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): August 17, 1998
EGAN SYSTEMS, INC.
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(Exact name of Registrant as specified in its charter)
2-95836-NY
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(Commission file number)
Delaware 13-3250816
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(State or other jurisdiction (I.R.S. Employer Identification
of incorporation) Number)
1501 Lincoln Avenue, Holbrook, New York 11741
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(Address of principal executive offices) (Zip code)
(516) 588-8000
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On August 17, 1998, the Company executed a Joint Venture Agreement with
Intermost Limited, a British Virgin Islands Company, for the purpose of
developing, upgrading and integrating computer and computer related systems and
for providing technical support, supervision, training and software development
principally in the People's Republic of China. This joint venture will operate
under the name of Tech 2020 Ltd. and will initially focus on YK 2000 problems.
Under the terms of the joint venture agreement, the Company will contribute
technology, hardware, training, technical support, patent rights and cash (in an
amount to be determined) and will receive fifty-one percent (51%) of all joint
venture earnings.
ITEM 7. FINANCIAL STATEMENTS & EXHIBITS
(c) Exhibits
1. Joint Venture Agreement of Tech 2020 Ltd.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly cause this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EGAN SYSTEMS, INC.
By: /s/ Edward Egan
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Edward Egan
President & Chief Financial Officer
Date: August 25, 1998
INDEX TO
JOINT VENTURE AGREEMENT
OF
TECH 2020 LTD.
ARTICLE SECTION PAGE
NUMBER NUMBER TITLE NUMBER
FORMATION OF JOINT VENTURE 1
I. 1.01 Formation of Joint Venture 1
1.02 Purposes and Scope of Joint Venture 1
1.03 Name of Joint Venture 1
1.04 Assumed Name Certificate 1
1.05 Scope of Venturers' Authority 1
1.06 Principal Place of Business 1
II. MANAGEMENT OF JOINT VENTURE 2
2.01 Management of Joint Venture 2
2.02 Compensation of Venturers 2
2.03 Change of Managing Venturer 3
2.04 Budgets 3
2.05 Contracts with Relocated Parties 3
2.06 Consent and Approval 3
III. CAPITAL CONTRIBUTION 3
3.01 Initial Contribution 3
3.02 Loans by Joint Ventures 4
IV. ADDITIONAL CONTRIBUTION 4
4.01 Contributions by Venturers 4
4.02 Additional Contributions 4
4.03 Failure of a Venturer to Make Additional
Contribution 4
V. ACCOUNTING AND DISTRIBUTIONS 5
5.01 Ownership of Joint Venture 5
5.02 Tax Status, Allocations and Reports 5
5.03 Distributions to Venturers 6
5.04 Accounting 6
5.05 Bank Accounts 6
5.06 Liabilities 7
5.07 Accounting and Application of Proceeds 7
VI. TERM, TERMINATION AND TRANSFERS OF INTEREST
7
6.01 Term 7
6.02 Voluntary Termination 8
6.03 Voluntary Transfer of Joint Venturer's
Interest 8
6.04 Involuntary Transfer of Joint Venture
Interests 8
6.05 Exercise of Preferential Purchase Right 9
6.06 Determination of Fair Market Value 10
6.07 Failure to Comply 11
6.08 Survival of Liabilities 11
6.09 Transfers Subject to This Agreement 11
6.10 Accounting 11
VII. DISSOLUTION 11
7.01 Final Accounting 11
7.02 Distributions Following Dissolution (No
Reconstitution) 12
7.03 Distributions Following Dissolution
(Reconstitution) 12
VIII. GENERAL 12
8.01 Notices 12
8.02 Insurance 13
8.03 Governing Laws 13
8.04 Fees and Commissions 13
8.05 Entire Agreement 13
8.06 Waiver 14
8.07 Severability 14
8.08 Binding Agreement 14
8.09 Time of Essence 14
8.10 Headings 14
8.11 Amendments 14
8.12 Terminology 14
Signature Page 15
ACKNOWLEDGMENTS 16
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JOINT VENTURE AGREEMENT
TECH 2020 LTD.
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THIS AGREEMENT, made and entered into effective for all purposes as of the
17th day of August 1998, by and between EGAN SYSTEMS, INC. (a Delaware
corporation) and INTERMOST LIMITED (a British Virgin Islands corporation),
(hereinafter referred to individually and collectively as a "Venturer" and the
"Venturers", respectively).
W I T N E S S E T H:
In consideration of the mutual covenants set forth herein, the Venturers
hereby agree as follows:
ARTICLE I
FORMATION OF JOINT VENTURE
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Section 1.01. Formation of Joint Venture. The Venturers hereby enter into
and form partnership and joint venture (the "Joint Venture") for the limited
purposes and scope set forth herein. Except as expressly provided for herein to
the contrary, the rights and obligations of the Venturers and the administration
and termination of the Joint Venture shall be governed by the laws of New York.
Section 1.02. Purposes and Scope of Joint Venture. The purposes and scope
of the Joint Venture shall be for the performance of computer and computer
related operations and systems development, upgrading, integrating, technical
support, supervisor, marketing, training and software development.
Section 1.03 Name of Joint Venture. The business and affairs of the Joint
Venture shall be conducted under the name of Tech 2020 Ltd., or of such
variations thereof of such nominees therefor as the Venturers may select.
Section 1.04 Assumed Name Certificate. The Venturers shall execute all
assumed or fictitious name certificate or certificates required by law to be
filed in connection with the formation of the Joint Venture and shall cause such
certificate or certificates to be filed in the assumed name records of Egan
Systems, Inc.
Section 1.05 Scope of Venturer's Authority. Except as otherwise expressly
and specifically provided in this Agreement, none of the Venturers shall have
any authority to act for, or to assume any obligations or responsibility on
behalf of, any other Venturers or the Joint Venture.
Section 1.06 Principal Place of Business. The principal place of business
of the Joint Venture shall be Shenzhen, China, or such other address as the
Venturers may from time to time select. All books, records and papers of the
Venture shall be kept at the principal place of business.
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ARTICLE II
MANAGEMENT OF JOINT VENTURE
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Section 2.01. Management of Joint Venture. The overall management and
control of the business and affairs of, and the authority to make all decisions
affecting the Joint Venture shall at all times be vested in the Venturers, but
the implementation of such management, control and decisions, except as
otherwise herein provided, shall be in the Managing Venturer (which term, as
used herein, shall be deemed to mean Egan Systems, Inc. until a new Managing
Venturer shall be appointed pursuant to Section 2.03 herein below) and may be
exercised by the said Managing Venturer to act in his behalf. The Managing
Venturer shall be responsible for the implementation of the decisions of the
Venturers and for conducting the ordinary and usual business and affairs to the
Joint Venture. Without in any way limiting the generality of the foregoing, the
following Joint Venture matters shall be effectuated only after the complete
concurrence of one hundred percent (100%) shall first have been received by the
Managing Venturer:
1. Borrowing any sum of money in excess of Five Thousand and No/100
Dollars ($5,000.00);
2. Determining when and whether distributions should be made to the
Venturers, as more fully set forth in Section 5.03. hereof;
3. Making any expenditure or incurring any obligation by or of the Joint
Venture in excess of Five Thousand and No/100 Dollars ($5,000.00);
4. Determining the maximum and minimum working capital requirements of
the Joint Venture;
5. Maintaining all funds of the Joint Venture in a Joint Venture account
in such banks selected by the Venturers;
6. Selling, transferring or assigning all or any part of the Interest
and/or any other substantial Joint Venture assets, distributing the
proceeds therefrom and, if then appropriate, terminating the Joint
Venture in accordance with the Article VI herein below.
Section 2.02 Compensation of Venturers. Except as may be expressly provided
for herein or hereafter approved by the Venturers, no payment will be made by
the Joint Venture to any Venturers for the services of such Venturer except as
mutually agreed upon by each party to the agreement. The Venturers, however,
shall be reimbursed by the Joint Venture for the reasonable out-of-pocket
expenses incurred in connection with the business and affairs of the Joint
Venture, including all legal, accounting, travel and other similar expenses
reasonably incurred in connection with the business of the Joint Venture.
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Section 2.03 Change of Managing Venturer. At any time upon unanimous
consent, a successor Managing Venturer may be appointed from the Venturers
herein. Upon such appointment, the Venturer previously acting as the Managing
Venturer hereunder shall be relieved of any and all responsibility for the
management of the Joint Venture after the date of such appointment. The relief
of any Venturer from acting as the Managing Venturer shall in no way adversely
affect its Percentage Interest hereunder (either equity or right to cash
distribution).
Section 2.04 Budgets. Not less often than once each fiscal year, the
Managing Venturer shall prepare and submit to the Venturers for their
consideration an operational budget ("Budget") setting forth the estimated
receipts and expenditures (capital, operating and other) of the Joint Venture
for the period covered by the Budget. When approved by the Venturers, Managing
Venturer shall in good faith use its best efforts to implement the Budget and
shall be authorized, without the need for further approval by the Venturers, to
make the expenditures and incur the obligations provided for the Budget.
Section 2.05 Contracts with Related Parties. The Managing Venturer shall
not enter into any contract, agreement, lease, venture of goods, services or
space with any part or entity related to or affiliated with any Venturer or with
respect to which any Venturer of party or entity related to or affiliated with
any Venturer has any direct or indirect ownership or control unless such
contract, agreement, lease or other arrangement has been approved by the
Venturers.
Section 2.06 Consent and Approval. In any instance under this Agreement in
which the consent or approval of a Venturer to any proposed action is required,
such consent or approval shall be deemed to have been given unless written
objection to such proposed action, stating with particular grounds therefor, is
sent by such objecting Venturer to the other Venturers within five (5) days
after receipt of a written request for such consent or approval.
ARTICLE III
CAPITAL CONTRIBUTION
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Section 3.01. Initial Contribution.
a) Egan Systems, Inc. shall contribute Technology hardware (including but
not limited to mainframes) training, technical support, patent rights
and cash in the amount to be determined on a pro rata basis.
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b) Intermost Limited shall contribute office space and manpower in the
PRC, supervision for PRC projects, PRC contracts, marketing and cash
in the amount to be determined on a pro rata basis.
Section 3.02 Loans by Joint Venturers. The Venturers may make future
advances of money, from time to time, to the Joint Venture or on its behalf, for
costs, expenses or expenditures growing out of the ownership and operation of
the Joint Venture property. However, unless a Venturers making such an advance
is obligated hereunder to make such advance as an additional capital
distribution to the Joint Venture but shall be treated, for Joint Venture
accounting purposes, as a loan to the Joint Venture, bearing no interest unless
otherwise agreed by the Venturers in writing.
ARTICLE IV
ADDITIONAL CONTRIBUTION
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Section 4.01 Contributions by Venturers. From time to time, additional
funds may be required to service the existing venture indebtedness and/or pay
operation expenses.
Section 4.02 Additional Contributions. If, from time to time, the Venturer
does not have sufficient funds to pay all costs and discharge all current
indebtedness, the Managing Venturer shall constitute a demand that each
Venturer, within thirty (30) days thereafter, contribute to the Joint Venture an
additional sum of money equal to the product obtained by multiplying the
additional amount of funds revenues required by such Venturer's Equity
Percentage Interest as set forth in Section 5.01 hereof.
Section 4.03 Failure of a Venturer to Make Additional Contribution. If any
Venturer fails or refuses to contribute to its additional contribution or
contributions as required under Section 4.02 herein above, the Managing Venturer
shall be entitled to declare forfeited to the Joint Venture, as liquidated
damages for such Venturer's breach thereof, the amount of the defaulting
Venturer's initial contribution (if any) made pursuant to Section 3.01 herein
above. In addition, the Managing Venturer may also solicit payment from those
existing Venturers who made their additional contribution or contributions in
full and on time, (or should all such Venturers fail to contribute the
defaulting Venturer or Venturers' share from any third party) of the entire
amount of the additional contribution for the defaulting Venturer. If the share
due by the defaulting Venturer is so paid, (a) the person or persons making such
payment shall become a Venturer or Venturers hereunder (if such person or
persons was or were not theretofore a Venturer); (b) the entire Percentage
Interest of the defaulting Venturer shall be allocated to the person or persons
making such payment in ratio of the payment so made; (c) the defaulting Venturer
shall cease to be a Venturer hereunder and to own any right, title or interest
in and to the Joint Venture or any assets of the Joint Venture; and (d) the
defaulting Venturer shall become obligated to execute, have acknowledged and
deliver to the Managing Venturer upon the Managing Venturer's request and
without further consideration of any nature being payable to the defaulting
Venturer, any instrument, including, without limitation, any withdrawal or
amendment to the assumed name certificate filed on behalf of the Joint Venture,
which the Managing Venturer determines it necessary or reasonably appropriate to
evidence such default and withdrawal; provided, however, that until such time as
the defaulting Venture's Percentage Interest is so reallocated, (i) all of the
Joint Venture items as would have been allocated and/or distributed to the
defaulting Venturer shall be allocated and/or distributed solely to the
non-defaulting Venturers in accordation to the ratio which respective Percentage
Interests bear to each other, and (ii) the defaulting Venturer shall be and
remain liable for his share of # debts and liabilities to the same extent as if
such default had never occurred.
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ARTICLE V
ACCOUNTING AND DISTRIBUTIONS
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Section 5.1 Ownership of Joint Venture. The Interest in Tech 2020 Ltd.
Joint Venture shall be owned initially by the Venturers in the percentage
interests (herein referred to as the "Percentage Interests") set forth opposite
each of their names below as tenants-in-common unless otherwise stipulated in
writing signed by all Venturers, such ownership being subject to all the terms
and provisions of this Agreement:
Egan Systems, Inc. 51.00 %
Intermost Limited 49.00 %
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100.00 %
Section 5.02 Tax Status, Allocations and Reports.
a) Any provision hereof to the contrary notwithstanding , solely for United
States federal income tax purposes, each of the Venturers hereby recognizes that
the Joint Venture may be subject to all provisions of Subchapter K of Chapter 1
of the Subtitle A of the United States Internal Revenue Code of 1954; provided,
however, the filing of U.S. Partnership Returns of Income shall not be construed
to extend the purposes of the Joint Venture or expand the obligations or
liabilities of the Venturers. At the request of any Venturer, the Joint Venture
shall file an election under Section 754 of the United States Internal Revenue
Code of 1954.
b) The Managing Venturer shall cause to be prepared all tax returns and
statements, if any, which must be filed on behalf of the Joint Venture with any
taxing authority, shall submit copies of all such returns and statements to all
the Venturers and shall make timely filing thereof.
c) Solely for federal and state income tax purposes, except as herein
otherwise specifically provided, all income, deductions, credits, gains and
losses of the Joint Venture shall be allocated to the Venturers in accordance
with their Percentage Interests as stated herein, unless otherwise amended.
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Section 5.03 Distributions to Venturers. At the end of each calendar
quarter, the Managing Venturer shall determine reasonable working capital
requirements of the Joint Venture. As used in this Section 5.03, the term
"Distributable Funds" shall mean the amount by which the total of cash owned by
the Joint Venture from time to time is in excess of the reasonable working
capital requirements of the Joint Venture. Within fifteen (15) days after the
end of each calendar quarter for which it has been determined that
Distributable. Funds exist, such Distributable Funds shall be distributed to the
Venturers in accordance with their Percentage Interests.
Section 5.04 Accounting.
a) The fiscal year of the Joint Venture shall end on the last day of
December of each year.
b) The books of account of the Joint Venture shall be kept and maintained
at all times at the place of places selected by the Managing Venturer. The books
of account shall be maintained on a cash basis.
c) The Managing Venturer shall prepare and furnish to each of the Venturers
promptly after the close of each calendar year an unaudited statement, certified
by Managing Venturer to be true and correct to the best of his knowledge and
belief, showing the operation of the Joint Venture for such year, the balance in
each Venturer's capital account, the unpaid balance due under all obligations of
the Joint Venture and all other information reasonably requested by any
Venturer.
d) Each Venturer shall have the right at all reasonable times during usual
business hours to audit, examine and make copies or extract from the books of
account of the Joint Venture. Such right may be exercised through any agent or
employee of such Venturer designated by him or by an independent public
accountant designated by such Venturer. Each Venturer shall bear all expenses
incurred in any examination made for such Venturer's account.
Section 5.05 Bank Accounts. Funds of the Joint Venture shall be deposited
in a Joint Venture account or accounts in the bank or banks selected by the
Venture. Withdrawals from bank accounts shall be made only by the Managing
Venturer to act in its behalf. All bank statements shall be returned to the
office of the Managing Venturer from the bank or banks.
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Section 5.06 Liabilities. Unless otherwise provided herein, as between the
parties hereto, each of the Venturers shall be severally liable for and hereby
agree to discharge in accordance with such Venturer's Percentage Interest, all
debts, obligations and other liabilities incurred or assumed in accordance with
the terms of this Agreement.
Section 5.07 Accounting and Application of Proceeds. Upon the sale,
disposition or refinancing of all or substantially all of the property of the
Joint Venture, an accounting through the effective date of such sale,
disposition or refinancing shall be made of the income, expenses, assets and
liabilities of the Joint Venture and the proceeds of such sale, disposition or
refinancing shall be applied or distributed as follows:
a) First to the payment of all expenses incurred in connection with such
sale, disposition or refinancing;
b) Next to the payment of all operating expenses incurred or accrued
through the effective date of such sale, disposition or refinancing, including
expense reimbursements to the Venturers;
c) Next to the payment or satisfaction of all non-expense cash
disbursements, including debt service, accrued or acquired to be disbursed
through effective date of the sale, disposition or refinancing;
d) Next to the repayment of any loans to the Joint Venture made by any of
the Venturers or any other person, corporation or entity;
e) The remaining proceeds, if any, shall be distributed to the Venturers in
accordance with their Percentage Interest in the Joint Venture and its property.
ARTICLE VI
TERM, TERMINATION AND TRANSFERS OF INTEREST
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Section 6.01 Term. The Joint Venture shall be in effect for a term
beginning on the date hereof and continuing until:
a) The express written consent of all Venturers agreeing to the termination
is first obtained;
b) Any other act occurs which, by law, would require that the Joint Venture
be terminated;
c) The withdrawal, bankruptcy, death, retirement or insanity of any
Venturer, or the occurrence of any other act which would legally disqualify or
impede the Managing Venturer from acting hereunder; provided, however, that, if
within forty-five (45) days after the effective date of such withdrawal,
bankruptcy, death, retirement or adjudication of insanity or other occurrence,
the remaining Venturers holding at least sixty percent (60%) of the total
Percentage Interests hereunder elect to reconstitute the Joint Venture, same
shall be reconstituted on the same terms, provisions and conditions as are set
forth herein; or
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d) In any event the expiration of ten (10) years from the date hereof.
Section 6.02 Voluntary Termination. No Venturer shall have the right to
voluntarily terminate the Joint Venture.
Section 6.03 Voluntary Transfer of Joint Venture's Interests. No Venturer
may sell, pledge, assign, give or in any manner transfer all or any portion of
his Joint Venture interest without the prior written consent of all of the other
Venturers. If any Venturer desires to sell, pledge, assign, give or in any
manner transfer all or any portion of his Joint Venture interest, such Venturer
shall first give written notice to all the Venturers, which notice shall state:
a) The extent of the interest to be conveyed;
b) The complete terms upon which the Venturer seeks to convey or encumber
the interest, including the purchase price therefor; and
c) The complete terms, including the name and address of any offer or, or
any offers he has received relating to the conveyance of such
interest.
Upon receipt of such notice, the other Venturers shall then have, in
addition to their right to deny consent to such transfer, a preferential right
to purchase, in accordance with their respective Percentage Interests, the
interest described therein upon the terms set forth therein, which might shall
be exercised, if at all, in the manner specified in Section 6.05 herein below.
Section 6.04 Involuntary Transfer of Joint Venture Interests. If:
a) Any Venturer shall file a voluntary petition in bankruptcy or shall be
adjudicated bankrupt or insolvent, or shall file any petition or answer seeking
any composition, readjustment, liquidation, dissolution or similar relief for
him under the present or any future federal bankruptcy act or any other present
or future applicable federal, state or other statute or law relative to
bankruptcy, insolvency or other relief for debtors, or shall seek or consent to
or acquiesce in the appointment of any trustee, receiver conservator or
liquidator or said Venturer or of all or any substantial part of his properties
or his interest in the Joint Venture shall be appointed without the consent or
acquiescence of said Venturer and such appointment shall remain unvacated and
unstayed for an aggregate of sixty (60) days (whether or not consecutive); or
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b) Any Venturer shall admit in writing his inability to pay his debts as
they mature; or
c) Any Venturer shall give notice to any governmental body of his
insolvency or pending insolvency or suspension or pending suspension of
operations; or
d) Any Venturer shall make an assignment for the benefit of creditors or
take any other similar action for the protection or benefit of creditors' or
e) Any Venturer becomes divorced or judicially separated from his spouse
pursuant to court order by which he is or may be required to transfer all or a
portion of his Joint Venture interest to such spouse;
Then such Venturer shall give written notice of such fact to all the
Ventures, whereupon all the Venturers shall have a preferential right to
purchase, in accordance with their respective Percentage Interests, the entirety
of the Venturer's Joint Venture interest, at its fair market value as determined
hereinafter in Section 6.06, which right shall be exercised, if at all, in the
manner specified in Section 6.05 herein below.
Section 6.05 Exercise of Preferential Purchase Right. If the Venturers, or
any of them, desire to exercise affirmatively the preferential purchase rights
granted in Section 6.03 and 6.04 herein above, or desire to refuse to consent to
the transfer proposed under Section 6.03 herein above, he or they shall do so by
giving written notice thereof to the Selling Venturer (which term, as used in
this Article VI shall include such Venturer's trustee, receive or other
representative, or the appropriate court, all as the case may be) within
forty-five (45) days after their receipt of notice of the facts provided for
therein. Upon the giving of a notice exercising affirmatively the preferential
purchase right, the notifying Venturers (hereinafter referred to collectively in
this Article VI as the "Purchasing Venturer") shall be obligated to consummate
the purchase thereof at the Joint Venture's offices determined in accordance
with Section 1.06 herein above within thirty (30) days after the expiration of
the aforesaid forty-five (45) day time period. The purchase price shall be paid
by the Purchasing Venturer at the consummation thereof either entirely in cash
or, if the preferential right arose under Section 6.03 herein above, on the
terms as specified in the notice called for therein. Coincident with such
purchase, the Percentage Interest of the Selling Venturer shall be reduced or
eliminated, as the case may be, and the Percentage Interest of the Purchasing
Venturer shall be proportionately increased. If one or more, but not all, of the
Venturers entitled thereto did not affirmatively exercise their preferential
purchase right, which additional right shall be exercised within ten (10) days
after the expiration of the forty-five (45) day time period provided for herein
above. If such Venturers affirmatively exercise their additional preferential
purchase right, they shall be obligated to consummate the purchase of the
additional interest covered thereby within thirty (30) days after the expiration
of the aforesaid forty-five (45) day time period. If the Venturers fail, refuse
or neglect to exercise affirmatively their preferential purchase right and, if
in instances arising under Section 6.03 no Venturer notifies the Selling
Venturer of his refusal to consent to the transfer, all within the said
forty-five (45) day time period:
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a) Where there right arose under Section 6.03, they shall have irrevocably
waived their preferential purchase right as to that particular offer on the
specific interest described in the notice; and
b) the Selling Venturer may then sell the interest to any person (but only
to the person and on the terms described in the notice where the preferential
purchase right arose under Section 6.03) within, but not after, sixty (60) days
from the date of the Selling Venturer's notice; provided, however, that in
instances where the preferential purchase right arose under Section 6.03 herein
above, the Selling Venturer shall not be entitled to sell his interest to any
different person or on any different terms than as described in the notice
provided for therein unless he shall have first again offered the interest to
the other Ventures as herein above provided.
Section 6.06 Determination of Fair Market Value. Where, according to
Section 6.04 herein above, the fair market value of a Joint Venture interest
must first be determined, such determination shall be made in accordance with
the provisions of this Section 6.06. First, in instances where the Selling
Venturer gives written notice of the operative facts recited therein, such
Venturer gives written notice of the operative facts recited therein, such
Venturer shall also, coincident therewith, include the name, mailing address and
telephone number of an appraiser appointed by him to determine such fair market
value. (In all other instances the name, mailing address and telephone number of
the first appraiser shall be sent by the Purchasing Venturer coincident with the
exercise of their preferential purchase rights). Second, the Purchasing Venturer
shall then appoint one (1) appraiser and furnish the name, mailing address and
telephone number of the appraiser so appointed to the Selling Venturer, it being
understood that the Purchasing Venturer shall only be entitled to appoint one
(1) appraiser regardless of the actual number of persons affirmatively
exercising their preferential purchase right. If the Purchasing Venturer fails
to appoint a second appraiser, then the first appraiser shall proceed to
determine the fair market value of the Joint Venture interest to be conveyed and
such determination shall be binding on the Selling and Purchasing Venturer. If,
however, a second appraiser is appointed, then the two (2) appraisers shall meet
and attempt to reach a determination of the fair market value. If they cannot do
so, the two (2) appraisers shall then select a third appraiser and the three (3)
appraisers shall then make such determination. If the two (2) appraisers cannot
agree on the third appraiser, then a third appraiser shall be appointed by the
Senior Federal District Judge for the Southern District of New York, and
application to such court may be made by either Venturer. Each Venturer shall
pay the fees and expenses of his or their own appraiser and one-half (1/2) the
fees and expenses of any third appraiser.
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Section 6.07. Failure to Comply. Any purported sale or assignment
consummated without first complying with this Article VI shall, as between the
existing Venturers on the one hand and the intended transferee on the other
hand, by null and void.
Section 6.08. Survival of Liabilities. No sale or assignment of a Joint
Venture interest shall release the Selling Venturer from those liabilities to
the Joint Venture which survive such assignment or sale as a matter of law.
Section 6.09. Transfers Subject to This Agreement. In the event of any
transfer or transfers permitted under this Article VI, the interest so
transferred shall be and remain subject to all terms and provisions of this
Agreement. The assignee or transferee shall be deemed to have assumed all the
obligations hereunder relating to the interests or rights so transferred and
shall bear such obligation jointly and severally with his or its transferor.
Section 6.10. Accounting. Upon termination of the Joint Venture, the
Venturers or the remaining Venturer, as the case may be, shall make, or cause to
be made, a final accounting of the Joint Venture and its assets and liabilities,
profits and losses, and shall distribute and disburse the funds or property of
the Joint Venture, to the extent available, as follows:
(a) First to the payment of all operating expenses incurred or accrued
through the effective date of termination;
(b) Next to the payment of all or the satisfaction of all non-expense cash
disbursements, including debt servicing, accrued or acquired to be
disbursed through the effective date of the termination;
(c) Next to the repayment of any loans made to the Joint Venture by any
person, corporation or entity other than the Venturers;
(d) Next to the repayment of any loans to the Joint Venture made by the
Venturer;
(e) The remaining proceeds, if any, shall be distributed to the Venturers
in accordance with their Percentage Interest in the Joint Venture and
its property.
ARTICLE VII
DISSOLUTION
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Section 7.01. Final Accounting. Upon termination of the Joint Venture, as
permitted herein, the Joint Venture shall be dissolved and an accounting shall
be made of the account of the Joint Venture, of each Venturer's interest herein,
and of the Joint Venture's assets, liabilities and operations from the date of
the last previous accounting to the date of such dissolution.
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Section 7.02. Distribution Following Dissolution (No Reconstitution). Upon
the dissolution of the Joint Venturer, where no reconstitution is effected
pursuant to Section 6.01(d) herein above, the Managing Venturer (or, in the
event the dissolution is caused by acts or occurrences attributable to the
Managing Venturer and falling within Section 6.01(d) herein above, the
Non-Managing Partner shall act as Liquidating Trustee (hereinafter so referred
to) and shall immediately proceed to terminate the business of the Joint
Venture. The Liquidating Trustee shall first determine or have determined the
fair market value of all Joint Venture properties and then attempt to sell all
Joint Venture properties (except cash and current receivables) at such prices
and on such terms as the Liquidating Trustee, in the exercise of his best
business judgment under the circumstances then presented, deems in the best
interest of all the Venturers; provided, however, the Liquidating Trustee may,
if he deems such action to be more in the interests of the Venturers than an
outright sale, transfer any such property without the sale thereof to all the
Venturers, in undivided interests, and in accordance with their Percentage
Interest (subject to any indebtedness thereon). The proceeds of any sale of
Joint Venture properties and all Joint Venture cash shall be distributed to the
extent that funds are available therefor in accordance with the Percentage
Interest of the Venturers. The Venturers, or any one of them, shall have the
right to purchase any Joint Venture property to be sold on liquidation provided
that the terms on which such sale is made are no less favorable to the remaining
Venturers than would otherwise be available from third parties.
Section 7.03. Distributions Following Dissolution (Reconstitution). If the
Joint Venture is dissolved but a reconstitution is effected pursuant to Section
6.01(d) herein above, the Joint Venture shall pay, to the extent it has current
funds available therefor, and shall obligate itself to pay to the extent that
current funds are not available therefor, to those of the Venturers who elect
not to become (or otherwise not entitled to become) a member of the
reconstituted Joint Venture, which fair market value shall be determined in
accordance with Section 6.06 herein above. In instances where the fair market
value determination is to be made for purposes of this Section 7.03, the term
Selling Venturer (as used in Section 6.06) shall refer to those Venturers
entitled to the distribution hereunder and the term Purchasing Venturer (as used
in Section 6.06) shall refer to the Joint Venture.
ARTICLE VIII
GENERAL
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Section 8.01. Notices. All notices, demands or requests provided for or
permitted to be given pursuant to this Agreement must be in writing and shall be
deemed to have been properly given if mailed by first class United States mail,
postage prepaid and registered or certified with return receipt requested, or by
delivering same in person to the intended addressee or by prepaid telegram.
Notice so mailed shall be effective upon the expiration of three (3) business
days after its deposit. Notice given in any other manner shall be effective only
if and when received by the intended addressee. For purposes of notice, the
addresses of the parties shall be as follows:
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Egan Systems, Inc. 1501 Lincoln Avenue
Holbrook, NY 11741
Attention: Ed Egan
Intermost Limited 4703, 47/F, Central Plaza
18 Harbour Road
Wanchai, Hong Kong
Attention: June Liang
By giving to the other parties at least thirty (30) days' written notice
thereof, the parties hereto and their respective successors and assigns shall
have the right, from time to time and at any time during the term of this
Agreement, to change their respective addresses and each shall have the right to
specify as its address any other address. All payments to be made pursuant
hereto to any Venturer shall be made at the address set forth above for such
Venturer. All such payments shall be effective upon receipt.
Section 8.02. Insurance.The Joint Venture shall carry and maintain in force
such insurance in such companies and for such amounts as the Venturers shall
determine is appropriate for the Joint Venture. All such policies of insurance
shall name the Joint Venture and all Venturers as named insureds, as their
respective interests may appear. The premiums of all such insurance shall be a
cost and expense to be borne by the Joint Venture.
Section 8.03. Governing Laws. This Agreement and the obligations of the
Venturers hereunder shall be interpreted, construed and enforced in accordance
with the laws of New York.
Section 8.04. Fees and Commission. Each Venturer hereby represents and
warrants to the other Venturers that there are no claims for brokerage,
commissions, finder's or other similar fees in connection with the transactions
covered by this Agreement insofar as such claims are based on arrangements or
agreements made by or on his behalf, and each Venturer hereby agrees to
indemnify and hold harmless the other Venturers from and against all
liabilities, costs, damages and expenses arising from any such claims.
Section 8.05. Entire Agreement. This Agreement contains the entire
agreement between the parties hereto relative to the formation of a Joint
Venture to invest in and operate the Land. No variations, modifications or
changes herein or hereof shall be binding upon any party hereto unless set forth
in a document duly executed by or on behalf of such party.
Section 8.06. Waiver. No consent or waiver, expressed or implied, by any
Venturer or the Joint Venture to or of any breach or default by any other
Venturer in the performance by the other of his obligations hereunder shall be
deemed or construed to be a consent or waiver to or of any other breach or
default in the performance by such other party of the same or any other
obligations of such Venturer hereunder. Failure on the part of any Venturer or
the Joint Venture to complain of any act or failure to act of any of the other
Venturers or to declare any of the other Venturers in default, irrespective of
how long such failure continues, shall not constitute a waiver of the Joint
Venture or such Venturer of his rights hereunder.
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Section 8.07. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
Section 8.08. Binding Agreement. Subject to the restrictions on transfers
and encumbrances set forth herein, this Agreement shall inure to the benefit of
and be binding upon the undersigned Venturers and their respective heirs,
executors, legal representatives, successors and assigns. Whenever, in this
instrument a reference to any party or Venturer is made, such reference shall be
deemed to include a reference to the heirs, executors, legal representatives,
successors and assigns of such party of Venturer.
Section 8.09. Time of Essence. Time shall be of the essence in performance
of any obligation and payment of any sum required by this Agreement.
Section 8.10. Headings. The headings used in this Agreement are for
organizational purposes only and do not constitute substantive matters to be
considered in construing the terms of this Agreement.
Section 8.11. Amendments. Subject to the provisions of this Agreement, this
Agreement may be amended or modified by an affirmative vote of the Venturer or
Venturers owning a majority in interest, as set out in Section 5.01 of this
Agreement, but only by a written instrument executed by such Venturer or
Venturers owning a majority in interest.
Section 8.12. Terminology. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural and vice versa, and shall
refer solely to the parties signatories thereto except where otherwise
specifically provided. Title of the articles and sections are for convenience
only and neither limit or amplify the provisions of the agreement itself, and
all references herein to articles, section or subdivisions itself, and all
reference herein to article, section or subdivision thereof unless specified
reference is made to such other articles, section or subdivisions of another
document or instrument.
IN WITNESS WHEREOF, this Agreement is executed effective as of the date
first set forth above.
EGAN SYSTEMS, INC.
By:
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INTERMOST LIMITED
By:
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THE STATE OF )
-----------
)
COUNTY OF )
-----------
BEFORE ME, the undersigned authority, on this day personally appeared
_____________________, known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he executed the same for
the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this day of , 1998.
---- -----------
----------------------------------------
NOTARY PUBLIC IN AND FOR
COUNTY,
----------- ---------------------
Name:
-----------------------------------
My Commission Expires:
------------------
THE STATE OF )
-----------
)
COUNTY OF )
-----------
BEFORE ME, the undersigned authority, on this day personally appeared
_____________________, known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he executed the same for
the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this day of , 1998.
---- ----------
----------------------------------------
NOTARY PUBLIC IN AND FOR
COUNTY,
----------- ---------------------
Name:
-----------------------------------
My Commission Expires:
------------------
