SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the
"Agreement") is entered into and effective as of August 31, 2007, by and among
PAY BY THE DAY HOLDINGS, INC., a Nevada corporation (“PBDH”), and PAY BY THE DAY
COMPANY INC., an Ontario corporation (“PBDI”), and the shareholders of PBDI
incorporated herein (collectively the “Shareholders”).
1.
RECITALS
This Agreement is entered into with
reference to and in contemplation of the following facts, circumstances and
representations:
1.1 PBDH desires to
issue a total of 200,000 shares of its common stock (the "Buyer Shares") to the
PBDI in exchange for the PBDI Shares.
1.2 PBDI
and the Shareholders desire to exchange the PBDI Shares for the Buyer Shares in
accordance with the terms and conditions of this Agreement.
1.3 PBDH,
PBDI, and the Shareholders desire that this transaction be
consummated.
1.4 The
Shareholders desire to exchange the PBDI shares for the Buyer Shares in
accordance with the terms of the Agreement.
2. EXCHANGE
AND ISSUANCE OF SHARES
2.1 Exchange
of Buyer Shares: PBDH shall exchange and deliver to the PBDI and the
Shareholders a total of 200,000 restricted shares of the common stock of
PBDH.
2.2 Exchange
of PBDI Shares: At the Closing, the PBDI and the Shareholders shall
exchange and deliver to PBDH a total of 1,000 shares of the common stock of PBDI
which represents one hundred percent (100%) of the issued and outstanding shares
of PBDI. PBDI will become a wholly owned subsidiary of
PBDH.
2.3
Nature of Buyer Shares: The Buyer Shares shall be issued with a
restrictive legend in accordance with the rules and regulations of the
Securities and Exchange Commission.
2.4 Private Sale
Acknowledgment: The parties acknowledge and agree that the exchange
and issuance of the Buyer Shares is being undertaken as a private sale pursuant
to Section 4(2) of the Securities Act of 1933, as amended and Nevada Statutes,
and is not being transacted via a broker-dealer and/or in the public market
place.
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3. REPRESENTATIONS
AND WARRANTIES OF BUYER.
PBDH represents and warrants
to PBDI and the Shareholders as follows:
3.1
Organization: PBDH is a corporation duly incorporated and validly existing under
the laws of the State of Nevada and is in good standing with respect to all of
its regulatory filings.
3.2 Capitalization: The
authorized capital of PBDH consists of 100,000,000 common shares with a par
value $.001, of which 50,000 common shares have been issued and are currently
outstanding.
3.3 Books
and Records: All material transactions of PBDH have been promptly and
properly recorded or filed in or with its books and records and the Minute Book
of PBDH contains records of all meetings and proceedings of the shareholders and
directors thereof.
3.4 Legal
Compliance: To the best of its knowledge, PBDH is not in breach of
any laws, ordinances, statutes, regulations, by-laws, orders or decrees to which
PBDH is subject or which apply to it or any of its assets.
3.5 Adverse
Financial Events: PBDH has not experienced nor is it aware of any occurrence or
event which has had or might reasonably be expected to have a material adverse
effect on its financial condition.
3.6 Disputes,
Claims and Investigations: There are no disputes, claims, actions,
suits, judgments, investigations or proceedings outstanding or pending or to the
knowledge of PBDH threatened against or affecting PBDH at law or in equity or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau or agency.
3.7 Employee
Liabilities: PBDH has no known liability to former employees or any liability to
any governmental authorities with respect to current or former
employees.
3.8 No Conflicts or
Agreement Violations: The execution, delivery and performance of this
Agreement will not conflict with or be in violation of the articles or by-laws
of PBDH or of any agreement to which PBDH is a party and will not give any
person or company a right to terminate or cancel any agreement or right enjoyed
by PBDH and will not result in the creation or imposition of any lien,
encumbrance or restriction of any nature whatsoever in favor of a third party
upon or against the assets of PBDH.
3.9 Validly Issued and
Authorized Shares: That the PBDH Shares will be validly authorized
and issued by PBDH, they will be fully paid and non-assessable and they will be
issued in full compliance with all federal and state securities
laws.
3.10 Corporate
Authority: The officers or representatives of PBDH executing this
Agreement represent that they have been authorized to execute this Agreement
pursuant to a resolution of the Board of Directors and shareholders of
PBDH.
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4.
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REPRESENTATIONS
OF PBDI AND THE SHAREHOLDERS
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PBDI hereby represents and warrant as
follows:
4.1 Share
Ownership: That the SHAREHOLDERS are the owners, beneficially and of
record, of the PDBI Shares and said shares are free and clear of all liens,
encumbrances, claims, charges and restrictions.
4.2 Transferability
of PBDI Shares: That SHAREHOLDERS have full power to transfer the
PBDI Shares to PBDH without obtaining the consent or approval of any other
person or governmental authority.
4.3 Validly
Issued and Authorized Shares: That the PBDI Shares are validly
authorized and issued, fully paid, and nonassessable, and the PBDI Shares have
been so issued in full compliance with all securities laws of Ontario
Canada.
4.4 Organization:
PBDI is a corporation duly incorporated and validly existing under the laws
of the Province Ontario and is in good standing with respect to all
of its regulatory filings.
4.5 Capitalization: The
authorized capital of PBDI consists of ___ common shares, par value US$0._ of
which 1000 common shares are issued and outstanding as fully paid and
non-assessable shares.
4.6 Books
and Records: All material transactions of PBDI have been promptly and
properly recorded or filed in or with its books and records and the Minute Book
of PBDI contains records of all meetings and proceedings of the shareholders and
directors thereof.
4.7 Legal
Compliance: PBDI is not in breach of any laws, ordinances, statutes,
regulations, by-laws, orders or decrees to which PBDI is subject or which apply
to it or any of its assets.
4.8 Adverse
Financial Events: PBDI has not experienced nor is it aware of any occurrence or
event which has had or might reasonably be expected to have a material adverse
effect on its financial condition.
4.9 Disputes,
Claims and Investigations: There are no disputes, claims, actions,
suits, judgments, investigations or proceedings outstanding or pending or to the
knowledge of PBDI threatened against or affecting PBDI at law or in equity or
before or by any federal, municipal or other governmental department,
commission, board, bureau or agency.
4.10 Employee
Liabilities: PBDI has no liability to former employees or any liability to any
government authorities with respect to current or former employees.
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4.11 No
Conflicts or Agreement Violations: The execution, delivery and
performance of this Agreement will not conflict with or be in violation of the
Articles of Incorporation of PBDI or of any agreement to which PBDI is a party
and will not give any person or company a right to terminate or cancel any
agreement or right enjoyed by PBDI and will not result in the creation or
imposition of any lien, encumbrance or restriction of any nature whatsoever in
favor of a third party upon or against the assets of PBDI.
4.12 No
Liens: That PBDI has not received a notice of any assignment, lien,
encumbrance, claim or charge against the PBDI Shares.
4.13 Corporate
Authority: The officers or representatives of PBDI executing this
Agreement represent that they have been authorized to execute this Agreement
pursuant to a resolution of the Boards of Directors and shareholders of
PBDI.
4.14 Business
of PBDI: PBDI is in the business of financing of computers and consumer
electronics and owns the assets and intellectual property listed in Schedule C
attached hereto free of all encumbrances. The assets listed in Schedule C are
all the assets used in the operation of PBDI’s business.
4.15 Operation:
Until the Closing PBDI will continue to operate its business in the normal
course and will not enter any material contracts or incur material obligations
without the written consent of the PBDH.
5. CLOSING,
ESCROW HOLDER AND CONDITIONS TO CLOSING
5.1 Exchange
Closing: The closing of the share exchange as contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxx &
Xxxxxx, LLP, 000 Xxxxx 0 Xxxxx, Xxxxx 000 Xxxxxxxxx, XX 00000 or such other
place as agreed by the parties at such time and place as may be agreed among by
the parties, but in no event later than September 30, 2007.
5.2 Closing
Conditions: Prior to the Closing the following will be
required:
5.2.1. Delivery of
PBDI Shares: PBDI shall deliver to PBDH the certificate or
certificates representing the PBDI Shares, duly endorsed for transfer
accompanied by a duly executed assignment of the PBDI Shares to PBDH. The PBDI
will deliver the PBDI Shares in escrow to Xxxxxx & Jaclin, LLP, Attention:
Xxxxx Xxxxxx, who will be instructed to hold the PBDI Shares in escrow on the
terms set out in this Agreement pending Closing. If Closing does not occur as
set out herein, Xxxxxx & Jaclin, LLP are instructed and authorized to return
the PBDI Shares to PBDI.
5.2.2. Delivery of
Buyer Shares: PBDH shall deliver to PBDI certificates representing the Buyer
Shares registered in the names of Xxxxxx Xxxxxxxx as set forth in
Schedule “A” to Xxxxxx & Jaclin, LLP who will on Closing deliver the Buyer
Shares to a representative of PBDI. If Closing does not occur as set
out herein, Xxxxxx & Xxxxxx, LLP are instructed and authorized to return the
Buyer Shares to the PBDH.
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5.2.3. Requisite
Corporate Resolutions: Each party shall deliver to the other
certified copies of resolutions from their respective Boards of Directors and
shareholders authorizing the subject transaction.
5.2.4. Satisfactory
Completion of Due Diligence: PBDI shall deliver to the other written
notice that it has completed its due diligence investigation and is satisfied
with the results of such investigation.
5.2.5. Audited
financial statements of PBDI in US GAAP for the 2 years to the end of PBDI’s
fiscal year end and unaudited statements for any quarters ending after the
fiscal year end but prior to the Closing Date. PBDI agrees to provide these
within 45 days of execution of this Agreement.
5.2.6. An 8-K for
filing with the SEC with registration statement level disclosure about the
business and management of PBDI and the acquisition of PBDI by the PBDH, as
prepared by the PBDH. PBDI will provide full disclosure and assistance as
requested by the PBDH and its advisors for the purpose of preparing such
filing.
5.3 Close
of Transaction: The subject transaction shall "close" upon the
satisfaction of the above conditions.
5.4 Notices:
All notices given pursuant to this Agreement must be in writing and may be given
by (1) personal delivery, or (2) registered or certified mail, return receipt
requested, or (3) via facsimile transmission to the parties as set forth
below. Any party hereto may by notice so given change its address for
any future notices:
REPRESENTATIONS AND
WARRANTIES OF SHAREHOLDERS ALONE
The Shareholders alone further
represent and warrant to Buyer as follows with respect to the Buyer
Shares:
5.5 Financially
Responsible: That they are financially responsible, able to meet
their obligations and acknowledge that this investment will be
speculative.
5.6 Investment
Experience: That they have had experience in the business of
investments in one or more of the following: (i) investment experience with
securities such as stocks and bonds; (ii) ownership of interests in
partnerships, new ventures and start-up companies; (iii) experience in business
and financial dealings; and that they can protect their own interests in an
investment of this nature and they do not have an "Investor Representative", as
that term is defined in Regulation D of the Securities Act of 1933 and do not
need such an Investor Representative.
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5.7 Investment
Risk: That they are capable of bearing the high degree of economic
risks and burdens of this investment, including but not limited to the
possibility of complete loss of all their investment capital and the lack of a
liquid market, such that they may not be able to liquidate readily the
investment whenever desired or at the then current asking price.
5.8 Access
to Information: That they have had access to the information
regarding the financial condition of Buyer and they were able to request copies
of such information, ask questions of and receive answers from Buyer regarding
such information and any other information their desires concerning the Buyer
Shares, and all such questions have been answered to their full
satisfaction.
5.9 Private
Transaction: That at no time was were they presented with or
solicited by any leaflet, public promotional meeting, circular, newspaper or
magazine article, radio or television advertisement or any other form of general
advertising.
5.10 Investment
Intent: The Buyer Shares are not being purchased with a view to or
for the resale or distribution thereof and they have no present plans to enter
into any contract, undertaking, agreement or arrangement for such resale or
distribution.
5.11 Due
Diligence: That the Shareholders shall have completed a due diligence
review of the affairs of Buyer and are satisfied with the results of that
review.
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If
to PBDH:
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Xxxxxx
& Jaclin, LLP
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Att:
Xxxxx X. Xxxxxx, Esq.
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000
Xxxxx 0, Xxxxx, Xxxxx 000
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Xxxxxxxxx,
XX 00000
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With
a copy to:
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Xxxxx
X. Xxxxxx, Esq.
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Xxxxxx
& Xxxxxx, LLP
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000
Xxxxx 0 Xxxxx, Xxxxx 000
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Xxxxxxxxx,
XX 00000
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Attention:
Xxxxx Xxxxxx
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Tel:
(000) 000-0000
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Fax:
(000) 000-0000
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If
to PBDI or:
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000
Xxxxxx Xxxxx, 0xx
Xx Xxxx
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XXXXXXXXXXXX
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Xxxxxxx,
XX X0X 0X0
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6. COOPERATION,
ARBITRATION, INTERPRETATION, MODIFICATION AND ATTORNEY FEES
6.1 Cooperation
of Parties: The parties further agree that they will do all things
necessary to accomplish and facilitate the purpose of this Agreement and that
they will sign and execute any and all documents necessary to bring about and
perfect the purposes of this Agreement.
6.2 Interpretation
of Agreement: The parties agree that should any provision of this
Agreement be found to be ambiguous in any way, such ambiguity shall not be
resolved by construing such provisions or any part of or the entire Agreement in
favor of or against any party herein, but rather by construing the terms of this
Agreement fairly and reasonably in accordance with their generally accepted
meaning.
6.3 Modification
of Agreement: This Agreement may be amended or modified in any way at
any time by an instrument in writing stating the manner in which it is amended
or modified and signed by each of the parties hereto. Any such
writing amending or modifying this Agreement shall be attached to and kept with
this Agreement.
6.4 Attorney
Fees: If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
the Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be
entitled.
6.5 Entire
Agreement: This Agreement constitutes the entire Agreement and
understanding of the parties hereto with respect to the matters herein set
forth, and all prior negotiations, writings and understandings relating to the
subject matter of this Agreement are merged herein and are superseded and
canceled by this Agreement.
6.6 Counterparts: This
Agreement may be signed in one or more counterparts.
6.7 Facsimile
Transmission Signatures: A signature received pursuant to a facsimile
transmission shall be sufficient to bind a party to this Agreement.
6.8 Accounting/Legal
Fees: PBDH hereby agrees to pay for any and all reasonable and necessary
accounting and legal fees, including any audit required to comply with the
filing requirements of the Securities and Exchange Commission.
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7.
CONFIDENTIALITY AND STANDSTILL AGREEMENT
7.1 Confidentiality: PBDI
acknowledges that the PBDH is a public company and has an obligation to disclose
all material information about its affairs. The Shareholders agree that they
will not trade in the securities of the PBDH while in possession of, nor will
they inform others of (except on a need to know basis), any non-disclosed
material information about the PBDH.
7.2 Standstill: PBDI agrees that they
will not for a period of 90 days after execution hereof, negotiate with any
party other than the PBDH as to the disposition or development of the Business.
The parties may extend the term of this clause by mutual
agreement.
IN
WITNESS WHEREOF, this Agreement is executed by the parties as of the date
first-above written.
PBDH:
PAY BY
THE DAY HOLDINGS, INC,
A Nevada
corporation
By /s/
Its:
President
PAY BY
THE DAY COMPANY INC.,
An
Ontario corporation
By: /s/
XXXXXX
XXXXXXXX
Its:
President
SHAREHOLDERS
By: /s/
XXXXXX
XXXXXXXX
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SCHEDULE
“A”
Allocation
of Shares
Total
of ____ shares to be issued as follows:
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Schedule
B
Financial
statement of PBDH as of __, 2007
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Schedule
C
Assets
and Intellectual Property of PBDI
As
of __, 2007
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