PLAN OF EXCHANGE
BY WHICH
WORLDTEQ GROUP INTERNATIONAL, INC.
(A NEVADA CORPORATION)
SHALL ACQUIRE
HARBIN YINHAI TECHNOLOGY DEVELOPMENT COMPANY LTD.
(A CORPORATION ORGANIZED UNDER THE LAWS OF THE PEOPLES' REPUBLIC OF CHINA)
I. RECITALS 1
1. The Parties to this Plan of Exchange: 1
(1.1) Worldteq Group International, Inc.. 1
(1.2) Harbin Yinhai Technology Development Company Ltd.. 1
(1.3) The Consultants.. 1
2. The Capital of the Parties: 1
(2.1) The Capital of WTEQ 1
(2.2) The Capital of Yinhai 1
3. Transaction Descriptive Summary: 1
4. SEC compliance. 2
5. Nevada compliance. 2
6. Audited Financial Statements. 2
II. PLAN OF REOGANIZATION 3
1. Conditions Precedent to Closing. 3
(1.1) Shareholder Approval. 3
(1.2) Board of Directors. 3
(1.3) Due Diligence Investigation. 3
(1.4) The rights of dissenting shareholders, 3
(1.5) All of the terms, covenants and conditions 3
(1.6) The representations and warranties 3
(1.7) Certificate of the Consultants 4
(1.8) Reverse Stock Split 4
(1.9) Absence of WTEQ Liabilities 4
(1.10) Delivery of Audited Financial Statements 4
(1.11) Cancellations/Amendments to Equity-Linked Securities 5
2. Conditions Concurrent and Subsequent to Closing. 5
(2.1) Delivery of Registered Capital of Yinhai. 5
(2.2) Acquisition Share Issuance 5
3. Plan of Acquisition 5
(3.1) Reorganization and Acquisition: 5
(3.2) Conversion of Outstanding Stock: 5
(3.3) Closing/Effective Date: 5
(3.4) Surviving Corporations 6
(3.5) Rights of Dissenting Shareholders: 6
(3.6) Service of Process: 6
(3.7) Surviving Articles of Incorporation: 6
(3.8) Surviving By-Laws: 6
(3.9) Further Assurance, Good Faith and Fair Dealing: 6
(3.10) General Mutual Representations and Warranties. 6
(3.10.1) Organization and Qualification. 6
(3.10.2) Corporate Authority. 6
(3.10.3) Ownership of Assets and Property. 7
(3.10.4) Absence of Certain Changes or Events. 7
(3.10.5) Absence of Undisclosed Liabilities. 8
(3.10.6) Legal Compliance. 8
(3.10.7) Legal Proceedings. 8
(3.10.8) No Breach of Other Agreements. 8
(3.10.9) Capital Stock. 8
(3.10.10) Brokers' or Finder's Fees. 9
(3.11) Miscellaneous Provisions 9
(3.11.1) 9
(3.11.2) 10
(3.11.3) 10
(3.11.4) 10
(3.11.5) 10
(3.11.6) 10
4. Termination 10
5. Closing 10
6. Execution in Counterparts 11
7. Merger Clause 11
The Remainder of this Page is Intentionally left Blank
PLAN OF EXCHANGE
BY WHICH
WORLDTEQ GROUP INTERNATIONAL, INC.
(A NEVADA CORPORATION)
SHALL ACQUIRE
HARBIN YINHAI TECHNOLOGY DEVELOPMENT COMPANY LTD.
(A CORPORATION ORGANIZED UNDER THE LAWS OF THE PEOPLES' REPUBLIC OF CHINA)
THIS PLAN OF EXCHANGE (the "Agreement" or "Plan of Exchange") is made and
dated as of this 21st day of January, 2005, and is intended to supersede all
previous oral or written agreements, if any, between the parties, with respect
to its subject matter. Notwithstanding the foregoing, it is subject to, and
shall be interpreted together with that certain Letter of Intent, dated January
11, 2005, and the Escrow Agreement, dated January 13, 2005. This Agreement
anticipates extensive due diligence by both parties, and may be terminated by
written notice, at any time (i) by mutual consent; (ii) by either party during
the due diligence phase.
I. RECITIALS
1. THE PARTIES TO THIS AGREEMENT:
(1.1) WORLDTEQ GROUP INTERNATIONAL, INC.("WTEQ"), a Nevada corporation.
(1.2) HARBIN YINHAI TECHNOLOGY DEVELOPMENT COMPANY LTD., a corporation
organized under the laws of the Peoples' Republic of China
("Yinhai").
(1.3) THE CONSULTANTS, which consist of Progressive Media Group, Inc., XCL
Partners, Inc., Aero Financial, Inc. and Triple S Parts, Inc.
2. THE CAPITAL OF THE PARTIES:
(2.1) THE CAPITAL OF WTEQ consists of 100,000,000 shares of common voting
stock of $0.001 par value authorized, of which 40,706,190
(pre-reverse stock split) shares are issued and outstanding.
(2.2) THE CAPITAL OF YINHAI consists of US$6,881,000 in registered
capital (US$1=8.2 RMB), which for the purposes of this Agreement,
is referred to as "common stock" or "capital stock".
3. TRANSACTION DESCRIPTIVE SUMMARY: WTEQ desires to acquire Yinhai and the
shareholders of Yinhai (the "Yinhai Shareholders") desire Yinhai to be acquired
by a public company. WTEQ would acquire 100% of the capital stock of Yinhai for
12,211,857 (post-reverse split) new shares of WTEQ. WTEQ would effect a 30:1
reverse stock split of its outstanding common and preferred stock prior to the
closing. At the closing, Yinhai and/or the Yinhai Shareholders would pay the
Consultants, for, among other things, their advise and counsel in connection
with this Plan of Exchange, an aggregate amount equal to $350,000, less related
expenses. The parties intend that the transactions qualify and meet the Internal
Revenue Code requirements for a tax free reorganization, in which there is no
corporate gain or loss recognized by the parties, with reference to Internal
Revenue Code (IRC) sections 354 and 368.
4. SEC COMPLIANCE. WTEQ shall cause the filing with the Commission of a Current
Report on Form 8-K, within four business days of the date hereof, reporting the
execution of this Agreement, and the filing and mailing to its shareholders of
an Information Statement on Schedule 14F-1 pursuant to Rule 14f-1 under the
Securities Exchange Act of 1934, as amended, which is required to be filed and
mailed ten days before a change in the majority of the Board of Directors of
WTEQ other than at a shareholders' meeting.
5. NEVADA COMPLIANCE. Articles of Exchange are required to be filed by Nevada
law as the last act to make the plan of exchange final and effective under
Nevada law.
6. AUDITED FINANCIAL STATEMENTS. Certain filings under the Securities Exchange
Act of 1934, such as a Current Report on Form 8-K, require audited financial
statements of Yinhai to be filed with the SEC within 71 days of the initial Form
8-K filing with respect to this transaction. In connection with WTEQ's filing of
a Current Report on Form 8-K/A within 71 days after the closing, as it relates
to this transaction, audited financial statements of Yinhai will be filed with
the SEC in accordance with Form 8-K. Yinhai has agreed to provide audited
financial statements prepared in conformity with U.S. GAAP to WTEQ at or prior
to closing.
7. NAME CHANGE. After the closing, the Yinhai Shareholders shall cause WTEQ
to change its corporate name to such name as may be designated by Yinhai. In
connection therewith, WTEQ shall file with the SEC and mail to shareholders a
Definitive Information Statement on Schedule 14C.
The Remainder of this Page is Intentionally left Blank
II. PLAN OF EXCHANGE
1. CONDITIONS PRECEDENT TO CLOSING.
The obligation of the parties to consummate the transactions contemplated herein
are subject to the fulfillment or waiver prior to the closing of the following
conditions precedent:
(1.1) SHAREHOLDER APPROVAL. Yinhai shall have secured shareholder approval
for this transaction, if required, in accordance with the laws of
its place of incorporation and its constituent documents.
(1.2) BOARD OF DIRECTORS. The Boards of Directors of each of Yinhai and
WTEQ shall have approved the transaction and this agreement, in
accordance with the laws of its place of incorporation and its
constituent documents.
(1.3) DUE DILIGENCE INVESTIGATION. Each party shall have furnished to the
other party all corporate and financial information which is
customary and reasonable, to conduct its respective due
diligence, normal for this kind of transaction. If either party
determines that there is a reason not to complete the Plan of
Exchange as a result of their due diligence examination, then
they must give written notice to the other party prior to the
expiration of the due diligence examination period. The due
diligence period, for purposes of this paragraph, shall expire on
the Closing Date. The Closing Date shall be three days after the
satisfaction or waiver of all of the conditions precedent to
closing set forth in this Plan of Exchange, unless extended to a
later date by mutual agreement of the parties.
(1.4) THE RIGHTS OF DISSENTING SHAREHOLDERS, if any, of each party shall
have been satisfied and the Board of Directors of each party
shall have determined to proceed with the Plan of exchange.
(1.5) ALL OF THE TERMS, COVENANTS AND CONDITIONS of the Plan of exchange
to be complied with or performed by each party before Closing
shall have been complied with, performed or waived in writing;
(1.6) THE REPRESENTATIONS AND WARRANTIES of the parties, contained in the
Plan of exchange, as herein contemplated, except as amended,
altered or waived by the parties in writing, shall be true and
correct in all material respects at the Closing Date with the
same force and effect as if such representations and warranties
are made at and as of such time; and each party shall provide the
other with a certificate, certified either individually or by an
officer, dated the Closing Date, to the effect, that all
conditions precedent have been met, and that all representations
and warranties of such party are true and correct as of that
date. The form and substance of each party's certification shall
be in form reasonably satisfactory to the other. In addition, it
shall be a condition precedent of Yinhai's obligation to
consummate the closing that a certificate of good standing on
WTEQ shall have been delivered to it by the Secretary of State of
Nevada.
(1.7) CERTIFICATE OF THE CONSULTANTS. It shall be a condition precedent to
Yinhai's obligation to consummate the closing that a certificate
of the Consultants, jointly and severally, in substantially the
following form be delivered to it at or prior to closing:
(I) WTEQ is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada and has all
requisite corporate power to own, operate and lease its
properties and assets and to carry on its business.
(II) The authorized capitalization and the number of issued and
outstanding capital shares of WTEQ are accurately and completely
set forth in the Plan of Exchange.
(III)The issued and outstanding shares of WTEQ (including the
12,211,857 new shares of WTEQ common stock to be issued at
closing) have been duly authorized and validly issued and are
fully paid and non-assessable.
(IV) WTEQ has the full right, power and authority to sell, transfer
and deliver 12,211,857 new shares of its common stock to the
Yinhai Shareholders, and, upon delivery of the certificates
representing such shares as contemplated in the Plan of Exchange,
will transfer to the Yinhai Shareholders good, valid and
marketable title thereto, free and clear of all liens.
(V) To the best of their knowledge, there is no litigation,
proceeding or governmental investigation pending or threatened
against or relating to WTEQ.
(VI) WTEQ has taken all steps in connection with the Plan of Exchange
and the issuance of shares thereunder which are necessary to
comply in all material respects with the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as well as
the rules and regulations promulgated pursuant thereto.
(VII) All necessary corporate action has been taken by WTEQ to
authorize the 30:1 reverse stock split, and such reverse stock
split has been approved by a majority of the outstanding shares
of common and preferred shares of WTEQ in accordance with the
provisions of NRS 78.2055.
(VIII) WTEQ has no material liabilities as such term is defined by
U.S. generally accepted accounting principles.
(1.8) REVERSE STOCK SPLIT. WTEQ shall have consummated a 30:1 reverse
stock split of its common and preferred shares in accordance with
the provisions of NRS 78.2055.
(1.9) ABSENCE OF WTEQ LIABILITIES. WTEQ shall have no material liabilities
as such term is defined by U.S. generally accepted accounting
principles. The certified public accounting firm of WTEQ shall
deliver to Yinhai a letter to such effect, and counsel to WTEQ
shall deliver to Yinhai a comfort letter with respect to the
absence of liabilities. In addition, Jeffrey Lieberman hereby
agrees to indemnify and hold harmless Yinhai with respect to any
known or unknown liabilities of WTEQ that may arise within a
period of three years after the closing.
(1.10) DELIVERY OF AUDITED FINANCIAL STATEMENTS. Yinhai shall have
delivered to WTEQ audited financial statements and an audit
report thereon for the year ended December 31, 2004, which audit
shall be prepared by a PCAOB member audit firm in accordance with
U.S. GAAP at Yinhai's expense.
(1.11) CANCELLATIONS/AMENDMENTS TO EQUITY-LINKED SECURITIES. Jeffrey
Lieberman will have amended his outstanding options to purchase
2,000,000 shares of common stock at an exercise price of $0.13
per share so that they entitled him to purchase 66,667 shares of
common stock at an exercise price of $1.50 per share, and Brian
Rosinski shall have adjusted his outstanding options to purchase
350,000 shares at an exercise price of $0.13 per share so that
they entitle him to purchase 11,667 shares of common stock at an
exercise price of $1.50 per share.
2. CONDITIONS CONCURRENT AND SUBSEQUENT TO CLOSING.
(2.1) DELIVERY OF REGISTERED CAPITAL OF YINHAI. Immediately upon or prior
to the Closing, the Yinhai Shareholders shall transfer to WTEQ
all of their shares of registered capital of Harbin Yinhai
Technology Development Company, Ltd.
(2.2) ACQUISITION SHARE ISSUANCE. Immediately upon the Closing, WTEQ shall
issue the acquisition shares of common stock, as follows (all
share figures are in post-reverse split numbers):
WTEQ Issued 1,356,873
------------ -----------
Acquisition Share Issuance 12,211,857
---------------------------- -----------
Resulting Total 13,568,730
---------------- -----------
3. PLAN OF EXCHANGE
(3.1) EXCHANGE AND REORGANIZATION: WTEQ and Yinhai shall be hereby
reorganized, such that WTEQ shall acquire 100% the capital stock
of Yinhai, and Yinhai shall become a wholly-owned subsidiary of
WTEQ.
(3.2) CONVERSION OF OUTSTANDING STOCK: Forthwith upon the effective date
of the Plan, WTEQ shall issue 12,211,857 new investment shares of
its common stock to or for the Yinhai Shareholders.
(3.3) CLOSING/EFFECTIVE DATE: The Plan of exchange shall become effective
immediately upon approval and adoption by the parties hereto, in
the manner provided by the law of the places of incorporation and
constituent corporate documents, and upon compliance with
governmental filing requirements, such as, without limitation,
compliance with Section 14 of the Securities Exchange Act of
1934, and the filing of Articles of Exchange, if applicable under
State Law. Closing shall occur when all conditions of closing
have been met or are waived by the parties. The parties
anticipate the filing of a Schedule 14-F Information Statement at
least ten days prior to any change in control of the Board of
Directors of WTEQ.
(3.4) SURVIVING CORPORATIONS: Both corporations shall survive the exchange
and reorganization herein contemplated and shall continue to be
governed by the laws of its respective State of incorporation.
(3.5) RIGHTS OF DISSENTING SHAREHOLDERS: Each Party is the entity
responsible for the rights of its own dissenting shareholders, if
any.
(3.6) SERVICE OF PROCESS AND ADDRESS: Each corporation shall continue to
be amenable to service of process in its own jurisdiction,
exactly as before this acquisition. The address of WTEQ is 30
West Gude Drive, Rockville, MD 20850. The address of Yinhai is 18
Dalian Road, Pingfang Industrial Development Zone, Harbin,
Peoples' Republic of China 150060.
(3.7) SURVIVING ARTICLES OF INCORPORATION: the Articles of Incorporation
of each Corporation shall remain in full force and effect,
unchanged.
(3.8) SURVIVING BY-LAWS: the By-Laws of each Corporation shall remain in
full force and effect, unchanged.
(3.9) FURTHER ASSURANCE, GOOD FAITH AND FAIR DEALING: the Directors of
each Company shall and will execute and deliver any and all
necessary documents, acknowledgments and assurances and do all
things proper to confirm or acknowledge any and all rights,
titles and interests created or confirmed herein; and both
companies covenant expressly hereby to deal fairly and in good
faith with each other and each others shareholders. In
furtherance of the parties desire, as so expressed, and to
encourage timely, effective and businesslike resolution the
parties agree that any dispute arising between them, capable of
resolution by arbitration, shall be submitted to binding
arbitration. As a further incentive to private resolution of any
dispute, the parties agree that each party shall bear its own
costs of dispute resolution and shall not recover such costs from
any other party.
(3.10) GENERAL MUTUAL REPRESENTATIONS AND WARRANTIES. The purpose
and general import of the Mutual Representations and Warranties,
are that each party has made appropriate full disclosure to the
others, that no material information has been withheld, and that
the information exchanged is accurate, true and correct. These
warranties and representations are made by each party to the
other, unless otherwise provided, and they speak and shall be
true immediately before Closing.
(3.10.1) ORGANIZATION AND QUALIFICATION. Each Corporation is duly
organized and in good standing, and is duly qualified to
conduct any business it may be conducting, as required by
law or local ordinance.
(3.10.2) CORPORATE AUTHORITY. Each Corporation has corporate
authority, under the laws of its jurisdiction and its
constituent documents, to do each and every element of
performance to which it has agreed, and which is reasonably
necessary, appropriate and lawful, to carry out this
Agreement in good faith.
(3.10.3) OWNERSHIP OF ASSETS AND PROPERTY. Each Corporation has
lawful title and ownership of it property as reported to the
other, and as disclosed in its financial statements.
(3.10.4) ABSENCE OF CERTAIN CHANGES OR EVENTS. Each Corporation has
not had any material changes of circumstances or events
which have not been fully disclosed to the other party, and
which, if different than previously disclosed in writing,
have been disclosed in writing as currently as is reasonably
practicable. Specifically, and without limitation:
(3.10.4-A) the business of each Corporation shall be conducted
only in the ordinary and usual course and consistent with
its past practice, and neither party shall purchase or sell
(or enter into any agreement to so purchase or sell) any
properties or assets or make any other changes in its
operations, respectively, taken as a whole, or provide for
the issuance of, agreement to issue or grant of options to
acquire any shares, whether common, redeemable common or
convertible preferred, in connection therewith;
(3.10.4-B) Neither Corporation shall (i) amend its Articles of
Incorporation or By-Laws, (ii) change the number of
authorized or outstanding shares of its capital stock, or
(iii) declare, set aside or pay any dividend or other
distribution or payment in cash, stock or property;
(3.10.4-C) Neither Corporation shall (i) issue, grant or pledge
or agree or propose to issue, grant, sell or pledge any
shares of, or rights of any kind to acquire any shares of,
its capital stock, (ii) incur any indebtedness other than in
the ordinary course of business, (iii) acquire directly or
indirectly by redemption or otherwise any shares of its
capital stock of any class or (iv) enter into or modify any
contact, agreement, commitment or arrangement with respect
to any of the foregoing;
(3.10.4-D) Except in the ordinary course of business, neither
party shall (i) increase the compensation payable or to
become payable by it to any of its officers or directors;
(ii) make any payment or provision with respect to any
bonus, profit sharing, stock option, stock purchase,
employee stock ownership, pension, retirement, deferred
compensation, employment or other payment plan, agreement or
arrangement for the benefit of its employees (iii) grant any
stock options or stock appreciation rights or permit the
exercise of any stock appreciation right where the exercise
of such right is subject to its discretion (iv) make any
change in the compensation to be received by any of its
officers; or adopt, or amend to increase compensation or
benefits payable under, any collective bargaining, bonus,
profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment, termination
or severance or other plan, agreement, trust, fund or
arrangement for the benefit of employees, (v) enter into any
agreement with respect to termination or severance pay, or
any employment agreement or other contract or arrangement
with any officer or director or employee, respectively, with
respect to the performance or personal services that is not
terminable without liability by it on thirty days notice or
less, (vi) increase benefits payable under its current
severance or termination, pay agreements or policies or
(vii) make any loan or advance to, or enter into any written
contract, lease or commitment with, any of its officers or
directors;
(3.10.4-E) Neither party shall assume, guarantee, endorse or
otherwise become responsible for the obligations of any
other individual, firm or corporation or make any loans or
advances to any individual, firm or corporation, other than
obligations and liabilities expressly assumed by the other
that party;
(3.10.4-F) Neither party shall make any investment of a capital
nature either by purchase of stock or securities,
contributions to capital, property transfers or otherwise,
or by the purchase of any property or assets of any other
individual, firm or corporation.
(3.10.5) ABSENCE OF UNDISCLOSED LIABILITIES. Each Corporation has,
and has no reason to anticipate having, any material
liabilities which have not been disclosed to the other, in
the financial statements or otherwise in writing.
(3.10.6) LEGAL COMPLIANCE. Each Corporation shall comply in all
material respects with all Federal, state, local and other
governmental (domestic or foreign) laws, statutes,
ordinances, rules, regulations (including all applicable
securities laws), orders, writs, injunctions, decrees,
awards or other requirements of any court or other
governmental or other authority applicable to each of them
or their respective assets or to the conduct of their
respective businesses, and use their best efforts to perform
all obligations under all contracts, agreements, licenses,
permits and undertaking without default.
(3.10.7) LEGAL PROCEEDINGS. Each Corporation has no legal
proceedings, administrative or regulatory proceeding,
pending or suspected, which have not been fully disclosed in
writing to the other.
(3.10.8) NO BREACH OF OTHER AGREEMENTS. This Agreement, and the
faithful performance of this agreement, will not cause any
breach of any other existing agreement, or any covenant,
consent decree, or undertaking by either, not disclosed to
the other.
(3.10.9) CAPITAL STOCK. The issued and outstanding shares and all
shares of capital stock of each Corporation is as detailed
herein, that all such shares are in fact issued and
outstanding, duly and validly issued, were issued as and are
fully paid and non-assessable shares, and that, other than
as represented in writing, there are no other securities,
options, warrants or rights outstanding, to acquire further
shares of such Corporation.
(3.10.10) SEC REPORTS, LIABILITIES AND TAXES. ( i ) WTEQ has filed all
required registration statements, prospectuses, reports,
schedules, forms, statements and other documents required to
be filed by it with the SEC since the date of its
registration under the Securities Act of 1933, as amended
(collectively, including all exhibits thereto, the "WTEQ SEC
Reports"). None of the WTEQ SEC Reports, as of their
respective dates, contained any untrue statements of
material fact or failed to contain any statements which were
necessary to make the statements made therein, in light of
the circumstances, not misleading. All of the WTEQ SEC
Reports, as of their respective dates (and as of the date of
any amendment to the respective WTEQ SEC Reports), complied
as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder.
(ii) Except as disclosed in the WTEQ SEC Reports filed prior to
the date hereof, WTEQ and its Subsidiaries have not incurred
any liabilities or obligations (whether or not accrued,
contingent or otherwise) that are of a nature that would be
required to be disclosed on a balance sheet of WTEQ and its
Subsidiaries or the footnotes thereto prepared in conformity
with GAAP, other than (A) liabilities incurred in the
ordinary course of business, or (B) liabilities that would
not, in the aggregate, reasonably be expected to have a
material adverse effect on WTEQ.
(iii)Except as disclosed in the WTEQ SEC Reports filed prior to
the date hereof, WTEQ and each of its Subsidiaries (i) have
prepared in good faith and duly and timely filed (taking
into account any extension of time within which to file) all
material tax returns required to be filed by any of them and
all such filed tax returns are complete and accurate in all
material respects; (ii) have paid all taxes that are shown
as due and payable on such filed tax returns or that WTEQ or
any of its Subsidiaries are obligated to pay without the
filing of a tax return; (iii) have paid all other
assessments received to date in respect of taxes other than
those being contested in good faith for which provision has
been made in accordance with GAAP on the most recent balance
sheet included in WTEQ's financial statements; (iv) have
withheld from amounts owing to any employee, creditor or
other person all taxes required by law to be withheld and
have paid over to the proper governmental authority in a
timely manner all such withheld amounts to the extent due
and payable; and (v) have not waived any applicable statute
of limitations with respect to United States federal or
state income or franchise taxes and have not otherwise
agreed to any extension of time with respect to a United
States federal or state income or franchise tax assessment
or deficiency.
(3.10.11) BROKERS' OR FINDER'S FEES. Each Corporation is not aware of
any claims for brokers' fees, or finders' fees, or other
commissions or fees, by any person not disclosed to the
other, which would become, if valid, an obligation of either
company.
(3.11) MISCELLANEOUS PROVISIONS
(3.11.1) Except as required by law, no party shall provide any
information concerning any aspect of the transactions
contemplated by this Agreement to anyone other than their
respective officers, employees and representatives without
the prior written consent of the other parties hereto. The
aforesaid obligations shall terminate on the earlier to
occur of (a) the Closing, or (b) the date by which any party
is required under its articles or bylaws or as required by
law, to provide specific disclosure of such transactions to
its shareholders, governmental agencies or other third
parties. In the event that the transaction does not close,
each party will return all confidential information
furnished in confidence to the other. In addition, all
parties shall consult with each other concerning the timing
and content of any press release or news release to be
issued by any of them.
(3.11.2) This Agreement may be executed simultaneously in two or more
counterpart originals. The parties can and may rely upon
facsimile signatures as binding under this Agreement,
however, the parties agree to forward original signatures to
the other parties as soon as practicable after the facsimile
signatures have been delivered.
(3.11.3) The Parties to this agreement have no wish to engage in
costly or lengthy litigation with each other. Accordingly,
any and all disputes which the parties cannot resolve by
agreement or mediation, shall be submitted to binding
arbitration under the rules and auspices of the American
Arbitration Association. As a further incentive to avoid
disputes, each party shall bear its own costs, with respect
thereto, and with respect to any proceedings in any court
brought to enforce or overturn any arbitration award. This
provision is expressly intended to discourage litigation and
to encourage orderly, timely and economical resolution of
any disputes which may occur.
(3.11.4) If any provision of this Agreement or the application
thereof to any person or situation shall be held invalid or
unenforceable, the remainder of the Agreement and the
application of such provision to other persons or situations
shall not be effected thereby but shall continue valid and
enforceable to the fullest extent permitted by law.
(3.11.5) No waiver by any party of any occurrence or provision hereof
shall be deemed a waiver of any other occurrence or
provision.
(3.11.6) The parties acknowledge that both they and their counsel
have been provided ample opportunity to review and revise
this agreement and that the normal rule of construction
shall not be applied to cause the resolution of any
ambiguities against any party presumptively. The Agreement
shall be governed by and construed in accordance with the
laws of the State of Nevada.
4. TERMINATION. The Plan of exchange may be terminated by written notice, at
any time prior to closing, by either party whether before or after approval by
the shareholders of either or both; (i) by mutual consent; (ii) by either party
during the due diligence phase, or (iii) by either party, in the event that the
transaction represented by the anticipated Plan of exchange has not been
implemented and approved by the proper governmental authorities 120 days from
the of this Agreement. In the event that termination of the Plan of exchange by
either or both, as provided above, the Plan of exchange shall forthwith become
void and there shall be no liability on the part of either party or their
respective officers and directors.
5. CLOSING. The parties hereto contemplate that the closing of this Plan of
Exchange shall occur no more than three days after all of the conditions
precedent have been met or waived. The closing deliveries will be made pursuant
to the Escrow Agreement, dated January 13, 2005. On the Closing Date, a
certificate for the 12,211,857 shares of WTEQ common stock will be delivered to
Yinhai from escrow for distribution to the Yinhai Shareholders and the
Consultants shall be paid by Yinhai and/or the Yinhai Shareholders an amount
equal to $350,000. The parties acknowledge that the Escrow Agreement has a
default provision that governs the rights of the parties in the event that
certain performances are not made on a timely basis and they expressly accept
the terms thereof.
6. EXECUTION IN COUNTERPARTS. This Plan of Exchange may be executed in any
number of counterparts, and when all of the counterparts are put together it
shall be deemed one document and shall be a binding contract.
7. MERGER CLAUSE. This Plan of Exchange, together with the Letter of Intent and
the Escrow Agreement, constitute the entire agreement of the parties hereto with
respect to the subject matter hereof, and such documents supercede all prior
understandings or agreements between the parties hereto, whether oral or
written, with respect to the subject matter hereof, all of which are hereby
superceded, merged and rendered null and void.
The Remainder of this Page is Intentionally left Blank
The parties hereto, intending to be bound, hereby sign this Plan of
Exchange below as of the date first written above.
WORLDTEQ GROUP HARBIN YINHAI TECHNOLOGY
INTERNATIONAL, INC. DEVELOPMENT COMPANY LTD.
By: /s/ Jeffrey Lieberman By: /s/ Tian, Ling
---------------------- ---------------
Jeffrey Lieberman, Tian, Ling,
President President
THE CONSULTANTS:
Progressive Media Group, Inc.
By /s/ Pamela Cohen
-----------------
Pamela Cohen, President
XCL Partners, Inc.
By /s/ Tim Reiu
-------------
Tim Reiu, President
Aero Financial, Inc.
By /s/ Jim Price
--------------
Jim Price, President
Triple S Parts, Inc.
By /s/ Emiliano Lakota
--------------------
Emiliano Lakota, President