SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
_______________________
LARGO VISTA GROUP, LTD.
(Exact name of Registrant as specified in its Charter)
Nevada 76-0434-540
(State of Incorporation) (IRS Employer ID No.)
4570 Campus Drive, Newport Beach, California 92660
(Address of principal executive offices)
(949) 252-2180
(Registrant's telephone number)
Securities to be registered pursuant to Section 12(g) of the Act:
210,099,545 Common shares
Securities registered pursuant to Section 12(b) of the Act: None
Title of Each Class Name of Each Exchange
to be Registered on which registered
Common Stock, $0.001 par value - OTC Bulletin Board
<PAGE>
Item 1. DESCRIPTION OF BUSINESS
INTRODUCTION
1. Largo Vista Group, Ltd., a Nevada corporation ("Largo Vista,"),
operates through its wholly owned subsidiary, Everlasting International
Ltd. ("Everlasting"), a Nevada corporation. Everlasting operates and owns a
66.67% interest in a joint venture company in China, operated under the
name "Kunming Xinmao Petrochemical Industry Co. Ltd." ("Xinmao or the
Company"). Xinmao is principally engaged in the business of purchasing and
reselling liquid petroleum gas ("LPG") in the retail and wholesale markets
to both residential and commercial consumers in Yunnan Province of South
China. Xinmao operates a storage depot and has office headquarters in the
City of Kunming. All of the Company's property and equipment is located in
China.
Largo Vista was originally incorporated on January 16, 1987 in Nevada under
the name, "The George Group". On January 9, 1989, The George Group
acquired Waste Service Technologies, Inc. ("WST"), an Oregon corporation.
On the same day The George Group filed a name change in Nevada and changed
its name to WST. WST's plan of business was to become an environmental
service company. It listed its stock and began trading on OTC Bulletin
Board.
On April 15, 1994, WST acquired Largo Vista, Inc., a California
corporation, and on the same day filed a name change in Nevada to change
WST's name to Largo Vista Group, Ltd. At the time of acquisition Largo
Vista filed a change of name with the OTC Bulletin Board and received a new
CUSIP number and symbol ("LGOV"). Largo Vista originally planned to
develop housing in China, but, after shipping two factory built homes to
China, never fully implemented the plans due to unanticipated financing,
environmental and regulatory complications.
On December 26, 1996, Largo Vista acquired Everlasting International Ltd.
("Everlasting"), a Nevada Corporation, which owns a 66.67% interest in
Kunming Xinmao Petrochemical Industry Co., Ltd. ("Xinmao"), mentioned
above. Everlasting acquired this asset from Proton Technology Corporation
Limited, a Bahamas Corporation ("Proton").
The historical chain-of-ownership of the asset is as follows: The Hong
Kong Company, formed under the laws of Hong Kong, was initially owned by
one individual, Tan Mau Tak. On November 8, 1995, Deng Shan, an
individual, purchased the Hong Kong Company from Chan Mau Tak. On December
20, 1996, the Hong Kong Co. was acquired from Deng Shan by Proton with
majority shareholder being Deng Shan. On December 21, 1996, Proton
transferred 100% of its interest in the Hong Kong Company to Everlasting
International Ltd., a Nevada Corporation. On April 29,1997, Largo Vista
shareholders consented to an acquisition and plan of reorganization
executed on December 26, 1996, wherein Largo Vista purchased 100% of the
stock of Everlasting from Proton Technology in a stock exchange
transaction.
2. Organization of the Subsidiary
Xinmao, in operation and providing uninterrupted service to consumers since
1992, is in its third year of operation as a subsidiary of Largo Vista.
Xinmao is the largest privately owned LPG distribution company in its area
of coverage based upon the number of end users.
<PAGE>
3. Organization Chart
LVG
Largo Vista Group,
Ltd.
Owns 100% EIL
Owns 100% LVI
Subsidiaries
EIL LVI
Everlasting Largo Vista, Inc.
International, Ltd.
No Operations Presently
Owns 66.67% of "Xinmao"
"Xinmao"
Kunming Xinmao
Petrochemical Industry
Co., Ltd., a
Chinese Joint Venture
JV Partners:
"Xinmao" - 66.67%
Government Partner
33.33%
Note: Government Partner is "Kunming Fuel General Co."
<PAGE>
LARGO VISTA GROUP, LTD.
EVERLASTING INTERNATIONAL, LTD.
(100% Owned Subsidiary of Largo Vista holding a)
66.67% Interest in the
Joint Venture
KUNMING XINMAO PETROCHEMICAL INDUSTRY CO., LTD.
(in which a)
33.3% Interest
is held by KUNMING FUEL GENERAL CO.
(Chinese Government Joint Venture Partner)
B. FINANCIAL INFORMATION BY
INDUSTRY SEGMENT AND CLASSES OF PRODUCTS
Registrant is in the purchasing and reselling segment of the liquid
petroleum gas ("LPG") market in China.
<TABLE>
Year
1998 1997 1996
1 2 3
<S> <C> <C> <C>
Sales to $1,476,971 $2,472,378 $0
Unaffiliated Customers:
Operating Loss $(506,694) (1) $(1,413,763) (1) $0
Identifiable Assets, Net $ 831,882 $ 1,179,527 $0
</TABLE>
(1) The calculations of $506,694 and $1,179,527 operating losses for the
years 1998 and 1997, respectively, are net amounts reflecting deductions
for receivables write down of approximately $1,130,000 in 1997 versus
approximately $50,000 in 1998; and losses incurred in lawsuits of
approximately $400,000 in 1997.
<PAGE>
C. BUSINESS
1. Terms of Xinmao Joint Venture
The Kunming Xinmao Petrochemical Co., Ltd. ("Xinmao") is a Joint Venture
formed under the laws of the People's Republic of China.
Term: Twenty years, commencing on August 28, 1992.
Parties: Party A is the Kunming Fuel General Co. ("Government Partner ") as
to a 33.33% interest with a "registered capital" investment of US $641,000.
Party B is Everlasting International, Ltd as to a 66.67% interest, with a
"registered capital" investment of US $1,283,400.
General Provisions: Government Partner has a general responsibility to
support Everlasting in its duties.
The Joint Venture is an independent entity with an independent accounting
system. An audit of the Joint Venture's financial records is conducted
annually by an auditor registered in China. Fiscal year of Joint Venture
is January 1 to December 31.
Everlasting is, subject to the terms and conditions of an operating
agreement set forth below, responsible for the general management of Xinmao
including: Procurement of equipment and raw materials, equipment
installation, testing and technical training, hiring a management staff,
production and technical processes and other duties entrusted to it.
This Operating Agreement was made between the Government Partner and the
Hong Kong Company on August 28, 1992, for a term of ten years, ending on
August 28, 2002. Everlasting, as purchasor of the Hong Kong Company, is
responsible to manage the day-to-day operations of Xinmao and assume sole
responsibility for its profits and losses.
Each party under Chinese law would normally participate in the profits and
losses of the Joint Venture according to its proportionate share of
contribution. However, this provision was changed by the Operating
Agreement, which provides that Xinmao is to pay the Government Partner 9
million Yuan (RMB) during the term of the Agreement as follows:
3.5 million Yuan for the first 3 years;
1.5 million Yuan per year for the 4th and 5th years;
500,000 Yuan per year from the 6th through the 10th years
The Company negotiated this agreement to provide flexibility and encourage
future investment and expansion by precluding the payment of large a sum of
money to the Government Partner. In addition, the Government Partner has
indicated a willingness to sell to Largo Vista an additional 28.33 % which
would result in Largo Vista owning 95% and the government partner owning 5%
of the joint venture.
2. Government License Held
The Xinmao Company holds a unique license issued by Chinese Central
Government (National Industrial and Commercial Registration Administration
of China). This license is most valuable because it permits the Company to
operate across provincial borders; whereas, competitors of the Company are
restricted to the geographic area in which they are located. In addition,
the license permits the Company to process domestic crude oil and sell its
by-products; to process and sell LPG to retail domestic and industrial
customers; to manufacture cylinders, stoves, water heaters, and cigarette
lighters and their accessories; and to provide services in inspection and
maintenance of stoves and cylinders for safety and quality.
<PAGE>
Xinmao is a Sino-Foreign Joint Venture registered with the government as
having foreign ownership. This registration permits foreign investment to
legally flow into China, and allows funds to legally flow out of China
including loan repayments, interest payments and dividends. Xinmao is one
of the few known Sino-Foreign Joint Ventures licensed to sell petroleum
products in the retail market.
Xinmao also holds a general contractors license intended for construction
of pipeline projects. As a part of its overall strategy to expand its LPG
market in China, management intends to expand its business in the future
beyond its current core business of purchasing and reselling LPG, utilizing
its various licensing authorities.
3. The Product
LPG is used by about 500 million people worldwide. As a form of energy it
is considered a very efficient fuel because in a liquid state it provides a
significant supply of energy in a comparatively small volume. LPG is
recognized for its transportability and ease-of-use. It is a clean and
environmentally friendly source of energy that has a variety of
residential, commercial, industrial and transportation uses. It can be
used at home for cooking and heating, replacing wood, kerosene, coal and
other environmentally unfriendly sources of energy. In fact, environmental
concerns have caused the outlaw of the use of coal in most larger cities in
China. Since LPG is one of the only viable sources of energy for cooking
and heating in Southern China, management believes the China LPG market is
ripe for growth and expansion.
Most Chinese consumers have used of wood and coal all of their life
primarily for cooking only; however, they are slowly beginning to realize
the ease and convenience of also using LPG for heating and heating water.
Most consumers obtain LPG in 15 kg. cylinders, very similar to those used
for gas barbecues in the U.S. As LPG delivery systems, such as pipelines,
make use more convenient and simple, LPG consumption per capita should
increase significantly. In addition, management believes there will be
future opportunities in drying tobacco and operating factory machinery and
vehicles.
4. Markets
The China LPG market is broken down into three segments for purposes of
analysis:
1.Distribution method from the major LPG companies,
2.Method of delivery to the consumer, and
3.Black Market dealers
<PAGE>
The Primary market segment is according to distribution method - that is
either retail-direct or wholesale-indirect. Retail distribution is
accomplished by the ten major LPG companies that deal directly with the end
user. Xinmao distributes to both retail and wholesale customers, and to
both residential and commercial users. However, retail customers are far
more profitable than wholesale because sales prices are higher and there
are no middleman costs. The Company is implementing strategies to develop
more retail users.
The second market segment is according to the delivery vehicle used by the
user, such as bottle or cylinder, pipeline, or tank truck.
The bottle users may be either retail, purchasing directly from a major LPG
company, or wholesale, purchasing indirectly from a distributor of a major
LPG company. Bottle customers purchase LPG in 15 kg. cylinders or bottles
that must, by law, be filled to a minimum of 13.5 kg which is considered
full. Bottle users include residential, and commercial customers.
Residential consumption is by far the largest, with commercial restaurants
and caterers following second. There has been little industrial use of LPG
to date.
Pipeline users are considered retail-direct users. LPG flows directly into
a household via pipes from a central storage tank that is replenished as
necessary by a major LPG company. Pipeline users are billed according to
usage based on a meter in their living unit.
Tank truck or bulk sales are made to wholesale distributors who operate
small bottle filling stations. These distributors represent lower profit
margins but volume makes-up some of the difference. Bulk sales are
encouraged to cultivate the small wholesale distributors because of the
potential of acquiring their customer base in the future.
A third market segment, although temporary, must be considered because of
the negative impact it has on the LPG market. This segment is comprised of
the many small independent distributors and individuals who operate
illegally in what is referred to as the "black market" - most operating
without a license, violating safety laws, and unfairly profiting by short-
filling LPG bottles. These abusers create problems of unfair competition
for the Company. The Kunming LPG Administration is aware of these abuses,
but, unless a blatant case is presented to it, it is ignoring the problems
until the market consolidates to a greater degree.
LPG consumption has been growing at a remarkable rate since the beginning
of 1990's. In 1990, LPG consumption was slightly over 2 million tons,
while in 1996, nearly 7.4 million tons. The average annual growth rate in
this period was more than 20%, and growth from 1994 to 1995 reached almost
33%. Even though LPG consumption has been developing very fast in the past
decade, LPG consumption per capita is still very low, partly due to the
large population in China. At present it is around only 6 kg nationwide
which is small in comparison to 100kg in its Asian neighbors such as Japan
and South Korea, for example. LPG development in China also shows
geographical variance. South China has led the nation in terms of per
capita consumption at nearly 35 kg. East China follows with per capita
consumption of about 10kg. North China is far less, only half of that in
<PAGE>
East China. And still in many places inland, the LPG consumption per
capita is negligible.
The majority of dollars invested in the China LPG market have been invested
in large "mega" depots by the major oil companies. Little to no focus has
been placed on the retail end-user market. Put simply, the LPG "storage"
infrastructure is in place, but it is overbuilt because the retail market
has not been cultivated at the same pace. Management's primary objective
is the development of this retail consumer base.
From the mega-depots on the east and southeast coast of China, LPG is
shipped to smaller inland storage depots via railroad tank car. LPG is
then pumped into large storage tanks until it is distributed in bottles,
pipelines or tank trucks to end users and distributors.
Inland infrastructure development has not kept pace with coastal
development. Inland depot storage capacity must be expanded to serve the
customers in waiting for LPG service. More efficient distribution methods
are also needed. The bottle exchange system is labor intensive - a factor
that does not significantly affect overhead yet, but will have greater
future impact as salaries increase.
Distribution of LPG via pipelines directly to end-users is very efficient,
but one drawback is the cost to install pipeline service to each household,
which is approximately $185 US. Some more affluent customers can afford to
pay the installation fee up front, but most of these have already purchased
pipeline service. Some new construction projects permit the cost of
installation to be incorporated into the cost of the home. However, most
customers can not afford the up-front fee, but are willing and able to pay
extra each month based on usage. Xinmao has seven pipeline projects either
completed or under construction.
5. Distribution of LPG
There are four basic levels of LPG distribution:
Major LPG companies
Major LPG Distributors
Medium LPG Distributors
Small Independent LPG Distributors
The Major LPG companies are characterized by the following: they purchase
LPG directly from refineries or major oil companies, they must be licensed,
have railroad tank cars and storage depots, and typically serve over 10,000
retail customers. These companies depend on distribution networks to get
LPG to the consumers.
Major distributors are licensed and generally serve more that 4,000 but
less than 10,000 customers directly, but do not typically have any railroad
tank cars, and have little or no storage capacity.
Medium Distributors are licensed and generally serve more than 1,500 but
less than 4,000 customers directly, have no storage capacity.
Small Independent Distributors are those who may or may not be licensed,
and have no relationship or loyalty to any major company or distributor,
and usually serve less than 1,500 customers.
<PAGE>
Since all of these distributors serve a customer base, Xinmao is actively
recruiting them on an ongoing basis.
The majority of Xinmao's customer base is serviced with the help of agents
and entity users. Xinmao has eight agents that are independent dealers who
exclusively represent the Company in an outlying county area that is
difficult for the Company to access on a regular basis. The consumers
serviced by the agent pay retail prices. The Company pays the agent a fee
for his services and the agent carries his own overhead expenses.
As the LPG market was developing in the early 1990's, the Company was
seeking to develop a customer base in the most efficient and effective
manner possible; and, as a result, began to cultivate the "entity user"...
Entity users were companies in other industries, already providing housing
for their employees, that desired to provide a convenience to their workers
by distributing LPG as an additional service. These entity users developed
into distribution outlets that benefited the Company by providing free
receiving, storage and LPG distribution service to consumers who paid
retail prices. As the market further developed, the entity user also began
to be a distribution outlet to other consumers in the local area that were
not affiliated with the entity company. Today, the Company is actively
seeking to cultivate and develop additional entity users to expand the
consumer base. Today Xinmao has 125 entity users.
In 1997, under the leadership of Largo Vista management, several
innovations were added to the distribution process. First, there was a
time delay between the sale of the LPG and receipt of the cash from the
sale. The Company responded with the "coupon program" whereby the
consumer, first purchased a special coupon from the bank and presented it
as payment as he exchanged an empty bottle of LPG for a full one. The bank
then remitted to the Company. The Bank of Agriculture, one of the largest
in China with over 1,000 branches in the province, has successfully worked
with the Company for over two years in this program and the bank is pleased
with exposure to a new customer base.
Second, also in 1997, the Company implemented the first consumer insurance
program. This insurance, written by the largest insurance company in China,
guaranteed the consumer who either made a non-refundable prepayment for LPG
by purchasing a coupon that the LPG would be at a fixed price, immediately
available, and a guaranteed quality and quantity.
These two innovations, the coupon program and the consumer insurance
protection program, were the first of their kind in China. In the future
the Company intends to implement a third innovation for the pipeline
distribution system which will be a prepaid "smart card", that will be
inserted into a meter in the consumer's home. This precludes cash flow and
collection problems. Distribution of the prepaid smart card will be
similar to the coupon program in concert with the Bank of Agriculture.
<PAGE>
The bulk of Xinmao's retail customers are located in the Yunnan Province
central cities of Kunming, Lunan, Chengong, Yiliang, Jinnin, Annin, and
Eshan. As the population thins out in the suburbs, distribution networks
take-over and service most customers. The rural areas are exclusively
serviced by smaller distributors.
Finally, there are a number of other minor distributors who purchase from
Xinmao and other major companies, who have solicited their own customer
base over a period of time and have generated customer loyalty through
relationship.
6. Raw Materials
The Chinese market is unique compared to other Asian countries. Japan and
Korea seek security of supply through regular term contracts supported by
long-term relationships, but, in China, low price and bargaining is the
driving force for LPG purchases.
Xinmao has been able to consistently purchase LPG at low prices due to high
volume of orders. When purchasing LPG, Xinmao must weigh various factors
including quality of LPG, price, and transportation costs. It generally
purchases from domestic sources inside China where prices are very low, but
transportation costs are higher. On occasion Xinmao also purchases LPG
from foreign companies such as Mobil Oil Hong Kong and Caltex.
Cost of goods can fluctuate widely and rapidly and can cause cash flow
problems. The Company is researching the feasibility of obtaining a much
larger storage facility that would permit it to purchase large quantities
of LPG when prices are favorable, and sell it when prices are higher.
7. Pricing and Competition
The LPG industry in Yunnan Province consists of ten major LPG companies
that have railroad tank cars, depot storage facilities, and sell LPG in
both the retail and wholesale markets. All ten companies depend on a
network of distributors to help reach and serve the needs of their
customers. Competition is based principally on price and service, with
some based on relationship and reputation. Nine of these companies are
government owned and operated to some degree, leaving Xinmao as the only
privately owned and operated company.
LPG retail market prices have been relatively unstable during the past two
years, characterized by over supply and cut-throat competition. This was
precipitated by environmental concerns that prompted the passing new
regulations by the Kunming City Government that outlaw the use of coal.
Other larger cities are following suit with similar clean air regulations,
leaving LPG as the major viable energy alternative for cooking, heating,
and hot water.
No companies were prepared to supply a sufficient amount of LPG to this new
consumer market, but all companies reacted to the huge new demand.
<PAGE>
The difference between Xinmao and the other nine government companies is
that the primary objective of Xinmao is to make a profit while profit is
secondary to the government companies primary objective is to ensure supply
LPG. The nine government companies, whose primary objective was to supply
LPG to consumers, are characterized by a lack of management and financial
expertise, and by large work staffs that operate very inefficiently. These
entities ordered an excess supply of LPG and had to cut prices to deplete
the excess. This began the spiraling downward price market in which Xinmao
was forced to compete. These pressures have eased, and Xinmao is
negotiating with the government agencies and some companies in an effort to
bring stability back to the market along with higher prices and profitable
margins.
Black Market. In the residential wholesale market, many independent,
"black market" dealers sprung-up and have been operating without a license,
and have ignored safety regulations that require inspection and pressure
testing of each bottle every five years. Another flagrant violation of
consumer fairness is the practice of short-filling bottles. The "black
market" dealer fills the bottle with 10 kg. of LPG, and sells it
representing it has 13.5 kg. of LPG. Short-filling has permitted the
Company's competition to charge lower prices and unfairly compete with
Xinmao. This practice of cheating the consumer has been prevalent over the
past several years. Xinmao is now challenging customers to be aware of
what they are paying for by implementation of a "weight comparison
program". The program permits the consumer to actually weigh the bottles
to expose the "short-fill" problem.
As of April 15, 1999, the Kunming LPG Administration established "minimum
pricing" regulations which set a base price for both wholesale bulk sales,
and wholesale and retail bottle sales. This regulation will help stop the
uncontrolled cut-throat pricing competition that occurred over the past 24
months. It will be incumbent upon the nine participating major LPG
companies to form task forces to assist the LPG Administrator in enforcing
these regulations. The "short-fill" practice is now illegal under new
"minimum price" regulations, which require all wholesalers to sell a 13.5
kg. bottle for no less than 36 RMB, and retail distributors for no less
than 42 RMB.
Xinmao competes with others on both reputation and service. To
differentiate itself from its competition, Xinmao stresses a long-term
relationship both with the residential user, and with the distributor, to
help them bring-in and keep new customers. The Company wants its
distributors and their customers to be a part of the "Xinmao Family". The
Company offers more than claims about its service. Its reputation is
excellent and is backed-up by a record of uninterrupted service since 1992.
Consumers and distributors know that they can rely on Xinmao to deliver and
that they will receive honest weights and measures.
8. Insurance
Xinmao sells a solid image of reliability, service, safety, and seven years
of uninterrupted service to its customers - and backs it up with insurance.
The Company provides consumer insurance, written by the Peoples Insurance
Company of China (PICC) which is owned by the government. The insurance
guarantees that a customer who paid in advance that the LPG would be at a
<PAGE>
fixed price, immediately available, and a guaranteed quality and quantity.
This innovation has given the customer new confidence, since in the past
many companies collected in advance, and then went out of business, leaving
the customer empty handed.
9. Government Regulation
The LPG industry is regulated on a day-to-day basis by the Kunming LPG
Administration, which oversees all companies licensed to do business, and
enforces rules and regulations in the market place. The LPG Administration
faces many problems in this rapidly emerging, chaotic market, including the
existence of many unlicensed small distributors, violations of safety
regulations, and bottles of LPG short-filled by as much as 25%. In April
1999, the local LPG Administration met with Xinmao and eight of the other
largest licensed companies in the area, and together set minimum price
policies intended to provide positive margins over cost. The LPG
Administration has also attempted to correct some of the more flagrant
violations, but has also overlooked them to some extent, waiting for one or
two companies to emerge as the survivors of the competition, proving that
they are financially able to carry the responsibility of uninterrupted
supply to consumers. Xinmao is poised to be the survivor, requiring only
an infusion of capital to give the LPG Administration the confidence it
needs to begin to enforce regulations more aggressively.
10. Patents, Trademarks & Licenses
The Company maintains no patents or trademarks.
11. Seasonal Factors
Northern China is subject to a wide range of seasonality ranging from snow
in the winter to hot, humid summers. However, moving south, the seasons
and temperatures do not fluctuate as much as in the north. The Xinmao
Company operates in Yunnan Province which, being at an elevation of
approximately 5,500 feet, is known for its moderate and even climate year
around - being slightly cooler in the winter, requiring some heating, while
the summer weather is warm and pleasant. As a result, seasonal factors do
not play a significant role in the Company's business.
12. Inventory
Inventory, valued at cost, on the first-in, first-out basis, consists
primarily of liquid petroleum gas.
13. Firm Backlog
None.
<PAGE>
14. Government Contracts
The Company has government approval for the exclusive development of
pipeline projects in the counties of Lunan, Fuming, Yiliang, Yuxi, and a
part of Kunming.
15. Environmental Factors
Between 1996 and 1998, environmental concerns over clean air and streets,
have prompted a general movement within the Chinese Government from the
Central Government to the provinces and the major cities to phase-out the
use of coal as an energy source for cooking and heating. As coal is phased-
out a void is left which is being filled by liquid petroleum gas (LPG)
because it is a clean burning, efficient and transportable energy
substitute. It is expected that continued efforts will be made to replace
other unclean burning fuels with LPG, especially in automobiles and
industrial applications, since it is the only viable alternative fuel
resource available to Southern China.
16. Financial Information Relating to Foreign & Domestic Sales
All of the Company's sales are foreign, through Xinmao, its China
subsidiary. The Company has had no significant foreign currency
transaction gains or losses in connection with its activities.
17. Employees
Largo Vista Largo Vista is fully staffed with 2 employees, and relies on
five other outside service providers for legal, accounting and other
services as needed. The Chinese subsidiary, Xinmao, is fully staffed with
84 employees, including a full management staff, which is considered highly
competent and well qualified.
LARGO VISTA GROUP, LTD.
Item 2. A. FINANCIAL INFORMATION
The following table summarizes certain selected financial data for the
periods presented for the Company. The data for the year ended December 31
1998 and 1997 should be read in conjunction with the more detailed audited
statements for such years presented elsewhere herein.
<TABLE>
6/30/99 6/30/98 12/31/98 12/31/97
<S> <S> <S> <S> <S>
Revenues $ $ $ $
LP Gas Sales $529,826 $858,674 $1,476,971 $2,472,378
Other Income $5,961 $72,227 $141,229 $70,427
Total Revenues $535,787 $930,901 $1,618,200 $2,542,805
Cost of Sales $494,726 $789,984 $1,353,537 $2,449,902
Margin $41,061 $140,917 $264,663 $92,903
G&A & Other
Expenses $305,007 $394,701 $640,631 (1) $1,399,646 (1)
EBIDTA -$232,420 -$218,327 -$308,042 -$1,233,213
Operating (Losses)-$316,815 -$317,371 -$506,694 -$1,413,763
</TABLE>
<PAGE>
(1) The calculations of $640,631 and $1,399,646 general and
administrative costs is net of the gross amount of $760,491 and $2,843,257
for the years 1998 and 1997, respectively. These net amounts reflect
deductions for receivables write down of approximately $1,130,000 in 1997
versus approximately $50,000 in 1998; and losses incurred in lawsuits of
approximately $400,000 in 1997.
B. Management's Discussion and Analysis of Financial Condition and Results
of Operation
1. Management's Discussion and Analysis of Financial Condition
And Results of Operations
Six Months ended June 30, 1999 and June 30, 1998
Revenues and expenses are generated from the Company' s Chinese subsidiary,
Kunming Xinmao Petrochemical Industrial Co., Ltd. ("Xinmao"). The United
States entities produce no revenues, and experience expenses in conjunction
with management oversight of the Chinese entity, legal, accounting and
other professional services. The result of consolidated operations are
reported.
Revenues for the six month period ending June 30, 1999 were $535,787,
decreased from $930,901 in the six month period ending June 30, 1998; a
decrease of $395,114 (42.4%). This reduction occurred primarily in the
bulk sales market segment and was the result of a management decision to
reduce sales in those market segments exhibiting depressed prices and
yielding negative margins. Price pressures have also negatively affected
sales volume and profitability in the retail residential market segment.
The LPG market in Yunnan Province is a developing one that has been highly
competitive and unstable over the past two years. The Company anticipates
increases in revenue from expanded marketing efforts, price increases,
expansion into other lines of business, and mergers and acquisitions.
Cost of sales for the six month period ending June 30, 1999 were $494,726,
decreased from $789,984 in the six month period ending June 30, 1998; a
decrease of $295,258 (37.4%). Cost of sales on a percentage basis has
remained fairly consistent over the last two years. The Company
anticipates improving cost of sales going forward by implementing cost
containment procedures and obtaining product at lower prices.
Margins for the six month period ending June 30, 1999 were $41,061,
decreased from $140,917 in the six month period ending June 30, 1998; a
decrease of $99,856 (70.9%). The decrease reflects extremely competitive
market conditions, and a decrease of other income of $66,266 (91.7%). The
Company anticipates improving the margin going forward by focusing sales
efforts on more profitable market segments and implementing measures to
reduce cost of goods.
General and administrative expenses for the six month period ending June
30, 1999 were $305,007, decreased from $394,701 in the six month period
ending June 30, 1998; a decrease of $89,694 (22.7%). The decrease reflects
the Company's efforts to trim excess costs; and, it anticipates improving
these expenses going forward by implementing strict cost control measures
both in China and the United States.
<PAGE>
EBIDTA for the six month period ending June 30, 1999 was [$232,420],
decreased from [$218,327] in the six month period ending June 30, 1998; a
decrease of $14,093 (6.5%). The decrease reflects lower revenues from LPG
sales due to downward price pressures, a decrease of other income of
$66,266, offset by a decrease of general and administrative expenses
$89,694.
Operating losses for the six month period ending June 30, 1999 were
[$316,815], decreased from [$317,371] in the six month period ending June
30, 1998; a decrease of $556 (0.2%). The minor variation between the
periods reflects the cost containment efforts implemented by the Company
directed toward improvement of profitability and lower interest rates.
Twelve months ended December 31, 1998 and December 31, 1997
Revenues and expenses are generated from the Company' s Chinese subsidiary,
Kunming Xinmao Petrochemical Industrial Co., Ltd. ("Xinmao"). The United
States entities produce no revenues, and experience expenses in conjunction
with management oversight of the Chinese entity, legal, accounting and
other professional services. The result of consolidated operations are
reported.
Revenues for the twelve month period ending December 31, 1998 were
$1,618,200, decreased from $2,542,805 in the twelve month period ending
December 31, 1997; a decrease of $924,605 (36.4%). This reduction occurred
primarily in the bulk sales market segment, a result of management's
decision to curtail sales activity in high volume, low to negative margin
market segments, especially in an environment of depressed prices and
oversupply conditions yielding negative margins. Price pressures have also
negatively affected sales volume and profitability in the retail
residential market segment. The LPG market in Yunnan Province has been
highly competitive and unstable over the past two years. It is a
developing market that reflects rapidly increasing consumer demand, low
cost of goods and temporary over supply placing downward pressure on
prices, and one that requires capital investment to improve delivery
systems to consumers. The Company anticipates increases in revenue from
expanded marketing efforts, price increases, expansion into other lines of
business, and mergers and acquisitions.
Cost of sales for the twelve month period ending December 31, 1998 were
$1,353,537, decreased from $2,449,902 in the twelve month period ending
December 31, 1997; a decrease of $1,096,365 (44.8%). Cost of sales on a
percentage basis has remained fairly consistent over the last two years.
The Company anticipates improving cost of sales going forward by
implementing cost containment procedures and obtaining product at lower
prices.
Margins for the twelve month period ending December 31, 1998 were $264,663,
increased from $92,903 in the twelve month period ending December 31, 1997;
an improvement of $171,760 (184.9%). The increase reflects reduction of
sales activity on unprofitable market segments, implementation of cost
reduction efforts and improved management techniques. Extremely
competitive market conditions, were offset in part by increased other
income by $70,802 (100.5%). The Company anticipates improving the margin
going forward by focusing sales efforts on more profitable market segments
and implementing additional measures to reduce cost of goods.
<PAGE>
General and administrative expenses for the twelve month period ending
December 31, 1998 were $640,631, decreased from $1,399,646 in the twelve
month period ending December 31, 1997; a decrease of $759,015 (-54.2%)
(1)... The decrease primarily results from better cost controls by
management; and lower business activity, i.e. lower revenues in 1998
equating to lower general and administrative expenses.
EBIDTA for the twelve month period ending December 31, 1998 was [$308,042],
increased from [$1,233,213] in the twelve month period ending December 31,
1997; an improvement of $925,171 (75.0%). The improvement reflects
improved margins and lower general and administrative costs.
Operating losses for the twelve month period ending December 31, 1998 were
[$506,694], decreased from [$1,413,763] in the twelve month period ending
December 31, 1997; a decrease of $907,069 (64.2%). This decrease reflects
higher margins, cost containment efforts, and lower interest rates.
2. Liquidity and Capital Resources
Historically, the Company has been able to borrow funds as necessary to
pursue operations. However, neither Largo Vista nor Xinmao have written
letters of commitment from either commercial or private sources of credit.
The Xinmao Company has received several verbal commitments from private
sources, but will not obtain written documents until the funds are
available.
3. Trends, events or uncertainties that have or are reasonably likely to
have a material impact on the Company's liquidity.
The economic growth of China with its huge population, emerging middle
class, and growing consumer sector are trends that management anticipates
will increase the Company's revenues from Xinmao as well as other
anticipated projects. China's young, developing LPG market presents
challenges of improving sales strategies, seeking lowest-cost sources of
goods, implementing efficient management techniques, and developing the
efficiency and effectiveness of human resources.
World geopolitical uncertainties, such as the United States bombing of the
Chinese consulate in Belgrade, Yugoslavia resulted in a short period (4-5
days) of unrest and negative reactions toward Americans in China; however,
no long term difficulties have been experienced and management does not
anticipate any serious detriment to prospects for the Company's success in
China because of the nature of the service a utility company provides that
is in continual demand, and the fact that foreign ownership is not readily
ascertainable by consumers.
In addition, even though Chinese management is optimistic of its ability to
obtain credit from private sources, the trend in China is for the banks to
tighten loan eligibility for businesses such as Xinmao that are
experiencing cash flow difficulties.
<PAGE>
Additionally, the Company is searching for joint venture partners in
various potential LPG projects in the Yunnan Province and in other
provinces. Investment by joint venture partners will be perceived as
financial strength by the local LPG Administration, and management
anticipates stronger enforcement of licensing and safety regulations, which
should reduce unfair competition currently experienced by the Company.
Year 2000 Issue
Many computer Systems in use today may be unable to correctly process data
or may not operate at all after December 31, l999 because those systems
recognize the year within a date only by the last two digits. Some computer
programs may interpret the year "00" as 1900, instead of as 2000, causing
errors in calculations or the value "00" may be considered invalid by the
computer program, causing the system to fail.
In the U.S., the Company maintains its financial data on a PC system
utilizing generic accounting software, both of which have been guaranteed
by the manufacturer as Y2K compliant. In China, due to government
regulations, the Company maintains a manual record system. During first
quarter 2000, in China, management expects to begin maintaining financial
and other information on both a manual and PC system, totally shifting to a
PC system as government regulations permit. The Company does not believe
it will either experience, or that it has significant exposure to, Year
2000 problems, and neither does it expect that the Year 2000 issue will
have a material cost or impact on Company operations. The Company's
primary contingency plan depends upon the use of manual back-up systems,
and alternative supply sources such as major oil companies.
These contingency plans are intended to mitigate the impact of third party
Year 2000 noncompliance. Outside of manual backup, the Company does not
plan to implement further contingency plans. However, there can be no
assurance that the systems of key suppliers and other companies on which
the Company relies will not have an adverse effect on the Company
including, (1) the inability to obtain products or services used in
business operations, (2) the inability to deliver goods or services sold to
customers
Forward - Looking Statements
Investors are cautioned that certain statements contained in this document,
including but not limited to those under the caption Management's
Discussion and Analysis as well as some statements by the Company in
periodic press releases and some oral statements of Company officials
during presentations about the Company, are "forward-looking" statements
within the meaning of the Private Securities Litigation Reform Act of l998
(the "Act"). Forward-looking statements include words such as "expects",
"anticipates", "intends", "plans", "believes", "estimates", or similar
expressions. In addition, any statements concerning future financial
performance (including future revenues, earnings or growth rates), ongoing
business strategies or prospects, and possible future company actions,
which may be provided by management are also forward-looking statements as
defined by the Act. Forward-looking statements are based on current
expectations and projections about future events and are subject to
<PAGE>
risks,uncertainties, and assumptions about the Company, economic and market
factors and the industries in which the Company does business, among other
things. These statements are not guaranties of future performance and the
company has no specific intention to update these statements. Actual events
and results may differ materially and detrimentally from those expressed or
forecasted in forward-looking statements.
Certain of the important factors that could cause actual results to differ
materially and negatively from the Company's expectations, among others,
include continued instability in pricing and unprofitable competition in
China, a slow down in the trend in sales of LPG during the remainder of the
year, an inability to obtain sufficient working capital, and new Government
regulations adverse to the Company's operations.
Item 3. PROPERTIES
A. Largo Vista
Currently Largo Vista has corporate offices in Newport Beach, California,
which include two office suites. The terms of this Lease provide for month
to month tenancy at $2,500 per month.
B. Xinmao
Xinmao provides its primary service from its depot, which is adjacent to a
railroad terminal. The depot has a capacity of storing 1,000 cubic meters
(approximately 500 metric tons) of LPG. Assuming the depot is operating at
full capacity and turns-over twice per month, the depot is sufficient to
supply 83,000 users assuming consumption of 12 kg. of LPG per household per
month. In addition, although not included in the assets of the Company,
Xinmao operates a joint venture that has access to LPG storage facilities
that will serve an additional 30,000 customers per month in Yuxi, a city
near Kunming.
The depot also has ten service stations from which the 2, 15, and 50
kilogram bottles are filled, and loaded onto trucks for distribution. For
its retail-direct customers, Xinmao transports the full bottles to an
exchange shop where either the customer comes in personally, or Xinmao will
provide a delivery man to take the bottle to the customer who pays a
delivery fee.
In the case of a pipeline, 50 kg. bottles are used in cluster to service
residents in the housing complex. The advantage the pipeline customer has
over the bottle customer is convenience and service. There is no need to
spend valuable time exchanging bottles. The meter is read by the
serviceman each month who also collects the amount due. Xinmao is planning
to use "smart meters" in future pipeline developments that require the
customer to go to the Bank of Agriculture and purchase a prepaid card,
similar to a prepaid phone card commonly in use in the U.S. This will
improve cash flow and reduce "slow-pays" and "bad debts".
<PAGE>
Xinmao leases a two story, 4,000 square foot facility in Kunming City,
where it operates a customer service and sales center, bottle exchange
shop, storage facility, and administrative offices, at an annual rental of
$1000 US per year, under a three year lease, with one year of the term
remaining. It also leases and operates a number of small bottle exchange
stores throughout key locations in the city.
Item 4. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership
as of September 30, 1999, of the Company's Common Stock, by any person who
is known to the Company to be the beneficial owner of more than 5% of the
Company's voting securities and by each director and by officers and
directors of the Company as a group.
<TABLE>
Beneficial Percentage
Name and Address Ownership of Class
<S> <C> <C>
Daniel Mendez 24,026,799 11.44%
4570 Campus Drive
Newport Beach, CA 92660*
Albert Figueroa 6,770,603 3.22%
Deng Shan 4,736,028 2.25%
All current directors and
officers as a group (3 persons) 35,533,430 16.91%
Proton Technology Corp., Ltd. 91,461,246 43.53%
</TABLE>
*This address also applies to all persons listed.
<PAGE>
Item 5. DIRECTORS AND EXECUTIVE OFFICERS
The names, ages and positions of the directors and executive
officers of the Company as of September30, 1999, are as follows:
<TABLE>
Name Age Position Since
<S> <C> <C> <C>
Daniel J. Mendez 47 Acting President and a Director 4/94
Albert N. Figueroa 33 Acting Secretary/Treasurer, and 5/95
a Director
Deng Shan 48 Director 1/99
Chairman of the Board 4/99
</TABLE>
The Directors serve until the next annual meeting of shareholders, or until
their successors are elected.
<PAGE>
Daniel J. Mendez, Acting President, is responsible for investor relations,
coordination of information with market makers and brokers and potential
partners, coordination of all agreements, corporate financing, and liaison
with Chinese operations. Mr. Mendez joined the Company in October of 1991
as a marketing coordinator. In April 1994 he became President and a
Director, and is responsible for investor relations, coordination of
corporate agreements, corporate financing, and liaison with Chinese
operations. Prior to 1991
Albert N. Figueroa, Acting Secretary and Treasurer, is the gatekeeper of
all corporate documents and information, maintains the minute book and all
corporate records and agreements, keeps the books, liaisons with all
outside service providers, and generally coordinates the flow of
information within the company and with the Chinese operations. Mr.
Figueroa was formerly involved in the construction industry as an
estimator.
Deng Shan, Chairman of the Board and Director, is well versed in the
business practices of China. Early in his career Mr. Deng was a lecturer in
Wuhan Chemical Engineering School. Later he advanced to associate
professor at Huazhong University of Science and Technology. In 1989, Mr.
Deng became the Director, Science and Technology Commission, Nanshan
District Government, China. Since 1994, Mr. Deng has been appointed as
Chief Executive Officer/Chairman of the Board of four commercial companies.
In 1996, Mr. Deng acquired Kunming Xinmao Petrochemical Industrial Co.,
Ltd. Mr. Deng has established strategic networks in both business and
government arenas.
Item 6. EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid and accrued by
the Company during its last three fiscal years to the executive officers to
whom it paid in excess of $100,000, including cash and issuance of
securities.
<TABLE>
Summary Compensation
Annual Compensation Awards Payouts
Other Secur-
Name Annual Restricted ities
All Other and Compen- Stock Underlying Compen-
Principal Salary Bonus sation Award(s) Options sation
Position Year $) ($) $ ($)SARs (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Daniel
Mendez 1996 138,900 0 0 2,668,767 0 0
Daniel
Mendez 1997 220,000 0 0 2,850,000 0 0
Daniel
Mendez 1998 220,000 0 0 3,304,737 0 0
Daniel
Mendez 1999 112,500 0 0 2,104,473 0 0
(3 Qtrs)
Albert
Figueroa 1996 100,000 0 0 1,921,293 0 0
Albert
Figueroa 1997 100,000 0 0 1,295,896 0 0
Albert
Figueroa 1998 100,000 0 0 1,817,449 0 0
Albert
Figueroa 1999 75,000 0 0 1,406,536 0 0
(3 Qtrs)
Deng
Shan 1997 100,000 0 0 1,295,896 0 0
Deng
Shan 1998 100,000 0 0 1,817,449 0 0
Deng
Shan 1999 75,000 0 0 1,438,519 0 0
(3 Qtrs)
</TABLE>
<PAGE>
Options/SAR Grants in Last Fiscal Year
No options or SAR Grants have been made by the Company during its
last fiscal year.
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A. In late December, 1996, the company entered into a Plan and Agreement
of Reorganization with Everlasting International, Ltd. ("Everlasting"), a
Nevada corporation, and Proton Technology Corporation Limited ("Proton"), a
Bahamas corporation, whereby the Company acquired 100% of the shares of
Everlasting, owned by Proton, in exchange for 123,850,139 shares of the
voting common stock of the Company. At the time of this transaction,
Everlasting owned two-thirds of Kunming Xinmao Petrochemical Industrial
Co., Ltd. ("Kunming Xinmao"), a Chinese entity, with the other third of
Kunming Xinmao owned by a Chinese Government corporation (this interest had
been transferred to Everlasting from Proton).
Mr. Deng Shan is currently a Director of Largo Vista and a majority
shareholder of Proton Technology Corporation, Ltd. A loan of $30,000.00 is
owed by the company to Proton Technology.
Other than discussed above, the Company has no knowledge of any transaction
or series of transactions, or any currently proposed transaction, or series
of transactions, to which the Company was or is to be party, in which the
amount involved exceeds $60,000, involving management, any person owning
10% or more of the common stock, or any member of the immediate family of
any of the foregoing persons.
<PAGE>
Item 8. LEGAL PROCEEDINGS
The Company has unpaid judgments totaling approximately $95,000, as a
result of disputes arising in the normal course of business.
In January, 1998, a breach of contract action was commenced in
China against Kunming Xinmao Petrochemical Industrial Co. Ltd..
In March, 1998, a Chinese court rendered a judgment against
Xinmao in the approximate amount of U.S. $452,000. During the fiscal year
ended December 31, 1998, a significant portion of the Company's physical
assets, including many of its rail cars and trucks, were attached and
executed upon based upon this judgment.
In the Hong Kong jurisdiction, Everlasting International, Ltd. brought suit
against the plaintiff in the above case and prevailed. However, the other
party has appealed. The final resolution of this matter is uncertain.
Aside from the above, there is no litigation outstanding, and
management is not aware of any potential claims which might be
asserted.
Item 9. MARKET PRICE AND DIVIDENDS
ON REGISTRANT'S COMMON STOCK
EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock trades on the NASD Bulletin Board,
under the symbol "LGOV". The closing sales price on September 30, 1999
was $0.10 bid and $0.11 ask.
Set forth below is the high and low bid information for the
Company's Common Stock for each full quarterly period within the
two most recent fiscal years and the first quarter of 1999.
<TABLE>
High Low
Period Bid Bid
<S> <C> <C>
3rd Quarter 1999 $.11 $.10
2nd Quarter 1999 $.125 $.125
1st Quarter 1999 $.12 $.10
4th Quarter 1998 .13 .11
3rd Quarter 1998 .20 .17
2nd Quarter 1998 .18 .17
1st Quarter 1998 .20 .18
4th Quarter 1997 .125 .09
3rd Quarter 1997 .13 .12
2nd Quarter 1997 .19 .18
1st Quarter 1997 .20 .18
</TABLE>
<PAGE>
At September 30, 1999, the Company had approximately 507 Shareholders of
record.
The Company has not paid a dividend since its incorporation, and
management does not anticipate the Company will pay dividends in
the near future.
<PAGE>
Item 10. RECENT SALES OF UNREGISTERED SECURITIES
During its last three fiscal years, up through and including this date, the
Registrant has issued the following unregistered securities.
From January 1, 1997 through December 31, 1997, the Company issued
2,995,194 shares of its common stock that was valued at $139,619 as
follows:
<TABLE>
Amount Name or Class of Nature Amount Exempti
Date Title Sold Persons of Of on
to Whom Sold Consider- Consider-Claimed
ation ation
<S> <C> <C> <C> <C> <C> <C>
10/27/97 1,861,027 Daniel Mendez Conversion 59,842 4(2)
of Loan
10/27/97 687,379 Albert Figueroa Conversion 21,695 4(2)
of Loan
10/27/97 391,788 John Prentice Conversion 50,932 4(2)
of Loan
10/27/97 55,000 William Vauthrin Conversion 7,150 4(2)
of Loan
------------ ----------
Total 2,995,194 139,619
</TABLE>
From January 1, 1998 through December 31, 1998, the Company issued
3,939,058 shares of its common stock that was valued at $322,912 as
follows:
<PAGE>
<TABLE>
Amount Name or Class of Nature Amount Exempti
Date Sold Persons of Of on
to Whom Sold Consider- Consider Claimed
ation ation
<S> <C> <C> <C> <C> <C> <C>
2/4/98 373,224 Albert Figueroa Conversion 7,065 4(2)
of Loan
2/4/98 1,553,921 Daniel Mendez Conversion 29,414 4(2)
of Loan
7/21/98 422,345 Albert Figueroa Conversion 17,950 4(2)
of Loan
7/21/98 1,039,568 Daniel Mendez Conversion 44,182 4(2)
of Loan
9/24/98 350,000 Danilo Cacciamatta Settlement 78,256 4(2)
of Claim
9/24/98 200,000 Equitrade Settlement 146,045 4(2)
of Claim
------------- -----------
7,939,058 322,912
</TABLE>
From January 1, 1999 through September 30, 1999, the Company issued
26,236,524 shares of its common stock that was valued at $1,617,364 as
follows:
<TABLE>
Amount Name or Class of Nature Amount Exempti
Date Title Sold Persons of Of on
to Whom Sold Consider- Consider-Claimed
ation ation
<S> <C> <C> <C> <C> <C> <C>
6/21/99 1,000,000 Daniel Mendez Settlement 35,000 4(2)
of Claim
6/21/99 1,000,000 Albert Figueroa Settlement 35,000 4(2)
of Claim
6/21/99 1,000,000 Deng Shan Settlement 35,000 4(2)
of Claim
6/21/99 700,000 Bernard Kruer Settlement 25,000 4(2)
of Claim
6/21/99 300,000 Gymar, Inc. Settlement 10,500 4(2)
of Claim
7/20/99 100,000 Craig Saunar Settlement 85,000 4(2)
of Claim
7/20/99 50,000 Fred Smith Services 5,000 4(2)
9/23/99 700,000 Dan/Colette Seifer Cash Sale 35,000 4(2)
9/23/99 100,000 John Prentice Conversion 4,000 4(2)
of Loan
9/27/99 2,104,473 Daniel Mendez Settlement 110,000 4(2)
of Claim
9/27/99 2,304,737 Daniel Mendez Settlement 185,000 4(2)
of Claim
9/27/99 2,850,970 Daniel Mendez Settlement 220,000 4(2)
of Claim (1)
9/27/99 1,406,536 Albert Figueroa Settlement 73,500 4(2)
of Claim
9/27/99 817,449 Albert Figueroa Settlement 65,000 4(2)
of Claim
9/27/99 1,295,896 Albert Figueroa Settlement 100,000 4(2)
of Claim (1)
9/27/99 1,438,519 Deng Shan Settlement 75,000 4(2)
of Claim
9/27/99 817,449 Deng Shan Settlement 65,000 4(2)
of Claim
9/27/99 1,295,896 Deng Shan Settlement 100,000 4(2)
of Claim (1)
9/27/99 746,522 Bernard Kruer Settlement 45,000 4(2)
of Claim
9/27/99 572,213 Bernard Kruer Settlement 64,999 4(2)
of Claim
9/27/99 575,407 Gymar, Inc. Settlement 30,000 4(2)
of Claim
9/27/99 245,234 Gymar, Inc. Settlement 19,500 4(2)
of Claim
9/27/99 287,989 Albert Figueroa Conversion 13,507 4(2)
of Loan
9/27/99 2,385,714 Daniel Mendez Conversion 111,890 4(2)
of Loan
9/27/99 184,164 Deng Shan Conversion 8,637 4(2)
of Loan
9/27/99 1,957,356 Proton Technology.Corporation, Ltd
Conversion 60,830 4(2)
of Loan
------------- ----------
26,236,524 1,617,364
<PAGE>
(1) The individuals receiving these shares each performed substantial
consulting services for the Company during fiscal 1997 for which they were
not compensated, and with respect to which they had continuing claims for
compensation. In settlement in full of these claims pertaining to 1997
services, the individuals in September of 1999 accepted the indicated
number of restricted shares of the Company's common stock.
Item 11.DESCRIPTION OF REGISTRANT'S SECURITIES
TO BE REGISTERED
The Company has only one type of security, Common Stock with par value
equal to $0.001. Prior to September 27, 1999, there were 200,000,000
authorized shares of Common Stock of which 186,013,021 shares were
issued/outstanding. However, on September 27, 1999, the Board of Directors
passed a resolution to increase the authorized shares to 400,000,000 with a
par value of $0.001. On October 4, 1999, shareholders representing a
majority of outstanding shares approved the resolution... A certificate of
amendment was filed in the public records of the State of Nevada on October
7, 1999.
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the holders of Capital Stock.
Holders of Common Stock are entitled to receive ratably such dividends as
may be declared by the Board of Directors out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities and the liquidation
preference of any preferred stock that might be issued in the future.
Holders of Common Stock have no preemptive or subscription rights, and
there are no redemption or conversion rights with respect to such shares.
All outstanding shares of Common Stock are fully paid and nonassessable.
<PAGE>
Item 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada General Corporation Law, under which the Company is
incorporated, gives a corporation the power to indemnify any of its
directors, officers, employees, or agents who are sued by reason of their
service in such capacity to the corporation provided that the director,
officer, employee, or agent acted in good faith and in a manner he believed
to be in or not opposed to the best interests of the corporation. With
respect to any criminal action, he must have had no reasonable cause to
believe his conduct was unlawful.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT
OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS AND CONTROLLING PERSONS OF
THE REGISTRANT PURSUANT TO THE FOREGOING PROVISIONS OR OTHERWISE, THE
REGISTRANT HAS BEEN ADVISED THAT IN THE OPINION OF THE SECURITIES AND
EXCHANGE COMMISSION SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS
EXPRESSED IN THE ACT AND IS, THEREFORE, UNENFORCEABLE, IN THE EVENT THAT A
CLAIM FOR INDEMNIFICATION AGAINST SUCH LIABILITIES (OTHER THAN THE PAYMENT
BY THE REGISTRANT OF EXPENSES INCURRED OR PAID BY A DIRECTOR, OFFICER OR
CONTROLLING PERSON OF THE REGISTRANT IN THE SUCCESSFUL DEFENSE OF ANY
ACTION, SUIT OR PROCEEDING) IS ASSERTED BY SUCH DIRECTOR, OFFICER OR
CONTROLLING PERSON IN CONNECTION WITH THE SECURITIES BEING REGISTERED, THE
REGISTRANT WILL, UNLESS IN THE OPINION OF ITS COUNSEL THE MATTER HAS BEEN
SETTLED BY CONTROLLING PRECEDENT, SUBMIT TO A COURT OF APPROPRIATE
JURISDICTION THE QUESTION WHETHER SUCH INDEMNIFICATION BY IT IS AGAINST
PUBLIC POLICY AS EXPRESSED IN THE ACT AND WILL BE GOVERNED BY THE FINAL
ADJUDICATION OF SUCH ISSUE.
Item 13. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
<PAGE>
JAAK (JACK) OLESK
Certified Public Accountant
270 North Canon Drive, Suite 203
(310) 288-0693
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors
Largo Vista Group, Ltd.
I have audited the accompanying consolidated balance sheet of Largo Vista
Group, Ltd. as of December 31, 1998, and the related consolidated
statements of operations, stockholders' equity <deficit> and cash flows for
each of the two years in the period ended December 31, 1998. These
consolidated financial statements are the responsibility of Company's
management. My responsibility is to express an opinion on these
consolidated financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing
standards in the United States of America. Those standards require that I
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements... An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. I believe that my audits provide a reasonable basis for my
opinion.
In my opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Largo Vista Group, Ltd. as of December 31, 1998, and results
of its operations and its cash flows for each of the two years in the
period ended December 31, 1998, in conformity with generally accepted
accounting principles.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed
in Note 2 to the consolidated financial statements, the Company has
suffered significant recurring losses from operations that raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2.
Significant litigation uncertainties also exist as described in Note 6.
The consolidated financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
/s/ Jaak Olesk CPA
Beverly Hills, California
April 24, 1999
(except for note 6 which is dated June 15, 1999)
(except for note 7 which is dated October 7, 1999)
<PAGE>
</TABLE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Balance Sheet
December 31, 1998
ASSETS
<S> <C>
Current Assets
Cash (Note 5) $ 13,528
Inventories 226,385
Prepaid expenses and
advances to suppliers 62,486
------------
Total current assets 302,399
Fixed assets
Property and equipment 1,109,669
<Less> accumulated depreciation <277,787>
-----------
Total fixed assets 831,882
Other Assets
Loans to officers 19,007
Deferred expenses 44,715
Other 215,568
-------------
Total other assets 279,290
-------------
$ 1,413,571
============
</TABLE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY <DEFICIT>
<S> <C>
Current Liabilities
Accounts payable $ 892,184
Accrued expenses 516,543
Taxes Payable 95,999
Notes Payable 1,645,146
Advances and Other 1,800,995
------------
Total current liabilities 4,950,867
Litigation contingencies (Note 6)
Shareholders' Equity <Deficit>
Common Stock, 200,000,000 shares
authorized; .001 par value;
183,863,021 shares issued and
outstanding 183,863
Additional Paid-in Capital 8,138,245
Retained earnings <deficit> <11,859,404>
-------------
Total shareholders' equity <deficit> <3,537,296>
-------------
$ 1,413,571
=============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Operations
For the Year Ended
December 31, December 31,
1998 1997
<S> <C> <C>
Revenue $ 1,476,971 $ 2,472,378
Cost of sales 1,353,537 2,449,902
----------- -----------
Gross profit 123,434 22,476
Expenses:
General and administrative
and Other 760,491 2,843,257
------------ -----------
<Loss> From operations <637,057> <2,820,781>
------------ -----------
Other income <expense>:
Interest <expense> <198,652> <180,550>
Other income 141,229 70,427
------------ ------------
<Loss> before income taxes <694,480> <2,930,904>
Income taxes - -
NET <LOSS> $ <694,480> $<2,930,904>
============ ============
<LOSS> per share of
common stock $ <.01> $ <.02>
============ ============
Weighted average
shares outstanding 181,565,237 177,130,257
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Cash Flows
For the Year Ended
December 31, December 31,
1998 1997
<S> <C> <C>
Cash flows from <for>
Operating activities:
Net <loss> $ <694,480> $<2,930,904>
Adjustments to reconcile
net<loss> to cash flows
<for> operating activities:
Depreciation 67,926 73,530
Changes in assets and
liabilities:
Accounts payable <380,603> 672,787
Accrued expenses 452,284 51,505
Notes and taxes
payable and other 145,781 1,427,764
------------ -----------
Net cash flows <for>
operating activities: <409,092> <705,318>
Cash flows from
investing activities: - -
Cash flows from
financing activities:
Issuance of
common stock 322,911 804,588
------------- ------------
Increase <decrease> in cash <86,181> 99,270
Cash at beginning of year 99,709 439
Cash at end of year $ 13,528 $ 99,709
=========== ===========
Supplemental cash
flows information:
Cash paid for interest $ - $ -
=========== ===========
Cash paid for taxes
$ - $ -
=========== ===========
Non-cash financing
transactions:
Shares issued
for services and
debt extinguishment $ 322,911 $ 804,588
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Shareholders' Equity <Deficit>
Additional Retained
Common Stock Paid-In Earnings
Shares Amount Capital <Deficit> Total
<S> <C> <C> <C> <C> <C>
Balance at
Dec. 31, 1996 173,219,068 $173,219 $7,021,390 $ <8,234,020> $<1,039,411>
Common shares
issued for
services
during year
ended
Dec. 31, 1997 6,704,895 6,705 797,883 - 804,588
Net<loss>for
Year ended
Dec. 31, 1997 - - - <2,930,904> <2,930,904>
___________ _______ __________ ____________ ___________
Balance at
Dec. 31, 1997 179,923,963 179,924 7,819,273 <11,164,924> <3,165,727>
Common shares
issued for
services
and debt
extinguishmemt
during the
year ended
Dec. 31, 1998 3,939,058 3,939 318,972 - 322,911
Net <loss>
for the
year ended
Dec. 31, 1998
- - - <694,480> <694,480>
___________ ________ __________ _____________ ____________
Balance at
Dec. 31, 1998 183,863,021 $183,863 $8,138,245 $<11,859,404> $<3,537,296>
=========== ======== ========== ============= ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements
December 31, 1998
Note 1 - Summary of Significant Accounting Policies
Nature of Operations and basis of consolidation
The consolidated financial statements include the accounts of Largo
Vista Group, Ltd. (the "Company"), a Nevada corporation, (date of
incorporation was January 16, 1987) its wholly-owned subsidiary, Largo
Vista, Inc., a California corporation (Largo Vista Inc. has had no
significant operations) (date of incorporation was October 12, 1988) its
wholly-owned subsidiary Everlasting International, Ltd., a Nevada
Corporation, and Kunming Xinmao Petrochemical Industrial Co., Ltd., a
Chinese entity (see Note 4). The Chinese entity operates a natural gas
distribution business. The United States entities have no operations.
Intercompany accounts and transactions have been eliminated. All amounts
in these financial statements and footnotes are in United States dollars
(See Note 5).
Cash and Cash Equivalents
Cash equivalents consist of funds invested in money market accounts
and in investments with a maturity of three months or less when purchased.
Loss per Share
The computation of loss per share of common stock is based on the
weighted average number of shares outstanding during the periods presented.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in financial statements and
accompanying notes. Actual results could differ from those estimates.
Valuation of shares for services
Shares issued for services were valued based upon estimated fair
market value of services. During the periods presented, United States
management's compensation has primarily been in the form of issuance of
shares by the Company.
Inventory
Inventory, valued at lower of cost of market, on the first-in, first-
out basis consists primarily of liquid natural gas.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
December 31, 1998
Note 1 - Summary of Significant Accounting Policies (continued)
Property and equipment and depreciation
Property and equipment consists of a building, storage tanks, railroad
cars and miscellaneous equipment. All property and equipment is located in
China. Depreciation is primarily by the straight line method over
estimated useful lives, generally of approximately five to thirty years.
Notes payable
Notes payable consists primarily of unsecured short-term loans, non-
interest bearing demand notes. A loan of $30,000 is payable to an entity
controlled by the Company's majority shareholder.
Advances and other
Advances and other consists primarily of advances to suppliers and
miscellaneous payables, primarily non-interest bearing.
Income Taxes
The Company records its income tax provision in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". (See Note 3).
Foreign currency translation
During the periods presented the Company had no significant foreign
currency transaction gains or losses.
Revenue recognition
The Company recognizes revenue upon delivery or pick up of natural
gas. There is not a significant amount of credit transactions.
Reclassifications
Certain prior year amounts have been reclassified to conform with 1998
classifications.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
December 31, 1998
Note 2 - Basis of presentation and considerations related to continued
existence (going concern)
The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. The
Company incurred net losses of $694,480 and $2,930,904 for the years ended
December 31, 1998, and 1997, respectively. Additionally, current
liabilities exceed current assets by $4,648,468 at December 31, 1998.
These factors, among others, raise substantial doubt as to the Company's
ability to continue as a going concern.
The Company's management intends to raise additional operating funds
through equity and/or debt offerings, and or institutional lines of credit
in China. However, there can be no assurance management will be successful
in this endeavor.
Note 3 - Income taxes
The Company records its income tax provision in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" which requires the use of the liability method of accounting for
deferred income taxes.
As the Company has not generated taxable income since inception no
provision for income taxes has been provided. At December 31, 1998, the
Company did not have any significant tax net operating loss carryforwards
(tax benefits resulting from losses for tax purposes have been fully
reserved due to the uncertainty of a going concern). At December 31, 1998,
the Company did not have any significant deferred tax liabilities or
deferred tax assets.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
December 31, 1998
Note 4 - December, 1996 Business Combination
In late, December, 1996 the Company entered into a Plan and Agreement
of Reorganization with Everlasting International, Ltd., ("Everlasting") a
Nevada corporation and Proton Technology Corporation Limited, ("Proton"), a
Bahamas corporation, whereby the Company acquired 100% of the shares of
Everlasting, owned by Proton, in exchange for 123,850,139 shares of the
voting common stock of the Company. At the time of this transaction,
Everlasting owned two thirds of Kunming Xinmao Petrochemical Industrial
Co., Ltd., ("Kunming Xinmao"), a Chinese entity, with the other third of
Kunming Xinmao owned by a Chinese government corporation (this interest had
been transferred to Everlasting from Proton). Both Everlasting and Proton
were paper entities created for the purpose of effectuating this
transaction.
The acquisition has been accounted for using the purchase method of
accounting, and accordingly, the purchase price has been allocated to the
assets purchased and the liabilities assumed based upon the fair values at
the date of acquisition. As there was no significant difference between
the book value and fair market value of the acquired no goodwill nor
negative goodwill has been recorded. Minority interest is not shown either
on the balance sheet or statement of operations since the consolidated
entity has losses and negative net assets (negative net worth).
The operating results of the acquired business have been included in
the consolidated statement of operations from January 1, 1997.
Congruent with this transaction, the Company: changed its fiscal year
to a calendar year; changed the par value of its common stock from $0.002
to $0.001; and increased the authorized shares of its common stock from
100,000,000 to 200,000,000.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.Notes to Consolidated Financial Statements
(continued)December 31, 1998
Note 5 - Chinese subsidiary
Kunming Xinmao Petrochemical
Industrial Co., Ltd. ("Xinmao")
(Stated in United States Dollars)
Condensed Balance Sheet-December 31, 1998
(Separate Financial Statements)
ASSETS
<S> <C>
Current Assets
Cash $ 13,528
Inventories 226,385
Prepaid expenses and
advances to suppliers 62,486
-----------
Total current assets 302,399
Fixed assets
Property and equipment 1,109,669
<Less> accumulated depreciation <277,787>
-----------
Total fixed assets 831,882
Other Assets
Other Receivable 19,007
Deferred expense 44,715
Other 215,568
------------
Total other assets 279,290
------------
$ 1,413,571
===========
</TABLE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY <DEFICIT>
<S> <C>
Current Liabilities
Accounts payable $ 668,656
Accrued expenses 126,554
Taxes payable 46,591
Notes payable 1,645,146
Advances and other 1,800,995
------------
Total current liabilities 4,287,942
Shareholders' Equity <Deficit> <2,874,371>
------------
$ 1,413,571
===========
</TABLE>
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
December 31, 1998
Note 5 - Chinese subsidiary (continued)
Kunming Xinmao Petrochemical
Industrial Co., Ltd.
(Stated in United States Dollars)
Condensed Statement of Operations
For the Year Ended December 31, 1998 and 1997
(Separate Financial Statements)
1998 1997
<S> <C> <C>
Revenue $ 1,476,971 $ 2,472,378
Cost of sales 1,353,537 2,449,902
------------ -----------
Gross profit 123,434 22,476
Expenses
Writedown of receivables 53,849 1,131,288
Selling, general and
administrative expenses 451,922 578,032
------------ ----------
505,771 1,709,320
<Loss> from operations <382,337> <1,686,844>
Interest <expense> <198,652> <180,550>
Other income 141,229 70,427
------------ -----------
NET <LOSS> $ <439,760> $ <1,796,967>
============ =============
</TABLE>
The financial information in Note 5 has been prepared in Renminbi, the
national currency of the People's Republic of China. Solely for the
convenience of the reader, the financial statements have been translated
into United States dollars at the rate of U.S. $1.00=RMB 8.28 quoted as of
December 31, 1998. No representation is made that the Renminbi could have
been, or could be, converted into United States dollars at that rate or at
any other certain rate on December 31, 1998, or any other date.
At December 31, 1998 the entire cash balance of $13,528 on the
consolidated balance sheet of Largo Vista Group, Ltd. was in Renminbi, a
currency which is not freely convertible into United States dollars. At
December 31, 1998 Largo Vista Group, Ltd., including all its subsidiaries,
had no United States dollars on hand or in banks, anywhere in the world.
From inception (January 16, 1987) to date (April 24, 1999) the United
States entities of the Company have had no assets, no revenues and no
operations. During this period however, the United States entities have
incurred significant losses.
<PAGE>
Largo Vista Group, Ltd.Notes to Consolidated Financial Statements
(continued)December 31, 1998
Note 5 - Chinese subsidiary (continued)
Beginning Retained Earnings (at December 31, 1997) of Kunming Xinmao
Petrochemical Industrial Co. Ltd. included a loss carry-forward of
approximatly $2 million already on the books at the time the Company
acquired Xinmao. This item was a carry over from the acquisition by Largo
Vista Group, Ltd., and not a result of operations under the control of
Largo Vista Group Ltd..
Note 6 - Litigation Contingencies
Litigation in China
1. Sichuan Province Panzhihur Peoples Court
Case 1997 #17
Claimant: Panzhihur Petrochemical Industry Co., Ltd.(Chan
Mao"CMD")
Defendant: Beihai Hi-Tech LPG Co., Ltd. (Zhang Xiao Fu "BHT")
Defendant: Kunming Xinmao Petrochemical Industry Co., Ltd., (Deng
Shan "Xinmao")
As of June 15, 1999, the case in the trial court was decided in favor
of CMD, and against Xinmao. The Plaintiff has executed on the judgment
against Xinmao. The only remaining issue is whether Xinmao is to file an
appeal based on fraudulent testimony in the trial by a key witness for the
Plaintiff. To date, no appeal has been filed.
The resolution of this matter is uncertain.
2. YONGHENG (Everlasting) NEVADA INTERNATIONAL CO., LTD.,
Plaintiff vs. CHAN MAU TAK, Defendant
Case HCA 14528/98
The above matter was filed IN THE HIGH COURT OF THE HONG KONG SPECIAL
ADMINISTRATION REGION, and is the Court of First Instance.
Although the parties are similar, this case is entirely separate from
the case above.
This lawsuit was brought by Everlasting International, Ltd. ("EIL")
against Chan Mao Tak ("CMD") for breach of the purchase agreement wherein
EIL acquired the assets of the Xinmao Company from CMD.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
December 31, 1998
Note 6 - Litigation Contingencies (continued)
EIL is a wholly owned subsidiary of Largo Vista Group, Ltd.
This lawsuit is brought on the basis that CMD has made fraudulent
representations concerning the assets of the Kunming Xinmao Petrochemical
Co., Ltd. The court ordered an Interlocutory Judgment on 10/14/98 in favor
of EIL for 1 million HK$ plus damages incurred plus interest @ 13.08% per
annum.
One million HK$ is the penalty provided in the Transfer Agreement.
CMD has filed an appeal, based on failure of service of process. It is not
likely that Xinmao has any liability in the matter since no complaint has
been filed against it.
If EIL prevails, management anticipates recovery of the 1 million HK$
plus the value of the assets misrepresented in the Transfer Agreement. CMD
owns and operates Panzhihur Petrochemical Industry Co., Ltd., a company
with assets including an LPG depot. This resolution of this matter is
uncertain.
The resolution of the above two matters in the aggregate is uncertain.
Note 7 - Subsequent Event
On September 27, 1999 the Company's Board of Directors approved a
resolution increasing the authorized common shares to 400,000,000. On
October 7, 1999 this document was filed with the Nevada Secretary of State.
Following are unaudited financial statements and footnotes as of June 30,
1999. (Management's assertion - these statements include all adjustments,
consisting of normal recurring accruals, which management considers
necessary for a fair presentation of the interim period.)
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Balance Sheet
June 30, 1999
ASSETS
<S> <C>
Current Assets
Cash (Note 5) $ 15,433
Inventories 228,054
Prepaid expenses and
advances to suppliers 81,192
------------
Total current assets 324,679
Fixed assets
Property and equipment 1,111,456
<Less> accumulated depreciation <310,414>
-----------
Total fixed assets 801,042
Other Assets
Other receivable 16,926
Deferred expenses 38,314
Other 189,483
----------
Total other assets 244,723
------------
$ 1,370,444
============
</TABLE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY <DEFICIT>
<S> <C>
Current Liabilities
Accounts payable $ 884,795
Accrued expenses 714,837
Taxes Payable 95,074
Notes Payable 1,645,146
Advances and Other 1,916,229
------------
5,256,081
Total current liabilities
Litigation contingencies (Note 6)
Shareholders' Equity <Deficit>
Common Stock, 200,000,000 shares
authorized; .001 par value;
183,863,021 shares issued and
outstanding 183,863
Additional Paid-in Capital 8,138,245
Retained earnings <deficit> <12,207,745>
--------------
Total shareholders' equity <deficit> <3,885,637>
--------------
$ 1,370,444
============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Operations
For the Six Months Ended
June 30, June 30,
1999 1998
<S> <C> <C>
Revenue $ 529,826 $ 858,674
Cost of sales 494,726 789,984
------------ -----------
Gross profit 35,100 68,690
Expenses:
General and administrative
and Other 305,007 394,701
----------- ----------
<Loss> From operations <269,907> <326,011>
----------- ----------
Other income <expense>:
Interest <expense> <84,395> <99,044>
Other income 5,961 72,227
----------- ---------
<Loss> before income taxes <348,341> <352,828>
Income taxes - -
NET <LOSS> $ <348,341> $ <352,828>
============ ============
<LOSS> per share of
common stock $ <.01> $ <.01>
============ ============
Weighted average
shares outstanding 183,863,021 179,923,963
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Cash Flows
For the Six Months Ended
June 30, June 30,
1999 1998
<S> <C> <C>
Cash flows from <for>
Operating activities:
Net <loss> $<348,341> $<352,828>
Adjustments to reconcile
net<loss> to cash flows
<for> operating activities:
Depreciation 31,526 35,457
Changes in assets and
liabilities:
Accounts payable 7,389 10,145
Accrued expenses 198,294 105,165
Notes and taxes
payable and other 113,037 129,044
--------- -----------
Net cash flows <for>
operating activities: 1,905 73,017
Cash flows from
investing activities: - -
Cash flows from
financing activities:
Issuance of
common stock - -
----------- ----------
Increase <decrease> in cash 1,905 <73,017>
Cash at beginning of period 13,528 99,709
Cash at end of period $ 15,433 $ 26,692
=========== =========
Supplemental cash
flows information:
Cash paid for interest $ - $ -
=========== =========
Cash paid for taxes $ - $ -
=========== =========
Non-cash financing
Transactions:
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Shareholders' Equity <Deficit>
Additional Retained
Common Stock Paid-In Earnings
Shares Amount Capital <Deficit> Total
<S> <C> <C> <C> <C> <C>
Balance at
December 31,
1998 183,863,021 $183,863 $8,138,245 $<11,859,404> $<3,537,296>
Net <loss>
for the Six
months ended
June 30,
1999 - - - <348,341> <348,341>
----------- --------- -------- ------------ -----------
Balance at
June 30,
1999 183,863,021 $183,863 $8,138,245 $<12,207,745> $<3,885,637>
=========== ======== ========== ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements
June 30, 1999
Note 1 - Summary of Significant Accounting Policies
Nature of Operations and basis of consolidation
The consolidated financial statements include the accounts of Largo
Vista Group, Ltd. (the "Company"), a Nevada corporation, (date of
incorporation was January 16, 1987) its wholly-owned subsidiary, Largo
Vista, Inc., a California corporation, (Largo Vista Inc. has had no
significant operations) (date of incorporation was October 12, 1988) its
wholly-owned subsidiary Everlasting International, Ltd., a Nevada
Corporation, and Kunming Xinmao Petrochemical Industrial Co., Ltd., a
Chinese entity (see Note 4). The Chinese entity operates a natural gas
distribution business. The United States entities have no operations.
Intercompany accounts and transactions have been eliminated. All amounts
in these financial statements and footnotes are in United States dollars
(See Note 5).
Cash and Cash Equivalents
Cash equivalents consist of funds invested in money market accounts
and in investments with a maturity of three months or less when purchased.
Loss per Share
The computation of loss per share of common stock is based on the
weighted average number of shares outstanding during the periods presented.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in financial statements and
accompanying notes. Actual results could differ from those estimates.
Valuation of shares for services
Shares issued for services were valued based upon estimated fair
market value of services. During the periods presented, United States
management's compensation has primarily been in the form of issuance of
shares by the Company.
Inventory
Inventory, valued at lower of cost of market, on the first-in, first-
out basis consists primarily of liquid natural gas.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
June 30, 1999
Note 1 - Summary of Significant Accounting Policies (continued)
Property and equipment and depreciation
Property and equipment consists of a building, storage tanks, railroad
cars and miscellaneous equipment. All property and equipment is located in
China. Depreciation is primarily by the straight line method over
estimated useful lives, generally of approximately five to thirty years.
Notes payable
Notes payable consists primarily of unsecured short-term loans,
primarily non-interest bearing demand notes. A loan of $30,000 is payable
to an entity controlled by the Company's majority shareholder.
Advances and other
Advances and other consists primarily of advances to suppliers and
miscellaneous payables, primarily non-interest bearing.
Income Taxes
The Company records its income tax provision in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". (See Note 3).
Foreign currency translation
During the periods presented the Company had no significant foreign
currency transaction gains or losses.
Revenue recognition
The Company recognizes revenue upon delivery or pick up of natural
gas. There is not a significant amount of credit transactions.
Reclassifications
Certain prior year amounts have been reclassified to conform with 1999
classifications.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
June 30, 1999
Note 2 - Basis of presentation and considerations related to continued
existence (going concern)
The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. The
Company incurred net losses of $348,341 and $352,828 for the six months
ended June 30, 1999, and 1998, respectively. Additionally, current
liabilities exceed current assets by $4,931,402 at June 30, 1999. These
factors, among others, raise substantial doubt as to the Company's ability
to continue as a going concern.
The Company's management intends to raise additional operating funds
through equity and/or debt offerings, and or institutional lines of credit
in China. However, there can be no assurance management will be successful
in this endeavor.
Note 3 - Income taxes
The Company records its income tax provision in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" which requires the use of the liability method of accounting for
deferred income taxes.
As the Company has not generated taxable income since inception no
provision for income taxes has been provided. At June 30, 1999, the
Company did not have any significant tax net operating loss carryforwards
(tax benefits resulting from losses for tax purposes have been fully
reserved due to the uncertainty of a going concern). At June 30, 1999, the
Company did not have any significant deferred tax liabilities or deferred
tax assets.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
June 30, 1999
Note 4 - December, 1996 Business Combination
In late, December, 1996 the Company entered into a Plan and Agreement
of Reorganization with Everlasting International, Ltd., ("Everlasting") a
Nevada corporation and Proton Technology Corporation Limited, ("Proton"), a
Bahamas corporation, whereby the Company acquired 100% of the shares of
Everlasting, owned by Proton, in exchange for 123,850,139 shares of the
voting common stock of the Company. At the time of this transaction,
Everlasting owned two thirds of Kunming Xinmao Petrochemical Industrial
Co., Ltd., ("Kunming Xinmao"), a Chinese entity, with the other third of
Kunming Xinmao owned by a Chinese government corporation (this interest had
been transferred to Everlasting from Proton). Both Everlasting and Proton
were paper entities created for the purpose of effectuating this
transaction.
The acquisition has been accounted for using the purchase method of
accounting, and accordingly, the purchase price has been allocated to the
assets purchased and the liabilities assumed based upon the fair values at
the date of acquisition. As there was no significant difference between
the book value and fair market value of the acquired no goodwill nor
negative goodwill has been recorded. Minority interest is not shown either
on the balance sheet or statement of operations since the consolidated
entity has losses and negative net assets (negative net worth).
The operating results of the acquired business have been included in
the consolidated statement of operations from January 1, 1997.
Congruent with this transaction, the Company: changed its fiscal year
to a calendar year; changed the par value of its common stock from $0.002
to $0.001; and increased the authorized shares of its common stock from
100,000,000 to 200,000,000.
<PAGE>
<TABLE>
Largo Vista Group,
Notes to Consolidated Financial Statements (continued)
June 30, 1999
Note 5 - Chinese subsidiary
Kunming Xinmao Petrochemical
Industrial Co., Ltd. ("Xinmao")
(Stated in United States Dollars)
Condensed Balance Sheet-June 30, 1999
(Separate Financial Statements)
ASSETS
<S> <C>
Current Assets
Cash $ 15,433
Inventories 228,054
Prepaid expenses and
advances to suppliers 81,192
------------
Total current assets 324,679
Fixed assets
Property and equipment 1,111,456
<Less> accumulated depreciation <310,414>
-------------
Total fixed assets 801,042
Other Assets
Other receivable 16,926
Deferred expense 38,314
Other 189,483
Total other assets 244,723
-------------
$ 1,370,444
===========
</TABLE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY <DEFICIT>
<S> <C>
Current Liabilities
Accounts payable $ 649,614
Accrued expenses 212,351
Taxes payable 43,643
Notes payable 1,645,146
Advances and other 1,916,227
----------
Total current liabilities 4,466,981
Shareholders' Equity <Deficit> <3,096,537>
-------------
$ 1,370,444
=========
</TABLE>
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
June 30, 1999
Note 5 - Chinese subsidiary (continued)
Kunming Xinmao Petrochemical
Industrial Co., Ltd.
(Stated in United States Dollars)
Condensed Statement of Operations
For the Six Months Ended June, 30 1999 and 1998
(Separate Financial Statements)
1999 1998
<S> <C> <C>
Revenue $ 529,826 $ 858,674
Cost of sales 494,726 789,984
------------- ----------
Gross profit 35,100 68,690
Expenses
Writedown of receivables - 47,206
Selling, general and
administrative expenses 178,833 246,577
------------ ----------
<Loss> from operations <143,733> <225,093>
Interest <expense> <84,395> <99,044>
Other income 5,961 72,227
----------- ------------
NET <LOSS> $ <222,167> $ <251,910>
=========== ===========
</TABLE>
The financial information in Note 5 has been prepared in Renminbi, the
national currency of the People's Republic of China. Solely for the
convenience of the reader, the financial statements have been translated
into United States dollars at the rate of U.S. $1.00=RMB 8.28 quoted as of
June 30, 1999. No representation is made that the Renminbi could have
been, or could be, converted into United States dollars at that rate or at
any other certain rate on June 30, 1999, or any other date.
At June 30, 1999 the entire cash balance of $15,433 on the
consolidated balance sheet of Largo Vista Group, Ltd. was in Renminbi, a
currency which is not freely convertible into United States dollars. At
June 30, 1999 Largo Vista Group, Ltd., including all its subsidiaries, had
no United States dollars on hand or in banks, anywhere in the world.
From inception (January 16, 1987) to date (October 14, 1999) the
United States entities of the Company have had no assets, no revenues and
no operations. During this period however, the United States entities have
incurred significant losses.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
June 30, 1999
Note 5 - Chinese subsidiary (continued)
Beginning Retained Earnings (at December 31, 1997) of Kunming Xinmao
Petrochemical Industrial Co. Ltd. included a loss carry-forward of
approximately $2 million already on the books at the time the Company
acquired Xinmao. This item was a carry over from the acquisition by Largo
Vista Group, Ltd., and not a result of operations under the control of
Largo Vista Group Ltd..
Note 6 - Litigation Contingencies
Litigation in China
1. Sichuan Province Panzhihur Peoples Court
Case 1997 #17
Claimant: Panzhihur Petrochemical Industry Co., Ltd.(Chan Mao"CMD")
Defendant: Beihai Hi-Tech LPG Co., Ltd. (Zhang Xiao Fu "BHT")
Defendant: Kunming Xinmao Petrochemical Industry Co., Ltd., (Deng Shan
"Xinmao")
As of June 15, 1999, the case in the trial court was decided in favor
of CMD, and against Xinmao. The Plaintiff has executed on the judgment
against Xinmao. The only remaining issue is whether Xinmao is to file an
appeal based on fraudulent testimony in the trial by a key witness for the
Plaintiff. To date, no appeal has been filed.
The resolution of this matter is uncertain.
2. YONGHENG (Everlasting) NEVADA INTERNATIONAL CO., LTD.,
Plaintiff vs. CHAN MAU TAK, Defendant
Case HCA 14528/98
The above matter was filed IN THE HIGH COURT OF THE HONG KONG SPECIAL
ADMINISTRATION REGION, and is the Court of First Instance.
Although the parties are similar, this case is entirely separate from
the case above.
This lawsuit was brought by Everlasting International, Ltd. ("EIL")
against Chan Mao Tak ("CMD") for breach of the purchase agreement wherein
EIL acquired the assets of the Xinmao Company from CMD.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
June 30, 1999
Note 6 - Litigation Contingencies (continued)
EIL is a wholly owned subsidiary of Largo Vista Group, Ltd.
This lawsuit is brought on the basis that CMD has made fraudulent
representations concerning the assets of the Kunming Xinmao Petrochemical
Co., Ltd. The court ordered an Interlocutory Judgment on 10/14/98 in favor
of EIL for 1 million HK$ plus damages incurred plus interest @ 13.08% per
annum.
One million HK$ is the penalty provided in the Transfer Agreement.
CMD has filed an appeal, based on failure of service of process. It is not
likely that Xinmao has any liability in the matter since no complaint has
been filed against it.
If EIL prevails, management anticipates recovery of the 1 million HK$
plus the value of the assets misrepresented in the Transfer Agreement. CMD
owns and operates Panzhihur Petrochemical Industry Co., Ltd., a company
with assets including an LPG depot. The resolution of this matter is
uncertain.
The resolution of the above two matters in the aggregate is uncertain.
None 7 - Subsequent Event
On September 27, 1999 the Company's Board of Directors approved a
resolution increasing the authorized common shares to 400,000,000. On
October 7, 1999 this document was filed with the Nevada Secretary of State.
<PAGE>
Item 14. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
No Change in accounting in accountants in the last 3 years.
Item 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Report of Independent Certified Public Accountants
Consolidated Financial Statements
Notes to Consolidated Financial Statements
(b) Exhibits Required by Item 601 of Regulation SK
3(i) Articles of Incorporation of Largo Vista Group, Limited
3(ii) By-laws of Largo Vista Group, Limited
3 (iii) Articles of Incorporation of Largo Vista Inc.
3 (iv) By-laws of Largo Vista Inc.
3. (v) Articles of Incorporation of Everlasting International Limited
3 (vi) By-laws of Everlasting International Limited
3 (Vii)Articles of Incorporation of Kunming Xinmao Petrochemical Industrial
Company Limited
4 Instruments defining rights of security holders, including
indentures.
None.
9 Voting Trust Agreement
None
10 Material Contracts
(a) On December 28, 1998, Largo Vista executed an agreement with the
Sentio Corporation wherein Sentio is to provide a state-of-the-art internet
website designed to provide current information to customers and
shareholders. As of September 30, 1999, although the Company has not
received an invoice, it estimates it is indebted to Sentio in the
approximate amount of $88,000.
(b) Contract Hong Kong De Xiang Tuo Yi Industrial Company August 28, 1992
(c) Plan and agreement of reorganization between Largo Vista Group,
Limited, Proton Technology Corporation Limited and Everlasting
International
(d) Joint Venture agreement of Kunming Xinmao Petrochemical Company
Limited
(e) Approval Certificate of Enterprises with Foreign Investment in the
People's republic of China
(f) Business License of Enterprise in the People's Republic of China
(g) Business Permit to Engage in LPG Business in Yunnan Province
(h) Notice of Subsidiaries of the Agriculture Bank of China, Yunnan
Provincial Branch Acting as the Agents for Collection and Receipt of
Payment for Kunming Xinmao Petrochemical Industrial Company Limited
(i) Agreement of Supply of Liquefied Petroleum Gas
(j) Method of Insurance for LPG Credit
(k) Memorandum of Understanding Kunming Xinmao Petrochemical Industry
Company Limited & Wuhan Minyi Fuel Gas Petrochemical Company Limited
(l) Memorandum of Understanding Kunming Xinmao Petrochemical Industry
Company Limited & Guilin Municipal Garden Fuel Gas Pipelines Limited
(m) Approval Certificate of Enterprises with Foreign Investment in the
Peoples Republic of China
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Signature Title Date
Acting President/ CEO /s/Daniel J. Mendez October 15, 1999
Daniel J. Mendez
Acting Secretary/Treasurer/s/Albert N. Figueroa October 15, 1999
Albert N. Figueroa
Director /s/ Deng Shan October 15, 1999
Deng Shan
Exhibit 3(1)
CERTIFICATE OF AMENDMENT OF
RESTATED ARTICLES OF INCORPORATION OF
(after issuance of stock)
Largo Vista Group, Ltd.
The undersigned Daniel J. Mendez (President) and Albert N. Figueroa
(Secretary) do hereby certify:
1. The Board of Directors of said Corporation at a meeting duly
convened, held on the 27th day of September, 1999, adopted a resolution to
amend the Restated Articles of Incorporation as follows:
Article IV is hereby amended to read as follows:
ARTICLE IV
STOCK: The aggregate number of shares which the Corporation shall
have the authority to issue is 400,000,000 shares at a par value of $.001
per share. All stock when issued shall be fully paid and non-assessable.
No holder of shares of common stock of the Corporation shall be
entitled, as such, to any pre-emptive or preferential rights to subscribe
to any unissued stock or any other securities which the Corporation may now
or thereafter be authorized to issue. The Board of Directors of the
Corporation may, however, by resolution determine that any unissued
securities of the Corporation shall be offered for subscription solely to
the holders of common stock of the Corporation or solely to the holders of
any class or classes of such stock in such proportions based on stock
ownership as said Board at its discretion may determine.
Each share of common stock shall be entitled to one vote at
stockholders meetings, either in person or by proxy. Cumulative voting in
elections of Directors and all other matters brought before stockholders
meeting, whether they be annual or special, shall not be permitted.
2. The number of shares of the Corporation outstanding and entitled
to vote on an amendment to the Articles of Incorporation is 57.28%; that
said changes and amendment have been consented to and approved by a
majority vote of the stockholders holding at least a majority of each class
of stock outstanding and entitled to vote thereon
<PAGE>
IN WITNESS WHEREOF, We have subscribed our names this 27th day of
September, 1999.
______________________________________
Daniel J. Mendez, President
______________________________________
Albert N. Figueroa, Secretary/Treasurer
STATE OF CALIFORNIA )
: ss
)
COUNTY OF __________________________________________)
On the _________ day of ________________________________________, 19____,
before me,
_____________________________________________________________________
personally appeared
___________________________________________________________________________
_____________
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
_________________________________________
Notary Public
RESTATED ARTICLES OF INCORPORATION
As Amended December 7, 1998
LARGO VISTA GROUP, LTD.
We, the undersigned natural persons of the ages of twenty-one (21) or
more, acting as Directors and Officers of Largo Vista Group, Ltd., a
Corporation formed under the General Corporation Law of Nevada, adopt the
following Restated Articles of Incorporation:
ARTICLE I
NAME: The name of the Corporation is LARGO VISTA GROUP, LTD.
<PAGE>
ARTICLE II
REGISTERED OFFICE AND AGENT: The address of the Corporation's
principal office is ONE EAST FIRST STREET, RENO, WASHOE COUNTY, NEVADA
89501. The initial agent for service of process at that address will be
THE CORPORATION TRUST COMPANY OF NEVADA.
ARTICLE III
A. PURPOSE: The purposes for which the Corporation is organized
are to engage in any activity or business not in conflict with the laws of
the State of Nevada or of the United States of America, and without
limiting the generality of the foregoing, specifically:
1. To have and to exercise all the powers now or hereafter
conferred by the Laws of the State of Nevada upon corporations organized
pursuant to the laws under which the Corporation is organized and any and
all acts amendatory thereof and supplemental thereto...
2. To discount and negotiate promissory notes, drafts, bills of
exchange and other evidence of debts, and to collect for others money due
them on notes, drafts, bills of exchange, commercial paper and other
evidence of indebtedness.
3. To purchase or otherwise acquire, own, hold, lease, sell,
exchange, assign, transfer, mortgage, pledge, or otherwise dispose of, to
guaranty, to invest, trade, and deal in and with personal property of every
class and description.
4. To enter into any kind of contract or agreement, cooperative
or profit sharing plan with its officers or employees that the Corporation
may deem advantageous or expedient or otherwise to reward or pay such other
persons for their services as the directors may deem fit.
5. To purchase, lease, or otherwise acquire, in whole or in
part, the business, the good will, rights, franchises and property of every
kind, and to undertake the whole or any part of the assets and liabilities,
of any person, firm, association, non-profit or profit Corporation, or own
property necessary or suitable for its purposes, and to pay the same in
cash, in the stocks or bonds of this company or otherwise, to hold or in
any manner dispose of the whole or any part of the business or property so
acquired and to exercise all of the powers necessary or incidental to the
conduct of such business.
6. To lend or borrow money and to negotiate and make loans,
either on its own account or as agent, or broker for others.
7. To enter into, make, perform, and carry out contracts of
every kind and for any lawful purpose, without limit as to amount with any
person, firm, association, cooperative, profit or non-profit Corporation,
municipality, state or government or any subdivision, district or
department thereof.
8. To buy, sell, exchange, negotiate, or otherwise deal in, or
hypothecate securities, stocks, bonds, debentures, mortgages, notes or
other collaterals or securities, created or issued by any Corporation
wherever organized including this Corporation, within such limits as may be
provided by law, and while owner of any such stocks or other collateral's
to exercise all rights, powers and privileges of ownership, including the
rights to vote the same; to subscribe for stock of any Corporation to be
organized, other than to promote the organization thereof.
<PAGE>
9. To purchase or otherwise acquire, own, hold, lease, sell,
exchange, assign, transfer, mortgage, pledge, license, or otherwise dispose
of any letters, patents, copyrights, or trademarks, of every class and
description.
10. To do any and all other such acts, things, business or
businesses in any manner connected with or necessary, incidental,
convenient or auxiliary to do any of these objects hereinbefore enumerated,
or calculated, directly or indirectly, to promote the interest of the
Corporation; and in carrying on its purposes, or for the purpose of
obtaining or furthering any of its business, to do any and all acts and
things, and to exercise any and all other powers which a co-partner or
natural person could do or exercise, and which now or hereafter may be
authorized by law, here and in any other part of the world.
11. The several clauses contained in this statement of powers
shall be construed as both purposes and powers; and the statements
contained in each of these clauses shall be in no way limited or
restricted, by reference to or inference from, the terms of any other
clauses, but shall be regarded as independent purposes and powers; and no
recitations, expressions or declaration of specific or special powers or
purposes herein enumerated shall be deemed to be exclusive; but is hereby
expressly declared that all other lawful powers not inconsistent herewith,
are hereby included.
ARTICLE IV
STOCK: The aggregate number of shares which the Corporation shall
have the authority to issue is 200,000,000 shares at a par value of $.001
per share. All stock when issued shall be fully paid and non-assessable.
No holder of shares of common stock of the Corporation shall be
entitled, as such, to any pre-emptive or preferential rights to subscribe
to any unissued stock or any other securities which the Corporation may now
or thereafter be authorized to issue. The Board of Directors of the
Corporation may, however, by resolution determine that any unissued
securities of the Corporation shall be offered for subscription solely to
the holders of common stock of the Corporation or solely to the holders of
any class or classes of such stock in such proportions based on stock
ownership as said Board at its discretion may determine.
Each share of common stock shall be entitled to one vote at
stockholders meetings, either in person or by proxy. Cumulative voting in
elections of Directors and all other matters brought before stockholders
meeting, whether they be annual or special, shall not be permitted.
<PAGE>
ARTICLE V
STOCKHOLDERS MEETINGS: Meetings of the shareholders shall be held at
such place within or without the State of Nevada as may be provided by the
By-Laws of the Corporation. Special meetings of the shareholders may be
called by the President or any other Executive Officer of the Corporation,
the Board of Directors, or any member thereof, or by the record holder or
holders of at least ten percent (10%) of all shares entitled to vote at the
meeting. Any action required or permitted to be taken at a meeting of the
shareholders, except election of Directors, may be taken without a meeting
if a written consent thereto is signed by shareholders holding at least a
majority of the voting power, except that if a different proportion of
voting power is required for such an action at a meeting, then that
proportion of written consents is required. Said written consents shall be
filed with the minutes of the proceedings of the shareholders.
ARTICLE VI
COMMENCING BUSINESS: The Corporation shall not commence business
until at least $1,000.00 has been received by it as consideration for the
issuance of shares.
ARTICLE VII
STOCK RIGHTS: The Board of Directors shall have the authority to
determine the classes and series of any subsequent stock issued by the
Corporation and the rights and preferences pertaining thereto.
ARTICLE VIII
BOARD OF DIRECTORS: A majority of the Board of Directors shall be
necessary to constitute a quorum; and when so constituted, the Board shall
be authorized to transact such business as may be delegated to it by the
stockholders and whenever the Board of Directors shall be so assembled and
act as a Board, either within or without the State of Nevada, any action
taken shall be the action of the Board of Directors and shall be binding
upon the Corporation, provided that three days prior notice, given either
orally or in writing, of the time and place of the meeting and of the
nature of the business proposed to be transacted shall have been given to
the entire Board of Directors, unless such notice be waived as hereinafter
provided. Any Director may waive notice of any meeting; and such waiver of
notice shall be in writing or a written memorandum shall be made of an oral
waiver of notice.
ARTICLE IX
A. DIRECTORS AND OFFICERS: The directors of the Corporation
shall consist of a board of not less than three (3) nor more than twenty-
five (25), a Chairman of the Board of Directors, a President, a Vice-
President, a Secretary and a Treasurer, who shall perform such duties and
have such authority as usually pertains to such directors and officers of a
corporation or as may be prescribed by the Board of Directors from time to
time.
B. QUALIFICATION OF DIRECTORS AND OFFICERS: Officers and
Directors of the Corporation need not be residents of the State of Nevada
and need not own shares of the Corporation's stock. The Secretary and
Treasurer may, but need not be, the same person.
<PAGE>
C. ELECTION: Directors shall be elected at the annual meeting of
the shareholders, and the persons receiving the highest number of votes
shall be declared duly elected, providing such numbers shall represent a
majority of all votes cast. Within ten (10) days after the election, the
Directors shall meet and elect a President, Vice-President, Secretary and
Treasurer.
D. TERM OF OFFICE: The term of office for all Directors shall be at
the discretion of the Shareholders, and the term of office for Officers
shall be set at the discretion of the Board of Directors, but in no event
greater than five years. (amended 12-7-98).
E. RESIGNATION OF OFFICERS: Any Officer or Director may resign
by filing his written resignation with the Secretary of the Corporation, or
in the case of the Secretary, with the President of the Corporation and
upon acceptance thereof by the Board of Directors, or if such Board shall
neglect to act upon such resignation within fourteen (14) days after
receipt, the resignation shall become effective and the office shall be
deemed vacant.
F. REMOVAL OF OFFICERS AND DIRECTORS: Any Officer or Director
of this Corporation may be removed at any time without cause in the manner
provided by the laws of the State of Nevada for the removal of such Officer
or Director, or by a majority vote of the outstanding stock of the
Corporation at any special meeting of the stockholders called for that
purpose as herein provided.
G. VACANCIES: In the case of death, disability, or resignation of
any Officer or Director of the Corporation, the remaining Directors or
Director, even though less than a quorum, shall fill vacancies for the
unexpired term or terms.
H. ORIGINAL DIRECTORS: The number of Directors constituting the
initial Board of Directors of the Corporation is three (3), and the names
and addresses of the persons who are the incorporators and who are to serve
as Directors until the first annual meeting of shareholders or until their
successors are elected and qualified are:
1. JOHN E. FITZWATER
701 S. PARKER STREET, SUITE 7300
ORANGE, CA 92668
2. STEWART FORD
2186 SILVA ROAD
LAGUNA NIGUEL, CA
3. ROBERT BALDWIN
1432 WALNUT AVENUE, #206
TUSTIN, CA
ARTICLE X
DURATION: The period of duration of the Corporation shall be
perpetual.
ARTICLE XI
AMENDMENT: These Articles of Incorporation, by vote of not less than
fifty percent (50%) of the issued and outstanding capital stock of the
Corporation, may be deemed amended in any respect amendable at law at any
meeting, or without a meeting by informal action as provided in Article V
hereof, and pursuant to NRS 78.320(2). A copy of the proposed amendment
shall be given to the stockholders as provided in Article V hereof, for
calling and holding meetings of the stockholders.
<PAGE>
ARTICLE XII
BY-LAWS: The Board of Directors of the Corporation shall have
authority to adopt such By-Laws as in their judgment may be deemed
necessary or advisable for the management and transaction of the business
of the Corporation provided that such By-Laws are not in conflict with
these Articles of Incorporation or the constitution of the State of
Nevada.
ARTICLE XIII
The name and post office address of each of the Incorporators signing
the Articles of Incorporation are as follows:
NAME POST OFFICE ADDRESS
D.A. TIU 800 SOUTH FIGUEROA STREET
LOS ANGELES, CALIFORNIA 90017
D.A. YARBOI 800 SOUTH FIGUEROA STREET
LOS ANGELES, CALIFORNIA 90017
R. RODRIGUEZ 800 SOUTH FIGUEROA STREET
LOS ANGELES, CALIFORNIA 90017
ARTICLE XIV.
(added by amendment 12-7-98
A. LIABILITY OF DIRECTORS AND OFFICERS... As fully as possible
under the laws of the State of Nevada as they now exist and they may from
time to time be revised, the Corporation intends that its directors and
officers be protected from legal action by stockholders other persons
(natural or otherwise) on account of service as directors or officers of
the Corporation. No director or officer of the Corporation shall be
personally liable to the Corporation or any of its stockholders for damages
for breach of fiduciary duty as a director or officer involving any act or
omission of any such director or officer, or for any actions of the
Corporation, to stockholders or any other person (natural or otherwise);
provided, however, that the foregoing provision shall not eliminate or
limit the liability of a director or officer (1) for acts or omissions
which involve intentional misconduct, fraud or a knowing violation of law,
or (2) the payment of dividends in violation of Section 78.300 of the
Nevada Revised Statutes. Any repeal or modification of this Article by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director or
officer of the Corporation for acts or omissions prior to such repeal or
modification. (article added 12-7-98)
B. INDEMNIFICATION. No officer or Director shall be personally
liable for any obligations of the corporation or for any duties or
obligations arising out of any acts or conduct of said officer of Director
performed for or on behalf of the corporation. Any person threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the
fact that he, his testator or intestate representative is or was a
director, officer, employee, or agent of the Corporation or is or was
serving at the request of the Corporation as an officer, director, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, shall be indemnified by the Corporation against all reasonable
expenses, including attorney's fees, judgments, fines, and amounts paid in
settlement actually and necessarily incurred by him in connection with the
defense of such action, suit or proceeding, or in connection with any
appeal therein, except in relation to matters as to which it shall be
adjudicated in such action, suit or proceeding or in connection with any
<PAGE>
appeal therein that such officer, director, employee or agent is liable for
acts or omissions which involve intentional misconduct, fraud or a knowing
violation of law in the performance of his duties. (article added 12-7-98)
C. AMOUNT OF INDEMNIFICATION. Pursuant to the foregoing
indemnification, the amount of indemnity to which any officer, director,
employee or agent shall be entitled shall be those actual and reasonable
expenses, including attorney's fees, judgments, fines, and amounts paid in
settlement actually and necessarily incurred by him, and the Corporation
shall pay in advance or as they are incurred, any and all retainers, fees,
costs, judgments, fines, amounts paid in settlement or other expenses
incurred by any officer, director, employee or agent of the Corporation, in
defending any threatened or pending civil or criminal action, suit or
proceeding. (article added 12-7-98)
D. OTHER INDEMNIFICATION. The indemnification herein provided
shall not be deemed exclusive of any other right to indemnification to
which any person seeking indemnification may be under any by-law,
agreement, vote of stockholders or disinterested Directors, or otherwise,
both as to action taken in his official capacity and as to action taken in
any other capacity while holding such office. It is the intent hereof that
all officers, directors, employees and agents of the Corporation be and
hereby are indemnified to the fullest extent permitted by the laws of the
State of Nevada and these By-Laws. The indemnification herein provided
shall continue as to any person who has ceased to be a Director, officer or
employee, and shall inure to the benefit of the heirs, executors and
administrators of any such person. (article added 12-7-98)
E. SETTLEMENT BY CORPORATION. The right of any person to be
indemnified shall be subject always to the right of the corporation by the
Board of Directors, in lieu of such indemnification, to settle any such
claim, action, suit or proceeding at the expense of the corporation by the
payment of the amount of such settlement and the costs and expenses
incurred in connection therewith. (article added 12-7-98)
IN WITNESS whereof we have subscribed our names on the 30th day of
DECEMBER, 1998; effective on the7th day of DECEMBER, 1998.
__________________________________
Daniel J. Mendez, Director and President
__________________________________
Albert Figueroa, Director and Secretary
Exhibit 3.(II)
AMENDED BY-LAWS OF
(Amended 12/7/98)
LARGO VISTA GROUP, INC.
ARTICLE I - OFFICES
The principle office of the corporation shall be located in
the State of California, City of Newport Beach, County of Orange.
The corporation may have such other offices, either within or
without the state of incorporation as the board of directors, in
its sole discretion, may designate or as the business of the
corporation may from time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on the
20th of January in each year, beginning with the year 1987 at the
hour of 10:00 o'clock A.M. for the purpose of electing directors
and for the transaction of such other business as may come before
the meeting. If the day fixed for the annual meeting shall be a
legal holiday such meeting shall be held on the next succeeding
business day. The Chairman of the Board, or in the absence of a
Chairman, the Director so appointed by the majority of Directors
serving on the Board of Directors, shall preside over the meeting.
2. SPECIAL MEETINGS.
Unless otherwise prescribed by statue, special meetings of
the stockholders, for any purpose or purposes, may be called by
the President or any other Executive Officer or by any Director,
and shall be called by the President at the request of the holders
of not less than ten per cent (10%) of all of the then outstanding
shares of the corporation entitled to vote at the meeting. The
Chairman of the Board, or in the absence of a Chairman, the
Director so appointed by the majority of Directors serving on the
Board of Directors, shall preside over the meeting.
<PAGE>
3. INFORMAL ACTION BY STOCKHOLDERS.
Pursuant to Article V of the Articles of Incorporation,
unless otherwise prescribed by statue, any action required or
permitted to be taken at a meeting of the shareholders, except
election of Directors, may be taken without a meeting if a written
consent thereto, setting forth the action so taken, is signed by
shareholders holding at least a majority of the voting power,
except that if a different proportion of voting power is required
for such an action at a meeting, then that proportion of written
consents is required. Said written consents shall be filed with
the minutes of the proceedings of the shareholders.
<PAGE>
4. PLACE OF MEETING.
a. Unless otherwise prescribed by statute, the directors
may designate any place, either within or without the state of
incorporation, as the place of meeting for annual meeting or for
any special meeting of stockholders called by the Directors. If
no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be principle office of the
corporation.
b. Stockholders may not participate in a meeting of
stockholders by means of a telephone conference or similar method
of communication by which all persons participating in the meeting
can hear eachother unless said participation is authorized in the
written notice sent to the stockholder or specifically authorized
by the person presiding over such meeting. Participation in a
meeting shall constitute presence at a meeting.
5. NOTICE OF MEETING.
a. Unless otherwise prescribed by statute, written notice
of each meeting of stockholders, whether annual or special,
stating the time and the
place where the meeting is to be held, shall be served either
personally or by mail, not less that ten (10) or more than sixty
(60) days before the meeting, upon each stockholders of record
entitled to vote at the meeting, and to any other stockholder to
whom the giving of notice may be required by law. Notice of a
special meeting shall also state the purpose or purposes for which
the meeting is called, and shall indicate that it is being issued
by, or at the direction of, the person or persons calling the
meeting. If, at any meeting, action is proposed that would, if
taken, entitle stockholders to receive payment for their shares
pursuant to statute, the notice of such meeting shall include a
statement of that purpose and to that effect. If notice mailed,
it shall be directed to each stockholder at his or her address, as
it appears on the records of the stockholders of the Corporation,
unless a stockholder shall have previously filed with the
Secretary of the Corporation a written request that notices
intended for him or her to be mailed to some other address, in
which case, it shall be mailed to the address designated in such
request.
<PAGE>
b. Notice of any meeting need not be given to any person
who may become a stockholder of record after the mailing of such
notice and prior to the meeting, or to any stockholder who attends
such meeting, in person or by proxy, or submits a signed waiver of
notice either before or after such a meeting. Notice of any
adjourned meeting of stockholders need not be given unless
otherwise required by statute.
<PAGE>
c. Pursuant to NRS 78.320, in no instance where action is
authorized by written consent need a meeting of shareholders be
called or notice given. The written consent must be filed with
the minutes of the proceedings of the shareholders.
6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
a. For the purpose of determining stockholders entitled to
notice of or to vote at any meeting of stockholders or any
adjournment thereof, or stockholders entitled to receive payment
of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the Directors of the
Corporation may provide that the stock transfer books shall be
closed for a stated period but not to exceed, in any case, seven
(7) days. If the stock transfer books shall be closed for the
purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, such books shall be closed for
at least seven (7) days immediately preceding such meeting.
b. In lieu of closing the stock transfer books, the
Directors may fix in advance a date as the record date for any
such determination of stockholders entitled to notice of or to
vote at a meeting of stockholders, and such date fixed shall not
in any case be more than ten (10) days and, in the case of a
meeting of stockholders, not less than seven (7) days, prior to
the date on which the particular action requiring such
determination of stockholders is to be taken. If the stock
transfer books are not closed and no record date is fixed for the
determination of stockholders entitled to notice of or to vote at
a meeting of stockholders, or stockholders entitled to receive
payment of dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the directors
declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of stockholders. When a
determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
7. VOTING LISTS.
The officer or agent having charge of the stock transfer
books for shares of the Corporation shall make, at least 30 days
before each meeting of stockholders, a complete list of the
stockholders entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order, with the address of and
<PAGE>
the number of shares held by each, which list, for a period of
seven days prior to such meeting, shall be kept on file at the
principle office of the Corporation and shall be subject to
inspection by any stockholder at any
time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any stockholder during the
whole time of the meeting. The original stock transfer book shall
be prima facie evidence as to who are the stockholders entitled to
examine such list or transfer books or to vote at the meeting of
stockholders.
8. QUORUM.
a. Except as otherwise provided herein, or by statute, or
in the Articles of Incorporation (such articles and any amendments
thereof being hereafter collectively referred to as the "Articles
of Incorporation"), at all meetings of the stockholders of the
Corporation, the presence at the commencement of such meetings in
person or by proxy of stockholders holding of record fifty-one
percent (51%) of the total number of shares of the Corporation
then issued and outstanding and entitled to vote, shall be
necessary and sufficient to constitute a quorum for the
transaction of any business. The withdrawal of any stockholder
after commencement of the meeting shall have no effect on the
existence of a quorum, after a quorum has been established at such
meeting.
b. Provided sufficient notice has been given to all
stockholders, the vote of stockholders who hold at least a
majority of the voting power present at a meeting at which a
quorum is present is the act of the stockholders.
c. Despite the absence of a quorum at any annual or special
meeting of stockholders, the stockholders present, by a majority
of the votes cast by the holders entitled to vote thereat, may
adjourn the meeting. At any such adjourned meeting at which a
quorum is present, any business may be transacted at the meeting
as originally called if a quorum had been present.
9. PROXIES.
At all meetings of stockholders, a stockholder may vote by
proxy executed in writing by the stockholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the
Secretary of the Corporation before or at a time of the meeting.
10. VOTING.
a. Except as otherwise provided by statute or the Articles
of Incorporation, any corporate action, other than election of
directors, to be taken by the vote of the stockholders, shall be
authorized by a majority of votes cast at a meeting of
stockholders by the holders of such shares entitled to vote
thereat.
<PAGE>
b. Except as otherwise provided by statute or the Articles of
Incorporation, at each meeting of stockholders, each holder of
record of stock of the Corporation entitled to vote thereat, shall
be entitled to one vote for each share of stock registered in his,
her or its name on the books of the Corporation. Cumulative
voting in elections of Directors and all other matters brought
before stockholders meeting, whether they be annual or special,
shall not be permitted.
c. Each stockholders entitled to vote or to express consent
or dissent without a meeting, may do so by proxy; provided,
however, that the instrument authorizing such proxy to act shall
have been executed in writing by the stockholder himself, herself
or itself, or by his or her or its attorney-in-fact thereunto duly
authorized in writing. No proxy shall be valid after the
expiration of eleven (11) months from the date of its execution,
unless the person executing it shall have specified therein the
length of time it is to continue in force. Such instrument shall
be exhibited to the Secretary of the Corporation at the meeting
and shall be filed with the minutes of the meeting.
d. Any action, except election of directors, which may be taken
by a vote of stockholders at a meeting, may be taken without a
meeting if authorized by written consent of shareholders holding
at least a majority of the voting power; provided that if a
greater proportion of voting power is required by such action at
such meeting, then such greater proportion of written consents
shall be required.
11. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders,
shall be as follows:
1. Roll Call
2. Proof of Notice of meeting or waiver of notice.
3. Reading, correcting, and approving of minutes of
the preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business
8. New Business.
<PAGE>
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business, affairs, property, and interests of the
Corporation shall be managed and controlled by its Board of
Directors. The Board of Directors may exercise all powers of the
Corporation, except as are in the Articles of Incorporation or by
statute expressly conferred upon or reserved to the shareholders.
The Directors shall in all cases act as a board, and they may
adopt such rules and regulations for the conduct of their meetings
and the management of the Corporation, as they may deem proper,
not inconsistent with these By-laws or the laws of the State of
Nevada or the laws of the United States.
2. NUMBER, TENURE AND QUALIFICATIONS.
a. The directors of the Corporation shall consist of a
board of not less than three (3) nor more than twenty-five (25),
unless and until otherwise determined by vote of a majority of the
entire Board of Directors who shall perform such duties and have
such authority as usually pertains to such directors and officers
of a corporation or as may be prescribed by the Board of Directors
from time to time.
b. Except as otherwise provided in the Articles of
Incorporation or these By-laws, the members of the Board of
Directors of the Corporation, who need not be stockholders, shall
be elected by a majority of votes cast at a meeting of
stockholders, by the holders of shares of stock present in person
or by proxy, entitled to vote at the election.
c. Each director shall hold office until the next annual
meeting of stockholders, and until his successor shall have been
elected and qualified, or his prior death, resignation or removal.
3. ANNUAL AND REGULAR MEETINGS; NOTICE
a. A regular annual meeting of the Directors, shall be held
without notice other than this By-law immediately after, and at
the same place as, the annual meeting of stockholders.
b. The Directors may provide, by resolution, the time and
place for the holding of additional regular meetings without
notice other than such resolution.
<PAGE>
c. Notice of any regular meeting of the Board of Directors shall
not be required to be given and, if given, need not specify the
purpose of the meeting; provided, however, that in case the Board
of Directors shall fix or change the time or place of any regular
meeting, notice of such action shall be given to each director who
shall not have been present at the meeting at which such change
was made within the time limited, and in the manner set forth in
Paragraph (b) Section 4 of this Article III, with respect to
special meetings, unless such notice shall be waived in the manner
set forth in Paragraph (c) or such Section 4.
4. SPECIAL MEETINGS; NOTICE
a. Special meetings of the Directors may be called by or at
the request of the President or any two Directors, at such time
and place as may be specified in the respective notices or waivers
of notice thereof.
b. Except as otherwise required by statute, notice of
special meetings shall be mailed directly to each director,
addressed to him or her at his or her residence or usual place of
business, at least three (3) business days prior to the day on
which the meeting is to be held, or shall be sent to him or her at
such place by telegram, radio or cable, or shall be delivered to
him or her personally or given to him or her orally, not later
than the day before the day on which the meeting is to be held. A
notice, or waiver of notice except as required by Section 8 of
this Article III, need not specify the purpose of the meeting.
c. Notice of any special meeting shall not be required to
be given to any director who shall attend such meeting without
protesting prior thereto or at its commencement, the lack of
notice to him or her, or any director who submits a signed waiver
of notice, whether before or after the meeting. Notice of any
adjourned meeting shall not be required to be given.
5. CHAIRMAN.
At all meetings of the Board of Directors, the Chairman of
the Board, if any and if present, shall preside. If there shall
be no Chairman, or he or she shall be absent, then a Chairman
shall be chosen by a majority of the directors present who shall
preside at that meeting only.
6. QUORUM AND ADJOURNMENTS.
Except as otherwise provided by law, the Articles of
Incorporation or these By-laws, at any meeting of the Board of
Directors, the presence of at least a majority of the entire Board
<PAGE>
shall be necessary and sufficient to constitute a quorum for the
transaction of business; but if less than said number is present
at a meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice.
7. MANNER OF ACTING.
a. At all meetings of the Board of Directors, each director
present shall have one vote, irrespective of the number of shares
of stock, if any, which he or she may hold.
b. Except as otherwise provided by statute, by the Articles
of Incorporation, or these By-laws, the action of a majority of
the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors.
c. Unless otherwise required by amendment to the Articles
of Incorporation or statute, any action required or permitted to
be taken at any meeting of the Board of Directors or any Committee
thereof may be taken without a meeting if a written consent
thereto is signed by all the members of the Board or Committee.
Such written consent shall be filed with the minutes of the Board
or Committee.
d. Unless otherwise prohibited by amendments to the Articles of
Incorporation or statute, members of the Board of Directors or of
any Committee of the Board of Directors may participate in a
meeting of such Board or Committee by means of a telephone
conference network or a similar communications method by which all
persons participating in the meeting can hear each other. Such
participation is constituted presence of all of the participating
persons at such meeting, and each person participating in the
meeting shall sign the minutes thereof, which may be signed in
counterparts.
8. NEWLY CREATED DIRECTORSHIP AND VACANCIES.
At any regular or special meeting newly created directorships
resulting from an increase in the number of directors or vacancies
occurring in the Board for any reason, except the removal of
directors without cause, may be filled by a vote of a majority of
the remaining directors then in office, although less than a
quorum exists. Vacancies occurring by reason of the removal of
directors without cause shall be filled by vote of the
stockholders at the meeting at which the removal was effected. A
director elected to fill a vacancy caused by resignation, death,
removal, inability to act or otherwise shall be elected to hold
office for the unexpired term of his predecessor.
<PAGE>
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed with or without
cause at any time by affirmative vote of the stockholders holding
of record in the aggregate at least a majority of the outstanding
shares of stock of the Corporation at a special meeting of the
stockholders called for that purpose, and may be removed for cause
by the action of the Board of Directors.
10. RESIGNATION.
A director may resign at any time by giving written notice to
the Board of Directors, the President or the Secretary of the
Corporation. Unless otherwise specified in the notice, the
resignation shall take effect upon receipt thereof by the Board or
such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for
their services, but by resolution of the Board of Directors a
fixed sum and expenses for actual attendance at each regular or
special meeting of the Board may be authorized. Nothing herein
contained shall be construed to preclude any director from serving
the Corporation in any other capacity and receiving compensation
therefor.
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of
the directors at which action on any corporate matter is taken
shall be presumed to have assented to the action taken unless his
dissent shall be entered in the minutes of the meeting or unless
he shall file his written dissent to such action with the person
acting as the Secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
13. EXECUTIVE AND OTHER COMMITTEES.
The Board of Directors, by resolution adopted by a majority
of the entire Board, may from time to time designate from among
its members an executive committee and other committees, and
alternative members thereof, as they may deem desirable, with such
powers and authority (to the extent permitted by law)
as may be provided in such resolution. Each such committee shall
serve at the pleasure of the Board.
<PAGE>
ARTICLE IV - OFFICERS
1. NUMBER; QUALIFICATION; ELECTION AND TERM OF OFFICE.
a. The officers of the Corporation shall consist of a
President, a Secretary and a Treasurer, and such other officers,
including a Chairman of the Board of Directors, and one or more
Vice Presidents, as the Board of Directors may from time to time
deem advisable. Any officer other than the Chairman or Vice
Chairman of the Board of Directors may be, but is not required to
be, a director of the Corporation. Any two or more offices may be
held by the same person.
b. The officers of the Corporation shall be elected by the
Board of Directors at the regular annual meeting of the Board
following the annual meeting of the stockholders.
c. The term of office for Officers shall be set at the
discretion of the Board of Directors, but in no event greater than
five years. (amended 12-7-98).
3. RESIGNATION.
Any officer may resign at any time by giving written notice
of such resignation to the Board of Directors or to the President
or the Secretary of the Corporation. Unless otherwise specified
in such written notice, such resignation shall take effect upon
receipt thereof by the Board of Directors or such officer, and the
acceptance of such resignation shall not be necessary to make it
effective.
4. REMOVAL.
Any officer or agent elected or appointed by the directors
may be removed, either with or without cause, and a successor
elected by a majority vote of the Board of Directors at any time.
5. VACANCIES.
A vacancy in any office because of death, resignation,
inability to act, removal, disqualification or otherwise, may at
any time be filled for the unexpired portion of the term by a
majority vote of the Board of Directors.
6. DUTIES OF OFFICERS.
Officers of the Corporation shall, unless otherwise provided
by the Board of Directors, each have powers and duties as
generally pertain to their respective offices as well as such
powers and duties as may be set forth in these By-laws, or may
from time to time be specifically conferred or imposed by the
Board of Directors. The President shall be the chief executive
officer of the Corporation.
<PAGE>
7. PRESIDENT.
Subject to the provisions of Article III, paragraph 5 of
these By-laws, the President shall be the chief executive officer
of the Corporation and, subject to the control of the directors,
shall in general supervise and control all of the business and
affairs of the Corporation. He or she shall, when present,
preside at all meetings of the stockholders and of the directors.
He or she may sign, with the Secretary or any other proper officer
of the Corporation thereunto authorized by the directors,
certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the directors have
authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the directors or
by these By-laws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise signed
or executed; and in general shall perform all duties incident to
the office of President and such other duties as may be prescribed
by the directors from time to time.
8. VICE - PRESIDENT.
In the absence of the President or in event of his death,
inability or refusal to act, the Vice President shall perform the
duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the
President. The Vice President shall perform such other duties as
from time to time may be assigned to him by the President or by
the directors.
9. SECRETARY.
The Secretary shall keep the minutes of the stockholders' and
of the directors' meetings in one or more books provided for that
purpose, see that all notices are duly given in accordance with
the provisions of these By-laws or as required, be custodian of
the corporate records and of the seal of the corporation and keep
a register of the post office address of each stockholder which
shall be furnished to the Secretary by such stockholder, have
general charge of the stock transfer books of the Corporation, and
in general perform all duties incident to the office of Secretary
and such other duties as from time to time may be assigned to him
by the President or by the directors.
<PAGE>
10. TREASURER.
If required by the directors, the Treasurer shall give a bond
for the faithful discharge of his duties in such sum and with such
surety or sureties as the directors shall determine. He shall
have charge and custody of and be responsible for all funds and
securities of the Corporation; receive and give receipts for
moneys due and payable to the Corporation from any source
whatsoever, and deposit all such moneys in the name of the
Corporation in such banks, trust companies or other depositories
as shall be selected in accordance with these By-laws and in
general perform all of the duties incident to the office of
Treasurer and such other duties as from time to time may be
assigned to him by the President or by the directors.
11. SALARIES.
The salaries of the officers shall be fixed from time to time
by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a
director of the Corporation.
12. SURETIES AND BONDS.
The Board of Directors may require any officer, employee or
agent of the Corporation to execute to the Corporation a bond in
such sum, and with such surety or sureties as the Board of
Directors may direct, conditioned upon the faithful performance of
his or her duties to the Corporation, including responsibility for
negligence for the accounting of all property, funds or securities
of the Corporation which may come into his hands.
13. SHARES OF STOCK OF OTHER CORPORATIONS.
Whenever the Corporation is the holder of stock of any other
corporation, any right or power of the Corporation as such
stockholder (including the attendance, acting and voting at
stockholders' meetings and the execution of waivers, consents,
proxies or other instruments) may be exercised on behalf of
the Corporation by the President, any Vice President or such other
person as the Board of Directors may authorize.
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
a. No contract or other transaction between this
Corporation and any other person, corporation or entity shall be
impaired, affected or invalidated, nor shall any director be
liable in any way by reason of the fact that one or more of the
directors of this Corporation is or are interested in, or is a
<PAGE>
director or officer, or are directors or officers of such other
corporations, provided that such facts are disclosed or made known
to the Board of Directors, prior to their authorizing such
transaction.
b. Any director, personally and individually, may be a
party to or may be interested in any contract or transaction of
this Corporation, and no directors shall be liable in any way by
reason of such interest, provided that the fact of such interest
be disclosed or made known to the Board of Directors prior to
their authorization of such contract or transaction, and provided
that the Board of Directors shall be authorize, approve or ratify
such contract or transaction by the vote (not counting the vote of
any such Director) of a majority of a quorum, notwithstanding the
presence of any such director at the meeting at which such action
is taken. Such director or directors may be counted in
determining the presence of a quorum at such meeting. This
section shall not be construed to impair, invalidate or in any way
affect any contract or other transaction which would otherwise be
valid under the law (common, statutory or otherwise) applicable
thereto.
2. LOANS.
No loans shall be contracted on behalf of the Corporation and
no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such
authority may be general or confined to specific instances.
3. CHECKS, DRAFTS, AND OTHER EVIDENCE OF INDEBTEDNESS.
All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness issued in the name of the
Corporation, shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to
time be determined by resolution of the Board of Directors.
4. DEPOSITS.
All funds of the Corporation not otherwise employed shall be
deposited from time to time to the credit of the Corporation in
such banks, trust companies or other depositories as the Board of
Directors may select.
ARTICLE VI - SHARES OF STOCK
1. CERTIFICATES OF STOCK.
Certificates representing shares of the Corporation's stock
shall be in such form as shall be adopted by the Board of
Directors. Such certificates shall be signed by the (1) the
Chairman of the Board, the President or a Vice President and (2)
the Secretary, the Treasurer or any Assistant Secretary or
Assistant Treasurer. All certificates for shares shall be
<PAGE>
consecutively numbered or otherwise identified and shall bear the
name and address of the holder, the number of shares, the date of
issue, and the Corporate Seal.
2. TRANSFER OF SHARES.
(a) Upon surrender to the Corporation or the transfer agent
of the Corporation of a certificate representing shares of stock
of the Corporation with an assignment or power of transfer
endorsed thereon or delivered therewith or accompanied by other
proper evidence of succession evidencing assignment or authority
to transfer, it shall be the duty of the Corporation to cancel the
old certificate and issue a new certificate to the person entitled
thereto; and every such transfer shall be entered on the transfer
book of the Corporation which shall be kept at its principle
office. The Corporation may require any proof of the authenticity
of the signature and of authority to transfer and of payment of
taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of
record of any share as the absolute owner thereof for all purposes
and, accordingly, shall not be bound to recognize any legal,
equitable or other claim to or interest in such share or shares of
stock on the part of any other person whether or not it shall have
express or other notice thereof, except as expressly provided by
the laws of the State of Nevada or the United States.
3. LOST OR DESTROYED CERTIFICATES.
The holder of any certificate representing shares of the
Corporation shall immediately notify the Corporation of any loss
or destruction of the certificate representing the same. The
Corporation may issue a new certificate in place of any
certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction
as the Board of Directors in its discretion may require, the Board
of Directors may, in its discretion, require the owner of the lost
or destroyed certificate, or his or her legal representatives, to
give the Corporation a bond in such sum as the Board may direct,
and with such surety or sureties as may be satisfactory to the
Board, to indemnify the Corporation against any claims, loss,
liability or damage it may suffer on account of the issuance of
the new certificate. A new certificate may be issued without
requiring any such evidence or bond when, in the judgment of the
Board of Directors, it is proper to do so.
4. RECORD DATE.
In lieu of closing the stock ledger of the Corporation, the
Board of Directors may fix, in advance, a date not exceeding sixty
<PAGE>
(60) days, nor less than ten (10) days, as the record date for the
determination of stockholders entitled to receive notice of, or to
vote at, any meeting of stockholders, or to consent to any
proposal without a meeting, or for the purpose of determining
stockholders entitled to receive payment of any dividends or
allotment of rights, or for the purpose of any other action. If
no record date is fixed, the record date for the determination of
stockholders entitled to notice of, or to vote at, a meeting of
stockholders shall be at the close of business on the day next
preceding the day on which the notice is given, or, if no notice
is given, the day preceding the day on which the meeting is held.
The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the
resolution of the directors relating thereto is adopted. When a
determination of stockholders of record entitled to notice of, or
to vote at, any meeting of stockholders has been made, as provided
for herein, such determination shall apply to any adjournment
thereof, unless directors fix a new record date for the adjourned
meeting.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall end on the 30th day
of September in each year, and may be changed by the Board of
Directors from time to time subject to applicable law.
ARTICLE VIII - DIVIDENDS
Subject to applicable law, the Board of Directors may from
time to time declare, and the Corporation may pay, dividends on
its outstanding shares in the manner and upon the terms and
conditions the Board may determine.
ARTICLE IX - SEAL
The Board of Directors shall provide a Corporate Seal which
shall be in such form as shall be approved from time to time by
the Board of Directors.
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is
required to be given to any stockholder or director of the
Corporation under the provisions of these By-laws or under the
provisions of the Articles of Incorporation, a waiver thereof in
writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
<PAGE>
ARTICLE XI - AMENDMENTS
1. BY STOCKHOLDERS.
All By-Laws of the Corporation may be altered, amended or replaced
and new By-Laws may be adopted by a vote of the stockholders
representing a majority of all the shares issued and outstanding,
at any annual stockholders' meeting or at any special
stockholders' meeting when the proposed amendment has been set out
in the notice of such meeting.
2. BY DIRECTORS.
The Board of Directors shall have the power to make, adopt,
alter, amend and repeal, from time to time, By-Laws of the
Corporation, provided, however, that the stockholders entitled to
vote with respect thereto as in this Article X above-provided may
alter, amend or repeal By-Laws made by the Board of Directors,
except that the Board of Directors shall have no power to change
the quorum for meetings of stockholders or of the Board of
Directors or to change any provisions of the By-Laws with respect
to the removal of directors or of the filling of vacancies in the
Board resulting from the removal by the stockholders. In any By-
Law regulating an impending election of directors is adopted,
amended or repealed by the Board of Directors, there shall be set
forth in the notice of the next meeting of stockholders for the
election of directors, the By-Laws so adopted, amended or
repealed, together with a concise statement of the changes made.
ARTICLE XII
1. LIABILITY OF DIRECTORS AND OFFICERS. As fully as possible
under the laws of the State of Nevada as they now exist and they
may from time to time be revised, the Corporation intends that its
directors and officers be protected from legal action by
stockholders other persons (natural or otherwise) on account of
service as directors or officers of the Corporation. No director
or officer of the Corporation shall be personally liable to the
Corporation or any of its stockholders for damages for breach of
fiduciary duty as a director or officer involving any act or
omission of any such director or officer, or for any actions of
the Corporation, to stockholders or any other person (natural or
otherwise); provided, however, that the foregoing provision shall
not eliminate or limit the liability of a director or officer (1)
for acts or omissions which involve intentional misconduct, fraud
or a knowing violation of law, or (2) the payment of dividends in
violation of Section 78.300 of the Nevada Revised Statutes. Any
repeal or modification of this Article by the stockholders of the
Corporation shall be prospective only, and shall not adversely
affect any limitation on the personal liability of a director or
officer of the Corporation for acts or omissions prior to such
repeal or modification. (article added 12-7-98)
<PAGE>
2. INDEMNIFICATION. No officer or Director shall be personally
liable for any obligations of the corporation or for any duties or
obligations arising out of any acts or conduct of said officer of
Director performed for or on behalf of the corporation. Any
person threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in the
right of the corporation, by reason of the fact that he, his
testator or intestate representative is or was a director,
officer, employee, or agent of the Corporation or is or was
serving at the request of the Corporation as an officer, director,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified by the
Corporation against all reasonable expenses, including attorney's
fees, judgments, fines, and amounts paid in settlement actually
and necessarily incurred by him in connection with the defense of
such action, suit or proceeding, or in connection with any appeal
therein, except in relation to matters as to which it shall be
adjudicated in such action, suit or proceeding or in connection
with any appeal therein that such officer, director, employee or
agent is liable for acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law in the performance
of his duties. (article added 12-7-98)
3. AMOUNT OF INDEMNIFICATION. Pursuant to the foregoing
indemnification, the amount of indemnity to which any officer,
director, employee or agent shall be entitled shall be those
actual and reasonable expenses, including attorney's fees,
judgments, fines, and amounts paid in settlement actually and
necessarily incurred by him, and the Corporation shall pay in
advance or as they are incurred, any and all retainers, fees,
costs, judgments, fines, amounts paid in settlement or other
expenses incurred by any officer, director, employee or agent of
the Corporation, in defending any threatened or pending civil or
criminal action, suit or proceeding. (article added 12-7-98)
4. OTHER INDEMNIFICATION. The indemnification herein provided
shall not be deemed exclusive of any other right to
indemnification to which any person seeking indemnification may be
under any by-law, agreement, vote of stockholders or disinterested
Directors, or otherwise, both as to action taken in his official
capacity and as to action taken in any other capacity while
holding such office. It is the intent hereof that all officers,
directors, employees and agents of the Corporation be and hereby
are indemnified to the fullest extent permitted by the laws of the
State of Nevada and these By-Laws. The indemnification herein
provided shall continue as to any person who has ceased to be a
Director, officer or employee, and shall inure to the benefit of
the heirs, executors and administrators of any such person.
(article added 12-7-98)
5. SETTLEMENT BY CORPORATION. The right of any person to be
indemnified shall be subject always to the right of the
<PAGE>
corporation by the Board of Directors, in lieu of such
indemnification, to settle any such claim, action, suit or
proceeding at the expense of the corporation by the payment of the
amount of such settlement and the costs and expenses incurred in
connection therewith. (article added 12-7-98)
CERTIFICATE OF PRESIDENT
THIS IS TO CERTIFY that I am the duly elected, qualified and
acting President of Largo Vista Group, Ltd., and that the above
and foregoing By-Laws constituting a true original copy were duly
adopted as the By-Laws of said Corporation as amended December 7,
1998.
IN WITNESS WHEREOF, I have executed this Certificate at
Newport Beach, California on this 30th day of December, 1998.
___________________________
Daniel J. Mendez, President
By-laws of
Largo Vista Group, Ltd.
(B LAWS_Amended 12-98)
Page 15 of 14
CERTIFICATE OF SECRETARY
THIS IS TO CERTIFY that I am the duly elected, qualified and
acting Secretary of Largo Vista Group, Ltd., and that the above
and foregoing by-laws constituting a true original copy were duly
adopted as the by-laws of said Corporation as amended December 7,
1998.
IN WITNESS WHEREOF, I have executed this Certificate at
Newport Beach, California on this 30th day of December 1998.
___________________________
Albert N. Figueroa, Secretary
By Laws Certificate
Exhibit 3 (III)
ARTICLES OF INCORPORATION
OF
LARGO VISTA INC.
ONE: The name of the corporation is:
LARGO VISTA INC.
TWO:The purpose of the corporation is to engage
in any lawful act or activity for which a corporation may be
organized under the General Corporation Law of California other
than the banking business, the trust company business, or the
practice of a profession permitted to be incorporated by the
California Corporations Code.
<PAGE>
THREE: The name and address in the State of California of this
corporation's initial agent for service of
process is:
Ms. Diana M. Dron
Monteleone & McCrory
10 Universal City Plaza
Suite 2500
Universal City, California 91608
FOUR: This corporation is authorized to issue only
one class of shares of stock; and the total number of shares
which this corporation is authorized to issue is: 1,000.
FIVE: The liability of the directors of the corporation for monetary
damages shall be eliminated to the fullest extent permissible under
California Law.
SIX: The corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the Corporations Code) for breach of duty to the
corporation and its shareholders through bylaw provisions or through
agreements with the agents, or both, in excess of the indemnification
otherwise permitted by Section 317 of the Corporations Code, subject to the
limits on such excess indemnification set forth in Section 204 of the
Corporations Code.
SEVEN: If proceedings for dissolution of the corporation to which
Corporation Code Section 2000 applies are instituted, the provisions of any
Buy-Out Agreement then in effect among the corporation's shareholders shall
govern and supersede any provisions of Section 2000 inconsistent therewith,
to the extent required to enforce such agreement.
DATED: This 11th day of October 1988, at Universal City,
California.
DIANA M . DRON
I hereby declare that I am the person who executed the
foregoing Articles of Incorporation, which execution is my act
and deed.
DIANA M. DRON
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
John A. Jones and Dona L. Blessing certify that:
1. They are the President and Secretary, respectively, of LARGO VISTA
INC., a California corporation.
2. Article FOUR of the articles of incorporation of this corporation
is amended to read as follows:
"FOUR: This corporation is authorized to issue only one class of shares of
stock; and the total number of shares which this corporation is authorized
to issue is 50,000,000."
3. The foregoing amendment to articles of incorporation has been duly
approved by the Board of Directors.
4. The foregoing amendment of articles of incorporation has been duly
approved by the required vote of shareholders in accordance with 902 of
the Corporations Code. The total number of outstanding shares of the
corporation is 1,000. The number of shares voting in favor of the amendment
equalled or exceeded the vote required. The percentage vote required was
more than 50%.
We declare under penalty of perjury under the laws of the state of
California that the matters set forth in this certificate are true and
correct of our own knowledqe.
May 29, 1992.
JOHN A. JONES, President
DONA L. BLESSING, Secretary
Exhibit 3 (IV)
BY-LAWS
OF
LARGO VISTA, INC.
ARTICLE I - OFFICES
The principle office of the corporation in the State of California
shall be located in the City of Orange, County of Orange. The corporation
may have such other offices, either within or without the Stateof
incorporation as the board of directors may designate or as the business of
the corporation may from time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on the 20th of
January in each year, beginning with the year 1987 at the hour of 10:00
o'clock A.M. for the purpose of electing directors and for the tranaction
of such other business as may come before the meeting. If the day fixed
for the annual meeting shall be a legal holiday such meeting shall be held
on the next succeeding business day.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statue, may be called by the president or
the directors, and shall be called by the president at the request of the
holders of not less than 50% per cent of all the outstanding shares of the
corporation entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the
State unless otherwise presscribed by statute, as the place of meeting for
annual meeting or for any special meeting called bythe directors. A waiver
of notice signed by all stockholders entitled to vote at a meeting may
designate any place, either within or without the state unless otherwise
prescribed by statute, as the place for holding such meeting. If no
designation is made, or if a special meeting be otherwise called, the place
of meeting shall be principle office of the corporation.
4. NOTICE OF MEETING
Written or printed notice stating the place, day and hour of the
meeting and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than three nor
more than seven days before the date of the meeting, either personally or
by mail, by or at the direction of the president, or the secretary, or the
officer or persons calling the meeting, to each stockholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to
be delevered when deposited in the United States mail, addressed to the
stockholder at his address as it appears on the stock transfer books of the
corporation, with postage thereon pre-paid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof, or
stockholders entitled to receive paymentof any dividend, or in order to
make a determination of stockholders for any other proper purpose, the
directors of the corporation may provide that the stock transfer books
shall be closed for a stated period but not to exceed, in any case, seven
days. If the stock transfer books shall be closed for the purpose of
determining stockholders entitledto notice of or to vote ata meeting of
stockholders, such books shall be closed for at least seven days
immediately preceding such meeting. In lieu of closing the stock transfer
books, the directors may fix in advance a date as the record date for any
such determination of stockholders, such date in any case to be not more
than ten days and, in case of a meeting of stockholders, not less than
seven days prior to the date on which the particular action requiringsuch
determination of stockholders is to be taken. If the stock transfer books
are not closed and no record date is fixed for the determination of
stockholders entitled to notice of or to vote at a meeting of stockholders,
or stockholders entitled to receive payment of dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
directors declaring such
dividend is adopted, as the case may be, shall be the record date for such
determination of stockholders. When a determination of stockholders
entitled to vote at any meeting of stockholders has been made as provided
in this section, such determination shall apply to any adjournment thereof.
<PAGE>
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for
shares of the corporation shall make, at least 30 days before each meeting
of stockholders, a complete list of the stockholders entitled to vote at
such meeting, or any adjournment thereof, arranged in alphabetical order,
with the address of and the number of shares held by each, which list, for
a period of seven days prior to such meeting, shall be kept on file at the
principle office of the corporation and shall be subject to inspection by
any stockholder at any time during usual business hours. Such list shall
also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any stockholder during the whole time
of the meeting. The original stock transfer book shall be prima facie
evidence as to who are the stockholders entitled to examine such list or
transfer books or to vote at the meeting of stockholders.
7. QUORUM.
At any meeting of stockholders a majority of the outstanding shares of
the corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than said number
of the outstanding shares are represented at a meeting, a majority of the
shares so represented may adjourn the meeting from time to time without
further notice. At such adjourned meeting at which a quorum shall be
present or represented, any business may be tranacted which might have been
transacted at the meeting as originally notified. The stockholders present
at a duly organized meeting may continu to tranact business until
adjournment, not withoutstanding the withdrawal of enough stockholders to
leave less than quorum.
8. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy
executed in writing by the stockholder or by his duly authorized attorney
in fact. Such proxy shall be filed with the secretary of the corporation
before or at a time of the meeting.
<PAGE>
9. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by proxy, for each share of stock
entitled to vote held by such stockholders. Upon the demand of any
stockhoder, the vote for directors and upon any question before the meeting
shall be by ballot. All elections for directors shall be decided by
plurality vote; all other questions shall be decided by majority vote
except as otherwise provided by the Certificate of Incorpration or the laws
of this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
1. Roll Call
2. Proof of Notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken at a
meeting of the stockholders, or any other action which may be taken at a
meeting of the stockholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its
board of directors. The directors shall in all cases act as a board, and
they may adopt such rules and regulations for the conduct of their meetings
and the management of the corporation, as they may deem proper, not
inconsistent with these by-laws and the laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be three. Each
director shall hold office until the next annual meeting of stockholders
and until his successor shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the direstors, shall be held without other notice
than this by-law immediately after, and at the same place as, the annual
meeting of stockholders. The directors may provide, by resolution, the time
and place for the holding of additional regular meetings without other
notice than such resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request
of the president or any two directors. The person or persons authorized to
call special meetings of the directors may fix the place for holding any
special meeting of the directors called by them.
<PAGE>
5. NOTICE.
Notice of any special meeting shall be given at least ten days
previously thereto by written notice delivered personally, or by telegram
or mailed to each director at his business address. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail so
addressed, with postage thereon prepaid. If notice be given by telegram
such notice shall be deemed to be delivered when the telegraph is delivered
to the telegraph company. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting to the transaction
of any business because the meeting is not lawfully called or convened.
6. QUORUM
At any meeting of least two directors shall constitute a quorum for
the transaction of business, but if less than said number is present at a
meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice.
7. MANNER OF ACTING
The act of the majority of the directors present at meeting at which a
quorum shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIP AND VACANCIES
Newly created directorships resulting from an increase in the number
of directors and vacancies occurring in the board for any reason except the
removal of directors without cause may be filled by a vote of a majority of
the directors than in office, although less than a quorum exists. Vacancies
occuring by reason of the removal of directors without cause shall be
filled by vote of the stockholders. A director elected to fill a vacancy
caused by resignation, death or removal shall be elected to hold office
for the unexpired term of his predecessor.
9. REMOVAL OF DIRECTORS
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board.Directors may be removed without
cause only by majority vote of the stockholders.
10. RESIGNATION
A director may resign at any time by giving written notice to the
board, the president or the security of the corporation. Unless otherwise
specified in the notice, the resignation shall take effect upon receipt
thereof by the board or such officer, and the acceptance of the resignation
shall not be necessary to make it effective.
11. COMPENSATION
No compensation shall be paid to directors, as such, for their
services, but by resolution of the board a fixed sum and expenses for
actual attendance at each regular or special meeting of the board may be
authorized. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
<PAGE>
12. PRESUMPTION OF ASSENT
A director of the corporation who is present at a meeting of the
directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be
entered inthe minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dessent shall not apply to a
director who voted in favor of such action.
13. EXECUTE AND OTHER COMMITTEES
The board, by resolution, may designate from among its members an
executive committee and other committees, each consisting of three or more
directors. Each such committee shall serve at the pleasure of the board.
ARTICLE IV - OFFICERS
1. NUMBER
The officers of the corporation shall be a president, a vice-
president, a secretary and a treasurer, each of whom shall be elected by
the directors. Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the directors.
2. ELECTION AND TERM OF OFFICE
The officers of the corporation to be elected by the directors shall
be elected annually at the first meeting of the directors held after each
annual meeting of the stockholders. Each officer shall hold office until
his successor shall have been duly elected and shall have qualified or
until his death or until he shall resign or shall have been removed in thge
manner hereinafter provided.
3. REMOVAL
Any officer or agent elected or appointed by the directors may be
removed by the directors whenever in their judgement the best interests of
the corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
4. VACANCIES
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the
unexpired portion of the term.
<PAGE>
5. PRESIDENT
The president shall be the principle executive officer of the
corporation and, subject to the control of the directors, shall in general
supervise and control all of the business and affairs of the corporation.
He shall, when present, preside at all meetings of the stockholders and of
the directors. He may sign, with the secretary or any other proper officer
of the corporation thereunto authorized by the directors, certificates for
shares of the corporation, any deeds, mortgages, bonds, contracts, or other
instruments which the directors have authorized to be executed, except in
cases where the signing and execution thereof shall be expressly delegated
by the directors or by these by-laws to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed or
executed; and in general shall perform all duties incident to the office of
president and such other duties as may be prescribed by the directors from
time to time.
6. VICE - PRESIDENT
In the absence of the president or in event of his death, inability or
refusal to act, the vice-president shall perform the duties of the
president, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the president. The vice-president shall
perform such other duties as from time to time may be assigned to him by
the President or by the directors.
7. SECRETARY
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see
that all notices are duly given in accordance with the provisions of these
by-laws or as required, be custodian of the corporate records and of the
seal of the corporation and keep a register of the post office address of
each stockholder which shall be furnished to the secretary by such
stockholder, have general charge of the stock transfer books of the
corporation and in general perform all duties incident to the office of
secretary and such other duties as from time to time may be assigned to him
by the president or by the directors.
8. TREASURER
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or
sureties as the directors shall determine. He shall have charge and custody
of and be responsible for all funds and securities of the corporation;
receive and give receipts for moneys due and payable to the corporation
from any source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositories as shall
be selected in accordance with these by-laws and in general perform all of
the duties incident to the office of treasurer and such other duties as
from time to time may be assigned to him by the president or by the
directors.
<PAGE>
9. SALARIES
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS
The directors may authorize any officer or officers, agent or agents,
to enetr into any contract or execute and deliver any instrument in the
name of and on behalf of the corporation, and such authority may be general
or confined to specific instances.
2. LOANS
No loans shall be contracted on behalf of the corporation and no
evidences of indebtness shall be issued in its name unless authorized by a
resolution of the directors. Such authority may be general or confined to
specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation,
shall be signed by such officer or officers, agent or agents of the
corporation and in such manner as shall from time to time be determined by
resolution of the directors.
4. DEPOSITS
All funds of the corporation not otherwise employed shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies or other depositories as the directors may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES
Certificates representing shares of the corporation shall be in such
form as shall be determined by the directors. Such certificates shall be
signed by the president and by the secretary or by such other officers
authorized by law and by the directors. All certificates for shares shall
be consecutively numbered or otherwise identified. The name and address of
the stockholders, the number of shares and date of issue, shall be entered
on the stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be canceled and no new
certificates shall be issued until the former certificate for a like number
of shares shall have been surrendered and canceled, except that in case of
a lost, destroyed or mutilated certificate a new one may be issued therefor
upon such terms and indemnity to the corporation as the directors may
prescribe.
<PAGE>
2. TRANSFER OF SHARES
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it
shall be the duty of the corporation to issue a new certificate to the
person entitled therto, and cancel the old certificate; every such transfer
shall be entered on the transfer book of the corporation which shall be
kept at its principle office.
(b) The corporation shall be entitled to treat the holder of record of
any share as the holder in fact therof, and accordingly, shall not be bound
to recognize any equitable or other claim to or interest in such share on
the part of any other person whether or not it shall have express or other
notice thereof, except as expressly provided by the laws of this state.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall end on the 31st day of
October in each year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may
pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law.
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the
corporation, the state of incorporation, year of incorporation and the
words, "Corporate Seal".
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to
be given to any stockholder or director of the corporation under the
provisions of these by-laws or under the provisions of the articles of
incorporation, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
ARTICLE XI - AMENDMENTS
these by-laws may be altered, amended or replaced and new by-laws may
be adopted by a vote of the stockholders representing a majority of all the
shares issued and outstanding, at any annual stockholders' meeting or at
any special stockholders' meeting when the proposed amendment has been set
out in the notice of such meeting.
Exhibit 3 (V)
ARTICLES OF INCORPORATION
OF
EVERLASTING INTERNATIONAL, LTD.
KNOW ALL MEN BY THESE PRESENTS:
That we the undersigned, have this day voluntarily associated
ourselves together for the purpose of forming a corporation under the laws
of the State of Nevada and we do hereby certify:
I.
The name of this corporation is EVERLASTING INTERNATIONAL, LTD.
II.
The resident agent of said corporation shall be Corporate Services
Company, 516 S. Fourth Street, Las Vegas, NV 89101, and such other offices
as may be determined by the By-Laws in and outside of the State of Nevada.
III.
The objects to be transacted, business and pursuit and nature of the
business, promoted or carried on by this corporation are and shall continue
to be engaged in any lawful activity.
IV.
The members of the governing board shall be styled Directors and the
first Board of Directors shall consist of one (1). The number of
stockholders of said corporation shall consist of one (1). The number of
directors and shareholders of this corporation may, from time to time, be
increased or decreased by an amendment to the By-Laws of this Corporation
in that regard, and without the necessity of amending these Articles of
Incorporation. The name and address of the first Board of Directors and of
the incorporator signing these Articles is as follows:
John Jones4570 Campus Drive
NewportBeach,CA 92660
V.
The Corporation is to have perpetual existence.
<PAGE>
VI.
The total authorized capitalization of this Corporation shall be and
is the sum of 25,000,000 shares Common stock at $.001 par value, said stock
to carry full voting power and the said shares shall be issued fully paid
at such time as the Board of Directors may designate in exchange for cash,
property, or services, the stock of other corporations or other values,
rights, or things, and the judgment of the Board of Directors as to the
value thereof shall be conclusive.
VII.
The capital stock shall be and remain non-assessable. The private
property of the stockholders shall not be liable for the debts or
liabilities of the Corporation.
IN WITNESS WHEREOF, I have set my hand this l 8th day of January, 1995.
John Jones
STATE OF MICHIGAN )
)SS
COUNTY OF JACKSON )
On this 18th day of January, 1995, before me, a notary
public in and for said County and State, personally appeared John Jones,
known to me to be the person whose name is subscribed to the foregoing
instrument, and he duly acknowledged to me that he executed the same for
the purpose therein mentioned.
IN WITNESS WHEREOF, I have set my hand and offered by official seal in
said County and State the day and year in this Certificate first above
written.
Notary Public
RONALD L. ELUSON
Notary Public, Washtenaw County, Ml
MV Commission Expires Sept 1, 1996
Acting in Jackson County.
Exhibit 3 (VI)
AMENDED BY-LAWS
OF
EVERLASTING INTERNATIONAL, LTD.
ARTICLE I - OFFICES
The principle office of the corporation shall be located in the State
of California, City of Newport Beach, County of Orange. The corporation
may have such other offices, either within or without the state of
incorporation as the board of directors, in its sole discretion, may
designate or as the business of the corporation may from time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on the 20th of
January in each year, beginning with the year 1987 at the hour of 10:00
o'clock A.M. for the purpose of electing directors and for the transaction
of such other business as may come before the meeting. If the day fixed
for the annual meeting shall be a legal holiday such meeting shall be held
on the next succeeding business day. The Chairman of the Board, or in the
absence of a Chairman, the Director so appointed by the majority of
Directors serving on the Board of Directors, shall preside over the
meeting.
2. SPECIAL MEETINGS.
Unless otherwise prescribed by statue, special meetings of the
stockholders, for any purpose or purposes, may be called by the President
or any other Executive Officer or by any Director, and shall be called by
the President at the request of the holders of not less than ten per cent
(10%) of all of the then outstanding shares of the corporation entitled to
vote at the meeting. The Chairman of the Board, or in the absence of a
Chairman, the Director so appointed by the majority of Directors serving on
the Board of Directors, shall preside over the meeting.
3. INFORMAL ACTION BY STOCKHOLDERS.
Pursuant to Article V of the Articles of Incorporation, unless
otherwise prescribed by statue, any action required or permitted to be
taken at a meeting of the shareholders, except election of Directors, may
be taken without a meeting if a written consent thereto, setting forth the
action so taken, is signed by shareholders holding at least a majority of
the voting power, except that if a different proportion of voting power is
required for such an action at a meeting, then that proportion of written
consents is required. Said written consents shall be filed with the
minutes of the proceedings of the shareholders.
<PAGE>
4. PLACE OF MEETING.
a. Unless otherwise prescribed by statute, the directors may
designate any place, either within or without the state of incorporation,
as the place of meeting for annual meeting or for any special meeting of
stockholders called by the Directors. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be
principle office of the corporation.
b. Stockholders may not participate in a meeting of stockholders by
means of a telephone conference or similar method of communication by which
all persons participating in the meeting can hear eachother unless said
participation is authorized in the written notice sent to the stockholder
or specifically authorized by the person presiding over such meeting.
Participation in a meeting shall constitute presence at a meeting.
5. NOTICE OF MEETING.
a. Unless otherwise prescribed by statute, written notice of each
meeting of stockholders, whether annual or special, stating the time and
the place where the meeting is to be held, shall be served either
personally or by mail, not less that ten (10) or more than sixty (60) days
before the meeting, upon each stockholders of record entitled to vote at
the meeting, and to any other stockholder to whom the giving of notice may
be required by law. Notice of a special meeting shall also state the
purpose or purposes for which the meeting is called, and shall indicate
that it is being issued by, or at the direction of, the person or persons
calling the meeting. If, at any meeting, action is proposed that would, if
taken, entitle stockholders to receive payment for their shares pursuant to
statute, the notice of such meeting shall include a statement of that
purpose and to that effect. If notice mailed, it shall be directed to each
stockholder at his or her address, as it appears on the records of the
stockholders of the Corporation, unless a stockholder shall have previously
filed with the Secretary of the Corporation a written request that notices
intended for him or her to be mailed to some other address, in which case,
it shall be mailed to the address designated in such request.
b. Notice of any meeting need not be given to any person who may
become a stockholder of record after the mailing of such notice and prior
to the meeting, or to any stockholder who attends such meeting, in person
or by proxy, or submits a signed waiver of notice either before or after
such a meeting. Notice of any adjourned meeting of stockholders need not
be given unless otherwise required by statute.
c. Pursuant to NRS 78.320, in no instance where action is authorized
by written consent need a meeting of shareholders be called or notice
given. The written consent must be filed with the minutes of the
proceedings of the shareholders.
6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
a. For the purpose of determining stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or
stockholders entitled to receive payment of any dividend, or in order to
make a determination of stockholders for any other proper purpose, the
Directors of the Corporation may provide that the stock transfer books
shall be closed for a stated period but not to exceed, in any case, seven
(7) days. If the stock transfer books shall be closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least seven (7) days
immediately preceding such meeting.
<PAGE>
b. In lieu of closing the stock transfer books, the Directors may
fix in advance a date as the record date for any such determination of
stockholders entitled to notice of or to vote at a meeting of stockholders,
and such date fixed shall not in any case be more than ten (10) days and,
in the case of a meeting of stockholders, not less than seven (7) days,
prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If the stock transfer books
are not closed and no record date is fixed for the determination of
stockholders entitled to notice of or to vote at a meeting of stockholders,
or stockholders entitled to receive payment of dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
directors declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of stockholders. When a
determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such determination
shall apply to any adjournment thereof.
7. VOTING LISTS.
The officer or agent having charge of the stock transfer books for
shares of the Corporation shall make, at least 30 days before each meeting
of stockholders, a complete list of the stockholders entitled to vote at
such meeting, or any adjournment thereof, arranged in alphabetical order,
with the address of and the number of shares held by each, which list, for
a period of seven days prior to such meeting, shall be kept on file at the
principle office of the Corporation and shall be subject to inspection by
any stockholder at any time during usual business hours. Such list shall
also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any stockholder during the whole time
of the meeting. The original stock transfer book shall be prima facie
evidence as to who are the stockholders entitled to examine such list or
transfer books or to vote at the meeting of stockholders.
8. QUORUM.
a. Except as otherwise provided herein, or by statute, or in the
Articles of Incorporation (such articles and any amendments thereof being
hereafter collectively referred to as the "Articles of Incorporation"), at
all meetings of the stockholders of the Corporation, the presence at the
commencement of such meetings in person or by proxy of stockholders holding
of record fifty-one percent (51%) of the total number of shares of the
Corporation then issued and outstanding and entitled to vote, shall be
necessary and sufficient to constitute a quorum for the transaction of any
business. The withdrawal of any stockholder after commencement of the
meeting shall have no effect on the existence of a quorum, after a quorum
has been established at such meeting.
b. Provided sufficient notice has been given to all stockholders,
the vote of stockholders who hold at least a majority of the voting power
present at a meeting at which a quorum is present is the act of the
stockholders.
<PAGE>
c. Despite the absence of a quorum at any annual or special meeting
of stockholders, the stockholders present, by a majority of the votes cast
by the holders entitled to vote thereat, may adjourn the meeting. At any
such adjourned meeting at which a quorum is present, any business may be
transacted at the meeting as originally called if a quorum had been
present.
9. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy
executed in writing by the stockholder or by his duly authorized attorney
in fact. Such proxy shall be filed with the Secretary of the Corporation
before or at a time of the meeting.
10. VOTING.
a. Except as otherwise provided by statute or the Articles of
Incorporation, any corporate action, other than election of directors, to
be taken by the vote of the stockholders, shall be authorized by a majority
of votes cast at a meeting of stockholders by the holders of such shares
entitled to vote thereat.
b. Except as otherwise provided by statute or the Articles of
Incorporation, at each meeting of stockholders, each holder of record of
stock of the Corporation entitled to vote thereat, shall be entitled to one
vote for each share of stock registered in his, her or its name on the
books of the Corporation. Cumulative voting in elections of Directors and
all other matters brought before stockholders meeting, whether they be
annual or special, shall not be permitted.
c. Each stockholders entitled to vote or to express consent or
dissent without a meeting, may do so by proxy; provided, however, that the
instrument authorizing such proxy to act shall have been executed in
writing by the stockholder himself, herself or itself, or by his or her or
its attorney-in-fact thereunto duly authorized in writing. No proxy shall
be valid after the expiration of eleven (11) months from the date of its
execution, unless the person executing it shall have specified therein the
length of time it is to continue in force. Such instrument shall be
exhibited to the Secretary of the Corporation at the meeting and shall be
filed with the minutes of the meeting.
d. Any action, except election of directors, which may be taken by a
vote of stockholders at a meeting, may be taken without a meeting if
authorized by written consent of shareholders holding at least a majority
of the voting power; provided that if a greater proportion of voting power
is required by such action at such meeting, then such greater proportion of
written consents shall be required.
11. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
1. Roll Call
2. Proof of Notice of meeting or waiver of notice.
3. Reading, correcting, and approving of minutes of
the preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business
8. New Business.
<PAGE>
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business, affairs, property, and interests of the Corporation
shall be managed and controlled by its Board of Directors. The Board of
Directors may exercise all powers of the Corporation, except as are in the
Articles of Incorporation or by statute expressly conferred upon or
reserved to the shareholders. The Directors shall in all cases act as a
board, and they may adopt such rules and regulations for the conduct of
their meetings and the management of the Corporation, as they may deem
proper, not inconsistent with these By-laws or the laws of the State of
Nevada or the laws of the United States.
2. NUMBER, TENURE AND QUALIFICATIONS.
a. The directors of the Corporation shall consist of a board of not
less than three (3) nor more than twenty-five (25), unless and until
otherwise determined by vote of a majority of the entire Board of Directors
who shall perform such duties and have such authority as usually pertains
to such directors and officers of a corporation or as may be prescribed by
the Board of Directors from time to time.
b. Except as otherwise provided in the Articles of Incorporation or
these By-laws, the members of the Board of Directors of the Corporation,
who need not be stockholders, shall be elected by a majority of votes cast
at a meeting of stockholders, by the holders of shares of stock present in
person or by proxy, entitled to vote at the election.
c. Each director shall hold office until the next annual meeting of
stockholders, and until his successor shall have been elected and
qualified, or his prior death, resignation or removal.
3. ANNUAL AND REGULAR MEETINGS; NOTICE
a. A regular annual meeting of the Directors, shall be held without
notice other than this By-law immediately after, and at the same place as,
the annual meeting of stockholders.
b. The Directors may provide, by resolution, the time and place for
the holding of additional regular meetings without notice other than such
resolution.
c. Notice of any regular meeting of the Board of Directors shall not
be required to be given and, if given, need not specify the purpose of the
meeting; provided, however, that in case the Board of Directors shall fix
or change the time or place of any regular meeting, notice of such action
shall be given to each director who shall not have been present at the
meeting at which such change was made within the time limited, and in the
manner set forth in Paragraph (b) Section 4 of this Article III, with
respect to special meetings, unless such notice shall be waived in the
manner set forth in Paragraph (c) or such Section 4.
4. SPECIAL MEETINGS; NOTICE
a. Special meetings of the Directors may be called by or at the
request of the President or any two Directors, at such time and place as
may be specified in the respective notices or waivers of notice thereof.
<PAGE>
b. Except as otherwise required by statute, notice of special
meetings shall be mailed directly to each director, addressed to him or her
at his or her residence or usual place of business, at least three (3)
business days prior to the day on which the meeting is to be held, or shall
be sent to him or her at such place by telegram, radio or cable, or shall
be delivered to him or her personally or given to him or her orally, not
later than the day before the day on which the meeting is to be held. A
notice, or waiver of notice except as required by Section 8 of this Article
III, need not specify the purpose of the meeting.
c. Notice of any special meeting shall not be required to be given
to any director who shall attend such meeting without protesting prior
thereto or at its commencement, the lack of notice to him or her, or any
director who submits a signed waiver of notice, whether before or after the
meeting. Notice of any adjourned meeting shall not be required to be
given.
5. CHAIRMAN.
At all meetings of the Board of Directors, the Chairman of the Board,
if any and if present, shall preside. If there shall be no Chairman, or he
or she shall be absent, then a Chairman shall be chosen by a majority of
the directors present who shall preside at that meeting only.
6. QUORUM AND ADJOURNMENTS.
Except as otherwise provided by law, the Articles of Incorporation or
these By-laws, at any meeting of the Board of Directors, the presence of at
least a majority of the entire Board shall be necessary and sufficient to
constitute a quorum for the transaction of business; but if less than said
number is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
7. MANNER OF ACTING.
a. At all meetings of the Board of Directors, each director present
shall have one vote, irrespective of the number of shares of stock, if any,
which he or she may hold.
b. Except as otherwise provided by statute, by the Articles of
Incorporation, or these By-laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors.
c. Unless otherwise required by amendment to the Articles of
Incorporation or statute, any action required or permitted to be taken at
any meeting of the Board of Directors or any Committee thereof may be taken
without a meeting if a written consent thereto is signed by all the members
of the Board or Committee. Such written consent shall be filed with the
minutes of the Board or Committee.
d. Unless otherwise prohibited by amendments to the Articles of
Incorporation or statute, members of the Board of Directors or of any
Committee of the Board of Directors may participate in a meeting of such
Board or Committee by means of a telephone conference network or a similar
communications method by which all persons participating in the meeting can
hear each other. Such participation is constituted presence of all of the
participating persons at such meeting, and each person participating in the
meeting shall sign the minutes thereof, which may be signed in
counterparts.
<PAGE>
8. NEWLY CREATED DIRECTORSHIP AND VACANCIES.
At any regular or special meeting newly created directorships
resulting from an increase in the number of directors or vacancies
occurring in the Board for any reason, except the removal of directors
without cause, may be filled by a vote of a majority of the remaining
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be
filled by vote of the stockholders at the meeting at which the removal was
effected. A director elected to fill a vacancy caused by resignation,
death, removal, inability to act or otherwise shall be elected to hold
office for the unexpired term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed with or without cause at
any time by affirmative vote of the stockholders holding of record in the
aggregate at least a majority of the outstanding shares of stock of the
Corporation at a special meeting of the stockholders called for that
purpose, and may be removed for cause by the action of the Board of
Directors.
10. RESIGNATION.
A director may resign at any time by giving written notice to the
Board of Directors, the President or the Secretary of the Corporation.
Unless otherwise specified in the notice, the resignation shall take effect
upon receipt thereof by the Board or such officer, and the acceptance of
the resignation shall not be necessary to make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their
services, but by resolution of the Board of Directors a fixed sum and
expenses for actual attendance at each regular or special meeting of the
Board may be authorized. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor.
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the
directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
13. EXECUTIVE AND OTHER COMMITTEES.
The Board of Directors, by resolution adopted by a majority of the
entire Board, may from time to time designate from among its members an
executive committee and other committees, and alternative members thereof,
as they may deem desirable, with such powers and authority (to the extent
permitted by law) as may be provided in such resolution. Each such
committee shall serve at the pleasure of the Board.
<PAGE>
ARTICLE IV - OFFICERS
1. NUMBER; QUALIFICATION; ELECTION AND TERM OF OFFICE.
a. The officers of the Corporation shall consist of a President, a
Secretary and a Treasurer, and such other officers, including a Chairman of
the Board of Directors, and one or more Vice Presidents, as the Board of
Directors may from time to time deem advisable. Any officer other than the
Chairman or Vice Chairman of the Board of Directors may be, but is not
required to be, a director of the Corporation. Any two or more offices may
be held by the same person.
b. The officers of the Corporation shall be elected by the Board of
Directors at the regular annual meeting of the Board following the annual
meeting of the stockholders.
c. Each officer shall hold office until the annual meeting of the
Board of Directors next succeeding his election, and until his successor
shall have been elected and qualified or until his death, resignation or
removal.
3. RESIGNATION.
Any officer may resign at any time by giving written notice of such
resignation to the Board of Directors or to the President or the Secretary
of the Corporation. Unless otherwise specified in such written notice,
such resignation shall take effect upon receipt thereof by the Board of
Directors or such officer, and the acceptance of such resignation shall not
be necessary to make it effective.
4. REMOVAL.
Any officer or agent elected or appointed by the directors may be
removed, either with or without cause, and a successor elected by a
majority vote of the Board of Directors at any time.
5. VACANCIES.
A vacancy in any office because of death, resignation, inability to
act, removal, disqualification or otherwise, may at any time be filled for
the unexpired portion of the term by a majority vote of the Board of
Directors.
6. DUTIES OF OFFICERS.
Officers of the Corporation shall, unless otherwise provided by the
Board of Directors, each have powers and duties as generally pertain to
their respective offices as well as such powers and duties as may be set
forth in these By-laws, or may from time to time be specifically conferred
or imposed by the Board of Directors. The President shall be the chief
executive officer of the Corporation.
7. PRESIDENT.
Subject to the provisions of Article III, paragraph 5 of these By-
laws, the President shall be the chief executive officer of the Corporation
and, subject to the control of the directors, shall in general supervise
and control all of the business and affairs of the Corporation. He or she
shall, when present, preside at all meetings of the stockholders and of the
directors. He or she may sign, with the Secretary or any other proper
officer of the Corporation thereunto authorized by the directors,
certificates for shares of the Corporation, any deeds, mortgages, bonds,
contracts, or other instruments which the directors have authorized to be
executed, except in cases where the signing and execution thereof shall be
expressly delegated by the directors or by these By-laws to some other
officer or agent of the Corporation, or shall be required by law to be
otherwise signed or executed; and in general shall perform all duties
incident to the office of President and such other duties as may be
prescribed by the directors from time to time.
<PAGE>
8. VICE - PRESIDENT.
In the absence of the President or in event of his death, inability or
refusal to act, the Vice President shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. The Vice President shall
perform such other duties as from time to time may be assigned to him by
the President or by the directors.
9. SECRETARY.
The Secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see
that all notices are duly given in accordance with the provisions of these
By-laws or as required, be custodian of the corporate records and of the
seal of the corporation and keep a register of the post office address of
each stockholder which shall be furnished to the Secretary by such
stockholder, have general charge of the stock transfer books of the
Corporation, and in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him
by the President or by the directors.
10. TREASURER.
If required by the directors, the Treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or
sureties as the directors shall determine. He shall have charge and
custody of and be responsible for all funds and securities of the
Corporation; receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever, and deposit all such moneys in the
name of the Corporation in such banks, trust companies or other
depositories as shall be selected in accordance with these By-laws and in
general perform all of the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the
President or by the directors.
11. SALARIES.
The salaries of the officers shall be fixed from time to time by the
Board of Directors and no officer shall be prevented from receiving such
salary by reason of the fact that he is also a director of the Corporation.
12. SURETIES AND BONDS.
The Board of Directors may require any officer, employee or agent of
the Corporation to execute to the Corporation a bond in such sum, and with
such surety or sureties as the Board of Directors may direct, conditioned
upon the faithful performance of his or her duties to the Corporation,
including responsibility for negligence for the accounting of all property,
funds or securities of the Corporation which may come into his hands.
<PAGE>
13. SHARES OF STOCK OF OTHER CORPORATIONS.
Whenever the Corporation is the holder of stock of any other
corporation, any right or power of the Corporation as such stockholder
(including the attendance, acting and voting at stockholders' meetings and
the execution of waivers, consents, proxies or other instruments) may be
exercised on behalf of the Corporation by the President, any Vice President
or such other person as the Board of Directors may authorize.
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
a. No contract or other transaction between this Corporation and any
other person, corporation or entity shall be impaired, affected or
invalidated, nor shall any director be liable in any way by reason of the
fact that one or more of the directors of this Corporation is or are
interested in, or is a director or officer, or are directors or officers of
such other corporations, provided that such facts are disclosed or made
known to the Board of Directors, prior to their authorizing such
transaction.
b. Any director, personally and individually, may be a party to or
may be interested in any contract or transaction of this Corporation, and
no directors shall be liable in any way by reason of such interest,
provided that the fact of such interest be disclosed or made known to the
Board of Directors prior to their authorization of such contract or
transaction, and provided that the Board of Directors shall be authorize,
approve or ratify such contract or transaction by the vote (not counting
the vote of any such Director) of a majority of a quorum, notwithstanding
the presence of any such director at the meeting at which such action is
taken. Such director or directors may be counted in determining the
presence of a quorum at such meeting. This section shall not be construed
to impair, invalidate or in any way affect any contract or other
transaction which would otherwise be valid under the law (common, statutory
or otherwise) applicable thereto.
2. LOANS.
No loans shall be contracted on behalf of the Corporation and no
evidences of indebtedness shall be issued in its name unless authorized by
a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
3. CHECKS, DRAFTS, AND OTHER EVIDENCE OF INDEBTEDNESS.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the Corporation,
shall be signed by such officer or officers, agent or agents of the
Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
<PAGE>
4. DEPOSITS.
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as the Board of Directors may select.
ARTICLE VI - SHARES OF STOCK
1. CERTIFICATES OF STOCK.
Certificates representing shares of the Corporation's stock shall be
in such form as shall be adopted by the Board of Directors. Such
certificates shall be signed by the (1) the Chairman of the Board, the
President or a Vice President and (2) the Secretary, the Treasurer or any
Assistant Secretary or Assistant Treasurer. All certificates for shares
shall be consecutively numbered or otherwise identified and shall bear the
name and address of the holder, the number of shares, the date of issue,
and the Corporate Seal.
2. TRANSFER OF SHARES.
(a) Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate representing shares of stock of the
Corporation with an assignment or power of transfer endorsed thereon or
delivered therewith or accompanied by other proper evidence of succession
evidencing assignment or authority to transfer, it shall be the duty of the
Corporation to cancel the old certificate and issue a new certificate to
the person entitled thereto; and every such transfer shall be entered on
the transfer book of the Corporation which shall be kept at its principle
office. The Corporation may require any proof of the authenticity of the
signature and of authority to transfer and of payment of taxes as the
Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of record
of any share as the absolute owner thereof for all purposes and,
accordingly, shall not be bound to recognize any legal, equitable or other
claim to or interest in such share or shares of stock on the part of any
other person whether or not it shall have express or other notice thereof,
except as expressly provided by the laws of the State of Nevada or the
United States.
3. LOST OR DESTROYED CERTIFICATES.
The holder of any certificate representing shares of the Corporation
shall immediately notify the Corporation of any loss or destruction of the
certificate representing the same. The Corporation may issue a new
certificate in place of any certificate theretofore issued by it, alleged
to have been lost or destroyed. On production of such evidence of loss or
destruction as the Board of Directors in its discretion may require, the
Board of Directors may, in its discretion, require the owner of the lost or
destroyed certificate, or his or her legal representatives, to give the
Corporation a bond in such sum as the Board may direct, and with such
surety or sureties as may be satisfactory to the Board, to indemnify the
Corporation against any claims, loss, liability or damage it may suffer on
account of the issuance of the new certificate. A new certificate may be
issued without requiring any such evidence or bond when, in the judgment of
the Board of Directors, it is proper to do so.
<PAGE>
4. RECORD DATE.
In lieu of closing the stock ledger of the Corporation, the Board of
Directors may fix, in advance, a date not exceeding sixty (60) days, nor
less than ten (10) days, as the record date for the determination of
stockholders entitled to receive notice of, or to vote at, any meeting of
stockholders, or to consent to any proposal without a meeting, or for the
purpose of determining stockholders entitled to receive payment of any
dividends or allotment of rights, or for the purpose of any other action.
If no record date is fixed, the record date for the determination of
stockholders entitled to notice of, or to vote at, a meeting of
stockholders shall be at the close of business on the day next preceding
the day on which the notice is given, or, if no notice is given, the day
preceding the day on which the meeting is held. The record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the resolution of the directors relating
thereto is adopted. When a determination of stockholders of record
entitled to notice of, or to vote at, any meeting of stockholders has been
made, as provided for herein, such determination shall apply to any
adjournment thereof, unless directors fix a new record date for the
adjourned meeting.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall end on the 30th day of
September in each year, and may be changed by the Board of Directors from
time to time subject to applicable law.
ARTICLE VIII - DIVIDENDS
Subject to applicable law, the Board of Directors may from time to
time declare, and the Corporation may pay, dividends on its outstanding
shares in the manner and upon the terms and conditions the Board may
determine.
ARTICLE IX - SEAL
The Board of Directors shall provide a Corporate Seal which shall be
in such form as shall be approved from time to time by the Board of
Directors.
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to
be given to any stockholder or director of the Corporation under the
provisions of these By-laws or under the provisions of the Articles of
Incorporation, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
ARTICLE XI - AMENDMENTS
1. BY STOCKHOLDERS.
All By-Laws of the Corporation may be altered, amended or replaced and new
By-Laws may be adopted by a vote of the stockholders representing a
majority of all the shares issued and outstanding, at any annual
stockholders' meeting or at any special stockholders' meeting when the
proposed amendment has been set out in the notice of such meeting.
<PAGE>
2. BY DIRECTORS.
The Board of Directors shall have the power to make, adopt, alter,
amend and repeal, from time to time, By-Laws of the Corporation, provided,
however, that the stockholders entitled to vote with respect thereto as in
this Article X above-provided may alter, amend or repeal By-Laws made by
the Board of Directors, except that the Board of Directors shall have no
power to change the quorum for meetings of stockholders or of the Board of
Directors or to change any provisions of the By-Laws with respect to the
removal of directors or of the filling of vacancies in the Board resulting
from the removal by the stockholders. In any By-Law regulating an
impending election of directors is adopted, amended or repealed by the
Board of Directors, there shall be set forth in the notice of the next
meeting of stockholders for the election of directors, the By-Laws so
adopted, amended or repealed, together with a concise statement of the
changes made.
ARTICLE XII
(Amended 12/21/96)
1. LIABILITY OF DIRECTORS AND OFFICERS. As fully as possible under the
laws of the State of Nevada as they now exist and they may from time to
time be revised, the Corporation intends that its directors and officers be
protected from legal action by stockholders other persons (natural or
otherwise) on account of service as directors or officers of the
Corporation. No director or officer of the Corporation shall be personally
liable to the Corporation or any of its stockholders for damages for breach
of fiduciary duty as a director or officer involving any act or omission of
any such director or officer, or for any actions of the Corporation, to
stockholders or any other person (natural or otherwise); provided, however,
that the foregoing provision shall not eliminate or limit the liability of
a director or officer (1) for acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law, or (2) the payment of
dividends in violation of Section 78.300 of the Nevada Revised Statutes.
Any repeal or modification of this Article by the stockholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director or officer of the
Corporation for acts or omissions prior to such repeal or modification.
(article added 12-7-98)
2. INDEMNIFICATION. No officer or Director shall be personally liable
for any obligations of the corporation or for any duties or obligations
arising out of any acts or conduct of said officer of Director performed
for or on behalf of the corporation. Any person threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, except an action
by or in the right of the corporation, by reason of the fact that he, his
testator or intestate representative is or was a director, officer,
employee, or agent of the Corporation or is or was serving at the request
of the Corporation as an officer, director, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall
be indemnified by the Corporation against all reasonable expenses,
including attorney's fees, judgments, fines, and amounts paid in settlement
actually and necessarily incurred by him in connection with the defense of
such action, suit or proceeding, or in connection with any appeal therein,
except in relation to matters as to which it shall be adjudicated in such
action, suit or proceeding or in connection with any appeal therein that
such officer, director, employee or agent is liable for acts or omissions
which involve intentional misconduct, fraud or a knowing violation of law
in the performance of his duties. (article added 12-7-98)
<PAGE>
3. AMOUNT OF INDEMNIFICATION. Pursuant to the foregoing
indemnification, the amount of indemnity to which any officer, director,
employee or agent shall be entitled shall be those actual and reasonable
expenses, including attorney's fees, judgments, fines, and amounts paid in
settlement actually and necessarily incurred by him, and the Corporation
shall pay in advance or as they are incurred, any and all retainers, fees,
costs, judgments, fines, amounts paid in settlement or other expenses
incurred by any officer, director, employee or agent of the Corporation, in
defending any threatened or pending civil or criminal action, suit or
proceeding. (article added 12-7-98)
4. OTHER INDEMNIFICATION. The indemnification herein provided shall not
be deemed exclusive of any other right to indemnification to which any
person seeking indemnification may be under any by-law, agreement, vote of
stockholders or disinterested Directors, or otherwise, both as to action
taken in his official capacity and as to action taken in any other capacity
while holding such office. It is the intent hereof that all officers,
directors, employees and agents of the Corporation be and hereby are
indemnified to the fullest extent permitted by the laws of the State of
Nevada and these By-Laws. The indemnification herein provided shall
continue as to any person who has ceased to be a Director, officer or
employee, and shall inure to the benefit of the heirs, executors and
administrators of any such person. (article added 12-7-98)
5. SETTLEMENT BY CORPORATION. The right of any person to be indemnified
shall be subject always to the right of the corporation by the Board of
Directors, in lieu of such indemnification, to settle any such claim,
action, suit or proceeding at the expense of the corporation by the payment
of the amount of such settlement and the costs and expenses incurred in
connection therewith. (article added 12-7-98)
CERTIFICATE OF PRESIDENT
THIS IS TO CERTIFY that I am the duly elected, qualified and acting
President of Everlasting International, Ltd., and that the above and
foregoing By-Laws constituting a true original copy were duly adopted as
the By-Laws of said Corporation as amended December 21, 1996.
IN WITNESS WHEREOF, I have executed this Certificate at Newport Beach,
California on this 21st day of December, 1996.
___________________________
Deng Shan, President
Exhibit 3 (VII)
ARTICLES OF INCORPORATION OF KUNMING
XINMAO PETROCHEMICAL INDUSTRIAL CO.,LTD.
Article I: General Principles
1. Kunming Xinmao Petrochemical Industrial Co. Ltd. invested by
Kunming City Fuel Co. (hereinafter "Part A") and Everlasting
International LTD., a Nevada corporation (hereinafter Part B)
according to Joint Venture Law of the People's Republic of China,
adopt the articles of incorporation.
2. Name: (Chinese)
(English) Kunming Xinmao Petrochemical Industrial Co., Ltd.
Address: No.50 Mingtong Road, Kunming City, Yunnan Province
3. Name and Address of Each Part:
Part A. Kunming City Fuel Co.
No. 270 Zhuji Road, Kunming City, Yunnan Province
Part: B: Everlasting International Ltd., a Nevada corporation No.
516
4. The company is a limited company.
5.The company is registered is in China and shall comply with
Chinese laws.
Article II: Purpose & business Scope
6. Purpose: adopting advanced technique abroad to produce and
sell advanced products to earn satisfied profits.
7 Business Scope: (1) processing and selling domestic and
industrial LPG:
<PAGE>
(2) Manufacturing cylinder, stove, water heater, cigarette
lighter and their accessories;
(3) Inspecting, maintaining and consulting of gas quality,
stove and cylinder;
(4) entrusted processing of domestic crude oil and sales of its by
products.
8. Production Scale (1994):
(1) 70-100 thousand LPG users;
(2) 50 thousand stoves and 500 thousand gas cigarette lighter
(3) 100 thousand ton entrusted processing of domestic crude oil
9. All the products are sold in China except that half of the
second kind products are sold abroad.
<PAGE>
Article III: Investment & Registered Capital
10. The amount of the investment is 2.75 m. and the amount of the
registered capital is $1.925 m.
11. Contribution:
The amount of Part A is $641,600.00, which holds 33.33%, including
the RMB cash and the equipment;
The amount of Pant B is $1, 283,400.00, which holds 66.67%.
including the cash, the importing equipment, the transportation
and official facilities.
12. Each part should submit each capital in time according to the
contract.
13. After the capital verification by CPA, the capital certificate
will be issued to each part which includes the name of the Co.,
the registered date, the investor's name, the amount of the
investment, the investment date and the issued date.
14. The corporation shall not reduce the amount of the registered
capital in the operating period.
15. When one part wants to transfer its investment totally or
partly, it should be allowed by the other part which has the
purchasing priority.
<PAGE>
16. The increase or transfer of the registered capital shall be
approved by all the directors and the original examination
institution. The corporation shall register again in the original
registration institution.
Article IV: Board of Directors
17. The Board of Directors has the highest powerful authority.
18. The Board of Directors shall be authorized to transact the
following business: Examining the reports submitted by the
President (such as the producing plan, the annual operating repent
and loaning);
Examining the annual financial statement, the budget he annual
profit distribution;
Deciding the important rules;
Deciding whether to set up a branch;
Amending the rules:
Discussing and deciding whether to stop production, end or conjoin
with another corporation;
Deciding whether to hire superior employees like the President,
the general engineer, the general accountant, the auditor and so
on.
Taking in charge of the liquidation at the end of the corporation;
Deciding other important affairs
<PAGE>
19. The number of directors of the corporation shall be five,
including three directors designated by Part B and two others by
Part B. Each director shall hold office in four years and may be
re-appointed.
20. The Chairman of the Board is designated by Part B and the
Vice Chairman of the Board is designated by Part A.
21. Each part shall inform the Board of Directors when
designating and changing the member of the Board.
22. A regular meeting shall be held in half a year. Special
meetings shall be held under the requirement of at least two
members of the Board on behalf of both parts.
23. Meetings shall be held on principle office generally.
24. At all meetings of the Board, the Chairman of the Board shall
preside. If the Chairman shall be absent, then the Vice Chairman
shall preside at that meeting only.
25. Written notice of each meeting of the Board, including the
content, date and place, shall be sent to each director by the
Chairman, not less than 30 days before the meeting.
26. A director may authorize his proxy in writing to attend the
meeting if he shall be absent. If the director die not attend the
meeting in person or by proxy, it would be deemed waiver.
27. The presence of at least three-fifths of the entire Board
shall be necessary and sufficient to constitute a quorum for the
transaction of business.
28. The minutes in Chinese of each meeting is required and it
shall be signed by each director or his proxy and shaIl be fiIed
in corporation.
<PAGE>
29. The following affairs shall be approved by all the directors:
(1) Amending the articles of incorporation;
(2) Ending the joint venture;
(3) Increasing and transferring of the registered capital;
(4) Conjoining with other companies.
30. Other affairs shall be approved by at least three directors on
behalf of both parts.
Article V: Management Organization
31. The management organization includes departments of
production, technique, sales, finance and administration.
32. There are one President and two Vice Presidents designated by
the Board of
Directors. The first-session President shail be designated by Part
B and the Vice
Presidents shall be designated by both parts.
33. The President shall subject to the control of the directors.
He or she shall organize ordinary production, technique and
management. In the absence of the President, the Vice President
shall perform the duties of the President.
<PAGE>
34. The important decision shall be made under the signatures of
the President and Vice Presidents.
35. The President and Vice Presidents shall hold office in four
years and shall continue if permitted by the Board of Directors.
36. The Chairman, Vice Chairman or any director may act as the
President, Vice President or another officer on the side if
designated by the Board of Directors.
37. The President and the Vice President shall not act as the
President or the Vice President in another company on the side and
shall not help another company to compete with the corporation.
38. The officers of the Corporation shall also consist of a
general engineer, a general accountant and an auditor who are
designated by the Board of Directors.
39. The General Engineer. General Accountant and Auditor shall be
under the leadership of the President.
The General Engineer shall take charge of the production and the
technique. The General Accountant shall take charge of the
financial work.
The Auditor shall take charge of the audition of the Corporation
and shall report to the President and the Board of Directors.
40. Any officer may resign at any time by giving written notice of
such resignation to the Board of directors at least 30 days
before.
Any officer may be removed or even indicated by the Board of
Directors for serious delinquency.
<PAGE>
Article VI: Financial Accounting
41. The financial accounting is under the requirement of Joint
Venture Financial
Accounting Regulation issued by China Department of Finance.
42. The fiscal year of the corporation shall be the calendar year
from the 1st day of January to the 31st day of December.
43. All the receipts, accounts shall be written in Chinese.
44. The standard money shall be RMB. It shall be calculated into
another kind of currency under the rate of foreign exchange issued
by State Foreign Exchange Management Bureau.
45. The corporation shall open accounts in Chinese banks or other
ones.
46. The financial accounting shall be on the accrual and
accounting equation basis.
47. The accounts shall include the following contents:
(1) All the cash receipts and payment;
(2) All the goods sales and buying;
(3) The registered capital and liabilities;
(4) The date of payment, the increase and transfer of the
registered capital.
<PAGE>
48. The financial statements and the income statements shall be
reported to the Board of Directors under the signature of the
auditor in the first quarter of next year by the Financial
Department.
49. Each part of the corporation may hire the auditor under its
payments to audit the corporation's accounts and the corporation
shall provide the convenience.
50. The depreciation period shall be decided by the Board of
Directors according to Tax Law of China Foreign Investment
Corporation.
51. All the affairs regarding the foreign exchange shall be cone
under the requirement of China Foreign Exchange Rules and the
regulation in the corporation's contract.
Article VII: Distribution of Profit
52. The savings fund, the development fund and the welfare fund
shall be detached from the after-tax profit which rate shall be
decided by the Board of Directors.
53. The remaining profit shall be distributed to each part
according to the ratio of investment.
54. The profit shall be distributed once a year. The plan and the
amount of the profit distribution shall be reported in the first
quarter of the fiscal year.
55. The profit shall not be distributed before making up for the
loss in the last fiscal year. The undistributed profit in the last
fiscal year may be combined into the profit in this fiscal year.
<PAGE>
Article VIII: Employees
56. All the affairs including the enrolling, hiring, firing,
resigning, payrolls, welfare, insurance, labor protection and
discipline shall be executed according to China Joint Venture
Labor Management Regulation.
57. The employees which the corporation needs may be recommended
by the
Department of Labor or may be enrolled by the corporation after
the permit of the
Department of Labor. All the applicants shall pass the test.
58. The corporation may warn, punish or even fire those who
disobey the regulation and the discipline. The name of those who
are fired shall be filed with the Department of Labor
59. The payrolls shall be decided by the Board of Directors and
shall be regulated in the labor contract.
60. All the affairs including the welfare, bonus, labor protection
and insurance shall be regulated clearly.
Article IX: Trade Union
61. The employees are authorized by China Trade Union Law to build
a Trade Union.
62. The Trade Union, on behalf of employees, shall protect the
employees rights; shall help the corporation arrange and use the
welfare and bonus: shall organize all kinds of activities; shall
teach the employees to obey the discipline
63. The Trade Union shall sign the labor contract with the
employer on behalf of the employees.
<PAGE>
64. The charger of the Trade Union has the authority to take part
in and submit the employees' opinion at the meeting of the Board
of Directors when discussing the development and the operation.
65. The Trade Union shall mediate the quarrels between the
employees and the corporation.
66. The corporation shall pay the activity fund, which amount is
equal to 2% of the total payrolls, to the Trade Union monthly. The
Trade Union shall use the activity fund according to Trade Union
Activity Fund Management Method issued by China General Trade
Union.
Article X: Period, End and Liquidation
67. The operating period is 20 years from the date of the license.
68. The Board of Directors shall submit the extending application,
under the agreement of both pants, to the original institution six
months before the end. when permitted. the corporation shall
change the license in the original institution.
69 The corporation may be ended in advance by the Board of
Directors under he agreement of both pants and sheIl get the
permit of the original institution.
70. Any pant can end joint venture. If:
(1) At least one par: disagrees to extend:
(2) The corporation can not continue going because of the loss:
(3) The corporation can not continue going because of the
serious damage caused by war or natural disaster:
(4) One part disobeys the contract and make a ban result
<PAGE>
71. when ending, the Board of Directors shall submit -the
liquidating procedure and principle and the name list of
Liquidating Committee; shall organize the Liquidating Committee
and liquid the assets of the corporation
72. The Liquidating Committee shall investigate the assets arc
liabilities of the corporation shall make the balance sheet and
the catalogue of assets. shall make the plan of liquidation and
shall execute .it after the permit of the Board of Directors.
73. The Liquidating Committee may prosecute or be prosecuted on
behalf of the corporation during the liquidation.
74 The cost of liquidation and the reward services have the
priority to be paid from the current assets of the corporation.
75. The rest assets after liabilities may be distributed to both
parts according to the ratio of investment or other regulation.
76. The corporation shall report to the examination institution
after the liquidation and shall cancel the license in the original
institution and shall report outside.
77. All the accounts shall be kept by Part A when he corporation
closes.
<PAGE>
Article XI. Rules
3. The rules are as follows:
(1) Rule of operating Management. which includes the duties and
procedures of each department;
(2) Rule of Employees:
(3) Rule of Payrolls:
(4) Rule of Employees Attendance. promotion. Award and Punishment:
(5) Rule of welfare
(6) Rule of finance
(7)Procedures of liquidation:
(8) Other essential rules.
Article XII: supplementary
79 The amendment shall be approved by the board of Directors and
the original examination institution.
80. The Articles shall be written in Chinese.
81. The Articles and the amendment shall be in effect when
permitted by China Foreign Trade Department or by its authorized
examination institution.
82. The Articles was sign up by the authorized represents of each
part in Kunming City, Yunnan Province on February 28. 1997
Kunming City Fuel Co. Everlasting International Co., Ltd. ( a
Nevada company)
Exhibit 10 (b)
Contract
Owner (Party A): Kunming Xinmao Petroleum Industrial Co., Ltd.
Contractor: Hong Kong De Xiang Tuo Yi Industrial Company
For the purpose to take the advantage of joint venture company,
implement the Contract of Kunming Xinmao Petroleum Industrial Co.,
Ltd. and protect the economic interest of two parties, and under
the leadership of the Board of Directors of Kunming Xinmao
Petroleum Industrial Co., Ltd., the Chinese party (Kunming
Municipal Fuel Company) chooses the foreign party (Hong Kong De
Xiang Tuo Yi Industrial Company) to contract for operation. And
Party B agrees to contract. Upon the consent of the Board of
Directors of Kunming Xinmao Petroleum Industrial Co., Ltd., party
B shall be responsible for all production and operation of our
company. The agreements are as followings:
I. Term of Contract: ten years from the date of issuing business
license, i.e. from August 28, 1992 to August 28, 2002.
II. Mode of Contact: decide its own operation, assume sole
responsibility for its profits or losses and distribute upon
profit preservation.
III. Index of profit preservation: during the contract period,
Party B shall pay a profit of nine million yuan RMB to the Chinese
party by stages.
Iv. Calculation method for profit preservation:
1. The calculation time shall start from August 28, 1992, after
three years, Party B shall return 3.5 yuan RMB to the Chinese
party.
2. From August 28 of the fourth year to August 28 of the fifth
year, Party B shall pay a profit of 1.5 million yuan RMB to the
Chinese party each year.
3. From August 28 of the sixth year to August 28 of the tenth
year, Party B shall pay a profit of 500 thousand yuan RMB to the
Chinese party each year.
4. The Chinese party shall share the contract profit paid by
Party B according to the regulations of this contract, and shall
not participate the profit distribution of Party B.
V. Withdrawal and use of Depreciation Expense
After the two invested parties recouping the cost of investment,
Party B
shall withdraw a depreciation expense at a depreciation rate of
10% for fixed assets. The depreciation expense shall be used for
purchasing and renewing fixed assets of the company, and as other
expenditures for production. The items for purchase and renewal
shall be determined by Party B and submitted to board of directors
for discussion. Party B shall be responsible for the management of
such items.
<PAGE>
VI. Rights and Obligations of two parties:
(I) The rights and obligations of Party A:
1. Have the right to supervise Party B for a legal operation;
2. Have the right to check and urge both Chinese and foreign
parties in paying their investment; and
3. Coordinate the Chinese party to provide Party B with
operation places and offices by tenancy. Party B and the Chinese
party shall sign a contract of tenancy after discussion.
(II). Rights and obligations of Party B:
1. After signing the contract, have the right to operate
independently, arrange production fluids and decide all production
activities;
2. According to the company's constitution, have the right to
decide the wages, distribution of bonus, personnel system and
employment of staff members of the enterprise;
3. Have the right to determine the mode of interior economic
responsibility system and organization setting-up;
4. Have the right to loan from banks independently;
5. With the consent of board of directors, may apply to
administrative departments for industry and commerce for altering
business scope;
6. Report the conditions of enterprise to the Owner, submit
financial statements and statistic statements regularly, pay
profits to the Chinese party according to the regulations of this
contract and accept the leadership of board of directors;
7. During the contract period, the ownership of the fixed assets
purchased by Party B with the funds other than the registered
capital shall belong to Party B.
VII. Modification, dismissal and obligations for breach of
contract
1. From the date of the contact coming into effect, both parties
shall completely fulfill their rights and obligations according to
the regulations of the contract. None of the parties shall modify
or dismiss
the contract arbitrarily, and modify or dismiss the contract for
the alteration of legal representatives of the two parties.
2. Should one of the followings occur, the contract may be
dismissed or modified:
(1). The contract can not be fulfilled due to the force majeure or
natural calamity; and
(2). Party B can not make any profit from the operation due to the
adjustment of national policies and regulations and laws.
3. Should either party fail to fulfill the contract, it shall
bear the obligations for breach of contract according to the
regulations of economic laws of the People's Republic of China.
<PAGE>
VIII. Others:
I. Any unforeseen matters to this contract shall be solved by
Party A and Party B through friendly consultation.
2. The original of the contract is in quadruplicate, Party A and
Party B hold two copies respectively. Five duplicated copies shall
be submitted to the board of directors.
Party A: Kunming Ximnao Petroleum Industrial Co., Ltd.
(seal )
Tan VIau Tak
Xu Ming
August28, 1992
Li Kaixin Huang Youhua
Party B: Hong Kong De xiang Tuo Yi Industrial Company
(seal)
CONTRACT
Exhibit 10 (c)
AGREEMENT AND PLAN OF REORGANIZATION
EVERLASTING INTERNATIONAL, LTD. (hereinafter "Everlasting") a
newly organized Nevada Corporation, and the wholly owned
subsidiary of PROTON TECHNOLOGY CORPORATION LIMITED, a Bahamas
Corporation (hereinafter "Proton"); and LARGO VISTA GROUP, LTD.
(hereinafter "Largo"), a Nevada Corporation and a publicly held
corporation, hereby agree as follows:
BACKGROUND
(a) Largo wishes to acquire and Proton wishes to transfer to
Largo all of the shares of the issued and outstanding stock of
Everlasting (the "Shares") in an exchange for voting shares of
Largo, in a transaction intended to qualify as a stock-for-stock
reorganization within the meaning of Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended (the "Exchange").
(b) Everlasting is the owner of De Xiang Tuo YI Industrial
Co., a sole proprietorship company organized under the laws of
Hong Kong (hereinafter the "Hong Kong Co.").
(c) The Hong Kong Co. in turn is a partner in a joint
venture company formed on August 28, 1992, known as the Kunming
Xinmao Petrochemical Industrial Co., Ltd. (hereinafter "Xinmao").
(d) The Hong Kong Co. owns and holds a 66.67% interest in
Xinmao and has responsibility for the operation of Xinmao.
(e) The Chinese government partner, Kunming Fuel General Co.
owns and holds an interest in the assets, rights and business of
Xinmao providing for a fixed payment for 10 years and thereafter a
33.33% interest in accord with the terms of the Joint Venture
Agreement.
(f) The Boards of Directors of Largo, Proton and Everlasting
have authorized the exchange.
(g) The Board of Directors of Largo has authorized execution
of this Agreement by Largo and has recommended the approval of
this Plan of Reorganization to the Largo Shareholders.
(h) The parties desire to make warranties, representations
and agreements in connection with the acquisition as set forth
herein.
NOW THEREFORE, in consideration of the mutual covenants and
promises contained herein, IT IS AGREED:
SECTION 1.
TERMS OF THE TRANSACTION
1.1 Number of Shares. Proton, which holds 100% of the
outstanding Common Stock of Everlasting, by its execution of this
Agreement, agrees to transfer to Largo 10,000,000 shares of $.001
par value common capital voting stock of Everlasting owned by
Proton, and representing 100% of the outstanding capital stock of
Everlasting, said Shares to exchanged for 123,850,139 shares of
Largo's voting common stock.
<PAGE>
1.2 Proton to Furnish Purchaser Questionnaire. Prior the
Closing of this transaction, Proton shall have executed and
delivered to legal counsel for Largo, a Purchaser Questionnaire
which demonstrates Proton is a validly organized offshore
corporation, that Proton does not conduct business in the United
States, that this Agreement has been negotiated for an offshore
corporation, and that Proton and the transaction meet the
requirements for a Regulation S transaction, such that the
transaction is able to proceed as a transaction exempt from
registration under Section 5 of the Securities Act of 1933 and
applicable state securities laws. Such Purchaser Questionnaire
shall have been reviewed and approved by Largo, prior to
consummation of this Agreement with Everlasting.
1.3 Delivery of Certificates of Everlasting. The transfer
by Proton of the Everlasting Shares shall be effected by the
delivery to Largo at the Closing of certificates representing the
transferred Shares endorsed in blank, with all necessary transfer
taxes and other revenue stamps acquired at the Shareholder's
expense and affixed thereto.
1.4 Delivery of Certificates of Largo. Largo shall issue
in a Regulation S transaction to Proton, 123,850,139 shares of the
common stock of Largo, said shares to be restricted shares issued
under Regulation S of the Securities Act of 1933, shall bear an
appropriate Regulation S legend, and shall have appropriate stop
transfer instructions with respect to said shares lodged with
Largo's transfer agent. Said shares will be issued as soon as
practical after the close of business on the Closing Date.
1.5 Further Assurance. At the closing, and from time to
time thereafter, Proton shall execute such additional instruments
and take such other action as Largo may request in order more
effectively to sell, transfer or assign the transferred Shares to
Largo and to confirm and otherwise evidence Largo's title thereto.
SECTION 2.
CLOSING
2.1 Closing. The Closing shall be held as soon as practical
after all conditions precedent to consummation of the Exchange as
set forth herein have been satisfied.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF
EVERLASTING & PROTON
<PAGE>
Everlasting and Proton by execution of this Agreement jointly
and severally represent and warrant to Largo as follows:
3.1 As to Everlasting:
3.1.1 Organization, Standing and Power. Everlasting is
a corporation duly organized, validly existing and in good
standing under the laws of the state of Nevada. Everlasting has
all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted,
and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary,
other than where the failure so to qualify would not have a
material adverse effect on Everlasting. Everlasting has delivered
to Largo complete and correct copies of the Articles of
Incorporation and Bylaws of Everlasting, as amended to the date
hereof.
3.1.2 Capitalization. At this date, authorized common
capital voting stock of Everlasting consists of 25,000,000 shares
of $.001 par value stock, of which no more than 10,000,000 shares
will, at the date of Closing be issued and outstanding, all of
said Shares being fully paid and nonassessable. All outstanding
shares of Everlasting common stock are validly issued, fully paid
and nonassessable and are not subject to preemptive rights created
by statute, Everlasting's Articles of Incorporation or Bylaws, or
any agreement to which Everlasting or Proton is a party or is
bound.
Except as described above, Everlasting has no other
outstanding equity securities on the Closing Date.
3.1.3 Financial Statements. No financial statements of
Everlasting shall be furnished to Largo since Everlasting has not
been engaged in any operations from inception to the present.
3.1.4 Undisclosed Liabilities. Everlasting has no
liabilities of any nature except to the extent disclosed to Largo
in writing, whether accrued, absolute, contingent, or otherwise
including, without limitation, tax liabilities and interest due or
to become due.
3.1.5 Interim Changes. Between December 31, 1996, and
the Closing Date there will not have been, except as set forth in
a list certified by the President of Everlasting and delivered to
Largo, or contemplated by the terms of this Agreement: (1) any
changes in Everlasting's financial condition, assets, liabilities
or business which, in the aggregate have been materially adverse;
(2) any damages, destruction or loss of or to Everlasting's
property, whether or not covered by insurance; (3) any declaration
or payment of any dividend or other distribution in respect to any
of Everlasting's capital stock, or any direct or indirect
redemption, purchase, repurchase or other acquisition of any such
stock; or (4) any bonus, increase paid or agreed to in the
compensation, retirement benefits or other commitments of
Everlasting's employees (as such plan or commitments do not
exist).
<PAGE>
3.1.6 Title to Property. Everlasting has good and
marketable title to all its properties and assets, real and
personal, reflected in Everlasting's balance sheet as of December
31, 1996, which assets consist primarily of the ownership of 100%
of The Hong Kong Co. Its assets are subject to no mortgage,
pledge, lien or encumbrance except for liens shown therein, with
respect to which no default exists, except as set forth in a list
certified by Everlasting's President and delivered to Largo.
3.1.7 Litigation. There is no civil or criminal
litigation or proceeding pending, nor is there any government
proceeding pending, or to management's knowledge threatened
against or relating to Everlasting or its respective properties or
business, nor are there any judgments, decrees or orders enjoining
Everlasting or any subsidiary in respect of, or the effect of
which is to prohibit, any business practice or the acquisition of
any property or the conduct of business in any area, except as set
forth in the list certified by the President of Everlasting and
attached to this agreement.
3.1.8 Access to Books, Records, Etc. From the date of
this Agreement to Closing, Everlasting shall: (1) give Largo or
its representatives full access during normal business hours to
all of its offices, books, records, contracts and other corporate
documents and properties so that Largo may inspect and audit them;
and (2) furnish such information concerning Everlasting's
properties and affairs as Largo may reasonably request.
3.1.9 Corporate and Shareholder Authority. Everlasting,
and Proton, as Everlasting's sole shareholder, have full corporate
and individual power and authority respectively, to enter into
this Agreement and to carry out their respective obligations
hereunder, and Everlasting and Proton have each delivered to Largo
concurrent with their respective execution of this Agreement,
certified copies of resolutions of their respective Board of
Directors authorizing execution of this Agreement by their
respective officers and their performance hereunder.
3.1.10 No Conflict or Violation of Other Agreements. The
execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both), or give rise to a right
of termination, cancellation or acceleration of any obligation or
to loss of a material benefit under, or result in any impairment
of or adverse effect on (1) any provision of the Articles of
Incorporation or Bylaws of Everlasting or (2) any license, joint
venture agreement, patent, mortgage, indenture, lease, or other
agreement or instrument, permit, concession, franchise, judgment,
order, decree, statute, law ordinance, rule or regulation
applicable to Everlasting or its properties or assets, other than
any such conflicts, violations, defaults, termination,
cancellations or accelerations which individually or in the
aggregate would not have a material adverse effect on Everlasting.
<PAGE>
No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or
commission or other governmental authority or instrumentality is
required by or with respect to Everlasting in connection with the
execution and delivery of this Agreement or the consummation by
Everlasting of the transactions contemplated hereby or thereby.
3.1.11 Tax Returns. Everlasting has filed or is in the
process of filing all applicable federal and state income or
franchise tax returns required to be filed or has received
currently effective extensions of the required filing dates.
3.2 As to The Hong Kong Co.
3.2.1 Organization, Standing and Power. The Hong Kong
Co. is a sole proprietorship company duly organized, validly
existing and in good standing under the laws of Hong Kong. The
Hong Kong Co. has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now
being conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such
qualification necessary, other than where the failure so to
qualify would not have a material adverse effect on The Hong Kong
Co. The Hong Kong Co. has delivered to Largo complete and correct
copies of the Articles, Charter and/or licenses or other documents
of title of The Hong Kong Co., issued under Hong Kong law, as
amended to the date hereof.
3.2.2 Financial Statements. The financial statements of
The Hong Kong Co. consist solely of the financial statements of
Xinmao, and those statements shall be furnished to pursuant to
subparagraph 3.3.3.
3.2.3 Undisclosed Liabilities. The Hong Kong Co. has no
liabilities of any nature except to the extent reflected or
reserved against in the Xinmao financial statements.
3.2.4 Title to Property. The Hong Kong Co. has good and
marketable title to all its properties and assets, real and
personal, reflected in Xinmao's balance sheet as of December 31,
1996, which assets consist solely of the ownership of 66.67% of
Xinmao, and the respective properties and assets are subject to no
mortgage, pledge, lien or encumbrance except for liens shown
therein, with respect to which no default exists, except as set
forth in a list certified by Xinmao's President on behalf of The
Hong Kong Co. and delivered to Largo.
3.2.5 Litigation. There is no civil or criminal
litigation or proceeding pending, nor is there any government
proceeding pending, or to management's knowledge threatened
against or relating to The Hong Kong Co. or its respective
properties or business, nor are there any judgments, decrees or
orders enjoining The Hong Kong Co. or any subsidiary in respect
of, or the effect of which is to prohibit, any business practice
or the acquisition of any property or the conduct of business in
any area, except as set forth in the list certified by the
President of The Hong Kong Co. and attached to this Agreement.
<PAGE>
3.2.6 No Conflict or Violation of Other Agreements. The
execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both), or give rise to a right
of termination, cancellation or acceleration of any obligation or
to loss of a material benefit under, or result in any impairment
of or adverse effect on (1) any provision of the Articles or
Charter or other organizational documents of The Hong Kong Co. or
(2) any license, joint venture agreement, patent, mortgage,
indenture, lease, or other agreement or instrument, permit,
concession, franchise, judgment, order, decree, statute, law
ordinance, rule or regulation applicable to The Hong Kong Co. or
its properties or assets, other than any such conflicts,
violations, defaults, termination, cancellations or accelerations
which individually or in the aggregate would not have a material
adverse effect on The Hong Kong Co. No consent, approval, order
or authorization of, or registration, declaration or filing with
any court, administrative agency or commission or other
governmental authority or instrumentality is required by or with
respect to The Hong Kong Co. in connection with the execution and
delivery of this Agreement or the consummation by The Hong Kong
Co. of the transactions contemplated hereby or thereby.
3.2.7 Tax Returns. The Hong Kong Co. has filed or is in
the process of filing all applicable tax returns required to be
filed or has received currently effective extensions of the
required filing dates.
3.3 As to Xinmao
3.3.1 Organization, Standing and Power. Xinmao is a
joint venture duly organized, validly existing and in good
standing under the laws of the P.R. China. Xinmao has all
requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted,
and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary,
other than where the failure so to qualify would not have a
material adverse effect on Xinmao. Xinmao has delivered to Largo
complete and correct copies of its Joint Venture Agreement,
Charter, license and/or other organization documents, as amended
to the date hereof.
3.3.2 Ownership of Xinmao. The Hong Kong Co. owns
66.67% of Xinmao and a Chinese Government owned corporation owns
33.33% of Xinmao. Except as described above, there are and will
be no other outstanding equity ownership interests in Xinmao on
the Closing Date.
3.3.3 Financial Statements. The financial statements of
Xinmao furnished to Largo consisting of consolidated balance
sheets as of September 30, 1995, and December 31, 1996, and
related consolidated statements of operations, for the period
covered by the September 30, 1995 statement, are correct and
fairly and accurately present the financial condition of Xinmao as
of said date and for the period indicated, and such statements
were prepared in accordance with generally accepted accounting
standards consistently applied.
<PAGE>
3.3.4 Undisclosed Liabilities. Xinmao has no
liabilities of any nature except to the extent reflected or
reserved against in Xinmao's December 31, 1996, consolidated
financial statements, whether accrued, absolute, contingent, or
otherwise including, without limitation, tax liabilities and
interest due or to become due.
3.3.5 Interim Changes. Between December 31, 1996, and
the Closing Date there will not have been, except as set forth in
a list certified by the President of The Hong Kong Co. and
delivered to Largo, or contemplated by the terms of this
Agreement: (1) any changes in Xinmao's financial condition,
assets, liabilities or business which, in the aggregate have been
materially adverse; (2) any damages, destruction or loss of or to
Xinmao's property, whether or not covered by insurance; (3) any
declaration or payment of any dividend or other distribution in
respect to any of Xinmao's capital stock, or any direct or
indirect redemption, purchase, repurchase or other acquisition of
any such stock; or (4) any bonus, increase paid or agreed to in
the compensation, retirement benefits or other commitments of
Everlasting's employees (as such plan or commitments do not
exist).
3.3.6 Title to Property. Xinmao has good and marketable
title to all its properties and assets, real and personal,
reflected in Xinmao's balance sheet as of December 31, 1996, and
the respective properties and assets are subject to no mortgage,
pledge, lien or encumbrance except for liens shown therein, with
respect to which no default exists, except as set forth in a list
certified by Xinmao's President and delivered to Largo.
3.3.7 Litigation. There is no civil or criminal
litigation or proceeding pending, nor is there any government
proceeding pending, or to management's knowledge threatened
against or relating to Xinmao or its respective properties or
business, nor are there any judgments, decrees or orders enjoining
Xinmao or any subsidiary in respect of, or the effect of which is
to prohibit, any business practice or the acquisition of any
property or the conduct of business in any area, except as set
forth in the list certified by the President of Xinmao and
attached to this agreement.
3.3.8 Access to Books, Records, Etc. From the date of
this Agreement to Closing, Xinmao shall: (1) give Largo or its
representatives full access during normal business hours to all of
its offices, books, records, contracts and other corporate
documents and properties so that Largo may inspect and audit them;
and (2) furnish such information concerning Xinmao's properties
and affairs as Largo may reasonably request.
3.3.9 No Conflict or Violation of Other Agreements. The
execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both), or give rise to a right
of termination, cancellation or acceleration of any obligation or
to loss of a material benefit under, or result in any impairment
of or adverse effect on (1) any provision of the Articles. Joint
Venture Agreement, or Charter or other organizing documents of
Xinmao; or (2) any license, joint venture agreement, patent,
mortgage, indenture, lease, or other agreement or instrument,
permit, concession, franchise, judgment, order, decree, statute,
law ordinance, rule or regulation applicable to Xinmao or its
<PAGE>
properties or assets, other than any such conflicts, violations,
defaults, termination, cancellations or accelerations which
individually or in the aggregate would not have a material adverse
effect on Xinmao. No consent, approval, order or authorization
of, or registration, declaration or filing with any court,
administrative agency or commission or other governmental
authority or instrumentality is required by or with respect to
Xinmao in connection with the execution and delivery of this
Agreement or the consummation by Everlasting and Xinmao of the
transactions contemplated hereby or thereby.
3.3.10 Tax Returns. Xinmao has filed or is in the process
of filing all applicable tax returns required to be filed or has
received currently effective extensions of the required filing
dates.
3.4 As to Proton
3.4.1 Proton Title to Shares. Proton represents hereby
that it is the owner and holds full right, title, and interest in
and to the Shares of Everlasting hereby offered for Exchange, free
and clear of adverse claims or encumbrances of any third parties,
and further that in the aggregate said shares represent 100% of
all the outstanding capital stock of Everlasting.
3.4.2 Restricted Largo Shares. Proton represents and
warrants that it will receive and hold the Largo shares for
investment in accordance with Regulation S, and not with a view to
the distribution thereof back into the United States. Proton
understands that Largo shares to be received by it will bear a
legend acknowledging that such shares are "restricted securities"
as contemplated under Regulation S promulgated by the Securities
and Exchange Commission.
(1) Proton understands and agrees that Largo shares may be
publicly offered or sold by it only pursuant to: (a) an exemption
from registration under the federal securities laws, as determined
by counsel to Largo; or (b) under a Registration Statement which
has been declared effective by the Securities and Exchange
Commission.
(2) There can be no assurance that when Proton wishes to
sell its Largo shares, that Largo will satisfy the requirements
for such a sale under applicable U.S. securities laws.
(3) Proton further agrees that the transfer agent for the
common stock of Largo will be instructed to place a "stop
transfer" order against all the Largo shares to be issued to
Proton prohibiting the transfer of the Largo shares on the books
and records of Proton until the conditions set forth in (1) above
have been met.
<PAGE>
3.4.3 Suitability Questionnaire. Proton shall execute
a Purchaser Suitability Questionnaire which demonstrates that
Proton qualifies as an offshore investor under Regulation S.
3.4.4 Prior to the Closing Date, Proton shall warrant and
represent that it has received all financial information and
documentation and books and records of Largo that Proton has
requested, and that Proton has had the opportunity, whether
exercised or not, to query and discuss Largo with Largo's
management, auditors, and accountants, and that Proton is
satisfied with respect thereto and is fully apprised of the risks
of an investment in Largo.
SECTION 4.
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF LARGO
Largo represents and warrants to, and covenants with
Everlasting and Proton as follows:
4.1 Organization, Standing and Power. Largo is a
corporation duly organized, validly existing and in good standing
under the laws of the state of Nevada. Largo has all requisite
power and authority to own, lease and operate its properties and
to carry on its business as now being conducted, and is duly
qualified and in good standing to do business in each jurisdiction
in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, other than
where the failure so to qualify would not have a material adverse
effect on Largo.
4.2 Capitalization. At this date, authorized common
capital voting stock of Largo consists of 100,000,000 shares of
$.002 par value stock, of which no more than 53,078,631 shares
will, at the date of Closing be issued and outstanding, all of
said Shares being fully paid and nonassessable. All outstanding
shares of Largo common stock are validly issued, fully paid and
nonassessable and are not subject to preemptive rights created by
statute, Largo's Articles of Incorporation or Bylaws, or any
agreement to which Largo is a party or is bound.
Except as described above, Largo has no other outstanding
equity securities on the Closing Date.
4.3 Financial Statements. The audited financial
statements of Largo furnished to Proton and Everlasting and
consisting of consolidated financial statements, including
consolidated schedules, at September 30, 1996, and for the years
then ended are correct and fairly and accurately present the
financial condition of Largo as of said date, and for the period
indicated, and such statements were prepared in accordance with
generally accepted accounting principles consistently applied.
<PAGE>
4.4 Undisclosed Liabilities. Largo has no liabilities of any
nature except to the extent reflected or reserved against in
Largo's September 30, 1996 consolidated financial statements,
whether accrued, absolute, contingent, or otherwise including,
without limitation, tax liabilities and interest due or to become
due.
4.5 Interim Changes. Between September 30, 1996, and the
Closing Date there will not have been, except as set forth in a
list certified by the President of Largo and delivered to
Everlasting and Proton, or contemplated by the terms of this
Agreement: (1) any changes in Largo's financial condition, assets,
liabilities or business which, in the aggregate have been
materially adverse; (2) any damages, destruction or loss of or to
Largo's property, whether or not covered by insurance; (3) any
declaration or payment of any dividend or other distribution in
respect to any of Largo's capital stock, or any direct or indirect
redemption, purchase, repurchase or other acquisition of any such
stock; or (4) any bonus, increase paid or agreed to in the
compensation, retirement benefits or other commitments of Largo's
employees (as such plan or commitments do not exist).
4.6 Title to Property. Largo has good and marketable title
to all its properties and assets, real and personal, reflected in
Largo's balance sheet as of September 30, 1996. Its assets are
subject to no mortgage, pledge, lien or encumbrance except for
liens shown therein, with respect to which no default exists,
except as set forth in a list certified by Largo's President and
delivered to Everlasting and Proton.
4.7 Litigation. There is no civil or criminal litigation
or proceeding pending, nor is there any government proceeding
pending, or to management's knowledge threatened against or
relating to Largo or its respective properties or business, nor
are there any judgments, decrees or orders enjoining Largo or any
subsidiary in respect of, or the effect of which is to prohibit,
any business practice or the acquisition of any property or the
conduct of business in any area, except as set forth in the list
certified by the President of Largo and attached to this
agreement.
4.8 Access to Books, Records, Etc. From the date of this
Agreement to Closing, Largo shall: (1) give Everlasting and Proton
or its representatives full access during normal business hours to
all of its offices, books, records, contracts and other corporate
documents and properties so that Everlasting and Proton may
inspect and audit them; and (2) furnish such information
concerning Largo's properties and affairs as Everlasting or Proton
may reasonably request.
4.9 Corporate Authority. Largo has full corporate power
and authority to enter into this Agreement and to carry out its
obligations hereunder, and has delivered to Everlasting and Proton
concurrent with its execution of this Agreement, certified copies
of resolutions of its Board of Directors authorizing execution of
this Agreement by Largo's officers and their performance
hereunder.
4.10 No Conflict or Violation of Other Agreements. The
execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both), or give rise to a right
of termination, cancellation or acceleration of any obligation or
<PAGE>
to loss of a material benefit under, or result in any impairment
of or adverse effect on (1) any provision of the Articles of
Incorporation or Bylaws of Largo or (2) any license, joint venture
agreement, patent, mortgage, indenture, lease, or other agreement
or instrument, permit, concession, franchise, judgment, order,
decree, statute, law ordinance, rule or regulation applicable to
Largo or its properties or assets, other than any such conflicts,
violations, defaults, termination, cancellations or accelerations
which individually or in the aggregate would not have a material
adverse effect on Largo. No consent, approval, order or
authorization of, or registration, declaration or filing with any
court, administrative agency or commission or other governmental
authority or instrumentality is required by or with respect to
Largo in connection with the execution and delivery of this
Agreement or the consummation by Largo of the transactions
contemplated hereby or thereby.
4.11 Tax Returns. Largo has filed or is in the process of
filing all applicable federal and state income or franchise tax
returns required to be filed or has received currently effective
extensions of the required filing dates.
SECTION 5.
CONDUCT PENDING THE CLOSING
5.1 Certificate of Incorporation and Bylaws. No change
will be made in either Everlasting's Articles of Incorporation or
Bylaws. No change will be made in Largo's Bylaws. Largo's
Articles of Incorporation will be amended to increase authorized
common stock to 200,000,000 shares of common stock and to provide
for cumulative voting rights for all common shares.
5.2 Capitalization, Etc. Except as contemplated by the
term of this Agreement, neither Everlasting nor Largo will make
any change in their respective authorized or issued common stock,
declare any dividends or other distribution, or issue, encumber,
purchase, or otherwise acquire any of their common stock, or grant
any options, warrants or conversion rights to any of their shares,
without the written consent of the parties hereto from the date
hereof until Closing.
5.3 Conduct of Business. Everlasting will use its best
efforts to cause Xinmao to maintain and preserve their respective
business organizations, employee relationships and goodwills
intact, and will not, without the written consent of Largo, enter
into any material commitments except which are necessary in the
ordinary course and operation of their respective businesses and
proposed business developments.
<PAGE>
SECTION 6.
CONDITIONS PRECEDENT TO OBLIGATIONS
OF LARGO AND PROTON
All obligations of Largo and of Proton under this Agreement
are subject to the fulfillment, before or at the Closing, of each
of the following conditions:
6.1 Required Consent of Largo's Common Shareholders.
Shareholders of Largo owning more than 50% of its outstanding
common stock shall approve the terms of this Plan and Agreement of
Reorganization and shall have authorized Largo to consummate this
Agreement.
6.2 Representations and Warranties True at Closing. The
representations and warranties of Largo, Proton and Ever contained
in this Agreement shall be deemed to have been made at and as of
the closing and shall then and there be true and accurate in the
exact same material respects.
6.3 Prior to the consummation of this Plan of
Reorganization, Largo shall have amended its Articles of
Incorporation to increase its authorized common stock from
100,000,000 to 200,000,000, and to provide cumulative voting
rights to its common stock.
SECTION 7.
CONDITIONS SUBSEQUENT TO OBLIGATIONS
OF LARGO AND PROTON
7.1 If during the 12 months subsequent to the closing of the
reorganization, any liabilities of Largo are discovered or
materialize which were not disclosed to Proton, whether as a
result of litigation or otherwise, the Proton Shareholder shall be
entitled to be issued additional shares of the voting common stock
of Largo having a value equal to 70% of such undisclosed or
unanticipated liabilities.
7.2 If during the twelve (12) months subsequent to the closing of
the reorganization, any liabilities of Everlasting, or its
subsidiaries, are discovered or materialize which were not
disclosed to Largo, whether as a result of litigation or
otherwise, Proton shall return that number of shares of common
voting stock of Largo received by Proton in this reorganization,
having a value equal to 30% of such undisclosed or unanticipated
liabilities, and such shares shall be treated as treasury shares.
7.3 For this purpose, such shares of largo shall be valued at the
average of the daily trading value of Largo's common stock in
public securities markets over the four (4) week period
immediately preceding the end of said twelve (12) month period.
<PAGE>
SECTION 8.
GENERAL PROVISIONS
8.1 Further Assurances. At the time and from time to time
after the Closing, each party will execute such additional
instruments and take such action as may be reasonably requested by
any other party to confirm or perfect title to any property
transferred hereunder or otherwise to carry out the intent and
purposes of this Agreement.
8.2 Waiver. Any failure on the part of any party to comply
with any of its obligations, agreements or conditions hereunder
may be waived in writing by the party to whom such compliance is
owed.
8.3 Brokers/Finders. Each party represents to the other
parties hereto that no one has acted for such party as a broker or
finder in connection with this Agreement and each party agrees to
indemnify and hold harmless the other parties hereto against any
fee, loss or expense arising out of claims by any alleged brokers
or finders employed or alleged to have been employed by any such
party.
8.4 Notices. All notices and other communications
hereunder shall be deemed to have been given if delivered in
person, sent prepaid, first class registered or certified mail,
return receipt requested, as follows:
If to Largo:
4570 Campus Drive
Newport Beach, California 92660
If to Everlasting:
Deng Shan
c/o Kunming Xinmao Petrochemical Industrial Co., Ltd.
50# Mingtong Road
Kunming, P.R. China
If to Proton:
4570 Campus Drive, Suite 36
Newport Beach, California 92660
With copies to: Davis & Associates
300 S. Grand Avenue, Suite 1400
Los Angeles, California 90071
8.5 Entire Agreement. This Agreement constitutes the
entire agreement between the parties and supersedes and cancels
any other agreement, representation or communication of any type
or sort, whether oral or written, between the parties hereto
relating to the transaction contemplated herein or the subject
matter or purposes contained herein.
8.6 Amendment and Modification. This Reorganization
Agreement may, subject to applicable law, be amended or
supplemented at any time prior to Closing by a written agreement
of Ever and Largo.
<PAGE>
8.7 Headings. The section and subsection headings in this
Agreement are inserted for convenience only and shall not effect
in any way the meaning or interpretation of this Agreement.
8.8 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
California.
8.9 Assignment. This Agreement shall inure to the benefit
of, and be binding upon, the parties hereto and their successors
and assigns; provided, however, that any assignment by any party
of its rights under this Agreement without the written consent of
the other parties shall be void.
8.10 Counterparts. This Agreement may be executed
simultaneously in several counterparts, each of which shall be
deemed an original and all of which together shall constitute one
and the same instrument. The signature pages of this Agreement
may be executed separately by each Shareholder.
8.11 Shareholder Signature Pages. The signature pages
provided for the Shareholders shall be circulated detached from
the body of this Agreement, shall be separately executed by each
Shareholder, and the signature pages as so executed shall be
attached to counterpart copies of this Agreement.
8.12 Expenses. The parties hereto agree to bear their own
expenses and fees in connection with the transactions contemplated
hereby.
8.13 This Agreement, excluding Section 3.1 and Section 7, is
intended to have a binding effect only through the date of Closing
and shall thereafter serve solely as a historical document.
WHEREOF, the parties have executed this Agreement and Plan of
Reorganization on this ______ day of _____________________, 1996
ATTEST LARGO VISTA GROUP, LTD.
________________________ By __________________________
Dated: _______________________
ATTEST: EVERLASTING INTERNATIONAL, LTD.
________________________ By __________________________
Dated: _______________________
ATTEST PROTON TECHNOLOGY CORPORATION
LIMITED
<PAGE>
________________________ By __________________________
Dated: _______________________
Exhibit 10 (d)
Joint Venture Agreement of Kunming Xinmaou Petrochemical Company Limited
Chapter I. General Previsions
Article 1.1 In accordance with the 'law of the People's Republic
of China on Joint Venture Using Chinese and Foreign Investment"
and the other relevant laws and regulations, the parties to this
contract have fully negotiated on the issues in tern of
establishing the joint venture "Kunming Xinmao Petrochemical
Industry Company Limited", adhering to the principle of equality
and mutual benefit. The contract hereunder worked out
Chapter H. parties to the Joint Venture
Article 2.1 Parties of this contract are as follows:
Party k Kunming Fuel Company
Place of registration: Kumning, Yunnan. PR China
Address: 270 Zhuji Street, Kunming
Telephone: 3134385
Legal representative: Li Kaixin
Post: Manager
Nationality: Chinese
Party B: Hong Kong Dexiang Tuoyi Industrial Company
Place of registration: Hong Kong
Address: 3/fs, Dingan Mansion, SOW, Tuguawandao, Kowloon, Hong
Kong
Tel.: (00852) 7736096
Legal representative: Tan Mau Tak
Post: Chairman of the board
Nationality: Taiwan patriot
Chapter III. Joint Venture Company
Article 3.1 The two parties have agreed to establish a joint
venture bearing the name of " Kunming Xinmao Petrochemical
Industry Co., LTD", in Chinese characters
", hereinafter referred to as the joint venture company.
The statuary address of the joint venture Company is on the 3rd
floor of Huahui Hotel. Xiaocaiyuan, Kunming, Yunnan, PR China. The
joint venture company shall establish its sub-offices and
subsidiary organizations in the China mainland, Hong Kong or
Other countries and regions, in line with the requirements of the
company, with the decision of the board of the directors and the
approval of the competent authorities.
Article 3.2 All activities of the joint venture Company shall be
governed by the laws, decrees and pertinent rules and regulations
of the People's Republic of China.
<PAGE>
Article 3.3 The Joint Venture Company is established by the two
parties according to
The relevant laws of the People's Republic of China, and it
registered as a liability limited company in China. Each party to
the joint venture Company shall make contribution. Share the
profit and enjoy dividends and assume the risks and losses
accordingly according to the proportion in the registered capital.
Article 3.4 The Commercial Bureau of Kunming municipality is the
competent authority of the joint venture.
Chapter W Business Purpose and Scope of the Joint Venture Company
Article 4.1 The business purpose of the joint venture company is
to adopt the state-of-the art and applicable technology and
scientific management, to yield the top class products with world
standard.
Business scope of the joint venture company: Produce, process and
market civilian-use and industrial gases: steel bottles, burners,
heaters, gas lighter and the necessaries:
Conduct gas quality analysis and inspection and test on steel
bottle and burners, maintenance and consulting; authorized
processing of the domestic crude oil and market its by-products.
finished oil, ceresin wax, asphalt, heavy oil and the other
product series.
Business scale of the joint venture company: 1. Open 70.000 to
100,000 household for using liquefied oil gas, 2. Produce 50.000
sets of burners and 500.000 gas lighters annually; 3. Process
100,000 tons of crude oil on the domestic market with
authorization. About 50% of the second category product of the
joint venture shall be exported overseas and the rest 50% shall be
sold on the domestic market. The joint venture shall balance all
its foreign currency revenue and expenditure.
Chapter V. Total Investment and Registered Capital,
Proportion and Mode of Contribution
<PAGE>
Article 5.1 The total investment contributed by the parties is US
2.75 million dollars, of which the registered capital is US 1.925
dollars, the insufficient par': shall be solved the joint venture
company through borrowing a bank loan. The contribution and
proportion of the two parries are as follows: Party A shall
contribute US 641,600 dollars (say six hundred forty-one thousand
and six hundred only), accounting for 33.33% of the total, in both
cash and complete facilities. Party B shall contribute US
1,283,400 dollars (say one million two hundred eighty-three
thousand and four hundred only), accounting for 66.67% of the
total registered capital, in cash, imported production plant,
transport means, office facilities.
The total investment shall be completed in two (2) years. The CNY
Renminbi and the foreign currency shall be convened according to
the foreign currency exchange rate announced by the State
Administration for Foreign Currency on that day.
Article 5.2 Each party shall make the agreed contribution to the
joint venture in line with the rules of the company. The
contributed cash and materials must be the actual properties of
the contributor without any secured property right.
Article 5.3 Any party of the joint venture shall not have the
right to procure any loan and lease equipment or any other
properties or the other properties other than the joint partner's
by using name of the joint venture, for the purpose of making
contribution to the joint venture. Any party shall also not have
the right to use the property or liability of the joint venture,
or the property of the other party as the guarantee of
contribution.
Article 5.4 The contribution of each party to the joint venture
shall be completed during the first three months of the first
investment period upon the signing of this contract and from the
date on which the business license of the joint venture is issued
by the competent administrative bureau for commerce and industry,
which shall not be less than 70% of the total contribution,
including 2.45 million CNY (about 445,900 US dollars) from Party A
and 4.9 million Yuan (about 891,100 US dollars) from Party
B. The remaining contributions of the two parties shall be
completed within 12 months after receiving the business license.
<PAGE>
The Joint Venture Company shall establish its own bank account.
Should any party fall to complete the contribution exceeding the
said date, it should be asked to pay a breach penalty at the
amount of 5% on the total contribution monthly and bear all the
economic losses incurred thereafter.
Article 5.5 The contributions of the two parties shall only be
recognized with the verification of a China CPA attached with a
capital verification certificate. The Joint Venture Company shall
produce a contribution certificate upon accepting the capital
verification certificate.
Article 5.6 During the process of operation, if the joint venture
intends to increase the capital due to short of funds, the two
parties shall negotiate for the increasing number and shall only
add the increasing number into the capital upon the approval of
the original authority and shall only increase according to the
proportions of the two parties in the joint venture company.
Article 5.7 During the course of operation, the joint venture
company shall not have the right to reduce the registered capital.
Article 5.8 when one party to the joint venture Company assigns
all or part of his investment, the other party shall enjoy the
priority.
Article 5.9 when one party to the joint venture Company intends to
transfer the condition of contribution to a third parry with a
more preferential condition than the other partner. The transfer
shall be deemed vain.
Chapter VI. Responsibilities of each Party to the Joint Venture
Company
Article 6.1 the responsibilities of the two parties are as
follows:
Party A shall be responsible for the following matters: complete
the formalities concerning the establishment of the joint venture
company in China; assist the joint venture in selecting the work
Site, settling the construction conditions of the joint venture
company; participating in the equipment selection, goods order
conference, accept the equipment decided and handle the issues
concerning the customs; assist Party B in recruiting personnel and
<PAGE>
training; assist Party B in acquiring visa and provide living
convenience for the residing staff, coordinate in domestic and
overseas marketing; and handle the other issues stipulated in the
contract and entrusted by the joint venture company.
Party B shall be responsible for the following matters: handle the
related issues entrusted by the joint venture company about
procurement of equipment and raw materials on the international
market; responsible for 50% export mission for the relevant
products of the joint venture company and providing necessary
market information; responsible for equipment installation, test
and technical training; dispatch necessary managerial staff, care
of the production and technical process and handle other matters
entrusted by the joint venture company.
Chapter VII. Board of Directors
Article 7.1 The highest authority of the joint venture company
shall be its board of directors. It shall decide all the major
issues. The date of registration of the joint venture company
shall be the date of the establishment of the board of the
directors of the joint venture Company.
Article 7.2 the board of directors is composed of five (5) people.
Two from Party A and three from Party B. The chairman of the board
shall be appointed by Party b and Party A shall appoint a vice
chairman of the board. The other directors who do not hold any
actual post in the joint venture Company shall not receive any
payment form the company. The office term of the chairman and the
vice chairman of the board shall be four (4) years and the term of
office can be renewed if continuously appointed by the concerned
party. When one party intends to replace a director, a written
notice is required.
Article 7.3 The chairman of the board is the legal representative
of the joint venture. Should the chairman fail to perform his
duty, he/she shall authorize the vice-chairman or the other
director in the joint venture Company to instead.
Article 7.4 the Joint Venture Company shall use the relevant laws,
decrees and regulations of the People's Republic of China in
conducting all its routine affairs. Including financial report.
Labor management. Profit distribution. Audit personnel arrangement
welfare treatment, and other major issues.
<PAGE>
Article 7.5 the joint venture company shall always decide its
major issues with the presentation of the two parties. As for
general matters, it requires at least half directors at present
for decision (including the directors of the two parties).
Article 7.6 the following matters shall only be passed unanimously
through the board of directors;
1. Revision of the contract and constitution of the joint
venture company;
2. Termination and dismissal of the joint venture company;
3. Increase and transfer of the registered capital; and
4. Merging of the joint venture company with other economic
organizations.
Article 7.7 the board meeting shall be presided over by the
chairman of the bean at least once every half year. Should the
chairman enable to convene the meeting, he/she shall appoint the
vice-chairman of the beard of other directors to preside the
meeting instead. Chairman of the board shall hold an interim
meeting with the propose of more than two directors from both
parties. The board minutes shall be well kept by the joint venture
Company.
Chapter VIII. Business Management Office
Article 8.1 the joint venture company shall adopt the general
manager responsible system under the leadership of the chairman of
the board. It shall also have other departments set up to be in
charge of daily work. It shall have one general manager, one
deputy general manager. The board of directors shall appoint the
general manager and the deputy general manager.
Article 8.2 The responsibility of the general manager are to
implement the decisions of the board of directors.
Article 8.3 in line with the requirements of the joint venture
company the chairman shall have the right to adjust the
constitution of the joint venture.
Article 8.4 the general manager and deputy general manager shall
not hold any high posts, such as general manager and deputy
general manager in other economic entities. The board of directors
shall have the right to end up the appointment when they are found
of any illegal behaviors.
<PAGE>
Chapter IX. Labor Management and Trade Union
Article 9.1 Wages. bonus, welfare treatment of the joint venture
Company shall be carried out according the standard of the same
trade in the same area. Issues concerning recruitment,
resignation, labor protection. Labor insurance. Labor discipline
shall be handled according to the relevant laws and regulation of
the People's Republic of China or the relevant rules of the local
labor administration. The high rank staff appointed the two
parties and the wage standard. As well as social insurance,
welfare, traffic expense shall be decided by the board of
directors.
Article 9.2 the staff members of the joint venture company shall
have the right to establish the trade union according to the
stipulations of the "Law of People's Republic of China on trade
Union" and the "Charter of the China trade Union." The trade union
shall organize necessary activities for the staff members.
Chapter X. Procurement of Equipment and
Materials and Commodity Inspection
Article 10.1 in purchasing the required production plant,
transport vehicles and other necessary raw materials, fuel and
office facilities. The Joint Venture Company shall give priority
to purchasing in China where conditions are the same.
Article 10.2 when the joint venture company entrusts Party' B to
purchase equipment from the overseas market, the principle of
selecting the best shall be taken into consideration and the price
shall be determined by the board of directors.
Article 10.3 the equipment and raw materials procured by the joint
venture or the invested equipment of Parry B shall submitted to
the China Commodity Inspection for inspection in line with the
regulations of the "Regulations of the People's Republic of China
on Commodity Inspection".
Chapter XI. Taxation, Finance and Profit Distribution
Article 11.1 the joint venture company shall pay taxes in
accordance with the stipulations of the Chinese laws and other
relevant regulations.
Article 11.2 Staff members and workers of the joint venture
Company shall pay individual income tax according to the
"Individual Income Tax Law of the People's Republic of China".
Foreign staff members can transfer the money abroad after paying
the tax.
Article 11.3 Allocation for reserve funds, expansion funds of the
joint venture company and welfare funds and bonuses for staff and
<PAGE>
workers shall be set aside in accordance with the stipulations in
the Law of the People's Republic of China on Joint Venture Using
Chinese and Foreign Investment". The annual proportion of all
allocations shall be decided by the board of directors according
to the business situation of the joint venture Company.
Article 11.4 the fiscal year of the joint venture company shall
start from January 1.to December 31. All the vouchers, receipts.
Statistic statements and reports account books shall be written in
Chinese.
Article 11.5 the accounting affairs and financial system of the
joint venture shall follow the rules of the relevant Chinese
financial regulations. And submit to the local competent authority
for filing.
Article 11.6 All the expenditure certificates of the joint venture
company shall only be valid with the signature of the general
manager or the signature of the authorized person. The vouchers
for both receiving and paying of the joint venture Company shall
use the set invoice issued by the taxation department. The
invoices acquired from overseas or Hong Kong Macao regions shall
only be deemed valid with entry manifest and the customs tariff of
the Chinese customs.
Article 11.7 financial checking and examination of the joint
venture Company shall be conducted by an auditor registered in
China and reports shall be submitted to the board of directors and
the general manager.
If Party B considered it necessary to employ a foreign auditor
registered in other country to undertake annual financial checking
and examination. Party A shall give consent. All the expenses
thereof shall be borne by Party B.
Article 11.8 the joint venture company is an independent entity
with an independent accounting system, assuming its own loss and
gain.
Article 11.9 the joint venture company shall distribute its annual
profit and share of deficits after paying taxes, deducting reserve
funds. Expansion fluids, welfare fluids and bonuses for staff and
workers. The profit and dividends. As well as the deficits and
losses shall be distributed and shared according to the proportion
of each parry in the registered capital.
<PAGE>
Article 11.10 All the issues concerning foreign exchange currency
of the joint venture Company shall be handled according to the
Interim Regulations of the People's Republic of China on Foreign
Exchange Administration and other related rules concerned.
Article 11.11 The profit that Parry B is acquired from the joint
venture company shall be wired to the specified account of Party B
through bank by the joint venture company.
Chapter XII. Duration, Dismissal and
Liquidation of the Joint Venture Company
Article 12.1 the duration of the joint venture company is 20
years. The establishment
Of the joint venture Company shall start from the date on which
the business license of the joint venture Company is issued.
During the operation period. Any party to the joint venture
Company shall not enter into any contract with any domestic unit
or organization that shall harm the interest of the joint venture
Company.
Article 12.2 upon the expiration of the joint venture Company, the
duration of the company shall be either extended or terminated
according to the decisions of the two parties. If a decision of
dismissal is made, the joint venture Company shall organize a
liquidation group to handle the remaining properties of the joint
venture Company. The residual assets of the joint venture Company
shall be distributed to each party according to the proportion of
the investment in the registered capital.
Article 12.3 the Joint Venture Company shall dismiss upon any of
the following cases:
12.3.1 Upon the expiration, one party disagrees the extension
of the contract:
12.3.2 The Joint Venture Company encounters with serious
deficits and falls to continue operation;
12.3.3 The joint venture enables to operate due to serious
losses resulted from natural disaster, wars and force majeure; and
12.3.4 The Joint Venture Company suffers great losses due to
one party to the joint venture Company breaching of the contract.
The board of directors shall propose an application for dismissal
in cases of 1, 2, and 3 mentioned above and the application shall
<PAGE>
come into force with the approval of the competent authority. When
the joint venture is dismissing, the regulation in 12.2. And the
other relevant laws and rules of the People's Republic of China
shall be adopted. This contract shall be terminated upon the
dismissal of the joint venture Company.
Chapter XIII. Insurance
Article 13.1 All-risks insurance policies of die joint venture
Company shall underwritten with the people's Republic of China.
The type. Value and duration of insurance shall be decided by the
board of directors in accordance with the stipulations of the
People' S Republic of China.
Chapter XIV. Liabilities of Breach of Contract
Article 14.1 Should either Parry A or Party B fall to pay on
schedule the contributions in accordance with the provisions
defined in Chapter V of this contract, the breaching party s~ pay
to the other party 5% of the contribution staring form the first
month after exceeding the time limit. Apart from the accumulated
payable breaching penalty, the observing party shall have the
right to ask the breaching party to compensate the economic losses
incurred and terminates the contract according to Article 15.2 of
this contract.
Article 14.2 should one party fail to perform the contract and
make the contribution to the joint venture according to the agreed
contract, it should be deemed as breach of contract. The observing
party shall urge the breaching party to pay off the contribution
within one month's tie. If the breaching party falls to pay the
contribution exceeding the limit, the breaching patty shall be
deemed as giving up all his rights in the joint venture Company
and quit from the joint venture Company automatically. Within one
month after the exceeding period, the observing party shall apply
to the original authority for terminating the joint venture
Company or apply for approval to find a third partner. The
observing party shall have the right to claim compensation from
the breaching party for the losses incurred. Should it be the
faults of the two parties, each party shall bear the liabilities
according to the actual situation.
Chapter AV. Force Majeure
Article 15.1 should either of the parties to the contract be
<PAGE>
prevented from executing contract by force majeure, such as
earthquake typhoon, flood, fire and war and other unforeseen
events. And their happening and consequences are unpreventable and
unavoidable, the prevented party shall notify the other party by
cable without any delay, within 15 days thereafter provide the
detailed information of the events and a valid document for
evidence issued by the relevant public notary organization for
explaining the reason of inability to execute or delay the
execution of all or part of the contract. Or explaining the reason
for extending the contract.
Chapter XVI. Settlement of Disputes
Article 16.1 any disputes arising from the execution of. Or in
connection with, the contract shall be settled through friendly
consultations between both parties. In case no settlement can be
reached through consultation, the disputes shall be submitted to
the Foreign Economic and Trade Arbitration Commission of the China
Council for the Promotion of International Trade for arbitration
in accordance with the rules of procedure. The arbitral award is
final and binding upon both parties.
The arbitration expense shall be borne by the losing party, during
the period of arbitration the joint venture Company shall continue
its operation without affecting the arbitration matters, as well
as the other parts in the company's constitution.
Chapter XVII. Applicable Laws
Article 17.1 The formation of this contract, its validity,
interpretation, execution and settlement of the disputes shall be
in line with the Laws of the People's Republic of China
Chapter XVIH. Effectiveness of the Contract and Miscellaneous
Article 18.1 this contract shall come into force upon the
signatures of the two parties
And the approval of the competent authority. So does the Revised
Version.
<PAGE>
Article 18.2 this contract shall have statuary power with the
signing of the two parties and the approval of the competent
authority. Each party to the joint venture shall strictly observe
the contract. Any party shall not terminate the contract without
the permit of the other party. Should one party propose for
terminate the contract or transfer the share right and the joint
conditions, the proposal should be put forward three months in
advance. A careful consideration shall be given. And the
consequent issues should be discussed thereafter.
Article 18.3 if there are any unforeseen issues concerning this
contract arising, the joint venture Company shall negotiate for
solution. The revised part shall be regarded as the supplementary
of this contract and carry the equal statuary power.
Article 18.4 Should notice in connection with any party's rights
and obligations be sent by either Party A or Party B by telegram
or telex, etc. the written letter notices shall be also required
afterwards. The legal address of Party A and Party B listed in
this contract shall be the posting addresses.
Article 18.5 this contract is written in Chinese and in
quadruplicate. The Chinese text has the statuary power. The two
parties to the joint venture Company shall have one copy each, the
joint venture Company shall have one copy. It has several
duplicated copies and a copy kept in the competent authority for
filing.
Article 18.6 this contract is signed on the date of August 8,
representatives of the two parties in Chunking, Yunnan, PR China.
<PAGE>
Signed by Party A:
Signed by Party B:
Li Kaixin (signature) Tan Mau Tak (Signature)
Representative of Kunnung Fuel Company Representative of Hong Kong
(Affixed with the official stamps) Dexiang Tuoyi Industrial
Company)
Exhibit 10 (e)
Approval Certificate of Enterprises with Foreign Investment in the People's
Republic of China
No.0320559
Name of Chinese
Company
English Kunming Xinmao Petrochemical Industrial, Co., Ltd.
Add of Co. No. 50 Mintong Rd., Kumin City
Type of Co. Joint Venture Duration of Co.
20 years
Total Investment 2.75 million USD
Registered Capital 1.925 million USD
Names of investors (Chinese & English ) Location
contributions
Party A: Kunming 916,600 USD
Kuming Haowei Enterprise (Group) Co., Ltd.
Party B: USA
1,833,400 USD
Everlasting International (Nevada)
Co., Ltd.
1. Processing and Selling Domestic & industrial LPG.
Business 2. Manufacturing Cylinder Stove Water Heater.
Cigarette Lighter And Their accessories.
Scope 3. Inspecting Maintaining and consulting of Gas
Quality stove And Cylinder.
4. Entrusted Processing of Domestic crude oil and
sales of its By Products
Exhibit 10 (f)
BUSINESS LICENSE OF ENTERPRISE IN THE
PEOPLE'S REPUBLIC OF CHINA
REGISTERED NO. 000010
The enterprise is admitted to be registered and do business.
<PAGE>
No. 0272468
Name of Company (Chinese)
(English) Kunmin Xinmao Petrochemical Industrial
Co. Ltd.
Add of Co. No. 50 Mintong Rd., Kunmin City
Type of Co. Joint Venture
Business Scope Processing and Selling Domestic and
industrial LPG
Manufacturing Cylinder Stove. Water Heater.
Cigarette Lighter and Their Accessories.
Inspecting, Maintaining and consulting of
Gas Quality Stove and Cylinder:
Entrusted Processing of Domestic Crude oil
and Sales of its by Products
Registered Capital 1.925 Million USD
Director Shan Deng
Vice Director Kaixing LI
General Manager Shan Deng
Vice General Manager
Branch Agency Baoji Representative Office
Business Period from August 28, 1992 to August 28 2012
License Period from August 28, 1992 to August 28 2012
Director of Minister of Commerce Zhongfu Wang
April 3, 1997
Exhibit 10(g)
BUSINESS PERMIT TO ENGAGE IN LPG
BUSINESS IN YUNNAN PROVINCE
Examined by Kunmin LPG Management Bureau. Kunmin Xinmao
Petrochemical Industrial co. Ltd. Is allowed to engage in LPG
business
Kunmin LPG Management Bureau.
Serial No. 015 May 1, 1993
Exhibit 10 (h)
AGRICULTRUAL BANK OF CHINA YUNNAN
PROVINCIAL BRANCH DOCUMENTS
No.477(1996)
NOTICE OF SUBSIDIARIES OF THE
AGRICULTURE BANK OF CHINA, YUNNAN
PROVINCIAL BRANCH ACTING AS THE AGENTS
FOR THE COLLECTION AND RECEIPT OF
PAYMENT FOR KUNMING XINMAO
PETROCHEMICAL INDUSTRIAL CO., LTD.
To all subsidiaries of the Agriculture Bank of China Yunnan
Provincial Branch,
The Agriculture Bank of China, Yunnan Provincial Branch,
(hereinafter "the Bank") and Kunming Xinmao Petrochemical
Industrial Co., Ltd.(hereinafter Xinmao Co.") signed an agreement
concerning the Bank acting as the agent for the collection and
receipt of payment for Xinmao Co. on November21, 1996 as follows:
I. We will establish agents in our subsidiaries for the collection
and receipt of payment for Xinmao Co.. Presently, we have six
agents in Chenggong County Fuel Co., Jinning County Foreign Trade
Co., Anning County Fuel Co., Yiliang County Stable Material Supply
Co., Lunan County Fuel Co. and Ershan County Agricultural
Machinery Factory which cover Kunming and Yuxi cities. With the
development and extension, we will establish more subsidiaries in
other counties, states and regions.
II. The International Business Department of the Bank is
authorized to the implementation of the agreement and to provide
instruction to subsidiaries regarding the operation of the agent
business.
<PAGE>
Ill. Xinmao Co. shall open an account in the International
Business Department of the Bank. and allI the agents shall
transfer the payment to Xinmao Co.'s account in time according to
the contract.
IV. Each agent shall negotiate with the International Business
Department of the Bank regarding the agent service charges and the
business service charges.
V. If there are any problems in the procedure of the agent
business! please notify us immediately.
The contract is attached.
November21, 1996
This Notice will be sent to Xinmao Co., the International Business
Department, the Accounting Department, the Cashiers Department,
the Planning Department, the General Office and the Inspection
Department of the Bank.
Exhibit 10 (I)
Agreement On Supply of Liquefied Petroleum Gas
Supplier: (Party A) Beibal Special Liquefied Petroleum Gas Co,
Ltd. Legal Representative: Zhang xiaofii
Address: 7th Floor, Jingxie Building, Guizhou Road, Beihal,
Guangxi
Recipient: ( party B) Panzhihua Deyun Petrochemical Industrial
Co., Ltd. Legal Representative: Tan Mau Tak
Address: Coal Washery, Geliping, Panzhihua Mineral Bureau
Guarantor: Kunming Xinmao Petrochemical Industrial Co., Ltd.
Address: 50 Mingtong Road, Kurtning City Legal Representative:
Deng Shari
Article 1. In view of that the legal representative of Party B
transferred Hong Kong De xiang Tuo Yi Industrial Company, of which
he owns full property, and 60.90% shares held by the company in
Kunming xinmao Petrochemical Industrial Co., Ltd. to Everlasting
International Nevada Holding Co., Ltd., Party A aggress to
voluntarily supply Party B with liquefied petroleum gas. And the
two parties reached the following agreement as to the affairs
concerning gas supply.
Article 2. Party A shall supply Party B with liquefied petroleum
gas for a period of four (4) years, 2675 tons each year and 10500
tons for four years (should the actual gas consumption of Party B
is less than 10500 tons, the time of Party A supply gas for Party
B shall be prolonged.
Article 3. The price for each tons of liquefied petroleum gas
reaching the special-used railway of Geliping Coal Washery,
Panzihua Mineral Bureau shall be 3100 yuan RMB (including all
expenses). The price shall be steady if the rate of US dollar
exchanging for Renminbi is within 1:9. In case of exceeding the
rate, the gas price shall be adjusted according to the actual
rate. Or if the actual gas price increases by 5%, the income for
the price increase exceeding 5% shall belong to Party A.
Article 4. Time, quality and acceptance of gas supply
1. The time of gas supply shall be from April 1,1996 and to
March 31,
2000 (the actual time of gas supply shall subject to Article 2 of
this agreement).
2 Party A shall delivery the gas evenly the average delivery
amount for each month or accumulated months shall not be less than
8-9 tankers (4-5 tankers for the first ten days of a month and 4-5
tankers for the last ten days of a month);
<PAGE>
3 The quality of the gas supplied by Party A shall be in
conformity with the State Standard of GB-1174.
4. Each time, the tankers shall be checked before acceptance at
the delivery point by the designated persons of the two parties.
The amount shall be calculated according to the position of slid
bar. Then in accordance with the accurate curve diagram of
liquefied gas provided by Party A, the persons of two parties
shall determined a height mark as the basis of settlement.
5. The weight of liquefied gas shall be calculated according to
the standard of 0.545.
Article 5. Account Settlement
1. According to the actual tonnage confirmed by the two parties,
Party B shall make the payment to the account designated by Party
A within five (5) days.
2. Party A shall send the voucher of added value tax within
thirty (30) days after the receipt of payment.
3. All relevant expenses paid by Party B for Party A in advance
and loans of Party A's staff, which shall be confirmed by the
telegram or facsimile of Party A, may be deducted from the payable
payment at the time of settlement.
Article 6. Other obligations of the two parties
1. After each arrival of goods, Party B shall check for
acceptance and unload it within four (4) days, and have railway
organizations send the train to the station designated by Party A.
The relevant expenses shall be paid by Party B for Party A in
advance with the receipts of railway
Organizations.
2. From the date of this agreement coming into force to April 1,
1996, Patty A shall be responsible for storing 100 liquefied
petroleum gas
for Party B free of charge in the storage station of Kunming
Xinmao Petroleum Industrial Co, Ltd.
3. Patty A shall assist Party B to buy comprehensive insurance
in China Pin' an Insurance Company for the customers supplied by
Party B. The premium shall be borne by Party B.
Article 7. Guarantee
Within a month after the agreement coming into force, Patty B
shall ask Ever Lasting International Nevada Holding Co., Ltd. to
pay 2.5 million yuan RMB to Party A as the earnest money according
to the related terms of Agreement on Enterprise Properly
<PAGE>
Transference and Agreement on Payment. After the implementation of
the agreement, Party A shall have the earnest money.
Article 8. Obligation for breach of the agreement
I - Should Party A be delay to supply the gas for one month,
Patty B shall have the right to deduct 3% of the payable amount in
this month and the penalty fee at the time of settlement. Should
the above breach of agreement occur twice in a year, Party A shall
return a doubled earnest money and be responsible for the economic
losses and legal obligations occurred due to delayed gas supply.
Moreover, Patty B shall have the right to ask Patty A to continue
the implementation of the agreement.
2. Should Patty B be unable to make the payment on time, for one
day exceeding the time limit, Party B shall pay a overdue fine of
3% of the payable amount to Party A.
3. Should Patty A be unable to implement the agreement regularly
due to Patty B's failure m returning the empty train on time
(exclude the unsuccessful acceptance due to the disputes of the
two parties), Patty B shall be responsible for a penalty fee
0 F 300 yuan for each train per day. In addition to have the right
to postpone the next gas supply, Party A shall bear no obligation
for the breach of agreement.
4 Should the breach of agreement be caused by force majeure,
either party shall inform the other party, and both parties shall
have the responsibility to avoid losses without obligation for
breach of agreement.
Article 9. Kunming Xinmao Petroleum Industrial Co., Ltd. agrees to
act as the guarantor for Party A's implementation of the
agreement. Should
Party A fail to completely implement the agreement, Party B shall
have the right to ask the guarantor undertaking all obligations
that should be borne by Party A.
Article 10. Effectiveness and termination
I. The agreement shall come into effect only with the following
conditions:
A Signatures of the legal representatives of the two parties;
B. The related Agreement on enterprise Properly Transference and
Agreement on Payment shall come into effect.
2. This agreement is in duplicated, Party A and Party B shall
hold each with equal legal effect.
3 this agreement shall be terminated upon the completion of the
obligation and rights of two parties.
<PAGE>
Article 11. Should any dispute occur and such dispute can not be
solved through consultation both parties shall have the right to
initiate legal proceedings in the intermediate people's court of
plaintiff.
Article 12. After the agreement coming into effect, all agreement
on liquefied petroleum gas supply signed before March 18, 1996
shall have no legal effect
Signed by representative of Party A Signed by representative of
Party B Tan Mau Tak (signature)
Seal of Party A
March 18, 1996
Guarantor:
Seal of Guarantee Unit:
March 18, 1996
Seal of Party B March 18, 1996
Exhibit 10 (j)
Method of Insurance for LPG Credit
I. Object:
All the LPG sold by Kunming Xinmao Petrochemical Industrial Co.
Ltd. and its related companies.
II. Relationship:
Kunming Xinmao Petrochemical Industrial Co.1 Ltd. and its related
companies are policyholders; Zhongbao Insurance Co., Hongshan
Branch is insurer; The users of Kunming Xinmao Petrochemical
Industrial Co.1 Ltd. and its related companies are insurants.
Ill. Period:
Five years.
IV. Responsibility:
The losses caused by the following reasons shall be indemnified by
insurer:
(1) If the LPG could not be provided continuously;
(2) If the LPG could not be provided by the certain price;
(3) If the quality or quantity of the LPG could not meet the
requirement of the
State.
V. Exception:
(1) The insurant can not provide the insurance receipt;
(2) The insurant behaves illegally;
(3) The transportation line or the pipeline is broken by the
natural disaster
(4) Other losses out of the scope of the insurance responsibility.
VI. Amount of Insurance Rate of Insurance and insurance:
The amount of insurance is decided by the value of LPG. The rate
of insurance is .25%.
VII. Quota Indemnity:
The insurance is indemnified in quota system.
(1) If the losses are caused by the first two reasons in item IV,
the quota is the price per can X 130%
<PAGE>
(2) If the quality or quantity of LPG could not meet the
requirement of the State but the user has used and can use it
continuously! the quota is RMB40 for 15 kg can and RMB120 for 50
kg can;
(3) the quota indemnity for per user is the amount written on the
insurance receipt
VIII. Indemnity:
(1) The insurant shall provide proof and related report;
(2) The place of indemnity is our agent in Yunnan Province;
(3) The valued period for demanding compensation is one month.
IX. Argument:
Each side can appeal to court.
Zhongbao Insurance Co., Hongshan Branch
Aug 26, 1997
Exhibit 10 (k)
Memorandum of Understanding
Name, addresses and legal representatives of the Parties:
Party A: Kunming Xinmao Petrochemical Industry Co. Ltd.
(Hereinafter referred to as Xinmao)
Address: No.5O, Mingtong Road, Kunming, Yunnan Province
Legal Representative: Deng Shan
Tel.: (871)-3510895
Email: [email protected]
Party B: Wuhan Minyi Fuel Gas Petrochemical Co. Ltd (Hereinafter
referred to as Minyi)
Address: No.18, Huangxing Road, Jiangan District, wuhan
Legal Representative Liu Rongcheng
Tel: (27)-8575-1858
WHEREAS Xinniao intends to develop its business into Hubei.,
Hunan, Guizhau, Sichuan, Guangxi and Yunnan and as a result become
the largest LPG retail company along and to the
south of thc Yangtze River.
WHEREAS Xinmao is capable to attract enough international funds
through its US shareholder;
WHEREAS Minyi is the only specialized company in Hubei that has
been seeking for LPG pipeline projects provincially and is willing
to do them with Xinnao through the advantages from each other
WHEREAS Mr. Peng Zibin has a very favorable background for the
market development;
<PAGE>
THEREFORE the following cooperative principles have been mutually
reached and agreed:
I. Party B agrees that Party A purchases more than 51% of its
shares;
2. Party B agrees that Party A can share Party B's existing
market and both will develop the LPG pipelines and bottle sales
together provincial-wide;
3 Within the next three months Party B agrees to support Party A
with the best effort to do the due diligence analysis on Party B
who should provide true statistics;
4. Party B agrees to adopt the advanced management system
introduced, to do any of the adjustment necessary and to connect
with the Computer Financial and Information System Xinmao and its
US shareholder have established;
5. Party A agrees to invest no less than one million US dollars
within next six months and guarantees the availability of the
funds used for tile development of LPG pipeline projects and other
possible acquisitions;
6. Party A agrees that Mr. Peng Zibin acts as the first Chairman
of the Board of the new joint venture Party A will support anyone
recommended by Party B to be the Chairman if that person is able
to bring the greatest profit for the joint venture;
7 Both parties agree that within the next six months after the signing
of this MOU (Memorandum of Understanding), Party A should not sign
acquisition document in Hubei Province except with wuhan Fuel Gas Group
Co., while Party B should not sign ally document with any companies for
acquisition cooperation as mentioned herein
8. Both parties agree that within six months, a new practical
joint venture agreement should be signed. Otherwise both parties
are free from the restrictions mentioned above.
9 This MOU has four copies that are signed personally by the
Chairman of the Board of each company and become effective
immediately
Party A: Kunming Xinmmao Petrochemical Industry Co. Ltd.
Chairman of the Board: Deng Shan
Date: March 14, 1999
Exhibit 10 (l)
Memorandum
Name, address and legal represeatatives of the parties:
Party A: Kunming Xinmao Petrochemical Industry Co., Ltd.
(Hereinafter referred to as Xinmao)
Address:50 Mingtong Road, Kunming, Yunnan Province
Legal Representative: Deng Shan
Tel (871)-3610895
Email ch81923@public,kn.yn.cn
Party B: Guilin Municipal Garden Fuel Gas Pipelines. Ltd.
(Hereinafter referred to as Guocheng)
Address: Building No.1 Garden Region, N. 2 City Circle road,
Guilin, Guangxi
Legal Representative: Ye Yang
Tel 1391151199
Whereas Xinmao intends to develop its business into Hubei, Hunan,
Guangxi Sichuad, Guagx and become the largest LPG retail company
along and to the south of the Yangtzi River:
Whereas Xinmao is capable to attract enough international funds
through its US Shareholder,
Whereas Guocheng has been authorized to install LPG pipelines for
10,000 city households in Guilin and has enough potentials to seek
for LPG pipeline projects provincially and is willing to do them
with Xinmao through the advantages from each other;
Whereas Madam Ye Yang has a very favorable background & for the
market development.
<PAGE>
Whereas the following cooperative principles have been mutually
reached and agreed:
1.Party B agrees that Party A Purchases more than 51% of Party B's
shares;
2. Party B agrees that Party A can share Party B's existing market
and both will develop the LPG pipelines and bottle sales together
all over Guangxi;
3 Within the next three months Party B agrees to support Party A
with the best effort to do the due diligence analysis on Party B
who should provide true statistics;
4.Party B agrees to adopt the advanced management system
introduced, to do any of the adjustment necessary and to connect
with the computer Financial and information system Xinmao and its
US shareholder have established;
5. Party A agrees to invest on less than one million US dollars
($1,000,000) within next six months and guarantees the
availability of the funds used for the development of LPG pipeline
projects and other possible acquisitions;
6.Party A agrees to support anyone recommended by Party B to be
the Chairman if that person is able to bring the greatest profit
for the joint venture.
7. Both parties agree within the next six months after the
signing of this MOU Party A should not sign acquisition document
in Guilin and while Party B should not sign any document with any
companies for acquisition cooperation as mentioned herin;
8.Both Party agree that within six months a new practical joint
venture agreement should be signed Otherwise both parties are free
from the restrictions mentioned above.
9. This MOU has four copies that are signed personally by the
chairman
of the Board of each company and become effective immediately.
Party A: Kunming Xinmao Petrochemical Industry Co. Ltd.
Chairman of the Board Deng Shan ____________________.
Date March 24, 1999
Party B; Guilin Municipal Garden fuel Gas Pipelines Co. Ltd.
Chairman of the Board Ye Yang _______________________.
Date March 24, 1999
Exhibit 10 (m)
APPROVAL CERTIFICATE OF ENTERPRISES WITH FOREIGN INVESTMENT IN THE
PEOPLES REPUBLIC OF CHINA
Serial No. Yunfu MCFTEO
(1992) 45#
Date of Approval August 21, 1992
Renewed Date March 19,1997
