<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 13, 1996
---------------------
STARLIGHT ACQUISITIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
COLORADO 33-28562 84-1107575
(State or other jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
1328 Starwood Lane, Evergreen, Colorado 80439
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (303) 674-8953
---------------------
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Effective May 10, 1996, Starlight Acquisitions, Inc. ("Starlight"), a
Colorado corporation, acquired all the outstanding capital stock of Toucan
Mining Limited ("Toucan"), a company organized under the laws of the Isle of
Man, in exchange for shares of common stock, no par value, (the "Common
Stock") of Starlight (the "Share Exchange) pursuant to a Share Exchange
Agreement (the "Agreement"), dated May 10, 1996, by and among Starlight and
the shareholders of Toucan. As a result of the Share Exchange, a change in
control of Starlight occurred. See Item 2 for a description of the Share
Exchange and related transactions. The Agreement is set forth as an exhibit
hereto.
[THIS IS A CHART ILLUSTRATING THE CORPORATE
STRUCTURE OF STARLIGHT AND ITS SUBSIDIARIES.]
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
THE SHARE EXCHANGE
GENERAL. Effective May 10, 1996 (the "Effective Date"), Toucan became a
wholly owned subsidiary of Starlight. Pursuant to the terms of the
Agreement, each shareholder of Toucan received seven shares of Common Stock
of Starlight for each share of common stock of Toucan held by such
stockholder. The shares of Common Stock received by the Toucan shareholders
in the Share Exchange were issued in a transaction exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act") and,
therefore, are restricted stock. Starlight intends, but is not obligated to,
file a registration statement under the Securities Act to register the sale
of such shares at some time in the future in which event the offering will be
made only by means of a prospectus. As of May 10, 1996, Starlight has
5,101,459 shares of Common Stock outstanding, after the Share Exchange. All
warrants of Starlight outstanding prior to the Effective Date have expired,
and Starlight issued new warrants on May 10, 1996, to purchase an
additional 100,000 shares of Common Stock at an exercise price of $4.00 per
share, which are immediately exercisable and expire on the later of the
eighteenth month anniversary of the issuance date or (ii) the six month
anniversary of the closing of the first registration of securities by the
Company. The new warrants were issued to former officers and directors of
Starlight in consideration of, among other things, their agreement to
indemnify Toucan and Starlight with respect to certain representations in the
Agreement. The holders of such warrants have certain piggy-back registration
rights with respect to the shares of Common Stock underlying such warrants.
Former stockholders of Toucan now own approximately 89% of the issued and
outstanding Common Stock of Starlight on a fully-diluted basis. See Appendix
A for a description of the ownership of Common Stock by the directors and
officers of Starlight, Toucan and MBL and the 5% or greater shareholders of
Starlight.
DIRECTORS AND OFFICERS OF STARLIGHT. Effective May 10, 1996, the
directors of Starlight are Robert Jeffcock, L. Clark Arnold and Don Box. Jay
Lutsky will serve as an advisory director of Starlight. Mr. Jeffcock serves
as Chief Executive Officer, Chief Financial Officer and Secretary of
Starlight, Mr. Arnold serves as Executive Vice President Exploration and Mr.
Box serves as Assistant Secretary.
ROBERT JEFFCOCK - From 1987 until 1990 Mr. Jeffcock was the Managing
Director of Blue Angel Mining Ltd., a gold exploration company in Ecuador and
from 1990 until 1994 he was a director of Atlantis Diamonds Ltd., which was
involved in diamond exploration and production in Brazil. In 1981, Mr.
Jeffcock was the co-founder and President of Isle Resources Inc., a public
oil and gas company. In 1984, Mr. Jeffcock
<PAGE>
co-founded Lysander Petroleum Ltd., which is now Melrose Energy Plc. Mr.
Jeffcock is also Chairman of Lone Mountain Mining Corp., a U.S. mining
company. Mr. Jeffcock was born in 1939, and educated at Bedales School and
at Aiglon School Villars, Switzerland.
L. CLARK ARNOLD - Mr. Arnold is a registered professional geologist in
the State of Arizona. Since the mid-1970s Mr. Arnold has engaged in a
consulting practice located in Tucson, Arizona, focused on mineral
exploration in Southwest U.S., South America and the Southwest Pacific. Mr.
Arnold was born in 1940 and holds a MS Degree and a Ph.D Degree in Geology,
both from the University of Arizona.
DON BOX - Mr. Box is the Chairman of the Board of Directors of Box
Energy Corporation, a public company owning oil and gas interests in the Gulf
of Mexico and mainland U.S. Mr. Box was born in 1950 and holds a bachelor of
Arts degree from the University of Pennsylvania, a Bachelor of science degree
in Economics from the Warton School of Business and a Masters degree in
Business Administration from Southern Methodist University.
JAY LUTSKY - Mr. Lutsky has been the Vice President and a Director of
Starlight since its inception. From February 1988 through May 1988 Mr. Lutsky
served as a director of Videocomm, Inc., a company engaged in producing
advertising and promotional videos. From December 1986 to May 1990, Mr.
Lutsky served as President and a Director of Eagle Venture Acquisitions,
Inc., a public company formed for the purpose of evaluating potential
business opportunities with the intent of acquiring such an opportunity. In
May 1990, Eagle Venture Acquisitions, Inc. merged with Network Real Estate,
Inc., of Soquel, California, a real estate brokerage firm. Mr. Lutsky
resigned as President but remained as a Director until March 1994. Mr.
Lutsky was born in 1943 and earned a Bachelor of Science degree in 1967 from
Kent State University.
TOUCAN
GENERAL. Toucan is an exploration stage company incorporated on
November 3, 1995 under the laws of the Isle of Man (British Isles). The
principal executive office of Toucan is located at Celtic House, Victoria
Street, Douglas, Isle of Man IM99 1QZ. Toucan conducts its operations
primarily through its wholly owned subsidiary, Mineradora de Bauxita Ltda.
("MBL"), which is an authorized mining company organized under the laws of
Brazil. The registered office of MBL is located at Rua 24 de Outubro no.
3313, Santarem, state of Para, Brazil. MBL has been financed entirely by
Toucan for the purpose of conducting mineral exploration, specifically gold
exploration. The sole asset of MBL is mineral claims in the Cuiaba Basin,
Mato Grosso, Brazil. See "Description of Exploration and Mining Concessions"
below.
MANAGEMENT. The directors of Toucan are Robert Jeffcock, Paraic O'Dowd
and Jonathan Ely. Mr. Jeffcock serves as Managing Director of Toucan. The
directors of MBL are Julio Lambertson Rabello and Carlos Edvardo Lins E
Silva. Igor Mousasticoshvily, a U.S. trained geologist, serves as Chief of
Operations of MBL. Neither Toucan nor MBL are required to have titled
officers.
DESCRIPTION OF EXPLORATION AND MINING CONCESSIONS. Under the Brazilian
Federal Constitution, all mineral resources belong to Brazil. Prospecting
and mining of mineral resources may be carried out only following the grant
of a prospecting authorization or mining concession by the National Mineral
Production Department ("DNPM"), an agency of the Ministry of Mines and
Energy, which administers the Brazilian Mining Code and other laws and
regulations governing prospecting and mining operations in Brazil. Mining
concessions are granted only to Brazilian companies that have been duly
authorized by the Ministry of Mines and Energy to act as a mining company.
In 1995, the Brazilian government approved a constitutional amendment that
eliminated the requirement of Brazilian control of mining companies, so that
a Brazilian mining company can be 100% foreign owned and still qualify as a
mining company.
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Mining concessions are granted only after exploration proves the
existence of a mineral deposit that is economically exploitable. Concessions
are granted for an indeterminate period of time lasting until the exhaustion
of the mineral deposit. Minerals extracted under the authority of a
concession belong to the concession holder. Concessions may be transferred
to third parties with the approval of the DNPM, provided the transferee has
the necessary qualifications to own a concession and to act as a mining
company.
The Mining Code and the Federal Constitution impose on mining companies
requirements relating to, among other things, the manner in which mineral
deposits are exploited, the health and safety of workers, the protection and
restoration of the environment, the prevention of pollution and the promotion
of the health and safety of local communities where the mines are located.
The Mining Code also imposes certain notification and reporting requirements.
MBL has exploration claims to 931,758 Hectares ("Ha") (2.47 Acres to 1
Ha) in the Cuiaba Basin. This area is approximately 160 kilometers long in a
northeast/southwest direction and is from 30-100 kilometers wide. The claims
are located between 15 DEG. - 16 DEG. 30' South latitude and between
55 DEG. 40' - 57 DEG. West longitude. The large, provincial city of Cuiaba,
the capital of Mato Grosso, is located within MBL's claim area. See map
below.
No further payments are necessary to perfect ownership of the claims by
MBL. Brazilian law requires that the claims will, in due course, be
advertised by the Brazilian authorities in the Government Gazette. This can
occur from one to twenty years from the date of making the claims. Once the
claims are published in the Government Gazette an annual tax is payable of 20
cents per Ha on those advertised claims.
Claim owners have three years from the date of publication in the
Government Gazette in which to submit the results of their exploration
program. If the results appear economically viable, a mining feasibility
study is prepared as well as an environmental study from an independent
consulting firm. The feasibility study and the environmental study have to
be submitted to the DNPM simultaneously.
On request and at the discretion of the DNPM, an additional one to three
years can be granted to continue exploration work. In the event that the
feasibility study shows a mine to be economically exploitable and the
environmental study is satisfactory, a mining concession is granted. The
mining concession has no expiration date and lasts as long as the mine is
economically viable and the operations are maintained in accordance with the
rules and regulations of the DNPM.
MBL's original claim also covered an additional 303,190 Ha in the same
basin, which were contested by a previous claimant. The Ministry of Mines
and Energy ruled against the previous claimant, and the decision was
published in the Government Gazettee on April 22, 1996. Accordingly, MBL's
claim to the additional 303,190 Ha will become effective on May 23, 1996,
after which MBL is able to apply to the DNPM for formal documentation of the
claim. MBL's claims, including the claims referred to above, will then
extend to 1,234,948 Ha or 4,766 square miles.
At this time, MBL is an exploration stage company and has no probable or
proven reserves as defined by the rules and regulations of the Securities and
Exchange Commission.
[THIS IS A MAP OF SOUTH AMERICA ILLUSTRATING
THE LOCATION OF THE MBL CLAIMS IN BRAZIL.]
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ACCESS TO CLAIMS. The Cuiaba Basin has a network of hard top roads that
are generally in good condition. MBL's claims are also criss-crossed with
sand and gravel roads, the majority of which are well maintained. Daily
scheduled commercial air service is available to and from Cuiaba.
LANDOWNERS. The majority of land covered by MBL's claims is a sandy
gravely soil covered in light scrub. Cattle ranching is the principal
agricultural activity. Except where the claims fall within a township such
as Cuiaba, the majority of the land has a low agricultural value.
Mining companies are subject to certain financial obligations, including
the payment of compensation to private property owners for damage and loss of
income caused by the use and occupation of their land in connection with
mining activities. Even though MBL owns the mining claims, access to the
land has to be negotiated with the surface owners. In the event that
agreement cannot be reached with the surface owner, MBL can still conduct
mining operations on the property by seeking a judicial order to determine
the amount of surface damage to the property and to grant the surface owner a
royalty on future production.
BRIEF HISTORY OF PREVIOUS OPERATIONS. Gold mining in the Cuiaba Basin
began around 1719. Mining activity was sporadic, tending to coincide with
periods of high gold price or technical innovations that enabled profitable
extraction of the gold. The most recent phase of activity occurred during
the 1980's when a period of high gold prices coincided with the availability
of sophisticated metal detectors. Miners quickly realized that by using this
equipment, near-surface gold mineralization (nuggets) could be readily
located and recovered with the help of earth moving equipment. Thousands of
hectares were stripped of soil and vegetation. The easily located nugget
fields now appear to be exhausted as do the majority of the easily mined
mineralized quartz veins.
CLIMATE. Exploration and mining operations are possible throughout the
year. The rainy season is from December through to April. There are only
occasional thunder storms from May to December. In summer (December -
February) the temperature can reach as high as 45 degrees Centigrade although
the mean temperature is 35 degrees Centigrade.
ENVIRONMENT. Previous miners have stripped thousands of hectares of
soil and vegetation in the Cuiaba Basin. MBL will arrange to document the
existing environmental condition of its claims to place on record with the
environmental authorities the damage done to the environment by previous
operators. Environmental regulation and protection in Brazil is based on
provisions of the Federal Constitution, and of federal, state and municipal
legislation. Mining and industrial activities require the preparation of an
environmental impact statement and the acquisition of an environmental
permit. In addition, the Mining Code requires the reclamation and
restoration of mined areas.
DESCRIPTION OF THE ROCK FORMATIONS AND MINERALIZATION. The rocks of
the Cuiaba Basin are phyllites of Archean age, which means they are amongst
the oldest rocks known and, although they were originally formed from fine
grained sediments (mudstones and siltstones), they have been converted to
micaceous metamorphic rocks as a result of exposure to elevated temperatures
and pressures.
The Cuiaba Basin has apparently been unusually tectonically stable over
an extended period of geologic time, allowing the development of a very deep
weathering profile in a climate characterized by alternating wet and dry
conditions.
Primary gold mineralization appears to be related to irregular quartz
veins thought to have formed during a period of metamorphism. The near
surface gold mineralization (nuggets, flakes and colours) is believed by
management to have developed as a result of leaching and upward migration of
gold in solution during development of the soil profile. Similar gold
occurrences or "nugget patches" recently recognized in
<PAGE>
Western Australia have been found to be associated with primary gold
mineralization at depth. Management believes that the broad areas of nugget
development in the Cuiaba Basin suggest surface manifestations of deeper,
disseminated and probably very fine grained, primary gold mineralization of
the sort found in Western Australia.
GOLD SALES. Gold mined in Brazil must be sold (i) to the Central Bank
of Brazil (via one of their registered agents), (ii) to the Sao Paulo gold
exchange or (iii) to any registered gold buyer in Brazil. The price paid is
normally the London afternoon Gold Fix. On occasion a premium is paid of
typically 2%. The agent charges a commission that is normally between 0.5 -
1.0%. The seller of the gold is paid in U.S. Dollars.
BRAZILIAN TAXATION. In general, Brazilian mining companies are subject to a
25% income tax and an 8% social security contribution. Dividends paid to
shareholders domiciled abroad are subject to a 15% withholding tax by the
Brazilian taxing authority.
EXCHANGE CONTROLS. Subject to certain registration requirements with the
Central Bank of Brazil, MBL may repatriate U.S. Dollars earned from its
Brazilian operations to Toucan or Starlight through the repayment of loans
and the payment of dividends. On occasions in the past, Brazil has imposed
temporary restrictions on the conversion and remittance of foreign capital,
for example when there was a serious imbalance in Brazil's balance of
payments. In such circumstances Starlight could be adversely affected, if
the exchange control rules were changed to delay or deny remittances abroad
from MBL.
PLAN OF OPERATIONS. MBL intends to undertake a program of mineral
exploration to target and explore selected areas of its Brazilian mining
claims to determine which areas are most likely to contain economic gold
mineralization. A mapping program based upon satellite imagery will precede
field investigation, which will include detailed geologic mapping,
geochemical sampling and drilling in accordance with standard exploration
practice. A program of this nature (bearing in mind the size of MBL's claim
area) is likely to take several years and could involve joint ventures. In
the event of encouraging results in a particular area, a more concentrated
study (with closely spaced drilling and metallurgical analysis) will be
undertaken to provide the basis of a feasibility study for mineral
development. MBL will also be working to acquire additional claims in the
Cuiba basin.
To fund this program for up to two years and to pay for normal expenses,
Starlight plans to raise approximately $4 million, net of offering costs.
The expenses for the first 12 months are anticipated to be approximately $2.5
million of which approximately 80% is expected to be spent on direct or
ancillary in-ground exploration costs and 10% on the acquisition of future
claims. The plan will be subject to review depending on the results
obtained. Costs could rise if, among other things, the weather proves
untypically harsh, unforeseen ground conditions are encountered, equipment
becomes difficult to source or negotiations with surface owners become
prolonged. MBL may spend more or less on claim acquisitions than currently
estimated. There can be no assurance that the exploration program will
result in the discovery of economic gold mineralization. The matters
discussed herein contain forward-looking statements that involve certain
risks, uncertainties and additional costs detailed herein. The actual
results that are achieved may differ materially from any forward-looking
projections, due to such risks, uncertainties and additional costs.
If Starlight succeeds in its fund raising efforts and meets NASDAQ
listing requirements, it intends to apply to NASDAQ for listing.
<PAGE>
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On May 10, 1996, the Board of Directors removed Comiskey & Company,
P.C., as Starlight's principal accountants.
None of the reports of Comiskey & Company, P.C. on the financial
statements of Starlight for either of the past two fiscal years contained an
adverse opinion or a disclaimer of opinion, or was qualified as to
uncertainty, audit scope, or accounting principles. During Starlight's two
most recent fiscal years and the subsequent interim period preceding such
resignation, there were no disagreements with Comiskey & Company, P.C. on any
matter of accounting principles or practices, financial statement disclosure,
or auditing scope or procedures. None of the reportable events listed in
Item 304(a)(1)(v) of Regulation S-K occurred with respect to Starlight and
Comiskey & Company, P.C.
Pursuant to Item 4(a) of Form 8-K and Item 304(a)(3) of Regulation S-K,
Starlight has provided Comiskey & Company, P.C. with a copy of this Form 8-K
and Comiskey & Company, P.C. has provided to Starlight a response addressed
to the Securities and Exchange Commission as to Comiskey & Company, P.C.'s
agreement with the statements made in this Item 4 with respect to Comiskey &
Company, P.C. Comiskey & Company, P.C.'s response letter is filed as an
exhibit to this Form 8-K.
ITEM 5. OTHER MATERIAL INFORMATION
REGULATION S OFFERING. On May 10, 1996, the Board of Directors of
Starlight approved an offering of 563,141 shares of Common Stock of Starlight
pursuant to Regulation S. The offering price shall be $.20 per share of
Common Stock.
CHANGE OF NAME. On May 10, 1996, the Board of Directors of Starlight
approved changing the name of Starlight to "Toucan Mining Corporation" to better
reflect the Share Exchange. The name change is subject to approval by the
shareholders of Starlight, which approval is expected to be sought as soon as
practicable after the date hereof.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
It is impracticable to provide all of the required financial statements
for Starlight or Toucan at this time. The registrant will file such
financial statements as soon as practicable, but no later than 60 days after
this report must be filed.
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(b) PRO FORMA FINANCIAL INFORMATION.
It is impracticable to provide the required pro forma financial
statements for Starlight or Toucan at this time. The registrant will file
such financial statements as soon as practicable, but no later than 60 days
after this report must be filed.
(c) EXHIBITS.
The following exhibits are furnished in accordance with Item 601 of
Regulation S-K.
2 Share Exchange Agreement, dated May 10, 1996, by and among Starlight
Acquisition, Inc. and the Shareholders of Toucan Mining Limited.
10.1 Warrant Agreement, dated May 10, 1996, by and between Starlight
Acquisition, Inc. and R. Haydn Silleck, John B. Marvin, Peter S.
Daley and Jay Lutsky.
10.2 Indemnification Agreement, dated May 10, 1996, by and among
R. Haydn Silleck, John B. Marvin, Peter S. Daley, Jay Lutsky,
Starlight Acquisition, Inc. and Toucan Mining Limited.
16 Statement from Comiskey & Company, P.C. regarding change in
certifying accountants.
<PAGE>
APPENDIX A
<TABLE>
<CAPTION> SHARES OWNED(1)
-------------------
PERCENT
NUMBER OF CLASS(2)
------ -----------
<S> <C> <C>
Clark Arnold(2) . . . . . . . . . . . . . . . . . . . . 420,000 8.23
Dunlaw Nominees . . . . . . . . . . . . . . . . . . . . 294,000 5.76
Caithness Limited(4). . . . . . . . . . . . . . . . . . 1,238,734 24.28
Zalcany Limited(5). . . . . . . . . . . . . . . . . . . 504,000 9.88
Roy G. Williams(5)(6) . . . . . . . . . . . . . . . . . 42,000 0.82
Richard M. Harris(5). . . . . . . . . . . . . . . . . . 42,000 0.82
Jonathan D. Harris(5) . . . . . . . . . . . . . . . . . 42,000 0.82
J. P. Jeffcock No. 2 Settlement(4). . . . . . . . . . . 484,008 9.49
Carlos Lins E. Silva(3) . . . . . . . . . . . . . . . . 210,000 4.12
Igor Mousasticoshvily(3). . . . . . . . . . . . . . . . 210,000 4.12
Mustardseed Estates Ltd.(5)(6). . . . . . . . . . . . . 210,000 4.12
The Magnum Trust(4) . . . . . . . . . . . . . . . . . . 105,000 2.06
</TABLE>
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(1) The persons named in this table have record ownership of such shares and
except as indicated in the footnotes to this table, the persons named in the
table have sole voting and investment power with respect to shares shown as
beneficially owned by them.
(2) Based on 5,101,469 shares of Common Stock outstanding.
(3) Director or officer of Starlight or MBL.
(4) Reads Trust Company Limited, as trustee, have sole voting and investment
control with respect to the shares held by the following shareholders:
Caithness Limited (1,238,734); J.P. Jeffcock No. 2 Settlement (484,008); The
Magnum Trust (105,000); this represents, in the aggregate, 35.83% of the
capital of Starlight following the merger with Toucan.
Mr. Robert Jeffcock is included in a class of potential beneficiaries in
a Trust which owns Caithness Limited.
(5) Zalcany Limited is a company ultimately controlled and owned by Mr. R.G.
Williams, Mr. R.M. Harris and Mr. J.D. Harris. Together they effectively
share the voting and investment power of the shares in Starlight held by
Zalcany Limited.
(6) Mr. R.G. Williams' family owns the equity share capital of Mustardseed
Estates Limited. Accordingly, Mr. R.G. Williams controls or shares voting
investment power over the following shareholders; R.G. Williams (42,000);
Zalcany Limited (504,000); and Mustardseed Estates Limited (210,000). This
represents in the aggregate, 14.82% of the issued share capital of Starlight
following the Share Exchange.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STARLIGHT ACQUISITION, INC.
(Registrant)
Date: May 13, 1996 By: /s/ Robert Jeffcock
---------------------------------------------------
Robert Jeffcock
Chief Executive Officer and Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. EXHIBIT PAGE
- ----------- ------- ----
2 Share Exchange Agreement, dated May 10, 1996, by
and among Starlight Acquisition, Inc. and the
Shareholders of Toucan Mining Limited
10.1 Warrant Agreement, dated May 10, 1996, by and
between Starlight Acquisitions, Inc. and R.
Haydn Silleck, John B. Marvin, Peter S. Daley
and Jay Lutsky
10.2 Indemnification Agreement, dated May 10, 1996, by
and among R. Haydn Silleck, John B. Marvin, Peter
S. Daley, Jay Lutsky, Starlight Acquisition, Inc. and
Toucan Mining Limited
16 Statement from Comiskey & Company, P.C.
regarding change in certifying accountants
<PAGE>
SHARE EXCHANGE AGREEMENT
BY AND AMONG
STARLIGHT ACQUISITIONS, INC.
AND
THE SHAREHOLDERS OF
TOUCAN MINING, LTD.
* * * * *
DATED AS OF May 10, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
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Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1. Definitions. . . . . . . . . . . . . . . . . . . . . .1
2. The Share Exchange . . . . . . . . . . . . . . . . . .3
2.1 The Share Exchange. . . . . . . . . . . . . . . .3
2.2 Effective Date. . . . . . . . . . . . . . . . . .3
2.3 Exchange of Toucan Common Stock . . . . . . . . .3
2.4 Exchange of Certificates. . . . . . . . . . . . .3
2.5 Reporting of Share Exchange . . . . . . . . . . .4
2.6 Board of Directors of Starlight . . . . . . . . .4
3. The Closing. . . . . . . . . . . . . . . . . . . . . .4
3.1 Time and Place of Closing . . . . . . . . . . . .4
3.2 Obligations of the Toucan Shareholders at or
Prior to the Closing. . . . . . . . . . . . . . .4
3.3 Obligations of Starlight at or Prior to the
Closing . . . . . . . . . . . . . . . . . . . . .4
4. Representations, Warranties and Covenants of the
Toucan Shareholders. . . . . . . . . . . . . . . . . .5
4.1 Corporate Organization. . . . . . . . . . . . . .5
4.2 Capitalization. . . . . . . . . . . . . . . . . .5
4.3 Authority; No Violation . . . . . . . . . . . . .5
4.4 Consents and Approvals. . . . . . . . . . . . . .5
4.5 Violation of Laws, Permits, etc.. . . . . . . . .5
4.6 Toucan Financial Statements. . . . . . . . . . .6
4.7 No Undisclosed Liabilities, etc.. . . . . . . . .6
4.8 Absence of Certain Changes. . . . . . . . . . . .6
4.9 Title to Property; Encumbrances . . . . . . . . .6
4.10 Litigation. . . . . . . . . . . . . . . . . . . .7
4.11 Taxes.. . . . . . . . . . . . . . . . . . . . . .7
4.12 Contracts . . . . . . . . . . . . . . . . . . . .7
4.13 Compensation and Employee Plans . . . . . . . . .8
4.14 Brokers, Finders and Advisors . . . . . . . . . .8
4.15 Labor Force . . . . . . . . . . . . . . . . . . .8
4.16 Books and Records . . . . . . . . . . . . . . . .8
4.17 Payments. . . . . . . . . . . . . . . . . . . . .8
4.18 Disclosure. . . . . . . . . . . . . . . . . . . .9
4.19 Joint Ventures. . . . . . . . . . . . . . . . . .9
4.20 Subsidiaries. . . . . . . . . . . . . . . . . . .9
4.21 Ownership of Shares.. . . . . . . . . . . . . . .9
4.22 Investment Letter . . . . . . . . . . . . . . . .9
5. Representations, Warranties and Covenants of
Starlight. . . . . . . . . . . . . . . . . . . . . . .9
5.1 Corporate Organization. . . . . . . . . . . . . .9
5.2 Capitalization. . . . . . . . . . . . . . . . . .9
5.3 Authority . . . . . . . . . . . . . . . . . . . 10
5.4 Consents and Approvals. . . . . . . . . . . . . 10
5.5 Violation of Laws, Permits, etc.. . . . . . . . 10
5.6 Starlight Financial Statements. . . . . . . . . 10
5.7 No Undisclosed Liabilities, etc . . . . . . . . 10
5.8 Absence of Certain Changes. . . . . . . . . . . 10
5.9 Title to Property; Encumbrances . . . . . . . . 11
5.10 Litigation. . . . . . . . . . . . . . . . . . . 11
5.11 Taxes.. . . . . . . . . . . . . . . . . . . . . 11
5.12 Contracts . . . . . . . . . . . . . . . . . . . 12
5.13 Compensation and Employee Plans . . . . . . . . 13
5.14 Brokers, Finders and Advisors . . . . . . . . . 13
5.15 Labor Force . . . . . . . . . . . . . . . . . . 13
5.16 Books and Records.. . . . . . . . . . . . . . . 13
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5.17 Payments. . . . . . . . . . . . . . . . . . . . 13
5.18 Disclosure. . . . . . . . . . . . . . . . . . . 14
5.19 Joint Ventures. . . . . . . . . . . . . . . . . 14
5.20 Subsidiaries. . . . . . . . . . . . . . . . . . 14
5.21 Approval of Share Exchange. . . . . . . . . . . 14
5.22 SEC Reporting Status. . . . . . . . . . . . . . 14
5.23 Investment Company. . . . . . . . . . . . . . . 14
5.24 SEC Filings . . . . . . . . . . . . . . . . . . 14
5.25 OTC Bulletin Board. . . . . . . . . . . . . . . 14
5.26 Secondary Trading Exemption . . . . . . . . . . 14
5.27 Certain Legal Proceedings . . . . . . . . . . . 14
5.28 Net Worth . . . . . . . . . . . . . . . . . . . 14
5.29 Accountants . . . . . . . . . . . . . . . . . . 14
6. Actions of the Toucan Shareholders Prior to the
Closing Date . . . . . . . . . . . . . . . . . . . . 15
6.1 Affirmative Covenants . . . . . . . . . . . . . 15
6.2 Negative Covenants. . . . . . . . . . . . . . . 15
6.3 Consents. . . . . . . . . . . . . . . . . . . . 15
6.4 Advice of Changes . . . . . . . . . . . . . . . 15
6.5 Best Efforts. . . . . . . . . . . . . . . . . . 15
6.6 Access to Properties and Records. . . . . . . . 15
6.7 Supply Documents, Reports, etc. . . . . . . . . 15
7. Actions of Starlight Prior to or at the Closing Date 16
7.1 Affirmative Covenants . . . . . . . . . . . . . 16
7.2 Negative Covenants. . . . . . . . . . . . . . . 16
7.3 Consents. . . . . . . . . . . . . . . . . . . . 16
7.4 Advice of Changes . . . . . . . . . . . . . . . 16
7.5 OTC Bulletin Board. . . . . . . . . . . . . . . 16
7.6 Commission Reports. . . . . . . . . . . . . . . 16
7.7 Best Efforts. . . . . . . . . . . . . . . . . . 16
7.8 Access to Properties and Records. . . . . . . . 17
7.9 Supply Documents, Reports, etc. . . . . . . . . 17
7.10 Board of Directors of Starlight . . . . . . . . 17
8. Conditions to Starlight's Obligations. . . . . . . . 17
9. Conditions to the Toucan Shareholders' Obligations . 18
10. Additional Agreements. . . . . . . . . . . . . . . . 19
10.1 Confidentiality . . . . . . . . . . . . . . . . 19
10.2 Further Assurances. . . . . . . . . . . . . . . 19
11. Termination, Waiver and Amendment. . . . . . . . . . 19
11.1 Termination . . . . . . . . . . . . . . . . . . 19
11.2 Manner of Exercise. . . . . . . . . . . . . . . 19
11.3 Effect of Termination . . . . . . . . . . . . . 19
11.4 Waiver. . . . . . . . . . . . . . . . . . . . . 19
11.5 Amendment . . . . . . . . . . . . . . . . . . . 19
12. Miscellaneous. . . . . . . . . . . . . . . . . . . . 20
12.1 Expenses. . . . . . . . . . . . . . . . . . . . 20
12.2 Press Releases. . . . . . . . . . . . . . . . . 20
12.3 Binding Effect. . . . . . . . . . . . . . . . . 20
12.4 Severability. . . . . . . . . . . . . . . . . . 20
12.5 Notices . . . . . . . . . . . . . . . . . . . . 20
12.6 Entire Agreement. . . . . . . . . . . . . . . . 21
12.7 Amendments; Waivers . . . . . . . . . . . . . . 21
12.8 Headings. . . . . . . . . . . . . . . . . . . . 21
12.9 Counterparts. . . . . . . . . . . . . . . . . . 21
12.10 Specific Performance . . . . . . . . . . . 21
12.11 GOVERNING LAW. . . . . . . . . . . . . . . 21
12.12 Time of Essence. . . . . . . . . . . . . . 21
12.13 Best Efforts . . . . . . . . . . . . . . . 22
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SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (this "Agreement") is entered into as of
May 10, 1996, by and among STARLIGHT ACQUISITIONS, INC., a Colorado
corporation, Bankhill Trustees Ltd. and Northquay Ltd., each an Isle of Man
company holding shares of Toucan Common Stock on behalf of the beneficiaries
listed on Schedule A hereto.
RECITALS
It is the intention of the parties hereto that Toucan become a
wholly-owned subsidiary of Starlight through the exchange of all outstanding
shares of Toucan Common Stock for shares of Starlight Common Stock on the
following terms:
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and the
mutual agreements hereinafter set forth, in accordance with the provisions of
applicable law, the parties hereby agree as follows:
1. DEFINITIONS. As used in this Agreement and documents delivered
pursuant to this Agreement, the following terms shall have the following
meanings:
AFFILIATE. "Affiliate" means an "affiliate" or "associate" as
those terms are defined in Rule 12b-2 promulgated by the Commission under the
Exchange Act.
CBCA. "CBCA" means the Colorado Business Corporations Act.
CLOSING. "Closing" means the closing referred to in SECTION 3.1.
CLOSING DATE. The "Closing Date" shall be such date as shall be
set by the parties in writing following satisfaction (or waiver) of the
conditions to the Closing set forth in Sections 8 and 9 hereof.
CODE. "Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
COMMISSION. "Commission" means the Securities and Exchange
Commission and/or any other Governmental Entity that administers either the
Securities Act or the Exchange Act.
EFFECTIVE DATE. "Effective Date" is as defined in SECTION 2.2.
ENCUMBRANCE. An "Encumbrance" is any option, pledge, security
interest, lien, charge, encumbrance, or restriction (whether on voting, sale,
transfer, disposition or otherwise), whether imposed by agreement,
understanding, law or otherwise, except those arising under applicable
federal or state securities laws.
ERISA. "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, or any successor statute.
EXCHANGE ACT. "Exchange Act" means the Securities Exchange Act
of 1934, as amended, or any successor statute.
GAAP. "GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, in statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, that are applicable to the circumstances as of
the date of determination.
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GOVERNMENTAL ENTITY. A "Governmental Entity" is any federal,
state, municipal, domestic or foreign court, tribunal, administrative agency,
department, commission, board, bureau or other governmental authority or
instrumentality.
INVESTMENT COMPANY ACT. "Investment Company Act" means the
Investment Company Act of 1940, as amended, or any successor statute.
JOINT VENTURE AND JOINT VENTURES. "Joint Venture" or "Joint
Ventures" means any partnership or joint venture with third parties in which
Toucan is a partner, venturer or participant.
MATERIAL EFFECT. "Material Effect" means a material adverse
effect in the business, operations, properties, assets, liabilities,
prospects or condition (financial or otherwise) of Starlight or Toucan, as
the context requires.
MBL. "MBL" means Mineradora de Bauxita Ltda., a subsidiary of
Toucan.
SHARE EXCHANGE. "Share Exchange" means the share exchange
between Starlight and the Toucan Shareholders as described in SECTION 2.1.
PLAN. "Plan" is as defined in SECTION 4.13.
SECURITIES ACT. "Securities Act" means the Securities Act of
1933, as amended, or any successor statute.
STARLIGHT. "Starlight" means Starlight Acquisitions, Inc.
STARLIGHT COMMON STOCK. "Starlight Common Stock" means
Starlight's common stock, no par value per share.
STARLIGHT DISCLOSURE SCHEDULE. "Starlight Disclosure Schedule"
is the disclosure schedule delivered by Starlight to the Toucan Shareholders
contemporaneously with the execution of this Agreement. Each heading in the
Starlight Disclosure Schedule shall refer to the applicable section of the
Agreement.
STARLIGHT FINANCIAL STATEMENTS. "Starlight financial
statements" are collectively the audited financial statements of Starlight as
of the years ended December 31, 1994 and 1995.
STARLIGHT SHARES. "Starlight Shares" means the shares of
Starlight Common Stock to be issued to the Toucan Shareholders in connection
with the Share Exchange.
SUBSIDIARY AND SUBSIDIARIES. "Subsidiary" or "Subsidiaries"
means any corporation with more than 50 percent of its voting power owned
directly or indirectly by Toucan, Starlight or other relevant person, as the
context requires.
TAXES. "Taxes" is as defined in SECTION 4.11.
TAX RETURN. "Tax Return" is as defined in SECTION 4.11.
TOUCAN. "Toucan" means Toucan Mining, Ltd. and, except where
the context indicates otherwise, MBL.
TOUCAN COMMON STOCK. "Toucan Common Stock" means Toucan's
capital stock of 10p (Ten Pence) each.
TOUCAN SHAREHOLDER DISCLOSURE SCHEDULE. "Toucan Shareholder
Disclosure Schedule" is the schedule delivered by the Toucan Shareholders to
Starlight contemporaneously with the execution of this Agreement. Each
heading in the Toucan Shareholder Disclosure Schedule shall refer to the
application section of the Agreement.
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TOUCAN FINANCIAL STATEMENTS. "Toucan financial statements" are
collectively the unaudited financial statements of Toucan as of March 31,
1996.
TOUCAN SHAREHOLDERS. "Toucan Shareholders" refers to Bankhill
Trustees Ltd. and Northquay Ltd., each holding on behalf of the beneficiaries
listed on Schedule A hereto.
TRANSFER AGENT. "Transfer Agent" means Corporate Stock
Transfer, Inc., located in Denver, Colorado.
2. THE SHARE EXCHANGE.
2.1 THE SHARE EXCHANGE. Subject to the terms and conditions of
this Agreement, at Closing, the Toucan Shareholders shall tender all their
respective shares of Toucan Common Stock to Starlight in exchange for shares
of Starlight Common Stock, and Toucan shall become a wholly-owned subsidiary
of Starlight.
2.2 EFFECTIVE DATE. The Share Exchange will become effective
upon the proper filing of Articles of Share Exchange with the Secretary of
State of the State of Colorado (the time of such filing referred to as the
"Effective Time" and the date of such filing referred to as the "Effective
Date").
2.3 EXCHANGE OF TOUCAN COMMON STOCK. The Toucan Common Stock
shall be exchanged in the Share Exchange as follows:
Each certificate that prior to the Effective Date represented an
outstanding share of Toucan Common Stock will be exchanged for seven shares
of Starlight Common Stock. No share of Starlight Common Stock shall be
affected in any manner by the consummation of the Share Exchange.
No fraction of a share of Starlight Common Stock will be issued upon
such exchange of shares of Toucan Common Stock, but any holder of shares of
Toucan Common Stock who would otherwise be entitled to a fraction of a share
of Starlight Common Stock will instead receive a cash payment in lieu of and
with respect to said fraction of a share to which such holder would be so
entitled determined by multiplying (i) the value of a share of Starlight
Common Stock (calculated as hereinafter provided) times (ii) the fractional
share interest to which such holder would otherwise be entitled, which
product shall be rounded to the nearest whole cent. For purposes of
computing such cash payment, the value of a share of Starlight Common Stock
shall be the average of the closing bid prices of Starlight Common Stock on
the OTC Bulletin Board for the last five trading days prior to the Effective
Time. Such cash payment shall be paid in U.S. dollars at the time of
presentation for surrender to the Transfer Agent of the certificate
representing shares of Toucan Common Stock. The right to receive such cash
payment shall, if the holder thereof shall not prior thereto so present such
certificate, terminate on the second anniversary date of the Effective Time.
No interest will accrue or be payable with respect to the amounts payable in
lieu of fractional shares.
2.4 EXCHANGE OF CERTIFICATES. At Closing, or as soon as
practicable thereafter, Starlight shall deliver to each Toucan Shareholder
listed on Schedule A hereto, a certificate representing the whole number of
shares of Starlight Common Stock into which such Toucan Shareholder's shares
of Toucan Common Stock shall have been exchanged as set forth herein, and
such Toucan Shareholder's certificate(s) of Toucan Common Stock shall be
delivered to Starlight.
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2.5 REPORTING OF SHARE EXCHANGE. For federal, state and local
income tax return reporting purposes, all parties agree to treat the Share
Exchange as a nontaxable exchange under Section 368 of the Code.
2.6 BOARD OF DIRECTORS OF STARLIGHT. Simultaneously at
Closing, R. Haydn Silleck, John B. Marvin and Peter S. Daley, constituting
three of the four directors of Starlight, shall resign from their positions
as directors and officers of Starlight, and Robert Jeffcock, L. Clark Arnold
and Don Box shall be elected as directors of Starlight to fill these director
vacancies. Jay Lutsky will immediately thereafter resign from the Board of
Directors and as an officer of Starlight and shall be elected as an Advisory
Director.
3. THE CLOSING.
3.1 TIME AND PLACE OF CLOSING. The closing of the Share
Exchange (the "Closing"), shall, unless otherwise agreed to in writing by the
parties, take place at the offices of Jenkens & Gilchrist, a Professional
Corporation, 1445 Ross Avenue, Suite 3200, Dallas, Texas at 10:00 a.m., local
time, on or prior to May , 1996.
3.2 OBLIGATIONS OF THE TOUCAN SHAREHOLDERS AT OR PRIOR TO THE
CLOSING. At or prior to Closing, and subject to the satisfaction by
Starlight of its obligations hereunder, the Toucan Shareholders shall deliver
to Starlight the following:
(a) A copy of the charter of Toucan certified as of a date
within thirty days of the Closing Date by the appropriate governmental
official of its jurisdiction of incorporation and certified by Toucan's
corporate secretary as to the absence of any amendments between the date of
the governmental certification and the Closing Date;
(b) A certificate from the appropriate governmental officials of
its jurisdiction of incorporation as to the existence and good standing of
Toucan and the payment of Taxes by Toucan as of a date within thirty days of
the Closing Date;
(c) A certificate of the corporate secretary of Toucan attaching
thereto a true and correct copy of the bylaws (the Memorandum and Articles of
Association) of Toucan.
(d) The certificate referred to in SECTION 8(a);
(e) The certificate under SECTION 8(b); and
(f) Such other documents as are required pursuant to this
Agreement or as may reasonably be requested from the Toucan Shareholders by
Starlight or its counsel.
3.3 OBLIGATIONS OF STARLIGHT AT OR PRIOR TO THE CLOSING. At or
prior to the Closing, and subject to the satisfaction by the Toucan
Shareholders of their obligations hereunder, Starlight shall deliver to the
Toucan Shareholders the following:
(a) A copy of the charter of Starlight certified as of a date
within thirty days of the Closing Date by the secretary of state of its state
of incorporation (the "Secretary of State") and certified by the corporate
secretary of Starlight as to the absence of any amendments between the date
of certification by the Secretary of State and the Closing Date.
(b) A certificate from the appropriate governmental officials of
the Secretary of State as to the existence and good standing of Starlight and
the payment of Taxes by Starlight as of a date within thirty days of the
Closing Date, and a telegram or other verification from such officials as to
the same matters dated the business day before the Closing Date;
(c) A certificate of the corporate secretary of Starlight
attaching thereto true and correct copies of the bylaws of Starlight and the
corporate resolutions duly adopted by the board of directors of Starlight
authorizing the consummation of the transactions contemplated hereby;
(d) The certificate of Starlight referred to in SECTION 9(a);
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(e) The certificate of Starlight referred to in SECTION 9(b); and
(f) Such other documents as are required pursuant to this
Agreement or as may reasonably be requested from Starlight by the Toucan
Shareholders or their counsel.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE TOUCAN
SHAREHOLDERS. Except as expressly set forth and specifically identified by
the section number of this Agreement in the Toucan Shareholder Disclosure
Schedule, the Toucan Shareholders represent, warrant and covenant to
Starlight as follows (each of the representations, warranties and covenants
made by the Toucan Shareholders, which specifically relate to Toucan, are
made to the best of the Toucan Shareholders' knowledge):
4.1 CORPORATE ORGANIZATION. Toucan is a corporation duly
incorporated and validly existing as a corporation and in good standing under
the laws of its jurisdiction of incorporation. Toucan has the requisite
corporate power and authority to carry on its business as now being conducted
and to own, lease and operate its property and assets, and Toucan is duly
qualified or licensed to do business and is in good standing in every
jurisdiction in which the failure to be so qualified and licensed could have
a Material Effect.
4.2 CAPITALIZATION.
(a) The authorized, issued and outstanding capital stock of
Toucan, all outstanding securities convertible into or exchangeable or
exercisable for shares of capital stock of Toucan and all rights, agreements
or other commitments of Toucan to issue, transfer or sell its capital stock
is as set forth in Section 4.2 of the Toucan Shareholder Disclosure Schedule.
All of the issued and outstanding shares of capital stock of Toucan are
validly issued, fully paid and nonassessable, and none of such shares have
been issued in violation of the preemptive rights of any person.
(b) Toucan does not own or hold any equity, debt or other
interest in any entity or business or any option to acquire any such
interest, except for MBL.
4.3 AUTHORITY; NO VIOLATION.
(a) Each Toucan Shareholder has the power and authority to
execute and perform this Agreement and to carry out the transactions
contemplated hereby. This Agreement has been duly and validly executed by
each Toucan Shareholder and is a valid and binding obligation of each Toucan
Shareholder, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, moratorium, reorganization,
receivership or similar laws affecting the rights of creditors generally.
(b) None of the execution, delivery or performance of this
Agreement does or will: (i) result in any violation of or be in conflict with
or constitute a default under any term or provision of the Articles of
Incorporation or bylaws of Toucan or any term or provision of any judgment,
decree, order, statute, injunction, rule or regulation applicable to Toucan
or any Toucan Shareholder, or of any material note, bond, mortgage,
indenture, lease, license, franchise, agreement or other instrument or
obligation to which Toucan or any Toucan Shareholder is bound; (ii) result in
the creation of any material Encumbrance upon any of the properties or assets
of Toucan or any Toucan Shareholder pursuant to any such term or provision;
or (iii) constitute a default under, terminate, accelerate, amend or modify,
or give any party the right to terminate, accelerate, amend, modify, abandon
or refuse to perform or comply with, any material contract, agreement,
arrangement, commitment or plan to which Toucan or any Toucan Shareholder is
a party, or by which Toucan or any Toucan Shareholder or any of their
respective properties or assets may be subject or bound.
4.4 CONSENTS AND APPROVALS. No federal, state or other
regulatory approvals are required to be obtained, nor any regulatory
requirements complied with, by Toucan or any Toucan Shareholder in connection
with the Share Exchange.
4.5 VIOLATION OF LAWS, PERMITS, ETC.
(a) Toucan is not in violation of any term or provision of its
Articles of Incorporation or bylaws, or of any material term or provision of
any judgment, decree, order, statute, law, injunction, rule, ordinance or
governmental regulation that is applicable to it and where the failure to
comply with which would have a Material Effect.
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(b) Toucan has maintained in full force and effect all
certificates, licenses and permits material to the conduct of its business,
and has not received any notification that any revocation or limitation
thereof is threatened or pending.
4.6 TOUCAN FINANCIAL STATEMENTS. The Toucan Financial
Statements fairly present the assets, liabilities and financial position of
Toucan purported to be covered thereby as of the dates thereof and the
results of their operations for the respective periods ended on such dates,
all in conformity with GAAP consistently applied.
4.7 NO UNDISCLOSED LIABILITIES, ETC. Toucan does not have any
material liabilities or obligations, whether direct, indirect, absolute or
contingent (including, without limitation, liabilities as guarantor or
otherwise with respect to obligations of others), except (a) liabilities that
are fully reflected on or reserved against on the latest balance sheet
included in the Toucan Financial Statements, (b) liabilities incurred in the
ordinary course of business since the date of the latest balance sheet
included in the Toucan Financial Statements that are consistent with past
practice and are included in the latest Toucan Financial Statements or (c) as
specifically disclosed in the Toucan Financial Statements.
4.8 ABSENCE OF CERTAIN CHANGES. Since the date of the latest
Financial Statement, except as specifically disclosed in the latest Toucan
Financial Statements, Toucan has not:
(a) Suffered any change that would be likely to result in a
Material Effect;
(b) Adopted or made any change in any pension, retirement,
profit sharing or other employee benefit plan or arrangement;
(c) Borrowed or agreed to borrow any money or incurred, assumed
or become subject to, whether directly or by way of guarantee or otherwise,
any other obligation or liability for borrowed money, whether absolute,
contingent, known, unknown, or otherwise, except in the ordinary course of
business and consistent with past practice;
(d) (i) Issued, purchased or redeemed any of its capital
securities or any option, warrant or right to purchase any of the same; (ii)
authorized, declared or paid stock dividends; (iii) authorized, declared or
paid any dividends, distributions of earnings or capital on, or splits or any
other reclassification of, its equity securities;
(e) Mortgaged, pledged or subjected to any Encumbrance any
material portion of its assets, tangible or intangible;
(f) Acquired or disposed of, or entered into any agreement to
acquire or dispose of, any material assets or properties, other than in the
ordinary course of business;
(g) Increased the salaries, compensation, pension or other
benefits payable to its officers and directors or their Affiliates;
(h) Forgiven or canceled any debts or claims or waived any
rights against Toucan or its Affiliates or forgiven or canceled any material
debts or claims or waived any material rights against any other person;
(i) Entered into, terminated or received notice of the
termination of any commitment, contract, agreement or transaction that is
material to Toucan; or
(j) Agreed, either in writing or otherwise, to take any action
described in this Section 4.8.
(k) Made any capital expenditure or commitment, except capital
expenditures that individually or in the aggregate do not exceed $50,000, as
Toucan may, in its discretion, deem appropriate.
4.9 TITLE TO PROPERTY; ENCUMBRANCES. Toucan has good and
indefeasible title to and other legal right to use all properties and assets,
real, personal and mixed, tangible and intangible, reflected as owned on the
latest balance sheet included in the Toucan Financial Statements or acquired
after the date of such balance sheet, except
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for properties and assets disposed of in accordance with customary practice
in the business or disposed of for full and fair value since the date of such
balance sheet in the ordinary course of business consistent with past
practice and except for matters that would not have a Material Effect.
4.10 LITIGATION.
(a) There is no action, proceeding, investigation or inquiry
pending or, to the best of Toucan's knowledge, threatened (i) against or
affecting any of Toucan's assets or business that, if determined adversely to
Toucan, would result in a Material Effect or (ii) that questions this
Agreement or any action contemplated by this Agreement or in connection with
the Share Exchange.
(b) Toucan has no knowledge of any state of facts or of the
occurrence or nonoccurrence of any event or group of related events, that
should reasonably cause Toucan to determine that there exists any basis for
any material claim against Toucan for any of the matters described in
paragraph (a) above.
4.11 TAXES.
As of the Closing Date, Toucan is not required to (i) file
any separate, consolidated, combined or unitary tax returns (including any
estimated tax returns), reports, elections, information returns,
declarations, statements or other filings (including any amendments thereto)
required to be filed with any relevant taxing authority ("Tax Returns") or
(ii) to pay any taxes, imposts, duties, fees, levies, withholdings or other
like assessments or charges, including, without limitation, income, gross
receipts, capital, transfer, excise, occupancy, real and personal property,
sales, use, employment franchise, AD VALOREM, social security, payroll,
unemployment compensation, stamp, net worth, surplus, environmental,
privilege, windfall profits, value-added, customs or other taxes of any sort,
imposed by the United States, or any state, local or foreign government or
subdivision or agency thereof, including any interest, penalties and
additions to tax attributable thereto ("Taxes").
4.12 CONTRACTS.
(a) SECTION 4.12 of the Toucan Shareholder Disclosure Schedule
contains a complete and correct list as of the date hereof of all material
agreements, contracts and commitments of the following types (and all
amendments thereto), written or oral, to which Toucan is a party or by which
any of its properties is bound:
(i) notes, agreements, mortgages, indentures, security
agreements and other instruments relating to the borrowing of money or
evidence of credit or the deferred purchase price of property, or the
direct or indirect guarantee by such entities of any such indebtedness
or deferred purchase price;
(ii) leases of real property and material personal
property (other than Leases);
(iii) Joint Venture agreements;
(iv) management, employment and consulting agreements or
other contracts for personal services that are not terminable by any of
such entities on not more than one month's notice without penalty;
(v) any agreements providing for liability for severance
pay, collective bargaining agreements, labor contracts, or labor or
personnel policies;
(vi) material surety, performance and maintenance bonds;
(vii) any plan, contract or arrangement providing for
bonuses, pensions, deferred compensation, retirement plan payments,
profit sharing, incentive pay, or for any other employee benefit plan;
(viii) brokerage or finder's agreements;
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(ix) any agreement that (a) restricts the right of such
entities to engage in any place in any line of business, other than in
the ordinary course of business or (b) would restrict the right of
Toucan to engage in any line of business after the Closing Date, other
than in the ordinary course of business; and
(x) any contract, commitment or agreement that
individually or in the aggregate is material to Toucan, except
contemplated by this Agreement or in the ordinary course of business and
consistent with past practice.
(b) Toucan has made available to Starlight complete and correct
copies of all material written agreements, contracts and commitments,
together with all amendments thereto, and accurate (in all material respects)
descriptions of all material oral agreements. Such agreements, contracts and
commitments are in full force and effect, and all of such entities and, to
the best of Toucan's knowledge, all other parties to such agreements,
contracts and commitments have performed all obligations required to be
performed by them to date thereunder in all material respects and are not in
default thereunder in any material respect.
4.13 COMPENSATION AND EMPLOYEE PLANS.
(a) For all purposes of this Section, "Plan" means (i) any
employee benefit plan as defined in Section 3(3) of the ERISA, that is (a)
maintained by Toucan, or (b) to which Toucan is making or accruing an
obligation to make contributions, or (ii) any other formal or informal
obligation to, arrangement with, or plan or program for the benefit of,
employees of Toucan, including, but not limited to, stock options, stock
bonuses, stock purchase agreements, bonuses, incentive compensation, deferred
compensation, supplemental pensions, vacations, severance pay, insurance or
any other benefit, program or practice. SECTION 4.13 of the Toucan
Shareholder Disclosure Schedule sets forth the name of each Plan and lists
all documents evidencing any Plan.
(b) Each Plan is now, and has been from its inception,
administered in compliance in all material respects with the provisions of
all applicable laws and regulations, including ERISA, the Code and the Age
Discrimination in Employment Act, as amended, insofar as such statutes are
applicable to such Plan.
4.14 BROKERS, FINDERS AND ADVISORS. Neither Toucan nor any
Toucan Shareholder has employed any broker, finder, or investment advisor on
its behalf, or incurred any liability for any brokerage or finder's fees or
commissions, in connection with the transaction contemplated hereby.
4.15 LABOR FORCE.
Toucan is in compliance in all material respects with all
applicable laws (including, without limitation, federal income tax laws),
ordinances, regulations, statutes, rules and restrictions of any Governmental
Entity respecting employment and employment practices and terms and
conditions of employment.
4.16 BOOKS AND RECORDS. The books and records of Toucan
(including, without limitation, the books of account, minute books and stock
record books) are complete and correct in all material respects and have been
maintained in accordance with sound business practices. The minute books of
Toucan contain accurate and complete records in all material respects of all
meetings held of, and corporate action taken by, the shareholders and the
Boards of Directors of the respective entities, and no meetings of or actions
by such shareholders or any such Boards of Directors have been held or taken
for which minutes have not been prepared and are not contained in such minute
books. None of the records and written documents furnished or made available
by Toucan or its agents to Starlight's representatives or agents, when
considered in context and together with any relevant or related documents
also so furnished or made available, contain any untrue statement of material
fact or omit a material fact necessary to make any statement therein not
misleading.
4.17 PAYMENTS. Toucan has not, directly or indirectly, paid or
delivered any fee, commission or other sum of money or item of property
however characterized to any finder, agent, government official or other
party, in the United States or any other country, in any manner related to
its business or operations, that the Toucan Shareholders know or have reason
to believe to have been illegal under any federal, state or local laws of the
United
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States or any other country or territory having jurisdiction over such
entity, and has not participated, directly or indirectly, in any boycotts or
similar practices.
4.18 DISCLOSURE. No representation or warranty made by the
Toucan Shareholders in this Agreement (including, without limitation, in the
Toucan Shareholder Disclosure Schedule) contains any untrue statement of
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading in light of the circumstances
under which made.
4.19 JOINT VENTURES. Toucan is not a member of any partnership,
joint venture or other business entity.
4.20 SUBSIDIARIES. Toucan does not own any subsidiary, except
for MBL.
4.21 OWNERSHIP OF SHARES. The shares of Toucan Common Stock are
owned of record by Bankhill Trustees Ltd. and Northquay Ltd. and beneficially
by the Toucan Shareholders as set forth on Schedule A. Bankhill Trustees Ltd.
and Northquay Ltd. possess full authority and legal right to sell, transfer
and assign the entire legal and beneficial ownership of the shares of Toucan
Common Stock, free from all liens, claims and encumbrances of any kind; and
there are no outstanding rights or obligations granted by the Toucan
Shareholders to purchase or acquire any of the shares of Toucan Common Stock
or any interest in any of the shares of Toucan Common Stock. Upon transfer
of the shares of Toucan Common Stock to Starlight hereunder at the Closing,
Starlight will receive the entire legal and beneficial interest in the shares
of Toucan Common Stock, free and clear of all liens, claims and encumbrances
and subject to no legal or equitable restrictions of any kind.
4.22 INVESTMENT LETTER. Each Toucan Shareholder acknowledges
that the Starlight Shares are restricted securities under the Securities Act
and represents that such Toucan Shareholder (i) is acquiring the Starlight
Shares for his own account without a view to distribution within the meaning
of the Securities Act, (ii) has received from Starlight its filings with the
Securities and Exchange Commission and all other information that he has
deemed necessary to make an informed investment decision with respect to an
investment in Starlight in general and the Starlight Shares in particular;
(iii) is financially able to bear the economic risks of an investment in
Starlight; and (iv) has such knowledge and experience in financial and
business matters in general and with respect to investments of a nature
similar to the Starlight Shares so as to be capable, by reason of such
knowledge and experience, of evaluating the merits and risks of, and making
an informed business decision with regard to, the acquisition of the
Starlight Shares.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF STARLIGHT. Except
as expressly set forth and specifically identified by the section number of
this Agreement in the Starlight Disclosure Schedule, Starlight hereby
represents, warrants and covenants to the Toucan Shareholders, as follows:
5.1 CORPORATE ORGANIZATION. Starlight is a corporation duly
incorporated and validly existing as a corporation and in good standing under
the laws of its jurisdiction of incorporation. Starlight has the requisite
corporate power and authority to carry on its business as now being conducted
and to own, lease and operate its properties and assets, and Starlight is
duly qualified or licensed to do business and is in good standing in every
jurisdiction in which the failure to be so qualified and licensed could have
a Material Effect. Section 5.1 of the Starlight Disclosure Schedule sets
forth the name and state of incorporation of Starlight and each state in
which it is qualified or licensed to do business.
5.2 CAPITALIZATION.
(a) The authorized, issued and outstanding capital stock of
Starlight, all outstanding securities convertible into or exchangeable or
exercisable for shares of capital stock of Starlight and all rights
agreements or other commitments of Starlight to issue, transfer or sell its
capital stock is as set forth in Section 5.2 of the Starlight Disclosure
Schedule. All of the issued and outstanding shares of Starlight are validly
issued, fully paid and nonassessable, and none of such shares have been
issued in violation of the preemptive rights of any person.
(b) The Starlight Shares shall be validly issued, fully paid and
nonassessable.
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(c) Starlight does not own or hold any equity, debt or other
interest in any entity or business on any option to acquire any such
interest.
5.3 AUTHORITY.
(a) The execution and performance of this Agreement have been
duly and validly authorized by the board of directors of Starlight and no
other corporate action by Starlight is necessary to authorize the execution,
delivery and performance of this Agreement. Starlight has the corporate
power and authority to execute and perform this Agreement and to carry out
the transactions contemplated hereby. This Agreement has been duly and
validly executed on behalf of Starlight and is a valid and binding obligation
of Starlight, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, moratorium, reorganization,
receivership or similar laws affecting the rights of creditors generally.
(b) None of the execution, delivery or performance of this
Agreement does or will, after the giving of notice, lapse of time or
otherwise, (i) result in any violation of or be in conflict with or
constitute a default under any term or provision of the Articles of
Incorporation or bylaws of Starlight or any term or provision of any
instrument, judgment, decree, order, statute, injunction, rule or regulation
applicable to Starlight or of any material note, bond, mortgage, indenture,
lease, license, franchise, agreement or other instrument or obligation to
which Starlight is bound; or (ii) result in the creation of any material lien
upon any of the properties or assets of Starlight pursuant to any such term
or provision; or (iii) constitute a default under, terminate, accelerate,
amend or modify, or give any party the right to terminate, accelerate, amend,
modify, abandon or refuse to perform or comply with any material contract,
agreement, arrangement, commitment or plan to which Starlight is a party, or
by which Starlight or any of the rights, properties or assets of Starlight
may be subject or bound.
5.4 CONSENTS AND APPROVALS. No federal, state or other
regulatory approvals are required to be obtained, nor any regulatory
requirements complied with, by Starlight in connection with the Share
Exchange.
5.5 VIOLATION OF LAWS, PERMITS, ETC.
(a) Starlight is not in violation of any term or provision of
its Articles of Incorporation or bylaws, or in any material respect of any
term or provision of any judgment, decree, order, statute, injunction, rule,
ordinance or governmental regulation applicable to it and where the failure
to comply with which would have a Material Effect.
(b) Starlight has maintained in full force and effect all
certificates, licenses and permits material to the conduct of its business,
and has not received any notification that any revocation or limitation
thereof is threatened or pending.
(c) All shares of issued and outstanding capital stock of
Starlight have been issued in compliance with all applicable securities laws.
5.6 STARLIGHT FINANCIAL STATEMENTS. The Starlight Financial
Statements fairly present the assets, liabilities and financial position of
such entity as of the dates thereof and the results of its operations for the
respective periods ended on such dates, all in conformity with GAAP
consistently applied.
5.7 NO UNDISCLOSED LIABILITIES, ETC. Starlight has no material
liabilities or obligations, whether direct, indirect, absolute or contingent
(including, without limitation, liabilities as guarantor or otherwise with
respect to obligations of others), except (a) liabilities that are fully
reflected on or reserved against on the latest balance sheet included in the
Starlight Financial Statements, (b) liabilities incurred in the ordinary
course of business since the date of the latest balance sheet included in the
Starlight Financial Statements that are consistent with past practice and are
included in the latest Starlight Financial Statements or (c) as specifically
disclosed in the Starlight Financial Statements.
5.8 ABSENCE OF CERTAIN CHANGES. Since the date of the latest
Starlight Financial Statement, except as specifically disclosed in the latest
Financial Statements for Starlight, Starlight has not:
(a) Suffered any change that would be likely to result in a
Material Effect;
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(b) Adopted or made any change in any pension, retirement,
profit sharing or other employee benefit plan or arrangement;
(c) Borrowed or agreed to borrow any money or incurred, assumed
or become subject to, whether directly or by way of guarantee or otherwise,
any other obligation or liability for borrowed money, whether absolute,
contingent, known, unknown, or otherwise, except in the ordinary course of
business and consistent with past practice;
(d) (i) Issued, purchased or redeemed any of its capital
securities or any option, warrant or right to purchase any of the same; (ii)
authorized, declared or paid stock dividends; (iii) authorized, declared or
paid any dividends, distributions of earnings or capital on, or splits or any
other reclassification of, its equity securities;
(e) Mortgaged, pledged or subjected to any Encumbrance any
material portion of its assets, tangible or intangible;
(f) Acquired or disposed of, or entered into any agreement to
acquire or dispose of, any material assets or properties, other than in the
ordinary course of business;
(g) Increased the salaries, compensation, pension or other
benefits payable to its officers and directors or their Affiliates;
(h) Forgiven or canceled any debts or claims or waived any
rights against Starlight or its Affiliates or forgiven or canceled any
material debts or claims or waived any material rights against any other
person;
(i) Entered into, terminated or received notice of the
termination of any commitment, contract, agreement or transaction that is
material to Starlight; or
(j) Agreed, either in writing or otherwise, to take any action
described in this Section 5.8.
(k) Made any capital expenditure or commitment, except capital
expenditures that individually or in the aggregate do not exceed $50,000, as
Starlight may, in its discretion, deem appropriate.
5.9 TITLE TO PROPERTY; ENCUMBRANCES. Starlight, either
directly or indirectly, has good and indefeasible title to and other legal
right to use all properties and assets, real, personal and mixed, tangible
and intangible, reflected as owned on their latest balance sheets included in
the Starlight Financial Statements or acquired after the date of such balance
sheet, except for properties and assets disposed of in accordance with
customary practice in the business or disposed of for full and fair value
since the date of such balance sheet in the ordinary course of business
consistent with past practice and except for matters that would not have a
Material Effect.
5.10 LITIGATION.
(a) There is no action, proceeding, investigation or inquiry
pending or, to the best of Starlight's knowledge, threatened (i) against or
affecting any of Starlight's assets or business that, if determined adversely
to Starlight, would result in a Material Effect or (ii) that questions this
Agreement or any action contemplated by this Agreement or in connection with
the Share Exchange.
(b) Starlight has no knowledge of any state of facts or of the
occurrence or nonoccurrence of any event or group of related events, that
should reasonably cause Starlight to determine that there exists any basis
for any material claim against Starlight for any of the matters described in
paragraph (a) above.
5.11 TAXES.
(a) Starlight has duly filed all required Tax Returns. All
Taxes owed by Starlight have been paid. All such Tax Returns described are
complete and accurate in all material respects and there is no basis for any
material assessment of any addition to the Tax shown thereon and (i) none of
such Tax Returns has been audited by the Internal Revenue Service or any
state, local or other taxing authority, (ii) Starlight has no proposed or
outstanding Tax
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deficiency (except as disclosed in the Starlight Financial Statements)
or assessment nor have they been notified of any Tax Return examination
applicable to the business or assets of Starlight (or of any examination
of any consolidated, combined or unitary Tax Returns of any Affiliated
Group of which Starlight was a member and which relate in part to
Starlight, (iii) no waiver of any statute of limitations relating to
such Tax Returns (or to Taxes payable by or chargeable as a lien upon
the assets of Starlight) has been given or requested, (iv) no extension
of the period for assessment or collection of any such Taxes has been
agreed, and (v) there are no Tax liens on any of the assets or
properties of Starlight other than liens for current Taxes not yet due
and payable. All Taxes payable by, or chargeable as a lien upon the
assets of Starlight as of the Closing have been duly paid, and the
balance sheet in the latest Starlight Financial Statement reflects an
adequate reserve for all Taxes payable or asserted to be payable by or
chargeable as a lien upon the assets of Starlight for all taxable
periods or portions thereof through the date thereof. Any tax sharing
agreements or arrangements between Starlight on the one hand and any
other corporation on the other and any obligations to make payments
under any such agreement or arrangement shall be or has been canceled
without any liability of any party to such agreement or arrangement, or
affiliates thereof as of the Closing.
(b) No consent has been filed under Section 341(f) of the Code
with respect to Starlight.
(c) Starlight is not a "United States real property holding
corporation" (as defined in Section 897(c)(2) of the Code).
(d) Starlight has not made any material payments, is not
obligated to make any material payments, and is not a party to any agreement
that under certain circumstances could obligate it to make any material
payments that will not be deductible under Section 280G of the Code.
(e) Starlight has no material liability for the Taxes of any
person other than Starlight (1) under Treasury Regulations Section 1.1502-6
(or any similar provision of state, local, or foreign law), (2) as a
transferee or successor, (3) by contract or (4) otherwise.
(f) Starlight has delivered to the Toucan Shareholders correct
and complete copies of all federal, state and local Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by
Starlight since its first fiscal year.
5.12 CONTRACTS.
(a) SECTION 5.12 of Starlight Disclosure Schedule contains a
complete and correct list as of the date hereof of all material agreements,
contracts and commitments of the following types (and all amendments
thereto), written or oral, to which Starlight are a party or by which any of
its properties is bound:
(i) notes, agreements, mortgages, indentures,
security agreements and other instruments relating to the
borrowing of money or evidence of credit or the deferred
purchase price of property, or the direct or indirect
guarantee by such entities of any such indebtedness or
deferred purchase price;
(ii) leases of real property and material
personal property (other than Leases);
(iii) Joint Venture agreements;
(iv) management, employment and consulting
agreements or other contracts for personal services that are
not terminable by any of such entities on not more than one
month's notice without penalty;
(v) any agreements providing for liability for
severance pay, collective bargaining agreements, labor
contracts, or labor or personnel policies;
(vi) material surety, performance and
maintenance bonds;
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(vii) any plan, contract or arrangement
providing for bonuses, pensions, deferred compensation,
retirement plan payments, profit sharing, incentive pay, or
for any other employee benefit plan;
(viii) brokerage or finder's agreements;
(ix) any agreement that (a) restricts the right
of such entities to engage in any place in any line of
business, other than in the ordinary course of business or (b)
would restrict the right of Starlight or any subsidiary of
Starlight to engage in any line of business after the Closing
Date, other than in the ordinary course of business; and
(x) any contract, commitment or agreement that
individually or in the aggregate is material to Starlight,
except contemplated by this Agreement.
(b) Starlight has made available to the Toucan Shareholders
complete and correct copies of all material written agreements, contracts and
commitments, together with all amendments thereto, and accurate (in all
material respects) descriptions of all material oral agreements. Such
agreements, contracts and commitments are in full force and effect, and all
of such entities and, to the best of Starlight's knowledge, all other parties
to such agreements, contracts and commitments have performed all obligations
required to be performed by them to date thereunder in all material respects
and are not in default thereunder in any material respect.
5.13 COMPENSATION AND EMPLOYEE PLANS.
(a) For all purposes of this Section, "Plan" means (i) any
employee benefit plan as defined in Section 3(3) of the ERISA, that is (a)
maintained by Starlight, or (b) to which Starlight is making or accruing an
obligation to make contributions, or (ii) any other formal or informal
obligation to, arrangement with, or plan or program for the benefit of,
employees of Starlight, including, but not limited to, stock options, stock
bonuses, stock purchase agreements, bonuses, incentive compensation, deferred
compensation, supplemental pensions, vacations, severance pay, insurance or
any other benefit, program or practice. SECTION 5.13 of the Starlight
Disclosure Schedule sets forth the name of each Plan and lists all documents
evidencing any Plan.
(b) Each Plan is now, and has been from its inception,
administered in compliance in all material respects with the provisions of
all applicable laws and regulations, including ERISA, the Code and the Age
Discrimination in Employment Act, as amended, insofar as such statutes are
applicable to such Plan.
5.14 BROKERS, FINDERS AND ADVISORS. Starlight has not employed
any broker, finder, or investment advisor on its behalf, or incurred any
liability for any brokerage or finder's fees or commissions, in connection
with the transaction contemplated hereby.
5.15 LABOR FORCE. Starlight is in compliance in all material
respects with all applicable laws (including, without limitation, federal
income tax laws), ordinances, regulations, statutes, rules and restrictions
of any Governmental Entity respecting employment and employment practices and
terms and conditions of employment.
5.16 BOOKS AND RECORDS. The books and records of Starlight
(including, without limitation, the books of account, minute books and stock
record books) are complete and correct in all material respects and have been
maintained in accordance with sound business practices. The minute books of
Starlight contain accurate and complete records in all material respects of
all meetings held of, and corporate action taken by, the shareholders and the
boards of directors of the respective entities, and no meetings of or actions
by such shareholders or any such boards of directors have been held or taken
for which minutes have not been prepared and are not contained in such minute
books. None of the records and written documents furnished or made available
by Starlight or its agents to Toucan's representatives or agents, when
considered in context and together with any relevant or related documents
also so furnished or made available, contain any untrue statement of material
fact or omit a material fact necessary to make any statement therein not
misleading.
5.17 PAYMENTS. Starlight has not, directly or indirectly, paid
or delivered any fee, commission or other sum of money or item of property
however characterized to any finder, agent, government official
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or other party, in the United States or any other country, in any manner
related to its business or operations, that Starlight knows or has
reason to believe to have been illegal under any federal, state or local
laws of the United States or any other country or territory having
jurisdiction over such entity, and has not participated, directly or
indirectly, in any boycotts or similar practices.
5.18 DISCLOSURE. No representation or warranty made by
Starlight in this Agreement (including, without limitation, in the Starlight
Disclosure Schedule) contains any untrue statement of material fact or omits
to state any material fact necessary to make the statements herein or therein
not misleading in light of the circumstances under which made.
5.19 JOINT VENTURES. Starlight is not a member of any
partnership, joint venture or other business entity.
5.20 SUBSIDIARIES. Starlight does not own any subsidiaries.
5.21 APPROVAL OF SHARE EXCHANGE. The board of directors of
Starlight has approved the Share Exchange without reservation or
qualification.
5.22 SEC REPORTING STATUS. Starlight filed a registration
statement on Form S-18 under the Securities Act, which was declared effective
on July 19, 1989. Since that date, Starlight has filed with the Commission
all reports required to be filed pursuant to Section 15(d) of the Exchange
Act. It has not filed a certification on Form 15 pursuant to Rule 12h-3 of
the Exchange Act.
5.23 INVESTMENT COMPANY. Starlight is not an investment company
within the meaning of Section 3 of the Investment Company Act. In addition,
since the inception of Starlight, all funds of Starlight have been held in
federally insured bank accounts, and the entire amount of such funds have
been federally insured at all times.
5.24 SEC FILINGS. Starlight has filed all forms, reports and
documents required to be filed with the Commission. All of such filings were
prepared in accordance with the requirements of all applicable laws in all
material respects, and did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
5.25 OTC BULLETIN BOARD. Starlight Common Stock is approved for
trading on the OTC Bulletin Board.
5.26 SECONDARY TRADING EXEMPTION. Starlight Common Stock is
approved for trading in the states listed under Section 5.26 of the Starlight
Disclosure Schedule.
5.27 CERTAIN LEGAL PROCEEDINGS.
(a) None of the directors, officers or other Affiliates of
Starlight have been included within the last five (5) years in any legal
proceedings of the type listed in Item 401(d) of Regulation S-B, Integrated
Disclosure System for Small Business Issuers.
(b) Neither Starlight, its predecessors, if any, or any of its
Affiliates has been subject to a disqualifying provision of Regulation A or
Regulation D, pursuant to the Securities Act.
5.28 NET WORTH. On the Closing Date, Starlight shall have (i)
at least $100,000 in cash or cash equivalents and (ii) net worth (taking into
account all accrued liabilities and liabilities relating to or arising from
commitments or obligations incurred prior to the Closing Date and expected to
come due within 30 days of the Closing Date) of at least $100,000.
5.29 ACCOUNTANTS. Comiskey & Company, P.C. is Starlight's
independent public accountants. None of the reports of Comiskey & Company,
P.C. on the financial statements of Starlight for either of the past two
fiscal years contained an adverse opinion or a disclaimer of opinion, or was
qualified as to uncertainty, audit scope, or
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accounting principles. During Starlight's two most recent fiscal years and
the subsequent interim period preceding such resignation, there were no
disagreements with Comiskey & Company, P.C. on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures. None of the reportable events listed in Item 304(a)(1)(v) of
Regulation S-K occurred with respect to Starlight and Comiskey & Company, P.C.
6. ACTIONS OF THE TOUCAN SHAREHOLDERS PRIOR TO THE CLOSING DATE.
6.1 AFFIRMATIVE COVENANTS. Prior to the Closing Date, the
Toucan Shareholders covenant that, unless the prior written consent of
Starlight is first obtained, which consent shall not be unreasonably
withheld, Toucan will:
(a) During the period from the date of this Agreement to the
Effective Time, Toucan will conduct its operations according to its ordinary
and usual course of business and consistent with past practice, and the
Toucan Shareholders will use their best efforts to preserve intact Toucan's
business organization, to keep available the services of its officers and
employees and to maintain satisfactory relationships with licensors,
licensees, suppliers, contractors, distributors, customers and others having
business relationships with Toucan.
(b) Duly comply with all laws applicable to them and their
respective properties, operations, business and employees that if not
complied with would result in a Material Effect.
6.2 NEGATIVE COVENANTS. Prior to the Closing Date, the Toucan
Shareholders covenant that, except with the prior written consent of
Starlight, which consent shall not be unreasonably withheld, Toucan will not:
(a) Do any of the restricted acts set forth in SECTION 4.8
hereof, or enter into any agreement of a nature set forth in SECTION 4.12
hereof;
(b) Enter into any transaction other than in the ordinary course
of business; or
(c) Amend the respective organizational or governing documents
of Toucan.
6.3 CONSENTS. The Toucan Shareholders will use best efforts to
obtain all consents from third parties, including, without limitation,
Governmental Entities necessary or appropriate to effectuate the transactions
contemplated by this Agreement.
6.4 ADVICE OF CHANGES. The Toucan Shareholders will promptly
advise Starlight in writing from time to time prior to the Closing Date with
respect to any matter hereafter arising and known to them that, if existing
or occurring at the date of this Agreement, would have been required to be
set forth or described in the Toucan Shareholder Disclosure Schedule or would
have resulted in any representation of the Toucan Shareholders in this
Agreement being untrue.
6.5 BEST EFFORTS. The Toucan Shareholders will use best
efforts to cause to be fulfilled those of the conditions to Starlight's
obligations to consummate the transactions contemplated by this Agreement
that are dependent upon the Toucan Shareholders' actions and to execute and
deliver such instruments and take such other actions as necessary or
appropriate in order to carry out the intent of this Agreement.
6.6 ACCESS TO PROPERTIES AND RECORDS. From and after the date
of this Agreement through the earlier of the Closing or the termination of
this Agreement, the Toucan Shareholders shall (a) provide Starlight an
identification of and access to all books, records and documents, including
contracts, agreements, consents, settlements, revenue and expense information
and (b) afford to Starlight and its officers, attorneys, accountants and
other authorized representatives free and full access during normal business
hours to the offices, properties, books and records of Toucan.
6.7 SUPPLY DOCUMENTS, REPORTS, ETC.
(a) The Toucan Shareholders shall furnish or make available to
Starlight all documents, reports and other information and data (including
financial statements) concerning Toucan as Starlight may reasonably require
in connection with any statement, application, or document required to be
filed with applicable Governmental
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Entities in connection with the transaction contemplated by this Agreement or
furnished to any other person, firm, corporation or Governmental Entity in
connection with this Agreement, including, but not limited to the Commission.
(b) The Toucan Shareholders represent and warrant that all such
information shall be true, correct, and complete in all material respects and
shall not omit any material fact required to be stated to make such
information not misleading in light of the circumstances under which made.
7. ACTIONS OF STARLIGHT PRIOR TO OR AT THE CLOSING DATE.
7.1 AFFIRMATIVE COVENANTS. Prior to the Closing Date,
Starlight covenants that, unless the prior written consent of the Toucan
Shareholders is first obtained, will:
(a) During the period from the date of this Agreement to the
Effective Time, conduct its operations according to its ordinary and usual
course of business and consistent with past practice, and will use its best
efforts to preserve intact their business organizations, to keep available
the services of its officers and employees and to maintain satisfactory
relationships with licensors, licensees, suppliers, contractors,
distributors, customers and others having business relationships with
Starlight.
(b) Duly comply with all laws applicable to it and its
properties, operations, business and employees that if not complied with
would result in a Material Effect.
(c) Use its best efforts to terminate any outstanding options or
warrants that have been issued by Starlight.
(d) Starlight shall satisfy on the date hereof and shall
continue to satisfy (i) the filing requirements set forth in Section 15(d) of
the Exchange Act and (ii) the requirements of Rule 15(c) 2-11 promulgated by
the Commissioner under the Exchange Act.
7.2 NEGATIVE COVENANTS. Prior to the Closing Date without the
prior written consent of the Toucan Shareholders, Starlight will not:
(a) Do any of the restricted acts set forth in Section 5.8
hereof, or enter into any agreement of a nature set forth in Section 5.12
hereof;
(b) Enter into any transaction other than in the ordinary course
of business;
(c) Amend its organizational or governing documents; or
(d) Extend the expiration date of any options or warrants.
7.3 CONSENTS. Starlight will use best efforts to obtain all
consents from third parties, including, without limitation, Governmental
Entities necessary or appropriate to effectuate the transactions contemplated
by this Agreement.
7.4 ADVICE OF CHANGES. Starlight will promptly advise the
Toucan Shareholders in writing from time to time prior to the Closing Date
with respect to any matter hereafter arising and known to it that, if
existing or occurring at the date of this Agreement, would have been required
to be set forth or described in the Starlight Disclosure Schedule or would
have resulted in any representation of Starlight in this Agreement being
untrue in any material respect.
7.5 OTC BULLETIN BOARD. Starlight will use its best efforts to
maintain the listing on the OTC Bulletin Board of the Starlight Common Stock.
7.6 COMMISSION REPORTS. Starlight shall file with the
Commission all reports that are required to be filed by the Exchange Act and
the rules and regulations promulgated thereunder.
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7.7 BEST EFFORTS. Starlight will use its best efforts to cause
to be fulfilled those of the conditions to the Toucan Shareholders'
obligations to consummate the transactions contemplated by this Agreement
that are dependent upon Starlight's actions and to execute and deliver such
instruments and take such other actions as necessary or appropriate in order
to carry out the intent of this Agreement.
7.8 ACCESS TO PROPERTIES AND RECORDS. From and after the date
of this Agreement through the earlier of the Closing or the termination of
this Agreement, Starlight shall (a) provide the Toucan Shareholders an
identification of and access to all books, records and documents, including
contracts, agreements, consents, settlements, revenue and expense
information, and (b) afford to the Toucan Shareholders and Toucan's officers,
attorneys, accounts and other authorized representatives free and full access
during normal business hours to the offices, properties, books and records of
Starlight.
7.9 SUPPLY DOCUMENTS, REPORTS, ETC.
(a) Starlight shall furnish or make available to the Toucan
Shareholders all documents, reports and other information and data (including
financial statements) concerning Starlight as the Toucan Shareholders may
reasonably require in connection with any statement, application, or document
required to be filed with applicable Government Entities in connection with
the transaction contemplated by this Agreement or furnished to any other
person, firm, corporation or Governmental Entity in connection with this
Agreement, including, but not limited to the Commission.
(b) Starlight represents and warrants that all such information
shall be true, correct, and complete in all material respects and shall not
omit any material fact required to be stated to make such information not
misleading in light of the circumstances under which made.
7.10 BOARD OF DIRECTORS OF STARLIGHT. Starlight shall duly call
a meeting of the Board of Directors to occur simultaneously at Closing. At
this meeting R. Haydn Silleck, John B. Marvin and Peter S. Daley shall resign
from their positions as directors and officers of Starlight and Robert
Jeffcock, L. Clark Arnold and Don Box shall be elected as directors of
Starlight to fill these director vacancies. Jay Lutsky will immediately
thereafter resign from the Board of Directors and as an officer of Starlight
and shall be elected as an Advisory Director.
8. CONDITIONS TO STARLIGHT'S OBLIGATIONS. Each and every
obligation of Starlight under this Agreement to be performed on or before the
Closing Date is, at the option of Starlight, subject to the satisfaction on
or before the Closing Date of each of the following conditions:
(a) (i) All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Toucan Shareholders at or
before the Closing Date shall have been duly complied with and performed in
all material respects, (ii) the representations and warranties of the Toucan
Shareholders set forth in ARTICLE 4 shall be true in all material respects on
and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date
and (iii) Starlight shall have received a certificate to such effect from the
Toucan Shareholders.
(b) All consents, waivers, approvals, licenses, authorizations
of, or filings or declarations with third parties or Governmental Entities
required to be obtained by Toucan or the Toucan Shareholders in order to
permit the transactions contemplated by this Agreement to be consummated in
accordance with agreements and court orders applicable to Toucan or the
Toucan Shareholders and applicable governmental laws, rules, regulations and
agreements shall have been obtained and any waiting period thereunder shall
have expired or been terminated, and Starlight shall have received a
certificate from the Toucan Shareholders to such effect.
(c) All actions, proceedings, instruments and documents in
connection with the consummation of the transactions contemplated by this
Agreement, including the forms of all documents, legal matters, opinions and
procedures in connection therewith, shall have been approved in form and
substance by counsel for Starlight, which approval shall not be unreasonably
withheld.
(d) The Toucan Shareholders shall have furnished such
certificates to evidence compliance with the conditions set forth in this
Article, as may be reasonably requested by Starlight or its counsel.
17
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(e) Toucan shall not have suffered any Material Effect.
(f) No material information or data provided or made available
to Starlight by or on behalf of Toucan shall be incorrect in any material
respect.
(g) No investigation and no suit, action or proceeding before
any court or any governmental or regulatory authority shall be pending or
threatened by any state or federal governmental or regulatory authority,
against Toucan or any of its affiliates, associates, officers or directors
seeking to restrain, prevent or change in any material respect the
transactions contemplated hereby or seeking damages in connection with such
transactions that are material to Toucan.
(h) R. Haydn Silleck, John B. Marvin, Peter S. Daley and Jay
Lutsky shall each receive warrants to purchase 25,000 shares of the common
stock of Starlight at an exercise price of $4.00 per share, pursuant to a
Warrant Agreement substantially in the form attached hereto as Exhibit A.
9. CONDITIONS TO THE TOUCAN SHAREHOLDERS' OBLIGATIONS. Except as
set forth below, each and every obligation of the Toucan Shareholders under
this Agreement to be performed on the Closing Date is, at the option of the
Toucan Shareholders, subject to the satisfaction on or before the Closing
Date, of each of the following conditions:
(a) (i) All of the terms, covenants and conditions of this
Agreement to be complied with or performed by Starlight at or before the
Closing Date shall have been duly complied with and performed in all material
respects, (ii) the representations and warranties of Starlight set forth in
ARTICLE 5 shall be true in all material respects on and as of the Closing
Date with the same force and effect as if such representations and warranties
had been made on and as of the Closing Date and (iii) the Toucan Shareholders
shall have received a certificate from the President of Starlight at Closing
to such effect.
(b) All consents, waivers, approvals, licenses, authorizations
of, or filings or declarations with third parties or Governmental Entities
required to be obtained by Starlight in order to permit the transactions
contemplated by this Agreement to be consummated in accordance with
agreements and court orders applicable to Starlight and applicable
governmental laws, rules, regulations and agreements shall have been obtained
and any waiting period thereunder shall have expired or been terminated, and
the Toucan Shareholders shall have received a certificate from the President
of Starlight to such effect.
(c) The Toucan Shareholders shall have received the written
opinion, dated as of the Closing Date, of counsel to Starlight, which counsel
shall be reasonably acceptable to the Toucan Shareholders, which opinion
shall relate to each of the representations referred to in Sections 5.1
through 5.4.
(d) All actions, proceedings, instruments and documents in
connection with the consummation of the transactions contemplated by this
Agreement, including the forms of all documents, legal matters, opinions and
procedures in connection therewith, shall have been approved in form and
substance by counsel for the Toucan Shareholders, which approval shall not be
unreasonably withheld.
(e) Starlight shall have furnished such certificates of its
officers and others to evidence compliance with the conditions set forth in
this Article, as may be reasonably requested by the Toucan Shareholders or
their counsel.
(f) Starlight shall not have suffered any Material Effect.
(g) No material information or data provided or made available
to the Toucan Shareholders by or on behalf of Starlight shall be incorrect in
any material respect.
(h) No investigation and no suit, action or proceeding before
any court or any governmental or regulatory authority shall be pending or
threatened by any state or federal governmental or regulatory authority,
against Starlight or any of their affiliates, associates, officers or
directors seeking to restrain, prevent or change in any material respect the
transactions contemplated hereby or seeking damages in connection with such
transactions that are material to Starlight.
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(i) On the Closing Date, Starlight shall have (i) at least
$100,000 in cash or cash equivalents and (ii) net worth (taking into account
all accrued liabilities and liabilities relating to or arising from
commitments or obligations incurred prior to the Closing Date and expected to
come due within 30 days of the Closing Date) of at least $100,000.
(j) Starlight Common shall be approved for listing on the OTC
Bulletin Board.
(k) Starlight shall satisfy (i) the filing requirements set
forth in Section 15(d) of the Exchange Act and (ii) the requirements of Rule
15(c)2-11 as promulgated by the Commissioner under the Exchange Act.
(l) Toucan Shareholders shall receive an indemnification
agreement in form and substance acceptable to them indemnifying such Toucan
Shareholders, Starlight and Toucan from losses arising from a breach by
Starlight of Section 5.28 or Section 9.12.
10. ADDITIONAL AGREEMENTS.
10.1 CONFIDENTIALITY. The parties hereto will, and will cause
their officers, directors, employees and authorized representatives to, hold
in confidence all, and not to use or to disclose to others any, nonpublic
information received by them from another party hereto in connection with the
transactions contemplated by this Agreement; provided, however, the
foregoing shall not restrict necessary disclosures in compliance with
requirements of any law, governmental order or regulation.
10.2 FURTHER ASSURANCES. After Closing, the parties shall
execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered such instruments and take such other action including payment of
monies as may be necessary or advisable to carry out their obligations under
this Agreement and under any document, certificate or other instrument
delivered pursuant hereto or required by law. If at any time subsequent to
the Closing, any party comes into possession of money or property belonging
to another party, such money or property shall be promptly turned over to the
party entitled thereto.
11. TERMINATION, WAIVER AND AMENDMENT.
11.1 TERMINATION. This Agreement may be terminated prior to the
Effective Date by: (i) mutual consent of the board of directors of Starlight
and the Toucan Shareholders for any reason; (ii) Starlight, if the Toucan
Shareholders have failed to comply in any material respect with any of its
covenants or agreements under this Agreement that are required to be complied
with prior to the date of such termination; (iii) the Toucan Shareholders, if
Starlight has failed to comply in any material respect with any of their
covenants or agreements under this Agreement that are required to be complied
with prior to the date of such termination; (iv) either Starlight or the
Toucan Shareholders, if the Closing does not take place prior to May 30,
1996, except that such date may be extended until June 15, 1996, Starlight or
the Toucan Shareholders, if such delay is attributable to actions by a
Governmental Entity; or (v) either Starlight or the Toucan Shareholders, if a
Governmental Entity has permanently enjoined or prohibited consummation of
the Share Exchange and such court or government action is final and
nonappealable.
11.2 MANNER OF EXERCISE. In the event of termination and
abandonment by a party pursuant to Section 11.1, written notice thereof shall
forthwith be given to the other party, and this Agreement shall terminate and
the transactions contemplated hereunder shall be abandoned without further
action by the parties.
11.3 EFFECT OF TERMINATION. In the event of the termination and
abandonment pursuant to Section 11.1, this Agreement shall become void and
have no effect, without any liability on the part of any of the parties or
their directors or officers or shareholders in respect of this Agreement and
the transactions contemplated hereby except that a party that breaches this
Agreement may have liability to the other parties hereto arising out of such
breach. Except as allowed under this Agreement, if the Share Exchange is not
consummated, each party to this Agreement will bear its own costs and
expenses in connection therewith and the transactions contemplated thereby.
11.4 WAIVER. The respective obligations of the parties hereto
to effect the Share Exchange are subject to written waiver thereof.
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11.5 AMENDMENT. The parties to this Agreement may, at any time
prior to the Effective Date, amend this Agreement or extend the time for
performance of any of the other parties' obligations under this Agreement and
waive any inaccuracies in the representations and warranties contained herein
and waive compliance with any of the agreements or conditions contained
herein that may be legally waived.
12. MISCELLANEOUS.
12.1 EXPENSES. Except as otherwise provided herein, Starlight
and Toucan shall pay all expenses and costs in connection with this Agreement
and the transactions contemplated hereby.
12.2 PRESS RELEASES. No party shall make any public
announcement or press release with respect to this transaction without
written consent of the others (which shall not be unreasonably withheld),
except as required by law.
12.3 BINDING EFFECT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party without the prior written
consent of the others. Nothing contained herein, express or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
12.4 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, in such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
12.5 NOTICES. Any notice, request, instructions or other
document to be given hereunder to any party shall be in writing, sent by
facsimile transmission or delivered personally or by courier or sent by
certified mail, postage prepaid, as follows:
If to the Toucan Shareholders:
Toucan Mining, Ltd.
Celtic House, Victoria Street
Douglas, Isle of Man IM99 1QZ
Attention: Robert P. Jeffcock
Copy to:
Mark D. Wigder
Jenkens & Gilchrist, a Professional Corporation
1445 Ross Avenue
Suite 3200
Dallas, Texas 75202
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If to Starlight:
Starlight Acquisitions, Inc.
1328 Starwood Lane
Evergreen, Colorado 80439
Attention: R. Haydn Silleck, President
Copy to:
Fay M. Matsukage
Stanford Place 3
Suite 201
4582 South Ulster Street Parkway
Denver, Colorado 80237-2633
Any party may change its address for purposes of this Section by giving
written notice of such change of address to the other parties in the
manner herein provided for giving notice. Any notice or communication
hereunder shall be deemed to have been given when (i) deposited in the
United States mail, if by certified mail, and (ii) received, if
delivered personally or by courier or facsimile transmission.
12.6 ENTIRE AGREEMENT. This Agreement (including the
instruments between the parties referred to herein and any waivers delivered
pursuant hereto) constitutes the entire agreement among the parties and
supersedes all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof. The Exhibits and Schedules are a part of this Agreement as if fully
set forth herein. All references to articles, sections, subsections,
paragraphs, clauses, exhibits and schedules shall be deemed references to
such part of this Agreement, unless the context shall otherwise require.
12.7 AMENDMENTS; WAIVERS. No supplement, modification, or
amendment of this Agreement or waiver of any provision of this Agreement will
be binding unless executed in writing by, or on behalf of, all parties to
this Agreement. No waiver of any of the provisions of this Agreement will be
deemed or will constitute a waiver of any other provision of this Agreement
(regardless of whether similar), nor will any such waiver constitute a
continuing waiver unless otherwise expressly provided.
12.8 HEADINGS. Descriptive headings contained herein are for
convenience of reference only and shall not affect the meaning or
interpretation hereof.
12.9 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original but all of
which together shall constitute but one agreement.
12.10 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur if any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provision hereof in any court of the
United States of America or any state having jurisdiction, in addition to any
other remedy to which they are entitled at law or in equity.
12.11 GOVERNING LAW. THIS AGREEMENT AND THE LEGAL RELATIONS
BETWEEN THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF COLORADO APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN THAT STATE, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
12.12 TIME OF ESSENCE. Time is of the essence of the
parties' obligation to consummate the transactions contemplated by this
Agreement on the Closing Date.
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12.13 BEST EFFORTS. No provision of this Agreement
calling for a party to use its best efforts or reasonable efforts shall
be construed so as to require such party to incur out-of-pocket
expenditures other than expenditures normally incurred in transactions
similar to the Share Exchange or to take any step that would not be
commercially reasonable, in light of all of the circumstances.
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<PAGE>
EXECUTED as of the day and year first above written.
STARLIGHT ACQUISITIONS, INC.
By: /s/ R. Haydn Silleck
Name: R. Haydn Silleck
Title: President
TOUCAN SHAREHOLDERS
BANKHILL TRUSTEES LTD.
By: /s/ Roy Williams
Name: Roy Williams
Title: Attorney-in-Fact
pursuant to power of Attorney
NORTHQUAY LTD.
By: /s/ Robert Jeffcock
Name: Robert Jeffcock
Title: Attorney-in-Fact
pursuant to Power of Attorney
<PAGE>
LIST OF SCHEDULES
Schedule A: List of Shareholders of Toucan
<PAGE>
LIST OF EXHIBITS
Exhibit A: Warrant Agreement
<PAGE>
WARRANT AGREEMENT
This WARRANT AGREEMENT (the "Agreement"), dated as of May 10, 1996, is
made by and between Starlight Acquisitions, Inc., a Colorado corporation (the
"Company"), and the individuals listed on EXHIBIT A hereto (collectively, the
"Warrantholders" and individually, a "Warrantholder").
The Company hereby agrees to issue to the Warrantholders, the warrants
hereinafter described (the "Warrants") to purchase an aggregate of 100,000
shares as set forth on EXHIBIT A hereto (the "Warrant Shares") (subject to
adjustment pursuant to SECTION 8 hereof) of the common stock, no par value,
of the Company (the "Common Shares"), at an Exercise Price determined in
accordance with SECTION 7 hereunder. The Warrants are being issued in
connection with the Share Exchange Agreement, dated as of May 10, 1996 (the
"Issue Date"), by and between the Company and the shareholders of Toucan
Mining Limited.
In consideration of the foregoing and for the purpose of defining the
terms and provisions of the Warrants and the respective rights and
obligations thereunder, the Company and the Warrantholders, for value
received, hereby agree as follows:
SECTION 1. FORM OF WARRANT CERTIFICATES; TRANSFERABILITY OF WARRANTS.
1.1 FORM OF WARRANT CERTIFICATE. The Warrants shall be evidenced by
one or more certificates substantially as set forth in EXHIBIT B attached
hereto (a "Warrant Certificate"). The Warrant Certificates shall be executed
on behalf of the Company by its Chairman of the Board, Chief Executive
Officer or a Vice President. A Warrant Certificate bearing the signature of
an individual who was at any time the proper officer of the Company shall
bind the Company, notwithstanding that such individual shall have ceased to
hold such office prior to the delivery of such Warrant or did not hold such
office on the date of this Agreement. Each Warrant Certificate shall be
numbered and registered on the books of the Company when it is issued, and
shall be dated as of the date of signature thereof by the Company either upon
initial issuance or upon division, exchange, substitution or transfer.
1.2 TRANSFER. The Warrant Certificate shall be transferable only on
the books of the Company maintained at its principal office at 1328 Starwood
Lane, Evergreen, Colorado 80439, or wherever its principal executive offices
may then be located upon delivery thereof duly endorsed by the Warrantholder
or its duly authorized attorney or representative, or accompanied by proper
evidence of succession, assignment or authority to transfer. Upon any
registration of transfer, the Company shall execute and deliver a new Warrant
Certificate to the person entitled thereto. All transfers shall be made
subject to the provisions of Section 13 hereof. In the event the Warrants or
any portion thereof are transferred, the subsequent holder thereof shall have
no greater rights than those afforded the Warrantholder hereunder.
1.3 DIVISION OF WARRANTS. Subject to all federal and state securities
laws, a Warrant Certificate may be divided or combined, upon request to the
Company by the Warrantholder, into a certificate or certificates representing
the right to purchase the same aggregate number of
<PAGE>
Warrant Shares. Unless the context indicates otherwise, the term
"Warrantholder" shall include any transferee or transferees of the Warrants
pursuant to this subsection 1.3, and the term "Warrants" shall include any
and all Warrants outstanding pursuant to this Agreement, including those
evidenced by a certificate or certificates issued upon division, exchange,
substitution or transfer pursuant to this Agreement.
SECTION 2. LEGEND ON WARRANT SHARES. Each certificate for Warrant
Shares initially issued upon exercise of the Warrant, unless at the time of
exercise such Warrant Shares are registered under the Securities Act of 1933,
as amended (the "Securities Act"), shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), and may not be sold. exchanged, hypothecated or transferred
in any manner in the absence of such registration or an exemption
therefrom. The shares are subject to the terms of a certain
Warrant Agreement, dated May 10, 1996, pursuant to which they were
issued."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement
under the Securities Act of the Warrant Shares represented thereby) shall
also bear the above legend unless, in the opinion of counsel satisfactory to
the Company, the securities represented thereby need no longer be subject to
such restrictions.
SECTION 3. TERM OF WARRANTS. Subject to the terms of this Agreement,
the Warrantholder shall have the right, at any time during the period
commencing at 9:00 a.m., Denver, Colorado time, on the date hereof and ending
at 5:00 p.m., Denver, Colorado time, on the later of (i) the eighteenth month
anniversary of the Issue Date or the six month anniversary of the closing of
the first registration of the offering of the Company's securities pursuant
to SECTION 10 hereof (the "Termination Date"), to purchase from the Company
up to the number of fully paid and nonassessable Warrant Shares that the
Warrantholder may at the time be entitled to purchase pursuant to this
Agreement, upon surrender to the Company, at its principal office, of the
certificate evidencing the Warrants to be exercised, duly completed and
signed, and upon payment to the Company of the Exercise Price (as defined in
and determined in accordance with the provisions of SECTIONS 7 AND 8 hereof),
for the number of Warrant Shares in respect of which such Warrants are then
exercised, but in no event for less than 25 Warrant Shares, unless the
Warrant entitled the Warrantholder on exercise to less than 25 Warrant
Shares, in which event the Warrant can be exercised for such lesser number of
Warrant Shares.
SECTION 4. EXERCISE. Payment of the aggregate Exercise Price shall be
made in cash or by check. Upon surrender of the Warrant Certificates and
payment of such Exercise Price as aforesaid, the Company shall issue and
cause to be delivered with all reasonable dispatch to or upon the written
order of the Warrantholder and in such name or names as the Warrantholder may
designate a certificate or certificates for the number of full Warrant Shares
so purchased upon the exercise of the Warrants, together with cash, as
provided in SECTION 9 hereof, in respect of any
2
<PAGE>
fractional Warrant Shares otherwise issuable upon such surrender. Such
certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a
holder of record of such Warrant Shares as of the date of the surrender of
the Warrant Certificate and the payment of the Exercise Price, as aforesaid,
notwithstanding that the certificates representing the Warrant Shares shall
not actually have been delivered or that the stock transfer books of the
Company shall then be closed. The Warrants shall be exercisable, at the
election of the Warrantholder, either in full or from time to time in part
and, in the event that a certificate evidencing the Warrants is exercised in
respect of less than all of the Warrant Shares specified therein at any time
prior to the Termination Date, a new certificate evidencing the remaining
Warrants will be issued by the Company.
SECTION 5. MUTILATED OR MISSING WARRANT CERTIFICATES. In case the
certificate or certificates evidencing the Warrants shall be mutilated, lost,
stolen or destroyed, the Company shall, at the request of the Warrantholder,
issue and deliver in exchange and substitution for and upon cancellation of
the mutilated certificate or certificates, a new Warrant Certificate or
certificates of like tenor and representing an equivalent right or interest,
but only upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction of such Warrants and a bond of indemnity, if requested,
also satisfactory in form and amount, at the applicant's cost. Applicants
for such substitute Warrant Certificate shall also comply with such other
reasonable requirements and pay such other reasonable charges as the Company
may prescribe.
SECTION 6. RESERVATION OF WARRANT SHARES. There has been reserved, and
the Company shall at all times keep reserved so long as all or any portion of
the Warrants remains outstanding, out of its authorized Common Shares, such
number of Warrant Shares as shall be subject to purchase under such portion
of the Warrant that remains outstanding.
SECTION 7. EXERCISE PRICE. The price per Share (the "Exercise Price")
at which Warrant Shares shall be purchasable upon the exercise of the Warrant
shall be $4.00. The Exercise Price as determined hereunder shall be subject
to further adjustment pursuant to Section 8 hereof.
SECTION 8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
8.1 GENERAL. The number of Warrant Shares purchasable upon the
exercise of the Warrants and the Exercise Price shall be subject to
adjustment from time to time upon the happening of certain events, as follows:
(a) In case the Company shall (i) pay a dividend in Common Shares
or make a distribution in Common Shares, (ii) subdivide its outstanding
Common Shares, (iii) combine its outstanding Common Shares into a smaller
number of Common Shares (by way of a reverse stock split or otherwise) or
(iv) issue by reclassification of its Common Shares other securities of the
Company, the number of Warrant Shares purchasable upon exercise of the
Warrants immediately prior thereto shall be adjusted so that the
Warrantholder shall be entitled to receive the kind and number of Warrant
Shares or other securities of the Company that it would have owned or would
have been entitled to receive after the happening of any of the events
described above, had the Warrants been exercised immediately prior to the
happening of such event or any record date with
3
<PAGE>
respect thereto. Any adjustment made pursuant to this subsection 8.1(a)
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) In case the Company shall issue rights, options, warrants or
convertible securities to all or substantially all of the holders of its
Common Shares, without any charge to such holders, entitling them to
subscribe for or purchase Common Shares at a price per share that is lower at
the record date mentioned below than the Exercise Price, the number of
Warrant Shares thereafter purchasable upon the exercise of the Warrants shall
be determined by multiplying the number of Warrant Shares theretofore
purchasable upon the exercise of the Warrants by a fraction, of which the
numerator shall be the number of Common Shares outstanding immediately prior
to the issuance of such rights, options, warrants or convertible securities
plus the number of additional Common Shares offered for subscription or
purchase, and of which the denominator shall be the number of Common Shares
outstanding immediately prior to the issuance of such rights, options,
warrants or convertible securities plus the number of Common Shares that the
aggregate offering price of the total number of Common Shares offered would
purchase at the Exercise Price. Such adjustment shall be made whenever such
rights, options, warrants or convertible securities are issued, and shall
become effective immediately and retroactively after the record date for the
determination of shareholders entitled to receive such rights, options,
warrants or convertible securities.
(c) In case the Company shall distribute to all or substantially
all of the holders of its Common Shares evidences of its indebtedness or
assets (excluding cash dividends or distributions out of earnings) or issue,
to all or substantially all of such holders, without any charge to such
holders, rights, options, warrants or convertible securities containing the
right to subscribe for or purchase Common Shares (excluding those referred to
in paragraph (b) above), then in each case the number of Warrant Shares
thereafter purchasable upon the exercise of the Warrants shall be determined
by multiplying the number of Warrant Shares theretofore purchasable upon
exercise of the Warrants by a fraction, of which the numerator shall be the
Exercise Price on the date of such distribution, and of which the denominator
shall be the Exercise Price on such date minus the then fair value of the
portion of the assets or evidences of indebtedness so distributed or of such
rights, options, warrants or convertible securities applicable to one share.
Such adjustment shall be made whenever any such distribution is made and
shall become effective on the date of distribution retroactive to the record
date for the determination of shareholders entitled to receive such
distribution.
(d) No adjustment in the number of Warrant Shares purchasable
hereunder shall be required unless such adjustment would require an increase
or decrease of at least one percent in the aggregate number of Warrant Shares
then purchasable upon the exercise of the Warrants or, if the Warrants are
not then exercisable, the number of Warrant Shares purchasable upon the
exercise of the Warrants on the first date thereafter that the Warrants
become exercisable; provided however, that any adjustments that by reason of
this subsection 8.1(d) are not required to be made immediately shall be
carried forward and taken into account in any subsequent adjustment.
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<PAGE>
(e) Whenever the number of Warrant Shares purchasable upon the
exercise of the Warrants is adjusted as herein provided in this subsection
8.1, the Exercise Price payable upon exercise of the Warrants shall be
adjusted by multiplying such Exercise Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of
Warrant Shares purchasable upon the exercise of the Warrant immediately prior
to such adjustment, and of which the denominator shall be the number of
Warrant Shares so purchasable immediately thereafter.
(f) Whenever the number of Warrant Shares purchasable upon the
exercise of the Warrants or the Exercise Price is adjusted as herein provided
in this SUBSECTION 8.1, the Company shall cause to be promptly mailed to the
Warrantholder in accordance with the provisions or SECTION 12 hereof, notice
of such adjustment or adjustments and a certificate of a firm of independent
public accountants selected by the Board of Directors of the Company (who may
be the regular accountants employed by the Company) setting forth the number
of Warrant Shares purchasable upon the exercise of the Warrants and the
Exercise Price after such adjustment, a brief statement of the facts
requiring such adjustment and the computation by which such adjustment was
made.
(g) For the purpose of this SUBSECTION 8.1, the term "Common
Shares" shall mean (i) the class of shares designated as the Common Shares of
the Company at the date of this Agreement or (ii) any other class of shares
resulting from successive changes or reclassifications of such Common Shares
including changes in par value, or from par value to no par value, or from no
par value to par value, in the event that at any time, as a result of an
adjustment made pursuant to this SECTION 8, the Warrantholder shall become
entitled to purchase any shares of the Company other than Common Shares,
thereafter the number of such other shares so purchasable upon exercise of
the Warrants and the Exercise Price of such shares shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of this SECTION 8.
(h) Upon the expiration of any rights, options, warrants or
conversion privileges referred to in this SECTION 8, if such shall not have
been exercised, the number of Warrant Shares purchasable upon exercise of the
Warrants and the Exercise Price, to the extent the Warrants have not then
been exercised, shall, upon such expiration, be readjusted and shall
thereafter be such as they would have been had they been originally adjusted
(or had the original adjustment not been required, as the case may be) on the
basis of (A) the fact that the only Common Shares so issued were the Common
Shares, if any, actually issued or sold upon the exercise of such privileges,
options, warrants or conversion rights and (B) the fact that such Common
Shares, if any, were issued or sold for the consideration actually received
by the Company upon such exercise plus the consideration, if any, actually
received by the Company for the issuance, sale or grant of all such rights,
options, warrants or conversion rights whether or not exercised; provided,
however, that no such readjustment shall have the effect of increasing the
Exercise Price by an amount in excess of the amount of the adjustment
initially made in respect of the issuance, sale or grant of such rights,
options, warrants or convertible rights.
5
<PAGE>
8.2 NO ADJUSTMENT OF DIVIDENDS. Except as provided in subsection 8.1,
no adjustment in respect of dividends shall be made during the term of the
Warrants or upon the exercise thereof.
8.3 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or
merger of the Company into another corporation or in case of any sale or
conveyance to another person of the property, assets or business of the
Company as an entirety or substantially as an entirety, the Company or such
successor or purchaser, as the case may be, shall execute with the
Warrantholder an agreement that the Warrantholder shall have the right
thereafter upon payment of the Exercise Price in effect immediately prior to
such action to purchase upon exercise of the Warrants the kind and amount of
shares and other securities and property that the Warrantholder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had the warrants been exercised
immediately prior to such action. In the event of a merger described in
Section 368 (a) (2) (E) of the Internal Revenue Code of 1986, as amended, in
which the Company is the surviving corporation, the right to purchase Warrant
Shares under the Warrants shall terminate on the date of such merger and
thereupon the Warrants shall become null and void but only if the controlling
corporation shall agree to substitute for the Warrants other warrants that
entitle the holders thereof to purchase, upon exercise thereof, the kind and
amount of shares and other securities and property that the Warrantholder
would have owned or had been entitled to receive had the Warrants been
exercised immediately prior to such merger. The adjustments required by this
SUBSECTION 8.3 shall be effected in a manner that shall be as nearly
equivalent as may be practicable to the adjustments provided for elsewhere in
this SECTION 8. The provisions of this SUBSECTION 8.3 shall similarly apply
to successive consolidations, mergers, sales or conveyances.
8.4 STATEMENT ON WARRANT CERTIFICATE. Irrespective of any adjustments
in the Exercise Price or the number or kind of shares purchasable upon the
exercise of the Warrants, the Warrant Certificate or certificates theretofore
or thereafter issued may continue to express the same price and number and
kind of shares as are stated in the Warrants initially issuable pursuant to
this Agreement.
SECTION 9. FRACTIONAL SHARES. The Company shall not be required to
issue fractional Warrant Shares on the exercise of the Warrants. If any
fraction of a Warrant Share would, except for the provisions of this SECTION
9, be issuable on the exercise of the Warrants (or specified portion
thereof), the Company shall pay an amount in cash equal to the then Current
Market Price multiplied by such fraction. For purposes of this Agreement,
the term "Current Market Price" shall mean (i) if the Common Shares are
traded in the over-the-counter market and not in the NASDAQ Market System
(National Market or SmallCap) or on any national securities exchange, the
average mean between the per share closing bid and asked prices of the Common
Shares on the 30 consecutive trading days immediately preceding the date in
question, as reported by NASDAQ Market System or an equivalent generally
accepted reporting service, or (ii) if the Common Shares are traded in the
NASDAQ Market System (National Market or SmallCap) or on a national
securities exchange, the average for the 30 consecutive trading days
immediately preceding the date in question of the daily per share closing
prices of the Common Shares in the
6
<PAGE>
NASDAQ Market System (National Market or SmallCap) or on the principal
securities exchange on which they are listed, as the case may be. The
closing price referred to in clause (ii) above shall be the last reported
sales price or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices, in either case in the
NASDAQ Market System (National Market or SmallCap) or on the principal
securities exchange on which the Common Shares are then listed.
SECTION 10. REGISTRATION RIGHTS
10.1 PIGGYBACK REGISTRATION. If the Company shall at any time propose,
on or after the Issue Date, the registration under the Securities Act of an
offering of its equity securities, the Company shall give written notice of
its intention as promptly as practicable of such proposed registration to
each and every Warrantholder or holder of Warrant Shares. The Company shall
use its best efforts to cause the registration (and the offering if requested
by the Warrantholder) of the Warrant Shares owned by the Warrantholder as the
Warrantholder shall request (within 10 days after the receipt of notice) to
be included, upon the same terms (including the method of distribution), in
any such offering; PROVIDED, HOWEVER, that:
(a) the Company shall not be required to give notice or include
such Warrant Shares in any such registration if the proposed
registration is (A) a registration of a stock option or compensation
plan or of securities issued or issuable pursuant to any such plan or
(B) a registration of securities proposed to be issued in exchange for
securities or assets of, or in connection with a merger or consolidation
with another corporation;
(b) the Company may, without the consent of the
Warrantholder, withdraw such registration statement and abandon the
proposed offering in which the Warrantholder had requested to
participate; and
(c) the registration rights set forth in this Section 10.1
shall be applicable to all Warrant Shares owned by the Warrantholder.
10.2 TERMS AND CONDITIONS. The registration rights of the Warrantholder
pursuant to this Section 10 are subject to the following terms and conditions:
(a) The Warrantholder shall provide the Company with such
information with respect to the Warrant Shares to be sold, the plans for the
proposed disposition thereof and such other information as shall, in the
opinion of counsel for the Company, be necessary to enable the Company to
include in such registration statement all material facts required to be
disclosed with respect to the Warrantholder.
(b) All expenses incurred by the Company in connection with any
registration requested under this Section will be paid by the Company. Such
expenses include, but are not limited to, printing expenses (including for
such number of registration statements, prospectuses and other filed material
as the Warrantholder shall reasonably request), "blue sky" fees and expenses
and fees and disbursements of counsel and accountants for the Company, except
that in
7
<PAGE>
any such requested registration, the Warrantholder shall pay the fees
and disbursements of its counsel and any underwriting discounts and
commissions with respect to such Warrantholder's Warrant Shares.
(c) The Company will take all necessary action that may be
required in qualifying or registering the Warrant Shares included in a
registration statement, for offering and sale under the securities or blue
sky laws of such states as are requested by the Warrantholders of such
securities.
10.3 UNDERWRITING. The Warrantholder and the Company each agree in
connection with any registration of Warrant Shares contemplated by this
section:
(i) to enter into an appropriate underwriting agreement containing
terms and provisions (including reasonable provisions as to indemnification)
customary in such agreements. The Warrantholder shall indemnify the Company
and the underwriters as to information provided pursuant to SECTION 10.2, the
Company shall indemnify the Warrantholder as to information contained in the
registration statement, and the underwriters shall indemnify the Company and
the Warrantholder as to information provided by such underwriters;
(ii) to permit the Company, in its sole discretion, to select the
managing underwriter(s) for any registration under SECTION 10.1;
(iii) to provide the Warrantholder and its representatives with
reasonable opportunity for due diligence, if any; and
(iv) notwithstanding the foregoing, if the offering of the
Company's securities pursuant to such registration statement is to be made by
or through underwriters, the Company shall not be required to include Warrant
Shares therein if and to the extent that the underwriter managing the
offering reasonably believes in good faith that such inclusion would
materially adversely affect such offering. The number of Common Shares to be
included in the registration shall be reduced as follows: the number of
Common Shares held by Warrantholders and by other shareholders pursuant to
other piggyback registration rights ("Additional Holders") shall be reduced
pro rata among the Warrantholder(s) and the Additional Holder(s) in
accordance with the number of Common Shares entitled to be registered
pursuant to piggyback registration rights by such Warrantholder(s) and
Additional Holder(s).
11. NO RIGHTS AS SHAREHOLDER; NOTICES TO WARRANTHOLDER. Nothing
contained in this Agreement or in the Warrant Certificate shall be construed
as conferring upon the Warrantholder, or its transferees, any rights as a
shareholder of the Company, including the right to vote, receive dividends,
consent or receive notices as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or any other
matter. If, however, at any time prior to the expiration of the Warrants and
prior to the exercise thereof, any of the following events shall occur:
8
<PAGE>
(a) any action that would require an adjustment pursuant to
SECTION 8.1 OR 8.3; or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property,
assets and business as an entirety) shall be proposed;
then in any one or more of said events, the Company shall give notice in
writing of such event to the Warrantholder as provided in SECTION 12 hereof
at least 20 days prior to the date fixed as a record date or the date of
closing the transfer books for the determination of the shareholders entitled
to any relevant dividend, distribution, subscription rights or other rights
or for the determination of shareholders entitled to vote on such proposed
dissolution, liquidation or winding up. Such notice shall specify such
record date or the date of closing the transfer books, as the case may be.
SECTION 12. NOTICES. Any notice pursuant to this Agreement by the
Company or by the Warrantholder shall be in writing and shall be deemed to
have been duly given if delivered by hand or if mailed by certified mail,
return receipt requested, postage prepaid, addressed as follows:
(a) If to the Warrantholder - to the address as set forth on the
signature page hereof.
(b) If to the Company - to the address first set forth above;
or to such other address as any such party may designate by notice to the
other party. Notices shall be deemed given at the time they are delivered
personally or three days after they are mailed in the manner set forth above.
SECTION 13. ASSIGNMENT. This Agreement is binding upon and inures to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. This Agreement cannot be assigned, amended or modified by
the parties hereto, except by written agreement executed by the parties;
PROVIDED, HOWEVER, that upon 10 days' prior written notice to the Company,
the Warrantholder may assign this Agreement and its rights and obligations
hereunder to any person or entity, without the consent of the Company,
PROVIDED, that the transferee agrees to be bound by the terms of this
Agreement as if such transferee were a Warrantholder and, PROVIDED FURTHER,
that the assignment is made pursuant to a valid exemption from registration
under the Securities Act. If requested by the Company, the Warrantholder
shall have furnished to the Company an opinion of counsel reasonably
satisfactory to the Company to such effect.
SECTION 14. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9
<PAGE>
SECTION 15. HEADINGS. The headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.
SECTION 16. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado applicable to
contracts made and to be performed entirely within such state, without regard
to its principles of conflicts of laws.
SECTION 17. SEVERABILITY. If any provision of this Agreement shall for
any reason be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof and this
Agreement shall be construed as if such invalid or unenforceable provision
had never been contained herein.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, on the day and year first above written.
STARLIGHT ACQUISITIONS, INC.
By: /s/ ROBERT JEFFCOCK
----------------------------
Name: Robert Jeffcock
----------------------------
Title: Chief Executive Officer
----------------------------
WARRANTHOLDERS:
/s/ JAY LUTSKY Address:
- --------------------------------- -------------------------------
Jay Lutsky -------------------------------
-------------------------------
/s/ R. HAYDN SILLECK Address:
- --------------------------------- -------------------------------
R. Haydn Silleck -------------------------------
-------------------------------
/s/ JOHN B. MARVIN Address:
- --------------------------------- -------------------------------
John B. Marvin -------------------------------
-------------------------------
/s/ PETER S. DALEY Address:
- ---------------------------------- -------------------------------
Peter S. Daley -------------------------------
-------------------------------
<PAGE>
EXHIBIT A
WARRANTHOLDERS: NUMBER OF COMMON SHARES
--------------- -----------------------
Jay Lutsky 25,000
R. Haydn Silleck 25,000
John B. Marvin 25,000
Peter S. Daley 25,000
<PAGE>
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT, entered into as of this 10th day of May,
1996, among R. Haydn Silleck ("Silleck"), John B. Marvin ("Marvin"), Peter S.
Daley ("Daley"), and Jay Lutsky ("Lutsky") (collectively, the "Indemnitors"),
Starlight Acquisition, Inc. a Colorado corporation ("Starlight"); and Toucan
Mining, Ltd., an Isle of Man company ("Toucan").
W I T N E S S E T H :
A. Starlight and the Toucan shareholders have entered into a certain
Share Exchange Agreement (the "Agreement"), dated as of even date herewith,
providing for the exchange of all of the shares of Toucan stock for shares of
Starlight common stock, upon the terms and conditions therein set forth.
B. Sections 5.28 and 9(i) of the Agreement contain certain provisions
concerning the financial condition of Starlight at the closing of the share
exchange (the "Share Exchange") provided for in the Agreement.
C. A condition to Toucan shareholders' obligation to consummate the
Share Exchange is the receipt by Toucan and Starlight of this Indemnification
Agreement from Indemnitors.
D. The Indemnitors are receiving certain warrants to purchase
Starlight common stock in consideration for the execution, delivery, and
performance of this Indemnification Agreement.
NOW, THEREFORE, for and in consideration of the premises, Indemnitors
hereby covenant and agree with Toucan and Starlight as follows:
1. Each Indemnitor represents to Toucan and Starlight that to the best
of his knowledge, the representation set forth in Section 5.28 of the
Agreement is true and the condition set forth in Section 9(i) of the
Agreement has been fulfilled.
2. Each Indemnitor severally indemnifies Toucan and Starlight against,
and hold each of them harmless from, any and all losses, costs, liabilities
and expenses of such parties of every kind and description, absolute and
contingent, which shall be or result from any breach by such Indemnitor of
the representation set forth in Paragraph 1 hereof. Payment for sums due
hereunder shall be paid by a defaulting Indemnitor to Toucan or Starlight as
the case may be, upon demand. The party entitled to payment hereunder shall
also be entitled to receive from the defaulting Indemnitor reasonable
attorneys' fees for collection of such payment if not paid within thirty (30)
days after demand is made and if such party prevails in any claim for any
such payment against Indemnitor hereunder.
<PAGE>
3. This Indemnification Agreement shall inure to the benefit of Toucan
and Starlight, and shall be binding upon Indemnitors and their respective
heirs, executors, administrators, successors and assigns.
INDEMNITORS:
/s/ R. Haydn Silleck
-----------------------------------
R. Haydn Silleck
/s/ John B. Marvin
-----------------------------------
John B. Marvin
/s/ PETER S. DALEY
-----------------------------------
Peter S. Daley
/s/ Jay Lutsky
-----------------------------------
Jay Lutsky
STARLIGHT ACQUISITION, INC.
By: /s/ R. Haydn Silleck
-------------------------------
Name: R. Haydn Silleck
-----------------------------
Title: President
-----------------------------
TOUCAN MINING, LTD.
By: /s/ R. Haydn Silleck
-------------------------------
Name: R. Haydn Silleck
-----------------------------
Title: President
-----------------------------
<PAGE>
C COMISKEY & COMPANY
& PROFESSIONAL CORPORATION
C CERTIFIED PUBLIC ACCOUNTANTS
Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
We were previously principal accountants for Starlight Acquisitions,
Inc. ("Starlight") and on February 19, 1996 we reported on the
financial statements of Starlight Acquisitions, Inc. as of and for
the two years ended December 31, 1995. On May 10, 1996, we were
dismissed as principal accountants of Starlight. We have read
Starlight's statements included under Item 4 of its Form 8-K for
May 10, 1996, and we agree with those statements.
/s/ Comiskey & Company
COMISKEY & COMPANY
PROFESSIONAL CORPORATION
Aurora, Colorado
May 10, 1996
Patrick J. Comiskey, C.P.A.
2851 South Parker Road
Pavilion Towers, Suite 1125
Aurora, Colorado 80014 (303) 695-6306
FAX (303) 695-0506
Members of American Institute of Certified Public Accountants
