Exhibit 2.1
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
BETWEEN
STARUNI CORPORATION
AND
ELEPHANT TALK LIMITED
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DATED AS OF JANUARY 4, 2002
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Table of Contents
Page
ARTICLE 1. MERGER OF ET INTO THE COMPANY 1
ARTICLE 2. ARTICLES OF INCORPORATION, BY-LAWS,
DIRECTORS AND OFFICERS 2
ARTICLE 3. CONVERSION AND EXCHANGE OF SHARES;
ASSET TRANSFER; AND INFORMATION STATEMENT 3
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY 5
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF ET 12
ARTICLE 6. TRANSACTIONS PRIOR TO THE EFFECTIVE TIME
OF THE MERGER 16
ARTICLE 7. CONDITIONS TO OBLIGATIONS OF THE PARTIES 23
ARTICLE 8. CONDITIONS TO OBLIGATIONS OF ET 23
ARTICLE 9. CONDITIONS TO THE COMPANY'S OBLIGATIONS 25
ARTICLE 10. TERMINATION 26
ARTICLE 11. MISCELLANEOUS 26
Exhibit A - ET List of shareholders
Exhibit B - Form of Opinion of Company Counsel
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AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
This Agreement of Merger and Plan of Reorganization (this "Merger
Agreement" or this "Agreement") is made as of January 4, 2002 by and between
Staruni Corporation, a California corporation (the "Company"), and Elephant Talk
Limited, a limited company incorporated in Hong Kong ("ET").
RECITALS
WHEREAS, ET is a privately owned corporation. ET wishes to obtain a
public market for its shares; and
WHEREAS, the Company is a corporation whose shares are publicly traded.
The Company conducts its businesses, consisting of Xxxxxxxxxxxx.xxx (the "ISP
Business") and Xxxxxxxx.xxx (the "Retail Business" and together with the ISP
Business, the "Existing Business"); and
WHEREAS, the respective Board of Directors of the Company and ET have
approved this Merger Agreement and deem it advisable and for the benefit of
their respective corporations and their shareholders that ET merge with and into
the Company on the terms and conditions herein set forth (the "Merger"); and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a "reorganization" within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to become legally bound, hereby agree as follows:
ARTICLE 1. MERGER OF ET INTO THE COMPANY
1.1. Merger. Upon the approval and adoption of this Merger Agreement by
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the shareholders of each of the Company and ET (the "Constituent Corporations")
in accordance with the laws of the State of California, and the satisfaction or
waiver of the conditions set forth herein to the obligations of the parties
hereto, articles of merger (the "Certificate of Merger") shall, subject to the
rights of termination and abandonment hereinafter set forth, be filed with the
Secretary of State of the State of California in accordance with the law of the
State of California. Effective as of the close of business on the date on which
the filing of the Certificate of Merger is made, ET shall merge with and into
the Company, which as the "Surviving Corporation" (known as Elephant Talk
Communications, Inc.) shall continue its corporate existence under the laws of
the State of California. The date and time of the filing of the Certificate of
Merger is herein referred to as the "Effective Time of the Merger."
1.2. Closing. Unless this Agreement shall have been terminated pursuant
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to Article 10 and subject to the satisfaction or, when permissible, waiver of
the conditions set forth in Articles 7, 8 and 9, the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place (i) at the
office of the Company on (a) January 3, 2002 or (b) the day which is one
Business Day (as defined below) after the date on which the last of the
conditions set forth in Articles 7, 8 and 9 (other than the filing of the
Certificate of Merger and other than any such conditions which by their terms
are not capable of being satisfied until the Closing Date) is satisfied or, when
permissible, waived, or (ii) on such other date and/or at such other time and/or
place as the parties may mutually determine (the "Closing Date"). "Business Day"
shall mean any day other than a Saturday, Sunday or a day on which banks in Hong
Kong are required or permitted to be closed.
1.3. Further Assurances. From time to time as and when requested by the
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Surviving Corporation, or by its successors or assigns, the officers and
directors of the Constituent Corporations last in office shall execute and
deliver such deeds and other instruments of transfer and shall take or cause to
be taken such further or other act as shall be necessary or advisable in order
to vest or perfect in the Surviving Corporation, or to confirm of record or
otherwise to the Surviving Corporation, title to and possession of all the
property, interests, assets, rights, privileges, immunities, powers and purposes
of each of the Constituent Corporations.
ARTICLE 2. ARTICLES OF INCORPORATION, BY-LAWS,
DIRECTORS AND OFFICERS
2.1. Restated Charter. At or immediately prior to the Effective
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Time of the Merger, the Company shall amend and restate its Articles of
Incorporation (the "Amended and Restated Charter").
2.2. Articles of Incorporation. The Articles of Incorporation
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of the Company in effect at the Effective Time of the Merger (as amended by the
Amended and Restated Charter) shall be the Articles of Incorporation of the
Surviving Corporation until amended as provided by law.
2.3. Amended and Restated By-Laws. At or immediately prior to the
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Effective Time of the Merger, the Company shall amend and restate its By-Laws
(the "Amended and Restated By-Laws").
2.4. By-Laws. The Amended and Restated By-Laws the Merger shall
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be the by-laws of the Surviving Corporation until amended or repealed as
provided by law.
2.5. Directors and Officers. The persons listed on Schedule 2.5(a)
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shall be the directors of the Surviving Corporation and shall hold office as
provided in the by-laws of the Surviving Corporation. The persons listed on
Schedule 2.5(b) shall be the officers of the Surviving Corporation and shall
hold office as provided in the by-laws of the Surviving Corporation.
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ARTICLE 3. CONVERSION AND EXCHANGE OF SHARES; ASSET TRANSFER AND
INFORMATION STATEMENT
3.1. Conversion Of Shares. The manner and basis of converting the
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shares of each Constituent Corporation shall be as follows:
(a) Subject to the provisions of paragraph (b), the holder of
each ordinary share, par value of HK$1 (Hong Kong Dollar One Only), of ET ("ET
Common Stock") outstanding immediately prior to the Effective Time of the Merger
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be entitled to receive as of the Effective Time of the Merger such
number of shares of common stock, no par value, of the Company ("Company Common
Stock") for each share of ET Common Stock owned as of the Effective Time of the
Merger so that as of the Effective Time of the Merger the former holders of ET
Common Stock will hold an aggregate of 90% of the issued and outstanding shares
of Company Common Stock.
(b) No certificates for fractions of shares of Company Common
Stock and no scrip or other certificates evidencing fractional interests in such
shares shall be issuable. If any fractional share of the Company Common Stock
would, except for the provisions of this Section 3.1(b), be deliverable, the
Surviving Corporation, in lieu of delivering such fractional share, shall pay to
the holder an amount in cash equal to the current market price of such
fractional share as determined in good faith by the Board of Directors of the
Surviving Corporation.
(c) The Merger shall effect no change in any of the shares of
the Company Common Stock outstanding at the Effective Time of the Merger and no
such shares shall be converted as a result of the Merger.
3.2. Changes in Company Common Stock. If, after the date hereof and
prior to the Effective Time of the Merger, Company Common Stock shall be
recapitalized or reclassified or the Company shall effect any stock dividend,
stock split, or reverse stock split of Company Common Stock or otherwise effect
any transaction that changes Company Common Stock into any other securities or
any other dividend or distribution shall be made on Company Common Stock (or
such other securities), then the shares of Company Common Stock to be delivered
under this Agreement to holders of ET Common Stock shall be appropriately and
equitably adjusted to the kind and amount of shares of stock and other
securities and property which holders of ET Common Stock would have been
entitled to receive had such shares been issued and outstanding as of the record
date for determining shareholders entitled to participate in such corporate
event.
3.3. Exchange of Certificates.
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(a) Each holder of record at the Effective Time of the Merger
of shares of ET Common Stock shall be entitled, upon the surrender to the
Company or its transfer agent of the certificate for its shares of ET Common
Stock for cancellation, to receive a certificate or certificates representing
the number of shares of Company Common Stock into which the holder's shares of
ET Common Stock shall have been converted in the Merger under Section 3.1(a).
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(b) Until so presented and surrendered in exchange for a
certificate or certificates representing shares of Company Common Stock, each
certificate which represented issued and outstanding shares of ET Common Stock
which were converted at the Effective Time of the Merger into the right to
receive shares of Company Common Stock shall be deemed for all corporate
purposes, except as set forth below, to evidence the ownership of the number of
shares of Company Common Stock into which the holder's shares shall have been
converted in the Merger. Unless and until any such certificates shall be so
surrendered, the holder of such certificate shall not be entitled to receive any
dividend or other distribution payable to holders of shares of Company Common
Stock. Following such surrender, there shall be paid to the record holder of the
certificate representing shares of Company Common Stock issued upon such
surrender the amount of dividends, if any, (without interest thereon) which
shall have become payable with respect to the number of shares of Company Common
Stock represented by the certificate issued in exchange upon such surrender.
3.4. No Further Transfers. After the Effective Time of the Merger,
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there shall be no registration of transfers on the stock transfer books of ET of
the shares which were outstanding immediately prior to the Effective Time of the
Merger.
3.5. Form S-4; Information Statement. If applicable and/or necessary,
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ET and the Company shall cooperate and promptly prepare and file with the
Securities and Exchange Commission (the "SEC") as soon as practicable a
Registration Statement on Form S-4 (the "Form S-4") under the Securities Act of
1933 (the "Securities Act"), with respect to the shares of Company Common Stock
issuable in connection with the Merger, a portion of which Form S-4 shall also
serve as the information statement in connection with the transactions
contemplated by this Agreement (the "Information Statement"). The respective
parties shall cause the Information Statement and the Form S-4 to comply as to
form in all material respects with the applicable provisions of the Securities
Act, the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations thereunder. The Company shall use all reasonable efforts, and ET
shall cooperate with the Company, to have the Form S-4 declared effective by the
SEC prior to the Effective Time of the Merger and to keep the Form S-4 effective
as long as is necessary to consummate the transactions contemplated by this
Agreement. The Company shall, as promptly as practicable, provide copies of any
written comments received from the SEC with respect to the Form S-4 to ET and
advise ET of any verbal comments with respect to the Form S-4 received from the
SEC. If necessary and/or applicable, the Company shall use its best efforts to
obtain, prior to the effective date of the Form S-4, all necessary state
securities laws or "Blue Sky" permits or approvals required to carry out the
transactions contemplated by this Agreement and shall pay all expenses incident
thereto. The Company agrees that the Information Statement, if necessary and/or
applicable, and each amendment or supplement thereto at the time of the mailing
thereof; or in the case of the Form S-4 and each amendment or supplement thereto
at the time it is filed or becomes effective, shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was made by the Company
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in reliance upon and in conformity with written information concerning ET
furnished to the Company by ET specifically for use in the Information
Statement. ET agrees that the written information concerning ET specifically
provided by it for inclusion in the Information Statement and each amendment or
supplement thereto, at the time of mailing thereof, or, in the case of written
information concerning ET provided by ET specifically for inclusion in the Form
S-4 or any amendment or supplement thereto, at the time it is filed or becomes
effective, shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No amendment or supplement to the Information Statement shall be
made by ET or the Company without the approval of the other party. The Company
shall advise ET, promptly after it receives notice thereof, of the time when the
Form S-4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Company
Common Stock issuable in connection with the transactions contemplated by this
Agreement for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Information Statement or the Form S-4 or comments thereon
and responses thereto or requests by the SEC for additional information. The
Company shall pay all fees and expenses incurred in relation to the printing and
filing of the Form S-4 and the Information Statement. The Form S-4 and the
Information Statement shall be prepared in a manner satisfactory to counsel for
ET.
3.6. Dissenting Shares. Notwithstanding any other provision of this
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Agreement to the contrary, holders of Company Common Stock that are outstanding
immediately prior to the Effective Time of the Merger that have not been voted
for adoption of the Merger and with respect to which dissenter's rights have
been properly perfected in accordance with Section 1300 et. seq. of the
California General Corporation Law (the "CGCL") ("Dissenting Shares"), shall be
entitled to receive payment of the fair market value of such shares of Company
Common Stock held by them in accordance with the provisions of the CGCL, except
that all Dissenting Shares held by Company shareholders who have failed to
perfect or effectively withdrawn his, her or its demand for dissenter's rights
shall, as of the Effective Time of the Merger or the occurrence of such event,
whichever later occurs, thereupon cease to be Dissenting Shares and the holder
thereof shall have no rights to receive payment for such shares and shall
continue to hold such shares of Company Common Stock after the Effective Time of
the Merger, after giving effect to the Merger.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants as follows:
4.1. Organization; Authority. The Company is a corporation organized
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and existing in good standing under the laws of the State of California. The
Company is not required to be qualified or licensed to do business as a foreign
corporation in any jurisdiction, except where the failure to be so qualified or
licensed would be curable by subsequent qualification without such failure
having a material adverse effect on the Company or would not have a material
adverse effect on the Company. The Company would not be subject to material
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penalties, taxes or other burdens based on its past conduct if it chose to
qualify in any jurisdiction in which it is not now qualified. No jurisdiction in
the United States in which the Company is not now qualified has asserted to the
Company that the Company is required to be qualified to do business therein. The
Company has all necessary power and authority to own or to lease, and to
operate, its properties and assets and to carry on its business as it is now
being conducted.
4.2. Subsidiaries. The Company has no Company Subsidiaries (the
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"Company Subsidiaries").
4.3. Capitalization of the Company. The authorized capital stock of the
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Company after the reverse split contemplated by the parties consists of (a)
250,000,000 shares of common stock, no par value, of which 3,462,690 shares
following the reverse split are or will be outstanding and have been duly
authorized and validly issued and are fully paid and nonassessable and (b)
50,000,000 shares of Class B Preferred Stock, no par value, of which no shares
are outstanding. No shares of the Company's capital stock are held by the
Company. There are no options, warrants, rights, calls, commitments or
agreements of any character obligating the Company to issue any shares of
capital stock or any security representing the right to purchase or otherwise
receive any such shares. Except for restrictions on transfer arising under
applicable Federal and state securities laws, there are no existing restrictions
imposed by the Company or by its affiliates on the transfer of any outstanding
shares of capital stock of the Company and there are no registration covenants
with respect thereto. None of the outstanding shares of the Company was issued
in violation of the preemptive rights of any present or former shareholder.
4.4. Charter Documents. The copies of the articles of
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incorporation and by-laws of the Company which have previously been delivered
to ET are complete and correct.
4.5. Subsidiary Capitalization. There are no Company Subsidiaries.
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4.6. Binding Obligation; Consents; Litigation. The execution and
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delivery of this Merger Agreement by the Company do not, and the consummation of
the transactions contemplated hereby will not, violate (i) any provision of the
articles of incorporation or by-laws of the Company or (ii) any provision of, or
result in a breach of any of the terms or provisions of, or result in the
acceleration of any obligation under, or constitute a default under, any
mortgage, lien, lease, agreement, instrument, order, arbitration award, judgment
or decree to which the Company is a party, or to which the Company is, or the
assets, properties or business of the Company are, subject, which would have a
material adverse effect on the Company or any of its assets (any such included
material adverse effect, a "Material Adverse Effect"). The Board of Directors of
the Company has approved this Merger Agreement, has authorized the execution and
delivery hereof and has directed that this Merger Agreement be submitted to the
shareholders of the Company for adoption by such shareholders. The Company has
full power, authority and legal right to enter into this Merger Agreement and,
upon appropriate vote of its shareholders in accordance with the law, to
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consummate the transactions contemplated hereby. Except for the approval of its
shareholders, the Company has taken all action required by law, its certificate
of incorporation, its by-laws or otherwise to authorize and to approve the
execution and delivery of this Merger Agreement and the documents, agreements
and certificates executed and delivered by the Company in connection herewith
and the consummation by the Company of the transactions contemplated hereby.
This Merger Agreement has been duly executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms. No consent, action, approval
or authorization of, or registration, declaration or filing with, any
governmental authority arising from the Company's obligations prior to the
Merger is required to be obtained by the Company in order to authorize the
execution and delivery by the Company of this Merger Agreement or the
consummation by the Company of the Merger.
4.7. Financial Statements. The Company has furnished ET with complete
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copies of the audited financial statements of the Company for fiscal years
ending September 30, 1999, September 30, 2000 and September 30, 2001, including
in each case a balance sheet, the related statements of income and of changes in
financial position for the period then ended, the accompanying notes, and the
report thereon of Sellers and Associates, P.C., independent certified public
accountants and the unaudited financial statements of the Company for the period
from October 1, 2001 to November 30, 2001, including a balance sheet and the
related statements of income and of changes in financial position for the
three-month period then ended (the consolidated balance sheet therein and the
notes thereto as at November 30, 2001 being called the "Company Balance Sheet").
All such financial statements (i) reflect and provide adequate reserves in
respect of all known liabilities of the Company in accordance with GAAP,
including all known contingent liabilities as of their respective dates, and
(ii) present fairly the financial condition of the Company at such dates except
that a diminution in the value of the Company's assets from that reflected on
the Company Balance Sheet shall not be a breach of the representation so long as
such diminution shall not result in the Company's being rendered insolvent at
any time from the date hereof through the Effective Time of the Merger. All
financial statements furnished are those that are available as public domain
having been filed with the Securities and Exchange Commission except those that
are furnished to ET as "interim" or "in-house unaudited" financial statements
which shall be balance sheets and related statements of income and expense
without changes in financial position or notes thereto.
4.8. Real Property. The Company has no legal or equitable title in,
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and has no leasehold interest in, any real property (the "Real Property").
4.9. Banking Facilities. Schedule 4.9 sets forth the name of each
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bank with which the Company has an account or safe deposit box, the identifying
numbers or symbols thereof and the name of each person authorized to draw
thereon or to have access thereto.
4.10. Powers of Attorney and Suretyships. The Company has set forth on
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Schedule 4.10 the name of each person, if any, holding any power of attorney
from the Company and a summary statement of the terms thereof. The Company has
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no material obligation or material liability, either actual, accrued, accruing
or contingent, as guarantor, surety, co-signer, endorser, co-maker, indemnitor
or otherwise in respect of the obligation of any person, corporation,
partnership, joint venture, association, organization or other entity.
4.11. Employee Benefits.
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(a) The Company has no funded or unfunded, written or oral,
employee benefit plans, contracts, agreements, incentives, salary, wages or
other compensation plans or arrangements.
(b) At the Effective Time of the Merger, the Company will have
no employees.
(c) The Company does not maintain, sponsor or contribute to
any plan or program providing retiree medical or life insurance benefits.
4.12. Compliance with Law; Permits. The Company has complied with all
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applicable federal, state, local or foreign laws, regulations, ordinances,
orders, injunctions, or decrees, or administrative decisions or directives (the
"Requirements of Law"), relating to its securities, property, employees, former
employees or applicants for employment ("Employees") or business, including,
without limitation, Title VII of the Civil Rights Act of 1964, as amended, OSHA,
the Age Discrimination in Employment Act of 1967, as amended, the Equal Pay Act
of 1963, as amended and the National Labor Relations Act, and all applicable
statutes, regulations, orders and restrictions relating to environmental
standards or controls.
4.13. Litigation.
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(a) Except as set forth in Schedule 4.13, there is no (i)
action, suit, claim, proceeding or investigation pending or, to the knowledge of
the Company or any officer of the Company, threatened against or affecting the
Company, or its assets, employees or properties, at law or in equity, or before
or by any court or governmental authority, (ii) arbitration proceeding relating
to the Company or its assets, employees or properties or (iii) governmental
inquiry pending or, to the knowledge of the Company or any officer of the
Company, threatened relating to or involving the Company, its assets or
properties or the businesses of the Company or the transactions contemplated by
this Merger Agreement (including inquiries as to the qualification of the
Company, if any, to hold or receive any permit) and the Company does not know of
any basis for any of the foregoing. There are no pending actions, suits, claims
or proceedings brought by the Company against others.
(b) Except as set forth in Schedule 4.13, the Company has not
received any written opinion, memorandum, legal advice or notice from legal
counsel to the effect that they are exposed, from a legal standpoint, to any
liability or disadvantage which may be material to their respective businesses
and which would continue past the Effective Time of the Merger. The Company is
not in default with respect to any order, writ, injunction or decree known to or
served upon the Company of any court or of any governmental authority.
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4.14. Material Contracts and Agreements. The Company has described all
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material contracts of the Company now in effect to which the Company is a party
or by which it or its properties or assets may be bound or affected, under which
the total obligation of the Company or any of the Company Subsidiaries is in
excess of $5,000 or which is otherwise material to the Company on Schedule 4.14
(the "Material Contracts"). No default, alleged default or anticipatory breach
exists on the part of the Company or, to the best knowledge of the Company or
any of its officers, on the part of any other party, under any Material
Contract, and there are no material agreements of the parties relating to any
Material Contract that have not been disclosed to ET. All Material Contracts
will be either (i) terminated as of the Effective Time of the Merger and
evidence of such termination shall be given to ET or (ii) assumed by ET at the
sole discretion of ET. As of the Effective Time of the Merger, the Company will
not be a party to any transaction with any officer or director of the Company,
any member of the family of any such officer or director or any corporation,
partnership, trust or other entity in which any such officer or director has a
substantial interest or is an officer, director, trustee or partner.
4.15. Labor Matters. The Company is not a party to any collective
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bargaining agreement with any labor organization. There is not pending, or to
the knowledge of the Company threatened, any labor dispute, strike or work
stoppage involving the employees of the Company.
4.16. Tax Matters.
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(a) The Company has filed all tax returns required to be filed
by it under the laws of the United States of America, the jurisdiction of its
incorporation, and each state or other jurisdiction in which it conducts
business activities and is required to file. The Company has paid or set up an
adequate reserve in respect of all taxes for the periods covered by such
returns. The Company has no tax liability for which no tax reserve has been made
in respect of any jurisdiction in which the Company has business activities and
is required to file. The Company has set up as provisions for taxes on the
Company Balance Sheet amounts sufficient for all accrued and unpaid federal,
state, county and local taxes of the Company, whether or not disputed, including
any interest and penalties in connection therewith, for all fiscal periods
ending on or before the date of the Company Balance Sheet.
(b) The Company's federal income tax returns have been
examined by the United States Internal Revenue Service (or closed by applicable
statutes) for all years to and including the fiscal year ended September 30,
2001 and no such examinations are in progress to the knowledge of the Company.
Any deficiencies proposed as a result of said audits have been paid or finally
settled and no issue has been raised in any such examinations which, by
application of similar principles, reasonably can be expected to result in the
assertion of a deficiency for any other year not so examined. The results of any
settlements and any necessary adjustments in state income tax resulting
therefrom are properly reflected in the Company's financial statements referred
to in Section 4.7. The Company is not aware of any fact which would constitute
grounds for any further tax liability with respect to the years which have not
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been examined. No agreements or waivers have been made by or on behalf of the
Company for the extension of time for the assessment of any tax or for any
applicable statute of limitations.
(c) Except for taxes for the payment of which an adequate
reserve has been established on the Company Balance Sheet, there are no tax
liens, whether imposed by any federal, state or local taxing authority,
outstanding against any of the assets, properties or business of the Company.
(d) All taxes and assessments that the Company is required to
withhold or to collect have been duly withheld or collected and all withholdings
and collections have either been duly and timely paid over to the appropriate
governmental authority or are, together with the payments due or to become due
in connection therewith, duly reflected on the Company Balance Sheet in
accordance with GAAP.
For purposes of this Section 4.16, the term "the Company" includes each
other corporation with which the Company files consolidated or combined income
tax returns or reports.
4.17. Absence of Undisclosed Liabilities. The Company has no material
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indebtedness, liability or obligation of any character whatsoever, whether or
not accrued and whether or not fixed or contingent, other than (i) liabilities
reflected in the Company Balance Sheet, (ii) liabilities incurred in the
ordinary course of business (or pursuant to the liquidation) of the Company
since the date of the Company Balance Sheet, (iii) indebtedness, liabilities and
obligations listed on Schedule 4.17 hereto, and (iv) liabilities incurred in
connection with the performance of this Merger Agreement. The Company has
described all material indebtedness, liabilities or obligations of the Company
known to it on Schedule 4.17 (the "Scheduled Liabilities").
4.18. Insurance. All significant policies of insurance, together with
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the premiums currently paid thereon, providing for business interruption,
personal, Employee, product or public liability coverage with respect to the
business of the Company are described on Schedule 4.18. The copies of such
policies which have previously been delivered to ET are complete and correct.
All such policies will be outstanding and in full force and effect at the
Effective Time of the Merger and thereafter, as applicable, until the complete
liquidation of the Company's business; provided, that as of the Effective Time
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of the Merger, some or all of such policies will be terminated and the balance
(if any) of such policies will be assigned to, and be for the benefit of, the
Surviving Corporation to the extent that the Company is named as a party in any
suit covered by such policies. Except as set forth on Schedule 4.18, there are
no claims, actions, suits or proceedings arising out of or based upon any of
such policies of insurance, and, so far as is known to the Company or any of its
officers, no basis for any such claim, action, suit or proceeding exists. There
are no notices of any pending or threatened terminations with respect to any of
such policies and each of the Company is in compliance with all conditions
contained therein.
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4.19. No Material Adverse Change. Since the date of the Company Balance
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Sheet, the Company has not experienced any damage, destruction or loss (whether
or not covered by insurance) or adverse change in the value of the Company such
that the Company has been or would be rendered insolvent.
4.20. Required Consents. There have been or will be timely filed,
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given, obtained or taken all applications, notices, consents, approvals, orders,
registrations, qualifications, waivers or other actions of any kind required by
virtue of the execution and delivery of this Merger Agreement by the Company or
the consummation by the Company of any of the transactions contemplated hereby.
4.21. Securities Filings. The Company has made available to ET true and
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complete copies of each report, statement and registration statement and
amendments thereto (including, without limitation, Quarterly Reports on Form
10-QSB, as amended, and Current Reports on Form 8-K, as amended) filed by the
Company with the SEC since January 1, 2000 and prior to the date hereof. The
reports and statements described in the preceding sentence, and those
subsequently provided or required to be provided to ET pursuant to this
Agreement, are referred to collectively herein as the "Company Securities
Filings". Each of the Company Securities Filings was prepared in all material
respects in accordance with the requirements of the Exchange Act, and none of
the Company Securities Filings contained or, as to Company Securities Filings
subsequent to the date hereof, will contain, any untrue statement of a material
fact or omitted or, as to Company Securities Filings subsequent to the date
hereof, will omit, to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
4.22. Transfer Of Assets And Liabilities To Surviving Corporation. The
-----------------------------------------------------------
Company will have transferred to the Surviving Corporation immediately prior to
the Effective Time of the Merger each and every one of its assets and the
Surviving Corporation will have assumed all of the Company's liabilities and
obligations now existing or hereafter arising out of the business and operations
of the Company through the period ending immediately prior to the Effective Time
of the Merger.
4.23. Interested Party Transactions. No event has occurred that
-------------------------------
would be required to be reported as a Certain Relationship or Related
Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC.
4.24. Takeover Statutes. The Board of Directors of the Company has
------------------
approved this Agreement and the consummation of the transactions contemplated
hereby and such approval constitutes approval of the Merger and the other
transactions contemplated hereby by the Board of Directors of the Company under
the provisions of any applicable "fair price", "moratorium", "control share
acquisition" or other anti takover statute or regulation such that such statute
or regulation does not apply to the Merger and the acquisition of the Merger
Shares pursuant to Article 3 and the other transactions contemplated hereby. To
11
the best knowledge of the Company, no state takeover statute is applicable to
the Merger and the other transactions contemplated hereby.
4.25. Company Common Stock.
--------------------
(a) The shares of Company Common Stock to be issued pursuant
to Section 3.1(a) (the "Merger Shares") have been duly authorized and, when
issued pursuant to the terms of this Agreement, will be duly and validly issued,
fully paid and nonassessable, and will be free and clear of all liens and
restrictions, other than restrictions on transfer imposed by the Securities Act
and state securities laws, including without limitation "blue sky" laws.
(b) Each and every offering or sale of securities and debt
instruments by the Company or any of its affiliates has complied in all respects
with all applicable foreign, federal and state securities laws.
(c) The transactions contemplated by this Agreement will
comply in all respects with all applicable foreign, federal and state securities
laws.
4.26. Disclosure; Representations and Warranties. The Company has made
-------------------------------------------
true and complete responses to all of ET's requests for information, documents,
contracts, agreements and records of the Company relating to the business of the
Company. Neither this Merger Agreement nor any statement, certificate, writing
or document furnished to ET by the Company in connection with this Merger
Agreement contains, as of the dates of such documents, any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained therein not misleading.
4.27. Finders or Brokers. The Company has not utilized the services of
------------------
any investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to a fee or commission in
connection with this Merger Agreement or upon consummation of the transactions
contemplated hereby.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF ET
ET represents and warrants that:
5.1 Corporate Status. ET is a limited company duly organized,
-----------------
validly existing and in good standing under the laws of Hong Kong, Special
Administrative Region of China.
5.2 Corporate Power. ET has the corporate power to own, lease, or
----------------
operate all properties and assets owned, leased or operated by it, to carry on
its business as now conducted and as proposed to be conducted, to execute and
deliver this Agreement and to consummate the transactions contemplated by this
Agreement.
12
5.3 Articles of Incorporation. Copies of ET's Articles of
-----------------------------
Incorporation, and any amendments or restatement thereof through the date
hereof, as filed with the Companies Registry of Hong Kong as well as all
relevant governmental operating licenses, have been presented to the Company for
review.
5.4 By-Laws. ET has provided the Company with a copy of its
-------
by-laws and such copy is true and complete.
5.5 Capitalization. The authorized share capital of ET consists of
--------------
30,000,000 ordinary shares, with par value of HK$1 per share, of which
30,000,000 shares are issued and fully paid. ET has no outstanding subscription,
options, warrants, call, or other agreement or commitments entitling any person
to purchase or otherwise acquire any shares of common stock of ET or other
capital stock or securities of ET, including any right of conversation or
exchange under any outstanding security or other instrument. ET is not subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital stock of any security convertible or
exchangeable for any of its capital stock. There are no voting trusts or other
agreements or understandings with respect to the voting of the capital stock of
ET. The common stock of ET is vested with all the voting rights in ET.
5.6 Subsidiaries. ET has no subsidiaries or affiliated
------------
corporations within the meaning of Section 1563 (a) or Section 1564 of the Code.
5.7 Shareholders. The shareholders of ET listed on Exhibit A are
------------
the only shareholders of ET.
5.8 Stock Paid and Nonassessable. The ET Shares have been duly
-----------------------------
and validly authorized and issued, and are fully paid and nonassessable and
free from preemptive and cumulative voting rights.
5.9 Authorization. This Agreement has been duly authorized, executed,
-------------
and delivered by ET, and has been approved by the Board of Directors of ET, and
constitutes a valid and binding agreement of ET enforceable in accordance with
its terms, subject to (a) approval by the requisite majority of holders of ET
Common Stock, (b) applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application, heretofore or hereafter enacted or in
effect, affecting the rights and remedies of creditors generally, and (c) the
exercise of judicial or administrative discretion in accordance with general
equitable principles, particularly as to the availability of the remedy of
specific performance or other injunctive relief.
5.10 Financial Statements. ET has provided the Company with audited
---------------------
financial statements for the fiscal years ended 31 December, 1999 and 31
December, 2000 (the "ET Financial Statements"). The ET Financial Statements are
complete and correct and have been prepared in accordance with generally
accepted accounting principals on a basis consistent with prior periods and
13
fairly present the financial condition of ET at the date of such statements, and
the results of operations for the period ended on such date and reflect all
adjustments which are necessary for a fair presentation of the results reported.
5.11 Compliance. ET is not in breach of, or in conflict with,
----------
any of the terms, conditions, or provisions of its Articles of Incorporation.
5.12 Directors and Officers. As of the date hereof, ET's officers
----------------------
and directors of ET are as set forth on Schedule 5.12.
5.13 Title to Property. ET has good and marketable title to all of the
-----------------
property and assets reflected in the balance sheet delivered pursuant to Section
5.10 and such property and assets are not subject to any mortgage, pledge, lien
or encumbrance.
5.14 Patents, Trademarks, etc. ET has received no notice of
----------------------------
infringement of, or conflict with, asserted rights of others with respect to any
patents, trademarks, service marks, trade names or copyright, nor is ET aware of
any infringement by other upon its name. There are no patents, patent rights,
trademarks, service marks, conducted or as contemplated by ET which ET does not
own or possess adequate rights to use. All of ET's employees, have transferred
to ET all of their right, title and interest in and to any intellectual property
owned by them or in which they share an ownership interest (if any) related in
any way to ET's business.
5.15 No Regulatory Violation. To the best of ET's knowledge, ET is not
-----------------------
in violation of any law, statue, order, rule, regulation, writ, injunction, or
decree of any governmental authority or court, domestic or foreign, with respect
to the conduct of its business, the operation of ET's facility or the ownership
of its properties, nor will the execution of this Agreement or consummation of
any of the transactions contemplated by this Agreement result in any such
violation.
5.16 No Contractual Violation. Neither the execution of this Agreement,
------------------------
nor the performance of ET's obligations pursuant to this Agreement or the
consummation of the transactions contemplated hereby, will conflict with, or
result in a breach or violation of any of the terms or provisions of, or
constitute, or with the passage of time or the giving of notice constitute, a
default under any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond debenture, note agreement, or other evidence of
indentureness, lease, contract or other agreement or instrument to which ET is a
party, or by which ET or any of its properties is bound, or ET's Articles of
Incorporation; and no consent, approval, authorization, or order of any court or
governmental agency or body is required for the consummation by ET of the
transactions contemplated hereby.
5.17 Material Contracts. ET warrants that there are no undisclosed
------------------
material agreements, written or oral, related to ET.
14
5.18 Undisclosed Liabilities. ET has no liabilities of any nature
-----------------------
except as specifically disclosed to Staruni in writing.
5.19 Litigation. There are no actions, suits or proceedings to which ET
----------
is a party, or of which any of its property is the subject, pending before or
brought by any court or governmental agency or body, nor, to the knowledge or
ET, is any such action, suit, or proceeding threatened, which would, singly, or
in the aggregate, result in any material adverse change in the condition
(financial or otherwise), business, key personnel, properties, assets, results
of operations (present or prospective) or net worth of ET.
5.20 Profit Sharing Plans, Etc. ET is not a party to and has no
----------------------------
obligation, contingent or otherwise, under any materials, oral or written,
expressed or implied: (i) commitment or agreement, with officers, directors,
employees, or any other persons providing similar services; (ii) agreement or
arrangement providing for the payment of any incentive, bonus, commission, or
deferred compensation or severance or termination pay; (iii) pension, profit
sharing, stock purchase, stock option, group life insurance, hospitalization
insurance, disability, retirement, or any other employee benefit plan, fringe
benefit plan, agreement, or arrangement, whether formal or informal and whether
legally binding or not; or (iv) collective bargaining or union contract or
agreement.
5.21 Tax Returns. ET has timely filed all tax returns and reports
------------
required to be filed by it, and has paid in a timely manner all taxes that are
shown on such returns as being due and payable other than such taxes as are
being contested in good faith and for which adequate reserves have been
established. ET is not a Subchapter S Corporation.
5.22 No Material Changes. There have been no material adverse changes
--------------------
in the condition (financial or otherwise), results of operations, or
shareholders' equity of ET since the date of the latest balance sheet contained
in Schedule 5.10, except for changes (material or otherwise) resulting from its
operations conducted in the ordinary course of business.
5.23 Brokers. All finders' fees or brokerage commissions of any kind
-------
will be payable by ET in connection with the transactions described in this
Agreement.
5.24 Disclosure of Material Facts. ET has not knowingly failed to
------------------------------
disclose to the Company any facts material to the assets, liabilities, earnings,
prospects, and business of ET. No representation or warranty by ET contained in
this Agreement, and, to the best of its knowledge, no statement contained in any
document (including, without limitation, the financial statements and Exhibits
hereto), list, certificate, or other writing furnished or to be furnished by or
on behalf of ET or any of its representations in connection with the
transactions contemplated hereby, contains or will contain any untrue statements
of a material fact, or omits or will omit to state any material fact necessary,
15
in light of the circumstances under which it was or will be made, in order to
make the statements contained herein or there not misleading or necessary in
order to provide fully and fairly the information required to be provided in any
such document, list, certificate, or other writing.
5.25 Interpretation. As used in this Agreement, the term "best
--------------
knowledge" or "ET's best knowledge" refers to the best knowledge of the officers
and directors of ET.
ARTICLE 6. TRANSACTIONS PRIOR TO THE EFFECTIVE
TIME OF THE MERGER
6.1. Stockholders' Consent.
---------------------
(a) The Board of Directors of the Company will submit (i) this
Merger Agreement and the Merger, (ii) the Amended and Restated Charter, (iii)
the Contribution Transaction, and (iv) the Private Placement Offering to its
shareholders for their adoption and will recommend to its shareholders such
adoption. In connection therewith, the Company shall prepare and file with the
SEC, as soon as practicable, the Information Statement and shall use its best
efforts promptly to obtain clearance by the staff of the SEC of the mailing of
such material to its shareholders. The Company will use its best efforts to
obtain the necessary approval of this Merger Agreement, the Amended and Restated
Charter and the Private Placement Offering by its shareholders and will take as
soon as practicable such other and further actions as may be required by this
Merger Agreement and as may be required by law to effectuate the Merger and the
other transactions contemplated hereby. In obtaining the authorization and
approval of its shareholders, the Company shall comply with all applicable
Federal and state securities and other laws in connection with the transactions
to be effected hereunder. Without limiting the generality of the foregoing, the
Company agrees that the information contained in the Information Statement
(other than information as to ET furnished to the Company in writing by ET) (i)
will comply in all respects with the provisions of the Exchange Act and the
rules and regulations promulgated thereunder, and (ii) will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading, in
each case when first mailed to the Company's shareholders and at all times
thereafter through the Effective Date of the Merger. The Company shall not
distribute any material to its shareholders in connection with this Merger
Agreement and the transactions contemplated hereby other than materials
contained in the Information Statement cleared by the staff of the SEC, except
such additional material cleared by the staff of the SEC.
(b) Without limiting the generality of the foregoing, ET
agrees that the information as to ET furnished to the Company in writing by ET
for use in the Information Statement (i) will comply in all respects with the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder, and (ii) will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case on the date on which the
Information Statement is first mailed or distributed to the Company's
shareholders ("Mailing Date") and at all times thereafter through the Effective
Date of the Merger.
16
6.2. Approvals; Consents. The Company will obtain or cause to be
--------------------
obtained all consents, approvals and authorizations required by any applicable
requirement of law or by any contract or agreement to be obtained by the Company
in connection with the consummation of the Merger. ET will obtain or cause to be
obtained all consents, approvals and authorizations required by any applicable
requirement of law or by any contract or agreement to be obtained by ET in
connection with the consummation of the Merger.
6.3. Conduct and Liquidation of Business Prior to Effective Time of
--------------------------------------------------------------
the Merger.
-----------
The Company agrees that from the date hereof to the Effective
Time of the Merger, and except as otherwise consented to or approved by an
officer of ET in writing or required by this Merger Agreement:
(i) No change shall be made in the number of
shares of authorized or issued capital stock of the Company; nor shall any
option, warrant, call, commitment, right or agreement of any character be
granted or made by the Company relating to its respective authorized or issued
capital stock.
(ii) No dividend shall be declared or paid or
other distribution or payment declared, made or paid in respect of the Company
Common Stock.
(iii) No powers of attorney shall be granted by
the Company except as may be necessary for the conduct of meetings of
shareholders or directors of the Company.
(iv) The Company shall terminate all contracts,
agreements, commitments, understandings or instruments of the Company, including
the Material Contracts, and to deliver evidence of such termination to ET prior
to the Effective time of the Merger.
(v) Except as agreed pursuant to Section 3.2,
prior to the Effective Time of the Merger, the Company will terminate the
employment of all of its employees, and shall give any notices required to be
given, and provide any benefit required to be paid or continued, pursuant to
the Worker Adjustment and Retraining Notification Act ("WARN"), COBRA or any
other applicable federal, state or local laws, regulations, ordinances,
orders, injunctions, or decrees, or administrative decisions or directives, with
respect to such termination of employment.
6.4. Letters of the Company's Accountants. The Company shall cause to
-------------------------------------
be delivered two letters from the Company's independent accountants, one dated a
date within two Business Days before the date on which the Form S-4 shall become
effective and one dated a date within two Business Days before the Closing Date,
each addressed to ET, in form and substance reasonably satisfactory to ET and
customary in scope and substance for comfort letters delivered by independent
17
public accountants in connection with registration statements similar to the
Form S-4.
6.5. NASD Listing. The Company shall cause the shares of Surviving
-------------
Corporation Common Stock to be authorized for quotation on the OTCBB of the
NASD.
6.6. Resignations. The Company shall deliver to ET resignation
------------
letters effective as of the Closing Date, in form and substance reasonably
satisfactory to counsel for ET, signed by each director and officer of the
Company.
6.7. Access to Information and Documents.
-----------------------------------
(a) From the date hereof to the Effective Time of the Merger,
the Company shall give to, or cause to be made available for, ET and ET shall
give to, or cause to be made available for, the Company and their respective
counsel, accountants and other representatives full access during normal
business hours to all properties, documents, contracts, employees and records of
the Company or ET and furnish the other party with copies of such documents and
with such information as such party from time to time reasonably may request;
provided, however, that nothing herein shall be deemed to obligate the Company
or ET to provide the other party access to information or operations the access
to which is restricted for statutory or other governmental security purposes.
The Company will make available to ET for examination correct and complete
copies of all Federal, state, local and foreign tax returns filed by the
Company, together with all available revenue agents' reports, all other reports,
notices and correspondence concerning tax audits or examinations and analyses of
all provisions for reserves or accruals of taxes including deferred taxes.
(b) Until the Effective Time of the Merger (and, if this
Merger Agreement is terminated prior to the Effective Time of the Merger, at all
times after such termination), the Company and ET will not disclose or use any
confidential information obtained in the course of their respective
investigations, except to the extent that any such confidential information
subsequently becomes public knowledge.
(c) If the Merger is not consummated and this Merger Agreement
is terminated, then ET shall promptly return all documents, contracts, records
or properties of the Company furnished by the Company to ET, and all copies
thereof, and the Company shall promptly return all documents, contracts, records
or properties of ET furnished by ET to the Company, and all copies thereof.
6.8. Periodic Information.
--------------------
(a) From the date hereof to the Effective Date of the Merger,
the Company shall furnish ET with such additional financial and operating data
and other information regarding its business, reasonably available to the
Company, as ET shall from time to time reasonably request.
18
(b) From the date hereof to the Effective Date of the Merger,
the Company shall, promptly and in a timely manner, notify ET of any of the
occurrence of any event, or the failure of any event to occur, that results in a
misrepresentation by the Company or the breach of any warranty by the Company,
or any failure by the Company to comply with any covenant, condition or
agreement contained herein.
(c) From the date hereof to the Effective Date of the Merger,
ET shall furnish the Company with such additional financial and operating data
and other information regarding its business, reasonably available to ET, as the
Company shall from time to time reasonably request.
(d) From the date hereof to the Effective Date of the Merger,
ET shall, promptly and in a timely manner, notify the Company of the occurrence
of any event, or the failure of any event to occur, that results in a
misrepresentation by ET or the breach of any warranty by ET, or any failure by
ET to comply with any covenant, condition or agreement contained herein.
6.9. Representations. The Company and ET (a) will take all action
---------------
necessary to render accurate as of the Effective Time of the Merger their
respective representations and warranties contained herein, (b) will refrain
from taking any action which would render any such representation or warranty
inaccurate in any material respect as of such time, and (c) will perform or
cause to be satisfied each covenant or condition to be performed or satisfied by
them under this Merger Agreement.
6.10. Deliveries by the Company.
-------------------------
On or prior to the Mailing Date, ET shall have received the
following:
(a) An opinion, dated the Mailing Date, of the Law Offices of
Xxxxx X. Xxxxxx, counsel to the Company, to the effect that, while such counsel
assumes no responsibility for any events, occurrences or statements of fact
relating to the Company or for the accuracy, completeness or fairness of any
statements contained in the Proxy Statement, and while such counsel expresses no
opinion as to the financial statements or other financial or statistical data
contained therein, with respect to the information in the Information Statement
relating to the Company, such counsel has no reason to believe that the
Information Statement, as amended or supplemented to the date of such opinion,
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
(b) A certificate of the Company's President and its chief
financial officer, dated the Mailing Date, in form and substance satisfactory to
ET, stating that (A) the Company has complied in all material respects with the
agreements contained herein on its part to be performed on or prior to such
date, and (B) the representations and warranties of the Company contained herein
are true and correct in all material respects at and as of the date of such
certificate, except to the extent affected by the transactions contemplated
hereby and by the liquidation of the Company as permitted by the provisions of
Section 6.3 prior to the Mailing Date, with the same effect as though such
representations and warranties had been made at and as of such date.
19
(c) A certificate of the Company's President and its chief
financial officer, dated the Mailing Date, in form and substance satisfactory to
ET, stating that all approvals, consents and waivers required by this Agreement
have been obtained, specifically identifying such consents, waivers and
attaching copies thereof to such certificate.
(d) A complete set of Schedules to this Agreement shall have
been delivered by the Company to ET and the form and content of such Schedules
shall be satisfactory to ET in its sole and complete discretion.
6.11. Information.
-----------
(a) The Company will furnish ET with all information
concerning the Company reasonably required for inclusion in any application made
by ET to any stock exchange or any governmental or regulatory body in connection
with the transactions contemplated by this Merger Agreement.
(b) ET will furnish the Company with all information
concerning ET reasonably required for inclusion in the Information Statement or
any application made by the Company to the SEC, any stock exchange or any
governmental or regulatory body in connection with the transactions contemplated
by this Merger Agreement.
6.12. Notice of Breach.
----------------
(a) ET will immediately give notice to the Company of the
occurrence of any event or the failure of any event to occur that results in a
breach of any representation or warranty by ET or a failure by ET to comply with
any covenant, condition or agreement contained herein.
(b) The Company will immediately give notice to ET of the
occurrence of any event or the failure of any event to occur that results in a
breach of any representation or warranty by the Company or a failure by the
Company to comply with any covenant, condition or agreement contained herein.
6.13. Negotiations with Third Parties. The Company will not, without
--------------------------------
the prior written approval of ET, initiate, solicit or encourage (including by
way of furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal relating to, or that may
reasonably be expected to lead to, any Competing Transaction (as defined below),
or enter into discussions or negotiate with any person or entity in furtherance
of such inquiries or to obtain a Competing Transaction, or agree to or endorse
any Competing Transaction, or authorize or permit any of the officers, directors
or employees of the Company or any investment banker, financial advisor,
attorney, accountant or other representative retained by the Company to take any
such action, and the Company shall promptly notify ET of all relevant terms of
any such inquiries and proposals received by the Company or by any such officer,
director, investment banker, financial advisor, attorney, accountant or other
representative relating to any of such matters and if such inquiry or proposal
is in writing, the Company shall promptly deliver or cause to be delivered to ET
a copy of such inquiry or proposal; provided, however, that nothing contained in
this Section 6.13 shall prohibit the Board of Directors of the Company from (i)
20
furnishing information to, or entering into discussions or negotiations with,
any person or entity in connection with an unsolicited bona fide written
proposal, which proposal is at a materially higher value, by such person or
entity to acquire the Company pursuant to a merger, consolidation, share
exchange, business combination or other similar transaction or to acquire a
substantial portion of the assets of the Company if the Board of Directors of
the Company, after consultation with and based upon the advice of independent
legal counsel (who may be the Company's regularly engaged independent legal
counsel), determines in good faith that such action is appropriate for such
Board of Directors to comply with its fiduciary duties to shareholders under
applicable law; (ii) complying with Rule 14e-2 promulgated under the Exchange
Act with regard to a Competing Transaction; or (iii) failing to make or
withdrawing or modifying its recommendation referred to in Section 6.1 if the
Board of Directors of the Company, after consultation with and based upon the
advice of independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), determines in good faith that such action is
necessary for such Board of Directors to comply with its fiduciary duties to
shareholders under applicable law; provided, further, however, that in
consideration of ET's willingness to incur the expenses and devote the time and
resources necessary to seek to consummate the transactions contemplated hereby,
if the transactions contemplated hereby fail to be consummated because the
Company has taken any of the actions contemplated in clauses (i) through (iii)
above and the Competing Transaction is consummated, the Company shall pay to ET,
by bank check or wire transfer of immediately available funds, an amount equal
to $1,000,000. For purposes of this Merger Agreement, "Competing Transaction"
shall mean any of the following (other than the transactions contemplated by
this Merger Agreement, including the Liquidation) involving the Company: (I) any
merger, consolidation, share exchange, business combination or similar
transaction; (II) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 20% or more of the assets of the Company, taken as a whole; (III)
any tender offer or exchange offer for 20% or more of the outstanding shares of
capital stock of the Company or the filing of a registration statement under the
Securities Act in connection therewith; (iv) any person having acquired
beneficial ownership of, or any group (as such term is used in Section 13(d) of
the Exchange Act and the rules and regulations promulgated thereunder) having
been formed which beneficially owns, or has the right to acquire beneficial
ownership of, 20% or more of the outstanding shares of capital stock of the
Company; or (v) any public announcement of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the foregoing.
6.14. Tax Matters.
-----------
(a) (i) The Company shall be responsible for the payment of
all taxes of the Company attributable to taxable periods ending on or before the
date of the Effective Time of the Merger (the "Pre-ETM Period") to the extent
that payment of such taxes (through payment of estimated taxes, withholding or
in any other manner) has not been made prior to the Effective Time of the Merger
including any taxes resulting from the transfer of assets by the Company. The
term "Taxes" shall mean all taxes, charges, fees, interest, penalties, additions
to tax or other assessments, including but not limited to income (whether net or
gross), excise, property, sales, transfer, use, value added, franchise taxes,
payroll, wage, unemployment, worker's compensation, social security, capital,
occupation, estimated, and customs duties imposed by any Tax Authority. The term
21
"Tax Authority" as used in this Section 6.14 shall mean any domestic or foreign
national, state or municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising any
regulatory or taxing authority.
(ii)In the case of any taxable period that includes (but
does not end on) the date of the Effective Time of the Merger, the Taxes of
the Company which shall be considered attributable to the pre-ETM Period
shall be computed as if such taxable period had in fact ended at the Effective
Time of the Merger and such Taxes as so computed shall be the responsibility
of the Company to the extent that payment of such Taxes has not been made prior
to the Effective Time of the Merger.
(b) The amount of any Taxes attributable to any taxable period
that includes (but does not end on) the date of the Effective Time of the Merger
shall be determined on the basis of the permanent books and records (including
workpapers) of the Company by assuming that the Company had a taxable year which
ended at the Effective Time of the Merger, except that exemptions, allowances or
deductions that are calculated on an annual basis shall be apportioned on a time
basis.
(c) The Company shall prepare and timely file or shall cause
the preparation and timely filing of all tax returns required to be filed prior
to the Effective Time of the Merger. The Surviving Corporation shall have the
sole responsibility for the preparation and filing of all other tax returns of
the Company.
(d) The Company shall retain its records relating to all tax
periods which remain subject to audit by action or statute or waiver for all
Pre-ETM Periods. To the extent that such records are currently maintained in
both a hard copy and an electronic media format, both such types of records that
pertain to the income or operations of the Company prior to the close of
business on the date of the Effective Time of the Merger will be retained by the
Company and will not be destroyed prior to the expiration of the applicable
statute of limitations.
6.15. Takeover Statute. If any "fair price," "moratorium," "control
----------------
share acquisition" or other form of anti-takeover statute or regulation shall
become applicable to the transactions contemplated hereby, the Company and the
members of its Board of Directors, shall grant such approvals and take such
actions as are necessary so that the Merger and the transactions contemplated
hereby may be consummated as promptly as practicable on the terms contemplated
hereby and otherwise act to eliminate or minimize the effects of such statute or
regulation on the transactions contemplated hereby.
6.16. Notice of Dissenting Shares. Prior to the Closing Date, the
-----------------------------
Company shall furnish ET with the name and address of each Company shareholder
who, prior to Closing Date, has requested appraisal rights pursuant to the CGCL
and the number of Dissenting Shares owned by such dissenting shareholder.
22
ARTICLE 7. CONDITIONS TO OBLIGATIONS OF THE PARTIES
The obligations of the parties under this Merger Agreement are subject
to the fulfillment and satisfaction of each of the following conditions, any one
or more of which may be waived by ET and the Company.
7.1. Stockholder Approvals. On or before the Effective Time of the
Merger, this Merger Agreement shall have been approved by the affirmative vote
of holders at least 51% of the outstanding shares of stock of each of the
Company and ET entitled to vote thereon and the shareholders of the Company
shall have approved the Amended and Restated Charter by the affirmative vote or
written consent of holders of 51% of the shares entitled to vote thereon.
7.2. Regulatory Approvals. On or before the Effective Time of the
---------------------
Merger, all applicable approvals of governmental regulatory authorities of the
United States of America or of any state or political subdivision thereof
required to consummate the Merger shall have been obtained.
7.3. No Injunctions; Illegality. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions contemplated by this
Agreement shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be pending;
and there shall not be any action taken, or any statute, rule, regulation or
order (whether temporary, preliminary or permanent) enacted, entered or enforced
which makes the consummation of the Merger or any of the other transactions
contemplated by this Agreement illegal or prevents or prohibits the consummation
of the Merger or any of the other transactions contemplated by this Agreement.
ARTICLE 8. CONDITIONS TO OBLIGATIONS OF ET
The obligations of ET hereunder are subject to the satisfaction, at or
before the Effective Time of the Merger, of the following conditions (any of
which may be waived, in whole or in part, by ET):
8.1. Representations and Warranties. The representations and warranties
------------------------------
of the Company contained in this Merger Agreement (including the Schedules and
Exhibits hereto), or in any certificate or document delivered to ET in
connection herewith, shall be true in all material respects the Closing Date as
if made again on and as of the Closing Date. The Company shall have duly
performed and complied with all agreements and conditions required by this
Merger Agreement to be performed or complied with by the Company at or before
the Closing Date. ET shall have been furnished with certificates of appropriate
officers of the Company, dated the Closing Date, certifying in such detail as ET
may reasonably request to the fulfillment of the foregoing conditions.
8.2. The Company's Performance. Each of the obligations of the Company
-------------------------
to be performed by it on or before the Closing Date pursuant to the terms of
23
this Merger Agreement shall have been duly performed in all material respects as
of the Closing Date, and the Company shall have delivered to ET a certificate to
such effect signed by the President of the Company.
8.3. Authority. All action required to be taken by, or on the part of,
---------
the Company to authorize the execution, delivery and performance of this Merger
Agreement by the Company and the consummation of the transactions contemplated
hereby shall have been duly and validly taken by the Board of Directors and
shareholders of the Company.
8.4. Filing of Charter Amendment. Before the Effective Time of the
----------------------------
Merger the Company shall have filed the Amended and Restated Charter with the
Secretary of State of California.
8.5. Mailing Date Documents. ET shall have received on the Mailing
------------------------
Date the documents which it is to receive under Section 6.10.
8.6. Opinion of the Company's Counsel. The Law Offices of Xxxxx X.
---------------------------------
Stuart, special counsel to the Company, shall have delivered to ET an opinion,
dated the Closing Date and addressed to ET, in the form attached hereto as
Exhibit B.
---------
8.7. Effectiveness of the S-4. The S-4 shall have been declared
--------------------------
effective by the SEC under the Securities Act and shall not be the subject of
any stop order or proceeding by the SEC seeking a stop order.
8.8. Listing of Shares. The shares of Company Common Stock issuable in
-----------------
accordance with this Agreement shall be eligible for quotation on the OTCBB of
the NASD.
8.9. Secretary's Certificate. The Company shall have delivered to ET a
-----------------------
copy of (A) the resolutions adopted by the Board of Directors of the Company
authorizing execution, delivery and performance of this Agreement and the
consummation of all of the transactions contemplated hereby (B) the bylaws of
the Company (C) the Amended and Restated Charter and (D) incumbency certificates
certifying the signature and office of each officer executing this Agreement,
the Certificate of Merger and the Contribution Agreement in each case, along
with a certificates executed on behalf of the Company's Secretary certifying to
ET that such documents are true, correct and complete, and that in the case of
(A), (B) and (C) such documents were duly adopted and have not been amended or
rescinded.
8.10.Other Matters. Such other certificates, documents and instruments
-------------
as ET reasonably may request which are related to the transactions contemplated
hereby.
24
0.00.Xxxxx Matters Satisfactory. All legal matters, and the form and
---------------------------
substance of all documents to be delivered by the Company to ET at the Effective
Time of the Merger, shall have been approved by, and shall be satisfactory to,
ET.
8.12. Diligence and Corporate Matters. The corporate matters and
----------------------------------
affairs of the Company, and the results of any and all due diligence inquiries
by ET and its representatives, shall be acceptable to ET and its counsel in the
sole discretion of ET; provided, however, that neither the provisions of this
paragraph nor any other provisions of this Agreement shall lessen the ability of
ET to rely upon the representations, warranties, covenants and agreements of the
Company.
ARTICLE 9. CONDITIONS TO THE COMPANY'S OBLIGATIONS
The obligations of the Company hereunder are subject to the
satisfaction, at or before the Effective Time of the Merger, of the following
conditions (any of which may be waived, in whole or in part, by the Company):
9.1. Representations and Warranties. The representations and warranties
------------------------------
of ET contained in this Merger Agreement, or in any certificate or document
delivered to the Company in connection herewith, shall be true in all material
respects at the Effective Time of the Merger as if made again on and as of the
Effective Time of the Merger. ET shall have duly performed and complied with all
agreements and conditions required by this Merger Agreement to be performed or
complied with by ET at or before the Effective Time of the Merger. The Company
shall have been furnished with certificates of appropriate officers of ET, dated
the Effective Time of the Merger, certifying in such detail as the Company may
reasonably request to the fulfillment of the foregoing conditions.
9.2. ET's Performance. Each of the obligations of ET to be performed by
----------------
it on or before the Effective Time of the Merger pursuant to the terms of this
Merger Agreement shall have been duly performed in all material respects at the
Effective Time of the Merger, and at the Effective Time of the Merger ET shall
have delivered to the Company a certificate to such effect signed by the
President of ET.
9.3. Authority. All action required to be taken by, or on the part of,
---------
ET to authorize the execution, delivery and performance of this Merger Agreement
and the consummation of the transactions contemplated hereby shall have been
duly and validly taken by the Board of Directors and the sole stockholder of ET.
9.4. Legal Matters Satisfactory. All legal matters, and the form and
---------------------------
substance of all documents to be delivered by ET to the Company at the Closing,
shall have been approved by, and shall be satisfactory to, the Company.
25
ARTICLE 10. TERMINATION
10.1. Termination.
-----------
This Merger Agreement may be terminated and the Merger
abandoned at any time before the Effective Time of the Merger:
(a) by the written consent of the Company and ET;
(b) by ET, if there has been a material misrepresentation in
this Merger Agreement by the Company, or a material breach by the Company of any
of its warranties or covenants set forth herein, or a failure of any condition
to which the obligations of ET hereunder are subject;
(c) by the Company, if there has been a material
misrepresentation in this Merger Agreement by ET, or a material breach by ET of
any of the warranties or covenants of ET set forth herein, or a failure of any
condition to which the obligations of the Company hereunder are subject;
(d) by either the Company or ET if the Effective Time of the
Merger shall not have occurred before February 1, 2002 for any reason other than
the failure of the party seeking to terminate this Merger Agreement to perform
its obligations hereunder or a misrepresentation or breach of warranty by such
party herein or as a result of the failure of any regulatory agency to have
issued its approval;
(e) by ET if more than 5% of the outstanding shares of Company
Common Stock are Dissenting Shares; or
(f) by ET if the Board of Directors of the Company (i) fails
to make or withdraws or modifies its recommendation to the shareholders of the
Company to vote in favor of the Merger and the offer transactions contemplated
hereby, or (ii) recommends to the Company's shareholders approval or acceptance
of a Competing Transaction, in each case only if the Board of Directors of the
Company, after consultation with and based upon the advice of independent legal
counsel (who may be the Company's regularly engaged independent legal counsel),
determines in good faith that such action is appropriate for such Board of
Directors to comply with its fiduciary duties to shareholders under applicable
law.
ARTICLE 11. MISCELLANEOUS
11.1. Expenses. Except as otherwise provided herein, the Company shall
--------
pay all of the expenses of the Company and ET, in connection with the
preparation and performance of the terms of this Merger Agreement and the
transactions contemplated hereby, including all fees and expenses of each
party's investment bankers, counsel and accountants.
11.2. Survival of Representations and Warranties.
------------------------------------------
(a) Except as provided below, the representations and
warranties of the Company contained in Article 4 and the representations and
26
warranties of ET contained in Article 5 shall terminate upon (i) the first
anniversary date of the Effective Time of the Merger, or (ii) the termination of
this Merger Agreement and abandonment of the Merger pursuant to the provisions
of Section 10.1(a) or 10.1(d) (except for the agreements as to expenses
contained in Section 11.1), and the parties hereto shall have no continuing
obligations or liabilities with respect thereto.
(b) If either ET or the Company shall have the right to
terminate this Merger Agreement and abandon the Merger pursuant to the
provisions of Section 10.1(b) or Section 10.1(c), then the party which does not
have the right so to terminate this Merger Agreement will use its reasonable
efforts to cure the condition giving rise to such right. If such party is unable
to cure the condition giving rise to such right, the other may exercise its
right under Section 10.1(b) or Section 10.1(c) to terminate the Merger Agreement
and abandon the Merger, or may waive such right and proceed to consummate the
Merger. In any such event, the representations, warranties, covenants and
agreements (except for the agreements and as to expenses contained in Section
11.1) of the parties shall terminate, and the parties hereto shall have no
continuing obligations or liabilities with respect thereto, except as set forth
in this Section 11.2(b).
11.3. Governing Law. This Merger Agreement shall be governed by, and
-------------
construed and enforced in accordance with, the laws of the state of California
applicable to contracts made and to be performed within such state.
11.4. Notices. All notices, consents, requests, instructions, approvals
-------
and other communications provided for herein shall be deemed validly given, made
or served if in writing and delivered personally (as of such delivery) or sent
by certified mail (as of two days after deposit in a United States post office),
or sent by overnight courier service (as of two days after delivery to an
internationally recognized courier service), or by telex, facsimile or telegraph
(upon receipt), in any case, postage and charges prepaid,
(a) if to ET, addressed to:
Elephant Talk Limited.
Xxxx 0000, Xxxxx 0
Xxxxxxxxxx Xxxxxx, 0 Xxxxxx Xxxx Xxxx
Xxxxxxx Xxx, Xxxxxxx
Xxxx Xxxx
Telephone: (000) 0000-0000
Facsimile: (000) 0000-0000
Attention: Xx. Xxxxxxxx Xxxx
(b) if to the Company, addressed to:
Staruni Corporation
0000 Xxxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
Facsimile: 1 (310) 470-9127
Attention: Xxxxx X. Xxxxxx
or such other address as shall be furnished in writing by either party
to the other.
27
11.5. Press Releases. ET and the Company will consult and cooperate
--------------
in the issuance, form, content and timing of any press releases issued in
connection with the transactions contemplated by this Merger Agreement.
11.6. Assignment; Amendments, Waivers.
-------------------------------
(a) Neither ET nor the Company shall assign any of its rights
or obligations under this Merger Agreement without the prior written consent of
the other.
(b) This Merger Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective successors and
permitted assigns, and no other person shall acquire or have any right under or
by virtue of this Merger Agreement.
(c) No provision of this Merger Agreement may be amended,
modified or waived except by written agreement duly executed by each of the
parties. No waiver by either party of any breach of any provision hereof shall
be deemed to be a continuing waiver thereof in the future or a waiver of any
other provision hereof; nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.
11.7. Entire Agreement. This Merger Agreement represents the entire
-----------------
agreement between the parties and supersedes and cancels any prior oral or
written agreement, letter of intent or understanding related to the subject
matter hereof.
11.8. Severability. If any term, provision, covenant or restriction of
this Merger Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Merger Agreement shall remain in full force
and effect, unless such action would substantially impair the benefits to either
party of the remaining provisions of this Merger Agreement.
11.9. Headings. The headings herein are for convenience only, do
---------
not constitute a part of this Merger Agreement, and shall not be deemed to
limit or affect any of the provisions hereof.
11.10. Counterparts. This Merger Agreement may be executed in one or
------------
more counterparts which, taken together, shall constitute one and the same
instrument, and this Merger Agreement shall become effective when one or more
counterparts have been signed by each of the parties.
IN WITNESS WHEREOF, this Agreement of Merger and Plan of Reorganization
has been duly executed by the parties hereto on the day and year first above
written.
28
ELEPHANT TALK LIMITED.
By: _________________________
Name: Xxxxxxxx Xxxx
Title: CEO
STARUNI CORPORATION
By: _________________________
Name: Xxxxx X. Xxxxxx
Title: President
29
Exhibit A - ET List of Shareholders
Shareholders Number of Shares Proportional
to be Transferred (in '000) Share (%)
Man Eagle Limited 4,998 16.7
28/F., Emperor Group Centre,
000 Xxxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx
Supreme Luck Management Co. Limited 3,381 11.3
0/X., 00 Xxx Xxxxx Xxxx, Xxxxxxx, Xxxx Xxxx
Dragon Source International Limited 1,470 4.9
Xxxx 0000, Xxxxxxxxx House,
00-00 Xxxxxxx Xxxx Xxxxx,
Xxxxxxxxxxx, Xxxxxxx, Xxxx Xxxx
Wellgear Far East Limited 1,911 6.4
00 Xx Xxxxx Xxxx, Xxxxx 00-0X
Xxxxxxx, Xxxx Xxxx
Xxxxxxx International Limited 735 2.5
1385 & 1387, 13/F, International Trademart,
Wang Xxxx Xxxxxx, Xxxxxxx Xxx, Xxxx Xxxx
Jenwell Limited 735 2.5
1385 & 1387, 13/F, International Trademart,
Wang Xxxx Xxxxxx, Xxxxxxx Xxx, Xxxx Xxxx
Xxxxxxx Xxxx 588 2.0
----
c/o Elephant Talk Limited
Room 0000-0 Xxxxx 0, Xxxxxxxxxx Xxxxxx
9 Xxxxxx Xxxx Road Kowloon, Hong Kong
Ieong Hio Xxxx, Xxx 588 2.0
-----
00 Xxxxxxxx Xxxx, Xxxxxxx, XX 00000, X.X.X.
Wiselink Technology Limited 294 1.0
Room 0000-0 Xxxxx 0, Xxxxxxxxxx Xxxxxx,
9 Xxxxxx Xxxx Road ,Kowloon, Hong Kong
The Hartcourt Companies, Inc 15,300 51.0
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, XX 00000, XXX
Total: 30,000 100.0
30
Exhibit B - Opinion of Company Counsel
Law Offices of Xxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxx.
Xxxxx 000
Xxx Xxxxxxx, XX 00000
January 4, 2002
To Whom It May Concern:
The undersigned has acted as legal counsel to Staruni
Corporation (the "Company") and is familiar with the terms and conditions of the
Agreement of Merger and Plan of Reorganization between Staruni Corporation and
Elephant Talk Limited after having reviewed all of the documents supporting the
Agreement. This office assumes no responsibility for any events, occurrences or
statements of fact relating to the Company or for the accuracy, completeness or
fairness of any statements contained in the Proxy Statement previously issued by
the Company or the Agreement of Merger, and this office expresses no opinion as
to the financial statements or other financial or statistical data contained
therein, with respect to the information in the Information Statement relating
to the Company.
It is the opinion of this office that the transaction
contemplated in the Agreement of Merger and Plan of Reorganization between
Staruni Corporation and Elephant Talk Limited may proceed, and that the
Information Statement, as amended or supplemented as of this date, does not
contain any untrue statement of a material fact and does not omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
Very truly yours,
Xxxxx X. Xxxxxx
31
Schedule 2.5
OFFICERS & DIRECTORS
Xxxxxxxx Xxxx Chairman, Chief Executive Officer
And Director
Xxxxx X. Xxxxxx Director
Xxx Xxxxx Director
Xxxx Xxxx Director
Xxxxxxx Xxxx Director
Xxxxxx Xxxx Director
32
Schedule 4.10
None
33
Schedule 4.12
None
34
Schedule 4.13
The Company is currently a defendant in the case of Republic Leasing Company,
Inc. Vs. Pego Systems, Inc. Los Angeles Superior Court Case No. NC 029 552.
Plaintiff's attorney have offered the Company's dismissal from the litigation in
exchange for a mutual release and waiver of costs, which the Company has
accepted. Settlement documents have been provided to Republic Leasing Company,
Inc. for approval and signature. The Company anticipates that its dismissal from
the litigation will occur within the next thirty days.
35
Schedule 4.14
None
36
Schedule 4.17
None
37
Schedule 4.18
None
38
January 4, 2002
Staruni Corporation
0000 Xxxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
To Whom It May Concern:
This shall serve as my notice of resignation as an officer and employee
of Staruni Corporation effective as of this date.
Very truly yours,
Xxxxx Xxxxxx
39
INDEMNITY AGREEMENT
The parties to this Agreement are Xxxxx Xxxxxx ("Stuart"), on the one
hand, and Elephant Talk Limited and Staruni Corporation (collectively referred
hereto as "ET") on the other.
WHEREAS, a merger is scheduled to occur between Staruni Corporation and
Elephant Talk Limited; and
WHEREAS, Staruni Corporation's businesses prior to such merger consist
of Xxxxxxxxxxxx.xxx and Xxxxxxxx.xxx (collectively "the ISP business"); and
WHEREAS, Elephant Talk had requested that Staruni Corporation spin-off
the ISP business at the same time as the completion of merger, which spin-off
was unable to be accomplished prior to the completion of merger;
IT IS NOW AGREED AS FOLLOWS:
For valuable consideration received, the adequacy of which is hereby
acknowledged by Xxxxxx, Xxxxxx shall indemnify ET and hold ET harmless from any
and all potential and actual claims, liens, damages, injuries, liabilities and
lawsuits which may occur as a result of ET's ownership of the ISP business from
January 4, 2002 until such time as ET may complete the sale of the ISP business
to a third party. Stuart shall be responsible for any attorney's fees and costs
which ET may incur as a result of the ISP business, and should litigation be
instituted against ET as a result of the ISP business, Stuart agrees to pay for
the defense of any such claim on behalf of ET, with ET reserving the right to
retain counsel of its choosing.
WHEREFORE, the parties hereto agree to the above on the date indicated
below.
Dated: January 4, 2002 ______________________
Xxxxx Xxxxxx
Dated: January 4, 2002 Elephant Talk Limited
Staruni Corporation
By:___________________
Xxxxxxxx Xxxx, CEO
40
LETTER OF UNDERSTANDING
This Letter of Understanding is by and between Staruni Corporation and
Elephant Talk Limited (collectively referred hereto as "ET"), on the one hand,
and Vision Aerospace, Inc. ("Vision"), a Nevada corporation, on the other.
WHEREAS, a merger is scheduled to occur between Staruni Corporation and
Elephant Talk Limited; and
WHEREAS, Staruni Corporation's businesses prior to such merger consist
of Xxxxxxxxxxxx.xxx and Xxxxxxxx.xxx (collectively "the ISP business"); and
WHEREAS, upon completion of the merger ET wishes to sell off the ISP
business;
Therefore, the parties understand as follows:
1. Shortly after the completion of the merger, ET shall sell the
ISP business to Vision and shall also sell to Vision all
assets of Staruni Corporation which existed as of January 3,
2002, including all stock and bank accounts (of which such
accounts are attached hereto as Schedule 4.9) of Staruni
Corporation, in exchange for 1,000,000 (one million) shares of
Vision.
This letter of understanding is executed on this 4th day of January,
2002 by the parties listed below.
Dated: January 4, 2002 Elephant Talk Limited
Staruni Corporation
By:______________________
Xxxxxxxx Xxxx, CEO
Dated: January 4, 2002 Vision Aerospace, Inc.
By:______________________
Xxxxx Xxxxxx, President
41
Schedule 4.9
Names and address of the Banks
Manufacturer's Bank
000 X. Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Account No.: 00000000
Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxx.
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Account No.: 1800053801
MDB Capital
000 Xxxxxxxx Xxxx.
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Account No.: T350322
42
