WHO IS THE DUMBO? WHO IS THE CHUMP? FORM 8-KSECURITIES AND EXCHANGE COMMISSION
CHEERS DUMBO CHUMP!!
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 9, 2003
ELEPHANT TALK COMMUNICATIONS, INC.
----------------------------------------
(Exact name of registrant as specified in its charter)
California 000-30061 95-2210753
(State of Incorporation) (Commission (IRS Employer
File Number) Identification #)
438 East Katella Avenue, Suite 217, Orange, California 92867
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(Address of Principal Executive Offices)
(714) 288-1570
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(Registrant's telephone number, including area code)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Pursuant to an execution of a Spin-Off Agreement, dated September 12,
2002, and through the subsequent transactions that closed on January 4, 2003,
Elephant Talk Communications, Inc. (the "Company"), terminated its relationship
with The Hartcourt Companies, Inc., a Utah corporation ("Hartcourt"). The
Company was formerly a subsidiary of Hartcourt.
Pursuant to the terms of the Spin-Off Agreement, the Company received
17,895,579 of its common shares held by Hartcourt and $349,000 in cash advances
from Hartcourt, in exchange for returning 4,756,000 common shares of Hartcourt
held by the Company and its affiliates, canceling two promissory notes of
Hartcourt held by the Company and its affiliate in the respective amounts of
$1,250,000 and $140,595, and canceling the indebtedness by issuing 5,000,000 of
its restricted common shares to Hartcourt. In addition to executing the Spin-Off
Agreement, the parties executed a mutual release to end their relationship and
place each other in a position whereby no party is indebted to the other party.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
None.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
None.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
None.
ITEM 5. OTHER EVENTS
None.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
None.
ITEM 7. FINANCIAL STATEMENTS
None
ITEM 8. CHANGE IN FISCAL YEAR
None.
ITEM 9 EXHIBITS
o Spin-Off Agreement, dated September 12, 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Current Report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: January 9, 2003 By: /s/ Russelle Choi
---------------------
Russelle Choi
President & CEO
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EXHIBIT
Spin-Off Agreement
This Agreement is made this 12th day of September by and between The
Hartcourt Companies, Inc. ("Hartcourt"), Elephant Talk Communications, Inc.
("ET") and Elephant Talk Limited ("ETL").
WHEREAS, Hartcourt holds 17,895,579 shares of ET; and
WHEREAS, ETL holds 4,756,000 shares of Hartcourt; and
WHEREAS, ET and ETL hold two promissory notes of Hartcourt in the
respective amounts of $1,250,000 and $140,595 (in the name of Jimmy
Lee); and
WHEREAS, Hartcourt has advanced ET the approximate sum of $349,000; and
WHEREAS, the parties seek to end their relationship and place each
other in a position whereby no party is indebted to the other party;
NOW, THEREFORE, the parties agree as follows:
1. Within five days of their execution of this Agreement, ET and ETL shall
deliver to Hartcourt their 4,756,000 shares of Hartcourt stock, and
shall cancel any and all indebtedness of Hartcourt to ET and ETL,
including the promissory notes executed by Hartcourt in favor of ET,
ETL and their predecessors, officers, subsidiaries, parent entities,
agents, assigns and assignees, and shall hold Hartcourt harmless from
any and all obligations which Hartcourt may have, contingent or
otherwise, to ET or ETL. ET and ETL shall arrange for the cancellation
of the $140,595.00 promissory note to Jimmy Lee from Hartcourt. ET
shall further deliver to Hartcourt 5,000,000 shares of restricted ET
stock. ET shall further execute an irrevocable order to Signature Stock
Transfer, Inc. whereby ET agrees that it shall not place any stop order
or other restrictions on the shares to be delivered to Hartcourt or on
the shares which are owned by Enlight Corporation, such that any
restrictions may be removed from such shares to be delivered to
Hartcourt and on such shares owned by Enlight on the appropriate dates.
Any and all deliveries by ET and/or ETL to Hartcourt shall be actually
delivered to John A. Furutani, who will serve as escrow agent for all
parties. Upon Hartcourt's performance under Paragraph 2 of this
Agreement, John A. Furutani shall deliver the documents specified in
this Paragraph to Hartcourt.
2. Within five days of Harcourt's execution of this Agreement, Hartcourt
shall deliver to ET its 17,895,579 shares of ET stock and shall cancel
any and all indebtedness of ET and ETL to Hartcourt, and shall hold ET
and ETL harmless from any and all obligations which ET or ETL may have,
contingent or otherwise, to Hartcourt. Any and all deliveries by
Hartcourt to ET and/or ETL shall be actually delivered to John A.
Furutani, who will serve as escrow agent for all parties. Upon ET and
ETL's performances under Paragraph 1 of this Agreement, John A.
Furutani shall deliver the documents specified in this Paragraph to ET
and ETL.
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3. ET and ETL shall execute a mutual general release with Hartcourt, and
Hartcourt shall execute a mutual general release with ET and ETL.
4. At the written request of ET, Hartcourt shall obtain the immediate
resignations of Stephen Tang, Dennis Poon and Manu Ohri and as
directors of ET, such that Hartcourt will no longer have any control
over ET. Hartcourt shall also make its best efforts to obtain the
resignation of Bruce Stuart as a director of ET.
5. ET and ETL respectively warrant and represent the following:
i. That the execution of this agreement by ET and ETL has been duly
authorized by all necessary corporate actions of ET and ETL and
constitutes a valid and binding obligation of ET and ETL. The execution
of this agreement by ET and ETL and the consummation of the
transactions contemplated hereby does not conflict with or result in a
default under or breach of: (1) ET or ETL's Articles of Organization or
By-laws or other organizational documents; (2) any agreement,
indenture, mortgage, contract or instrument to which ET or ETL is bound
or by which any of its properties or assets is subject; (3) any order,
writ, injunction, decree or judgment of any court or governmental
agency applicable to ET and ETL or to which any of its assets is bound;
(4) any law or regulation applicable to ET and ETL or by which any of
its assets is bound.
ii. That ET and ETL are corporations or corporate entities in good
standing with the states of their incorporation and have not been
voluntarily or involuntarily dissolved.
6. Hartcourt warrants and represents the following:
i. That the execution of this agreement by Hartcourt has been duly
authorized by all necessary corporate actions of Hartcourt and
constitutes a valid and binding obligation of Hartcourt. The execution
of this agreement by Hartcourt and the consummation of the transactions
contemplated hereby does not conflict with or result in a default under
or breach of: (1) Hartcourt's Articles of Organization or By-laws or
other organizational documents; (2) any agreement, indenture, mortgage,
contract or instrument to which Hartcourt is bound or by which any of
its properties or assets is subject; (3) any order, writ, injunction,
decree or judgment of any court or governmental agency applicable to
Hartcourt or to which any of its assets is bound; (4) any law or
regulation applicable to Hartcourt or by which any of its assets is
bound.
ii. That Hartcourt is a corporation in good standing with the state of
Utah and has not been voluntarily or involuntarily dissolved.
7. All representations and covenants made by each party shall survive the
execution hereof and the termination of this Agreement.
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8. For the period of five years from the date of the execution of this
Agreement, Hartcourt shall not directly or indirectly solicit, or cause
to be solicited, for the benefit of Hartcourt or any other firm, any of
ET and/or ETL's customers, as to those, or similar services rendered
through and/or by ET and ETL, and shall not attempt to interfere with
ET and/or ETL's relationship with any of its customers. For the period
of five years from the date of the execution of this Agreement, ET and
ETL shall not directly or indirectly solicit, or cause to be solicited,
for the benefit of ET and/or ETL or any other firm, any of Hartcourt's
and its subsidiaries and/or affiliates' customers, as to those, or
similar services rendered through and/or by Hartcourt and its
subsidiaries or affiliates, and shall not attempt to interfere with
Hartcourt and its subsidiaries or affiliates' relationship with any of
its customers.
9. Hartcourt, ET and ETL recognize that each is aware of the other's
proprietary information, including but not limited to, trade secrets,
"know-how", customer lists, rate-pricing policies, customer and product
development plans, financial information and any other business
information pertaining to the business of ET and ETL and Hartcourt
(hereinafter referred to as "trade secrets").
Hartcourt agrees not to use such trade secrets of ET and/or ETL except
on behalf of ET and/or ETL and Hartcourt shall not disclose, use,
publish or in any other manner reveal, directly or indirectly, such
proprietary information except as may be necessary to perform its
services hereunder. Upon the termination of this Agreement, Hartcourt
agrees to treat all such proprietary information as confidential
property of ET and/or ETL and not to disclose or use any of such
proprietary information in any manner whatsoever.
ET and ETL agree not to use such trade secrets of Hartcourt except on
behalf of Hartcourt and ET and ETL shall not disclose, use, publish or
in any other manner reveal, directly or indirectly, such proprietary
information except as may be necessary to perform its services
hereunder. Upon the termination of this Agreement, ET and ETL agree to
treat all such proprietary information as confidential property of
Hartcourt and not to disclose or use any of such proprietary
information in any manner whatsoever.
The parties expressly agree that the customers developed for ET and/or
ETL by Hartcourt are a trade secret of ET and/or ETL, and that any
customers developed for Hartcourt or any of its affiliates and/or
subsidiaries by ET and/or ETL are a trade secret of Hartcourt.
The parties further agree to the especially sensitive nature of the
proprietary information and agree to keep confidential all such
proprietary information. The parties agree that unless written consent
has been received from the other parties, they will never engage in or
refrain from any action, where such action or inaction may result (a)
in the unauthorized disclosure of any or all such proprietary
information to any person or entity; or (b) in the infringement of any
or all such rights. The parties agree that they will not, without the
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written permission of the other party, use the proprietary information
which they are obligated hereunder to maintain in confidence for any
reason other than to enable it to properly and completely perform its
efforts. The parties agree to limit the disclosure of proprietary
information to those persons in their respective companies who have a
need to know all or part of the proprietary information. The parties
shall make such disclosure to each such person limited to that portion
of the trade secret that person needs to know. The parties hereby agree
to exercise every reasonable precaution to prevent and restrain the
unauthorized disclosure of the proprietary information by any of its
directors, officers, employees, subcontractors, licensees or agents.
Without limiting the generality of the foregoing the parties shall
require that all of their employees, consultants and permitted
licensees having access to the proprietary information execute an
agreement for the protection of the proprietary information.
The parties acknowledge and agree that due to the unique nature of the
proprietary information there can be no adequate remedy at law for any
breach of its obligations hereunder, that any such breach may allow the
party disclosing the proprietary information (hereinafter referred to
as the "Disclosing Party") or third parties to unfairly compete with
the other party (hereinafter referred to as the "Damaged Party")
resulting in irreparable harm to the Damaged Party and therefore upon
any such breach or any threat thereof, the Damaged Party shall be
entitled to appropriate equitable relief in addition to whatever
remedies it might have at law.
The Disclosing Party will notify the Damaged Party in writing
immediately upon the occurrence of any unauthorized release or other
breach of which it is aware.
10. Hartcourt shall defend, indemnify and hold ET and ETL harmless from and
against any claim, loss, expense or damage to any person or persons,
firm or firms, corporation or corporations or property as a result of:
(a) failure by Hartcourt to meet any representation or to perform any
obligation required to be performed by Hartcourt hereunder;
(b) failure to comply with any requirements of any governmental
authority; and
Hartcourt will indemnify ET and ETL against all costs, reasonable
counsel fees, expenses and liabilities incurred in or about any such
claim or action or proceeding brought thereon; and in case any action
or proceeding be brought against ET or ETL by reason of any such claim,
Hartcourt upon notice from ET and/or ETL, covenants to resist or
defend, at Hartcourt's expense, such action or proceeding by counsel
reasonably satisfactory to ET and/or ETL.
11. ET and ETL shall defend, indemnify and hold Hartcourt harmless from and
against any claim, loss, expense or damage to any person or persons,
firm or firms, corporation or corporations or property as a result of:
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(a) failure by ET or ETL to meet any representation or perform any
obligation required to be performed by ET or ETL hereunder;
(b) failure to comply with any requirements of any governmental
authority; and
ET and ETL will indemnify Hartcourt against all costs, reasonable
counsel fees, expenses and liabilities incurred in or about any such
claim or action or proceeding brought thereon; and in case any action
or proceeding be brought against Hartcourt by reason of any such claim,
ET and ETL upon notice from Hartcourt, covenants to resist or defend,
at ET's and ETL's expense, such action or proceeding by counsel
reasonably satisfactory to Hartcourt.
12. Each party executing this Agreement in a representative capacity is
empowered to do so and has obtained any required board consents and/or
resolutions. Each party executing this Agreement acknowledges that it
has not assigned, sold or transferred in any manner any of the
consideration at issue in this Agreement, and that each party hereto is
capable of performing in accordance with the terms of this Agreement.
13. This Agreement sets forth the entire agreement between the parties and
supersedes any and all prior agreements or understandings between the
parties pertaining to the subject matter hereof. This Agreement may be
amended only by an agreement in writing executed by all of the parties
hereto.
14. In the event any term, provision, or part of this Agreement is declared
or determined to be illegal or invalid, the illegal or invalid term,
provision, or part declared illegal or invalid shall be severed from
and deemed not a part of this Agreement, and the validity of the
remaining terms, provisions, and parts shall not be affected thereby.
15. In the event that any party hereto should bring any action, suit, or
proceeding against any other party hereto, arising out of or related to
this Agreement, the validity hereof, any of the terms or provisions
hereof, or any of the matters released hereby, the successful party in
such action, suit, or proceeding shall be entitled to recover from such
other party its reasonable attorneys' fees and costs (including costs
and fees of experts) incurred in connection therewith. The parties
agree that any action between the parties relating to this Agreement
shall be governed by the laws of the State of California.
16. This Agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and
the same instrument, binding on all parties hereto.
17. All notices and other communications made pursuant to this Agreement
shall be in writing and shall be deemed to have been given or delivered
upon receipt if given by fax, hand, mail or by courier, in each case
addressed as follows:
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To Elephant Talk Communications, Inc. and Elephant Talk Limited:
Elephant Talk Communications, Inc.
Elephant Talk Limited
8/F 145-159 Yeung Uk Road
Tuesn Wan, Hong Kong
Telephone (from U.S.): 011 852 2 707070 3
Fax (from U.S.): 011 852 2 707070 7
To The Hartcourt Companies, Inc.
The Hartcourt Companies, Inc.
Nice Year Villa
Unit D2-2
3333 Hong Mei Road
Shanghai, China 201103
Telephone (from U.S.): 011 8621 6406 5784
Fax (from U.S.): 011 8621 6406 4984
with a copy to:
John A. Furutani, Esq.
2500 E. Colorado Blvd.
Suite 301
Pasadena, CA 91107
Telephone: (626) 844-2437
Fax: (626) 844-2442
18. The parties hereto agree that John A. Furutani, acting as the Escrow
Agent, shall not be personally liable for any act he may do or omit to
do under this Agreement while acting in good faith and in the exercise
of its best judgment. In the event of a dispute between any of the
parties hereto, except as otherwise expressly provided herein, the
Escrow Agent is authorized and directed to disregard any and all
notices or warnings given by Hartcourt, ET and ETL, excepting only: (i)
orders or process of court; or (ii) instructions jointly executed by
ET, ETL and Hartcourt. The Escrow Agent is hereby expressly authorized
to comply with and obey any and all orders, judgments or decrees issued
by any court and any instructions jointly executed by all of the
parties hereto. The parties hereto shall indemnify the Escrow Agent and
hold him harmless from and against any and all damages, including
attorneys' fees, which the parties hereto may suffer or incur by reason
of the compliance by the Escrow Agent with any such order, judgment or
decree, notwithstanding that any such order, judgment or decree may be
subsequently reversed, modified, annulled, set aside or vacated, or
found to have been entered without jurisdiction.
The Escrow Agent has the absolute right, at the Escrow Agent's
election, to file an action in interpleader in a court of proper
jurisdiction requiring the parties hereto to answer and litigate their
claims and rights among themselves, and the Escrow Agent is authorized
to deposit with the clerk of the court all documents and funds held by
him pursuant to this Agreement. In the event such action is filed, the
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parties hereto agree to equally pay all costs, expenses and reasonable
attorneys' fees which the Escrow Agent incurs in such interpleader
action. Upon filing of such action, the Escrow Agent shall thereupon be
fully released and discharged from all obligations to further perform
any duties or obligations otherwise imposed by the terms of this
Agreement.
The Escrow Agent shall not be bound in any way by any other agreement
between the parties hereto as to which the Escrow Agent is not a party,
whether or not the Escrow Agent has knowledge thereof. The Escrow Agent
shall have no duties or responsibilities except as expressly set forth
in this Agreement. The Escrow Agent may rely conclusively on any
certificate, statement, request, waiver, receipt, agreement or other
instrument which the Escrow Agent believes to be genuine and to have
been signed and presented by an appropriate person or persons,
including copies and facsimiles.
The retention and distribution of the documents and shares in
accordance with the terms and provisions of this Agreement shall fully
and completely release the Escrow Agent from any obligation or
liability assumed by the Escrow Agent hereunder as to such documents or
shares.
The Escrow Agent shall not be liable in any respect for verifying the
identity, authority or rights of the parties executing or delivering or
purporting to execute and/or deliver the documents or shares deposited
hereunder.
The parties hereto will indemnify, defend (with counsel acceptable to
the Escrow Agent) and hold the Escrow Agent harmless against any and
all losses, damages, claims and expenses, including reasonable
attorneys' fees, that may be incurred by the Escrow Agent by reason of
its compliance with the terms of this Agreement. If, as a result of any
disagreement between the parties hereto and/or adverse demands and
claims being made by any of them upon the Escrow Agent, the Escrow
Agent shall become involved in litigation, including any interpleader
action brought by the Escrow Agent as provided for in this Agreement,
the parties hereto shall be liable to the Escrow Agent, on demand, for
all costs, expenses and attorneys' fees that the Escrow Agent shall
incur and/or be compelled to pay by reason of such litigation.
The engagement of John Furutani as escrow agent for ET, ETL and Hartcourt in
connection with this Agreement, notwithstanding that such services are provided
as an accommodation to ET, ETL and Hartcourt for no consideration, may result in
certain conflicts of interests relating to: (i) John Furutani's professional
obligation to zealously represent Hartcourt as its legal counsel; and (ii) John
Furutani entering into a business arrangement with a client. In addition, this
Agreement contains provisions which limit John Furutani's liabilities and
obligations as escrow agent, and provide John Furutani with indemnification
rights as escrow agent against Hartcourt, ET and ETL. In signing this Agreement,
ET, ETL and Hartcourt acknowledge that they have been informed, and been given
the reasonable opportunity, prior to executing this Agreement, to seek advice
from independent legal counsel relative to the appropriateness, fairness and
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reasonableness of the terms of this Agreement and any potential or actual
adverse interests or conflicts of interest in connection therewith. In view of
the foregoing, ET, ETL and Hartcourt agree that: (i) at no time shall it claim
that John Furutani failed to raise all potential or actual adverse interests or
conflicts of interest; and (ii) at no time shall any such purported failure be
construed, claimed or deemed by ET, ETL or Hartcourt to be a breach of any
professional obligation of John Furutani pertaining to providing disclosures to,
and/or obtaining the consent of, ET, ETL or Hartcourt with respect to potential
or actual adverse interests or conflicts of interests.
WHEREFORE, each party has executed this Agreement on the respective
date set forth below.
Dated: Sept. 16, 2002 The Hartcourt Companies, Inc.
By: /s/Alan Phan
Its: Chairman of the Board
Dated: Sept. 13, 2002 Elephant Talk Communications, Inc.
By: /s/ Russelle Choi
Its: Chief Executive Officer
Dated: Sept. 13, 2002 Elephant Talk, Limited
By: /s/ Ken Ieong
Its: Director
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