Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
by and among
Royal Coronado Co. Ltd.
a Nevada corporation
and
L & L Investments Holdings Inc., a British Virgin Islands corporation
effective as of August 18, 2001
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, is made and entered into this
15th day of August 2001, by and between Royal Coronado Co. Ltd., a Nevada
corporation ("Royal") and L & L Investments Holdings Inc., a British Virgin
Islands corporation ("LLI"), and certain shareholders of LLI , and specifically
incorporated herein by reference (LLI and LLI Shareholders shall be hereinafter
jointly referred to as "LLI Parties").
Premises
A. This Agreement provides for the reorganization of LLI with and into
Royal, with LLI becoming a wholly-owned subsidiary of Royal, and in connection
therewith, the exchange of the outstanding common stock of LLI into shares of
common voting stock of Royal, all for the purpose of effecting a tax-free
reorganization pursuant to sections 354 and 368(a)(1)(B) of the Internal Revenue
Code of 1986, as amended ("IRC"). On the terms and conditions set forth herein,
the parties hereby adopt the Plan of Reorganization embodied in this Agreement.
B. The boards of directors of LLI and Royal have determined, subject to the
terms and conditions set forth in this Agreement, that the exchange contemplated
hereby, as a result of which LLI would become a wholly owned subsidiary of Royal
is desirable and in the best interests of their stockholders. This Agreement is
being entered into for the purpose of setting forth the terms and conditions of
the proposed exchange.
Agreement
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 here from, it is hereby agreed as follows:
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ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF
LLI AND LLI SHAREHOLDERS
LLI and each of LLI Shareholders, individually and neither jointly nor
severally, represents and warrants to Royal, except as disclosed in this
Agreement or in the case of any representation qualified by its terms to a
particular Schedule, as hereinafter defined, of LLI attached hereto, that the
statements made in this Article I will be correct and complete at the Effective
Date, as hereinafter defined, provided, however, if there is no Effective Date,
then no party shall be liable for any inaccuracy.
Section 1.1 Shareholders. Each of the LLI Shareholders is the owner of all
of the issued and outstanding shares of the capital stock of LLI attributed to
such Shareholder; each LLI Shareholder has full legal title to all LLI Shares as
being owned by such LLI Shareholder free from any and all claims, liens or other
encumbrances. LLI Shareholders have unqualified right to sell, transfer, and
dispose of their respective LLI Shares subject to the laws of bankruptcy,
insolvency and general creditors= rights. Each LLI Shareholder represents and
warrants that, in regards to such LLI Shareholder's shares of LLI, such LLI
Shareholder has full right and authority to execute this Agreement and to
transfer his shares of LLI to Royal.
Section 1.2 Organization. LLI is a corporation duly organized, validly
existing, and in good standing under the laws of 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
in all material respects as it is now being conducted, including qualification
to do business as a foreign corporation in the jurisdiction in which the
character and location of the assets owned by it or the nature of the business
transacted by it requires qualification. Included in the LLI Schedules (as
hereinafter defined) are complete and correct copies of the articles of
incorporation, bylaws and amendments thereto of LLI as in effect on the date
hereof. The execution and delivery of this Agreement does not and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not violate any provision of LLI's articles of
association or by-laws. LLI has full power, authority and legal right and has
taken all action required by law, its articles of incorporation, its bylaws or
otherwise to authorize the execution and delivery of this Agreement.
Section 1.3 Capitalization. The authorized capitalization of LLI consists
of 10 million Common Shares, $0.01 par value per share (the "LLI Common
Shares"). As of the date of this Agreement, 5,000,000 of the authorized common
shares are issued and outstanding. All issued and outstanding shares are legally
issued, fully paid and nonassessable and are not issued in violation of the
preemptive or other rights of any person. LLI has no other securities, warrants
or options authorized or issued.
Section 1.4 Subsidiaries and Predecessor Corporations. LLI has two
wholly-owned subsidiaries which are described in LLI audited financial
statements. For purposes herein, all references to LLI shall include LLI and all
of its subsidiaries.
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Section 1.5 Financial Information.
(a) Attached hereto as Schedule 1.5 are audited financial statements
of LLI for the fiscal years ended April 30, 2000 and 2001 (the "LLI
Financial Statements").
(b) LLI has no liabilities with respect to the payment of any federal,
state, county, local or other taxes (including any deficiencies, interest
or penalties), except for taxes accrued but not yet due and payable;
(c) LLI has filed all state, federal and local income tax returns
required to be filed by it from inception to the date hereof, if any;
(d) The books and records, financial and others, of LLI are in all
material respects complete and correct and have been maintained in
accordance with good business accounting practices; and
(e) except as and to the extent disclosed herein and the LLI
Schedules, LLI has no material contingent liabilities, direct or indirect,
matured or unmatured.
Section 1.6 Information. The information concerning LLI set forth in this
Agreement and in the LLI Schedules to the best of LLI=s knowledge, is complete
and accurate in all material respects and does not contain any untrue statement
of a material fact or omit to state a material fact required to make the
statements made, in light of the circumstances under which they were made, not
misleading.
Section 1.7 Options and Warrants. There are no existing options, warrants,
calls or commitments of any character to which LLI is a party and by which it is
bound.
Section 1.8 Absence of Certain Changes or Events. Except as set forth in
this Agreement, the LLI Schedules, or as otherwise disclosed to Royal, since
April 30, 2001:
(a) there has not been: (i) any material adverse change in the
business, operations, properties, assets or condition of LLI; or (ii) any
damage, destruction or loss to LLI (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties,
assets or condition of LLI;
(b) LLI has not: (i) amended its articles of incorporation or bylaws;
(ii) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed or agreed to purchase or redeem any
of its capital stock; (iii) waived any rights of value which in the
aggregate are extraordinary or material considering the business of LLI;
(iv) made any material change in its method of management, operation or
accounting other than in its ordinary course of business; (v) entered into
any other material transaction; (vi) made any accrual or arrangement for or
payment of bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii)
increased the rate of compensation; or (viii) made any increase in any
profit sharing, bonus, deferred compensation, insurance, pension,
retirement or other employee benefit plan, payment or arrangement made to,
for, or with its officers, directors or employees.
(d) to the best knowledge of LLI, it has not become subject to any law
or regulation which materially and adversely affects, or in the future may
adversely affect, the business, operations, properties, assets or condition
of LLI.
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Section 1.9 Title and Related Matters. Except as provided herein or in the
LLI Schedules, LLI has good and marketable title to and is the sole and
exclusive owner of all of its properties, inventory, interests in properties and
assets, real and personal including technical information, copyrights,
trademarks, service marks and tradenames (collectively, the "Assets") which are
reflected in the LLI Schedules or acquired after that date (except properties,
interests in properties and assets sold or otherwise disposed of since such date
in the ordinary course of business), free and clear of all liens, pledges,
charges or encumbrances except: (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will
not, materially detract from or interfere with the present or proposed use of
the properties subject thereto or affected thereby or otherwise materially
impair present business operations on such properties; and (c) as described in
the LLI Schedules. Except as set forth in the LLI Schedules, LLI owns free and
clear of any liens, claims, encumbrances, royalty interests or other
restrictions or limitations of any nature whatsoever, any and all products it is
currently manufacturing, including the underlying technology and data, and all
procedures, techniques, marketing plans, business plans, methods of management
or other information utilized in connection with LLI's business. Except as set
forth in the LLI Schedules, no third party has any right to, and LLI has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any product, technology, data, trade secrets, know-how,
proprietary techniques, trademarks, service marks, trade names or copyrights
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a materially adverse affect on the business,
operations, financial conditions or income of LLI or any material portion of its
properties, assets or rights.
Section 1.10 Litigation and Proceedings. To the best of LLI's knowledge and
belief, there are no actions, suits, proceedings or investigations pending or
threatened by or against LLI or affecting LLI or its properties, at law or in
equity, before any court or other governmental agency or instrumentality,
domestic or foreign or before any arbitrator of any kind that would have a
material adverse affect on the business, operations, financial condition or
income of LLI. LLI does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental agency or instrumentality or
of any circumstances which, after reasonable investigation, would result in the
discovery of such a default.
Section 1.11 Contracts.
(a) Except as included or described in the LLI Schedules, there are no
material contracts, agreements, franchises, license agreements or other
commitments to which LLI is a party or by which it or any of its assets,
products, technology or properties are bound;
(b) Except as included or described in the LLI Schedules or reflected
in the most recent LLI balance sheet, LLI is not a party to any oral or
written: (i) contract for the employment of any officer or employee which
is not terminable on thirty (30) days or less notice; (ii) profit sharing,
bonus, deferred compensation, stock option, severance pay, pension benefit
or retirement plan, agreement or arrangement covered by Title IV of the
Employee Retirement Income Security Act, as amended; (iii) agreement,
contract or indenture relating to the borrowing of money; (iv) guaranty of
any obligation, other than one on which LLI is a primary obligor, for
collection and other guaranties of obligations, which, in the aggregate do
not exceed more than one year or providing for payments in excess of
$10,000 in the aggregate; (v) consulting or other similar contracts with an
unexpired term of more than one year or providing for payments in excess of
$10,000 in the aggregate; (vi) collective bargaining agreements; (vii)
agreement with any present or former officer or director of LLI; or (viii)
contract, agreement or other commitment involving payments by it of more
than $10,000 in the aggregate; and
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(c) To LLI's knowledge, all contracts, agreements, franchises, license
agreements and other commitments to which LLI is a party or by which its
properties are bound and which are material to the operations of LLI taken
as a whole, are valid and enforceable by LLI in all respects, except as
limited by bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally.
Section 1.12 Material Contract Defaults. Except as set forth in the LLI
Schedules, to the best of LLI's knowledge and belief, LLI is not in default in
any material respect under the terms of any outstanding contract, agreement,
lease or other commitment which is material to the business, operations,
properties, assets or condition of LLI, and there is no event of default in any
material respect under any such contract, agreement, lease or other commitment
in respect of which LLI has not taken adequate steps to prevent such a default
from occurring.
Section 1.13 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which LLI is a
party or to which any of its properties or operations are subject.
Section 1.14 Governmental Authorizations. To the best of LLI's knowledge
and except as provided herein or in the LLI Schedules, LLI has all licenses,
franchises, permits or other governmental authorizations legally required to
enable LLI to conduct its business in all material respects as conducted on the
date hereof. Except for compliance with federal and state securities and
corporation laws, as hereinafter provided, 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
LLI of this Agreement and the consummation by LLI of the transactions
contemplated hereby.
Section 1.15 Compliance With Laws and Regulations. To the best of LLI's
knowledge, except as disclosed in the LLI Schedules, LLI 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 LLI or would not result in LLI's incurring any material liability.
Section 1.16 Insurance. Unless otherwise disclosed, LLI has no insurable
properties and no insurance policies will be in effect at the Closing Date, as
hereinafter defined.
Section 1.17 Approval of Agreement. The board of directors of LLI has
authorized the execution and delivery of this Agreement by LLI, has approved the
transactions contemplated hereby and approved the submission of this Agreement
and the transactions contemplated hereby to the stockholders of LLI for their
majority approval, which approval has been provided.
Section 1.18 Material Transactions or Affiliations. Except as disclosed
herein and in the LLI Schedules, there exists no material contract, agreement or
arrangement between LLI and any predecessor and any person who was at the time
of such contract, agreement or arrangement an officer, director or person owning
of record, or known by LLI to own beneficially, ten percent (10%) or more of the
issued and outstanding LLI Common Shares and which is to be performed in whole
or in part after the date hereof. In all of such transactions, the amount paid
or received, whether in cash, in services or in kind, has been during the full
term thereof, and is required to be during the unexpired portion of the term
thereof, no less favorable to LLI than terms available from otherwise unrelated
parties in arms length transactions. There are no commitments by LLI, whether
written or oral, to lend any funds to, borrow any money from or enter into any
other material transactions with, any such affiliated person.
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Section 1.19 Labor Relations. LLI has never had a work stoppage resulting
from labor problems. To the best knowledge of LLI, no union or other collective
bargaining organization is organizing or attempting to organize any employee of
LLI.
Section 1.20 Previous Sales and Issuance of Securities. Since inception,
LLI has issued LLI Common Shares in reliance upon applicable exemptions from the
registration requirements under the laws of the jurisdiction of British Virgin
Islands to the shareholders. The shares of LLI Common Stock issued to the LLI
Shareholders are legally issued, fully paid and nonassessable and are not issued
in violation of the preemptive or other rights of any person.
Section 1.21 Reorganization Related Representations.
(a) following the Effective Date, LLI will continue its historic
business or use a significant portion of its historic business assets in
its business;
(b) LLI is not an investment company as defined in section
368(a)(2)(f)(iii) and (iv) of IRC;
(c) LLI is not under the jurisdiction of a court in a title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the IRC.
Section 1.22 LLI Schedules. Upon execution hereof, LLI will deliver to
Royal the following schedules, which are collectively referred to as the "LLI
Schedules" and which consist of separate schedules dated as of the date of this
Agreement and instruments and data as of such date, all certified by the chief
executive officer of LLI as complete, true and correct in all material respects:
(a) copies of the articles of incorporation, bylaws and all minutes of
shareholders' and directors' meetings of LLI;
(b) the financial information of LLI referenced hereinabove in Section
1.4;
(c) a list indicating the name and address of the stockholders of LLI,
together with the number of shares owned by them;
(d) the LLI Business Plan which includes, among other matters,
information concerning all of LLI's material licenses, permits and other
governmental authorizations, requests or applications therefor, pursuant to
which LLI carries on or proposes to carry on its business (except those
which in the aggregate, are immaterial to the present or proposed business
of LLI), as well as a description of any material adverse change in the
business operations, property, inventory, assets or condition of LLI since
the most recent LLI balance sheet required to be provided pursuant to
Section 1.7; and
LLI shall cause the LLI Schedules and the instruments and data delivered to
Royal hereunder to be updated after the date hereof up to and including the
Closing Date, as hereinafter defined.
Section 1.23 Taxes. LLI has complied with applicable tax filing
requirements, if any.
Section 1.24 Additional Information Available. LLI will make available to
Royal the opportunity to ask questions and receive answers concerning
acquisition of LLI shares in this transaction, and to obtain any additional
information related thereto which LLI possesses or can acquire without
unreasonable effort or expense.
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Section 1.25 Limitation on Liability. Notwithstanding anything to the
contrary contained in this Agreement, LLI shall not have any liability for any
misrepresentation or breach of any representation or warranty contained in this
Article I, if Royal has actual knowledge (rather than Knowledge) of such
misrepresentation or breach.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF ROYAL
As an inducement to, and to obtain the reliance of LLI, Royal represents
and warrants as follows:
Section 2.1 Organization. Royal is a corporation duly organized, validly
existing and in good standing under the laws of the state 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 in all
material respects as it is now being conducted, including qualification to do
business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in the Royal Schedules (as hereinafter
defined) are complete and correct copies of the articles of incorporation,
amended articles of incorporation (collectively, hereinafter referred to as the
"articles of incorporation"), bylaws of Royal as in effect on the date hereof
and a certificate of Good Standing. The execution and delivery of this Agreement
does not and the consummation of the transactions contemplated by this Agreement
in accordance with the terms hereof will not, violate any provision of Royal's
articles of incorporation or bylaws. Royal has taken all action required by law,
its articles of incorporation, its bylaws or otherwise to authorize the
execution and delivery of this Agreement. Royal has full power, authority and
legal right and has taken all action required by law, its articles of
incorporation, bylaws or otherwise to consummate the transactions herein
contemplate.
Section 2.2 Capitalization. The authorized capitalization of Royal consists
of 6,500,000 shares of Common Stock, par value $0.001 per share of which
1,000,000 shares are issued and outstanding, prior to the cancellation of
certain shares and forward stock split referred to in Section 6.6 herein, and
500,000 authorized of preferred stock, no par value per share, of which none are
issued. All issued and outstanding shares are legally issued, fully paid and
nonassessable and are not issued in violation of the preemptive or other rights
of any person. Royal has no other securities, warrants or options authorized or
issued.
Section 2.3 Subsidiaries. At the Closing, other than as disclosed herein,
Royal shall own no securities or have any interest in any corporation,
partnership, or other form of business organization, including its current
subsidiaries.
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Section 2.4 Financial Statements.
(a) Attached hereto as Schedule 2.4 are unaudited financial statements
of Royal as of June 30, 2001 ("Royal Management Reports"), audited
financial statements of Royal for the fiscal years ended February 28, 2000
and February 29, 2001 ("Audited Financial Statements") together with the
related footnotes. The Royal Management Reports and Audited Financial
Statements are hereafter referred to as the "Royal Financial Statements".
The Royal Financial Statements are correct and complete in all respects and
fairly present, in accordance with generally accepted accounting principles
("GAAP"), consistently applied, the consolidated financial position of
Royal as of such dates and the results of operations and changes in
financial position for such periods all in accordance with GAAP, subject,
in case of the Management Reports, to normal recurring year end adjustments
(the effect of which will not, individually or in the aggregate, be
materially adverse) and the absence of the notes (that if presented would
not differ materially from those included in the Royal Audited Financial
Statements). The Royal Financial Statements comply with the requirements of
Regulation S-X of the Securities and Exchange Commission and the provisions
of the Securities Act of 1933 (the "1933 Act") and will be suitable for
inclusion in any subsequent filing with any state or federal regulatory
agency under the Securities Exchange Act of 1934 (the "1934 Act")
(b) The books and records, financial and others, of Royal are in all
material respects complete and correct and have been maintained in
accordance with good business accounting practices;
(c) Royal has no liabilities with respect to the payment of any
federal, state, county, local or other taxes, current or accrued (including
any deficiencies, interest or penalties).
Section 2.5 Information. The information concerning Royal as set forth in
this Agreement and in the Royal Schedules, to the best of Royal's knowledge, is
complete and accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required to make
the statements made, in light of the circumstances under which they were made,
not misleading.
Section 2.6 Absence of Certain Changes or Events. Except as described
herein or in the Royal Schedules, since June 30, 2001:
(a) Royal has not: (i) amended its articles of incorporation or
bylaws; (ii) waived any rights of value which in the aggregate are
extraordinary or material considering the business of Royal; (iii) made any
material change in its method of management, operation or accounting; or
(iv) made any accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any present
or former officer or employee;
(b) Except as disclosed to LLI or as included in the Royal Schedules,
Royal has not: (i) granted or agreed to grant any options, warrants or
other rights for its stocks, bonds or other corporate securities calling
for the issuance thereof, which option, warrant or other right has not been
canceled as of the Closing Date; (ii) borrowed or agreed to borrow any
funds or incurred or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred in the
ordinary course of business; and
(c) to the best knowledge of Royal, it has not become subject to any
law or regulation which materially and adversely affects, or in the future
may adversely affect, the business, operations, properties, assets or
condition of Royal.
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Section 2.7 Title and Related Matters. As of the Closing Date, Royal will
own no real, personal or intangible property, other than as disclosed herein.
Section 2.8 Litigation and Proceedings. There are no actions, suits or
proceedings pending or, to the best of Royal's knowledge and belief, threatened
by or against or affecting Royal, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind that would have a material adverse effect on the
business, operations, financial condition, income or business prospects of
Royal. Royal does not have any knowledge of any default on its part with respect
to any judgment, order, writ, injunction, decree, award, rule or regulation of
any court, arbitrator or governmental agency or instrumentality.
Section 2.9 Contracts. On the Closing Date and other than as disclosed
herein in Schedule 2.9 or otherwise:
(a) There are no material contracts, agreements, franchises, license
agreements, or other commitments to which Royal is a party or by which it
or any of its properties are bound;
(b) Royal is not a party to any contract, agreement, commitment or
instrument or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or award which materially and
adversely affects, or in the future may (as far as Royal can now foresee)
materially and adversely affect, the business, operations, properties,
assets or conditions of Royal; and
(c) Royal is not a party to any material oral or written: (i) contract
for the employment of any officer or employee; (ii) profit sharing, bonus,
deferred compensation, stock option, severance pay, pension, benefit or
retirement plan, agreement or arrangement covered by Title IV of the
Employee Retirement Income Security Act, as amended; (iii) agreement,
contract or indenture relating to the borrowing of money; (iv) guaranty of
any obligation for the borrowing of money or otherwise, excluding
endorsements made for collection and other guaranties of obligations,
which, in the aggregate exceeds $1,000; (v) consulting or other similar
contract with an unexpired term of more than one year or providing for
payments in excess of $10,000 in the aggregate; (vi) collective bargaining
agreement; (vii) agreement with any present or former officer or director
of Royal; or (viii) contract, agreement, or other commitment involving
payments by it of more than $10,000 in the aggregate.
Section 2.10 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which Royal is a
party or to which any of its properties or operations are subject.
Section 2.11 Material Contract Defaults. To the best of Royal's knowledge
and belief, Royal is not in default in any material respect under the terms of
any outstanding contract, agreement, lease or other commitment which is material
to the business, operations, properties, assets or condition of Royal, and there
is no event of default in any material respect under any such contract,
agreement, lease or other commitment in respect of which Royal has not taken
adequate steps to prevent such a default from occurring.
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Section 2.12 Governmental Authorizations. To the best of Royal's knowledge,
Royal has all licenses, franchises, permits and other governmental
authorizations that are legally required to enable it to conduct its business
operations in all material respects as conducted on the date hereof. Except for
compliance with federal and state securities or corporation laws, 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 Royal of the transactions contemplated hereby.
Section 2.13 Compliance With Laws and Regulations. To the best of Royal's
knowledge and belief, Royal 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
Royal or would not result in Royal's incurring any material liability.
Section 2.14 Insurance. Royal has no insurable properties and no insurance
policies will be in effect at the Closing Date, as hereinafter defined.
Section 2.15 Approval of Agreement. The board of directors of Royal has
authorized the execution and delivery of this Agreement by Royal and has
approved the transactions contemplated hereby. The approval of this Agreement by
Royal's shareholders is not required.
Section 2.16 Material Transactions or Affiliations. Except as stated herein
or in the Royal Schedules, as of the Closing Date there will exist no material
contract, agreement or arrangement between Royal and any person who was at the
time of such contract, agreement or arrangement an officer, director or person
owning of record, or known by Royal to own beneficially, ten percent (10%) or
more of the issued and outstanding common stock of Royal and which is to be
performed in whole or in part after the date hereof. Royal has no commitment,
whether written or oral, to lend any funds to, borrow any money from or enter
into any other material transactions with, any such affiliated person.
Section 2.17 Labor Relations. Royal has never had a work stoppage resulting
from labor problems. Royal has no employees other than its officers and
directors.
Section 2.18 Taxes. (a) Royal has timely filed (within the applicable
extension periods) with the appropriate governmental agencies all governmental
tax returns, information returns, tax reports and declarations which are
monetary liabilities. All governmental tax returns, information returns, tax
reports and declarations filed by Royal for years for which the statute of
limitations has not run (the "Tax Returns") are correct in all material
respects. Royal has timely paid (or has collected and paid over in the case of
sales, use or similar taxes) all taxes, additions to tax, penalties, interest,
assessments, deposits, and other governmental charges imposed by law upon it or
any of its properties, tangible or intangible assets, income, receipts,
payrolls, transactions, capital, net worth and franchises, or upon the sale, use
or delivery of any item sold by the Company, other than as may be disclosed in
the Schedule of Taxes. Except as set forth in the Schedule of Taxes, no tax
returns have been examined by the Internal Revenue Service or any other
governmental authority. Except as may be disclosed in the Schedule of Taxes or
in any document delivered to Royal therewith, Royal (i) is not currently being
audited with respect to any tax, assessment or other governmental charge; (ii)
has not received formal or informal notice from any governmental agency that an
audit or investigation with respect to any tax, assessment or other governmental
charge is to be initiated; (iii) is not formally or informally discussing
material pending ruling requests or other material tax or assessment issues with
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the Internal Revenue Service or any other governmental taxing authority in
connection with any matter concerning any member of Royal's group; or (iv) has
not been formally or informally notified of any potential tax or assessment
issue which the Internal Revenue Service or any other governmental taxing
authority intends to raise in connection with any matter concerning any member
of Royal's group. Except (i) as may be disclosed in the Schedule of Taxes, or
(ii) in connection with any pending audit or investigation, Royal has not
granted or proposed any waiver of any statute of limitations with respect to, or
any extension of a period for the assessment or collection of, or any offer in
compromise of any governmental tax. The accruals and reserves for taxes
reflected in the financial statements are adequate to cover substantially all
taxes (including additions to tax, interest, penalties, and other charges or
assessments, if any) which become due and payable or accruable by reason of the
business conducted by Royal through the Closing Date herein. Royal is not now or
has it ever been a corporation which meets the tests of Section 542(b)(2) of the
Internal Revenue Code. Royal has not participated in, or is required to
participate in, for any period prior to the date of this Agreement the filing of
any consolidated tax return other than (i) as set forth in the Schedule of
Taxes, or (ii) as a member of an affiliated group of which Royal is the common
parent.
Section 2.19 Reporting Act Documents. Except as set forth in Royal's
Schedules, Royal has, in all reporting act documents, complied in all material
respects with the reporting requirements of the Exchange Act and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
The information contained in each reporting act document of Royal, to the best
of Royal's knowledge, is true and correct in all material respects as of the
date thereof, and no reporting act document contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading as of the date thereof.
To the best knowledge of current management of Royal, there is no negative
matters, such as pending investigation or formal inquiry, which are outstanding
concerning Exchange Act reports filed by Royal prior to the Closing hereof or
with the NASD.
Section 2.20 Royal Schedules. Upon execution hereof, Royal shall deliver to
LLI the following schedules, which are collectively referred to as the "Royal
Schedules" which are dated the date of this Agreement, all certified by an
officer of Royal to be complete, true and accurate:
(a) complete and correct copies of the articles of incorporation,
bylaws and Certificate of Good Standing of Royal as in effect as of the
date of this Agreement;
(b) copies of all financial statements of Royal identified in Section
2.4(a);
(c) the description of any material adverse change in the business,
operations, property, assets, or condition of Royal since June 30, 2001
required to be provided pursuant to Section 2.6; and
(d) any other information, together with any required copies of
documents, required to be disclosed in the Royal Schedules under this
Agreement.
Royal shall cause the Royal Schedules and the instruments to be delivered
to LLI hereunder to be updated after the date hereof up to and including the
Closing Date.
11
Section 2.21 Additional Information Available. Royal will make available to
each LLI Shareholder the opportunity to ask questions and receive answers
concerning the acquisition of Royal Common Stock in the transaction, and to
obtain any additional information which Royal possesses or can acquire without
unreasonable effort or expense.
Section 2.22 Limitation on Liability. Notwithstanding anything to the
contrary contained in this Agreement, Royal shall not have any liability for any
misrepresentation or breach of any representation or warranty contained in this
Article II, if LLI or any of the LLI Shareholders has actual knowledge (rather
than Knowledge) of such misrepresentation or breach.
ARTICLE III
EXCHANGE PROCEDURE
Section 3.1 Delivery of LLI Securities. On the Closing Date, the holders of
the LLI Common Shares shall deliver to Royal (i) certificates or other documents
evidencing all of the issued and outstanding LLI Common Shares, duly endorsed in
blank or with executed stock power attached thereto in transferrable form and
(ii) investment letters, the form of which is attached hereto as Exhibit "A".
Section 3.2 Issuance of Royal Common Shares. (a) In exchange for all of the
LLI Common Shares tendered pursuant to Section 3.1, Royal shall instruct its
Transfer Agent to issue an aggregate of 5 million "restricted" Royal Common
Shares to the LLI shareholders on a pro rata basis and shall cause such shares
to be delivered to LLI. Each share of LLI shall be exchanged for one (1) share
of Royal (based on the total issuance of 5,000,000 Royal Common Shares).
Following the share exchange, the total number of shares of common stock
outstanding in Royal will be 5,980,000 shares.
(b) No fractional Royal Common Shares shall be issued pursuant to this
Section 3.2. In lieu of such fractional shares, all shares to be issued
shall be rounded up or down to the nearest whole share.
(c) The total of 5,000,000 shares to be issued to the LLI shareholders
by Royal (the "LLI Shares") are not being registered under the Securities
Act of 1933, as amended (the "Securities Act") and are to be issued as
"restricted securities", as that term is defined in Rule 144 promulgated
under the Act, and that the certificates representing the LLI Shares will
bear a legend to that effect, substantially in the form set forth in
Schedule 3.2, as follows:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF CERTAIN
STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE
STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR
ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF
SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION
FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
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Section 3.3 Undertakings.
(a) Upon execution hereof or as soon thereafter as practical,
management of Royal and LLI shall execute, acknowledge and deliver (or
shall cause to be executed, acknowledged and delivered) any and all
certificates, opinions, financial statements, schedules, agreements,
resolutions, rulings or other instruments required by this Agreement to be
so delivered, 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, subject only
to the conditions to Closing referenced hereinbelow.
(b) LLI hereby undertakes and provides assurances to Royal that it
will file a current report on Form 8-K within 15 days of the Closing in
compliance with the Exchange Act, with the audited financial statements of
LLI and the pro forma statements required by the Exchange Act and by
Regulation S-B by amendment of the Form 8-K within the time parameters
established by the Exchange Act, and will otherwise comply with the
reporting requirements of the Exchange Act.
Section 3.4 Closing. The closing ("Closing") of the transactions
contemplated by this Agreement shall be as of the date in which all of the
shareholders of LLI have approved the terms of this Agreement ("Closing
Date"), all conditions to Closing referenced in this Agreement have been
satisfied or waived by LLI and all documentation referenced herein is
delivered to the respective party herein, unless a different date is
mutually agreed to in writing by the parties hereto.
Section 3.5 Termination.
(a) This Agreement may be terminated by the board of directors of
either Royal or LLI at any time prior to the Closing Date if:
(i) there shall be any action or proceeding before any court or
any governmental body which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement and which,
in the judgment of such board of directors, made in good faith and
based on the advice of its legal counsel, makes it inadvisable to
proceed with the exchange contemplated by this Agreement; or
(ii) any of the transactions contemplated hereby are disapproved
by any regulatory authority whose approval is required to consummate
such transactions; or
(iii) the conditions described in Section 6.6 below have not been
satisfied in full; or
In the event of termination pursuant to this paragraph (a) of this
Section 3.5, no obligation, right, or liability shall arise hereunder and
each party shall bear all of the expenses incurred by it in connection with
the negotiation, drafting and execution of this Agreement and the
transactions herein contemplated;
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(b) This Agreement may be terminated at any time prior to the Closing
Date by action of the board of directors of Royal if LLI shall fail to
comply in any material respect with any of its covenants or agreements
contained in this Agreement or if any of the representations or warranties
of LLI contained herein shall be inaccurate in any material respect, which
noncompliance or inaccuracy is not cured after 20 days' written notice
thereof is given to LLI. If this Agreement is terminated pursuant to this
paragraph (b) of this Section 3.5, this Agreement shall be of no further
force or effect and no obligation, right or liability shall arise
hereunder; and
(c) This Agreement may be terminated at any time prior to the Closing
Date by action of the board of directors of LLI if Royal shall fail to
comply in any material respect with any of its covenants or agreements
contained in this Agreement or if any of the representations or warranties
of Royal contained herein shall be inaccurate in any material respect,
which noncompliance or inaccuracy is not cured after 20 days written notice
thereof is given to Royal. If this Agreement is terminated pursuant to this
paragraph (c) of Section 3.5, this Agreement shall be of no further force
or effect and no obligation, right or liability shall arise hereunder.
(d) This Agreement may be rescinded by the mutual agreement of the
parties hereto in the event the parties deem such action to be in the best
interest of their respective companies.
Section 3.6 Directors of Royal. Upon the Closing, the present members of
Royal's Board of Directors shall remain on the Board of Directors. Any vacancies
on the Board may be filled by the Board of Directors. Each director shall hold
office until his successor shall have been duly elected and shall have qualified
or until his or her earlier death, resignation or removal.
Section 3.7 Officers of Royal. Upon the Closing, the present officers of
Royal shall remain officers of LLI at the discretion of the Board of Directors
of LLI.
Section 3.8 Effective Date. The parties hereto hereby agree that the
Effective Date of the transaction proposed herein shall be 11:50 P.M. Eastern
Time on August 18, 2001, unless the parties agree otherwise, in writing.
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Access to Properties and Records. Royal and LLI will each
afford to the officers and authorized representatives of the other full access
to the properties, books and records of Royal and LLI, as the case may be, in
order that each may have full opportunity to make such reasonable investigation
as it shall desire to make of the affairs of the other and each will furnish the
other with such additional financial and operating data and other information as
to the business and properties of Royal and LLI, as the case may be, as the
other shall from time to time prior to Closing reasonably request. In addition,
Royal shall provide to LLI subsequent to Closing all information necessary to
allow LLI to properly prepare and file all reports required to be filed pursuant
to the Exchange Act, including all information concerning Royal's subsidiaries
which existed prior to Closing.
14
Section 4.2 Information for Royal Public Reports. LLI will furnish Royal
with all information concerning LLI and the LLI Stockholders, including all
financial statements, required for inclusion in any public report to be filed by
Royal pursuant to the Securities Act, the Exchange Act, or any other applicable
federal or state law. LLI covenants that all information so furnished to Royal,
including the financial statements described in Section 1.4, shall be true and
correct in all material respects without omission of any material fact required
to make the information stated not misleading. Similarly, Royal will provide all
information concerning its history and operations reasonably requested by LLI.
Section 4.3 Special Covenants and Representations Regarding the Royal
Common Shares to be Issued in the Exchange. The consummation of this Agreement,
including the issuance of the Royal Common Shares to the stockholders of LLI as
contemplated hereby, constitutes the offer and sale of securities under the
Securities Act, and applicable state statutes. Such transaction shall be
consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes which depend, inter alia, upon the
circumstances under which the LLI stockholders acquire such securities. In
connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, LLI shall cause to
be delivered, and the LLI stockholders shall deliver to Royal, the investment
letters referenced in Section 3.1.
Section 4.4 Third Party Consents. Royal and LLI agree to cooperate with
each other in order to obtain any required third party consents to this
Agreement and the transactions herein contemplated.
Section 4.5 Actions Prior to Closing.
(a) From and after the date of this Agreement until the Closing Date
and except as set forth in the Royal or LLI Schedules or as permitted or
contemplated by this Agreement, LLI will each use its best efforts to:
(i) carry on its business in substantially the same manner as it
has heretofore;
(ii) maintain and keep its properties in states of good repair
and condition as at present, except for depreciation due to ordinary
wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations
under material contracts, leases and instruments relating to or
affecting its assets, properties and business;
(v) maintain and preserve its business organization intact, to
retain its key employees and to maintain its relationship with its
material suppliers and customers; and
(vi) fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal and state laws and
all rules, regulations and orders imposed by federal or state
governmental authorities.
(b) From and after the date of this Agreement until the Closing
Date, neither Royal nor LLI will, without the prior consent of the
other party:
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(i) except as otherwise specifically set forth herein, make any
change in their respective certificates or articles of incorporation
or bylaws;
(ii) declare or pay any dividend on its outstanding shares of
capital stock, except as may otherwise be required by law, or effect
any stock split or otherwise change its capitalization, except as
provided herein;
(iii) enter into or amend any employment, severance or similar
agreements or arrangements with any directors or officers;
(iv) grant, confer or award any options, warrants, conversion
rights or other rights not existing on the date hereof to acquire any
shares of its capital stock; or
(v) purchase or redeem any shares of its capital stock, except as
disclosed herein.
Section 4.6 Indemnification.
(a) LLI and its chief executive officer and director hereby agrees to
indemnify Royal and each of the officers, agents and directors of Royal as of
the date of execution of this Agreement against any loss, liability, claim,
damage or expense (including, but not limited to, any and all expense 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 inaccuracy appearing in
or misrepresentation made in this Agreement. The indemnification provided for in
this paragraph shall survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement for a period of 18 months;
and
(b) Royal and its chief executive officer and director hereby agrees to
indemnify LLI and each of the officers, agents, directors and current
shareholders of LLI as of the Closing Date against any loss, liability, claim,
damage or expense (including, but not limited to, any and all expense 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 inaccuracy appearing in
or misrepresentation made in this Agreement and particularly the representation
regarding no liabilities referred to in Section 2.4(b). The indemnification
provided for in this Section shall survive the Closing and consummation of the
transactions contemplated hereby and termination of this Agreement for a period
of 18 months.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF ROYAL
The obligations of Royal under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.1 Accuracy of Representations. The representations and warranties
made by LLI 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 the Closing Date (except for changes therein permitted
by this Agreement), and LLI shall have performed or complied with all covenants
and conditions required by this Agreement to be performed or complied with by
LLI prior to or at the Closing. Royal shall be furnished with a certificate,
signed by a duly authorized officer of LLI and dated the Closing Date, to the
foregoing effect.
16
Section 5.2 Stockholder Approval. The stockholders of LLI shall have
approved this Agreement and the transactions contemplated thereby as described
in Section 4.1 if such approval is required by the laws of British Virgin
Islands.
Section 5.3 Officer's Certificate. Royal shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
LLI to the effect that no litigation, proceeding, investigation or inquiry is
pending or, to the best knowledge of LLI, threatened, which might result in an
action to enjoin or prevent the consummation of the transactions contemplated by
this Agreement or, to the extent not disclosed in the LLI Schedules, by or
against LLI which might result in any material adverse change in any of the
assets, properties, business or operations of LLI.
Section 5.4 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 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 LLI.
Section 5.5 Other Items. Royal shall have received such further documents,
certificates or instruments relating to the transactions contemplated hereby as
Royal may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF LLI
The obligations of LLI under this Agreement are subject to the
satisfaction, at or before the Closing Date (unless otherwise indicated herein),
of the following conditions:
Section 6.1 Accuracy of Representations. The representations and warranties
made by Royal 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 Royal shall have performed and complied with all
covenants and conditions required by this Agreement to be performed or complied
with by Royal prior to or at the Closing. LLI shall have been furnished with a
certificate, signed by a duly authorized executive officer of Royal and dated
the Closing Date, to the foregoing effect.
Section 6.2 Officer's Certificate. LLI shall be furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
Royal to the effect that no litigation, proceeding, investigation or inquiry is
pending or, to the best knowledge of Royal, threatened, which might result in an
action to enjoin or prevent the consummation of the transactions contemplated by
this Agreement or, to the extent not disclosed in the Royal Schedules, by or
against Royal which might result in any material adverse change in any of the
assets, properties, business or operations of Royal.
Section 6.3 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 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 Royal.
17
Section 6.5 Compliance with Reporting Requirements. As of the Closing Date,
Royal shall be current in, and in compliance with all requirements of, all
filings required to be tendered to the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended.
Section 6.6 Forward Split and Shares Cancellation. Simultaneous with the
Closing of this Agreement, the Board of Directors of Royal shall authorize a
forward split of the Royal issued and outstanding Common Stock, whereby 2 shares
of Common Stock shall be issued in exchange for every 1 share of Common Stock
presently issued and outstanding, which forward split shall have an effective
date of August 15, 2001. In addition, simultaneous with the Closing of this
Agreement, Royal shall have received for cancellation an aggregate of 610,100
(pre-split) shares of its previously issued and outstanding common stock,
currently owned by its officers and directors. As a result and on Closing Date,
as defined herein, there will be no more than 779,800 common shares issued and
outstanding. All issued and outstanding Royal Common Shares have been legally
issued, fully paid and are nonassessable.
Section 6.7 Name Change. Royal shall also approve the name change and shall
propose such name change in the special meeting of the shareholders. Upon
receiving the approval of the shareholders of Royal, it shall deliver to LLI an
amendment to Royal's certificate of incorporation changing the company's name to
"L & L Financial Holdings Inc." or such similar name at the discretion of LLI's
Board of Directors.
Section 6.8 No Liabilities. As of the Closing Date, as defined herein the
Royal balance sheet and the notes thereto, shall reflect that Royal has: (i) no
receivables; (ii) no accounts payable; (iii) except as stated herein or in the
Royal Schedules, no liabilities, whether absolute, accrued, known or unknown,
contingent or otherwise, whether due or to become due, including, without
limitation, liabilities as guarantor under any guaranty or other governmental
charges. In the event Royal is bound by or otherwise liable for any contract,
lease or other agreement or any other liability at the date of Closing, Royal's
existing "inside" officers and directors shall execute and deliver a binding
Indemnification and Hold Harmless Agreement at Closing relevant to such
obligations.
Section 6.9 Other Items. LLI shall have received such further documents,
certificates, or instruments relating to the transactions contemplated hereby as
LLI may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Brokers and Finders. Except as set forth in Schedule 7.1, each
party hereto hereby represents and warrants that it is under no obligation,
express or implied, to pay certain finders in connection with the bringing of
the parties together in the negotiation, execution, or consummation of this
Agreement. The parties each agree to indemnify the other against any claim by
any third person not listed in Schedule 7.1 for any commission, brokerage or
finder's fee or other payment with respect to this Agreement or the transactions
contemplated hereby based on any alleged agreement or understanding between the
indemnifying party and such third person, whether express or implied from the
actions of the indemnifying party.
Section 7.2 Law. Forum and Jurisdiction. This Agreement shall be construed
and interpreted in accordance with the laws of the State of Nevada.
18
Section 7.3 Notices. Any notices 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:
If to Royal: Royal Coronado Co. Ltd.
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇. ▇.▇.
▇▇▇▇, ▇▇ ▇▇▇▇▇
If to LLI: L & L Investments Holdings Inc.
▇▇▇▇ ▇▇▇▇▇, ▇▇▇-▇▇- ▇▇▇▇▇▇▇▇ ▇▇.,
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
With copies to: Law Offices of ▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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.
Section 7.4 Attorneys' Fees. The prevailing party in any proceeding brought
to enforce or interpret any provision of this Agreement shall be entitled to
recover its reasonable attorney's fees, costs and disbursements incurred in
connection with such proceeding, including but not limited to the costs of
experts, accountants and consultants and all other costs and services reasonably
related to the proceeding, including those incurred in any bankruptcy or appeal,
from the non-prevailing party or parties.
Section 7.5 Confidentiality. Each party hereto agrees with the other
parties that, unless and until the reorganization contemplated by this Agreement
has been consummated, they and their representatives will hold in strict
confidence all data and information obtained with respect to another party or
any subsidiary thereof from any representative, officer, director or employee,
or from any books or records or from personal inspection, of such other party,
and shall not use such data or information or disclose the same to others,
except: (i) to the extent such data is a matter of public knowledge or is
required by law to be published; and (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement.
Section 7.6 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.
Section 7.7 Third Party Beneficiaries. This contract is solely between
Royal and LLI and, except for the LLI shareholders or as otherwise specifically
provided herein, no director, officer, stockholder, employee, agent, independent
contractor or any other person or entity shall be deemed to be a third party
beneficiary of this Agreement.
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Section 7.8 Entire Agreement. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof. This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations or warranties, written or oral,
except as set forth herein. This Agreement may not be amended or modified,
except by a written agreement signed by all parties hereto.
Section 7.9 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 three years.
Section 7.10 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.
Section 7.11 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 or 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 hereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
Section 7.12 Incorporation of Recitals. All of the recitals hereof are
incorporated by this reference and are made a part hereof as though set forth at
length herein.
Section 7.13 Expenses. Each party herein shall bear all of their respective
costs and expenses incurred in connection with the negotiation of this Agreement
and in the consummation of the transactions provided for herein and the
preparation therefor.
Section 7.14 Headings; Context. The headings of the sections and paragraphs
contained in this Agreement are for convenience of reference only and do not
form a part hereof and in no way modify, interpret or construe the meaning of
this Agreement.
Section 7.15 Benefit. This Agreement shall be binding upon and shall insure
only to the benefit of the parties hereto, and their permitted assigns
hereunder. This Agreement shall not be assigned by any party without the prior
written consent of the other party.
Section 7.16 Public Announcements. Except as may be required by law,
neither party shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto.
Section 7.17 Severability. In the event that any particular provision or
provisions of this Agreement or the other agreements contained herein shall for
any reason hereafter be determined to be unenforceable, or in violation of any
law, governmental order or regulation, such unenforceability or violation shall
not affect the remaining provisions of such agreements, which shall continue in
full force and effect and be binding upon the respective parties hereto.
20
Section 7.18 Failure of Conditions; Termination. In the event any of the
conditions specified in this Agreement shall not be fulfilled on or before the
Closing Date, either of the parties have the right either to proceed or, upon
prompt written notice to the other, to terminate and rescind this Agreement
without liability to any other party. The election to proceed shall not affect
the right of such electing party reasonably to require the other party to
continue to use its efforts to fulfill the unmet conditions.
Section 7.19 No Strict Construction. The language of this Agreement shall
be construed as a whole, according to its fair meaning and intendment, and not
strictly for or against either party hereto, regardless of who drafted or was
principally responsible for drafting the Agreement or terms or conditions
hereof.
Section 7.20 Execution Knowing and Voluntary. In executing this Agreement,
the parties severally acknowledge and represent that each: (a) has fully and
carefully read and considered this Agreement; (b) has been or has had the
opportunity to be fully apprized of its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; and (c) is
executing this Agreement voluntarily, free from any influence, coercion or
duress of any kind.
Section 7.21 Joint Preparation. This Agreement is to be deemed to have been
prepared jointly by the parties hereto and any uncertainty or ambiguity existing
herein, if any, shall not be interpreted against any party, but shall be
interpreted according to the application of the rules of interpretation for
arm's length agreements.
Section 7.22 Arbitration and Venue. Any controversy arising out of or
relating to this Agreement or any modification or extension thereof, including
any claim for damages and/or recission, shall be settled by arbitration in
Nevada in accordance with the Commercial Arbitration Rules of the American
Arbitration Association before one arbitrator. The arbitrator sitting in any
such controversy shall have no power to alter or modify any express provisions
of this Agreement or to render any award which by its terms effects any such
alteration, or modification. The parties consent to the jurisdiction of the
Superior Court of Nevada, and of the United States District Court for the state
of Nevada for all purposes in connection with such arbitration including the
entry of judgment on any award. The parties consent that any process or notice
of motion or other application to either of said courts, and any paper in
connection with arbitration, may be served by certified mail or the equivalent,
return receipt requested, or by personal service or in such manner as may be
permissible under the rules of the applicable court or arbitration tribunal,
provided a reasonable time for appearance is allowed, The parties further agree
that arbitration proceedings must be instituted within one year after the
claimed breach occurred, and that such failure to institute arbitration
proceedings within such period shall constitute an absolute bar to the
institution of any proceedings and a waiver of all claims. Each of the parties
shall, subject to the award of the arbitrators, pay an equal share of the
arbitrators' fees except the arbitrators shall have the power to award recovery
of all costs (including the attorneys' fees, administrative fees, arbitrators'
fees and court fees) to the prevailing party, as determined by the arbitrators.
This section shall survive the termination of this Agreement.
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IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective officers, hereunto duly authorized, and
entered into as of the date first above written.
Royal Coronado Co. Ltd.
ATTEST:
/s/ ▇▇▇ ▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
_________________________ By: ______________________________
Secretary or Chief Executive Office & Chairman
Assistant Secretary
ATTEST: L & L Investments Holdings Inc.
/s/ ▇▇▇▇▇ K.C. AU /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
____________________________ By: _______________________________
▇▇▇▇▇ K.C. AU ▇▇▇▇▇▇▇ ▇. ▇▇▇
Secretary or President
Assistant Secretary
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EXHIBIT "A"
FORM OF INVESTMENT LETTER
INVESTMENT LETTER
August 18, 2001
Royal Coronado Co. Ltd.
Gentlemen:
The undersigned herewith deposits certificate(s) for shares of common stock of L
& L Investments Holdings, Inc., ("LLI"), as described below (endorsed, or having
executed stock powers attached) in acceptance of and subject to the terms and
conditions of that certain Agreement and Plan of Reorganization (the
"Agreement"), between LLI and Royal Coronado Co. Ltd. ("Royal" or the
"Company"), dated August 18, 2001, receipt of which is hereby acknowledged, in
exchange for shares of Common Stock of Royal (the "Exchange Shares"). If any
condition precedent to the Agreement is not satisfied within the relevant time
parameters established in the Agreement (or any extension thereof), the
certificate(s) are to be returned to the undersigned.
The undersigned hereby represents, warrants, covenants and agrees with you
that, in connection with the undersigned's acceptance of the Exchange Shares and
as of the date of this letter:
1. The undersigned is aware that his, her or its acceptance of the Exchange
Shares is irrevocable, absent an extension of the Expiration Date of any
material change to any of the terms and conditions of the Agreement.
2. The undersigned does hereby appoint, ▇▇▇▇▇▇▇ ▇▇▇, LLI' President
("Attorney") as its lawful attorney and agent with full power to execute the
Agreement and any amendments to the Agreement which may be agreed to after the
date hereof, which amendments would have been approved by the majority of the
LLI shareholders, on behalf of the undersigned and further grants unto the
Attorney, full power and authority to do and perform each and every act
necessary to be done to complete the same, subject only to removal or
substitution by the undersigned upon written notification to the Attorney of the
foregoing.
2. The undersigned warrants full authority to deposit all shares referred
to above and that Royal will acquire a good and unencumbered title thereto.
3. The undersigned has full power and authority to enter into this
agreement and that this agreement constitutes a valid and legally binding
obligation of the undersigned.
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4. By execution hereof, the undersigned hereby confirms that the Royal
common stock to be received in exchange for LLI common stock (the "Securities"),
will be acquired for investment for the undersigned's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that the undersigned has no present intention of selling, granting
any participation in, or otherwise distributing the same. By execution hereof,
the undersigned further represents the undersigned does not have any contract,
undertaking, agreement or arrangement with any third party, with respect to any
of the Securities.
5. The undersigned understands that the Securities are being issued
pursuant to available exemption thereto and have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), or under any state
securities laws. The undersigned understands that no registration statement has
been filed with the United States Securities and Exchange Commission nor with
any other regulatory authority and that, as a result, any benefit which might
normally accrue to a holder such as me by an impartial review of such a
registration statement by the Securities and Exchange Commission or other
regulatory authority will not be forthcoming. The undersigned understands that
he/she/it cannot sell the Securities unless such sale is registered under the
1933 Act and applicable state securities laws or exemptions from such
registration become available. In this connection the undersigned understands
that the Company has advised the Transfer Agent for the Common Shares that the
Securities are "restricted securities" under the 1933 Act and that they may not
be transferred by the undersigned to any person without the prior consent of the
Company, which consent of the Company will require an opinion of my counsel to
the effect that, in the event the Securities are not registered under the 1933
Act, any transfer as may be proposed by the undersigned must be entitled to an
exemption from the registration provisions of the 1933 Act. To this end, the
undersigned acknowledges that a restrictive legend will be placed upon the
certificate representing the Securities and that the Transfer Agent has been
advised of such facts.
6. The undersigned represents that it is experienced in evaluation and
investing in securities of companies and acknowledges that he/she/it is able to
fend for itself, can bear the economic risk of this investment and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the investment in the Securities.
In Witness Whereof, the undersigned has duly executed this Investment
Letter as of the date indicated hereon.
Dated: August 18, 2001
Very truly yours,
_______________________________
(signature)
_______________________________
(print name in full)
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇
_______________________________
(address)
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