Exhibit 10.19 Agreement with Beijing UAC Stock Trading Online Co., Ltd.
Beijing UAC Stock Trade Online Co. Ltd.
( )
and
The Hartcourt Companies Inc.
Contractual Joint Venture Contract
June 30, 1999
Chapter 1 General Provisions
In accordance with the "Law of the People's Republic of China on Chinese-Foreign
Cooperative Joint Ventures" and other relevant Chinese laws and regulations,
Beijing UAC Stock Trade Online Corporation Limited and Hartcourt Companies Inc.,
adhering to the principle of equality and mutual benefit and through friendly
consultations, agree to jointly invest to set up a cooperative joint venture
enterprise in Beijing, the People's Republic of China. Both parties have entered
into this Contract on the terms and conditions set forth below.
Chapter 2 Parties
Article 1. The parties to this Contract are as follows.
Party A: Beijing UAC Stock Trade Online Co. Ltd.
Registered Address: Da Yuan Hotel, 0 Xx Xxxx Xxx, Xxx Xxxx Xxxxxxxx,
Xxxxxxx, Xxxxx
Legal Representative: Xxx Xxxxx
Position: President Nationality: China
Party B: Hartcourt Companies Inc.
Registered Address: 0000 X. Xxxxxx Xx Xxxx Xxxxx, XX. 00000, XXX
Legal Representative: Xxxx X. Xxxx
Position: President Nationality: USA
Chapter 3 Organizational Form
Article 2. In accordance with the "Law of the People's Republic of China on
Chinese-Foreign Cooperative Joint Ventures " and other relevant laws and
regulations of China, Party A and Party B agree to set up a contractual joint
venture company (hereafter referred to as the JV Company).
Article 3. The Chinese name of the Company shall be: The English name of the
Company shall be: UAC Stock Exchange Online Co. LTD.
The legal address of the Company shall be: B1005, Tsing Hua Xxx Xxx Office
Building, Hai Xxxx District Shuang Qing Road, Beijing, China
Article 4. The Company shall be a Chinese legal person. All activities of the
Company shall be governed and protected by the laws and relevant rules and
regulations of China.
Article 5. The names and the legal addresses of Party A and Party B are:
Party A: Beijing UAC Stock Exchange Online Co. Ltd.
Registered Address: B1005 Xxx Xxx Building, Tsing Hua Science Park,
Hai Xxxx Xxxxxxxx, Xxxxxxx 000000, Xxxxx
Party B: Hartcourt Companies Inc.
Registered Address: 0000 X. Xxxxxx Xx Xxxx Xxxxx, XX. 00000, XXX
Article 6. The cooperative joint venture company shall be organized as a limited
liability company. As such, the Company shall only be responsible for the
liabilities of up to the total amount of the total registered capital of the
Company. Subject to the foregoing, the profits, risks and losses of the Company
shall be shared by the parties in accordance with the provisions set forth in
the contract.
Chapter 4 Objectives, Scope and Scale of Production and Business
Article 7. The objective of the joint venture of the parties is, in keeping with
the desire of mutual benefiting, enhancing economic cooperation and technical
exchange, and develop China's electronic information industry, adopt advanced
and appropriate technology and scientific management method, manufacture
advanced and unique cooperatively produced products, achieve satisfactory
economic benefit for both parties.
Article 8. The business scope of the JV Company shall be as follows: technology
development, service, consulting, transferring and training; computer software
development; computer communication network project; sales of computer
peripheral equipment, mechanical and electronic equipment, electronic device,
hardware and electric equipment, and air conditioner.
Article 9. The business scale of the JV Company shall be small-scale technology
intense software production company.
Chapter 5 Registered Capital and Conditions for Cooperation
Article 10. The registered capital of the Company shall be USD 1,000,000, (one
million dollars) of which Party B shall contribute USD 1,000,000. Party A will
contribute its software, technology and market share. Party A and Party B will
own 65% and 35% of the JV Company, respectively.
Article 11. Within one month from the date the JV company obtains its business
license, both parties shall transfer their respective contribution, cash and
assets, according to the terms of this contract, to the JV company in one
installment.
Article 12. When both parties have made their respective contributions in full,
a Certified Public Accountant in China shall be appointed by the Company to
verify the contributions and issue a verification report. Thereupon, the Board
of the Company shall issue a Certificate of Investment to each party pursuant to
such report.
Article 13. During the period of joint venture, no party should reduce its cash
and assets contribution in the JV company.
Article 14. If both parties believe it is necessary, after the board makes the
decision and receives approval from the authority who approved the joint
venture, the JV company can increase registered capital.
Article 15. In case any party intends to assign all or part of its capital
contribution to a third party, consent shall be obtained from the other party.
The assignment shall be submitted to the original approval authority for
examination and approval. Upon receipt of the approval of the original approval
authority the Company shall register the change in ownership with the relevant
governmental authorities. After each such assignment, the Company shall cancel
the original Investment Certificate issued to the Party which has assigned its
capital contribution and issue a new Investment Certificate to show the new
ownership interest in the Company.
Article 16. When one party to the Company assigns all or part of its investment,
the other party shall have the preemptive right to purchase the same.
Chapter 6 Loan Application
Article 17. Among the JV company's total investment, besides the contribution
from both parties, if a loan is necessary due to insufficient fund in the
business operation, the JV company can apply loan from financial institutions.
The Party A may assist the loan application if necessary.
Article 18. Both parties shall guarantee the loan according to their percentage
of ownership in the JV company.
Chapter 7 Responsibilities of the Parties
Article 19. In addition to its other obligations under this Contract, Party A
shall be responsible for the following matters: (1) to apply with the relevant
departments in China for approval, registration, business license and other
matters concerning the establishment of the Company; (2) to apply with the land
administration for obtaining the land use right for the Company; (3) to provide
the investment and conditions for cooperation as stipulated in the Article 10 in
this contract; (4) to assist the Company in applying for and putting into place
basic facilities for such things as water supply, electricity supply,
transportation, etc.; (5) to assist foreign personnel and staff in applying for
entry visa, work permits and in handling their travel arrangements, etc.; (6) to
assist the Company to sell the cooperatively produced products within China; and
(7) to be responsible for other matters entrusted by the Company and accepted by
Party A.
Article 20. In addition to its other obligations under this contract, Party B
shall be responsible for the following matters: (1) to provide capital
investment as stipulated in the Article 10 in this contract; (2) to assist Party
A personnel with entry visa formalities for them to visit and receive training
outside of China, and arrange for living accommodations and suitable working and
studying conditions; (3) to provide advanced business management experience,
knowledge, and assist the Company in establishing a quality assurance system;
(4) to be responsible for other matters entrusted by the Company and accepted by
Party B.
Chapter 8 Board of Directors
Article 21. The date of issuance of the business license of the Company shall be
the date of the establishment of the Board of Directors of the Company.
Article 22. The Board of Directors shall be composed of three Directors, of
which two shall be appointed by Party A and one shall be appointed by Party B.
The Chairman of the Board shall be appointed by Party A and its Vice-chairman
shall be appointed by Party B. The term of office for the Directors, Chairman
and Vice-chairman is four years. Their term of office may be renewed if
reappointed by the appointing party.
Article 23. The Board of Directors shall be the highest authority of the
Company. It shall discuss and decide all major issues including:
1. Make decision to hire president, chief engineer, accountant and other
senior employees;
2. Approve important report submitted by the president;
3. Approve year end financial statement, budget, yearly profit distribution; 4.
Increase the JV company's registered capital, asset guarantee, one party's
assign of its all or partial ownership in the JV company;
5. Make decision to set up branch offices;
6. Revise the joint venture contract and the article of the company;
7. Discuss and decide the JV company's cease of production, termination or
merger with another organization;
8. Be responsible for the liquidation upon the termination of the joint
venture or at the end of the joint venture period;
9. Other important matters that should be decided by the board.
Article 24. The Chairman of the Board shall set the agenda after consultation
with the Vice-chairman and shall be responsible for convening and presiding over
such meetings. The meeting record shall be made in Chinese and shall be filed
with the Company. The meeting record shall be signed by all attending directors.
If a proxy attends the meeting, the proxy shall sign the record.
Article 25. Should a Director be unable for some reason to participate in the
Board Meeting, he shall issue a power of attorney and entrust a proxy to
participate in the meeting with the same rights and powers as the Director
issuing the power of attorney. If a Director fails to participate or to entrust
another to participate, he will be deemed as having waived such right.
Article 26. The minimum number of people attending the board meeting shall be
two-third of the total number of directors. If less than two-third people
attending, any resolution passed in the meeting is void.
Article 27. The Chairman of the Board is the legal representative of the
Company. Should the Chairman be unable to exercise his responsibilities for some
reasons, he shall authorize the Vice-chairman or any other Directors to
represent the Company temporarily.
Chapter 9 Distribution of Profits, Losses and Risks (Fees)
Article 28. The profits, risks and losses will be distributed according to the
following proportion: Party A: 65%, Party B: 35%
Article 29. Within the term of the Company, it is agreed that the risks and
losses will be jointly shared by both parties according to the following
proportion: Party A: 65%, B: 35%, no matter how much profit Party A and Party B
have obtained or will obtain respectively.
Chapter 10 Joint Venture Term
Article 30. The term of the JV Company shall be 15 years commencing from the
date of issuance of the Company's business license.
Article 31. By agreement of Party A and Party B, application for extension of
the term of the Company may be submitted to the Approval Authority no less than
six (6) months prior to the expiration of the term. The term may be extended
subject to approval of the Approval Authority and procedures for amending the
registration shall be carried out with the relevant office of the administration
for industry and commerce.
Chapter 11 Termination and Liquidation
Article 32. The Contract shall terminate upon the expiration of the joint
venture term, unless extended pursuant to Article 31 of this Contract. In
addition to this, and to any other reasons stated elsewhere herein, the
following shall constitute the reason for termination of this contract before
the term of the expiration of this contract. (1) if one party materially
breaches this Contract; (2) if the cumulative losses of the Company exceed an
amount acceptable to the parties; (3) if, at any time after the Company
commences manufacturing the cooperatively produced product, and after the
parties have made best efforts, Party A and Party B confirm that a performance
level sufficient to warrant continued operations cannot or will not be met; (4)
if the conditions or consequences of force majeure prevail for a period in
excess of three (3) months and the parties have been unable to find an equitable
solution; or (5) for other reasons provided for in this Contract or in relevant
laws and regulations of China.
Article 33. Upon the expiration of the term or termination in advance, the Board
of Directors shall promptly formulate procedures and principles for liquidation
and shall appoint a committee ("the Liquidation Committee") to assess and
liquidate the Company's remaining assets in accordance with the applicable laws
and regulations and the principles set out below: (1) the Liquidation Committee
shall be made up of two members, of which one members shall be appointed by
Party A and one members by Party B. Members of the Liquidation Committee may,
but need not be, members of the Board of Directors. Each party may also appoint
specialists, such as accountants and lawyers, to be members of the Liquidation
Committee. The Board of Directors shall report the formation of the Committee to
the JV company and to appropriate authorities; (2) the Liquidation Committee
shall have the power to represent the Company in instituting or responding to
legal actions (including arbitration); (3) the Liquidation Committee shall
conduct a thorough examination of the Company's assets and liabilities. Based
upon such valuation, the Liquidation Committee shall develop a liquidation plan
that, if approved by the Board of Directors, shall be executed under the
Liquidation Committee's supervision; (4) the liquidation expenses, including
remuneration to members of the Committee and advisors to the Liquidation
Committee, shall be paid out of the Company's assets in priority to the claims
of other creditors; (5) after the liquidation of the Company's assets and
settlement of all of its outstanding debts, the balance of its assets shall be
paid over to the parties in the proportion as follows: Party A 65%, Party B 35%;
(6) on Completion of all liquidation procedures, the Liquidation Committee shall
submit a final report approved by the Board of Directors to the original
approval authority, and apply with the local office of the administration for
industry and commerce for cancellation of the registration. Chapter 12 Insurance
Article 34. The Company shall at all times during the term of the joint venture
effect and maintain full and adequate insurance against loss or damage by fire
and such other risks as are customarily issued in connection with the operation
of this type of Company.
Article 35. Insurance policies of the Company on various kinds of risks shall be
underwritten with the insurance company(ies) in China. Types, the value and
duration of insurance shall be discussed and decided by the Board of Directors
in accordance with the stipulations of the insurance company.
Chapter 13 Settlement of Dispute
Article 36. Any dispute arising during the implementation of this contract or
related to this contract should be resolved through friendly discussion among
the joint venture parties. If, within 15 days from the date any party notified
the other party in writing the existence of the dispute according to this
Article, the dispute can not be settled, the dispute should be submitted to
arbitration committee for arbitration according to arbitration procedure. The
arbitration is final and bonding to both parties.
Chapter 14 Liability for Breach of Contract
Article 37. Should either party fail to contribute in full its contribution in
accordance with this Contract, the breaching party shall pay to the other party
5% of the amount the breaching party failed to pay, starting from the first
month after exceeding the time limit; should either party fail to provide its
conditions for cooperation in accordance with this Contract, the breaching party
shall pay to the other party 5% of the total capital of the Company from the
first month after exceeding the time limit.
Article 38. A thirty (30) day grace period shall be allowed before the penalty
is applied. Said penalties shall accrue hereunder for a maximum period of three
(3) months after which the party not in default shall have the right to
terminate this Contract as provided in Article 32
Article 39. Should all or part of the Contract and its appendices be unable to
be fulfilled owing to the fault of one party, the party shall bear all the
responsibility. But if the other party fails to take appropriate measure to
prevent further lose, the other party has no right to demand compensation for
the further lose from the breaching party. Should it be the fault of both
parties, they shall bear their responsibilities respectively.
Chapter 15 Governing Law
Article 40. The draft, effect, explanation, implementation, and settlement of
dispute of this contract are all governed by the laws of the People's Republic
of China.
Chapter 16 Language
Article 41. This contract is written in both Chinese and English. If the two
versions do not agree, the Chinese version shall be considered accurate.
Chapter 17 Effectiveness of the Contract and Miscellaneous
Article 42. The Contract and its appendices shall come into force from the date
of approval of the examination and approval authority.
Article 43. Any amendment of this Contract or its appendices shall come into
force only after the written agreement signed by Party A and Party B and
approved by the original examination and approval authority.
Article 44. Failure or delay on the part of either party hereto to exercise any
right, power or privilege under this Contract, or under any other agreement
relating hereto, shall not operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege preclude any other future
exercise thereof.
Article 45. Any notice or communication provided for this Contract by either
party to the other, if it is send via telegram, facsimile and it is relevant to
each party's rights and responsibilities, shall be confirmed in writing in
Chinese or English by registered airmail letter, promptly transmitted or
addressed to the appropriate party. All notices and communications shall be sent
to the appropriate address set forth below, until the same is changed by notice
given in writing to the other party or the parties, as the case may be.
Party A
Address: B 1005, Xxx Xxx Building, Xxxx Xxx Xxxxxxx Xxxx
Xxx Xxxx Xxxxxxxx, Xxxxxxx 000000, Xxxxx
Telephone: 00000000
Fax: 00000000
Attention: Zhang Shi
Party B
Address: 0000 X. Xxxxxx Xx Xxxx Xxxxx, XX. 00000, XXX
Telephone: 000 000 0000
Fax: 000 000 0000
Attention: Xx. Xxxx Xxxx
Article 46. The Appendices attached hereto are hereby made an integral part of
this Contract and are equally binding on this Contract.
Article 47. Each of the parties hereto has caused this Contract to be executed
by its duly authorized representatives on the 2nd July 1999 in China.
Representative of Party A Representative of Party B
/s/ Zhang, Shi /s/ Xxxx X. Xxxx
----------------------------- ---------------------------------------
Zhang, Shi Xxxx X. Xxxx
JOINT VENTURE AGREEMENT
Two Parties of This Agreement:
Party A: The Hartcourt Companies, Inc.
Address: 0000 X. Xxxxxx Xx Xxxx Xxxxx, XX. 00000 XXX
Authorized Representative: Xx. Xxxx X. Xxxx, Chairman and CEO
Party B: Zhang, Shi (??)
Owner of Beijing UAC Stock Trade Online Co. Ltd.
( )
Address: Xxxx Xxxx Plaza, Building B,
Tsing Hua Science and Technology Park,
Beijing 100084
WHEREAS:
1. The two parties agreed to form a joint venture company (herein
referred to as the JV company) operating under the laws of the
People's Republic of China. The Chinese name of the JV company is: .
And the English name of the JV company is: Beijing UAC Stock Exchange
Online Co. LTD.
2. The detailed terms of the JV company are set forth in the "Joint
Venture Agreement" between Beijing UAC Stock Trading Online Co. Ltd.
( ) and The Hartcourt Companies Inc. and signed on August 9th,
1999.
3. Party B agreed to transfer all tangible and intangible assets, except
the real estate property, of Beijing UAC Stock Trading Online Co. Ltd.
To the JV company in exchange for Fifty (50%) percent ownership of the
JV company.
4. Party A agreed to invest One Million US dollars ($1,000,000) in the JV
company and pay Party B One Million and Seven Hundred Thousand Dollars
($1,700,000) to pay Party B. In addition, Party A agreed to transfer
One Million (1,000,000) common shares of Hartcourt (OTC:HRCT) to the
JV company, from which 200,000 shares shall be used to pay Party B for
existing loan to the company and 800,000 shares to be recorded as loan
from Hartcourt Companies to the JV company. All above payments shall
be made within 15 days from the date of issuance of the JV company
license.
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5. Party A has the right to assign this agreement to another US-listed
company. The term of the agreement shall remain the same.
6. The agreement, its effect, interpretation, implementation and
settlement of dispute all are governed by the laws of the People's
Republic of China.
7. This agreement is written in both Chinese and English. If the two
versions do not agree, the Chinese version shall be considered
accurate.
Party A: The Hartcourt Companies, Inc. Party B: Zhang, Shi ( )
Representative: Representative:
s/s/ Xxxx Xxxx s/s/ Zhang Shi
----------------------------- ---------------------------------------
Xx. Xxxx X. Xxxx Zhang, Shi
Date: August 9th, 1999 Date: August 9th, 1999
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