CAPITAL COMMERCE LTD.
2B Mansion House, 000 Xxxx Xxxxxx, Xxxxxxxxx
Telephone: 350.76173 Fax: 350.70135
On 28 July 1997, Capital Commerce, Ltd. (an Isle of Man Corporation),
does hereby enter into this agreement with The Harcourt Companies, Inc. (a Utah
Corporation), to provide free trading securities for the purchase of Pego
Industries and the creation of ECS (a Nevada Corporation. to be a wholly owned
subsidiary of Hartcourt). The free trading securities to be provided by Capital
Commerce shall be from its trading portfolio, in the amount of no less than US
$6.000,000.00 as follows:
Capital Commerce Ltd. does hereby agree to provide the following, free trading
securities from its portfolio, to be
used by HRCT as equity capital:
1. Uniforms for America (NASDAQ BB: UNTIF) at the current price of
US$ 6.00 per share 500,000 shares US $3,000,000
2. The Beverage Store (NASDAQ BB: BEVG) at the current price of
US$ 5.75 per share 260,869 shares US $1,500,000
3. Phone Time Resources, Inc. (NASDAQ BB: PHTM) at the current price of
US$ 1.10 per share 1,363,636 shares US $1,500.000
US$6,000,000
In exchange for the above referenced securities Xxxxxxxxx agrees to issue a
class 'A' convertible, preferred stock, in the amount of $4,000,000.00 bearing
interest at 9% per annum, interest payable in equal monthly amounts of US$
30,000.00 per month, for a term of ten (10) years.
In exchange for the securities in the amount of US $2,000.000.00, Xxxxxxxxx
agrees to a class 'B' convertible preferred stock, bearing interest at 9% per
annum, interest payable in equal monthly installments of US $15,000 per month,
for a term of (10) years.
At any time during the 10 years term referenced herein. Xxxxxxxxx shall have the
right to call the preferred class 'A' or class 'B' securities provided to
Capital Commerce in exchange for US$4.000.000 for the class 'A' securities and
US$2,000,000 for the class 'B' shares, plus any interest accrued to that date.
Xxxxxxxx shall have the right to exchange all or any portion of the portfolio
shares herein, for any other shares of equal or greater value owned by Capital
Commerce.
All preferred shares issued by Xxxxxxxxx shall be fully assignable and
transferable on the books of the Company, and shall further be non-assessable.
At the end of the 10 year term, Capital Commerce, its assigns or nominees, may
elect to renew the convertible preferred shares, at the same terms and
conditions as contained herein.
67
Special Terms of the Preferred Stock:
1. At the option of Capital Commerce. the Hartcourt class 'A' and class
'B' preferred shares shall be convertible into Hartcourt Common stock,
based upon the Hartcourt closing price per share, on the day of
conversion, on a dollar for dollar basis.
2. In the alternative, at the option of Capital Commerce. the Hartcourt
class 'A' preferred shares shall be convertible into a 30% non diluted
interest in ECS, until such time as ECS has gone public, at which
time, the dilution clause contained herein, shall have no further
force or effect.
3. At the further option of Capital Commerce, the Hartcourt class 'B'
preferred shares shall be convertible into a 30% non diluted interest
in Pego Industries, until such time as Pego has gone public, at which
time the dilution clause contained herein shall have no further force
or effect.
4. Regardless of the status of the preferred shares and the payment of
the interest thereon, the anti-dilution clause will remain in effect
until ECS and Pego commence to trade publicly, so that at no time
prior to the approval of ECS or Pego to trade publicly, shall the
interest of Capital Commerce in Pego or of ECS fall below 30%.
The parties hereto recognize and acknowledge that Mercantile Investment Trust
Ltd. has acted as the intermediary, broker, and finder, in this transaction and
that it shall be entitled to receive compensation related thereto, in the amount
of 10% of the amount of the transaction, specifically US $600,000, payable in
the form of Hartcourt Regulation 'S' stock. The exact number of Hartcourt shares
payable to Mercantile shall be based upon the closing Bid price, upon the date
of execution. Both parties hereby acknowledge the participation of Mercantile
Investment Trust Ltd., and concur that any and all finders fees due and owing to
Mercantile shall be the sole responsibility of Hartcourt.
In the event that it becomes necessary to enforce all or any part of this
transaction through the courts, it is agreed and understood that the prevailing
party will be entitled to recover reasonable attorney fees and costs.
Executed this 28th day of July, 1997
THE HARTCOURT COMPANIES CAPITAL COMMERCE, LTD.
/s/Xxxx Xxxx /s/Xxxxxxx Xxxxx
By: Xxxx Xxxx By: Xxxxxxx Xxxxx
68
March 23, 1998
Xx. Xxxx X. Xxxx
President/CEO
Harcourt Investment (USA) Corporation
00000 Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Dear Xx. Xxxx:
I am attaching an installment note which sets forth the agreement you reached
with our Operating Director, Xx. Xxxx Xxxxxx, on Thursday, March 19, 1998.
Harcourt Investment (USA) Corporation now owes Scripto-Tokai Corporation
$686,850.56 for various transactions with our wholly owned subsidiary, Anja
Engineering Corporation.
As a result of meeting held over the last few months, we have agreed to a
negotiated settlement of $200,000 to be paid as shown on the enclosed note.
As long as all payments are made in accordance with the enclosed note the
$200,000 plus interest shall represent the full and complete balance due from
your company. If payments are not made as agreed, Xxxxxxxx will be responsible
for all attorney's fee and collection costs in addition to the balance due.
I am sure both our companies are glad to be putting this matter behind us.
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Senior Vice President
Accept/s/ Xxxx X. Xxxx Date March 24, 1998
Xxxx X. Xxxx,
President/CEO
Harcourt Investment (USA) Corporation
69
INSTALLMENT NOTE
$200,000.00 Fontana, California, March 23, 1998
At the times and in the installments hereinafter stated, for value received,
Harcourt Investment (USA) Corporation promises to pay to the order of
Scripto-Tokai Corporation, 00000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, the
negotiated principal sum of two hundred thousand dollars and no cents, payable
as follows, to-wit:
The sum of $100,000 Dollars on the 15th day of May, 1998, and the sum of
$6,414.72 Dollars on the 10th day of each and every succeeding quarter
thereafter including interest from the date until the principal sum shall be
fully paid, at the rate of 10% percent per annum, payable quarterly. The
quarterly payments (see attached schedule) herein provided shall include the
interest, and all sums over and above the accumulated interest at time of
payment shall be applied to the discharge of the principal sum of this note.
Should the interest not be so paid, it shall become a part of the principal, and
thereafter bear like interest as the principal. Should default be made in the
payment of any installment of principal or interest when due, then the whole sum
of the remaining balance of principal and interest shall become immediately due
and payable at the option of the holder of this note. Principal and interest
payable in lawful money of the United States.
/s/ Xxxx X. Xxxx, CEO
Xxxx X. Xxxx, President, CEO
Harcourt Investment (USA) Corporation
Date:_____________________________________
70
