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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 26, 2000
BEACH COUCH, INC.
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-25747 33-0812709
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
94 Rue de Lausanne, CH1202, Geneva, Switzerland
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 011-41-22-9000000
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4190 Bonita Road, #105, Bonita, CA 91902
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(Former name or former address, if changed since last report.)
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ITEM 1. CHANGES IN CONTROL OF THE REGISTRANT
In connection with the acquisition of Elawchina.com, Inc., a British
Virgin Islands corporation ("Elaw"), under the Agreement and Plan of
Reorganization as set forth in Item 2, below, all of the former directors and
officers of the Registrant resigned their positions. Roland Shi was appointed as
Chairman, Chief Executive Officer, and a Director; Benny Li was appointed as
Secretary, Treasurer and a Director; and Michael A.J. Harrop was appointed as a
Director. Mr. Harrop is also acting as President until the next meeting of the
Board of Directors, at which time he will resign from that position.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
AGREEMENT AND PLAN OF REORGANIZATION. On April 26, 2000, the Registrant
executed an Agreement and Plan of Reorganization ("Agreement") with
Elawchina.com, Inc., a British Virgin Islands corporation ("Elaw"), and certain
Stockholders of Elaw pursuant to which 100% of the issued and outstanding shares
of common stock of Elaw (20,000,000 shares), held by the three persons
identified below, are to be exchanged on a one share for one share basis for an
aggregate of 20,000,000 shares of restricted common stock of the Registrant. By
virtue of the reorganization, Elaw becomes a subsidiary of the Registrant, and
the Registrant will continue to operate through its newly acquired subsidiary.
The following tabulates holdings of common stock of the Registrant by
former stockholders of Elaw, giving effect to and as a result of the
reorganization with Elaw.
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<CAPTION>
Owner Shares Owned (1) Percent of Class (2)
- ----- ---------------- --------------------
<S> <C> <C>
Benny Li 6,000,000 23.3%
Cocal, Inc. 6,000,000 23.3%
Roland Shi 8,000,000 31.1%
</TABLE>
(1) All Common Shares held by them are "restricted securities" and as such are
subject to limitations on resale. The shares may be resold pursuant to Rule 144
under certain circumstances.
(2) Assumes that there will be 25,705,000 shares of common stock of the
Registrant outstanding immediately after issuance of these shares as required by
the Agreement and Plan of Reorganization and assuming cancellation of other
shares (currently pending).
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DESCRIPTION OF ELAWCHINA.COM, INC. Following is a description of the
business of Elawchina.com, Inc.:
SUMMARY
Elawchina.com, Inc. has entered into an exclusive worldwide marketing contract
with Beijing Elawchina Network Technology Co., Ltd. to develop subscription
service marketing programs for access to the English translation pages of the
Elawchina.com web pages. Beijing Elawchina Network Technology Co., Ltd. has
developed the only interactive English/Chinese translation of the Chinese legal
database. The database contains national, provincial and municipal laws,
interpretations and rulings covering all of China. The Elawchina.com web pages
provide immigration laws and rules, business practice requirements, law firm
reference services, investment opportunities as provided by the Chinese
Government, and guides to doing business and investing in the expanding Chinese
markets. Upon the successful integration of China into the World Trade
Organisation, access to this information will be a primary requirement of any
law firm representing a company planning to enter the Chinese market, financial
institutions providing capital to these companies, government agencies and the
legal departments of any multinational expanding in China.
Elawchina.com provides a method to help overseas lawyers understand and enter
the Chinese legal market. In developed countries, the legal industry generates
large revenues. In America, the legal industry has set a yearly turnover record
of over US$1,000 billion. This makes it the third largest sector in the service
industry after Finance and Food & Beverage.
Following further "opening up" by the Chinese government and China's entry into
the WTO, business opportunities in China will become more attractive for
overseas legal firms. Because of its bilingual capabilities, Elawchina.com can
act as direct agent for overseas professionals in providing Chinese legal
information and advice.
Elawchina.com has created an information and reference service for lawyers,
including rules and regulations of practice, the most recent developments in the
legal industry, test information, legal publication information and advice on
running a law firm.
Elawchina.com, Inc. has prepared an interactive demonstration CD-Rom which is
currently being distributed to potential professional subscribers whom the
Company feels would utilise a professionally translated, legal database.
Subscription costs consist of a registration fee, a monthly access charge and
hourly usage billing. The Elawchina web site is available to non-professionals
for a nominal monthly membership fee, but does not include access to the English
translation of the Chinese legal data base search engine.
Elawchina.com, Inc. believes that upon China's entry into the World Trade
Organisation foreign ownership of IT companies will be allowed. In order to
capitalise on that fact the marketing contract with Beijing Elawchina Network
Technology Co., Ltd. includes an option to purchase 100% of the Company upon
approval by the proper Chinese Government Authorities.
The Officers and Directors of Elawchina.com, Inc. are:
CEO/Chairman of the Board of Directors
Mr. Roland Shi, Ph. J.D. - Founder and President of Beijing Elawchina Network
Technology Co., Ltd., General Counsel for Bank of China-Beijing, Counsel -
Motorola (China), Commercial Relations Department.
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Director
Michael A.J. Harrop - Chairman, Harrop, Lees Brown & Co.-Merchant Bankers,
Geneva Switzerland, New products Development Department-DuPont and Co., Geneva
Switzerland.
Secretary/Treasurer/Director
Benny Li - Chinese Entrepreneur, Founder and President - Li Enterprises, Ltd. -
Beijing, China
EXECUTIVE SUMMARY
The development of a legal infrastructure has been recognized as one of the most
important factors in ensuring further economic growth in China. As a result,
there is a need for increased resources in the field of law. The services
offered by Elawchina.com are fundamental in meeting that need.
Elawchina.com offers a unique product. It is a professional, bilingual
(Chinese/English) web site, which provides various legal services including
laws, legislation and precedent databases, which are updated regularly as
developments occur, and a classified lawyer referral database.
Lawyers in China are able to exchange ideas with lawyers in other countries and
users are able to obtain in home or in office legal instruction. By buying a
membership, all users receive specialized information and can access world news,
the latest legal developments and other issues of interest from their homes.
Everyone is able to exchange information with others of similar interest.
Finally, Elawchina.com is the only network to provide domestic on-line legal
aid; offering free legal consultation and assistance to those who need but
cannot otherwise afford to retain a lawyer.
Elawchina.com employs groups of legal experts as well as network specialists. In
co-operation with Law Schools at the Peoples University of China and Beijing
University, the Lawyers Association of China and law firms in USA, Canada and
Hongkong, Elawchina.com has the potential to become the leading international
legal network. The market potential is broad. Through effective market promotion
and development, it can solidify its position within the on-line legal service
field and is developing advertising revenue, e-business and user visits for the
network.
BUSINESS OPPORTUNITY
1. Mission
The aim of Elawchina.com network is to establish one of the largest
comprehensive legal web sites in China by which professionals will provide legal
advice to Internet users. Its mission statement is: Your need is our resource.
FULFILLING SOCIAL NEED
The relationship between product supply and demand is key to the market. The
mission of Elawchina.com network stems from increased business opportunities
arising from the rapid development of the Chinese economy. A legal framework is
necessary to protect and accelerate this economic development and the ensuing
demand for legal expertise has made Elawchina.com a considerable resource.
Following China's implementation of the Open Policy'
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and its admittance to the WTO, Elawchina.com has even greater opportunities to
expand internationally.
A. THE DEVELOPMENT OF THE INTERNET
Professionals are looking for more efficient means of disseminating information.
At the same time, Internet technology is propelling the development of Chinese
economy and society. Internet growth has made offering modern science to a mass
audience possible and popular and its continued growth will guarantee the
survival and development of Elawchina.com network.
MARKET ANALYSIS
A. LAWYER RESOURCE
The volume of business in China's legal industry is increasing rapidly.
According to statistics publicised by the Lawyers Association of China, there
were more that 100,000 registered lawyers at the end of 1999. In emerging
countries, there are 2 lawyers for every 1,000 people on average. Based on this
rate, China's 1.26 Billion population will support 2.5 million lawyers in total.
About 40,000 lawyers will qualify every year in China so that by 2010 there will
be .5 million practitioners. Added to this are the 150,000 law students in more
than 100 universities and colleges currently studying law. Together, they form a
potentially huge professional user-base and pool of human resources for
Elawchina.com network and for the legal industry.
In 1999, China promulgated more than 5,000 laws, rules, regulations and decrees
in over 20 categories, had a total of 550,000 lawsuits, of which 200,000 were
civil cases, 200,000 commercial cases and 150,000 criminal and conducted
approximately 1,500 international arbitrations, all of which Elawchina.com is
adding to its databases. The precedent database will assist lawyers in the
preparation and drafting of legal documentation, an activity that accounts for
up to 50% of their practice.
After signing agreements with the U.S., which will allow it to join, the WTO,
China will allow foreign lawyers to carry on broader legal business in China.
This will greatly increase the business of foreign lawyers in China. By
providing legal information in both English and Chinese, Elawchina.com will
attract those foreign lawyers who are uninformed about China and the Chinese
legal system.
B. INTERNET USERS
The total number of the Internet users is an important indicator of market scale
for any portal service. This number had exceeded 170,000,000 globally by the end
of 1998. In China, the growth rate of Internet users has remained at 200% every
year since the Internet went commercial several years ago. The following data
will give a brief description of the current status of Internet users in China
and its growth trend.
In 1999, Cable Network of China (CNC) was founded to provide digital service to
cable TV subscribers. It is predicted that the participation of 80,000,000 cable
TV subscribers will lead to an explosive increase in the Internet user
population in China in the next two years. According to CNNIC, Internet users in
China reached 2,100,000 by the end of 1998, and exceeded
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4,000,000 in July 1999 with an increase of 100% during only a six-month period.
It is estimated that Internet users in China will exceed 15,000,000) by the end
of 2000.
C. PC USERS
The PC is the major end user device to hook up to the Internet; therefore, the
rapid increase in sales of PC equipment will not only enlarge the Internet user
base but also stimulate the use of the Internet for both information and
services. China has been ranked fifth in the world in PC purchasing. In 1998,
sales of PCs in China increased by 30% to reach 4,000,000. Currently, there are
about 14,000,000 PCs in China, 3,000,000 of which are owned by individuals. In
2002, China will become the 3rd largest market in the world for PCs, with an
estimated sales volume of 10,300,000.
D. E-COMMERCE
In 1998, e-commerce in the U.S. generated $101B revenue, that is, 33 percent of
total revenue generated over the Internet. Research conducted at IDC concluded
that revenue generated by e-commerce was $700M in Asia in 1998 and it will be
$32B in 2003, of which China will account for $4B. Undoubtedly, e-commerce will
be the spotlight of the strongest economic growth in the future (Goldman Sach,
1999).
E. INTERNET ADVERTISING
Internet advertising is growing faster than any other media. According to IAB
statistics, Internet advertising expenditures during the period 1996 to 1998
were $109M, $335M, and $655M - more than a 100% increase each year. In the US,
Internet advertising expenditure in 1998 was $1.9B, the first time it exceeded
other outdoor advertising. The estimated amount of Internet advertising
expenditure will be $6.7B in 2001.
F. TREND FOR THE WEB SITE
The professional web site will be the major trend for the future. ICP provides
comprehensive service to every client but the professional web site focuses on a
special group of clients. It knows what its users need and the way to fulfill
those needs.
PRODUCTS & SERVICES
OBJECTIVE
Elawchina.com is a large-scale business web site that works in the legal domain.
It has the advantages of the Internet and will quickly become the largest
professional bilingual (Chinese/English) network in the world. By offering a
comprehensive legal information service, it is geared to the needs of both
business and individuals and is gradually strengthening and developing its
electronic business to form a unified network service platform.
INTRODUCTION OF CHINESE & OVERSEAS UPDATED LEGAL RULES AND REGULATIONS
The traditional method of obtaining legal information is from code, legal
writing and research. This is time consuming. Since the law is continuously
changing and evolving, its dissemination must be timely. Providing current
information by means of the Internet is clearly superior to any
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other media and will enable Elawchina.com to keep abreast of the latest
developments in the legal field at home and abroad.
Initially, Elawchina.com has introduced a database containing the following:
>> Rules, regulations and the related documentation approved by the National
and Local Peoples Representative Congress of China, and the Standing
Committee of Peoples Representative Congress of China;
>> Administrative Law, Departmental Regulation and related documentation
issued by the State Council, the Ministerial Council and the Local Peoples
Government;
>> Judicial decisions of the Peoples Supreme Court and the Supreme
Procuratorate;
>> Legislation of Special Administrative Division;
>> International Treaty and International Convention
>> Relevant Chinese legal rules and regulations for those countries and
regions which have close business relations with China, for example; Stock
and bonds Laws, Investment Laws, Trade Laws, Corporation Laws and
Immigration Laws and Regulations,
>> All reprinted or copied legal rules and regulations will be divided into 6
classifications, for example, Departmental Laws, enactment of regulations
etc.
Because of the continuous emergence of laws and regulations, economic and social
legal precedents have become a popular reference for both the layman and the
professional. Elawchina.com provides users with precedents on-line. All
precedents chosen are classified as follows: Criminal Law, Peoples Commercial
Law, Commercial Law and Trademarks and commentary by distinguished lawyers.
Precedents emphasise Finance, Futures, Real estate, anti- dumping, foreign trade
and intellectual property. Litigation and arbitration precedents are also
included.
LEGAL AID
A sound society relies on a sound legal system. In developed countries, the
government offers free legal consulting services and assistance (called Legal
Aid) to those citizens who need urgent legal assistance but can not afford it.
In China, there are currently only small-scale legal consulting hotlines
available. Due to their small scale, users can rarely get timely help and the
range of services are limited. Elawchina.com is the sole network which provides
this kind of legal aid service backed by a legal consultant group including
representation in lawsuits, preparing legal documentation, etc.
DISTANT LEGAL EDUCATION (DLE)
Elawchina.com has established a special DLE service offering five subject areas:
criminal law, civil law, commercial law, administrative law and legal
procedures. Elawchina.com has created an on-line Law School, which offers sample
examination papers and tutorials on-line.
EXPLORE HOT ISSUES AND FOCUSES
Elawchina.com gives timely reports on current events, changes in China Laws and
Regulations, etc.
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LAWYER DATABASE
LAW EXCHANGE PLATFORM AND INFORMATION EXCHANGE SERVICE
Elawchina.com collects and compiles into a directory, photographs and personal
information about lawyers, including practice area, typical cases handled,
contact details and so on. There is a search engine to allow users to search for
a lawyer by name, geographical area or speciality. The database is also linked
to their personal homepages, which Elawchina.com can help design for a fee.
Elawchina.com hopes that, ultimately, there will be more than 10,000 lawyers
registered on line.
By providing personal homepages, Elawchina.com will provide a platform for
registered lawyers to describe their own specialities, thereby bridging the gap
between suppliers and consumers in the real market and creating a place for
exchanging ideas across space.
INTERNATIONAL LEGAL CULTURE AND INFORMATION EXCHANGE
Because Elawchina.com service is bilingual, lawyers in China and abroad can
readily exchange information and ideas to promote co-operation.
A. LEGAL FORUM
Elawchina.com has established a legal forum covering subjects such as
immigration, commercial investment, product launch, environmental protection,
responsibility of products, and other popular topics. As a direct service
provider, Elawchina.com will not only help users to access information, but also
offer intermediary and consulting services.
B. LAWYER-ONLINE
The Lawyer-online Department of Elawchina.com is responsible for creating
cyber-lawyers who are available to offer legal services to the over 4,000,000
potential business clients for the Elawchina.com database.
C. ON-LINE SALES
Businessmen in China and aboard can use Elawchina.com for advertising or make
use of the web site retail system to order legal materials, magazines,
newspapers etc.
D. MEMBERSHIP SYSTEM
Elawchina.com has established a membership system. Membership will entitle users
to obtain legal information and news in brief by newsletter and e-mail.
Elawchina.com has designed a separate English version of the Directory of the
Chinese Legal System for overseas lawyers, business, governmental organisations,
groups and individuals which all premium subscription members will be able to
access. The Directory contains a brief introduction, comparison and analysis of
Chinese laws and regulations; compilation of all categories of laws and
regulations; a directory of Chinese legal organisations; links to lawyers in
China; an on-line forum and other benefits.
E. PUBLIC NETWORK SERVICE
FREE SERVICES
One of the benefits of an Internet Web Site is its connection to a variety of
quality free services. Offering such services will be of great importance in
attracting and retaining users.
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Elawchina.com will offer the following free services:
1. Legal Information Assistance
>> Legal Company Assistance
Law-can will collect legal information on a company. By searching a
specific corporate name, users will be able to obtain up-to-the-minute
trade and other information about the company.
>> Price Assistance
Users may also receive price comparisons by e-mail, ICQ paging, etc.
2. Law Software Download
This service will provide more than 100 types of commercial software which
can be downloaded free of charge.
3. Free E-mail
Using the web, users will be able to access their private e-mail boxes
worldwide.
LEGAL FORUM
Users can take advantage of the web site to exchange ideas and information with
others of similar interests. This engenders innate loyalty to the site.
Moreover, it will permit accurate and purposeful release of information and
development of commercial activities.
Elawchina.com will offer several discussion groups on various subjects where
registered members can exchange ideas and express opinion in their chosen
fields. Court facts and legal news reports will also be available on the net.
1. WEB SITE STRUCTURE
Applying the most popular internet/intranet technology in the world,
Elawchina.com is a two-way legal information service network. By using just one
computer, a telephone wire and a modem, users can easily browse, search or
download any information that Elawchina.com provides online. This network is
comprised of the following sub-systems:
2. SEARCH ENGINE
A search engine for the legislation and lawyer databases is one of the core
tools provided by Elawchina.com. Its main task is to make use of the computing
group system and then provide the public with a high-speed legal searching
service.
3. WORKSTATION OF LEGAL CONSULTATION
The workstation offers a high quality legal consultation service to those
organisations and enterprises, which encounter numerous legal matters daily. The
workstation is normally of medium disposition comprising a single computer,
which is accessible to the Internet. Since there is a specialised engine for the
legal knowledge database available, it can be run off-line. When the workstation
cannot carry out a task, users can access the network and connect to the hub
computing group system so as to form a stronger distribution system and then
find an effective solution.
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SALES & MARKETING
I. TARGET MARKET ANALYSIS
Elawchina.com is a specialised web site primarily serving the legal profession.
Its content and service are geared to end users that need legal information. The
target groups of consumers include government officials, legal service
providers, administrative officers, law researchers, and those generally
interested in the law.
There are several motivations for users:
>> Obtain knowledge of laws, legal rules and regulations inside China
>> Ability to contact lawyers
>> Inter-legal-field information and idea exchange
>> Overseas legal firms or individuals requiring knowledge of laws, legal
rules and regulations of China;
>> Concerns about contemporary legal issues, obtaining further information and
taking part in issues;
>> Legal education
Different users have a common need in that they require a service, which is
fast, convenient and user-friendly. However, different categories of users do
have distinguishable needs; for example, large scale enterprises and
organisations tend to require general information and professional legal users
have specific needs; accordingly, Elawchina.com has developed different
marketing plans.
II. MEANS OF SALES AND REVENUE SOURCES
Depending on the service and product Elawchina.com offers, there are five major
revenue sources: revenue from online advertisement; fees charged for the online
services of professional legal consultants; commission from intermediary
service; electronic business and service; and online membership fees.
A. REVENUE FROM ONLINE ADVERTISEMENT
By making available the most current laws, rules and regulations and precedents,
the reputation of the web site server will increase substantially. The result
will be greater income generation from advertisements and electronic business.
B. FEE-CHARGING LEGAL CONSULTING SERVICE
Elawchina.com will operate in co-operation with the Law Department of Peoples
University and be backed up by a large number of professional legal specialists.
Fees for legal assistance, legal consulting hotlines and so on will be charged
to users.
C. COMMISSION-BASED MEDIUM SERVICE
Elawchina.com will implement non-compete, commission-based intermediary
agreements that protect the common interests of both its users and itself. In
addition, it will build, between lawyers and users, a direct connection to
provide fee-charging commission-based intermediary service.
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D. E-COMMERCE
Through selling legal software and hardware to end users, Elawchina.com is in
direct touch with the target market. It allows the users to order legal
materials and newspapers online. Elawchina.com makes an immediate retail profit
or co-operates, as an agent, with publishing houses or news agencies. In
addition, Elawchina.com will provide a series of fee-charging legal consultation
and services, such as the guides for investment, immigration, tourism and the
stock market.
E. MEMBERSHIP SYSTEM
The domestic membership system is set up to strengthen the inter-connection and
information exchange among all users. Members registered will be charged yearly
dues to defray the network cost of providing better and better quality services.
Access to the English translation service of the site is being marketed to
professional users by Elawchina.com, Inc. on a subscription basis. Elawchina.com
receives 50% of gross sales on all subscriptions. Elawchina.com projects 400,000
registered users within one year.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired. The required financial
statements will be provided as an amendment to this Form 8-K as soon as
practicable but not later than 60 days after the due date of this report.
(b) Pro Forma Financial Information. The required pro forma financial
information will be provided as an amendment to this Form 8-K as soon as
practicable but not later than 60 days after the due date of this report.
(c) Exhibits. The following exhibits are furnished in accordance with
the provisions of Item 601 of Regulation S-B.
Exhibit
No. Description
2.1 Agreement and Plan of Reorganization between
Beach Couch, Inc., Elawchina.com, Inc. and
the individual shareholders of
Elawchina.com, Inc.("Benny Li, Cocal, Inc.
and Roland Shi"), dated April 26, 2000.
(Filed herewith.)
10.1 International Distribution Agreement between
Beijing Elawchina Network Technology Co.,
Ltd. and Elawchina.com, Inc. dated March 14,
2000. (Filed herewith.)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BEACH COUCH, INC.
By: /s/ Michael A.J. Harrop
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Michael A.J. Harrop, President
Date: May 5, 2000
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EXHIBIT INDEX
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<CAPTION>
Exhibit
No. Description
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<S> <C>
2.1 Agreement and Plan of Reorganization between
Beach Couch, Inc., Elawchina.com, Inc. and
the individual shareholders of
Elawchina.com, Inc.("Benny Li, Cocal, Inc.
and Roland Shi"), dated April 26, 2000.
(Filed herewith.)
10.1 International Distribution Agreement between
Beijing Elawchina Network Technology Co.,
Ltd. and Elawchina.com, Inc. dated March 14,
2000. (Filed herewith.)
</TABLE>
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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BEACH COUCH, INC.
(a Delaware Corporation)
ACQUISITION OF
ELAWCHINA.COM, INC.
(a British Virgin Islands Corporation)
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TABLE OF CONTENTS
<TABLE>
RECITALS
AGREEMENT
<S> <C>
1. Plan of Reorganization
1.1 Acquisition
1.2 Exchange of Shares
1.3 Change in Management of ELAW-USA
1.4 Taxes
2. Closing
2.1 Delivery of Shares
2.2 Closing Requirements
3. Representations of Stockholders and ELAW-BVI
3.1 Organization
3.2 Capitalization
3.3 Authority
3.4 ELAW-BVI Stockholders
3.5 Due Diligence
3.6 Approvals and Consent
3.7 Financial Statements
3.8 Undisclosed Liabilities
3.9 Assets
3.10 Litigation
3.11 Applicable Laws
3.12 Taxes
3.13 Breach of Contracts
3.14 ELAW-BVI Disclosure
3.15 Stockholder Disclosure
4. Representations of ELAW-USA
4.1 Organization
4.2 Capitalization
4.3 Authority
4.4 Due Diligence
4.5 Approvals and Consent
4.6 Litigation
4.7 Financial Statements
4.8 Applicable Laws
4.9 Breach of Contracts
4.10 Taxes
4.11 ELAW-USA Disclosure
4.12 Undisclosed Liabilities
4.13 Delivery of Records
5. Indemnification
6. Mutual Covenants of the Parties
</TABLE>
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<TABLE>
<S> <C>
7. Restrictions on Transfer of Shares
8. Nature and Survival of Representations
9. Miscellaneous
9.1 Undertakings and Further Assurances
9.2 Waiver
9.3 Notices
9.4 Headings
9.5 Governing Law and Arbitration Provision
9.6 Binding Effect
9.7 Entire Agreement
9.8 Time
9.9 Expenses
9.10 Severability
9.11 Counterparts and Facsimile Signatures
SIGNATURE PAGE
</TABLE>
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is entered
into as of the 26th day of April, 2000, by and among BEACH COUCH, INC., a
Delaware corporation ("ELAW-USA"); ELAWCHINA.COM, INC., a British Virgin Islands
corporation ("ELAW-BVI"), and the individual shareholders of ELAW-BVI identified
on the signature page hereof.
RECITALS
WHEREAS, Stockholders owns 100% of the issued and outstanding common
stock of ELAW-BVI (an aggregate of 20,000,000 shares); and
WHEREAS, ELAW-USA desires to acquire all of the issued and outstanding
common stock of ELAW-BVI owned by Stockholders, and Stockholders desires to
exchange all of their shares of common stock in ELAW-BVI for shares of common
stock of ELAW-USA;
NOW, THEREFORE, for and in consideration of the mutual covenants and
representations and warranties of each other contained herein and other good and
valuable consideration, the receipt of which is hereby acknowledged, ELAW-USA,
ELAW-BVI and Stockholders agree as follows:
1. Plan of Reorganization. The Plan of Reorganization is as follows:
1.1 Acquisition. At the Closing, ELAW-USA shall acquire from Stockholders, and
Stockholders shall sell, transfer, assign and convey to ELAW-USA 100% of all the
issued and outstanding shares of common stock of ELAW-BVI (the "ELAW-BVI
Shares", in exchange for an aggregate of 20,000,000 shares of ELAW-USA's common
stock (the "ELAW-USA Shares"). The ELAW-USA Shares issued shall have the rights,
restrictions and privileges set forth in ELAW-USA's Articles of Incorporation
and in the stock certificates therefor. Upon the Closing, ELAW-BVI shall become
a wholly-owned subsidiary of ELAW-USA.
1.2 Exchange of Shares. To consummate the acquisition, ELAW-USA Shares shall be
delivered by ELAW-USA to Stockholders in exchange for 100% of the ELAW-BVI
Shares and 100% of the ELAW-BVI Shares owned by Stockholders, as specified on
the signature page hereof.
1.3 Change in Management of ELAW-USA. Upon execution of this Agreement, the
officers and directors of ELAW-USA shall be:
<TABLE>
<CAPTION>
Name Position
---- --------
<S> <C>
Ruolan Shi (Roland).........................President
Michael A.J. Harrop.........................Secretary
To Be Nominated.............................Treasurer
To Be Nominated.............................Director
To Be Nominated.............................Director
To Be Nominated.............................Director
</TABLE>
1.4 Taxes. Each party shall be responsible for and shall pay any and all taxes
charges or fees attributable to such party, including individual state and
federal income taxes, arising out of, or by reason of, the exchange of ELAW-USA
Shares for the ELAW-BVI Shares, or otherwise in connection with the transactions
contemplated hereby. Each party hereto represents and warrants that he has
relied solely on the opinions or advice of his own professional advisors with
respect to the tax consequences of this transaction, if any, and has not relied
on the opinions or advice of the other parties or his professional advisors in
any way with respect to the tax consequences of this transaction.
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<PAGE> 5
2. Closing. The closing of the reorganization and the transactions contemplated
in this Agreement (the "Closing") shall be deemed to take place upon execution
of this Agreement by all of the parties hereto, whereupon Stockholders shall be
deemed to have accepted delivery of the certificates of ELAW-USA Shares to be
issued in their names, and in connection therewith, shall make delivery of their
ELAW-BVI Shares to ELAW-USA.
2.1 Delivery of Shares. Upon execution of this Agreement, Stockholders shall
deliver their respective certificates representing the ELAW-BVI Shares duly
endorsed in blank, free and clear of all claims and encumbrances, to counsel to
ELAW-USA, and ELAW-USA shall issue and deliver ELAW-USA Shares to counsel to
Stockholders. The ELAW-USA Shares shall be duly issued in the name of
Stockholders, and shall be duly recorded on the books and records of ELAW-USA.
2.2 Closing Requirements. Subsequent to Closing, each of the parties shall
execute and deliver such instruments and documents and take such other actions
as may, in the reasonable opinion of counsel for each, be required to complete
the transactions under this Agreement. It is contemplated that within ten (10)
business days after the date of this Agreement, the following documents shall
have been delivered and the following activities shall have taken place, all of
which shall be deemed to have occurred contemporaneously at the Closing:
a) the securities to be delivered pursuant to Subparagraph 2.1 have
been delivered to the respective parties, duly endorsed or issued as
the case may be;
b) delivery of all corporate records of ELAW-USA, ELAW-BVI to the new
management, as set forth in Paragraph 1.4, including without
limitation, corporate minute books (which shall contain copies of
the Articles of Incorporation and Bylaws, as amended to the
Closing), stock books, stock transfer books, corporate seals,
contracts, licenses and sub-licenses, non-disclosure and
confidentiality agreements, and such other corporate books and
records as may be reasonably requested;
c) copies of resolutions by ELAW-BVI's Board of Directors authorizing
this Agreement;
d) copies of resolutions by ELAW-USA's Board of Directors authorizing
this Agreement; and
e) the parties hereto have signed and delivered such other instruments
and documents, if any, relating to and effecting the transactions
contemplated herein.
3. Representations of Stockholders and ELAW-BVI. Stockholders and ELAW-BVI
hereby represent and warrant that effective this date, the representations and
warranties listed below are true and correct:
3.1 Organization. ELAW-BVI is a corporation duly incorporated, validly existing
and in good standing under the laws of the British Virgin Islands with full
power and authority to own and use its properties and conduct its business as
presently conducted by it. ELAW-BVI has furnished ELAW-USA with copies of the
Articles of Incorporation and the Bylaws of ELAW-BVI, including all amendments
thereto. Such copies are true, correct and complete and contain all amendments
through the date hereof, which, together with this Agreement, are sufficient to
effect the transactions hereunder and evidence the intent of the parties hereto.
3.2 Capitalization. The authorized stock of ELAW-BVI consists of (a) 20,000,000
shares of common stock, and (b) no shares of preferred stock. 20,000,000 shares
of common stock have been issued All shares issued and outstanding are duly and
validly authorized and issued and are fully paid and nonassessable. ELAW-BVI
does not have outstanding any security convertible into, or any warrant, option
or other right to subscribe for or acquire any equity interest in ELAW-BVI.
3.3 Authority. ELAW-BVI has the requisite corporate authority to enter into and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement by ELAW-BVI and the consummation of the
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<PAGE> 6
transactions contemplated hereby will not violate or conflict with any
provisions of the Articles of Incorporation, as amended, or Bylaws of ELAW-BVI
or contravene any law, rule, regulation, court or administrative order binding
on it, or result in the breach of or constitute a default in the performance of
any material obligation, agreement, covenant or condition contained in any
material contract, lease, judgment, decree, order, award, note, loan or credit
agreement or any other material agreement or instrument to which ELAW-BVI is a
party or by which it is bound, the default or breach of which would have a
material adverse effect on the property and assets of ELAW-BVI, considered as a
whole. ELAW-BVI has taken all requisite corporate action to authorize and
approve the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby. Upon due execution and
delivery of this Agreement, this Agreement will constitute a valid, legal and
binding obligation of ELAW-BVI and Stockholders enforceable against them in
accordance with its terms.
3.4 ELAW-BVI Shareholders. Stockholders are the owners of 100% of the issued and
outstanding common stock of ELAW-BVI; such ELAW-BVI Shares are free and clear
from any security interests, claims, liens, or other encumbrances; and
Stockholders have the unqualified right to transfer and dispose of their
ELAW-BVI Shares. Stockholders will deliver, upon reasonable demand of ELAW-USA,
any approvals, consents or other authorizations to ELAW-USA and said approvals,
consents and other authorizations will have been duly executed, valid and
binding.
3.5 Due Diligence. ELAW-BVI has furnished to ELAW-USA copies of all documents
requested by ELAW-USA. No "due diligence" investigations undertaken by ELAW-USA
shall in any event relieve ELAW-BVI or Stockholders of their responsibilities
for the accuracy and completeness of any representation or warranty of ELAW-BVI
or of Stockholders contained herein or the performance of any covenant or
agreement of ELAW-BVI or of Stockholders contained herein.
3.6 Approvals and Consent. No approval, authorization or other action by, or
filing with, any third-party, including a governmental authority is required in
connection with the execution, delivery and performance by ELAW-BVI and
Stockholders of their obligations under this Agreement and their respective
performance of the transactions contemplated hereby.
3.7 Financial Statements. ELAW-BVI has provided unaudited financial statements
of ELAW-BVI for the period from inception through the date of Closing.
3.8 Undisclosed Liabilities. ELAW-BVI has no liabilities or obligations
whatsoever that exceed ten percent (10%) of the total assets of ELAW-BVI, either
accrued, absolute, contingent or otherwise, except as disclosed on the unaudited
financial statements heretofore provided and those incurred in or as a result of
the ordinary course of business of ELAW-BVI subsequent to the date of the
financial statements.
3.9 Assets. The assets of ELAW-BVI as set forth in the unaudited financial
statements heretofore provided have been acquired in bona fide transactions,
fully supported by appropriate instruments of assignment, sale, or transfer,
where appropriate, and are offset by no liabilities or contingencies,
contractual or otherwise, except as indicated in the financial statements.
3.10 Litigation. ELAW-BVI is not involved in any pending litigation or
governmental investigation or proceeding and, to the best knowledge of ELAW-BVI
and Stockholders, no litigation, claims, assessments, or governmental
investigation or proceeding is threatened against ELAW-BVI, its Stockholders or
properties.
3.11 Applicable Laws. ELAW-BVI has complied with all applicable laws in
connection with its formation, issuance of securities, organization,
capitalization and operations, and no contingent liabilities have been
threatened or claims made, and no basis for the same exists with respect to said
operations, formation or capitalization, including claims for violation of any
state or federal securities laws.
3.12 Taxes. ELAW-BVI has filed all governmental, tax or related returns and
reports due or required to be filed and has paid all taxes or assessments which
have become due as of the date of this Agreement, including any employment
related taxes and withholdings, and ELAW-BVI, to the best of its knowledge, is
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<PAGE> 7
not subject to a tax audit by any federal, state or local tax authority and its
properties are not subject to any tax liens.
3.13 Breach of Contracts. ELAW-BVI has not breached, nor is there any pending or
threatened claims or any legal basis for a claim that ELAW-BVI has breached, any
of the terms or conditions of any agreements, contracts or commitments to which
it is a party or is bound and the execution and performance hereof will not
violate any provisions of applicable law of any agreement to which ELAW-BVI is
subject.
3.14 ELAW-BVI Disclosure. At the date of this Agreement, ELAW-BVI has disclosed
all events, conditions and facts materially affecting the business and prospects
of ELAW-BVI. ELAW-BVI has not withheld disclosure of any such events,
conditions, and facts which it, through management, has knowledge of, or has
reasonable grounds to know, which may materially affect the business and
prospects of ELAW-BVI.
3.15 Stockholder Disclosure. Each Stockholder hereby represents that the
materials prepared and delivered by ELAW-USA to Stockholders will have been read
and understood by such Stockholder, that he is familiar with the business of
ELAW-USA, that he is acquiring the ELAW-USA Shares under Section 4(2) of the
Securities Act of 1933, (the "Act"), commonly known as the private offering
exemption, and that the shares are restricted and may not be resold, except in
reliance upon an exemption under the Act.
4. Representations of ELAW-USA. ELAW-USA hereby represents and warrants that
effective this date, the representations and warranties listed below are true
and correct:
4.1 Organization. ELAW-USA is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with full power and
authority to own and use its properties and conduct its business as presently
conducted by it. ELAW-USA is duly qualified and in good standing to do business
as a foreign corporation in any other jurisdiction where failure to so qualify
would have a material adverse effect on its business or assets. ELAW-USA has
made available to Stockholders copies of the Articles of Incorporation and the
Bylaws of ELAW-USA, including all amendments thereto. Such copies are true,
correct and complete and contain all amendments through the date hereof,
together with this Agreement, which are sufficient to effect the transactions
hereunder and evidence the intent of the parties hereto.
4.2 Capitalization. The authorized stock of ELAW-USA consists of (a) one hundred
million shares of common stock and (b)ten million shares preferred stock.
Immediately prior to the Closing, there will be five million shares of common
stock outstanding and no shares of preferred stock issued and outstanding, prior
to the issuance of the 20,000,000 ELAW-USA Shares to be delivered at Closing
pursuant to this Agreement. At the time of their issuance and delivery pursuant
to this Agreement, all ELAW-USA Shares to be issued pursuant to the terms hereof
shall be duly and validly authorized and issued, fully paid and nonassessable.
Except as disclosed in writing prior to Closing, ELAW-USA does not have
outstanding any security convertible into, or any warrant, option or other right
to subscribe for or acquire any shares of stock of ELAW-USA; nor is ELAW-USA
under any obligation, whether written or oral, to issue any of its securities.
4.3 Authority. ELAW-USA has the requisite corporate authority to enter into and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement by ELAW-USA and the consummation of the transactions
contemplated hereby will not violate or conflict with any provisions of the
Articles of Incorporation, as amended, or Bylaws of ELAW-USA or contravene any
law, rule, regulation, court or administrative order binding on it, or result in
the breach of or constitute a default in the performance of any material
obligation, agreement, covenant or condition contained in any material contract,
lease, judgment, decree, order, award, note, loan or credit agreement or any
other material agreement or instrument to which ELAW-USA is a party or by which
it is bound, the default or breach of which would have a material adverse effect
on the property and assets of ELAW-USA, considered as a whole. ELAW-USA has
taken all requisite corporate action to authorize and approve the execution,
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<PAGE> 8
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby. Upon due execution and delivery of this
Agreement, this Agreement will constitute a valid, legal and binding obligation
of ELAW-USA enforceable against it in accordance with its terms.
4.4 Due Diligence. ELAW-USA has furnished to Stockholders copies of all
documents requested by Stockholders. No "due diligence" investigations
undertaken by Stockholders shall in any event relieve ELAW-USA or its current
officers and directors of their responsibilities for the accuracy and
completeness of any representation or warranty of ELAW-USA contained herein or
the performance of any covenant or agreement of ELAW-USA contained herein.
4.5 Approvals and Consent. No approval, authorization or other action by, or
filing with, any third-party, including a governmental authority is required in
connection with the execution, delivery and performance by ELAW-USA of its
obligations under this Agreement and its performance of the transactions
contemplated hereby.
4.6 Litigation. ELAW-USA is not involved in any pending litigation or
governmental investigation or proceeding and, to the best knowledge of ELAW-USA,
no litigation, claims, assessments, or governmental investigation or proceeding
is threatened against ELAW-USA, its Stockholders or properties.
4.7 Financial Statements. ELAW-USA has provided to Stockholders copies of its
periodic filings with the Securities and Exchange Commission, which include
audited financial statements of ELAW-USA prepared in accordance with the
requirements of Regulation S-B of the Securities Act of 1933, as amended (the
"Act"), for the most recent fiscal year end.
4.8 Applicable Laws. ELAW-USA has complied with all state, federal and local
laws in connection with its formation, issuance of securities, organization,
capitalization and operations, and no contingent liabilities have been
threatened or claims made, and no basis for the same exists with respect to said
operations, formation or capitalization, including claims for violation of any
state or federal securities laws.
4.9 Breach of Contracts. ELAW-USA has not breached, nor is there any pending or
threatened claims or any legal basis for a claim that ELAW-USA has breached, any
of the terms or conditions of any agreements, contracts or commitments to which
it is a party or is bound and the execution and performance hereof will not
violate any provisions of applicable law of any agreement to which ELAW-USA is
subject.
4.10 Taxes. ELAW-USA has filed all governmental, tax or related returns and
reports due or required to be filed and has paid all taxes or assessments which
have become due as of the date of this Agreement, including any employment
related taxes and withholdings, and ELAW-USA, to the best of its knowledge, is
not subject to a tax audit by any federal, state or local tax authority and its
properties are not subject to any tax liens. ELAW-USA will cause to be filed or
prepared, as applicable, by the date of this Agreement, all federal, state,
county and local income, excise, property and other tax returns, forms, or
reports, which are due or required to be filed by it prior to the date of this
Agreement.
4.11 ELAW-USA Disclosure. At the date of this Agreement, ELAW-USA has disclosed
all events, conditions and facts materially affecting the business and prospects
of ELAW-USA. ELAW-USA has not withheld disclosure of any such events,
conditions, and facts which it, through management, has knowledge of, or has
reasonable grounds to know, which may materially affect the business and
prospects of ELAW-USA.
4.12 Undisclosed Liabilities. ELAW-USA has no material liabilities or
obligations whatsoever, either accrued, absolute, contingent or otherwise,
except as disclosed on the audited financial statements heretofore provided.
4.13 Delivery of Records. ELAW-USA shall deliver the corporate financial
records, minute books, and other documents and records in their entirety to the
new management as contemplated by Subparagraph 1.3.
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<PAGE> 9
5. Indemnification. The parties hereby agree that for a period of two years
commencing the date hereof, and in accordance with the terms of Paragraph 8,
each party to this Agreement shall indemnify and hold harmless each other party
at all times after the date of this Agreement against and in respect of any
third-party liability, damage or deficiency, all actions, suits, proceedings,
demands, assessments, judgments, costs and expenses, including attorney's fees,
incident to any of the foregoing, resulting from any misrepresentation, breach
of covenant or warranty or nonfulfillment of any agreement on the part of such
party under this Agreement or from any misrepresentation in or intentional
omission from any document or certificate furnished or to be furnished to a
party hereunder. Subject to the terms of this Agreement, the defaulting party
shall reimburse the other party or parties with respect to such third-party's
actions on demand, for any reasonable payment made by said parties at any time
after the Closing, in respect of any liability or claim to which the foregoing
indemnity relates, if such payment is made after reasonable notice to the other
party to defend or satisfy the same and such party failed to defend or satisfy
the same. In the event a third-party action is threatened or commenced but not
resolved within said two-year period, the parties hereby agree to extend this
indemnification through resolution of the third-party action.
In addition, each party agrees to indemnify each other party for any
loss incurred as a result of the subsequent discovery of any liability that is
not disclosed in the financial statements or schedules provided under this
Agreement that was known to such knowledgeable party or parties at the time of
the Closing.
6. Mutual Covenants of the Parties. ELAW-USA, ELAW-BVI and Stockholders each
covenant and agree to execute any further documents or agreements and to take
any further acts that may be reasonably necessary to effect the transactions
contemplated hereunder, including, but not limited to, obtaining any consents or
approvals of any third-party required to be obtained to consummate the
transactions contemplated by this Agreement.
7. Restrictions on Transfer of Shares. The parties hereto acknowledge that all
securities transferred and/or issued in connection with the transactions
contemplated hereby are restricted as to transfer and the certificates therefore
shall bear legends to such effect and no transfer of any shares may be effected,
except pursuant to an effective registration statement prepared and filed
pursuant to the Act or pursuant to an exemption from registration thereunder, as
evidenced by an opinion of counsel or as otherwise allowed under the laws of
descent and distribution.
8. Nature and Survival of Representations. All representations, warranties and
covenants made by any party in this Agreement shall survive the Closing
hereunder and the consummation of the transactions contemplated hereby for two
(2) years from the date hereof. All of the parties hereto are executing and
carrying out the provisions of this Agreement in reliance solely on the
representations, warranties and covenants and agreements contained in this
Agreement or at the Closing of the transactions herein provided for and not upon
any investigation upon which it might have made or any representations,
warranty, agreement, promise or information, written or oral, made by the other
party or any other person other than as specifically set forth herein.
9. Miscellaneous.
9.1 Undertakings and Further Assurances. At any time, and from time to time,
hereafter, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to carry out the intent
and purposes of this Agreement.
9.2 Waiver. Any failure on the part of any party hereto to comply with any of
its obligations, agreements or conditions hereunder may be waived in writing by
the party to whom such compliance is owed.
9.3 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed to have been given if delivered in person or sent by prepaid
first class registered or certified mail, return
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<PAGE> 10
receipt requested, or by Federal Express or other means of overnight delivery to
the addresses set forth on the signature page hereof.
9.4 Headings. The paragraph and subparagraph headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.5 Governing Law and Arbitration Provision. This Agreement shall be governed by
the laws of the State of Colorado. Any dispute arising directly or indirectly
from this Agreement shall be settled by arbitration within the State of Colorado
(as designated by ELAW-USA). Any arbitration will be conducted by the American
Arbitration Association in accordance with its Rules of Commercial Arbitration,
and judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof. The parties hereto agree that service by
certified mail to their business addresses shall constitute sufficient service
of process of any proposed arbitration.
9.6 Binding Effect. This Agreement shall be binding upon the parties hereto and
inure to the benefit of the parties, his respective heirs, administrators,
executors, successors and assigns. This Agreement shall not be assigned by any
party hereto, except upon the consent, in writing, of the other parties hereto.
9.7 Entire Agreement. This Agreement, including any documents delivered pursuant
to the terms hereof, is the entire agreement of the parties covering everything
agreed upon or understood with respect to the transactions contemplated hereby
and supersedes all prior agreements, covenants, representations or warranties,
whether written or oral, by any party hereto. There are no oral promises,
conditions, representations, understandings, interpretations or terms of any
kind as conditions or inducements to the execution hereof.
9.8 Time. Time is of the essence. The parties each agree to proceed promptly and
in good faith to consummate the transactions contemplated herein.
9.9 Expenses. Each of the parties hereto shall pay its own expenses incurred in
connection with the authorization, preparation, execution and performance of
this Agreement and obtaining any necessary regulatory approvals, including,
without limitation, all fees and expenses of his respective counsel.
9.10 Severability. If any part of this Agreement is deemed to be unenforceable
the balance of the Agreement shall remain in full force and effect.
9.11 Counterparts and Facsimile Signatures. This Agreement and any Exhibits,
attachments, or documents ancillary hereto, may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument. Execution and
delivery of this Agreement by exchange of facsimile copies bearing the facsimile
signature of a party hereto shall constitute a valid and binding execution and
delivery of this Agreement by such party. Such facsimile copies shall constitute
enforceable original documents.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 11
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
BEACH COUCH, INC.
(A DELAWARE CORPORATION)
By: /s/ Michael A.J. Harrop
-------------------------------
Michael A.J. Harrop - President
Attest:
/s/ Eric Drizenko
- ------------------------
Eric Drizenko, Secretary
ELAWCHINA.COM, INC.
(A BVI CORPORATION)
By: /s/ Roland Shi
-------------------------------
Roland Shi - President
Attest:
/s/ Xuemu Chen
- ------------------------
Xuemu Chen, Secretary
STOCKHOLDERS OF ELAW-BVI:
1. Benny Li - 6 million shares 30%
2. Cocal, Inc. - 6 million shares 30%
3. Roland Shi - 8 million shares 40%
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<PAGE> 1
INTERNATIONAL DISTRIBUTION AGREEMENT EXHIBIT 10.1
BETWEEN
BEIJING ELAWCHINA NETWORK TECHNOLOGY CO., LTD.
AND
ELAWCHINA.COM, INC.
THIS AGREEMENT is entered into by and between Beijing Elawchina Network
Technology Co., Ltd., a Chinese Corporation with offices at Changwaxi Road 8,
Haidaid District, Beiling, China ("Company"), and elawchina.com, Inc., a BVI
Corporation, with offices at 2nd Floor, 116 Main Street, P.O. Box 3342 Road
Town, Tortola British Virgin Islands ("Distributor").
WHEREAS, Company has developed a legal educational and consulting information
network in the Chinese language and intends to market and sell all non-Chinese
translations of the content of said legal education and consulting network (the
Product); and
WHEREAS, Distributor has represented that it has the ability to sell, market,
and distribute the Product in all countries of the world outside China (the
Territory);
WHEREAS, Company is desirous to appoint Distributor as its exclusive distributor
to sell, market, and distribute the Product in the Territory, and Distributor
desires to accept such appointment; and
WHEREAS, both Company and Distributor have agreed to the terms and conditions
under which Distributor shall provide such services.
NOW, THEREFORE, in consideration of the promises and agreements set forth
herein, the parties, each intending to be legally bound hereby, do promise and
agree as follows:
1. APPOINTMENT OF INTERNATIONAL DISTRIBUTOR
A. Company hereby appoints Distributor, for the Term of this Agreement,
as its exclusive distributor, for the sale and distribution of the Product in
all markets and channels of distribution in the Territory. The appointment shall
include, but not be limited to, a license under all of Company's patents,
trademarks, service marks, logos, and copyrights and any applications therefore
with respect to the Product and in which Company has rights.
B. Distributor shall have the right to appoint local Subdistributors
and Sales Representatives in the countries of the Territory to effect the sale
and distribution of the Product. Such Subdistributors and Sales Representatives
shall be selected by Distributor and shall be reasonably acceptable to Company.
Moreover, Distributor shall guarantee the performance and obligations of all
such Subdistributors and Sales Representatives.
C. It is expressly understood and agreed that Company hereby retains
all rights not expressly granted hereunder.
DISTRIBUTOR AGREEMENT 1 MARCH 14, 2000
<PAGE> 2
2. TERM
A. This Agreement shall be effective as of the date of execution by
both parties and shall extend for the 30 years (the Term).
B. This Agreement shall automatically renew for successive five-year
Extended Terms unless Company or Distributor shall state in writing to the other
party 30 days prior to the end of each Term its intent not to renew.
3. RECORD INSPECTION AND AUDIT
A. Company shall have the right, upon reasonable notice, to inspect
Distributor's books and records and all other documents and material in
Distributor's possession or control with respect to the subject matter of this
Agreement. In addition, Distributor shall contractually obligate its
Subdistributors and Sales Representatives to agree to make their books and
records available to Company for inspection. Company shall have free and full
access thereto for such purposes and may make copies thereof.
B. All books and records relative to Distributor's obligations
hereunder shall be maintained and made accessible to Company for inspection for
at least seven years after termination of this Agreement.
4. WARRANTIES AND OBLIGATIONS
A. Company represents and warrants that it has the right and power to
enter into the subject Agreement and that there are no other agreements with any
other party in conflict with such grant.
B. Company further represents and warrants that it has no actual
knowledge that the Product infringes any valid rights of any third party.
C. Distributor represents and warrants that it will use its best
efforts to promote, market, advertise, sell and distribute the Product in the
Territories and that its Subdistributors and Sales Representatives will use
their best efforts to promote, market, advertise, sell, and distribute the
Product in their respective territories. Distributor and its Subdistributors and
Sales Representatives shall be solely responsible for the sale and distribution
of the Product and will bear all costs associated therewith.
5. PRODUCT MARKINGS
A. Distributor and its Subdistributors and Sales Representatives shall
fully comply with the marking provisions of the intellectual property laws of
the applicable countries in the Territory.
B. In the event that Distributor or any of its Subdistributors or Sales
Representatives utilize any trademark, service mark, or other mark or logo of
Company, or to which Company has rights, title, or interest and that Company has
licensed the use of hereunder to Distributor with respect to promotional,
packaging, and advertising material, such use shall include all appropriate
legal notices as required by Company.
DISTRIBUTOR AGREEMENT 2 MARCH 14, 2000
<PAGE> 3
6. INCENTIVES
Four times each calendar year during the Term of this Agreement, Company shall
calculate sales by territory, product, and distributor/Subdistributor and, in
its unfettered discretion, may award a distributor and/or its salesperson(s)
with gifts or other incentives of Company's selection.
7. ROYALTIES
Commencing on 28 April, 2000 Company shall be paid, on a Quarterly basis, a
royalty of One Million two hundred fifty thousand ($1,250,000.00) USD for a
total period of four quarters, in addition to Twenty-five (25)% of gross
revenues of sales made by Distributor and Subdistributors].
10. OPTION
A. Subject to Section 13, Distributor shall have an exclusive option,
exercisable upon 30 days written notice to purchase 100% of the equity of
Company.
B. The cost to Distributor to exercise such option shall be Ten
thousand ($10,000.00) USD.
8. NOTICES
Any notice required to be given pursuant to this Agreement shall be in writing
in the English language and mailed by certified or registered mail, return
receipt requested, or delivered by a national overnight express service.
9. INTELLECTUAL PROPERTY RIGHTS
A. Company shall retain all rights, title, and interest in the original
Product and to any modifications or improvements made thereto. Distributor will
not obtain any rights in the Product as a result of its responsibilities
hereunder. The parties agree to execute any documents reasonably requested by
the other party to effect any of the above provisions.
B. Distributor acknowledges Company's exclusive rights in the Product
and that the Product is unique and original to Company and that Company is the
owner thereof. Unless otherwise permitted by law, neither Distributor nor any of
its Subdistributors or Sales Representatives shall, at any time during or after
the effective Term of the Agreement, dispute or contest, directly or indirectly,
Company's exclusive right and title to the Product or the validity thereof.
C. Neither Distributor nor any of its Subdistributors or Sales
Representatives shall have any right to duplicate, translate, decompile, reverse
engineer, or adapt the Product without Company's prior written consent, nor
shall they attempt to develop any products that contain the "look and feel" of
any of the Product.
10. PRODUCT WARRANTY
A. The warranty with respect to the Product is as described in the
warranty agreement provided with each Product. This is the only warranty offered
by Company. Company does not warrant that the Product will meet the requirements
of any end user.
DISTRIBUTOR AGREEMENT 3 MARCH 14, 2000
<PAGE> 4
B. Company does not extend to Distributor or any of its Subdistributors
or Sales Representatives any additional warranties, express or implied, and
Distributor and its Subdistributors and Sales Representatives waive any and all
claims to damages.
C. Upon receipt of any warranty claim that is made in a timely and
prompt fashion, Company shall make reasonable efforts to correct any significant
reproducible error in the Product, provided such error relates to the proper
functioning of the Product and has not been caused by negligence on the part of
Distributor or its Subdistributors or Sales Representatives or any third party,
computer malfunction, or other causes external to the Product. Company's
liability is limited to replacement of Product.
D. THE WARRANTIES CONTAINED HEREIN ARE IN LIEU OF ALL OTHER WARRANTIES
OR CONDITIONS, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THOSE OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL COMPANY
BE LIABLE FOR DAMAGES, DIRECT OR INDIRECT, INCLUDING INCIDENTAL OR CONSEQUENTIAL
DAMAGES SUFFERED BY DISTRIBUTOR, SUBDISTRIBUTOR, SALES REPRESENTATIVE, RETAILER,
END USER, OR OTHER THIRD PARTY ARISING FROM BREACH OF WARRANTY OR BREACH OF
CONTRACT, NEGLIGENCE, OR ANY OTHER LEGAL GROUND OF ACTION.
E. Distributor shall be liable for any representations or warranties
made by it or its Subdistributors or Sales Representatives without the approval
of Company in its advertising, brochures, manuals, or by its agents, employees,
or representatives, whether in writing or orally with respect to each Product.
11. CONFIDENTIALITY
A. It is recognized that during the course of its work with Company,
Distributor or its Subdistributors or Sales Representatives may have occasion to
conceive, create, develop, review, or receive information that is considered by
Company to be confidential or proprietary including information relating to the
Product, including inventions, patent, trademark and copyright applications,
improvements, know-how, specifications, drawings, cost data, process flow
diagrams, customer and supplier lists, bills, ideas, and/or any other written
material referring to same (the Confidential Information). Both during the Term
of this Agreement and thereafter, Distributor agrees to maintain in confidence
such Confidential Information unless or until:
1. It shall have been made public by an act or omission of a
party other than itself;
2. Distributor receives such Confidential Information from an
unrelated third party on a nonconfidential basis; or
3. The passage of one (1) year from the date of the disclosure of
such Confidential Information to Distributor, whichever shall
first occur.
B. Distributor further agrees to use all reasonable precautions to
ensure that all such Confidential Information is properly protected and kept
from unauthorized persons or disclosure.
DISTRIBUTOR AGREEMENT 4 MARCH 14, 2000
<PAGE> 5
C. If requested by Company, Distributor agrees to promptly return to
Company all materials, writings, equipment, models, mechanisms, and the like
obtained from or through Company including, but not limited to, all Confidential
Information, all of which Distributor recognizes is the sole and exclusive
property of Company.
D. Distributor agrees that it will not, without first obtaining the
prior written permission of Company do any of the following:
1. Directly or indirectly utilize such Confidential Information
in its own business;
2. Manufacture and/or sell any product that is based in whole or
in part on such Confidential Information; or
3. Disclose such Confidential Information to any third party.
E. Distributor shall have each of its Subdistributors and Sales
Representatives agree to be bound by the provisions of this paragraph.
12. COMPLIANCE WITH LOCAL LAWS
A. Distributor and its Subdistributors and Sales Representatives shall
ensure compliance with all applicable laws and regulations in each country in
the Territory.
B. Distributor and its Subdistributors and Sales Representatives shall
cooperate promptly with Company to assist Company in complying with all laws of
each country in the Territory, including but not limited to, all laws and
regulations relating to the control of exports or the transfer of technology.
13. GOVERNMENT APPROVAL
A. Where necessary, Distributor and its Subdistributors and Sales
Representatives shall be required to obtain all governmental approvals required
to fulfill its obligations under this Agreement. Such undertaking shall be at
Distributor's sole expense.
B. If approval by any governmental entity in any country in the
Territory is required before this Agreement is enforceable by Company, then such
government approval is a condition precedent to the validity of this Agreement.
It is expressly understood and agreed that Company shall have no obligations
under this Agreement until such governmental approval has been obtained and
evidence of such approval has been received by Company.
C. In the event that any governmental entity requires material changes
to be made to the terms of this Agreement or the relationship between the
parties, either party may terminate this Agreement upon ten (10) days written
notice.
14. NONCOMPETITION
During the term of this Agreement, neither Distributor nor any of its
Subdistributors or Sales Representatives shall serve as distributor or marketing
or sales representative in connection with any product that is directly or
indirectly competitive with the product or products that Distributor
DISTRIBUTOR AGREEMENT 5 MARCH 14, 2000
<PAGE> 6
is distributing, promoting, or selling on behalf of Company without first
obtaining Company's written consent.
15. TERMINATION
The following termination rights are in addition to the termination rights that
may be provided elsewhere in the Agreement.
A. Immediate Right of Termination. Company shall have the right to
immediately terminate this Agreement by giving written notice to Distributor in
the event that Distributor does any of the following:
1. Files a petition in bankruptcy or is adjudicated bankrupt or
insolvent, or makes an assignment for the benefit of
creditors, or an arrangement pursuant to any bankruptcy law,
or if Distributor discontinues or dissolves its business, or
if a receiver is appointed for Distributor or for
Distributor's business and such receiver is not discharged
within one hundred and eighty (180) days;
2. Makes any change in the current management of Distributor,
which in their opinion threatens to damage the reputation of
Company, or the Product; or
3. Engages in any illegal, unfair, or deceptive business
practices or unethical conduct whatsoever, whether or not
related to the Product.
B. Right to Terminate Upon Notice. Either party may terminate this
Agreement on thirty (30) days' written notice to the other party in the event of
a breach of any provision of this Agreement by the other party, provided that,
during the thirty-day period, the breaching party fails to cure such breach.
16. POSTTERMINATION RIGHTS
A. Not less than ten (10) days prior to the expiration of this
Agreement or immediately upon termination thereof, Distributor and its
Subdistributors and Sales Representatives shall provide Company with a complete
schedule of all inventory of Product then on hand (the Inventory).
B. Upon expiration or termination of this Agreement, except for reason
of a breach of Distributor's duty to comply with applicable laws, legal
notice/marking requirements, Distributor and its Subdistributors and Sales
Representatives shall, thereafter, cease the sale or distribution of the
Product. Company shall have the option of purchasing any of the existing
Inventory of Product then on hand as of the date of expiration or termination of
the Agreement.
C. Upon the expiration or termination of this Agreement, all rights
granted to Distributor under this Agreement shall forthwith terminate and
immediately revert to Company and Distributor and its Subdistributors and Sales
Representatives shall discontinue all use of the Product and the like.
DISTRIBUTOR AGREEMENT 6 MARCH 14, 2000
<PAGE> 7
D. Upon expiration or termination of this Agreement, Company may
require that Distributor and its Subdistributors and Sales Representatives
transmit to Company, at no cost, all material relating to the Product.
E. It is understood and agreed that termination or expiration of this
Agreement shall not extinguish any of Distributor's obligations under this
Agreement that by their terms continue after the date of termination or
expiration.
17. INFRINGEMENTS
A. Distributor agrees to notify Company promptly in the event
Distributor and its Subdistributors and Sales Representatives become aware of
any infringements of the Product. Company shall have the right, in its sole
discretion, to prosecute lawsuits against third parties for infringement of
Company's rights in the Product. All costs and expenses associated with such
lawsuits shall be borne by Company, which shall be entitled to any recovery
received less damages to Distributor,as a result thereof, whether by
adjudication or settlement.
B. Distributor and its Subdistributors and Sales Representatives agree
to fully cooperate with Company and its representatives in the prosecution of
any such suit. Company shall reimburse Distributor for the expenses incurred as
a result of such cooperation.
18. INDEMNITY
A. Distributor agrees to defend, indemnify, and hold Company, and its
officers, directors, agents, and employees, harmless against all costs,
expenses, and losses (including reasonable attorney fees and costs) incurred
through claims of third parties against Company based on Distributor's breach of
any representations or warranties contained herein or as a result of any of
Distributor's actions or inactions.
B. Company agrees to defend, indemnify, and hold Distributor, and its
officers, directors, agents, and employees, harmless against all costs,
expenses, and losses (including reasonable attorney fees and costs) incurred
through claims of third parties against Distributor based on Company's breach of
any representations or warranties contained herein or as a result of any of
Company's actions or inactions.
19. INDEPENDENT CONTRACTOR
Distributor's performance of its duties and obligations under this Agreement and
the performance of its Subdistributors and Sales Representatives are in a
capacity as an independent contractor. Accordingly, nothing contained in this
Agreement shall be construed as establishing an employer/employee, a
partnership, agency, brokerage, or a joint venture relationship between
Distributor, and its Subdistributors and Sales Representatives, and Company.
20. JURISDICTION AND DISPUTES
A. This Agreement shall be governed by the laws of British Virgin
Islands,(BVI).
B. All disputes hereunder shall be resolved in the applicable courts of
BVI. The parties consent to the jurisdiction of such courts, agree to accept
service of process by mail, and waive any jurisdictional or venue defenses
otherwise available.
DISTRIBUTOR AGREEMENT 7 MARCH 14, 2000
<PAGE> 8
21. AGREEMENT BINDING ON SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of the parties
hereto, and their heirs, administrators, successors, and assigns.
22. WAIVER
No waiver by either party of any default shall be deemed as a waiver of any
prior or subsequent default of the same or other provisions of this Agreement.
23. SEVERABILITY
If any provision hereof is held invalid or unenforceable by a court of competent
jurisdiction, such invalidity shall not affect the validity or operation of any
other provision and such invalid provision shall be deemed to be severed from
the Agreement.
24. ASSIGNABILITY
The license granted hereunder is personal to Distributor and may not be assigned
by any act of Distributor or by operation of law except with the consent of
Company.
25. INTEGRATION
This Agreement constitutes the entire understanding of the parties, and revokes
and supersedes all prior agreements between the parties and is intended as a
final expression of their Agreement. It shall not be modified or amended except
in writing signed by the parties hereto and specifically referring to this
Agreement. This Agreement shall take precedence over any other documents that
may be in conflict therewith.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have each caused to be affixed hereto its or his/her hand and seal the day
indicated.
Beijing Elawchina Network Technology Co., Ltd.
/s/ Roland Shi
Roland Shi
President
14 March, 2000
elawchina.com, Inc.
/s/ Roland Shi
Roland Shi
President
14 March, 2000
DISTRIBUTOR AGREEMENT 8 MARCH 14, 2000
