SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
THE HARTCOURT COMPANIES INC.
(Exact name of Registrant as specified in its charter)
UTAH
(State or other jurisdiction of incorporation or organization)
87-0400541
(IRS Employer Identification No.)
4695 MacArthur Court, Suite 530, Newport Beach, CA 92660
(Address of Principal Executive Offices, including ZIP Code)
Consulting/Fee/Option Agreements with Fred G. Luke, individually and as
President of NuVen Advisors Inc., Archer & Weed, John A. Furutani, Esq.
and Yan Wu
(Full title of the plan)
Dr. Alan V. Phan, 4695 MacArthur Court, Suite 530, Newport Beach, CA 92660
(Name and address of agent for service)
(949) 833-5381
(Telephone number, including area code, of agent for service)
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed
Proposed Maximum
Maximum Aggregate Amount of
Title of Securities Amount of Shares Offering Offering Registration
to be Registered to be Registered Price Per Share(1) Price(1) Fee
- ------------------------- ----------------------- ---------------------- -------------------- -----------------
<S> <C> <C> <C> <C>
$.01 par value
Common Stock 118,110 $1.27 $ 149,999.70 $ 32.83
$.01 par value
Common Stock
underlying options 1,000,000 $.50 $ 500,000.00 $ 278.00
$.01 par value
Common Stock 18,000 $1.27 $ 22,860.00 $ 5.00
$.01 par value
Common Stock 1,513 $1.27 $ 1,921.51 $ .42
$.01 par value
Common Stock
underlying options 1,000,000 $1.25 $ 1,250,000 $ 278.00
TOTALS 2,137,623 N/A $ 1,924,781.21 $ 594.25
</TABLE>
(1) This calculation is made solely for the purposes of determining the
registration fee pursuant to the provisions of Rule 457(h) under the
Securities Act and is calculated on the basis of the par value of the
common stock since there is no quotation by any market or exchange and the
Common Stock is not reported on the OTC Bulletin Board.
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PROSPECTUS
THE HARTCOURT COMPANIES INC.
4695 MacArthur Court, Suite 530
Newport Beach, CA 92660
(949) 833-5381
(2,137,623 SHARES OF COMMON STOCK)
This Prospectus relates to the offer and sale by The Hartcourt
Companies Inc., a Utah corporation (the "Company"), of shares of its $.01 par
value per share common stock (the "Common Stock") to certain consultants and
advisors (the "Consultants") pursuant to consulting agreements entered into
between the Company and the Consultants for payment of services rendered. The
Company is registering hereunder and then issuing, upon receipt of adequate
consideration therefor, to the Consultants 2,137,623 shares of Common Stock in
consideration for services to be performed under the respective agreements.
The Common Stock is not subject to any restriction on transferability.
Recipients of shares other than persons who are "affiliates" of the Company
within the meaning of the Securities Act of 1933 (the "Act") may sell all or
part of the shares in any way permitted by law, including sales in the
over-the-counter market at prices prevailing at the time of such sale. Of the
shares registered hereunder, there are no shares being registered for affiliates
of the Company. An affiliate is summarily, any director, executive officer or
controlling shareholder of the Company or anyone of its subsidiaries. An
"affiliate" of the Company is subject to Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). If an Employee who is not
now an "affiliate" becomes an "affiliate" of the Company in the future, he would
then be subject to Section 16(b) of the Exchange Act. (See "General Information
- - Restrictions on Resales").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is August 25, 1999
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This Prospectus is part of a Registration Statement which was filed and
became effective under the Securities Act of 1933, as amended (the "Securities
Act"), and does not contain all of the information set forth in the Registration
Statement, certain portions of which have been omitted pursuant to the rules and
regulations promulgated by the U.S. Securities and Exchange Commission (the
"Commission") under the Securities Act. The statements in this Prospectus as to
the contents of any contracts or other documents filed as an exhibit to either
the Registration Statement or other filings by the Company with the Commission
are qualified in their entirety by the reference thereto.
A copy of any document or part thereof incorporated by reference in
this Prospectus but not delivered herewith will be furnished without charge upon
written or oral request. Requests should be addressed to: The Hartcourt
Companies Inc., 4695 MacArthur Court, Suite 530, Newport Beach, CA 92660, (949)
833-5381,
The Company is subject to the reporting requirements of the Exchange
Act and in accordance therewith files reports and other information with the
Commission. These reports, as well as the proxy statements, information
statements and other information filed by the Company under the Exchange Act may
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W. Washington D.C. 20549. Copies may be
obtained at the prescribed rates. The Company=s stock has been traded on the
over-the-counter market since 1994 and is currently reported by the National
Quotation Bureau Electronic Bulletin Board.
No person has been authorized to give any information or to make any
representation, other than those contained in this Prospectus, and, if given or
made, such other information or representation must not be relied upon as having
been authorized by the Company. This Prospectus does not constitute an offer or
a solicitation by anyone in any state in which such is not authorized or in
which the person making such is not qualified or to any person to whom it is
unlawful to make an offer or solicitation.
Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has not been a
change in the affairs of the Company since the date hereof.
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TABLE OF CONTENTS
Information Required in the Section 10(a) Prospectus ......................6
Item 1. Plan Information..................................................6
General Information...............................................6
The Company.............................................6
Purposes.................................................6
Common Stock.............................................6
The Consultants.........................................6
No Restrictions on Transfer.............................6
Tax Treatment to the Consultants........................6
Tax Treatment to the Company............................7
Restrictions on Resales.................................7
Documents Incorporated by Reference and Additional Information.............8
Item 2. Registrant Information and Employee Plan Annual Information.......8
Legal Opinion and Experts...............................8
Indemnification of Officers and Directors...............8
Information Required in the Registration Statement.........................9
Item 3. Incorporation of Documents by Reference...........................9
Item 4. Description of Securities.........................................9
Item 5. Interests of Named Experts and Counsel............................9
Item 6. Indemnification of Directors and Officers.........................9
Item 7. Exemption from Registration Claimed...............................10
Item 8. Exhibits..........................................................10
Item 9. Undertakings......................................................11
Signatures . . . . . . . . ................................................14
Exhibit Index . . . . .....................................................15
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a)
PROSPECTUS
Item 1. Plan Information
GENERAL INFORMATION
The Company
The Company has its principal executive offices at 4695 MacArthur
Court, Suite 530, Newport Beach, CA 92660,where its telephone number is (949)
833-5381.
Purposes
The Common Stock to be issued by the Company to certain Consultants
will be issued pursuant to agreements entered into between Consultants and the
Company, which the agreements have been approved by the Board of Directors of
the Company (the "Board of Directors"). The agreements are intended to provide a
method whereby the Company may be stimulated by the personal involvement of the
Consultants in the Company's future prosperity, thereby advancing the interests
of the Company, and all of its shareholders. Copies of the agreements have been
filed as exhibits to this Registration Statement.
Common Stock
The Board has authorized the issuance of up to 2,137,623 shares of the
Common Stock to the Consultants and upon effectiveness of this Registration
Statement.
The Consultants
The Consultants have agreed to provide their expertise and advice to
the Company for the purposes set forth in their agreements with the Company.
No Restrictions on Transfer
The Consultants will become the record and beneficial owners of the
shares of Common Stock upon issuance and delivery and are entitled to all of the
rights of ownership, including the right to vote any shares awarded and to
receive ordinary cash dividends on the Common Stock.
Tax Treatment to the Consultants
The Common Stock is not qualified under Section 401(a) of the Internal
Revenue Code. The Consultants, therefore, will be required for federal income
tax purposes to recognize ordinary income during the taxable year in which the
first of the following events occurs: (a) the shares become freely transferable,
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<PAGE>
or (b) the shares cease to be subject to a substantial risk of forfeiture.
Accordingly, absent a specific contractual provision to the contrary the
Consultants will receive compensation taxable at ordinary rates equal to the
fair market value of the shares on the date of receipt since there will be no
substantial risk of forfeiture or other restrictions on transfer. If, however,
the Consultants receive shares of common stock pursuant to the exercise of an
option or options at an exercise price below the fair market value of the shares
on the date of exercise, the difference between the exercise price and the fair
market value of the stock on the date of exercise will be deemed ordinary income
for federal income tax purposes. The Consultants are urged to consult each of
their tax advisors on this matter. Further, if any recipient is an "affiliate",
Section 16(b) of the Exchange Act is applicable and will affect the issue of
taxation.
Tax Treatment to the Company
The amount of income recognized by any recipient hereunder in
accordance with the foregoing discussion will be an expense deductible by the
Company for federal income tax purposes in the taxable year of the Company
during which the recipient recognizes income.
Restrictions on Resales
In the event that an affiliate of the Company acquires shares of Common
Stock hereunder, the affiliate will be subject to Section 16(b) of the Exchange
Act. Further, in the event that any affiliate acquiring shares hereunder has
sold or sells any shares of Common Stock in the six months preceding or
following the receipt of shares hereunder, any so called "profit", as computed
under Section 16(b) of the Exchange Act, would be required to be disgorged from
the recipient to the Company. Services rendered have been recognized as valid
consideration for the "purchase" of shares in connection with the "profit"
computation under Section 16(b) of the Exchange Act. The Company has agreed that
for the purpose of any "profit" computation under 16(b) the price paid for the
Company=s Common Stock issued hereunder to affiliates is equal to the value of
services rendered. Shares of the Company=s Common Stock acquired hereunder by
persons other than affiliates are not subject to Section 16(b) of the Exchange
Act.
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<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
AND
ADDITIONAL INFORMATION
The Company hereby incorporates by reference (i) its annual report on
Form 10-KSB for the year ended December 31, 1998, filed pursuant to Section 13
of the Exchange Act, (ii) any and all Quarterly Reports and Current Reports on
Forms 10-Q (or 10-QSB or 8-K) filed under the Securities or Exchange Act
subsequent to the filing of the Company=s Annual Report on Form 10-K (or 10-KSB)
for the fiscal year ended December 31, 1998, as well as all other reports filed
under Section 13 of the Exchange Act, and (iii) its annual report, if any, to
shareholders delivered pursuant to Rule 14a-3 of the Exchange Act. In addition,
all further documents filed by the Company pursuant to Section 13, 14, or 15(d)
of the Exchange Act prior to the termination of this offering are deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing. All documents which when together, constitute this Prospectus,
will be sent or given to participants by the Registrant as specified by Rule
428(b)(1) of the Securities Act.
Item 2. Registrant Information and Employee Plan Annual Information
A copy of any document or part thereof incorporated by reference in
this Registration Statement but not delivered with this Prospectus or any
document required to be delivered pursuant to Rule 428(b) under the Securities
Act will be furnished without charge upon written or oral request. Requests
should be addressed to: The Hartcourt Companies Inc., 4695 MacArthur Court,
Suite 530, Newport Beach, CA 92660, (949) 833-5381.
Legal Opinion and Experts
Richard O. Weed has rendered an opinion on the validity of the
securities being registered. Mr. Weed is not an "affiliate" of the Company. He
does not currently own any shares of the Company's common stock.
The financial statements of The Hartcourt Companies Inc. incorporated
by reference in this Prospectus for the year ended December 31, 1998 have been
audited by Harlan & Boettger, LLP, independent certified public accountants, as
set forth in their report incorporated herein by reference, and are incorporated
herein in reliance upon such report given upon the authority of said firm as
experts in auditing and accounting.
Indemnification of Officers and Directors
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, or persons controlling the Company,
the Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
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PART II
INFORMATION REQUIRED IN
THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Registrant hereby states that (i) all documents set forth in (a)
through (c), below, are incorporated by reference in this registration
statement, and (ii) all documents subsequently filed by registrant pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which de-registers all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents.
(a) Registrant's latest Annual Report, whether filed pursuant to
Section 13(a) or 15(d) of the Exchange Act;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by annual
report referred to in (a), above; and
(c) The latest prospectus filed pursuant to Rule 424(b) under the
Securities Act.
Item 4. Description of Securities
No description of the class of securities (i.e. the $.01 par value
Common Stock) is required under this item because the Common Stock is registered
under Section 12 of the Exchange Act.
Item 5. Interests of Named Experts and Counsel
Mr. Weed has not nor does he presently own any shares of the Company's
common stock.
Item 6. Indemnification of Directors and Officers
Article VII, Section 1 of the Company=s Bylaws limit the liability of
any officer or Director and permit the Company to indemnify its directors and
officers as follows:
"No officer or Director shall be personally liable for any obligations
of the corporation or for any duties or obligations arising out of any
acts or conduct of said officer or director performed for or on behalf
of the corporation. The corporation shall and does hereby indemnify and
hold harmless each person and his heirs and administrators who shall
serve at any time hereafter as a Director or officer of the corporation
from and against any and all claims, judgments and liabilities to which
such persons shall become subject by reason of his having heretofore or
hereafter been a Director or officer of the corporation or by reason of
any action alleged to have been heretofore or hereafter taken or
omitted to have been taken by him as such Director or officer, and
shall reimburse each such person for all legal and all other expenses
reasonably incurred by him in connection with any such claim or
liability, including power to defend such person from all suits or
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claims as provided for under the provisions of the Utah Business
corporation Act; provided, however, that no such person shall be
indemnified against, or be reimbursed for, any expense incurred in
connection with any claim or liability arising out of his own
negligence or willful misconduct. The rights accruing to any person
under the foregoing provisions of this section shall not exclude any
right to which he may lawfully be entitled, nor shall anything herein
contained restrict the right of the corporation to indemnify or
reimburse such person in any proper case, even though not specifically
herein provided for. The corporation, its directors, officers,
Consultants and agents shall be fully protected in taking any action or
making any payment, or in refusing so to do in reliance upon the advice
of counsel.@
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
(a) The following exhibits are filed as part of this
registration statement pursuant to Item 601 of Regulation S-B and are
specifically incorporated herein by this reference:
Exhibit No. Title
1. Not required.
2. Not required.
3. Not required.
4. Not applicable.
5. Opinion of Richard O. Weed regarding the legality of
the securities registered.
6. Not required.
7. Not required.
8. Not required.
9. Not required.
10. A. Option Agreement with Fred G. Luke,
individually and as President of NuVen
Advisors Inc.
B. Fee Agreement with Archer & Weed
C. Fee Agreement with John A. Furutani, Esq.
D. Fee and Option Agreement with Yan Wu
11. Not required.
12. Not required.
13. Not required.
14. Not required.
15. Not required.
16. Not required.
17. Not required.
18. Not required.
19. Not required.
20. Not required.
21. Not required.
22. Not required.
23. Not required.
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Exhibit No. Title
24.1 Consent of Richard O. Weed, special counsel to
registrant, to the use of his opinion with respect to
the legality of the securities being registered hereby
and to the references to him in the Prospectus filed
as a part hereof.
24.2 Consent of Harlan & Boettger, LLP
25. Not applicable.
26. Not applicable.
27. Not applicable.
28. Not applicable.
29. Not applicable.
Item 9. Undertakings
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
registrant pursuant to the foregoing provisions, or otherwise, registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by registrant of expenses
incurred or paid by a director, officer or controlling person of registrant in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement
to:
(i) include any prospectus required by Section 10 (a) (3) of the
Securities Act;
(ii) reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represents a fundamental
change in the information set forth in the registration
statement; (iii) include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
provided, however, paragraphs (i) and (ii) shall not apply if the
information required to be included in a post-effective amendment
by those paragraphs are incorporated by reference from periodic
reports filed by the registrant small business issuer under the
Exchange Act.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment to the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
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(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual
report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14e-3 under the Securities
Exchange Act of 1934; and, where interim financial information
require to be presented by Article 3 of Regulation S-X is not set
forth in the prospectus, to deliver, or cause to be delivered to
each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference
in the prospectus to provide such interim financial information.
Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of registrant's annual
report pursuant to Section 13(a) of the Securities Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Newport Beach, State of California on the 25th day of
August, 1999.
The Hartcourt Companies Inc.
(Registrant)
By: /s/ Dr. Alan V. Phan
----------------------------------
Dr. Alan V. Phan, President
Pursuant to the requirements of the 1933 Act, this registration
statement or amendment has been signed by the following persons in the
capacities and on the dates indicated:
Signatures Title Date
- ------------------------ -------- ---------------
/s/ Dr. Alan V. Phan Director August 25, 1999
- ------------------------
D. Alan V. Phan
/s/ Fred G. Luke Director August 25, 1999
- ------------------------
Fred G. Luke
/s/ Jon L. Lawver Director August 25, 1999
- -------------------------
Jon L. Lawver
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FORM S-8 REGISTRATION STATEMENT
EXHIBIT INDEX
The following Exhibits are filed as part of this registration statement
pursuant to Item 601 of Regulation S-B and are specifically incorporated herein
by this reference:
Exhibit
Number in
Registration Numbered
Statement Description Page
- --------------- -------------------------------------------- --------
5. Opinion of Counsel ....................................16
10. A. Option Agreement with Fred G. Luke
individually, and as President of NuVen
Advisors Inc. ................................19
B. Fee Agreement with Archer & Weed .............24
C. Fee Agreement with John A. Furutani, Esq. ....27
D. Fee and Option Agreement with Yan Wu .........30
24.1 Consent of Richard O. Weed to Use of Opinion ..........40
24.2 Consent of Harlan & Boettger, LLP .....................41
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EXHIBIT 5.
OPINION OF COUNSEL
ARCHER & WEED
Special Project Counsel
4695 MacARTHUR COURT, SUITE 530, NEWPORT BEACH, CALIFORNIA 92660-2164
TELEPHONE (949) 475-9086 FACSIMILE (949) 475-9087
WRITER'S DIRECT NUMBER
(949) 475-9086
August 25, 1999
Board of Directors
The Hartcourt Companies Inc.
4695 MacArthur Court, Suite 530
Newport Beach, CA 92660
Re: Form S-8 Registration Statement Opinion of Counsel
Gentlemen:
I have acted as a special counsel for The Hartcourt Companies Inc. a
Utah corporation (the "Company") in connection with the preparation and filing
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended, (the "Act") of a registration statement on
Form S-8 (the "Registration Statement"), relating to the offer and sale of
2,137,623 shares of Common Stock, $.01 par value (the "Common Stock") to
Consultants of the Company, in consideration for services performed and to be
performed on behalf of the Company under the terms and conditions of certain
agreements (the "Agreements").
As special counsel for the Company, I have examined the Company's
articles of incorporation, bylaws, minute book, and certain other corporate
records. For the purpose of the opinions expressed below, I have also examined
the Registration Statement on Form S-8 to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, covering the
Common Stock in this offering.
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In arriving at the opinions set forth below, I have examined and relied
upon originals or copies, certified or otherwise identified to my satisfaction,
of corporate records (including the Registration Statement with its exhibits)
provided by the officers of the Company. I have made such investigations of law
as I have considered necessary or appropriate as a basis for my opinions.
My opinions are qualified in all respects by the scope of the document
examination and I make no representation as to the sufficiency of my
investigation for your purpose. I have not made any document examination or
rendered any other advice other than as described herein and I at all times have
assumed and relied upon the truth and completeness of the information,
statements and representations which have been given by the Company to me. I do
not express any opinion with respect to the completeness, adequacy, accuracy or
any other aspect of the financial statements incorporated by reference in the
Registration Statement.
In rendering this opinion, I have assumed, without independently
verifying such assumptions, and this opinion is based and conditioned upon the
following: (i) the genuineness of the signatures on and the enforceability of
all instruments, documents and agreements examined by me and the authenticity of
all documents furnished for my examination as originals and the conformity to
the original documents of all documents furnished to me as copies; (ii) where an
executed document has been presented to me for my review, that such document has
been duly executed on or as of the date stated and that execution and delivery
was duly authorized on the part of the parties thereto; (iii) each of the
foregoing certificates, instruments and documents being duly authorized,
executed and delivered by or on behalf of all the respective parties thereto,
and such instruments and documents being legal, valid binding obligations of
such parties; (iv) the truth and accuracy of representations and statements made
in the documents received from the State of Utah; and (vi) The Hartcourt
Companies Inc. will be operated in accordance with the terms of its charter
documents and the laws of the State of Utah and the terms of the instruments or
documents referred to above.
Based upon the foregoing, I am of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Utah, the
jurisdiction of its incorporation.
2. The terms and provisions of the Common Stock conform to the
description thereof contained in the Registration Statement, and the form of the
stock certificates used to evidence the Common Stock are in good and proper form
and no stockholder is entitled to preemptive rights to subscribe for or purchase
any of the Common Stock.
3. Based upon the foregoing, I am of the opinion that the issuance and
the sale of the shares of Common Stock in this offering has been duly and
validly authorized, and subject to compliance with the provisions of the written
agreements, the Common Stock issuable under the Agreements will duly authorized
and validly issued as fully paid and non-assessable shares of Common Stock.
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I am admitted to practice in the State of California and the State of
Texas. I am not admitted to practice in Utah, the state of incorporation of the
Company, or in any other jurisdictions other than California and Texas, in which
the Company may own property or transact business. My opinions herein are with
respect to federal law only and, to the extent my opinions are derived from the
laws of other jurisdictions, are based upon an examination of all relevant
authorities and the documents referenced herein and are believed to be correct.
However, except for pending litigation or claims matters, I have not directly
obtained legal opinions as to such matters from attorneys licensed in such other
jurisdictions. No opinion is expressed upon any conflict of law issues. My
opinions are qualified to the extent that enforcement of rights and remedies are
subject to bankruptcy, insolvency, fraudulent conveyance, moratorium, and other
laws of general application or equitable principles affecting the rights and
remedies of creditors and security holders and to the extent that the
availability of the remedy of specific performance or of injunctive relief is
subject to the discretion of the court before which any proceeding may be
brought.
This opinion is limited to matters existing as of this date, and no
responsibility is assumed to advise you of changes (factual or legal) which may
hereafter occur, whether deemed material or not.
This opinion is furnished by me to you as special counsel for the
Company and it is solely for your benefit. This opinion is not to be used,
circulated, quoted or otherwise referred to in whole or in part for any purpose,
other than as set forth in my written consent.
Very truly yours,
/s/ Richard O. Weed
---------------------------------------
Richard O. Weed
[HARTCORT\FS8:MAY1999]-2
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EXHIBIT 10.A.
OPTION AGREEMENT FRED G. LUKE, INDIVIDUALLY
AND AS PRESIDENT OF NUVEN ADVISORS, INC.
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") is entered into effective the 1st
day of day of April 1999, by and between Fred G. Luke, individually and as
President of NuVen Advisors Inc., a Nevada corporation ("NuVen"), and The
Hartcourt Companies Inc., a Utah corporation (the "Company").
WHEREAS, the Company proposes to issue to NuVen options to purchase
shares of its common stock (the "Common Stock") in connection with the Company's
engagement of NuVen pursuant to the Advisory Agreement of even date between the
Company and NuVen, incorporated by reference herein (the "Advisory Agreement");
and,
WHEREAS, to induce NuVen to execute the First Amendment to the Advisory
Agreement the Company hereby grants NuVen an option to purchase shares of the
Company's Common Stock subject to the terms and conditions set forth below.
NOW, THEREFORE, for and in consideration of the mutual promises herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and subject to the terms and conditions set forth
below, NuVen and the Company agree as follows:
1. The Option
The Company hereby grants to NuVen (hereinafter "Holder") an option
(the "Option") to acquire One Million (1,000,000) shares of the
Company's Common Stock, subject to adjustment as set forth herein (such
shares, as adjusted, are hereinafter referred to as the "Option
Shares"), at a purchase price of Fifty Cents ($.50) per share ("Option
Price") representing one hundred ten percent (110%) of the ten (10) day
moving average closing bid price for the Company's common stock.
2. Term and Exercise of Option
A. Term of Option. Subject to the terms of this Agreement, Holder
shall have the right to exercise the Option in whole or in part,
commencing the date hereof through the close of business on
December 1, 2001.
B. Exercise of the Option. The Option may be exercised upon written
notice to the Company at its principal office setting out the
number of Option Shares to be purchased, together with payment of
the Option Price
[HARTCORT\FS8:MAY1999]-2
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<PAGE>
C. Issuance of Option Shares. Upon such notice of exercise and
payment of the Option Price, the Company shall issue and cause to
be delivered within five (5) business days following the written
order of Holder, or its successor as provided for herein, and in
such name or names as the Holder may designate, a certificate or
certificates for the number of Option Shares so purchased. The
rights of purchase represented by the Option shall be
exercisable, at the election of the Holder thereof, either in
full or from time to time in part, and in the event the Option is
exercised in respect of less than all of the Option Shares
purchasable on such exercise at any time prior to the date of
expiration hereof, the remaining Option Shares shall continue to
be subject to adjustment as set forth in paragraph 4 hereof. The
Company irrevocably agrees to reconstitute the Option Shares as
provided herein.
3. Reservation of Option Shares
The Company shall at all times keep reserved and available, out of its
authorized Common Stock, such number of shares of Common Stock as shall
be sufficient to provide for the exercise of the rights represented by
this Agreement. The transfer agent for the Common Stock and any
successor transfer agent for any shares of the Company's capital stock
issuable upon the exercise of any of such rights of purchase, will be
irrevocably authorized and directed at all times to reserve such number
of shares as shall be requisite for such purpose. The Company will
cause a copy of this Agreement to be kept on file with the transfer
agent or its successors.
4. Adjustment of Option Shares
The number of Option Shares purchasable pursuant to this Agreement
shall be subject to adjustment from time to time upon the happening of
certain events, as follows:
A. Adjustment for Recapitalization. Subject to paragraph 4.B below,
in the event the Company shall (a) subdivide its outstanding
shares of Common Stock, or (b) issue or convert by a
reclassification or recapitalization of its shares of Common
Stock into, for, or with other securities (a "Recapitalization"),
the number of Option Shares purchasable hereunder immediately
following such Recapitalization shall be adjusted so that the
Holder shall be entitled to receive the kind and number of Option
Shares or other securities of the Company measured as a
percentage of the total issued and outstanding shares of the
Company's Common Stock as of the hereof which it would have been
entitled to receive immediately preceding such Recapitalization,
had such Option been exercised immediately prior to the happening
of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph shall be calculated
and effected taking into account the formula set forth in
paragraph 4.B. below and shall become effective immediately after
the effective date of such event retroactive to the effective
date.
B. Adjustment of the Exercise Price and Number of Option Shares. In
the event of any change in the Company's Common Stock by reason
of a reverse stock split, neither the number nor the Option Price
of the shares subject to this Option shall be changed or be
adjusted.
C. Preservation of Purchase Rights Under Consolidation. Subject to
paragraph 4.B above, in case of any Recapitalization or any other
consolidation of the Company with or merger of the Company into
another corporation, or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety
or substantially as an entirety, the Company shall prior to the
closing of such transaction, cause such successor or purchasing
corporation, as the case may be, to acknowledge and accept
responsibility for the Company's obligations hereunder and to
[HARTCORT\FS8:MAY1999]-2
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<PAGE>
grant the Holder the right thereafter upon payment of the Option
Price to purchase the kind and amount of shares and other
securities and property which he would have owned or have been
entitled to receive after the happening of such consolidation,
merger, sale or conveyance. The provisions of this paragraph
shall similarly apply to successive consolidations, mergers,
sales or conveyances.
D. Notice of Adjustment. Whenever the number of Option Shares
purchasable hereunder is adjusted, as herein provided, the
Company shall mail by first class mail, postage prepaid, to the
Holder notice of such adjustment or adjustments, and shall
deliver to Holder setting forth the adjusted number of Option
Shares purchasable and a brief statement of the facts requiring
such adjustment, including the computation by which such
adjustment was made.
5. Failure to Deliver Option Shares Constitutes Breach Under Advisory
Agreement
Failure by the Company, for any reason, to deliver the certificates
representing any shares purchased pursuant to this Option within the
five (5) business day period set forth in paragraph 2 above, or the
placement of a Stop Transfer order by the Company on any Option Shares
once issued, shall constitute a "Breach" under the Advisory Agreement
and, for the purpose of determining the terms of this Agreement, shall
automatically toll the expiration of this Agreement for a period of
time equal to the delay in delivering the subject shares or term of the
Stop Transfer order.
6. Assignment
The Option represented by this Agreement may only be assigned or
transferred by NuVen to an Affiliate or subsidiary, or as the result of
a corporate reorganization or recapitalization. For the purpose of this
Option the term "Affiliate" shall be defined as a person or enterprise
that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the
Company otherwise, this Agreement and the rights hereunder shall not be
assigned by either party hereto.
7. Counterparts
A facsimile, telecopy or other reproduction of this instrument may be
executed by one or more parties hereto 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.
8. 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.
9. 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:
[HARTCORT\FS8:MAY1999]-2
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<PAGE>
To NuVen: Fred G. Luke
NuVen Advisors Inc.
6337 So. Highland Drive, Suite 319
Salt Lake City, Utah 84121
With copy to: Archer & Weed
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
Telephone: (714) 833-5363
Facsimile: (714) 833-5384
To the Company: The Hartcourt Companies Inc.
2049 Century Park East, #3760
Los Angeles, California 90067
Telephone: (310) 788-2634
Facsimile: (310) 553-1338
10. 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.
11. Governing Law
This Agreement was negotiated, and shall be governed by the laws of
Utah notwithstanding any conflict-of-law provision to the contrary.
12. 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.
13. 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.
[HARTCORT\FS8:MAY1999]-2
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<PAGE>
14. 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 Closing, this
Agreement may be amended by a writing signed by all parties hereto.
15. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first written above.
"NuVen"
By: /s/ Fred G. Luke
----------------------------------
Fred G. Luke, individually
and as President of NuVen
Advisors Inc.
The "Company"
The Hartcourt Companies Inc.
By: /s/ Dr. Alan V. Phan
----------------------------------
Name: Dr. Alan V. Phan
Title: President
[HARTCORT\FS8:MAY1999]-2
23
EXHIBIT 10.B.
FEE AGREEMENT WITH ARCHER & WEED
This agreement is between The Hartcourt Companies Inc. ("Client") whose
address is 2049 Century Park East, Los Angeles, California 90067 and Richard O.
Weed of the firm Archer & Weed whose address is 4695 MacArthur Court, Suite 530,
Newport Beach, California 92660.
Richard O. Weed verbally agreed to provide legal services to Client
with respect to certain legal matters or special projects referred to Richard O.
Weed by Client from time to time. This agreement is made to document the
conditions and guidelines that will govern the relationship between the parties.
Client has requested Richard O. Weed's assistance with (1) the closing under
that certain Share Purchase Agreement concerning the proposed business
transaction to fund, own and operate a Chinese Joint Venture to provide Internet
services via PRC's public telecommunication network to 20 cities in China; (2)
preparation of a legal opinion for inclusion in a form S-8 registration
statement; and (3) any other matters agreed to and confirmed by Richard O. Weed
in writing.
To protect both of the parties and to comply with professional
obligations, we have already discussed with each other and resolved any
potential conflicts of interest with present or former clients. The services
which Richard O. Weed will provide shall be in accordance with the following
terms and conditions:
Professional Fees
Fees will be based upon the reasonable value of Richard O. Weed's
services as determined in accordance with the American Bar Association Model
Code of Professional Responsibility and the California & Texas Rules of
Professional Conduct. Fees will be based on the rates charged by Richard O.
Weed.
Richard O. Weed's rate is $200 per hour. It is anticipated that Client
and Richard O. Weed will agree on a fixed fee for special projects from time to
time. The fixed fee arrangements for special projects will be agreed to in
writing from time to time.
Client understands Richard O. Weed's billing rate may be reasonably
adjusted from time to time, but not more frequently than annually. Notice of any
such adjustments will be given within a reasonable time. Client further
understands that during the course of Richard O. Weed's engagement, it may be
necessary or advisable to delegate various portions of this matter to others.
Costs and Expenses
Client understands that in the course of representation, it may be
necessary for Richard O. Weed to incur certain costs or expenses. Client will
reimburse Richard O. Weed for certain costs or expenses actually incurred and
reasonably necessary for completing the assigned matter, as long as the charges
for costs and expenses are competitive with other sources of the same products
or services. More particularly, Client will reimburse Richard O. Weed in
accordance with the following guidelines:
[HARTCORT\FS8:MAY1999]-2
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<PAGE>
1. Computer-Related Expenses - Client will reimburse Richard O. Weed
for computerized research and research services. However, any charges over $500
per month will require approval. Client also encourages Richard O. Weed to
utilize computer services which will enable Richard O. Weed to more efficiently
manage the projects.
2. Travel - Client will reimburse Richard O. Weed for expenses in
connection with out of town travel. However, Client will only reimburse for
economy class travel and, where necessary, for the reasonable cost of a rental
car. All related travel expenses, i.e., lodging and meals, must be reasonable
under the circumstances.
3. Filing Fees & Court Costs - Client will reimburse Richard O. Weed
for expenses incurred in connection with filing fees and court costs, if any,
but will not be responsible for sanctions or penalties imposed due to the
conduct of Richard O. Weed.
Billing
All bills will include a summary statement of the kinds of services
rendered during the relevant period. Client expects that Richard O. Weed will
maintain back-up documentation for all expenses. Client expects to be billed
monthly or at the conclusion of each project and expects to pay Richard O.
Weed's invoices as described below.
Payment
As payment for services and costs, Client agrees to pay all invoices
for services rendered within 15 days of receipt.
Involvement of Client
Client expects to be kept closely involved with the progress of Richard
O. Weed's services in this matter. Richard O. Weed will keep Client apprized of
all material developments in this matter, and, in the case of litigation or
administrative proceedings, will provide sufficient notice to enable a
representative to attend meetings, conferences, hearings and other proceedings.
A copy of all correspondence in the course of Richard O. Weed's services will be
forwarded to Client.
There may be times when Richard O. Weed will need to obtain information
from Client. All requests for access to documents, employees, or other
information shall be granted without unreasonable delay. At the conclusion of
this matter, all documents obtained shall be returned upon request.
Termination
Client shall have the right to terminate Richard O. Weed's engagement
by written notice at any time. Richard O. Weed has the same right to terminate
this engagement, subject to an obligation to give Client reasonable notice to
permit it to obtain alternative representation or services and subject to
applicable ethical provisions. Richard O. Weed will be expected to provide
reasonable assistance in effecting a transfer of responsibilities to the new
firm.
[HARTCORT\FS8:MAY1999]-2
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<PAGE>
Disputes
The laws of the state of California shall govern the interpretation of
this agreement, including all rules or codes of ethics which apply to the
provision of services. All disputes between us arising out of this engagement
which cannot be settled, shall be resolved through binding arbitration in Orange
County, California in accordance with the rules for resolution of commercial
disputes, then in effect, of the American Arbitration Association, and judgment
upon the award may be entered in any Court having jurisdiction thereof. It is
further agreed that the arbitrators may, in their sole discretion, award
attorneys' fees to the prevailing party.
Dated: March 26, 1998
Client
The Hartcourt Companies Inc.
By: /s/ Dr. Alan V. Phan
-----------------------------
Name: Dr. Alan V. Phan
Title: resident
Archer & Weed
By: /s/ Richard O. Weed
-----------------------------
Name: Richard O. Weed
Title: Special Project Counsel
[HARTCORT\FS8:MAY1999]-2
26
EXHIBIT 10.C.
FEE AGREEMENT WITH JOHN A. FURUTANI, ESQ.
This FEE AGREEMENT FOR LEGAL SERVICES (the "Agreement") is between The
Hartcourt Companies Inc., ("Client" or the "Company") whose address is 4695
MacArthur Court, Suite 530, Newport Beach, California 92660 and John A. Furutani
("Attorney") whose address is 2500 E. Colorado Boulevard, Suite 301, Pasadena,
California 91107.
Attorney has agreed to provide legal services to Client with respect to
any and all legal matters or special projects referred to Attorney by Client
from time to time. This agreement is made in advance as to the conditions and
guidelines that will govern the relationship between the parties.
To protect both of the parties and to comply with professional
obligations, we have already discussed with each other and resolved any
potential conflicts of interest with present or former clients. The services
which Attorney will provide shall be in accordance with the following terms and
conditions:
1. Professional Fees
Fees will be based upon the reasonable value of Attorney's services as
determined in accordance with the American Bar Association Model Code
of Professional Responsibility and the Utah Rules of Professional
Conduct. Fees will be based on the rates charged by Attorney.
Attorney's rate is Two Hundred Dollars ($200) per hour. It is
anticipated that Client and Attorney will agree on a fixed fee for
special projects from time to time. The fixed fee arrangements for
special projects will be agreed to in writing from time to time.
Client understands Attorney's billing rate may be reasonably adjusted
from time to time, but not more frequently than annually. Notice of any
such adjustments will be given within a reasonable time. Client further
understands that during the course of Attorney's engagement, it may be
necessary or advisable to delegate various portions of this matter to
others.
2. Costs and Expenses
Client understands that in the course of representation, it may be
necessary for Attorney to incur certain costs or expenses. Client will
reimburse Attorney for certain costs or expenses actually incurred and
reasonably necessary for completing the assigned matter, as long as the
charges for costs and expenses are competitive with other sources of
the same products or services. More particularly, Client will reimburse
Attorney in accordance with the following guidelines:
[HARTCORT\FS8:MAY1999]-2
27
<PAGE>
A. Computer-Related Expenses. Client will reimburse Attorney for
computerized research and research services. However, any
charges over $500 per month will require approval. Client also
encourages Attorney to utilize computer services which will
enable Attorney to more efficiently manage the projects.
B. Travel. Client will reimburse Attorney for expenses in
connection with out of town travel. However, Client will only
reimburse for economy class travel and, where necessary, for
the reasonable cost of a rental car. All related travel
expenses, i.e., lodging and meals, must be reasonable under
the circumstances.
C. Filing Fees & Court Costs. Client will reimburse Attorney for
expenses incurred in connection with filing fees and court
costs, if any, but will not be responsible for sanctions or
penalties imposed due to the conduct of Attorney.
3. Billing
All bills will include a summary statement of the kinds of services
rendered during the relevant period. Client expects that Attorney will
maintain back-up documentation for all expenses. Client expects to be
billed monthly or at the conclusion of each project and expects to pay
Attorney's invoices as described below.
4. Payment
Client agrees to satisfy Attorneys' fees by way of the issuance by
Client shares of Client's common stock (the "Fee Shares"), the Fee
Shares shall be issued and deposited in Attorney's name with a national
securities broker. The Fee Shares shall be liquidated from time to time
at Attorney's direction as market conditions allow. At least once a
month, Attorney will send Client a statement for fees and costs, with
written notice to the brokerage firm of the dollar amount of such
statement. Unless objection is made to the bill, Attorney shall be
allowed without further consent or approval by Client, to transfer
funds from the securities account to Attorney's general operating
account(s) to satisfy such statement. Attorney, has not been engaged to
perform, nor will Attorney agree to perform any services in connection
with a capital raising transaction in exchange for shares. It is
mutually understood and agreed that any fees for services that are in
connection with a capital raising transaction shall be paid in cash.
In the course of Attorney's representation of Client, if all the Fee
Shares are liquidated, additional shares of Client's common stock
sufficient to cover expected fees and costs, in an amount
contemporaneously agreed to by the parties, will again be placed with
the brokerage firm, under the terms and conditions outlined above. At
the conclusion of Attorney's representation of Client, and the payment
of all final fees and costs, any unused Fee Shares shall forthwith be
returned to Client.
[HARTCORT\FS8:MAY1999]-2
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<PAGE>
5. Registration of Client Shares
No later than ten (10) days following the date hereof as to the Fee
Shares and the Option, Client will cause such shares to be registered
with the Securities and Exchange Commission under a Form S-8 or other
applicable registration statement, and it shall cause such registration
statement to remain effective at all time while Attorney holds such
shares. At Attorney's election, such shares may be issued prior to
registration in reliance on exemptions from registration provided by
Section 4(2) of the Securities Act of 1933 (the "33 Act"), Regulation D
of the '33 Act, and applicable state securities laws.
6. Involvement of Client
Client expects to be kept closely involved with the progress of
Attorney's services in this matter. Attorney will keep Client apprised
of all material developments in this matter, and, in the case of
litigation or administrative proceedings, will provide sufficient
notice to enable a representative to attend meetings, conferences,
hearings and other proceedings. A copy of all correspondence in the
course of Attorney's services will be forwarded to Client.
There may be times when Attorney will need to obtain information from
Client. All requests for access to documents, employees, or other
information shall be granted without unreasonable delay. At the
conclusion of this matter, all documents obtained shall be returned
upon request.
8. Termination
Client shall have the right to terminate Attorney's engagement by
written notice at any time. Attorney has the same right to terminate
this engagement, subject to an obligation to give Client reasonable
notice to permit it to obtain alternative representation or services
and subject to applicable ethical provisions. Attorney will be expected
to provide reasonable assistance in effecting a transfer of
responsibilities to the new firm.
"Client"
The Hartcourt Companies Inc.
Dated: July 30, 1999 By: /s/ Dr. Alan V. Phan
----------------------------------
Name: Dr. Alan V. Phane:
Title: President
"Attorney"
Dated: July 30, 1999 By: /s/ John A. Furutani
----------------------------------
John A. Furutani
EXHIBIT 10.D.
FEE AND OPTION AGREEMENT WITH YAN WU
FEE AGREEMENT FOR INTRODUCTION SERVICES
This FEE AGREEMENT FOR INTRODUCTION SERVICES (the "Agreement") is
between The Hartcourt Companies Inc., a Utah corporation (the "Company") and Yan
Wu, an individual (the "Introducer").
WHEREAS, the Company acknowledges that Introducer's talents and
services are of a special, unique, unusual and extraordinary character and are
of particular and peculiar benefit and importance to the Company; and,
WHEREAS, Introducer has agreed to provide services to the Company with
respect to the Company's desire to identify and acquire Internet-related
businesses; and,
WHEREAS, this Agreement is made to set out the compensation, conditions
and guidelines that will govern the relationship between the parties.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the receipt and sufficiency of which is expressly
acknowledged by the parties hereto, the parties agree as follows:
1. The Services
Effective the date below, and for the term of this Agreement,
Introducer will use its best efforts to search for, identify and make
known to the Company, Internet-related businesses and Assets
("Opportunities") which qualify as potential acquisitions by the
Company. Such efforts by Introducer shall hereinafter be referred to as
the "Services".
2. Term of Agreement
Unless otherwise terminated as provided hereunder, the Services shall
be provided to the Company from the Effective Date (as defined below)
through December 30, 1999.
3. Costs and Expenses
The Company understands that, in the course of Introducer's efforts to
identify suitable acquisitions, strategic partners or assets for the
Company to purchase, it may be necessary for Introducer to incur
certain costs or expenses. The Company will reimburse Introducer for
its costs or expenses actually incurred and reasonably necessary for
Introducer to provide the Services to the Company, as long as
Introducer's costs and expenses are reasonable and related to
evaluations carried out for the Company's exclusive use. Subject to the
foregoing, and the Company's prior written approval, the Company will
reimburse Introducer for reasonable travel expenses including lodging
and the cost of a rental car, copy and filing fees, and retrieval costs
incurred in researching prospective Opportunities.
[HARTCORT\AGR:YANWU-IN]
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<PAGE>
4. Payment for Services/Stock Option
The Company agrees to satisfy Introducers' time and expense incurred,
up to and including the first acquisition by the Company of an
Opportunity introduced or arranged by Introducer (the "Initial
Acquisition") by way of an Option Agreement. The Company hereby grants
to Introducer the option to purchase up to One Million (1,000,000)
shares of the Company's no par value common stock (the "Option Shares")
at a price of One Dollar Twenty-Five Cents ($1.25) per share (the
"Exercise Price") pursuant to the Option Agreement, a copy of which is
attached hereto as Exhibit "A." The Option is non-transferable and will
expire unless exercised on or before the third anniversary of the
Effective Date hereof. Introducer has not been engaged to perform, nor
will Introducer agree to perform any services in connection with
capital raising transactions. It is mutually understood and agreed that
any fees for services provided by Introducer on behalf of or which
results in some benefit for the Company in connection with a capital
raising transaction shall be negotiated separately from this Agreement
and paid by the Company in cash.
5. Registration of the Company Shares
No later than ten (10) days following the date hereof as to the
Company's shares underlying the Option, the Company will cause such
shares to be registered with the Securities and Exchange Commission
under a Form S-8 or other applicable registration statement, and it
shall cause such registration statement to remain effective at all time
while Introducer holds the Option. At Introducer's election, the Option
Shares may be issued prior to registration in reliance on exemptions
from registration provided by Section 4(2) of the Securities Act of
1933 (the Securities Act"), Regulation D of the Securities Act, and
applicable state securities laws.
6. Involvement of the Company
The Company expects to be kept informed on the progress of Introducer's
services and, in this regard, Introducer agrees to keep the Company
apprised of all material developments in writing at least monthly.
There may be times when Introducer will need to obtain information from
the Company. All requests for access to documents, employees, or other
information of the Company shall be granted without unreasonable delay.
7. Termination
Either party may terminate this Agreement upon thirty (30) days notice
by registered or certified mail, return receipt requested, addressed to
the other party. If this Agreement is terminated by either party, the
Company shall only be liable for payment of fees earned by Introducer
as a result of work prior to the effective date of the termination. The
thirty (30) days notice shall be measured from the date the notice is
mailed.
[HARTCORT\AGR:YANWU-IN]
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<PAGE>
8. Assignment
Notwithstanding contained herein to the contrary, the rights to the
shares underlying the Option, and the obligation to provide the
Services set forth in this Agreement, may be assigned or transferred by
Introducer to an Affiliate or subsidiary, or as the result of a
corporate reorganization or recapitalization of Introducer; otherwise,
this Agreement and the rights and obligations hereunder shall not be
assigned. For the purpose of this Agreement the term "Affiliate" shall
be defined as a person or enterprise that directly, or indirectly,
through one or more intermediaries, controls or is controlled by, or is
under common control with Introducer.
9. Counterparts
A facsimile, telecopy or other reproduction of this instrument may be
executed by one or more parties hereto 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.
10. 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.
11. 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 Introducer: Yan Wu
7331 Old Mitylene Rd.
Montgomery, Alabama 36117
Telephone: (334) 274-0948
To the Company: The Hartcourt Companies Inc.
1196 E. Willow St.
Long Beach, CA 90806
Telephone: (562) 426-9796
Facsimile: (562) 426-8896
[HARTCORT\AGR:YANWU-IN]
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<PAGE>
With copy to: Archer & Weed
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
Telephone: (714) 833-5363
Facsimile: (714) 833-5384
12. 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.
13. Governing Law
This Agreement was negotiated, and shall be governed by the laws of
Utah notwithstanding any conflict-of-law provision to the contrary.
14. 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.
15. 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.
16. 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 a closing of the
Initial Acquisition, this Agreement may be amended by a writing signed
by all parties hereto.
17. 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.
[HARTCORT\AGR:YANWU-IN]
33
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement the latter
of the dates written below.
The "Company"
The Hartcourt Companies Inc.
Dated: August 23, 1999 By: /s/ Dr. Alan V. Phan
----------------------------------
Name: Dr. Alan V. Phan
Title: President
"Introducer"
Yan Wu
Dated: August 23, 1999 /s/ Yan Wu
---------------------------------------
Yan Wu
[HARTCORT\AGR:YANWU-IN]
34
<PAGE>
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") is entered into effective the 23rd
day of August 1999, by and between Yan Wu, an individual ("Wu"), and The
Hartcourt Companies Inc., a Utah corporation (the "Company").
WHEREAS, the Company proposes to issue to Wu options to purchase shares
of its common stock (the "Common Stock") in connection with the Company's
engagement of Wu pursuant to the Advisory Agreement of even date between the
Company and Wu, incorporated by reference herein (the "Advisory Agreement");
and,
WHEREAS, to induce Wu to execute the First Amendment to the Advisory
Agreement the Company hereby grants Wu an option to purchase shares of the
Company's Common Stock subject to the terms and conditions set forth below.
NOW, THEREFORE, for and in consideration of the mutual promises herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and subject to the terms and conditions set forth
below, Wu and the Company agree as follows:
1. The Option
The Company hereby grants to Wu (hereinafter "Holder") an option (the
"Option") to acquire One Million (1,000,000) shares of the Company's
Common Stock, subject to adjustment as set forth herein (such shares,
as adjusted, are hereinafter referred to as the "Option Shares"), at a
purchase price of One Dollar and Twenty Five Cents ($1.25) per share
("Option Price").
2. Term and Exercise of Option
A. Term of Option. Subject to the terms of this Agreement, Holder
shall have the right to exercise the Option in whole or in part,
commencing the date hereof through the close of business on
December 1, 2001.
B. Exercise of the Option. The Option may be exercised upon written
notice to the Company at its principal office setting out the
number of Option Shares to be purchased, together with payment of
the Option Price
C. Issuance of Option Shares. Upon such notice of exercise and
payment of the Option Price, the Company shall issue and cause to
be delivered within five (5) business days following the written
order of Holder, or its successor as provided for herein, and in
such name or names as the Holder may designate, a certificate or
certificates for the number of Option Shares so purchased. The
rights of purchase represented by the Option shall be
exercisable, at the election of the Holder thereof, either in
full or from time to time in part, and in the event the Option is
exercised in respect of less than all of the Option Shares
purchasable on such exercise at any time prior to the date of
expiration hereof, the remaining Option Shares shall continue to
be subject to adjustment as set forth in paragraph 4 hereof. The
Company irrevocably agrees to reconstitute the Option Shares as
provided herein.
[HARTCORT\AGR:YANWUOPT]
35
<PAGE>
3. Reservation of Option Shares
The Company shall at all times keep reserved and available, out of its
authorized Common Stock, such number of shares of Common Stock as shall
be sufficient to provide for the exercise of the rights represented by
this Agreement. The transfer agent for the Common Stock and any
successor transfer agent for any shares of the Company's capital stock
issuable upon the exercise of any of such rights of purchase, will be
irrevocably authorized and directed at all times to reserve such number
of shares as shall be requisite for such purpose. The Company will
cause a copy of this Agreement to be kept on file with the transfer
agent or its successors.
4. Adjustment of Option Shares
The number of Option Shares purchasable pursuant to this Agreement
shall be subject to adjustment from time to time upon the happening of
certain events, as follows:
A. Adjustment for Recapitalization. Subject to paragraph 4.B below,
in the event the Company shall (a) subdivide its outstanding
shares of Common Stock, or (b) issue or convert by a
reclassification or recapitalization of its shares of Common
Stock into, for, or with other securities (a "Recapitalization"),
the number of Option Shares purchasable hereunder immediately
following such Recapitalization shall be adjusted so that the
Holder shall be entitled to receive the kind and number of Option
Shares or other securities of the Company measured as a
percentage of the total issued and outstanding shares of the
Company's Common Stock as of the hereof which it would have been
entitled to receive immediately preceding such Recapitalization,
had such Option been exercised immediately prior to the happening
of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph shall be calculated
and effected taking into account the formula set forth in
paragraph 4.B. below and shall become effective immediately after
the effective date of such event retroactive to the effective
date.
B. Adjustment of the Exercise Price and Number of Option Shares. In
the event of any change in the Company's Common Stock by reason
of a reverse stock split, neither the number nor the Option Price
of the shares subject to this Option shall be changed or be
adjusted.
C. Preservation of Purchase Rights Under Consolidation. Subject to
paragraph 4.B above, in case of any Recapitalization or any other
consolidation of the Company with or merger of the Company into
another corporation, or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety
or substantially as an entirety, the Company shall prior to the
closing of such transaction, cause such successor or purchasing
corporation, as the case may be, to acknowledge and accept
responsibility for the Company's obligations hereunder and to
grant the Holder the right thereafter upon payment of the Option
Price to purchase the kind and amount of shares and other
securities and property which he would have owned or have been
entitled to receive after the happening of such consolidation,
merger, sale or conveyance. The provisions of this paragraph
shall similarly apply to successive consolidations, mergers,
sales or conveyances.
[HARTCORT\AGR:YANWUOPT]
36
<PAGE>
D. Notice of Adjustment. Whenever the number of Option Shares
purchasable hereunder is adjusted, as herein provided, the
Company shall mail by first class mail, postage prepaid, to the
Holder notice of such adjustment or adjustments, and shall
deliver to Holder setting forth the adjusted number of Option
Shares purchasable and a brief statement of the facts requiring
such adjustment, including the computation by which such
adjustment was made.
5. Failure to Deliver Option Shares Constitutes Breach Under Advisory
Agreement
Failure by the Company, for any reason, to deliver the certificates
representing any shares purchased pursuant to this Option within the
five (5) business day period set forth in paragraph 2 above, or the
placement of a Stop Transfer order by the Company on any Option Shares
once issued, shall constitute a "Breach" under the Advisory Agreement
and, for the purpose of determining the terms of this Agreement, shall
automatically toll the expiration of this Agreement for a period of
time equal to the delay in delivering the subject shares or term of the
Stop Transfer order.
6. Assignment
The Option represented by this Agreement may only be assigned or
transferred by Wu to an Affiliate or subsidiary, or as the result of a
corporate reorganization or recapitalization. For the purpose of this
Option the term "Affiliate" shall be defined as a person or enterprise
that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the
Company otherwise, this Agreement and the rights hereunder shall not be
assigned by either party hereto.
7. Counterparts
A facsimile, telecopy or other reproduction of this instrument may be
executed by one or more parties hereto 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.
8. 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.
[HARTCORT\AGR:YANWUOPT]
37
<PAGE>
9. 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 Wu: Yan Wu
7331 Old Mitylene Rd.
Montgomery, Alabama 36117
Telephone: (334) 274-0948
With copy to: Archer & Weed
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
Telephone: (714) 833-5363
Facsimile: (714) 833-5384
To the Company: The Hartcourt Companies Inc.
1196 E. Willow St.
Long Beach, California 90806
Telephone: (562) 426-9796
Facsimile: (562) 426-8896
10. 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.
11. Governing Law
This Agreement was negotiated, and shall be governed by the laws of
Utah notwithstanding any conflict-of-law provision to the contrary.
12. 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.
13. 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.
[HARTCORT\AGR:YANWUOPT]
38
<PAGE>
14. 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 Closing, this
Agreement may be amended by a writing signed by all parties hereto.
15. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first written above.
"Wu"
Yan Wu, an individual
/s/ Yan Wu
---------------------------------------
Yan Wu
The "Company"
The Hartcourt Companies Inc.
By: /s/ Dr. Alan V. Phan
----------------------------------
Name: Dr. Alan V. Phan
Title: President
[HARTCORT\AGR:YANWUOPT]
39
EXHIBIT 24.1
CONSENT OF RICHARD O. WEED TO USE OF OPINION
ARCHER & WEED
Special Project Counsel
4695 MacARTHUR COURT, SUITE 530, NEWPORT BEACH, CALIFORNIA 92660-2164
TELEPHONE (949) 475-9086 FACSIMILE (949) 475-9087
WRITER=S DIRECT NUMBER
(949) 475-9086
August 25, 1999
Board of Directors
The Hartcourt Companies Inc.
4695 MacArthur Court, Suite 530
Newport Beach, CA 92660
Re: Form S-8
Gentlemen:
I hereby consent to the filing of my opinion dated even date herewith
as an Exhibit to the Form S-8 Registration Statement to be filed by The
Hartcourt Companies Inc.
I further consent to the reference to me and my opinion under the
caption "Legal Opinion and Experts" in the Prospectus.
Very truly yours,
/s/ Richard O. Weed
---------------------------------------
Richard O. Weed
[HARTCORT\FS8:MAY1999]-2
40
EXHIBIT 24.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement of
The Hartcourt Companies Inc. Form S-8 of our report dated March 6, 1999,
appearing in the Annual Report on Form 10-KSB of The Hartcourt Companies Inc.
for the year ended December 31, 1998, and to the reference to us under the
heading "Experts" in the Prospectus which is part of this Registration
Statement.
/s/ Harlan & Boettger, LLP
- ----------------------------------
Harlan & Boettger
San Diego, California
August 25, 1999
[HARTCORT\FS8:MAY1999]-2
41