UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
INFORMATION FILED PURSUANT TO SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934
JULY 11, 2006
(Date)
CITY CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation)
000-33167 22-2774460
(Commission File No.) (IRS Employer ID)
2535 Pilot Knob Road, Suite 118
Mendota Heights MN 55120
(Address of principal executive offices and zip code)
(651) 452-1606
(Registrant's telephone number, including area code)
CITY CAPITAL CORPORATION
A Nevada Corporation
(651) 452-1606
This information statement is being mailed on or about July11, 2006, to you and
other holders of record of the common stock of City Capital Corporation (the
"COMPANY") as of the close of business on June 30, 2006. Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the
mailing to the Company's shareholders of this Information Statement prior to a
change in a majority of the Company's directors otherwise than at a meeting of
the Company's shareholders. This information statement is provided to you for
information purposes only. We are not soliciting proxies in connection with the
items described in this information statement. You are urged to read this
information statement carefully. You are not, however, required to take any
action.
In connection with the consummation of the reorganization (as described in
greater detail in the section below entitled "Change in Control") the Company
will acquire ECC Vine Street Real Estate Acquisitions, LLC ("ECC Vine"), a
Missouri limited liability company, pursuant to the terms of a reorganization
agreement (the "Agreement"), pursuant to which ECC Vine will become a
wholly-owned subsidiary of the Company. In furtherance of the transaction, on
May 5, 2006, Mr. Joseph Donahue resigned as Chief Executive Officer and Chairman
of the Board of Directors of the Company (the "BOARD"), and Ephren W. Taylor II
was appointed as Chief Executive Officer and Chairman of the Board.
On or about July 31, 2006, and upon compliance with Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder, Mr. Richard Overdorff will resign from
the Board and Phillip B. St. James will be appointed as a director of the
Company. The appointment of Phillip B. St. James is made in connection with the
transaction.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of the following:
COMMON STOCK
As of the Record Date, there were 235,000,000 shares of Common Stock and
15,000,000 shares of Preferred Stock authorized with a par value of $.001 per
share, of which approximately 6,040,531 shares of Common Stock and no shares of
Preferred Stock were issued and outstanding. Each holder of the Company's Common
Stock is entitled to one vote for each share held of record on all matters
submitted to the vote of stockholders, including the election of directors. All
voting is non-cumulative, which means that the holder of fifty percent (50%) of
the shares voting for the election of the directors can elect all the directors.
The holders of Common Stock are entitled to receive pro rata dividends, when and
as declared by the Board of Directors in its discretion, out of funds legally
available therefore.
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Dividends on the Common Stock are declared by the Board of Directors. The
payment of dividends on the Common Stock in the future, if any, will be
determined by the Board of Directors. In addition, the payment of such dividends
will depend on the Company's financial condition, results of operations, capital
requirements and such other factors as the Board of Directors deems relevant.
PREFERRED STOCK
Our Articles of Incorporation authorize the issuance of 15,000,000 shares of
Preferred Stock. The Board of Directors has sole discretion in designating the
preferences, limitations and relative rights of the Preferred Stock. The Company
presently has one (1) class or series of Preferred Stock outstanding.
Series A Preferred Stock - The Company has 15,000,000 shares of Series A
Preferred Stock designated. Each share of Series A Preferred Stock is
convertible into shares of the Company's Common Stock on a 25-for-1 basis, and
the conversion ratio, as adjusted by forward or reverse stock splits. The Series
A Preferred Stock is non-interest bearing, has voting rights consistent with
conversion rights, i.e., each share of Series A Preferred Stock is entitled to
25 votes. In the event of a liquidation event, the Series A Preferred Stock
participates equally with holders of shares of Common Stock based on the
foregoing formula. As of the Record Date, there were no shares of Series A
Preferred Stock outstanding.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 30, 2006, certain information known to
us with respect to the beneficial ownership of the Company's common stock by (i)
each director and executive officer of the Company, (ii) each person who is
known by us to own of record or beneficially more than 5% of the outstanding
common stock, and (iii) all of the Company's directors and its executive
officers as a group. Unless otherwise indicated, each of the shareholders can be
reached at the Company's principal executive offices located at 2535 Pilot Knob
Road, Suite 118, Mendota Heights, Minnesota 55120.
- -------------- ---------------------------- --------------------- --------------
Name and Address of Amount of Beneficial Percent of
Title of Class Beneficial Owner (1) Ownership Class
- --------------- --------------------------- --------------------- --------------
Gary Borglund,
Common Stock 2535 Pilot Knob Road,
Suite 118, 37,500 0.62%
Mendota Heights, MN 55120
- --------------- --------------------------- --------------------- --------------
Ephren W. Taylor II 0.00%
Common Stock 2535 Pilot Knob Road,
Suite 118, 0
Mendota Heights, MN 55120
- --------------- --------------------------- --------------------- --------------
Richard Overdorff 2535
Common Stock Pilot Knob Road, Suite 118, 3,000 (2) 0.05%
Mendota Heights, MN 55120
- --------------- --------------------------- --------------------- --------------
Common Stock Shares of all directors
and executive officers as 40,500 0.67%
a group (3 persons)
- --------------- --------------------------- --------------------- --------------
Common Stock Macenta Group, LLC
721 Olive Street 1,202,000 19.89%
Suite 1500
St. Louis MO 63101
- --------------- --------------------------- --------------------- --------------
(1) Each person has sole voting power and sole dispositive power as to all of
the shares shown as beneficially owned by them. (2) These shares are held in
the name of Mr. Ken Blomhofer, who resides in Mr. Overdorff's household.
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CHANGE IN CONTROL.
On July 31, 2006, and pursuant to an Exchange Agreement (the "Agreement") dated
as of April 19, 2006, by and between the Company and the sole unitholder of ECC
Vine, a Missouri limited liability company, the Company will acquire ECC Vine as
a wholly-owned subsidiary of the Company. In consideration for the outstanding
shares of ECC Vine received by the Company, the Company will issue to the sole
unitholder of ECC Vine 6,731,364 restricted common shares of the Company, in a
change of control of the Company, with the former unitholder of ECC Vine owning
approximately 48.7% of the Company on a fully diluted basis. The Company is
unaware of any arrangements, including any pledge by any person of the Company's
securities, the operation of which may at a subsequent date result in a change
in control of the Company.
DIRECTORS AND EXECUTIVE OFFICERS
There are no material proceedings to which any director, officer or affiliate
of the Company, any owner of record or beneficially of more than five percent of
the common stock of the Company, or any associate of any such director, officer,
affiliate of the Company, or security holder is a party adverse to the Company
or any of its subsidiaries or has a material interest adverse to the Company or
any of its subsidiaries.
The following sets forth the names and ages and the business experience of the
current directors, nominees for directors and executive officers of the Company,
the principal positions with the Company held by such persons and the date such
persons became a director or executive officer. The directors serve one year
terms or until their successors are elected. There are no family relationships
among any of the Directors, nominees or executive officers.
Ephren W. Taylor II, Chairman and Chief Executive Officer
Ephren W. Taylor II, age 23, became the Company's Chief Executive Officer and
Chairman of the Board of the Company on May 5, 2006. Mr. Taylor's interest in
the proposed reorganization transaction arises from his affiliation with ECC
Vine, as to which Mr. Taylor is Chairman and CEO of Ephren Capital Corporation,
the sole member of ECC Vine. Mr. Taylor, age 23, has from 2003 to the present
served as the Chief Executive Officer and President of Amoro Corporation, a
public company trading under the symbol AORO.PK that is developing various real
estate projects in Tennessee, Ohio and Missouri. Mr. Taylor is also serving as
the Chief Executive Officer of Amoro Capital Corporation, which owns a
diversified portfolio of companies including Ephren Capital Corporation, Green
Mountain Springs Water, a third generation bottled water company, and Amoro
Financial Group. From 2000 to 2003, Mr. Taylor founded and served as Chief
Executive Officer of iNTouch Connections, LLC, a technology company.
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Gary Borglund, Director
Gary Borglund, age 58, became a director of the Company in 1997, and will
continue in such capacity as an independent director until his successor is
elected. Mr. Borglund has over ten years of professional experience in new
ventures as a principal and executive, as well as ten years as a consultant.
Since 1998, Mr. Borglund has worked exclusively with early stage development,
high tech and Internet companies. Mr. Borglund serves on several boards of
directors for public and private companies and remains in these capacities with
regard to the companies to date. Mr. Borglund was a Director of Red Oak
Management from 1996 to 2000. Since joining the Company, he has dealt with
issues regarding funding and the restructuring of debt. Mr. Borglund attended
the University of Minnesota.
Richard Overdorff, Director.
Mr. Overdorff, age 63, became a director of the Company in 2001, and will serve
in such capacity until 10 days following the mailing of this Information
Statement. Mr. Overdorff has a broad base of experience in multiple disciplines
for application to corporate planning and operations. His business career
includes corporate management with an international airline, serving as a
Management Consultant to blue chip corporations with Golightly & Co
International of New York City, and the management of a financial services
practice providing investment services to individuals and closely held
businesses. A 1967 MBA graduate in Marketing and Finance from Penn State
University, he earned the designation of Certified Financial Planner in 1984, is
licensed as a Securities Principal, an Insurance Broker and a California Real
Estate Broker. For the past fourteen years, Mr. Overdorff has been an
Independent Registered Representative with TransAm Financial Group, Inc. He is a
member of the Financial Planning Association, sits on the Board of the Orange
County Financial Society, and is a Member of the Irvine Valley College
Foundation Board of Governors.
Phillip B. St. James, Director Nominee
Mr. St. James obtained a Bachelor of Science degree in 1984 from DeVry Institute
of Technology and in 1998 he earned a Masters in Business Management at Webster
University. From 1998 to the present, he has worked as Community Affairs
Representative, later as Vice President of Domestic Programs, for Heart-To-Heart
International in Kansas City, Missouri, where he actively identified, recruited
and facilitated partnerships with community-minded organizations. In these
positions, he also established budgets, identified prospective funding sources
and raised financial support; working with representatives of Tanzania, Africa
(Arusha was Kansas City's "Sister City") and mainland China, he created systems
to assess needs and procure products, establish logistics, monitor effectiveness
and on-going needs. In 2000, Mr. St. James assumed management duties over U.S.
corporate giving and philanthropy for Sanofi Aventis, Europe's largest (and the
world's third largest) pharmaceutical company. Among other duties at Sanofi
Aventis, he has redefined the company's involvement in community initiatives,
including educational programs, United Way, Matching Gifts and Volunteer
Programs as well as community health initiatives for the underserved and
uninsured. Mr. St. James also manages the budget process and tracking of the
Sanofi Aventis Foundation.
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INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
The Company is not aware of any pending legal proceeding contemplated by a
governmental authority concerning our business or properties. As of the date of
this filing, the Company is not a party to any legal proceeding, either as
plaintiff or defendant except as otherwise disclosed in its SEC reports.
Because of the nearly complete turnover of the Company's Board of Directors, it
is not yet clear which members of the Board of Director will serve on standing
committees of the Board, as a financial expert of the board's audit committee,
or other committees performing similar functions. The Company intends to
establish appropriate Board committees, including an audit committee, at some
time following the appointment of the new directors as described in this
Information Statement.
The Board conducted nearly all of its business and approved nearly every
corporate action during fiscal 2005 by the unanimous written consent of all its
members, in the absence of formal Board meetings. Holders of the Company's
securities can send communications to the Board via mail or telephone to the
Secretary at the Company's principal executive offices. The Company has not yet
established a policy with respect to Board members' attendance at the annual
meetings.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
There are no transactions, or series of similar transactions, since the
beginning of the Company's last fiscal year, or any currently proposed
transactions, or series of similar transactions, to which the Company or any of
its subsidiaries was or is to be a party, in which the amount involved exceeds
$60,000 and in which any director or executive officer of the Company, nominee
for director of the Company, security holder known to the registrant as owning
of record or beneficially more than five percent of any class of the Company's
securities, or any immediate family member of any of the foregoing persons had,
or will have, a direct or indirect material interest.
CERTAIN BUSINESS RELATIONSHIPS
None of the directors or nominees for director has been an executive officer of,
or owns or has owned, of record or beneficially in excess of 10% equity interest
in, any business or professional entity (i) that has made or proposes to make,
payments to the registrant or its subsidiaries for property or services in
excess of five percent of the Company's or the other entity's consolidated gross
revenues, (ii) to which the Company or its subsidiaries has made or proposes to
make, payments for property or services in excess of 5% of the Company's or the
other entity's consolidated gross revenues for its last fiscal year, or (iii) to
which the Company or its subsidiaries was indebted in an aggregate amount in
excess of five percent of the registrant's total consolidated assets at the end
of such fiscal year, nor have they been members of or counsel to a law firm or
investment banking firm with which the Company has had or will have a
relationship.
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INDEBTEDNESS OF MANAGEMENT
No director or executive officer of the Company, nominee for director of the
Company, immediate family member of any of the foregoing, corporation or
organization of which any of the foregoing is an executive officer or partner,
or is, directly or indirectly, the beneficial owner of ten percent or more of
any class of equity securities, or trust or other estate in which any of the
foregoing has a substantial beneficial interest or as to which such person
serves as a trustee or in a similar capacity, has been indebted to the Company
or its subsidiaries at any time since the beginning of the Company's last fiscal
year in an amount in excess of $60,000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors, and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the SEC. Executive officers, directors and
greater-than-ten percent shareholders are required by SEC regulations to furnish
the Company with all Section 16(a) forms they file. Based solely on its review
of the copies of the forms received by it and written representations from
certain reporting persons that they have complied with the relevant filing
requirements, the Company believes that, during the year ended December 31,
2005, all of the Company's executive officers, directors and greater-than-ten
percent shareholders complied with all Section 16(a) filing requirements.
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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth, as to the Chief Executive Officer,
information concerning all compensation paid for services to the Company in all
capacities for each of the three years ended December 31 indicated below. No
other executive officer of the Company received total annual salary and bonus in
excess of $100,000 for each of the three years ended September 30 indicated
below.
================================================================================================================================
Name and Year Annual compensation Long-term compensation
principal Salary Bonus Other annual Awards Payouts LTIP All other
position compensation Restricted stock Securities payouts compensation
($) ($) ($) award(s) under-lying ($) ($)
($) options/
SARs (#)
($)
(a) (b) (c) (d) (e) (f) (g) (i) (h)
================================================================================================================================
Gary 2005 $85,169 - - - - - -
Borglund, 2004 $55,069 - - - - - -
President (1) 2002 $9,800 - - - - - -
================================================================================================================================
COMPENSATION OF DIRECTORS
At present, non-employee directors do not receive any cash compensation or award
of options, warrants, or stock appreciation rights (SARs) for their service on
the Board. The Board may in the future establish a policy for compensation of
non-employee directors, which may include cash payments, option or stock grants
and/or reimbursement of expenses.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
At present, there are no employment contracts between the Company and any named
executive officers except Gary Borglund, whose contractual arrangements are
described in the next succeeding paragraph. There are no compensatory plans or
arrangements with respect to a named executive officer that would result in
payments or installments in excess of $100,000 upon the resignation, retirement
or other termination of such executive officer's employment with the Company or
from a change-in-control.
On October 1, 2004, the Company entered into an employment agreement with Mr.
Borglund, the full text of which is an exhibit of the Company's latest annual
report filed with the Securities and Exchange Commission). Under the terms of
this three-year contract, Mr. Borglund is to be paid $80,000 per year, subject
to review by the Company's Compensation Committee on an annual basis with regard
to the possibility of an increase in base salary; provided, however, the base
salary is not to be decreased. In addition, he is eligible to receive an annual
bonus; beginning in 2005, the target amount for the annual bonus is not less
than 10% of the base salary, subject to review by the Company's Compensation
Committee on an annual basis with regard to the possibility of an increased
annual bonus and subject to the caveat that the Company's financial performance
could result in a decrease or elimination of the Annual Bonus for any year(s).
Under the agreement, Mr. Borglund is to be granted options to purchase 50,000
shares of the Company common stock (the term of the option is ten years and will
vest 25% annually beginning on the first anniversary of the effective date. The
stock option price shall be the fair market value of the Company's common stock
on the effective date. These options have not yet been granted.
8
ADDITIONAL INFORMATION
Additional information concerning the Company, including its annual and
quarterly reports on Forms 10-KSB and 10-QSB, and current reports on Form 8-K,
which have been filed with the Securities and Exchange Commission, may be
accessed through the EDGAR archives at www.sec.gov.
CITY CAPITAL CORPORATION
On behalf of the Board of Directors
/s/ Gary Borglund
--------------------------
Gary Borglund, President
July 11, 2006
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EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT ("AGREEMENT") is made this 19 day of April, 2006,
by and between CITY CAPITAL CORPORATION, a Nevada corporation, ("CCCN"), and
EPHREN CAPITAL CORPORATION (the "ECC Unit Holder"), a Missouri corporation and
the sole holder of issued and outstanding limited liability company units of ECC
Vine Street Real Estate Acquisitions, LLC ("ECC"), a Missouri limited liability
company dba "ECC JAZZ DISTRICT ACQUISITIONS, LLC", pursuant to which all of the
issued and outstanding capital units of ECC will be exchanged for a quantity of
newly issued common shares of the Company. In this Agreement, the parties are at
times referred to collectively as the "Parties" and individually as a "Party."
WITNESSETH
WHEREAS, CCCN is a publicly traded company whose common stock, par value
$.001 per share (the "CCCN Common Stock") is quoted on the OTC Bulletin Board
under the symbol "CCCN," and
WHEREAS, the ECC Unit Holder owns all of the issued and outstanding units
of ECC (the "ECC Units"), and
WHEREAS, the parties desire that CCCN acquire all of the ECC Units from the
ECC Unit Holder solely in exchange for an aggregate of 6,731,364 newly issued
shares of common stock of CCCN (the "CCCN Exchange Shares") pursuant to the
terms and conditions set forth in this Agreement, and
WHEREAS, the Parties intend that the transaction contemplated herein (the
"Transaction") qualifies as a reorganization and tax-free exchange under Section
368(a) of the Internal Revenue Code of 1986, as amended, and
WHEREAS, immediately following the Closing (as hereinafter defined), there
will be issued and outstanding an aggregate of 11,569,895 shares of CCCN Common
Stock, including the CCCN Exchange Shares to be issued to the ECC Unit Holder,
and
WHEREAS, following the Closing, ECC will become a wholly-owned subsidiary
of CCCN.
WHEREAS, immediately following the consummation of the Transaction, the
CCCN Exchange Shares will represent between approximately Fifty-Seven Percent
(57%) of the total outstanding Common Stock of CCCN, and
AGREEMENT
NOW, THEREFORE, on the stated premises and for and in consideration of the
foregoing recitals, which are hereby incorporated by reference, the mutual
covenants and agreements hereinafter set forth and the mutual benefits to the
Parties to be derived herefrom and for other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the Parties hereto
agree as follows:
10
EXCHANGE
1.1 The Exchange. At the Closing (as hereinafter defined), each ECC Unit
issued and outstanding immediately prior to the Closing Date shall be exchanged
for share(s) of CCCN Common Stock. The aggregate number of shares of CCCN Stock
exchanged for all of the ECC Units pursuant to this Agreement shall be
6,731,364. From and after the Closing Date, the ECC Unit Holder shall no longer
own any ECC Units, and the membership certificate(s) formerly representing ECC
Units shall represent the CCCN Exchange Shares issuable in exchange therefor
pursuant to this Agreement.
1.2 No Dilution. CCCN shall neither effect, nor fix any record date with
respect to, any stock split, stock dividend, reverse stock split,
recapitalization, or similar change in the CCCN Stock between the date of this
Agreement and the Effective Time.
1.3 Closing. The closing ("Closing") of the Transaction shall occur no
later than three (3) business days after each of the closing conditions set
forth in Articles V and VI have been satisfied or waived (the "Closing Date").
1.4 Closing Events. At the Closing, each of the respective Parties hereto
shall execute, acknowledge, and deliver (or shall cause to be executed,
acknowledged, and delivered) any and all stock certificates, officers'
certificates, opinions, financial statements, disclosures, agreements,
resolutions, rulings, or other instruments required by this Agreement to be so
delivered at or prior to the Closing, and the documents and certificates
provided in Sections 5.2, 5.4, 6.2, 6.4 and 6.5, together with such other items
as may be reasonably requested by the Parties hereto and their respective legal
counsel in order to effectuate or evidence the Transaction. If agreed to by the
Parties, the Closing may take place through the exchange of documents (other
than the exchange of stock certificates) by efax, fax, email and/or express
courier. At the Closing, the CCCN Exchange Shares shall be issued in the names
and denominations provided by the ECC Unit Holder.
1.5 Standstill.
(a) Until the earlier of the Closing or April 28, 2006 (the "No Shop
Period"), neither ECC nor the ECC Unit Holder will (i) solicit or encourage any
offer or enter into any agreement or other understanding, whether written or
oral, for the sale, transfer or other disposition of any capital stock or assets
of ECC to or with any other entity or person, except as contemplated by the
Transaction, other than sales of goods and services by ECC in the ordinary
course of its business; (ii) entertain or pursue any unsolicited communication,
offer or proposal for any such sale, transfer or other disposition; or (iii)
furnish to any person or entity (other than CCCN and its authorized agents and
representatives) any nonpublic information concerning ECC or its business,
financial affairs or prospects for the purpose or with the intent of permitting
such person or entity to evaluate a possible acquisition of any capital stock or
assets of ECC. If either ECC or the ECC Unit Holder shall receive any
unsolicited communication or offer, ECC or the ECC Unit Holder, as applicable,
shall immediately notify CCCN of the receipt of such communication or offer.
11
(b) During the No-Shop Period, CCCN will not (i) solicit or encourage
any offer or enter into any agreement or other understanding, whether written or
oral, for the sale, transfer or other disposition of any capital stock or assets
of CCCN to or with any other entity or person, except as contemplated herein,
other than sales of goods and services by CCCN in the ordinary course of its
business; (ii) entertain or pursue any unsolicited communication, offer or
proposal for any such sale, transfer or other disposition; or (iii) furnish to
any person or entity (other than ECC, and its authorized agents and
representatives) any nonpublic information concerning CCCN or its business,
financial affairs or prospects for the purpose or with the intent of permitting
such person or entity to evaluate a possible acquisition of any capital stock or
assets of CCCN. If either CCCN or any of CCCN's stockholders shall receive any
unsolicited communication or offer, CCCN or CCCN's stockholders, as applicable,
shall immediately notify the ECC Unit Holder of the receipt of such
communication or offer.
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF ECC UNIT HOLDER
As an inducement to, and to obtain the reliance of CCCN, the ECC Unit
Holder represents and warrants to CCCN as follows:
2.1 Organization. ECC is a limited liability company duly organized,
validly existing, and in good standing under the laws of the State of Missouri.
ECC has the power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, including qualification
to do business as a foreign corporation in jurisdictions in which the character
and location of the assets owned by it or the nature of the business transacted
by it requires qualification. The execution and delivery of this Agreement does
not, and the consummation of the Transaction in accordance with the terms hereof
will not, violate any provision of ECC's organizational documents. ECC has taken
all action required by laws, its articles of incorporation, certificate of
business registration, or otherwise to authorize the execution and delivery of
this Agreement. ECC has full power, authority, and legal right and has taken or
will take all action required by law, its organizational documents, and
otherwise to consummate the Transaction.
2.2 Capitalization. All issued and outstanding ECC Units are legally
issued, fully paid, and non-assessable and were not issued in violation of the
pre-emptive or other rights of any person.
2.3 Subsidiaries and Predecessor Corporations. ECC does not have any
subsidiaries and does not own, beneficially or of record, any shares or other
equity interests of any other corporation or entity.
2.4 Financial Statements.
(a) On or before the Closing Date (the "Audit Period"), ECC shall have
delivered to CCCN (i) audited financial statements and notes thereto covering
its fiscal years ending December 31, 2005 and 2004, including income statements,
balance sheets and statements of cash flow and equity for such fiscal years then
ended (the "ECC Financial Statements").
12
(b) ECC has filed all local income tax returns required to be filed by
it from its inception to the date hereof. All such returns are complete and
accurate in all material respects. ECC has no liabilities with respect to the
payment of federal, county, local, or other taxes (including any deficiencies,
interest, or penalties), except for taxes accrued but not yet due and payable,
for which ECC may be liable in its own right or as a transferee of the assets
of, or as a successor to, any other corporation or entity.
(c) No deficiency for any taxes has been proposed, asserted or
assessed against ECC. There has been no tax audit, nor has there been any notice
to ECC by any taxing authority regarding any such tax audit, or, to the
knowledge of ECC, is any such tax audit threatened with regard to any taxes or
ECC tax returns. ECC does not expect the assessment of any additional taxes of
ECC for any period prior to the date hereof and has no knowledge of any
unresolved questions concerning the liability for taxes of ECC.
(d) The books and records, financial and otherwise, of ECC are in all
material respects complete and correct and have been maintained in accordance
with good business and accounting practices.
2.5 Information. The information concerning ECC set forth in this Agreement
and the ECC Information are and will be complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, nor misleading as of the date hereof
and as of the Closing Date.
2.6 Common Stock Equivalents. There are no existing options, warrants,
calls, commitments of any character or other common stock equivalents relating
to any authorized but un-issued ECC Units.
2.7 Absence of Certain Changes or Events. Except as set forth in this
Agreement or the ECC Information, since the date of the ECC Financial
Statements:
(a) except in the normal course of business, there has not been (i)
any material adverse change in the business, operations, properties, assets, or
condition of ECC; or (ii) any damage, destruction, or loss to ECC (whether or
not covered by insurance) materially and adversely affecting the business,
operations, properties, assets, or condition of ECC;
(b) ECC has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability (absolute
or contingent) not otherwise in the ordinary course of business, and except for
capital raised by issuance of debt or equity in a private placement or other
capital raising transaction deemed advisable by ECC; (ii) paid any material
obligation or liability not otherwise in the ordinary course of business
(absolute or contingent) other than current liabilities reflected in or shown on
the most recent ECC consolidated balance sheet, and current liabilities incurred
since that date in the ordinary course of business; (iii) sold or transferred,
or agreed to sell or transfer, any of its assets, properties, or rights not
otherwise in the ordinary course of business (except assets, properties, or
rights not used or useful in its business which, in the aggregate have a value
of less than $50,000), or canceled, or agreed to cancel, any debts or claims
(except debts or claims which in the aggregate are of a value of less than
$50,000); (iv) made or permitted any amendment or termination of any contract,
agreement, or license to which they are a party not otherwise in the ordinary
course of business if such amendment or termination is material, considering the
business of ECC; or (v) issued, delivered, or agreed to issue or deliver any
stock, bonds or other corporate securities including debentures (whether
authorized and unissued or held as treasury stock).
13
(c) such imperfections of title and easements as do not and will not
materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties.
2.8 Litigation and Proceedings. Except as set forth in the ECC Information,
there are no actions, suits, proceedings, or investigations pending or, to the
knowledge of ECC, threatened by or against ECC, or affecting ECC or its
properties, at law or in equity, before any court or other governmental agency
or instrumentality, domestic or foreign, or before any arbitrator of any kind.
2.9 No Conflict With Other Instruments. The execution of this Agreement and
the consummation of the Transaction will not result in the breach of any term or
provision of, or constitute an event of default under, any material indenture,
mortgage, deed of trust, or other material contract, agreement, or instrument to
which ECC is a party or to which any of its properties or operations are
subject.
2.10 Contracts. ECC has provided, or will provide CCCN, copies of all
material contracts, agreements, franchises, license agreements, or other
commitments to which ECC is a party or by which it or any of its assets,
products, technology, or properties are bound.
2.11 Compliance With Laws and Regulations. ECC has complied with all
applicable statutes and regulations of any national, county, or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets, or condition of ECC, or except to the extent that noncompliance would
not result in the incurrence of any material liability for ECC.
2.12 Approval of Agreement. The management of ECC (the "ECC Management")
and the ECC Unit Holder have approved the execution and delivery of this
Agreement by the ECC Unit Holders, and have approved the Transaction.
2.13 ECC Information. ECC will deliver, as soon as practicable, the
following information, which are collectively referred to as the "ECC
Information," all certified by the chief executive officer of ECC as complete,
true, and correct:
(a) Complete and correct copies of the organizational documents, as
amended, of ECC in effect as of the date of this Agreement, and
14
(b) True and correct copies of all material contracts, agreements, or
other instruments to which ECC is a party or by which it or its properties are
bound, specifically including all contracts, agreements, or arrangements
referred to in Section 2.10.
2.14 Title and Related Matters. ECC has good and marketable title to all of
its properties, interest in properties, and assets, real and personal, which are
reflected in the ECC Financial Statements or acquired after that date (except
properties, interest in properties, and assets sold or otherwise disposed of
since such date in the ordinary course of business), free and clear of all
liens, pledges, charges, or encumbrances except:
(a) statutory liens or claims not yet delinquent;
(b) such imperfections of title and easements as do not and will not
materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and
(c) as described in the ECC Information.
2.15 Governmental Authorizations. ECC has all licenses, franchises,
permits, and other government authorizations, that are legally required to
enable it to conduct its business operations in all material respects as
conducted on the date hereof. Except for compliance with federal and state
securities or corporation laws, as hereinafter provided, no authorization,
approval, consent, or order of, or registration, declaration, or filing with,
any court or other governmental body is required in connection with the
execution and delivery by ECC of this Agreement and the consummation by ECC of
the Transaction.
2.16 Continuity of Business Enterprises. ECC has no commitment or present
intention to liquidate ECC or sell or otherwise dispose of a material portion of
its business or assets following the consummation of the Transaction.
2.17 Ownership of ECC Units. The ECC Unit Holder is the legal and
beneficial owner of 100% of the ECC Units, free and clear of any claims,
charges, equities, liens, security interests, and encumbrances whatsoever, and
the ECC Unit Holder has full right, power, and authority to transfer, assign,
convey, and deliver his ECC Units; and delivery of such ECC Units at the Closing
will convey to CCCN good and marketable title to such ECC Units, free and clear
of any and all claims, charges, equities, liens, security interests, and
encumbrances whatsoever.
2.18 Brokers. The ECC Unit Holder has not entered into any contract with
any person, firm or other entity that would obligate ECC or CCCN to pay any
commission, brokerage or finder's fee in connection with the Transaction.
2.19 Nominees. During the past five years, no event listed in
Sub-paragraphs (1) through (4) of Subparagraph (d) of Item 401 of Regulation S-B
has occurred with respect to any of the nominees of the ECC Unit Holder (the
"Nominees") to serve as CCCN's directors and officers following the Closing
which is material to an evaluation of the ability or integrity of such Nominee.
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REPRESENTATIONS, COVENANTS, AND WARRANTIES OF CCCN
As an inducement to, and to obtain the reliance of the ECC Unit Holder,
CCCN represents and warrants as follows:
3.1 Organization. CCCN is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Nevada, and has the
corporate power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, and there is no
jurisdiction in which it is not qualified in which the character and location of
the assets owned by it or the nature of the business transacted by it requires
qualification. Included in the CCCN Information (as hereinafter defined) are
complete and correct copies of the Articles of Incorporation and bylaws of CCCN,
and all amendments thereto, as in effect on the date hereof. The execution and
delivery of this Agreement does not, and the consummation of the Transaction
will not, violate any provision of CCCN's Articles of Incorporation or bylaws.
CCCN has taken all action required by law, its Articles of Incorporation, its
bylaws, or otherwise to authorize the execution and delivery of this Agreement,
and CCCN has full power, authority, and legal right and has taken all action
required by law, its Articles of Incorporation, bylaws, or otherwise to
consummate the Transaction.
3.2 Capitalization. CCCN's authorized capitalization consists of
235,000,000 shares of Common Stock, of which no more than 4,838,531 shares will
be issued and outstanding immediately prior to the Closing (an aggregate of
10,569,895 shares of CCCN Stock shall be outstanding immediately following the
Closing); and 15,000,000 shares of preferred stock, none of which are issued and
outstanding. All presently issued and outstanding shares are legally issued,
fully paid, and non-assessable and not issued in violation of the pre-emptive or
other rights of any person. The CCCN Exchange Shares will be legally issued,
fully paid and non-assessable and shall not be issued in violation of the
pre-emptive or other rights of any other person.
3.3 Subsidiaries. Except as otherwise disclosed in its SEC reports, CCCN
does not have any subsidiaries and does not own, beneficially or of record, any
shares or other equity interests of any other corporation or other entity.
3.4 Financial Statements. Except as otherwise disclosed in its SEC reports:
(a) CCCN has no liabilities with respect to the payment of any
federal, state, county, local, or other taxes (including any deficiencies,
interest, or penalties), except for taxes accrued but not yet due and payable,
for which CCCN may be liable in its own right, or as a transferee of the assets
of, or as a successor to, any other corporation or entity;
(b) CCCN has filed all federal, state, or local income tax returns
required to be filed by it from its inception to the date hereof; and
16
(c) The books and records, financial and otherwise, of CCCN are in all
material respects complete and correct and have been maintained in accordance
with good business and accounting practices. No deficiency for any taxes has
been proposed, asserted or assessed against CCCN. There has been no tax audit,
nor has there been any notice to CCCN by any taxing authority regarding any such
tax audit, or, to the knowledge of CCCN, is any such tax audit threatened with
regard to any taxes or CCCN tax returns. CCCN does not expect the assessment of
any additional taxes of CCCN for any period prior to the date hereof and has no
knowledge of any unresolved questions concerning the liability for taxes of
CCCN. CCCN has good and marketable title to its assets and, except as set forth
in the CCCN Information or the Financial Statements of CCCN or the notes
thereto, has no material contingent liabilities, direct or indirect, matured or
unmatured.
3.5 Information. The information concerning CCCN set forth in this
Agreement and the CCCN Information are and will be complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading as of the date
hereof and as of the Closing Date.
3.6 Common Stock Equivalents. Except as set forth herein, there are no
existing options, warrants, calls, commitments of any character or other common
stock equivalents relating to authorized and unissued stock of CCCN.
3.7 Absence of Certain Changes or Events. Except as described herein or in
the CCCN Information, since September 30, 2005: (a) There has not been (i) any
material adverse change, financial or otherwise, in the business, operations,
properties, assets, or condition of CCCN (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties, assets,
or condition of CCCN;
(b) CCCN has not (i) amended its Articles of Incorporation or bylaws;
(ii) declared or made, or agreed to declare or make any payment of dividends or
distributions of any assets of any kind whatsoever to stockholders or purchased
or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii)
waived any rights of value which in the aggregate are extraordinary or material
considering the business of CCCN; (iv) made any material change in its method of
management, operation, or accounting; (v) entered into any other material
transactions; (vi) made any accrual or arrangement for or payment of bonuses or
special compensation of any kind or any severance or termination pay to any
present or former officer or employee; (vii) increased the rate of compensation
payable or to become payable by it to any of its officers or directors or any of
its employees; or (viii) made any increase in any profit sharing, bonus,
deferred compensation, insurance, pension, retirement, or other employee benefit
plan, payment, or arrangement, made to, for, or with its officers, directors, or
employees;
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(c) CCCN has not (i) granted or agreed to grant any options, warrants,
or other rights for its stocks, bonds, or other corporate securities calling for
the issuance thereof, except for those issued to ECC pursuant to this
transaction; (ii) borrowed or agreed to borrow any funds or incurred, or become
subject to, any material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; (iii) paid or agreed to
pay any material obligation or liability (absolute or contingent) other than
current liabilities reflected in or shown on the most recent CCCN balance sheet
and current liabilities incurred since that date in the ordinary course of
business and professional and other fees and expenses incurred in connection
with the preparation of this Agreement and the consummation of the Transaction;
(iv) sold or transferred, or agreed to sell or transfer, any of its assets,
property, or rights (except assets, property, or rights not used or useful in
its business which, in the aggregate have a value of less than $5,000), or
canceled, or agreed to cancel, any debts or claims (except debts or claims which
in the aggregate are of a value of less than $5,000); (v) made or permitted any
amendment or termination of any contract, agreement, or license to which it is a
party if such amendment or termination is material, considering the business of
CCCN; or (vi) issued, delivered, or agreed to issue or deliver any stock, bonds,
or other corporate securities including debentures (whether authorized and
unissued or held as treasury stock), except in connection with this Agreement;
and
(d) To the best knowledge of CCCN, it has not become subject to any
law or regulation which materially and adversely affects, or in the future may
adversely affect, the business, operations, properties, assets, or condition of
CCCN.
3.8. Title and Related Matters. Except as otherwise stated in its SEC
reports, CCCN has good and marketable title to all of its properties, interest
in properties, and assets, real and personal, which are reflected in the CCCN
balance sheet or acquired after that date (except properties, interest in
properties, and assets sold or otherwise disposed of since such date in the
ordinary course of business), free and clear of all liens, pledges, charges, or
encumbrances except:
(a) statutory liens or claims not yet delinquent;
(b) such imperfections of title and easements as do not and will not
materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and
(c) as described in the CCCN Information.
3.9 Litigation and Proceedings. There are no actions, suits, or proceedings
pending or, to the knowledge of CCCN, threatened by or against or affecting
CCCN, at law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind.
3.10 Contracts. CCCN is not a party to any material contract, agreement, or
other commitment, except as specifically disclosed in its SEC reports and the
disclosures called for by this Agreement.
3.11 No Conflict With Other Instruments. The execution of this Agreement
and the consummation of the Transaction will not result in the breach of any
term or provision of, or constitute a default under, any indenture, mortgage,
deed of trust, or other material agreement or instrument to which CCCN is a
party or to which it or any of its assets or operations are subject.
18
3.12 Governmental Authorizations. CCCN has all licenses, franchises,
permits, and other government authorizations, that are legally required to
enable it to conduct its business operations in all material respects as
conducted on the date hereof. Except for compliance with federal and state
securities or corporation laws, as hereinafter provided, no authorization,
approval, consent, or order of, or registration, declaration, or filing with,
any court or other governmental body is required in connection with the
execution and delivery by CCCN of this Agreement and the consummation by CCCN of
the Transaction.
3.13 Compliance With Laws and Regulations. Except as described herein, in
its SEC reports or in the CCCN Information, to the best of its knowledge, CCCN
has complied with all applicable statutes and regulations of any federal, state,
or other applicable governmental entity or agency thereof, except to the extent
that noncompliance would not materially and adversely affect the business,
operations, properties, assets, or conditions of CCCN or except to the extent
that noncompliance would not result in the incurrence of any material liability.
This compliance includes, but is not limited to, to the extent such compliance
is applicable, the filing of all reports to date with the United States
Securities and Exchange Commission (the "SEC") and state securities authorities.
3.14 Insurance. CCCN owns no insurable properties and carries no casualty
or liability insurance except a fidelity bond covering its officers and
directors.
3.15 Approval of Agreement. The board of directors of CCCN (the "CCCN
Board") has authorized the execution and delivery of this Agreement by CCCN and
the CCCN Board and a majority of CCCN's shareholders (the "CCCN Shareholders")
have by written consent approved this Agreement and the Transaction.
3.16 Continuity of Business Enterprises. CCCN has no commitment or present
intention to liquidate CCCN or sell or otherwise dispose of a material portion
of its business or assets following the consummation of the Transaction.
3.17 Material Transactions of Affiliations. Except as disclosed herein and
in the CCCN Information, there exists no material contract, agreement, or
arrangement between CCCN and any person who was at the time of such contract,
agreement, or arrangement an officer, director, or person owning of record or
known by CCCN to own beneficially, 10% or more of the issued and outstanding
common stock of CCCN and which is to be performed in whole or in part after the
date hereof or was entered into not more than three years prior to the date
hereof. Neither any officer, director, nor 10% stockholder of CCCN has, or has
had during the last preceding full fiscal year, any known interest in any
material transaction with CCCN which was material to the business of CCCN. CCCN
has no commitment, whether written or oral, to lend any funds to, borrow any
money from, or enter into any other material transaction with any such
affiliated person.
3.18 Employment Matters. CCCN has no employees other than its executive
officers.
19
3.19 CCCN Information. CCCN has delivered to ECC, or will deliver as soon
as practicable at ECC's request, the following disclosures, which are
collectively referred to as the "CCCN Information," which are dated the date of
this Agreement, all certified by an officer to be complete, true, and accurate:
(a) complete and accurate copies of the Articles of Incorporation and
bylaws, as amended, of CCCN as in effect as of the date of this Agreement;
(b) a copy of the federal income tax returns of CCCN identified in
Section 3.4(b);
(c) a description of any material adverse change in the business,
operations, property, assets, or condition of CCCN, required to be provided
pursuant to Section 3.7; and
(d) any other information, together with any required copies of
documents, required to be disclosed in the CCCN Information by Sections 3.1
through 3.17.
3.20 Current Information. CCCN shall cause the CCCN Information and the
instruments and data delivered to ECC hereunder to be updated after the date
hereof up to and including the Closing Date.
3.21 Brokers. CCCN has not entered into any contract with any person, firm
or other entity that would obligate ECC or CCCN to pay any commission, brokerage
or finders' fee in connection with the Transaction.
SPECIAL COVENANTS
4.1 Shareholders' Actions of CCCN. Prior to the Closing (and in compliance
with applicable laws, rules and regulations), CCCN shall cause the following
actions to be taken by the written consent of the Board of Directors of the
Company:
(a) Current Directors of CCCN shall appoint and elect Ephren Taylor,
Jr. as a director and the CEO of CCCN, effective at the time of the Closing;
(b) Approval of this Agreement and the Transaction; and
(c) Current Directors will resign at closing and take such other
actions as the directors may determine are necessary or appropriate.
4.2 Unit Holders' Actions of ECC. Prior to the Closing, the following
actions shall be taken by the written unanimous consent of the ECC Unit Holders:
(a) the approval of this Agreement and the Transaction; and
(b) such other actions as the management of ECC may determine are
necessary or appropriate.
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4.3 Access to Properties and Records. CCCN and ECC will each afford to the
officers and authorized representatives of the other reasonable access to the
properties, books, and records of CCCN or ECC in order that each may have full
opportunity to make such reasonable investigation as it shall desire to make of
the affairs of the other, and each will furnish the other with such additional
financial and operating data and other information as to the business and
properties of CCCN or ECC as the other shall from time to time reasonably
request.
4.4 Delivery of Books and Records. At the Closing, CCCN shall deliver to
ECC, the originals of the corporate minute books, books of account, contracts,
records, and all other books or documents of CCCN now in the possession or
control of CCCN or its representatives and agents.
4.5 Dilution Protection. Until ninety (90) days after the Closing, CCCN
shall not effect any stock dividend, subdivision, reclassification,
recapitalization, split, conversion, consolidation or combination of CCCN Common
Stock.
4.6 Actions Prior to Closing by both Parties.
(a) From and after the date of this Agreement until the Closing Date
and except as set forth in the CCCN or ECC Information or as permitted or
contemplated by this Agreement, CCCN and ECC will each: (i) carry on its
business in substantially the same manner as it has heretofore; (ii) maintain
and keep its properties in states of good repair and condition as at present,
except for depreciation due to ordinary wear and tear and damage due to
casualty; (iii) maintain in full force and effect insurance comparable in amount
and in scope of coverage to that now maintained by it; (iv) perform in all
material respects all of its obligation under material contracts, leases, and
instruments relating to or affecting its assets, properties, and business; (v)
use its best efforts to maintain and preserve its business organization intact,
to retain its key employees, and to maintain its relationship with its material
suppliers and customers; and (vi) fully comply with and perform in all material
respects all obligations and duties imposed on it by all federal and state laws
and all rules, regulations, and orders imposed by federal or state governmental
authorities.
(b) From and after the date of this Agreement until the Closing Date,
neither CCCN nor ECC will: (i) make any change in their organizational
documents, Articles of Incorporation or bylaws; (ii) take any action described
in Section 2.7 in the case of ECC, or in Section 3.7, in the case of CCCN (all
except as permitted therein or as disclosed in the applicable Party's
disclosures); (iii) enter into or amend any contract, agreement, or other
instrument of any of the types described in such Party's disclosures, except
that a Party may enter into or amend any contract, agreement, or other
instrument in the ordinary course of business involving the sale of goods or
services, or (iv) make or change any material tax election, settle or compromise
any material tax liability or file any amended tax return.
4.7 Indemnification.
(a) ECC hereby agrees to indemnify CCCN and each of the officers,
agents and directors of CCCN as of the date of execution of this Agreement
against any loss, liability, claim, damage, or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever), to which it or they may become subject arising out of or
based on any inaccuracy appearing in or misrepresentation made in Article II.
The indemnification provided for in this paragraph shall not survive the Closing
and consummation of the Transaction but shall survive the termination of this
Agreement pursuant to Section 7.1(b) of this Agreement.
21
(b) CCCN hereby agrees to indemnify ECC and each of the officers,
agents and directors of ECC as of the date of execution of this Agreement
against any loss, liability, claim, damage, or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever), to which it or they may become subject arising out of or
based on any inaccuracy appearing in or misrepresentation made under Article
III. The indemnification provided for in this paragraph shall not survive the
Closing and consummation of the Transaction but shall survive the termination of
this Agreement pursuant to Section 7.1(c) of this Agreement.
CONDITIONS PRECEDENT TO OBLIGATIONS OF CCCN
The obligations of CCCN under this Agreement are subject to the
satisfaction, at or before the Closing, of the following conditions:
5.1 Accuracy of Representations; Performance. The representations and
warranties made by the ECC Unit Holders in this Agreement were true when made
and shall be true at the Closing Date with the same force and effect as if such
representations and warranties were made at and as of the Closing Date (except
for changes therein permitted by this Agreement), and ECC shall have performed
or complied with all covenants and conditions required by this Agreement to be
performed or complied with by the ECC Unit Holders prior to or at the Closing.
CCCN may request to be furnished with a certificate, signed by a duly authorized
representative of all of the ECC Unit Holders and dated the Closing Date, to the
foregoing effect.
5.2 Certificates. CCCN shall have been furnished with a certificate dated
the Closing Date and signed by a duly authorized representative of all of the
ECC Unit Holders to the effect that no litigation, proceeding, investigation, or
inquiry is pending or, to the best knowledge of such ECC Unit Holders is
threatened, which might result in an action to enjoin or prevent the
consummation of the Transaction, or, to the extent not disclosed in the ECC
Information, by or against ECC which might result in any material adverse change
in any of the assets, properties, business, or operations of ECC.
5.3 No Material Adverse Change. Prior to the Closing Date, there shall not
have occurred any material adverse change in the financial condition, business,
or operations of ECC, nor shall any event have occurred which, with the lapse of
time or the giving of notice, may cause or create any material adverse change in
the financial condition, business, or operations.
5.4 Other Items.
(a) CCCN shall have received a member list of ECC containing the name,
address, and number of units held by each ECC Unit Holder as of the date of
Closing certified by an executive officer of ECC as being true, complete, and
accurate;
(b) CCCN shall have received such further documents, certificates, or
instruments relating to the Transaction as CCCN may reasonably request;
22
(c) complete and satisfactory due diligence review of ECC by CCCN;
(d) approval of the Transaction by the ECC Board and the ECC Unit
Holders;
(e) on or before the date of the Closing, ECC shall have delivered to
CCCN the ECC Financial Statements; and
(f) any necessary third-party consents shall be obtained prior to
Closing, including but not limited to consents necessary from ECC's lenders,
creditors, vendors and lessors.
CONDITIONS PRECEDENT TO OBLIGATIONS OF ECC UNIT HOLDERS
The obligations of the ECC Unit Holders under this Agreement are
subject to the satisfaction, at or before the Closing, of the following
conditions:
6.1 Accuracy of Representations; Performance. The representations and
warranties made by CCCN in this Agreement were true when made and shall be true
as of the Closing Date (except for changes therein permitted by this Agreement)
with the same force and effect as if such representations and warranties were
made at and as of the Closing Date, and CCCN shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by CCCN prior to or at the Closing. ECC shall have been furnished
with a certificate, signed by a duly authorized executive officer of CCCN and
dated the Closing Date, to the foregoing effect.
6.2 Officer's Certificate. ECC shall have been furnished with a certificate
dated the Closing Date and signed by a duly authorized executive officer of CCCN
to the effect that no litigation, proceeding, investigation, or inquiry is
pending or, to the best knowledge of CCCN threatened, which might result in an
action to enjoin or prevent the consummation of the Transaction.
6.3 No Material Adverse Change. Prior to the Closing Date, there shall not
have occurred any material adverse change in the financial condition, business,
or operations of CCCN nor shall any event have occurred which, with the lapse of
time or the giving of notice, may cause or create any material adverse change in
the financial condition, business, or operations of CCCN.
6.4 Good Standing. ECC shall have received a certificate of good standing
from the Secretary of State of the State of Nevada or other appropriate office,
dated as of a date within ten days prior to the Closing Date certifying that
CCCN is in good standing as a corporation in the State of Nevada and has filed
all tax returns required to have been filed by it to date and has paid all taxes
reported as due thereon.
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6.5 Other Items.
(a) ECC shall have received a stockholder list of CCCN containing the
name, address, and number of shares held by each CCCN stockholder as of the date
of Closing certified by an executive officer of CCCN as being true, complete,
and accurate;
(b) ECC shall have received such further documents, certificates, or
instruments relating to the Transaction as ECC may reasonably request;
(c) complete and satisfactory due diligence review of CCCN by the ECC
Unit Holders;
(d) approval of the Transaction by the CCCN Board and a majority of
the CCCN Shareholders;
(e) there shall have been no material adverse changes in CCCN,
financial or otherwise, from the information provided in the CCCN Financial
Statements;
(f) at the Closing, the authorized capitalization of CCCN shall
consist of (i) 235,000,000 shares of CCCN Stock, of which 4,838,531 shares shall
be issued and outstanding immediately after the Closing, excluding the CCCN
Exchange Shares;
(g) except as set forth herein, there shall be no CCCN Common Stock
Equivalents outstanding as of immediately prior to the Closing. For purposes of
the foregoing, "CCCN Common Stock Equivalents" shall mean any subscriptions,
warrants, options or other rights or commitments of any character to subscribe
for or purchase from CCCN, or obligating CCCN to issue, any shares of any class
of the capital stock of CCCN or any securities convertible into or exchangeable
for such shares;
(h) the resignation of the officers and directors of CCCN effective
upon the Closing, with such vacancies filled by the nominees of the ECC Unit
Holders as set forth herein; and
(i) any necessary third-party consents shall be obtained prior to
Closing, including but not limited to consents necessary from CCCN's lenders,
creditors, vendors and lessors.
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TERMINATION
7.1 Termination.
(a) This Agreement may be terminated by either the ECC Unit Holders or
the CCCN Board at any time prior to the Closing Date if: (i) there shall be any
actual or threatened action or proceeding before any court or any governmental
body which shall seek to restrain, prohibit, or invalidate the Transaction and
which, in the judgment of such board of directors, made in good faith and based
on the advice of its legal counsel, makes it inadvisable to proceed with the
exchange contemplated by this Agreement; (ii) the Transaction is disapproved by
any regulatory authority whose approval is required to consummate such
transaction or in the judgment of such board of directors, made in good faith
and based on the advice of counsel, there is substantial likelihood that any
such approval will not be obtained or will be obtained only on a condition or
conditions which would be unduly burdensome, making it inadvisable to proceed
with the exchange; (iii) there shall have been any change after the date of the
latest balance sheets of ECC and CCCN, respectively, in the assets, properties,
business, or financial condition of ECC and CCCN, which could have a materially
adverse effect on the value of the business of ECC and CCCN respectively, except
any changes disclosed in the ECC and CCCN Information, as the case may be, dated
as of the date of execution of this Agreement. In the event of termination
pursuant to this paragraph (a) of Section 7.1, no obligation, right, or
liability shall arise hereunder, and each party shall bear all of the expenses
incurred by it in connection with the negotiation, drafting, and execution of
this Agreement and the Transaction; (iv) the Closing Date shall not have
occurred by May 30, 2006; or (v) if CCCN shall not have provided responses
satisfactory in ECC's reasonable judgment to ECC's request for due diligence
materials.
(b) This Agreement may be terminated at any time prior to the Closing
by action of the CCCN Board if the ECC Unit Holders shall fail to comply in any
material respect with any of their covenants or agreements contained in this
Agreement or if any of the representations or warranties of the ECC Unit Holders
contained herein shall be inaccurate in any material respect, and, in either
case if such failure is reasonably subject to cure, it remains uncured for seven
days after notice of such failure is provided to the ECC Unit Holders. If this
Agreement is terminated pursuant to this paragraph (b) of Section 7.1, this
Agreement shall be of no further force or effect, and no obligation, right, or
liability shall arise hereunder.
(c) This Agreement may be terminated at any time prior to the Closing
by action of the ECC Unit Holders if CCCN shall fail to comply in any material
respect with any of its covenants or agreements contained in this Agreement or
if any of the representations or warranties of CCCN contained herein shall be
inaccurate in any material respect, and, in either case if such failure is
reasonably subject to cure, it remains uncured for seven days after notice of
such failure is provided to CCCN. If this Agreement is terminated pursuant to
this paragraph (c) of Section 7.1, this Agreement shall be of no further force
or effect, and no obligation, right, or liability shall arise hereunder.
MISCELLANEOUS
8.1 Governing Law. This Agreement shall be governed by, enforced, and
construed under and in accordance with the laws of the United States of America
and, with respect to matters of state law, with the laws of Nevada. Any dispute
arising under or in any way related to this Agreement will be submitted to
binding arbitration before a single arbitrator by the American Arbitration
Association in accordance with the Association's commercial rules then in
effect. The arbitration will be conducted in San Antonio, Texas. The decision of
the arbitrator will set forth in reasonable detail the basis for the decision
and will be binding on the parties. The arbitration award may be confirmed by
any court of competent jurisdiction.
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8.2 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if personally delivered to it or sent by
registered mail or certified mail, postage prepaid, or by prepaid telegram
addressed as follows:
If to CCCN, to: City Capital Corporation
ATTN: Gary Borglund
2535 Pilot Knob Road, Suite 118
Mendota Heights, MN 55120
If to the ECC Ephren Capital Corporation
Unit Holders, to: ATTN: Ephren Taylor, Jr.
2000 Mallory Lane, Suite 130-301
Franklin, TN 37067
or such other addresses as shall be furnished in writing by any Party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.
8.3 Attorney's Fees. In the event that any Party institutes any action or
suit to enforce this Agreement or to secure relief from any default hereunder or
breach hereof, the breaching Party or Parties shall reimburse the non-breaching
Party or Parties for all costs, including reasonable attorneys' fees, incurred
in connection therewith and in enforcing or collecting any judgment rendered
therein.
8.4 Confidentiality. CCCN and the ECC Unit Holders will keep confidential
all information and materials regarding the other Party designated by such Party
as confidential. The provisions of this Section 8.5 shall not apply to any
information which is or shall become part of the public domain through no fault
of the Party subject to the obligation from a third party with a right to
disclose such information free of obligation of confidentiality. CCCN and ECC
agree that no public disclosure will be made by either Party of the existence of
the Transaction or the letter of intent or any of its terms without first
advising the other Party and obtaining its prior written consent to the proposed
disclosure, unless such disclosure is required by law, regulation or stock
exchange rule.
8.5 Expenses. Except as otherwise set forth herein, each Party shall bear
their own costs and expenses associated with the Transaction. Without limiting
the generality of the foregoing, all costs and expenses incurred by ECC and CCCN
after the Closing shall be borne by CCCN. After the Closing, the costs and
expenses of the ECC Unit Holders shall be borne by the ECC Unit Holders.
8.6 Information; Knowledge. Each Party is presumed to have full knowledge
of all information set forth in the other party's disclosures delivered pursuant
to this Agreement.
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8.7 Third Party Beneficiaries. This contract is solely between CCCN and the
ECC Unit Holders, and, except as specifically provided, no director, officer,
stockholder, employee, agent, independent contractor, or any other person or
entity shall be deemed to be a third party beneficiary of this Agreement.
8.8 Entire Agreement. This Agreement represents the entire agreement
between the Parties relating to the Transaction. There are no other courses of
dealing, understandings, agreements, representations, or warranties, written or
oral, except as set forth herein.
8.9 Survival. The representations and warranties of the respective Parties
shall not survive the Closing and the consummation of the Transaction.
8.10 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which taken together shall
be but a single instrument.
8.11 Amendment or Waiver. Every right and remedy provided herein shall be
cumulative with every other right and remedy, whether conferred herein, at law,
or in equity, and may be enforced concurrently herewith, and no waiver by any
party of the performance of any obligation by the other shall be construed as a
waiver of the same or any other default then, theretofore, or thereafter
occurring or existing. At any time prior to the Closing Date, this Agreement may
be amended by a writing signed by all Parties hereto, with respect to any of the
terms contained herein, and any term or condition of this Agreement may be
waived or the time for performance hereof may be extended by a writing signed by
the party or parties for whose benefit the provision is intended.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their respective representatives, hereunto duly authorized, as of
the date first above-written.
"ECC UNIT HOLDER" EPHREN CAPITAL CORPORATION
By: /s/ Ephren W. Taylor II
-------------------------
Ephren W Taylor II, President
"CCCN" CITY CAPITAL CORPORATION
By: /s/ Gary Borglund
---------------------
Gary Borglund, President
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