CORPORATE COMBINATION AGREEMENT
This Corporate Combination Agreement (the "Agreement") effective February
6, 2003, is by and between ECONTENT, INC., a Delaware corporation ("ECONTENT"),
having its principal offices at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000;
and the Majority Interest holders of Angel Babies, LLC, a California limited
liability company, having its principal offices at 0000 Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxx 00000. The majority interest holders will be referred to collectively
as "ANGEL BABIES" unless specifically cited as the interest holders.
RECITALS:
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A. ECONTENT desires to acquire all of the issued and outstanding capital
interests and/or shareholdings of ANGEL BABIES and all of the members/Interest
Holders of ANGEL BABIES desire to exchange all of their interests of ANGEL
BABIES for shares of ECONTENT authorized but unissued restricted common stock as
hereinafter provided.
B. It is the intention of the parties hereto that: (i) ECONTENT shall
acquire all of the issued and outstanding membership interests of ANGEL BABIES
in exchange solely for the number of shares of ECONTENT's authorized but
unissued shares of restricted common stock, par value $.0001 ("Common Stock"),
set forth below (the "Exchange"); and (ii) ) the Exchange will qualify as a
tax-free reorganization pursuant to sections 354 and Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the Exchange shall
qualify as a transaction in securities exempt from registration or qualification
under the Securities Act of 1933, as amended, and under the applicable
securities laws of each state or jurisdiction where all of the members of ANGEL
BABIES (the "Members") reside, with ANGEL BABIES becoming a wholly-owned
subsidiary of ECONTENT. The combined entity would then change its name to "ANGEL
BABIES, INC., A DELAWARE CORPORATION".
C. The board of directors and majority shareholders of ECONTENT deems it to
be in the best interest of ECONTENT and its shareholders to acquire all of the
issued and outstanding interests of ANGEL BABIES.
D. The Managing members and Majority Interest holders of ANGEL BABIES deem
it to be in the best interest of the ANGEL BABIES interest holders to exchange
all of the capital interests of ANGEL BABIES for shares of ECONTENT, as
hereinafter provided.
E. Fairness Opinion. EContent and Angel Babies will retain a qualified
independent firm to issue a fairness opinion as to the value of each entity
entering into this combination agreement. The outcome of this opinion could
reflect the number of shares to be exchanged in Section 1.1. In the event that
the Fairness Opinion does not reflect a valuation of the Angelbabies Property at
$2.5 million or better, Angelbabies has the option to terminate this merger
agreement.
F. Net operating loss (NOL) Econtent has a net operating loss in excess of
$11 million dollars. It is in the best interest of the parties to preserve as
much of the NOL as possible. Therefore, opinions of both tax attornies and ETNT
accounting firm are necessary in the final valuation and fairness opinion. G. It
is agreed that Xxxxxx X. Xxxxxx shall be appointed the CEO effective upon the
signing this Combination agreement. ETNT shall draw up a resolution from the
board of directors effective forthwith.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
SECTION 1. EXCHANGE OF SHARES
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1.1 Exchange of Shares. ECONTENT and the Shareholders hereby agree that the
share holders shall, on the Closing Date (February 28, 2003), exchange all of
the issued and outstanding interests of ANGEL BABIES for 166,700,000 shares of
ECONTENT (the "ECONTENT Shares"). If all rights are sold, exercised or otherwise
converted into common stock, then a total, post-closing number of shares will be
206,700,000. The ANGEL BABIES interests to be tendered, 5,000 membership units,
will represent all of the issued and outstanding capital interests of ANGEL
BABIES. The ANGEL BABIES interests owned by each interest holder and the number
of ECONTENT Shares which each will receive in the Exchange are set forth in
Exhibit A hereto, which will constitute 100% of LLC interests, and, after
acquisition, will approximate 81% of the then-outstanding ownership of the
combined entity. This agreement will go forward so long as at least 80% of the
ANGEL BABIES interests are tendered for exchange. Any remaining minority
interest holders who choose not to exchange their interests will remain as
minority holders in the subsidiary. The number of EContent shares to be issued
to Angel Babies will be adjusted according to the percentage of Angel Babies
units tendered.
1.2 Delivery of Shares/Interests. On the Closing Date, the interest holders
wishing to exchange ANGEL BABIES membership interests for ECONTENT Shares (the
"Exchanging Interest Holders") will deliver to ECONTENT the certificates
representing the ANGEL BABIES Interests, duly endorsed (or with executed stock
powers) so as to make ECONTENT the sole owner thereof. Upon delivery of the
ANGEL BABIES Interests, ECONTENT will deliver certificates representing the
ECONTENT Shares to the exchanging Interest holders, making the exchanging
interest holders the majority shareholders of ECONTENT.
1.3 Restricted Securities. The ECONTENT Shares have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be resold unless the resale thereof is registered under the Securities Act or an
exemption from such registration is available. Each certificate representing the
ECONTENT Shares will have a legend thereon in substantially the following form:
The Shares represented by the certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"). The shares
have been acquired for investment and may not be sold or transferred in
the absence of an effective Registration Statement for the resale of
the shares under the Act unless in the opinion of counsel satisfactory
to the Company, registration is not required under the Act.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF ANGEL BABIES AND THE Majority
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Interest Holder(s)
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The Interest Holders of ANGEL BABIES, constituting 100% hereby represent
and warrant as follows:
2.1 Organization and Good Standing. ANGEL BABIES is a limited liability
company duly organized, validly existing and in good standing under the laws of
the jurisdiction of California. ANGEL BABIES has the corporate power and
authority to carry on its business as presently conducted. ANGEL BABIES is
qualified to do business in all jurisdictions where the failure to be so
qualified would have a material adverse effect on its business.
2.2 Corporate Authority. ANGEL BABIES has the power to operate as a limited
liability company and to perform any company obligations hereunder. The
execution and delivery of this Agreement by each of the exchanging Interest
Holders, and the consummation of the transaction contemplated hereby, are not in
violation of any restrictions governing member transactions. The execution and
performance of this Agreement, ultimately effecting a change in control of the
company, will not constitute a material breach of any agreement, indenture,
mortgage, license or other instrument or document to which ANGEL BABIES is a
party and will not violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to ANGEL BABIES or its properties. The execution and
performance of this Agreement will not violate or conflict with any provision of
the Articles of Organization or the Operating Agreement of ANGEL BABIES.
2.3 Ownership of Shares. The Interest Holders described on Exhibit A are
the owners of record and beneficially of all of the issued and outstanding
membership interests of ANGEL BABIES. Except as set forth on Schedule 2.3, each
Interest Holder represents and warrants that he, she or it owns such interests
free and clear of all rights, claims, liens and encumbrances, and the interests
have not been sold, pledged, assigned or otherwise transferred except pursuant
to this Agreement.
2.4 Receipt of Company Information; Independent Investigation; Access. All
requested publicly-available documents, records and books pertaining to ECONTENT
and the ECONTENT Shares will be delivered to each Majority Interest Holder or
that interest holder's advisors, and any of the other Interest Holders as
requested. All of the Interest Holders' questions and requests for information
will be answered to the Interest Holders' satisfaction. Each Interest Holder
acknowledges that they, in making the decision to exchange the ANGEL BABIES
Interests for ECONTENT Shares, will rely upon independent investigations made by
them or their representatives, if any, and they will have, prior to the Closing
Date, been given access to and the opportunity to examine all material contracts
and documents relating to this offering and an opportunity to ask questions of,
and to receive information from, ECONTENT or any person acting on its behalf
concerning the terms and conditions of this Agreement. Each ANGEL BABIES
interest holder and its advisors, if any, will have been furnished with access
to all publicly available materials relating to the business, finances and
operation of ECONTENT and materials relating to the offer and sale of the
ECONTENT Shares which have been requested. Each interest holder and its
advisors, if any, will have received complete and satisfactory answers to any
such inquiries.
2.5 Risks. Each Interest Holder executing this agreement acknowledges and
understands that the exchange for the ECONTENT Shares involves a high degree of
risk and is suitable only for persons of adequate financial means who have no
need for liquidity in this investment in that (i) the Interest Holder may not be
able to liquidate the investment in the event of an emergency; (ii)
transferability is extremely limited; and (iii) in the event of a disposition,
the Interest Holder could sustain a complete loss of its entire investment. The
Interest Holder is sufficiently experienced in financial and business matters to
be capable of evaluating the merits and risks of an investment in ECONTENT; has
evaluated such merits and risks, including risks particular to the Interest
Holder's situation; and the Interest Holder has determined that this investment
is suitable for the Interest Holder. The Interest Holder has adequate financial
resources and can bear a complete loss of the Interest Holder's investment.
2.6 Investment Intent. Each Interest Holder hereby represents that the
ECONTENT Shares are being acquired for the Interest Holder's own account with no
intention of distributing such securities to others. The Interest Holder has no
contract, undertaking, agreement or arrangement with any person to sell,
transfer or otherwise distribute to any person or to have any person sell,
transfer or otherwise distribute the Shares for the Interest Holder. The
Interest Holder is presently not engaged, nor does the Interest Holder plan to
engage within the presently foreseeable future, in any discussion with any
person regarding such a sale, transfer or other distribution of the Shares or
any interest therein.
2.7 Compliance with Federal and State Securities Laws. The Interest Holder
understands that the ECONTENT Shares have not been registered under the
Securities Act. The Interest Holder understands that the ECONTENT Shares must be
held indefinitely unless the sale or other transfer thereof is subsequently
registered under the Securities Act or an exemption from such registration is
available. Moreover, the Interest Holder understands that its right to transfer
the ECONTENT Shares will be subject to certain restrictions, which include
restrictions against transfer under the Securities Act and applicable state
securities laws. In addition to such restrictions, the Interest Holder realizes
that it may not be able to sell or dispose of the ECONTENT Shares as there may
be no public or other market for them. The Interest Holder understands that
certificates evidencing the Shares shall bear a legend substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR PLEDGED UNLESS REGISTERED UNDER THE SECURITIES ACT AND
ANY APPLICABLE STATE LAW OR PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS
2.8 Approvals. No approval, authorization, consent, order or other action
of, or filing with, any person, firm or corporation or any court, administrative
agency or other governmental authority is required in connection with the
execution and delivery of this Agreement by ANGEL BABIES and the Majority
Interest Holders for the consummation of the transactions described herein,
other than as set forth on Schedule 2.8.
2.9 No General Solicitation. No Interest Holder is purchasing (or
exchanging for) the ECONTENT Shares because of or following any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or presented at any seminar
or meeting, or any solicitation or a subscription by a person other than a
representative of ECONTENT.
2.10 Financial Statements, Books and Records. Attached as Exhibit 2.10 are
the audited financial statements (balance sheet, income statement, notes) of
ANGEL BABIES as of September 30, 2002 (the "Financial Statements"). The books of
account and other financial records of ANGEL BABIES are in all respects complete
and correct in all material respects and are maintained in accordance with good
business and accounting practices. The Managing Member(s) and Majority Interest
Holders acknowledge that a minimum of two (2) years of audited financial
information will be required to be filed with the Securities and Exchange
commission within 60 days of the Closing date of this Agreement.
2.11 No Material Adverse Changes. Since September 30, 2002 there has not
been:
(i) any material adverse change in the financial position of ANGEL
BABIES except changes arising in the ordinary course of business, which
changes will in no event materially and adversely affect the financial
position of ANGEL BABIES;
(ii) any damage, destruction or loss materially affecting the assets,
prospective business, operations or condition (financial or otherwise) of
ANGEL BABIES whether or not covered by insurance;
(iii) any declaration, setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of ANGEL BABIES
capital interests;
(iv) any sale of an asset (other than in the ordinary course of
business) or any mortgage or pledge by ANGEL BABIES of any properties or
assets; or
(v) adoption of any pension, profit sharing, retirement, stock bonus,
stock option or similar plan or arrangement.
2.12 Taxes. ANGEL BABIES has filed all material tax, governmental and/or
related forms and reports (or extensions thereof) due or required to be filed
and has paid or made adequate provisions for all taxes or assessments which had
become due as of the Closing Date, and there are no deficiency notices
outstanding. No extensions of time for the assessment of deficiencies for any
year is in effect. No deficiency notice is proposed or, to the knowledge of the
Major Interest Holders after reasonable inquiry, threatened against ANGEL
BABIES. The tax returns of ANGEL BABIES have never been audited.
2.13 Compliance with Laws. ANGEL BABIES has complied with all federal,
state, county and local laws, ordinances, regulations, inspections, orders,
judgments, injunctions, awards or decrees applicable to it or its business
which, if not complied with, would materially and adversely affect the business
of ANGEL BABIES.
2.14 No Breach. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the Articles of Organization or the
Operating Agreement of ANGEL BABIES;
(ii) violate, conflict with or result in the breach of any of the
terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or
lapse of time, or both constitute) a default under any contract or other
agreement to which ANGEL BABIES is a party or by or to which it or any of
its assets or properties may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory body against, or binding
upon, ANGEL BABIES or upon the properties or business of ANGEL BABIES; or
(iv) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein which could have a
material, adverse effect on the business or operations of ANGEL BABIES.
2.15 Actions and Proceedings. ANGEL BABIES is not a party to any material
pending litigation or, to the knowledge of the Interest Holders, after
reasonable inquiry, any governmental investigation or proceeding not reflected
in the ANGEL BABIES Financial Statements and, to their best knowledge, no
material litigation, claims, assessments or non-governmental proceedings are
threatened against ANGEL BABIES except as set forth on Schedule 2.15 attached
hereto and made a part hereof.
2.16 Agreements. Schedule 2.16 sets forth any material contract or
arrangement to which ANGEL BABIES is a party or by or to which it or its assets,
properties or business are bound or subject, whether written or oral.
2.17 Brokers or Finders. No broker's or finder's fee will be payable by
ANGEL BABIES in connection with the transactions contemplated by this Agreement,
nor will any such fee be incurred as a result of any actions by ANGEL BABIES or
any of its Interest Holders.
2.18 Real Estate. Except as set forth on Schedule 2.18, ANGEL BABIES owns
no real property nor is a party to any leasehold agreement. All uses of the real
property by ANGEL BABIES or its subsidiaries conform in all material respects to
all applicable building and zoning ordinances, laws and regulations.
2.19 OSHA and Environmental Compliance. To the knowledge of the Majority
Interest Holders, ANGEL BABIES has duly complied with, and its offices, real
property, business, assets, leaseholds and equipment are in compliance in all
material respects with, the provisions of the Federal Occupational Safety and
Health Act, the Environmental Protection Act, and all other environmental laws.
There have been no outstanding citations, notices or orders of non-compliance
issued to ANGEL BABIES or relating to its business, assets, property,
leaseholders or equipment under such laws, rules or regulations.
ANGEL BABIES has been issued all required federal, state and local
licenses, certificates or permits relating to all applicable environmental laws.
There are no visible signs of releases, spills, discharges, leaks or disposal
(collectively, referred to as "Releases") of hazardous substances at, upon,
under or within the real property owned by ANGEL BABIES. There are no
underground storage tanks or polycholorinated biphenyls on the real property. To
the best of the Majority Interest Holders' knowledge, after reasonable inquiry,
the real property has never been used as a treatment, storage or disposal
facility of hazardous waste. To the best of the Majority Interest Holders'
knowledge, after reasonable inquiry, no hazardous substances are present on the
real property or any premises leased by ANGEL BABIES excepting such quantities
as are handled in accordance with all applicable manufacturer's instructions and
governmental regulations and in the proper storage containers and as are
necessary for the operation of the commercial business of ANGEL BABIES.
2.20 Tangible Assets. To the knowledge of the Majority Interest Holders,
ANGEL BABIES has full title and interest in all machinery, equipment, furniture,
leasehold improvements, fixtures, projects, owned or leased by ANGEL BABIES, any
related capitalized items or other tangible property material to the business of
ANGEL BABIES (the "Tangible Assets"). Other than as set forth in Schedule 2.20,
ANGEL BABIES holds all rights, title and interest in all the Tangible Assets
owned by it on the Balance Sheet or acquired by it after the date on the Balance
Sheet free and clear of all liens, pledges, mortgages, security interests,
conditional sales contracts or any other encumbrances. All of the Tangible
Assets are in good operating condition and repair and are usable in the ordinary
course of business of ANGEL BABIES and conform to all applicable laws,
ordinances and government orders, rules and regulations relating to their
construction and operation, except as set forth on Schedule 2.20 hereto. ANGEL
BABIES has clear title to all of its fictional business names, trading names,
registered and unregistered trademarks, service marks and applications
(collectively, the "Marks") and Marks are included as Tangible Assets.
2.21 Liabilities. ANGEL BABIES did not have any material direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued or absolute, contingent or otherwise, including,
without limitation, any liability on account of taxes, any governmental charge
or lawsuit (all of the foregoing collectively defined to as "Liabilities"),
which are not fully, fairly and adequately reflected on the Financial Statements
(annual and interim), except for any specific Liabilities set forth on Schedule
2.21 attached hereto and made a part hereof. As of the date of Closing, ANGEL
BABIES will not have any Liabilities, other than Liabilities fully and
adequately reflected on the Financial Statements except for Liabilities incurred
in the ordinary course of business and as set forth in Schedule 2.21, and will
not exceed $250,000 on the date of Closing. ANGEL BABIES will be responsible for
all legal fees incident to the merger/acquisition, commencing with preparation
of this definitive corporate combination agreement, and not attributable to
creditor compromise and/or share issuance associated with ECONTENT activities
pre-merger. The combination and any NASD/CUSIP liaison activities, plus any SEC
filing requirements, commencing with the 10k will be considered a cost of
combination and attributable to the post-merger entity. The only legal fees
which will not be incurred as ongoing corporate debt are those associated with
debt compromise of pre-merger ECONTENT creditors. ECONTENT may issue up to
2,500,000 post-merger S8 shares subject to a legal opinion, to counsel, which
will be in excess of the 206,700,000 closing limit, to retire existing legal
fees. Any fees due Xxxxxxxxx & Associates not paid as a result of that issuance
will carry forward. ANGEL BABIES may assume up to $250,000 of ECONTENT's
existing debt at the election of Xxxxxx X. Xxxxxx, the Managing Member of
Angelbabies, LLC.
2.22 Access to Records. The corporate financial records, minute books and
other documents and records of ANGEL BABIES have been made available to ECONTENT
prior to the Closing hereof.
2.23 Operations of ANGEL BABIES. From the date of the Financial Statements
through the date of Closing, ANGEL BABIES has not and will not, outside of the
ordinary course of business, have:
(i) incurred any indebtedness or borrowed money;
(ii) declared or paid any dividend or declared or made any
distribution of any kind to any Interest Holder, or made any direct or
indirect redemption, retirement, purchase or other acquisition of any
interests in its capital structure;
(iii) made any loan or advance to any Interest Holder, officer,
director, employee, consultant, agent or other representative or made any
other loan or advance;
(iv) disposed of any assets of ANGEL BABIES;
(v) materially increased the annual level of compensation of any
executive employee of ANGEL BABIES;
(vi) increased, terminated, amended or otherwise modified any plan for
the benefit of employees of ANGEL BABIES;
(vii) issued any equity securities or rights to acquire such equity
securities; or
(viii) entered into or modified any contract, agreement or
transaction.
2.24 Capitalization. The authorized capital of ANGEL BABIES consists of
5000 membership interests, having no par value. ANGEL BABIES has not granted,
issued or agreed to grant, issue or make any warrants, options, subscription
rights or any other commitments of any character relating to the issued or
unissued membership interests of ANGEL BABIES.
2.25 Full Disclosure. No representation or warranty by ANGEL BABIES or the
Majority Interest Holders in this Agreement or in any document or schedule to be
delivered by them pursuant hereto, and no written statement, certificate or
instrument furnished or to be furnished by ANGEL BABIES pursuant hereto or in
connection with the negotiation, execution or performance of this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state any fact necessary to make any statement herein or therein
not materially misleading or necessary to a complete and correct presentation of
all material aspects of the business of ANGEL BABIES, and/or the status of the
ANGEL BABIES Shares.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF ECONTENT
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ECONTENT hereby represents and warrants as follows:
3.1 Organization and Good Standing. ECONTENT is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. It has the corporate power to own its own property and to carry on its
business as now being conducted and is duly qualified to do business in any
jurisdiction where so required except where the failure to so qualify would have
no material adverse effect on its business.
3.2 Corporate Authority. ECONTENT has the corporate power to enter into
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby has been, or will be prior to the Closing Date, duly authorized by the
Board of Directors of ECONTENT and a majority of the Interest Holders as
required by Delaware law. The execution and performance of this Agreement will
not constitute a material breach of any agreement, indenture, mortgage, license
or other instrument or document to which ECONTENT is a party and will not
violate any judgment, decree, order, writ, rule, statute, or regulation
applicable to ECONTENT or its properties. The execution and performance of this
Agreement will not violate or conflict with any provision of the Articles of
Incorporation or by-laws of ECONTENT.
3.3 The ECONTENT Shares. At the Closing, the ECONTENT Shares to be issued
and delivered to the Interest Holders hereunder will when so issued and
delivered, constitute valid and legally issued shares of ECONTENT Common Stock,
fully paid and nonassessable.
3.4 Financial Statement: Books and Records. Attached as Exhibit 3.4 are the
audited financial statements (balance sheet, income statement and Notes) of
ECONTENT for the fiscal year ended September 30, 2001 and unaudited financial
statements for the quarter ended at June 30, 2002 (collectively the "Financial
Statements"), all of which are on file with the U.S. Securities and Exchange
Commission's XXXXX system, and an interim statement, dated November 30, 2002,
for pre-merger purposes. The Financial Statements fairly represent the financial
position of ECONTENT as at such date and the results of their operations for the
periods then ended. The Financial Statements were prepared in accordance with
generally accepted accounting principles applied on a consistent basis with
prior periods except as otherwise stated therein. The books of account and other
financial records of ECONTENT are in all respects complete and correct in all
material respects and are maintained in accordance with good business and
accounting practices.
3.5 No Material Adverse Changes.
Except as described on Schedule 3.5, since September 30, 2002, there has
not been:
(i) any material adverse changes in the financial position of ECONTENT
except changes arising in the ordinary course of business, which changes
will in no event materially and adversely affect the financial position of
ECONTENT.
(ii) any damage, destruction or loss materially affecting the assets,
prospective business, operations or condition (financial or otherwise) of
ECONTENT whether or not covered by insurance;
(iii) any declaration setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of ECONTENT
capital stock, other than as agreed upon among the parties;
(iv) any sale of an asset (other than as described in (iii) above, or
in the ordinary course of business) or any mortgage pledge by ECONTENT of
any properties or assets; or
(v) adoption or modification of any pension, profit sharing,
retirement, stock bonus, stock option or similar plan or arrangement.
(vi) except in the ordinary course of business, incurred or assumed
any indebtedness or liability, whether or not currently due and payable;
(vii) any loan or advance to any shareholder, officer, director,
employee, consultant, agent or other representative or made any other loan
or advance otherwise than in the ordinary course of business;
(viii) any material increase in the annual level of compensation of
any executive employee of ECONTENT;
(ix) except in the ordinary course of business, entered into or
modified any contract, agreement or transaction;
(x) issued any equity securities or rights to acquire equity
securities, other than as set forth in Schedule 3.5, such that total issued
and outstanding shares of the company will not exceed 40,000,000 shares as
of the date of the exchange with ANGEL BABIES.
3.6 Taxes. ECONTENT has filed all tax, governmental and/or related forms
and reports (or extensions thereof) due or required to be filed as of June 30,
2002 . Any liabilities for taxes, in the aggregate, will not exceed $1,000.
3.7 Compliance with Laws. Except as described on Schedule 3.7, ECONTENT has
complied with all federal, state, county and local laws, ordinances,
regulations, inspections, orders, judgments, injunctions, awards or decrees
applicable to it or its business, which, if not complied with, would materially
and adversely affect the business of ECONTENT.
3.8 Actions and Proceedings. ECONTENT is not a party to any material
pending litigation or, to its knowledge, any governmental proceedings are
threatened against ECONTENT.
3.9 Periodic Reports. ECONTENT is a Section 12(g) reporting company and
therefore must file periodic reports to be filed pursuant to the Securities
Exchange Act of 1934, as amended, for purposes of trading on the OTC Bulletin
Board. These reports are current as of the date of execution of this Agreement.
3.10 Capitalization. As of the Closing Date, there are approximately 1000
shareholders of record that are the owners of 40,000,000 shares of ECONTENT
Common Stock, none of which owns in excess of 5% of the issued and outstanding
shares, except as may be set forth on Schedule 3.10 attached, a shareholder
list. ECONTENT has 50,000,000 shares of common stock, par value $0.08 per share
authorized and 1,000,000 shares of preferred stock, par value $10.00 , none of
which are issued..
3.11 Access to Records. The corporate financial records, minute books, and
other documents and records of ECONTENT have been made available to ANGEL BABIES
prior to the Closing hereof.
3.12 No Breach. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the Articles of Incorporation or By-Laws
of ECONTENT;
(ii) violate, conflict with or result in the breach of any of the
material terms of, result in a material modification of, otherwise give any
other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default under, any contract
or other agreement to which ECONTENT is a party or by or to which it or any
of its assets or properties may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory body against, or binding
upon, ECONTENT or upon the securities, properties or business to ECONTENT;
or
(iv) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein, which violation could
have a material adverse effect on the business or operations of ECONTENT.
3.13 Brokers or Finders. Other than 166,700,000 shares which will be issued
at Closing, 40,000,000 issued and outstanding, no broker's or finder's fee will
be payable by ECONTENT in connection with the transactions contemplated by this
Agreement, nor will any such fee be incurred as a result of any actions of
ECONTENT.
3.14 Corporate Authority. ECONTENT has the corporate power to enter into
this Agreement and to perform its respective obligations hereunder. The
execution and delivery of this Agreement and the consummation of the transaction
contemplated hereby have been duly authorized by the Board of Directors and a
majority of the Shareholders of ECONTENT. The execution and performance of this
Agreement will not constitute a material breach of any agreement, indenture,
mortgage, license or other instrument or document to which ECONTENT is a party
and will not violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to ECONTENT or its properties. The execution and
performance of this Agreement will not violate or conflict with any provision of
the Certificate of Incorporation or by-laws of ECONTENT.
3.15 Full Disclosure. No representation or warranty by ECONTENT in this
Agreement or in any document or schedule to be delivered by them pursuant
hereto, and no written statement, certificate or instrument furnished or to be
furnished by ECONTENT pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary
to make any statement herein or therein not materially misleading or necessary
to complete and correct presentation of all material aspects of the business of
ECONTENT.
3.16 No Claims Outstanding. ECONTENT represents that it is not subject to
any claims, litigation, or other charges against its assets, has no real estate
or real estate holdings, has no employees, one officer and two directors,
serving without pay, and therefore there can be no OSHA or other personnel
claims outstanding or potentially assertable against the company. Furthermore,
there have been no material changes in the company's position, and the company
has conducted no other business, since November 30, 2002, other than as set
forth on Schedule 3.16, indicating a description of activities since
recapitalization of the corporation.
3.17 Securities Issuances. ECONTENT represents that all of the existing and
outstanding shares were lawfully issued and are dutifully accounted for in the
financial statements and with the company's transfer agent.
SECTION 4. CONDITIONS PRECEDENT
--------------------------------
4.1 Conditions Precedent to the Obligation of ANGEL BABIES Interest
Holders. All obligations of the Interest Holders under this Agreement are
subject to the fulfillment, prior to or as of the Closing Date, as indicated
below, of each of the following conditions:
(a) The representations and warranties by or on behalf of ECONTENT
contained in this Agreement or in any certificate or document delivered
pursuant to the provisions hereof shall be true in all material respects at
and as of Closing Date as though such representations and warranties were
made at and as of such time.
(b) ECONTENT shall have performed and complied in all material
respects, with all covenants, agreements, and conditions set forth in, and
shall have executed and delivered all documents required by this Agreement
to be performed or complied with or executed and delivered by them prior to
or at the Closing.
(C) On or before the Closing, the Board of Directors and a majority
of the shareholders of ECONTENT shall have approved, in accordance with
Delaware law, the execution, delivery and performance of this Agreement and
the consummation of the transaction contemplated herein and authorized all
of the necessary and proper action to enable ECONTENT to comply with the
terms of the Agreement.
(d) ECONTENT shall have sufficient shares of ECONTENT Common Stock
authorized but unissued to complete the Exchange.
(e) All instruments and documents delivered to ANGEL BABIES and the
Interest Holders pursuant to provisions hereof shall be reasonably
satisfactory to legal counsel for ANGEL BABIES.
(f) ECONTENT shall have no more than 40,000,000 shares of common stock
outstanding (and no preferred stock) on the day of closing. ECONTENT will
issue shares as necessary to compensate all intermediaries, creditors,
consultants, financial advisors and the like, so that no claims exist
against the merged entity upon closing for any form of brokerage or
consulting fees resulting from this corporate combination.
(g) ECONTENT shall have compromised its existing creditors and/or
other claimants or liabilities such that no more than $250,000 in
liabilities are outstanding.
(i) ECONTENT's board of directors will appoint at least 7 individuals
designated by ANGEL BABIES to assume open director seats to be filled upon
signing of this document (or earlier at the election of the appointed
directors). At a minimum, Xxxxxx X. Xxxxxx, Xxxxxxx Xxxxxxxx and Xxxx
Xxxxxxx will be appointed as directors, only Xxxxxx and Xxxxxxxx will be an
executive officers of the company.
(j) All of the current officers and directors of ECONTENT, and its
holders of more than 5% of the issued and outstanding securities prior to
the acquisition, will have entered into agreements not sell, pledge or
otherwise transfer their ECONTENT shares for a period of 12 months from the
date of Closing (the "Lock Up Agreements").
4.2 Conditions Precedent to the Obligations of ECONTENT and ECONTENT
Shareholders. All obligations of ECONTENT under this Agreement are subject to
the fulfillment, prior to or at Closing, of each of the following conditions:
(a) The representations and warranties by ANGEL BABIES through its
Majority Interest Holders, contained in this Agreement or in any
certificate or document delivered pursuant to the provisions hereof shall
be true in all material respects at and as of the Closing as though such
representations and warranties were made at and as of such time;
(b) ANGEL BABIES and its Interest Holders shall have performed and
complied with, in all material respects, with all covenants, agreements,
and conditions set forth in, and shall have executed and delivered all
documents required by this Agreement to be performed or complied or
executed and delivered by them prior to or at the Closing;
(c) ANGEL BABIES will provide audited financial statements for its
previous two years and current stub period, to allow for the filing of
updated information with the SEC in a timely manner: within 60 days of the
Closing.
SECTION 5. COVENANTS
---------------------
5.1 Corporate Examinations and Investigations. Prior to the Closing Date,
the parties acknowledge that they have been entitled, through their employees
and representatives, to make such investigation of the assets, properties,
business and operations, books, records and financial condition of the other as
they each may reasonably require. No investigations, by a party hereto shall,
however, diminish or waive any of the representations, warranties, covenants or
agreements of the party under this Agreement.
5.2 Further Assurances. The parties shall execute such documents and other
papers and take such further actions as may be reasonably required or desirable
to carry out the provisions hereof and the transactions contemplated hereby.
Each such party shall use its best efforts to fulfill or obtain the fulfillment
of the conditions to the Closing, including, without limitation, the execution
and delivery of any documents or other papers, the execution and delivery of
which are necessary or appropriate to the Closing.
5.3 Confidentiality. In the event the transactions contemplated by this
Agreement are not consummated, ECONTENT, ANGEL BABIES and the Interest Holders
agree to keep confidential any information disclosed to each other in connection
therewith for a period of one (1) year from the date hereof; provided, however,
such obligation shall not apply to information which:
(i) at the time of the disclosure was public knowledge;
(ii) after the time of disclosure becomes public knowledge (except due
to the action of the receiving party); or
(iii) the receiving party had within its possession at the time of
disclosure; or
(iv) is ordered disclosed by a Court of proper jurisdiction.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
------------------------------------------------------
Notwithstanding any right of either party to investigate the affairs
of the other party and its Shareholders or Interest Holders, each party has the
right to rely fully upon representations, warranties, covenants and agreements
of the other party and its Shareholders or Interest Holders contained in this
Agreement or in any document delivered to one by the other or any of their
representatives, in connection with the transactions contemplated by this
Agreement. All such representations, warranties, covenants and agreements shall
survive the execution and delivery hereof and the closing hereunder for one
year following the Closing.
SECTION 7. INDEMNIFICATION
---------------------------
For a period of one (1) year from the Closing, the Majority Interest
Holders of ANGEL BABIES agree to indemnify and hold harmless ECONTENT, its
officers, directors and principal shareholders, and ECONTENT agrees to
indemnify and hold harmless the ANGEL BABIES Interest Holders, at all times up
to one (1) year after the date of this Agreement against and in respect of any
liability, damage, or deficiency, all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including attorneys' fees, incident
to any of the foregoing, resulting from any material misrepresentation made by
any indemnifying party to an indemnified party, an indemnifying party's breach
of a covenant or warranty or an indemnifying party's nonfulfillment of any
agreement hereunder, or from any material misrepresentation or omission from
any certificate, financial statement or tax return furnished or to be furnished
hereunder for any period up to and including 120 days after execution of this
Agreement.
If the indemnified party receives written notice of the commencement
of any legal action, suit or proceeding with respect to which the indemnifying
party is or may be obligated to provide indemnification pursuant to this
Section, the indemnified party shall, within 30 days of the receipt of such
written notice, give the indemnifying party written notice thereof (a "Claim
Notice"). Failure to give such Claim Notice within such 30 day period shall not
constitute a waiver by the indemnified party or its rights to indemnity
hereunder with respect to such action, suit or proceeding unless the defense
thereof is prejudiced thereby. Upon receipt by the indemnifying party of a
Claim Notice from the indemnified party with respect to any claim for
indemnification which is based upon a claim made by a third party ("Third Party
Claim"), the indemnifying party may assume the defense of the Third Party Claim
with counsel of its own choosing, as described below. The indemnified party
shall cooperate in the defense of the Third Party Claim and shall furnish such
records, information and testimony and attend all such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably required in
connection therewith. The indemnified party shall have the right to employ its
own counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of the indemnified party unless the indemnifying party shall
not have with reasonable promptness employed counsel to assume the defense of
the Third Party Claim, in which event such fees and expenses shall be borne
solely by the indemnifying party. The indemnifying party shall not satisfy or
settle any Third Party Claim for which indemnification has been sought and is
available hereunder, without the prior written consent of the indemnified
party, which consent shall not be delayed or which shall not be required if the
indemnified party is granted a release in connection therewith. If the
indemnifying party shall fail with reasonable promptness to defend such Third
Party Claim, the indemnified party may defend, satisfy or settle the Third
Party Claim at the expense of the indemnifying party and the indemnifying party
shall pay to the indemnified party the amount of such Loss within ten days
after written demand thereof. The indemnification provisions hereof shall
survive the termination of this Agreement.
SECTION 8. DOCUMENTS AT CLOSING AND THE CLOSING
------------------------------------------------
8.1 Documents at Closing. At the Closing, the following transactions shall
occur, all of such transactions being deemed to occur simultaneously:
(a) ANGEL BABIES will deliver, or will cause to be delivered, to
ECONTENT the following:
(i) a certificate executed by the Managing Members of ANGEL
BABIES to the effect that all representations and warranties made by
ANGEL BABIES under this Agreement are true and correct as of the
Closing, the same as though originally given to ECONTENT on said date;
(ii) a certificate from California dated at or about the Closing
to the effect that ANGEL BABIES is in good standing under the laws of
said State;
(iii) ANGEL BABIES and its Interest Holders shall deliver an
opinion of its legal counsel, limited as to any portion of the opinion
as to an aspect of the agreement governed by the application of
California law, to ECONTENT to the effect that:
(a) ANGEL BABIES is a limited liability company validly existing
and in good standing under the laws of the State of California
and is duly qualified to do business in any jurisdiction where so
required except where the failure to so qualify would have no
material adverse impact on the company;
(b) ANGEL BABIES has the corporate power to carry on its business
as now being conducted; and
(c) This Agreement has been duly authorized, executed and
delivered by the Majority Interest Holders of ANGEL BABIES.
(v) Certificates representing those interests of ANGEL BABIES to
be exchanged for ECONTENT Shares will be delivered, along with duly
executed powers transferring such certificates to ECONTENT.
(vi) all other items, the delivery of which is a condition
precedent to the obligations of ECONTENT, as set forth in Section 4.
(b) ECONTENT will deliver or cause to be delivered to ANGEL BABIES and
the ANGEL BABIES Interest Holders:
(i) a certificate from ECONTENT executed by the President or
Secretary of ECONTENT, to the effect that all representations and
warranties of ECONTENT made under this Agreement are true and correct
as of the Closing, the same as though originally given to ANGEL BABIES
on said date;
(ii) certified copies of resolutions by ECONTENT Board of
Directors authorizing this transaction; and an opinion of ECONTENT
counsel as described in Section 4 above;
(iii) certificates from the Delaware Secretary of State dated at
or about the Closing Date that ECONTENT is in good standing under the
laws of said State;
(iv) an opinion of counsel, limited as to any portion of the
opinion that applies to an aspect governed by the application of
Delaware law, dated as of the Closing to the effect that:
(1) ECONTENT is a corporation validly existing and in good
standing under the laws of the State of Delaware;
(2) This Agreement has been duly authorized executed and
delivered by ECONTENT and is a valid and binding obligation of
ECONTENT enforceable in accordance with its terms;
(3) ECONTENT, through its Board of Directors and its
shareholders, has taken all corporate action necessary for
performance under this Agreement;
(4) The documents executed and delivered to ANGEL BABIES and the
ANGEL BABIES Interest Holders hereunder are valid and binding in
accordance with their terms;
(5) The shares of ECONTENT Shares to be issued pursuant to
Section 1.1 hereof, when issued, will be duly and validly issued,
fully paid and non-assessable; and
(6) ECONTENT has the corporate power to execute the Agreement,
deliver the Shares and perform under this Agreement.
(vi) resignation of all officers and all but one of the
directors;
(vii) consent of Xxxxxxx Xxxxxxxx and Xxxx Xxxxxxx, the sole
directors and majority shareholders, designating Xxxxxx X. Xxxxxx,
Xxxxxxx Xxxxxxxx, and Xxxxxx Xxxxxxxx to fill the vacancies created by
the resignation of the former directors of ECONTENT.
(viii) all other items, the delivery of which is a condition
precedent to the obligations of ANGEL BABIES, as set forth in Section
4 hereof.
8.2 The Closing. The Closing shall take place at the time or place as may
be agreed upon by the parties hereto, but no later than February 28, 2003. At
the Closing, the parties shall provide each other with such documents as may be
necessary.
SECTION 9. MISCELLANEOUS
-------------------------
9. 1 Waivers. The waiver of a breach of this Agreement or the failure of
any party hereto to exercise any right under this Agreement shall in no way
constitute waiver as to future breach whether similar or dissimilar in nature or
as to the exercise of any further right under this Agreement.
9.2 Amendment. This Agreement may be amended or modified only by an
instrument of equal formality signed by the parties or the duly authorized
representatives of the respective parties.
9.3 Assignment. This Agreement is not assignable except by operation of
law.
9.4 Notice. Until otherwise specified in writing, the mailing addresses and
fax numbers of the parties of this Agreement shall be as follows:
To: ECONTENT:
Xxxxxxx Xxxxxxxx, President
ECONTENT Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
with copy to:
To: ANGEL BABIES:
Xxxxxx X. Xxxxxx,
Managing Member ANGEL BABIES LLC.
0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
with copy to:
Xxxxxxxxxxx Xxxxxxxxx
Xxxxxxxxx & Associates
00000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Any notice or statement given under this Agreement shall be deemed to have been
given if sent by registered mail addressed to the other party at the address
indicated above or at such other address which shall have been furnished in
writing to the addressor.
9.5 Governing Law. This Agreement shall be construed, and the legal
relations between the parties determined, in accordance with the laws of the
State of Delaware, thereby precluding any choice of law rules which may direct
the application of the laws of any other jurisdiction.
9.6 Publicity. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued by either
party hereto at any time from the signing hereof without advance approval in
writing of the form and substance by the other party.
9.7 Entire Agreement. This Agreement (including the Exhibits and Schedules
to be attached hereto) and the collateral agreements executed in connection with
the consummation of the transactions contemplated herein contain the entire
agreement among the parties with respect to the exchange and issuance of the
Shares and related transactions, and supersede all prior agreements, written or
oral, with respect thereto.
9.8 Headings. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
9.9 Severability of Provisions. The invalidity or unenforceability of
any term, phrase, clause, paragraph, restriction, covenant, agreement or
provision of this Agreement shall in no way affect the validity or enforcement
of any other provision or any part thereof.
9.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed, shall constitute an original copy
hereof, but all of which together shall consider but one and the same document.
9.11 Binding Effect. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
9.12 Tax Treatment. ECONTENT, ANGEL BABIES and the Majority Interest
Holders acknowledge that they each have been represented by their own tax
advisors in connection with this transaction; that none of them has made a
representation or warranty to any of the other parties with respect to the tax
treatment accorded this transaction, or the effect individually or corporately
on any party under the applicable tax laws, regulations, or interpretations; and
that no opinion of counsel or private revenue ruling has been obtained with
respect to the effects of this transaction under the Code.
9.13 Press Releases. The parties will mutually agree as to the wording and
timing of any informational releases concerning this transaction prior to and
through Closing.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
ECONTENT , INC.
a Delaware corporation
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------
Xxxxxxx Xxxxxxxx, President
ANGEL BABIES LLC
a California Limited Liability Company
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx, Managing Member
EXHIBIT "A"
LIST OF ANGEL BABIES INTEREST HOLDERS
========================================================================================================
Name of Interest Holder of Approximate Number of Shares of Number of Shares of ECONTENT
ANGEL BABIES Percentage of ANGEL BABIES Common Stock
Holding Held to be Issued
--------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxxx 33 1650 54862500
--------------------------------------------------------------------------------------------------------
Xxxx Xxx Xxxxxxxxx 26 1300 43225000
--------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxxx 15 750 24937500
--------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxxx 6 000 0000000
--------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx Xxxxxxx 4.5 000 0000000
--------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxx 2 100 3325000
--------------------------------------------------------------------------------------------------------
Xxxxxxx xxxxx, M.D. 2 100 3325000
--------------------------------------------------------------------------------------------------------
Xxxxx & Xxxxxxx Xxxxxxx 2 100 3325000
--------------------------------------------------------------------------------------------------------
Xxxxxxx & Xxxxxxxx Xxxxxxxx 2 100 3325000
--------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxx 1.5 75 2493750
--------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx 1 50 1662500
--------------------------------------------------------------------------------------------------------
Xxxx Xxxxxx 1 50 1662500
--------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxx 1 50 1662500
--------------------------------------------------------------------------------------------------------
The Nanula Family Trust 1 50 1662500
--------------------------------------------------------------------------------------------------------
Xxxx X. Xxxxxxxxx 1 50 1662500
--------------------------------------------------------------------------------------------------------
Levy Xxxxxxxxx Family Foundation 1 50 1662500
--------------------------------------------------------------------------------------------------------
All Interest Holders 100 5,000 166,700,000
========================================================================================================
EXHIBITS
SCHEDULES
ANGEL BABIES Schedules
2.3 Exceptions to free and clear ownership of Interests: NONE
2.9 ANGEL BABIES Consents.
2.10 ANGEL BABIES Financial Statements: Audited through December 31, 2001,
and unaudited through September 30, 2002;
2.15 Claims, Litigation, Government actions pending: See List attached: NONE
2.16 ANGEL BABIES Significant contracts:
2.18 ANGEL BABIES List of Real Estate Owned and List of Leases
2.20 ANGEL BABIES List of exceptions to the Tangible Assets on balance
sheets:
2.22 ANGEL BABIES List of undisclosed Liabilities: NONE
2.24 ANGEL BABIES Warrants, Options and preferred interests currently in
existence: NONE
ECONTENT Schedules
3.4 ECONTENT Financial Statements
3.5 List of material adverse changes
3.10 List of shareholders from Transfer Agent
3.16 Activities of ECONTENT in previous 3 years
