Exhibit to Form 8-K The Acquisition and Capital Increase Agreement Between L&L International Holdings, Inc. and Fuchang Wang Of Luxi County Hon Shen Coal Co. Ltd. (Translation)
Exhibit to Form 8-K
The Acquisition and Capital Increase Agreement
Between
L&L International Holdings, Inc.
and Xxxxxxx Xxxx Of
Luxi County Xxx Xxxx Coal Co. Ltd.
(Translation)
This Acquisition and Capital Increase Agreement (this “Agreement”) is entered into by and between L&L International Holdings, Inc., a U.S. company (“Party A”), and Xxxxxxx Xxxx (“Party B”), the sole owner of Luxi County Xxx Xxxx Coal Co. Ltd. (“Xxx Xxxx”), pursuant to further discussion of the cooperative operation contract of Xxx Xxxx Co. Ltd. in Luxi County (“Cooperative Agreement”) entered by the Parties on October 23, 2009. Both parties via friendly discussions on the increase capital of Party A’s acquisition of Xxx Xxxx, reached the following agreements:
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1. Parties Party B: Xxxxxxx Xxxx and Luxi County Xxx Xxxx Coal Co. Ltd. |
| 2. | Subscription of Increased Capital | ||
| (1) | Amount of Increased Registered Capital and Total Investment | ||
| Xxx Xxxx’x registered capital shall be increased from RMB 3.6 million to XXX 00 xxxxxxx (xxxxxx. $4.39 million USD). Party A shall subscribe for all of the increase in the registered capital by increasing its investment. In accordance with Xxx Xxxx’x operational capital requirements, Xxx Xxxx’x total working capital shall be increased by Party A from the original RMB 3.6 million to XXX 00 million, which can be arranged by Party A based on operation needs, through either loans or increasing capital in phases. | |||
| (2) | Shareholder’s Ratio of Equity after the Subscription of Increased Capital | ||
| After Party A’s subscribes for the increased registered capital, the shareholders’ ratio of ownership of Xxx Xxxx will be as follows: | |||
| 1. | Party A shall acquire 93% of the equity ownership by paying equivalent foreign currency to purchase the increased registered capital of RMB 26.40 million (or approximately $3.86 million USD). | ||
| 2. | Party B already paid the original registered capital of Xxx Xxxx of RMB 3.6 million. Now Party B shall have 7% of Xxx Xxxx’x equity ownership by contributing Xxx Xxxx’x existing coal washing facilities and coking facilities as a condition of cooperation. | ||
| Xxx Xxxx is composed of two operations: 1) Coal washing facilities (production capacity increased to 300 thousand tons per year as of July 2009); and 2) Coking facilities. Party B guarantees business documentation of the two operations is complete for operations. | |||
| (3) | Timeline of Party A’s Injection | ||
| Party A shall inject (subscribe) by installments Xxx Xxxx’x increased registered capital of a total amount of RMB 26.40 million, (approximately $3.86 million USD). The first payment of RMB 6 million (or equivalent $0.8 million US Dollars) shall be paid by cash within 3 months after the government’s approval of the Cooperative Agreement; the second payment of RMB 20.40 million (or by equivalent $3 million US Dollars) shall be made within 2 years after the government’s approval. | |||
| (4) | Both Parties agree that Xxx Xxxx shall change its name after Xxx Xxxx has been transferred to a Sino-foreign Cooperation Company. Xxx Xxxx’x name shall be “Yunnan | ||
| L&L Xxx Xxxx Coal Company Limited”, and the legal address of Xxx Xxxx shall be changed to “Banqiao Village Jiucheng Town Huxi County Yunnan Province China.” | ||
| 3. | Duties and Obligations | |
| (1) | Party A shall pay the related capital pursuant to the terms and conditions of above articles, Xxx Xxxx shall provide a written confirmation of receipt to Party A when it receives the payments. | |
| (2) | Party A shall own 93% of Xxx Xxxx and injecting increased capital, along with taking the related rights and liabilities. | |
| (3) | Party B shall assume all debts and liabilities of Xxx Xxxx prior to its formal conversion into a Sino-foreign Cooperation Company (“SFCC”), thus shall fully discharge Party A and Xxx Xxxx (as a SFCC) of all such debts and liabilities. Party B shall further be liable to Party A and Xxx Xxxx (as a SFCC) for any and all losses that may be incurred due to Party B’s prior debts and liabilities. | |
| (4) | Upon the execution of the Agreement, Party B shall not enter into loans or mortgages in the name of Xxx Xxxx (Luxi County Xxx Xxxx Coal Co., Ltd.). | |
| 4. | Penalty of Violation of Agreement | |
| In case of violation of the Agreement by any party, the violating party shall compensate the other party for all resulting damages and losses. | ||
| 5. | Dispute Resolution | |
| In the event of any dispute, the Parties shall resolve such dispute through negotiation. If no resolution can be reached by negotiation, the dispute shall be resolved through mediation by an agreed third party. The Parties shall make all efforts to avoid litigation. If the Parties cannot resolve through mediation, the dispute shall be submitted by any Party to the China International Economic and Trade Arbitration Commission’s office in Shenzhen. The decision of arbitration is final and binding on both Parties. | ||
| The Agreement is executed in Chinese in six copies, and effective as of October 23, 2009 when signed by both parties, or their authorized signatories. Each Party and the Company will have one copy. The other three duplicates will be submitted to the appropriate authority for approval. | ||
Party A: L&L International Holdings, Inc.
Legal representative (sign): /s/ Xxxxxxx X. Xxx
Party B: Luxi County Xxx Xxxx Coal Co, Ltd (stamped with a Company Seal)
Legal representative (sign): /s/ Xxxxxxx Xxxx
| December 9, 2009 |
