Nevada
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33-1219070
|
|
State
or Other Jurisdiction of
Incorporation
or Organization)
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(I.R.S.
Employer
Identification
Nos.)
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Large accelerated filer
¨
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Accelerated filer
¨
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
x
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Item
1.
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Business
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1
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Item
1A.
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Risk
Factors
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31
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Item
2.
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Financial
Information
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32
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Item
3.
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Properties
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48
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Item
4.
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Security
Ownership of Certain Beneficial Owners and Management
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51
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Item
5.
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Directors
and Executive Officers
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53
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Item
6.
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Executive
Compensation
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55
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Item
7.
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Certain
Relationships and Related Transactions, and Director
Independence
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58
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Item
8.
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Legal
Proceedings
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59
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Item
9.
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Market
Price of and Dividends on the Registrant’s Common Equity and Related
Stockholder Matters
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59
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Item
10.
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Recent
Sales of Unregistered Securities
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60
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Item
11.
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Description
of Registrant’s Securities to be Registered
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62
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Item
12.
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Indemnification
of Directors and Officers
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62
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Item
13.
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Financial
Statements and Supplementary Data.
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63
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Item
14.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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63
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Item
15.
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Financial
Statements and Exhibits
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63
|
|
·
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Qinghai
Province Sanjiang Group Company Limited (English translation) (“Qinghai
Sanjiang”), a PRC government owned company with major business activities
in the agriculture industry; and
|
|
·
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Guangzhou
City Garwor Company Limited (English translation) (“Garwor”), a private
limited company incorporated in the PRC, specializing in sales and
marketing.
|
Company
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Shareholding
by the group
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Immediate subsidiary
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Equity
Ownership
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Revenues generating activities
|
|||
Sino
Agro Food, Inc.
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The
Ultimate Holding Company
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Service
fees will be charged to its operational subsidiaries in China starting in
its fiscal year ending June 30, 2011.
|
|||||
Capital
Award Inc.
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100%
|
Fishery
development including consulting service fees, technology fees, supply of
plants and equipment and other related services and management fees, since
2004
|
|||||
Macau
Eiji Company Limited
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100%
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Jiang
Men City Heng Sheng Tai Agriculture Development Co. Ltd.
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75%
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Growing
and processing of HU Plants including sales of fresh and dried HU flowers
and value added processed HU Flowers.
Revenues
generated since 2008.
|
|||
Hang
Yu Tai Investment Limited
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100%
|
ZhongXingNongMu
Co. Ltd.
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78%
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Dairy
Farm operation, including sales of fresh liquid milk, dairy products,
fertilizer, livestock feed and cattle since 2006. Revenues generated
since 2006.
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|||
A
Power Agro Agriculture Development (Macau) Limited
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100%
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Qinghai
Sanjiang A Power Agriculture Co. Ltd (China).
(Operational
company)
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45%
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Manufacturing
and beef cattle farming, including the sales of bio-organic fertilizer,
livestock feed and beef cattle. It is anticipated that revenue and sales
will be generated starting from this fiscal year ending June 30,
2011.
|
|||
Tri-way
Industries Limited
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100%
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A
newly formed Sino-Foreign Joint Venture Company at Enping County,
Guangdong
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From
20%
(as
provided in the joint venture agreement)
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Fish
Farm operation including the sales of farmed fish and it is anticipated
that revenues will be generated from July
2011.
|
|
·
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solid
waste filter and separator;
|
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·
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micro-bio
filter for the treatment of insoluble
wastes;
|
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·
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oxygen
injector;
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·
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steam
generated heating compartment (optional, depending on the species of fish
to be grown);
|
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·
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ultra
violet light disinfection chamber;
|
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·
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air
blower configuration;
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·
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designs
of the grow-out tanks;
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·
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designs
of the quarantine station;
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·
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designs
of the nursery station;
|
|
·
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designs
of stock feed processing lay-out
plans.
|
|
·
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systems
for rotational stocking of fish and rotational harvesting of fish,
designed to stock the growing fish tanks with certain variety of fish of
certain sizes and age group at pre-determined intervals, to provide
constant production of multiple varieties all year round or as and when
the markets require;
|
|
·
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quality
control systems to keep the quality of the water and production in
check;
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·
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diseases
control and prevention system to enhance better production cycles of the
farms;
|
|
·
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maintenance
programs to ensure the smooth running of the farms’ equipment;
and
|
|
·
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training
programs for the workers on standard operating
procedures.
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Items of comparison
|
APT farms
|
Conventional farms
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||
Surface
area measured for productivity
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25
tons per year per 72 m²
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0.5
tons per year per 660m²
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||
Water
capacity measured for productivity
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25
tons per year per 100 m³
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0.5
tons per year per 1320m³
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||
Labor
content
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One
worker per 50 tons per year
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One
worker per 6 tons per year
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||
Water
usage
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Minimal
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100%
Changed every year
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||
Energy
requirement
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2.5%
cost of production
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No
specified records
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||
Quality
standard
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Can
be organic or non-organic.
Guaranteed
free from chemical and pollution of export standard
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No
consistency
Not
of export quality
|
||
Harvesting
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All
year round
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Once
or twice annually
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||
Subjecting
to seasonal variation
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No
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Yes
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||
Subjecting
to external predators and diseases
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No
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Yes
|
||
Usage
of antibiotics and chemicals
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No
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Yes
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||
Environmentally
friendly
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Yes
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No
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||
Live
span of major plants & equipment
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25
years or more
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Two
years
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||
Average
Gross profit
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minimum
60% of sales value, depending on the species of fish grown
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No
accurate calculation
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||
Averaged
mortality rate for the Grow-out
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8%
or less
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Above
25%
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||
Average
of feed to fish conversion rate
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2
to 1
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4.5
to 1
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·
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Commencement
of construction of the farm building on or before July 15,
2010;
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·
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Commencement
of construction of the grow out tanks on or before August 1,
2010;
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·
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Completion
of construction of farm building and tanks on or before September 30,
2010; and
|
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·
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First
Income from sales of fish on or before July 1,
2011.
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·
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harvesting
the green flowers from the HU Plants before they mature into fruits and
sell them as vegetables;
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·
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drying
the green flowers harvested and selling them as dried vegetables for human
consumption; and
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·
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processing
and packaging the dried and fresh flowers into salted, pickled and in
brine vegetables.
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·
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Year
1 plants yield only about 10% of green flowers, as compared to the matured
plants.
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·
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Year
2 plants yield about 50% of green flowers, as compared to the matured
plants.
|
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·
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Year
3 fully matured plants yield an average of 120,000 green flowers per year
per mu over the next 25 years, the average production life span of a HU
plant.
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·
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All
harvested green flowers will be stored and kept cool in the cool room
while waiting to be processed.
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·
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They
will then be steamed in batches at boiling temperature for less than 15
minutes. The naturally dried flowers will require washing and
grading. Flavored dried flowers will be aromatically cured after
steaming.
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·
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Thereafter,
they will be transferred to the drier to be dried at 140Celsius for about
3 hours and at gradually decreasing temperature for another 5
hours.
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·
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Packaging
procedures will then follow.
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·
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They
will then be stored and sold through the winter period until next harvest
season.
|
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·
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easy
access to affordable pool of labor in the Enping region, and at the same
time creating job opportunities for the local people
.
|
|
·
|
our
experience in the industry dictates that these traditional systems and
methods produce the end products of such quality much preferred by the
local markets.
|
|
·
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These
facilities located in the agriculture districts are regarded as temporary
agriculture facilities, and as such prior approval of the regional council
is not required, as long as the village committee of the County has been
duly informed accordingly. In this respect, we have the consent of the
village committee for the erection of the
facilities.
|
Product
|
Revenue
ended Dec
31,
2009
|
Percentage of
Revenue of
this
Subsidiary
|
Revenue
6 months
ended June
30,
2009
|
Percentage of
Revenue of
this
Subsidiary
|
Revenue
6 months
ended June 30,
2010
|
Percentage of
Revenue of
this
Subsidiary
|
||||||||||||||||||
Fresh
flowers
|
464,531 | 16 | % | 0 | 0 | % | 0 | 0 | % | |||||||||||||||
Dried
flowers
|
2,450,560 | 84 | % | 151,537 | 100 | % | 0 | 0 | % | |||||||||||||||
Total
|
2,915,091 | 100 | % | 151,537 | 100 | % | 0 | 0 | % |
|
·
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Production
and sales of fresh liquid milk;
|
|
·
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Rearing
and sales of beef cattle;
|
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·
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Planting
of crops for the purpose of further processing into livestock
feed;
|
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·
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Processing
and sales of livestock feed; and
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·
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Processing
and sales of fertilizer.
|
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·
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Breeding
of cows and cattle; and
|
|
·
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Veterinary
services
|
Sale
|
Revenue
ended Dec 31,
2009
|
Percentage of
Revenue of
this
Subsidiary
|
Revenue
6 months
ended June 30,
2009
|
Percentage of
Revenue of
this
Subsidiary
|
Revenue
6 months
ended June 30,
2010
|
Percentage
of Revenue
of
this
Subsidiary
|
||||||||||||||||||
Fresh
liquid milk
|
16,113,349
|
69.5 | % |
7,616,758
|
83 | % |
4,655,372
|
41.8 | % | |||||||||||||||
Beef
cattle
|
255,031
|
1.1 | % |
697,438
|
7.6 | % |
801,882
|
7.2 | % | |||||||||||||||
Value
added dairy products
|
0 | 0 | % | 0 | 0 | % |
3,675,293
|
33 | % | |||||||||||||||
Livestock
feed
|
5,842,538
|
25.2 |
679,085
|
7.4 | % |
1,826,509
|
16.4 | % | ||||||||||||||||
Fertilizer
|
937,756
|
4.2 | % |
183,536
|
2 | % |
178,196
|
1.6 | % | |||||||||||||||
Total
|
23,148,674
|
100 | % |
9,176,817
|
100 | % |
11,137,252
|
100 | % |
|
·
|
maturity
of our cows reaching better yield cycles, i.e. from average of 7.6 kg per
cow per day in 2009 to 8.3 kg per cow per day in
2010.
|
|
·
|
more
milking days, i.e. from average of 288 days per year to 306 days per
year.
|
|
·
|
increase
in number of milking cows, i.e. from 3,800 heads in 2009 to
5,000 heads in 2010.
|
|
·
|
Revenue
from 39 days of sale of fresh milk in 2009 was carried forward to this
current half corrected for reason of doubtful receivables recorded
earlier.
|
|
·
|
Sales
of value added products in current half year are inclusive of the sales
from November 1, 2009 to June 30, 2010. At the same time sale price
for the value added products (at an average of $1,841 per metric ton) was
much higher than the sale price for fresh milk (at an average of $663 per
ton).
|
|
·
|
We
sold more livestock feed in the early months of 2010 due to high demand
generated by the extreme winter condition during that
period.
|
|
·
|
the
most up-to-date feed mixing machines and milking
equipment;
|
|
·
|
efficient
housing and supporting facilities that can accommodate up to 3,500
cows;
|
|
·
|
in
house veterinary facilities and
services;
|
|
·
|
a
modern and well equipped quarantine station that has the capacity to
handle up to 2,000 cows;
|
|
·
|
significant
feed and forages storages areas to stock up to 25,000 tons of livestock
feed;
|
|
·
|
a
crop plantation on more than 1,000 acres of land;
and
|
|
·
|
processing
factories for the manufacturing of livestock feed and
fertilizer.
|
|
·
|
Zhang
Zheng Xi (agent of TianJin Mu Dairy Co. Ltd.),
(ZZX).
|
|
·
|
Siao
Shu Dong (agent of Chengde Huang Yuan Dairy Co. Ltd.)
,(SSD).
|
|
·
|
Wang
Cheng Xiang (agent of Mengniu Dairy Group),
(WCX).
|
|
·
|
Jun
Heng (agent of Yili Dairy Group),
(JH).
|
Sale
|
Sales
ended Dec 31,
2009
|
Percentage of
total sales
|
Sales
6 months
ended June 30,
2009
|
Percentage of
total sales
|
Sales
6 months
ended June 30,
2010
|
Percentage
of total
sales
|
||||||||||||||||||
ZZX
|
8,213,156 | 35.48 | % | 3,100,846 | 33.79 | % | 4,092,940 | 36.75 | % | |||||||||||||||
SSD
|
5,206,137 | 22.49 | % | 2,124,433 | 23.15 | % | 2,543,748 | 22.84 | % | |||||||||||||||
WCX
|
4,069,537 | 17.58 | % | 1,709,641 | 18.63 | % | 2,002,478 | 17.98 | % | |||||||||||||||
JH
|
2,122,733 | 9.17 | % | 851,609 | 9.28 | % | 1,255,168 | 11.27 | % |
|
·
|
Qinghai
Province Sanjiang Group Company Limited (English translation) (“Qinghai
Sanjiang”), a PRC government owned company with major business activities
in the agriculture industry; and
|
|
·
|
(Guangzhou
City Garwor Company Limited (English translation) (“Garwor”), a private
limited company incorporated in the PRC, specializing in sales and
marketing.
|
|
·
|
using
environmental friendly technology to recycle agriculture waste for
production of organic fertilizer;
|
|
·
|
using
environmental friendly technology and bacteria to produce organic feed;
and
|
|
·
|
using
environmental friendly technology to increase dairy milk production and
quality.
|
·
|
Organic
fertilizer project :
US$450,000.00
|
·
|
Organic
livestock
feed:
US$950,000.00
|
·
|
Organic
farm
grass:
US$600,000.00
|
|
·
|
US$630,000.00
capital contribution;
|
|
·
|
appropriate
plots of lands with the related “Land Usage Rights” or convertible old
factory suitable for the projects, that
is:
|
|
·
|
land
and buildings measuring up to 1,800 mu (about 297 acres) and 9,000 m² of
built-up areas for the development of the demonstration farms for the
rearing of cattle and sheep; and
|
|
·
|
land
and buildings measuring up to 480 mu (about 79.2 acres) and 155,040
m² of built-up area for the development of the manufacturing
plants for bio-organic fertilizer;
|
|
·
|
vehicles
for use by Sanjiang A Power during pre-development and the implementation
stage;
|
|
·
|
company
office and accommodation for personnel from out of
town;
|
|
·
|
the
necessary facilities for the
projects;
|
|
·
|
liaison
in procuring governmental financial assistance or other incentives for
agriculture projects to meet the needs of the
projects;
|
|
·
|
first
batch of premium herd of cows and goats for the demonstration farms;
and
|
|
·
|
related
plants and equipment and facilities for the production factories and
laboratories of Sanjiang A Power.
|
|
·
|
US$140,000.00
capital contribution;
|
|
·
|
modern
agriculture management system;
|
|
·
|
liaison
in procuring financial assistance to raise development
capital;
|
|
·
|
expertise
in the sales and marketing needs of Sanjiang A
Power;
|
|
·
|
international
business network;
|
|
·
|
assistance
to resolve any misunderstanding between the Chinese and foreign parties
resulting from the difference in laws and regulation between the two
concerned countries.
|
|
·
|
US$630,000.00
capital contribution;
|
|
·
|
the
rights to use the relevant patented technologies and the related
trademarks and brands;
|
|
·
|
the
rights to use the patented Bacterial and Bio-organic Fertilizer
Manufacturing Technology, the Stock Feed Manufacturing
Technology;
|
|
·
|
the
right to use related conversion techniques associated with the Bio-organic
Fertilizer and Livestock Feed
Manufacturing;
|
|
·
|
business
and sales network and the right to operate and generate financial benefit
using the above mentioned technologies, techniques, systems, trademarks
and labels; and
|
|
·
|
knowledge
and connections for securing financings for its
developments.
|
|
·
|
Sanjiang
A Power suffers severe financial losses and is not able to continue
operation as a result;
|
|
·
|
a
party hereto fails to fulfill its obligations herein, and Sanjiang A Power
is not able to continue operation as a
result;
|
|
·
|
force
majeure; and
|
|
·
|
Sanjiang
A Power fails to achieve its business objectives, and has no prospect of
development.
|
|
·
|
The
Name of the company shall be Sanjiang A Power Agriculture Co. Ltd.
(translation in English)
|
|
·
|
Total
Investment Capital : U.S.$2 million
|
|
·
|
Registered
Capital: U.S. $1.4 million, out of which US$630,000.00 to be contributed
by Qinghai Sanjiang (45%), US$140,000.00 by Garwor (10%) and US$630,000.00
by Pretty Mountains (45%).
|
|
·
|
7
members in the Board of Directors consisting of 3 appointees from Qinghai
Sanjiang, 1 from Garwor, and 3 from Pretty
Mountains.
|
|
·
|
change
its place of business from the City of Xining to the County of
Huangyuan;
|
|
·
|
effect
the registration of APWAM as a shareholder of Sanjiang A Power, replacing
Pretty Mountains; and
|
|
·
|
Investigation
and feasibility study of the potential project
sites;
|
|
·
|
Investigation
and feasibility study of the supplies and production of raw
materials;
|
|
·
|
Investigation
and feasibility study of the sales and marketing of the products to be
produced by Sanjiang A Power;
|
|
·
|
Investigation
and feasibility study of the related facilities within the
locations;
|
|
·
|
Investigation
and feasibility study of applicability of SIAF’s technologies for
bio-organic fertilizer and livestock feed under the local conditions;
and
|
|
·
|
Investigation
and analysis of potential cooperative activities with the regional
government and the farmers;
|
|
·
|
Establishing
trial facilities to test the production of bio-organic fertilizer and
livestock feed, using locally sourced raw
materials;
|
|
·
|
Laboratory
testing of sample products of fertilizer and livestock feed on their
respective standard of qualities;
and
|
|
·
|
Financial
feasibility studies of all aspects of the business
operations.
|
|
·
|
The
Huangyuan Government agreed to allocate the site of the old army goods and
materials transfer terminal, consisting over 150 mu of land and over
20,000 m² of built up area (39 buildings, each of approximately 538 m²)
(“Project Site”) to Sanjiang A Power for the purpose of the
projects.
|
|
·
|
Sanjiang
A Power shall register its place of business in the County of Huangyuan
within 6 months of the Development
Agreement.
|
|
·
|
Sanjiang
A Power’s total investment and development capital for the projects shall
be RMB96.2 million (equivalent to about U.S.$14.15 million), of which the
fixed assets should amount to RMB50.20 million (equivalent to U.S.$7.382
million, based on the exchange rate of U.S.$1 =
RMB6.80).
|
|
·
|
Livestock
Feed manufacturing
|
|
·
|
Cattle
rearing and fattening stations
|
|
·
|
Manufacturing
of bio-organic fertilizer
|
|
·
|
Plantation
of pastures and crops as the raw materials for livestock
feed.
|
|
·
|
Renovation
and building work on staff quarters, capable to house up to 70 workers at
a time;
|
|
·
|
Renovation
and installation of facilities for six beef cattle fattening demonstration
yards and buildings, with the capacity to house up to 120 heads of cattle
per house;
|
|
·
|
Construction
of a factory with the capacity to produce up to 20,000 tons of bio-organic
fertilizer per year was completed last week of June 2010, and is now in
operation producing up to 600 tons per day to fill its first order of
2,500 tons sold regionally;
|
|
·
|
Construction
of a new headquarter office building consisting of 2,500m² was commenced
on June 12, 2010 and expected to be completed on or before December 31,
2010;
|
|
·
|
Invention
of a new enzyme (“the Enzyme”) that is capable of allowing fermentation
and germination processes in our manufacturing of livestock feed to take
place at 4Celsius within 7 days, which is suitable in the colder northern
China climates since it will save much additional heating costs to
initiate the fermentation and germination process of the livestock feed,
as compared to the old enzyme performing at 15Celsius within 21
days;
|
|
·
|
Additional
weight gained average per beef cattle was recorded at one extra kilogram
per day over their normal weight
gains.
|
|
·
|
Additional
fresh milk produced per cow was recorded at one and half kilograms of milk
per day over and above their normal daily
production.
|
|
·
|
All
feeds were much easier to digest resulting in much cleaner environment in
the cattle yards and houses.
|
|
·
|
No
sickness during the period was recorded through the cause of consumption
of our feeds, but there was one cow had an early
abortion.
|
|
·
|
All
cattle preferred to eat our feeds and reluctant to revert back to the
consumption of their old feed after they had consumed our feed during the
period.
|
|
·
|
Manufacturing
of livestock feed to achieve 20,000 tons, to be sold to the regional
farmers and 10,000 tons to be consumed by our own cattle on the Project
Site;
|
|
·
|
Manufacturing
of bio-organic fertilizer to reach 10,000 tons;
and
|
|
·
|
Rearing
and fattening of beef cattle to reach a minimum of 1,000
heads.
|
|
·
|
eliminating
toxic fat in the soil;
|
|
·
|
eliminating
the adversity caused through frequent application of chemicals and
antibiotics;
|
|
·
|
increase
growth of micro organism in the soil to purify water
toxicity;
|
|
·
|
improve
the disease resistant ability of the root systems of
plants;
|
|
·
|
neutralize
the bad affect caused by the toxic
mineral;
|
|
·
|
increase
soil resistant to salinity ;
|
|
·
|
increase
nutrient to the soil;
|
|
·
|
procure
nutrient absorbing ability of the
soil;
|
|
·
|
increase
diseases resistant ability of the growing
plants;
|
|
·
|
reduce
plant diseases and the developments of
insects;
|
|
·
|
multiply
the growth of micro-organism and natural bacterial;
and
|
|
·
|
reduce
the usage of chemical fertilizer and improves the economic benefit of the
chemical fertilizer. (In this respect, it is because of the use of
bio-organic fertilizer will improve the soil’s overall ability to the
absorb nutrients more consistently and easily, such that within a period
of six months after the application of the bio-organic fertilizer, the
soil in general will start to show the benefit and in the position to use
less chemical fertilizer, the exact reduced usage quantity of chemical
fertilizer is usually subject to how poorly the soil have been demanded by
the pro-long usage of chemical fertilizer in the past, however it is
evidenced frequently that the saving could be measured anyway from 30% up
to 60% within a year cycle after the application of bio-organic
fertilizer.)
|
|
·
|
Our
cattle houses (22 of them) will be leased out to the regional farmers who
will have the option to lease up to 4 houses at a time, such that they
will supply their own young cattle for fattening and they will manage
their respective operations.
|
|
·
|
We
will provide all associated in-house facilities and services (i.e.
veterinary service, utilities, laboratory analysis, ration and nutrient
formulated mixing machines, etc.), supply the livestock feed, and
marketing of their grown up beef cattle (“the Farmers’
cost”).
|
|
·
|
The
breeders will grant us the first option to buy all grown up cattle stocks
from them and in the event that they decide to sell to other buyers, such
sales will be conducted through our account so that the Farmers’ cost will
be deducted from the proceeds of
sales.
|
|
·
|
The
regional farmers planting wild wheat, wild peas and wild pastures can now
increase their yearly yield from 1.25 tons per mu to 4.5 tons per mu by
using our organic fertilizer.
|
|
·
|
The
regional dairy farmers who were used to get an average of about 1.5 tons
(or 1500 kg) of fresh milk from one head of cow per year based on maximum
milking day of 180 days per year (due to long winter spell in Qinghai
Province) can now get an extra 450 kg of milk per year using our livestock
feed to feed right through the winter to maximize the milking days to 300
days per year.
|
|
·
|
1st
tranche of U.S.$1,000,000 on or before December 31, 2009, which was paid
on December 28, 2009;
|
|
·
|
2nd
tranche of U.S.$1,000,000 on or before December 31, 2010;
and
|
|
·
|
3rd
tranche of U.S.$1,500,000 on or before November 11,
2012.
|
|
·
|
Engineering
designs of the livestock feed manufacturing
factories;
|
|
·
|
Engineering
designs of the factories’ plants and
equipment;
|
|
·
|
Designs
of various lay-out plans for the said factories and
equipment;
|
|
·
|
Management
of the related operation; and
|
|
·
|
Training
of personnel of the related
operation.
|
|
·
|
Field-cropped
grass, corns, or other similar materials are cut and sun cured in the
fields;
|
|
·
|
Raw
materials are then transported to processing locations for further
processing
|
|
·
|
Raw
materials are finely cut and mixed together then stored in open concrete
yards; or
|
|
·
|
Raw
materials are compacted into various sharps and forms such as pellets,
cubes, or square blocks, and then
stored.
|
|
·
|
Unsafe
for consumption due to high count of bad
bacteria;
|
|
·
|
Poor
to taste due to high content of bad bacterial and rough to
feel;
|
|
·
|
Non-uniform
quality and generally low in nutrient, low in protein and vitamins with
high fiber;
|
|
·
|
Poor
digestibility usually evidenced by animal
dropping.
|
|
·
|
Type
One is a more general application type of livestock feed suitable for beef
cattle and sheep; and
|
|
·
|
Type
Two is special ration designed for dairy cows that consists of various
grades adaptable to various stages in the life of dairy cows from the time
of pregnancy, carrying period with calves to three months old,
weaning of the calves to they are six months old, and continued milking
period of the calves until they
reproduce.
|
|
·
|
reduce
sickness in animal;
|
|
·
|
increase
milking life span of cows;
|
|
·
|
reduce
mortality rate of animals;
|
|
·
|
increase
birth rate of cattle and sheep;
|
|
·
|
increase
milk productivity of the cows;
|
|
·
|
increase
weight gain in cattle and sheep;
and
|
|
·
|
improve
quality of the milk produced by
cows.
|
|
·
|
All
land clearing, leveling and fencing at the development site have been
completed.
|
|
·
|
All
soil testing, water quality testing and water in flow rate testing have
been done.
|
|
·
|
Majority
of the plants and equipment have been
delivered.
|
|
·
|
Construction
of the farm buildings has been in progress and within
schedule.
|
|
·
|
Construction
of the fish tanks has been in progress and six tanks has been
constructed.
|
|
·
|
Contracts
on the provision of related services and consultancies needed for the
construction, operation of the farm have been
organized.
|
|
·
|
300,000
fingerlings have been ordered for delivery from September 2010 through
November 2010 and our last inspection at the supplier’s farm on August 18,
we saw that the fingerling were at an average of 60 mm per fingerling and
growing healthily.
|
|
·
|
Documents
related to the application for setting up of the SFJVC is now being
finalized by the Chinese party’s lawyer, and it will be submitted to the
relevant authorities within the month of September,
2010.
|
|
·
|
To
produce uniform and high standard of quality “Organic Food” in efficient
and economically manner, supported by sustainable markets to meet the
middle income population of China as well as other Asian
countries.
|
|
·
|
To
bring the farmed produce and products directly from farms to the end
consumer’s markets, thus providing more efficient services and cost saving
benefits to the end consumers as a
whole.
|
|
·
|
To
bring better economic benefits to the farmers and growers, thus improving
their living standard and bringing economic benefits to the communities as
a whole.
|
|
·
|
No
income tax
|
|
·
|
No
value added tax, subsidizes in transportation within the
country
|
|
·
|
No
import tax on imported plants and
equipment
|
|
·
|
Rebate
of development capital calculated up to 33% of development
assets
|
|
·
|
Advantageous
loans with no interest or fixed terms of
repayment
|
|
·
|
“Land
Usage Rights” being accepted as collateral that can be pledged against
bank borrowings
|
|
·
|
Environmental
|
|
·
|
Business
Registration
|
|
·
|
Foreign
Investment and Trade
|
|
·
|
Foreign
Exchange Control
|
|
·
|
Finance
|
|
·
|
Commerce
and Business
|
|
·
|
Statistic
and Records
|
|
·
|
Customs
|
|
·
|
Land
|
|
·
|
Taxation
|
|
·
|
Town
Planning
|
|
·
|
Business
and Commerce
|
|
·
|
Land
Development
|
|
·
|
Health
|
SIAF China
office and
Capital
Award
|
Intermediate
holding
companies
|
HST
|
ZhongXing
|
SanJiang A
Power
|
Total
|
||||||||
Full
Time
|
|||||||||||||
Administration
|
|||||||||||||
Management
|
8
|
2
|
3
|
8
|
8
|
29
|
|||||||
Clerical
|
3
|
2
|
2
|
12
|
7
|
26
|
|||||||
Sales
|
5
|
0
|
2
|
3
|
5
|
15
|
|||||||
Non-Skilled
|
2
|
0
|
3
|
6
|
10
|
21
|
|||||||
Operation
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||
Management
|
3
|
0
|
2
|
6
|
5
|
16
|
|||||||
Clerical
|
3
|
0
|
3
|
3
|
3
|
12
|
|||||||
Skilled
|
6
|
0
|
3
|
80
|
35
|
124
|
|||||||
Non-skilled
|
3
|
0
|
5
|
20
|
25
|
53
|
|||||||
Part
Time
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||
Operation
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||
Skilled
harvesting
|
0
|
0
|
100
|
80
|
40
|
220
|
|||||||
Non-skilled
|
0
|
0
|
12
|
12
|
8
|
32
|
|||||||
Total
|
33
|
4
|
137
|
230
|
146
|
548
|
|
·
|
The
Dairy business, through a combination of Hang Yu Tai Investment Limited
and ZhongXingNongMu Co. Ltd.
|
|
·
|
The
Plantation business, through a combination of Macau Eiji Company Limited
and Jiang Men City Heng Sheng Tai Agriculture Development Co.
Ltd.
|
|
·
|
The
Fishery business, through a combination of Capital Award Inc. and
SIAF.
|
|
·
|
The
Beef business , through a combination of Jiang Men City Heng Sheng Tai
Agriculture Development Co. Ltd. and Qinghai Sanjiang A Power Agriculture
Co. Ltd.
|
Description
|
Year 2009 (Actual records)
|
|
Land
that are producing crops for making of livestock feed (Productive
land)
|
1,000
acres
|
|
Number
of milking cows being milked (productive cows)
|
3,500
heads
|
|
Number
of standing by milking cows to replace the non-productive
cows
|
1,250
heads
|
|
Average
of productivity / productive cow
|
6.8
MT /head/ year
|
|
Average
of fresh milk sales prices
|
US$643
/ MT
|
|
Average
of dairy products’ sale prices
|
US$1,843
/ MT
|
|
Average
of sales prices of Livestock feed
|
||
For
internal usage (at cost)
|
US$37
/ MT
|
|
For
external sales
|
US$56
/ MT
|
|
Average
of revenue generated per productive cows
|
US$4,393
/ Cow / year
|
|
Average
of revenue generated per productive acre
|
US$1,809
/ acre / year
|
|
Average
raw materials cropped for making of
livestock
feed;
|
||
Internally
used by own cows
|
24,750
MT
|
|
Externally sales to regional
farmers
|
15,840 MT
|
|
Total
crops
|
40,590
MT
|
|
Total
production of fresh milk
|
23,905
MT
|
|
Sales
components in % and amounts of sales for
|
||
Fresh
Milk
|
US$15,374,776
(85%)
|
|
Dairy
Products
|
US$723,519
(4%)
|
|
Livestock
Feed
|
US$1,808,797
(10%)
|
|
Others (combination of fertilizer and
cattle)
|
US$176,955 (1%)
|
|
Total
Revenue of sales
|
US$18,084,046.
|
|
Gross
Profit Margins based on sales of
|
||
Fresh
Milk
|
51%
|
|
Dairy
Products
|
57%
|
|
Livestock
Feed
|
17%
|
|
Others
(combination of fertilizer and cattle)
|
15%
|
|
·
|
Year
1 plants yield only about 10% of green flowers, as compared to the matured
plants.
|
|
·
|
Year
2 plants yield about 50% of green flowers, as compared to the matured
plants.
|
|
·
|
Year
3 fully matured plants yield an average of 100,000 to 120,000 green
flowers per year per mu (or 600,000 to 720,000 pieces per acre per year)
over the next 25 years, the average production life span of a HU
plant.
|
Description
|
Year
2009 (Actual records)
|
|
New
Planting
|
88
acres
|
|
Year
1 plants
|
42
acres
|
|
Year
2 plants
|
47
acres
|
|
Year
3 and above plants
|
0
acre
|
|
Total
land planted with HU Flowers
|
179
acres
|
|
Total
Harvests of fresh flowers
|
16,740,000
pieces
|
|
Average
of weight per piece of flower
|
250
gram
|
|
Conversion
rate of fresh flowers to
|
8.16
Kg. (of flowers) to 1 Kg. of
|
|
Dried
flowers
|
(dried
flowers).
|
|
Averaged
sales price of fresh flowers
|
US$0.103
/ piece
|
|
Averaged
sales price of dried flowers
|
US$5,605
/ MT
|
|
Average
sales price of value added flowers
|
No
sales
|
|
Revenue
and % of sales from sales of :
|
||
Fresh
Flowers
|
$172,832.
(10%)
|
|
Dried
Flowers
|
$2,586,796
(90%)
|
|
Value
added flowers
|
0%
|
|
Gross
Profit % of sales of
|
72%
|
|
·
|
Firstly,
incomes will be generated from the referred services contracted to APM
fish farm developers.
|
|
·
|
Secondly,
incomes will be generated through sales of fish and fish products of the
APM Fish Farms.
|
|
·
|
Thirdly,
incomes will be generated via a marketing net work that will be developed
by us to market all of the APM fish farms’ fish and fish products under
our designed labels and brands.
|
|
·
|
Construction
of the farm building was commenced since July 15,
2010;
|
|
·
|
Construction
of the grow out tanks was commenced from August 1,
2010;
|
|
·
|
Targeted
completion of construction of farm building and tanks on or before October
31, 2010; and
|
|
·
|
First
Income from sales of fish is aiming at on or before August 1,
2011.
|
|
·
|
Our
cattle houses (23 of them) will be leased out to the regional farmers who
will have the option to lease up to 4 houses at a time, such that they
will supply their own young cattle for fattening and they will manage
their respective operations.
|
|
·
|
We
will provide all associated in-house facilities and services (i.e.
veterinary service, utilities, laboratory analysis, ration and nutrient
formulated mixing machines, etc.) and supply the livestock feed (“the
Farmers’ cost”) and marketing of their grown up beef
cattle.
|
|
·
|
The
breeders will grant us the first option to buy all grown up cattle stocks
from them and in the event that they decide to sell to other buyers, such
sales will be conducted through our account so that the Farmers’ cost will
be deducted from the proceeds of
sales.
|
|
·
|
Manufacturing
and sales of organic and combined
fertilizer.
|
|
·
|
Manufacturing
and sales of Livestock feed.
|
|
·
|
Farm
services provided to the breeders.
|
|
·
|
Marketing
and sales of beef cattle.
|
Category
|
2009
|
2008
|
Difference
|
|||||||||
Fishery
|
$ | 726,702 | $ | 562,497 | $ | 164,205 | ||||||
Dairy
|
18,084,046 | 14,388,014 | 3,696,032 | |||||||||
Plantation
|
2,915,091 | 1,238,956 | 1,676,135 | |||||||||
Beef
|
0 | 0 | 0 | |||||||||
Totals
|
$ | 21,725,839 | $ | 16,189,467 | $ | 5,536,372 |
Category
|
2009
|
2008
|
Difference
|
|||||||||
Fishery
|
$ | 0 | $ | 0 | $ | 0 | ||||||
Dairy
|
8,578,652 | 7,553,003 | 1,025,649 | |||||||||
Plantation
|
806,790 | 394,656 | 412,134 | |||||||||
Beef
|
0 | 0 | 0 | |||||||||
Totals
|
$ | 9,385,442 | $ | 7,947,659 | $ | 1,437,783 |
Years-ended December 31,
|
||||||||
Category
|
2009
|
2008
|
||||||
Fishery
|
726,702 | 562,497 | ||||||
(100 | )% | (100 | )% | |||||
Dairy
|
9,505,394 | 6,835,011 | ||||||
(52.56 | )% | (47.50 | )% | |||||
Plantation
|
2,108,301 | 844,300 | ||||||
(72.32 | )% | (68.15 | )% | |||||
Beef
|
0 | 0 |
Category
|
2009
|
2008
|
Difference
|
|||||||||
Office
and corporate expenses
|
$ | 405,123 | $ | 540,472 | $ | (135,349 | ) | |||||
Wages
and Salaries
|
$ | 568,757 | $ | 758,487 | $ | (189,730 | ) | |||||
Office
Rentals
|
$ | 69,936 | $ | 63,320 | $ | 6,616 | ||||||
Traveling
and related lodging
|
$ | 62,827 | $ | 69,122 | $ | (6,295 | ) | |||||
Motor
vehicles expenses and local transportation
|
$ | 20,646 | $ | 20,160 | $ | 486 | ||||||
Entertainments
and meals
|
$ | 39,090 | $ | 47,298 | $ | (8,208 | ) | |||||
Sub-total
|
$ | 1,166,379 | $ | 1,498,859 | $ | (332,480 | ) | |||||
Depreciation
and amortization
|
$ | 1,685,705 | $ | 1,312,493 | $ | 373,212 | ||||||
Total
|
$ | 2,852,084 | $ | 2,811,352 | $ | 40,732 |
(1)
|
Building
costs and imported costs of plants and equipment were at their highest in
China during 2008 and the early months of
2009.
|
(2)
|
It
was not until after the first six months of 2009 that we finalized our
investigations and tests to enable the manufacture of parts and components
for our fishery plants and equipment. By waiting, we were able to
experience substantial cost savings while obtaining durable quality
standard components as compared to the
imports.
|
(3)
|
It
was not until recently that we were able to develop a management system
that will provide enough security in our farm operation to protect our
technology from being pirated.
|
Q1
|
Q2
|
1
st
Half
total
|
|||||||||||
2009
|
|||||||||||||
Fishery
|
$ | 413,650 | $ | 313,052 | $ | 726,702 | |||||||
Dairy
|
$ | 3,622,403 | $ | 3,535,515 | $ | 7,157,918 | |||||||
Plantation
|
$ | 151,538 | $ | 151,537 | |||||||||
Beef
|
|||||||||||||
Total
|
$ | 4,036,053 | $ | 4,000,105 | $ | 8,036,158 | |||||||
2010
|
|||||||||||||
Fishery
|
$ | 300,000 | $ | 395,531 | $ | 695,531 | |||||||
Dairy
|
$ | 4,161,322 | $ | 4,575,735 | $ | 8,687,057 | |||||||
Plantation
|
|||||||||||||
Beef
|
|||||||||||||
Total
|
$ | 4,411,322 | $ | 4,971,266 | $ | 9,382,588 |
Q1
|
Q2
|
1
st
Half –
total
|
|||||||||||
2009
|
|||||||||||||
Fishery
|
|||||||||||||
Dairy
|
$ | 1,744,944 | $ | 1,876,256 | $ | 3,621,200 | |||||||
Plantation
|
$ | 70,718 | $ | 70,718 | |||||||||
Beef
|
|||||||||||||
Total
|
$ | 1,744,944 | $ | 1,946,974 | $ | 3,691,918 | |||||||
2010
|
|||||||||||||
Fishery
|
|||||||||||||
Dairy
|
$ | 1,824,742 | $ | 2,052,269 | $ | 3,877,011 | |||||||
Plantation
|
|||||||||||||
Beef
|
|||||||||||||
Total
|
$ | 1,824,742 | $ | 2,052,269 | $ | 3,877,011 |
Q1
|
Q2
|
1
st
Half –
total
|
|||||||||||
2009
|
|||||||||||||
Fishery
|
$ | 413,650 | $ | 313,052 | $ | 726,702 | |||||||
Dairy
|
$ | 1,877,459 | $ | 1,659,259 | $ | 3,536,718 | |||||||
Plantation
|
$ | 80,820 | $ | 80,820 | |||||||||
Beef
|
|||||||||||||
Total
|
$ | 2,291,109 | $ | 2,053,131 | $ | 4,344,240 | |||||||
2010
|
|||||||||||||
Fishery
|
$ | 300,000 | $ | 395,531 | $ | 695,531 | |||||||
Dairy
|
$ | 2,286,580 | $ | 2,523,466 | $ | 4,810,046 | |||||||
Plantation
|
|||||||||||||
Beef
|
|||||||||||||
Total
|
$ | 2,586,580 | $ | 2,918,997 | $ | 5,505,577 |
Q1
|
Q2
|
1
st
Half –
total
|
|||||||||||
2009
|
|||||||||||||
Office
and corporate operation expenses
|
$ | 434,915 | $ | 202,385 | $ | 637,300 | |||||||
Wages
and salaries
|
$ | 237,569 | $ | 235,371 | $ | 472,940 | |||||||
Office
rentals
|
$ | 21,984 | $ | 21,984 | $ | 43,968 | |||||||
Travel
and lodging
|
$ | 17,579 | $ | 20,254 | $ | 37,833 | |||||||
Motor
vehicle and transports
|
$ | 1,770 | $ | 3,084 | $ | 4,854 | |||||||
Meals
and entertainment
|
$ | 43,903 | $ | 39,282 | $ | 83,185 | |||||||
$ | 757,720 | $ | 522,360 | $ | 1,280,080 |
2010
|
|||||||||||||
Office
and corporate operation expenses
|
$ | 619,406 | $ | 520,964 | $ | 1,140,370 | |||||||
Wages
and salaries
|
$ | 218,343 | $ | 715,725 | $ | 934,068 | |||||||
Office
rentals
|
$ | 25,502 | $ | 35,193 | $ | 60,695 | |||||||
Travel
and lodging
|
$ | 8,931 | $ | 23,886 | $ | 32,817 | |||||||
Motor
vehicle and transports
|
$ | 4,241 | $ | 2,393 | $ | 6,634 | |||||||
Meals
and entertainment
|
$ | 11,866 | $ | 12,975 | $ | 24,841 | |||||||
$ | 888,289 | $ | 1,311,136 | $ | 2,199,425 |
Contractual
Obligations
|
Less than
1 year
|
1-3
years
|
3-5
years
|
More than
5 years
|
Total
|
|||||||||||||||
Long
Term Bank Debts
|
$ | - | $ | - | $ | - | $ | 3,681,885 | $ | 3,681,885 |
|
1.
|
Address:
Guangzhou City, Guangdong Province, P.R.
China
|
|
2.
|
Address:
Huangyuan Town, Qinghai Province, P.R.
China
|
|
3.
|
Address:
Enping City, Guangzhou
|
|
1.
|
Address:
Ba Langgou Village, Hebei Province
|
|
2.
|
Address:
Seventeen Channels Village, Hebei
Province
|
|
3.
|
Address:
Seventeen Channels Village, Hebei
Province
|
|
4.
|
Address:
Langwo Channels Village, Hebei
Province
|
|
5.
|
Address:
Langwo Channels Village, Hebei
Province
|
|
6.
|
Address:
ZhangMutou,YanE Village, LiangXi Town, Guangdong
Province
|
|
7.
|
Address:
DongGongPingTang,YanE Village, LiangXi Town, Guangdong
Province
|
|
8.
|
Address:
Western to ChuLuo,YanE Village, LiangXi Town, Guangdong
Province
|
|
9.
|
Address:
North to SaoYiMing, YanE Village, LiangXi Town, Guangdong
Province
|
10.
|
Address:
South to PaiZi and ChunZi, YanE Village, LiangXi Town, Guangdong
Province
|
11.
|
Address:
ZhangMutou, Enping City, Guangdong
Province
|
12.
|
Address:
DongChuLu, Enping City, Guangdong
Province
|
13.
|
Address:
Western to SaoYi Lang, Enping City, Guangdong
Province
|
14.
|
Address:
South to XiangZiZhi Zi, Enping City, Guangdong
Province
|
15.
|
Address:
YanE Village LiangXi Town, Guangdong
Province
|
16.
|
Address:
Shanxiang School YanE Village, LiangXi Town, Guangdong
Province
|
17.
|
Address:
NiuyantanDaiwan Village, JunTang Town, Guangdong
Province
|
18.
|
Address:
Yi Dui Sheng Feng Kuang, Huang Bi District, Niu Jiang Town, Guangdong
Province.
|
19.
|
Address:
Er Dui Sheng Feng Kuang, Huang Bi District, Niu Jiang Town, Guangdong
Province.
|
20.
|
Address:
San Dui Sheng Feng Kuang, Huang Bi District, Niu Jiang Town, Guangdong
Province.
|
21.
|
Address:
Lian Dui Sheng Feng Kuang, Huang Bi District, Niu Jiang Town, Guangdong
Province.
|
Shareholders
|
Number
of Common
Shares
|
Percentage
of Common Stock
|
||||||
Lee
Yip Kun Solomon
|
13,500,000 | 26 | % | |||||
Tan
Poay Teik
|
4,500,000 | 8.66 | % | |||||
Chen
Bor Hann
|
900,000 | 1.73 | % | |||||
All
officers and directors as a group [3 persons]
|
18,900,000 | 36.39 | % |
Shareholders
|
#
of Preference
Series
A Shares
|
Percentage
of Series A Preferred Stock
|
||||||
Lee
Yip Kun Solomon
|
70 | 70 | % | |||||
Tan
Poay Teik
|
25 | 25 | % | |||||
Chen
Bor Hann
|
5 | 5 | % | |||||
All
officers and directors as a group [3 persons]
|
100 | 100 | % |
Shareholders
|
#
of Preference
Series
B Shares
|
Percentage
of Series B Preferred Stock
|
||||||
Lee
Yip Kun Solomon
|
4,900,000 | 70 | % | |||||
Tan
Poay Teik
|
1,750,000 | 25 | % | |||||
Chen
Bor Hann
|
350,000 | 5 | % | |||||
All
officers and directors as a group [3 persons] Held under a company namely
Capital Adventure Inc.
|
7,000,000 | 100 | % |
Name
|
Age
|
Position
|
||
Lee
Yip Kun Solomon
|
61
|
C.E.O.
and Director
|
||
Tan
Poay Teik
|
52
|
C.E.O.
Marketing
|
||
Chen
Bor Hann
|
|
46
|
|
Company
Secretary
|
|
·
|
Any
bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that
time,
|
|
·
|
Any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor
offenses),
|
|
·
|
Being
subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking
activities,
|
|
·
|
Being
found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or
vacated.
|
|
·
|
Having
any government agency, administrative agency, or administrative court
impose an administrative finding, order, decree, or sanction against them
as a result of their involvement in any type of business, securities, or
banking activity.
|
|
·
|
Being
the subject of a pending administrative proceeding related to their
involvement in any type of business, securities, or banking
activity.
|
|
·
|
Having
any administrative proceeding been threatened against you related to their
involvement in any type of business, securities, or banking
activity.
|
Name
and Principal Position
|
Fiscal
Year
Ended
|
Salary($)
|
Option
Awards
($)
|
Total
($)
|
|||||||||
Mr.
Lee Yip Kun Solomon, Chief Executive Officer
|
2009
|
336,000 | 0 | 336,000 | |||||||||
2008
|
336,000 | 0 | 336,000 | ||||||||||
Mr.
Tan Paoy Teik, Chief Marketing Officer
|
2009
|
174,000 | 0 | 174,000 | |||||||||
2008
|
174,000 | 0 | 174,000 | ||||||||||
Mr.
Chen Bor Hann, Secretary
|
2009
|
60,000 | 0 | 60,000 | |||||||||
2008
|
60,000 | 0 | 60,000 |
Name
|
Number
of securities
underlying
unexercised
options
(#)
Exercisable
|
Number
of securities
underlying
unexercised
unearned
options(#)
|
Equity
incentive plan
awards:
Number of
securities
underlying
unexercised
unearned
options
(#)
|
Option
exercise
price
($)
|
Option
expiration
date
|
Number
of
shares
or
units
of stock
that
have not
vested
(#)
|
Market
value of
shares
or units of
stock
that have
not
vested ($)
|
|||||||||||||||||||||
Mr.
Lee Solomon Yip Kun
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Mr.
Tan Paoy Teik
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Mr.
Chen Bor Hann
|
0 | 0 | 0 | 0 | 0 | 0 | 0 |
Name
and Principal Position
|
Salary($)
|
|||
Mr.
Lee Yip Kun Solomon, Chief Executive Officer and Chairman
|
336,000 | |||
Mr.
Tan Paoy Teik, Chief Marketing Officer, Director
|
174,000 | |||
Mr.
Chen Bor Hann, Secretary, Director
|
60,000 |
|
•
|
any
outstanding option or other equity-based award repriced or otherwise
materially modified (such as by extension of exercise periods, the change
of vesting or forfeiture conditions, the change or elimination of
applicable performance criteria, or the change of the bases upon which
returns are determined;
|
|
•
|
any
waiver or modification of any specified performance target, goal or
condition to payout with respect to any amount included in non-stock
incentive plan compensation or
payouts;
|
|
•
|
any
option or equity grant;
|
|
•
|
any
non-equity incentive plan award made to a named executive
officer
|
|
•
|
any
nonqualified deferred compensation plans including nonqualified defined
contribution plans; or
|
|
•
|
any
payment for any item to be included under All Other Compensation in the
Summary Compensation Table.
|
Name
|
Year
end
|
Fees
or cash paid ($)
|
Stock
awards
|
Total
|
||||||||||
Mr.
Lee Yip Kun Solomon
|
Dec.
31, 2009
|
0 | 0 | 0 | ||||||||||
Mr.
Tan Paoy Teik
|
Dec.
31, 2009
|
0 | 0 | 0 | ||||||||||
Mr.
Chen Bor Hann
|
Dec.
31, 2009
|
0 | 0 | 0 |
Name
of related party
|
Nature
of transactions
|
|
Mr.
Rui Xiong He , director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
During
the year ended December 31, 2008, Mr. Rui Xiong He sold his land use
rights to the Company for $764,128.
Included
in other payables, due to Mr. Rui Xiong He is $16,985 and $306,620 as of
December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Xiang Jun Fang, director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
Included
in other receivables, due from Mr. Xiang Jun Fang is $260,101 and $114,630
at December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of repayment.
Included
in other payables, due to Mr. Xiang Jun Fang is $150,057 and $108,488 at
December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Solomon Lee, Chairman
|
Included
in due from directors, Mr. Solomon Lee is $73,164 and $798,058 as of
December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Michael Bor Hann Chen, director and company secretary
|
Included
in due from directors, Mr. Michael Bor Hann Chen is $38,228 and $37,495 as
of December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Zhao Yu Lim Director of Qinghai Sanjiang A Power Agriculture Co., Ltd
(“SJAP”),
Subsequently
as at June 30, 2010 all receivables due from the directors were repaid as
such there was no more loan being advanced to the directors as at June 30,
2010.
|
Included
in other payable, SJAP is $2,494 and $nil as of December, 31, 2009 and
December 31, 2008 respectively. The amounts are unsecured, interest free
and have no fixed term of
repayment.
|
High
|
Low
|
|||||||
July
1 – September 30, 2008
|
$ | 0.99 | $ | 0.35 | ||||
October 1 –
December 31, 2008
|
$ | 0.64 | $ | 0.01 | ||||
January
1 – March 31, 2009
|
$ | 0.16 | $ | 0.01 | ||||
April
1 – June 30, 2009
|
$ | 0.75 | $ | 0.10 | ||||
July
1 – September 30, 2009
|
$ | 1.01 | $ | 0.50 | ||||
October 1 –
December 31, 2009
|
$ | 1.27 | $ | 0.59 | ||||
January
1 – March 31, 2010
|
$ | 1.88 | $ | 1.07 | ||||
April
1 – June 30, 2010
|
$ | 1.31 | $ | 0.44 |
Date
|
Events
|
Shares
issued
|
Price
/
share
|
Consideration
received
|
#
of Non-USA
Investors
|
#
of USA
Investors
|
||||||||||||||||
July
24, 2007
|
Issuance
of shares for the Merger of CA and VOLG
|
32,000,000 | 0.617 | 19,739,157 | 62 | 0 | ||||||||||||||||
July
24, 2007
|
Issuance
of shares to VOLG’s existing debenture holders
|
10,804,579 | 0.001 | 0 | 4 | 1 | ||||||||||||||||
Sept.
5, 2007
|
Issuance
of shares for the acquisition of 100% equity in Macau Eiji Company
Limitada
|
2,000,000 | 2.338 | 4,675,000 | 3 | 0 | ||||||||||||||||
Sept.
5, 2007
|
Issuance
of shares for the acquisition of 100% equity in HangYuTai Investmento
Limitada
|
7,000,000 | 2.416 | 16,910,000 | 3 | 0 | ||||||||||||||||
Sept.
5, 2007
|
Issuance
of shares for the acquisition of 100% equity in
Triway
Industries Limited
|
1,000,000 | 2.25 | 2,250,000 | 8 | 0 | ||||||||||||||||
Total
for 2007
|
52,804,579 | 43,574,157 |
Date
|
Events
|
Shares
issued
|
Price
/
share
|
Consideration
received
|
#
of Non-USA
Investors
|
#
of USA
Investors
|
||||||||||||||||
Oct.
1, 2009
|
Shares
sold
|
150,000 | 0.35 | 52,500 | 0 | 1 | ||||||||||||||||
Nov.
25. 2009
|
Shares
sold
|
150,000 | 0.35 | 52,500 | 0 | 1 | ||||||||||||||||
Dec.
11 & 22 2009
|
Shares
sold
|
315,000 | 0.35 | 110,250 | 0 | 1 | ||||||||||||||||
Dec.
23, 2009
|
Common
shares retired, (from Solomon Lee share account)
|
-875,000 | 0.001 | -875 | 0 | 0 | ||||||||||||||||
Total
for 2009
|
-260,000 | 214,375 |
Date
2010
|
Events
|
Shares
issued
|
Price
/
share
|
Consideration
received
|
#
of Non-USA
Investors
|
#
of USA
Investors
|
|||||||||||||||
(i) Issuance
of shares in settlement of debts accrued under Promissory
Notes
|
|||||||||||||||||||||
Jan.1
to 27
|
1,342,000 | 0.20 | 268,400 | 7 | 0 | ||||||||||||||||
Feb.
10
|
780,000 | 0.30 | 234,000 | 1 | 0 | ||||||||||||||||
March
12 to 19
|
2,625,000 | 0.25 | 656,250 | 3 | 0 | ||||||||||||||||
April
15 to 27
|
1,055,000 | 0.15 | 158,250 | 4 | 0 | ||||||||||||||||
May
13
|
800,000 | 0.20 | 160,000 | 2 | 0 | ||||||||||||||||
May
14
|
350,000 | 0.40 | 140,000 | 2 | 0 | ||||||||||||||||
June
10.
|
1,000,000 | 0.20 | 200,000 | 5 | 0 | ||||||||||||||||
Total
Issuance of shares in settlement of debts
|
7,952,000 | 1,816,900 | 24 | 0 | |||||||||||||||||
(ii)
Issuance of shares for employees’ compensation
|
|||||||||||||||||||||
May
4.
|
497,059 | 1.00 | 497,059 | 30 | 0 | ||||||||||||||||
(iii)
Shares being retired or voided [1]
|
|||||||||||||||||||||
Jan.
11, 2010 (Voided)
|
-150,002 | 0 | 0 | -2 | 0 | ||||||||||||||||
March
23, 2010 (Retired)
|
-2,000,000 | 0 | 0 | -1 | 0 | ||||||||||||||||
May
17, 2010 (Voided)
|
-40,000 | 0 | 0 | -2 | 0 | ||||||||||||||||
June
26, 2010 (Retired & transferred to Preference Series B
shares)
|
-7,000,000 | 1.00 | -7,000,000 | -2 | 0 | ||||||||||||||||
Total
shares being retired or voided
|
-9,190,002 | ||||||||||||||||||||
June 26, 2010 issuance of Preference Series A & B | 7,000,100 | 1.00 | 7,000,100 | 3 | 0 | ||||||||||||||||
Total
for 1
st
half 2010
|
6,259,157 | 2,314,059 |
|
|
None
of these issuances involved underwriters, underwriting discounts or
commissions.
|
|
|
Restrictive
legends were and will be placed on all certificates issued as described
above.
|
|
|
The
distribution did not involve general solicitation or
advertising.
|
|
|
The
distributions were made only to investors who were sophisticated enough to
evaluate the risks of the
investment.
|
|
|
None
of these issuances involved underwriters, underwriting discounts or
commissions;
|
|
|
We
placed Regulation S required restrictive legends on all certificates
issued;
|
|
|
No
offers or sales of stock under the Regulation S offering were made to
persons in the United States;
|
|
|
No
direct selling efforts of the Regulation S offering were made in the
United States.
|
|
|
Access
to all our books and records.
|
|
|
Access
to all material contracts and documents relating to our
operations.
|
|
|
The
opportunity to obtain any additional information, to the extent we
possessed such information, necessary to verify the accuracy of the
information to which the investors were given
access.
|
PAGE
|
|
CONSOLIDATED
BALANCE SHEETS
|
2
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
3
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
4
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
5 -
30
|
June 30 ,2010
|
December 31 ,2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
$
|
$
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
1,192,345 | 2,360,587 | ||||||
Inventories
|
8,283,818 | 6,099,411 | ||||||
Deposits
and prepaid expenses
|
11,867,002 | 10,189,266 | ||||||
Accounts
receivable, net of allowance for doubtful accounts
|
1,679,845 | 6,869,505 | ||||||
Other
receivables
|
1,240,850 | 1,885,491 | ||||||
Due
from directors
|
- | 111,392 | ||||||
Total
current assets
|
24,263,860 | 27,515,652 | ||||||
Property
and equipment, net of accumulated depreciation
|
11,099,547 | 7,564,664 | ||||||
Construction
in progress
|
6,612,150 | 5,995,939 | ||||||
Land
use rights, net of accumulated amortization
|
14,917,017 | 13,769,496 | ||||||
Proprietary
technologies, net of accumulated amortization
|
7,476,301 | 7,634,635 | ||||||
Goodwill
|
12,000,000 | 12,000,000 | ||||||
Long
term accounts receivable
|
9,351,753 | 9,338,477 | ||||||
61,456,768 | 56,303,211 | |||||||
Other
assets
|
||||||||
Licence
rights
|
1 | 1 | ||||||
Investment
in unconsolidated corporate joint venture
|
843,202 | 242,669 | ||||||
843,203 | 242,670 | |||||||
Total
assets
|
$ | 86,563,831 | $ | 84,061,533 | ||||
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable and accruals
|
199,863 | 756,209 | ||||||
Due
to a director
|
364,490 | - | ||||||
Other
payables
|
4,263,246 | 4,536,128 | ||||||
Short
term debt
|
- | 2,435,221 | ||||||
Total
current liabilities
|
4,827,599 | 7,727,558 | ||||||
Other
liabilities
|
||||||||
Long
term debt
|
3,681,885 | 4,401,002 | ||||||
Total
liabilities
|
8,509,484 | 12,128,560 | ||||||
Commitments
and contingencies
|
- | - | ||||||
Stockholders'
equity
|
||||||||
Preferred
stock: $0.001 par value
|
||||||||
(10,000,000
shares authorized, 0 share issued and outstanding) as of June 30, 2010 and
December 31, 2009, respectively
|
||||||||
Series
A preferred stock: $0.001 par value
|
||||||||
(100
shares authorized, 100 and 0 shares issued and outstanding as of June 30,
2010 and December 31, 2009, respectively)
|
- | - | ||||||
Series
B convertible preferred stock: $0.001 par
value)
|
||||||||
(10,000,000
shares authorized, 7,000,000 and 0 shares issued and outstanding as of
June 30, 2010 and December 31, 2009,
respectively)
|
7,000 | - | ||||||
Common
stock: $0.001 par value
|
||||||||
(100,000,000
shares authorized,51,942,636 and 52,683,579 shares issued and outstanding
as of June 30,2010 and December 31, 2009, respectively)
|
51,943 | 52,684 | ||||||
Additional
paid - in capital
|
46,043,648 | 43,703,848 | ||||||
Retained
earnings
|
19,472,604 | 17,086,949 | ||||||
Accumulated
other comprehensive income
|
2,717,912 | 2,168,203 | ||||||
Total
Sino Agro Food, Inc. and subsidiaries stockholders' equity
|
68,293,107 | 63,011,684 | ||||||
Non
- controlling interest
|
9,761,240 | 8,921,289 | ||||||
Total
stockholders' equity
|
78,054,347 | 71,932,973 | ||||||
Total
liabilities and stockholders' equity
|
86,563,831 | 84,061,533 |
Three months
|
Three months
|
Six months
|
Six months
|
|||||||||||||
ended
|
ended
|
ended
|
ended
|
|||||||||||||
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Revenue
|
$ | 4,971,266 | $ | 4,000,104 | $ | 9,382,588 | $ | 8,036,158 | ||||||||
Cost
of goods sold
|
2,052,269 | 1,946,974 | 3,877,011 | 3,691,918 | ||||||||||||
Gross
profit
|
2,918,997 | 2,053,130 | 5,505,577 | 4,344,240 | ||||||||||||
General
and administrative expenses
|
(1,038,734 | ) | (522,360 | ) | (2,199,425 | ) | (1,280,080 | ) | ||||||||
Net
income from operations
|
1,880,263 | 1,530,770 | 3,306,152 | 3,064,160 | ||||||||||||
Interest
expense
|
(119,779 | ) | (118,634 | ) | (240,687 | ) | (235,998 | ) | ||||||||
|
||||||||||||||||
Net
income before income taxes
|
1,760,484 | 1,412,136 | 3,065,465 | 2,828,162 | ||||||||||||
Provision
for income taxes
|
- | - | - | - | ||||||||||||
Net
income
|
1,760,484 | 1,412,136 | 3,065,465 | 2,828,162 | ||||||||||||
Less:
Net income attributable to the non - controlling interest
|
(494,407 | ) | (318,319 | ) | (679,810 | ) | (615,336 | ) | ||||||||
Net
income attributable to the Sino Agro Food, Inc. and
subsidiaries
|
1,266,077 | 1,093,817 | 2,385,655 | 2,212,826 | ||||||||||||
Other
comprehensive income
|
. | |||||||||||||||
Foreign
currency translation gain
|
364,014 | 7,789 | 709,850 | 15,559 | ||||||||||||
Comprehensive
income
|
1,630,091 | 1,101,606 | 3,095,505 | 2,228,385 | ||||||||||||
Less:
other comprehensive income attributable to the non - controlling
interest
|
(80,131 | ) | (380 | ) | (160,141 | ) | (680 | ) | ||||||||
Comprehensive
income attributable to Sino Agro Food, Inc. and
subsidiaries
|
1,549,960 | 1,101,226 | 2,935,364 | 2,227,705 | ||||||||||||
Earnings per share attributable
to Sino Agro Food, Inc.
and subsidiaries common
stockholders:
|
||||||||||||||||
Basic
|
$ | 0.02 | $ | 0.02 | $ | 0.04 | $ | 0.04 | ||||||||
Diluted
|
$ | 0.02 | $ | 0.02 | $ | 0.04 | $ | 0.04 | ||||||||
Weighted
average number of shares outstanding:
|
||||||||||||||||
Basic
|
51,942,636 | 51,942,636 | 52,943,579 | 52,943,579 | ||||||||||||
Diluted
|
54,128,579 | 54,128,578 | 52,943,579 | 52,943,579 |
Six months
|
Six months
|
|||||||
ended
|
ended
|
|||||||
June 30,
|
June 30,
|
|||||||
2,010
|
2,009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
$
|
$
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
income for the period
|
3,065,465 | 2,828,162 | ||||||
Adjustments
to reconcile net income to net cash from operations:
|
||||||||
Depreciation
|
760,483 | 820,193 | ||||||
Amortization
|
435,552 | 433,940 | ||||||
Common
stock issued for services
|
497,059 | |||||||
Changes
in operating assets and liabilities:
|
||||||||
(Increase)
decrease in inventories
|
(2,184,407 | ) | 3,150,608 | |||||
(Increase)
decrease in deposits and prepaid expenses
|
(1,677,736 | ) | 4,690,038 | |||||
Decrease
in due from directors
|
111,392 | - | ||||||
Increase
in due to a director
|
2,181,490 | - | ||||||
(Decrease)
increase in accounts payable and accruals
|
(556,346 | ) | 230,515 | |||||
(Decrease)
increase in other payables
|
(272,882 | ) | 53,334 | |||||
Decrease
(increase) in accounts receivable
|
5,176,384 | (5,974,073 | ) | |||||
Decrease
(increase) in other receivables
|
644,641 | (1,182,596 | ) | |||||
Net
cash provided by operating activities
|
8,181,095 | 5,050,121 | ||||||
Cash
flows from investing activities
|
||||||||
Purchases
of property and equipment
|
(4,294,270 | ) | (3,666,553 | ) | ||||
Investment
in unconsolidated corporate joint venture
|
(600,533 | ) | (242,669 | ) | ||||
Payment
for construction in progress
|
(616,211 | ) | (245,704 | ) | ||||
Acquisition
of land use rights
|
(1,216,530 | ) | - | |||||
Net
cash used in investing activities
|
(6,727,544 | ) | (4,154,926 | ) | ||||
Cash
flows from financing activities
|
||||||||
Common
stock issued at stated value
|
- | 215,250 | ||||||
Common
stock redeemed at stated value
|
- | (875 | ) | |||||
Debts proceeds
|
- | 2,430,454 | ||||||
Repayment
of debts
|
(3,154,338 | ) | (2,443,836 | ) | ||||
Net
cash used in financing activities
|
(3,154,338 | ) | 200,993 | |||||
Effects
on exchange rate changes on cash
|
532,545 | (1,178,154 | ) | |||||
Increase
in cash and cash equivalents
|
(1,168,242 | ) | (81,966 | ) | ||||
Cash
and cash equivalents, beginning of period
|
2,360,587 | 1,731,118 | ||||||
Cash
and cash equivalents, end of period
|
1,192,345 | 1,649,152 | ||||||
Supplementary
disclosures of cash flow information:
|
||||||||
Cash
paid for interest
|
240,687 | 235,998 | ||||||
Cash
paid for income taxes
|
- | - | ||||||
Non-cash
transactions:
|
||||||||
7,000,000
shares of Series B convertible preferred stock converted
|
7,000,000 | - | ||||||
7,000,000
shares of common stock retired
|
(7,000,000 | ) | - | |||||
100
shares of Series A preferred stock issued from due to a
director
|
100 | - | ||||||
2,190,002
shares of common stock were retired
|
||||||||
7,952,000
shares of common stock were issued
|
- | - | ||||||
for
settlement of debts due to third parties
|
1,816,900 | - |
1.
|
CORPORATE
INFORMATION
|
|
Sino
Agro Food, Inc. (“the Company”) (formerly known as Volcanic Gold, Inc. and
A Power Agro Agriculture Development, Inc.) is an International Business
Corporation incorporated on October 1, 1974 in the State of Nevada, United
States of America. The shares are quoted on the Pink Sheet, OTC under the
ticker symbol of “SIAF”.
|
|
The
Company operated mining and exploration business but ceased its mining and
exploring business after October 14, 2005. On August 24, 2007,
the Company entered into a Merger and Acquisition Agreement between the
Company and Capital Award Inc. (“CA”) and its subsidiaries Capital Stage
Inc. (“CS”) and Capital Hero
Inc. (“CH”). Effective the same date, CA, a Belize
Corporation, completed a reverse merger transaction with SIAF; a public
shell into which CA merger pursuant to which SIAF acquired all the
outstanding common stock of CA from Capital Adventure, a shareholder of CA
for 32,000,000 shares of the company’s common
stock.
|
|
On
August 24, 2007 the Company changed its name from Volcanic Gold, Inc. to A
Power Agro Agriculture Development, Inc. On December 8, 2007,
the Company officially changed its name to Sino Agro Food,
Inc.
|
|
On
September 5, 2007, the Company made further acquisitions by acquiring
three existing businesses in the People’s Republic of China (“PRC”) by
acquiring of:
|
|
a)
|
Hang
Yu Tai Investment Limited (“HYT”), a Macau incorporated
company, the owner of 78% equity interest in ZhongXingNongMu Co. Ltd
(“ZX”), a PRC incorporated company;
|
|
b)
|
Tri-way
Industries Limited (“TRW”), a Hong Kong incorporated company;
and
|
|
c)
|
Macau
Eiji Company Limited (“MEIJI”), a Macau incorporated company, the owner of
75% equity interest in Enping City Juntang Town Hang Sing Tai Agriculture
Co. Ltd. (“HST”), a PRC corporate Sino-Foreign joint
venture.
|
1.
|
CORPORATE
INFORMATION (CONTINUED)
|
•
|
Qinghai
Province Sanjiang Group Company Limited (English translation) (“Qinghai
Sanjiang”), a PRC government owned company with major business activities
in the agriculture industry;
and
|
•
|
Guangzhou
City Garwor Company Limited (English translation) (“Garwor”), a private
limited company incorporated in the PRC, specializing in sales and
marketing.
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
2.1
|
FISCAL
YEAR
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
|
2.2
|
REPORTING
ENTITY
|
Place of
|
Issued and
|
Percentage of
|
Principal
|
|||||
Name of subsidiaries
|
incorporation
|
paid - in capital
|
interest
|
activity
|
||||
Capital
Award Inc. ("CA")
|
Belize
|
$50,000
|
100%
(2009: 100%) directly
|
Fishery
development and holder of A-Power Technology master
licence
|
||||
Capital
Stage Inc. ("CS")
|
Belize
|
$50,000
|
100%
(2009: 100%) indirectly
|
Dormant
|
||||
Capital
Hero Inc. ("CH")
|
Belize
|
$50,000
|
100%
(2009: 100%) indirectly
|
Dormant
|
||||
Tri-way
Industries Limited ("TRW")
|
Hong
Kong, PRC
|
HK$10,000
|
100%
(2009: 100%) directly
|
Investment
holding, holder of enzyme technology master licence for manufacturing of
livestock feed and bio-organic fertilizer and has not commenced
its business of fish farm operation
|
||||
Pretty
Mountain Holdings Limited ("PMH")
|
Hong
Kong, PRC
|
HK$10,000
|
80%
(2009: 80%) directly
|
Dormant
|
||||
Macau
Eiji Company Limited ("MEIJI")
|
Macau,
PRC
|
Pataca
30,000
|
100%
(2009: 100%) directly
|
Investment
holding
|
||||
Enping
City Juntang Town Hang Sing Tai Agriculture Co. Ltd
("HST")
|
PRC
|
RMB100,000
|
75%
(2009: 75%) indirectly
|
Hylocereus
Undatus Plantation ("HU Plantation")
|
||||
Jiang
Men City Heng Sheng Tai Agriculture Development Co. Ltd
("JHST")
|
PRC
|
$600,000
|
100%
(2009: 100%) directly
|
The
Company has not commenced its business of Hylocereus
Undatus Plantation ("HU Plantation")
|
||||
Hang
Yu Tai Investment
|
Macau,
PRC
|
Pataca
25,000
|
100%
(2009: 100%) directly
|
Investment
holding
|
||||
Limited
("HYT")
|
||||||||
ZhongXingNongMu
Co. Ltd ("ZX")
|
PRC
|
RMB60,000,000
|
78%
(2009: 78%) indirectly
|
Dairy
production and manufacturing of organic fertilizer,livestock
feed, and beef cattle and plantation of crops and
pasture
|
||||
A
Power Agro Agriculture Development (Macau) Limited
("APWAM")
|
Macau,
PRC
|
Pataca
25,000
|
100%
(2009: 100%) directly
|
Investment
holding
|
||||
Name
of unconsolidated
|
Place
of
|
Issued
and
|
Percentage
of
|
Principal
|
||||
corporate
joint venture
|
incorporation
|
paid
- in capital
|
interest
|
activity
|
||||
Qinghai
Sanjiang A Power Agriculture Co., Ltd ("SJAP")
|
PRC
|
Issued
capital: $1,400,000 Paid - in capital: $843,202
|
45%
(2009: 45%) indirectly
|
The
Company has not commenced its business of manufacturing of organic
fertilizer,livestock feed, and beef cattle and plantation of crops and
pastures
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.3
|
BASIS
OF PRESENTATION
|
2.4
|
BASIS
OF CONSOLIDATION
|
2.5
|
BUSINESS
COMBINATION
|
2.6
|
NON - CONTROLLING
INTEREST IN CONSOLIDATED FINANCIAL
STATEMENTS
|
2.7
|
USE
OF ESTIMATES
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.8
|
REVENUE
RECOGNITION
|
2.9
|
COST
OF GOODS SOLD
|
2.10
|
SHIPPING
AND HANDLING
|
2.11
|
ADVERTISING
|
2.12
|
FOREIGN
CURRENCY TRANSLATION AND OTHER COMPREHENSIVE
INCOME
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.13
|
CASH
AND CASH EQUIVALENTS
|
2.14
|
ACCOUNTS
RECEIVABLE
|
2.15
|
INVENTORIES
|
-
|
raw
materials – purchase cost on a weighted average
basis;
|
-
|
manufactured
finished goods and work-in-progress – cost of direct materials and labor
and a proportion of manufacturing overheads based on normal operation
capacity but excluding borrowing costs;
and
|
-
|
retail
and wholesale merchandise finished goods – purchase cost on a weighted
average basis.
|
2.16
|
PROPERTY
AND EQUIPMENT
|
Milk
cows
|
10
years
|
Plant
and machinery
|
5 -
10 years
|
Structure
and leasehold improvements
|
10
-20 years
|
Mature
seeds
|
20
years
|
Furniture
and equipment
|
2.5
- 10 years
|
Motor
vehicles
|
5
-10 years
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.16
|
PROPERTY
AND EQUIPMENT (CONTINUED)
|
2.17
|
GOODWILL
|
2.18
|
PROPRIETARY
TECHNOLOGIES
|
2.19
|
CONSTRUCTION
IN PROGRESS
|
2.20
|
LAND
USE RIGHTS
|
2.21
|
CORPORATE
JOINT VENTURE
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.21
|
CORPORATE
JOINT VENTURE (CONTINUED)
|
2.22
|
INCOME
TAXES
|
2.23
|
POLITICAL
AND BUSINESS RISK
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.24
|
CONCENTRATION OF CREDIT
RISK
|
Three
months
|
Three
months
|
Six
months
|
Six
months
|
||||||||||||||
ended
|
ended
|
ended
|
ended
|
||||||||||||||
June
30,
|
June
30,
|
June
30,
|
June
30,
|
||||||||||||||
2010
|
2009
|
2010
|
2009
|
||||||||||||||
Customer
A
|
45.06 | % | 34.46 | % | 42.43 | % | 25.94 | % | |||||||||
Customer
B
|
34.07 | % | 33.46 | % | 32.18 | % | 30.50 | % | |||||||||
Customer
C
|
20.87 | % | 32.08 | % | 17.97 | % | 28.07 | % | |||||||||
Customer
D
|
- | - | 4.00 | % | - | ||||||||||||
100.00 | % | 100.00 | % | 96.58 | % | 84.51 | % |
June
30, 2010
|
December
31, 2009
|
||||||||
Customer
A
|
57.82 | % | 35.48 | % | |||||
Customer
B
|
26.71 | % | 22.49 | % | |||||
Customer
C
|
3.79 | % | 9.17 | % | |||||
Customer
D
|
3.59 | % | 17.58 | % | |||||
Customer
E
|
2.91 | % | - | ||||||
Customer
F
|
- | 11.04 | % | ||||||
94.82 | % | 95.76 | % |
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.25
|
IMPAIRMENT
OF LONG-LIVED ASSETS AND INTANGIBLE
ASSETS
|
2.26
|
EARNINGS
PER SHARE
|
2.27
|
ACCUMULATED
OTHER COMPREHENSIVE INCOME
|
2.28
|
RETIREMENT
BENEFIT COSTS
|
2.29
|
STOCK-BASED
COMPENSATION
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.30
|
FAIR
VALUE OF FINANCIAL INSTRUMENTS
|
Level 1
|
Quoted
market prices available in active markets for identical assets or
liabilities as of the reporting
date.
|
Level 2
|
Pricing
inputs other than quoted prices in active markets included in Level 1,
which are either directly or indirectly observable as of the reporting
date.
|
Level 3
|
Pricing
inputs that are generally observable inputs and not corroborated by market
data.
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
3.
|
SEGMENT
INFORMATION
|
Three
months ended June 30, 2010
|
||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU
Plantation
Division
|
Corporate
and
others
|
Total
|
||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
Revenue
|
395,531 | 4,575,735 | - | - | 4,971,266 | |||||||||||||||
Net
income (loss)
|
381,678 | 2,295,161 | (41,868 | ) | (874,487 | ) | 1,760,484 | |||||||||||||
Total
assets
|
14,675,437 | 39,508,665 | 11,522,288 | 20,857,441 | 86,563,831 |
Three
months ended June 30, 2009
|
||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU
Plantation
Division
|
Corporate
and
others
|
Total
|
||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
Revenue
|
313,052 | 3,535,515 | 151,537 | - | 4,000,104 | |||||||||||||||
Net
income (loss)
|
310,101 | 1,401,434 | 40,015 | (339,414 | ) | 1,412,136 | ||||||||||||||
Total
assets
|
14,341,457 | 34,084,258 | 9,889,959 | 19,973,177 | 78,288,851 |
3.
|
SEGMENT
INFORMATION (CONTINUED)
|
Six
months ended June 30, 2010
|
||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU
Plantation
Division
|
Corporate
and
others
|
Total
|
||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
Revenue
|
695,531 | 8,687,057 | - | - | 9,382,588 | |||||||||||||||
Net
income (loss)
|
1,297,767 | 3,186,299 | (84,704 | ) | (1,333,897 | ) | 3,065,465 | |||||||||||||
Total
assets
|
14,675,437 | 39,508,665 | 11,522,288 | 20,857,441 | 86,563,831 |
Six
months ended June 30, 2009
|
||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU
Plantation
Division
|
Corporate
and
others
|
Total
|
||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
Revenue
|
726,702 | 7,157,918 | 151,538 | - | 8,036,158 | |||||||||||||||
Net
income (loss)
|
720,801 | 2,794,599 | 2,099 | (689,337 | ) | 2,828,162 | ||||||||||||||
Total
assets
|
14,341,457 | 34,084,258 | 9,889,959 | 19,973,177 | 78,288,851 |
4.
|
INCOME
TAXES
|
4.
|
INCOME
TAXES (CONTINUED)
|
5.
|
CASH
AND CASH EQUIVALENTS
|
June
30, 2010
|
December
31, 2009
|
|||||||
$
|
$
|
|||||||
Cash
and bank balances
|
1,192,345 | 2,360,587 |
6.
|
INVENTORIES
|
June
30, 2010
|
December
31, 2009
|
|||||||
$
|
$
|
|||||||
Immature
seeds
|
420,398 | 411,594 | ||||||
Harvested
HU plantation
|
53 | 53 | ||||||
Unharvested
HU plantation
|
281,561 | 89,666 | ||||||
Forage
for milk cows and consumable
|
7,581,806 | 5,598,098 | ||||||
8,283,818 | 6,099,411 |
7.
|
DEPOSITS
AND PREPAID EXPENSES
|
June
30, 2010
|
December
31, 2009
|
|||||||
$
|
$
|
|||||||
Deposits
for
|
||||||||
acquisition
of land use rights
|
4,453,666 | 4,453,666 | ||||||
inventory
purchased
|
299,764 | 219,551 | ||||||
tenancy
agreement
|
2,129 | 2,129 | ||||||
materials
used for construction in progress
|
75,110 | 79,607 | ||||||
Prepayments
for purchases of milk cows, dairy farm and containers
|
7,036,333 | 5,434,313 | ||||||
11,867,002 | 10,189,266 |
8.
|
ACCOUNTS
RECEIVABLE
|
June
30, 2010
|
December
31, 2009
|
|||||||
$
|
$
|
|||||||
0 -
30 days
|
954,356 | 1,530,838 | ||||||
31
- 90 days
|
418,262 | - | ||||||
91
- 120 days
|
- | 5,338,667 | ||||||
over
120 days and less than 1 year
|
307,227 | - | ||||||
over
1 year
|
9,351,753 | 9,338,477 | ||||||
11,031,598 | 16,207,982 | |||||||
Less:
amounts reclassified as long term accounts receivable
|
(9,351,753 | ) | (9,338,477 | ) | ||||
1,679,845 | 6,869,505 |
9
.
|
OTHER
RECEIVABLES
|
June
30, 2010
|
December
31, 2009
|
|||||||
$
|
$
|
|||||||
Advance
to service providers
|
- | 12,983 | ||||||
Due
from related parties
|
- | 260,101 | ||||||
Due
from employees
|
471,840 | 430,552 | ||||||
Due
from third parties
|
769,010 | 1,181,855 | ||||||
1,240,850 | 1,885,491 |
10.
|
PROPERTY
AND EQUIPMENT
|
June
30, 2010
|
December
31, 2009
|
|||||||
$
|
$
|
|||||||
Milk
cows
|
8,461,403 | 4,953,669 | ||||||
Plant
and machinery
|
3,341,767 | 2,948,148 | ||||||
Structure
and leasehold improvements
|
1,172,373 | 783,491 | ||||||
Mature
seeds
|
486,335 | 484,436 | ||||||
Furniture
and equipment
|
85,737 | 85,506 | ||||||
Motor
vehicles
|
85,398 | 83,493 | ||||||
13,633,013 | 9,338,743 | |||||||
Less:
Accumulated depreciation
|
(2,533,466 | ) | (1,774,079 | ) | ||||
Net
carrying amount
|
11,099,547 | 7,564,664 |
11.
|
CONSTRUCTION
IN PROGRESS
|
June
30, 2010
|
December
31, 2009
|
|||||||
$
|
$
|
|||||||
Construction
in progress
|
||||||||
-
Rangeland for milk cows
|
5,974,436 | 5,741,168 | ||||||
-
Oven room for production of dried flowers
|
637,714 | 254,771 | ||||||
6,612,150 | 5,995,939 |
12.
|
LAND
USE RIGHTS
|
June
30, 2010
|
December
31, 2009
|
|||||||
$
|
$
|
|||||||
Cost
|
16,324,409 | 15,107,879 | ||||||
Less:
Accumulated impairment losses
|
(1,407,392 | ) | (1,338,383 | ) | ||||
Net
carrying amount
|
14,917,017 | 13,769,496 |
13.
|
PROPRIETARY
TECHNOLOGIES
|
June
30, 2010
|
December
31, 2009
|
|||||||
$
|
$
|
|||||||
Proprietary
technologies
|
8,010,323 | 8,000,000 | ||||||
Less:
Accumulated amortisation
|
(534,022 | ) | (365,365 | ) | ||||
Net
carrying amount
|
7,476,301 | 7,634,635 |
14.
|
GOODWILL
|
June
30, 2010
|
December
31, 2009
|
|||||||
$
|
$
|
|||||||
Goodwill
from acquisition
|
38,444,099 | 38,444,099 | ||||||
Less:
Accumulated impairment losses
|
(26,444,099 | ) | (26,444,099 | ) | ||||
Net
carrying amount
|
12,000,000 | 12,000,000 |
15.
|
INVESTMENT
IN UNCONSOLIDATED CORPORATE JOINT
VENTURE
|
June
30, 2010
|
December
31, 2009
|
|||||||
$
|
$
|
|||||||
Investment
in unconsolidated joint venture
|
843,202 | 242,669 |
16.
|
LICENCE
RIGHTS
|
17.
|
OTHER
PAYABLES
|
June
30, 2010
|
December
31, 2009
|
|||||||
$
|
$
|
|||||||
Proprietary
technologies payable
|
3,577,264 | 3,577,264 | ||||||
Due
to third parties
|
685,982 | 601,326 | ||||||
Due
to related parties
|
- | 169,536 | ||||||
Stamp
duty payable
|
- | 4,678 | ||||||
Others
|
- | 183,324 | ||||||
4,263,246 | 4,536,128 |
18.
|
SHAREHOLDERS’EQUITY
|
19.
|
BANK
BORROWINGS
|
Name
of bank
|
Interest
rate
|
Term
|
Security
|
Amount
|
|||||||||||
June
30, 2010
|
December
31, 2009
|
||||||||||||||
$
|
$
|
||||||||||||||
Agricultural
Development Bank of China
|
6.84 | % |
1/23/2007-
7/31/2010
|
Corporate
guarantee by third party
|
- | 1,408,321 | |||||||||
Agricultural
Development Bank of China
|
6.12 | % |
1/23/2008-7/22/2010
|
Corporate
guarantee by third party
|
- | 711,495 | |||||||||
Agricultural
Development Bank of China
|
6.12 | % |
1/23/2008-8/8/2010
|
Corporate
guarantee by third party
|
- | 315,405 | |||||||||
- | 2,435,221 |
Name
of bank
|
Interest
rate
|
Term
|
Security
|
Amount
|
|||||||||||
June
30, 2010
|
December
31, 2009
|
||||||||||||||
$
|
$
|
||||||||||||||
Agricultural
Development Bank of China
|
6.75 | % |
4/29/2007-4/28/2012
|
Corporate
guarantee by third party
|
3,681,885 | 4,401,002 | |||||||||
3,681,885 | 4,401,002 |
20.
|
OBLIGATION
UNDER OPERATING LEASES
|
$
|
||||
Year
ended December 31,2010
|
28,182 | |||
Year
ended December 31,2011
|
56,364 | |||
Year
ended December 31,2012
|
56,364 | |||
Year
ended December 31,2013
|
5,160 | |||
Year
ended December 31,2014
|
5,160 | |||
Thereafter
|
- | |||
151,230 |
21.
|
CONTINGENCIES
|
22.
|
RELATED
PARTY TRANSACTIONS
|
Name
of related party
|
Nature
of transactions
|
|
Mr.
Rui Xiong He , director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
Included
in other payables, due to Mr. Rui Xiong He is $16,985 as of December, 31,
2009. The amounts are unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Xiang Jun Fang, director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
Included
in other receivables, due from Mr. Xiang Jun Fang is $260,101 as of
December, 31, 2009. The amounts are unsecured, interest free and have no
fixed term of repayment.
|
|
Included
in other payables, due to Mr. Xiang Jun Fang is $150,057 as of December,
31, 2009. The amounts are unsecured, interest free and have no fixed term
of repayment.
|
||
Qinghai
Sanjiang A Power Agriculture Co., Ltd (“SJAP”), investee
|
Included
in other payable, SJAP is $2,494 as of December, 31, 2009. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Solomon Yip Kun Lee, Chairman
|
Included
in due from directors, Mr. SolomonYip Kun Lee is $73,164 as of
, December, 31, 2009. The amount is unsecured, interest free
and have no fixed term of repayment.
|
|
Included
in due to a director, Mr. SolomonYip Kun Lee is $364,490 as
of June 30, 2010. The amount is unsecured, interest free and
have no fixed term of repayment
|
||
Mr.
Michael Bor Hann Chen, director and company secretary
|
Included
in due from directors, Mr. Michael Bor Hann Chen is $38,228 as of
December, 31, 2009. The amount is unsecured, interest free and have no
fixed term of
repayment.
|
23.
|
SUBSEQUENT
EVENTS
|
PAGE
|
||
CONSOLIDATED
BALANCE SHEETS
|
2
|
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
3
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
4
|
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
5 -
30
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
2,360,587 | 1,731,118 | ||||||
Inventories
|
6,099,411 | 5,199,241 | ||||||
Deposits
and prepaid expenses
|
10,189,266 | 10,189,266 | ||||||
Accounts
receivable, net of allowance for doubtful accounts
|
6,869,505 | 2,073,567 | ||||||
Other
receivables
|
1,885,491 | 1,197,617 | ||||||
Due
from directors
|
111,392 | 835,553 | ||||||
Total
current assets
|
27,515,652 | 21,226,362 | ||||||
Property
and equipment, net of accumulated depreciation
|
7,564,664 | 6,970,522 | ||||||
Construction
in progress
|
5,995,939 | 4,224,253 | ||||||
Land
use rights, net of accumulated amortization
|
13,769,496 | 13,464,781 | ||||||
Proprietary
technologies, net of accumulated amortization
|
7,634,635 | 7,946,667 | ||||||
Goodwill
|
12,000,000 | 12,000,000 | ||||||
Long
term accounts receivable
|
9,338,477 | 9,325,174 | ||||||
56,303,211 | 53,931,397 | |||||||
Other
assets
|
||||||||
Licence
rights
|
1 | 1 | ||||||
Investment
in unconsolidated corporate joint venture
|
242,669 | - | ||||||
242,670 | 1 | |||||||
Total
assets
|
$ | 84,061,533 | $ | 75,157,760 | ||||
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable and accruals
|
756,209 | 1,030,695 | ||||||
Other
payables
|
4,536,128 | 4,621,679 | ||||||
Short
term debt
|
2,435,221 | - | ||||||
Total
current liabilities
|
7,727,558 | 5,652,374 | ||||||
Other
liabilities
|
||||||||
Long
term debt
|
4,401,002 | 6,836,223 | ||||||
Total
liabilities
|
12,128,560 | 12,488,597 | ||||||
Commitments
and contingencies
|
- | - | ||||||
Stockholders'
equity
|
||||||||
Preferred
stock: $0.001 par value (10,000,000 shares authorized, 0 shares issued and
outstanding)
|
||||||||
Common
stock: $0.001 par value (100,000,000 shares
authorized,52,683,579 and 52,943,579 shares issued and outstanding at
December 31,2009 and 2008 respectively)
|
52,684 | 52,944 | ||||||
Additional
paid- in capital
|
43,703,848 | 43,489,213 | ||||||
Retained
earnings
|
17,086,949 | 10,279,010 | ||||||
Accumulated
other comprehensive income
|
2,168,203 | 2,138,447 | ||||||
Total
Sino Agro Food, Inc. and subsidiaries stockholders' equity
|
63,011,684 | 55,959,614 | ||||||
Non
- controlling interest
|
8,921,289 | 6,709,549 | ||||||
Total
stockholders' equity
|
71,932,973 | 62,669,163 | ||||||
Total
liabilities and stockholders' equity
|
$ | 84,061,533 | $ | 75,157,760 |
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Revenue
|
21,725,839 | 16,189,467 | ||||||
Cost
of goods sold
|
9,385,442 | 7,947,659 | ||||||
Gross
profit
|
12,340,397 | 8,241,808 | ||||||
General
and administrative expenses
|
(2,852,084 | ) | (2,811,352 | ) | ||||
Impairment
loss
|
- | (293,404 | ) | |||||
Net
income from operations
|
9,488,313 | 5,137,052 | ||||||
Other
income (loss)
|
||||||||
Other
income
|
26 | 62,142 | ||||||
Interest
expenses
|
(470,019 | ) | (419,130 | ) | ||||
Total
other income (expenses)
|
(469,993 | ) | (356,988 | ) | ||||
Income
from unconsolidated corporate joint venture and equity
investee
|
- | 191,992 | ||||||
Net
income from continuing operations before income
taxes
|
9,018,320 | 4,972,056 | ||||||
Provision
for income taxes
|
- | - | ||||||
Net
income from continuing operations
|
9,018,320 | 4,972,056 | ||||||
Net
income from discontinued operations net of amount attributable to non -
controlling interest (net of income taxes of $0)
|
- | 3,412,449 | ||||||
Net
income
|
9,018,320 | 8,384,505 | ||||||
Less:
Net income attributable to the non - controlling interest
|
(2,210,381 | ) | (1,279,584 | ) | ||||
Net
income attributable to the Sino Agro Food, Inc. and
subsidiaries
|
6,807,939 | 7,104,921 | ||||||
Other
comprehensive income
|
. | |||||||
Foreign
currency translation gain
|
31,118 | 1,762,560 | ||||||
Comprehensive
income
|
6,839,057 | 8,867,481 | ||||||
Less:
other comprehensive income attributable to the non - controlling
interest
|
(1,359 | ) | (22,633 | ) | ||||
Comprehensive
income attributable to Sino Agro Food, Inc. and
subsidiaries
|
6,837,698 | 8,844,848 | ||||||
Earnings
per share attributable to Sino Agro Food, Inc. and subsidiaries common
stockholders:
|
||||||||
Basic
- From continuing operations
|
0.13 | 0.07 | ||||||
Basic
- From discontinued operations
|
- | 0.06 | ||||||
0.13 | 0.13 | |||||||
Diluted
- From continuing operations
|
0.13 | 0.07 | ||||||
Diluted
- From discontinued operations
|
- | 0.06 | ||||||
0.13 | 0.13 | |||||||
Weighted
average number of shares outstanding:
|
||||||||
Basic
|
52,889,473 | 52,943,579 | ||||||
Diluted
|
52,889,473 | 52,943,579 |
Common stock
|
Accumulated
|
|||||||||||||||||||||||||||
Par value $0.001
|
Additional
|
other
|
||||||||||||||||||||||||||
Nominal
|
paid - in
|
Retained
|
comprehensive
|
Non - controlling
|
||||||||||||||||||||||||
Number of shares
|
amount
|
capital
|
earnings
|
income
|
interest
|
Total
|
||||||||||||||||||||||
$
|
$
|
$
|
$
|
$
|
$
|
|||||||||||||||||||||||
Balance
at January 1, 2008
|
52,943,579 | 52,944 | 43,489,213 | 3,174,089 | 398,520 | 5,407,332 | 52,522,098 | |||||||||||||||||||||
Net
income for the year
|
- | - | - | 7,104,921 | - | 1,279,584 | 8,384,505 | |||||||||||||||||||||
Foreign
currency translation gain
|
- | - | - | - | 1,739,927 | 22,633 | 1,762,560 | |||||||||||||||||||||
Balance
at December 31, 2008
|
52,943,579 | 52,944 | 43,489,213 | 10,279,010 | 2,138,447 | 6,709,549 | 62,669,163 | |||||||||||||||||||||
Issue
of common stock at stated value
|
615,000 | 615 | 214,635 | - | - | - | 215,250 | |||||||||||||||||||||
Common
stock redeemed at par value
|
(875,000 | ) | (875 | ) | - | - | - | - | (875 | ) | ||||||||||||||||||
Net
income for the year
|
- | - | - | 6,807,939 | - | 2,210,381 | 9,018,320 | |||||||||||||||||||||
Foreign
currency translation gain
|
- | - | - | - | 29,756 | 1,359 | 31,115 | |||||||||||||||||||||
Balance
at December 31, 2009
|
52,683,579 | 52,684 | 43,703,848 | 17,086,949 | 2,168,203 | 8,921,289 | 71,932,973 |
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
income for the year
|
9,018,320 | 8,384,505 | ||||||
Adjustments
to reconcile net income to net cash from operations:
|
||||||||
Impairment
loss
|
- | 293,404 | ||||||
Depreciation
|
820,193 | 706,912 | ||||||
Profit
from disposal of unconsolidated equity investee
|
- | (3,412,449 | ) | |||||
Income
from unconsolidated equity investee
|
- | (191,992 | ) | |||||
Amortization
|
865,512 | 605,581 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Increase
in inventories
|
(900,170 | ) | (4,572,440 | ) | ||||
Increase
in construction in progress
|
(1,771,686 | ) | (391,869 | ) | ||||
Increase
in deposits and prepaid expenses
|
- | (2,407,014 | ) | |||||
Decrease
(increase) in due from directors
|
724,161 | (826,867 | ) | |||||
Decrease
in accounts payable and accruals
|
(274,486 | ) | (2,310,953 | ) | ||||
(Decrease)
increase in other payables
|
(85,551 | ) | 4,033,565 | |||||
(Increase)
decrease in accounts receivable
|
(4,809,241 | ) | 7,844,989 | |||||
Increase
in other receivables
|
(687,874 | ) | (725,450 | ) | ||||
Net
cash provided by operating activities
|
2,899,178 | 7,029,922 | ||||||
Cash
flows from investing activities
|
||||||||
Purchases
of property and equipment
|
(1,414,336 | ) | (1,983,664 | ) | ||||
Investment
in unconsolidated corporate joint venture
|
(242,669 | ) | - | |||||
Acquisition
of proprietary technologies
|
- | (8,000,000 | ) | |||||
Proceeds
from disposal of unconsolidated equity investee
|
- | 4,405,000 | ||||||
Acquisition
of land use rights
|
(858,195 | ) | (764,128 | ) | ||||
Net
cash used in investing activities
|
(2,515,200 | ) | (6,342,792 | ) | ||||
Cash
flows from financing activities
|
||||||||
Common
stock redeemded at par value
|
(875 | ) | - | |||||
Common
stock issued at stated value
|
215,250 | - | ||||||
Repayment
of debts
|
(2,435,221 | ) | (2,275,812 | ) | ||||
Proceeds
from issuance of debts
|
2,435,221 | 2,723,310 | ||||||
Net
cash provided by financing activities
|
214,375 | 447,498 | ||||||
Effects
on exchange rate changes on cash
|
31,116 | 237,976 | ||||||
Increase
in cash and cash equivalents
|
629,469 | 1,372,604 | ||||||
Cash
and cash equivalents, beginning of year
|
1,731,118 | 358,514 | ||||||
Cash
and cash equivalents, end of year
|
2,360,587 | 1,731,118 | ||||||
Supplementary
disclosures of cash flow information:
|
||||||||
Cash
paid for interest
|
470,019 | 419,130 | ||||||
Cash
paid for income taxes
|
- | - |
1.
|
CORPORATE
INFORMATION
|
|
a)
|
Hang
Yu Tai Investment Limited (“HYT”), a Macau incorporated
company, the owner of 78% equity interest in ZhongXingNongMu Co. Ltd
(“ZX”), a PRC incorporated company;
|
|
b)
|
Tri-way
Industries Limited (“TRW”), a Hong Kong incorporated company;
and
|
|
c)
|
Macau
Eiji Company Limited (“MEIJI”), a Macau incorporated company, the owner of
75% equity interest in Enping City Juntang Town Hang Sing Tai Agriculture
Co. Ltd. (“HST”), a PRC corporate Sino-Foreign joint
venture.
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
Place of
|
Issued and
|
Percentage of
|
Principal
|
|||||
Name of subsidiaries
|
incorporation
|
paid - in capital
|
interest
|
activity
|
||||
Capital
Award Inc. ("CA")
|
Belize
|
$50,000
|
100%
(2008: 100%) directly
|
Fishery
development and holder of A-Power Technology master
licence
|
||||
Capital
Stage Inc. ("CS")
|
Belize
|
$50,000
|
100%
(2008: 100%) indirectly
|
Dormant
|
||||
Capital
Hero Inc. ("CH")
|
Belize
|
$50,000
|
100%
(2008: 100%) indirectly
|
Dormant
|
||||
Tri-way
Industries Limited ("TRW")
|
Hong
Kong, PRC
|
HK$10,000
|
100%
(2008: 100%) directly
|
Investment
holding, holder of enzyme technology master licence for manufacturing of
livestock feed and bio-organic fertilizer and has yet commenced
its business of fish farm operation
|
||||
Pretty
Mountain Holdings Limited ("PMH")
|
Hong
Kong, PRC
|
HK$10,000
|
80%
(2008: 80%) directly
|
Dormant
|
||||
Macau
Eiji Company Limited ("MEIJI")
|
Macau,
PRC
|
Pataca
30,000
|
100%
(2008: 100%) directly
|
Investment
holding
|
||||
Enping
City Juntang Town Hang Sing Tai Agriculture Co. Ltd
("HST")
|
PRC
|
RMB100,000
|
75%
(2008: 75%) indirectly
|
Hylocereus Undatus Plantation ("HU Plantation") | ||||
Jiang
Men City Heng Sheng
Tai
Agriculture Development
Co.
Ltd ("JHST")
|
PRC
|
Issued
capital:
$600,000
Paid
- in capital:
$180,117
|
100%
(2008: 100%) directly
|
The
Company has yet commenced its business of Hylocereus
Undatus Plantation ("HU Plantation")
|
||||
Hang
Yu Tai Investment
Limited
("HYT")
|
Macau,
PRC
|
Pataca
25,000
|
100%
(2008: 100%) directly
|
Investment
holding
|
||||
ZhongXingNongMu
Co. Ltd ("ZX")
|
PRC
|
RMB60,000,000
|
78%
(2008: 78%) indirectly
|
Dairy
production and manufacturing of organic fertilizer,livestock
feed, and beef cattle and plantation of crops and
pasture
|
||||
A
Power Agro Agriculture Development (Macau) Limited
("APWAM")
|
Macau,
PRC
|
Pataca
25,000
|
100%
(2008: 100%) directly
|
Investment
holding
|
||||
Name
of unconsolidated
|
Place
of
|
Issued
and
|
Percentage
of
|
Principal
|
||||
corporate
joint venture
|
incorporation
|
paid
- in capital
|
interest
|
activity
|
||||
Qinghai
Sanjiang A Power
Agriculture
Co., Ltd
("SJAP")
|
PRC
|
Issued
capital:
$1,400,000
Paid
- in capital:
$242,669
|
45%
(2008: Nil%) indirectly
|
The
Company has yet commenced its business of manufacturing of organic
fertilizer,livestock feed, and beef cattle and plantation of crops and
pastures
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
-
|
raw
materials – purchase cost on a weighted average
basis;
|
-
|
manufactured
finished goods and work-in-progress – cost of direct materials and labor
and a proportion of manufacturing overheads based on normal operation
capacity but excluding borrowing costs;
and
|
-
|
retail
and wholesale merchandise finished goods – purchase cost on a weighted
average basis.
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2009
|
2008
|
|||||||
Customer
A
|
22.54 | % | 21.86 | % | ||||
Customer
B
|
21.20 | % | 18.11 | % | ||||
Customer
C
|
12.26 | % | 17.02 | % | ||||
Customer
D
|
9.62 | % | 4.20 | % | ||||
Customer
E
|
9.35 | % | 8.07 | % | ||||
74.97 | % | 69.26 | % |
2009
|
2008
|
|||||||
Customer
A
|
35.48 | % | 50.45 | % | ||||
Customer
B
|
22.49 | % | 31.36 | % | ||||
Customer
C
|
17.58 | % | 14.68 | % | ||||
Customer
D
|
11.04 | % | 1.01 | % | ||||
Customer
E
|
9.17 | % | - | |||||
Customer
F
|
- | 2.39 | % | |||||
95.76 | % | 99.89 | % |
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
Level 1
|
Quoted
market prices available in active markets for identical assets or
liabilities as of the reporting
date.
|
Level 2
|
Pricing
inputs other than quoted prices in active markets included in Level 1,
which are either directly or indirectly observable as of the reporting
date.
|
Level 3
|
Pricing
inputs that are generally observable inputs and not corroborated by market
data.
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.30
|
FAIR
VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING
PRONOUNCEMENTS
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
3.
|
SEGMENT
INFORMATION
|
2009
|
||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU Plantation
Division
|
Corporate and
others
|
Total
|
||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
Revenue
|
726,702 | 18,084,046 | 2,915,091 | - | 21,725,839 | |||||||||||||||
Net
income (loss)
|
672,583 | 6,108,967 | 1,460,553 | (1,434,164 | ) | 6,807,939 | ||||||||||||||
Total
assets
|
13,817,585 | 38,660,534 | 10,981,384 | 20,602,030 | 84,061,533 | |||||||||||||||
Capital
expenditures
|
36,615 | 18,623,474 | 8,641,647 | 7,662,998 | 34,964,734 |
2008
|
||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU Plantation
Division
|
Corporate and
others
|
Total
|
||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
Revenue
|
562,497 | 14,388,014 | 1,238,956 | - | 16,189,467 | |||||||||||||||
Net
income
|
495,718 | 4,221,500 | 284,420 | 2,103,283 | 7,104,921 | |||||||||||||||
Total
assets
|
14,832,962 | 30,823,721 | 9,390,175 | 20,110,902 | 75,157,760 | |||||||||||||||
Capital
expenditures
|
48,734 | 16,118,887 | 8,444,959 | 7,993,643 | 32,606,223 |
4.
|
INCOME
TAXES
|
5.
|
CASH
AND CASH EQUIVALENTS
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Cash
and bank balances
|
2,360,587 | 1,731,118 |
6.
|
INVENTORIES
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Immature
seeds
|
411,594 | 397,275 | ||||||
Harvested
HU plantation
|
53 | 16 | ||||||
Unharvested
HU plantation
|
89,666 | 106,478 | ||||||
Forage
for milk cows and consumable
|
5,598,098 | 4,695,472 | ||||||
6,099,411 | 5,199,241 |
7.
|
DEPOSITS
AND PREPAID EXPENSES
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Deposits
for acquisition of land use rights
|
4,453,666 | 4,453,666 | ||||||
inventory
purchased
|
219,551 | 219,551 | ||||||
tenancy
agreement
|
2,129 | 2,129 | ||||||
materials
used for construction in progress
|
79,607 | 79,607 | ||||||
Prepayments
for purchases of milk cows, dairy
farm and containers
|
5,434,313 | 5,434,313 | ||||||
10,189,266 | 10,189,266 |
8.
|
ACCOUNTS
RECEIVABLE
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
0 -
30 days
|
1,530,838 | 387,576 | ||||||
31
- 90 days
|
- | - | ||||||
91
- 120 days
|
5,338,667 | 1,672,767 | ||||||
over
120 days and less than 1 year
|
- | 13,224 | ||||||
over
1 year
|
9,338,477 | 9,325,174 | ||||||
16,207,982 | 11,398,741 | |||||||
Less:
amounts reclassified as long term accounts receivable
|
(9,338,477 | ) | (9,325,174 | ) | ||||
6,869,505 | 2,073,567 |
9.
|
OTHER
RECEIVABLES
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Advance
to builders for construction of rangeland
|
- | 307,302 | ||||||
Advance
to service providers
|
12,983 | 12,983 | ||||||
Due
from construction material suppliers
|
- | 88,020 | ||||||
Due
from related parties
|
260,101 | 114,630 | ||||||
Due
from employees
|
430,552 | 653,168 | ||||||
Due
from third parties
|
1,181,855 | 21,514 | ||||||
1,885,491 | 1,197,617 |
10.
|
PROPERTY
AND EQUIPMENT
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Milk
cows
|
4,953,669 | 3,666,376 | ||||||
Plant
and machinery
|
2,948,148 | 2,948,148 | ||||||
Structure
and leasehold improvements
|
783,491 | 656,448 | ||||||
Mature
seeds
|
484,436 | 484,436 | ||||||
Furniture
and equipment
|
85,506 | 85,506 | ||||||
Motor
vehicles
|
83,493 | 83,493 | ||||||
9,338,743 | 7,924,407 | |||||||
Less:
Accumulated depreciation
|
(1,774,079 | ) | (953,885 | ) | ||||
Net
carrying amount
|
7,564,664 | 6,970,522 |
11.
|
CONSTRUCTION
IN PROGRESS
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Construction
in progress
|
||||||||
-
Rangeland for milk cows
|
5,741,168 | 4,224,253 | ||||||
-
Oven room for production of dried flowers
|
254,771 | - | ||||||
5,995,939 | 4,224,253 |
12.
|
LAND
USE RIGHTS
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Cost
|
15,107,879 | 14,249,684 | ||||||
Less:
Accumulated amortisation
|
(1,338,383 | ) | (784,903 | ) | ||||
Net
carrying amount
|
13,769,496 | 13,464,781 |
13.
|
PROPRIETARY
TECHNOLOGIES
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Proprietary
technologies
|
8,000,000 | 8,000,000 | ||||||
Less:
Accumulated amortisation
|
(365,365 | ) | (53,333 | ) | ||||
Net
carrying amount
|
7,634,635 | 7,946,667 |
14.
|
GOODWILL
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Goodwill
from acquisition
|
38,444,099 | 38,444,099 | ||||||
Less:
Accumulated impairment losses
|
(26,444,099 | ) | (26,444,099 | ) | ||||
12,000,000 | 12,000,000 |
15.
|
INVESTMENT IN UNCONSOLIDATED
CORPORATE JOINT VENTURE
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Capital
contribution
|
242,669 | - |
15.
|
INVESTMENT
IN UNCONSOLIDATED CORPORATE JOINT VENTURE
(CONTINUED)
|
16.
|
LICENCE
RIGHTS
|
17.
|
OTHER
PAYABLES
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Proprietary
technologies payable
|
3,577,264 | 3,577,264 | ||||||
Due
to third parties
|
601,326 | 601,326 | ||||||
Due
to related parties
|
169,536 | 415,108 | ||||||
Stamp
duty payable
|
4,678 | 4,678 | ||||||
Others
|
183,324 | 23,303 | ||||||
4,536,128 | 4,621,679 |
18.
|
SHARE
CAPITAL
|
19.
|
BANK
BORROWINGS
|
Short
term debt
|
|||||||||||||||
Name
of bank
|
Interest rate
|
Term
|
Security
|
Amount
|
|||||||||||
2009
|
2008
|
||||||||||||||
$
|
$
|
||||||||||||||
Agricultural
Development Bank of China
|
6.84 | % |
1/23/2007-
7/31/2010
|
Corporate
guarantee by third party
|
1,408,321 | - | |||||||||
Agricultural
Development Bank of China
|
6.12 | % |
1/23/2008-7/22/2010
|
Corporate
guarantee by third party
|
711,495 | - | |||||||||
Agricultural
Development Bank of China
|
6.12 | % |
1/23/2008-8/8/2010
|
Corporate
guarantee by third party
|
315,405 | - | |||||||||
2,435,221 | - | ||||||||||||||
Long
term debt
|
|||||||||||||||
Name
of bank
|
Interest rate
|
Term
|
Security
|
Amount
|
|||||||||||
2009
|
2008
|
||||||||||||||
$
|
$
|
||||||||||||||
Agricultural
Development Bank of China
|
6.84 | % |
1/23/2007-
7/31/2010
|
Corporate
guarantee by third party
|
- | 1,408,321 | |||||||||
Agricultural
Development Bank of China
|
6.12 | % |
1/23/2008-7/22/2010
|
Corporate
guarantee by third party
|
- | 711,495 | |||||||||
Agricultural
Development Bank of China
|
6.12 | % |
1/23/2008-8/8/2010
|
Corporate
guarantee by third party
|
- | 315,405 | |||||||||
Agricultural
Development Bank of China
|
6.75 | % |
4/29/2007-4/28/2012
|
Corporate
guarantee by third party
|
4,401,002 | 4,401,002 | |||||||||
4,401,002 | 6,836,223 |
20.
|
OBLIGATION
UNDER OPERATING LEASES
|
2009
|
||||
$
|
||||
Year
ended December 31,2010
|
45,692 | |||
Year
ended December 31,2011
|
5,158 | |||
Year
ended December 31,2012
|
5,158 | |||
Year
ended December 31,2013
|
5,158 | |||
Year
ended December 31,2014
|
1,289 | |||
Thereafter
|
- | |||
62,455 |
21.
|
CONTINGENCIES
|
22.
|
RELATED
PARTY TRANSACTIONS
|
Name of related party
|
Nature of transactions
|
|
Mr.
Rui Xiong He , director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
During
the year ended December 31, 2008, Mr. Rui Xiong He sold his land use
rights to the Company for $764,128.
Included
in other payables, due to Mr. Rui Xiong He is $16,985 and $306,620 as of
December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Xiang Jun Fang, director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
Included
in other receivables, due from Mr. Xiang Jun Fang is $260,101 and $114,630
at December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of repayment.
Included
in other payables, due to Mr. Xiang Jun Fang is $150,057 and $108,488 at
December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Solomon Lee, Chairman
|
Included
in due from directors, Mr. Solomon Lee is $73,164 and $798,058 as of
December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Michael Bor Hann Chen, director and company secretary
|
Included
in due from directors, Mr. Michael Bor Hann Chen is $38,228 and $37,495 as
of December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
|
Qinghai
Sanjiang A Power Agriculture Co., Ltd (“SJAP”), investee
|
Included
in other payable, SJAP is $2,494 and $nil as of December, 31, 2009 and
December 31, 2008 respectively. The amounts are unsecured, interest free
and have no fixed term of
repayment.
|
23.
|
SUBSEQUENT
EVENTS
|
23.
|
SUBSEQUENT
EVENTS (CONTINUED)
|
By:
|
/s/
Lee
Yip Kun
Solomon
|
Lee
Yip Kun
Solomon
|
|
Chairman
and Chief Executive
Officer
|
Exhibit No.
|
|
Exhibit
Description
|
2.1
|
|
Stock
Purchase Agreement and Share Exchange – Volcanic Gold and Capital
Award
|
2.2
|
Acquisition
Agreement - Hang Yu Tai Investment Limited
|
|
2.3
|
Acquisition
Agreement - Macau Eiji Company Limited
|
|
2.4
|
Acquisition
Agreement - Tri-way Industries Limited
|
|
2.5
|
Disposition
Agreement - Triway selling equity interest in TianQuan
Science
|
|
2.6
|
Acquisition
Agreement - A Power Agro Agriculture Development (Macau) Limited acquired
the Pretty Mountains’ 45% equity interest in Sanjiang A
Power
|
|
3.1
|
Articles
of Incorporation of Volcanic Gold, Inc.
|
|
3.2
|
Amendment
to Articles of Incorporation – Name Change: Volcanic Gold, Inc.
to A Power Agro Agriculture Development, Inc.
|
|
3.3
|
Certificate
of Correction
|
|
3.4
|
Amendment
to Articles of Incorporation – Name Change: A Power Agro
Agriculture Development, Inc. to Sino Agro Food, Inc.
|
|
3.5
|
Bylaws
of Volcanic Gold, Inc.
|
|
3.6
|
Organizational
Documents: Capital Award, Inc.
|
|
3.7
|
Organizational
Documents: Hang Yu Tai Investment Limited
|
|
3.8
|
Organizational
Documents: ZhongXingNongMu Co. Ltd.
|
|
3.9
|
Organizational
Documents: Macau Eiji Company Limited
|
|
3.10
|
Organizational
Documents: Jiang Men City Heng Sheng Tai Agriculture
Development Co. Ltd.
|
|
3.11
|
Organizational
Documents: Tri-way Industries Limited
|
|
3.12
|
Organizational
Documents: A Power Agro Agriculture Development (Macau)
Limited
|
|
4.1
|
Form
of common stock Certificate of Sino Agro Foods, Inc.
(1)
|
|
4.2
|
Certificate
of Rights and Preferences – Series A
Preferred
|
4.3
|
Certificate
of Rights and Preferences – Series B Preferred
|
|
10.1
|
Patented
“Intellectual Property” namely “Zhi Wu Jei Gan Si Liao Chan Ye Hua Chan
Pin Ji Qi Zhi Bei Fang Fa” registered under the Patent Number
“ZL2005 10063039.9” and Certificate number “329722” of
China
|
|
10.2
|
Sino
Foreign Joint Venture Agreement: Jiang Men City Heng Sheng Tai
Agriculture Development Co. Ltd.
|
|
10.3
|
Sino
Foreign Joint Venture Agreement: Qinghai Sanjiang A Power
Agriculture Co. Ltd.
|
|
10.4
|
Deed
of Trust - A Power Agro Agriculture Development (Macau)
Limited
|
|
10.5
|
Deed
of Trust - Macau Eiji Company Limited
|
|
10.6
|
Deed
of Trust - Hang Yu Tai Investment Limited
|
|
10.7
|
Master
License from Infinity Environmental Group, a Belize
corporation.
|
|
(a)
|
The
authorized capital stock of Volcanic Gold consists of 50,000,000 shares of
common stock, $0.02 par value per share, of which 9,900,000 common stock
issued and outstanding, and no shares of Preferred Stock. As set forth
below, prior to Closing, the Volcanic Gold will effectuate a 1-50 reverse
split to decrease the amount of issue and outstanding shares to 198,000
shares.
|
|
(b)
|
All
issued and outstanding shares are, and shall be at Closing, validly
issued, fully paid and nonassessable and are not issued in violation of
the preemptive or other rights of any person. Except for the convertible
debentures set forth on Section 1.2 to the Parent Disclosure Schedules, as
of the date hereof and at the Closing there are and there will be no
existing options, convertible or exchangeable securities, calls, claims,
warrants, preemptive rights, registration rights or commitments of any
character relating to the issued or unissued capital stock or other
securities of Volcanic Gold. There are no voting trusts, proxies or other
agreements, commitments or understandings of any character to which
Volcanic Gold is a party or by which Volcanic Gold is bound with respect
to the voting of any capital stock of Volcanic Gold. There are no
outstanding stock appreciation, phantom stock or similar rights with
respect to any capital stock of Volcanic Gold. There are no outstanding
obligations to repurchase, redeem or otherwise acquire any shares of
capital stock of Volcanic Gold. The convertible debentures are convertible
into an aggregate of 7,000,200 post reverse split
shares.
|
|
(c)
|
At
the Closing, the shares of Parent Stock to be issued and delivered to the
Shareholder hereunder and in connection herewith will, when so issued and
delivered, constitute duly authorized, validly and legally issued,
fully-paid, nonassessable shares of Volcanic Gold capital stock, will not
be issued in violation of any preemptive or similar rights and will be
issued free and clear of all liens and
encumbrances.
|
|
(a)
|
The
books and records, financial and others, of Volcanic Gold are in all
material respects complete and correct and have been maintained in
accordance with good business accounting practices;
and
|
|
(b)
|
Volcanic
Gold has no liabilities or liens with respect to the payment of any
country, federal, state, county, or local taxes (including any
deficiencies, interest or penalties). Volcanic Gold has filed all federal,
state, county and local income, excise, property and other tax,
governmental and/or other returns, forms, filings, or reports, which are
due or required to be filed by it prior to the date hereof and have paid
or made adequate provision in the Parent Financial Statements for the
payment of all taxes, fees, or assessments which have or may become due
pursuant to such returns, filings or reports or pursuant to any
assessments received. Volcanic Gold is not delinquent or obligated for any
tax, penalty, interest, delinquency or charge and there are no tax liens
or encumbrances applicable to either corporation. Volcanic Gold is not
bound by any agreement with respect to
Taxes.
|
|
(c)
|
Volcanic
Gold shall remain responsible for all debts incurred by Volcanic Gold
prior to the date of closing.
|
|
(a)
|
There
are no material contracts, agreements franchises, license agreements, or
other commitments to which Volcanic Gold is a party or by which it or any
of its properties are bound, other than this
Agreement:
|
|
(b)
|
Volcanic
Gold 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 materially and adversely affects,
or in the future may (as far as Volcanic Gold can now foresee) materially
and adversely affect , the business, operations, properties, assets or
conditions of Volcanic Gold; and
|
|
(c)
|
Volcanic
Gold 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 (ERISA), 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 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) contract, agreement or other commitment involving payments by it for
more than $10,000 in the
aggregate.
|
(a)
|
any
change in the assets, liabilities, financial condition or operating
results of Volcanic Gold from that reflected in the Parent Financial
Statements, except changes in the ordinary course of business that have
not caused, in the aggregate, a Material Adverse
Effect;
|
(b)
|
any
damage, destruction or loss, whether or not covered by insurance, that
would have a Material Adverse
Effect;
|
(c)
|
any
waiver or compromise by Volcanic Gold of a valuable right or of a material
debt owed to it;
|
(d)
|
any
satisfaction or discharge of any lien, claim, or encumbrance or payment of
any obligation by Volcanic Gold, except in the ordinary course of business
and the satisfaction or discharge of which would not have a Material
Adverse Effect;
|
(e)
|
any
material change to a material contract by which Volcanic Gold or any of
its assets is bound or subject;
|
(f)
|
any
material change in any compensation arrangement or agreement with any
employee, officer, director or
shareholder;
|
(g)
|
any
resignation or termination of employment of any officer of Volcanic
Gold;
|
(h)
|
any
mortgage, pledge, transfer of a security interest in, or lien, created by
Volcanic
Gold, with respect to any of its material properties or assets, except
liens
for
taxes not yet due or payable and liens that arise in the ordinary course
of
business
and do not materially impair Volcanic Gold’s ownership or use of such
property
or assets;
|
(i)
|
any
loans or guarantees made by Volcanic Gold to or for the benefit of its
employees,
officers or directors, or any members of their immediate families,
other
than travel advances and other advances made in the ordinary course of its
business;
|
(j)
|
any
declaration, setting aside or payment or other distribution in respect of
any of Volcanic Gold’s capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any of such stock by
Volcanic Gold;
|
(k)
|
any
alteration of Volcanic Gold’s method of accounting or the identity of its
auditors;
|
(l)
|
any
issuance of equity securities to any officer, director or affiliate;
or
|
(m)
|
any
arrangement or commitment by the Parent to do any of the things described
in this Section.
|
|
(a)
|
The
books and records, financial and others, of Capital Award are in all
material respects complete and correct and have been maintained in
accordance with good business accounting practices;
and
|
|
(b)
|
Capital
Award has no liabilities with respect to the payment of any country,
federal, state, county, local or other taxes (including any deficiencies,
interest or penalties).
|
|
(a)
|
There
are no material contracts, agreements, franchises, license agreements, or
other commitments to which Capital Award is a party or by which it or any
of its properties are bound;
|
|
(b)
|
Capital
Award 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 Capital Award can now foresee)
materially and adversely affect, the business, operations, properties,
assets or conditions of Capital Award;
and
|
|
(c)
|
Capital
Award 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 $100,000; (v) consulting or other contract
with an unexpired term of more than one year or providing for payments in
excess of $100,000 in the aggregate; (vi) collective bargaining agreement;
(vii) contract, agreement, or other commitment involving payments by it
for more than $250,000 in the
aggregate.
|
|
(a)
|
to
Capital Award, letters of resignation from all current officers and
directors of Volcanic Gold effective upon the Closing together with
evidence of the election of the officers and directors set forth in
Sections 3.6 and 3.7 below effective upon the Closing;
and
|
|
(b)
|
to
Capital Award, the results of UCC, judgment lien and tax lien searches
with respect to Volcanic Gold, the results of which indicate no liens on
the assets of Volcanic Gold; and
|
|
(c)
|
to
the Shareholder, a certificate representing the new shares of Parent Stock
issued as set forth in Section 3.2
below.
|
1.
|
Current
shareholders:
|
199,800
shares;
|
|
2.
|
Shareholder
|
32,000,000
shares;
|
|
3.
|
Note
holders:
|
7,000,200
shares;
|
and |
4.
|
Belmont
Partners
|
800,00
shares.
|
(a)
|
This
Agreement may be terminated by the Shareholder, or the boards of directors
of either Volcanic Gold or Capital Award, respectively, 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.
|
|
(a)
|
This
Agreement may be terminated at any time prior to the Closing Date by
action of the board of directors of Volcanic Gold if either of Capital
Award or the Shareholder 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 Capital Award or the Shareholder
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 Capital Award or the Shareholder, as the case may be.
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, except for any
liability of any party then in
breach.
|
|
(b)
|
This
Agreement may be terminated at any time prior to the Closing Date by
action of either the board of directors of Capital Award or by the
Shareholder if either of Volcanic Gold or Belmont Partners 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 Volcanic Gold or Belmont Partners 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 Volcanic Gold or Belmont
Partners, as the case may be. If this Agreement is terminated pursuant to
this paragraph (c) of this Section 3.5, this Agreement shall be of no
further force or effect and no obligation, right or liability shall arise
hereunder, except for any liability of any party then in
breach.
|
NAME
|
OFFICE
|
|
Lee
Solomon Yip Kun
|
President
and Chief Executive Officer
|
|
Tan
Poay Teik Peter
|
Chief
Financial Officer
|
|
Chen
Bor Hann Michael
|
|
Secretary
|
|
(a)
|
From
and after the date of this Agreement until the Closing Date, except as
permitted or contemplated by this Agreement, Volcanic Gold and Capital
Award will each use its best efforts
to:
|
|
(i)
|
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;
|
|
(ii)
|
maintain
in full force and effect insurance comparable in amount and in scope of
coverage to that now maintained by
it;
|
|
(iii)
|
perform
in all material respects all of its obligations under material contracts,
leases and instruments relating to or affecting its assets, properties and
business;
|
|
(b)
|
From
and after the date of this Agreement until the Closing Date, Volcanic Gold
will not, without the prior consent of Capital
Award:
|
|
(i)
|
except
as otherwise specifically set forth herein, make any change in its
articles of incorporation or
bylaws;
|
|
(ii)
|
declare
or pay any dividend on its outstanding common 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 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 common stock;
or
|
|
(v)
|
purchase
or redeem any common stock.
|
(a)
|
Each
of Volcanic Gold and Belmont Partners hereby agrees to jointly and
severally indemnify Capital Award, each of the officers, agents and
directors and current shareholders of Capital Award, and the Shareholder
as of the Closing Date against any loss, liability, claim, damage or
expense (including, but not limited to, all reasonable legal fees, court
costs and other expenses reasonably incurred in investigating, preparing
or defending against any litigation, commenced or threatened or any claim
whatsoever and notwithstanding the absence of a final determination as to
the indemnifying parties’ obligation to reimburse the indemnified parties
for such losses and the possibility that such payments might later be held
to have been improper), to which it or they may become subject to 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. Notwithstanding the above, the amount of such
indemnification shall be limited to $175,000 regardless of the actual
damages incurred.
|
|
(b)
|
Each
of Capital Award and the Shareholder hereby agrees to jointly and
severally indemnify Volcanic Gold and Belmon Partners, each of the
officers, agents and directors and current shareholders thereof as of the
Closing Date against any loss, liability, claim, damage or expense
(including, but not limited to, all reasonable legal fees, court costs and
other expenses reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened or any claim
whatsoever and notwithstanding the absence of a final determination as to
the indemnifying parties’ obligation to reimburse the indemnified parties
for such losses and the possibility that such payments might later be held
to have been improper), to which it or they may become subject to 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. Notwithstanding the
above, the amount of such indemnification shall be limited to $175,000
regardless of the actual damages
incurred.
|
|
(a)
|
Volcanic
Gold is a corporation duly organized, validly existing and in good
standing under the laws of the
Nevada;
|
|
(b)
|
Volcanic
Gold has the corporate power to execute, deliver and perform under this
Agreement, all corporate action necessary for performance under this
Agreement has been taken and this Agreement has been duly authorized,
executed and delivered by Volcanic Gold and is a valid and binding
obligation of Volcanic Gold enforceable in accordance with its terms;
and
|
|
(c)
|
The
documents executed and delivered to Capital Award and the Shareholder
hereunder are valid and binding in accordance with their terms and vest in
the Shareholder all right, title and interest in and to the shares of
Parent common stock to be issued pursuant hereto, and the shares of Parent
Stock when issued will be duly and validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive rights of
any person; and
|
|
(d)
|
All
of the issued and outstanding common stock of Volcanic Gold have been duly
and validly issued, are fully paid and nonassessable, and were not issued
in violation of any preemptive rights of any
person.
|
If
to Capital Award:
|
GuangZhou
Office
|
ATTEST:
|
VOLCANIC
GOLD, INC.
|
||
By:
|
/s/ Joseph Meuse
|
||
Name:
|
|||
Title:
|
|||
ATTEST:
|
BELMONT
PARTNERS LLC
|
||
By:
|
/s/ Joseph Meuse
|
||
Name:
|
|||
Title:
|
|||
ATTEST:
|
CAPITAL
AWARD, INC.
|
||
|
By:
|
/s/ Lee Solomon Yip Kun
|
|
Name: Mr.
Lee Solomon Yip Kun
|
|||
Title: Director
|
|||
CAPITAL
ADVENTURE, INC.
|
|||
/s/ Lee Solomon Yip Kun
|
By:
|
/s/ Tan Poay Teik Petr
|
|
Name: Mr.
Tan Poay Teik Petr
|
|||
Title: Director
|
CAPITAL
AWARD INC.
|
(company
No. 33562)
|
|
(a)
|
The
representations and warranties of the Company set forth in the Agreement
and in all Exhibits, Schedules and other documents furnished in connection
therewith are in all material respects true and correct as if made on the
Closing Date stipulated in the
Agreement;
|
|
(b)
|
The
Company has performed all covenants, satisfied all conditions, and
complied with all other terms and provisions of the Agreement to be
performed, satisfied or complied with by it as of the Closing
Date;
|
|
(c)
|
Since
such date and other than as previously disclosed to Volcanic Gold Inc.,
the Company has not entered into any material transaction other than
transactions which are usual and in the ordinary course if its business;
and
|
|
(d)
|
The
is no litigation, proceeding, investigation or inquiry pending or, to the
best knowledge of the Company, threatened, which might result in an action
to enjoin or prevent the consummation of the transactions contemplated by
the Agreement or, to the extent not disclosed in the Company Disclosure
Schedules contained within the Agreement, by or against the Company which
might result in any material adverse change in any of the assets,
properties, business or operations of the
Company.
|
/s/ Solomon Lee Yip
Kun
|
Mr.
Solomon Lee Yip Kun
|
Director
and Chief Executive Officer
|
No.19A,
Jalan Wawasan Ampang 2/8, Bandar Baru Ampang, 68000 Selangor,
Malaysia
|
Telephone
603-42703939 Fax. 603-42701761
|
/s/ Joseph Meuse
|
Director
of Belmont Partner LLP
|
Mr.
JOSEPH MEUSE
|
CAPITAL
AWARD INC.
|
(
company
No
.
33562)
|
|
(a)
|
The
representations and warranties of the Company set forth in the Agreement
and in all Exhibits, Schedules and other documents furnished in connection
therewith arc in all material respects true and correct as if made on the
Closing Date stipulated in the
Agreement:
|
|
(b)
|
The
Company has performed all covenants, satisfied all conditions, and
complied with all other terms and provisions of the Agreement to be
performed, satisfied or complied with by it as of the Closing
Date;
|
|
(c)
|
Since
such date and other than as previously disclosed to Volcanic Gold Inc.,
the Company has not entered into any material transaction other than
transactions which are usual and in the ordinary course if its business;
and
|
|
(d)
|
The
is no litigation, proceeding, investigation or inquiry pending or, to the
best knowledge of the Company, threatened, which might result in an action
to enjoin or prevent the consummation of the transactions contemplated by
the Agreement or, to the extent not disclosed in the Company Disclosure
Schedules contained within the Agreement, by or against the Company which
might result in any material adverse change in any of the assets,
properties, business or operations of the
Company.
|
/s/ Solomon Lee Yip
Kun
|
Mr.
Solomon Lee Yip Kun
|
Director
and Chief Executive
Officer
|
No.19A,
Jalan Wawasan Ampang 2/8, Bandar Baru Ampang, 68000 Selangor,
Malaysia
|
Telephone
603-42703939 Fax. 603-42701761
|
/s/ Lee Solomon Yip Kun | /s/ Zeng Shao Quan | /s/ Chen Bor Hann Michael | ||
Mr.
Lee Solomon Yip Kun
|
|
Mr.
Zeng Shao Quan
|
|
Mr.
Chen Bor Hann Michael
|
1.
|
The
Vendors are the legal and beneficial owners of Hang Yu Tai Investimento
Limitada (Company No. 25487 SO) (hereinafter referred to as
“the said Company”), a company incorporated in Macau SAR, People’s
Republic of China with limited liability and having its principal place of
business at Macao East-north Big Road, Hai Ming Ju, Building 3, 5th floor
L room. Miss Tong Mo Ping and Miss Tong Mo Ching each has
17,500 and 7,500 ordinary shares respectively of Macau Dollar One (M$1)
only each fully paid up representing 25,000 shares collectively,
(hereinafter collectively referred to as “the Sale Shares”) aggregating to
One Hundred Percentum (100%) of the issued and paid-up capital of the said
Company.
|
2.
|
The
said Company is the legal and beneficial owners of 78% equity interest in
a company in China known as ZHONGXINGNONGMU CO. (in Chinese Business
Register No. 1308001000413) (hereinafter called “ZHONGXING”). ZHONGXING is
duly established and incorporated in Hebei China with limited liability
and a registered capital of RMB60 million, having its registered address
at HEBEISHENG CHENGDESHI FENGNING MANZUZIZHIXIAN DAGELU XIQULU
78 HAO. Mr. SUN XIMIN is the legal representative of ZHONGXING that is
carrying on the business of rearing of cattle and operating of diary farm.
(Hereinafter referred to as “Principal
Activities”).
|
3.
|
ZHONGXING
is applying to become a sino-foreign joint venture enterprise, (herein
after referred to as SFJVE), such that corresponding Joint Venture
Agreement (JVA) between the said Company and ZHONGXING and the Memorandum
of Article and Association of the SFJVE (hereinafter called the M&A)
have been executed and agreed upon in preparation together with the
aforesaid submission. (A copy of each of the said JVA and M&A are
annexed hereto and marked appendix (X) and Appendix (Y)
respectively)
|
4.
|
The
said Company has no other business activity except the aforesaid holding
of 78% equity interest in
ZHONGXING.
|
5.
|
The
Purchaser is a company quoted on the OTCBPS of NASDAQ, the United States
of America with Ticker Symbol reference of
“APWA”.
|
6.
|
As
at 5
th
September 2007, the financial position of the said Company, as shown in
its management account, is owning 78% equity stake in ZHONGXING which is
representing its only asset, whereas ZhongXing’s Financial Audited Report
2006 and Management Account 2007 is evidencing Net Assets of NO LESS THAN
United States Dollars (Ten million two hundred and sixty nine thousand)
(US$10,269,000.00) as at 31
st
.
December 2006 and of United State Dollars ( Nineteen Million
Five Hundred and Sixty Five Thousand) (US$19,565,000.00) as at 31
st
July 2007 respectively excluding the values of the new blocks of land
measuring up to 5,000 Mu (hereinafter referred to as New Land) and based
on the exchange rate of US$1 to RMB7.75 (hereinafter referred to as “the
ZHONGXING Accounts”). Copies of the ZhongXing’s Audited
Report 2006 and Management Account 2007 and reference of the New Land are
annexed hereto and marked as Appendix (C1), Appendix (C2) and Appendix
(C3) respectively.)
|
7.
|
The
Vendors have agreed to sell and the Purchaser has agreed to purchase the
Sale Shares free from all encumbrances with all rights to dividends and
other distribution declared made and paid after the date of this Agreement
upon the terms and conditions hereinafter
appearing.
|
1.
|
Definitions
and Interpretations
|
(a)
|
“Purchaser” includes
its respective nominees and successors in title
;
|
(b)
|
“Vendors” include
their respective successors in title
;
|
|
(c)
|
“The
Completion Date” shall refer to the date of full payment of all monies and
shares payable by the Purchaser herein provided
;
|
|
(d)
|
“US$”
means United States Dollars, the currency of the United States of America
;
|
|
(e)
|
All
undertakings, agreements, terms, warranties and representations expressed
to be made by two or more parties hereto shall be deemed to be made by
them and be binding on them jointly and severally
;
|
|
(f)
|
Reference
to natural persons shall be deemed to include body corporate and the
plural number shall include the singular number and vice versa
;
|
|
(g)
|
Words
importing the masculine gender shall be deemed to include the feminine and
neuter gender ;
|
|
(h)
|
The
headings are inserted for convenience of reference only and shall not
affect the interpretation of this Agreement hereof
;
|
|
(i)
|
Where
an act required to be done within a specified number of days after or from
a specified date, the period is inclusive of and begins to run from the
date so specified ;
|
|
(j)
|
A
period of a month from the happening of an event or the doing of an act or
thing shall be deemed to be inclusive of the day on which the event
happens or the act or thing is or was required to be done
;
|
|
(k)
|
The
Appendices hereto shall be taken, read and construed as an essential part
of this Agreement ;
|
2.
|
Agreement For Sale and
Purchase
|
2.1
|
Purchase Consideration
and Part Payment
|
2.2
|
Payment of Balance
Purchase Price
|
|
The
balance of the Purchase Price amounting to
United States Dollars Sixteen
Million and Nine Hundred and Ten Hundred Thousand
(US$16,910,000.00) only (hereinafter called "the Balance Purchase
Price”) shall be settled within Ninety (90) days from the date
hereof (hereinafter called “the Completion Date”) by the issuance of
shares by the Purchaser to the Vendors or the Vendor’s nominee(s)
amounting to 7,000,000 units of its shares (hereinafter called “the
Purchaser’s Consideration Shares”) at par of US$0.001 per share. The
Purchaser’s Consideration Shares shall rank pari passu in all respects
with the existing Purchaser’s shares save and except for dividends to be
declared for the financial year ending 31st August
2007.
|
2.3
|
Purchaser’s Right
after payment of the Part
Payment
|
3.
|
Due
Diligence
|
3.1
|
Purchaser's Rights to
Due Diligence
|
|
(i)
|
make
such reasonable enquiries and to attend at the offices of the
said Company and ZHONGXING;
|
|
(ii)
|
a
due diligence investigation of on the profit records of the said Company
and ZHONGXING.
|
|
(iii)
|
a
due diligence investigation of the profit forecast and projection of the
said Company’s and ZHONGXING’s operations by the Purchaser and its
auditors ;
|
|
(iv)
|
obtain
current valuation of ZHONGXING’s properties to confirm that the Net Asset
Value of the ZHONGXING is in accordance with records stated in ZHONGXING’s
Management Account as at 31
st
July 2007.
|
|
(v)
|
follow
up and carry on with the application of the Sino joint venture of
ZHONGXING (SJVZHONGXING) where the Purchaser shall proceed with matters
related to the SJVZHONGXING as a foreign Joint Venture Partner to obtain
the right to repatriate its share of profits and investment and investment
interest earned and or invested in the SJVZHONGXING in the People's
Republic of China.
|
3.2
|
Vendors'
Obligations
|
3.3
|
Purchaser's
Entitlement to claim
|
|
(i)
|
the
Purchaser is unable to make reasonable enquiries or attend at the office
of The said Company and ZHONGXING or carry out the due diligence
investigations due to no fault of the Purchaser;
or
|
|
(i)
|
it
is found, as a result of the due diligence investigations or otherwise,
that any of the Representations and Warranties contained in Clause 11 are
untrue, misleading or incorrect or have not been fully carried out in any
material respect, or
|
(iii)
|
in
any event of any matter or thing arising or becoming known or being
notified to the Purchaser which is materially inconsistent with any of the
Representations and Warranties contained in Clause 11
;
|
4.
|
Delivery of
Documents
|
4.1
|
Simultaneously
with the execution of this Agreement, the Vendors shall deliver or cause
to be delivered the following documents to the
Purchaser:
|
|
(a)
|
The
transfer forms in respect of the Sale Shares duly executed by the Vendors
in favour of the Purchaser and/or the Purchaser's nominee(s) (hereinafter
called “the said Transfers”) together with all the share certificates in
respect of the Sale Shares and all other relevant documents necessary for
effecting the transfer of the Sale Shares to the Purchaser and or the
Purchaser's nominee(s).
|
|
(b)
|
The
letters of resignations of all the existing directors from their
respective offices in the said Company each acknowledging that they have
no claims against the said Company for compensation or otherwise;
and
|
|
(c)
|
Resolutions
of the Board of Directors of the said Company in accordance with the
Memorandum and Articles of Association of the said Company approving
:-
|
|
(i)
|
the
sale and transfer of the Sale Shares from the Vendors to the Purchaser or
its nominee or nominees and the registration of such transfer ;
and
|
|
(ii)
|
the
appointment of such persons as the Purchaser may nominate as the new
Directors of the said Company ;
|
|
(d)
|
the
common seal and certificate of incorporation of the said
Company.
|
5.
|
Completion
|
The
Completion of this Agreement shall take place on the Completion Date,
whereupon:
|
6.
|
Non-Registration of
the Transfer of the Sale
Shares
|
|
In
the event that the transfer of the Sale Shares cannot be registered in
favour of the Purchaser or its nominee(s) free from encumbrances for any
reason whatsoever, all monies received by or paid on behalf of the Vendors
or for or on behalf of The said Company and ZHONGXING shall be refunded by
the Vendors to the Purchaser or its nominee(s) free of interest thereon
and upon such refund this Agreement shall be deemed terminated and of no
further effect and neither of the parties shall have any claim against the
other PROVIDED THAT all documents received by the Purchaser shall have by
then returned by the Purchaser to the
Vendors.
|
7.
|
Outgoings
|
|
All
rent, assessment charges, rates, taxes and other outgoings if any payable
by The said Company and ZHONGXING on or before the Completion Date shall
be borne and paid for by the Vendors PROVIDED ALWAYS that the Vendors
shall indemnify the Purchaser or its assigns in respect of any penalties
and damages which may be arise as a result of any late payments or default
in payment in respect of such rent, assessment charges, rates, taxes or
other outgoings.
|
8.
|
Vendors’
Indemnity
|
8.1
|
If
there shall be any breach by the Vendors of any warranty, guarantee,
undertaking and agreement herein contained, then the Purchaser shall be
entitled to be indemnified by the Vendors in respect of any loss resulting
from such breach.
|
8.2
|
Without
prejudice to the generality of the foregoing, if the effect of any such
breach is that The said Company and ZHONGXING has incurred or incurs any
liability or contingent liability which would not have been incurred had
there been no such breach, then the Vendors shall make good to The said
Company and ZHONGXING the amount of the loss occasioned by such liability
by payment in cash to The said Company and
ZHONGXING.
|
9.
|
Representations
and Warranties
|
9.1
|
The
Vendors hereby jointly and severally represent, warrant and undertake to
and with the Purchaser as follows
:-
|
|
(a)
|
None
of the Sale Shares which are registered in the names of the Vendors are
subject to any option, charge, lien or encumbrances and the Vendors are
the beneficial owners thereof ;
|
|
(b)
|
The
accounts of the said Company and ZHONGXING as at the 31
st
July 2007 gave a true and fair view of the financial position of The said
Company and ZHONGXING.
|
|
(c)
|
The
said Company and ZHONGXING are not involved in any dispute with any
revenue authorities concerning any matter likely to affect in any way the
liability ( whether accrued, contingent or future) of The said Company and
ZHONGXING to taxation or other sum imposed, charged, levied or payable
under the provision of any taxation
statute.
|
|
(d)
|
The
said Company and ZHONGXING have not prior to the date hereof issued or
agreed to issue any shares or given or agreed to give any option in
respect of any shares nor issued or agreed to issue or give any option in
respect of any debentures or other
securities.
|
|
(e)
|
There
are no existing service agreements or contracts between The said Company
and ZHONGXING and any directors
thereof.
|
|
(f)
|
The
said Company and ZHONGXING are not engaged in any litigation or
arbitration proceedings and no such proceedings and no prosecution are
pending or threatened against the said Company and the Vendors know of no
facts or matters likely to give rise thereto and that the said Company is
not in default in respect of any obligations whether contractual statutory
or municipal;
|
|
(g)
|
The
said Company and ZHONGXING have no subsidiaries other than the
subsidiaries disclosed hereof. (Hereinafter called the subsidiaries
attached hereof marked appendix
(D))
|
|
(h)
|
The
said Company and ZHONGXING have no mortgages liens other encumbrances
secured over any of their properties and assets other than the one
disclosed in the disclosure annexed hereto as Appendix
(G).
|
|
(i)
|
The
said Company and ZHONGXING have in relation to each of their employee (and
in so far as relevant to each of its former employees) complied in all
material respects with all obligations imposed on it by all statutes,
regulations and codes of conduct and practice relevant to the relations
between them and their employees.
|
10.
|
Default by
Purchaser
|
11.
|
Force
Majeure
|
12.
|
Time
of Essence
|
13.
|
Notice
|
|
Every
notice, request, consent, demand or other communication under this
Agreement shall be given or made in writing shall be sufficiently served
on the party to whom it is addressed if it is left at or sent by
registered post or telegram to the address given above or to the place of
business for the time or to such address as one party hereto may from time
to time notify in writing to the other party hereto. A notice sent by
registered post or facsimile shall be deemed to have served at the time
when it ought in due course of post or transmission to have been
received.
|
14.
|
Governing
Law
|
|
This
Agreement shall be governed by and construed in accordance with the Laws
of Macau SAR.
|
15.
|
Modifications
|
16.
|
Severability
|
17.
|
This Agreement the
Sole Agreement
|
18.
|
Costs
|
19.
|
Successors
Bound
|
Signed
by THE VENDORS
|
)
|
|
in
the presence of :-
|
)
|
|
)
|
||
)
|
(signed)
|
|
)
|
(Tong
Mo Ping)
|
|
)
|
_______________________
|
|
)
|
||
)
|
)
|
||
)
|
(signed)
|
|
)
|
(Tong
Mo Ching)
|
|
)
|
_______________________
|
|
)
|
THE
PURCHASER
|
)
|
|
)
|
(Common
Seal of
|
|
)
|
A
Power Agro Agriculture Development Inc.
|
|
(Company
No. C3048-1974
|
)
|
affixed)
|
was
hereunto affixed in the
|
)
|
|
presence
of :-
|
)
|
|
)
|
(signed)
|
|
(Solomon
YK Lee)
|
||
_____________________
|
||
DIRECTOR
|
1.
|
The
Vendors are the legal and beneficial owners of Macau Eiji Limitada
(Company No. 22347 SO) (hereinafter referred to as “the said Company”), a
company incorporated in Macau SAR, People’s Republic of China with limited
liability and having its principal place of business at Building A, First
floor, No.51-53 B Pi La Street, Macau. Mr. Iong Kun Lok
and Mr. Lau Wai Yip each has (16,500) and (13,500) ordinary shares
respectively of Macau Dollar One (M$1) only each fully paid up
representing (30,000) shares collectively, (hereinafter collectively
referred to as “the Sale Shares”) aggregating to One Hundred Percentum
(100%) of the issued and paid-up capital of the said
Company.
|
2.
|
The
said Company is the legal and beneficial owners of 75% equity interest in
a Hylocereus Undatus flowers (HU flowers) plantation company in China
known as Hang Sing Tai Agriculture Development Co. Limited (Chinese
Business Register No. 4407852000202) (hereinafter called “HST”), HST is
duly established and incorporated in Enping, Guangdong, China with limited
liability and a registered capital of RMB 100 thousand, having its
registered address at No. 1-3 First Floor, Jiang Zhou Shui Zha Office
Building, No. 19 Jiang Zhou Yu Jiang Jun Road, Juntang Town, Enping City,
Guangdong Province, China. Mr.
Fang Xiang Jun
is the
legal representative of HST and carrying on the business of HU flowers
plantation. (hereinafter referred to as “Principal
Activities”).
|
3.
|
HST
is applying to become a sino-foreign joint venture enterprise, (herein
after referred to as SFJVE), such that corresponding Joint Venture
Agreement (JVA) between the said Company and HST and the Memorandum of
Article and Association of the SFJVE (hereinafter called the M&A) have
been executed and agreed upon in preparation together with the aforesaid
submission. (A copy of each of the said JVA and M&A are annexed hereto
and marked appendix (X) and Appendix (Y)
respectively)
|
4.
|
The
said Company has no other business activity except the aforesaid holding
of 75% equity interest in HST.
|
5.
|
The
Purchaser is a company quoted on the OTCBPS of NASDAQ, the United States
of America with Ticker Symbol reference of
“APWA”.
|
6.
|
As
at 5
th
September 2007, the financial position of the said Company, as shown in
its management account, is owning 75% equity stake in HST which is
representing its only asset, whereas HST’s Financial Management Account
2007 is evidencing Net Assets of NO LESS THAN United States Dollars (Six
Million Three hundred and Ninety Thousand) (US$6,390,000.00) as at 31
st
July2007 excluding the values of the new blocks of land measuring up to
500 Mu (hereinafter referred to as New Land) and based on the exchange
rate of US$1 to RMB7.75 (hereinafter referred to as “the HST
Accounts”). Copies of the HST’s Management Account 2007
and reference of the New Land are annexed hereto and marked as Appendix
(C1), Appendix (C2) respectively.)
|
7.
|
The
Vendors have agreed to sell and the Purchaser has agreed to purchase the
Sale Shares free from all encumbrances with all rights to dividends and
other distribution declared made and paid after the date of this Agreement
upon the terms and conditions hereinafter
appearing.
|
1.
|
Definitions
and Interpretations
|
|
(a)
|
“Purchaser” includes
its respective nominees and successors in title
;
|
|
(b)
|
“Vendors” include
their respective successors in title
;
|
|
(c)
|
“The
Completion Date” shall refer to the date of full payment of all monies and
shares payable by the Purchaser herein provided
;
|
|
(d)
|
“US$”
means United States Dollars, the currency of the United States of America
;
|
|
(e)
|
All
undertakings, agreements, terms, warranties and representations expressed
to be made by two or more parties hereto shall be deemed to be made by
them and be binding on them jointly and severally
;
|
|
(f)
|
Reference
to natural persons shall be deemed to include body corporate and the
plural number shall include the singular number and vice versa
;
|
|
(g)
|
Words
importing the masculine gender shall be deemed to include the feminine and
neuter gender ;
|
|
(h)
|
The
headings are inserted for convenience of reference only and shall not
affect the interpretation of this Agreement hereof
;
|
|
(i)
|
Where
an act required to be done within a specified number of days after or from
a specified date, the period is inclusive of and begins to run from the
date so specified ;
|
|
(j)
|
A
period of a month from the happening of an event or the doing of an act or
thing shall be deemed to be inclusive of the day on which the event
happens or the act or thing is or was required to be done
;
|
|
(k)
|
The
Appendices hereto shall be taken, read and construed as an essential part
of this Agreement ;
|
2.
|
Agreement For Sale and
Purchase
|
2.1
|
Purchase Consideration
and Part Payment
|
2.2
|
Payment of Balance
Purchase Price
|
2.3
|
Purchaser’s Right
after payment of the Part
Payment
|
3.
|
Due
Diligence
|
3.1
|
Purchaser's Rights to
Due Diligence
|
|
(i)
|
make
such reasonable enquiries and to attend at the offices of the
said Company and HST;
|
|
(ii)
|
a
due diligence investigation of on the profit records of the said Company
and HST.
|
|
(iii)
|
a
due diligence investigation of the profit forecast and projection of the
said Company’s and HST’s operations by the Purchaser and its auditors
;
|
|
(iv)
|
obtain
current valuation of HST’s properties to confirm that the Net Asset Value
of the HST is in accordance with records stated in HST’s Management
Account as at 31
st
July 2007.
|
|
(v)
|
follow
up and carry on the with the application of the Sino joint
venture of HST (SJVHST) and the Purchaser shall proceed with
matters related to the SJVHST as a foreign Joint Venture Partner to obtain
the right to repatriate its share of profits and investment and investment
interest earned and or invested in the SJVHST in the People's Republic of
China.
|
3.2
|
Vendors'
Obligations
|
3.3
|
Purchaser's
Entitlement to claim
|
|
(i)
|
the
Purchaser is unable to make reasonable enquiries or attend at the office
of The said Company and HST or carry out the due diligence investigations
due to no fault of the Purchaser;
or
|
|
(i)
|
it
is found, as a result of the due diligence investigations or otherwise,
that any of the Representations and Warranties contained in Clause 11 are
untrue, misleading or incorrect or have not been fully carried out in any
material respect, or
|
|
(iii)
|
in
any event of any matter or thing arising or becoming known or being
notified to the Purchaser which is materially inconsistent with any of the
Representations and Warranties contained in Clause 11
;
|
4.
|
Delivery of
Documents
|
4.1
|
Simultaneously
with the execution of this Agreement, the Vendors shall deliver or cause
to be delivered the following documents to the
Purchaser:
|
|
(a)
|
The
transfer forms in respect of the Sale Shares duly executed by the Vendors
in favour of the Purchaser and/or the Purchaser's nominee(s) (hereinafter
called “the said Transfers”) together with all the share certificates in
respect of the Sale Shares and all other relevant documents necessary for
effecting the transfer of the Sale Shares to the Purchaser and or the
Purchaser's nominee(s).
|
|
(b)
|
The
letters of resignations of all the existing directors from their
respective offices in the said Company each acknowledging that they have
no claims against the said Company for compensation or otherwise;
and
|
|
(c)
|
Resolutions
of the Board of Directors of the said Company in accordance with the
Memorandum and Articles of Association of the said Company approving
:-
|
|
(i)
|
the
sale and transfer of the Sale Shares from the Vendors to the Purchaser or
its nominee or nominees and the registration of such transfer ;
and
|
|
(ii)
|
the
appointment of such persons as the Purchaser may nominate as the new
Directors of the said Company ;
|
|
(d)
|
the
common seal and certificate of incorporation of the said
Company.
|
5.
|
Completion
|
6.
|
Non-Registration of
the Transfer of the Sale
Shares
|
7.
|
Outgoings
|
8.
|
Vendors’
Indemnity
|
8.1
|
If
there shall be any breach by the Vendors of any warranty, guarantee,
undertaking and agreement herein contained, then the Purchaser shall be
entitled to be indemnified by the Vendors in respect of any loss resulting
from such breach.
|
8.2
|
Without
prejudice to the generality of the foregoing, if the effect of any such
breach is that The said Company and HST has incurred or incurs any
liability or contingent liability which would not have been incurred had
there been no such breach, then the Vendors shall make good to The said
Company and HST the amount of the loss occasioned by such liability by
payment in cash to The said Company and
HST.
|
9.
|
Representations
and Warranties
|
9.1
|
The
Vendors hereby jointly and severally represent, warrant and undertake to
and with the Purchaser as follows
:-
|
|
(a)
|
None
of the Sale Shares which are registered in the names of the Vendors are
subject to any option, charge, lien or encumbrances and the Vendors are
the beneficial owners thereof ;
|
|
(b)
|
The
accounts of The said Company and HST as at the 31
st
July 2007 gave a true and fair view of the financial position of The said
Company and HST.
|
|
(c)
|
The
said Company and HST are not involved in any dispute with any revenue
authorities concerning any matter likely to affect in any way the
liability ( whether accrued, contingent or future) of The said Company and
HST to taxation or other sum imposed, charged, levied or payable under the
provision of any taxation statute.
|
|
(d)
|
The
said Company and HST have not prior to the date hereof issued or agreed to
issue any shares or given or agreed to give any option in respect of any
shares nor issued or agreed to issue or give any option in respect of any
debentures or other securities.
|
|
(e)
|
There
are no existing service agreements or contracts between The said Company
and HST and any directors thereof.
|
|
(f)
|
The
said Company and HST are not engaged in any litigation or arbitration
proceedings and no such proceedings and no prosecution are pending or
threatened against the said Company and the Vendors know of no facts or
matters likely to give rise thereto and that the said Company is not in
default in respect of any obligations whether contractual statutory or
municipal;
|
|
(g)
|
The
said Company and HST have no subsidiaries other than the subsidiaries
disclosed hereof. (Hereinafter called the subsidiaries attached hereof
marked appendix (D))
|
|
(h)
|
The
said Company and HST have no mortgages liens other encumbrances secured
over any of their properties and assets other than the one disclosed in
the disclosure annexed hereto as Appendix
(G).
|
|
(i)
|
The
said Company and HST have in relation to each of their employee (and in so
far as relevant to each of its former employees) complied in all material
respects with all obligations imposed on it by all statutes, regulations
and codes of conduct and practice relevant to the relations between them
and their employees.
|
10.
|
Default by
Purchaser
|
11.
|
Force
Majeure
|
12.
|
Time of
Essence
|
13.
|
Notice
|
14.
|
Governing
Law
|
15.
|
Modifications
|
16.
|
Severability
|
17.
|
This Agreement the
Sole Agreement
|
18.
|
Costs
|
19.
|
Successors
Bound
|
Signed
by THE VENDORS
|
)
|
|||
in
the presence of :-
|
)
|
|||
)
|
||||
)
|
(signed)
|
|||
)
|
(Iong
Kun Lok)
|
|||
)
|
||||
)
|
||||
)
|
||||
)
|
||||
)
|
(signed)
|
|||
)
|
(Lau
Wai Yip)
|
|||
)
|
||||
)
|
1.
|
The
Vendors are the legal and beneficial owners of Tri-Way Industries Limited
(Company No.1004146) (hereinafter referred to as “the said
Company”), a company incorporated in Hong Kong SAR, People’s Republic of
China with limited liability and having its principal place of business at
Rm 1613, 16/F, Tai Yau Building, 181 Johnston Road, Waichai Hong Kong. Mr.
HUNG PANG CHEUNG BENNY and Miss. CHAN YUEN YI NORA each has (5,000) and
(5,000)ordinary shares respectively of Hong Kong Dollar One (HK$1) only
each fully paid up representing 10,000 shares collectively, (hereinafter
collectively referred to as “the Sale Shares”) aggregating to One Hundred
Percent (100%) of the issued and paid-up capital of the said
Company.
|
2.
|
The
said Company is the legal and beneficial owners of 30% equity interest in
a Turf plantation and “provision of related engineering service” company
in China known as
Hu Nan
Tian Qian Ke Ji Kai Fa You Xian Gong Si
(hereinafter called“ TQST
”) (Business Register No. 4301002017685), TQST is duly established and
incorporated in Hunan China with limited liability and a registered
capital of RMB10 million, having its registered address at Hu Nan Sheng
Chang Sha Shi Fu Rong Qu Gao Xin Ji Shu Chan Ye Kai Fa Qu Long Ping Gao Ke
Ji Yuan Guan Wei Hui Ban Gong Lou Fu Lou 2 Lou , and Mr.
Han Bing Xin
is the
legal representative of TQST that is carrying on the business of Turf
plantation and the provision of related engineering service. (hereinafter
referred to as “Principal
Activities”).
|
3.
|
TQST
is applying to become a sino-foreign joint venture enterprise, (herein
after referred to as SFJVE), such that corresponding Joint Venture
Agreement (JVA) between the said Company and TQST and the Memorandum of
Article and Association of the SFJVE (hereinafter called the M&A) have
been executed and agreed upon in preparation together with the aforesaid
submission. (A copy of each of the said JVA and M&A are annexed hereto
and marked appendix (X) and Appendix (Y)
respectively)
|
4.
|
The
said Company has no other business activity except the aforesaid holding
of 30% equity interest in TQST.
|
5.
|
The
Purchaser is a company quoted on the OTCBPS of NASDAQ, the United States
of America with Ticker Symbol reference of
“APWA”.
|
6.
|
As
at 5
th
September 2007, the financial position of the said Company, as shown in
its management account, is owning 30% equity stake in TQST which is
representing its only asset, whereas TQST’s Financial Audited Report 2006
and Management Account 2007 is evidencing Net Assets of NO LESS THAN
United States Dollars (Two Million Six hundred Thousand) (US$2,600,000.00)
as at 31
st
.
December 2006 and of United State Dollars ( Three million )
(US$3,000,000.00) as at 31
st
July 2007 respectively excluding the values of the new blocks of land
measuring up to 1,000 Mu (hereinafter referred to as New Land) and based
on the exchange rate of US$1 to RMB7.75 (hereinafter referred to as “the
TQST Accounts”). Copies of the TQST’s Audited Report 2006
and Management Account 2007 and reference of the New Land are annexed
hereto and marked as Appendix (C1), Appendix (C2) and Appendix (C3)
respectively.)
|
7.
|
The
Vendors have agreed to sell and the Purchaser has agreed to purchase the
Sale Shares free from all encumbrances with all rights to dividends and
other distribution declared made and paid after the date of this Agreement
upon the terms and conditions hereinafter
appearing.
|
1.
|
Definitions
and Interpretations
|
|
(a)
|
“Purchaser” includes
its respective nominees and successors in title
;
|
|
(b)
|
“Vendors” include
their respective successors in title
;
|
|
(c)
|
“The
Completion Date” shall refer to the date of full payment of all monies and
shares payable by the Purchaser herein provided
;
|
|
(d)
|
“US$”
means United States Dollars, the currency of the United States of America
;
|
|
(e)
|
All
undertakings, agreements, terms, warranties and representations expressed
to be made by two or more parties hereto shall be deemed to be made by
them and be binding on them jointly and severally
;
|
|
(f)
|
Reference
to natural persons shall be deemed to include body corporate and the
plural number shall include the singular number and vice versa
;
|
|
(g)
|
Words
importing the masculine gender shall be deemed to include the feminine and
neuter gender ;
|
|
(h)
|
The
headings are inserted for convenience of reference only and shall not
affect the interpretation of this Agreement hereof
;
|
|
(i)
|
Where
an act required to be done within a specified number of days after or from
a specified date, the period is inclusive of and begins to run from the
date so specified ;
|
|
(j)
|
A
period of a month from the happening of an event or the doing of an act or
thing shall be deemed to be inclusive of the day on which the event
happens or the act or thing is or was required to be done
;
|
|
(k)
|
The
Appendices hereto shall be taken, read and construed as an essential part
of this Agreement ;
|
2.
|
Agreement For Sale and
Purchase
|
2.1
|
Purchase Consideration
and Part Payment
|
2.2
|
Payment of Balance
Purchase Price
|
2.3
|
Purchaser’s Right
after payment of the Part
Payment
|
3.
|
Due
Diligence
|
3.1
|
Purchaser's Rights to
Due Diligence
|
|
(i)
|
make
such reasonable enquiries and to attend at the offices of the
said Company and TQST;
|
|
(ii)
|
a
due diligence investigation of on the profit records of the said Company
and TQST.
|
|
(iii)
|
a
due diligence investigation of the profit forecast and projection of the
said Company’s and TQST’s operations by the Purchaser and its auditors
;
|
|
(iv)
|
obtain
current valuation of TQST’s properties to confirm that the Net Asset Value
of the TQST is in accordance with records stated in TQST’s Management
Account as at 31
st
July 2007.
|
|
(v)
|
follow
up and carry on the with the application of the Sino joint
venture of TQST (SJVTQST), and the Purchaser shall proceed with
matters related to the SJVTQST as a foreign Joint Venture Partner to
obtain the right to repatriate its share of profits and investment and
investment interest earned and or invested in the SJVTQST in the People's
Republic of China.
|
3.2
|
Vendors'
Obligations
|
3.3
|
Purchaser's
Entitlement to claim
|
|
(i)
|
the
Purchaser is unable to make reasonable enquiries or attend at the office
of The said Company and TQST or carry out the due diligence investigations
due to no fault of the Purchaser;
or
|
|
(i)
|
it
is found, as a result of the due diligence investigations or otherwise,
that any of the Representations and Warranties contained in Clause 11 are
untrue, misleading or incorrect or have not been fully carried out in any
material respect, or
|
|
(iii)
|
in
any event of any matter or thing arising or becoming known or being
notified to the Purchaser which is materially inconsistent with any of the
Representations and Warranties contained in Clause 11
;
|
4.
|
Delivery of
Documents
|
|
(a)
|
The
transfer forms in respect of the Sale Shares duly executed by the Vendors
in favour of the Purchaser and/or the Purchaser's nominee(s) (hereinafter
called “the said Transfers”) together with all the share certificates in
respect of the Sale Shares and all other relevant documents necessary for
effecting the transfer of the Sale Shares to the Purchaser and or the
Purchaser's nominee(s).
|
|
(b)
|
The
letters of resignations of all the existing directors from their
respective offices in the said Company each acknowledging that they have
no claims against the said Company for compensation or otherwise;
and
|
|
(c)
|
Resolutions
of the Board of Directors of the said Company in accordance with the
Memorandum and Articles of Association of the said Company approving
:-
|
|
(i)
|
the
sale and transfer of the Sale Shares from the Vendors to the Purchaser or
its nominee or nominees and the registration of such transfer ;
and
|
|
(ii)
|
the
appointment of such persons as the Purchaser may nominate as the new
Directors of the said Company ;
|
|
(d)
|
the
common seal and certificate of incorporation of the said
Company.
|
5.
|
Completion
|
6.
|
Non-Registration of
the Transfer of the Sale
Shares
|
7.
|
Outgoings
|
8.
|
Vendors’
Indemnity
|
8.1
|
If
there shall be any breach by the Vendors of any warranty, guarantee,
undertaking and agreement herein contained, then the Purchaser shall be
entitled to be indemnified by the Vendors in respect of any loss resulting
from such breach.
|
8.2
|
Without
prejudice to the generality of the foregoing, if the effect of any such
breach is that The said Company and TQST has incurred or incurs any
liability or contingent liability which would not have been incurred had
there been no such breach, then the Vendors shall make good to The said
Company and TQST the amount of the loss occasioned by such liability by
payment in cash to The said Company and
TQST.
|
9.
|
Representations
and Warranties
|
9.1
|
The
Vendors hereby jointly and severally represent, warrant and undertake to
and with the Purchaser as follows
:-
|
|
(a)
|
None
of the Sale Shares which are registered in the names of the Vendors are
subject to any option, charge, lien or encumbrances and the Vendors are
the beneficial owners thereof ;
|
|
(b)
|
The
accounts of The said Company and TQST as at the 31
st
July 2007 gave a true and fair view of the financial position of The said
Company and TQST.
|
|
(c)
|
The
said Company and TQST are not involved in any dispute with any revenue
authorities concerning any matter likely to affect in any way the
liability ( whether accrued, contingent or future) of The said Company and
TQST to taxation or other sum imposed, charged, levied or payable under
the provision of any taxation
statute.
|
|
(d)
|
The
said Company and TQST have not prior to the date hereof issued or agreed
to issue any shares or given or agreed to give any option in respect of
any shares nor issued or agreed to issue or give any option in respect of
any debentures or other
securities.
|
|
(e)
|
There
are no existing service agreements or contracts between The said Company
and TQST and any directors thereof.
|
|
(f)
|
The
said Company and TQST are not engaged in any litigation or arbitration
proceedings and no such proceedings and no prosecution are pending or
threatened against the said Company and the Vendors know of no facts or
matters likely to give rise thereto and that the said Company is not in
default in respect of any obligations whether contractual statutory or
municipal;
|
|
(g)
|
The
said Company and TQST have no subsidiaries other than the subsidiaries
disclosed hereof. (Hereinafter called the subsidiaries attached hereof
marked appendix (D))
|
|
(h)
|
The
said Company and TQST have no mortgages liens other encumbrances secured
over any of their properties and assets other than the one disclosed in
the disclosure annexed hereto as Appendix
(G).
|
|
(i)
|
The
said Company and TQST have in relation to each of their employee (and in
so far as relevant to each of its former employees) complied in all
material respects with all obligations imposed on it by all statutes,
regulations and codes of conduct and practice relevant to the relations
between them and their employees.
|
10.
|
Default by
Purchaser
|
11.
|
Force
Majeure
|
12.
|
Time of
Essence
|
13.
|
Notice
|
14.
|
Governing
Law
|
15.
|
Modifications
|
16.
|
Severability
|
17.
|
This Agreement the
Sole Agreement
|
18.
|
Costs
|
19.
|
Successors
Bound
|
Signed
by THE VENDORS
|
)
|
|||
in
the presence of :-
|
)
|
|||
)
|
||||
)
|
(signed)
|
|||
)
|
(HUNG
PANG CHEUNG BENNY)
|
|||
)
|
||||
)
|
||||
)
|
||||
)
|
||||
)
|
(signed)
|
|||
)
|
(CHAN
YUEN YI NORA)
|
|||
)
|
||||
)
|
1.
|
The
Vendor is the legal and beneficial owners of 30% equity stake of
Hu Nan Tian Qian Ke Ji Kai Fa
You Xian Gong Si
(Chinese Business Register No. 4301002017685),
(hereinafter referred to as “the said Company”), a company incorporated in
People’s Republic of China with limited liability and having its principal
place of business at (Hu Nan Sheng Chang Sha Shi Fu Rong Qu Gao Xin Ji Shu
Chan Ye Kai Fa Qu Long Ping Gao Ke Ji Yuan Guan Wei Hui Ban Gong Lou Fu
Lou 2 Lou) and with a fully paid up registered capital of RMB10 million
having main business activities in Turf Plantations and related
engineering services. (herein after referred to as “Principal
Activities”). The Vendor’s ownership in the said company is aggregating to
Thirty Percent (30%) of the fully paid-up Registered capital of the said
Company (hereinafter referred to as “the Sale 30% Equity”)
.
|
2.
|
The
Purchaser is a businessman having multiple business interests in P.R.
China.
|
3.
|
The
financial position of the said Company, as shown in its Management account
supported by an Audited Report prepared by a firm of Public Chartered
Accountants is evidencing Net Assets of no less than United States Dollars
Three Million and Twenty Six Thousand (US$3,680,000.00) as at 30th.
September 2008 and Retained Earning of United State Dollars One Million
and five hundred thousand (US$ 1,500,000.00) based on the exchange rate of
US$1 to RMB6.80 (hereinafter referred to as “the TQST
Accounts”). Copies of the TQST’s Audited Report at
30
th
September 2008 is annexed hereto and marked as Appendix
(C1).
|
4.
|
The
Vendors have agreed to sell and the Purchaser has agreed to purchase the
Sale of the 30% Equity free from all encumbrances with all rights to
dividends and other distribution declared made and paid after the date of
this Agreement upon the terms and conditions hereinafter
appearing.
|
1.
|
Definitions
and Interpretations
|
(a)
|
“Purchaser” includes
its respective nominees and successors in title
;
|
(b)
|
“Vendors” include
their respective successors in title
;
|
|
(c)
|
“The
Completion Date” shall refer to the date of full payment of all monies and
shares payable by the Purchaser herein provided
;
|
|
(d)
|
“US$”
means United States Dollars, the currency of the United States of America
;
|
|
(e)
|
All
undertakings, agreements, terms, warranties and representations expressed
to be made by two or more parties hereto shall be deemed to be made by
them and be binding on them jointly and severally
;
|
|
(f)
|
Reference
to natural persons shall be deemed to include body corporate and the
plural number shall include the singular number and vice versa
;
|
|
(g)
|
Words
importing the masculine gender shall be deemed to include the feminine and
neuter gender ;
|
|
(h)
|
The
headings are inserted for convenience of reference only and shall not
affect the interpretation of this Agreement hereof
;
|
|
(i)
|
Where
an act required to be done within a specified number of days after or from
a specified date, the period is inclusive of and begins to run from the
date so specified ;
|
|
(j)
|
A
period of a month from the happening of an event or the doing of an act or
thing shall be deemed to be inclusive of the day on which the event
happens or the act or thing is or was required to be done
;
|
|
(k)
|
The
Appendices hereto shall be taken, read and construed as an essential part
of this Agreement ;
|
2.
|
Agreement For The Sale
and Purchase
|
2.1
|
Purchase Consideration
and Part Payment
|
2.2
|
Payment of Balance
Purchase Price
|
|
The
balance of the Purchase Price amounting to
United States Dollars Four
Million Four Hundred Twenty Six Thousand and Four Hundred and Seventy
(US$4,426,470.00) only (hereinafter called "the Balance Purchase
Price”) shall be settled within Sixty (60) days from the date
hereof (hereinafter called “the Completion
Date”).
|
2.3
|
Purchaser’s Right
after payment of the Part
Payment
|
|
After
the Purchaser has paid the Balance Payment referred to in Clause 2.2
hereof, the Purchaser shall become the owner of the 30% equity of the said
Company (hereinafter referred to as Ownership) and the Vendor shall have
no further claim or entitlement to the said company
thereafter.
|
3.
|
Due
Diligence
|
3.1
|
Purchaser's Rights to
Due Diligence
|
|
(i)
|
make
such reasonable enquiries and to attend at the offices of the
said Company.
|
|
(ii)
|
a
due diligence investigation of on the profit records of the said
Company.
|
|
(iii)
|
a
due diligence investigation of the profit forecast and projection of the
said Company’s operations by the Purchaser and its auditors
;
|
|
(iv)
|
obtain
current valuation of Said Company’s properties to confirm that the Net
Asset Value of the Said Company is in accordance with records stated in
the Said Company’s Audited Report as at 30th September
2008.
|
3.2
|
Vendors'
Obligations
|
3.3
|
Purchaser's
Entitlement to claim
|
(i)
|
the
Purchaser is unable to make reasonable enquiries or attend at the office
of The said Company and TQST or carry out the due diligence investigations
due to no fault of the Purchaser;
or
|
(i)
|
it
is found, as a result of the due diligence investigations or otherwise,
that any of the Representations and Warranties contained in Clause 11 are
untrue, misleading or incorrect or have not been fully carried out in any
material respect, or
|
(iii)
|
in
any event of any matter or thing arising or becoming known or being
notified to the Purchaser which is materially inconsistent with any of the
Representations and Warranties contained in Clause 9 hereof
;
|
4.
|
Delivery of
Documents
|
|
(a)
|
The
transfer forms in respect of the Sale 30% Equity duly executed by the
Vendors in favour of the Purchaser and/or the Purchaser's nominee(s)
(hereinafter called “the said Transfers”) together with all other relevant
documents necessary for effecting the transfer of the Sale 30% Equity to
the Purchaser and or the Purchaser's
nominee(s).
|
|
(b)
|
The
letters of resignations of all the existing directors from their
respective offices in the said Company each acknowledging that they have
no claims against the said Company for compensation or
otherwise;
|
5.
|
Completion
|
The
Completion of this Agreement shall take place on the Completion Date,
whereupon the Purchaser shall issue the Purchaser’s Consideration Shares
in the name of the Vendors and/or their nominee(s) as the Vendors shall
direct and shall deliver the share certificates to the
Vendors.
|
6.
|
Non-Registration of
the Transfer of the Sale
Shares
|
|
In
the event that the transfer of the Sale Shares cannot be registered in
favour of the Purchaser or its nominee(s) free from encumbrances for any
reason whatsoever, all monies received by or paid on behalf of the Vendors
or for or on behalf of The said Company and TQST shall be refunded by the
Vendors to the Purchaser or its nominee(s) free of interest thereon and
upon such refund this Agreement shall be deemed terminated and of no
further effect and neither of the parties shall have any claim against the
other PROVIDED THAT all documents received by the Purchaser shall have by
then returned by the Purchaser to the
Vendors.
|
7.
|
Outgoings
|
|
The
Vendor has on February 2008 deposited and advanced a sum of US$95,000. to
the Said Company, the Vendor hereby agrees to write off this amount
without any further claim to the Said Company such that all rent,
assessment charges, rates, taxes and other outgoings if any payable by The
said Company on or before the Completion Date shall be borne and paid for
by the Purchaser PROVIDED ALWAYS that the Purchaser shall indemnify the
Vendor or its assigns in respect of any penalties and damages which may be
arise as a result of any late payments or default in payment in respect of
such rent, assessment charges, rates, taxes or other
outgoings.
|
8.
|
Vendors’
Indemnity
|
8.1
|
If
there shall be any breach by the Vendors of any warranty, guarantee,
undertaking and agreement herein contained, then the Purchaser shall be
entitled to be indemnified by the Vendors in respect of any loss resulting
from such breach.
|
8.2
|
Without
prejudice to the generality of the foregoing, if the effect of any such
breach is that The said Company has incurred or incurs any liability or
contingent liability which would not have been incurred had there been no
such breach, then the Vendors shall make good to The said Company the
amount of the loss occasioned by such liability by payment in cash to The
said Company.
|
9.
|
Representations
and Warranties
|
9.1
|
The
Vendors hereby jointly and severally represent, warrant and undertake to
and with the Purchaser as follows
:-
|
|
(a)
|
None
of the Sale 30% Equity which are registered in the names of the Vendors
are subject to any option, charge, lien or encumbrances and the Vendors
are the beneficial owners thereof ;
|
|
(b)
|
The
accounts of The said Company as at the 30th September 2008 gave a true and
fair view of the financial position of The said Company bearing normal
operational financial changes and minimal consequences that will cause
material adverse effect to the Said Company financially calculating to the
Completion Date..
|
|
(c)
|
The
said Company is not involved in any dispute with any revenue authorities
concerning any matter likely to affect in any way the liability ( whether
accrued, contingent or future) of The said Company to taxation or other
sum imposed, charged, levied or payable under the provision of any
taxation statute.
|
|
(d)
|
The
said Company have not prior to the date hereof issued or agreed to issue
any shares or equity stake or given or agreed to give any option in
respect of any shares or equity stake nor issued or agreed to issue or
give any option in respect of any debentures or other
securities.
|
|
(e)
|
There
are no existing service agreements or contracts between The said Company
and any of the Vendor’s nominees action as the directors of the Said
Company thereof.
|
|
(f)
|
The
said Company is not engaged in any litigation or arbitration proceedings
and no such proceedings and no prosecution are pending or threatened
against the said Company and the Vendors know of no facts or matters
likely to give rise thereto and that the said Company is not in default in
respect of any obligations whether contractual statutory or
municipal;
|
|
(g)
|
The
said Company have no subsidiaries other than the subsidiaries disclosed
hereof.
|
|
(h)
|
The
said Company have no mortgages liens other encumbrances secured over any
of their properties and assets other than the one disclosed in the
Financial Statements of the Said
Company.
|
|
(i)
|
The
said Company has in relation to each of their employee (and in so far as
relevant to each of its former employees) complied in all material
respects with all obligations imposed on it by all statutes, regulations
and codes of conduct and practice relevant to the relations between them
and their employees.
|
10.
|
Default by
Purchaser
|
11.
|
Force
Majeure
|
12.
|
Time of
Essence
|
13.
|
Notice
|
|
Every
notice, request, consent, demand or other communication under this
Agreement shall be given or made in writing shall be sufficiently served
on the party to whom it is addressed if it is left at or sent by
registered post or telegram to the address given above or to the place of
business for the time or to such address as one party hereto may from time
to time notify in writing to the other party hereto. A notice sent by
registered post or facsimile shall be deemed to have served at the time
when it ought in due course of post or transmission to have been
received.
|
14.
|
Governing
Law
|
|
This
Agreement shall be governed by and construed in accordance with the Laws
of Republic of People of China.
|
15.
|
Modifications
|
16.
|
Severability
|
17.
|
This Agreement the
Sole Agreement
|
18.
|
Costs
|
19.
|
Successors
Bound
|
(signed)
|
(signed)
|
|
|
|
|
DIRECTOR
|
DIRECTOR
|
Signed
by THE Purchaser )
|
|
(signed)
|
|
|
|
Shan
De Zhang:-
|
FILED
|
IN
THE OFFICE OF THE
|
SECRETARY
OF STATE OF THE
|
STATE
OF NEVADA
|
OCT
1 - 1974
|
WM.
SWACKHAMER-SECRETARY OF STATE
|
|
No.
3048 - 74
|
Directors
|
Address
|
|
D.
Allen Penick, Jr.
|
3290
Plumas Street #116
|
|
Reno,
Nevada 89502
|
||
Robin
E. Hendrickson
|
1450
East Second Street
|
|
Reno,
Nevada 89502
|
||
Norman
A. Lamb
|
P.O.
Box 148
|
|
|
Vallejo,
California
94590
|
D.
Allen Penick, Jr.
|
3290
Plumas Street #116
|
|
Reno,
Nevada 89502
|
||
Robin
E. Hendrickson
|
1450
East Second Street
|
|
Reno,
Nevada 89502
|
||
Norman
A. Lamb
|
P.O.
Box 148
|
|
Vallejo,
California 94590
|
/s/ D. ALLEN PENICK, JR.
|
D.
ALLEN PENICK, JR.
|
/s/ ROBIN E. HENDRICKSON
|
ROBIN
E. HENDRICKSON
|
/s/ NORMAN A. LAMB
|
NORMAN
A. LAMB
|
STATE
OF NEVADA
|
) | |
|
) ss. | |
COUNTY
0F WASHOE
|
) |
/s/
RUTH B. AXTELL
|
Notary
Public in and for said
County
and State
|
|
STATE
OF CALIFORNIA
|
)
|
|
)
ss.
|
||
COUNTY
OF SOLANO
|
)
|
/s/
ILLEGIBLE
|
Notary
Public in and for said
County
and State
|
|
|
ROSS
MILLER
|
|||
Secretary
of State
|
Filed
in the office of
|
Document
Number
|
||
204
North Carson Street, Ste 1
|
|
20070548706-99
|
||
Carson
City, Nevada 89701-4299
(775)
684 5708
|
Ross
Miller
Secretary
of State
|
Filing
Date and Time
08/09/2007
3:43 PM
|
||
Website:
secretaryofstate.biz
|
State
of Nevada
|
Entity
Number
|
||
|
|
C3048-1974
|
Certificate
of Amendment
|
(PURSUANT
TO NRS 78.385 AND 78.390)
|
USE
BLACK INK ONLY - DO NOT HIGHLIGHT
|
ABOVE
SPACE IS FOR OFFICE USE ONLY
|
I.
|
The
name of the corporation is being changed to A Power Agro Agriculture
Development, Inc.
|
IV.
|
The
total authorized number of shares of stock which the corporation shall
have the authority to issue is One Hundred Ten Million (110,000,000),
which shall be divided into two classes as follows; One Hundred Million
(100,000,000) shares of common stock, $0.001 par value per share, and Ten
Million (10,000,000) shares of blank check preferred stock, $0.001 par
value per share.
|
This
form must be accompanied by appropriate fees.
|
[ILLEGIBLE]
|
|
ROSS
MILLER
|
|||
Secretary
of State
|
Filed
in the office of
|
Document
Number
|
||
204
North Carson Street, Ste 1
|
|
20070555937-33
|
||
Carson
City, Nevada 89701-4299
(775)
634 5708
|
Ross
Miller
Secretary
of State
|
Filing
Date and Time
08/14/2007
11:34 AM
|
||
Website:
secretaryofstate.biz
|
State
of Nevada
|
Entity
Number
|
||
|
|
C3048-1974
|
Certificate
of Correction
|
(PURSUANT
TO NRS 78, 78A, 80, 81,
82,
84, 86, 87, 88A, 89 AND 92A)
|
USE
BLACK INK ONLY - DO NOT HIGHLIGHT
|
ABOVE
SPACE IS FOR OFFICE USE ONLY
|
Chief
Executive Officer
|
|||
/s/
Joseph Meuse
|
Joseph
Meuse
|
August
14, 2007
|
|
Authorized
Signature
|
Title
|
Date
|
This
form must be accompanied by appropriate fees.
|
[ILLEGIBLE]
|
|
ROSS
MILLER
Secretary
of State
204
North Carson Street, Ste 1
Carson
City, Nevada 89701-4299
(776)
684 5708
Website:
secretaryofstate.biz
|
Certificate
of Amendment
(PURSUANT
TO NRS 78.385 AND 78.390)
|
Filed
in the office of
Ross
Miller
Secretary
of State
State
of Nevada
|
Document
Number
20070x690021-27
Filing
Date and Time
10/09/2007
4:08 PM
Entity Number
C3048-1974
|
USE
BLACK INK ONLY - DO NOT HIGHLIGHT
|
ABOVE
SPACE IS FOR OFFICE USE ONLY
|
4.
Effective date of filing (optional):
|
|
(must
not be later then 90 days after the certificate is
filed)
|
5.
Officer Signature (Required):
|
/s/
Lee Solomon Yip
Kun
|
This
form must be accompanied by appropriate fees.
|
Nevada
Secretary of State AM 78.385 Amend 2007
Revised
on: 01/01/07
|
/s/ ILLEGIBLE | |||
/s/ ILLEGIBLE | Directors. | ||
/s/ ILLEGIBLE |
/s/ ILLEGIBLE | |
Secretary.
|
Secretary.
|
REGISTERED
AGENT:
|
|
|
|
60
Market Square
|
|
PO
Box 364
|
|
Belize
City
|
|
Belize
|
|
Central
America
|
|
Telephone:
501-227-7132/3/4/5
|
|
Fax:
501-227-7018
|
|
Telex:
158 BZE BANK BZ
|
REGISTERED
AGENT:
|
|
The
Belize Bank Limited
|
|
60
Market Square
|
|
PO
Box 364
|
|
Belize
City
|
|
Belize
|
|
Central
America
|
|
Telephone:
501 22 77132/3/4/5
|
|
Fax:
501 22 77018
|
|
Telex:
158 BZE BANK BZ
|
CLAUSE
|
||
1
|
NAME
|
1
|
2
|
REGISTERED
OFFICE
|
1
|
3
|
REGISTERED
AGENT
|
1
|
4
|
GENERAL
OBJECTS AND POWERS
|
1
|
5
|
EXCLUSIONS
|
5
|
6
|
SHARE
CAPITAL
|
5
|
7
|
AMENDMENTS
|
7
|
ARTICLE
|
||
1
|
PRELIMINARY
|
8
|
2
|
OFFICES
|
9
|
3
|
REGISTERED
SHARES
|
9
|
4
|
BEARER
SHARES
|
9
|
5
|
SHARE -
ISSUE, TRANSFER AND TRANSMISSION
|
12
|
6
|
MEETINGS
OF MEMBERS
|
13
|
7
|
VOTING
AND PROXIES
|
16
|
8
|
DIRECTORS
|
17
|
9
|
POWERS
OF DIRECTORS
|
18
|
10
|
PROCEEDINGS
OF DIRECTORS
|
18
|
11
|
OFFICERS
|
20
|
12
|
SEAL
|
20
|
13
|
DIVIDENDS
|
21
|
14
|
AUDIT
|
22
|
15
|
NOTICES
|
22
|
16
|
AMENDMENTS
|
24
|
1.
|
NAME
|
2.
|
REGISTERED
OFFICE
|
3.
|
REGISTERED
AGENT
|
4.
|
GENERAL OBJECTS AND
POWERS
|
|
4.1
|
to
carry on the business of an investment company and for that purpose to
acquire and hold either in the name of the Company or in that of any
nominee shares, stocks, debentures, debenture stock, scrip, bonds, notes,
obligations, investments and securities and warrants or options in respect
of any shares, stocks, debentures, debenture stock, scrip, bonds, notes,
obligations, investments or
securities;
|
|
4.2
|
to
acquire such shares, stocks, debentures, debenture stocks, scrip, bonds,
notes, obligations, investments or securities or warrants or options
therein by original subscription, contract, tender, purchase, exchange,
underwriting, participation in syndicates or otherwise, and whether or not
fully paid up, and to subscribe for the same subject to such terms and
conditions (if any) as may be thought
fit;
|
|
4.3
|
to
exercise and enforce all rights and powers conferred by or incident to the
ownership of any such shares, stock, obligations or other securities
including without prejudice to the generality of the foregoing all such
powers of veto or control as may be conferred by virtue of the holding by
the Company of some special proportion of the issued or nominal amount
thereof and to provide managerial and other executive supervisory and
consultancy services for or in relation to any company in which the
Company is interested upon such terms as may be thought
fit;
|
|
4.4
|
to
acquire and hold either in the name of the Company or in that of any
nominee and whether as principal or broker or agent any currency in any
form in any part of the world and any commodity and to enter into any
contract of purchase, sale or option to purchase or sell in respect of any
such currency or commodity;
|
|
4.5
|
to
offer for public subscription any shares or stocks in the capital of or
debentures or debenture stock or other securities of or otherwise to
establish or promote or concur in establishing or promoting, any company,
societe anonyme, association, undertaking or public or private
body;
|
|
4.6
|
to
carry on business as capitalists, financiers, concessionaires and
merchants and to undertake and carry on and execute any other business
which may seem to be capable of being conveniently carried on in
connection with any of these objects or calculated directly or indirectly
to enhance the value of or facilitate the realisation of, or render
profitable, any of the Company’s property or
rights;
|
|
4.7
|
to
carry on the business of a property investment and holding company and for
that purpose to purchase, take on lease, or in exchange, or otherwise
acquire, hold, undertake or direct the management of work, develop the
resources of, and turn to account any estates, lands, buildings,
tenements, and other real property and property of every description,
whether of freehold, leasehold, or other tenure, and wheresoever situate,
and any interests therein, rights and powers conferred by, or incident to,
the ownership of any such property;
|
|
4.8
|
to
sell, lease, let, mortgage, or otherwise dispose of, grant rights over or
otherwise provide any such property of the Company without seeking rental
or consideration for such disposal or provision, or otherwise upon such
terms as the Company shall
determine;
|
|
4.9
|
to
acquire and assume for any estate or interest and to take options over,
construct, develop or exploit any property, real or personal or movable or
immovable and rights of any kind and the whole or any part of the
undertaking assets and liabilities of any person and to act and carry on
business as a holding company;
|
|
4.10
|
to
acquire, trade and deal with, or hold stocks, shares, bonds, debentures,
scrip, investments and securities of all kinds issued in any country in
any part of the world;
|
|
4.11
|
to
raise and borrow money by the issue of shares, stock, debentures, bonds,
obligations, deposit notes and otherwise howsoever and to underwrite any
such issue and without limiting the generality of the foregoing to secure
or discharge any debt or obligation of or binding on the Company in any
manner and in particular by the issue of debentures (perpetual or
otherwise) and to secure the repayment of any money borrowed raised or
owing by mortgage, charge, or lien upon the whole or any part of the
Company’s property or assets (whether present or
future);
|
|
4.12
|
to
deposit the monies of the Company with any company or person and to
advance and lend money upon such terms as may be arranged and with or
without security and to guarantee the performance of any contract or
obligation and the payment of money of or by any person or company, and
generally to give guarantees and indemnities including guarantees and
indemnities in respect of the liabilities of persons whether or not
associated with the Company and whether or not the Company receives any
consideration therefor and to secure any such guarantee or indemnity by
the grant of charges, mortgages or liens on the whole or any part of the
Company’s property or assets present or
future;
|
|
4.13
|
to
apply for, purchase or by other means acquire and protect, prolong and
renew any patents, patent rights, brevets d’invention, licences, trade
marks, protections and concessions or other rights which may appear likely
to be advantageous or useful to the
Company;
|
|
4.14
|
to
acquire and undertake, on any terms and subject to any conditions, the
whole or any part of the business, property and liabilities of any person
or company carrying on any business which the Company is authorised to
carry on, or possessed of property suitable for the purposes of the
Company;
|
|
4.15
|
to
amalgamate with or enter into partnership or any joint purpose or
profit-sharing arrangement with or to co-operate in any way with, or
assist or subsidise any company, firm or person carrying on, or proposing
to carry on, any business within the objects of the
Company;
|
|
4.16
|
to
purchase with a view to closing or reselling in whole or in part any
business or properties which may seem or be deemed likely to injure by
competition or otherwise any business or branch of business which the
Company is authorised to carry on, and to close, abandon and give up any
works or businesses at any time acquired by the
Company;
|
|
4.17
|
to
act as directors or managers or to appoint directors or managers of any
subsidiary company or of any other company in which this Company is or may
be interested;
|
|
4.18
|
to
make, draw, accept, endorse, discount, negotiate, execute and issue and to
buy, sell and deal in promissory notes, bills of exchange, cheques, bills
of lading, shipping documents, dock and warehouse warrants and other
instruments negotiable or transferable or
otherwise;
|
|
4.19
|
to
lend money with or without security and to subsidise, assist and guarantee
the payment of money by or the performance of any contract, engagement or
obligation by any persons or
companies;
|
|
4.20
|
to
constitute any trusts with a view to the issue of preferred or deferred or
any other special stocks or securities based on or representing any
shares, stocks, or other assets specifically appropriated for the purposes
of any such trusts, and to settle and regulate and, if thought fit, to
undertake and execute any such trusts and to issue, dispose of or hold any
such preferred, deferred or other special stocks or
securities;
|
|
4.21
|
to
pay all preliminary expenses of the Company and any company promoted by
the Company or any company in which this Company is or may contemplate
being interested including in such preliminary expenses all or any part of
the costs and expenses of owners of any business or property acquired by
the Company;
|
|
4.22
|
to
enter into any arrangements with any Government or authority, imperial,
supreme, municipal, local or otherwise, or company that seems
conducive to the Company’s objects or any of them and to obtain from any
such Government, authority, or company any charters, contracts, decrees,
rights, grants, loans, privileges or concessions which the Company may
think it desirable to obtain and to carry out, exercise and comply with
others;
|
|
4.23
|
to
vest any real or personal property, rights or interest, acquired by or
belonging to the Company in any person or company on behalf or for the
benefit of the Company, with or without any declared trust in favour of
the Company;
|
|
4.24
|
to
undertake and perform sub-contracts and to act through or by means of
agents, brokers, sub-contractors or
others;
|
|
4.25
|
to
remunerate any person or company rendering services to the Company,
whether by cash payment or by the allotment to him or them of shares,
stocks, debentures, bonds or other securities of the Company credited as
paid up in full or in part or
otherwise;
|
|
4.26
|
to
procure the Company to be registered or recognised in any part of the
world outside Belize;
|
|
4.27
|
to
distribute among the members of the Company in kind any property of the
Company (whether by way of dividend or otherwise) and in particular any
shares, stocks, debentures, bonds or other securities belonging to or at
the disposal of the Company;
|
|
4.28
|
to
do all or any of the above things in any part of the world, and either as
principals, agents, trustees, contractors or otherwise and either alone or
in conjunction with others, and either by or through agents,
sub-contractors, trustees or
otherwise;
|
|
4.29
|
to
accept payment for any property or rights sold or otherwise disposed of or
dealt with by the Company either in cash, by instalments or otherwise, or
in fully or partly paid up shares of any company or corporation, with or
without deferred or preferred rights in respect of dividend or repayment
of capital or otherwise or in debentures or mortgage debentures or
debenture stock, mortgages or other securities of any company or
corporation, or partly in one mode and partly in another and to hold,
dispose of or otherwise deal with any shares, stock or securities so
acquired;
|
|
4.30
|
to
have the power exercisable solely by resolution of the directors to vest
the corpus or the income of any trust in itself and to do all such things
as may be conducive to the attainment of such objects;
and
|
|
4.31
|
to
make such gifts of the Company’s property as all members of the Company in
general meeting shall decide including, without limiting the generality
thereof, the power to vest all or any part of the Company’s property,
revocable or irrevocable, in the name of trustees for the benefit of such
person or persons including the Company on such terms as all the members
of the Company in general meeting shall
decide.
|
5.
|
EXCLUSIONS
|
6.
|
SHARE
CAPITAL
|
|
6.1
|
Shares
in the Company shall be issued in the currency of The United States of
America.
|
|
6.2
|
The
authorised capital of the Company is fifty thousand dollars ($50,000)
divided into fifty thousand (50,000) shares of one dollar ($1.00) par
value.
|
|
6.3
|
The
authorised share capital of the Company is made up of one class of share
divided into fifty thousand (50,000) shares of one dollar ($1.00) par
value with one (1) vote for each
share.
|
|
6.4
|
The
designations, powers, preferences, rights, qualifications, limitations and
restrictions of each class and series of shares that the Company is
authorised to issue, including, but not limited to, the allocation of
different rights as to voting, dividends, redemption or distribution on
liquidation, shall be fixed by resolution of the directors of the Company
unless such designations, powers, preferences, rights, qualifications,
limitations and restrictions are fixed by this Memorandum of Association
or the Articles of Association of the
Company.
|
|
6.5
|
Registered
or Bearer Shares:
|
|
6.5.1
|
the
Company may issue all or part of its authorised shares either as
registered shares or as shares issued to bearer and the directors of the
Company shall be empowered to determine by resolution of the directors
which of such authorised shares shall be issued as registered shares and
which as shares issued to bearer unless such determination is fixed by
this Memorandum of Association or the Articles of Association of the
Company;
|
|
6.5.2
|
shares
issued as registered shares may be exchanged for shares issued to bearer;
shares issued to bearer may be exchanged for registered
shares;
|
|
6.5.3
|
notice
to the holders of shares issued to bearer shall be sent by prepaid
registered post addressed to the addressee to which the original bearer
share certificates were despatched and/or in the manner set out in the
Articles of Association of the Company and compliance with the foregoing
shall constitute proper service of any notice upon the bearer of such
shares.
|
6.6
|
Registered
shares in the Company may be transferred, subject to compliance with the
requirements
of the Act and of this Memorandum of Association and the Articles of
Association
of the Company.
|
7.
|
AMENDMENTS
|
SIGNATURE
OF WITNESS
|
SIGNATURE
OF SUBSCRIBER
|
|||
/s/ Phillis Mendez | /s/ [ILLEGIBLE] | |||
Name:
|
Phillis
Mendez
|
Name:
|
Belize
Registration Services Limited
|
|
Address:
|
60
Market Square
|
Address:
|
60
Market Square
|
|
P.O.
Box 364
|
P.O.
Box 1764
|
|||
Belize
City, Belize
|
Belize
City, Belize
|
|||
Date:
|
March
1, 2004
|
Date:
|
March
1,
2004
|
Words
|
Meanings
|
|
the Memorandum
|
the
Memorandum of Association of the Company as originally framed or as from
time to time amended;
|
|
the
Act
|
the
International Business Companies Act, 1990 including any
statutory modification or re-enactment thereof for the time being in
force;
|
|
the
Seal
|
the
Common Seal of the Company, any Overseas Seal or any Securities Seal
authorised in accordance with Article 12;
|
|
Articles
|
these
Articles of Association as originally framed or as from time to time
amended.
|
(a)
|
for
the purpose of exercising his voting rights at a meeting, the bearer of a
bearer share certificate shall produce such certificate to the chairman of
the meeting;
|
(b)
|
for
the purpose of exercising his vote on a resolution in writing, the bearer
of a bearer share certificate shall cause his signature to any such
resolution to be authenticated as hereinafter
provided;
|
(c)
|
for
me purpose of requisitioning a meeting of members, the bearer of a bearer
share certificate shall address his requisition to the directors and his
signature thereon shall be duly authenticated as hereinafter provided;
and
|
(d)
|
for
the purpose of receiving dividends, the bearer of a bearer share
certificate shall present at such places as may be designated by the
directors any coupons or talons issued for such purpose, or shall present
the bearer share certificate to any paying agent authorised to pay
dividends.
|
(a)
|
identifying
the bearer share certificate produced to him by number and date and
specifying the number of shares and the class of shares (if appropriate)
comprised therein;
|
(b)
|
confirming
that the signature of the bearer of the bearer share certificate was
subscribed in his presence and that if the bearer is representing a body
corporate he has so acknowledged and has produced satisfactory evidence
thereof; and
|
(c)
|
specifying
the capacity in which he is qualified as an authorised person and, if a
notary public, affixing his seal thereto or, if a bank manager, attaching
an identifying stamp of the bank of which he is a
manager.
|
|
(1)
|
by
the chairman of the meeting; or
|
|
(2)
|
by
at least two members having the right to vote at the meeting;
or
|
|
(3)
|
by
a member or members representing not less than 10 per cent, of the total
voting rights of all the members having the right to vote at the
meeting;
|
(a)
|
in
the case of auditors appointed by the directors, may be fixed by
resolution of the directors;
|
(b)
|
subject
to the foregoing, shall be fixed by resolution of the members or in such
manner as the Company may by resolution of the members
determine.
|
SIGNATURE
OF WITNESS
|
SIGNATURE
OF SUBSCRIBER
|
|||
/s/ Phillis Mendez | /s/ [ILLEGIBLE] | |||
Name:
|
Phillis
Mendez
|
Name:
|
Belize
Registration Services Limited
|
|
Address:
|
60
Market Square
|
Address:
|
60
Market Square
|
|
P.O.
Box 364
|
P.O.
Box 1764
|
|||
Belize
City, Belize
|
Belize
City, Belize
|
|||
Date:
|
March
1, 2004
|
Date:
|
March
1,
2004
|
Chapter
1
|
General
Provision
|
1
|
Chapter
2
|
The
name, address and tenure of operation of the company
|
2
|
Chapter
3
|
The
scope of business of the company
|
3
|
Chapter
4
|
The
registered capital of the company
|
3
|
Chapter
5
|
Names
of shareholders
|
3
|
Chapter
6
|
Method,
amount and date of capital contributions made by
shareholders
|
3
|
Chapter
7
|
The
organization of the company and its formation, their functions and
meetings’ procedures
|
4
|
Section
1
|
Shareholders'
meeting
|
4
|
Section
2
|
The
board of directors
|
5
|
Section
3
|
Chief
Executive Officer
|
8
|
Section
4
|
Audit
Committee
|
9
|
Chapter
8
|
The
legal representative
|
10
|
Chapter
9
|
The rights and
obligations of
shareholders
|
10
|
Chapter
10
|
Investment
|
11
|
Chapter
11
|
Transfer
of equity
|
11
|
Chapter
12
|
Accounting
policies, profit distribution and audit;
|
11
|
Chapter
13
|
Merger,
setting up branches and the increase or decrease of the its registered
capital
|
11
|
Chapter
14
|
Labour
and employment policy, the conference of the representatives of the staff
and workers and the Labour Union
|
11
|
Chapter
15
|
The
dissolution and liquidation of the company
|
12
|
Chapter
16
|
The
amendment of the articles of association of the company
|
12
|
Chapter
17
|
Supplementary
Articles
|
13
|
Article
1
|
Definitions
|
Article2
|
The
purpose of this article of association is to maintain the company's
healthy, stable and sustainable development through regulating
organization structure and activities of the company, and then further
protect the lawful rights and interests of the company, the shareholders
and the creditors, in order to realize the goal of gaining profit for the
investors.
|
Article3
|
Should
any term and condition of this article of association be in contradiction
with the mandatory provisions of any existing law and regulations, the law
or regulations shall prevail. Should any term and condition of
this article of association be in contradiction with the non mandatory
provisions of the existing law and regulations, the term and condition of
this article of association shall
prevail.
|
Article4
|
Should
any term and condition of this article of association be in contradiction
with any agreement of the shareholders, the term and condition of this
article of association shall prevail unless it is expressly provided
otherwise in the shareholder
agreement
|
Article5
|
The
formulation and amendment of the article of association shall require the
approval of 90% of the shareholders with voting right. The amendment of
any term and condition shall be approved by 100% of the shareholders with
voting right, and mark beside: amendment of the term shall be approved by
100% of the shareholders with voting
right.
|
Article6
|
The
name and address of the company
|
Article7
|
The
tenure of operation of the company shall be in perpetuity. (amendment of
this term shall be approved by 100% of the shareholders with voting
right).
|
Article8
|
The
business scope of the company
|
Article10
|
Name
and number of shareholders of the
company:
|
Name and address
|
Identification No.
|
||
Party
A :
|
ZhongXing
Agriculture and Husbandry Holdings Co. Ltd.
|
||
No.78
Xiqu Road, Dage Town, Fengning Man Autonomous County,
|
|||
Chengde
City, Hebei Province, China
|
1308001000413h
|
||
Party
B :
|
Hang
Yu Tai Investment Limited
|
||
RM.L,
5
th
Floor, Block3, Dong Bei Da Ma Road, Hai Ming Ju, Macau
|
25487SO
|
Article11
|
The
company operates in the form of shareholder system, that is the
shareholders are maintained as agreed by the joint venture partners
(Article 13, Chapter 6) unless the following circumstances
arise:
|
i.
|
Withdrawal
or dissolution of the shareholder. The share equity is then transferred to
other person under in accordance with Chapter
11.
|
ii.
|
Death
of shareholder. One or more successors inherit the share equity and become
the shareholders instead. (Amendment of this term shall be approved by
100% of the shareholders with voting
right).
|
iii.
|
The
shareholder dies without a successor but has made a probate of a will and
named a beneficiary, therefore the beneficiary becomes a
shareholder.
|
Article12
|
The
company shall prepare a list of the shareholders in accordance with
article 33 of the Company Law, and distribute one copy to each
shareholder, and keep at least two copies at the premises of the company,
in order for the shareholder to exercise the shareholder's
right.
|
Article
3
|
The
method, amount and date of capital contributions made by shareholders are
agreed by shareholders as follows:
|
Party
A:
|
provides
the existing asset and resources including the registered capital,
factory, factory buildings, patent right, exclusive right and land use
right (details enclosed), management right and
interest.
|
Party
B:
|
provides
a sum of US$100,000.00 as the initial registered capital of the company,
and imports from overseas premium quality livestock, seedlings and
advanced production technology and A Power Agro Agriculture Development,
Inc’s proprietary technology. Please refer to: (
http://www.pinksheets.com/pink/index.jsp//
) OTCBPS: APWA; contributes USD$100,000 as registered
capital.
|
Article14
|
The
shareholders shall distribute the net profit according to their respective
shareholding.
|
Article15
|
Shareholders
shall bear the risk of the company according to their respective
shareholding, while the company shall bear full responsibility over its
debts.
|
Article16
|
the
company shall issue investment certificates to its shareholders in
according with Article 32, Company Law.
|
Article17
|
The
company shall establish the shareholders' meeting which shall comprise all
the shareholders. The shareholders' meeting is the highest authority of
the company, and shall exercise its authorities according to law and
relevant terms in these articles of
association.
|
Article18
|
The
shareholders' meeting shall carry out the following
functions:
|
i.
|
Determining
the company's operation guidelines and investment
plans;
|
ii.
|
Electing
and changing the chairperson, the deputy chairperson and directors;
determining the number of directors, and the percentage of shareholder
directors and non-shareholder directors; determining the remuneration for
the members of board of directors and the payment
term.
|
iii.
|
Electing
and changing the audit members appointed from non-employees (the number of
audit members to be appointed from employees shall be determined according
to law), and determining the number of audit members, and their
remuneration and payment
term.
|
iv.
|
Deliberating
and approving the reports of the board of
directors;
|
v.
|
Deliberating
and approving the reports of the audit
committee;
|
vi.
|
Deliberating
and determining projects to be carried out in the People's Republic of
China with the amount of investment totaling
USD$30,000,000.00;
|
vii.
|
Deliberating
and approving annual financial budget plans and final account plans of the
company;
|
viii.
|
Deliberating
and approving net profit distribution plans, and provident funds
withdrawal plans, and loss and recovery plans of the
company;
|
ix.
|
Deliberating
and approving the important sales of
assets;
|
x.
|
Deciding
on the change of tenure of operation of the company, dissolution and
liquidation of the company;
|
xi.
|
Deliberating
and approving the matters concerning transfer of equity of the
company;
|
xii.
|
Amending
the articles of association of the
company;
|
xiii.
|
Approving
the establishment of the subsidiaries, branches (a branch is not a
separate legal entity, therefore it has no right of independent
operation);
|
xiv.
|
Adopting
resolutions on employment and dismissal of the accounting
firm;
|
xv.
|
Supervising
and examining the works of the board of directors and its members, the
audit committee and its members, all staffs and professionals employed by
the company;
|
xvi.
|
Exercising
other authorities outside the authorities of the board of
directors.
|
Article19
|
The
shareholders' meeting shall not interfere the authorities of the board of
directors authorized by these articles of
association.
|
Article20
|
The
first shareholders' meeting shall be convened and presided over by the
shareholder who has the largest shareholding and shall exercise it
authorities according to Company Law and Law of Sino-foreign Joint
Ventures.
|
Article21
|
Where
any of the matters within the scope of authority of the shareholders’
meeting, it may be approved by all the shareholders in writing, without
the need of convening a shareholders' meeting. A decision
in writing may be made with the signatures or seals of all the
shareholders thereon, and be kept by the
company.
|
Article22
|
A
shareholders' meeting may be a scheduled meeting and an emergency
meeting:
|
i.
|
The
scheduled meeting shall be held 4 times in a year in first half of March,
June, September and December, whereby the scheduled meeting of December
shall be convened on December 13, and the date is recognized as the
anniversary of the company.
|
ii.
|
The
emergency meeting shall be convened on the following
occasions:
|
a)
|
Any
of the shareholders proposes for such a
meeting;
|
b)
|
It
is called by the board of
directors;
|
c)
|
1/3
of the directors propose for such a meeting to be
held;
|
d)
|
The
audit committee proposes for such a meeting to be
held.
|
Article23
|
The
shareholders' meeting shall be prepared by the board of directors, and the
notice shall be given to all the shareholders by the secretary of the
board of directors.
|
Article24
|
The
scheduled shareholders' meeting shall be presided over by each of the
shareholders by rotation according to their percentage of
shareholding. The duty shareholder is unable to chair the
meeting for any reason, that shareholder chair the next
meeting. Proxy of any absentee shareholder is not allowed to
chair any meeting. (the persons mentioned in articles viii, ix, x of
chapter 1 are exceptions )
|
Article25
|
Where
the board of directors is unable to or doesn't perform the duty to convene
and prepare for the shareholders' meeting, the shareholders may convene
and prepare for it.
|
Article26
|
Where
the shareholders' meeting is convened, a notice to all the shareholders
shall be made 45 days prior to the meeting by the secretary of the board
of directors, unless the urgency of the matter dictates otherwise. The
emergency means the unexpected events which may have a great impact on the
company.
|
Article27
|
The
shareholders should attend the shareholders' meeting personally. If the
shareholders are unable to be present for special reason, they may appoint
their spouses, parents, issues or attorney to attend the meeting as their
proxies and exercise the voting right in writing, or they may not entrust
any person to attend the meeting with their votes in handwriting and
signatures.
|
Article28
|
The
proceedings of the shareholders' meeting shall be minuted which shall be
signed by the shareholders attending the meeting and shall be kept
record. Voting shall be made by ballot. The
shareholders who are present shall vote by ballot bearing their signatures
to agree, object, or abstain in writing. Anyone who shall
refuse to sign on the ballot paper or failed to attend the meeting and yet
failed to express his decision in writing either personally or through his
proxy shall be deemed to have
abstained.
|
Article29
|
Where
the shareholders' meeting requires the directors, the audit committee
members or the senior management to attend the meeting, then they should
be present at the meeting to answer any queries from the
floor.
|
Article30
|
Shareholders
shall cast their votes at the shareholders’' meeting according to their
percentage of shareholding.
|
i.
|
General
matters shall require approval of two-thirds of the votes held by
shareholders;
|
ii.
|
The
adoption of a resolution of reducing the tenure of operation or the
dissolution of the company shall require approval of 90 percent
of the votes held by
shareholders;
|
iii.
|
An
amendment to the articles of association shall require affirmative votes
by 90 percent of the votes held by shareholders; an amendment to a certain
term of the articles of association shall require affirmative votes by 100
percent of the votes held by the shareholders, and note this beside the
term. (( Amendment of this term shall require affirmative votes by 100% of
the voted held by
shareholders)
|
Article31
|
The
company shall have a board of directors. The board of directors is
accountable to the shareholders' meeting and shall have the following
functions:
|
i.
|
Calling
and preparing for a shareholders' meeting, and presenting reports
thereto;
|
ii.
|
Implementing
resolutions passed by the shareholders'
meeting;
|
iii.
|
Determining
the company's operating plans (below RMB500,000.00) and investment
programs (below
RMB1,000,000.00);
|
iv.
|
Drafting
annual financial budget plans and final accounting plans of the company
and submitting the plans to the shareholders' meeting for deliberation and
approval;
|
v.
|
Drafting
the company's profit distribution plans and plans to cover company
losses;
|
vi.
|
Drafting
plans to issue company bonds and financial bonds, and submitting the plans
to the shareholders' meeting for deliberation and
approval;
|
vii.
|
Making
decision on the matters concerning the company's loan from bank or any
other financial institution;
|
viii.
|
Drafting
plans for dissolution or liquidation of the company, and submitting the
plans to the shareholders' meeting for deliberation and
approval;
|
ix.
|
Approving
the structure of the company's internal management, including the name,
the function, the staff s' organization, and the procedure of work
etc.;
|
x.
|
Appointing
or removing the CEO, the heads of each department and the senior
professional personnel and determining their
remuneration;
|
xi.
|
Approving
the the basic management manual of the company, including but not only the
plans, the human resources, the salary, the finance, the working, the
manufacture, the materials, the marketing, the quality, the import and
export and logistics, and the culture of the enterprise
etc.;
|
xii.
|
Supervising
the CEO and the operation of each department; receiving briefings from the
CEO and performing
inspection;
|
xiii.
|
Appointing
the chairman of the board, the directors and the manager of the
subsidiaries;
|
Article32
|
The
members of the board of directors shall be natural persons appointed by
the shareholders' meeting, comprising 5 to 7 persons, and the number of
the members shall be odd number. The chairman of the board deputy chairman
of board and the directors may be appointed from shareholders or
non-shareholders. The age limit for the directors is 60 years'
old.
|
Article33
|
The
tenure of office of the directors shall be 3 years, and may be re-elected,
consecutively. Current directors whose term expire or who have
resigned before their terms expire shall continue to perform the duties
until re-election of directors taking place, failing which they shall
compensate the company for any losses suffered by the company as the
result.
|
Article34
|
The
board of directors shall have one chairman, deputy chairman, and 2
executive directors, the rest are non executive
directors. Executive directors can be candidates as the company
legal representative.
|
Article
35
|
The
company may appoint honorary chairperson, honorary directors, without the
term limit, and such persons shall have no voting
rights.
|
Article
36
|
The
chairperson’s duties and
functions:
|
i.
|
Chairing
the meetings of the board of
directors.
|
ii.
|
drafting
the plan within the purview of the Board, programs, systems, documents,
presented to the Board approval, signing, promulgation and implementation
(see the specific scope of the "Board Rules of
Procedure");
|
iii.
|
chairing
the meeting of shareholders convened by the board of directors or any
meeting jointly held by the Board and the shareholders
;
|
iv.
|
Calling
for the board of directors’
meetings;
|
v.
|
proposing
to the Board of Directors the appointment of CEO, heads of various
departments, as well as other key personne; proposing to the Board of
Directors appointment of directors and key management personnel to the
subsidiary;.
|
vi.
|
supervising
the CEO and performance of various
departments;
|
vii.
|
signing
and publishing document s of the Company and the
Board;
|
viii.
|
signing
letters of appointment and
others;.
|
ix.
|
in
emergency situation, in order to protect the company’s assets from damage
permitting the CEO to specially handle the company’s assets and thereafter
submitting a report thereof to the board of directors and the
shareholders’ meeting;
|
x.
|
Co-signing
and approving with the CEO on matters requiring special
expenditure;
|
xi.
|
supervising
the implantation of corporate
culture;
|
xii.
|
Exercising
other functions dictated by the shareholders’
meeting.
|
Article37
|
The
deputy chairperson shall assist the chairperson in his work, and in the
event that the chairman is unable to perform his duties, the deputy
chairperson shall perform such
duties.
|
Article38
|
The
meeting of board shall be convened once a month, and in principle to be
held on the first Saturday of each month. A meeting of the
board shall be convened if the chairperson so decides, or as one-third of
the directors or audit committee or the CEO so
proposes.
|
Article39
|
Board
of directors shall hold scheduled meeting every month by 15-day prior
written notice to the directors by the Secretary of the Board; Emergency
meeting may be held by a 7-day prior notice to the directors in written.
The Board may hold informal meetings to study, discuss and receive
briefings without prior notice.
|
Article40
|
The
meeting of the Board of Directors shall be convened and presided by the
chairperson of the board; where the chairperson of the board cannot or
fail to perform his such function, the meeting shall be chaired by the
deputy chairperson; and where the deputy chairperson fails to do so, then
a director elected by more than half the directors present shall chair
such meeting.
|
Article41
|
The
board of directors shall execute one-man-one-vote written voting system by
open ballot. The decision shall be effective only if approved by over
two-thirds of all directors. If any director is unable to attend the
meeting due to any special reason, he may appoint other director in
writing to express his opinion or decision, followed personally with by
written decision thereafter. In special circumstance where a
director is absent due to death, injury, or deliberate attempt to delay or
refuse to vote, and which has resulted in a split vote situation, then the
chairperson of the meeting shall have a second
vote.
|
Article
42
|
The
directors may vote for, against or abstain from voting on any motion
presented at the meeting.
|
Article
43
|
The
proceedings of the meeting shall be minuted which shall be signed by the
shareholders attending the meeting and shall be kept
record..
|
Article
44
|
The
board of directors may formulate the detailed procedures for the
proceedings of the meeting.
|
Article45
|
A
person in any of the following categories may not serve as a
director:
|
|
1.
|
without
civil capacity or with restricted civil
capacity;
|
|
2.
|
has
been penalized for the following crimes, and completion of the sentence
being less than 5 years ago: embezzlement, bribery, conversion of
property, misappropriation of property, sabotage of social economic order;
or having been deprived of political rights as a result of a criminal
conviction, and completion of such sentence is less than 5 years
ago;
|
|
3.
|
having
served as a director, the factory chief, or the general manager of a
company or enterprise in liquidation as a result of mismanagement, and
being personally responsible for such liquidation, and the date of such
liquidation is less than 3 years
ago;
|
|
4.
|
having
served as the legal representative of a company or enterprise whose
business license was revoked due to its violation of law, and being
personally responsible for such revocation, and such revocation occurred
less than 3 years ago;
|
|
5
.
|
in
default of personal debt of a significant
amount.
|
|
6.
|
violated
the one-child policy.
|
Article
46
|
The
directors must fulfill with the following
obligation:
|
|
1)
|
Comply
with laws, rules, regulations and professional ethics, diligently and
faithfully perform their duties, be loyal to the company to safeguard the
highest interests of the company obligations; when their interests
conflict with the interests of the company, must give priority to
safeguard the interests of the
company;
|
|
2)
|
To
exercise their power within the scope of their duties and shall not exceed
the terms of reference or intentionally fail to perform their duties or
delay in performing their duties;
|
|
3)
|
Except
with the approval of the shareholders’ meeting, shall not trade or enter
into contracts with the Company;
|
|
4)
|
shall
not use internal information for their own gain or gain of
others;
|
|
5)
|
Unless
prior disclosure to and approval of the shareholders’ meeting have been
made, the directors shall not engage or help others to engage in any
business or enterprise. Disclosure must be made on the
directors’ businesses prior to the appointment of his
directorship. Any losses suffered by the company as a result of
non disclosure by the directors shall be borne by the directors concerned,
while the company shall have the right to pursue legal remedies against
the directors concerned;
|
|
6)
|
shall
not abuse their position by accepting money or benefit from
others;.
|
|
7)
|
shall
not misuse properties of the
company;
|
|
8)
|
shall
not misappropriate the company’s funds for personal use or use of
others;
|
|
9)
|
shall
not use their position to canvas for business opportunity for themselves
or others;
|
10)
|
shall
turn over any commission paid by others for any transaction entered into
by the company, failing which it shall be deemed as a misappropriation of
the company’s asset or fund;
|
11)
|
shall
not transfer the asset or fund of the company into their own name or into
any other individual’s name,
|
12)
|
shall
not pledge the company’s assets as security or guarantee for payment of
the debts of themselves or
others;
|
13)
|
Strictly
keep company secrets
confidential;
|
14)
|
provide
fair and equitable treatment to all
shareholders;
|
15)
|
diligently
read the company's administrative report, business reports, financial
reports, etc., and keep abreast of company management
situation;
|
16)
|
the
independent exercise of the powers of the directors, and shall not be
manipulated by others; and unless permitted by laws and administrative
regulations shall delegate the powers to
others;
|
17)
|
diligently
accept the supervision of the shareholders, other directors, audit
committee and the employees of the company and listen to their
recommendations;
|
18)
|
shall
not act on behalf of the company or board of directors without due
authorization under the articles of association or by the board of
directors;
|
19)
|
in
the event of resignation, the directors shall continue to perform the
duties of the directors until the resignation of the directors are
accepted by the board of directors, failing which the directors concerned
shall be responsible for any losses suffered by the company as a result
thereof;
|
20)
|
the
company shall deduct from the directors’ remuneration and pay on behalf
taxes payable by the directors according to the
laws.
|
Article
47
|
Article
46 also applies to audit committee, CEO, executives, professional
technical personnel and also the
shareholders.
|
Article
48
|
The
company shall employ a chief executive (the CEO), and shall entrust the
CEO with powers in implementing the company’s business projects (business
plans, investment programs), i.e. the CEO shall be the person responsible
for the implementation of the daily operational matters vis-à-vis with the
external parties and the internal management
people.
|
Article
49
|
Upon
the nomination or recommendation by the chairman, the CEO shall be
employed or dismissed by the Board. Board members can serve as
the CEO, the divisional heads or other senior
positions.
|
Article
50
|
The
tenure of the CEO shall be 5 years, and is renewable. The age
limit for the CEO is 65 years
old.
|
Article51
|
The
duties and functions of the CEO are as
follows:
|
(I)
|
In
charge of all daily operations and management matters of the company,
including
|
|
1.
|
organizing
the departments of the company, implementing annual business plans,
investment programs, and carrying out the directives of the board of
directors;
|
|
2.
|
drafting
the company’s annual business plan and investment
proposal;
|
|
3.
|
personally
or authorizing others represent the company in negotiation, public
relations, advertising and other activities vis-à-vis the customers,
government, intermediaries, etc., drafting of business projects and their
pricing, duration, partner, conclusion and other contractual matters, and
timely reporting the same to the
Board;
|
|
4.
|
in
charge of the company's production, sales, quality control and
services;
|
|
5.
|
proposing
to the Board mobilization of the assets of the
Company;
|
|
6.
|
formulating
and proposing to the Board on the company’s borrowing and the amount,
term, interest rate and method;
|
(II)
|
preparing
the name list of departmental heads and proposing the same to the Board
for formal employment; the departmental heads and other executives shall
be directly answerable to the CEO, and indirectly reporting to the
chairman of the board;
|
(III)
|
personally
or authorizing others employ or dismiss the middle level management
personnel;
|
(IV)
|
proposing
holding of an emergency meeting of board and drafting the agenda of the
meeting;
|
(V)
|
convening
the meeting of the departmental
heads;
|
(VI)
|
together
with the Chief Financial Officer
jointly
approving matters concerning
finances;
|
(VII)
|
together
with the head of financial control jointly approving matters concerning
management of funds;
|
(VIII)
|
representing
the company, and signing documents on behalf of the company, the CEO is
also the company's legal
representative;
|
(IX)
|
approving
expenditure for the projects and within the limit authorized by the
Board;
|
(X)
|
exercise
or delegate such powers authorized by the
Board;
|
(XI)
|
directly
responsible for or delegate such responsibilities to the Chief Operations
Officer for the daily administrative work; organizational strength,
drafting, development of the company's development plans, programs and
other important documents; develop basic management system of the company
(including companies set up various departments and branches , duties,
staffing, wages, etc.), and the corporate office details the specific
regulations submitted to the Board for approval; the company's human
resources (including incentives, training, recruitment, promotion,
transfer, demotion, etc.); the company's external public relations liaison
work; together with the Chief Financial Officer jointly approve the wages
of workers, benefits programs; together with the chairman, the Chief
Financial Officer jointly approve special items expenditure; appointment
or dismissal of the middle level management and staff; approving, specific
capital expenditures within authorized limits; helping the chairman in
building up the company’s corporate culture; communicating with the
workers congress, union and safeguarding the democratic workers’ rights
and benefits.
|
Article
52
|
The
CEO shall attend the board meetings, but with no voting rights, and shall
submit his reports at the board meetings and report to
the chairman if the board meeting is not in
session.
|
Article
53
|
Upon
the request of the board of directors or the audit committee, the CEO
shall accurately report to the board of directors or the audit committee
any contract the company has entered into, its performance, use of funds
and profit and loss situation.
|
Article
54
|
The
company shall formulate "The Work Manual of the CEO", and the same shall
be implemented after its approval by the board of
directors.
|
Article
55
|
The
company shall enter into an employment contract with the CEO setting out
the terms, remuneration and other terms and conditions for his
employment.
|
Article
56
|
The
company shall establish an Audit Committee to carry out the following
functions:
|
(I)
|
carrying
out auditing and inspecting the company's financial
affairs;
|
(II)
|
supervising
the works and performance of the Chairman, directors, the CEO and the
senior management personnel, and enquiring if need to. When
these officers are in violation of the laws, regulations, the constitution
of the company or resolutions of the shareholders’ meeting, or damage the
interests of the company, the audit committee has the right to request for
rectification and to propose to the shareholders’ meeting or the board of
directors recommending
dismissal;
|
(III)
|
proposing
convening of emergency meeting of
shareholders;
|
(IV)
|
convening
a shareholders’ meeting, if the Board of Directors fails to convene,
organize and call for a meeting;
|
(V)
|
proposing
motion to the shareholders meeting, and the same shall be included in the
agenda for the meeting;
|
(VI)
|
Upon
written request of a shareholder, pursuing legal action against any board
members, the CEO, the heads of various departments, the executive
personnel who has cause damage or loss to the company due to his violation
of the laws, regulations or the constitution of the
company;
|
(VII)
|
attending
board meetings with the right to speak in order to carry out its
supervisory responsibilities;
|
(VIII)
|
engaging
a law firm or accounting firm to investigate the affairs of the company
(or performing the investigation itself), if it finds irregularity in the
operation of the company, the costs thereof shall be borne by the company,
and shall report the same to the shareholders’
meeting;
|
(IX)
|
exercising
other powers as granted by the shareholders’
meeting.
|
Article57
|
The
audit committee shall comprise of shareholders (at least one) and employee
representatives, of 5 to 13 members, and the number shall be odd
number. The number of representatives of the employees sitting
in the audit committee shall not be less than 1/5, and shall be elected at
the workers congress.
|
Article
58
|
The
term of office of the members shall be 5 years, re-electable and
renewable. The age limit shall be 75 years
old.
|
Article
59
|
In
the event of resignation, the auditors shall continue to perform their
duties until re-election of new auditors, failing which the auditors
concerned shall be responsible for any losses suffered by the company as a
result thereof.
|
Article
60
|
the
directors, the CEO, departmental heads and other senior management
personnel or key managerial personnel may not serve as the
auditors.
|
Article
61
|
The
audit committee shall have a chairman, and may have one or two
vice-chairmen, to be elected by the members of the audit committee by
majority votes.
|
Article
62
|
The
chairman shall convene and chair the audit committee meeting, and if the
Chairman is unable to perform duties or fails to perform his duties,
Vice-Chairman shall take over the chair. If Vice-Chairman
cannot perform his duties or does not discharge his duties, a member
elected by 1/2 or more members of the audit committee shall convene the
meeting.
|
Article
63
|
Generally
the audit committee shall hold two regular meetings each year, one every
six months. An emergency meeting can be convened if 1/3 of the
members of the audit committee shall requisition for one to be held, and
the moderator shall give 15-day written notice to all
members.
|
Article64
|
The
quorum for a meeting of the audit committee shall be more than half of the
members attending, and any resolution shall only be passed if approved by
majority votes.
|
Article65
|
The
audit committee shall execute one-man-one-vote written voting system by
open ballot. In a tie situation, the chairperson of the meeting shall have
a second vote. If any director is unable to attend the meeting
and fails to appoint other member in writing to vote on his behalf, he
shall be deemed to have abstained from
voting.
|
Article66
|
the
employees of the company shall provide the relevant information to the
audit committee, but shall not impede the functioning of the audit
committee.
|
Article
67
|
The
audit committee meeting shall be minuted and its resolutions permanently
kept in files of the company.
|
Article
68
|
All
cost for the performance of the audit committee’s functions shall be borne
by the company.
|
Article
69
|
The
company's legal representative shall be elected among the chairman,
executive directors and the CEO at the shareholders’
meeting.
|
Article
70
|
Any
documents signed by the legal representative on behalf of the company
shall be binding on the company.
|
Article
71
|
Rights
of shareholders are as follows:
|
(I)
|
To
vote in accordance with its equity ratio at the shareholders
meeting,
|
(II)
|
To
be elected to the Board of Directors, audit
committee.
|
(III)
|
To
access financial accounts according to the
laws.
|
(IV)
|
To
appoint proxy to participate in meetings of
shareholders;
|
(V)
|
To
have access to the constitution and audited
accounts.
|
(VI)
|
To
receive profits after tax according to equity
ratio.
|
(VII)
|
pre
emptive right to receive transfer of the equity from other
shareholders.
|
(VIII)
|
To
supervise the actions of the company and to provide suggestions and
enquiries.
|
(IX)
|
To
transfer shareholding in accordance with the constitution and the
laws.
|
(X)
|
To
receive distribution of the company’s assets according to the equity ratio
after the dissolution of the
company.
|
(XI)
|
pursuing
legal action in accordance with the provisions of article 153of the
Company Law against any board members, audit committee members, the heads
of various departments or the people outside the company who has cause
damage or loss to the
company.
|
Article
72
|
Obligations
of shareholders are as follows:.
|
(I)
|
complying
with the laws and the articles of
association;
|
(II)
|
paying
in full subscribed capital;
|
(III)
|
shall
not misappropriate the assets or fund of the
company;
|
(IV)
|
bear
the corporate liability according to the subscribed capital contributions
ratio;
|
(V)
|
shall
not withdraw their capital
contributions;
|
(VI)
|
shall
keep all information of the company
confidential;
|
(VII)
|
to
participate in the liquidation of the company at the instance of
dissolution of the company;
|
(VIII)
|
to
comply with Article 47 of the Constitution of the
company.
|
Article
73
|
The
Shareholders, especially the equity shareholders or controlling
shareholders must comply with Article 20 of the Company Law that they
shall not abuse the rights and corporate separate entity, and if violated,
they must be held accountable.
|
Article
74
|
The
company may invest in other businesses, but shall establish partnership,
an unlimited company or wholly owned
enterprises.
|
Article
75
|
The
company may issue bonds to raise funding in accordance with Chapter 7 of
the Company Law
|
Article
76
|
To
maintain the company's long-term stability of its shareholders, transfer
of shareholding can only be carried out among
shareholders.
|
Article
77
|
The
shareholders shall have a preemptive right to
purchase.
|
Article
78
|
Should
a shareholder intends to sell his shares, he shall notify the other
shareholders. An agreement to purchase must be in writing,
failing such agreement it shall be deemed to have rejected the offer to
purchase.
|
Article79
|
After
sale and transfer of the shares concerned, the old “investment
certificate" shall be destroyed and a new be issued to the new
shareholder.
|
Article
80
|
In
the following circumstances, shareholders are entitled to request the
company to purchase its shares at a reasonable
price:
|
(A)
|
The
company fails to declare profits distribution for 3 years consecutively,
although the company has made consecutive profits for 3
years;
|
(B)
|
the
occurrence of circumstance for dissolution of the company as prescribed in
the articles of association, but the company is being kept in existence by
amending the articles of
association.
|
Article
81
|
The
purchase price may be determined in consultation with the shareholders by
the company, failing such agreement, a valuer may be appointed by the
parties to determine the purchase price
thereof.
|
Article
82
|
The
company shall establish its financial and accounting systems in accordance
with the relevant national statues and
regulations.
|
Article
83
|
The
company shall prepare its financial and accounting reports at the end of
each fiscal year, which shall be reviewed and verified in accordance with
the law.
|
Article
83
|
The
company shall submit its financial and accounting reports prepared in
accordance with the generally accepted accounting principles within one
month after the end of each fiscal year to the
shareholders.
|
Article
85
|
In
distribution of its current year after-tax profit, the company shall
allocate 10 percent to its statutory reserve fund. Allocation to the
company’s statutory reserve fund may be waived once the cumulative amount
of funds therein exceeds 200 percent of the company’s registered
capital.
|
Article
86
|
Where
the statutory reserve fund is not sufficient to cover the company’s loss
from the previous year, the current year profit shall be used to cover
such loss before allocation is made to the statutory reserve
fund.
|
Article
87
|
After
the company has made allocation to the statutory reserve fund, allocation
may be made to the discretionary reserve fund. Detailed implementing
measures shall be formulated by the board of directors to be approved at
the shareholders' meeting.
|
Article
88
|
After
provisions have been made to cover its previous year’s losses and to the
statutory reserve fund, the remainder of the profit shall be distributed
to the shareholders in proportion to the equity
interest.
|
Article
89
|
The
company shall engage an accounting firm to audit the financial affairs of
the company at the shareholders’
meeting.
|
Article90
|
The
company shall provide the certified public accountants with truthful and
complete accounting vouchers, account books, financial and accounting
reports and other accounting documents, and shall not refuse to provide,
conceal information or misreport.
|
Article
91
|
The
company may not establish any separate accounting book besides the
accounting book prescribed by law.
|
Article
92
|
The
company shall merge with other enterprises. It may increase its capital,
but not decrease its capital.
|
Article
93
|
The
company shall adopt employment and labour policies as prescribed by the
country or local governments within the scope of the relevant
provisions. It may adopt the experience of other developed
countries in attracting
talents.
|
Article
94
|
The
company shall allow setting up of workers’ congress, trade unions and
other organizations to protect employees’ rights. The company
will pay for operating expenses.
|
Article
95
|
The
company shall draw up regulations on wages, welfare, labor safety,
insurance, dismissal and other matters related to employees,and shall seek
the opinion of the trade
unions.
|
Article
96
|
The
company may be dissolved in any of the following
circumstances:
|
(1)
|
The
shareholders’ meeting has adopted a resolution for dissolution (amendment
of the term shall be approved by 100% of the shareholders with voting
right).
|
(2)
|
The
company’s business license is revoked and its operation is ordered to be
closed.
|
(3)
|
If
the company is to be dissolved pursuant in Article 183 of the Company Laws
by the People’ Court.
|
Article
97
|
Where
the company counters severe difficulties in the management of the company,
and the continuation of the same would cause heavy losses, and it cannot
be solved by any other means, then the shareholders having more than 10%
voting rights may petition the court for dissolution of the
company.
|
Article
98
|
Once
the company is dissolved, the shareholders shall form a liquidation
committee within 15 days from the date of
dissolution.
|
Article
99
|
The
liquidation committee shall exercise the following functions in the course
of liquidation:
|
(a)
|
identifying
the company’s assets, and preparing the balance sheet and schedule of
assets respectively;
|
(b)
|
notifying
creditors through notice or public
announcement;
|
(c)
|
handing
the company’s ongoing business which are related to
liquidation;
|
(d)
|
making
full payment of taxes owed or and the process of
liquidation,
|
(e)
|
identifying
the company’s creditor’s rights and debtor’s
liabilities;
|
(f)
|
disposing
off the remaining assets after full payment of company
debts;
|
(g)
|
participating
in civil actions on the behalf of the
company;
|
Article
100
|
The
liquidation committee shall notify creditors within 10 days of its
establishment, and shall make a public announcement in a newspaper within
60 days. Creditors shall file their creditor’s rights with the liquidating
committee of within 30 days of receiving the notice, and within 45days of
publication of the first notice if such creditors did not receive the
notice. and provide supporting materials. The liquidation committee shall
record such creditor's rights. During the reporting creditor, the
liquidation group may not pay off
creditors.
|
Article
101
|
After
identifying the company’s assets and preparing the balance sheet and
schedule of assets, the liquidating committee shall prepare a liquidating
plan, which shall be submitted to the shareholders’ committee or the
relevant authority for
ratification.
|
Article
102
|
After
payment of liquidation expense, wages and expense for labor insurance of
the workers ,the statutory reserve fund and company debts, the remaining
assets shall be distributed to the shareholder in proportion to their
equity interest, otherwise shall not distribute
it.
|
Article
103
|
In
the course of liquidation, the company may continue to operate , but may
not conduct the business activities not relevant to its
operation.
|
Article
104
|
After
identification of company assets and preparation of the balance sheets and
schedule of assets, the liquidating committee discovers that the company
does not have sufficient assets to fully repay company debts, the
liquidating committee shall immediately file a bankruptcy application with
the Court and shall transfer the liquidating affairs to People’s
Court.
|
Article
105
|
Upon
completion of a company’s liquidation, the liquidating committee shall
prepare a liquidating report, which shall be submitted to the
shareholders’ committee or the relevant authority for ratification, and
upon ratification, the liquidating committee shall submit such report to
the company registration authority to apply for company de-registration,
and make a public announcement of the company’s
termination.
|
Article
106
|
A
committee member who causes loss to the company or its creditors due to
his intentional misconduct or gross negligence shall be liable for
damages.
|
Article
107
|
In
any of the following circumstances, the shareholders may seek to amend the
articles of association:
|
(1)
|
if
the same is in contradiction with the Company Law or other laws and
regulations;
|
(2)
|
the
company’s operating environment and conditions have substantially changed,
and the existing provisions of the articles of association impede the
development of the company.
|
Article
108
|
Any
guidelines, regulations or directives formulated by the Board, the CEO or
the heads of various departments shall not contradict the provisions of
this Constitution.
|
Article109
|
References
in this Constitution on "above", "more than", "off" and "beyond", "full"
are included in this number." Within" and "below", "dissatisfaction" does
not include the number.
|
Article
110
|
If
there exists ambiguity in this Constitution, the provisions of the Company
Law shall be followed.
|
Article
111
|
These
articles of association shall be interpreted accordingly by the
shareholders' meeting.
|
Article
112
|
These
articles of association shall be signed by all the shareholders and shall
take effect upon full agreement of the shareholders
thereto.
|
ZhongXing
Agriculture and
|
||
Husbandry
Holdings Co. Ltd.
|
(signed)
|
|
Date:
September 7, 2007
|
||
Hang
Yu Tai Investment Limited
|
||
(signed)
|
||
Date:
September 7, 2007
|
Chapter
1
|
General
Provision
|
1
|
Chapter
2
|
The
name, address and tenure of operation of the company
|
2
|
Chapter
3
|
The
scope of business of the company
|
2
|
Chapter
4
|
The
registered capital of the company
|
3
|
Chapter
5
|
Names
of shareholders
|
3
|
Chapter
6
|
Method,
amount and date of capital contributions made by
shareholders
|
3
|
Chapter
7
|
The
organization of the company and its formation, their functions and
meetings’ procedures
|
3
|
Section
1
|
Shareholders'
meeting
|
3
|
Section
2
|
The
board of directors
|
5
|
Section
3
|
Chief
Executive Officer
|
8
|
Section
4
|
Audit
Committee
|
9
|
Chapter
8
|
The
legal representative
|
10
|
Chapter
9
|
The rights and
obligations of
shareholders
|
10
|
Chapter
10
|
Investment
|
10
|
Chapter
11
|
Transfer
of equity
|
11
|
Chapter
12
|
Accounting
policies, profit distribution and audit;
|
11
|
Chapter
13
|
Merger,
setting up branches and the increase or decrease of the its registered
capital
|
11
|
Chapter
14
|
Labour
and employment policy, the conference of the representatives of the staff
and workers and the Labour Union
|
11
|
Chapter
15
|
The
dissolution and liquidation of the company
|
12
|
Chapter
16
|
The
amendment of the articles of association of the company
|
12
|
Chapter
17
|
Supplementary
Articles
|
12
|
Article1
|
Definitions
|
Article2
|
The
purpose of this article of association is to maintain the company's
healthy, stable and sustainable development through regulating
organization structure and activities of the company, and then further
protect the lawful rights and interests of the company, the shareholders
and the creditors, in order to realize the goal of gaining profit for the
investors.
|
Article3
|
Should
any term and condition of this article of association be in contradiction
with the mandatory provisions of any existing law and regulations, the law
or regulations shall prevail. Should any term and condition of
this article of association be in contradiction with the non mandatory
provisions of the existing law and regulations, the term and condition of
this article of association shall
prevail.
|
Article4
|
Should
any term and condition of this article of association be in contradiction
with any agreement of the shareholders, the term and condition of this
article of association shall prevail unless it is expressly provided
otherwise in the shareholder
agreement
|
Article5
|
The
formulation and amendment of the article of association shall require the
approval of 90% of the shareholders with voting right. The amendment of
any term and condition shall be approved by 100% of the shareholders with
voting right, and mark beside: amendment of the term shall be approved by
100% of the shareholders with voting
right.
|
Article6
|
The
name and address of the company
|
Article7
|
The
tenure of operation of the company shall be in perpetuity. (amendment of
this term shall be approved by 100% of the shareholders with voting
right).
|
Article8
|
The
business scope of the company
|
Article9
|
The
registered capital of the company is USD$600,000.00. (amendment of this
term shall require approval of 100% of the shareholders with voting
right).
|
Article10
|
Name
and number of shareholders of the
company:
|
Name and address
|
Identification No.
|
||
Party
A :
|
EnPing
City JunTang Town Hang Sing Tai Agriculture Co. Ltd.
|
||
No.
1-3 First Floor, Jiang Zhou Shui Zha Office Building,
|
|||
No.
19 Jiang Zhou Yu Jiang Jun Road, Juntang Town, Enping
City,
|
|||
Guangdong
Province, China
|
|||
Party
B :
|
Macau
EIJI Company Limited
|
22347SO
|
|
Building
A, First floor, No.51-53 B Pi La Street, Macau
|
i.
|
Withdrawal
or dissolution of the shareholder. The share equity is then transferred to
other person under in accordance with Chapter
11.
|
ii.
|
Death
of shareholder. One or more successors inherit the share equity and become
the shareholders instead. (Amendment of this term shall be approved by
100% of the shareholders with voting
right).
|
iii.
|
The
shareholder dies without a successor but has made a probate of a will and
named a beneficiary, therefore the beneficiary becomes a
shareholder.
|
Article11
|
The
company shall prepare a list of the shareholders in accordance with
article 33 of Company Law, and distribute one copy to each shareholder,
and keep at least two copies at the premises of the company, in order for
the shareholder to exercise the shareholder's
right.
|
Article
12
|
The
method, amount and date of capital contributions made by shareholders are
agreed by shareholders as
follows:
|
Party
A:
|
provides
the existing asset and resources including factory, factory buildings,
patent right, exclusive right and land use right (details enclosed),
management right and interest. (all should be settled within 90 days from
the effective date of the
agreement).
|
Party
B:
|
provides
the registered capital of US$600,000.00 and imports from overseas advanced
processing technology and premium quality livestock, seedlings and
advanced production technology and A Power Agro Agriculture Development,
Inc.(APWA"s) proprietary
technology.
|
Article13
|
The
shareholders shall distribute the net profit according to their respective
shareholding.
|
Article14
|
Shareholders
shall bear the risk of the company according to their respective
shareholding, while the company shall bear full responsibility over its
debts.
|
Article15
|
the
company shall issue investment certificates to its shareholders in
according with Article 32, Company
Law.
|
Article16
|
The
company shall establish the shareholders' meeting which shall comprise all
the shareholders. The shareholders' meeting is the highest authority of
the company, and shall exercise its authorities according to law and
relevant terms in these articles of
association.
|
Article17
|
The
shareholders' meeting shall carry out the following
functions:
|
i.
|
Determining
the company's operation guidelines and investment
plans;
|
ii.
|
Electing
and changing the chairperson, the deputy chairperson and directors;
determining the number of directors, and the percentage of shareholder
directors and non-shareholder directors; determining the remuneration for
the members of board of directors and the payment
term.
|
iii.
|
Electing
and changing the audit members appointed from non-employees (the number of
audit members to be appointed from employees shall be determined according
to law), and determining the number of audit members, and their
remuneration and payment
term.
|
iv.
|
Deliberating
and approving the reports of the board of
directors;
|
v.
|
Deliberating
and approving the reports of the audit
committee;
|
vi.
|
Deliberating
and determining the project to be carried out in the People's Republic of
China with an investment exceeding
USD$6,000,000.00.
|
vii.
|
Deliberating
and approving annual financial budget plans and final account plans of the
company;
|
viii.
|
Deliberating
and approving net profit distribution plans, and provident funds
withdrawal plans, and loss and recovery plans of the
company;
|
ix.
|
Deliberating
and approving the important sales of
assets;
|
x.
|
Deciding
on the change of tenure of operation of the company, dissolution and
liquidation of the company;
|
xi.
|
Deliberating
and approving the matters concerning transfer of equity of the
company;
|
xii.
|
Amending
the articles of association of the
company;
|
xiii.
|
Approving
the establishment of the subsidiaries, branches (a branch is not a
separate legal entity, therefore it has no right of independent
operation);
|
xiv.
|
Adopting
resolutions on employment and dismissal of the accounting
firm;
|
xv.
|
Supervising
and examining the works of the board of directors and its members, the
audit committee and its members, all staffs and professionals employed by
the company;
|
xvi.
|
Exercising
other authorities outside the authorities of the board of
directors.
|
Article18
|
The
shareholders' meeting shall not interfere the authorities of the board of
directors authorized by these articles of
association.
|
Article19
|
The
first shareholders' meeting shall be convened and presided over by the
shareholder who has the largest shareholding and shall exercise it
authorities according to Company Law and Law of Sino-foreign Joint
Ventures.
|
Article20
|
Where
any of the matters within the scope of authority of the shareholders’
meeting, it may be approved by all the shareholders in writing, without
the need of convening a shareholders' meeting. A decision
in writing may be made with the signatures or seals of all the
shareholders thereon, and be kept by the
company.
|
Article21
|
A
shareholders' meeting may be a scheduled meeting and an emergency
meeting:
|
i.
|
The
scheduled meeting shall be held 4 times in a year in second half of
January, April, July and October, whereby the scheduled meeting of January
shall be convened on January 29, and the date is recognized as the
anniversary of the company.
|
ii.
|
The
emergency meeting shall be convened on the following
occasions:
|
a)
|
Any
of the shareholders proposes for such a
meeting;
|
b)
|
It
is called by the board of
directors;
|
c)
|
1/3
of the directors propose for such a meeting to be
held;
|
d)
|
The
audit committee proposes for such a meeting to be
held.
|
Article22
|
The
shareholders' meeting shall be prepared by the board of directors, and the
notice shall be given to all the shareholders by the secretary of the
board of directors.
|
Article23
|
The
scheduled shareholders' meeting shall be presided over by each of the
shareholders by rotation according to their percentage of
shareholding. The duty shareholder is unable to chair the
meeting for any reason, that shareholder chair the next
meeting. Proxy of any absentee shareholder is not allowed to
chair any meeting. (the persons mentioned in articles viii, ix, x of
chapter 1 are exceptions )
|
Article24
|
Where
the board of directors is unable to or doesn't perform the duty to convene
and prepare for the shareholders' meeting, the shareholders may convene
and prepare for it.
|
Article25
|
Where
the shareholders' meeting is convened, a notice to all the shareholders
shall be made 45 days prior to the meeting by the secretary of the board
of directors, unless the urgency of the matter dictates otherwise. The
emergency means the unexpected events which may have a great impact on the
company.
|
Article26
|
The
shareholders should attend the shareholders' meeting personally. If the
shareholders are unable to be present for special reason, they may appoint
their spouses, parents, issues or attorney to attend the meeting as their
proxies and exercise the voting right in writing, or they may not entrust
any person to attend the meeting with their votes in handwriting and
signatures.
|
Article27
|
The
proceedings of the shareholders' meeting shall be minuted which shall be
signed by the shareholders attending the meeting and shall be kept
record. Voting shall be made by ballot. The
shareholders who are present shall vote by ballot bearing their signatures
to agree, object, or abstain in writing. Anyone who shall
refuse to sign on the ballot paper or failed to attend the meeting and yet
failed to express his decision in writing either personally or through his
proxy shall be deemed to have
abstained.
|
Article28
|
Where
the shareholders' meeting requires the directors, the audit committee
members or the senior management to attend the meeting, then they should
be present at the meeting to answer any queries from the
floor.
|
Article29
|
Shareholders
shall cast their votes at the shareholders’' meeting according to their
percentage of shareholding.
|
i.
|
General
matters shall require approval of two-thirds of the votes held by
shareholders;
|
ii.
|
The
adoption of a resolution of reducing the tenure of operation or the
dissolution of the company shall require approval of 90 percent
of the votes held by
shareholders;
|
iii.
|
An
amendment to the articles of association shall require affirmative votes
by 90 percent of the votes held by shareholders; an amendment to a certain
term of the articles of association shall require affirmative votes by 100
percent of the votes held by the shareholders, and note this beside the
term. (( Amendment of this term shall require affirmative votes by 100% of
the voted held by
shareholders)
|
Article30
|
The
company shall have a board of directors. The board of directors is
accountable to the shareholders' meeting and shall have the following
functions:
|
i.
|
Calling
and preparing for a shareholders' meeting, and presenting reports
thereto;
|
ii.
|
Implementing
resolutions passed by the shareholders'
meeting;
|
iii.
|
Determining
the company's operating plans ( upto RMB2,000,000.00) and investment
programs (unto
RMB4,000,000.00);
|
iv.
|
Drafting
annual financial budget plans and final accounting plans of the company
and submitting the plans to the shareholders' meeting for deliberation and
approval;
|
v.
|
Drafting
the company's profit distribution plans and plans to cover company
losses;
|
vi.
|
Drafting
plans to issue company bonds and financial bonds, and submitting the plans
to the shareholders' meeting for deliberation and
approval;
|
vii.
|
Making
decision on the matters concerning the company's loan from bank or any
other financial
institution;
|
viii.
|
Drafting
plans for dissolution or liquidation of the company, and submitting the
plans to the shareholders' meeting for deliberation and
approval;
|
ix.
|
Approving
the structure of the company's internal management, including the name,
the function, the staff s' organization, and the procedure of work
etc.;
|
x.
|
Appointing
or removing the CEO, the heads of each department and the senior
professional personnel and determining their
remuneration;
|
xi.
|
Approving
the the basic management manual of the company, including but not only the
plans, the human resources, the salary, the finance, the working, the
manufacture, the materials, the marketing, the quality, the import and
export and logistics, and the culture of the enterprise
etc.;
|
xii.
|
Supervising
the CEO and the operation of each department; receiving briefings from the
CEO and performing
inspection;
|
xiii.
|
Appointing
the chairman of the board, the directors and the manager of the
subsidiaries;
|
Article31
|
The
members of the board of directors shall be natural persons appointed by
the shareholders' meeting, comprising 5 to 7 persons, and the number of
the members shall be odd number. The chairman of the board deputy chairman
of board and the directors may be appointed from shareholders or
non-shareholders. The age limit for the directors is 60 years'
old.
|
Article32
|
The
tenure of office of the directors shall be 3 years, and may be re-elected,
consecutively. Current directors whose term expire or who have
resigned before their terms expire shall continue to perform the duties
until re-election of directors taking place, failing which they shall
compensate the company for any losses suffered by the company as the
result.
|
Article33
|
The
board of directors shall have one chairman, deputy chairman, and 2
executive directors, the rest are non executive
directors. Executive directors can be candidates as the company
legal representative.
|
Article
34
|
The
company may appoint honorary chairperson, honorary directors, without the
term limit, and such persons shall have no voting
rights.
|
Article
35
|
The
chairperson’s duties and
functions:
|
i.
|
Chairing
the meetings of the board of
directors.
|
ii.
|
drafting
the plan within the purview of the Board, programs, systems, documents,
presented to the Board approval, signing, promulgation and implementation
(see the specific scope of the "Board Rules of
Procedure");
|
iii.
|
chairing
the meeting of shareholders convened by the board of directors or any
meeting jointly held by the Board and the shareholders
;
|
iv.
|
Calling
for the board of directors’
meetings;
|
v.
|
proposing
to the Board of Directors the appointment of CEO, heads of various
departments, as well as other key personne; proposing to the Board of
Directors appointment of directors and key management personnel to the
subsidiary;.
|
vi.
|
supervising
the CEO and performance of various
departments;
|
vii.
|
signing
and publishing document s of the Company and the
Board;
|
viii.
|
signing
letters of appointment and
others;.
|
ix.
|
in
emergency situation, in order to protect the company’s assets from damage
permitting the CEO to specially handle the company’s assets and thereafter
submitting a report thereof to the board of directors and the
shareholders’ meeting;
|
x.
|
Co-signing
and approving with the CEO on matters requiring special
expenditure;
|
xi.
|
supervising
the implantation of corporate
culture;
|
xii.
|
Exercising
other functions dictated by the shareholders’
meeting.
|
Article36
|
The
deputy chairperson shall assist the chairperson in his work, and in the
event that the chairman is unable to perform his duties, the deputy
chairperson shall perform such
duties.
|
Article37
|
The
meeting of board shall be convened once a month, and in principle to be
held on the fourth Saturday of each month. A meeting of the
board shall be convened if the chairperson so decides, or as one-third of
the directors or audit committee or the CEO so
proposes.
|
Article38
|
Board
of directors shall hold scheduled meeting every month by 15-day prior
written notice to the directors by the Secretary of the Board; Emergency
meeting may be held by a 7-day prior notice to the directors in written.
The Board may hold informal meetings to study, discuss and receive
briefings without prior notice.
|
Article39
|
The
meeting of the Board of Directors shall be convened and presided by the
chairperson of the board; where the chairperson of the board cannot or
fail to perform his such function, the meeting shall be chaired by the
deputy chairperson; and where the deputy chairperson fails to do so, then
a director elected by more than half the directors present shall chair
such meeting.
|
Article40
|
The
board of directors shall execute one-man-one-vote written voting system by
open ballot. The decision shall be effective only if approved by over
two-thirds of all directors. If any director is unable to attend the
meeting due to any special reason, he may appoint other director in
writing to express his opinion or decision, followed personally with by
written decision thereafter. In special circumstance where a
director is absent due to death, injury, or deliberate attempt to delay or
refuse to vote, and which has resulted in a split vote situation, then the
chairperson of the meeting shall have a second
vote.
|
Article
41
|
The
directors may vote for, against or abstain from voting on any motion
presented at the meeting.
|
Article
42
|
The
proceedings of the meeting shall be minuted which shall be signed by the
shareholders attending the meeting and shall be kept
record..
|
Article
43
|
The
board of directors may formulate the detailed procedures for the
proceedings of the meeting.
|
Article44
|
A
person in any of the following categories may not serve as a
director:
|
|
1.
|
without
civil capacity or with restricted civil
capacity;
|
|
2.
|
has
been penalized for the following crimes, and completion of the sentence
being less than 5 years ago: embezzlement, bribery, conversion of
property, misappropriation of property, sabotage of social economic order;
or having been deprived of political rights as a result of a criminal
conviction, and completion of such sentence is less than 5 years
ago;
|
|
3.
|
having
served as a director, the factory chief, or the general manager of a
company or enterprise in liquidation as a result of mismanagement, and
being personally responsible for such liquidation, and the date of such
liquidation is less than 3 years
ago;
|
|
4.
|
having
served as the legal representative of a company or enterprise whose
business license was revoked due to its violation of law, and being
personally responsible for such revocation, and such revocation occurred
less than 3 years ago;
|
|
5.
|
in
default of personal debt of a significant
amount.
|
|
6.
|
violated
the one-child policy.
|
Article
45
|
The
directors must fulfill with the following
obligation:
|
|
1)
|
Comply
with laws, rules, regulations and professional ethics, diligently and
faithfully perform their duties, be loyal to the company to safeguard the
highest interests of the company obligations; when their interests
conflict with the interests of the company, must give priority to
safeguard the interests of the
company;
|
|
2)
|
To
exercise their power within the scope of their duties and shall not exceed
the terms of reference or intentionally fail to perform their duties or
delay in performing their duties;
|
|
3)
|
Except
with the approval of the shareholders’ meeting, shall not trade or enter
into contracts with the Company;
|
|
4)
|
shall
not use internal information for their own gain or gain of
others;
|
|
5)
|
Unless
prior disclosure to and approval of the shareholders’ meeting have been
made, the directors shall not engage or help others to engage in any
business or enterprise. Disclosure must be made on the
directors’ businesses prior to the appointment of his
directorship. Any losses suffered by the company as a result of
non disclosure by the directors shall be borne by the directors concerned,
while the company shall have the right to pursue legal remedies against
the directors concerned;
|
|
6)
|
shall
not abuse their position by accepting money or benefit from
others;.
|
|
7)
|
shall
not misuse properties of the
company;
|
|
8)
|
shall
not misappropriate the company’s funds for personal use or use of
others;
|
|
9)
|
shall
not use their position to canvas for business opportunity for themselves
or others;
|
10)
|
shall
turn over any commission paid by others for any transaction entered into
by the company, failing which it shall be deemed as a misappropriation of
the company’s asset or fund;
|
11)
|
shall
not transfer the asset or fund of the company into their own name or into
any other individual’s name,
|
12)
|
shall
not pledge the company’s assets as security or guarantee for payment of
the debts of themselves or
others;
|
13)
|
Strictly
keep company secrets
confidential;
|
14)
|
provide
fair and equitable treatment to all
shareholders;
|
15)
|
diligently
read the company's administrative report, business reports, financial
reports, etc., and keep abreast of company management
situation;
|
16)
|
the
independent exercise of the powers of the directors, and shall not be
manipulated by others; and unless permitted by laws and administrative
regulations shall delegate the powers to
others;
|
17)
|
diligently
accept the supervision of the shareholders, other directors, audit
committee and the employees of the company and listen to their
recommendations;
|
18)
|
shall
not act on behalf of the company or board of directors without due
authorization under the articles of association or by the board of
directors;
|
19)
|
in
the event of resignation, the directors shall continue to perform the
duties of the directors until the resignation of the directors are
accepted by the board of directors, failing which the directors concerned
shall be responsible for any losses suffered by the company as a result
thereof;
|
20)
|
the
company shall deduct from the directors’ remuneration and pay on behalf
taxes payable by the directors according to the
laws.
|
Article
46
|
Article
46 also applies to audit committee, CEO, executives, professional
technical personnel and also the
shareholders.
|
Article
47
|
The
company shall employ a chief executive (the CEO), and shall entrust the
CEO with powers in implementing the company’s business projects (business
plans, investment programs), i.e. the CEO shall be the person responsible
for the implementation of the daily operational matters vis-à-vis with the
external parties and the internal management
people.
|
Article
48
|
Upon
the nomination or recommendation by the chairman, the CEO shall be
employed or dismissed by the Board. Board members can serve as
the CEO, the divisional heads or other senior
positions.
|
Article
49
|
The
tenure of the CEO shall be 5 years, and is renewable. The age
limit for the CEO is 60 years
old.
|
Article50
|
The
duties and functions of the CEO are as
follows:
|
(I)
|
In
charge of all daily operations and management matters of the company,
including
|
|
1.
|
organizing
the departments of the company, implementing annual business plans,
investment programs, and carrying out the directives of the board of
directors;
|
|
2.
|
drafting
the company’s annual business plan and investment
proposal;
|
|
3.
|
personally
or authorizing others represent the company in negotiation, public
relations, advertising and other activities vis-à-vis the customers,
government, intermediaries, etc., drafting of business projects and their
pricing, duration, partner, conclusion and other contractual matters, and
timely reporting the same to the
Board;
|
|
4.
|
in
charge of the company's production, sales, quality control and
services;
|
|
5.
|
proposing
to the Board mobilization of the assets of the
Company;
|
|
6.
|
formulating
and proposing to the Board on the company’s borrowing and the amount,
term, interest rate and method;
|
(II)
|
preparing
the name list of departmental heads and proposing the same to the Board
for formal employment; the departmental heads and other executives shall
be directly answerable to the CEO, and indirectly reporting to the
chairman of the board;
|
(III)
|
personally
or authorizing others employ or dismiss the middle level management
personnel;
|
(IV)
|
proposing
holding of an emergency meeting of board and drafting the agenda of the
meeting;
|
(V)
|
convening
the meeting of the departmental
heads;
|
(VI)
|
together
with the Chief Financial Officer
jointly
approving matters concerning
finances;
|
(VII)
|
together
with the head of financial control jointly approving matters concerning
management of funds;
|
(VIII)
|
representing
the company, and signing documents on behalf of the company, the CEO is
also the company's legal
representative;
|
(IX)
|
approving
expenditure for the projects and within the limit authorized by the
Board;
|
(X)
|
exercise
or delegate such powers authorized by the
Board;
|
(XI)
|
directly
responsible for or delegate such responsibilities to the Chief Operations
Officer for the daily administrative work; organizational strength,
drafting, development of the company's development plans, programs and
other important documents; develop basic management system of the company
(including companies set up various departments and branches , duties,
staffing, wages, etc.), and the corporate office details the specific
regulations submitted to the Board for approval; the company's human
resources (including incentives, training, recruitment, promotion,
transfer, demotion, etc.); the company's external public relations liaison
work; together with the Chief Financial Officer jointly approve the wages
of workers, benefits programs; together with the chairman, the Chief
Financial Officer jointly approve special items expenditure; appointment
or dismissal of the middle level management and staff; approving, specific
capital expenditures within authorized limits; helping the chairman in
building up the company’s corporate culture; communicating with the
workers congress, union and safeguarding the democratic workers’ rights
and benefits.
|
Article
51
|
The
CEO shall attend the board meetings, but with no voting rights, and shall
submit his reports at the board meetings and report to
the chairman if the board meeting is not in
session.
|
Article
52
|
Upon
the request of the board of directors or the audit committee, the CEO
shall accurately report to the board of directors or the audit committee
any contract the company has entered into, its performance, use of funds
and profit and loss situation.
|
Article
53
|
The
company shall formulate "The Work Manual of the CEO", and the same shall
be implemented after its approval by the board of
directors.
|
Article
54
|
The
company shall enter into an employment contract with the CEO setting out
the terms, remuneration and other terms and conditions for his
employment.
|
Article
55
|
The
company shall establish an Audit Committee to carry out the following
functions:
|
(I)
|
carrying
out auditing and inspecting the company's financial
affairs;
|
(II)
|
supervising
the works and performance of the Chairman, directors, the CEO and the
senior management personnel, and enquiring if need to. When
these officers are in violation of the laws, regulations, the constitution
of the company or resolutions of the shareholders’ meeting, or damage the
interests of the company, the audit committee has the right to request for
rectification and to propose to the shareholders’ meeting or the board of
directors recommending
dismissal;
|
(III)
|
proposing
convening of emergency meeting of
shareholders;
|
(IV)
|
convening
a shareholders’ meeting, if the Board of Directors fails to convene,
organize and call for a
meeting;
|
(V)
|
proposing
motion to the shareholders meeting, and the same shall be included in the
agenda for the meeting;
|
(VI)
|
Upon
written request of a shareholder, pursuing legal action against any board
members, the CEO, the heads of various departments, the executive
personnel who has cause damage or loss to the company due to his violation
of the laws, regulations or the constitution of the
company;
|
(VII)
|
attending
board meetings with the right to speak in order to carry out its
supervisory responsibilities;
|
(VIII)
|
engaging
a law firm or accounting firm to investigate the affairs of the company
(or performing the investigation itself), if it finds irregularity in the
operation of the company, the costs thereof shall be borne by the company,
and shall report the same to the shareholders’
meeting;
|
(IX)
|
exercising
other powers as granted by the shareholders’
meeting.
|
Article
56
|
The
audit committee shall comprise of shareholders (at least one) and employee
representatives, of 5 to 13 members, and the number shall be odd
number. The number of representatives of the employees sitting
in the audit committee shall not be less than 1/5, and shall be elected at
the workers congress.
|
Article
57
|
The
term of office of the members shall be 5 years, re-electable and
renewable. The age limit shall be 75 years
old.
|
Article
58
|
In
the event of resignation, the auditors shall continue to perform their
duties until re-election of new auditors, failing which the auditors
concerned shall be responsible for any losses suffered by the company as a
result thereof.
|
Article
59
|
the
directors, the CEO, departmental heads and other senior management
personnel or key managerial personnel may not serve as the
auditors.
|
Article
60
|
The
audit committee shall have a chairman, and may have one or two
vice-chairmen, to be elected by the members of the audit committee by
majority votes.
|
Article
61
|
The
chairman shall convene and chair the audit committee meeting, and if the
Chairman is unable to perform duties or fails to perform his duties,
Vice-Chairman shall take over the chair. If Vice-Chairman
cannot perform his duties or does not discharge his duties, a member
elected by 1/2 or more members of the audit committee shall convene the
meeting.
|
Article
62
|
Generally
the audit committee shall hold two regular meetings each year, one every
six months. An emergency meeting can be convened if 1/3 of the
members of the audit committee shall requisition for one to be held, and
the moderator shall give 15-day written notice to all
members.
|
Article63
|
The
quorum for a meeting of the audit committee shall be more than half of the
members attending, and any resolution shall only be passed if approved by
majority votes.
|
Article64
|
The
audit committee shall execute one-man-one-vote written voting system by
open ballot. In a tie situation, the chairperson of the meeting shall have
a second vote. If any director is unable to attend the meeting
and fails to appoint other member in writing to vote on his behalf, he
shall be deemed to have abstained from
voting.
|
Article65
|
the
employees of the company shall provide the relevant information to the
audit committee, but shall not impede the functioning of the audit
committee.
|
Article
66
|
The
audit committee meeting shall be minuted and its resolutions permanently
kept in files of the company.
|
Article
67
|
All
cost for the performance of the audit committee’s functions shall be borne
by the company.
|
Article
68
|
The
company's legal representative shall be elected among the chairman,
executive directors and the CEO at the shareholders’
meeting.
|
Article
69
|
Any
documents signed by the legal representative on behalf of the company
shall be binding on the company.
|
Article
70
|
Rights
of shareholders are as follows:
|
(I)
|
To
vote in accordance with its equity ratio at the shareholders
meeting,
|
(II)
|
To
be elected to the Board of Directors, audit
committee.
|
(III)
|
To
access financial accounts according to the
laws.
|
(IV)
|
To
appoint proxy to participate in meetings of
shareholders;
|
(V)
|
To
have access to the constitution and audited
accounts.
|
(VI)
|
To
receive profits after tax according to equity
ratio.
|
(VII)
|
pre
emptive right to receive transfer of the equity from other
shareholders.
|
(VIII)
|
To
supervise the actions of the company and to provide suggestions and
enquiries.
|
(IX)
|
To
transfer shareholding in accordance with the constitution and the
laws.
|
(X)
|
To
receive distribution of the company’s assets according to the equity ratio
after the dissolution of the
company.
|
(XI)
|
pursuing
legal action in accordance with the provisions of article 153of the
Company Law against any board members, audit committee members, the heads
of various departments or the people outside the company who has cause
damage or loss to the
company.
|
Article
71
|
Obligations
of shareholders are as follows:.
|
(I)
|
complying
with the laws and the articles of
association;
|
(II)
|
paying
in full subscribed capital;
|
(III)
|
shall
not misappropriate the assets or fund of the
company;
|
(IV)
|
bear
the corporate liability according to the subscribed capital contributions
ratio;
|
(V)
|
shall
not withdraw their capital
contributions;
|
(VI)
|
shall
keep all information of the company
confidential;
|
(VII)
|
to
participate in the liquidation of the company at the instance of
dissolution of the company;
|
(VIII)
|
to
comply with Article 47 of the Constitution of the
company.
|
Article
72
|
The
Shareholders, especially the equity shareholders or controlling
shareholders must comply with Article 20 of the Company Law that they
shall not abuse the rights and corporate separate entity, and if violated,
they must be held accountable.
|
Article
73
|
The
company may invest in other businesses, but shall establish partnership,
an unlimited company or wholly owned
enterprises.
|
Article
74
|
The
company may issue bonds to raise funding in accordance with Chapter 7 of
the Company Law
|
Article
75
|
To
maintain the company's long-term stability of its shareholders, transfer
of shareholding can only be carried out among
shareholders.
|
Article
76
|
The
shareholders shall have a preemptive right to
purchase.
|
Article
77
|
Should
a shareholder intends to sell his shares, he shall notify the other
shareholders. An agreement to purchase must be in writing,
failing such agreement it shall be deemed to have rejected the offer to
purchase.
|
Article78
|
After
sale and transfer of the shares concerned, the old “investment
certificate" shall be destroyed and a new be issued to the new
shareholder.
|
Article
79
|
In
the following circumstances, shareholders are entitled to request the
company to purchase its shares at a reasonable
price:
|
(A)
|
The
company fails to declare profits distribution for 3 years consecutively,
although the company has made consecutive profits for 3
years;
|
(B)
|
the
occurrence of circumstance for dissolution of the company as prescribed in
the articles of association, but the company is being kept in existence by
amending the articles of
association.
|
Article
80
|
The
purchase price may be determined in consultation with the shareholders by
the company, failing such agreement, a valuer may be appointed by the
parties to determine the purchase price
thereof.
|
Article
81
|
The
company shall establish its financial and accounting systems in accordance
with the relevant national statues and
regulations.
|
Article
82
|
The
company shall prepare its financial and accounting reports at the end of
each fiscal year, which shall be reviewed and verified in accordance with
the law.
|
Article
83
|
The
company shall submit its financial and accounting reports prepared in
accordance with the generally accepted accounting principles within one
month after the end of each fiscal year to the
shareholders.
|
Article
84
|
In
distribution of its current year after-tax profit, the company shall
allocate 10 percent to its statutory reserve fund. Allocation to the
company’s statutory reserve fund may be waived once the cumulative amount
of funds therein exceeds 50 percent of the company’s registered
capital.
|
Article
85
|
Where
the statutory reserve fund is not sufficient to cover the company’s loss
from the previous year, the current year profit shall be used to cover
such loss before allocation is made to the statutory reserve
fund.
|
Article
86
|
After
the company has made allocation to the statutory reserve fund, allocation
may be made to the discretionary reserve fund. Detailed implementing
measures shall be formulated by the board of directors to be approved at
the shareholders' meeting.
|
Article
87
|
After
provisions have been made to cover its previous year’s losses and to the
statutory reserve fund, the remainder of the profit shall be distributed
to the shareholders in proportion to the equity
interest.
|
Article
88
|
The
company shall engage an accounting firm to audit the financial affairs of
the company at the shareholders’
meeting.
|
Article89
|
The
company shall provide the certified public accountants with truthful and
complete accounting vouchers, account books, financial and accounting
reports and other accounting documents, and shall not refuse to provide,
conceal information or misreport.
|
Article
90
|
The
company may not establish any separate accounting book besides the
accounting book prescribed by law.
|
Article
91
|
The
company shall merge with other enterprises. It may increase its capital,
but not decrease its capital.
|
Article
92
|
The
company shall adopt employment and labour policies as prescribed by the
country or local governments within the scope of the relevant
provisions. It may adopt the experience of other developed
countries in attracting
talents.
|
Article
93
|
The
company shall allow setting up of workers’ congress, trade unions and
other organizations to protect employees’ rights. The company
will pay for operating expenses.
|
Article
94
|
The
company shall draw up regulations on wages, welfare, labor safety,
insurance, dismissal and other matters related to employees,and shall seek
the opinion of the trade
unions.
|
Article
95
|
The
company may be dissolved in any of the following
circumstances:
|
(1)
|
The
shareholders’ meeting has adopted a resolution for dissolution (amendment
of the term shall be approved by 100% of the shareholders with voting
right).
|
(2)
|
The
company’s business license is revoked and its operation is ordered to be
closed.
|
(3)
|
If
the company is to be dissolved pursuant in Article 183 of the Company Laws
by the People’ Court.
|
Article
96
|
Where
the company counters severe difficulties in the management of the company,
and the continuation of the same would cause heavy losses, and it cannot
be solved by any other means, then the shareholders having more than 10%
voting rights may petition the court for dissolution of the
company.
|
Article
97
|
Once
the company is dissolved, the shareholders shall form a liquidation
committee within 15 days from the date of
dissolution.
|
Article
98
|
The
liquidation committee shall exercise the following functions in the course
of liquidation:
|
(a)
|
identifying
the company’s assets, and preparing the balance sheet and schedule of
assets respectively;
|
(b)
|
notifying
creditors through notice or public
announcement;
|
(c)
|
handing
the company’s ongoing business which are related to
liquidation;
|
(d)
|
making
full payment of taxes owed or and the process of
liquidation,
|
(e)
|
identifying
the company’s creditor’s rights and debtor’s
liabilities;
|
(f)
|
disposing
off the remaining assets after full payment of company
debts;
|
(g)
|
participating
in civil actions on the behalf of the
company;
|
Article
99
|
The
liquidation committee shall notify creditors within 10 days of its
establishment, and shall make a public announcement in a newspaper within
60 days. Creditors shall file their creditor’s rights with the liquidating
committee of within 30 days of receiving the notice, and within 45days of
publication of the first notice if such creditors did not receive the
notice. and provide supporting materials. The liquidation committee shall
record such creditor's rights. During the reporting creditor, the
liquidation group may not pay off
creditors.
|
Article
100
|
After
identifying the company’s assets and preparing the balance sheet and
schedule of assets, the liquidating committee shall prepare a liquidating
plan, which shall be submitted to the shareholders’ committee or the
relevant authority for
ratification.
|
Article
101
|
After
payment of liquidation expense, wages and expense for labor insurance of
the workers ,the statutory reserve fund and company debts, the remaining
assets shall be distributed to the shareholder in proportion to their
equity interest, otherwise shall not distribute
it.
|
Article
102
|
In
the course of liquidation, the company may continue to operate , but may
not conduct the business activities not relevant to its
operation.
|
Article
103
|
After
identification of company assets and preparation of the balance sheets and
schedule of assets, the liquidating committee discovers that the company
does not have sufficient assets to fully repay company debts, the
liquidating committee shall immediately file a bankruptcy application with
the Court and shall transfer the liquidating affairs to People’s
Court.
|
Article
104
|
Upon
completion of a company’s liquidation, the liquidating committee shall
prepare a liquidating report, which shall be submitted to the
shareholders’ committee or the relevant authority for ratification, and
upon ratification, the liquidating committee shall submit such report to
the company registration authority to apply for company de-registration,
and make a public announcement of the company’s
termination.
|
Article
105
|
A
committee member who causes loss to the company or its creditors due to
his intentional misconduct or gross negligence shall be liable for
damages.
|
Article
106
|
In
any of the following circumstances, the shareholders may seek to amend the
articles of association:
|
|
(1)
|
if
the same is in contradiction with the Company Law or other laws and
regulations;
|
|
(2)
|
the
company’s operating environment and conditions have substantially changed,
and the existing provisions of the articles of association impede the
development of the company.
|
|
(amendment
of the term shall be approved by 100% of the shareholders with voting
right.)
|
Article
107
|
Any
guidelines, regulations or directives formulated by the Board, the CEO or
the heads of various departments shall not contradict the provisions of
this Constitution.
|
Article108
|
References
in this Constitution on "above", "more than", "off" and "beyond", "full"
are included in this number." Within" and "below", "dissatisfaction" does
not include the number.
|
Article
109
|
If
there exists ambiguity in this Constitution, the provisions of the Company
Law shall be followed.
|
Article
110
|
These
articles of association shall be interpreted accordingly by the
shareholders' meeting.
|
Article
111
|
These
articles of association shall be signed by all the shareholders and shall
take effect upon full agreement of the shareholders
thereto.
|
Jiang
Men City Heng Sheng Tai Agriculture Development Co.
Limited
|
(signed)
|
Date:
September 22, 2007
|
|
Macau
EIJI Company limited
|
(signed)
|
Date:
September 22, 2007
|
(Sd.)
Ms. Teresa K. L. LAI
|
Ms.
Teresa K. L. LAI
|
|
for
Registrar of Companies
|
Hong
Kong
|
(
Sd.) Raymond Leung
|
|
Raymond Leung | |
CAYMAN
HK NOMINEES LIMITED
|
One
|
25/F
Car Po Commercial Building,
|
|
18
Lyndhurst Terrace, Central
Hong
Kong.
|
|
Corporation
|
Total
Number of Shares Taken
|
One
|
(Sd.)
Cheng, Chan Yuet Har
|
Cheng,
Chan Yuet Har
|
Secretary
|
25/F
Car Po Commercial Building,
|
18
Lyndhurst Terrace, Central, Hong
Kong
|
(a)
|
The
number of Members for the time being of the Company (exclusive of persons
who are in the employment of the Company, and of persons, who having been
formerly in the employment of the Company were, while in such employment
and having continued after the determination of such employment to be,
Members of the Company) is not to exceed fifty, but where two or more
persons hold one or more shares in the Company jointly, they shall, for
the purpose of this paragraph, be treated as a single
Member.
|
(b)
|
Any
invitation to the public to subscribe for any shares or debentures or
debenture stock of the Company is hereby
prohibited.
|
(c)
|
The
right of transfer of shares shall be restricted as hereinafter
provided.
|
(d)
|
The
Company shall not have power to issue share warrants to
bearer.
|
10.
|
(a)
|
Subject
to Section 116C of the Ordinance, an Annual General Meeting and a meeting
called for the passing of a special resolution shall be called by not less
than 21 days' notice in writing, and any other general meeting shall be
called by not less than 14 days' notice in writing. However, a meeting
that is called by shorter notice than herein provided shall nevertheless
be deemed to have been duly called if it is so
agreed:
|
|
(i)
|
in
the case of Annual General Meetings, by all the members entitled to attend
and vote; and
|
|
(ii)
|
in
the case of any other meeting, by a majority in number of the members
having the right to attend and vote at the meeting, being a majority
together holding at least 95 per cent in nominal value of the shares
giving that right.
|
|
(b)
|
The
quorum for the transaction of business at any General Meeting shall be two
members present in person or by proxy, except when the Company has only
one member, the sole member shall have the power to transact business as
if at a General Meeting.
|
(c)
|
Meetings
may be held in Hong Kong or at such other place or places in the world as
the majority of the shareholders in value shall from time to time by
resolution determine.
|
(d)
|
A
resolution in writing signed by 100% of the shareholders and annexed or
attached to the General Meetings Minute Book shall be as valid and
effective as a resolution passed at a meeting duly convened. The signature
of any shareholder may be given by his Attorney or Proxy. Any such
resolution may be contained in one document or separate copies prepared
and/or circulated for the purpose and signed by one or more
shareholders.
|
14.
|
(a)
|
The
Directors shall be paid out of the funds of the Company remuneration for
their services such
sum
(if any) as the Company may by ordinary resolution from time to time
determine.
|
|
(b)
|
The
Directors shall also be entitled to be paid their reasonable expenses
incurred in consequence of their attendance at meetings of Directors,
committee meetings or general meetings or otherwise in or about the
business of the Company.
|
21.
|
(a)
|
The
Directors may exercise all the powers of the Company to borrow money and
to mortgage or charge all or any part of the undertaking, property and
assets (present and future) and uncalled capital of the Company and to
issue debentures, debenture stocks, bonds and other securities, whether
outright or as collateral security for any debt, liability or obligation
of the Company or of any third party. Debentures, debenture stocks, bonds
and other securities of the Company may be made assignable free from any
equities between the Company and the person to whom the same may be
issued, and may be issued at a discount, premium or otherwise and with any
special privileges as to redemption, surrender, drawings, allotment of
shares, attending and voting at general meetings of the Company,
appointment of Directors and
otherwise.
|
(b)
|
The
Directors shall cause a proper register to be kept, in accordance with the
provisions of the Ordinance, of all mortgages and charges affecting the
property of the Company and shall duly comply with the requirements of the
Ordinance in regard to the registration of mortgages and charges therein
specified and otherwise. Where any uncalled capital of the Company is
charged, all persons taking any subsequent charge thereon shall take the
same subject to such prior charge, and shall not be entitled, by notice to
the members of otherwise, to obtain priority over such prior
charge.
|
31.
|
(a)
|
Meetings
of the Directors may be held in Hong Kong or in any other part of the
world as may be
convenient
for the majority.
|
(b)
|
Notice
of a meeting of Directors shall be deemed to be duly given to a Director
if it is given to him personally, orally or in writing, or sent to him at
his last known address or any other address given by him to the Company
for this purpose. A Director may consent to short notice of and may waive
notice of any meeting and any such waiver may be
retrospective.
|
(c)
|
The
Directors may elect a Chairman of the Board and determine the period for
which he is to hold office; but if no such Chairman be elected, or if at
any meeting the Chairman be not present within 5 minutes after the time
appointed for holding the meeting, the Directors present may choose one of
their members as the chairman of such
meeting.
|
(d)
|
Unless
otherwise determined by the Company by Ordinary Resolution, the quorum for
meeting of the Directors shall be two. Matters arising at any meeting
shall be decided by a majority of votes. In case of an equality of votes,
and in case a chairman of the meeting is chosen or elected, the chairman
shall have a second or casting
vote.
|
(e)
|
A
resolution in writing signed by all the Directors (so long as they
constitute a quorum as provided in Article 31 (d) hereof) and annexed or
attached to the Directors' Minute Book shall be as valid and effective as
a resolution passed at a meeting duly convened. The signature of any
Director may be given by his Alternate. Any such resolution may be
contained in one document or separate copies prepared and/or circulated
for the purpose and signed by one or more of the Directors. A cable, telex
or fax message sent by a Director or his Alternate shall be deemed to be a
document signed by him for the purpose of this
Article.
|
(f)
|
If
the Company shall have only one director, the provisions hereinbefore
contained for meetings of the directors shall not apply but such sole
director shall have full power to represent and act for the Company in all
matters and in lieu of minutes of a meeting shall record in writing and
sign a note of memorandum of all matters requiring a resolution of the
directors. Such note or memorandum shall constitute sufficient evidence of
such resolution for all purposes.
|
37.
|
(a)
|
If
the Company shall be wound up whether voluntarily or otherwise the
liquidators may with the
sanction
of a special resolution divide among the contributories in specie or kind
any part of the assets of the Company and may with the like sanction vest
any part of the assets of the Company in trustees upon such trusts for the
benefit of the contributories or any of them as the liquidators with the
like sanction think fit.
|
(b)
|
If
thought expedient any such division may be otherwise than in accordance
with the legal rights of the contributories and in particular any class
may be given preferential or special rights or may be excluded altogether
or in part; but in case any division otherwise than in accordance with the
legal rights of the contributories shall be determined on any contributory
who would be prejudiced thereby shall have a right to dissent and
ancillary rights as if such determination were a Special Resolution passed
pursuant to Section 237 of the
Ordinance.
|
(c)
|
In
case any of the shares to be divided as aforesaid consist of shares which
involve a liability to calls or otherwise, any person entitled under such
division to any of the said shares may, within ten days after the passing
of the special resolution by notice in writing, direct the Liquidator to
sell his proportion and pay him the net proceeds, and the Liquidator
shall, if practicable, act
accordingly.
|
(Sd.)
Cheng, Chan Yuet Har
|
Cheng,
Chan Yuet Har
|
Secretary
|
25/F
Car Po Commercial Building,
|
18
Lyndhurst Terrace, Central,
|
Hong
Kong.
|
1.
|
The
Vendor is the inventor, and the legal patent holder of an Intellectual
Property for the manufacturing of livestock feed applicable to the
consumption of cattle and cows, namely “Zhi Wu Jie Gan Si Liao Chan Ye Hua
Chan Pin Ji Qi Zhi Bei Fang Fa” registered under Patent Number “ZL2005
10063039.9 and Certificate # 329722” of People’s Republic of China
(hereinafter refer to as “SFM
Technology”).
|
2.
|
The
Purchaser is a company incorporated in Hong Kong Special Administrative
Region, People’s Republic of China with limited liability and having its
principal place of business at Rm 1613, 16/F, Tai Yau Building, 181
Johnston Road, Wanchai Hong Kong. It is a fully owned subsidiary of Sino
Agro Food, Inc. (“SIAF”) which is a Nevada Incorporation quoted on OTCB
under Pinksheet companies with a representative office at Rm3711, China
Shine Plaza, No.9 Lin He Xi Road, Tianhe District, GuangZhou, People’s
Republic of China.
|
3.
|
The
Present market value of the SFM Technology including its related brand and
label is collectively valued at RMB68,000,000.00 (equivalent to
US$10,000,000.00 based on exchange rate of US$1=RMB6.80) as indicated in a
Valuation Report as prepared by a firm of professional valuers registered
in People’s Republic of China. Copies of the Valuation Report
dated 30
th
September 2008 is annexed hereto and marked as Appendix (V
1).
|
4.
|
The
Vendor has agreed to sell and the Purchaser has agreed to purchase an
exclusive master license to use and to license other users to
use the secrets, copyrights, processes and other Intellectual Property
associated with the SFM Technology (hereinafter referred to as “the
Exclusive Master License”) in any territory of the People’s Republic of
China free from all encumbrances with all rights to the patented
Intellectual Property including related brand and label as governed by the
laws of People’s Republic of China after the date of this Agreement upon
the terms and conditions hereinafter
appearing.
|
1.
|
Definitions
and Interpretations
|
(a)
|
“Purchaser” includes
its respective nominees and successors in title
;
|
(b)
|
“Vendor” include
his heir personal representative and successors in title
;
|
|
(c)
|
“The
Completion Date” shall refer to the date of full payment of all monies and
shares payable by the Purchaser herein provided
;
|
|
(d)
|
“US$”
means United States Dollars, the currency of the United States of America
;
|
|
(e)
|
All
undertakings, agreements, terms, warranties and representations expressed
to be made by two or more parties hereto shall be deemed to be made by
them and be binding on them jointly and severally
;
|
|
(f)
|
Reference
to natural persons shall be deemed to include body corporate and the
plural number shall include the singular number and vice versa
;
|
|
(g)
|
Words
importing the masculine gender shall be deemed to include the feminine and
neuter gender ;
|
|
(h)
|
The
headings are inserted for convenience of reference only and shall not
affect the interpretation of this Agreement hereof
;
|
|
(i)
|
Where
an act required to be done within a specified number of days after or from
a specified date, the period is inclusive of and begins to run from the
date so specified ;
|
|
(j)
|
A
period of a month from the happening of an event or the doing of an act or
thing shall be deemed to be inclusive of the day on which the event
happens or the act or thing is or was required to be done
;
|
|
(k)
|
The
Appendices hereto shall be taken, read and construed as an essential part
of this Agreement ;
|
2.
|
Agreement for the Sale
and Purchase
|
2.1
|
Purchase Consideration
and Part Payment
|
2.2
|
Payment of Balance
Purchase Price
|
|
The
balance of the Purchase Price amounting to
United States Dollars
Seven Million Nine Hundred and Twenty Six Thousand and Five
Hundred
(US$7,926,500.00) only (hereinafter called "the Balance
Purchase Price”) shall be paid and settled within a period of three years
from the date hereof and in manner herein set
forth:
|
Tranche
|
Date of settlements
on or before
|
Partial payment
amount
in US$
|
Related terms and conditions
|
|||
1
|
31
st
December 2008
|
4,426.00
|
Payable
in cash and / or in other forms of assets acceptable to the
Vendor.
|
|||
2
|
31
st
December 2009
|
1,000,000.00
|
Payable
in cash and / or in SIAF shares calculated at 85% of its three months’
average of its market prices from the date leading up to the date of
settlement.
|
|||
3
|
31
st
December 2010
|
1,000,000.00
|
Payable
in cash and / or in SIAF shares calculated at 85% of its three months’
average of its market prices from the date leading up to the date of
settlement.
|
|||
4
|
|
11
th
November 2011
|
|
1,500,000.00
|
|
Payable
in cash and / or in SIAF shares calculated at 85% of its three months’
average of its market prices from the date leading up to the date of
settlement.
|
2.3
|
Purchaser’s Right
after payment of the Part
Payment
|
3.
|
Due
Diligence
|
3.1
|
Purchaser's Rights to
Due Diligence
|
|
(i)
|
make
such reasonable enquiries with relevant Authorities and clients of the
Vendor in the matters relating to the SFM Technology and related brand and
label.
|
|
(ii)
|
make
due diligence investigation of the track records of the SFM
Technology.
|
|
(iii)
|
make
due diligence investigation of the economic and financial forecast and
projection of the application of the SFM Technology by the Purchaser and
its auditors .
|
3.2
|
Vendor's
Obligations
|
3.3
|
Purchaser's
Entitlement to claim
|
|
(i)
|
the
Purchaser is unable to make reasonable enquiries or to carry out due
diligence investigations set forth in Clause 3.1 hereof due to no fault of
the Purchaser; or
|
|
(i)
|
it
is found, as a result of the due diligence investigations or otherwise,
that any of the Representations and Warranties contained in Clause 9 are
untrue, misleading or incorrect or have not been fully carried out in any
material respect, or
|
|
(iii)
|
in
any event of any matter or thing arising or becoming known or being
notified to the Purchaser which is materially inconsistent with any of the
Representations and Warranties contained in Clause 9 hereof
;
|
4.
|
Delivery of
Documents
|
5.
|
Completion
|
5A
|
Subsequent
Settlement
|
6.
|
Outgoings
|
|
The
Vendor hereby agrees to pay all annual patent fee, charges, levies, taxes
and other payments if any payable by Vendor in relation to the Patent of
the SFM Technology and its related brand and label on or before the
Completion Date, and as such the Vendor shall indemnify the Purchaser or
its assigns in respect of any penalties and damages which may be arise as
a result of any late payments or default in payment in respect of such
payments.
|
8.
|
Vendor’s
Indemnity
|
If
there shall be any breach by the Vendor of any warranty, guarantee,
undertaking and agreement herein contained, then the Purchaser shall be
entitled to be indemnified by the Vendor in respect of any loss resulting
from such breach.
|
9.
|
Representations
and Warranties
|
9.1
|
The
Vendor hereby represents, warrants and undertakes to and with the
Purchaser as follows :-
|
|
(a)
|
None
of the patented SFM Technology and its related brand and label that are
registered in the name of the Vendor are subject to any option, charge,
lien or encumbrances and the Vendor is the beneficial owner thereof
;
|
|
(b)
|
The
Valuation Report presented to the Purchaser dated 30th September 2008 gave
a true and fair view of the market value of the SFM Technology and its
related brand and label calculated up to the Completion
Date.
|
|
(c)
|
The
Vendor is not involved in any dispute with any revenue authorities
concerning any matter likely to affect in any way the ownership and
application of the SFM Technology and its related brand and
label.
|
|
(d)
|
The
Vendor has not prior to the date hereof agreed to sell or given or agreed
to license the Patent SFM Technology and its related brand and label to
any other party apart from the
Purchaser.
|
|
(e)
|
The
Vendor is not engaged in any litigation or arbitration proceedings and no
such proceedings and no prosecution are pending or threatened against the
Vendor in selling of the license of the SFM Technology and its related
brand and label, and the Vendor knows of no facts or matters likely to
give rise thereto.
|
|
(f)
|
The
Vendor has no mortgages liens other encumbrances secured over the SFM
Technology and its related brand and
label.
|
10.
|
Default by
Purchaser
|
11.
|
Force
Majeure
|
12.
|
Time of
Essence
|
13.
|
Notice
|
|
Every
notice, request, consent, demand or other communication under this
Agreement shall be given or made in writing shall be sufficiently served
on the party to whom it is addressed if it is left at or sent by
registered post or telegram to the address given above or to the place of
business for the time or to such address as one party hereto may from time
to time notify in writing to the other party hereto. A notice sent by
registered post or facsimile shall be deemed to have served at the time
when it ought in due course of post or transmission to have been
received.
|
14.
|
Governing
Law
|
|
This
Agreement shall be governed by and construed in accordance with the Laws
of Republic of People of China.
|
15.
|
Modifications
|
16.
|
Severability
|
17.
|
This Agreement the
Sole Agreement
|
18.
|
Costs
|
19.
|
Successors
Bound
|
Signed
by
|
)
|
||
THE
PURCHASER
|
)
|
(Rubber
stamp of
|
|
)
|
Tri-Way
Industries Limited affixed)
|
||
)
|
|||
)
|
(signed)
|
||
Signed
by THE VENDOR
|
)
|
||
)
|
|||
)
|
(signed)
|
||
)
|
|||
Shan
De Zhang
|
1.
|
Upon
mutual benefit, EnPing City JunTang Town Hang Sing Tai Agriculture Co.
Ltd. (“Party A”) and Macau EIJI Company Limited (“Party B”)
hereby agree to enter into this joint venture agreement in accordance with
the laws of Sino Foreign Joint Venture Enterprises of the People’s
Republic of China and other relevant
regulations.
|
2.
|
The
Joint Venture Parties
|
Party
A :
|
EnPing
City JunTang Town Hang Sing Tai Agriculture Co.
Ltd.
Country of Registration :
China
|
Address :
|
No.
1-3 First Floor, Jiang Zhou Shui Zha Office Building, No. 19 Jiang Zhou Yu
Jiang Jun Road, Juntang Town, Enping City, Guangdong Province,
China
|
Party
B :
|
Macau
EIJI Company
Limited
Country of Registration :
Macau, China
|
Address :
|
Building
A, First floor, No.51-53 B Pi La Street,
Macau
|
3.
|
For
mutual benefit, the Parties hereto agree to enter into a joint venture by
setting up in Enping City, Guangdong Province, China a joint venture
company, to be named as Jiang Men City Heng Sheng Tai Agriculture
Development Co. Ltd. (“the JVCo”).
|
4.
|
The
parties hereto as the legal persons jointly incorporate the JVCo in
accordance with the laws of Sino Foreign Joint Venture Enterprises of the
People’s Republic of China and other relevant
regulations.
|
5.
|
The
activities of the JVCo shall be carried out in compliance with the laws of
the People’s Republic of China and other relevant regulations, and be
subjected to its jurisdiction.
|
6.
|
The
parties hereto shall share the risks, indebtedness and losses of the JVCo
as well its profit.
|
7.
|
The
objective of the joint venture is to advance the development of
agricultural products to cater for the increasing domestic or overseas
demand for the agricultural products, so as to gain economical benefits
for both parties.
|
8.
|
The
scope of business: to produce highly in demand agricultural products for
domestic and overseas markets in order to its competitiveness in the
international markets.
|
9.
|
The
scale of business: to produce 12,708,333 kilograms of Hylocereus Undatus
dried flowers per year.
|
10.
|
The
parties hereto the method of cooperation as follows
:-
|
|
(1)
|
The
parties hereto shall deliberate on the tenure of the joint
venture. Party A shall provide its existing assets, resources
(including factories, intellectual property and land usage rights,
business operation right and benefits) (“Party A’s Assets and Rights”) as
the consideration for this joint
venture.
|
|
(2)
|
Party
B shall provide a sum of US$600,000 as the registered capital required for
the establishment of the JVCo and procure foreign modern technology for
value adding, premium seedlings, as well as modern production technique
and technology of A Power Agro Agriculture Development, Inc. as the
consideration for this joint
venture.
|
|
(3)
|
Party
A shall have 25%, whereas Party B 75% of the equity interest in the JVCo,
the parties hereto shall share the profit and loss of the JVCo in that
ratio.
|
|
(4)
|
After
the incorporation of the JVCo and upon the payment by Party B of the
registered capital, Party A shall forthwith transfer and assign all Party
A’s Assets and Rights to the JVCo.
|
11.
|
All
plant and equipment to be purchased by Party B shall be first verified and
approved by the relevant
authorities.
|
12.
|
After
verification and approval of the relevant authority of the sale and
purchase agreements entered into by the JVCo and Party B for the purchase
of the plant and equipment, the personnel of the JVCo shall within three
months thereafter inspect and verify the purchased items and appoint Bank
of China to liaise with the banker of Party B on the issuance of the
necessary letters of credit.
|
13.
|
Party
B shall ship all the purchased goods to a designated seaport within 6
months from the date of receipt of the letter of
credit.
|
14.
|
The
parties hereto shall abide by the time frame for allocating the land or
capital, failing which the defaulting party shall bear all losses arising
therefrom.
|
15.
|
Party
A shall have the following
responsibilities:
|
|
1.
|
To
submit the necessary application to the relevant authorities for
incorporation of the JVCo;
|
|
2.
|
To
submit the necessary application to the relevant authorities for the use
of land by the JVCo;
|
|
3.
|
To
provide necessary facilities for the JVCo and to purchase locally the
requisite plant and equipment;
|
|
4.
|
To
facilitate purchase of raw materials, and to handle all applications for
the supply of water, electricity, telephone and other communication
connection;
|
|
5.
|
To
handle procurement of workers, and to recommend requisite management and
technical personnel for consideration for employment by the management of
the JVCo;
|
|
6.
|
To
deal with invitation for the expatriates personnel of the JVCo, and to
arrange the necessary accommodation and transportation for such
personnel.
|
|
7.
|
To
assist in matters relating to the transportation of and related customs
matter for the export of the
products;
|
|
8.
|
To
be responsible for the transportation of all equipment imported by Party B
from the main ports in Guangdong Province to the project sites of the
JVCo; and
|
|
9.
|
Other
matters as agreed by the parties to be the responsibilities of Party
A.
|
16.
|
Party
B shall have the following
responsibilities:
|
|
1.
|
To
provide the necessary funding to meet the construction requirement of the
JVCo;
|
|
2.
|
To
fund the procurement of facilities, imported or sourced locally, and other
technical know-how and technologies as required by the
JVCo;
|
|
3.
|
To
provide production technical know-how, operation and management
manuals;
|
|
4.
|
To
provide related global technical and market
information;
|
|
5.
|
To
provide technical training;
|
|
6.
|
To
source from overseas those raw materials, parts and equipment that cannot
be procured locally;
|
|
7.
|
To
deliver all purchased equipment to a designated seaport according to the
agreed schedule, and to be responsible for installation, commissioning and
running of the equipment;
|
|
8.
|
To
strive to the competitiveness of the products in international markets,
and to increase the export volume so as to ensure JVCo’s attain a balanced
foreign exchange and high economic return;
and
|
|
9.
|
Other
matters as agreed by the parties to be the responsibilities of Party
B.
|
17.
|
If
the JVCo suffers losses as a result of failure of any of the parties in
carrying out its responsibilities, the defaulting party shall bear all
losses arising therefrom.
|
18.
|
The
shareholders’ meeting is the highest authority of the
JVCo.
|
19.
|
The
Board of directors shall consist of 5 members; 2 appointees from Party A
and 3 from Party B. The Board shall have 1 chair person and 2 deputy chair
persons, for tenure of 3 years. A director appointed by Party A shall be
made the Chair person, whereas 2 directors appointed by Party B shall be
made the deputy chair persons.
|
20.
|
The
legal representative of the JVCo shall be selected at the shareholders’
meeting, and if the chair person for any reason is not able to carry out
his duties, deputy chair person or other directors shall be empowered to
represent the JVCo.
|
21.
|
The
Board shall schedule to meet once a month on the 4
th
Monday of every month at Enping City of Guangdong Province, or at any
other venue when necessary. The Board of Directors may
hold short notice meeting. The meetings of the Board
shall be chaired by the chair person or the deputy chair person or other
director as directed by the chair
person.
|
22.
|
Director
who is not able to attend any scheduled meeting may appoint proxy to
attend the meeting in writing, and such proxy shall have the right of
speech and voting right at the meetings, but such proxy shall not
represent more than 1 absent
director.
|
23.
|
The
quorum for any meeting shall be two third of the members of the
board.
|
24.
|
The
meetings of the board of directors shall be conducted in a respectful,
fair and just manner.
|
25.
|
The
following matters shall require unanimous approval of the board of
directors before tabling the same at the shareholders’ meeting
:
|
|
1.
|
Amendment
to the Constitution of the JVCo;
|
|
2.
|
Resolution
of the JVCo;
|
|
3.
|
Increasing
or transferring the registered capital of the JVCo;
and
|
|
4.
|
Merger
of the JVCo with other business
entity.
|
26.
|
The
management of the JVCo shall be responsible for the day to day
administration and operation of the company. The management
shall consist of 1 General Manager, 1 Deputy General Manager and several
other senior managers, the employment of same shall be decided by the
board of directors, for tenure of 5
years.
|
27.
|
The
duties and powers of the General Manager are as follows
:
|
|
1.
|
To
carry out the matters as directed in the company’s Constitution and the
shareholders’ meetings;
|
|
2.
|
To
nominate key persons for various departments of the company, and to
recruit other personnel and to notify the board of directors of such
employment;
|
|
3.
|
To
formulate the company’s operation and management systems, and to deploy,
direct, supervise and inspect the
operation;
|
|
4.
|
To
periodically submit report on work progress, financial and profit &
loss report to the board of
directors;
|
|
5.
|
To
decide on maters relating to purchase of raw materials and parts &
equipment, marketing of products, contracts for specific cooperation with
others and cash flow financing;
|
|
6.
|
To
monitor and adjust price fixing for the company’s
products;
|
|
7.
|
To
represent the JVCo in negotiation and signing of
contracts;
|
|
8.
|
To
hold management meetings and to execute the decisions made
thereat;
|
|
9.
|
To
resolve matters/problems raised by various departments of the
company;
|
|
10.
|
To
represent or appoint agent to represent the JVCo, as directed by the board
of directors, in matters concerning the
JVCo;
|
|
11.
|
To
handle all disciplinary matters;
and
|
|
12.
|
To
handle all other matters within the ambit of duties of the General
Manager.
|
28.
|
The
duties and powers of the Deputy General Manager are as follows
:
|
|
1.
|
To
assist the General Manager in the operation and management of the
JVCo;
|
|
2.
|
To
take over the function of the General Manager, when the General Manager is
absent;
|
|
3.
|
To
represent the JVCo in business
negotiation;
|
|
4.
|
To
deal with conflicts arisen in the course of operation and other related
problems; and
|
|
5.
|
To
handle all other matters within the ambit of duties of the Deputy General
Manager.
|
29.
|
The
board of directors shall decide on the grouping of personnel during the
pre development stage of the JVCo. All expenses incurred during
the pre development stage shall be gradually billed into the cost of
production over the years.
|
30.
|
the
JVCo shall abide by the laws of China and other rules and regulations as
formulated by the governmental labour department on matters relating to
employment, dismissal, wages, discipline, welfare of workers employed by
the JVCo.
|
31.
|
The
workers of the JVCo shall have to right to form trade union and organize
activities thereof.
|
32.
|
The
board of directors shall at the end of each calendar year prepare the
budget and plan for the following year for the rate of production, as well
as the import and export, for execution by the heads of
departments. The budget and plan may be adjusted along the way
according to market condition.
|
33.
|
For
any purchase or procurement of material or equipment, priority must be
given for such items to be sourced locally, taking into account the
quality, specification and pricing of the items
concerned.
|
34.
|
After
due inspection has been carried out by China’s Export Goods Inspection
Department, the agricultural products of the JVCo shall be exported
directly according to the yearly plan for export. The
JVCo may also participate in Guangzhou Expo for purpose of exporting the
products.
|
35.
|
In
principle the JVCo shall export all the company’s products of export
quality to attain a balance of payment in its imports and
exports.
|
36.
|
Party
A shall be responsible for marketing the products locally, whereas Party B
shall be in charge of the export aspect, under the brand name of the
JVCo.
|
37.
|
The
pricing and quantum of exported products shall be fixed by taking into
account the company’s balance of payment in foreign exchange and cost, and
shall be adjusted according to the international market
condition.
|
38.
|
The
pricing and quantum of the products to be sold locally shall be fixed by
the Board of Directors and implemented by the department concerned in
accordance with the goods pricing policy set by the China
Government. As for the pricing of exported products, the
General Manager shall decide whether it shall be fixed according to the
international market condition or the transacted price at Guangzhou
Expo.
|
39.
|
The
board of directors shall formulate the company’s accounting system in
accordance with the regulations set by the Finance Ministry of China,
taking into consideration the requirement of the
company.
|
40.
|
Various
reports shall be submitted to the parties before the 10
th
of following calendar month, whereas year-end report shall be submitted at
the end of the following month after the end of year, and audited by
Chinese auditors appointed by the company. All reports shall be
extended to the relevant departments, including the statistics department,
of the company for record purpose.
|
41.
|
The
JVCo shall adopt ‘credit & debit’ method for keeping accounts, to be
written in Chinese language and in Renminbi denomination and other
currencies shall be converted to Renminbi at the rate published by Bank of
China. Currency used in trading shall be calculated based
on trading exchange rate, whereas transmission of fund in and out of the
country shall comply with the foreign exchange control regulations of
China.
|
42.
|
The
JVCo shall engage Chinese auditors for auditing of accounts, and such
audited accounts shall be submitted to the shareholders’ meetings, the
board of directors and the General
Manager.
|
43.
|
The
JVCo shall maintain Renminbi and foreign currency bank accounts with local
branch of Bank of China.
|
44.
|
The
JVCo shall pay taxes in accordance with the laws of taxation of
China.
|
45.
|
The
JVCo shall apply for tax reduction or exemption or rebate according to the
laws.
|
46.
|
Parties
hereto shall pay their respective
taxes.
|
47.
|
The
board of directors may decide to distribute net profit earned by the JVCo
to the parties hereto according to the agreed ratio, after allocating
provisions for reserves, workers’ welfare fund, incentive fund, company
development fund and payment of
taxes.
|
48.
|
Party
B shall follow the exchange control regulations in repatriating its net
profit from this joint venture.
|
49.
|
If
the company incurs losses, such losses may be, as the shareholders’
meeting shall decide, replenished by utilizing the company’s reserves or
be borne by the parties according to the agreed
ratio.
|
50.
|
This
Agreement shall be submitted for approval in accordance with the relevant
regulations governing sino-foreign joint
venture. Thereafter the JVCo shall submit the approval
letter to the Industrial and Commerce Administration Management Department
for registration and issuance of business license, and simultaneously
Party B shall register itself with the said Department. The tenure of
operation of the JVCo shall commence from the date of issuance of the
Business License.
|
51.
|
Should
the shareholders decide to continue with the joint venture 6 months before
the expiration of this joint venture, the shareholders may apply to the
relevant authorities to extend the validity period of this joint
venture.
|
52.
|
The
JVCo may be dissolved during the currency of this joint venture if
:-
|
|
1.
|
the
company suffers severe financial losses and is not able to continue its
operation as a result;
|
|
2.
|
a
party hereto fails to fulfill its obligations herein, and the company is
not able to continue its operation as a
result;
|
|
3.
|
occurrence
of natural disaster, war etc and the company suffers severe losses as a
result; and
|
|
4.
|
the
company fails to achieve its business objectives, and has no prospect of
development.
|
|
5.
|
Despite
much effort from both parties the situation is irreparable, the board of
directors may submit application to the relevant authority for its early
dissolution.
|
|
6.
|
If
the company is dissolved due to the occurrence of the circumstance as
stated in 1 and 2 herein, then the defaulting party shall compensate the
other party for the losses it incurs as a
result.
|
53.
|
If
the company is to be dissolved during the currency of its term, the assets
of the company shall be utilized for the purpose of payment of debts,
taxes and other payables, and the balance thereof shall be distributed to
the parties hereto in the agreed
ratio.
|
54.
|
At
the expiration of the tenure of this joint venture, this Agreement shall
lapse automatically, and all the assets of the company shall be reverted
to Party A without any condition attached
thereto.
|
55.
|
Upon
dissolution of the company, all books and records shall be kept by Party
A.
|
56.
|
Any
amendment to this Agreement shall require written consent of both parties,
and be subject to approval of the relevant authority before taking
effect.
|
57.
|
The
company shall take out insurance coverage from the insurance companies
licensed to operate in China.
|
58.
|
All
products of the company shall be sold under the brand name and trademark
of “APA” to be registered with Trademark Control Department of
China. If necessary such trademark shall be registered
internationally.
|
59.
|
This
Agreement shall be governed in accordance with the laws of
China.
|
60.
|
The
parties hereto shall strive to resolve all disputes arising from this
Agreement; if the disputes cannot be resolved through negotiation, then
such disputes shall be referred to
Arbitration.
|
61.
|
The
arbitration shall take place in Shenzhen, and the dispute shall be settled
by arbitration in accordance with the Rules of the China International
Economic and Trade Arbitration
Centre.
|
62.
|
The
award of the Arbitrator shall be final and binding on the
Parties.
|
63.
|
All
expenses incurred in the arbitration shall be borne by the losing
party.
|
64.
|
The
terms of this Agreement, other than the part which is the subject matter
of the arbitration, shall remain
operational.
|
65.
|
The
General Manager shall forthwith inform Party B of the occurrence of force
majeure or other matter of serious consequence, which will affect the
performance of this Agreement, and shall deliver to Party B by registered
air mail such written documents of such
event.
|
66.
|
This
Agreement and its attachments shall have the same legal
force.
|
67.
|
This
Agreement shall be in the Chinese Language and printed in 6 copies, of
which each party shall have 2 copies each, and the relevant approving
authorities each shall have 1 copy. All copies shall have the
same legal force.
|
Party
A : EnPing City JunTang Town Hang Sing Tai
Agriculture
Co. Ltd.
|
Party
B: Macau EIJI Company Limited
|
|||
Legal
Representative :
|
(signed)
|
Authorized
Signatory :
|
(signed)
|
|
(Fang
Xiang Jun)
|
(Chan
Bor Han)
|
|||
Date
: September 5, 2007
|
Date
: September 5,
2007
|
1.
|
Upon
mutual benefit and the basis of fair and friendly negotiation, Qinghai
Province Sanjiang Group Company Limited (“Party A”), Guangzhou City Garwor
Company Limited (“Party A”) and Pretty Mountains Holdings Limited (“Party
C”) hereby agree to enter into this joint venture agreement, in accordance
with the laws of Sino Foreign Joint Venture Enterprises of the People’s
Republic of China and other relevant regulations, for the setting up of a
sino-foreign joint venture company in the vicinity of the City of
Xiling, Qinghai Province of the People’s Republic of
China.
|
2.
|
The
Joint Venture Parties
|
Party A | : | Qinghai Province Sanjiang Group Company Limited Country of Registration : China |
Address
|
:
|
No.
50, Sengli Lu, Xiling City, Qinghai Province,
China.
|
Party B | : | Garwor Company Limited Country of Registration : China |
Address
|
:
|
No.
20, 4
th
Floor, Beiau Yi Lu, Panyi District, Guangzhou,
China.
|
Party C | : |
Pretty
Mountains Holdings
Limited Country
of Registration : Macau, China
|
Address
|
:
|
Flat/RM1613,
16
th
Tai Yau Building, 181 Johnston Road, Wanchai, Hong
Kong
|
3.
|
For
mutual benefit, the Parties hereto agree to enter into a joint venture by
setting up at No. 50, Sengli Lu, Xiling City, Qinghai Province, China a
joint venture company, to be named as
Sanjiang A Power Agriculture
Co. Ltd.
(“SJVC”).
|
4.
|
The
parties hereto as the legal persons jointly incorporate the SJVC in
accordance with the laws of Sino Foreign Joint Venture Enterprises of the
People’s Republic of China and other relevant
regulations.
|
5.
|
The
activities of the SJVC shall be carried out in compliance with the laws of
the People’s Republic of China and other relevant regulations, and be
subjected to its jurisdiction.
|
6.
|
The
SJVC shall be a limited liability corporation, and the parties hereto
shall share the risks, indebtedness and losses of the SJVC as well its
profit.
|
7.
|
The
objective of the joint venture is to re-align the development of
agricultural products (to facilitate internationalization and
commercialization as well as recycling of organic agriculture) to cater
for the increasing domestic or overseas demand for the agricultural
products, so as to gain economical benefits for all
parties.
|
8.
|
The
scope of business: to produce organic fertilizer, organic farm grass,
organic livestock feed and livestock rearing, so as to produce highly in
demand agricultural products for domestic and overseas markets in order to
its competitiveness in the international
markets.
|
1.
|
using
environmental friendly technology to recycle agriculture waste for
production of organic
fertilizer;
|
2.
|
using
environmental friendly technology and bacteria to produce organic
feed;
|
3.
|
using
environmental friendly technology to increase dairy milk production and
quality; and
|
4.
|
using
animals energy analytical method and management system to develop
agriculture projects.
|
9.
|
The
scale of business: to devise a 7-year plan to produce 1,190,017 metric
tons of organic agricultural products. The details are as
follows :
|
Description
|
Unit
|
Year
1
|
Year
2
|
Year
3
|
Year
4
|
Year
5
|
Year
6
|
Year
7
|
7 years
Total |
|||||||||||
A
|
Planned
production
|
|||||||||||||||||||
1
|
Organic
fertilizer
|
ton
|
17,500
|
25,000
|
35,000
|
52,500
|
70,000
|
150,000
|
300,000
|
650,000
|
||||||||||
2
|
Organic
livestock feed
|
|||||||||||||||||||
*
|
Type
(1)
|
ton
|
30,000
|
60,000
|
90,000
|
90,000
|
90’000
|
90,000
|
90,000
|
540,000
|
||||||||||
3
|
Demonstration
farms (cattle & sheep)
|
|||||||||||||||||||
Cattle
|
head
|
50
|
||||||||||||||||||
10
|
10
|
|||||||||||||||||||
Organic farm
grass
(
1
)
|
||||||||||||||||||||
Sheep
|
head
|
200
|
||||||||||||||||||
ton
|
7
|
7
|
||||||||||||||||||
|
Organic farm
grass
(
2
)
|
|
|
|
|
|
|
|
|
|
Description
|
Unit
|
Year
1
|
Year
2
|
Year
3
|
Year
4
|
Year
5
|
Year
6
|
Year
7
|
7
years
Total
|
|||||||||||
B
|
Basic
information
|
|||||||||||||||||||
1
|
Manufacturing
organic fertilizer
|
|||||||||||||||||||
Land
area required
|
Mu
|
30
|
30
|
30
|
60
|
120
|
240
|
480
|
480
|
|||||||||||
Building
area required
|
M²
|
9,690
|
14,535
|
19,380
|
29,070
|
38,760
|
77,520
|
155,040
|
155,040
|
|||||||||||
Employment
opportunity
|
person
|
18
|
32
|
44
|
57
|
103
|
174
|
297
|
||||||||||||
2
|
Organic
livestock feed
|
|||||||||||||||||||
Type (2)
|
||||||||||||||||||||
Land
area required
|
Mu
|
60
|
60
|
110
|
200
|
400
|
460
|
520
|
520
|
|||||||||||
Building
area required
|
M²
|
12,255
|
12,255
|
24,510
|
49,020
|
98,040
|
110,295
|
122,550
|
122,550
|
|||||||||||
Job
vacancy
|
person
|
15
|
175
|
315
|
567
|
1,021
|
1,161
|
1,301
|
||||||||||||
*
|
Type(1)
|
|||||||||||||||||||
Land
area required
|
Mu
|
60
|
60
|
110
|
200
|
400
|
460
|
460
|
||||||||||||
Building
area required
|
M²
|
12,255
|
12,255
|
24,510
|
49,020
|
98,040
|
110,295
|
110,295
|
||||||||||||
Employment
opportunity
|
person
|
15
|
175
|
315
|
567
|
1,021
|
1,161
|
|||||||||||||
3
|
Demonstration
farms ( cattle & sheep)
|
|||||||||||||||||||
Cattle
|
||||||||||||||||||||
Land
area required
|
Mu
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
||||||||||||
Building
area required
|
M²
|
5,000
|
5,000
|
5,000
|
5,000
|
5,000
|
5,000
|
5,000
|
||||||||||||
Employment
opportunity
|
person
|
10
|
10
|
10
|
10
|
10
|
10
|
|||||||||||||
Sheep
|
||||||||||||||||||||
Land
area required
|
Mu
|
800
|
800
|
800
|
800
|
800
|
800
|
800
|
||||||||||||
Building
area required
|
M²
|
4,000
|
4,000
|
4,000
|
4,000
|
4,000
|
4,000
|
4,000
|
||||||||||||
|
Employment
opportunity
|
|
person
|
|
|
5
|
|
5
|
|
5
|
|
5
|
|
5
|
|
5
|
|
5
|
10.
|
Total
Investment
: U.S.$2,000,000.00
|
11.
|
Registered
capital
: U.S.$1,400,000.00
|
12.
|
The
parties shall pay up the registered capital in accordance with the equity
ratio; all parties shall pay up 30%, 30% and finally 40% of
their respective share in accordance with the equity ratio within 45 days,
90 days and 180 days from the date of issuance of the business license for
SJVC.
|
13.
|
Tenure
of the joint venture: 30
years.
|
14.
|
The
arrangement for cooperation :
|
(1)
|
Party
A to provide :
|
1.
|
US$630,000.00
as capital;
|
2.
|
appropriate
plots of lands with the related “Land Usage Rights” or convertible old
factory suitable for the
projects;
|
3.
|
vehicles
for use by the SJVC during the development
stage;
|
4.
|
project
site for development of demonstration farms for the rearing of cattle and
goats;
|
5.
|
project
site for manufacturing of bio-organic
fertilizer;
|
5.
|
project
site for production of livestock feed and farm
grass;
|
6.
|
company
office and accommodation for personnel from out of town during the
development stage of the
company;
|
7.
|
related
plants and equipment and facilities for the production factories and
laboratories of the SJVC;
|
8.
|
first
batch of premium herd of cows and goats for the demonstration
farms;
|
9.
|
proper
channels for procuring governmental financial assistance or other
incentives for agriculture projects to meet the needs of the
projects;
|
10.
|
agriculture
land by way of transfer or lease for production
purposes.
|
(2)
|
Party
B to provide :
|
1.
|
US$140,000.00
as capital;
|
2.
|
modern
agriculture management
system;
|
3.
|
international
business network;
|
4.
|
proper
channels for procuring financial assistance locally to meet the
development cost;
|
5.
|
assistance
to resolve any misunderstanding between the Chinese and foreign parties
resulting from the difference in opinion on the laws and regulation
between the two concerned
countries;
|
6.
|
expertise
in the sales and marketing needs of the
SJVC.
|
(3)
|
Party
C to provide :
|
1.
|
US$630,000.00
as capital;
|
2.
|
the
rights to use the relevant patented technologies and the related
trademarks and brands;
|
3.
|
the
rights to use the patented Bacterial and Bio-organic Fertilizer
Manufacturing Technology, the Stock Feed Manufacturing
Technology;
|
4.
|
the
related techniques associated with the Bio-organic Fertilizer and
Livestock Feed Manufacturing;
|
5.
|
international
business and sales network and business operation model that generate
financial benefit based on
branding;
|
6.
|
channels
for securing international financings for its
developments.
|
1.
|
If
any of the technologies, techniques, systems, designs, brands and
trademarks mentioned above are the properties of Party C, the SJVC shall
acquire no right to operate the same except in the circumstances if they
would be developed and/or invented by the SJVC during the course of its
developments and operation. In these events should anyone of
the joint venture parties use any of the new inventions, such party shall
pay the SJVC compensation, the values of which will be determined in
accordance with the international market values at the time of
usages.
|
2.
|
Party
C shall conduct feasibility studies on the projects, in coordination with
Party A, and such feasibility studies reports shall be the properties of
the SJVC. If any one of the Joint Venture partners should use
any of the referred studies, such party shall pay the SJVC compensation,
values of which will be determined in accordance with the international
market values at the time of
usages.
|
3.
|
The
SJVC will appoint Sino Agro Food, Inc. as its consultant for the purpose
of applying the necessary treatment to make its group and organization
structures, business strategies and operation on par with the
international corporate standards, to facilitate realization of its
planned listing exercise on overseas bourses, and the expenses incurred
thereby shall be borne by the parties
hereto.
|
15.
|
All
plant and equipment purchased by Party C shall be verified and approved by
the relevant authority.
|
16.
|
Within
three months after the approval of the relevant authority has been given
for the contracts entered into by the SJVC Party C for the purchase of any
plant and equipment, the personnel of the SJVC shall inspect and verify
the purchased items and authorize Bank of China to issue the relevant
letters of credit in favour of the banker of Party
C.
|
17.
|
Party
C shall ship all the purchased goods to a seaport directed by the SJVC
within 6 months from the date of issuance of the letter of
credit.
|
18.
|
The
parties hereto shall abide by the time frame for allocating the land or
capital, failing which the defaulting party shall bear all losses arising
therefrom.
|
19.
|
Party
A shall have the following
responsibilities:
|
1.
|
To
submit the necessary application to the relevant authorities for
incorporation of the SJVC;
|
2.
|
To
submit the necessary application to the relevant authorities for the use
of land by the SJVC;
|
3.
|
To
reasonably provide in accordance with the production requirement the
necessary public facilities for the
SJVC;
|
4.
|
To
facilitate purchase of raw materials, and to handle all applications for
the supply of water, electricity, telephone and other communication
connection;
|
5.
|
To
handle procurement of workers, and to recommend requisite management and
technical personnel for consideration for employment by the management of
the SJVC;
|
6.
|
To
deal with invitation for the expatriates personnel of the SJVC, and to
arrange the necessary accommodation and transportation for such
personnel.
|
7.
|
To
assist in matters relating to the transportation of and related customs
matter for the export of the
products;
|
8.
|
To
be responsible for the transportation of all equipment imported by Party C
from the main ports in Guangdong Province to the project sites of the
SJVC; and
|
9.
|
Other
matters as agreed by the parties to be the responsibilities of Party
A.
|
20.
|
Party
B shall have the following
responsibilities:
|
1.
|
To
be responsible for ensuring the safety of the SJVC’s tangible and
intangible assets in the course of their
usage;
|
2.
|
To
handle the necessary application to the relevant authorities for the use
of land by the SJVC by way of lease from the local
farmers;
|
3.
|
To
handle the application of permits and prearrangements needed to service
the company’s logistic;
|
4.
|
To
carry out the assessment of management and technical personnel recommended
by Party A and Party C;
|
5.
|
To
obtain all permits for the company’s produces and products from the
Government bodies whenever
necessary;
|
6.
|
To
protect the company’s right in using assets provided either by Party A or
Party C;
|
7.
|
other
duties mutually agreed upon by all
parties.
|
21.
|
Party
C shall have the following
responsibilities:
|
1.
|
the
provision of all designs and plans for the construction of the company’s
production factories;
|
2.
|
the
provision of a list of imported plants and equipment needed by the
company;
|
3.
|
the
provision of technical specification of, operation manual of, and
management systems for the company’s
production;
|
4.
|
the
provision of information and news relating to technologies and markets
needed by the company’s
operation;
|
5.
|
protecting
the company’s assets and training of workers for the
company;
|
6.
|
assisting
the company in the purchase of imported goods that could not be purchased
in China;
|
7.
|
the
timely shipping of goods purchased for and on behalf of the company, and
for the installation of related plants and
equipment;
|
8.
|
improving
the company’s competitiveness, market shares and to ensure good
profitability to be derived from the company’s export
sales;
|
9.
|
other
duties mutually agreed upon by all
parties.
|
22.
|
1.
|
The
parties hereto shall not carry out any manufacturing operation using the
patent right, the specific technology, facilities and equipment and
trademark as mentioned in this Agreement (save and except the SJVC) in the
13 provinces, regions or cities in the western China (including
Qinghai Province, Gansu Province, Shanxi Province, Sichuan Province,
Yunnan Province, Guizhou Province, Chongqing Municipality, Guangxi
Autonomous Region, Sizhan Autonomous Region, Ningxia Autonomous Region,
Xinjiang Vygur Autonomous Region and Inner Mongolia Autonomous
Region).
|
2.
|
If
the SJVC suffers losses as a result of failure of any of the parties in
carrying out its responsibilities, the defaulting party shall bear all
losses arising therefrom.
|
23.
|
The
Board of Directors is the highest authority of the SJVC; it decides on
important matters, and unanimous decision of the Board of Directors is
required for very important matters. Simple majority decision shall
suffice for other matters.
|
24.
|
The
Board of Directors shall be formed on the date of registration of the
incorporation of the SJVC.
|
25.
|
The
Board of directors shall consist of 7 members; 3 appointees from Party A,
1 from Party B and 3 from Party C.
|
26.
|
The
chair person shall be the legal representative of the company, and he
shall be elected by the parties
hereto.
|
27.
|
The
tenure of the chair person shall be 3 years and re
electable.
|
28.
|
A
director appointed by Party A shall be made the first term Chair person,
whereas a director appointed by Party C shall be made the first term
Finance Director cum Chief Financial
Officer.
|
29.
|
If
the chair person for any reason is not able to carry out his duties,
deputy chair person or other directors shall be empowered to represent the
SJVC.
|
30.
|
The
Board shall schedule to meet once a month on the 1
st
Saturday of every month at Xiling City, or at any other venue when
necessary. The chair person may hold short notice
meeting. The meetings of the Board shall be chaired by
the chair person or the deputy chair person or other director as directed
by the chair person. The chair person shall notify the
directors of the date, venue and agenda for the meetings 3 weeks prior to
the scheduled meetings.
|
31.
|
Director
who is not able to attend any scheduled meeting may appoint proxy to
attend the meeting in writing, and such proxy shall have the right of
speech and voting right at the meetings, but such proxy shall not
represent more than 1 absent
director.
|
32.
|
The
quorum for any meeting shall be two third of the directors (including the
proxy) attending the meeting.
|
33.
|
The
meetings of the board of directors shall be conducted in a respectful,
fair and just manner.
|
34.
|
The
following matters shall require unanimous approval of the board of
directors before tabling the same at the shareholders’ meeting
:
|
1.
|
Amendment
to this Joint Venture Agreement or the Constitution of the
SJVC;
|
2.
|
Resolution
of the SJVC;
|
3.
|
Increasing,
reducing or transferring the registered capital of the
SJVC;
|
4.
|
Merger
of the SJVC with others, re-organization of the company
structure;
|
5.
|
Pledging
the company’s assets as security;
and
|
6.
|
Such
matters that require unanimous decision of the Board of
Directors.
|
35.
|
The
management of the SJVC shall be responsible for the day to day
administration and operation of the company. The management
shall consist of 1 General Manager, 1 Deputy General Manager and several
other senior managers, the employment of same shall be decided by the
board of directors, for tenure of 3
years.
|
36.
|
The
duties and powers of the General Manager are as follows
:
|
1.
|
To
carry out the matters as directed in this Joint Venture Agreement, the
company’s Constitution and the Board of
Directors;
|
2.
|
To
nominate key persons for various departments of the company, and to
recruit other personnel and to notify the board of directors of such
employment;
|
3.
|
To
formulate the company’s operation and management systems, and to deploy,
direct, supervise and inspect the
operation;
|
4.
|
To
periodically submit report on work progress, financial and profit &
loss report to the board of
directors;
|
5.
|
To
be responsible for the daily operation and management: purchase of raw
materials and parts & equipment, price fixing for the company’s
products, marketing of products, contracts for specific cooperation with
others and cash flow
financing;
|
6.
|
To
represent the SJVC in negotiation and signing of
contracts;
|
7.
|
To
hold management meetings and to execute the decisions made
thereat;
|
8.
|
To
resolve matters/problems raised by various departments of the
company;
|
9.
|
To
represent or appoint agent to represent the SJVC, as directed by the board
of directors, in matters concerning the
SJVC;
|
10.
|
To
handle all disciplinary matters;
and
|
11.
|
To
handle all other matters within the ambit of duties of the General
Manager.
|
37.
|
The
duties and powers of the Deputy General Manager are as follows
:
|
1.
|
To
assist the General Manager in the operation and management of the
SJVC;
|
2.
|
To
take over the function of the General Manager, when the General Manager is
absent;
|
3.
|
To
represent the SJVC in business
negotiation;
|
4.
|
To
deal with conflicts arisen in the course of operation and other related
problems; and
|
5.
|
To
handle all other matters within the ambit of duties of the Deputy General
Manager.
|
38.
|
All
expenses incurred during the pre development stage shall be gradually
billed into the cost of production over the
years.
|
39.
|
The
SJVC shall abide by the laws of China and other rules and regulations as
formulated by the governmental labour department on matters relating to
employment, dismissal, wages, discipline, welfare of workers employed by
the SJVC. The SJVC’s employees shall enjoy paid leave
according to the laws.
|
40.
|
The
workers of the SJVC shall have to right to form trade union and organize
activities thereof.
|
41.
|
The
board of directors shall meet at the end of each calendar year to prepare
the budget and plan for the following year for the rate of production, as
well as the import and export, and report the same to the relevant
governmental department according to the requirement of the
regulations. The budget and plan may be adjusted along the way
according to market condition, taking into account the economic returns
and balance of payment.
|
42.
|
For
any purchase or procurement of material or equipment, priority must be
given for such items to be sourced locally, taking into account the
quality, specification and pricing of the items
concerned.
|
43.
|
After
due inspection has been carried out by China’s Export Goods Inspection
Department, the agricultural products of the SJVC shall be exported
directly according to the yearly plan for export. The
SJVC may also participate in Guangzhou Expo for purpose of exporting the
products.
|
44.
|
The
SJVC may export all the company’s products of export quality to attain a
balance of payment in its imports and exports, and to gain more foreign
exchange.
|
45.
|
Party
C shall be responsible for marketing the products overseas, and the
company’s products shall be sold, domestically or overseas, under the
brand name of the SJVC.
|
46.
|
The
pricing and quantum of exported products shall be fixed by taking into
account the company’s balance of payment in foreign exchange and cost, and
shall be adjusted according to the international market
condition.
|
47.
|
The
pricing and quantum of the products to be sold locally shall be fixed by
the board of directors and implemented by the department concerned in
accordance with the goods pricing policy set by the China
Government. As for the pricing of exported products, the
Bbard of directors shall decide whether it shall be fixed according to the
international market condition or the transacted price at Guangzhou
Expo.
|
48.
|
The
board of directors shall formulate the company’s accounting system in
accordance with the regulations set by the Finance Ministry of China,
taking into consideration the requirement of the
company.
|
49.
|
Various
reports shall be submitted to the parties before the 10
th
of following calendar month, whereas year-end report shall be submitted at
the end of the following month after the end of year, and audited by
Chinese auditors appointed by the company. All reports shall be
extended to the relevant departments, including the statistics department,
for record purpose.
|
50.
|
The
SJVC shall adopt ‘credit & debit’ method for keeping accounts, to be
written in Chinese language and in Renminbi denomination and other
currencies shall be converted to Renminbi at the rate published by Bank of
China. Currency used in trading shall be calculated based
on trading exchange rate, whereas transmission of fund in and out of the
country shall comply with the foreign exchange control regulations of
China.
|
51.
|
The
SJVC shall engage Chinese auditors for auditing of accounts, and such
audited accounts shall be submitted to the board of directors and the
General Manager.
|
52.
|
The
SJVC shall maintain Renminbi and foreign currency accounts with a local
bank permitted by the National Foreign Exchange Control Board to operate
foreign exchange transactions.
|
53.
|
The
SJVC shall pay taxes in accordance with the laws of taxation of
China.
|
54.
|
The
SJVC shall apply for tax reduction or exemption or rebate according to the
laws.
|
55.
|
Parties
hereto shall pay their respective
taxes.
|
56.
|
The
board of directors may decide to distribute net profit earned by the SJVC
to the parties hereto according to the agreed ratio, after set aside
provisions for reserves, workers’ welfare fund, incentive fund, company
development fund and payment of
taxes.
|
57.
|
Party
C shall follow the exchange control regulations in repatriating its net
profit from this joint venture.
|
58.
|
If
the company incurs losses, such losses may be, as the shareholders’
meeting shall decide, replenished by utilizing the company’s reserves or
be borne by the parties according to the agreed
ratio.
|
59.
|
This
Agreement shall be submitted for approval in accordance with the relevant
regulations governing sino-foreign joint
venture. Thereafter the SJVC shall submit the approval
letter to the Industrial and Commerce Administration Management Department
for registration and issuance of business license. The tenure of the SJVC
shall commence from the date of issuance of the Business
License.
|
60.
|
Should
the shareholders decide to continue with the joint venture 6 months before
the expiration of this joint venture, the shareholders may apply to the
relevant authorities to extend the validity period of this joint
venture.
|
61.
|
The
SJVC may be dissolved during the currency of this joint venture if
:-
|
1.
|
the
company suffers severe financial losses and is not able to continue its
operation as a result;
|
2.
|
a
party hereto fails to fulfill its obligations herein, and the company is
not able to continue its operation as a
result;
|
3.
|
occurrence
of natural disaster, war etc and the company suffers severe losses as a
result; and
|
4.
|
the
company fails to achieve its business objectives, and has no prospect of
development.
|
5.
|
Despite
much effort from both parties the situation is irreparable; the board of
directors may submit application to the relevant authority for its early
dissolution.
|
6.
|
If
the company is dissolved due to the occurrence of the circumstance as
stated in item 2 herein, then the defaulting party shall compensate the
other parties for the losses they may suffer as a
result.
|
62.
|
If
the company is to be dissolved during the currency of its term, the assets
of the company shall be utilized for the purpose of payment of debts,
taxes and other payables, and the balance thereof shall be distributed to
the parties hereto in the agreed
ratio.
|
63.
|
At
the expiration of the tenure of this joint venture, this Agreement shall
lapse automatically, and all the assets of the company shall be reverted
to Party A without any condition attached
thereto.
|
64.
|
Upon
dissolution of the company, all books and records shall be kept by Party
A.
|
65.
|
Any
amendment to this Agreement shall require written consent of all parties,
and be subject to approval of the relevant authority before taking
effect.
|
66.
|
The
company shall take out insurance coverage from the insurance companies
licensed to operate in China.
|
67.
|
The
organic agriculture products of the company shall be sold under the brand
name and trademark of “San Yi” (tentative name), which is to be used after
due registration of same with Trademark Control Department of
China. If necessary such trademark shall be registered
internationally.
|
68.
|
Should
any party fail to pay up on schedule the contribution in accordance with
the requirement as prescribed in Article 5 of this contract, the
defaulting party shall pay to the innocent party or parties 5% of its
share of the contribution per month starting from the first month after
the breach. Should the defaulting party fail to pay up 3 months after the
due date for payment, then the innocent party or parties shall have the
right to terminate this Agreement and claim damages from the defaulting
party.
|
69.
|
Should
all or part of the contract and its appendices not be able to be performed
due to the fault of one party, the defaulting party shall bear the
liability for breach of contract. Should it be the fault of
both parties, they shall bear their
respective liabilities according to the actual situation.
|
70.
|
The
formation, validity, termination and carrying into effect of this
Agreement and settlement of disputes arising therefrom shall be
governed by the laws of the People's Republic of
China.
|
71.
|
Any
disputes arises in the course of carrying into effect this Agreement shall
be settled through friendly consultations among the shareholders of the
company. In case no settlement can be reached through consultations, the
disputes shall be referred to
Arbitration.
|
72.
|
The
arbitration shall take place in Beijing, and shall be conducted by the
China International Economic and Trade Arbitration Centre in accordance
with its rules.
|
73.
|
The
arbitral award is final and binding upon all
parties.
|
74.
|
The
fees for arbitration shall be borne by the losing
Party.
|
75.
|
The
terms of this Agreement, other than the part which is the subject matter
of the arbitration, shall remain
operational.
|
76.
|
The
General Manager shall forthwith inform the shareholders of the company of
the occurrence of force majeure or other matter of serious consequence,
which will affect the performance of this Agreement, and shall deliver to
the shareholders or the Board of Directors by registered air mail such
written documents of such event.
|
77.
|
This
Agreement and its attachments shall have the same legal
force.
|
78.
|
This
Agreement may be printed in various languages, but the version in Chinese
Language shall prevail. Should this Agreement contain any ambiguity, then
the Constitution of the company shall prevail. This Agreement shall take
effect upon its approval by the Department of Commerce and Trade of the
Xiling City. This Agreement shall be printed in 24 copies, of which each
party shall have 2 copies each, and the relevant approving authorities
each shall have 1 copy. All copies shall have the same legal
force.
|
1.
|
The
Trustee is the registered Shareholder of Two thousand Five Hundred (2,500)
units of Shares of Macau$l.00 each in each of the company (listed in Table
A hereof), and Three thousand units of shares of Macau$l.00 each in the
Company (listed in Table (B) hereof), (hereinafter referred to as “the
said Shares” collectively) which represent an approximate sum of Ten (10%)
percent of the issued and paid up capital in each of the aforesaid
companies.
|
Table (A)
Name
of company
|
Registration
#
|
Paid up Capital
|
Shareholder’s equity %
|
|||||||
In
Macau $
|
Trustee
|
|||||||||
Hang
Yu Tai Investment Limited
|
25487
SO
|
25,000.00 | 10 | % | ||||||
A
Power Agro Agriculture Development (Macau) Limited
|
29629
SO
|
25,000.00 | 10 | % |
Table
(B)
Name
of company
|
Registration #
|
Paid up Capital
|
Shareholder’s equity %
|
|||||||
In
Macau $
|
Trustee
|
|||||||||
Macau
Eiji Company Limited
|
22347
SO
|
30,000.00 | 10 | % |
2.
|
The
consideration for the issue or purchase of the said Shares of RM1.00 each
which represent an approximate sum of Ten
(10%) percent
of the issued and paid up
capital of each of the aforesaid companies (hereinafter referred to as the
“Trust Shares”) was fully paid out of monies provided to the Trustee by
the Beneficiary, as the Trustee hereby acknowledges, and in consideration
thereof received by the Trustee, the Trustee covenants to hold the said
Trust Shares in trust for the Beneficiary upon the trusts and the terms
and conditions hereinafter declared. The Particulars of the Trust Shares
are as follows:-
|
1.
|
The
Trustee hereby acknowledges and declares that the Beneficiary are the sole
beneficial owner of the said Trust Shares and all dividends, interest,
bonuses (whether in the form of moneys or shares or otherwise) and any
other sums rights and interest accrued or to accrue upon the same or any
of them upon trust for the Beneficiary absolutely and the Trustee further
agrees to transfer pay and deal with the said Trust Shares, dividends,
interest, bonuses and any other sums right and interest and exercise all
rights and privileges in relation to the said Trust Shares in such manner
as the Beneficiary shall at any time and from time to time
direct.
|
2.
|
The
Trustee shall on the instructions of the Beneficiary attend all meetings
of Shareholders or otherwise which the Trustee shall be entitled to attend
by virtue of being the registered holder of the said Trust Shares or any
of them and shall vote at every such meeting fully in accordance with the
instructions of the Beneficiary. At the sole discretion and on the
instructions of the Beneficiary the Trustee shall if so required by the
Beneficiary execute all proxies or other documents which shall be
necessary or proper to enable the Beneficiary and/or any person or person
nominated by the Beneficiary to vote at any such meeting in the place of
the Trustee and the Trustee shall consult and take instructions from the
Beneficiary on and prior to all decisions to be taken by the Trustee by
virtue of the Trustee being the registered holder of the said Trust Shares
or any of them.
|
3.
|
All
the said Trust Shares are duly transferred at the request of the
Beneficiary out of the Trustee’s name as registered holder thereof and the
trusts pertaining thereto being duly performed and satisfied, the
obligations of the Trustee hereunder shall cease but without prejudice to
any claims by the Beneficiary for any antecedent
breach.
|
4.
|
The
Trustee and the Beneficiary hereby mutually agree and covenant, that the
contents of this Deed shall be confidential and shall not be disclosed to
any third party(ies) unless such disclosure is required by law or any
competent and relevant authority or authorities and the party being so
requested to disclose is under a legal obligation to do
so.
|
5.
|
The
Trustee agrees that so long as he holds the said Trust Shares upon trust
for the Beneficiary hereunder, the Beneficiary shall have and be given
sole custody of the share certificates of the said Trust Shares and valid
and registered-able memorandum of transfers in respect thereof executed by
the Trustee in favour of the Beneficiary or his nominee or
nominees.
|
6.
|
Each
party hereto shall execute and do all such acts documents and things as
may be necessary to give full effect to all the provisions of this Trust
Deed.
|
7.
|
The
Trustee hereby confirms and agrees to forthwith do and execute any
documents for the transfer and conveyance of the said Trust Shares and all
rights whatsoever as aforesaid derived therefrom and/or any other
securities relating thereto in such manner as the Beneficiary may direct
the Trustee.
|
8.
|
The Trustee hereby further
declares that he shall hold all monies derived from a sale of the said
shares on trust for the Beneficiary and shall make payment of all such
monies to such person or persons as the Beneficiary may
direct.
|
9.
|
The
Trustee hereby confirms and agrees that he shall so long as he holds the
said Trust Shares and/or the rights as aforesaid and/or any securities
relating thereto vote act and exercise all his rights power and
obligations in PPSB and/or any other company in respect of the said Trust
Shares and/or any other securities in accordance with the instructions of
the Beneficiary.
|
10.
|
The
Trustee hereby further declares that he shall hold all such other shares
and/or securities as he may be offered in exchange for the said Trust
Shares on trust for the Beneficiary provided that the Beneficiary shall
have prior directed the Trustee to accept such other shares and/or
securities in exchange for the said Trust Shares and the terms of the
trusts herein declares shall be binding on all such other shares and/or
securities as if the same were an accretion to the said Trust Shares or a
substitution thereof.
|
11.
|
The
power to appoint a new trustee hereof is vested in the Beneficiary during
his lifetime.
|
12.
|
The
expression “the Trustee” shall include his heirs, personal
representatives, executors, trustees and successors-in-title and the
trusts herein declares shall be binding on all or any of such aforesaid
persons.
|
13.
|
The
expression “the Beneficiary” shall include his heirs, personal
representatives, executors, trustees, successors-in-title and
assigns.
|
14.
|
Words
importing the masculine gender shall include the feminine and neuter
genders and words importing the singular shall include the plural and vice
versa.
|
SIGNED,
SEALED and DELEVERED
|
)
|
||
by
the Trustee
|
)
|
||
in
the presence of:-
|
)
|
||
)
|
|
||
)
|
|||
)
|
For
and on behalf of
Sino
Agro Food, Inc.
|
|
/s/
Lee Solomon Yip Kun
|
|
Authorised
Signature
|
1.
|
The
Trustee is the registered Shareholder of Two thousand Five Hundred (2,500)
units of Shares of Macau$l.00 each in each of the company (listed in Table
A hereof), and Three thousand units of shares of Macau$l.00 each in the
Company (listed in Table (B) hereof), (hereinafter referred to as “the
said Shares” collectively) which represent an approximate sum of Ten (10%)
percent of the issued and paid up capital in each of the aforesaid
companies.
|
Table
(A
)
Name of
company
|
Registration
# |
Paid up Capital
|
Shareholder’s equity %
|
|||||||
In
Macau $
|
Trustee
|
|||||||||
Hang
Yu Tai Investment Limited
|
25487
SO
|
25,000.00 | 10 | % | ||||||
A
Power Agro Agriculture Development (Macau) Limited
|
29629
SO
|
25,000.00 | 10 | % | ||||||
Table
(B)
|
||||||||||
Name
of company
|
Registration #
|
Paid up Capital
|
Shareholder’s equity %
|
|||||||
In
Macau $
|
Trustee
|
|||||||||
Macau
Eiji Company Limited
|
22347
SO
|
30,000.00 | 10 | % |
2.
|
The
consideration for the issue or purchase of the said Shares of RM1.00 each
which represent an approximate sum of Ten
(10%) percent
of the issued and paid up
capital of each of the aforesaid companies (hereinafter referred to as the
“Trust Shares”) was fully paid out of monies provided to the Trustee by
the Beneficiary, as the Trustee hereby acknowledges, and in consideration
thereof received by the Trustee, the Trustee covenants to hold the said
Trust Shares in trust for the Beneficiary upon the trusts and the terms
and conditions hereinafter declared. The Particulars of the Trust Shares
are as follows:-
|
1.
|
The
Trustee hereby acknowledges and declares that the Beneficiary are the sole
beneficial owner of the said Trust Shares and all dividends, interest,
bonuses (whether in the form of moneys or shares or otherwise) and any
other sums rights and interest accrued or to accrue upon the same or any
of them upon trust for the Beneficiary absolutely and the Trustee further
agrees to transfer pay and deal with the said Trust Shares, dividends,
interest, bonuses and any other sums right and interest and exercise all
rights and privileges in relation to the said Trust Shares in such manner
as the Beneficiary shall at any time and from time to time
direct.
|
2.
|
The
Trustee shall on the instructions of the Beneficiary attend all meetings
of Shareholders or otherwise which the Trustee shall be entitled to attend
by virtue of being the registered holder of the said Trust Shares or any
of them and shall vote at every such meeting fully in accordance with the
instructions of the Beneficiary. At the sole discretion and on the
instructions of the Beneficiary the Trustee shall if so required by the
Beneficiary execute all proxies or other documents which shall be
necessary or proper to enable the Beneficiary and/or any person or person
nominated by the Beneficiary to vote at any such meeting in the place of
the Trustee and the Trustee shall consult and take instructions from the
Beneficiary on and prior to all decisions to be taken by the Trustee by
virtue of the Trustee being the registered holder of the said Trust Shares
or any of them.
|
3.
|
All
the said Trust Shares are duly transferred at the request of the
Beneficiary out of the Trustee’s name as registered holder thereof and the
trusts pertaining thereto being duly performed and satisfied, the
obligations of the Trustee hereunder shall cease but without prejudice to
any claims by the Beneficiary for any antecedent
breach.
|
4.
|
The
Trustee and the Beneficiary hereby mutually agree and covenant, that the
contents of this Deed shall be confidential and shall not be disclosed to
any third party(ies) unless such disclosure is required by law or any
competent and relevant authority or authorities and the party being so
requested to disclose is under a legal obligation to do
so.
|
5.
|
The
Trustee agrees that so long as he holds the said Trust Shares upon trust
for the Beneficiary hereunder, the Beneficiary shall have and be given
sole custody of the share certificates of the said Trust Shares and valid
and registered-able memorandum of transfers in respect thereof executed by
the Trustee in favour of the Beneficiary or his nominee or
nominees.
|
6.
|
Each
party hereto shall execute and do all such acts documents and things as
may be necessary to give full effect to all the provisions of this Trust
Deed.
|
7.
|
The
Trustee hereby confirms and agrees to forthwith do and execute any
documents for the transfer and conveyance of the said Trust Shares and all
rights whatsoever as aforesaid derived therefrom and/or any other
securities relating thereto in such manner as the Beneficiary may direct
the Trustee.
|
8.
|
The
Trustee hereby further declares that he shall hold all monies derived from
a sale of the said shares on trust for the Beneficiary and shall make
payment of all such monies to such person or persons as the Beneficiary
may direct.
|
9.
|
The
Trustee hereby confirms and agrees that he shall so long as he holds the
said Trust Shares and/or the rights as aforesaid and/or any securities
relating thereto vote act and exercise all his rights power and
obligations in PPSB and/or any other company in respect of the said Trust
Shares and/or any other securities in accordance with the instructions of
the Beneficiary.
|
10.
|
The
Trustee hereby further declares that he shall hold all such other shares
and/or securities as he may be offered in exchange for the said Trust
Shares on trust for the Beneficiary provided that the Beneficiary shall
have prior directed the Trustee to accept such other shares and/or
securities in exchange for the said Trust Shares and the terms of the
trusts herein declares shall be binding on all such other shares and/or
securities as if the same were an accretion to the said Trust Shares or a
substitution thereof.
|
11.
|
The
power to appoint a new trustee hereof is vested in the Beneficiary during
his lifetime.
|
12.
|
The
expression “the Trustee” shall include his heirs, personal
representatives, executors, trustees and successors-in-title and the
trusts herein declares shall be binding on all or any of such aforesaid
persons.
|
13.
|
The
expression “the Beneficiary” shall include his heirs, personal
representatives, executors, trustees, successors-in-title and
assigns.
|
14.
|
Words
importing the masculine gender shall include the feminine and neuter
genders and words importing the singular shall include the plural and vice
versa.
|
SIGNED,
SEALED and DELEVERED
|
)
|
||
by
the Trustee
|
)
|
||
in
the presence of:-
|
)
|
||
)
|
|
||
)
|
|||
)
|
For
and on behalf of
|
|
Sino
Agro Food, Inc.
|
|
/s/
Lee Solomon Yip Kun
|
|
Authorised
Signature
|
1.
|
The
Trustee is the registered Shareholder of Two thousand Five Hundred (2,500)
units of Shares of Macau$l.00 each in each of the company (listed in Table
A hereof); and Three thousand units of shares of Macau$1.00 each in the
Company (listed in Table (B) hereof), (hereinafter referred to as “the
said Shares” collectively) which represent an approximate sum of Ten (10%)
percent of the issued and paid up capital in each of the aforesaid
companies.
|
Table (A
)
Name of company
|
Registration
#
|
Paid up Capital
|
Shareholder’s equity %
|
|||||||
In
Macau $
|
Trustee
|
|||||||||
Hang
Yu Tai Investment Limited
|
25487
SO
|
25,000.00 | 10 | % | ||||||
A
Power Agro Agriculture Development (Macau) Limited
|
29629
SO
|
25,000.00 | 10 | % | ||||||
Table
(B)
|
||||||||||
Name
of company
|
Registration #
|
Paid up Capital
|
Shareholder’s equity %
|
|||||||
In
Macau $
|
Trustee
|
|||||||||
Macau
Eiji Company Limited
|
22347
SO
|
30,000.00 | 10 | % |
2.
|
The
consideration for the issue or purchase of the said Shares of RM1.00 each
which represent an approximate sum of Ten
(10%) percent
of the issued and paid up
capital of each of the aforesaid companies (hereinafter referred to as the
“Trust Shares”) was fully paid out of monies provided to the Trustee by
the Beneficiary, as the Trustee hereby acknowledges, and in consideration
thereof received by the Trustee, the Trustee covenants to hold the said
Trust Shares in trust for the Beneficiary upon the trusts and the terms
and conditions hereinafter declared. The Particulars of the Trust Shares
are as follows:-
|
1.
|
The
Trustee hereby acknowledges and declares that the Beneficiary are the sole
beneficial owner of the said Trust Shares and all dividends, interest,
bonuses (whether in the form of moneys or shares or otherwise) and any
other sums rights and interest accrued or to accrue upon the same or any
of them upon trust for the Beneficiary absolutely and the Trustee further
agrees to transfer pay and deal with the said Trust Shares, dividends,
interest, bonuses and any other sums right and interest and exercise all
rights and privileges in relation to the said Trust Shares in such manner
as the Beneficiary shall at any time and from time to time
direct.
|
2.
|
The
Trustee shall on the instructions of the Beneficiary attend all meetings
of Shareholders or otherwise which the Trustee shall be entitled to attend
by virtue of being the registered holder of the said Trust Shares or any
of them and shall vote at every such meeting fully in accordance with the
instructions of the Beneficiary. At the sole discretion and on the
instructions of the Beneficiary the Trustee shall if so required by the
Beneficiary execute all proxies or other documents which shall be
necessary or proper to enable the Beneficiary and/or any person or person
nominated by the Beneficiary to vote at any such meeting in the place of
the Trustee and the Trustee shall consult and take instructions from the
Beneficiary on and prior to all decisions to be taken by the Trustee by
virtue of the Trustee being the registered holder of the said Trust Shares
or any of them.
|
3.
|
All
the said Trust Shares are duly transferred at the request of the
Beneficiary out of the Trustee’s name as registered holder thereof and the
trusts pertaining thereto being duly performed and satisfied, the
obligations of the Trustee hereunder shall cease but without prejudice to
any claims by the Beneficiary for any antecedent
breach.
|
4.
|
The
Trustee and the Beneficiary hereby mutually agree and covenant, that the
contents of this Deed shall be confidential and shall not be disclosed to
any third party(ies) unless such disclosure is required by law or any
competent and relevant authority or authorities and the party being so
requested to disclose is under a legal obligation to do
so.
|
5.
|
The
Trustee agrees that so long as he holds the said Trust Shares upon trust
for the Beneficiary hereunder, the Beneficiary shall have and be given
sole custody of the share certificates of the said Trust Shares and valid
and registered-able memorandum of transfers in respect thereof executed by
the Trustee in favour of the Beneficiary or his nominee or
nominees.
|
6.
|
Each
party hereto shall execute and do all such acts documents and things as
may be necessary to give full effect to all the provisions of this Trust
Deed.
|
7.
|
The
Trustee hereby confirms and agrees to forthwith do and execute any
documents for the transfer and conveyance of the said Trust Shares and all
rights whatsoever as aforesaid derived therefrom and/or any other
securities relating thereto in such manner as the Beneficiary may direct
the Trustee.
|
8.
|
The Trustee hereby further
declares that he shall hold all monies derived from a sale of the said
shares on trust for the Beneficiary and shall make payment of all such
monies to such person or persons as the Beneficiary may
direct.
|
9.
|
The
Trustee hereby confirms and agrees that he shall so long as he holds the
said Trust Shares and/or the rights as aforesaid and/or any securities
relating thereto vote act and exercise all his rights power and
obligations in PPSB and/or any other company in respect of the said Trust
Shares and/or any other securities in accordance with the instructions of
the Beneficiary.
|
10.
|
The
Trustee hereby further declares that he shall hold all such other shares
and/or securities as he may be offered in exchange for the said Trust
Shares on trust for the Beneficiary provided that the Beneficiary shall
have prior directed the Trustee to accept such other shares and/or
securities in exchange for the said Trust Shares and the terms of the
trusts herein declares shall be binding on all such other shares and/or
securities as if the same were an accretion to the said Trust Shares or a
substitution thereof.
|
11.
|
The
power to appoint a new trustee hereof is vested in the Beneficiary during
his lifetime.
|
12.
|
The
expression “the Trustee” shall include his heirs, personal
representatives, executors, trustees and successors-in-title and the
trusts herein declares shall be binding on all or any of such aforesaid
persons.
|
13.
|
The
expression “the Beneficiary” shall include his heirs, personal
representatives, executors, trustees, successors-in-title and
assigns.
|
14.
|
Words
importing the masculine gender shall include the feminine and neuter
genders and words importing the singular shall include the plural and vice
versa.
|
SIGNED,
SEALED and DELEVERED
|
)
|
||
by
the Trustee
|
)
|
||
in
the presence of:-
|
)
|
|
|
)
|
|||
)
|
|||
)
|
For
and on behalf of
|
|
Sino
Agro Food, Inc.
|
|
/s/
Lee Solomon Yip Kun
|
|
Authorised
Signature
|
BETWEEN:
|
INFINITY
ENVIRONMENTAL GROUP LTD
|
AND:
|
CAPITAL AWARD INC.
of 19A, Jalan Wawasan
Ampang 68000 SELANGOR,
MALAYSIA
(“The Licensee”) of the second
part.
|
A.
|
Infinity
is the designed of “A Power” Aquaculture Technology Systems (APTS) and is
entitled
to use and license other users of the secrets, copyrights, processes,
know-how or
other
intellectual property associated with
APTS.
|
B.
|
Infinity
has agreed to grant the Licensee an exclusive license to use and exploit
the
intellectual
property for the project in the manner referred to in this
Agreement.
|
1.
|
Interpretation
|
(1)
|
In
this agreement the following definitions shall
apply:
|
(2)
|
Except for the
purpose of identification, headings and underlining have been inserted in
this Agreement for the purpose of guidance only and shall not be part of
this
Agreement.
|
(3)
|
The
Recitals and the Schedules shall form part of this
Agreement.
|
(4)
|
Commencement and
Term
|
(5)
|
License
|
|
(6)
|
Obligation and warranties of
the Parties
|
|
(a)
|
the
use of any or all of the Intellectual Property and the Plans according to
the terms and conditions of this Agreement will not result in the
infringement of proprietary rights of third
parties:
|
|
(b)
|
the
plans and the Intellectual Property are original work designed by Infinity
and Infinity is their sole proprietor and they do not infringe any
existing copyright.
|
|
(a)
|
Infinity
must provide sufficient information as requested by the Licensee or its
authorized agent for the purpose set out in Clause
(d.l)
|
|
(b)
|
Infinity
must supply to the Licensee two copies of the Plans for the purpose set
out in Clause (5).
|
|
(c)
|
Infinity
allows for the plans to be submitted to any relevant body for purpose set
out in Clause (d.l).
|
|
(d)
|
Infinity
agrees that there is nothing in the Agreement requiring the Licensee or
its authorized agent to follow the Plans or to prevent the Licensee or its
authorized agent departing from the Plans in such manner as it thinks fit
or to satisfy development requirements by the appropriate development
body.
|
|
(7)
|
Termination
|
|
(a)
|
the
making or filing of an application to wind up the Licensee (otherwise than
for the purpose of reconstruction or amalgamation) under any law or
government regulation relating to bankruptcy or
insolvency;
|
|
(b)
|
the
appointment of a receiver for all or substantially all of the assets of
the Licensee;
|
|
(c)
|
the
making by the Licensee of any assignment or attempted assignment for the
benefit of its creditors;
|
|
(d)
|
the
institution by the Licensee of any proceedings for the liquidation or
winding up of its business.
|
|
(8)
|
Consequences of
Termination
|
|
(9)
|
Assignment
|
|
(10)
|
Applicable
Law
|
|
(11)
|
Goods
and Services Tax
|
|
(12)
|
Amendments
|
|
(13)
|
Severability
|
|
(14)
|
Further
Agreements
|
|
(15)
|
Notices
|
For
Infinity
|
||
Address
|
P.O.
Box 2381, Carlingford Court, Carlingford, NSW 2118,
Australia
|
|
Email
Address
|
headoff@apoweragro.com
or
gvadvisor@gmail.com
|
|
Fax.
number
|
612-98725602
|
|
For
the Licensee
|
||
Address
|
No.
19A, Jalan Wawasan Ampang, 2/8, Bandar Baru Ampang, 68000 Selangor,
Malaysia
|
|
Fax.
Number
|
603-56367043
|
EXECUTED
as an
Agreement.
|
||
SIGNED
SEALED AND
|
||
DELIVERED
by a director of
INFINITY
ENVIRONMENTAL GROUP LTD.
|
||
|
||
For and
behalf of
|
||
Infinity
Environmental Group Ltd
|
||
/s/
ILLEGIBLE
|
||
Authorized
Signature
|
||
Authorized
representative of
Infinity
Environmental Group Ltd.
|
||
SIGNED
SEALED AND
|
||
DELIVERED
by a director
of
|
||
CAPITAL
AWARD INC
|
||
|
For
and on behalf of
CAPITAL
AWARD INC.
|
|
Authorized
representative of
Capital
Award Inc.
|
/s/
Lee Solomon Yip Kun
|
|
Authorized
Signature(s)
|
1
|
The
Licensee
|
Capital Award Inc.
Address:
No. 19A, Jalan Wawasan Ampang 2/8, Bandar Baru
Ampang,
68000, Selangor Malaysia
|
||
2
|
The
Intellectual
|
(a)
|
The
A Power Module inclusive
|
|
Property |
(b)
|
The
A Power integrated water treatment system including all
|
||
components
and operation manual.
|
||||
(c)
|
The
A Power farm management systems and procedures.
|
|||
3
|
Manner
in which
the
Intellectual
Property is
to
|
The
Intellectual Property provided under the License will be provided as
required for the implementation of the project at a time as determined by
Infinity in the following format:
|
||
be supplied |
(a)
|
promotion
videos
|
||
(b)
|
design
specifications
|
|||
(c)
|
operation
and service manuals
|
|||
(d)
|
training
|
|||
(e)
|
on
line support during the life of the license.
|
|||
4
|
The
Project
|
The
Development in all provinces of the Peoples Republic Of China of the A
Power fish farms in the locations to be identified by the Licensee and
accepted by Infinity before commencement of work.
|
||
5
|
Terms
|
The
Licensee shall be allowed to issue Operator Licenses, for the A Power
Modules, which shall remain valid for 55 years from date of commencement
of the operation of the A Power Modules. The right of the License under
this Agreement shall remain valid for 55 years from date of this
Agreement.
|
||
6
|
License
Fee
|
The
License fee is to be calculated based on US$5,000.00 per A Power
Module.
|
||
7
|
Payment
terms of the License fee
|
(a)
|
All
payments shall be paid within 60 days from date of the monthly invoiced
statement issued by Infinity.
|
|
|
(b)
|
The
Licensee shall inform Infinity the number of Modules that has been sold
within 30 days from date of sales such that Infinity shall issue
corresponding invoices and monthly Statement
accordingly.
|
8
|
Special
Conditions
|
(a)
|
All
engineering drawing and plans as referred to in Clause 6.d.2 must be
approved by Infinity prior to the submission to the relevant
body.
|
|
(b)
|
All
Building and / or Installation work for the A Power Modules must be
completed by Certified Installation Contractors approved by Infinity for
the purpose of the execution of the Project.
|
|||
(c)
|
All
Components and parts of the A Power Modules constructed with the use of
the License must be purchased from suppliers approved by
Infinity.
|
|||
(d)
|
All
farm operation Managers and Supervisors working in the farms under the
License must be qualified personnel certified by
Infinity.
|
|||
(e)
|
All
fingerlings and fish stocks of the farms under the License must be free
from any Special Pathogen certified by Veterinary approved by Infinity
before their entry to the farms.
|
|||
9
|
Performance
of the Licensee
|
The parties hereby agree that in consideration of Infinity allowing the Licensee to pay for the License fee in manner as described in Schedule (7), the Licensee shall pay Infinity a sum of US$2,500,000.00 on or before 31 st . July 2008 representing License fee covering 500 units of APM construed as the minimum performance required of the Licensee during the period from 1 st . August 2006 to 31 st . July 2008. (Hereinafter called the Performance Payment). | ||
The “Performance Payment” of US$2,500,000.00 shall be paid by the Licensee regardless whether the Licensee will or will not have sold or built any of the said 500 units of APM during the said period. | ||||
The Licensee shall be allowed to deduct from the “Performance Payment” all Payments referred to in Schedule (7) paid for AP Modules built or sold during the said period as long as the said numbers are below 500 units. | ||||
10
|
Authorization
of the License
|
The Licensee shall be permitted to grant to its authorized agents the authority to develop the farm and the project, and shall be permitted to issue “Operator Licenses” for the developed farm in accordance with the terms and conditions of this Agreement. |