, warrants, and
other rights that such stock shall carry with it.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, Parties agree as follows:
SECTION 1. PURCHASE AND SALE OF SELLERS STOCK.
Basic Transaction. Subject to and in reliance upon the representations,
warranties and agreements hereinafter set forth, and subject to the terms and
conditions hereinafter set forth, BUYER agrees to purchase from the SELLER, all
of the SELLER'S Common Capital Stock above referred to hereinabove, to wit,
4,964,990 shares of capital stock, which in the aggregate will constitute 58.53%
of the expanded capital of SELLER. These shares shall be free and clear of all
liens and encumbrances, for the consideration specified below in this Section 1.
A. Purchase Price. BUYER agrees to pay to the SELLER at Closing (defined in
Section 1.B. below) a purchase price as determined pursuant to Section 1.A.i.
below (the "Purchase Price") and which Purchase Price shall be paid as provided
in Section 1.A.ii. below.
i. The Purchase Price shall be 4.713 Hong Kong Dollars (HK$4.713) per share for
a total of HK$23.4 Million.
ii. Fifty (50%) percent of said purchase price (HK$11.7 Million) shall be paid
in cash and the remaining fifty(50%) percent paid in free-trading shares of
BUYER or any NASDAQ listed company acceptable to the present shareholders of
SELLER.
iii. The Purchase Price shall be paid by BUYER on the Closing Date in the
following manner:
a. Two-third (2/3) of the cash portion, being HK$7,800,000, shall be remitted by
BUYER by telegraphic transfer to SELLER's bank account (with Wing Lung Bank Ltd
of Account No. 06-000-4115-6 at Xxxxxx Xxxxx, 000 Xxxxx'x Xxxx Xxxxxxx, Xxxx
Xxxx) two (2) days before Closing and the remaining HK$3,800,000, sixty (60)
days after Closing.
b. The free-trading shares portion shall be delivered and deposited on Closing
to SELLER's account opened with a stock broker in the United States.
iv. The stamp duty to be paid to the Hong Kong Government in connection to the
transactions contemplated by this Agreement shall be for the account of the
BUYER. The stamp duty shall be paid by SELLER on behalf of BUYER. BUYER shall
reimburse SELLER for the full amount paid by SELLER within seven (7) days after
receiving the invoice for this purpose from SELLER.
B. Post-Closing Adjustment. In the event the final closing Net Worth (as defined
below) as of the Closing Date shall be more than $5,000 less than the Net Worth
reported in the balance sheet dated as of February 28, 1999, which shall be
delivered to BUYER simultaneously with execution of this Agreement, then SELLER
shall pay to BUYER, within ten (10) days following notice of such deficiency, an
amount calculated as follows:
HK$23,400,000 x [1 - (Closing Net Worth / February 28, 1999 Net Worth)]
In the event the final closing Net Worth (as defined below) as of the Closing
Date shall be more than $5,000 over and above the Net Worth reported in the
balance sheet dated as of February 28, 1999, which shall be delivered to BUYER
simultaneously with the execution of this Agreement, then BUYER shall pay to
SELLER within ten (10) days following notice of such increment, an amount
calculated as follows:
HK$23,400,000 x [(Closing Net Worth / February 28, 1999 Net Worth) - 1]
For purposes hereof, the Net Worth of SELLER shall be equal to the sum of total
assets less total liabilities.
For the avoidance of doubt, Parties agree that the adjustment described
hereinabove shall not in any manner affect or change the holding of BUYER of
58.53% in SELLER's expanded capital immediately after the completion of the
transaction anticipated in the Agreement.
C. The Closing and the Closing Date. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of SELLER in Hong Kong, commencing at 10:00 a.m. local time on the third (3rd)
business day following the satisfaction or waiver of all conditions (including
all conditions set forth in Section 6 hereto) to the obligations of the Parties
to consummate the transactions contemplated hereby, including all necessary
regulatory approvals, other than conditions with respect to actions the
respective Parties will take at the Closing itself or thereafter) or such other
date as BUYER and the SELLER may mutually agree but not later than 45 days from
the execution of this Agreement (the "Closing Date").
D. Deliveries at Closing. At the Closing, (i) the SELLER will deliver to BUYER
the various certificates, instruments, and documents referred to in Section
6.A.i. and 6.A.iii. below, (ii) BUYER will deliver to the SELLER the various
certificates, instruments, and documents referred to in Section 6.B.ii. below,
(iii) SELLER will deliver to BUYER stock certificates representing all of the
4,964,990 shares SELLER Stock original certificates or endorsed in blank or
accompanied by duly executed assignment documents, and (iv) BUYER will deliver
to SELLER the consideration in the manner specified in Section 1.A. above.
E. As used herein, the term shares of The Hartcourt Companies, Inc. refers to
free trading common stock, the certificates for which shall not bear any legend
restricting transfer of the shares. All payments referred to herein which are
payable in Common Stock shall be based on the average closing price per share of
such Common Stock quoted on the NASDAQ bulletin board , or on such other
securities exchange as the Common Stock is then trading, for the seven (7)
trading days prior to the Closing Date.
SECTION 2. REPRESENTATION AND WARRANTIES RELATING TO SELLERS .
The SELLER, represents and warrants to BUYER that the statements contained in
this Section 2 are current and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 2). Nothing in the Schedules hereto shall be deemed
adequate to disclose an exception to a representation or warranty made herein,
unless the disclosure identifies the exception with particularity and describes
the relevant facts in detail. In addition, for purposes of this Agreement, the
terms "reserved" or "reflected" when used with reference to financial statements
shall mean an item accounted for either: (a) as an expense on the income
statements included in such financial statements; or (b) as an offset to a
particular asset account or as a liability on the balance sheet included in such
financial statements. The terms "reserved" or "reflected" shall not mean an item
which is disclosed in the notes to a financial statement and which is not also
accounted for in the financial statements as contemplated in the preceding
sentence.
For purposes of this Agreement, an inaccuracy, breach or non-fulfillment of a
warranty, representation or covenant shall not constitute any inaccuracy, breach
or non-fulfillment hereunder unless and until the aggregate of all such
inaccuracies, breaches, and non-fulfilled representations or covenants exceeds
the sum of Twenty thousand ($20,000) dollars. All such inaccuracies, breaches
and non-fulfilled warranties, representations and covenants that would
constitute an inaccuracy, breach or non-fulfillment of any representation,
warranty or covenant but for the fact that, individually or in the aggregate,
they do not satisfy such $20,000 threshold are hereinafter collectively
described a "Nonmaterial Breaches". Once the aggregate of all Nonmaterial
Breaches exceeds $20,000, then the aggregate amount of all such Nonmaterial
Breaches (from the first dollar of such Nonmaterial Breaches) shall nevertheless
be deemed breaches in respect of which BUYER may assert a claim pursuant to
Section 8 hereof.
A. Organization and Standing. SELLER is a corporation duly organized, validly
existing and in good standing under the laws of Hong Kong, has all requisite
corporate power to own and operate its properties and assets, and to carry on
its business as presently conducted and as presently proposed to be conducted in
the future and SELLER is qualified by virtue of existing licenses to do business
in any jurisdiction permitted under the laws of Hong Kong. SELLER has delivered
to BUYER complete and correct copies of its Memorandum and Articles of
Association, licenses, Board of Director Resolutions and if required,
shareholder approval. Such copies are true, correct, complete and properly
executed (if applicable) and contain all amendments through the date of this
Agreement, and will be true, correct and complete as of the Closing Date.
B. Capitalization and Ownership.
i. The authorized capital stock of SELLER consists of 3,800,000 shares of common
stock, par value HK$1.0, of which 3,519,349 shares are issued and outstanding.
There is no other class of capital stock authorized or outstanding. The issued
and outstanding shares of SELLER Stock are duly authorized, validly issued in
compliance with applicable law, are fully paid and non-assessable and are
registered in the names of the shareholders in such amounts as appearing on the
stock transfer books of SELLER. The outstanding SELLER Stock, together with any
stock options granted by SELLER and any shares of capital stock issued pursuant
to the exercise of any stock options, have not been issued in violation of
securities laws, rules and regulations. The number of authorized, issued and
outstanding shares of each class of capital stock of SELLER as of the Closing
Date is set forth on Schedule 2(b)(i) attached hereto. Upon completion of the
transaction contemplated hereby, fifty-eight & fifty-three hundredth percent
(58.53%) of the outstanding capital stock of SELLER will have been transferred,
sold and delivered to BUYER and all rights of any nature whatsoever to purchase
or otherwise acquire any of the capital stock of SELLER shall have been
terminated.
ii. There are (a) no dividends or other distributions accrued or declared but
unpaid in respect of the shares of capital stock of SELLER; (b) no outstanding
contracts, subscriptions, warrants, options or other rights of any kind
(including conversion, exchange or preemptive rights) to subscribe for or
purchase any capital stock or other securities of SELLER; (c) no voting trusts,
voting agreements or irrevocable proxies executed by SELLER; (d) no existing
rights of SELLER or any other party to require SELLER to register any securities
of SELLER or to participate with SELLER in any registration by SELLER of its
securities; (e) no other agreements by SELLER which provide for the purchase,
sale, pledge, lien, encumbrance or other transfer of the shares of common stock
of SELLER or any other capital stock or securities of SELLER, authorized or not,
or any restrictions thereon; and (f) no agreements, commitments or rights of
SELLER or any other party to purchase, redeem or otherwise acquire any shares of
SELLER.
C. Subsidiaries. SELLER does not own, directly or indirectly, any capital stock
or other equity or ownership or voting interest (whether controlling or not) in
any corporation, trust, partnership, association or business entity of any
nature whatsoever save and except those already disclosed to BUYER.
D. Corporate and Individual Power; Validity of Agreements; Consents. SELLER have
all requisite power and authority (including all corporate power and authority
with respect to SELLER under its Memorandum and Articles of Association, Bylaws
and the rules, regulations and laws of Hong Kong) to execute and deliver this
Agreement and all of the agreements, instruments and other documents to be
executed and delivered by SELLER incidental to the consummation of the
transactions contemplated hereby ("Ancillary Documents") and to carry out and
perform its obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and all Ancillary Documents have been duly
authorized by the Board of Directors of SELLER. No other approval, consent,
waiver or authorization of, or filing or registration with, any governmental
authority or third party is required on the part of SELLER for the execution,
delivery or performance of this Agreement and the Ancillary Documents and the
transactions contemplated hereby and thereby. This Agreement is, and the
Ancillary Documents are, duly executed and delivered by SELLER and constitute
valid and binding obligations of the SELLER, legally enforceable against SELLER
in accordance with their terms, except that such enforcement may be subject to
bankruptcy, insolvency, reorganization or other laws now or hereafter in effect
affecting the enforcement of creditors' rights generally and general principle
of equity.
E. No Violation. Subject to the fulfillment of the requirements of Sections 6.A.
hereof as applicable to SELLER, the execution, delivery and performance of this
Agreement and the Ancillary Documents will not and do not result in any
violation or breach of, be in conflict with, or constitute a default or event of
default (whether by notice of lapse of time or both) or give rise to a right of
termination, cancellation or acceleration under any provision of (i) the
Memorandum and Articles of Association or Bylaws of SELLER, (ii) any law, rule
or regulation, or any judgment, decree, order, ruling, or award of any court or
governmental authority, domestic or foreign, applicable to SELLER or its
business as conducted on the date of this Agreement and as expected to continue
thereafter based on applicable law and regulations currently in existence, the
violation of which would have a material adverse effect on the business of
SELLER, taken as a whole; (iii) any license, certificate or permit (all such
licenses, certificates or permits are set forth in Schedule 2(l) attached
hereto) of SELLER; or (iv) any agreement, contract, understanding, indenture or
other instrument to which SELLER is a party or by which its assets or business,
or the shares of SELLER are bound; nor will such execution, delivery or
consummation give to others any rights in or with respect to the shares of
SELLER of any of the assets or businesses of SELLER or result in the creation of
any lien, charge or encumbrance upon the shares of SELLER or any such assets or
businesses.
F. Minute Books. The minute books and the corporate secretaries' files of SELLER
have been made available to BUYER and shall be available until the Closing Date.
SELLER agrees to provide a copy of its minutes books to BUYER before Closing and
further agrees to provide BUYER copy of minute to be recorded in or filed into
the minutes books after Closing. The minute books contain a complete and
accurate summary of all meetings of or actions by directors and shareholders
which were required for compliance with all material statutes and regulations
and are in compliance with SELLER's Memorandum and Articles of Association and
Bylaws.
G. Financial Statements. SELLER, prior to the Closing Date, will have delivered
to BUYER true and correct copies of the following which shall be attached hereto
as Schedule 2(g): the reviewed balance sheet, statement of income, statement of
changes in shareholders' equity and statement of cash flows for the last fiscal
year prior to June 30, 1999, which have been prepared and reviewed, at SELLER's
expense, by Certified Public Accountants, including any and all related notes,
supplementary information and exhibits thereto (the "Reviewed Financial
Statements") and any monthly financial statement ended prior to 120 days prior
to the Closing Date. SELLER has previously delivered to BUYER the unaudited
balance sheet and statement of income of SELLER for the eight months ended
February 28, 1999, any Corporate Income Tax Returns dated 1996 and 1997, 1998,
and a complete schedule of all of the equipment owned by SELLER (the "Previous
Financial Statements"). Such Previous Financial Statements are attached hereto
as a part of Schedule 2(g). SELLER shall provide prior to the Closing Date
either (i) copies of any management letter comments prepared by a firm of
independent certified public accountants for SELLER in the previous five years
and SELLER's responses thereto, or (ii) a certification by a director of SELLER
that no such comments have been received with respect to such periods. The
Reviewed Financial Statements and the Previous Financial Statements are sometime
referred to herein as the "Financial Statements".
SELLER represents and warrants that the Financial Statements as of, and for the
periods ending on, the respective dates thereof are and will be complete and
correct in all respects and fairly present the information purported to be shown
therein and (a) are and will be in accordance with, and have been derived from,
the books and records of SELLER, (b) have been prepared in conformity with
generally accepted accounting principles ("GAAP") consistently applied
throughout the periods indicated except as stated therein, (c) fairly present
the results of operations of SELLER as well as changes in shareholders' equity
for the periods indicated, (d) fairly present the combined financial condition,
assets and liabilities (fixed and contingent) of SELLER as of the dates thereof,
(e) make full and adequate provision for all fixed or contingent obligations,
liabilities, or commitments of SELLER as of the dates thereof in accordance with
GAAP, (f) reflect all accrued and unpaid benefits of SELLER's employees
including, without limitation, vacation and holiday pay, sick leave and pension
liability, and (g) do not contain any statement that is false or misleading with
respect to any material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading.
H. Absence of Undisclosed Liabilities. SELLER does not have any debt, liability
or obligation of any nature, whether accrued, absolute, contingent or otherwise
(including, without limitation, amounts owed to any Government Department),
except as reserved or reflected in the Financial Statements or incurred in the
ordinary course of business after the date hereof, which debt, liability or
obligation would have, or could reasonably be expected to have, a material
adverse effect on the business of SELLER, taken as a whole. There is no basis
for the assertion against SELLER of any liabilities not reflected in the
Financial Statements, except for liabilities incurred in the ordinary course of
business after the date hereof.
I. Absence of Changes.
i. Since June 30, 1999, SELLER has conducted its business in the ordinary and
usual course consistent with past practice so as to maintain and preserve intact
its properties, businesses, and other assets including but not limited to the
goodwill of customers and others having relations with SELLER.
ii. Since June 30, 1999, there has not been any change in or effect on the
business of SELLER that has had an adverse effect on SELLER's business,
operations, properties, assets, working capital, liabilities, relationship with
marketing agents and brokers, prospects or condition (financial or otherwise),
and no fact or condition exists or, to the knowledge of SELLER, is contemplated
or threatened that has a reasonable probability of resulting in any change in or
effect on the business of SELLER or that would result in an adverse effect on
SELLER's business, operations, relationships with marketing agents and brokers,
properties, assets, working capital, liabilities, prospects or condition
(financial or otherwise). No representation or warranty is made by SELLER
regarding the possible impact of future changes in the law of Hong Kong.
J. Insurance.
i. Schedule 2(j) sets forth a list of all SELLER policies of property, theft,
fire, liability, workers' compensation, title, professional liability, life
insurance, reinsurance, fidelity or any other insurance owned or maintained by
SELLER or in which SELLER is a named insured or on which SELLER is paying any
premiums. SELLER has provided BUYER with access to and copies of all SELLER
policies listed on Schedule 2(j). All such SELLER policies are of a type
customary in businesses such as those engaged in by SELLER and are and shall
remain in full force and effect at all times through and as of the Closing Date,
and none of the insured parties thereunder is in default with respect to any
provision contained in any such insurance policies, or in the payment of
premiums, nor has any party failed to give any notice or present any claim
thereunder when due, to the extent such default, nonpayment or failure would
have an adverse effect on SELLER. Except as set forth in Schedule 2(j) hereto,
no claims have been settled during the preceding two (2) year period nor are
there any claims outstanding with respect to any such policies which would have
an adverse effect on SELLER.
K. Title to Properties and Assets; Liens, etc.
i. Save and except those already disclosed to BUYER, SELLER does not own any
real property. Schedule 2(k) hereto is a true, complete and correct list of all
personal property owned by SELLER including all patents, trademarks or
copyrights and operating licenses which are material to the businesses thereof
including all personal property reflected in the Financial Statement. All such
personal property is under physical custody of SELLER, including personal
property under capital leases.
ii. Except as otherwise set forth in the Financial Statements, SELLER has good
and marketable title to all of its properties and assets, whether real,
personal, mixed, tangible or intangible, in each case free and clear of all
mortgages, liens, charges, encumbrances, security interests, adverse claims,
contracts of sale, covenants, conditions or restrictions on use or transfer, or
other defects of title of any kind or nature which would have an adverse effect
on SELLER. None of the encumbrances set forth in the Financial Statements
impairs or interferes with the present or contemplated use of any of the
properties subject thereto or affected thereby or otherwise impairs the business
operations conducted by SELLER in a manner which will have an adverse effect
thereon.
iii. Schedule 2(k)(iii) also lists all leases and other agreement or instruments
under which SELLER holds, leases or is entitled to the use of any real or
personal property. All such leases and agreements are in full force and effect
and all rentals, royalties or other payments due and payable thereunder prior to
the date hereof have been duly paid. SELLER has made available to BUYER a true
and correct copy of each lease and agreement for real property and for equipment
utilized in the business of SELLER. Any property (real or personal) covered by
the terms of such leases is presently occupied or used by SELLER as lessee under
the terms of such leases for its business, and SELLER is entitled, by the term
of such leases and under applicable laws, rules and regulations, to use any
leased premises and/or property for the purposes for which and in the manner in
which they are currently being used by SELLER. SELLER is not in default or in
breach of any material provision of any of its leases or licenses, nor has any
event occurred which, with the passage of time or giving of notice or both,
would constitute a default or breach of material provision by SELLER thereunder.
To SELLER's knowledge, none of the other parties to any of such leases or
licenses is in default or in breach of any material provision of any of such
leases or licenses. SELLER holds a valid leasehold or licensed interest in the
property which it leases or which is licensed to it.
iv. The property, machinery and equipment listed on Schedule 2(k)(iv) are all of
the property, machinery and equipment material to and used by SELLER in the
ordinary course of its operations, are in good repair, well maintained, and in
good and satisfactory operating condition, except for normal wear and tear and
such minor defects as do not substantially interfere with the continued use
thereof in the conduct of normal operations. To the best knowledge of SELLER,
all property, machinery and equipment used by SELLER in their operations are in
conformity with all applicable laws, ordinances, regulations, orders and other
requirements currently in effect or scheduled to come into effect relating to
their ownership, use and operation, the violation of which would have an adverse
effect on the business, operations, properties, prospects, working capital,
condition (financial or otherwise), liabilities or assets of SELLER.
L. Compliance with Law and Other Instruments. Attached as Schedule 2(l) is a
list of all licenses, certificates and permits of SELLER, together with true and
correct copies of each such license, certificate and permit, which licenses,
certificates and permits are in full force and effect, and SELLER is in
compliance with the terms, undertakings, conditions and provisions of such
licenses, certificates and permits. Except where a violation or the
non-compliance would have a material adverse effect on SELLER's business or
financial condition, SELLER is in compliance with all laws, ordinances, rules,
regulations and orders of all governmental or regulatory entities, bodies,
agencies and commissions ("Regulatory Entities") which are material and
applicable to the operation of its business as currently operated and as
anticipated to be operated. No notice has been issued and no investigation or
review is pending or, to the knowledge of SELLER, threatened by any Regulatory
Entities (i) with respect to any alleged violation by SELLER of any law,
ordinance, rule, regulation, order or guideline of any of the Regulatory
Entities, or (ii) with respect to any alleged failure to have all permits,
certificates, licenses, approvals and other authorizations required in
connection with the operation of the business of SELLER as operated currently
and as anticipated to be operated. Except as otherwise set forth on Schedule
2(l), no proceeding is pending, or to the knowledge of SELLER, threatened, which
could result in a revocation or denial to renew any license, permit,
certificate, approval or other authorization required in connection with the
operation of the business of SELLER as conducted on the date hereof and as
SELLER proposes to conduct such business thereafter. There is no existing law,
rule, regulation or order prohibits SELLER from conducting its business in any
jurisdiction in which it is now conducting such business or in which it
presently proposes to conduct business in the future.
M. Regulatory Filings. Schedule 2(m) contains a list of all filings and
submissions (other than submission of forms and approvals) made to, and all
inspection, audit or compliance survey reports received from, all federal and
state regulatory bodies having jurisdiction over SELLER, and (i) each of the
filings and submissions listed on Schedule 2(m) was in compliance with all
applicable laws, rules and regulations in all material respects; (ii) none of
the filings or submissions listed on Schedule 2(m) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or necessary in order
to provide the applicable Regulatory Entities with adequate information as to
SELLER, subject to the jurisdiction of such Regulatory Entities; (iii) neither
any of the SELLER or SELLER has received notice of, and, to the knowledge of
SELLER, none of the applicable Regulatory Entities have threatened to issue
notice of, any deficiencies (a) with respect to any filings or submissions
listed on Schedule 2(m) or (b) with respect to the financial condition or
conduct of the business of SELLER under applicable regulatory standards; and
(iv) neither any of the SELLER or SELLER has not submitted nor is presently
preparing or planning to prepare any written response to any inspection, audit
or compliance survey report or to any notice of deficiency relating to the
ownership, operations or other activities of SELLER.
N. Material Contracts.
Except as previously set forth on a different Schedule, Schedule 2(n)(i) sets
forth a true and complete list of all written or oral contracts (in the case of
oral contracts, a summary description is provided), agreements, leases,
mortgages, guarantees, matters of suretyship, powers of attorney, indemnity
arrangements and commitments ("Contracts") to which SELLER is a party or by
which any of its assets are bound and which in any case involve total payments
or receipts by SELLER of $25,000 or more, or that do not expire within one year.
All the Contracts constitute legal, valid and binding obligations of SELLER and
(i) are in full force and effect on the date hereof, and (ii) SELLER has not
violated any provision of, or committed or failed to perform any act which, with
notice, lapse of time or both, would constitute a default, of any material
provision of any Contract. To SELLER's knowledge, no other party to any of the
Contracts is in default thereof. Except as set forth on Schedule 2(n)(ii),
SELLER has performed its obligations under all Contracts in all material
respects and, to SELLER's knowledge, no party to any Contract has grounds to
terminate such Contract. Except as set forth on Schedule 2(n)(iii), each
Contract is with unrelated third parties and was entered into on an arm's length
basis in the ordinary course of business. None of the transactions contemplated
by this Agreement or any Ancillary Document creates in any party to the
Contracts the right to revise the terms of, to demand a penalty or premium, to
terminate or to accelerate any obligations of SELLER, or declare that such
Contracts have been breached, and no facts or circumstances exist, or upon
Closing will exist, which, with notice or lapse of time or both, would
constitute a breach or default under any of the terms of any Contract. Correct
and complete copies of all written Contracts disclosed on Schedule 2(n) have
been made available to BUYER.
O. Litigation. Except as set forth and summarized in Schedule 2(o), there is no:
(i) action, suit, claim, proceeding, audit or investigation pending or, to the
knowledge of SELLER, after inquiry of senior management and attorneys for
SELLER, threatened by any private or governmental litigant or before or by any
federal, state, municipal or other governmental department, court, commission,
board, bureau, agency or instrumentality, domestic or foreign, against SELLER or
any of its assets or employees, officers or directors (in their capacities as
employees, officers or directors of SELLER) or against persons or entities who
perform professional services under contract with SELLER; (ii) arbitration
proceedings relating to SELLER or pending under collective bargaining agreements
or otherwise; or (iii) governmental or professional inquiries pending or
threatened against SELLER (including, without limitation any inquiry as to the
qualification of SELLER to hold or receive any license or permit), and to the
best of SELLER's knowledge, there is no basis for any of the foregoing as to
SELLER or any of its employees, officers, directors or assets or as to entities
or persons who perform professional services under contract with SELLER in
connection with the performance of such services on behalf of, or rendered to
SELLER. SELLER is not subject to any continuing injunction, judgment, or other
order of any court, arbitrator, or governmental or quasi-governmental agency.
SELLER is not in default under any order, license, regulation, or demand of any
Federal, state, municipal or other governmental agency or regulatory body or
with respect to any order, writ, injunction or decree of any court.
P. Fees and Commissions. Save and except the commission agreements signed
between the BUYER and Agri-China Corporation Limited and SELLER and X.X. Xxx and
Co. Limited, no person, firm or other entity retained or procured by or through
SELLER is entitled to or may claim any fee or other payment as a finder, broker,
agent, intermediary or in similar capacity (collectively "Intermediary") nor is
SELLER acting for the benefit of any person or entity (other than the parties to
this agreement) in connection with the transactions contemplated by this
agreement, and SELLER will indemnify and hold harmless BUYER from liability for
any compensation to any Intermediary retained by, or claiming through SELLER and
from the fees and expenses of defending against such liability or alleged
liability. The foregoing indemnification is hereby made part of the
indemnification obligation of SELLER pursuant to Section 8 hereof.
Q. Interested Party Transactions. Except as set forth on Schedule 2(q), no
officer, director or shareholder, or any affiliate (defined below) of any such
person or entity or of SELLER, has, either directly or indirectly, (i) an
interest in any person or entity which (a) furnishes or sells services or
products which are furnished or sold or furnishes or sells products or services
which compete with products or services which are furnished or sold by or
proposed to be furnished or sold by SELLER, or (ii) purchases from or sells or
furnishes to SELLER any goods or services, or (b) has a beneficial interest in
or is a party to any contract or agreement to which SELLER is a party or by
which SELLER may be bound or affected, or has any direct or indirect interest
(other than in his capacity as a shareholder of SELLER) in any property, real or
personal, tangible or intangible of SELLER.
For purpose of this Agreement, the term "affiliate" shall mean any corporation,
partnership, joint venture, person or other entity who directly, or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with any other corporation, partnership, joint venture, person or
other entity.
R. Taxes.
i. SELLER has accurately prepared and timely filed with the appropriate
governmental authorities all Tax Returns and reports required to be filed by it
under all applicable laws or regulations, including but not limited to payroll
and other employee taxes which are required to be filed, and has paid, or made
provision for the payment of, all amounts of Taxes which have or may have become
due pursuant to said returns or reports or pursuant to any assessment which has
been received by it or which are otherwise due by SELLER. SELLER has provided to
BUYER true, accurate and complete copies of all such tax returns and all
schedules and other supporting documents thereto filed by SELLER with all
appropriate taxing authorities, including all communications relating thereto,
for each of the last three (3) fiscal years. The provisions for Taxes reflected
in the Financial Statements are, or will be, adequate for all Taxes for the
periods ending on the respective dates of said Financial Statements and all
years and periods prior thereto and for which SELLER may have been liable on
such date. SELLER is not a party to any pending action, proceeding or audit,
nor, to the knowledge of SELLER, is any such action, proceeding or audit
threatened by any governmental authority for any assessment or collection of
taxes, interest, penalties, assessments or deficiencies, and there is no basis
for any assessment or collection of taxes, interest, penalties, assessments,
deficiencies or for any deficiency notice, thirty (30) day letter, or similar
notice with respect to Taxes. There are no tax liens on any of the properties or
assets of SELLER. SELLER has made all payments of all Taxes required to be made
under the Laws of Hong Kong and any comparable provisions law and have collected
or withheld (and have duly remitted or deposited) all amounts required to be
collected or withheld. SELLER has not waived any law or regulation fixing, or
consented to the extension of, any period of time for assessment of any Taxes
which waiver or consent is currently in effect and there is no outstanding
request for any extension of time within which to pay any Taxes or file any Tax
Returns with the appropriate governmental authorities.
ii. For purposes of this Agreement, "Tax" or "Taxes" shall mean any and all
taxes, levies, fees, duties and charges of whatever kind (including any
interest, penalties or additions to the tax imposed in connection therewith or
with respect thereto), whether or not imposed on SELLER, including, without
limitation, taxes imposed on, or measured by, income, franchise, profits, or
gross receipts, and also ad valorem, value added, sales, use, service, real or
personal property, capital stock, license, payroll, withholding, employment,
social security, worker" compensation, unemployment compensation, utility,
severance, production, excise, stamp, occupation, premium, windfall profits,
transfer, and gains taxes, and customs duties; and "Tax Return" shall mean
returns, reports, information statements, and other documentation (including any
additional or supporting material) filed or maintained, or required to be filed
or maintained, in connection with the calculation, determination, assessment or
collection of any Tax.
S. Bank Accounts. Schedule 2(s) sets forth a true and correct list of the names
and addresses of all banks and other institutions at which SELLER has accounts,
borrowing resolutions, deposits or safety deposit bases, with the nature of such
account, the account number, and the names of all persons authorized to draw on
or give instructions with respect to such accounts or deposits, or to have
access thereto, and the names and addresses of all persons, if any, holding a
power-of-attorney on behalf of SELLER. Except as set forth on Schedule 2(s), all
cash in such accounts is held in demand deposits and is not subject to any
restriction or limitation as to withdrawal.
T. Employees, Consultants, Independent Contractors and Agents.
i. Schedule 2(t)(i) contains, under the heading "Employment, Consulting and
Other Personal Service Contracts", a true and correct list of all contracts
(whether written or oral) with employees, marketing representatives, agents,
independent contractors and consultants of SELLER, together with their titles or
positions and the annualized amounts of base pay or compensation being paid to,
or accrued for, each such person. Except as otherwise disclosed on Schedule
2(t)(i), no contract or agreement whether written or oral, requires SELLER to
pay compensation, commissions (i.e., marketing sales of agent broker agreements)
or other remunerations at any time subsequent to termination of such contract or
agreement. SELLER has not guaranteed any bonus due and/or payable, now or in the
future, to any employee, representative, agent, contractor or consultant.
ii. Schedule 2(t)(i) also contains a complete list of all employees, their date
of hire, their position or job description, and their annualized compensation.
U. Environmental Matters. To the best knowledge of SELLER, after reasonable
investigation and inquiry, the operations of SELLER comply with all applicable
environmental and health and safety laws, regulations, ordinances and
requirements. SELLER has obtained all environmental, health and safety permits,
licenses, authorizations or other entitlement necessary for its operations, the
lack of which could cause a material adverse effect on the business, operations,
properties, assets, liabilities, working capital, prospects or condition
(financial or otherwise) of SELLER, and all such permits, licenses,
authorizations or other entitlement are in good standing and SELLER is in
compliance with all material terms and conditions of such permits. SELLER is not
aware of, nor have SELLER made or filed, any report or notice reporting a
release, spill, emission, leaking, disposal, discharge, leaching or migration
into the indoor or outdoor environment of a waste, pollutant, hazardous
substance, toxic substance, hazardous waste, extremely hazardous waste, medical
waste, restricted waste, special waste, asbestos or any substance or waste
relating to the operations or activities of SELLER, the presence of which will
or could require remedial action.
V. Books and Records. The books and records of SELLER have been made available,
and shall be available hereafter, to BUYER. Subject to the specific disclosures,
exceptions, qualifications and limitations as to the matters represented and
warranted herein, the books and records taken as a whole contain a complete and
accurate record of the business and operations of SELLER and have been
maintained in accordance with good business practices. SELLER has not engaged in
any material transaction, maintained any bank account or used any of its
corporate funds which has not been reflected in the regularly maintained books
and records of SELLER.
W. Proprietary Rights. SELLER owns or possess adequate licenses or other rights
to use all copyrights, uncopyrighted works, trademarks, service marks, trade
names, patents, unpatented inventions, trade secrets, know-how and other
proprietary rights necessary or desirable to conduct its business as now
conducted and hereafter proposed to be conducted (collectively, the "
Proprietary Rights") and has made all applications and licenses necessary
therefor. All such Proprietary Rights are listed and briefly described on
Schedule 2(w). Neither the validity of the Proprietary Rights nor the title
thereto or use thereof by SELLER is being questioned in any pending or
threatened litigation and the conduct of the business of SELLER, as now or
heretofore conducted, does not violate licenses, copyrights, uncopyrighted
works, trademarks, service marks, trade names, trade name rights, patents,
patent rights, unpatented inventions or trade secrets of others in any way which
could have an adverse effect on the business, assets, liabilities, or conditions
(financial or otherwise) of SELLER. To SELLER's knowledge, there is no
infringement by others of any of the Proprietary Rights.
X. Letters of Intent. Except with respect to BUYER and as contemplated hereby,
SELLER has not entered into a letter of intent, agreements in principle or other
written agreement, whether binding or non-binding by its terms, with respect to
any merger, sale of assets or other corporate transaction which could result in
the sale, disposition or exchange of any material assets of SELLER, other than
as contemplated by this Agreement.
Y. Receivables. All receivables of SELLER shown on the Financial Statements
(except to the extent reflected on the Financial Statements as reserved against
uncollectible receivables) are good and collectible in the normal course of
business.
Z. Fraud and Abuse. To the knowledge of SELLER or SELLER's officers, directors
and employees, as applicable, have not engaged in any activities which are
prohibited under federal, state or local statutes or regulations or which are
prohibited by rules of professional conduct or which otherwise could constitute
fraud.
AA. Post Closing Liability of SELLER. Notwithstanding anything to the contrary
herein, from and after the Closing Date, SELLER shall be liable for any breach,
inaccuracy, non-fulfillment or misrepresentation of any representation,
warranty, covenant or agreement contained in this Agreement or any Ancillary
Documents.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER.
BUYER represents and warrants to SELLER as follows, as of the date hereof and
the Closing Date:
A. Organization and Standing. BUYER is a corporation organized, validly
existing, and in good standing under the laws of the State of Utah, United
States of America.
B. Corporate Power; Validity of Agreement; Consents. BUYER has all requisite
corporate power and authority under its Articles of Incorporation, Bylaws and
the Utah General Corporation Law to execute and deliver this Agreement and all
of the agreements, instruments and other documents to be executed and delivered
by BUYER incident to the consummation of the transaction contemplated hereby,
(collectively, the BUYER Ancillary Documents) to which it is a party, and to
carry out and perform its obligations under the terms of this Agreement and the
BUYER Ancillary Documents. The execution, delivery and performance of this
Agreement and the BUYER Ancillary Documents, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action by BUYER. This Agreement and the BUYER Ancillary
Documents have been duly executed and delivered by BUYER and constitute the
legal, valid and binding obligations of BUYER, legally enforceable against it in
accordance with their terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization or other laws now or hereafter in effect
affecting the enforcement of creditors rights generally, and (ii) general
principles of equity.
C. No Violation. Subject to the fulfillment of the requirements of Sections 6.A.
hereof as applicable to BUYER, the execution, delivery and performance of this
Agreement and the BUYER Ancillary Documents will not and do not result in any
violation or breach of, be in conflict with, or constitute a default or event of
default (whether by notice or lapse of time or both) or give rise to a right of
termination, cancellation or acceleration under any provision of (i) the
Articles of Incorporation or Bylaws of BUYER or (ii) any law, rule or
regulation, or any judgment, decree, order, ruling, or award of any court or
governmental authority, applicable to BUYER and its business as conducted on the
date of this Agreement and as expected to continue thereafter based on
applicable law and regulations currently in existence.
SECTION 4. CONDUCT OF BUSINESS PENDING CLOSING; ASSETS.
A. Ordinary Course of Business. During the period from the date of this
Agreement to the Closing Date and except as otherwise agreed to by the parties
in writing, SELLER shall conduct, or shall have conducted, its operations
according to its ordinary and usual course of business consistent with past
practice. Until the Closing Date, SELLER shall also use its best efforts to
preserve intact its business organization, contracts and properties, keep
available the services of its officers and employees, maintain satisfactory
relationships with licensors, suppliers, distributors, customers, employees,
contractors and others having business relationships with SELLER. Without
limiting the generality of the foregoing, prior to the earlier of the Closing
Date or the termination of this Agreement, and except as otherwise required by
this Agreement or any of the Ancillary Documents, SELLER shall not, without the
prior written consent of BUYER:
i. amend its Memorandum and Articles of Association;
ii. authorize for issuance, issue or deliver any additional shares of any stock
of any class or securities convertible into shares of stock or issue or grant
any right, option, warrant or other commitment for the issuance of shares of
stock or such securities;
iii. split, combine or reclassify any shares of SELLER's capital stock or
declare, set aside or pay any dividend (whether in cash, stock or property) in
respect of SELLER's capital stock or redeem or otherwise acquire any of SELLER's
capital stock;
iv. solicit or encourage any inquiries or proposals (other than with BUYER) for
the acquisition of any of SELLER's capital stock, assets or business;
v. sell or purchase marketable securities owned by SELLER, if any;
vi. prepay expenses or obligations except in accordance with the terms of
applicable contracts or agreements and in the ordinary course of business (or
otherwise not to exceed $1,000);
vii. increase compensation and/or benefits for any of SELLER's employees,
consultants or officers;
viii. terminate or enter into any employment or consulting contracts or any
collective bargaining agreement;
ix. sell or dispose of or encumber any amount of SELLER's capital assets with an
aggregate value of $5,000 or more or make any capital expenditures in an
aggregate amount in excess of $5,000, or enter into, renew or extend any lease
of capital equipment or real estate involving payments in an aggregate amount in
excess of $5,000 for the term of the lease;
x. create, amend, extend, renew, assume, incur or guarantee any indebtedness
either involving amounts in excess of $1,000, individually or in the aggregate
which is not in the ordinary course of its business;
xi. enter into any contract or commitment (including employment, consulting and
collective bargaining agreements) or engage in any transaction which is not in
the usual and ordinary course of SELLER's business or which is inconsistent with
SELLER's past practices and which is not terminable at will upon 30 days notice
without penalty of any kind;
xii. create any stock option or other stock-based incentive plan;
xiii. acquire any other business or interest therein;
xiv. enter into, amend or terminate (other than by expiration) any material
contract to which SELLER is a party or by which its assets are bound;
xv. amend, supplement or otherwise alter, in any material respect, any contracts
or relationships with suppliers or customers, except as required hereunder or
pursuant to any of the Ancillary Documents;
xvi. commence, compromise, settle, waive, approve or permit the settlement of,
any litigation, proceeding, hearing, arbitration or other dispute or claim
involving amounts in controversy of more than $1,000 in the aggregate, other
than for fair consideration in the ordinary course of business consistent with
past practice;
xvii. enter into any agreement or engage in any transaction with any affiliate,
stockholder, director, officer or affiliate of SELLER;
xviii. make any change in the accounting practices of SELLER;
xix. fail to keep in full force and effect insurance covering SELLER and
SELLER's assets comparable in amount and scope of coverage to that which is now
maintained;
xx. fail to comply with any laws and regulations applicable to SELLER, or to the
conduct of SELLER's business;
xxi. enter into any agreement or arrangements, written or oral, that would cause
any of the statements contained in Section 2 to be untrue; or
xxii. enter into any contract or commitment to do any of the things described in
Clauses (i) through (xxi) above.
B. Assets. The assets of SELLER as of the Closing Date (tangible and intangible)
will include all the equipment, inventory and other assets being presently used
in and necessary or useful for the conduct of or related to its business, except
those consumed after the date hereof in the ordinary course of business or those
sold with BUYER's express written consent.
SECTION 5. ADDITIONAL AGREEMENTS.
A. Access and Information.
i. SELLER has afforded and shall continue to afford BUYER and its accountants,
counsel and other representatives full access for the period commencing on the
date hereof through and as of the Closing Date to all of the properties, books,
contracts, commitments, records and employees of SELLER and, during such period,
shall furnish to BUYER all information concerning the business, properties and
personnel of SELLER as BUYER may reasonably request, provided that no
investigation pursuant to this Section 5 shall cure any breach of any
representations or warranties of SELLER. BUYER shall take all reasonable efforts
to maintain the confidentiality of the existence of this Agreement and the
transactions contemplated hereby, including, without limitation, reviewing
information requested by BUYER at a location in Hong Kong other than at the
premises of SELLER during normal business hours when employees are present, and
obtaining the consent of SELLER prior to contacting or otherwise communicating
with any employee, supplier or customer of SELLER.
ii. SELLER shall use their best efforts and at BUYER's own cost to cause
SELLER's independent auditors to make available copies of all such documents and
information with respect to the business and properties of SELLER as
representatives of BUYER may from time to time reasonably request, including,
without limitation, the working papers used to prepare the Financial Statements
and income tax returns filed by SELLER.
B. Notice of Changes. Between the date hereof and the Closing Date, SELLER,
shall promptly advise BUYER in writing of any changes or matters which change or
supplement the information set forth in this Agreement or the Schedules attached
hereto; provided, however, that no such change or supplement shall cure any
breach of any representations or warranties of SELLER. If, between the date
hereof and the Closing Date, any authority of the Hong Kong SAR Government shall
commence any examination, review, investigation, action, suit or proceeding
against SELLER shall give prompt notice thereof to the BUYER and shall keep the
BUYER informed as to the status thereof. BUYER shall have the right to be
present at and participate in any such proceeding affecting SELLER or its status
or operations.
C. Certain Defaults. SELLER shall give prompt notice to BUYER of any notice of
default received by it subsequent to the date of this Agreement and prior to the
Closing Date under any instrument or agreement to SELLER is a party or by which
SELLER is bound, which default could, if not remedied, result in any adverse
effect on SELLER's business, prospects, condition (financial or otherwise),
properties, operations, working capital, liabilities, or assets or which would
render incorrect any representation or warranty made herein.
D. Consents. Each party shall cooperate with the other party hereto and shall
use its best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary and proper or advisable to consummate and
make effect, as soon as reasonably practicable, the transactions contemplated by
this Agreement and use its best efforts to file all applications and information
in order to obtain the Closing Date all licenses, permits, consents or other
approvals required, respectively, to be obtained by each such party from any
governmental authority or other person in connection with consummation of the
transactions contemplated by this Agreement, including without limitation, all
consents necessary from regulatory agencies and under supplier or lease
agreements, so that the same will continue in effect after the Closing.
E. Notice of Breach. Each party shall immediately give notice to the others of
the occurrence of any event, or the failure of any event to occur, that results
in a breach of any representation or warranty contained herein by such party or
a failure by such party to comply with any covenant, condition or agreement
contained herein.
F. Expenses. Except as otherwise expressly provided herein or in any Ancillary
Document, BUYER shall pay all of its costs and expenses incurred in connection
with this Agreement and the transactions contemplated herein, and the SELLER
shall pay all of the costs and expenses of the SELLER incurred in connection
with this Agreement and the transactions contemplated herein.
G. Press Release. Prior to the Closing Date, neither BUYER nor SELLER shall
issue any press releases concerning the terms and conditions of this Agreement
or the transactions contemplated hereby without the prior review and approval of
BUYER and SELLER, other than such announcements, filings or press releases as
required by law.
H. Conduct. Except as provided by this Agreement or as BUYER may otherwise
consent in writing, SELLER will enter into, any transaction, take any action or
permit any event to occur which would result in any of the representations and
warranties contained in this Agreement, or in any other agreement, certificate
or other document delivered by or on behalf of SELLER, or any of their
representatives, to BUYER in connection with this Agreement or the transactions
contemplated herein, not being true and correct immediately after such
transaction has been entered into or consummated or such event has occurred.
I. Further Assurances. At the request of BUYER, SELLER shall promptly take, or
cause to be taken, all action, and do or cause to be done, all things, and
execute and deliver, or caused to be executed and delivered, as the case may be,
to BUYER or for the benefit of BUYER, all such further assignments,
endorsements, and other documents as BUYER may reasonably request in order to
consummate the transactions contemplated by this Agreement. At the request of
SELLER, BUYER shall take all action, do all things, and execute and deliver to
SELLER all such further assignments, endorsements, and other documents as SELLER
may reasonably request in order to consummate the transactions contemplated by
this Agreement. In case at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement or any of the
Ancillary Documents, the SELLER, proper officers or directors of SELLER, or
BUYER, as the case may be, shall take all such necessary action.
J. No Shop. Save and except those already disclosed to BUYER, until the Closing
Date or the termination of this Agreement pursuant to Section 7 hereof, SELLER
shall not solicit, directly or indirectly, any inquiries or proposals for the
acquisition of any of the capital stock, assets or business of SELLER from, or
furnish information relating to the foregoing to, or engage in negotiations or
discussions relating to the foregoing with, or accept any proposal relating to
the foregoing from, any corporation, partnership, person or other entity or
group other than BUYER, and SELLER shall use all reasonable efforts to restrict
any officer, director, employee, investment banker, attorney or other advisor
retained by SELLER from doing any of the foregoing. SELLER shall, after closing,
confidential documents and information or compilations of such documents or
information provided to third parties, if any, in connection with any previous
negotiations or discussions since January 1, 1999, relating to the foregoing.
SELLER will, immediately upon receipt, advise BUYER orally and promptly
thereafter in writing of any inquiry or proposal received for the acquisition of
the capital stock, assets or business of SELLER.
K. Withholding. SELLER shall provide any certificates or affidavits required by
BUYER so that BUYER shall not be required to withhold any taxes from amounts to
be paid the SELLER hereunder.
L. Business Name. On and after the Closing Date, SELLER authorizes BUYER to use
the corporate and/or trade names of SELLER for all purposes in connection with
the operations of BUYER.
M. Intercompany Indebtedness. Prior to or as of the Closing Date, any obligation
owed to SELLER by any officer, director, employee, agent or representative of
SELLER shall be paid irrespective of the terms of repayment described in any
note evidencing such obligation other than amounts advanced in the ordinary
course of business under standard travel and expense plans in connection with
any such person's employment, including for education purposes.
N. BUYER will, within 14 days from the date hereof, complete its due diligence
covering the relevant business areas and information pertinent to the subject
new share issuance. Such due diligence shall be at the sole cost and expense of
BUYER.
O. SELLER will continue its existing operation and will use its best efforts to
develop an electronic real time financial data distribution infrastructure
targeting financial institutions and investors in the Greater China area as well
as being involved in the business of an Internet Service Provider with focus on
the investment and financial market.
P. BUYER will use its best effort to locate and transfer from North America
technology and marketing ideas that can be adopted by SELLER in the Greater
China area.
Q. Parties understand that further funding of approximately US$ 3 Million to US$
5 Million will be required to finance the expansion of SELLER's services in the
Greater China area.
R. BUYER will provide such guarantees as will relieve Xx. Xxxxxxx Xxxx of his
obligations as guarantor to various banks and financial institutions that are
now providing credit facilities to SELLER or its subsidiary.
S. Parties agree that SELLER's existing loans from SELLER's shareholders, in the
approximate amount of HK$5,200,000, shall be settled in the following manner:
i. HK$2,000,000 shall be repaid by SELLER in twelve (12) equal monthly
installments beginning from the end of the first month after Closing;
ii. The balance, being the amount of the existing shareholders' loan less the
HK$2,000,000 to be repaid in the manner described hereinabove, shall be repaid
by BUYER on behalf of SELLER by the issuance of shares of The Hartcourt
Companies, Inc. in such number and quantity based on the per share value
calculated according to Section 1.E. hereof. Sale of the shares of The Hartcourt
Companies, Inc. so acquired by the SELLER's existing shareholders will be
restricted within the first twelve (12) month after Closing. Save and except
this restriction, BUYER warrants that the said shares shall rank pari-passu with
all the existing shares of The Hartcourt Companies, Inc. and will continue to be
freely tradable at NASDAQ.
T. SELLER will grant share options to employees and full time directors to
subscribe for not more that 10% of the issued share capital of SELLER at terms
and conditions to be decided by the board of directors subsequent to the Closing
contemplated herein.
SECTION 6. CONDITIONS PRECEDENT.
A. Conditions Precedent to Closing. Subject to waiver as set forth in Section
7.F. below, the respective obligations of each party hereto to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at or
prior to the Closing Date of each of the following conditions:
i. All statutory and regulatory requirements necessary for the valid
consummation by BUYER and SELLER of the transactions contemplated by this
Agreement and any Ancillary Documents shall have been fulfilled; all
authorizations, consents, approvals and waivers of all Regulatory Entities
necessary to be obtained in order to permit consummation of the transactions
contemplated by this Agreement, including, without limitation, the consents set
forth in Section 2.D., shall have been obtained. Parties hereto agree to
promptly apply for any license, permit or other consent necessary to consummate
the transactions contemplated under this Agreement and the Ancillary Documents.
ii. No injunction, restraining order or other ruling or order issued by any
court of competent jurisdiction or governmental authority or regulatory body or
other legal restraint or prohibition shall be in effect, and no proceeding,
action, suit or claim brought or made by any governmental authority or
regulatory body shall be pending or threatened that seeks any injunction,
restraining order or other order or other relief, and no statute, rule,
regulation or executive order shall have been enacted, promulgated or proposed,
in each case, that would prohibit the consummation of the transactions
contemplated by this Agreement; it being understood that the parties hereto
shall use their best efforts to have any such injunction, ruling, order,
restraint or prohibition (each, a ?Restraint) lifted and to oppose any action to
impose a Restraint, and to reasonably extend the date set forth in Section
7.A.ii. hereof so long as such efforts are continuing in good faith.
iii. All approvals, consents, authorizations and waivers which SELLER is
required to obtain to continue obligations or rights under the lease agreement
of its office premises or Contracts after the Closing Date shall have been
obtained.
iv. SELLER and BUYER each shall have complied with and performed in all material
respects all of its obligations and duties hereunder as of the Closing Date and
shall not have breached in any material respect any of the terms and conditions
of this Agreement or the Ancillary Documents.
B. Conditions Precedent to Obligations of SELLER. Subject to waiver as set forth
in Section 7.F. below, the obligations of SELLER to effect the transactions
contemplated by this Agreement are subject to the fulfillment on or prior to the
Closing Date of each of the following conditions:
i. BUYER shall have performed and complied with all of the agreements and
covenants contained in this Agreement required to be performed and complied by
it on or prior to the Closing Date and the representations and warranties of
BUYER contained in this Agreement shall be true in all material respects on the
date hereof and as of the Closing Date.
ii. BUYER shall have delivered to SELLER copies of the actions of its Board of
Directors authorizing and approving the execution, delivery and performance of
this Agreement and the Ancillary Documents.
iii. No Restraint issued by any court of competent jurisdiction or governmental
authority or regulatory body or other legal Restraint shall be in effect, and no
proceeding, action, suit or claim brought or made by any governmental authority
or regulatory body shall be rending or threatened that seeks any Restraint or
other relief, and no statute, rule, regulation or executive order shall have
been enacted, promulgated or proposed, in each case, that would prohibit the
consummation of the transactions contemplated by this Agreement; it being
understood that the parties hereto shall use their best efforts to have any such
Restraint lifted and to oppose any action to impose a Restraint, and to
reasonably extend the date set forth in Section 7.A.ii. hereof so long as such
efforts are continuing in good faith.
C. Conditions Precedent to Obligations of BUYER. Subject to waiver as set forth
in Section 7.F., the obligations of BUYER to effect the transactions
contemplated by this Agreement are subject to the fulfillment on or prior to the
Closing Date of each of the following conditions:
i. SELLER shall have performed and complied with all of the agreements and
covenants contained in this Agreement required to be performed and complied with
by it on or prior to the Closing Date and the representations and warranties of
SELLER contained in this Agreement shall be true in all material respects on the
date hereof and as of the Closing Date.
ii. No Restraint issued by any court of competent jurisdiction or governmental
authority or regulatory body or other legal Restraint shall be in effect, and no
proceeding, action, suit or claim brought or made by any governmental authority,
regulatory body, or third party shall be pending or threatened that seeks any
Restrain or other relief, and no statute, rule, regulation or executive order
shall have been enacted, promulgated or proposed, in each case, that would
prohibit the consummation of the transactions contemplated by this Agreement, it
being understood that the parties hereto shall use their best efforts to have
any such Restraint lifted and to oppose any action to impose a Restraint, and to
reasonably extend the date set forth in Section 7.A.ii. hereof so long as such
efforts are continuing in good faith.
iii. SELLER shall have delivered to BUYER a certificate to the effect that each
of the conditions specified in Sections 6.C.i. and 6.C.ii. are satisfied in all
respects.
iv. BUYER shall have received a certificate of SELLER dated as of the Closing
Date certifying to the incumbency of the officers of SELLER signing for it and
as to the authenticity of their signatures.
v. SELLER shall have delivered to BUYER certified copies of its written consent
and unanimous resolution of its Board of Directors authorizing and approving the
execution, delivery and performance of this Agreement.
vi. BUYER shall , concurrent with the closing hereof and upon completion of the
subject new share issuance appoint five (5) directors to the Board of Directors
of SELLER. SELLER shall retain its existing 4 directors, it being intended that
the new Board of Directors shall have 9 members. SELLER shall deliver its duly
executed Board of Directors' resolution to this effect at least five (5)
business days prior to the Closing Date.
vii. SELLER's Reviewed Financial Statements and Previous Financial Statements
shall be acceptable to BUYER and its representatives.
viii. Prior to the Closing Date, BUYER shall have received certified copies of
release and termination agreements executed by all the shareholders of SELLER,
and all other parties to, or which may be bound by, any shareholders'
agreements, voting agreements, stock option agreements and any and all other
similar agreements between current and/or past shareholders or employees of
SELLER (collectively, the "Corporate Agreements"). The release and termination
agreements to be provided hereunder shall be in form and substance acceptable to
BUYER and shall provide for a full and complete release and termination of all
Corporate Agreements.
ix. Prior to the Closing Date, BUYER shall have received an estoppel letter
dated not more than three (3) business days prior to the Closing Date from the
lessors of the office premises occupied by SELLER, in form and substance
acceptable to BUYER, which estoppel letter(s) shall set forth all contracts
between SELLER and such lessor, the term remaining under each such contract and
shall certify that as of the date of such letter(s) (i) all such contracts are
in full force and effect, (ii) to the best of their knowledge, no party to any
such contract has violated any provision of, or committed or failed to perform
any act which, with notice, lapse of time or both, would constitute a default,
of any material provision of any such contract, (iii) to the knowledge of the
lessor, no other party to any of such contracts, if any, is in default thereof,
and (iv) the lessor consents to and approves the transactions contemplated in
this Agreement.
SECTION 7. TERMINATION, AMENDMENT AND WAIVER; DEFAULT.
A. Termination. This Agreement may be terminated at any time prior to the
Closing Date;
i. By mutual agreement of SELLER and BUYER;
ii. By the Non-Defaulting Party, in the event of a Completed Default pursuant to
Section 7.B. hereof, upon written notice of default and a fifteen (15) business
day cure period.
B. Default Generally. In the event that prior to the Closing Date, any party
hereto fails in the due performance or observance of its obligations under this
Agreement, or any of its representations or warranties set out herein is
breached or determined to be materially inaccurate as of the date of this
Agreement or as of the Closing Date, then so long as such state of facts
continues, such party (a "Defaulting Party") shall be deemed to be in default
("Default"). In such event, the other party ("Non-Defaulting Party") may deliver
a written notice identifying the claimed failure, breach or inaccuracy. If said
failure or breach is not or cannot be cured within fifteen (15) business days
after the delivery of written notice, or said inaccurate representation or
warranty is not or cannot be made true within fifteen (15) business days after
the delivery of written notice, a "Completed Default" may be declared by the
Non-Defaulting Party.
C. Default by SELLER. In the event of a Completed Default by the SELLER, BUYER
may (in its sole discretion):
i. terminate this Agreement and (a) bring an action against SELLER and/or SELLER
for damages and/or (b) make a Claim (as defined in Section 8.A. hereof) against
SELLER as provided in Section 8.A. hereof; or
ii. consummate the purchase of the SELLER Stock by requiring SELLER to continue
to satisfy their other covenants and agreements provided herein and, in
furtherance thereof, bring an action against SELLER for equitable relief,
including an action for specific performance, and further to make a claim
against SELLER for any damages or losses suffered by BUYER as a result of the
default.
No partial exercise of any remedy provided above shall preclude any further
exercise thereof.
D. Default by BUYER. Prior to the Closing Date, in the event of a Completed
Default by BUYER, SELLER may:
i. terminate this Agreement and (i) bring an action against BUYER for damages
and/or (ii) make a Claim against BUYER as provided in Section 8.B. hereof; or
ii. Consummate the sale of the SELLER Stock by requiring BUYER to continue to
satisfy their other covenants and agreements provided herein and, in furtherance
thereof, bring an action against BUYER for equitable relief, including an action
for specific performance.
No partial exercise of any remedy provided above shall preclude any further
exercise thereof.
E. Effect of Termination. In the event of termination of this Agreement by
either SELLER or by BUYER as provided in this Section 7, no party hereto shall
have any further liability hereunder; provided, however, such termination shall
not relieve a party whose breach of this Agreement gave rise to such termination
from liability for damages for such breach and provided further that the
indemnification provisions of Section 8 hereof and the confidentiality provision
of Section 9 hereof will survive any such termination.
F. Extension; Waiver. At any time, any party may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein for its benefit or in any document delivered to it pursuant hereto,
and/or (iii) waive compliance with any of the agreements or conditions contained
herein for its benefit to the extent legally permissible. Any agreement on the
part of a party hereto to such extension or waiver shall not be valid unless set
forth in an instrument in writing signed on behalf of such party and shall not
operate as an extension or waiver of any subsequent or other failure.
SECTION 8. INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
A. Indemnification by SELLER. Subject to Section 8 hereof, SELLER, if this
transaction is not completed, agrees to indemnify, defend and hold harmless
BUYER and its respective directors, officers, employees, agents, affiliates,
successors, attorneys and assigns (collectively, "Indemnitee") from and against
any and all losses, claims, demands, damages, liabilities, deficiencies, costs
and expenses (including, without limitation, reasonable attorneys' fees and
disbursements and amounts paid in settlement of any claim, act or suit) of every
kind, nature and description (each, a "Claim" and collectively, "Claims")
suffered by Indemnitee based upon, arising out of or otherwise in respect of:
i. any inaccuracy in or breach or non-fulfillment of any representation,
warranty, covenant or agreement of the SELLER contained in this Agreement or in
any Ancillary Document, certificate or other documents delivered by or on behalf
SELLER pursuant to this Agreement;
ii. the ownership, management and conduct of SELLER's business prior to and
including the Closing Date, including, but not limited to, Claims arising out of
termination of any of SELLER's employees, if any, as of and including the
Closing Date, except for Claims fully reflected or reserved against on the
Financial Statements; or
iii. Any act or omission of SELLER, or any of their respective agents and
employees in respect of periods prior to and including the Closing Date, except
for Claims fully reflected or reserved against on the Financial Statements.
Any cost resulting from the undisclosing of liabilities by SELLER will be offset
against SELLER by reducing the existing shareholders' loan by the same amount.
B. Indemnification by BUYER. Subject to Section 8 hereof, BUYER agrees to
indemnify, defend and hold harmless SELLER and its directors, officers,
employees, agents, affiliates, successors, attorneys and assigns (collectively,
"SELLER Indemnitee") from and against any and all Claims, costs , expenses cost,
demands, damages, liabilities, deficiencies (including, without limitation,
reasonable attorney's fees and disbursements and amounts paid in settlement of
any claim, act or suit) of every kind, nature and description (each, a "Claim"
and collectively, "Claims") suffered by SELLER Indemnitee based upon, arising
out of or otherwise in respect of any inaccuracy in or breach or non-fulfillment
of any representation, warranty, covenant or agreement of BUYER contained in
this Agreement or in any Ancillary Document, certificate or other documents
delivered by or on behalf of BUYER pursuant to this Agreement.
The rights of Indemnitee and SELLER Indemnitee to indemnification hereunder
shall not be prejudiced or limited in any manner by any right to indemnification
under any of the Ancillary Documents and each such right of indemnification and
agreements shall be cumulative. An Indemnitee or SELLER Indemnitee may proceed
against the other party with respect to all or any portion of a Claim.
C. Notice and Opportunity to Defend.
i. Promptly after receipt by an Indemnitee or SELLER Indemnitee of notice of the
assertion of any Claim or discovery of any fact upon which such party expects to
make a claim for indemnification hereunder, the Indemnitee or SELLER Indemnitee
shall give the party or parties who may become obligated to provide
indemnification hereunder (the "Indemnifying Party") written notice describing
such Claim or fact in reasonable detail; provided, however, that the failure of
the Indemnitee or SELLER Indemnitee to provide notice of the Claim promptly
after the Indemnitee or SELLER Indemnitee receives notice of such Claim shall
not relieve the Indemnifying Party of its obligations to indemnify the
Indemnitee or SELLER Indemnitee with respect to such Claim except to the extent
that such failure actually prejudices the Indemnifying Party hereunder. Such
Indemnifying Party shall have the right, at such Party's option, to compromise
or defend, at such Party's own expense and by such Party's own counsel, any such
matter involving the asserted liability of the Indemnitee or SELLER Indemnitee
as to which the Indemnifying Party shall have acknowledged its obligation to
indemnify the party seeking indemnification hereunder; provided that counsel for
the Indemnifying Party shall be approved by the Indemnitee or SELLER Indemnitee;
and provided further that the Indemnifying Party shall not, without the consent
of the Indemnitee or SELLER Indemnitee, consent to the entry of any judgment or
enter into any settlement that adversely affects the business or operations of
the Indemnitee or SELLER Indemnitee or that does not include the giving by the
claimant or plaintiff to such Indemnitee or SELLER Indemnitee of a release from
all liability with respect to such Claim for litigation. If any Indemnifying
Party shall undertake to compromise or defend any such asserted liability, such
party shall promptly notify the Indemnitee or SELLER Indemnitee of such party's
intention to do so, and the Indemnitee or SELLER Indemnitee agrees to cooperate
fully with the Indemnifying Party and such party's counsel in the compromise of,
or defense against, any such asserted liability. All costs and expenses incurred
in connection with such cooperation shall be borne by the Indemnifying Party. In
any event, the Indemnitee or SELLER Indemnitee shall have the right at its own
expense to participate in the defense of such asserted liability.
ii. An Indemnitee or SELLER Indemnitee shall not compromise or settle any matter
which, if sustained, would entitle the Indemnitee or SELLER Indemnitee to
indemnification hereunder from SELLER or BUYER, as the case may be, which
consent shall not be unreasonably withheld or delayed. Xx. Xxxxxxx Xxxx
(including any successor designated by the unanimous written consent of SELLER)
is hereby irrevocably designated as the SELLER agent for purposes of consenting
to any compromise or settlement in accordance with this Section 8.B.ii. and each
shall have authority to determine the validity of, satisfy, compromise, settle
or otherwise to adjust any Claims on behalf of SELLER which may, in the sole
judgment of either of them, affect the liability of SELLER to any Indemnitee or
SELLER Indemnitee pursuant to this Agreement.
D. Survival of Representations and Warranties. All representations and
warranties of SELLER contained herein (including all schedules and exhibits
hereto) or in any certificate, Schedule or other instrument or document
delivered pursuant to this Agreement and the Ancillary Documents and the
provisions of this Section 8 shall survive the execution hereof and Closing Date
for a period of two (2) years from and after the Closing Date, except that with
respect to any warranty or representation with respect to Taxes and/or any
willful, intentional or knowing misrepresentation of SELLER or any of the
officers, directors, employees, agents or representatives of SELLER
(collectively "SELLER and their Agents"), such warranty and representation shall
survive until the later of the end of said two- year period or expiration of the
applicable statute of limitations pursuant to which BUYER or any Indemnitee or
SELLER Indemnitee can seek recovery from SELLER and its Agents.
SECTION 9. CONFIDENTIALITY.
A. Respective Obligations. Each of the parties hereto and their respective
representatives will hold in confidence any data and information obtained with
respect to any other party, or the business of any other party, from any
representative, officer, director or employee of such party, or from any books
or records of such party in connection with this Agreement or the transactions
contemplated by this Agreement, and shall not use such data and information
except for the reasonable due diligence purposes of such party exclusively
related to the transactions contemplated hereby. No party receiving such
confidential information shall disclose such information to any person except
for such party's officers, directors, independent accountants, legal counsel or
other representatives (collectively, "Representatives") with a need to know such
information for the purpose of evaluating the transactions contemplated hereby.
The parties will inform their respective Representatives that by receiving any
such confidential information, they are agreeing to be bound by the terms of
this Section 9. Confidential information shall not include information in the
public domain, information published or disseminated by the party generating
such information without restriction to other persons, information which is
independently developed by the other party, information identified in writing by
the furnishing party as not being confidential or information which is required
by any applicable law or regulation to be disclosed.
B. Survival. The obligations and rights of the parties under this Section 9
shall survive any expiration or termination of this Agreement for any reason
whatsoever.
C. Termination. If this Agreement is terminated pursuant to Section 7, all
copies of written data and information, including copies in the possession of
such Party's Representatives, obtained by any of the parties hereto from any
other party shall be returned promptly to the relevant party upon request
therefore by the party providing such data or information or that Party's
counsel. Each party hereto agrees to use all reasonable efforts to keep
confidential any information obtained by it unless and until such information is
ascertainable from public or published information or trade sources or is
otherwise a matter of public knowledge or unless the information is needed in
connection with any on-going dispute among the parties hereto. Each party shall
keep all information confidential and shall not use such information for such
Party's benefit in the event this Agreement is terminated pursuant to Section 7.
The obligations under this Section 9 are in addition to the and not in lieu of
obligations arising under any other confidentiality or similar agreement between
BUYER and any of the other parties hereto.
SECTION 10. MISCELLANEOUS.
A. Governing Law. This Agreement and all transactions contemplated by this
Agreement shall be governed by, and construed and enforced in accordance with,
the internal laws of the State of California without regard to principles of
conflicts of laws to the extent that such principles would require the
application of the laws of any jurisdiction other than the State of California.
B. No Assignment; Successors and Assigns. BUYER may assign its rights and
obligations hereunder to any entity wholly owned by BUYER, without the consent
of notice to SELLER. Except as otherwise provided herein, the provisions hereof
shall inure to the benefit of, are binding upon and are enforceable by and
against the parties and their respective legal representatives, successors and
permitted assigns. SELLER may not assign their rights and obligations hereunder
without the written consent of BUYER.
C. Entire Agreement. This Agreement (including all the Exhibits and Schedules
hereto) constitutes the full and entire understanding and agree among the
parties with regard to the subject matter hereof and supersedes all prior
negotiations, understandings and representations, both written and oral, if any,
made by and among such parties, including, without limitation, the Memorandum of
Understanding dated June 18, 1999, between SELLER and BUYER.
D. Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given (i) on the date of receipt, if delivered personally;
(ii) seven (7) days after being mailed by registered or certified mail, return
receipt requested; (iii) upon delivery by commercial overnight courier (e.g.,
Federal Express, DHL, etc.), return receipt or confirmation of delivery
requested; or (iv) by facsimile transmission with voice confirmation of receipt,
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
i. If to BUYER to:
The Hartcourt Companies, Inc.
0000 X. Xxxxxx Xx.
Xxxx Xxxxx, XX 00000 XXX
(000)000-0000
Fax# (000)000-0000
ii. If to SELLER to:
Financial Telecom Limited
308 Hang Bong Xxxxxxxxxx Xxxxxx,
00 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxx Xxxx
(000)0000-0000
Fax#(000)0000-0000
E. Cooperation. The parties agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be necessary or desirable in order to expeditiously consummate or implement
the transactions contemplated by this Agreement.
F. Interpretation. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
G. Delays or Omissions. No delay or omission to exercise any right, power or
remedy accruing to any party to this Agreement, upon any breach or default of
another party under this Agreement, shall impair any such right, power or remedy
of such party nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereunder occurring; nor shall any waiver of any single breach or default
theretofore or thereafter occurring act as a waiver of any other breach or
default under this Agreement. Any waiver, permit, consent or approval of any
kind or character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing subject to the provisions of
Section 7 hereof. Except as otherwise provided herein, all remedies, either
under this Agreement, or by law or otherwise afforded to any party, shall be
cumulative and not alternative.
H. Counterparts. This Agreement may be executed in any number of counterparts,
each of which may be executed by less than all of the parties, each of which
shall be enforceable against the parties actually executing such counterparts,
and all of which together shall constitute one instrument.
I. Severability. If any provision of this Agreement or any Ancillary Document
entered into pursuant hereto is contrary to, prohibited by or deemed invalid
under applicable law or regulation, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible. If any provision of this Agreement may be
construed in two or more ways, one of which would render the provision invalid
or otherwise voidable or unenforceable and another of which would render the
provision valid and enforceable, such provision shall have the meaning which
renders it valid and enforceable.
J. Attorney's Fees. In the event any arbitration, litigation or other legal
action or proceeding is brought between the parties to enforce any provision of
this Agreement or because of an alleged dispute, breach, default or
misrepresentation in connection with any provision of this Agreement, the
prevailing party will be entitled to an award of judgment for all reasonable
costs incurred by reason of such proceeding, including reasonable attorneys'
fees even if incident to appellate, bankruptcy, post-judgment or alternative
dispute resolution proceedings, payments owed to arbitrators, travel expenses,
per diem expenses, witness fees, investigative fees, paralegal fees and all
other reasonable charges billed by an attorney for the prevailing party. A party
not entitled to recover its costs shall not recover attorneys' fees. No sum for
attorneys' fees shall be counted in calculating the amount of a judgment for
purposes of determining whether a party is entitled to recover its costs or
attorneys' fees.
K. Specific Performance. Each of the parties acknowledges that the parties will
be irreparably damaged (and damages at law would be an inadequate remedy) if
this Agreement is not specifically enforced. Therefore, in the event of a breach
or threatened breach by any party of any provision of this Agreement, then the
other parties shall be entitled subject to the provisions of Section 9 hereof,
in addition to all other rights or remedies, to injunctions restraining such
breach, without being required to show any actual damage or to post any bond or
other security, unless the court adjudicating the motion for equitable relief
otherwise requires a bond, in which case the parties agree that a bond in the
amount of $1,000 is sufficient and appropriate.
L. Waivers. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto, shall be deemed to constitute
a waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein or in any Ancillary Document.
The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach.
M. Rules of Construction. In this Agreement, unless the context otherwise
requires, words in the singular include the plural and in the plural include the
singular, and words of masculine gender include the feminine and the neuter, and
when the sense so indicates words of the neuter gender may refer to any gender,
and the word "his" may include "its".
N. Jurisdiction. Each of the parties hereto irrevocably consents to the
exclusive jurisdiction of the federal and state courts located in Los Angeles
County, California, in any and all actions between or among any of the parties
hereto, whether arising hereunder or otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day first
above written.
BUYER:
THE HARTCOURT COMPANIES, INC.,
a Utah corporation, USA
By:_________________________
Xxxx X. Xxxx, Chairman
SELLERS:
FINANCIAL TELECOM LIMITED,
a Hong Kong corporation
By:_________________________
Xxxxxxx Xxxx, Managing Director
Schedule 1(a)(iv)
Bonus, Compensation, Health and Other Plans
Bonus
Bonus may be paid to the staff members from time to time based on staff
performance and profitability of the company while such payment is solely at the
discretion of the company.
Compensation - Overtime
Overtime work with prior approval of immediate supervisor is subject to overtime
pay based on the following formula :-
Overtime pay per hour = Basic monthly salary / 8 hours / 30 days x 1.5
Minimum overtime work being 30 minutes.
Compensation - Vacation Leave and Casual Leave
Staff member having completed the probation period is entitled to pay vacation
leave of :
14 working days for the first year 17 working days for the second year
and thereafter
21 working days per year for staff member who is also the authorized
signatory of the company
Vacation leave entitlement is calculated on the fiscal year basis from July 1 to
June 30 starting from the joining date of staff member. A maximum of 14 days of
unclaimed leave is allowed for rolling over to the succeeding fiscal year, while
the unclaimed leave in excess of 14 days will be forfeited.
Casual leave application will be considered on the merits of the individual case
and requires approval by the department head in advance, whenever possible.
Casual leave taken wil offset the balance of vacation leave of the staff member.
Compensation - Advance Leave
No advance leave will be allowed to staff member except under the following
situations :
Examinations
Marriage
Emergency
and provided that sound and proven evidence is available for consideration and
approval by supervisor, and that the staff member has served the company for
more than 3 months. Under NO circumstances however, that more than 7 days of
advance leave will be granted.
Schedule 1(a)(iv) continued
Compensation - Meal and Travel Allowance
Meal allowance of HK$30 will be paid to staff member having overtime work of
over 3 hours and that such work period either cover 1:00 pm on Saturdays and
Holidays or 8:30 pm on weekings.
Travel allowance of HK$30 will be paid to staff member having overtime work
beyond 10:00 pm on any working day or on Sunday or public holiday.
Compensation - Education Allowance
Subject to prior approval by department head, staff member will be entitled to
reimbursement of education fees including course fees and examination fees on
subjects directly related to the job nature of the staff member.
Health Plan [Refer to Attachment 1(a)(iv)] Staff member is entitled to company
medical benefits from either :
Government Hospital / Clinics Consultations
Staff member to pay 100% of total xxxx amount first and to claim for
reimbursement of 70% from the company subsequently
Doctors of the SMS Group
Staff member to pay 30% of the xxxx for General Care consultation in
clinic, remaining 70% to be settled by the company. For Specialist Care
consultation referred by the General Care doctors, staff will have to pay
HK$140 in clinic, remaining HK$160 to be settled by the company. For
laboratory and X-ray tests referred by the panel doctors, staff will have
to pay 30% of the xxxx and the company will settle the remaining 70%.
A ceiling of HK$3,000 on the above benefits will be applicable to each
staff member per annum.
Hospitalization Allowance
A ceiling of HK$3,000 for reimbursement of hospitalization expenses will
also be applicable to each staff member per annum
Schedule 2(b)(i)
Authorized, Issued and Outstanding Capital Stock
COMMON STOCK
Authorized:
[ 8,800,000 ] Shares Authorized.
Outstanding: 3,519,349
Shareholder Shares Percentage
Xxxxxxx International Limited 3,427,349 97.39%
Tang Wing On 92,000 2.61%
--------- -------
3,519,349 100.00%
No other common stock is outstanding.
PREFERRED STOCK
NIL
Schedule 2(g)
FINANCIAL STATEMENTS
Attachment
Details Reference
------------------------------------------------------------- -------------
Audited Financial Statements for the year ended June 30, 1996 2(g)-1
Audited Financial Statements for the year ended June 30, 1997 2(g)-2
Audited Financial Statements for the year ended June 30, 1998 2(g)-3
Financial Statement for the eight (8) months ended February 28, 1999 2(g)-4
Schedule 2(j)
Insurance Policies and Claims
Refer to Attachment 2(j)
I N S U R A N C E P O L I C I E S
Policy Expiry Insurance Sum
Coverage Details Number Date Company Insured
(HK$)
Financial Telecom Limited
Employee' Compensation W53-041442 31/12/99 Wing Lung Insurance $1,427,000
Public Liability - Office W53-041443 31/12/99 Wing Lung Insurance $2,000,000
Public Liability - Satellite Disc & Equip. W53-041444 31/12/99 Wing Lung Insurance $5,000,000
Public Liability - Transmission Sites W53-041445 31/12/99 Wing Lung Insurance $5,000,000
Burglary W53-041446 31/12/99 Wing Lung Insurance $120,000
Money In Transit W67-045012 30/06/00 Wing Lung Insurance $30,000
Commercial Fire - Transmitter & Equip. W11-137909 30/06/00 Wing Lung Insurance $900,000
Fire & Extended Perils - F & F, Computers 100000805 02/02/00 Sedgwick $1,350,000
Topomedia
Buildings - Hang Bong Commercial Centre W11-136533 16/05/00 Wing Lung Insurance $5,000,000
Xxxxxxx
Buildings - Hang Bong Commercial Centre W11-136532 16/05/00 Wing Lung Insurance $3,000,000
Schedule 2(k)
Material Personal Property
NIL
Schedule 2(k)(iii)
Real Property Leases
Office
Landlord: Xxxxxxx International Ltd
Agreement Details: Leased Agreement of Office Premises
Leased Location: Xxxx Xx. 0 & 0, 0/X, Xxxx Xxxx Xxxxxxxxxx
Xxxxxx
00 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxx Xxxx
Current Period: Feb 5, 1999 to Feb 4, 2002
Monthly Rental: HK$21,573.00 per month
(rates, utility bills and management fee are
paid by Tenant)
Refer to Attachment 2(k)(iii)-1
Transmission Sites
Refer to Attachment 2(k)(iii)-2
Schedule 2(k)(iv)
Property, Machinery and Equipment
Refer to Attachment 2(k)(iv)
Schedule 2(l)
Licenses, Certificates and Permits and
Pending/Threatened Proceedings
Licenses:
Effective / Attachment
Authority Name Licence Details Expiry Date Reference
Office of the Telecommunications Public Radiocommunication May 1, 1996 / 2(l)-1
Authority Service Licence April 30, 2006
(Licence No: 054)
Post Office Telecom Licensing Radio Dealers Licence (Restricted) Xxx 00, 0000 / 0(x)-0
Xxxxxx - Xxxx Xxxx **
** No expiry date. Agreement is continuous until notice of termination from
either party.
Certificate:
Issue Attachment
Issuance Office Name of Certificate Date Reference
Registrar of Companies Certificate of Incorporation Jun 10, 1983 2(l)-3
Inland Revenue Department Business Registration Certificate Jun 10, 1999 2(l)-4
(renew annually)
Schedule 2(m)
Regulatory Filings
Filing Document Year of Filing Attachment Reference
Annual Return 1999 2(m)-1
Profits Tax Computation 1996/97 2(m)-2
Profits Tax Computation 1997/98 2(m)-3
Profits Tax Computation 1998/99 2(m)-4
Schedule 2(n)(i)
Material Contracts
Effective / Attachment
Vendor Contract Details Expiry Date Reference
Xxxxxxx International Ltd Tenancy Agreement for Office Premises Feb 5, 1995 / 2(n)(i)-1
Feb 4, 2002
China Motion Telecom (HK) Ltd Radio Paging Network Operation Mar 1, 1998 / 2(n)(i)-2
**
Hong Kong Futures Exchange Ltd Provision of Real Time Composite Signal Jan 1, 1998 / 2(n)(i)-3
**
Internet Access H.K. Ltd Real-time Online Financial Data and Jul 29, 1996 / 2(n)(i)-4
Information through Internet **
Korea Leasing (Hong Kong) Ltd Property Mortgage Loan to Xxxxxxx May 17, 1994 / 2(n)(i)-5
International Ltd on Office Premises May 16, 2009
Omega Research International Reseller on Omega's Feb 20, 1998 / 2(n)(i)-6
Product in Hong Kong Feb 19, 2000
Shanghai VSAT Network Systems Transmission of Real-time AFX news May 6, 1998 / 2(n)(i)-7
Co Ltd through Satellite for News Translation **
Sino Information Services Co Ltd Distribution of Financial Data and Jan 19, 1996 / 2(n)(i)-8
Information from Bank of China **
Effective / Attachment
Vendor Contract Details Expiry Date Reference
Commodity Quotations, Inc. XxxXxxxx Information Distribution Dec 1, 1990 / 2(n)(i)-9
License Agreement #
Stock Exchange Information Provision of Market Datafeed Service Apr 1, 1998 / 2(n)(i)-10
Services Ltd **
Tse's Forex Investment Co Ltd Distribution of Foreign Exchange Sep 26, 1995 / 2\(n)(i)-11
Quotation from Tse's Co. **
Commodity Quotations, Inc. XxxXxxxx Service Marketing May 1, 1991 / 2(n)(i)-12
Representative Agreement #
** No expiry date. Agreement is continuous until notice of termination from
either party.
# Renewed by verbal agreement. Valid until notice of termination from either
party.
Schedule 2(n)(ii)
Contracts in Default
NIL
Schedule 2(n)(iii)
Related Party Contracts
Nature of Contract: Tenancy Agreement
Party: Xxxxxxx International Ltd
Relationship: 1. Xx Xxxx Ping Wing is both the Director
of Xxxxxxx International Ltd and
Financial Telecom Ltd.
2. Xx Xxxx Wing On is both the shareholder of
Xxxxxxx International Ltd and Financial
Telecom Ltd.
Refer to Attachment 2(n)(iii)
Schedule 2(o)
Litigation Summary
NIL
Schedule 2(q)
Interested Party Transactions.
NIL
Schedule 2(s)
Bank Accounts
Bank Name Address Account No. Signatories
Wing Lung Bank Ltd Ground Floor S/A#06-201-6354-2 Class A & B
00 Xxxxx'x Xxxx Xxxxxxx X/X#00-000-0000-0
Xxxx Xxxx
Standard Chartered Bank Shop 101 C/A#343-0-007752-1 Class A & X
Xxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxx Xxxx
Bank of China Bank of China Tower C/A#000-000-00000000 Class A & X
0 Xxxxxx Xxxx Xxxxxxx
Xxxx Xxxx
Xxxxxxxx Bank Shop 101, Pioneer Centre S/A#000-0-000000 Class A & B
000 Xxxxxx Xxxx, Xxxxxxx X/X#000-000000-000
Xxxx Xxxx
Bank of East Asia Ltd Ground Floor Class A only
00 Xxx Xxxxx Xxxx Xxxxxxx X/X#000-00-00000-0
Xxxx Xxxx
Signatories of Class A includes: Tang Wing On, Xxxx Xxx Wing & Tang Ping Wing
Signatories of Class B includes: Xxxxx Xxx Ping & Xxx Xxxx Har
Remarks: All bank signature must be signed by two signatories and one of the
signatory must be in Class A.
Schedule 2(t)(i)
Employment, Consulting and Other Personal Service Contracts
Employment Contracts
Employee Position/Job Description Hire Date Annual Salary
Refer to Attachment 2(t)(i) (inside sealed envelope)
Consulting Contracts
Name of Party Service Monthly Charge Termination
ABC Data & Telecom Ltd General consultancy and computer HK$27,000 3 months advance *
software development notice
Xx Xxxx Xxxx General consultancy on software HK$3,000 plus 1 month advance **
development HK$250 per hour notice
* Agreement being prepared
** Verbal contract
Schedule 2(w)
Proprietary Rights
Right Description Expiration
NIL
ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Agreement") is effective as of September 9,
1999 by and among The Hartcourt Companies, Inc., a Utah corporation, whose
principal executive office is located at 0000 X. Xxxxxx Xx., Xxxx Xxxxx, XX
00000 ("Buyer"), Financial Telecom Limited ("Seller"), a Hong Kong corporation
with principal office at 308 Hang Bong Xxxxxxxxxx Xxxxxx, 00 Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxxx Xxxx and Xxxxxxx Xxxx & Co., whose principal office is located at
00/X, Xxx Xxxxx xxx Xxxxx Xxx Xxxxxxxx, 22-26 Bonham Strand, Xxxxxx Xxx, Hong
Kong (the "Escrow Agent"), with reference to the following facts:
RECITALS:
WHEREAS, Buyer and Seller have entered into a separate agreement on
August 17, 1999 for the purchase and sale of 58.53 percent of the common shares
of Seller, for the purchase price of 4.713 Hong Kong Dollars per share, total
shares being 4,964,990 common shares of FTL the total purchase price being
HK$23.4 Million which purchase price is payable as follows: Fifty (50%) percent
of said purchase price (HK$11.7 Million) shall be paid in cash and a like sum to
be paid in common shares of Buyer or any acceptable NASD listed company under
the following terms, conditions and schedules, and
WHEREAS, Buyer and Seller do hereby agree that the purchase price shall
be paid as follows:
A. On or before September 20, 1999, Buyer shall deposit with the Escrow
Agent HK$ 3.9 million (hereinafter called "Escrow B1") and Seller shall deposit
827,498 of its common shares with said Escrow Agent (hereinafter called "Escrow
S1"). Upon receipt of Escrow B1 by the Escrow Agent, the Seller hereby
irrevocably authorizes the Escrow Agent to release and the Escrow Agent shall
release Escrow S1 to the Buyer. Upon receipt of Escrow S1 by the Escrow Agent,
the Buyer irrevocably authorizes the Escrow Agent to release and the Escrow
Agent shall release Escrow B1 to the Seller.
B. On or before October 15, 1999, Buyer will deliver to the Escrow
Agent its common shares or common shares of another acceptable NASD listed
company equivalent in value to HK$ 11.7 Million (hereinafter called "Escrow B2")
with the price per share and consequential number of shares determined in
accordance with the formula agreed to in the previously executed purchase
agreement of August 17, 1999. Seller will inform the Escrow Agent in writing the
contents of Escrow B2 on or before October 15, 1999. Seller will deliver
4,137,492 of its common shares (hereinafter called "Escrow S2") which shares
represent the balance of its shares which shall result in Buyer having
Fifty-Eight and Fifty Three Hundredths (58.53%) Percent ownership of Seller.
Upon fulfillment of these conditions by Buyer and Seller, the Escrow Agent is
hereby authorized by Buyer and by Seller to deliver Escrow S2 to Buyer and
Escrow B2 to Seller.
C On or before October 20, 1999, Buyer shall pay directly to Seller HK$
3.9 Million.
D. On or before November 20, 1999, Buyer shall pay directly to Seller
HK$ 3.9 Million in final payment of its purchase.
.
Buyer and Seller further agree and understand that the provisions herein
contained shall supercede and take precedence over the "payment" provisions
previously executed by Buyer and Seller in the Stock Purchase Agreement and the
above provisions A, B, C and D replace Section 1-A.iii of the Stock Purchase
Agreement executed by and between Buyer and Seller.
WHEREAS, Buyer and Seller have requested the Escrow Agent to act as
escrow agent for the transactions contemplated in this Agreement, and to accept
the delivery of documents, funds and shares, and to disburse such shares, funds
and documents, in accordance with the terms of this Agreement; and
WHEREAS, the Escrow Agent is amenable to acting in such separate and
independent capacity pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for valuable consideration, the receipt and sufficiency of
which are hereby mutually acknowledged, the parties to this Agreement
(collectively "parties," and individually "party") agree as follows:
AGREEMENT:
1. ACCEPTANCE OF DOCUMENTS, FUNDS AND SHARES; RELATIONSHIP TO BUYER
The Escrow Agent agrees to accept for retention all documents, funds and shares
from Buyer and Seller, which may only be disbursed as described above. Buyer and
Seller acknowledge and agree that the Escrow Agent is performing this service at
the request of, and as an accommodation to Buyer and Seller. Except for the
duties of the Escrow Agent to disburse documents, funds and shares as provided
by the Agreement, the Escrow Agent shall have no duties or obligations to Buyer
or Seller or any of them, and, in any event, the Escrow Agent shall not be
presumed, implied or otherwise construed to be acting as legal counsel to Buyer
or Seller or any of them. The Escrow Agent shall have no responsibility for any
funds or shares not transmitted to the Escrow Agent.
2. RESPONSIBILITIES AND DUTIES OF THE PARTIES
(a) Deliveries by the Parties: Delivery of the escrow items shall be
made in the manner and amounts as above set forth in Sections A and B above
written.
3. DISBURSEMENT OF ESCROWED DOCUMENTS, FUNDS AND SHARES TO THE BUYER
AND SELLER
(a) In the event that all the terms of this Agreement are complied
with, and Buyer and Seller have fulfilled all requirements set forth for each,
then in that event the Escrow Agent shall disburse to each documents, funds and
shares in accordance with Sections A and B hereinabove set forth.
4. DISCHARGE OF ESCROW AGENT'S OBLIGATIONS
The obligations of the Escrow Agent for the documents and shares received
hereunder shall terminate upon the disbursement of all documents and shares to
Buyer pursuant to the terms of this Agreement.
5. COMPENSATION
The Escrow Agent shall receive such compensation for its services hereunder as
shall be agreed to by Buyer, Seller and the Escrow Agent.
6. MATTERS PERTAINING TO ESCROW AGENT
(a) No Liability for Acts; Indemnity. The Escrow Agent shall not be
personally liable for any act it may do or omit to do under this Agreement while
acting in good faith and in the exercise of its best judgment. In the event of a
dispute between Buyer and Seller, except as otherwise expressly provided herein,
the Escrow Agent is authorized and directed to disregard any and all notices or
warnings given by Buyer, excepting only: (i) orders or process of court; or (ii)
instructions jointly executed by Buyer and Seller. The Escrow Agent is hereby
expressly authorized to comply with and obey any and all orders, judgments or
decrees issued by any court and any instructions jointly executed by Buyer and
Seller. Buyer and Seller shall indemnify the Escrow Agent and hold it harmless
from and against any and all damages, including attorneys' fees, which the
Escrow Agent may suffer or incur by reason of the compliance by the Escrow Agent
with any such order, judgment or decree, notwithstanding that any such order,
judgment or decree may be subsequently reversed, modified, annulled, set aside
or vacated, or found to have been entered without jurisdiction.
(b) Right to File Interpleader Action. The Escrow Agent has the
absolute right, at the Escrow Agent's election, to file an action in
interpleader in a court of proper jurisdiction requiring Buyer to answer and
litigate their claims and rights among themselves, and the Escrow Agent is
authorized to deposit with the clerk of the court all documents, funds and
shares held by it pursuant to this Agreement. In the event such action is filed,
Buyer agrees to equally pay all costs, expenses and reasonable attorneys' fees
which the Escrow Agent incurs in such interpleader action. Upon filing of such
action, the Escrow Agent shall thereupon be fully released and discharged from
all obligations to further perform any duties or obligations otherwise imposed
by the terms of this Agreement.
(c) Sole Agreement between the Parties. The Escrow Agent shall not
be bound in any way by any other agreement between Buyer and Seller as to which
the Escrow Agent is not a party, whether or not the Escrow Agent has knowledge
thereof. The Escrow Agent shall have no duties or responsibilities except as
expressly set forth in this Agreement. The Escrow Agent may rely conclusively on
any certificate, statement, request, waiver, receipt, agreement or other
instrument which the Escrow Agent believes to be genuine and to have been signed
and presented by an appropriate person or persons, including copies and
facsimiles.
(d) Performance and Release. The retention and distribution of the
documents, funds and shares in accordance with the terms and provisions of this
Agreement shall fully and completely release the Escrow Agent from any
obligation or liability assumed by the Escrow Agent hereunder as to such
documents, funds or shares.
(e) No Liability for Acceptance of Documents, Funds or Shares. The
Escrow Agent shall not be liable in any respect for verifying the identity,
authority or rights of the parties executing or delivering or purporting to
execute and/or deliver the documents, funds or shares deposited hereunder.
(f) Indemnity. Buyer and Seller will indemnify, defend (with counsel
acceptable to the Escrow Agent) and hold the Escrow Agent harmless against any
and all losses, damages, claims and expenses, including reasonable attorneys'
fees, that may be incurred by the Escrow Agent by reason of its compliance with
the terms of this Agreement. If, as a result of any disagreement between Buyer
and/or adverse demands and claims being made by any of them upon the Escrow
Agent, the Escrow Agent shall become involved in litigation, including any
interpleader action brought by the Escrow Agent as provided for in this
Agreement, Buyer and Seller shall be liable to the Escrow Agent, on demand, for
all costs, expenses and attorneys' fees that the Escrow Agent shall incur and/or
be compelled to pay by reason of such litigation.
7. REPLACEMENT OF ESCROW AGENT
In the event the Escrow Agent is or becomes unwilling or unable to
act in such capacity for any reason, Buyer and Seller shall jointly appoint a
successor.
8. MISCELLANEOUS
(a) Cooperation. Each party agrees, without further consideration,
to cooperate and diligently perform any further acts, and to execute and deliver
any documents that may be reasonably necessary or otherwise reasonably required
to consummate, evidence, confirm and/or carry out the intent and provisions of
this Agreement, all without undue delay or expense.
(b) Interpretation.
(i) Survival. All representations and warranties made by any
party in connection with any transaction contemplated by this Agreement shall,
irrespective of any investigation made by or on behalf of any other party
hereto, survive the execution and delivery of this Agreement, and the
performance or consummation of any transaction described in this Agreement.
(ii) Entire Agreement/No Collateral Representations. The parties
expressly acknowledge and agree that this Agreement, (1) is the final, complete
and exclusive statement of the agreement of the parties with respect to the
subject matter hereof and that this escrow agreement shall complete the relevant
and necessary agreement among the parties, (2) supersedes any prior or
contemporaneous agreements, proposals, commitments, guarantees, assurances,
communications, discussions, promises, representations, understandings, conduct,
acts, courses of dealing, warranties, interpretations or terms of any kind as
pertains to creation of this escrow, whether oral or written (collectively and
severally, the "prior agreements"), and that any such prior agreements are of no
force or effect except as expressly set forth herein; and (3) may not be varied,
supplemented or contradicted by evidence of prior agreements, or by evidence of
subsequent oral agreements. No prior drafts of this Agreement, and no words or
phrases from any prior drafts, shall be admissible into evidence in any action
or suit involving this Agreement.
(iii) Amendment; Waiver; Forbearance. Except as expressly
provided otherwise herein, neither this Agreement nor any of the terms,
provisions, obligations or rights contained herein, may be amended, modified,
supplemented, augmented, rescinded, discharged or terminated (other than by
performance), except by a written instrument or instruments signed by all of the
parties to this Agreement. No waiver of any breach of any term, provision or
agreement contained herein, or of the performance of any act or obligation under
this Agreement, or of any extension of time for performance of any such act or
obligation, or of any right granted under this Agreement, shall be effective and
binding unless such waiver shall be in a written instrument or instruments
signed by each party claimed to have given or consented to such waiver and each
party affected by such waiver. Except to the extent that the party or parties
claimed to have given or consented to a waiver may have otherwise agreed in
writing, no such waiver shall be deemed a waiver or relinquishment of any other
term, provision, agreement, act, obligation or right granted under this
Agreement, or any preceding or subsequent breach thereof. No forbearance by a
party to seek a remedy for any noncompliance or breach by another party hereto
shall be deemed to be a waiver by such forbearing party of its rights and
remedies with respect to such noncompliance or breach, unless such waiver shall
be in a written instrument or instruments signed by the forbearing party.
(iv) Remedies Cumulative. The remedies of each party under this
Agreement are cumulative and shall not exclude any other remedies to which such
party may be lawfully entitled.
(v) Severability. If any term or provision of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
determined to be invalid, illegal or unenforceable under present or future laws,
then, and in that event: (1) the performance of the offending term or provision
(but only to the extent its application is invalid, illegal or unenforceable)
shall be excused as if it had never been incorporated into this Agreement, and,
in lieu of such excused provision, there shall be added a provision as similar
in terms and amount to such excused provision as may be possible and be legal,
valid and enforceable; and (2) the remaining part of this Agreement (including
the application of the offending term or provision to persons or circumstances
other than those as to which it is held invalid, illegal or unenforceable) shall
not be affected thereby, and shall continue in full force and effect to the
fullest extent provided by law.
(vi) Time of the Essence. It is expressly understood and agreed
that time of performance is strictly of the essence with respect to each and
every date, term, condition, obligation and provision hereof and that the
failure to timely perform any of the terms, conditions, obligations or
provisions hereof by any party shall constitute a material breach and a
noncurable (but waiveable) default under this Agreement by the party so failing
to perform.
(vii) Parties in Interest. Notwithstanding anything else to the
contrary herein, nothing in this Agreement shall confer any rights or remedies
under or by reason of this Agreement on any persons other than the parties
hereto and their respective successors and assigns, if any, as may be permitted
hereunder, nor shall anything in this Agreement relieve or discharge the
obligation or liability of any third person to any party to this Agreement, nor
shall any provision give any third person any right of subrogation or action
over or against any party to this Agreement.
(viii) No Reliance Upon Prior Representation. Each party
acknowledges that: (1) no other party has made any oral representation or
promise which would induce them prior to executing this Agreement to change
their position to their detriment, to partially perform, or to part with value
in reliance upon such representation or promise; and (2) such party has not so
changed its position, performed or parted with value prior to the time of the
execution of this Agreement, or such party has taken such action at its own
risk.
(ix) Headings; References; Incorporation; "Person"; Gender;
Statutory References. The headings used in this Agreement are for convenience
and reference purposes only, and shall not be used in construing or interpreting
the scope or intent of this Agreement or any provision hereof
(c) Enforcement.
(i) Applicable Law. This Agreement and the rights and remedies of
each party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in accordance with the laws (without regard to the
conflicts of law principles) of the jurisdiction as is set forth in the Stock
Purchase Agreement entered into between the parties.
(ii) Consent to Jurisdiction; Service of Process. Any "action or
proceeding" (as such term is defined below) arising out of or relating to this
Agreement shall be filed in and heard and litigated solely before the state
courts of California located within the County of Los Angeles, State of
California, United States of America. Each party generally and unconditionally
accepts the exclusive jurisdiction of such courts and venue therein; consents to
the service of process in any such action or proceeding by certified or
registered mailing of the summons and complaint in accordance with the notice
provisions of this Agreement; and waives any defense or right to object to venue
in said courts based upon the doctrine of "forum non conveniens." The term
"action or proceeding" is defined as any and all claims, suits, actions,
hearings, arbitrations or other similar proceedings, including appeals and
petitions therefrom, whether formal or informal, governmental or
non-governmental, or civil or criminal.
(iii) Recovery of Fees and Costs. If any party institutes or
should the parties otherwise become a party to any action or proceeding based
upon or arising out of this Agreement including, without limitation, to enforce
or interpret this Agreement or any provision hereof, or for damages by reason of
any alleged breach of this Agreement or any provision hereof, or for a
declaration of rights in connection herewith, or for any other relief, including
equitable relief, in connection herewith, the "prevailing party" (as such term
is defined below) in any such action or proceeding, whether or not such action
or proceeding proceeds to final judgment or determination, shall be entitled to
receive from the non-prevailing party as a cost of suit, and not as damages, all
reasonable fees, costs and expenses of enforcing any right of the prevailing
party (collectively, "fees and costs"), including, without limitation: (1)
reasonable attorneys' fees and costs and expenses; (2) witness fees (including
experts engaged by the parties, but excluding shareholders, officers, employees
or partners of the parties); (3) fees, costs and expenses of accountants and
other professionals; and (4) any and all other similar fees incurred in the
prosecution or defense of the action or proceeding including, without
limitation, fees incurred in the following: (A) postjudgment motions; (B)
contempt proceedings; (C) garnishment, levy, and debtor and third party
examinations; (D) discovery; and (E) bankruptcy litigation. All of the aforesaid
fees and costs shall be deemed to have accrued upon the commencement of such
action and shall be paid whether or not such action is prosecuted to judgment.
Any judgment or order entered in such action shall contain a specific provision
providing for the recovery of the aforesaid fees, costs and expenses incurred in
enforcing such judgment and an award of prejudgment interest from the date of
the breach at the maximum rate of interest allowed by law. The term "prevailing
party" is defined as the party who is determined to prevail by the court after
its consideration of all damages and equities in the action or proceeding,
whether or not the action or proceeding proceeds to final judgment (the court
shall retain the discretion to determine that no party is the prevailing party
in which case no party shall be entitled to recover its fees and costs under
this section 9(d)).
(d) Successors and Assigns. All of the representations, warranties,
covenants, conditions and provisions of this Agreement shall be binding upon and
shall inure to the benefit of each party and such party's respective successors
and permitted assigns, spouses, heirs, executors, administrators and personal
and legal representatives.
(e) Notices. Unless otherwise specifically provided in this
Agreement, all notices, demands, requests, consents, approvals or other
communications (collectively and severally called "notices") required or
permitted to be given hereunder, or which are given with respect to this
Agreement, shall be in writing, and shall be given by: (i) personal delivery
(which form of notice shall be deemed to have been given upon delivery); (ii) by
telegraph or by private airborne/overnight delivery service (which forms of
notice shall be deemed to have been given upon confirmed delivery by the
delivery agency); (iii) by electronic or facsimile or telephonic transmission,
provided the receiving party has a compatible device or confirms receipt thereof
(which forms of notice shall be deemed delivered upon confirmed transmission or
confirmation of receipt); or (iv) by mailing in the United States mail by
registered or certified mail, return receipt requested, postage prepaid (which
forms of notice shall be deemed to have been given upon the fifth 5th business
day following the date mailed). Each party, and their respective counsel, hereby
agree that if notice is to be given hereunder by such party's counsel, such
counsel may communicate directly with all principals, as required to comply with
the foregoing notice provisions. Notices shall be addressed at the addresses
hereinabove set forth in the introductory section of this Agreement or to such
other address as the receiving party shall have specified most recently by like
notice, with a copy to the other parties hereto. Any notice given to the estate
of a party shall be sufficient if addressed to the party as provided in this
section. Any party may, at any time by giving five (5) days' prior written
notice to the other parties, designate any other address in substitution of the
foregoing address to which such notice will be given.
(f) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument, binding on all parties hereto. Any
signature page of this Agreement may be detached from any counterpart of this
Agreement and reattached to any other counterpart of this Agreement identical in
form hereto by having attached to it one or more additional signature pages.
(g) Execution by All Parties Required to be Binding; Electronically
Transmitted Documents. This Agreement shall not be construed to be an offer and
shall have no force and effect until this Agreement is fully executed by all
parties hereto. If a copy or counterpart of this Agreement is originally
executed and such copy or counterpart is thereafter transmitted electronically
by facsimile or similar device, such facsimiled document shall for all purposes
be treated as if manually signed by the party whose facsimile signature appears.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
"BUYER"
THE HARTCOURT COMPANIES, INC.
a Utah corporation
By:
---------------------------------
Xx. Xxxx Xxxx, President
"SELLER"
FINANCIAL TELECOM LIMITED
a Hong Kong Corporation
By:
----------------------------------
Xxxxxxx Xxxx, Managing Director
"ESCROW AGENT"
XXXXXXX XXXX & CO,
Solicitors
By:
----------------------------------
