Exhibit 1.4
AGREEMENT AND PLAN OF SHARE EXCHANGE
by and among
Australia China Investments Limited,
a British Virgin Islands Corporation,
and
the Stockholders of Australia China Investments Limited
on the one hand;
and
Equity Finance Holding Corporation,
a Belize corporation
and
Certain Stockholders of Equity Finance Holding Corporation,
on the other hand
10 January 2003
AGREEMENT AND PLAN OF SHARE EXCHANGE
This Agreement and Plan of Share Exchange, dated as of 10 January 2003 (this
"Agreement"), is made and entered into by and among Australia China Investments
Limited, a British Virgin Islands corporation ("Australia China Investments"),
and the stockholders of Australia China Investments identified on Schedule A
hereto (collectively, the "Stockholders" and each, individually, a
"Stockholder"), on the one hand, and Equity Finance Holding Corporation, a
Belize corporation ("EFHLF"), and the stockholders of EFHLF listed on Schedule B
hereto who together own at least a majority of EFHLF's outstanding capital stock
(collectively, the "EFHLF Stockholders"), on the other hand.
WHEREAS, the respective Boards of Directors of Australia China
Investments and EFHLF have adopted resolutions approving and adopting the
proposed share exchange (the "Exchange") upon the terms and conditions
hereinafter set forth in this Agreement;
WHEREAS, the Stockholders holds an aggregate of 5,000,000 shares and
now in the progress to increase the shares to 824,283,600 shares for the
capitalization of the loan from the shareholders of Australia China
Investments's capital stock (the "Australia China Investments Shares"), which
represent all of the issued and outstanding shares of capital stock of Australia
China Investments, and the Stockholder desires to participate in the Exchange;
WHEREAS, Australia China Investments will enter into this Agreement for
the purpose of evidencing its consent to the consummation of the Exchange and
for the purpose of making certain representations, warranties, covenants and
agreements;
WHEREAS, the EFHLF Stockholders will enter into this Agreement for the
purpose of making certain representations, warranties, covenants and agreements;
WHEREAS, it is intended that the terms and conditions of this Agreement
comply in all respects with Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended ("the Code") and the regulations corresponding thereto, so that
the Exchange shall qualify as a tax free reorganization under the Code;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE 1
THE EXCHANGE
1.1 The Exchange. Upon the terms and subject to the conditions hereof,
at the Closing (as hereinafter defined) the Stockholders will sell, convey,
assign, transfer and deliver to EFHLF stock certificates representing the
Australia China Investments Shares, and (i) EFHLF will issue to the Stockholders
or the Stockholders' nominees, one or more stock certificates representing an
aggregate of 6,000,000 shares of its common capital stock, par value $.01 per
share ("EFHLF Common Stock") [and] (ii) EFHLF Stockholders will transfer to the
Stockholders or the Stockholders' nominees one or more stock certificates
representing an aggregate of 3,000,000 out of 4,634,100 the EFHLF Shares owned
by EFHLF Stockholders (collectively "the EFHLF Shares") in exchange for the
Australia China Investments Shares.
1.2 Closing. The closing of the Exchange (the "Closing") shall take
place on or before 31 January 2003, or on such other date as may be mutually
agreed upon by the parties. Such date is referred to herein as the "Closing
Date."
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF AUSTRALIA CHINA INVESTMENTS
Australia China Investments hereby represents and warrants to EFHLF as
follows:
2.1 Organization. Australia China Investments has been duly
incorporated, is validly existing as a corporation and is in good standing under
the laws of its jurisdiction of incorporation, and has the requisite power to
carry on its business as now conducted.
2.2 Capitalization. The authorized capital stock of Australia China
Investments consists of [5,000,000] shares of common stock, $0.01 par value, of
which [5,000,000] shares are issued and outstanding. All of the issued and
outstanding shares of capital stock of Australia China Investments are duly
authorized, validly issued, fully paid, non-assessable and free of preemptive
rights. There are no outstanding or authorized options, rights, warrants, calls,
convertible securities, rights to subscribe, conversion rights or other
agreements or commitments to which Australia China Investments is a party or
which are binding upon Australia China Investments providing for the issuance or
transfer by Australia China Investments of additional shares of its capital
stock and Australia China Investments has not reserved any shares of its capital
stock for issuance, nor are there any outstanding stock option rights, phantom
equity or similar rights, contracts, arrangements or commitments which are
binding upon Australia China Investments. There are no voting trusts or any
other agreements or understandings with respect to the voting of Australia China
Investments's capital stock.
2.3 Certain Corporate Matters. Australia China Investments is duly
qualified to do business as a corporation and is in good standing in each
jurisdiction in which the ownership of its properties, the employment of its
personnel or the conduct of its business requires it to be so qualified, except
where the failure to be so qualified would not have a material adverse effect on
Australia China Investments's financial condition, results of operations or
business. Australia China Investments has full corporate power and authority and
all authorizations, licenses and permits necessary to carry on the business in
which it is engaged and to own and use the properties owned and used by it.
2.4 Authority Relative to this Agreement. Australia China Investments
has the requisite power and authority to enter into this Agreement and to carry
out its obligations hereunder. The execution, delivery and performance of this
Agreement by Australia China Investments and the consummation by Australia China
Investments of the transactions contemplated hereby have been duly authorized by
the Stockholders and the Board of Directors of Australia China Investments and
no other actions on the part of Australia China Investments are necessary to
authorize this Agreement or the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Australia China Investments
and constitutes a valid and binding agreement of Australia China Investments,
enforceable against Australia China Investments in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally or by
general principles of equity.
2.5 Consents and Approvals; No Violations. Except for requirements of
applicable law, no filing with, and no permit, authorization, consent or
approval of, any third party, public body or authority is necessary for the
consummation by Australia China Investments of the transactions contemplated by
this Agreement. Neither the execution and delivery of this Agreement by
Australia China Investments nor the consummation by Australia China Investments
of the transactions contemplated hereby, nor compliance by Australia China
Investments with any of the provisions hereof, will (a) conflict with or result
in any breach of any provisions of the organizational documents of Australia
China Investments, (b) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which Australia China
Investments is a party or by which it or its properties or assets may be bound
or (c) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Australia China Investments, or any of its properties or assets,
except in the case of clauses (b) and (c) for violations, breaches or defaults
which are not in the aggregate material to Australia China Investments taken as
a whole.
2.6 Title to Assets. Australia China Investments has good and
marketable title to all of the assets and properties now carried on its books
including 85% ownership of Yantai Dahua Paper Industry Company Limited and those
reflected in the most recent balance sheet contained in the Australia China
Investments Financial Statements, free and clear of all liens, claims, charges,
security interests or other encumbrances, except as described in the Australia
China Investments Financial Statements or arising thereafter in the ordinary
course of business (none of which will be material).
2.7 Disclosure. The representations and warranties and statements of
fact made by Australia China Investments in this Agreement are, as applicable,
accurate, correct and complete and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements and information contained herein not false or misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
The Stockholders hereby represents and warrants to EFHLF and the EFHLF
Stockholders, as to themselves and their respective ownership in the Australia
China Investments Shares, as follows:
3.1 Ownership of the Australia China Investments Shares. The
Stockholders own, beneficially and of record, good and marketable title to the
Australia China Investments Shares, free and clear of all security interests,
liens, adverse claims, encumbrances, equities, proxies, options or stockholders'
agreements. At the Closing, the Stockholder will convey to EFHLF good and
marketable title to the Australia China Investments Shares, free and clear of
any security interests, liens, adverse claims, encumbrances, equities, proxies,
options, stockholders' agreements or restrictions.
3.2 Authority Relative to this Agreement. The execution, delivery and
performance of this Agreement by the Stockholders and the consummation by the
Stockholders of the transactions contemplated hereby have been duly authorized
by the Stockholders, and no other actions on the part of the Stockholders are
necessary to authorize this Agreement or the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the
Stockholders and constitutes a valid and binding agreement of the Stockholders,
enforceable against the Stockholders in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity.
3.3 Consents and Approvals; No Violations. Except for requirements of
applicable laws, no filing with, and no permit, authorization, consent or
approval of, any public body or authority is necessary for the consummation by
the Stockholders of the transactions contemplated by this Agreement. Neither the
execution and delivery of this Agreement by the Stockholders nor the
consummation by the Stockholders of the transactions contemplated hereby, nor
compliance by the Stockholders with any of the provisions hereof, will (a)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, agreement or other
instrument or obligation to which the Stockholders are a party or by which the
Stockholders or their properties may be bound or (b) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Stockholders,
except in the case of clauses (a) and (b) for violations, breaches or defaults
which are not in the aggregate material to the Stockholders.
3.4 Restricted Securities. The Stockholders acknowledge that the EFHLF
Shares will not be registered pursuant to the Securities Act of 1933, as amended
(the "Securities Act") or any applicable state securities laws that the EFHLF
Shares are issued without such registration in reliance upon the exemption
afforded by Regulation S of the Securities Act of 1933 for offers and
sales that occur outside the United States, that the EFHLF Shares will be
characterized as "restricted securities" under federal securities laws and are
subject to a distribution compliance period of one-year, and that under such
laws and applicable regulations the EFHLF Shares cannot be sold or otherwise
disposed of without registration under the Securities Act or an exemption
therefrom. In this regard, the Stockholders are familiar with Rule 144
promulgated under the Securities Act, as currently in effect, and understands
the resale limitations imposed thereby and by the Securities Act. Each of the
Stockholders is not a "U.S. Person" as that term is defined in Rule 902(k) of
the Securities Act of 1933.
3.5 Legend. The Stockholders acknowledge that the certificate(s)
representing the EFHLF Shares shall each conspicuously set forth on the face or
back thereof a legend in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE UNITED STATES OR TO A U.S. PERSON IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED IN
THE UNITED STATES OR TO A U.S. PERSON.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
EFHLF AND THE EFHLF STOCKHOLDERS
EFHLF and the EFHLF Stockholders hereby represent and warrant, jointly
and severally, to Australia China Investments and the Stockholders as follows:
4.1 Organization. EFHLF is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and has the requisite corporate power to carry on its business as now conducted.
4.2 Capitalization. EFHLF's authorized capital stock consists of
100,000,000 shares of capital stock, all of which are designated as Common
Stock, of which 5,149,000 shares are and at the Closing will be issued and
outstanding. All issued and outstanding shares of EFHLF Common Stock are duly
authorized, validly issued, fully paid, non-assessable and free of preemptive
rights. When issued, the EFHLF Shares will be duly authorized, validly issued,
fully paid, non-assessable and free of preemptive rights, there are no
outstanding or authorized options, rights, warrants, calls, convertible
securities, rights to subscribe, conversion rights or other agreements or
commitments to which EFHLF is a party or which are binding upon EFHLF providing
for the issuance by EFHLF or transfer by EFHLF of additional shares of EFHLF's
capital stock and EFHLF has not reserved any shares of its capital stock for
issuance, nor are there any outstanding stock option rights, phantom equity or
similar rights, contracts, arrangements or commitments to issue capital stock of
EFHLF. There are no voting trusts or any other agreements or understandings with
respect to the voting of EFHLF's capital stock.
4.3 Certain Corporate Matters. EFHLF is duly licensed or qualified to
do business and is in good standing as a foreign corporation in every
jurisdiction in which the character of EFHLF's properties or nature of EFHLF's
business requires it to be so licensed or qualified other than such
jurisdictions in which the failure to be so licensed or qualified does not, or
insofar as can reasonably be foreseen, in the future will not, have a material
adverse effect on its financial condition, results of operations or business.
EFHLF has full corporate power and authority and all authorizations, licenses
and permits necessary to carry on the business in which it is engaged or in
which it proposes presently to engage and to own and use the properties owned
and used by it. EFHLF has delivered to Australia China Investments true,
accurate and complete copies of its Certificate of Incorporation and Bylaws,
which reflect all restatements of and amendments made thereto at any
time prior to the date of this Agreement. The records of meetings of the
stockholders and Board of Directors of EFHLF are complete and correct in all
material respects. The stock records of EFHLF and the Stockholder lists of EFHLF
that EFHLF has previously furnished to Australia China Investments are complete
and correct in all material respects and accurately reflect the record ownership
and the beneficial ownership of all the outstanding shares of EFHLF's capital
stock and any other outstanding securities issued by EFHLF. EFHLF is not in
default under or in violation of any provision of its Certificate of
Incorporation or Bylaws in any material respect. EFHLF is not in any material
default or in violation of any restriction, lien, encumbrance, indenture,
contract, lease, sublease, loan agreement, note or other obligation or liability
by which it is bound or to which any of its assets is subject.
4.4 Authority Relative to this Agreement. EFHLF has the requisite
corporate power and authority to enter into this Agreement and carry out its
obligations hereunder. The execution, delivery and performance of this Agreement
by EFHLF and the consummation of the transactions contemplated hereby have been
duly authorized by the Board of Directors of EFHLF and no other actions on the
part of EFHLF are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by EFHLF and constitutes a valid and binding obligation of EFHLF,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity.
4.5 Consents and Approvals; No Violations. Except for applicable
requirements of federal securities laws and state securities or blue-sky laws,
no filing with, and no permit, authorization, consent or approval of, any third
party, public body or authority is necessary for the consummation by EFHLF of
the transactions contemplated by this Agreement. Neither the execution and
delivery of this Agreement by EFHLF nor the consummation by EFHLF of the
transactions contemplated hereby, nor compliance by EFHLF with any of the
provisions hereof, will (a) conflict with or result in any breach of any
provisions of the charter or Bylaws of EFHLF, (b) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which EFHLF is a party or by which it or any of its properties or assets may be
bound or (c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to EFHLF, or any of its properties or assets, except in
the case of clauses (b) and (c) for violations, breaches or defaults which are
not in the aggregate material to EFHLF taken as a whole.
4.6 SEC Documents. EFHLF hereby makes reference to the following
documents filed with the United States Securities and Exchange Commission (the
"SEC"), as posted on the SEC's website, www.sec.gov: (collectively, the "SEC
Documents"): (a) Current Report on Form 8-K as filed on August 30, 2002; (b)
Annual and Transition Report of Foreign Private Issuers [Sections 13 or 15(d)]
on Form 20-F for the fiscal year ended December 31, 2001; (c) Current Report on
Form 8-K as filed on June 27, 2002; (d) Notification of inability to timely file
Form 20-F on Form NT 20-F as filed on June 25, 2002; (e) Current Report on Form
8-K as filed on June 25, 2002; (f) Annual and Transition Report of Foreign
Private Issuers [Sections 13 or 15(d)] on Form 20-F for the fiscal year ended
December 31, 2000; (g) Notification of inability to timely file Form 20-F on
Form NT 20-F as filed on March 30, 2001; (h) Annual and Transition Report of
Foreign Private Issuers [Sections 13 or 15(d)] on Form 20-F for the fiscal year
ended June 29, 2000, and all amendments thereto. The SEC Documents constitute
all of the documents and reports that EFHLF was required to file with the SEC
pursuant to the Securities Exchange Act of 1934 ("Exchange Act") and the rules
and regulations promulgated thereunder by the SEC since the effectiveness of
EFHLF's Form 20-F filed on June 29, 2000. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder and none of
the SEC Documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of EFHLF included in the SEC Documents
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles in the United States (except, in the case of unaudited statements, as
permitted by the applicable form under the Exchange Act) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the financial position of EFHLF as of the dates
thereof and its statements of operations, stockholders' equity and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal and recurring year-end audit adjustments which were and are not expected
to have a material adverse effect on EFHLF, its business, financial condition or
results of operations). Except as and to the extent set forth on the
consolidated balance sheet of EFHLF as of September 30, 2002, including the
notes thereto, EFHLF has no liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise and whether required to be reflected
on a balance sheet or not), except for liabilities and obligations incurred in
the ordinary course of business consistent with past practices since September
30, 2002 which in the aggregate could not reasonably be expected to have a
material adverse effect on EFHLF, its business, financial condition or results
of operations.
4.7 Financial Statements.
(a) Included in the SEC Documents are the audited balance
sheet of EFHLF as at December 31, 2001, and the related statements of income,
stockholders' equity and cash flows for the two years then ended, together with
the unqualified report thereon (except with respect to continuation as a going
concern) of Malone & Bailey, PLLC ("Malone"), independent auditor (collectively,
"EFHLF's Audited Financials").
(b) Included in the SEC Documents are the unaudited balance
sheets of EFHLF as at September 30, 2002, and the related statements of
operations and cash flows for the nine months ended September 30, 2002,
("EFHLF's Interim Financials"). The unaudited balance sheet at September 30,
2002 included in EFHLF's Interim Financials is hereinafter referred to as the
"Unaudited Balance Sheet" and September 30, 2002 is hereinafter referred to as
the "EFHLF Balance Sheet Date".
(c) EFHLF's Audited Financials and EFHLF's Interim Financials
(collectively "EFHLF's Financial Statements") are (i) in accordance with the
books and records of EFHLF, (ii) correct and complete, (iii) fairly present the
financial position and results of operations of EFHLF as of the dates indicated,
and (iv) prepared in accordance with U.S. GAAP (except that (x) unaudited
financial statements may not be in accordance with GAAP because of the absence
of footnotes normally contained therein, and (y) interim (unaudited) financials
are subject to normal year-end audit adjustments that in the aggregate will not
have a material adverse effect on EFHLF, its business, financial condition or
results of operations and (z) EFHLF's Financial Statements do not contain any
untrue statement of material fact or omit to state a material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made not misleading.
4.8 Events Subsequent to Financial Statements. Since December 31, 2001,
there has not been:
(a) Any sale, lease, transfer, license or assignment of any assets,
tangible or intangible, of EFHLF;
(b) Any damage, destruction or property loss, whether or not covered by
insurance, affecting adversely the properties or business of EFHLF;
(c) Any declaration or setting aside or payment of any dividend or
distribution with respect to the shares of capital stock of EFHLF or
any redemption, purchase or other acquisition of any such shares;
(d) Any subjection to any lien on any of the assets, tangible or
intangible, of EFHLF;
(e) Any incurrence of indebtedness or liability or assumption of
obligations by EFHLF;
(f) Any waiver or release by EFHLF of any right of any material value;
(g) Any compensation or benefits paid to officers or directors of
EFHLF;
(h) Any change made or authorized in the Certificate of Incorporation
or Bylaws of EFHLF; or
(i) Any loan to or other transaction with any officer, director or
stockholder of EFHLF giving rise to any claim or right of EFHLF against
any such person or of such person against EFHLF.
4.9 Undisclosed Liabilities. Except as otherwise disclosed in EFHLF's
Financial Statements, EFHLF has no material liability or obligation whatsoever,
either direct or indirect, matured or unmatured, accrued, absolute, contingent
or otherwise; there is no material pending or threatened legal proceeding
against EFHLF or any of it property.
4.10 Tax Matters.
(a) EFHLF has duly filed all material federal, state, local and foreign
tax returns required to be filed by or with respect to it with the
Internal Revenue Service or other applicable taxing authority, and no
extensions with respect to such tax returns have been requested or
granted;
(b) EFHLF has paid, or adequately reserved against in EFHLF's Financial
Statements, all material taxes due, or claimed by any taxing authority
to be due, from or with respect to it;
(c) To the best knowledge of EFHLF, there has been no material issue
raised or material adjustment proposed (and none is pending) by the
Internal Revenue Service or any other taxing authority in connection
with any of EFHLF's tax returns;
(d) No waiver or extension of any statute of limitations as to any
material federal, state, local or foreign tax matter has been given by
or requested from EFHLF; and
(e) EFHLF has not filed a consent under Section 341(f) of the Internal
Revenue Code of 1986, as amended.
For the purposes of this Section 4.10, a tax is due (and must therefore
either be paid or adequately reserved against in EFHLF's Financial Statements)
only on the last date payment of such tax can be made without interest or
penalties, whether such payment is due in respect of estimated taxes,
withholding taxes, required tax credits or any other tax.
4.11 Real Property. EFHLF does not own or lease any real property.
4.12 Books and Records. The books and records of EFHLF delivered to the
Stockholder prior to the Closing fully and fairly reflect the transactions to
which EFHLF is a party or by which it or its properties are bound.
4.13 Questionable Payments. Neither EFHLF nor any employee, agent or
representative of it has, directly or indirectly, made any bribes, kickbacks,
illegal payments or illegal political contributions using Company funds or made
any payments from EFHLF's funds to governmental officials for improper purposes
or made any illegal payments from EFHLF's funds to obtain or retain business.
4.14 Environmental Matters.
(a) Definitions. For the purpose of this Agreement, the following terms
shall have the meaning herein specified:
(i) "Governmental Authority" shall mean the United States,
each state, each county, each city and each other political
subdivision in which EFHLF's business is located, and any
court, political subdivision, agency or instrumentality with
jurisdiction over EFHLF's business.
(ii) "Environmental Laws" shall mean (A) the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C.A. 9601 et seq.
("CERCLA"), (B) the Resource Conservation and Recovery Act, as
amended by the Hazardous and Solid Waste Amendment of 1984, 42
U.S.C.A. 6901 et seq. ("RCRA"), (C) the Clean Air Act, 42
U.S.C.A. 7401 et seq., (D) the Federal Water Pollution Control
Act, as amended, 33 U.S.C.A. 1251 et seq., (E) the Toxic
Substances Control Act, 15 U.S.C.A. 2601 et seq., (F) all
applicable state laws, and (G) all other laws and ordinances
relating to municipal waste, solid waste, air pollution, water
pollution and/or the handling, discharge, disposal or recovery
of on-site or off-site hazardous substances or materials, as
each of the foregoing has been or may hereafter be amended
from time to time.
(iii) "Hazardous Materials" shall mean, among others, (A) any
"hazardous waste" as defined by RCRA, and regulations
promulgated thereunder; (B) any "hazardous substance" as
defined by CERCLA, and regulations promulgated thereunder; (C)
any "toxic pollutant" as defined in the Federal Water
Pollution Prevention and Control Act, as amended, 33 U.S.C.
1251 et seq., (commonly known as "CWA" for "Clean Water Act"),
and any regulations thereunder; (D) any "hazardous air
pollutant" as defined in the Air Pollution Prevention and
Control Act, as amended, 42 U.S.C. 7401 et seq. (commonly
known as "CAA" for "Clean Air Act") and any regulations
thereunder; (E) asbestos; (F) polychlorinated biphenyls; (G)
any substance the presence of which at the Business Location
(as hereinafter defined) is prohibited by any Environmental
Laws; and (H) any other substance which is regulated by any
Environmental Laws.
(iv) "Hazardous Materials Contamination" shall mean the
presence of Hazardous Materials in the soil, groundwater, air
or any other media regulated by the Environmental Laws on,
under or around EFHLF's facilities at levels or concentration
which trigger any requirement under the Environmental Laws to
remove, remediate, mitigate, abate or otherwise reduce the
level or concentration of the Hazardous Materials. The term
"Hazardous Materials Contamination" does not include the
presence of Hazardous Materials in process tanks, lines,
storage or reactor vessels, delivery trucks or any other
equipment or containers, which Hazardous Materials are used in
the manufacture, processing, distribution, use, storage, sale,
handling, transportation, recycling, reuse or disposal of the
products that were manufactured and/or distributed by EFHLF.
(v) "Business Location" shall mean any real property,
building, facility or structure owned, leased or occupied by
EFHLF at any time from its inception until the present.
(b) Representations and Warranties. Based on the foregoing, EFHLF and
the EFHLF Stockholders, jointly and severally, represent and warrant
that:
(i) To the best knowledge of EFHLF and the EFHLF Stockholders,
after due investigation, there has been no material failure by
EFHLF to comply with all applicable requirements of
Environmental Laws relating to EFHLF, EFHLF's operations, and
EFHLF's manufacture, processing, distribution, use, treatment,
generation, recycling, reuses, sale, storage, handling,
transportation or disposal of any Hazardous Material and EFHLF
is not aware of any facts or circumstances which could
materially impair such compliance with all applicable
Environmental Laws.
(ii) EFHLF has not received notice from any Governmental
Authority or any other person of any actual or alleged
violation of any Environmental Laws, nor is any such notice
anticipated.
(iii) To the best knowledge of EFHLF and the EFHLF
Stockholders, after due investigation, Environmental Laws do
not require that any permits, licenses or similar
authorizations to construct, occupy or operate any equipment
or facilities used in the conduct of EFHLF's business.
(iv) No Hazardous Materials are now located at the Business
Location, and, to the best knowledge of EFHLF, after due
investigation, EFHLF has not ever caused or permitted any
Hazardous Materials to be generated, placed, stored, held,
handled, located or used at the Business Location, except
those which may lawfully be used, transported, stored, held,
handled, generated or placed at the Business Location in the
conduct of EFHLF's business.
(v) EFHLF has not received any notices, whether from a
Governmental Authority or some other third party, that
Hazardous Material Contamination exists at the Business
Location or at any other location utilized by EFHLF in the
conduct of its business nor is EFHLF aware of any
circumstances that would give rise to an allegation of such
contamination.
(vi) To the best knowledge of EFHLF and the EFHLF
Stockholders, after due investigation, no investigation,
administrative order, consent order or agreement, litigation
or settlement with respect to Hazardous Materials or Hazardous
Materials Contamination is proposed, threatened, anticipated,
pending or otherwise in existence with respect to the Business
Location or with respect to any other site controlled or
utilized by EFHLF in the operation of its business. To the
best knowledge of EFHLF, after due investigation, the Business
Location is not currently on, and has never been on, any
federal or state "Superfund" or "Superlien" list.
4.15 Intellectual Property. EFHLF does not own or use any trademarks,
trade names, service marks, patents, copyrights or any applications with respect
thereto. EFHLF has no knowledge of any claim that, or inquiry as to whether, any
product, activity or operation of EFHLF infringes upon or involves, or has
resulted in the infringement of, any trademarks, trade-names, service marks,
patents, copyrights or other proprietary rights of any other person, corporation
or other entity; and no proceedings have been instituted, are pending or are
threatened.
4.16 Insurance. EFHLF has no insurance policies in effect.
4.17 Contracts. Except as set forth on Schedule 4.17, EFHLF has no
material contracts, leases, arrangements or commitments (whether oral or
written). EFHLF is not a party to or bound by or affected by any contract,
lease, arrangement or commitment (whether oral or written) relating to: (a) the
employment of any person; (b) collective bargaining with, or any representation
of any employees by, any labor union or association; (c) the acquisition of
services, supplies, equipment or other personal property; (d) the purchase or
sale of real property; (e) distribution, agency or construction; (f) lease of
real or personal property as lessor or lessee or sublessor or sublessee; (g)
lending or advancing of funds; (h) borrowing of funds or receipt of credit; (i)
incurring any obligation or liability; or (j) the sale of personal property.
4.18 Litigation. EFHLF is not subject to any judgment or order of any
court or quasijudicial or administrative agency of any jurisdiction, domestic or
foreign, nor is there any charge, complaint, lawsuit or governmental
investigation pending against EFHLF. EFHLF is not a plaintiff in any action,
domestic or foreign, judicial or administrative. There are no existing actions,
suits, proceedings against or investigations of EFHLF, and EFHLF knows of no
basis for such actions, suits, proceedings or investigations. There are no
unsatisfied judgments, orders, decrees or stipulations affecting EFHLF or to
which EFHLF is a party.
4.19 Employees. EFHLF does not have any employees. EFHLF does not owe
any compensation of any kind, deferred or otherwise, to any current or previous
employees. EFHLF has no written or oral employment agreements with any officer
or director of EFHLF. EFHLF is not a party to or bound by any collective
bargaining agreement. Except as set forth on Schedule 4.19, there are no loans
or other obligations payable or owing by EFHLF to any stockholder, officer,
director or employee of EFHLF, nor are there any loans or debts payable or owing
by any of such persons to EFHLF or any guarantees by EFHLF of any loan or
obligation of any nature to which any such person is a party.
4.20 Employee Benefit Plans. EFHLF has no (a) non-qualified deferred or
incentive compensation or retirement plans or arrangements, (b) qualified
retirement plans or arrangements, (c) other employee compensation, severance or
termination pay or welfare benefit plans, programs or arrangements or (d) any
related trusts, insurance contracts or other funding arrangements maintained,
established or contributed to by EFHLF.
4.21 Legal Compliance. To the best knowledge of EFHLF, after due
investigation, no claim has been filed against EFHLF alleging a violation of any
applicable laws and regulations of foreign, federal, state and local governments
and all agencies thereof. EFHLF holds all of the material permits, licenses,
certificates or other authorizations of foreign, federal, state or local
governmental agencies required for the conduct of its business as presently
conducted.
4.22 No Subsidiaries. EFHLF does not own any capital stock or have any
interest in any corporation, partnership, or other form of business
organization.
4.23 Broker's Fees. Neither EFHLF, nor anyone on its behalf has any
liability to any broker, finder, investment banker or agent, or has agreed to
pay any brokerage fees, finder's fees or commissions, or to reimburse any
expenses of any broker, finder, investment banker or agent in connection with
this Agreement. EFHLF indemnifies Australia China Investments and the
Stockholders with respect to any such liability.
4.24 Disclosure. The representations and warranties and statements of
fact made by EFHLF in this Agreement are, as applicable, accurate, correct and
complete and do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained herein not false or misleading.
ARTICLE 5
INDEMNIFICATION
5.1 The EFHLF Stockholders hereby agree, jointly and severally, to
indemnify Australia China Investments, the Stockholders and each of the
officers, agents and directors of Australia China Investments against any loss,
liability, claim, damage or expense (including, but not limited to, any and all
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever) to
which it or they may become subject arising out of or based on any breach of or
inaccuracy in any of the representations and warranties made by EFHLF and/or the
EFHLF Stockholders herein or any misrepresentation made by EFHLF and/or the
EFHLF Stockholders in this Agreement. The indemnification provided for in this
paragraph shall survive the Closing until the expiration of the applicable
statute of limitations.
ARTICLE 6
COVENANTS AND AGREEMENTS OF THE PARTIES
b. EFFECTIVE PRIOR TO CLOSING
6.1 Corporate Examinations and Investigations. Prior to the Closing,
each party shall be entitled, through its employees and representatives, to make
such investigations and examinations of the books, records and financial
condition of Australia China Investments and EFHLF as each party may request. In
order that each party may have the full opportunity to do so, Australia China
Investments and EFHLF, the Stockholder and each of the EFHLF Stockholders shall
furnish each party and its representatives during such period with all such
information concerning the affairs of Australia China Investments or EFHLF as
each party or its representatives may reasonably request and cause Australia
China Investments or EFHLF and their respective officers, employees,
consultants, agents, accountants and attorneys to cooperate fully with each
party's representatives in connection with such review and examination and to
make full disclosure of all information and documents requested by each party
and/or its representatives. Any such investigations and examinations shall be
conducted at reasonable times and under reasonable circumstances, it being
agreed that any examination of original documents will be at each party's
premises, with copies thereof to be provided to each party and/or its
representatives upon request.
6.2 Cooperation; Consents. Prior to the Closing, each party shall
cooperate with the other parties to the end that the parties shall (i) in a
timely manner make all necessary filings with, and conduct negotiations with,
all authorities and other persons the consent or approval of which, or the
license or permit from which is required for the consummation of the Exchange
and (ii) provide to each other party such information as the other party may
reasonably request in order to enable it to prepare such filings and to conduct
such negotiations.
6.3 Conduct of Business. Subject to the provisions hereof, from the
date hereof through the Closing, each party hereto shall (i) conduct its
business in the ordinary course and in such a manner so that the representations
and warranties contained herein shall continue to be true and correct in all
material respects as of the Closing as if made at and as of the Closing and (ii)
not enter into any material transactions or incur any material liability not
required or specifically contemplated hereby, without first obtaining the
written consent of Australia China Investments and the Stockholder on the one
hand and EFHLF and the EFHLF Stockholders on the other hand. Without the prior
written consent of Australia China Investments, the Stockholder, EFHLF or the
EFHLF Stockholders, except as required or specifically contemplated hereby, each
party shall not undertake or fail to undertake any action if such action or
failure would render any of said warranties and representations untrue in any
material respect as of the Closing.
6.4 Litigation. From the date hereof through the Closing, each
party hereto shall promptly notify the representative of the other parties of
any lawsuits, claims, proceedings or investigations which after the date hereof
are threatened or commenced against such party or any of its affiliates or any
officer, director, employee, consultant, agent or shareholder thereof, in their
capacities as such, which, if decided adversely, could reasonably be expected to
have a material adverse effect upon the condition (financial or otherwise),
assets, liabilities, business, operations or prospects of such party or any of
its subsidiaries.
6.5 Notice of Default. From the date hereof through the Closing,
each party hereto shall give to the representative of the other parties prompt
written notice of the occurrence or existence of any event, condition or
circumstance occurring which would constitute a violation or breach of this
Agreement by such party or which would render inaccurate in any material respect
any of such party's representations or warranties herein.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of Australia China Investments and the
Stockholder. The obligations of Australia China Investments and the Stockholder
under this Agreement shall be subject to each of the following conditions:
(a) Closing Deliveries. At the Closing, EFHLF and/or the EFHLF
Stockholders shall have delivered or caused to be delivered to Australia China
Investments and the Stockholder the following:
(i) resolutions duly adopted by the Board of
Directors of EFHLF authorizing and approving the Exchange and
the execution, delivery and performance of this Agreement;
(ii) a certificate of good standing for EFHLF from
the relevant jurisdiction, dated not earlier than five days
prior to the Closing Date;
(iii) subject to compliance with [Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder], written
resignations of all officers and directors of EFHLF in office
immediately prior to the Closing, and board resolutions
electing the following individuals to the positions with EFHLF
listed opposite their names below:
Tang Yuxiang .............Chairman of the Board; CEO
Qu Shuzhi ..................................Director
(iv) certificate representing the EFHLF Shares to be
delivered pursuant to this Agreement bearing the names of the
Stockholders or the Stockholders' nominees, as provided on
Schedule A hereto;
(v) such other documents as Australia China
Investments may reasonably request in connection with the
transactions contemplated hereby.
(b) Representations and Warranties to be True. The
representations and warranties of EFHLF and the EFHLF Stockholders herein
contained shall be true in all material respects at the Closing with the same
effect as though made at such time. EFHLF and the EFHLF Stockholders shall have
performed in all material respects all obligations and complied in all material
respects with all covenants and conditions required by this Agreement to be
performed or complied with by them at or prior to the Closing.
7.2 Conditions to Obligations of EFHLF and the EFHLF Stockholders. The
obligations of EFHLF and the EFHLF Stockholders under this Agreement shall be
subject to each of the following conditions:
(a) Closing Deliveries. On the Closing Date, Australia China
Investments and/or the Stockholder shall have delivered to EFHLF the
following:
(i) certificate(s) representing the Australia China
Investments Shares to be delivered pursuant to this Agreement duly
endorsed or accompanied by duly executed stock powers; and
(ii) such other documents as EFHLF may reasonably request in
connection with the transactions contemplated hereby.
(b) Representations and Warranties to be True. The
representations and warranties of Australia China Investments and the
Stockholder herein contained shall be true in all material respects at the
Closing with the same effect as though made at such time. Australia China
Investments and the Australia China Investments Stockholder shall have performed
in all material respects all obligations and complied in all material respects
with all covenants and conditions required by this Agreement to be performed or
complied with by them at or prior to the Closing.
7.3 Name Change & State of Incorporation. At or prior to the Closing
Date, EFHLF's Board of Directors shall have approved an amendment to the
certificate of incorporation to change the name of EFHLF to "YANTAI DAHUA
HOLDINGS COMPANY LIMITED". Such amendment shall be carried out promptly upon
approval of the same by the shareholders of EFHLF.
7.4 EFHLF Shareholder Meeting. EFHLF shall call a special shareholders
meeting to be held on or prior to the Closing Date at which meeting the
shareholders of EFHLF shall be requested to approve, and EFHLF's Board of
Directors shall recommend approval of, the terms of this Agreement, including
the name change described in Section 7.4 and such other matters as shall require
shareholder approval hereunder.
ARTICLE 8
GENERAL PROVISIONS
8.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
sent by overnight courier or mailed by registered or certified mail (postage
prepaid and return receipt requested) to the party to whom the same is so
delivered, sent or mailed at addresses set forth on the signature page hereof
(or at such other address for a party as shall be specified by like notice).
8.2 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise stated.
8.3 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated and the parties shall negotiate
in good faith to modify this Agreement to preserve each party's anticipated
benefits under this Agreement.
8.4 Miscellaneous. This Agreement (together with all other documents
and instruments referred to herein): (a) constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties with respect to the subject matter hereof; (b) except as
expressly set forth herein, is not intended to confer upon any other person any
rights or remedies hereunder and (c) shall not be assigned by operation of law
or otherwise, except as may be mutually agreed upon by the parties hereto.
8.5 Separate Counsel. Each party hereby expressly acknowledges that it
has been advised to seek its own separate legal counsel for advice with respect
to this Agreement, and that no counsel to any party hereto has acted or is
acting as counsel to any other party hereto in connection with this Agreement.
8.6 Governing Law; Venue. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of Belize, Central America.
8.7 Counterparts and Facsimile Signatures. This Agreement may be
executed in two or more counterparts, which together shall constitute a single
agreement. This Agreement and any documents relating to it may be executed and
transmitted to any other party by facsimile, which facsimile shall be deemed to
be, and utilized in all respects as, an original, wet-inked document.
8.8 Amendment. This Agreement may be amended, modified or supplemented
only by an instrument in writing executed by all parties hereto.
8.9 Parties In Interest: No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. This Agreement
shall not be deemed to confer upon any person not a party hereto any rights or
remedies hereunder.
8.10 Waiver. No waiver by any party of any default or breach by another
party of any representation, warranty, covenant or condition contained in this
Agreement shall be deemed to be a waiver of any subsequent default or breach by
such party of the same or any other representation, warranty, covenant or
condition. No act, delay, omission or course of dealing on the part of any party
in exercising any right, power or remedy under this Agreement or at law or in
equity shall operate as a waiver thereof or otherwise prejudice any of such
party's rights, powers and remedies. All remedies, whether at law or in equity,
shall be cumulative and the election of any one or more shall not constitute a
waiver of the right to pursue other available remedies.
8.11 Expenses. At or prior to the Closing, the parties hereto shall pay
all of their own expenses relating to the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of their
respective counsel and financial advisers.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EQUITY FINANCE HOLDING CORP
By: /s/ James A. Bishop
--------------------------
Name: James A. Bishop
Title: Board Chairman
Address: Suite 408, Calle Cleofas Ruiz #853-B
Zona Centro - C.P. 22710
Playas De Rosarito, B.C., Mexico
EFHLF STOCKHOLDERS:
By: /s/ James A. Bishop
-------------------------
Name: James A. Bishop
Augen Opticien GMBH of Honk Kong Ltd.
EQUITY FINANCE INTERNATIONAL CORPORATION
International Money School
Address: Suite 408, Calle Cleofas Ruiz #853-B
Zona Centro - C.P. 22710
Playas De Rosarito, B.C., Mexico
AUSTRALIA CHINA INVESTMENTS LIMITED
By: /s/ Tang Yuxiang
-----------------------------
Name: Tang Yuxiang
Title: Director
Address: East of Muping City, Yantai, Shandong, China.
AUSTRALIA CHINA INVESTMENTS STOCKHOLDERS:
/s/ Tang Yuxiang
-----------------------------
Name: Tang Yuxiang
Address: East of Muping City, Yantai, Shandong, China.
/s/ Qu Shuzhi
-----------------------------
Name: Qu Shuzhi
Address: East of Muping City, Yantai, Shandong, China.
SCHEDULE A
AUSTRALIA CHINA INVESTMENTS STOCKHOLDERS
Name Address No. of Shares
- ---- ------- -------------
Tang Yuxiang East of Muping City, Yantai, 2,500,000
Shandong, China.
Qu Shuzhi East of Muping City, Yantai, 2,500,000
Shandong, China.
SCHEDULE B
EFHLF STOCKHOLDERS
Name Address No. of Shares
- ---- ------- -------------
Augen Opticien GMBH
of Honk Kong Ltd. Suite 408, Calle Cleofas Ruiz #853-B 1,000,000
Zona Centro - C.P. 22710
Playas De Rosarito, B.C., Mexico
EQUITY FINANCE
INTERNATIONAL CORPORATION Suite 408, Calle Cleofas Ruiz #853-B 1,000,000
Zona Centro - C.P. 22710
Playas De Rosarito, B.C., Mexico
International Money School Suite 408, Calle Cleofas Ruiz #853-B 1,000,000
Zona Centro - C.P. 22710
Playas De Rosarito, B.C., Mexico