Dated the 29th day of December 2006 Zhou Haisheng Liu Gang and AI-ASIA INFORMATION TECHNOLOGY (SHANGHAI) CO., LTD.
EXHIBIT 10.2
Dated
the 29th
day of December 2006
Zhou
Xxxxxxxx
Xxx
Gang
and
AI-ASIA
INFORMATION TECHNOLOGY (SHANGHAI) CO., LTD.
ON
CHINA PRINCELY EDUCATION TECHNOLOGY DEVELOPMENT (BEIJING) COMPANY
LIMITED
Table
of Contents
|
1
|
Definitions
|
3
|
|
2
|
Preconditions
|
6
|
|
3
|
Assets
and Operation of China Princely
|
6
|
|
4
|
Sale
and Purchase of the Sale Interests
|
6
|
|
5
|
Representations
and Warranties
|
7
|
|
6
|
Fees
and Taxes
|
8
|
|
7
|
Registration
of the Ownership Change of China Princely
|
9
|
|
8
|
Business
Term of Wholly owned foreign China Princely
|
9
|
|
9
|
Confidentiality
|
9
|
|
10
|
Breach
of the Agreement
|
9
|
|
11
|
Dispute
Settlement
|
9
|
|
12
|
Governing
Law and Jurisdiction
|
9
|
|
13
|
Effectiveness
|
9
|
|
14
|
Miscellaneous
|
10
|
|
Schedule
1:
|
Acknowledged
Due Diligence Results & Financial Projections
|
12
|
|
Schedule
2:
|
Assets
and Liabilities List and Relevant Proofs of China Princely
|
13
|
|
Schedule
3:
|
Licenses
and Permits for China Princely to be an Authorized Accrediting
Organization in Vocational
Education
|
14
|
|
Schedule
4:
|
Primary
Terms and Conditions of the Sale and Purchase Agreement
|
15
|
|
Schedule
5:
|
Primary
Terms and Conditions of the Share Consideration
|
16
|
2
THIS
AGREEMENT
is
entered into on the 29th
day of
December 2006 in Shanghai.
BETWEEN:
| (1) |
Xxxx
Xxxxxxxx,
(Holder of PRC ID Number 110227631007331) of Room 601, Xx.0, Xxxxxxxx
00,
Xxx Xxx Xxx Xx, Xxxxxxxx Xxxxxxxx, Xxxxxxx, People’s Republic of
China;
|
Liu
Gang,
(Holder
of PRC ID Number 000000000000000000) of Wenzhou, Zhejiang, People’s Republic of
China; and
| (2) |
Ai-Asia
Information Technology (Shanghai) Co., Ltd.,
a wholly-owned foreign company with limited liability and registered
office at Room 628-14, Building 2, Guo Shou Jing Road, Zhangjiang
Hi-Tech
Park, Shanghai, People’s Republic of China and legal representative of
Zhou Bizheng. Currently it is in the process of changing its name
to
Hartcourt
Education Investment Management & Consulting (Shanghai) Co.,
Ltd.
(hereinafter “Hartcourt
Education”).
|
WHEREAS:
|
1.
|
China
Princely Education Technology Development (Beijing) Co., Ltd
(“China
Princely”)
is a company duly incorporated and validly existing with limited
liability
and has legally obtained Business License from Commercial and Industrial
Administrative Bureau (License No.
1101082787475);
|
|
2.
|
Xxxx
Xxxxxxxx and Xxx Gang are both Chinese natural persons, who are
the
shareholders of China Princely with each holding 50% equity
interest;
|
|
3.
|
Hartcourt
Education is a wholly-owned foreign company duly incorporated and
validly
existing with limited liability in
China;
|
|
4.
|
Xxxx
Xxxxxxxx and Liu Gang hereby jointly agree to sell all their 100%
equity
interests in China Princely to Hartcourt Education, and Hartcourt
Education agrees to purchase it;
|
|
5.
|
Xxxx
Xxxxxxxx signed the Memorandum of Understanding with Hartcourt
Companies,
Inc, the parent company of Hartcourt Education, on October 12,
2006.
|
THEREFORE,
IT IS HEREBY AGREED BY XXXX XXXXXXXX, LIU GANG AND HARTCOURT EDUCATION AS
FOLLOWS:
|
1.
|
DEFINITIONS
|
In
this
Agreement (including the Schedules), unless the context otherwise defines,
the
following words and expressions in capital letters shall have the following
meanings:
|
“Xxxx
Xxxxxxxx”
|
Chinese
natural person and a shareholder of China Princely with 50% equity
interest in it prior to the execution of the Agreement.
|
3
|
“Liu
Gang”
|
Chinese
natural person and a shareholder of China Princely, holding 50%
equity
interest in it through capital increase to China Princely prior
to the
execution of the Agreement.
|
|
“Hartcourt
Education”
|
Ai-Asia
Information Technology (Shanghai) Co., Ltd. It is now in the process
of
changing its name to Hartcourt Education Investment Management
and
Consulting (Shanghai) Co., Ltd. Hartcourt Education is the wholly
owned
subsidiary of Hartcourt.
|
|
“Hartcourt”
|
The
Hartcourt Companies, Inc. is incorporated in State of Utah, United
States,
the shares of which are currently listed on the Over-the-Counter
Bulletin
Board (“OTCBB”)
of the United States. Hartcourt conducts and focuses its business
on the
education investment and management.
|
|
“China
Princely”
|
China
Princely Education Technology Development (Beijing) Co., Ltd. Prior
to the
execution of the Agreement, Xxxx Xxxxxxxx and Xxx Gang are the
investors
of China Princely.
|
|
“CIVTE”
|
The
Central Institute of Vocational and Technical Education of the
Ministry of
Education, a non-enterprise entity directly under the Ministry
of
Education. Founded in 1990, CIVTE is a vocational education research
and
development institution at the national level.
|
|
“Vocational
Competency Certificate”
|
The
certificate that CIVTE authorized China Princely to grant according
to the
Letter issued by CIVTE on Sept 9, 2005, “The Letter on Consigning the Work
of Developing Curriculum Program, Training and Certifying the Vocational
Competency Based on Computer Internet (Jiao Zhi Suo [2005]
No.4)
|
|
“CASTIP”
|
China
Association of Science And Technology Industry Parks. CASTIP has
signed
with China Princely a series of cooperation agreements, including
without
limitation to the joint issuance of the vocational competency
certificates.
|
4
|
“Financial
Due Diligence”
|
The
Financial Due Diligence conducted by Hartcourt Education prior
to December
20, 2006 on China Princely’s financial standing as of November 30, 2006.
Detailed Financial Due Diligence results are set out in the Schedule
1.
|
|
“Financial
Projections”
|
In
relation to the year ending on December 31, 2007, 2008 and 2009,
the
Financial Projection on China Princely conducted by Hartcourt Education
prior to December 20, 2006. Detailed Financial Projections is set
out in
the Schedule 1.
|
|
“Sale
Interests”
|
The
100% entire interest in the registered capital of China Princely
to be
sold by Xxxx Xxxxxxxx and Xxx Gang to Hartcourt Education.
|
|
“Agreement
for Sale and Purchase of the
Entire
Interest in the Registered Capital
of
China Princely”
|
The
agreement executed by Xxxx Xxxxxxxx, Liu Gang and Hartcourt Education
on
the sale and purchase of the 100% entire interest in the registered
capital of China Princely.
|
|
“Consideration”
|
The
total consideration payable by Hartcourt Education of which includes
RMB2,400,000 cash and 5,400,000 new Hartcourt Restricted Shares
of Common
Stock. The Consideration payment terms are set out in Clause 4.2
and
4.5.
|
|
“Restricted
Shares of Hartcourt Common Stock”
|
The
ordinary restricted shares of common stock with par value of US$0.001
each
in the capital of Hartcourt to be allotted and issued. Trading
symbol:
X.X. XXXX.XX, Xxxxxxxxx 000000.
|
|
“Delivery
Date of the Sale Interests in
China
Princely”
|
The
delivery date of the 100% sale interests in China Princely, on
which,
pursuant to the PRC law, 100% control of China Princely has changed
from
Xxxx Xxxxxxxx and Xxx Gang to Hartcourt Education. Delivery Date
of Sale
Interests in China Princely shall be within 30 business days upon
obtaining all necessary consents permits and approvals from relevant
Governmental Agency on Foreign Investment.
|
|
“Consideration
Shares Trading Dates”
|
The
dates on which the restricted shares of Hartcourt common stock
as share
consideration are permitted to be freely traded at the stock exchange.
The
date shall be the first trading date after one anniversary of the
date
when Hartcourt issues the consideration shares to Xxxx Xxxxxxxx
and Liu
Gang.
|
5
|
“Governmental
Agency on Foreign Investment”
|
Relevant
PRC Administrative authority on Foreign Economic &
Trade.
|
|
“Consideration
Payment Date”
|
The
date on which Hartcourt Education pays cash consideration and issues
Restricted Shares of Hartcourt Common Stock to Xxxx Xxxxxxxx and
Xxx Gang
as set out in Clause 4.5.
|
|
“Net
Profit”
|
Net
Profit = total realized profit - income tax (all based on U.S.
GAAP and
audited by independent auditor)
|
|
2.
|
PRECONDITIONS
|
|
2.1
|
Hartcourt
Education has entrusted independent professionals to perform financial
due
diligence and financial projections on China Princely. Hartcourt
Education, Xxxx Xxxxxxxx and Liu Gang hereby acknowledge the results
of
the due diligence in writing. Acknowledged results of financial
due
diligence and financial projections are set out in Schedule 1.
|
|
2.2
|
The
authorization granted by CIVTE to China Princely to issue the Vocational
Competency Certificates and the cooperation agreements that China
Princely
and CIVTE had executed prior to the Agreement, shall remain valid
after
the Sale and Purchase of the Sale Interests.
|
|
3.
|
ASSETS
AND OPERATIONS OF CHINA
PRINCELY
|
|
3.1
|
Prior
to the Sale and Purchase of the Sale Interests, total amount of
assets of
China Princely, including but not limit to fixed assets, intellectual
property right, etc. Assets and Liabilities list and Relevant Proofs
of
China Princely are set out in Schedule 2.
|
| 3.2 |
China
Princely has obtained all the licenses and permits for granting
Vocational
Competency Certificates, including but not limit to the documents
and
agreements from or with CIVTE and CASTIP, details of which are
set out in
Schedule 3.
|
|
4
|
SALE
AND PURCHASE OF THE SALE
INTERESTS
|
|
4.1
|
Within
30 business days upon the Preconditions are satisfied and the
prerequisites are met in respect of the Assets and Operations of
China
Princely referred to in Clause 3, Xxxx Xxxxxxxx, Xxx Gang and Hartcourt
Education shall sign and execute an Agreement for Sale and Purchase
of the
Entire Interest in the Registered Capital of China Princely. Subject
to
the terms and conditions of the agreement, Xxxx Xxxxxxxx and Liu
Gang
shall sell their 100% equity interest in China Princely to Hartcourt
Education. The primary terms and conditions of the Agreement for
Sale and
Purchase of the Entire Interest in the Registered Capital of China
Princely are set out in Schedule 4.
|
6
|
4.2
|
The
Consideration for the sale and purchase of the Sale Interests shall
be an
aggregate of RMB2,400,000 cash and 5,400,000 Restricted Shares
of
Hartcourt Common Stock, based on the assets of China Princely,
the capital
injected to China Princely from Xxxx Xxxxxxxx and Xxx Gang as well
as the
financial projections each year in the future years. Among the
total
Consideration, RMB300,000 cash and the Consideration Shares shall
be paid
and issue to Xxxx Xxxxxxxx and Liu Gang proportionally to their
percentage
of equity interest in China Princely, while the rest RMB2,100,000
cash
shall be invested in China Princely as capital
injection.
|
|
4.3
|
Hartcourt
Education shall credit the Consideration to the accounts designated
by
Xxxx Xxxxxxxx and Xxx Gang.
|
|
4.4.
|
Since
the Delivery Date of the Sale Interests in China Princely, Hartcourt
Education shall take over the 100% control of China Princely from
Xxxx
Xxxxxxxx and Liu Gang as shareholder pursuant to the
Agreement.
|
|
4.5.
|
Hartcourt
Education shall credit the Consideration, satisfied as details
hereunder:-
|
| (1) |
Within
10 business days upon the Delivery Date of the Sale Interests in
China
Princely, Hartcourt Education shall credit RMB150,000 cash to Xxxx
Xxxxxxxx, and RMB150,000 cash to Liu Gang.
|
| (2) |
With
30 business days upon the Delivery Date of the Sale Interests in
China
Princely, Hartcourt Education shall injected RMB2,100,000 cash
to China
Princely to increase its registered capital.
|
| (3) |
With
30 business days upon the Delivery Date of the Sale Interests in
China
Princely, Hartcourt Education shall issue and allot the Consideration
of
total 5,400,000 Restricted Shares of Hartcourt Common Stock to
Xxxx
Xxxxxxxx and Xxx Gang with 2,700,000 shares each. Hartcourt and
Hartcourt
Education shall jointly guarantee the average closing price of
the 3 days
immediately prior to the Consideration Shares Trading Date at not
less
than US$0.50 per share, otherwise, Hartcourt shall credit additional
cash
or issue and allot additional new Restricted Shares of Hartcourt
Common
Stock to make it up. The primary terms and conditions of issuance
of
Restricted Shares of Hartcourt Common Stock and Consideration Shares
Trading Date are set out in Schedule 5.
|
In
the
event of, as deemed by Hartcourt Education reasonably, the team of Xxxx Xxxxxxxx
and Liu Gang fails to fulfill the Financial Projections of 2007 as represented
and guaranteed in the Agreement, Xxxx Xxxxxxxx and Xxx Gang agree to postpone
the Consideration Shares Trading Date for one more year.
|
5
|
REPRESENTATIONS
AND WARRANTS
|
|
5.1
|
Xxxx
Xxxxxxxx hereby represents and warrants as
follows:-
|
|
(1)
|
Xxxx
Xxxxxxxx shall be the actual beneficial owner of the 50% Sale Interests
in
the registered capital of China Princely and has full rights, interests,
and control in this 50% interest.
|
|
(2)
|
Xxxx
Xxxxxxxx assures that no third-party interest has been put against
the
Sale Interests such as pledge, lien, etc. from its incorporation
till the
Delivery Date of the Sale Interests in China Princely, and no conflicts
or
disputes in respect of any interest stand
thereon.
|
7
|
(3)
|
The
Net Profit of China Princely in 2007 shall be not less than RMB2,000,000.
|
|
(4)
|
No
false investment or capital withdrawal happens to China Princely,
otherwise, Xxxx Xxxxxxxx shall take full responsibility and liabilities
and indemnify China Princely and Hartcourt Education for all the
losses
incurred; all the risks and losses before Hartcourt Education obtaining
the 100% equity interests in China Princely, except otherwise expressly
acceptable by Hartcourt Education, shall be borne by Xxxx Xxxxxxxx,
and
provided any losses caused herewith to China Princely or Hartcourt
Education, Xxxx Xxxxxxxx shall assume the liabilities to indemnify.
|
|
(5)
|
As
of the date of the Agreement, Xxxx Xxxxxxxx shall not, directly
or
indirectly, sponsor or participate in sponsoring any education
institutions that might potentially be competitive to China Princely
in
China.
|
| 5.2 |
Liu
Gang hereby represents and warrants as
follows:-
|
|
(1)
|
Liu
Gang shall be the actual beneficial owner of the 50% Sale Interests
in the
registered capital of China Princely and has full rights, interests,
and
control in this 50% interest.
|
|
(2)
|
Liu
Gang assures that no third-party interest has been put against
the Sale
Interests such as pledge, lien, etc. from its incorporation till
the
Delivery Date of the Sale Interests in China Princley, and no conflicts
or
disputes in respect of any interest stand
thereon.
|
|
(3)
|
Liu
Gang guarantees that his capital injection in China Princely is
all real
and no withdrawal any of the capital from China Princely will happen,
otherwise, Liu Gang shall take full responsibility and liabilities
and
indemnify China Princely and Hartcourt Education for all the losses
incurred;
|
|
(4)
|
As
of the date of the Agreement, Liu Gang shall not, directly or indirectly,
sponsor or participate in sponsoring any education institutions
that might
potentially be competitive to China Princely in
China.
|
| 5.3 |
Hartcourt
Education hereby represents and warrants as
follows:-
|
|
(1)
|
Hartcourt
Education is a duly incorporated and validly existing
company.
|
|
(2)
|
Hartcourt
Education has the corporate powers and authority to sign and execute
this
Agreement.
|
|
(3)
|
Hartcourt
Education guarantees to pay the Consideration of the Sale Interests
in
full when due.
|
|
(4)
|
Hartcourt
Education guarantees that all the documents presented to Xxxx Xxxxxxxx
and
Xxx Gang are true, and in the event of any losses caused by the
untrue
documents, Hartcourt Education shall assume the liabilities and
indemnify
China Princely, Xxxx Xxxxxxxx and Liu Gang for the losses incurred
hereof.
|
|
6
|
FEES
AND TAXES
|
| 6.1 |
Xxxx
Xxxxxxxx, Xxx Gang and Hartcourt Education shall assume the respective
share of the expenses incurred for the Sale Interests in China
Princely
and be obliged to pay taxes due and payable.
|
8
|
7
|
THE
REGISTRATION OF THE OWNERSHIP CHANGE OF CHINA
PRINCELY
|
| 7.1 |
In
respect of registration of the ownership change with Commercial
&
Industrial Bureau related to the Sale Interests, Xxxx Xxxxxxxx
and Liu
Gang shall cooperate with the China Princely to complete it before
the
Delivery Date of the Sale Interests in China Princely, Hartcourt
Education
shall provide necessary assistance
thereto.
|
| 8 |
BUSINESS
TERM OF THE WHOLLY OWNED FOREIGN CHINA PRINCELY
|
|
8.1
|
After
Hartcourt Education controls the 100% equity interest in China
Princely,
the business term of the wholly owned foreign China Princely shall
be 50
years.
|
|
9
|
CONFIDENTIALITY
|
|
9.1
|
Xxxx
Xxxxxxxx, Xxx Gang and Hartcourt Education undertakes the responsibilities
to keep all the known information and documents in connection with
this
Agreement strictly confidential;
|
|
9.2
|
Except
legally required by relevant governmental authority or securities
supervisory administration in respect hereof, without the consent
of all
its counterparties, no party shall divulge anything to any third
party
other than the parties in this Agreement.
|
|
10
|
BREACH
OF THE AGREEMENT
|
|
10.1
|
Any
party of Xxxx Xxxxxxxx, Liu Gang and Hartcourt Education, when
fails to
fulfill its obligations specified in this Agreement without legal
reasons,
shall assume the liabilities of breach to non-breaching
party.
|
|
11
|
DISPUTE
SETTLEMENT
|
| 11.1 |
Any
dispute, controversy or claim arising out of or relating to this
Agreement, shall be settled by negotiation and discussion between
Xxxx
Xxxxxxxx, Xxx Gang and Hartcourt Education in good faith. This
negotiation
and discussion shall start immediately after one party sending
out the
written notice to the other parties in this
regards.
|
| 11.2 |
In
the event that the dispute, controversy or claim cannot be solved
within
90 days of the aforesaid written notice, this dispute, controversy
or
claim, as any parties requires, and after informing the other parties,
shall be submitted and settled by China International Economic
and Trade
Arbitration Commission, Shanghai Branch. Arbitration Rules will
be final,
and will be binding on Xxxx Xxxxxxxx, Liu Gang and Hartcourt Education.
|
| 12 |
GOVERNING
LAW AND JURISDICATION
|
| 12.1 |
This
Agreement shall be governed, construed and interpreted in accordance
with
the laws of the People’s Republic of
China.
|
| 13 |
EFFECTIVENESS
|
| 13.1 |
This
Agreement will be effective immediately upon duly signed by Xxxx
Xxxxxxxx,
Xxx Gang and Hartcourt Education or their authorized
representative.
|
9
|
14
|
MISCELLANEOUS
|
|
14.1
|
The
headings of the Clause in this Agreement are for reference only
and shall
not be construed as the interpretation of this Agreement.
|
|
14.2
|
This
Agreement will supersede all previous agreements, arrangements,
memorandum
of understandings between the parties hereto upon signed and executed
by
all parties.
|
|
14.3
|
This
Agreement will be in three original copies, one copy with each
party, and
each copy shall be deemed as equally authentic.
|
10
IN
WITNESS
whereof
this Agreement has been duly executed by all parties hereto the day and year
first above written.
SIGNED
by
/S/
XXXX
XXXXXXXX
XXXX
XXXXXXXX
SIGNED
by
/S/
LIU
XXXX
XXX
GANG
SIGNED
by
for
and
on behalf of
/S/
AI-ASIA
INFORMATION TECHNOLGOY (SHANGHAI) CO., LTD
AI-ASIA
INFORMATION TECHNOLGOY (SHANGHAI) CO., LTD
11
Schedule
1: Acknowledged
Due Diligence Results & Financial Projections
12
Schedule
2: Assets
and Liabilities List and Relevant Proofs of China Princely
13
Schedule
3: Licenses
and Permits for China Princely to be an Authorized Accrediting Organization
in
respect of Vocational Education
14
Schedule
4: Primary Terms and Conditions of the Sale and Purchase
Agreement
| 1 |
Xxxx
Xxxxxxxx will sell his 50% equity interest in China Princely to
Hartcourt
Education.
|
| 2 |
Liu
Gang will sell his 50% equity interest in China Princely to Hartcourt
Education.
|
| 3 |
The
Consideration for the sale and purchase of the Sale Interests Shall
be an
aggregate of RMB2,400,000 cash and 5,400,000 Restricted Shares
of
Hartcourt Common Stock, based on the assets of China Princely,
the capital
injected to China Princley from Xxxx Xxxxxxxx and Xxx Gang and
the
financial projections each year in the future years. Among
the total Consideration, RMB300,000 cash and the Consideration
Shares
shall be paid and issued to Xxxx Xxxxxxxx and Liu Gang proportionally
to
their percentage of equity interest in China Princely, while the
rest
RMB2,100,000 cash shall be invested in China Princely as capital
injection.
|
| 4 |
Hartcourt
Education shall credit the Consideration to the accounts designated
by
Xxxx Xxxxxxxx and Xxx Gang.
|
|
5
|
The
Delivery Date of the Sale Interests in China Princely shall be
within 30
business days upon obtaining the offcial approval from Governmental
Agency
on Foreign Investment; and Since the Delivery Date of the Sale
Interests
in China Princely, Hartcourt Education shalll take over the 100%
control
of China Princely from Xxxx Xxxxxxxx and Liu Gang as shareholder
pursuant
to the Agreement.
|
|
6
|
Hartcourt
Education shall credit the Consideration, satisfied as details
hereunder:-
|
|
(1)
|
Within
10 business days upon the Delivery Date of the Sale Interests in
China
Princely, Hartcourt Education shall credit RMB150,000 cash to Xxxx
Xxxxxxxx, and RMB150,000 cash to Liu Gang.
|
|
(2)
|
With
30 business days upon the Delivery Date of the Sale Interests in
China
Princely, Hartcourt Education shall injected RMB2,100,000 cash
to China
Princely to increase its registered capital.
|
|
(3)
|
With
30 business days upon the Delivery Date of the Sale Interests in
China
Princely, Hartcourt Education shall issue and allot the Consideration
of
total 5,400,000 Restricted Shares of Hartcourt Common Stock to
Xxxx
Xxxxxxxx and Xxx Gang with 2,700,000 shares each. Hartcourt and
Hartcourt
Education shall jointly guarantee the average closing price of
the 3 days
immediately prior to the Consideration Shares Trading Date at not
less
than US$0.50 per share, otherwise, Hartcourt shall credit additional
cash
or issue and allot additional new Restricted Shares of Hartcourt
Common
Stock to make it up. The primary terms and conditions of issuance
of
Restricted Shares of Hartcourt Common Stock and Consideration Shares
Trading Date are set out in Schedule 5.
|
In
the
event of, as deemed by Hartcourt Education reasonably, the team of Xxxx Xxxxxxxx
and Liu Gang fails to fulfill the Financial Projections of 2007 as represented
and guaranteed in the Agreement, Xxxx Xxxxxxxx and Xxx Gang agree to postpone
the aforesaid Consideration Shares Trading Date for one more year.
| 7 |
After
Hartcourt Education controls the 100% equity interest in China
Princely,
China Princely will become a wholly owned foreign
company.
|
| 8 |
The
business term of the wholly owned foreign China Princely shall
be 50
years.
|
15
Schedule
5: Primary
Terms and Conditions of the Share Consideration
16
