FORM 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported): February 1, 1999
THE HARTCOURT COMPANIES INC.
(Exact name of registrant as specified in its charter.)
Utah
(State of incorporation or organization)
001-12671
(Commission File Number)
87-0400541
(I.R.S. Employee Identification No.)
2049 Century Park East, Los Angeles, California
(Address of principal executive offices)
90067
(Zip Code)
Registrant's telephone number, including area code: (310) 788-2634
N/A
(Former name or former address, if changed since last report)
[HARTCORT\8-K:FEB1999]-5
1
<PAGE>
Item 1. Changes in Control of Registrant
N/A
Item 2. Acquisition or Disposition of Assets
See Item 5.
Item 3. Bankruptcy or Receivership
N/A
Item 4. Changes in Registrant's Certifying Accountant
N/A
Item 5. Other Events
Effective February 1, 1999, pursuant to a Share Purchase
Agreement, the Company acquired one (1) share of common stock of Enova
Holdings Inc., a Nevada corporation ("Enova") representing 100% of the
total issued and outstanding capital stock of Enova, making Enova a
wholly-owned subsidiary.
Effective March 1, 1999, the Company and Enova executed an
Exchange Agreement (the "Enova Agreement") whereby the Company
exchanged all of its ownership in two wholly-owned subsidiaries, Pego
Systems Inc. ("Pego") and Electronic and Component Systems Inc.
("ECS"), collectively, the "Subsidiaries", for 5,213,594 additional
shares of common stock of Enova.
On March 24, 1999, the Company entered into a Distribution
Agreement pursuant to which the Company agreed to distribute to all
shareholders of record on March 31, 1999 all of the 5,213,595 shares of
common stock of Enova and to file, within a reasonable period of time
following such distribution, a Registration Statement on Form 10-SB to
cause the distributed shares of Enova to be registered under the
Securities Exchange Act of 1934.
As a result of the Share Purchase Agreement, the Enova
Agreement and the Distribution Agreement, each shareholder of record of
the Company on March 31, 1999 will receive one (1) share of Enova for
every four (4) shares owned of the Company. Following the distribution
of the Enova shares both the Company and Enova will continue to operate
as separate companies.
Item 6. Resignation of Registrant's Directors
On March 24, 1999, Leonard J. Roman and Frederic Cohn resigned
as Directors and officers of the Company, effective the date of
acceptance of their respective replacement officers and directors.
The sole remaining Director, Dr. Alan Phan, nominated Fred G.
Luke and Jon L. Lawver as Directors to hold office until the next
meeting of the shareholders of the Company. Both Mr. Luke and Mr.
Lawver agreed to accept their positions.
[HARTCORT\8-K:FEB1999]-5
2
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements - None
(b) Proforma Financial Statements - None
(c) Exhibits
1. Share Purchase Agreement dated February 1, 1999
2. Exchange Agreement dated March 23, 1999
3. Distribution Agreement dated March 24, 1999
4. Resignation letter of Leonard J. Roman
5. Resignation letter of Frederic Cohn
Item 8. Change in Registrant's Fiscal Year
N/A
[HARTCORT\8-K:FEB1999]-5
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
THE HARTCOURT COMPANIES INC.
(Registrant)
Dated: March 24, 1999 By: /s/ Dr. Alan Phan
----------------------------------
Dr. Alan Phan
[HARTCORT\8-K:FEB1999]-5
4
<PAGE>
EXHIBIT "(c) 1."
SHARE PURCHASE AGREEMENT DATED FEBRUARY 1, 1999
[HARTCORT\8-K:FEB1999]-5
<PAGE>
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT, ("Agreement") dated as of February 1,
1999, among The Hartcourt Companies Inc., a Utah corporation ("Purchaser") and
the shareholder listed on the signature page hereof (the "Selling Shareholder")
of Enova Holdings Inc., a Nevada corporation ("Enova").
WHEREAS, Purchaser desires to acquire from the Selling Shareholder the
one (1) outstanding share of Enova (the "Enova Share") for the Purchase Price;
and
WHEREAS, the Selling Shareholder desires to sell the Enova Share to
Purchaser for the Purchase Price.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions
1.1 "Closing Date" means February 27, 1999, notwithstanding the
actual effective date of new assignments or certificates
issued pursuant hereto.
1.2 "GAAP" means United States generally accepted accounting
principles, consistently applied throughout the specified
period and in all prior comparable periods.
1.3 "Purchase Price" has the meaning ascribed to it in paragraph
2.1.
1.4 "Purchaser" has the meaning ascribed to it in the forepart of
this Agreement.
1.5 "Enova" has the meaning ascribed to it in the forepart of this
Agreement.
2. Consideration and Closing
2.1 Purchase and Sale. On the terms and subject to the conditions
of this Agreement:
A. At the Closing, Purchaser shall purchase from the
Selling Shareholder, free and clear of all Liens, the
Enova Share.
B. The Purchase Price shall be payable at the Closing as
set forth below.
C. The Purchase Price shall be $500.00.
2.2 Closing. The Closing will take place at the offices of Archer
& Weed, 4695 MacArthur Court, Suite 530, Newport Beach,
California 92660 on the Closing Date in accordance with the
terms of this Agreement, or at such other place or time as
Purchaser and the Selling Shareholder mutually agree. At the
Closing, Purchaser shall pay to the Selling Shareholder the
Purchase Price pursuant to paragraph 2.1. Simultaneously, the
Selling Shareholder shall deliver to Purchaser one certificate
representing the Enova Share together with all necessary
instruments of transfer, in form and substance reasonably
satisfactory to Purchaser. At the Closing, there shall also be
delivered to Purchaser the opinions, certificates and other
contracts, documents and instruments required to be delivered
under the terms of this Agreement.
[HARTCORT\AGR:ENOVASHR]-3
5
<PAGE>
3. Representations and Warranties of the Selling Shareholder
The Selling Shareholder represents and warrants to Purchaser that the
statements contained in this paragraph 3 are true and correct as of the
date of this Agreement, and will be true and correct as of the Closing
Date (as though made then and as though such Closing Date was
substituted for the date of this Agreement throughout this paragraph
3). The Selling Shareholder has delivered an affidavit to Purchaser
setting forth certain information, the disclosure of which is required
or appropriate in relation to any or all of the following
representations and warranties.
3.1 Organization of Enova. Enova is a corporation duly
incorporated, validly existing and in good standing under the
laws of Nevada. There has not been since the date of formation
May 5th, 1998, any business activity in Enova.
3.2 Capitalization. As of the date hereof, and immediately prior
to the consummation of the transactions contemplated hereby
and before giving effect to such transactions, the authorized
capital stock of Enova consists of 75,000,000 shares of $.001
par value common stock, and 25,000,000 shares of $.001 par
value preferred stock, of which one (1) share of common stock
is issued and outstanding. As of the date hereof, there are no
preemptive or similar rights to purchase or otherwise acquire
shares of the capital stock of Enova pursuant to any provision
of law, the charter or bylaws (in each case, as amended and in
effect on the date hereof), or any agreement to which Enova is
a party. The one share of outstanding capital stock of Enova
has been duly authorized and validly issued, is fully paid and
non-assessable.
3.3 Financial Statements. There are no current financial
statements. Enova was originally formed on May 5th, 1998, and
has never incurred any business activity.
3.4 Disclosure. This Agreement does not, and the documents and
certificates executed by the Selling Shareholder and/or Enova
or otherwise furnished by the Selling Shareholder and Enova to
Purchaser do not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to
make the statements contained herein or therein, in light of
the circumstances under which they were made, not misleading.
4.0 Representations and Warranties of Purchaser
Purchaser represents and warrants to the Selling Shareholder that:
4.1 Organization and Authority. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Utah, with the corporate power and
authority to carry on its business as now being conducted. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated in this Agreement have been,
or will be prior to closing, duly authorized by all requisite
corporate actions on the part of Purchaser. This Agreement has
been duly executed and delivered by Purchaser and constitutes
the valid, binding, and enforceable obligation of Purchaser.
[HARTCORT\AGR:ENOVASHR]-3
6
<PAGE>
4.2 Ability to Carry Out Agreement. To the best of Purchaser's
knowledge and belief, the execution and performance of this
Agreement will not violate, or result in a breach of, or
constitute a default in, any provisions of applicable law, any
agreement, instrument, judgment, order or decree to which
Purchaser is a party or to which Purchaser is subject. No
consents of any persons under any contract or agreement
required to be disclosed pursuant to this Agreement are
required for the execution, delivery, and performance by
Purchaser of this Agreement.
4.3 Full Disclosure. The information concerning Purchaser, set
forth in this Agreement, and in Purchaser Disclosure
Documents, is, to the best of Purchaser's knowledge and
belief, complete and accurate in all material respects and
does not contain any untrue statement of a material fact or
omit to state a material fact required to make the statements
made, in light of the circumstances under which they were
made, not misleading.
4.4 Date of Representations and Warranties. Each of the
representations and warranties of Purchaser set forth in this
Agreement is true and correct at and as of the Closing Date,
with the same force and effect as though made at and as of the
Closing Date, except for changes permitted or contemplated by
this Agreement.
5.0 Conditions Precedent to Obligations of the Selling Shareholder
All obligations of the Selling Shareholder under this Agreement are
subject to the fulfillment, prior to or as of the Closing Date, of each
of the following conditions:
5.1 Representations and Warranties. The representations and
warranties by Purchaser set forth in this Agreement shall be
true and correct at and as of the Closing Date, with the same
force and effect as though made at and as of the Closing Date,
except for changes permitted or contemplated by this
Agreement. Purchaser shall deliver on the Closing Date a
certificate to this effect, referred to as Purchaser
Certificate of Representations and Warranties.
5.2 No Breach or Default. Purchaser shall have performed and
complied with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by
it prior to or at the Closing.
5.3 Action to Pay Purchase Price. Purchaser shall have taken all
corporate and other action necessary to deliver the Purchase
Price to the Selling Shareholder pursuant to this Agreement at
Closing.
5.4 Company Disclosure Documents. Before Closing, Purchaser will
have delivered to the Selling Shareholder, or caused the
delivery of, original by-laws and minutes, certified Articles
of Incorporation and any amendments thereto, together with a
list of any and all bank accounts or similar depository
accounts, and obligations of Enova as of the Closing Date.
5.5 Approval of Other Instruments and Documents by the Selling
Shareholder. All instruments and documents delivered to the
Selling Shareholder pursuant to the provisions of this
Agreement shall be reasonably satisfactory to their legal
counsel.
[HARTCORT\AGR:ENOVASHR]-3
7
<PAGE>
6.0 Conditions Precedent to Obligations of Purchaser
All obligations of Purchaser under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the
following conditions:
6.1 Representations and Warranties. The representations and
warranties executed by and on behalf the Selling Shareholder
set forth in this Agreement shall be true and correct at and
as of the Closing Date, with the same force and effect as
though made at and as of the Closing Date, except for changes
permitted or contemplated by this Agreement. The Selling
Shareholder shall cause to be delivered on the Closing Date
the certificate to this effect, referred to in this Agreement
as the Certificate of Representations and Warranties executed
by each Selling Shareholder.
6.2 Action to Transfer the Enova Share. The Selling Shareholder
shall have taken all action necessary to transfer the Enova
Share to Purchaser pursuant to this Agreement. In this regard,
the conveyance(s) of the Enova Share shall contain such good
and sufficient stock powers, and other good and sufficient
instruments of sale, conveyance, transfer, and assignment, in
form and substance reasonably satisfactory to Purchaser's
counsel and with all requisite documentary stamps, if any,
affixed, as shall be required or as may be appropriate in
order effectively to vest in Purchaser's good, indefeasible,
and marketable title to the Enova Share free and clear of all
liens, mortgages, conditional sales, and other title retention
agreements, pledges, assessments, covenants, restrictions,
reservations, easements, and all other encumbrances of every
nature.
6.3 Enova's Financials. There is no prior or current business of
Enova. Enova is recently formed and the only expense to date
is for costs of incorporation. There are no financial
statements.
6.4 Organization.
A. Enova is duly organized, validly existing, and in
good standing under the laws of Nevada.
B. Enova has the corporate power to carry on its
business as now being conducted and is duly qualified
to do business in any other jurisdiction where
required or where the non-qualification to do
business would have a material adverse affect on the
value of its business.
C. All action and approvals required in connection to
the transfer of the Enova Share to Purchaser have
been properly taken, completed or obtained by the
Selling Shareholder and/or Enova, to the extent, if
any, that they are necessary.
[HARTCORT\AGR:ENOVASHR]-3
8
<PAGE>
7.0 Covenants and Agreements of the Selling Shareholder
Up to and including the Closing Date, the Selling Shareholder covenant
that:
7.1 Access and Information. After the execution of this Agreement,
the Selling Shareholder will permit Purchaser to have
reasonable access to all information necessary to verify the
representations and warranties made herein. After the Closing,
the Selling Shareholder will continue to permit Purchaser
access to such additional documentation and information as is
reasonably necessary to completion of the transactions
contemplated under this Agreement.
7.2 Best Efforts. The Selling Shareholder shall use his best
efforts to fulfill all conditions of the Closing
8.0 Termination
8.1 Termination Without Cause. This Agreement may be terminated at
any time prior to the Closing Date without cost or penalty to
either party by mutual consent of the Selling Shareholder and
Purchaser.
8.2 Termination with Cause. This Agreement may be terminated, with
the terminating party to be reimbursed by the other party of
all expenses and costs related to this Agreement, if:
A. Breach or Noncompliance by the Selling Shareholder.
The Selling Shareholder shall fail to comply in any
material aspect with any of their representations,
warranties, or obligations under this Agreement, or
if any of the representations or warranties made by
the Selling Shareholder under this Agreement shall be
inaccurate in any material respect and is not cured
within ten (10) business days of notice of such
breach.
B. Breach or Noncompliance by Purchaser. Purchaser shall
fail to comply in any material aspect with any of its
representations, warranties, or obligations under
this Agreement, or if any of the representations or
warranties made by Purchaser under this Agreement
shall be inaccurate in any material respect and is
not cured within ten (10) business days of notice of
such breach.
9. Securities Registration; Disclosure
9.1 Private Transaction. Purchaser understands that the Enova
Share issued pursuant to this Agreement, has not been nor will
it be registered under the Securities Act of 1933 as amended
("Securities Act"), but is issued pursuant to exemptions from
registration including but not limited to Regulation D and
paragraph 4(2) of the Securities Act.
[HARTCORT\AGR:ENOVASHR]-3
9
<PAGE>
9.2 Access to Information. Purchaser represents that, by virtue of
its economic bargaining power or otherwise, it has had access
to or has been furnished with, prior to or concurrently with
Closing, the same kind of information that would be available
in a registration statement under the Securities Act should
registration of the Enova Share issued pursuant to this
Agreement have been necessary, and that it has had the
opportunity to ask questions of and receive answers from the
Selling Shareholder, or any party acting on his behalf,
concerning the business of Enova and that it has had the
opportunity to obtain any additional information, to the
extent that the Selling Shareholder possesses such information
or can acquire it without unreasonable expense or effort,
necessary to verify the accuracy of information obtained or
furnished by the Selling Shareholder.
10.0 Miscellaneous Provisions
10.1 Survival of Representations and Warranties. 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 three
(3) years from the Closing Date. The Selling Shareholder and
Purchaser are executing and carrying out the provisions of
this Agreement in reliance on the representations, warranties,
and covenants and agreements contained in this Agreement or at
the Closing of the transactions herein provided for including
any investigation upon which they 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.
10.2 Costs and Expenses. All costs and expenses in the proposed
sale and transfer described in this Agreement shall be borne
by the Selling Shareholder and Purchaser in the following
manner:
A. Attorneys Fees and Costs. Each party shall pay the
fees of its own attorney(s), if any, except as may be
expressly set forth herein to the contrary.
B. Costs of Closing. Each party shall bear its
reasonable share of all other Closing costs and
expenses arising from this Agreement.
10.3 Further Assurances. At any time and from time to time, after
the effective date, each party will execute such additional
instruments and take such action as may be reasonably
requested by the other party to confirm or perfect title to
any property transferred hereunder or otherwise to carry out
the intent and purposes of this Agreement.
10.4 Waiver. Any failure of any party to this Agreement 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. The failure of any party to this Agreement
to enforce at any time any of the provisions of this Agreement
shall in no way be construed to be a waiver of any such
provision or a waiver of the right of such party thereafter to
enforce each and every such provision. No waiver of any breach
of or non-compliance with this Agreement shall be held to be a
waiver of any other or subsequent breach or non-compliance.
10.5 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.
[HARTCORT\AGR:ENOVASHR]-3
10
<PAGE>
10.6 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
10.7 Governing Law. This Agreement shall be governed by the laws of
the United States, State of Nevada.
10.8 Binding Effect. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their
respective heirs, administrators, executors, successors, and
assigns.
10.9 Entire Agreement. This Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior
agreements, arrangements, or understandings between the
parties relating to the subject matter of this Agreement. No
oral understandings, statements, promises, or inducements
contrary to the terms of this Agreement exist. No
representations, warranties, covenants, or conditions, express
or implied, other than as set forth herein, have been made by
any party.
10.10 Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in
full force and effect.
10.11 Amendment. This Agreement may be amended only by a written
instrument executed by the parties or their respective
successors or assigns.
10.12 Facsimile Counterparts. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more
parties hereto and such executed copy may be delivered by
facsimile of similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such
party can be seen, and such execution and delivery shall be
considered valid, binding and effective for all purposes. At
the request of any party hereto, all parties agree to execute
an original of this Agreement as well as any facsimile,
telecopy or other reproduction hereof.
10.13 Time is of the Essence. Time is of the essence of this
Agreement and of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
"Purchaser"
The Hartcourt Companies Inc.
By: /s/ Dr. Alan Phan
----------------------------------
Name: Dr. Alan Phan
Title: President
"Selling Shareholder"
By: /s/ Jon L. Lawver
----------------------------------
Name: Jon L. Lawver
No. of Enova Shares:One (1)
[HARTCORT\AGR:ENOVASHR]-3
11
<PAGE>
EXHIBIT "(c) 2."
EXCHANGE AGREEMENT DATED MARCH 23, 1999
[HARTCORT\AGR:ENOVASHR]-3
12
<PAGE>
ENOVA HOLDINGS INC.
4695 MacArthur Court, Suite 530
Newport Beach, CA 92660
Telephone: (949) 833-2094; Facsimile: (949) 833-7854
March 23, 1999
Board of Directors
The Hartcourt Companies Inc.
2049 Century Park East, Suite 3760
Los Angeles, California 90067
RE: Subscription Agreement for exchange of shares of capital stock
of Enova Holdings Inc., a Nevada corporation ("Enova") for
assets of The Hartcourt Companies Inc. ("HRCT")
Gentlemen:
Enova is a subsidiary of HRCT. Enova wishes to increase its capital and, in
exchange for additional capital to be contributed by HRCT, has agreed to issue
additional shares of its capital stock to HRCT.
Based upon these facts and the representations contained herein, when executed
by an authorized officer of Enova, this letter (the "Agreement") will set out
the understanding and agreement regarding the contemplated subscription and
exchange transaction as follows:
1. Transfer Shares of Subsidiaries by HRCT
Upon acceptance of this Agreement by Enova, HRCT will deliver to Enova
all of the issued common shares in the wholly-owned subsidiaries, Pego
Systems Inc. and Electronic Components and Systems Inc. ("Subsidiary
Shares"). The transfer by HRCT to Enova of the Subsidiary Shares are
collectively referred to herein as the "Subscription".
2. Issuance of Shares by Enova
Upon receipt of the Subsidiary Shares, Enova agrees to issue and
deliver to HRCT 5,213,594 shares of its $.001 par value common stock
(the "Enova Shares"), which HRCT intends to distribute to its
shareholders within thirty (30) days (the "Spinoff").
3. Representations and Warranties of Enova
In connection with this subscription, and as an inducement to HRCT to
enter into this Agreement, Enova confirms that:
A. Enova Shares. The Enova Shares, when delivered, will be free
and clear of liens, claims and encumbrances, and Enova has all
necessary right and power to enter into this Agreement and to
cause such issuance of Enova Shares to HRCT as contemplated
herein.
B. Organization. Enova is duly organised, validly existing, and
in good standing under the laws of Nevada.
[ENOVA\AGR:SUB4HRCT]-5
13
<PAGE>
Enova Holdings Inc.
March 23, 1999
Page 14
C. Capitalization. The capitalization of Enova is, as of the date
hereof, comprised of 75,000,000 shares of $.001 par value
common stock, and 25,000,000 shares of $.001 par value
preferred stock, of which 1 share of common stock is presently
issued and outstanding, and owned beneficially and of record
by HRCT.
D. Compliance. Enova is in compliance with all applicable laws,
rules and regulations, relating to its business, except to the
extent that non-compliance would not materially and adversely
affect its business or financial condition.
4. Indemnification
Each party agrees to indemnify and hold the other harmless for two (2)
years following the date hereof against and in respect of any
liability, damage, or deficiency, all actions, suits, proceedings,
demands, assessments, judgments, costs and expenses resulting from any
misrepresentations, breach of covenant or warranty, or from any
misrepresentation contained in the definitive agreement or any
certificate furnished as part of the transaction contemplated herein.
5. Conditions Precedent
A. To HRCT Closing:
To induce HRCT to enter into this Agreement, and as
consideration for the Subscription, Enova agrees as follows:
(i). No Distributions. That, between the date hereof and
the Spinoff, except with the prior written consent of
HRCT, Enova shall not make any dividend or
distribution to its stockholders.
(ii). Exchange Preferred Shares. On or before closing Enova
shall have concluded with Dr. Alan Phan ("Phan"),
holder of all of the issued and outstanding shares of
HRCT Original Preferred Stock (the "Original HRCT
Preferred"), an agreement to exchange the Original
HRCT Preferred on a one for four (1:4) basis for
shares of Series A Preferred Stock of Enova which
shall have the same rights, privileges and
preferences as the Original HRCT Preferred.
(iii) No Settlements. Not mortgage, pledge, or subject to
lien or encumbrance any of its assets, tangible or
intangible, not in the ordinary course of business,
or to Affiliates, as such term is defined in the
federal securities rules and regulations.
(iv) Protective Provisions. Prior to the Spinoff, Enova
shall not:
(a) Increase the authorized number of its shares
of common stock; or
(b) Create any new class of shares having
preferences over or becoming senior to the
Enova Shares or the Series A Preferred Stock
of Enova as to dividends, liquidation or
priority in bankruptcy, or granting any
special security interest in assets; or
[ENOVA\AGR:SUB4HRCT]-5
14
<PAGE>
Enova Holdings Inc.
March 23, 1999
Page 15
(c) Repurchase any of its common stock; or
(d) Merge or consolidate with any other company,
except into or with a wholly-owned
subsidiary of Enova, without the approval of
HRCT; or
(e) Sell, convey or otherwise dispose of, or
create or incur any mortgage, lien, charge
or encumbrance on or security interest in or
pledge of, or sell and leaseback, all or
substantially all of its property or
business without the approval of HRCT; or
(f) Effect a stock split or enter into any type
of transaction which results in diluting
HRCT's interest in Enova as contemplated by
this Agreement.
B. To Enova Closing:
To induce Enova to enter into this Agreement, and as partial
consideration for the Subscription, HRCT agrees as follows:
(i) Settle Litigation. Prior to March 3, 1999, HRCT shall
have reached an agreement to settle the litigation,
American Equities LLC v The Hartcourt Companies Inc.,
Case no. BC196936 and related cross-complaints, The
Hartcourt Companies Inc. v. Pacific Rim Corporation
Inc., Case no. SC 054496, and The Hartcourt Companies
Inc. v. Promed International Ltd. and Mandarin
Overseas Investment Co. Ltd., Case no. SC054492
(collectively, the "Litigation"), which settlement
shall result in the cancellation and return to HRCT
all issued and outstanding shares of HRCT's Series A
$1,000 stated value Preferred Stock, Series B $1,000
stated value Preferred Stock, Series C $1,000 stated
value Preferred Stock, Series D $1,000 stated value
Preferred Stock and Class A no par value Preferred
Stock.
6. Further Documentation
Each party hereto agrees to execute such additional instruments and
take such action as may be reasonably requested by the other party to
effect the transaction, or otherwise to carry out the intent and
purposes of this Agreement.
7. Private Transaction
A. Private Offering. Enova and HRCT each understand that the
exchange contemplated herein constitutes a private,
arms-length transaction between a willing seller and a willing
buyer without the use or reliance upon a distribution or
securities underwriter.
B. Purchase for Own Account. Neither Enova nor HRCT are
underwriters of, or dealers in, the respective securities to
be exchanged hereunder, and neither party is acting as such or
participating, pursuant to a contractual agreement, in the
distribution of such securities.
[ENOVA\AGR:SUB4HRCT]-5
15
<PAGE>
Enova Holdings Inc.
March 23, 1999
Page 16
C. Access to Information. Enova and HRCT, and their respective
advisors, have been afforded the opportunity to discuss the
exchange transaction contemplated herein with legal and
accounting professionals, and to examine and evaluate the
financial impact of such transaction.
8. Notices
All notices and other communications hereunder shall be in writing and
shall be sent by prepaid first class mail to the parties at the
following addresses, as amended by the parties with written notice to
the other:
To HRCT: The Hartcourt Companies Inc.
2049 Century Park East
Los Angeles, California 90067
Telephone: (310) 788-2634
Facsimile: (310) 553-1338
To Enova: Enova Holdings Inc.
2049 Century Park East
Los Angeles, California 90067
Telephone: (310) 788-2634
Facsimile: (310) 553-1338
9. Counterparts
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10. Applicable Law
This Agreement was negotiated, and shall be governed by the laws of
Nevada notwithstanding any conflict-of-law provision to the contrary.
11. Entire Agreement
This Agreement sets forth the entire understanding between the parties
hereto and no other prior written or oral statement or agreement shall
be recognized or enforced.
12. Severability
If a court of competent jurisdiction determines that any clause or
provision of this Agreement is invalid, illegal or unenforceable, the
other clauses and provisions of the Agreement shall remain in full
force and effect and the clauses and provision which are determined to
be void, illegal or unenforceable shall be limited so that they shall
remain in effect to the extent permissible by law.
[ENOVA\AGR:SUB4HRCT]-5
16
<PAGE>
Enova Holdings Inc.
March 23, 1999
Page 17
13. Amendment or Waiver
Every right and remedy provided herein shall be cumulative with every
other right and remedy, whether conferred herein, at law, or in equity,
and may be enforced concurrently herewith, and no waiver by any party
of the performance of any obligation by the other shall be construed as
a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the issuance and
exchange of the Securities as contemplated herein, this Agreement may
be amended by a writing signed by all parties hereto.
14. Headings
The section and subsection headings in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. Facsimile Counterpart
This instrument may be executed by one or more parties in counterparts,
and such executed copy may be delivered by facsimile or similar
instantaneous electronic transmission device pursuant to which the
signature of or on behalf of such party can be seen, and such execution
and delivery shall be considered valid, binding and effective for all
purposes. At the request of any party hereto, all parties agree to
execute an original of this instrument as well as any facsimile,
telecopy or other reproduction hereof.
Sincerely,
The Hartcourt Companies Inc.
By: /s/ Dr. Alan Phan
-----------------------------
Name: Dr. Alan Phan
Title: resident
ACCEPTED AND AGREED EFFECTIVE
THE 1ST DAY OF MARCH, 1999
Enova Holdings Inc.
By: /s/ J.L. Lawver
-----------------------------
Name: J.L. Lawver
Title: President
[ENOVA\AGR:SUB4HRCT]-5
17
<PAGE>
EXHIBIT "(c) 3."
DISTRIBUTION AGREEMENT DATED MARCH 24, 1999
[ENOVA\AGR:SUB4HRCT]-5
18
<PAGE>
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT, dated March 24, 1999, is by and between
The Hartcourt Companies Inc., a Utah corporation ("Hartcourt") and Enova
Holdings Inc., a Nevada corporation ("Enova"). Capitalized terms used herein and
not otherwise defined shall have the respective meanings assigned to them in
paragraph 1 hereof.
WHEREAS, the Board of Directors of Hartcourt has determined that it is
in the best interests of Hartcourt and its shareholders to separate Hartcourt's
existing subsidiaries into an independent business;
WHEREAS, the Board of Directors of Hartcourt has determined that
Hartcourt will distribute to its shareholders all of the capital stock of Enova
held directly or indirectly by Hartcourt, subject to the terms and conditions
set forth herein;
WHEREAS, the Enova Distribution is intended to qualify as a tax-free
spin-off under Section 355 of the Code;
WHEREAS, it is appropriate and desirable to set forth certain
agreements that will govern certain matters relating to the Enova Distribution
and the relationship of Hartcourt and Enova following the Enova Distribution;
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
10. Definitions
For the purpose of this Agreement the following terms shall have the
following meanings:
1.1 "Agent" means the distribution agent to be appointed by
Hartcourt to distribute the shares of Enova stock held by
Hartcourt pursuant to the Enova Distribution.
1.2 "Agreement" means this Distribution Agreement, including all
of the Schedules hereto.
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.4 "Commission" means the Securities and Exchange Commission.
1.5 "Consents" means any consents, waivers or approvals from, or
notification requirements to, any third parties.
1.6 "Exchange Act" means the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated
thereunder.
1.7 "Enova" means Enova Holdings Inc., a Nevada corporation.
1.8 "Enova Common Stock" means the Common Stock, par value $.001
per share, of Enova.
1.9 "Enova Class A Warrant" means the Class A Warrant that grants
the holder the right to acquire one share of Enova Common
Stock at a purchase price of $4.00 per share.
[HARTCORT\AGR:DISTRIB]-4
19
<PAGE>
1.10 "Enova Preferred Stock" means the Preferred Stock, Series D,
par value $.001 per share, of Enova.
1.11 "Enova Stock" means collectively the Enova Common Stock and
the Enova Preferred Stock.
1.12 "Enova Distribution" means the distribution by Hartcourt on a
pro rata basis to holders of Hartcourt Stock of all of the
outstanding shares of Enova Stock owned by Hartcourt on the
Enova Distribution Date as set forth in paragraph 2 of this
Agreement.
1.13 "Enova Distribution Date" means the date determined pursuant
to paragraph 2.3 of this Agreement on which the Enova
Distribution occurs.
1.14 "Enova Form 10-SB" means the Registration Statement on Form
10-SB to be filed by Enova with the Commission in connection
with the Enova Distribution.
1.15 "Enova Information Statement" means the Information Statement
constituting a part of the Enova Form 10, which will be mailed
to Hartcourt shareholders in connection with the Enova
Distribution.
1.16 "Enova Record Date" means the time at which the transfer
agents for the Hartcourt Stock close the transfer records for
Hartcourt Stock on the date to be determined by the Hartcourt
Board of Directors as the record date for determining
shareholders of Hartcourt entitled to receive the special
dividend of shares of Enova Stock in the Enova Distribution.
1.17 "Enova Ancillary Agreement" means any written agreement
between Hartcourt and Enova executed in furtherance of the
transactions contemplated herein.
1.18 "Hartcourt" means The Hartcourt Companies Inc., a Utah
corporation.
1.19 "Hartcourt Common Stock" means the Common Stock, $.01 par
value per share, of Hartcourt.
1.20 "Securities Act" means the Securities Act of 1933, as amended,
together with the rules and regulations promulgated
thereunder.
2.0 The Distribution
2.1 The Distribution. Subject to paragraph 2.3 hereof, on or prior
to the Enova Distribution Date, Hartcourt will deliver to the
Agent for the benefit of holders of record of Hartcourt Stock
on the Enova Record Date, stock certificates representing all
of the outstanding shares of Enova Stock then beneficially
owned by Hartcourt, and shall cause the transfer agent for the
shares of Hartcourt Stock to instruct the Agent on the Enova
Distribution Date to distribute the appropriate number of such
shares of Enova Stock to each such holder of Hartcourt Stock
or designated transferee or transferees of such holder.
[HARTCORT\AGR:DISTRIB]-4
20
<PAGE>
Subject to paragraph 2.4, each holder of Hartcourt Stock on
the Enova Record Date (or such holder's designated transferee
or transferees) will be entitled to receive in the Enova
Distribution a number of shares of Enova Stock equal to the
number of shares of Hartcourt Stock held by such holder on the
Enova Record date divided by four (4).
Each of Enova and Hartcourt, as the case may be, will provide
to the Agent all share certificates and any information
required in order to complete the Enova Distribution on the
terms contemplated hereby.
2.2. Actions Prior to The Enova Distribution. Hartcourt and Enova
shall prepare and mail, prior to the Enova Distribution Date,
to the holders of Hartcourt Common Stock, the Enova
Information Statement, which shall set forth appropriate
disclosure concerning Enova, the Enova Distribution and such
other matters as Hartcourt and Enova may determine. Within a
reasonable period of time following the Enova Distribution
Date Hartcourt and Enova shall prepare, and Enova shall file
with the Commission, the Enova Form 10-SB, which shall include
or incorporate by reference the Enova Information Statement.
Enova shall use its reasonable best efforts to cause the Enova
Form 10-SB to be declared effective under the Exchange Act as
soon as practicable following the filing thereof. In this
regard:
(a) Hartcourt and Enova shall take all such action as may
be necessary or appropriate under the securities or
blue sky laws of the United States (and any
comparable laws under any foreign jurisdiction) in
connection with the Enova Distribution.
(c) Enova shall prepare and file, and shall use its
reasonable best efforts to have approved, an
application for the listing of the Enova Common stock
to be distributed in the Enova Distribution on a
mutually agreeable stock exchange or on the Nasdaq
Electronic Bulletin Board system.
2.3. Conditions to The Enova Distribution. The Hartcourt Board
shall have the sole discretion to determine the Enova Record
Date and the Enova Distribution Date, and all appropriate
procedures in connection with the Enova Distribution, provided
that the Enova Distribution shall not occur prior to such time
as each of the following conditions shall have been satisfied
or shall have been waived by the Hartcourt Board in its sole
discretion:
(a) A private letter ruling from the Internal Revenue
Service or written opinion from qualified tax counsel
shall have been obtained, and shall continue in
effect, to the effect that, among other things, the
Enova Distribution will qualify as a tax-free
distribution for federal income tax purposes under
Section 355 of the Code, and such ruling or opinion
shall be in form and substance satisfactory to
Hartcourt in its sole discretion;
(b) Any material Governmental approvals and consents
necessary to consummate the Enova Distribution shall
have been obtained and he in full force and effect;
[HARTCORT\AGR:DISTRIB]-4
21
<PAGE>
(c) No order, injunction or decree issued by any court or
agency of competent jurisdiction or other legal
restraint or prohibition preventing the consummation
of the Enova Distribution shall be in effect and no
other event shall have occurred or failed to occur
that prevents the consummation of the Enova
Distribution;
(d) The Hartcourt Board shall have formally approved the
Distribution; provided that the satisfaction of such
conditions shall not create any obligation on the
part of Hartcourt, Enova or any other person to
effect or to seek to effect the Enova Distribution or
in any way limit Hartcourt's right to terminate this
Agreement as set forth in paragraph 7.1 or alter the
consequences of any such termination from those
specified in paragraph 7.2.
2.4. Fractional Shares. No certificates representing fractional
shares of Enova Common Stock will be distributed to holders of
Hartcourt Common Stock in the Enova Distribution. Holders that
receive certificates in the Enova Distribution and holders
that would otherwise receive less than one whole share of
Enova Common Stock in the Enova Distribution will receive one
whole share in lieu of such fractional shares as contemplated
hereby.
3. Certain Agreements Relating to The Enova Distribution
3.1. Enova Ancillary Agreements. Effective as of the date hereof,
each of Hartcourt and Enova are executing and delivering each
of the Enova Ancillary Agreements.
3.2. The Enova Board. Enova and Hartcourt shall take all actions
which may be required to elect or otherwise appoint as
directors of Enova, on or prior to the Enova Distribution
Date, the persons so named shall also be directors in the
Enova Form 10-SB and shall constitute the Board of Directors
of Enova on the Enova Distribution Date.
3.3. Enova Charter, Bylaws And Warrants. Prior to the Enova
Distribution Date, (a) Hartcourt shall cause Articles of
Amendment and Restatement of Enova, substantially in the form
filed with the Enova Form 10-SB, to be filed for record with
the Nevada Secretary of State and to be in effect on the Enova
Distribution Date, and (b) the Board of Directors of Enova
shall amend the Bylaws of Enova so that the Enova Bylaws are
substantially in the form filed with the Enova Form 10-SB.
Prior to the Enova Record Date, the Board of Directors of
Enova shall declare a dividend of the Class A Warrants so that
each share of Enova Common Stock issued and outstanding on the
Enova Distribution Date shall initially have one Class A
Warrant attached thereto.
4. Mutual Releases; Indemnification
4.1. Release of Pre-Closing Claims.
(a) Release by Enova. It is the intent of each of
Hartcourt and Enova by virtue of the provisions of
this paragraph 4.1 to provide for a full and complete
release and discharge of all Liabilities existing or
arising from all acts and events occurring or failing
to occur or alleged to have occurred or to have
failed to occur and all conditions existing or
alleged to have existed on or before the Enova
Distribution Date, between or among Enova, on the one
hand, and Hartcourt, on the other hand (including any
contractual agreements or
[HARTCORT\AGR:DISTRIB]-4
22
<PAGE>
arrangements existing or alleged to exist between or
among any such members on or before the Enova
Distribution Date as follows: Enova does hereby, for
itself and successors and assigns, and all Persons
who at any time prior to the Enova Distribution Date
have been shareholders, directors, officers, agents
or employees of Enova (in each case, in their
respective capacities as such), remise, release and
forever discharge Hartcourt, its respective
Affiliates, successors and assigns, and all Persons
who at any time prior to the Enova Distribution Date
have been shareholders, directors, officers, agents
or employees of Hartcourt (in each case, in their
respective capacities as such), and their respective
heirs, executors, administrators, successors and
assigns, from any and all Liabilities whatsoever,
whether at law or in equity (including any right of
contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing
or arising from any acts or events occurring or
failing to occur or alleged to have occurred or to
have failed to occur or any conditions existing or
alleged to have existed on or before the Enova
Distribution Date, including in connection with the
actions or decisions taken or omitted to be taken in
connection with the Enova Distribution
(b) Release by Hartcourt. Effective as of the Enova
Distribution Date, Hartcourt does hereby, for itself
and its successors and assigns, and all Persons who
at any time prior to the Enova Distribution Date have
been shareholders, directors, officers, agents or
employees of Hartcourt (in each case, in their
respective capacities as such), remiss, release and
forever discharge Enova, its successors and assigns,
and all Persons who at any time prior to the Enova
Distribution Date have been shareholders, directors,
officers, agents or employees of Enova (in each case,
in their respective capacities as such~, and their
respective heirs, executors, administrators,
successors and assigns, from any and all Liabilities
whatsoever, whether at law or in equity (including
any right of contribution), whether arising under any
contract or agreement, by operation of law or
otherwise, existing or arising from any acts or
events occurring or failing to occur or alleged to
have occurred or to have failed to occur or any
conditions existing or alleged to have existed on or
before the Enova Distribution Date.
4.2. Indemnification by Enova. Enova shall indemnify, defend and
hold harmless Hartcourt, and each of its directors, officers
and employees, and each of the heirs, executors, successors
and assigns of any of the foregoing ~collectively, the
"Hartcourt Indemnities"), from and against any and all
Liabilities of the Hartcourt Indemnities relating to, arising
out of or resulting from any of the following items (without
duplication), in each case whether arising before, on or after
the Enova Distribution Date:
(a) The failure of Enova or any other Person to pay,
perform or otherwise promptly discharge any
Liabilities of any member of Enova in accordance with
their respective terms, whether prior to or after the
Enova Distribution Date or the date hereof (including
any Liabilities assumed or retained by Enova);
[HARTCORT\AGR:DISTRIB]-4
23
<PAGE>
4.3. Indemnification by Hartcourt. Hartcourt shall indemnify,
defend and hold harmless Enova, each of its directors,
officers and employees, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively,
the "Enova Indemnities"), from and against any and all
Liabilities of the Enova Indemnities relating to, arising out
of or resulting from any of the following items (without
duplication), in each case whether arising before, on or after
the Enova Distribution Date:
(a) The failure of Hartcourt or any other Person to pay,
perform or otherwise promptly discharge any
Liabilities of Hartcourt whether prior to or after
the Enova Distribution Date or the date hereof
(including any Liabilities assumed or retained by
Hartcourt);
4.4. Survival of Indemnities. The rights and obligations of each of
Hartcourt and Enova and their respective Indemnities under
this paragraph 4 shall survive the sale or other transfer by
any party of any Assets or businesses or the assignment by it
of any Liabilities.
5. Interim Operations And Certain Other Matters
5.1. Certain Tax Matters. Unless otherwise agreed to in writing in
any Ancillary Agreement, Hartcourt and Enova shall each be
responsible for any taxes incurred, accrued or owed through
the Enova Distribution Date. Following the Enova Distribution
Date, Hartcourt and Enova, as separate entities, shall be
responsible for their respective tax obligations.
5.2. Agreement For Exchange of Information; Archives. Hartcourt and
Enova each agrees that (a) Enova shall maintain in effect at
its own cost and expense adequate systems and controls to the
extent necessary to enable Hartcourt to satisfy its respective
reporting, accounting, audit and other obligations, and (b)
Enova shall provide, or cause to be provided, to Hartcourt in
such form as Hartcourt shall request, at no charge to
Hartcourt, all financial and other data and information as
Hartcourt determines necessary or advisable in order to
prepare Hartcourt financial statements and reports or filings
with any Governmental Authority.
5.3. Insurance Matters. All rights of Enova under Enova Policies as
of the Enova Distribution Date shall survive the Enova
Distribution Date in accordance with their respective terms as
of such date.
Enova does hereby agree that Hartcourt shall not have any
Liability whatsoever as a result of the insurance policies and
practices of Hartcourt and its Affiliates as in effect at any
time prior to the Enova Distribution Date, including as a
result of the level or scope of any such insurance, the
creditworthiness of any insurance carrier, the terms and
conditions of any policy, the adequacy or timeliness of any
notice to any insurance carrier with respect to any claim or
potential claim or otherwise. In no event shall Hartcourt have
liability or obligation whatsoever to Enova in the event that
any Enova Insurance Policy or other contract or policy of
insurance shall be terminated or otherwise cease to be in
effect for any reason, shall be unavailable or inadequate to
cover any Liability of Enova for any reason whatsoever or
shall not be renewed or extended beyond the current expiration
date.
[HARTCORT\AGR:DISTRIB]-4
24
<PAGE>
6. Further Assurances And Additional Covenants
6.1. Further Assurances. In addition to the actions specifically
provided for elsewhere in this Agreement, each of the parties
hereto shall use its reasonable best efforts, prior to, on and
after the Enova Distribution Date, to take, or cause to be
taken, all actions, and to do, or cause to be done, all
things, reasonably necessary, proper or advisable under
applicable laws, regulations and agreements to consummate and
make effective the transactions contemplated by this Agreement
and the Enova Ancillary Agreements.
Without limiting the foregoing, prior to, on and after the
Enova Distribution Date, each party hereto shall cooperate
with the other parties, and without any further consideration,
but at the expense of the requesting party, to execute and
deliver, or use its reasonable best efforts to cause to be
executed and delivered, all instruments, including instruments
of conveyance, assignment and transfer, and to make all
filings with, and to obtain all consents, approvals or
authorizations of, any Governmental Authority or any other
Person under any permit, license, agreement, indenture or
other instrument (including any Consents or Governmental
Approvals), and to take all such other actions as such party
may reasonably be requested to take by any other party hereto
from time to time, consistent with the terms of this Agreement
and the Enova Ancillary Agreements, in order to effectuate the
provisions and purposes of this Agreement and the Enova
Ancillary Agreements and the other transactions contemplated
hereby and thereby. Without limiting the foregoing, each party
will, at the reasonable request, cost and expense of any other
party, take such other actions as may be reasonably necessary
to vest in such other party good and marketable title, free
and clear of any Security Interest, if and to the extent it is
practicable to do so.
Hartcourt and Enova, at the request of the other, shall use
its reasonable best efforts to obtain, or to cause to be
obtained, any consent, substitution, approval or amendment
required to novate (including with respect to any federal
government contract) or assign all obligations under
agreements, leases, licenses and other obligations or
Liabilities of any nature whatsoever that constitute
Liabilities of Enova or Liabilities that relate to Enova, or
to obtain in writing the unconditional release of all parties
to such arrangements, so that, in any such case, Enova will be
solely responsible for such Liabilities; provided, however,
that neither Hartcourt nor Enova shall be obligated to pay any
consideration therefor to any third party from whom such
consents, approvals, substitutions, amendments and releases
are requested.
If Hartcourt or Enova is unable to obtain, or to cause to be
obtained, any such required consent, approval, release,
substitution or amendment, Hartcourt shall continue to be
bound by such agreements, leases, licenses and other
obligations and, unless not permitted by law or the terms
thereof, Enova shall, as agent or subcontractor for Hartcourt,
pay, perform and discharge fully all the obligations or other
Liabilities of Hartcourt thereunder from and after the date
hereof. Enova shall indemnify each Hartcourt Indemnities, and
hold each of them harmless against any Liabilities arising in
connection therewith.
The parties hereto agree to take any reasonable actions
necessary in order for the Enova Distribution to qualify as a
tax-free distribution pursuant to Section 355 of the code.
[HARTCORT\AGR:DISTRIB]-4
25
<PAGE>
6.2. Qualification as Tax-free Distribution. After the Enova
Distribution date, Hartcourt or Enova shall not take any
action which could reasonably be expected to prevent the Enova
Distribution from qualifying as a tax-free distribution within
the meaning of Section 355 of the Code or any other
transaction contemplated by this Agreement or any Ancillary
Agreement which is intended by the parties to be tax-free from
failing so to qualify.
After the Enova Distribution Date, Enova shall not take any
action or enter into any transaction which could reasonably be
expected to materially adversely impact the reasonably
expected tax consequences to Hartcourt which are known to
Enova of any transaction contemplated by this Agreement.
7. Termination
7.1. Termination. This Agreement may be terminated at any time
prior to the Enova Distribution Date by Hartcourt.
7.2. Effect of Termination. In the event of any termination of this
Agreement, no party to this Agreement (or any of its directors
or officers) shall have any Liability or further obligation to
any other party.
8. Miscellaneous
8.1. Counterparts; Entire Agreement; Corporate Power. This
Agreement and each Enova Ancillary Agreement may be executed
in one or more counterparts, all of which shall be considered
one and the same agreement, and shall become effective when
one or more counterparts have been signed by each of the
parties and delivered to the other party.
This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof, supersede
all previous agreements, negotiations, discussions, writings,
understandings, commitments and conversations with respect to
such subject matter and there are no agreements or
understandings between the parties other than those set forth
or referred to herein or therein.
Hartcourt represents on behalf of itself and Enova represents
on behalf of itself as follows:
(a) each has the requisite corporate or other power and
authority and has taken all corporate or other action
necessary in order to execute, deliver and perform
each of this Agreement and each other Enova Ancillary
Agreements to which it is a party and to consummate
the transactions contemplated hereby and thereby; and
(b) this Agreement and each Enova Ancillary Agreement to
which it is a party has been duly executed and
delivered by it and constitutes a valid and binding
agreement of it enforceable in accordance with the
terms thereof.
Notwithstanding any provision of this Agreement or any Enova
Ancillary Agreement, Hartcourt shall not be required to take
or omit to take any act that would violate its fiduciary
duties to any minority stockholders, if any.
[HARTCORT\AGR:DISTRIB]-4
26
<PAGE>
8.2. Governing Law. This Agreement and, unless expressly provided
therein, each Enova Ancillary Agreement, shall be governed by
and construed and interpreted in accordance with the laws of
the State of California.
8.3. Assign Ability. Except as set forth in any Enova Ancillary
Agreement, this Agreement and each Enova Ancillary Agreement
5hail be binding upon and inure to the benefit of the parties
hereto and thereto, respectively, and their respective
successors and assigns; provided, however, that no party
hereto or thereto may assign its respective rights or delegate
its respective obligations under this Agreement or any Enova
Ancillary Agreement without the express prior written consent
of the other parties hereto or thereto.
8.4. Third Party Beneficiaries. Except for the indemnification
rights under this Agreement of any Hartcourt Indemnities or
Enova Indemnities in their respective capacities as such, (a)
the provisions of this Agreement and each Enova Ancillary
Agreement are solely for the benefit of the parties and are
not intended to confer upon any Person except the parties any
rights at remedies hereunder, and (b) there are no third party
beneficiaries of this Agreement or any Enova Ancillary
Agreement and neither this Agreement nor any Enova Ancillary
Agreement shall provide any third person with any remedy,
claim, liability, reimbursement, claim of action or other
right in excess of those existing without reference to this
Agreement or any Enova Ancillary Agreement.
8.5. Notices. All notices or other communications under this
Agreement or any Enova Ancillary Agreement shall be in writing
and shall be deemed to be duly given when (a) delivered in
person or (b) deposited in the United States mail or private
express mail, postage prepaid, addressed as follows:
If to Hartcourt, to: The Hartcourt Companies Inc.
c/o Dr. Alan Phan
2049 Century Park East
Los Angeles, California 90067
Telephone: (310) 788-2634
Facsimile: (310) 553-1338
If to Enova, to: Enova Holdings Inc.
4695 MacArthur Court, Suite 530
Newport Beach, CA 92660
Telephone: (949) 833-2094
Facsimile: (949) 833-7854
8.6. Severability. If any provision of this Agreement or any Enova
Ancillary Agreement or the application thereof to any Person
or circumstance is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof or thereof, or the application of
such provision to Persons or circumstances or in jurisdictions
other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall
in no way be affected, impaired or invalidated thereby, so
long as the economic or legal substance of the transactions
contemplated hereby or thereby, as the case may be, is not
affected in any manner adverse to any party. Upon such
determination, the parties shall negotiate in good faith in an
effort to agree upon such a suitable and equitable provision
to effect the original intent of the parties.
[HARTCORT\AGR:DISTRIB]-4
27
<PAGE>
8.7. Force Majeure. No party shall be deemed in default of this
Agreement or any Enova Ancillary Agreement to the extent that
any delay or failure in the performance of its obligations
under this Agreement or any Enova Ancillary Agreement results
from any cause beyond its reasonable control and without its
fault or negligence, such as acts of God, acts of civil or
military authority, embargoes, epidemics, war, riots,
insurrections, fires, explosions, earthquakes, floods,
unusually severe weather conditions, labor problems or
unavailability of parts, or, in the case of computer systems,
any failure in electrical or air conditioning equipment. In
the event of any such excused delay, the time for performance
shall be extended for a period equal to the time lost by
reason of the delay.
8.8. Publicity. Prior to the Enova Distribution Date, each of Enova
and Hartcourt shall consult with each other prior to issuing
any press releases or otherwise making public statements with
respect to the Enova Distribution or any of the other
transactions contemplated hereby and prior to making any
filings with any Governmental Authority with respect thereto.
8.9. Expenses. Except as expressly set forth in this Agreement or
in any Enova Ancillary Agreement, whether or not the Enova
Distribution is consummated, all third party fees, costs and
expenses paid or incurred prior to the Enova Distribution Date
in connection with the Enova Distribution will be paid by
Hartcourt; provided however that Enova shall consult with
Hartcourt prior to incurring any such third party obligations.
8.10. Headings. The paragraph and paragraph headings contained in
this Agreement and in the Enova Ancillary Agreements are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement or any Enova
Ancillary Agreement.
8.11. Survival of Covenants. Except as expressly set forth in any
Enova Ancillary Agreement, the covenants, representations and
warranties contained in this Agreement and each Enova
Ancillary Agreement, and liability for the breach of any
obligations contained herein, shall survive the Enova
Distribution and shall remain in full force and effect
following the consummation of the Enova Distribution.
8.12. Waivers of Default. Waiver by any party of any default by the
other party of any provision of this Agreement or any Enova
Ancillary Agreement shall not be deemed a waiver by the
waiving party of any subsequent or other default, nor shall it
prejudice the rights of the other party.
8.13. Amendments. No provisions of this Agreement or any Enova
Ancillary Agreement shall be deemed waived, amended,
supplemented or modified by any party, unless such waiver,
amendment, supplement or modification is in writing and signed
by the authorized representative of the party against whom it
is sought to enforce such waiver, amendment, supplement or
modification.
[HARTCORT\AGR:DISTRIB]-4
28
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Distribution Agreement
to be executed by their duly authorized representatives.
"Hartcourt"
The Hartcourt Companies Inc.
By: /s/ Dr. Alan Phan
----------------------------------
Name: Dr. Alan Phan
Title: President
"Enova"
Enova Holdings Inc.
By: /s/ J.L. Lawver
----------------------------------
Name: J.L. Lawver
Title: President
[HARTCORT\AGR:DISTRIB]-4
29
<PAGE>
EXHIBIT "(c) 4."
RESIGNATION LETTER OF LEONARD J. ROMAN
[HARTCORT\AGR:DISTRIB]-4
30
<PAGE>
The Hartcourt Companies Inc.
2049 Century Park East, #3760
Los Angeles, California 90067
March 24, 1999
Board of Directors
The Hartcourt Companies Inc.
2049 Century Park East, #3760
Los Angeles, California 90067
Gentlemen:
I hereby resign as a Director of The Hartcourt Companies Inc. (the "Company") to
be effective the date of the acceptance of a successor director. I state and
represent that this resignation is not because of any disagreement between
myself and the management of the Company relating to the Company's operations,
policies and practices.
Very truly yours,
/s/ Leonard J. Roman
---------------------------------------
Leonard J. Roman
[HARTCORT\MIN:ROMARES]
31
<PAGE>
EXHIBIT "(c) 5."
RESIGNATION LETTER OF FREDERIC COHN
[HARTCORT\MIN:ROMARES]
32
<PAGE>
The Hartcourt Companies Inc.
2049 Century Park East, #3760
Los Angeles, California 90067
March 24, 1999
Board of Directors
The Hartcourt Companies Inc.
2049 Century Park East, #3760
Los Angeles, California 90067
Gentlemen:
I hereby resign as Vice President, Secretary and Director of The Hartcourt
Companies Inc. (the "Company") to be effective the date of the acceptance of a
successor director. I state and represent that this resignation is not because
of any disagreement between myself and the management of the Company relating to
the Company's operations, policies and practices.
Very truly yours,
/s/ Frederic Cohn
---------------------------------------
Frederic Cohn
[HARTCORT\MIN:COHNRES]
33
