EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is made this 23rd day of
November 2004, by and among REWARD ENTERPRISES, INC., a Nevada corporation
("Reward"); CONSUMERS CHOICE FINANCIAL SERVICES, INC., a Nevada corporation
("CCF"); and the persons listed in Exhibit A-1 hereof who are the owners of
record of all ownership interest of CCF who execute and deliver the Agreement
("CCF Stockholders"), based on the following:
RECITALS
Reward wishes to acquire all the ownership interest stock of CCF in
exchange for the common stock of Reward in a transaction intended to qualify as
a tax-free exchange pursuant to section 368(a)(1)(B) of the Internal Revenue
Code of 1986, as amended. The parties intend for this Agreement to represent the
terms and conditions of such tax-free reorganization, which Agreement the
parties hereby adopt.
AGREEMENT
Based on the stated premises, which are incorporated herein by reference,
and for and in consideration of the mutual covenants and agreements hereinafter
set forth, the mutual benefits to the parties to be derived here from, and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, it is hereby agreed as follows:
ARTICLE I
EXCHANGE OF STOCK
1.01 Exchange of Interests. On the terms and subject to the conditions set
forth in this Agreement, on the Closing Date (as defined in Section 1.05
hereof), the CCF Stockholders shall assign, transfer, and deliver to Reward,
free and clear of all liens, pledges, encumbrances, charges, restrictions, or
claims of any kind, nature, or description, all of their respective ownership
interest in CCF (the "CCF Shares") owned by the CCF Stockholders which interests
shall represent one hundred percent (100%) of the ownership interest in CCF, and
Reward agrees to acquire such ownership interests on such date by issuing and
delivering in exchange therefore an aggregate of three hundred eighty million
(380,000,000) restricted shares of Reward common stock, par value $0.001 per
share, (the "Reward Common Stock"). The Reward Common Stock shall be issued pro
rata based on the percentage of ownership interest held and as set forth
opposite the CCF Stockholder's respective names in Exhibit A-1. The shares are
to be issued and held in escrow to be delivered at Closing when all conditions
are met.
1.02 Delivery of Certificates by CCF Stockholders. The transfer of CCF
Shares by the CCF Stockholders shall be effected by the delivery to Reward at
the Closing (as set forth in Section 1.05 hereof) of certificates representing
the CCF Shares endorsed in blank or accompanied by stock powers executed in
blank, with all signatures medallion guaranteed.
1.03 Operation as Wholly-Owned Subsidiary. After giving effect to the
transaction contemplated hereby, Reward will own one hundred percent (100%) of
the ownership interest of CCF and CCF will be a wholly-owned subsidiary of
Reward operating under the name CONSUMERS CHOICE FINANCIAL SERVICES, INC., or
such other name as Reward may determine.
1.04 Closing and Parties. The Closing contemplated hereby shall be held at
a mutually agreed upon time and place on or before February 23, 2005, or on
another date to be agreed to in writing by the parties (the "Closing Date"). The
Agreement may be closed at any time following approval by a majority of the
board of directors of Reward and a majority of the stockholders of CCF. The
Closing may be accomplished by wire, express mail, overnight courier, conference
telephone call or as otherwise agreed to by the respective parties or their duly
authorized representatives.
1.05 Closing Events.
(a) Reward Deliveries. Subject to fulfillment or waiver of the conditions
set forth in Article IV, Reward shall deliver to CCF at Closing all the
following:
(i) Copies of the resolutions of Reward's board of directors'
minutes or consents authorizing the execution and performance
of this Agreement and the contemplated transactions;
(ii) Certificates for 380,000,000 shares of Reward Common Stock in
the names of the CCF Stockholders or their respective
designees and in the amounts set forth in Exhibit A-1
delivered to escrow pending CCF Deliveries.
In addition to the above deliveries, Reward shall take all steps and actions as
CCF and the CCF Stockholders may reasonably request or as may otherwise be
reasonably necessary to consummate the transactions contemplated hereby.
(b) CCF Deliveries. Subject to fulfillment or waiver of the conditions set
forth in Article V, CCF and/or the CCF Stockholder's shall deliver to Reward at
Closing all the following:
(i) Copies of resolutions of the board of directors and of the
stockholders of CCF authorizing the execution and performance
of this Agreement and the contemplated transactions; and
(ii) The certificates representing the CCF Shares endorsed in blank
or accompanied by stock powers executed in blank, with all
signatures medallion guaranteed.
(iii) CCF must obtain a signed Letter of Intent to acquire or launch
operations of a commercial debt recovery business or CCF must
submit a completed bank charter application within ninety days
or the Reward Common Stock my be reduced or otherwise modified
by Reward.
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In addition to the above deliveries, CCF shall take all steps and actions as
Reward may reasonably request or as may otherwise be reasonably necessary to
consummate the transactions contemplated hereby.
1.06. Termination. This Agreement may be terminated by the board of
directors of either Reward or CCF at any time prior to the Closing Date if:
(a) 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 transactions contemplated by this Agreement and which, in the
reasonable judgment of such board of directors, made in good faith and based
upon the advice of its legal counsel, makes it inadvisable to proceed with the
transactions contemplated by this Agreement; or
(b) Any of the transactions contemplated hereby are disapproved by any
regulatory authority whose approval is required to consummate such transactions
or in the reasonable 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.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF REWARD
As an inducement to, and to obtain the reliance of CCF, Reward represents
and warrants as follows:
2.01 Organization. Reward is, and will be on the Closing Date, 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 and will be 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 are no other jurisdictions in which it is
not so qualified in which the character and location of the assets owned by it
or the nature of the material business transacted by it requires qualification,
except where failure to do so would not have a material adverse effect on its
business, operations, properties, assets or condition. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will not,
violate any provision of Reward's articles of incorporation or bylaws, or other
agreement to which it is a party or by which it is bound.
2.02 Approval of Agreement. Reward has full power, authority, and legal
right and has taken, or will take, all action required by law, its articles of
incorporation, bylaws, and otherwise to execute and deliver this Agreement and
to consummate the transactions herein contemplated. The board of directors of
Reward has authorized and approved the execution, delivery, and performance of
this Agreement and the transactions contemplated hereby; subject to compliance
with state and federal corporate and securities laws.
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2.03 Capitalization. The authorized capitalization of Reward consists of
500,000,000 shares of common stock, $0.001 par value, of which 4,412,200 shares
of common stock are issued and outstanding. There are no dividends or other
amounts due or payable with respect to any of the shares of capital stock of
Reward.
2.04 Outstanding Warrants and Options. Reward has no existing warrants or
options, calls, or commitments of any nature relating to the authorized and
unissued Reward Common Stock.
2.05 Litigation and Proceedings. There are no material actions, suits, or
administrative or other proceedings pending or, to the knowledge of Reward,
threatened by or against Reward or adversely affecting Reward 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.
Reward does not have any knowledge of any default on its part with respect to
any judgment, order, writ, injunction, decree, award, rule, or regulation of any
court, arbitrator, or governmental agency or instrumentality.
2.06 No Conflict With Other Instruments. The execution of this Agreement
and the consummation of the transactions contemplated by this Agreement 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 Reward is a party or to
which any of its properties or operations are subject.
2.07 Reward Schedules. Reward has delivered to CCF the following
schedules, which are collectively referred to as the "Reward Schedules" and
which consist of the following separate schedules dated as of the date of
execution of this Agreement:
(a) A schedule including copies of the articles of incorporation and
bylaws of Reward in effect as of the date of this Agreement;
(b) A schedule containing copies of resolutions adopted by the board of
directors of Reward approving this Agreement and the transactions herein
contemplated;
(c) A schedule setting forth any other information, together with any
required copies of documents, required to be disclosed in the Reward Schedules
by Sections 2.01 through 2.06.
Reward shall cause the Reward Schedules and the instruments delivered to CCF
hereunder to be updated after the date hereof up to and including a specified
date not more than three business days prior to the Closing Date. Such updated
Reward Schedules shall be delivered prior to and as a condition precedent to the
obligation of CCF to close.
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ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF CCF
As an inducement to, and to obtain the reliance of, Reward, CCF represents
and warrants as follows:
3.01 Organization. CCF is, and will be on the Closing Date, 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 and will be 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 are no other jurisdictions in which it is not so qualified
in which the character and location of the assets owned by it or the nature of
the material business transacted by it requires qualification, except where
failure to do so would not have a material adverse effect on its business,
operations, properties, assets or condition of CCF. The execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will not,
violate any provision of CCF's articles of incorporation or bylaws, or other
material agreement to which it is a party or by which it is bound.
3.02 Approval of Agreement. CCF has full power, authority, and legal right
and has taken, or will take, all action required by law, its articles of
incorporation, bylaws, or otherwise to execute and deliver this Agreement and to
consummate the transactions herein contemplated. The board of directors of CCF
have authorized and approved the execution, delivery, and performance of this
Agreement and the transactions contemplated hereby; subject to the approval of
the CCF Stockholders.
3.03 Capitalization. The authorized capitalization of CCF consists of
50,000,000 shares of capital stock, par value $0.001 of which as of the date
hereof 10,000,000 shares are issued and outstanding. All issued and outstanding
shares of CCF are legally issued, fully paid, and nonassessable and not issued
in violation of the preemptive or other right of any person. There are no
dividends or other amounts due or payable with respect to any of the shares of
capital stock of CCF.
3.04 Financial Statements.
(a) Included in Schedule 3.04 is the unaudited balance sheet of CCF as of
September 30, 2004. Following the Closing, CCF shall furnish audited financial
statements for the period from inception through December 31, 2004.
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(b) The audited financial statements delivered pursuant to Section 3.04(a)
have been prepared in accordance with United States generally accepted
accounting principles consistently applied throughout the periods involved and,
when required to be audited, have been audited by a certified public accountants
licensed to practice in the United States and before the Securities and Exchange
Commission. The audited financial statements have been presented in accordance
with the requirements of Regulation S-X promulgated by the SEC regarding the
form and content of and requirements for financial statements to be filed with
the SEC. The financial statements of CCF will present fairly, as of their
respective dates, the financial position of CCF.
3.05 Outstanding Warrants and Options. CCF has no issued warrants or
options, calls, or commitments of any nature relating to the authorized and
unissued CCF capital stock.
3.06 Litigation and Proceedings. There are no material actions, suits, or
proceedings pending or, to the knowledge of CCF, threatened by or against CCF or
adversely affecting CCF, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. CCF does not have any knowledge of any default on its
part with respect to any judgment, order, writ, injunction, decree, award, rule,
or regulation of any court, arbitrator, or governmental agency or
instrumentality.
3.07 No Conflict With Other Instruments. The execution of this Agreement
and the consummation of the transactions contemplated by this Agreement 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 CCF is a party or to which
any of its properties or operations are subject.
3.08 Governmental Authorizations. CCF has all licenses, franchises,
permits, and other governmental authorizations that are legally required to
enable it to conduct its business in all material respects as conducted on the
date of this Agreement. Except for compliance with applicable securities and
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
CCF of this Agreement and the consummation by CCF of the transactions
contemplated hereby.
3.09 Compliance With Laws and Regulations. CCF has complied with all
applicable statutes and regulations of any national, provincial, state, 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 CCF or except to the extent that noncompliance would not
result in the occurrence of any material liability for CCF.
3.10 CCF Schedules. CCF has delivered to Reward the following schedules,
which are collectively referred to as the "CCF Schedules" and which consist of
the following separate schedules dated as of the date of execution of this
Agreement:
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(a) A schedule including copies of the articles of incorporation and
bylaws of CCF and all amendments thereto in effect as of the date of this
Agreement;
(b) A schedule containing copies of resolutions adopted by the board of
directors of CCF approving this Agreement and the transactions herein
contemplated;
(c) A schedule setting forth the financial statements required pursuant to
Section 3.04 (a) hereof; and
(d) A schedule setting forth any other information, together with any
required copies of documents, required to be disclosed in the CCF Schedules by
Sections 3.01 through 3.09.
CCF shall cause the CCF Schedules and the instruments delivered to Reward
hereunder to be updated after the date hereof up to and including a specified
date not more than three business days prior to the Closing Date. Such updated
CCF Schedules shall be delivered prior to and as a condition precedent to the
obligation of Reward to close.
ARTICLE IV
SPECIAL COVENANTS
4.01 New Board of Directors and Officers. Upon closing of the transactions
contemplated by this Agreement, the current board of directors and officers of
Reward shall resign and in their place nominees of CCF shall be appointed,
subject to the approval of the suitability and qualifications of such nominees.
4.02 The Acquisition of Reward Common Stock. Reward and CCF understand and
agree that the consummation of this Agreement including the issuance of the
Reward Common Stock to CCF Stockholders in exchange for the CCF Shares as
contemplated hereby, constitutes the offer and sale of securities under the
Securities Act and applicable state statutes. Reward and CCF agree that such
transactions shall be consummated in reliance on exemptions from the
registration and prospectus delivery requirements of such statutes which depend,
among other items, on the circumstances under which such securities are
acquired. The certificates representing the Reward Common Stock shall be marked
with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND ARE "RESTRICTED SECURITIES" WITHIN THE MEANING
OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED
WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OR OTHER COMPLIANCE UNDER THE SECURITIES ACT.
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In connection with the transaction contemplated by this Agreement, Reward and
CCF shall each file, with the assistance of the other and their respective legal
counsel, such notices, applications, reports, or other instruments as may be
deemed by them to be necessary or appropriate in an effort to document reliance
on such exemptions, and the appropriate regulatory authority in the states where
the CCF Stockholders reside unless an exemption requiring no filing is available
in such jurisdictions, all to the extent and in the manner as may be deemed by
such parties to be appropriate.
4.03 Securities Filings. Reward shall be responsible for the preparation
of any required filing with the Securities and Exchange Commission and CCF will
be responsible for any and all filings in any jurisdiction where its
stockholders reside which would require a filing with a governmental agency as a
result of the transactions contemplated in this Agreement.
ARTICLE V
MISCELLANEOUS
The covenants set forth in this section shall survive the Closing Date and
the consummation of the transactions herein contemplated.
5.01 No Representation Regarding Tax Treatment. No representation or
warranty is being made by any party to any other regarding the treatment of this
transaction for national, provincial, federal or state income taxation. Each
party has relied exclusively on its own legal, accounting, and other tax adviser
regarding the treatment of this transaction for federal and state income taxes
and on no representation, warranty, or assurance from any other party or such
other party's legal, accounting, or other adviser.
5.02 Governing Law. This Agreement shall be governed by, enforced and
construed under and in accordance with the laws of the State of Nevada.
5.03 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if personally delivered, if sent by
facsimile or telecopy transmission or other electronic communication confirmed
by registered or certified mail, postage prepaid, or if sent by prepaid
overnight courier to the address of the respective parties 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 or sent by facsimile or telecopy
transmission or other electronic communication, or one day after the date so
sent by overnight courier.
5.04 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 nonbreaching
party or parties for all costs, including reasonable attorneys' fees, incurred
in connection therewith and in enforcing or collecting any judgment rendered
therein.
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5.05 Schedules; Knowledge. Whenever in any section of this Agreement
reference is made to information set forth in the schedules provided by Reward
or CCF such reference is to information specifically set forth in such schedules
and clearly marked to identify the section of this Agreement to which the
information relates. Whenever any representation is made to the "knowledge" of
any party, it shall be deemed to be a representation that no officer or director
of such party, after reasonable investigation, has any knowledge of such
matters.
5.06 Entire Agreement. This Agreement represents the entire agreement
between the parties relating to the subject matter hereof. All previous
agreements between the parties, whether written or oral, have been merged into
this Agreement. This Agreement alone fully and completely expresses the
agreement of the parties relating to the subject matter hereof. There are no
other courses of dealing, understandings, agreements, representations, or
warranties, written or oral, except as set forth herein.
5.07 Survival; Termination. The representations, warranties, and covenants
of the respective parties shall survive the Closing Date and the consummation of
the transactions herein contemplated for a period of six months from the Closing
Date, unless otherwise provided herein.
5.08 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.
5.09 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 such remedies may be enforced concurrently, 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 thereof may be extended by a writing signed
by the party or parties for whose benefit the provision is intended.
5.10 Acceptance by Fax. This Agreement shall be accepted, effective and
binding, for all purposes, when the parties shall have signed and transmitted to
each other, by telecopier or otherwise, copies of the signature pages hereto.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
as of the date first above written.
REWARD ENTERPRISES, INC. CONSUMERS CHOICE FINANCIAL
SERVICES, INC.
a Nevada corporation a Nevada corporation
By: /s/Xxxx Xxxxxxxxxx By: /s/Xxxx Xxxxxx
------------------------------- ----------------------------------
Its Duly Authorized Officer Its Duly Authorized Officer
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EXHIBIT A-1
CONSUMERS CHOICE FINANCIAL
LIST OF STOCKHOLDERS
Number of Shares/ Number of Reward
Percent of Ownership Shares to be Received
Name of Shareholder of CCF in Exchange
-----------
York Ventures
Southwest, LLC 5,000,000/50% 190,000,000
ATM Alliance
Trust, LLC 5,000,000/50% 190,000,000
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