SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "Agreement") is entered into and
effective as of September 12, 1997, by and between those undersigned parties
(collectively the "SHAREHOLDERS"), PRETORY, S.A., a French corporation ("PSA")
and PRETORY USA, INC., a Nevada corporation ("PUI" or the "COMPANY").
1. RECITALS
This Agreement is entered into with reference to and in contemplation of
the following facts, circumstances and representations:
1. The SHAREHOLDERS are the owners of 2,332 shares of the 2,336 issued
and outstanding shares of common stock of PSA (the "PSA Shares").
2. PUI desires to issue a total of 4,720,000 shares of its common stock
(the "PUI Shares") to the SHAREHOLDERS in exchange for the PSA
Shares.
3. The SHAREHOLDERS desire to exchange the PSA Shares for the PUI
Shares in accordance with the terms and conditions of this
Agreement.
4. PSA desires that this transaction be consummated.
2. EXCHANGE AND ISSUANCE OF SHARES
2.1 Exchange of PUI Shares: PUI shall exchange and deliver to the
SHAREHOLDERS, a total of 4,720,000 restricted shares of PUI restricted common
stock in accordance with the allocation set forth in the attached Schedule "A".
Page 20
2.2 Exchange of PSA Shares: At the closing, the SHAREHOLDERS shall
exchange and deliver to PUI, a total of 2,329 shares of PSA common stock which
represents ninety-nine and seven tenths percent (99.7%) of the issued and
outstanding shares of PSA.
2.3 Nature of PUI Shares: The SHAREHOLDERS shall be issued the PUI Shares,
which unless otherwise contractually restricted, shall be subject to a one (1)
year holding period before the PUI Shares are eligible for sale in the U.S.
public market. The sale of the PUI Shares will be further limited by the resale
provisions of SEC Rule 144.
2.4 Restricted Nature of PUI Shares: Notwithstanding the one (1) year
holding period for the PUI Shares, each of the SHAREHOLDERS who become
"affiliates" or "control persons" of PUI will be subject to certain limitations
with respect to the sale of their respective PUI Shares. Accordingly, as a
result of such a designation, the sale of the PUI Shares will be limited by SEC
Rule 144.
2.5 Private Sale Acknowledgment: The parties acknowledge and agree that
the exchange and issuance of the PUI Shares is being undertaken as a private
sale pursuant to Section 4 of the Securities Act of 1933, as amended, and Nevada
Revised Statutes Chapters 78 and 90, and is not being transacted via a
broker-dealer and/or in the public market place.
2.6 issuance of Additional Shares by PUI: The parties hereto acknowledge
and agree that in addition to the issuance of the 4,720,000 PUI Shares, that PUI
will be issuing concurrently an additional 1,780,000 shares to the below listed
persons which will result in a total of 6,500,000 shares being issued and
outstanding at the completion of the subject transaction:
Name No. Shares
---- ----------
1. XXXXX XXXXXXXX and
XXXXXXX XXXXXXXX 510,000
2. XXXXXX XXXXX BIN XXXXXX 270,000
3. XXXXXX XXXXXX 100,000
Page 21
4. INVESTMENT GROUP 900,000
---------
TOTAL 1,780,000
=========
3. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The COMPANY represents and warrants to the SHAREHOLDERS and PSA as
follows:
3.1 Organization: PUI is a corporation duly incorporated and validly
existing under the laws of Nevada and is in good standing with respect to all of
its regulatory filings.
3.2 Capitalization: The authorized capital of PUI consists of 100,000,000
common shares with a par value $.001 and of which no shares have been issued at
this time.
3.3 Financial Statements: PUI has furnished to the SHAREHOLDERS and PSA
audited financial statements for the period ending September 30, 1997. That at
the Closing the financial affairs of PUI will be materially the same as
represented in the financial statements for the period ending September 30,
1997.
3.4 Books and Records: All material transactions of PUI have been promptly
and properly recorded or filed in or with its books and records and the Minute
Book of PUI contains records of all meetings and proceedings of the SHAREHOLDERS
and directors thereof.
3.5 Legal Compliance: To the best of its knowledge, PUI is not in breach
of any laws, ordinances, statutes, regulations, by-laws, orders or decrees to
which PUI is subject or which apply to it or any of its assets.
3.6 Tax Returns: All tax returns and reports of PUI required by law to be
filed prior to the date hereof have been filed and are substantially true,
complete and correct and all taxes and governmental charges have been paid.
Page 23
3.7 Adverse Financial Events: PUI 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.
3.8 Disputes, Claims and Investigations: There are no disputes, claims,
actions, suits, judgments, investigations or proceedings outstanding or pending
or to the knowledge of PUI threatened against or affecting PUI at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, bureau or agency.
3.9 Employee Liabilities: PUI has no liability to former employees or any
liability to any governmental authorities with respect to current or former
employees.
3.10 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 PUI or of any agreement to which PUI is a party and will
not give any person or company a right to terminate or cancel any agreement or
right enjoyed by PUI and will not result in the creation or imposition of any
lien, encumbrances or restriction of any nature whatsoever in favor of a third
party upon or against the assets of PUI.
3.11 Validly Issued and Authorized Shares: That the PUI Shares will be
validly authorized and issued by the COMPANY, they will be fully paid and
non-assessable and that they will be issued in full compliance with all federal
and state securities laws.
3.12 Restrictive Legend: That the PUI Shares will have a restrictive
legend imposed thereon identifying them as "Restricted Shares" which are subject
to the conditions and limitations of SEC Rule 144 with respect to their sale in
the U.S. public market place.
3.13 Corporate Authority: The officers or representatives of the COMPANY
executing this Agreement represent that they have been authorized to execute
this Agreement pursuant to a resolution of the Board of Directors of the
COMPANY.
Page 24
4.9 Legal Compliance: PSA is not in breach of any laws, ordinances,
statutes, regulations, by-laws, orders or decrees to which PSA is subject or
which apply to it or any of its assets.
4.10 Tax Returns: All tax returns and reports of PSA required by law to be
filed prior to the date hereof have been filed and are subsequently true,
complete and correct and all taxes and governmental charges have been paid.
4.11 Adverse Financial Events: PSA 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.
4.12 Disputes, Claims and Investigations: There are no disputes, claims,
actions, suits, judgments, investigations or proceedings outstanding or pending
or to the knowledge of PSA threatened against or affecting PSA at law or in
equity or before or by any federal, provincial, municipal or other governmental
department, commission, board, bureau or agency.
4.13 Employee Liabilities: PSA has no liability to former employees or any
liability to any government authorities with respect to current or former
employees.
4.14 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 PSA or of any agreement to which PSA is a party and will
not give any person or company a right to terminate or cancel any agreement or
right enjoyed by PSA and will not result in the creation or imposition of any
lien, encumbrances or restriction of any nature whatsoever in favor of a third
party upon or against the assets of PSA.
4.15 No Liens: That PSA has not received a notice of any assignment, lien,
encumbrance, claim or charge against the PSA Shares.
4.16 Corporate Authority: The officers or representatives of PSA executing
this Agreement represent that they have been authorized to execute this
Agreement pursuant to a resolution of the Boards of Directors of PSA.
Page 26
5. REPRESENTATIONS AND WARRANTIES
OF SHAREHOLDERS ALONE
The SHAREHOLDERS alone further represent and warrant to PUI as follows
with respect to the PUI Shares:
5.1 Financially Responsible: That they are financially responsible and
able to meet their obligations and acknowledge that this investment will be
speculative.
5.2 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 stock 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.
5.3 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 its investment capital and the lack of a
liquid market, such that it may not be able to liquidate readily the investment
whenever desired or at the then current asking price.
5.4 Access to Information: That they have had access to the information
regarding the financial condition of the COMPANY and they were able to request
copies of such information, ask questions of and receive answers from the
COMPANY regarding such information and any other information they desire
concerning the PUI Shares, and all such questions have been answered to their
full satisfaction.
5.5 Private Transaction: That at no time 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.
5.6 Investment Intent: The PUI 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.
Page 26
5.7 Due Diligence: That the SHAREHOLDERS shall have completed a due
diligence review of the affairs of PUI and are satisfied with the results of
that review.
6. CLOSING, ESCROW HOLDER AND
CONDITIONS TO CLOSING
6.1 Exchange Closing: The closing of the share exchange as contemplated by
this Agreement (the "Closing") shall take place in San Diego, California, at
such time and place as may be agreed among by the parties, but in no event later
than November 15, 1997, unless otherwise extended in writing by the parties.
6.2 Appointment of Escrow Holder: The parties hereby appoint XXXXXXX X.
XXX, III, ESQ. of San Diego, California as the Escrow Holder pursuant to this
Agreement.
6.3 Opinion of Counsel for PUI: The SHAREHOLDERS and PSA shall have
received an opinion from the legal counsel for PUI, in form and substance
reasonably satisfactory to the SHAREHOLDERS and PSA, to the effect that:
1. PUI is a corporation duly organized and legally existing under
the laws of the State of Nevada and is in good standing with
respect to all of its regulatory filings, and
2. This Agreement when duly executed and delivered by PUI,
constitutes a legal, valid and binding obligation of PUI
enforceable against it in accordance with its terms, and
3. The PUI Shares delivered pursuant to the Agreement have been
validly issued, are fully paid and non-assessable, and
4. The PUI Shares have been legally and validly issued and are in
compliance with
Page 27
all federal and state securities laws including but not
limited to Section 4 of the Securities Act of 1933, as
amended, and Nevada Revised Statutes Chapters 78 and 90.
6.4 Opinion of Counsel For SHAREHOLDERS and PSA: PUI shall have received
an opinion from the legal counsel for the SHAREHOLDERS and PSA, in form and
substance reasonably satisfactory to PUI, to the effect that:
1. PSA is a corporation duly organized and legally existing under
the laws of France and is in good standing with respect to all
of its regulatory filings, and
2. The PSA Shares delivered pursuant to this Agreement have been
validly issued, fully paid, non-assessable, and have been
originally issued in full compliance with all applicable
securities laws of France.
3. The SHAREHOLDERS have the full power to transfer the PSA
Shares to PUI without obtaining the consent or approval of any
other person or governmental agency.
4. That PUI is legally capable of owning and is permitted to own
a controlling Interest in PSA under the applicable laws of
France.
5. That PSA is required to have a minimum of seven (7)
shareholders who must be citizens of France.
6.5 Escrow Conditions and Closing: Prior to the Closing the following will
be required:
Page 28
1. Delivery of PSA Shares: The SHAREHOLDERS shall deliver to the
Escrow Holder the certificate or certificates representing the
2,329 PSA Shares registered in the name of PUI, duly endorsed
for transfer accompanied by a duly executed assignment of the
PSA Shares to PUI.
2. Delivery of PUI Shares: PUI shall deliver to the Escrow Holder
a total of 4,720,000 of the PUI of the Shares registered in
the names of the SHAREHOLDERS as set forth in Schedule "A".
3. Legal Opinion and Documents: Both parties shall deliver to the
Escrow Holder such legal opinions and other documents as are
required by the terms and conditions of the Agreement.
4. Requisite Corporate Resolutions: Each party shall deliver to
the Escrow Holder certified copies of resolutions from their
respective Boards of Directors authorizing the subject
transaction.
5. Shareholder or Board of Directors Approval: PUI shall deliver
to the Escrow Holder documentation evidencing the PUI
shareholder approval of the subject transaction. In the event
no shares have been issued by PUI prior to the subject
transaction, PUI shall deliver a certified copy of the
resolution of the PUI Board of Directors authorizing the
subject transaction.
6.6 Close of Transaction: The subject transaction shall "close" upon the
satisfaction of the above conditions.
Page 29
7. COOPERATION, ARBITRATION, INTERPRETATION,
MODIFICATION AND ATTORNEY FEES
7.1 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.
7.2 Arbitration: The parties hereby submit all controversies, claims and
matters of difference arising out of this Agreement to arbitration in San Diego,
California according to the rules and practices of the American Arbitration
Association from time to time in force. This submission and agreement to
arbitrate shall be specifically enforceable. The Agreement shall further be
governed by the laws of the State of Nevada.
7.3 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 reasonable in accordance with their generally
accepted meaning.
7.4 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.
7.5 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.
7.6 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.
Page 30
7.7 Counterparts: This Agreement may be signed in one or more
counterparts.
7.8 Facsimile Transmission Signatures: A signature received pursuant to a
facsimile transmission shall be sufficient to bind a party to this Agreement
SHAREHOLDERS
DATED: 12/09/, 1997 /s/ Jacques Gaussens
------- ---------------------------------------
JACQUES GAUSSENS
DATED: 12/09/, 1997 /s/ Arcole Investment Trust
------- ---------------------------------------
ARCOLE INVESTMENT TRUST
DATED: 12/09/, 1997 /s/ Xxxxxx Xxxxxxx
------- ---------------------------------------
XXXXXX XXXXXXX
PRETORY S.A.
Societe PRETORY
000, xxx xxx Xxxxxxxx
00000 XXXXX
Tel: 00 00 00 00-00 : [ILLEGIBLE]
[ILLEGIBLE]
DATED: 12/09/, 1997 BY: /s/ Jacques Gaussens
------- ---------------------------------------
JACQUES GAUSSENS
President
PRETORY USA, INC.
DATED: 12/09/, 1997 BY: /s/ Xxxxxx Xxxxxxx
------- ---------------------------------------
XXXXXX XXXXXXX
President
Page 31
SCHEDULE "A"
NAME NO. PUI SHARES
---- --------------
1. JACQUES GAUSSENS 1,125,000
2. ARCOLE INVESTMENT TRUST 2,250,000
3. XXXXXX XXXXXXX 1,345,000
---------
TOTAL SHARES 4,720,000
=========
Page 32
