Exhibit A
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (this "Agreement"), is entered into as of the third day of
February, 2004, by and among: (i) Process Equipment, Inc., a Nevada corporation (the "Corporation"),
and (ii) Jade Profit Investment Limited, a British Virgin Islands limited liability corporation ("Jade"), as
the parent of Hainan Quebec Ocean Fishing Co. Ltd., a People's Republic of China limited liability
corporation ("HQ"). The Corporation, Jade and the stockholders of Jade listed on Schedule I hereto (the
"Jade Stockholders") are referred to collectively as the "Parties."
WHEREAS, on the terms and conditions hereinafter provided, the Corporation desires to acquire from
the Jade Stockholders and the Jade Stockholders wish to transfer to the Corporation 100% of the issued
and outstanding share capital of Jade (the "Transferred Jade Shares") in exchange for 48,423,770 of
newly-issued common stock of the Corporation constituting 93% of the issued and outstanding common
stock of the Corporation on a fully-diluted basis as of the Closing (defined below), subject to adjustment
as described in Section 3.1 (the "Issued Shares");
NOW THEREFORE, on the stated premises and for and in consideration of the mutual covenants and
agreements hereinafter set forth and the mutual benefits to the Parties to be derived herefrom, it is hereby
agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND
WARRANTIES OF THE CORPORATION
As an inducement to, and to obtain the reliance of Jade, the Corporation, represents and warrants as
follows:
1.1 Organization. The Corporation is a company duly organized and validly existing under the laws
of Nevada and has the corporate power and is 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. Schedule 1.1 includes: (a) a certified copy of the articles of
incorporation of the Corporation in effect as of the date of this Agreement or as soon as practicable; (b)
the bylaws of the Corporation in effect as of the date of this Agreement; and (c) certificate of good
standing of the Corporation issued by the Nevada Secretary of State and dated within one day prior to the
date of this Agreement, or as soon as practicable.
1.2 Due Authorization. The Corporation has taken, or will have taken prior to Closing (as defined
below), all actions required by law, its articles of incorporation, its bylaws, or otherwise to authorize the
execution and delivery of this Agreement. No authorization, approval, consent, or order of, or
registration with, any court or other governmental body is required in connection with the execution and
delivery by the Corporation of this Agreement and consummation by the Corporation of the transactions
contemplated by this Agreement.
1.3 Absence of Violation. The execution and delivery of this Agreement, and all exhibits hereto does
not and the consummation of the transactions contemplated hereby and thereby will not (a) conflict with,
violate, result in a breach of or constitute a default under any provision of the articles of incorporation (as
amended) or bylaws or other organizational documents of the Corporation; (b) violate, conflict with or
result in the breach or termination of or modification, or otherwise give any other contracting party the
right to terminate or modify, or constitute a default, with or without notice, the lapse of time or both, or
cause the acceleration of any obligation, under the terms of any contract to which the Corporation is a
party; (c) result in the creation of any lien, charge or encumbrance upon the properties or other assets of
the Corporation; or (d) conflict with, violate, result in a breach of or constitute a default under any
judgment, order, injunction, decree or award against, or binding upon, the Corporation or upon any of its
properties or assets.
1.4 Consents. The Corporation is not subject to any law, ordinance, regulation, rule, order, judgment,
injunction, decree, charter, bylaw, contract, commitment, lease, agreement, instrument or other restriction
of any kind which would prevent the Corporation from performing the terms of this Agreement or any of
the transactions contemplated hereby without the consent of any third party, or which would require the
consent of any third party for the consummation of this Agreement or any of the transactions
contemplated hereby, or which would result in any penalty, forfeiture or other termination as a result of
such consummation.
1.5 Binding Obligation. When executed by the Corporation, this Agreement and all exhibits hereto
and the representations and warranties contained herein and therein will constitute a valid and binding
obligation of the Corporation enforceable in accordance with their respective terms.
1.6 Capitalization and Outstanding Shares. As of the date of this Agreement, the authorized
capitalization of the Corporation consists of 25,000,000 shares of common stock, US$0.001 par value, of
which, 3,644,800 shares of common stock are outstanding. Such issued and outstanding shares are
validly issued, fully paid, and non-assessable and not issued in violation of the pre-emptive or other
rights of any person. Schedule 1.6 contains a true and complete description, as of the date of this
Agreement, of: (a) the authorized share capital of the Corporation; (b) the issued and outstanding share
capital of the Corporation; and (c) the fully-diluted share capital of the Corporation.
1.7 Options or Warrants or Subscriptions. Except as set forth in Schedule 1.7 to this Agreement,
there are no existing options, warrants, calls, subscriptions or commitments of any character relating to
the authorized and un-issued share capital of the Corporation, including, but not limited to the common
stock of the Corporation.
1.8 Compliance With Laws and Regulations. The Corporation has complied with all applicable
statutes and regulations of any federal, 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 the Corporation or except to the extent that noncompliance would not result in the
occurrence of any material liability for the Corporation.
1.9 Litigation. There are no claims, actions, suits, proceedings or investigations pending or threatened
or reasonably anticipated against or affecting the Corporation or any of its assets or business or this
Agreement or any exhibit hereto, at law or in equity, by or before any court, arbitrator or governmental
authority, domestic or foreign.
1.10 No Bankruptcy. There has not been filed any petition or application, nor any proceeding
commenced by or against the Corporation with respect to any assets of the Corporation under any law,
domestic or foreign, relating to bankruptcy, reorganization, fraudulent transfer, compromise,
arrangements, insolvency, readjustment of debt or creditors' rights, and no assignment has been made by
the Corporation for the benefit of creditors generally.
1.11 Shareholder's Agreements. Except for this Agreement and any agreements incorporated as
exhibits hereto, there is no agreement which governs or purports to govern the shareholdings of the
Corporation or which restricts or purports to restrict the exercise by any shareholder of the Corporation
of his rights as a shareholder of the Corporation, including without restriction, any such agreement,
arrangement, commitment or understanding restricting or otherwise relating to the voting, dividend rates
or disposition of the shares (or units or other equity interest, as the case may be) of the Corporation, save
as governed by applicable law.
1.12 Option Plans. There is no share option plan or similar plan and to acquire any additional shares or
units or other equity interests, as the case may be, of the Corporation or securities convertible or
exercisable into or exchangeable for, or which otherwise confer on the holder thereof any right to
acquire, any such additional shares or units or equity interests, as the case may be.
1.13 Financial Statements. The financial statements contained in the filings with the Securities and
Exchange Commission ("SEC") are accurate and in keeping with the requirements of the securities laws
of the United States.
1.14 Tax Returns. Except as set forth on Schedule 1.14, all required tax returns and information
returns and reports of or relating to any tax and the information and data contained therein have been
properly and accurately compiled and completed in all material respects, and filed in a timely manner
with the appropriate taxation authority for the Corporation.
1.15 Guarantees. The Corporation does not have any outstanding contracts or commitments
guaranteeing (or indemnifying or making contribution to others for breaches in connection with) the
payment or collection or the performance of the obligations of others, and none of them has entered into
any deficiency agreements, or issued any comfort letters, or otherwise granted any material financial
assistance to any person, firm, corporation or other entity.
1.16 No Non-Competition Agreement. There is no restriction agreement nor any non-solicitation or
non-competition agreement or other agreement restricting in any way the carrying on of the business of
the Corporation binding upon the Corporation.
1.17 Real Property. Except as set forth on Schedule 1.17(a), the Corporation does not own any real or
otherwise immovable property. Except as set forth on Schedule 1.17(b), the Corporation does not hold as
tenant any leases.
1.18 Employment Matters. Except as disclosed in Schedule 1.18, the Corporation does not have any
employment, consulting or severance contract, arrangement or understanding with any person
whomsoever, with annual obligations in excess of $20,000. The Corporation has not granted any "golden
parachute" to any of its past or present employees. The salaries and bonuses of all officers and
employees of the Corporation have been paid in full by the Corporation. The Corporation is in
compliance in all material respects with all applicable laws relating to employment in all relevant
jurisdictions. There is no pending or outstanding employment dispute within the Corporation. The
consummation of the transactions contemplated by this Agreement will not give rise to any liability of
the Corporation for bonuses, severance pay, termination benefits or other amounts.
1.19 Intellectual Property. The Corporation has not and is not violating any patents, material trade
marks, trade names, copyrights, service marks, applications therefor and other industrial and intellectual
property.
1.20 Issuance of Shares Exempt from Registration. The issuance of the Issued Shares to the Jade
Stockholders is exempt from registration under United States federal and state securities laws and regulations.
1.21 No Materially Adverse Undisclosed Facts. There is no fact known to the management of the
Corporation which has not previously been disclosed in writing to Jade which may materially adversely
affect the Corporation or its respective assets, properties, business, prospects, operation or condition
(financial or otherwise), or which should be disclosed to Jade in order to make any of the warranties and
representations herein true and not misleading and no state of facts is known (or with reasonable
diligence would be known) to the management of the Corporation that would operate to prevent the
Corporation from continuing to carry on its business in the manner in which carried on at the date hereof.
1.22 Absence of Certain Changes or Events. Except in order to fulfill the obligations created by this
Agreement and to complete the transactions contemplated herein, from the date of this Agreement until
the completion of the Closing (as described below) the Corporation will: (a) not incur any liability or
obligation whatsoever, secured or unsecured, direct or indirect, other than in the ordinary and usual
course of its business; (b) not enter into any contracts or agreements whatsoever, other than in the
ordinary and usual conduct and course of its business; (c) not change any of its accounting methods,
principles, practices or policies; (d) not cease to operate its properties and to carry on its business as
heretofore carried on, nor fail to maintain all of its properties, rights and assets consistently with past
practices; (e) not sell or otherwise in any way alienate or dispose of any of its assets other than in the
ordinary course of business and in a manner consistent with past practices; (f) not modify its articles of
incorporation, bylaws or capital structure;(g) not make any modification to its authorized or issued
shares, nor redeem, retire, repurchase or otherwise acquire, nor issue, sell or otherwise dispose of, shares
of its capital stock other equity interests or warrants, bonds or rights in its own capital, (h) not make any
distribution, by way of dividend or otherwise, to any of its shareholders or to any affiliate or associate
thereof, or reserve or declare any dividend; (i) not make any material change in the form of compensation
or remuneration payable or to become payable to any of its shareholders, directors, officers, employees or
agents nor in the rate thereof; (j) other than the ordinary course of business, not grant to any customer
any special allowance or discount, or change its pricing, credit or payment policies; (k) not make any
loan or advance, or assume, guarantee or otherwise become liable with respect to the liabilities or
obligations of any person; (l) not permit, cause or suffer any extraordinary losses not covered by
insurance; (m) not remove any director or auditor or terminate any officer or have any of the
foregoing resign; (n) not purchase or otherwise acquire any shares or other equity interest, as the case
may be, in any person. The Corporation further represents that (o) it is not currently facing any action or
suit, proceeding, inquiry, or any threat thereof, against or affecting the Corporation at law or in equity or
before or by any foreign, federal, state, provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality which may in any way materially and adversely
affect the Corporation; (p) except as described in its SEC filings, and/or the Corporation's interim
financial statements, there have not been any transactions, agreements, arrangements or payments
(including, without limitation, salaries, bonuses, royalties or fees) relating to or affecting the Corporation
or its business: (i) involving any related entity of the Corporation, (ii) involving any current or former
director, officer, shareholder of the Corporation, or (iii) involving any member of the immediate family
of any individual described in clause (ii) above, (iv) involving any other person not acting at arm's length
with the Corporation or (v) not otherwise at arm's length.
1.23 Reliance. All representations and warranties of the Corporation contained herein, shall be
deemed to have been relied upon by Jade and HQ notwithstanding any investigation heretofore or
hereafter made by Jade or HQ or by their counsel or by any other representative of Jade or HQ and shall
survive the date hereof and continue in full force and effect for the benefit of Jade and HQ for an
unlimited duration in case of fraud, gross negligence, material willful concealment or until the limitation
period under any applicable tax statute has expired or, in all other cases, until the second anniversary of
the date hereof.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF JADE
As an inducement to, and to obtain the reliance of the Corporation, Jade represents and warrants, with
respect to itself and HQ, as follows:
2.1 Organization. (a) Jade is a company duly organized and validly existing under the laws of the
British Virgin Islands and has the corporate power and is 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. Schedule 2.1(a) includes: (i) a certified copy of the
articles of incorporation or similar instruments of Jade in effect as of the date of this Agreement, (ii) the
bylaws or similar instruments of Jade in effect as of the date of this Agreement, and (iii) a certificate of
good standing or comparable document, to the extent available, of Jade, issued by the appropriate
authorities and dated within one day prior to the date of this Agreement, or as soon as practicable.
(b) HQ is a company duly organized and validly existing under the laws of the People's
Republic of China and has the corporate power and is 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. Schedule 2.1(b) includes: (i) a certified copy of the
articles of incorporation or similar instruments of HQ in effect as of the date of this Agreement, (ii) the
bylaws or similar instruments of HQ in effect as of the date of this Agreement, and (iii) a certificate of
good standing or comparable document, to the extent available, of HQ, issued by the appropriate
authorities and dated within one day prior to the date of this Agreement, or as soon as practicable.
2.2 Due Authorization. Jade has taken, or will have taken prior to Closing (as defined below), all
actions required by law, its articles of incorporation, its bylaws, or otherwise to authorize the execution
and delivery of this Agreement. 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 Jade of this Agreement and consummation by Jade of the transactions
contemplated by this Agreement.
2.3 Absence of Violation. The execution and delivery of this Agreement, and all exhibits hereto does
not and the consummation of the transactions contemplated hereby and thereby will not (a) conflict with,
violate, result in a breach of or constitute a default under any provision of the articles of incorporation (as
amended) or bylaws or other organizational documents of Jade or HQ; (b) violate, conflict with or result
in the breach or termination of or modification, or otherwise give any other contracting party the right to
terminate or modify, or constitute a default, with or without notice, the lapse of time or both, or cause the
acceleration of any obligation, under the terms of any contract to which Jade or HQ is a party; (c) result
in the creation of any lien, charge or encumbrance upon the properties or other assets of Jade or HQ; or
(d) conflict with, violate, result in a breach of or constitute a default under any judgment, order,
injunction, decree or award against, or binding upon, Jade or upon any of its properties or assets or upon
HQ or upon any of the properties or assets of HQ.
2.4 Consents. Neither Jade nor HQ is subject to any law, ordinance, regulation, rule, order, judgment,
injunction, decree, charter, bylaw, contract, commitment, lease, agreement, instrument or other restriction
of any kind which would prevent Jade or HQ from performing the terms of this Agreement or any of the
transactions contemplated hereby without the consent of any third party, or which would require the
consent of any third party for the consummation of this Agreement or any of the transactions
contemplated hereby, or which would result in any penalty, forfeiture or other termination as a result of
such consummation.
2.5 Binding Obligation. When executed by Jade, this Agreement, and all exhibits hereto and the
representations and warranties contained herein and therein will constitute a valid and binding obligation
of Jade enforceable in accordance with their respective terms.
2.6 Capitalization and Outstanding Shares. Jade owns 84.42% of the total share capital of HQ as of
the Closing Date (defined below). Such share capital ownership is valid, fully paid and non-assessable.
2.7 Ownership of Jade Shares. Jade Stockholders hereby represent and warrant that the Transferred
Jade Shares constitute all of Jade's issued and outstanding share capital, free and clear of any claims,
charges, equities, liens, security interests, and encumbrances whatsoever (including but not limited to any
marital or community property interest). Delivery of the Transferred Jade Shares at the Closing will
convey to the Corporation good and marketable title to such shares, free and clear of any claims, charges,
equities, liens, security interests and encumbrances whatsoever.
2.8 Options or Warrants or Subscriptions. Except as set forth in Schedule 2.8 to this Agreement,
there are no existing options, warrants, calls, subscriptions or commitments of any character relating to
the authorized and unissued share capital of Jade, including, but not limited to the common stock of Jade.
2.9 Compliance With Laws and Regulations. Both Jade and HQ have complied with all applicable
statutes and regulations of the British Virgin Islands and the People's Republic of China, as applicable,
except to the extent that noncompliance would not materially and adversely affect the business,
operations, properties, assets, or condition of Jade and HQ or except to the extent that noncompliance
would not result in the occurrence of any material liability for Jade and HQ.
2.10 Litigation. There are no claims, actions, suits, proceedings or investigations pending or
threatened or reasonably anticipated against or affecting Jade or HQ or any of their assets or business or
this Agreement or any exhibit hereto, at law or in equity, by or before any court, arbitrator or
governmental authority, domestic or foreign.
2.11 No Bankruptcy. There has not been filed any petition or application, nor any proceeding
commenced by or against Jade with respect to any assets of Jade under any law, domestic or foreign,
relating to bankruptcy, reorganization, fraudulent transfer, compromise, arrangements, insolvency,
readjustment of debt or creditors' rights, and no assignment has been made by Jade for the benefit of
creditors generally.
2.12 Option Plans. There is no share option plan or similar plan to acquire any additional shares or
units or other equity interests, as the case may be, of Jade or securities convertible or exercisable into or
exchangeable for, or which otherwise confer on the holder thereof any right to acquire, any such
additional shares or units or equity interests, as the case may be.
2.13 Financial Statements. The financial statements attached hereto as Schedule 2.13 accurately reflect
subject to further auditing according to U.S. generally accepted accounting principles: (a) the assets of
Jade (cash and in kind); and (b) all outstanding obligations of Jade whatsoever. Jade shall provide the
audited financial statements for the fiscal years of 2002 and 2003 within 60 days after the Closing Date
for Form 8K filing with the SEC.
2.14 Tax Returns. Except as set forth on Schedule 2.14, all required tax returns and information
returns and reports of or relating to any tax and the information and data contained therein have been
properly and accurately compiled and completed in all material respects, and filed in a timely manner
with the appropriate taxation authority for Jade and for HQ.
2.15 Guarantees. Jade does not have any outstanding contracts or commitments guaranteeing (or
indemnifying or making contribution to others for breaches in connection with) the payment or collection
or the performance of the obligations of others, and has not entered into any deficiency agreements, or
issued any comfort letters, or otherwise granted any material financial assistance to any person, firm,
corporation or other entity.
2.16 No Non-Competition Agreement. There is no restriction agreement nor any non-solicitation or
non-competition agreement or other agreement restricting in any way the carrying on of the business of
Jade binding upon Jade.
2.17 Real Property.
Jade does not own any real or otherwise immovable property.
2.18 Intellectual Property. Jade has not and is not violating any patents, material trade marks, trade
names, copyrights, service marks and other industrial and intellectual property.
2.19 No Materially Adverse Undisclosed Facts. There is no fact known to the management of Jade or
HQ which has not previously been disclosed in writing to the Corporation which may materially
adversely affect Jade or its respective assets, properties, business, prospects, operation or condition
(financial or otherwise),or which should be disclosed to the Corporation in order to make any of the
warranties and representations herein true and not misleading and no state of facts is known (or with
reasonable diligence would be known) to the management of Jade, which would operate to prevent Jade
from continuing to carry on its business in the manner in which carried on at the date hereof.
2.20 Non-U.S. Person. The Jade Stockholders are not "U.S. Persons" under relevant the United States
securities law and are obtaining shares of the common stock of the Corporation for their own accounts.
2.21 Reliance. All representations and warranties of the HQ contained herein, shall be deemed to have
been relied upon by the Corporation notwithstanding any investigation heretofore or hereafter made by
the Corporation or by their counsel or by any other representative of HQ and shall survive the date hereof
and continue in full force and effect for the benefit of Corporation for an unlimited duration in case of
fraud, gross negligence, material willful concealment or until the limitation period under any applicable
tax statute has expired or, in all other cases, until the second anniversary of the date hereof.
2.22 Absence of Certain Changes or Events. Except in order to fulfill the obligations created by this
Agreement and to complete the transactions contemplated herein, from the date of this Agreement until
the completion of the Closing (as described below) Jade will: (a) not incur any liability or obligation
whatsoever, secured or unsecured, direct or indirect, other than in the ordinary and usual course of its
business; (b) not enter into any contracts or agreements whatsoever, other than in the ordinary and usual
conduct and course of its business; (c) not change any of its accounting methods, principles, practices or
policies; (d) not cease to operate its properties and to carry on its business as heretofore carried on, nor
fail to maintain all of its properties, rights and assets consistently with past practices; (e) not sell or
otherwise in any way alienate or dispose of any of its assets other than in the ordinary course of business
and in a manner consistent with past practices; (f) not modify its articles of incorporation, bylaws or
capital structure; (g) not make any modification to its authorized or issued shares, nor redeem, retire,
repurchase or otherwise acquire, nor issue, sell or otherwise dispose of, shares of its capital stock other
equity interests or warrants, bonds or rights in its own capital, (h) not make any distribution, by way of
dividend or otherwise, to any of its shareholders or to any affiliate or associate thereof, or reserve or
declare any dividend; (i) not make any material change in the form of compensation or remuneration
payable or to become payable to any of its shareholders, directors, officers, employees or agents nor in
the rate thereof; (j) other than the ordinary course of business, not grant to any customer any special
allowance or discount, or change its pricing, credit or payment policies; (k) not make any loan or
advance, or assume, guarantee or otherwise become liable with respect to the liabilities or
obligations of any person; (l) not permit, cause or suffer any extraordinary losses not covered by
insurance; (m) not remove any director or auditor or terminate any officer or have any of the foregoing
resign; (n) not purchase or otherwise acquire any shares or other equity interest, as the case may be, in
any person. Jade further represents that (o) it is not currently facing any action or suit, proceeding,
inquiry, or any threat thereof, against or affecting Jade at law or in equity or before or by any foreign,
federal, state, provincial, municipal or other governmental department, commission, board, bureau,
agency or instrumentality which may in any way materially and adversely affect Jade; (p) except as
described in Jade's financial statements, there have not been any transactions, agreements, arrangements
or payments (including, without limitation, salaries, bonuses, royalties or fees) relating to or affecting
Jade or its business: (i) involving any related entity of Jade, (ii) involving any current or former director,
officer, shareholder of Jade, or (iii) involving any member of the immediate family of any individual
described in clause (ii) above, (iv) involving any other person not acting at arm's length with Jade or (v)
not otherwise at arm's length.
ARTICLE III
THE CLOSING
3.1 The Exchange. The Jade Stockholders agree to assign, transfer, and deliver to the Corporation,
free and clear of all liens, pledges, encumbrances, charges, restrictions or known claims of any kind,
nature, or description, all of the outstanding common shares of Jade constituting 100% of the issued and
outstanding common shares of Jade, and the Corporation agrees to acquire such shares by issuing and
delivering to the Jade Stockholders and/or their designees in exchange therefor 48,423,770 shares of
newly-issued common stock of the Corporation constituting 93% percent of the issued and outstanding
common stock of the Corporation on a fully-diluted basis, subject to adjustment according to the Price
Adjustment Formula (defined below). If, after the Sale of Assets (defined below), the Corporation
possesses more or less than US$500,000 cash (or bank deposits or equivalents of cash) (the "Target Cash
Level"), then the number of shares of newly-issued common stock of the Corporation issued to the Jade
Stockholders and/or their designees will be increased or decreased, as the case may be, by the difference
between the Target Cash Level and the actual cash amounts (or bank deposits or equivalents of cash) that
the Corporation possesses after the Sale of Assets and on the Closing Date (defined below) divided by
0.30 (the "Price Adjustment Formula").
3.2 Closing. The closing ("Closing") of the transactions contemplated by this Agreement shall be on
March 31, 2004 or at such time and place as the parties may mutually agree ("Closing Date").
3.3 Conditions Precedent to Closing.
The conditions precedent to the obligations set forth in this Agreement include:
(a) a complete and satisfactory due diligence review of the officers, books, records, business and
affairs of the Corporation by Jade;
(b) a complete and satisfactory due diligence review of the books, records, business and affairs of
Jade by the Corporation;
(c) the resignation of the entire current board of directors and the executive officers of the
Corporation and the simultaneous election of new board members designated by Jade;
(d) the increase in authorized shares of common stock of the Corporation to 100,000,000;
(e) the sale, transfer or other disposition of all of the Corporation's assets and liabilities owned by its
operating subsidiary with special emphasis on ridding the Corporation of its existing liabilities in terms
of contractual or other obligations (the "Sale of Assets");
(f) all necessary filings with the SEC and any and all other governmental bodies;
(g) the name change of the Corporation into Hainan Quebec Maritime Industries Company (Call
letters HQCh);
(h) the stockholders of the Corporation shall authorize the Board of Directors of the Corporation to, at
their discretion, effect up to a 3 for 1 reverse split of all of the outstanding shares of common stock of the
Corporation;
(i) change the fiscal year of the Corporation from April 31 to December 31; and
(j) any other conditions precedent set forth in Articles V and VI of this Agreement.
3.4 Appropriate Approval. All of the items set forth in Section 3.3 of this Agreement and all of the
transactions contemplated hereunder, shall have been properly authorized and approved by the
stockholders of the Corporation.
3.5 Closing Events. At the Closing, each of the respective Parties hereto shall execute, acknowledge,
and/or deliver, as applicable, or shall ensure to be executed, acknowledged, and delivered, as applicable,
the following:
(a) In the case of Jade: (i) each of the Schedules set forth in Article II of this Agreement, (ii) power of
stock transfer and share certificates evidencing the transfer of the Transferred Jade Shares to the
Corporation, and (iii) an opinion of counsel of Jade as to: (A) the due organization of Jade and HQ; (B)
the due authorization by Jade and HQ of this Agreement and all exhibits hereto; and (C) the
enforceability against Jade of the Agreement and all exhibits hereto.
(b) In the case of the Corporation: (i) each of the Schedules set forth in Article I of this Agreement,
(ii) share certificates evidencing the ownership by the Jade Stockholders of the Issued Shares, (iii) the
Amended Articles of Incorporation certified by an officer of the Corporation to be in force as of the date
of the Closing, (iv) an opinion of counsel of the Corporation as to: (A) the due organization of the
Corporation; (B) the due authorization by the Corporation of this Agreement and all exhibits hereto; and
(c) the enforceability against the Corporation, of the Agreement and all exhibits hereto, and (v) the
exemption from registration under U.S. federal and state securities laws and regulations of the issuance
of the Issued Shares to the Jade Stockholders.
(d) Any and all certificates, together with such other items as may be reasonably requested by the
Parties hereto and their respective legal counsel in order to effectuate or evidence the transactions
contemplated hereby.
ARTICLE IV
SPECIAL REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF JADE WITH RESPECT TO THE SUBSCRIPTION OF THE ISSUED SHARES
The Issued Shares shall be issued to the Jade Stockholders only for the respective accounts of the
Jade Stockholders, pursuant to an exemption from the registration requirements of the U.S. federal and
state securities laws and regulations. Each certificate representing the Issued Shares issued and delivered
at the Closing will have typed or printed thereon a restricted legend which will read substantially as
follows:
"The shares represented by this certificate have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), or any state securities laws, but have been acquired by the
registered owner hereof for the purpose of investment and in reliance upon the statutory exemptions
contained in the Securities Act and similar provisions of any applicable state securities laws. The shares
may not be sold, pledged, transferred or assigned except in accordance with THE SECURITIES ACT and
all other applicable state securities laws."
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CORPORATION
In addition to the conditions precedent set forth in Section 3.2 to this Agreement, the obligations
of the Corporation under this Agreement are subject to the satisfaction, at or before the Closing Date, of
the following conditions:
5.1 Accuracy of Representations. The representations and warranties made by Jade in this
Agreement were true when made and shall be true at the Closing Date with the same force and effect as if
such representations and warranties were made at and as of the Closing Date (except for changes therein
permitted by this Agreement), and Jade shall have performed or complied with all covenants and
conditions required by this Agreement to be performed or complied with by them prior to or at the
Closing.
5.2 No Material Adverse Change. Prior to the Closing Date, there shall not have occurred any
material adverse change in the financial condition, business, or operations of Jade nor shall any event
have occurred which, with the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business or operations of Jade.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF JADE
In addition to the conditions precedent set forth in Section 3.2 to this Agreement, The obligations
of Jade under this Agreement are subject to the satisfaction, at or before the Closing Date, of the
following conditions:
6.1 Accuracy of Representations. The representations and warranties made by the Corporation in this
Agreement were true when made and shall be true as of the Closing Date (except for changes therein
permitted by this Agreement) with the same force and effect as if such representations and warranties
were made at and as of the Closing Date, and the Corporation shall have performed and complied with all
covenants and conditions required by this Agreement to be performed or complied with by the
Corporation prior to or at the Closing.
6.2 No Material Adverse Change. Prior to the Closing Date, there shall not have occurred any
material adverse change in the financial condition, business, or operations of the Corporation nor shall
any event have occurred which, with the lapse of time or the giving of notice, may cause or create any
material adverse change in the financial condition, business or operations of the Corporation.
6.3 Discharge of Existing Liabilities. The Corporation shall discharge all the existing liabilities
before or simultaneously with the Closing Date.
ARTICLE VII
MISCELLANEOUS
7.1 Governing Law. This Agreement shall be governed by, enforced, and construed under and in
accordance with the laws the State of Delaware without regard to its conflicts of laws principles.
7.2 Resolution of Disputes.
(a) Any dispute, controversy or claim arising out of or relating to this Agreement, or the interpretation,
breach, termination or validity hereof, shall first be resolved through friendly consultation, if possible.
Such consultation shall begin immediately after one party has delivered to the other party a written
request for such consultation (the "Consultation Date"). If the dispute cannot be resolved within 30 days
following the Consultation Date, the dispute shall be submitted to arbitration upon the request of either
party, with written notice to the other party.
(b) Arbitration. The arbitration shall be conducted by a tribunal (the "Tribunal") in New York, New York
under the auspices of the American Arbitration Association ("AAA") in accordance with the commercial
arbitration rules and supplementary procedures for international commercial arbitration of the AAA.
There shall be three arbitrators - one arbitrator shall be chosen by each party to the dispute and those two
arbitrators shall choose the third arbitrator. All arbitration proceedings shall be conducted in English.
Each party shall cooperate with the other in making full disclosure of and providing complete access to
all information and documents requested by the other party in connection with the arbitration
proceedings. Arbitration shall be the sole, binding, exclusive and final remedy for resolving any dispute
between the parties; either party may apply to any court of competent jurisdiction in relevant
jurisdictions for enforcement of any award granted by the Tribunal.
(c) During the period when a dispute is being resolved, except for the matter being disputed, the parties
shall in all other respects continue to abide by the terms of this Agreement.
7.3 Notices. Any notice or other communications required or permitted hereunder shall be
sufficiently given if personally delivered to it or sent by registered mail or certified mail, postage prepaid,
or by prepaid telegram addressed as follows:
(a) If to the Corporation, addressed as follows:
(c) If to any Jade Stockholder, to the name and address indicated on Schedule I 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, mailed or telegraphed.
7.4 Schedules; Knowledge. Each party is presumed to have full knowledge of all information set
forth in the other party's schedules delivered pursuant to this Agreement.
7.5 Entire Agreement. This Agreement represents the entire agreement between the parties relating to
the subject matter thereof.
7.6 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 three months. All rights and obligations under this entire Agreement shall be binding upon and inure
to the benefit of the heirs, executors, administrators and assigns of the parties.
7.7 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. For purposes of this
Agreement, facsimile signatures may be deemed originals.
7.8 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 may be enforced concurrently
herewith, and no waiver by any party of the performance of any obligation by the other shall be construed
as a waiver of the same of 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 may be extended by a writing signed by the party or parties for
whose benefit the provision is intended.
7.9 Indemnification. Jade and the Corporation hereby agree to indemnify and hold harmless
respectively the Corporation, Jade and all of the Corporation's or Jade's officers, directors, stockholders,
employees and agents against any and all expenses, liabilities, costs and damages (other than costs and
expenses directly incurred by the Corporation and the officers, directors, stockholders, employees and
agents of the Corporation or Jade in the process of their due diligence investigation), including, but not
limited to all expense of defense and investigation relating thereto, of any and every nature and
description, however incurred, arising out of any wrongful or negligent act or omission by Jade or by the
Corporation, or any designee of Jade or the Corporation related to this Agreement, and the transactions
described herein, including but not limited to the share exchange transaction described in Section 3.1
above, and any agreement or proceeding related to any of them.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by each party
hereto as of the date first above written.
PROCESS EQUIPMENT, INC. |
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By:_________________________________
Name: Xxxxxx X.Xxxxxxxxx
Title: CEO and Director |
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Jade Profit Investment Limited |
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By: _________________________________
Name: Xxxxxxx Sporns
Title: CEO and Director |
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SCHEDULE I
JADE STOCKHOLDERS
Name of Stockholder |
Share Percentage |
Address |