SHARE EXCHANGE AGREEMENT
------------------------
THIS SHARE EXCHANGE AGREEMENT (the "Agreement" ) is dated as of August 8,
1996 by and between Foreclosed Realty Exchange, Inc., their heirs,
designees, or assigns (the "Company") and Luk Xxxx Xxxxx,(the
"Shareholder").
RECITALS
--------
WHEREAS, As of the Closing, Shareholder owns 100% of the issued and
outstanding stock of Physical Beauty & Fitness Holdings Limited ("Physical
Limited"), and;
WHEREAS, the Company is a U.S. public company, currently listed on the
NASD Bulletin Board, and;
WHEREAS, the Company desires to acquire one share (100%) of Physical
Limited (the "Physical Shares") and Shareholder desires to exchange all of
the Physical Shares for new shares in the Company.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in reliance upon the representations and warranties
hereinafter set forth, the parties agree as follows:
I. EXCHANGE OF THE SHARES AND CONSIDERATION
1.01. SHARES BEING EXCHANGED. Effective at the closing of this Agreement
(the "Closing"), and subject to the terms and conditions of this Agreement,
Shareholder shall assign, transfer and deliver to the Company or it's
assigns all of the Physical Shares.
1.02. CONSIDERATION. Subject to the terms and conditions of this
Agreement, and in consideration of the assignment and delivery of the
Physical Shares to the Company, the Company shall at Closing issue to
Shareholder and/or its designee(s), and Shareholder and/or its designee(s)
shall purchase, acquire and accept from the Company 8,000,000 shares in the
Company equal to 80% of all issued and outstanding stock.
1
1.03. CLOSING. The Closing of the transaction contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxx X. Xxxxx
or other such place as mutually agreed upon, on or before October 15, 1996.
1.04. METHOD OF CLOSING. The method of closing shall require the parties
to satisfy the conditions specified in Section 6.
II. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER AND PHYSICAL LIMITED.
Shareholder and Physical Limited represent and warrant to the Company as
follows, as of the Closing:
2.01. ORGANIZATION. Physical Limited is a corporation duly organized,
validly existing and in good standing under the laws of the British Virgin
Islands. Physical Limited has the corporate power and authority to carry on
its business as presently conducted; to enter into this agreement; and
Physical Limited is qualified to do business in all jurisdictions where the
failure to be so qualified would have a material adverse effect on its
business.
2.02. CAPITALIZATION.
2.02(a) All of the issued and outstanding shares of Physical Limited
are duly authorized, validly issued, issued for value, fully paid and non
assessable.
2.02(b) There are no outstanding options, warrants, or any other rights
to purchase any securities of Physical Limited.
2.03. FINANCIAL STATEMENTS. All financial information provided by
Shareholder is accurate and not misleading, to the best of Shareholder's
knowledge. Shareholder represents that Physical Limited's after tax net
income for the 15 month period ending 12/31/95, will be not less than US$2.5
million according to HK GAAP. In the event that the audited earnings fall
below the represented amount by more than 5%, the number of shares received
by Shareholder will be reduced proportionately to provide the minority
shareholders with the same Earnings per Share that would have existed had
the earnings met the minimum level stated above.
2
2.04. LITIGATION. There is no litigation, proceeding or investigation
pending or threatened against Physical Limited affecting any of its
properties, subsidiaries, or assets against or any officer, director, or
stockholder or consultant that might result, either in any case or in the
aggregate, in any material adverse change in the business, operations,
affairs or condition of Physical Limited or its properties or assets, or
that might call into question the validity of this Agreement, or any action
taken or to be taken pursuant hereto.
2.05. TITLE TO ASSETS. Physical Limited has good and marketable title to
all of its assets and properties now carried on its books. The assets of
Physical Limited consist solely the joint venture interests names in the
recitals.
2.06. NO CONFLICT. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with
or result in a breach of any term or provision of, or constitute a default
under, the Memorandum and Articles of Association of Physical Limited or any
agreement, contract or instrument to which Physical Limited is a party or by
which it or any of its assets are bound.
2.07. AUTHORITY. Shareholder have full power and authority to enter into
this Agreement and to carry out the transactions contemplated herein. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, have been duly authorized and approved by
Shareholder and no other corporate proceedings on the part of Physical
Limited and/or Shareholder are necessary to authorize this Agreement and the
transactions contemplated hereby.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Shareholder as follows, as
of the Closing:
3.01. ORGANIZATION.
3.01(a) The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, has the
corporate power and authority to carry on its business as presently
conducted and is qualified to do business in all jurisdictions where the
failure to be so qualified would have a material adverse effect on the
business of the Company.
3.01(b) The copies of the Certificate of Incorporation of the Company,
as certified by the Secretary of State of Delaware and the Bylaws of the
Company heretofore furnished to Shareholder are complete and correct copies
of the Articles of Incorporation and the Bylaws of the Company as amended
and in effect on the date hereof. All minutes of meetings and actions in
writing without a meeting of the Board of Directors and shareholders of the
Company are contained in the minute book of the Company and no minutes or
actions in writing without a meeting have been excluded in such minute book.
3.02. CAPITALIZATION OF THE COMPANY. The authorized capital stock of the
Company consists of One Hundred Million Shares (100,000,000) of Common
Stock, par value $0.001 per share, of which ten Million Shares (10,000,000)
shall be issued and outstanding at the Closing, after reorganization
issuances, reverse splits, consultant issuances and Consideration. All
outstanding shares are duly authorized, validly issued, fully paid and non-
assessable, and at the Closing the Consideration will be duly authorized,
validly issued, fully paid and non-assessable. Except for such outstanding
Shares, there are no outstanding shares of capital stock or other securities
or other equity interests of the Company or rights of any kind to acquire
such stock, other securities or other equity interests.
3.03. AUTHORITY. The Company has full power and authority to enter into
this Agreement and to carry out the transactions contemplated herein. The
execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, and the issuance of the Company Shares in
accordance with the terms hereof, have been duly authorized and approved by
the Board of Directors of the Company and no other corporate proceedings on
the part of Company are necessary to authorize this Agreement, the
transactions contemplated hereby and the issuance of the Consideration in
accordance with the terms hereof.
3.04. NO UNDISCLOSED LIABILITIES. The Company is not subject to any
material undisclosed liability or obligation of any nature, whether
absolute, accrued, contingent, or otherwise and whether due or to become
due. In addition, at the closing, the Company will have no liabilities,
existing or contingent.
4
3.05. LITIGATION. There is no litigation, proceeding or investigation
pending or to the knowledge of the Company, threatened against the Company
affecting any of its properties or assets, or, to the knowledge of the
Company, against any officer, director, or stockholder of the Company that
might result, either in any case or in the aggregate, in any material
adverse change in the business, operations, affairs or condition of the
Company or any of its properties or assets, or that might call into question
the validity of this Agreement, or any action taken or to be taken pursuant
hereto.
3.06. TITLE TO ASSETS. The Company has good and marketable title to all
of its assets and properties now carried on its books including those
reflected in the balance sheet contained in the Company's financial
statements, free and clear of all liens, claims, charges, security interests
or other encumbrances, except as described in the balance sheet included in
the Company's financial statements or on any Exhibits attached hereto.
3.07. CONTRACTS AND UNDERTAKINGS. The Company (including any of its
subsidiaries) has no contracts, agreements, leases, licenses, arrangements,
commitments and other undertakings (collectively "Contracts") to which the
Company or any such subsidiary is a party or by which it or its property is
bound that have not been disclosed to Shareholder. The Company is not in
material default, or alleged to be in material default, under any Contract
and, to the knowledge of the Company, no other party to any Contract to
which the Company is a party is in default thereunder nor, to the knowledge
of the Company, does there exist any condition or event which, after notice
or lapse of time or both, would constitute a default by any party to any
such Contract.
3.08. NO CONFLICT. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with
or result in a breach of any term or provision of, or constitute a default
under, the Certificate of Incorporation or Bylaws of the Company, or any
agreement, contract or instrument to which the Company is a party or by
which it or any of its assets are bound.
5
3.9. ACCURACY. Neither this Agreement nor any other agreement, document,
certificate or written or oral statement furnished to Shareholder by or on
behalf of the Company in connection with the transactions contemplated
hereby, contains any untrue statement of a material fact or when taken as a
whole omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
3.10. FINANCIAL STATEMENTS. The financial statements of the Company (the
"Financial Statements") set forth in its public filings (a) were prepared
in accordance with the books and records of the Company; (b) were prepared
in accordance with generally accepted accounting principles consistently
applied; (c) are accurate and fairly present the Company's financial
condition and the results of its operations as of the relevant dates thereof
and for the periods covered thereby; (d) contain and reflect all necessary
adjustments and accruals for a fair presentation of the Company's financial
condition and the results of its operations for the periods covered by said
financial statements; and (e) contain and reflect adequate provisions for
all reasonably anticipated liabilities with respect to the period(s) then
ended.
3.11. ABSENCE OF MATERIAL CHANGES. Since June 30, 1996, except as
described in any Exhibit hereto or as required or permitted under this
Agreement, there has not been:
3.11(a) any material change in the condition (financial or otherwise)
of the properties, assets, liabilities or business of Company, except
changes in the ordinary course of business which, individually and in the
aggregate, have not been materially adverse.
3.11(b) any undisclosed redemption, purchase or other acquisition of
any shares of the capital stock of Company, or any issuance of any shares of
capital stock or the granting, issuance or exercise of any rights, warrants,
options or commitments by the Company relating to their authorized or issued
capital stock.
3.12. COMPLIANCE WITH LAW. The Company has in all material respects
complied with and it is now in all material respects in compliance with, all
Federal and State laws applicable to the Company, including that the Company
is current in its SEC filings. The Consideration will be issued in full
compliance with all state and federal securities laws.
6
IV. COVENANTS AND AGREEMENTS OF THE PARTIES EFFECTIVE PRIOR
TO CLOSING
4.01. CORPORATE EXAMINATIONS AND INVESTIGATIONS Prior to the Closing,
Shareholder shall be entitled, through its employees and representatives, to
make such investigations and examinations of the books, records and
financial condition of the Company as Shareholder may request. In order
that Shareholder may have the full opportunity to do so, the Company shall
furnish Shareholder and its representatives during such period with all such
information concerning the affairs of the Company as Shareholder or its
representatives may reasonably request and cause the Company's officers,
employees, consultants, agents, accountants and attorneys to cooperate fully
with Shareholder or its representatives in connection with such review and
examination and to make full disclosure of all information and documents
requested by Shareholder and/or its representatives. Any such
investigations and examinations shall be conducted at reasonable times and
under reasonable circumstances, it being agreed that any examination of
original documents will be at the Company's premises, with copies thereof to
be provided to Shareholder and/or its representatives upon request.
4.02. COOPERATION; CONSENTS. Prior to the Closing Date, each party shall
cooperate with the other parties to the end that the parties shall (i) in a
timely manner make all necessary filings with, and conduct negotiations
with, all authorities and other persons the consent or approval of which, or
a license or permit from which is required for the consummation of the
transactions contemplated by this Agreement and (ii) provide to each other
party such information as the other party may reasonably request in order to
enable it to prepare such filings and to conduct such negotiations.
4.03. CONDUCT OF BUSINESS. From the date hereof through the Closing, the
Company shall (i) conduct its business in the ordinary course and in such a
manner so that the representations and warranties contained herein shall
continue to be true and correct as of the Closing as if made at and as of
the Closing and (ii) not enter into any transaction not envisioned or
required by this transaction, or incur any liability, without first
obtaining the written consent of Shareholder. Without the prior written
consent of Shareholder, except as expressly set forth herein, the Company
shall not undertake or fail to undertake any action if such action or
failure would render any of said warranties and representations untrue as of
the Closing.
7
4.04. NOTICE OF DEFAULT. From the date hereof through the Closing, each
party hereto shall give to the other parties prompt written notice of the
occurrence or existence of any event, condition or circumstance occurring
which would constitute a violation or breach of this Agreement by such party
or which would render inaccurate in any material respect any of such party's
representations or warranties contained herein.
V. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
All representations, warranties and covenants of the Company and
Shareholder contained herein shall survive the closing.
VI. CONDITIONS TO CLOSING
6.01. CONDITIONS TO OBLIGATION OF SHAREHOLDER The obligations of
Shareholder under this Agreement shall be subject to each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES OF COMPANY TO BE TRUE. The
representations and warranties of Company herein contained shall be true in
all material respects at the Closing with the same effect as though made at
such time. The Company shall have performed in all material respects all
obligations and complied in all material respects, to its actual knowledge,
with all covenants and conditions required by this Agreement to be performed
or complied with by it at or prior to the Closing. Shareholder is not
required to close if the Company has any liability in excess of Two Thousand
Dollars.
(b) NO LEGAL PROCEEDINGS. No injunction or restraining order shall be
in effect prohibiting this Agreement, and no action or proceeding shall have
been instituted and, at what would otherwise have been the Closing, remain
pending before the court to restrain or prohibit the transactions
contemplated by this Agreement.
(c) STATUTORY REQUIREMENTS. All statutory requirements for the valid
consummation by the Company of the transactions contemplated by this
Agreement shall have been fulfilled. All authorizations, consents and
approvals of all governments and other persons required to be obtained in
order to permit consummation by the Company of the transactions contemplated
by this Agreement shall have been obtained.
8
(d) DIRECTOR RESIGNATION. Prior to the Closing, all of the directors
and officers of the Company shall have submitted their resignations to
Company to be held in escrow and to become effective at the Closing.
(e) NO LIABILITIES As of the closing, the Company shall have no
liabilities. In addition, the Company shall have no material contingent
liabilities.
6.02. CONDITIONS TO OBLIGATIONS OF COMPANY. The obligation of the Company
under this Agreement shall be subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER TO BE TRUE. The
representations and warranties of Shareholder herein contained shall be true
in all material respects as of the Closing, and shall have the same effect
as though made at the Closing; Shareholder shall have performed in all
material respects all obligations and complied in all material respects,
with all covenants and conditions required by this Agreement to be performed
or complied with by them prior to the Closing.
(b) NO LEGAL PROCEEDINGS. No injunction or restraining order shall be
in effect, and no action or proceeding shall have been instituted and, at
what would otherwise have been the Closing, remain pending before the court
to restrain or prohibit the transactions contemplated by this Agreement.
(c) STATUTORY REQUIREMENTS. All statutory requirements for the valid
consummation by Shareholder of the transactions contemplated by this
Agreement shall have been fulfilled. All authorizations, consents and
approvals of all governments and other persons required to be obtained in
order to permit consummation by Shareholder of the transactions contemplated
by this Agreement shall have been obtained, including, but not limited to,
requirements imposed by the government of Hong Kong.
9
VII. MISCELLANEOUS
7.01. EXPENSES OF SALE. Except as otherwise provided herein, each party
shall bear its own direct and indirect expenses incurred in connection with
the negotiation and preparation of this Agreement and the consummation and
performance of the transactions contemplated herein. Without limitation,
such expenses shall include the fees and expenses of all attorneys, brokers,
investment bankers, accountants, agents and finders and other professionals
incurred in connection herewith, acting on behalf of such party. The
parties have not entered into any agreement for commissions, finder's fees
or other compensation in connection with the contemplated transactions which
my be asserted by any person based on any agreement or arrangement for
payment by the other party.
7.02. NOTICES. All notices, requests and other communications thereunder
shall be in writing and shall be delivered by courier or other means of
personal service (including by means of a nationally recognized courier
service or professional messenger service), or mailed first class, postage
prepaid, by certified mail, return receipt requested, or by Federal Express
or other reputable overnight delivery service, in all cases, addressed to:
10
All notices, requests and other communications shall be deemed given on the
date of actual receipt or delivery as evidenced by written receipt,
acknowledgment or other evidence of actual receipt or delivery to the
address. In case of service by telecopy, a copy of such notice shall be
personally delivered or sent by registered or certified mail, in the manner
set forth above, within three (3) business days thereafter. Either party
hereto may from time to time by notice in writing served as set forth above
designate a different address or a different or additional person to which
all such notices or communications thereafter are to be given.
7.03. PARTIES IN INTEREST. Except as otherwise expressly provided herein,
all the terms and provisions of this Agreement shall be binding upon, shall
inure to the benefit of and shall be enforceable by the respective heirs,
beneficiaries, personal and legal representatives, successors, designees and
assigns of the parties hereto.
7.04. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, including any
Schedules, Exhibits and other documents and writings referred to herein or
delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to its subject matter. There are
no restrictions, agreements, promises, warranties, covenants or undertakings
other than those expressly set forth herein or therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to its subject matter. This Agreement may be amended only by a
written instrument duly executed by the parties or their respective
successors or assigns.
7.05. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
7.06. TERMINATION In the event that one party's due diligence determines a
material breach or inaccuracy in the other's representation(s) or other
terms of this agreement, the party may terminate its obligations under this
agreement by providing written notice of the breach. If the breach is not
cured within 10 calender days, the agreement is terminated, with no further
obligations of the parties.
11
7.07. GOVERNING LAW. This Agreement shall be subject to California law
and jurisdiction, except insofar as the laws of the jurisdictions of
domicile of the parties shall control in any conflict of laws dispute.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto as of the date first above written.
Company
By: /s/ Xxxxxx Xxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxx
__________________________
Title: President
_________________________
Physical Limited
By: /s/ Luk Xxxx Xxxxx
__________________________
Name: Luk Xxxx Xxxxx
__________________________
Title:_________________________
Shareholder
By: /s/ Luk Xxxx Xxxxx
_________________________
Name: Luk Xxxx Xxxxx
__________________________
Title:_________________________
12
EXHIBIT A
---------
CERTIFICATE
Reference is made to that certain Share Exchange Agreement (the "Share
Exchange Agreement") between Foreclosed Realty Exchange, Inc. (the
"Company"), on the one hand, and Physical Beauty & Fitness Holdings Ltd.(the
"Shareholder") on the other hand. Defined terms not defined herein shall
have the same meaning as ascribed to them in the Share Exchange Agreement.
In connection with the closing, the Shareholder has requested that Xxxxxx
Xxxxxxx ("Xxxxxxx") provide this Certificate to the Shareholder. As the
largest shareholder of the Company, Xxxxxxx will benefit from the
consummation of the transactions contemplated by the Share Exchange
Agreement and has agreed to provide this certificate. Xxxxxxx acknowledges
that the Shareholder is relying on this Certificate and Xxxxxxx may have
personal liability in the event that the matters certified herein shall not
be accurate.
Xxxxxxx hereby certifies that to the best of his knowledge the
representations and warranties of the Company contained in Sections 3.01
through 3.13, inclusive, of the Share Exchange Agreement are true and
correct in all material respects at the date hereof and that the conditions
precedent set forth in Sections 6.01(e) have been satisfied.
Xxxxxxx'x liability hereunder shall expire two years from the Date of
closing. In the event that any third party makes a claim against the
Company arising out of or based upon or covered by the representations and
warranties of the Company referred to above, then the Company shall promptly
provide written notice thereof to Xxxxxxx and provide him with a reasonable
opportunity to satisfy such claim.
October 7, 1996
/s/ Xxxxxx Xxxxxxx
______________________________
Associated Consulting
Group, Inc. by
Xxxxxx Xxxxxxx, President
14
EXHIBIT 1.02
SHARES ISSUED TO SHAREHOLDER AND/OR ITS DESIGNEE(S)
Name/Designee Number of Foreclosed Number of Physical
Realty Exchange, Inc. Beauty & Fitness
Shares received by Holdings Ltd.
shareholder/designee shares exchanged
by shareholder
/designee
_____________________________________________________________
Luk Xxxx Xxxxx, 8,000,000 one
Designee
15
October 14, 1996
Mr. Xxxxxx Xxxxxxx, President
Foreclosed Realty Exchange, Inc.
0000 XX 00xx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Dear Xx. Xxxxxxx,
We refer to the Share Exchange Agreement dated August 8, 1996, by and
between Foreclosed Realty Exchange, Inc. (the "Company") on the one hand,
and Physical Beauty & Fitness Holdings Ltd. ("Shareholder") on the other
hand.
We hereby extend the closing date to on or before October 21, 1996 at 5pm
Los Angeles time.
Please confirm your consent to this extension by signing and returning the
enclosed copy of this letter in the place as marked.
Company
By: /s/ Xxxxxx Xxxxxxx
--------------------
Name: Xxxxxx Xxxxxxx
Title: President
Physical Limited
By: /s/ Luk Xxxx Xxxxx
--------------------
Name: Luk Xxxx Xxxxx
Title: Director
Shareholder
By: /s/ Luk Xxxx Xxxxx
--------------------
Name: Luk Xxxx Xxxxx
Title: Director
