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:
73,214,087 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 ("LGI"), through
its wholly owned subsidiary, Everlasting International Ltd.,
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"). 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 the Yunnan Province of China. The
Company operates a storage depot and office headquarters in the
city of Kunming. All of the Company's property and equipment is
located in China.
The Company was originally incorporated under the name, "The
George Group" on January 16, 1987 in Nevada. 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 never executed on the plans due to unanticipated
environmental, financing and regulatory complications.
During its due diligence of the Chinese construction industry,
Company officials met Mr. Deng Shan, who was a government official
at the time heading up the Science and Technology Bureau in
Shenzhen. Mr. Deng left his position in the Chinese government
and negotiated the purchase of a 66.67% interest in the Xinmao
Company a Hong Kong entity. On September 29, 1997, this same
66.67% interest was acquired by Largo Vista.
As a result, the Company became the primary owner of the Kunming
Xinmao Petrochemical Industry Co., Ltd. ("Xinmao") headquartered
in Kunming City, capital of the Yunnan Province in South Central
China. The Xinmao Company was founded in 1992 to distribute LPG
on a wholesale and retail basis.
Sales have grown slowly due to chaotic market conditions. Xinmao
is working through the problems created by the market and is
seeking to survive.
2. Organization of the Subsidiary
Xinmao has been in operation since 1992, and has provided
uninterrupted service since that time. Xinmao 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 in terms of end users.
<PAGE>
3. Organization Chart
LARGO VISTA GROUP, LTD.
EVERLASTING INTERNATIONAL, LTD.
(100% Owned Subsidiary)
HONG KONG TUOYI INDUSTRIAL COMPANY
(100% Owned Subsidiary)
66.67% Interest
Joint Venture
KUNMING XINMAO PETROCHEMICAL INDUSTRY CO., LTD.
33.3% Interest
KUNMING FUEL GENERAL CO.
(Chinese Government Owned)
B. FINANCIAL INFORMATION BY
INDUSTRY SEGMENT AND CLASSES OF PRODUCTS
Registrant is in only one industry segment, the purchasing and
reselling of liquid petroleum gas ("LPG") in China.
<TABLE>
Year
1998 1997 1996
1 2 3
<S> <C> <C> <C>
Sales to $1,353,668 $2,192,751 $0
Unaffiliated Customers:
Operating Loss $(1,095,991) $(2,732,268) $(1,598,242)
Identifiable Assets, Net $0 $0 $0
</TABLE>
<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.
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 as follows:
Term: Twenty years, commencing on August 8, 1992.
Parties: Party A is the Kunming Fuel Company ("Kunming") as to a
33.33% interest with a "registered capital" investment of USD
$641,000.
Party B is Hong Kong Dexiang Tuoyi Industrial Company (the "Hong
Kong" company) as to a 66.67% interest, with a "registered
capital" investment of USD $1,283,400.
The Hong Kong Company was formerly owned by one individual, Tan
Mau Tak. On November 8, 1995, Deng Shan purchased the Hong Kong
Company from Tan Mau Tak. On December 21,1996,. On April 29,1997
Everlasting International Ltd. purchased the Hong Kong Company
from Proton Technology.
General Provisions: Kunming is responsible in general to support
the Hong Kong Company in its duties.
The Hong Kong Company is, subject to the terms and conditions of
an operating agreement set forth below, responsible for the
general management of the 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.
Fiscal year of Joint Venture is January 1 to December 31.
The Joint Venture is an independent entity with an independent
accounting system.
An audit of the Joint Venture's financial records is to be
conducted annually by an auditor registered in China.
Operating Agreement
This Agreement was made between Xinmao and the Hong Kong Company
on August 28, 1992, for a term of ten years, ending on August 28,
2002. The Hong Kong Company is to management the day-to-day
operations of Xinmao and assume sole responsibility for its
profits and losses. During the term of the Agreement, Xinmao is
to pay Kunming 9 million Yuan (RMB) as follows:
<PAGE>
3.5 million Yuan per year for 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
2. Government License Held
The Xinmao Company holds a unique license issued by Chinese
Central Government that permits it to operate across provincial
borders; to process domestic crude oil and sell its by-products;
to process and sell domestic and industrial LPG; 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.
Xinmao is registered with the government as having foreign
ownership. This allows foreign investment, including loan
repayments, interest and dividends to be sent out of China
pursuant to registered agreements. It is the only known Sino-
Foreign Joint Venture that is licensed to sell products on the
retail market.
Xinmao is also licensed as a general contractor for pipeline
project construction. Management hopes 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, its advantage lies in that it is an efficient fuel since
its state of liquid provides a significant supply of energy in a
comparatively small volume. It is also a clean and
environmentally friendly energy that has a variety of residential,
commercial, industrial and transportation uses. It can be used at
home for cooking and heating and helps to protect the environment
by replacing wood, kerosene and coal. LPG is also recognized for
its transportability and ease-of-use.
LPG is the only viable source of energy for cooking and heating in
Southern China. Environmental concerns have outlawed the use of
coal. Management believes the LPG market is ripe for growth and
expansion.
Xinmao currently distributes LPG for use only in cooking, heating
and hot water. Management believes there will be future
opportunities in drying tobacco and operating factory machinery
and vehicles.
<PAGE>
4. Markets
The Primary market segmentation is classified by distribution
method that is either retail or direct vs. wholesale or indirect.
Retail or direct distribution is accomplished by the ten major LPG
companies who deal directly with the end user. Retail business is
more profitable than wholesale because sales prices are higher and
there are no middleman costs.
Wholesale or indirect distribution business is accomplished
through distributor networks to the end-users.
Secondary market segmentation is classified according to the
delivery vehicle used by the end-user, such as bottle, pipeline,
or tank truck.
The bottle users may be either retail, purchasing directly from a
major LPG company, or wholesale, purchasing indirectly from a
large or small 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, commercial, and
industrial 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 is piped
directly into a household 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 to wholesale distributors who operate
small bottle filling stations. These distributors represent the
least profit margins to the Company, and are tolerated because of
the potential of acquiring their customer base.
A Tertiary market segmentation, although temporary, must be
considered because of the impact (negative) they have had on the
LPG market. They are the many small independent distributors and
individuals who operate illegally in what is referred to as the
"black market" - some without a license, others violating safety
laws, others 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 reaching 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,
Japan and South Korea, for example.
<PAGE>
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 East
China. And still in many places inland, the LPG consumption per
capita is negligible.
As the LPG distribution market is developing in China, the
majority of dollars 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.
From the mega-depots on the east 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 through
the bottle system or the tank truck system to end users and
distributors.
Inland infrastructure development has not kept pace with coastal
development. More railroad tank cars are needed to supply more
inland depots. 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 impact as
salaries increase. The pipeline distribution method is very
efficient, but there are some drawbacks. The cost to install
pipeline service to a household is approximately $185 USD. Some
customers can afford to pay this installation fee up front, but
most of these more affluent consumers have been tapped. There are
some new construction projects where the cost of installation can
be incorporated into the cost of the home. Most customers can not
afford the up-front fee, but can pay extra each month based on
usage.
The Company serves its customers directly in the retail market,
and indirectly through its network of distributors.
Xinmao distributes to both retail and wholesale customers, and to
both residential and commercial users. Retailer customers are far
more profitable than wholesale, and the Company is also devising
strategies to develop more retail users.
Xinmao also has four pipeline projects either completed or under
construction.
<PAGE>
Transportation and access makes It impossible for the Company to
directly service its entire customer base, given the manner in
which the LPG market has evolved. Roads are adequate to handle the
growing volume of traffic. Therefore, much reliance is placed on
wholesale distributors. The market largely evolved around
wholesale distributors, also called "entity users", that were
companies that already provided housing to its employees as part
of their compensation, desiring to upgrade standards by giving LPG
as an additional part of their compensation. These entity users
did not pay retail prices, but they provided a service of
distributing the LPG from the work place to its workers.
Now, the trend is away from government owned housing, and the role
of the entity user will change. In the past several years workers
have been encouraged to purchase their homes from the government
with little money down, and the balance financed. This will
change the way the entity user does business, and the way LPG is
distributed. Xinmao is striving to convert the workers into
retail customers, but the method is not yet clear as to how this
can be accomplished.
5. Distribution of LPG
Major LPG Companies purchase LPG directly from refineries or major
oil companies, must be licensed, have railroad tank cars and
storage depots, and typically serve over 10,000 retail customers.
These companies depend on distribution networks.
Major Distributors are licensed under the major LPG company, have
no railroad tank cars and little or no storage capacity, and serve
more that 4,000 but less than 10,000 customers directly.
Small Distributors are licensed under the major distributor, have
no storage capacity, and serve more than 1,500 but less than 4,000
customers directly.
Small Independent Distributors are those who may or may not be
licensed, and have no relationship to any major company or
distributor, and usually serve less than 1,500 customers.
Xinmao's wholesale customers include both major and minor
distributors. These distributors are segregated into two
categories: agents and entity users. Xinmao has 8 agents that
are independent dealers who exclusively represent it in an
outlying county area that is difficult to access by the Company on
a regular basis. The agent carries his own overhead expenses, and
is paid a fee by the Company for his services. Xinmao has 125
entity users that are usually affiliated with a company and
service a homogenous group of people such as employees of the same
company, or residents of the same housing complex. In many
situations the entity user may also serve LPG needs of customers
in the same geographical area but outside of its sphere of
influence. Finally, there are a number of other minor
distributors who purchase from Xinmao and other major companies,
who have solicited their customer base over a period of time and
<PAGE>
have generated customer loyalty through relationship.
Distribution patterns generally follow population concentration
with the bulk of Xinmao's retail customers being located in the
Yunnan Province central cities of
Kunming,Luan,Chengong,Yiliang,Jinnin,Annin, and Eshan. As the
population thins out in the suburbs, distribution networks take-
over and service most customers. Smaller distributors exclusively
service the rural areas.
The market is too new and changes too rapidly to identify any
significant buying patterns; however, the competition generally
follows distribution patterns. Since transportation is the main
issue in reaching customers, buying patterns are similar for all
competitors.
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, while low price
and bargaining is the driving force for Chinese LPG purchasers.
Due to high volume, Xinmao has consistently been able to purchase
LPG in large quantities at low prices. It generally purchases
from domestic sources inside China because of the availability of
guaranteed price contracts for one year, lower transportation
costs and ease of distribution. On occasion it also purchases
from 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
In general, the LPG market in the Yunnan Province has been
relatively unstable during the past year-and-a-half. This
instability was precipitated by environmental concerns that
prompted a new regulation by the Kunming City Government outlawing
the use of coal, leaving LPG as the only viable energy alternative
for cooking and heating.
Since no companies were prepared or able to supply a sufficient
amount of LPG to this new consumer market, a number of government
owned or operated companies were set up. The only concern these
Government companies have had has been to provide LPG to the
consumers, regardless of cost. These companies have neither
management experience nor financial expertise, and are not
motivated to make a profit.
<PAGE>
Because of this activity, LPG inventory exceeded demand. The lack
of sufficient storage facilities resulted in cut-throat pricing
and other poor business practices. These factors caused an
unstable and chaotic market that has prevailed over the past 18
months in Yunnan, and has hampered Xinmao from operating
efficiently and achieving profitability.
Black Market. In the residential wholesale market, many dealers,
"black market" dealers have operated without a license, and
ignored safety regulations that require inspection and pressure
test 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, by means
of a "weighing program" to "be aware" of what they are paying for
by actually weighing the bottles to expose the "short-fill"
problem. The "short-fill" practice is now illegal under new
"minimum price" regulations that require all wholesalers sell a
13.5 kg. bottle for no less than 36 RMB, and retail distributors
for no less than 42 RMB.
As of April 15, 1999, the Kunming LPG Administration established
"minimum pricing" regulations which set a base price for both
wholesale bulk and bottle sales, and retail bottle sales. This
regulation will help stop the uncontrolled cut-throat pricing
competition that occurred over the past 18 months. It will be
incumbent upon the nine major LPG companies to form task forces to
assist the LPG Administrator in enforcing these regulations.
8. Competition
The LPG industry in Yunnan Province consists of ten major LPG
companies. These ten companies have railroad tank cars and 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.
The difference between Xinmao and the other nine government
companies is the motive to earn a profit. The government
companies are characterized by large staffs operating very
inefficiently. The government companies are content to expand
their reliance on distributors rather than to market for retail
business.
<PAGE>
In addition to licensed companies, there are hundreds of small
independent distributors that purchase from other distributors.
The glut of LPG in the market place, along with the need of the
government owned companies to reduce excess inventories, enabled
the evolution of a "black market" for LPG which allowed many
consumer abuses to arise, prices to plummet, and fly-by-night
distributors to plunder the market.
The product of all LPG companies is the same. The differentiating
variables are price and service.
The Company competes 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 all 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 results - uninterrupted service since 1992. Consumers and
distributors understand that they receive honest weights and
measures and reliable service.
9. Insurance
Xinmao sells its solid image of reliability, service, safety, and
7 years of uninterrupted service to its potential customers and
backs it up insurance. The Company provides insurance to any
customer who prepays for LPG that is backed by the government, and
guarantees that the customer will receive the LPG he paid for in
advance. 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.
10. Government Regulation
The LPG industry is regulated on a day-to-day basis by the Kunming
LPG Administration, which oversees companies licensed to do
business, and enforces rules and regulations in the market place.
The LPG Administration faces many problems that have arisen in the
rapidly emerging, chaotic market, including the existence of many
unlicensed small companies and distributors, violations of safety
regulations, and bottles of LPG short-filled by as much as 25%.
The LPG Administration has attempted to correct some of these
problems, but has also overlooked them to some extent due to
shortage of manpower, and in the belief that many of these
problems will eventually solve themselves.
<PAGE>
In April 1999, the local LPG Administration met with the nine
largest licensed companies in the area, and together set minimum
price policies intended to provide positive margins over cost.
11. Patents, Trademarks & Licenses
The Company maintains no patents or trademarks.
12. 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 4,000 feet, is known for its moderate and
even climate year around with it being slightly cooler in the
winter, requiring some heating, while the summer weather is warm
and pleasant. As a result, season factors do not play a
significant role in the Company's business.
13. Inventory
Inventory, valued at lower of cost of market, on the first-in,
first-out basis, consists primarily of liquid natural gas.
14. Firm Backlog
None.
15. Government Contracts
The Company does not have any Government contracts.
16. Environmental Factors
Between 1996 and 1998, because of environmental concerns from
clean air and streets, there has been 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, especially in automobiles and
industry, with LPG since it is the only viable fuel resource
available to Southern China.
<PAGE>
17. Financial Information Relating to Foreign & Domestic Sales
All of the Company's sales are foreign, through its China
subsidiary. The Company has had no significant foreign currency
transaction gains or losses in connection with its activities.
18. Employees
A. Largo Vista
Largo Vista is fully staffed with 2 employees and 2 outside
service providers.
Management Payroll $250,000 annually
Advertising & Public Relations Payroll $ 7,500 annually
Administrative & Support Payroll $255,000 annually
------------------
Total $512,500 annually
B. Xinmao
The Xinmao Company is fully staffed with 84 employees, including a
full management staff, which, by Chinese standards is very
competent and well qualified.
Management Payroll $40,000 annually
Advertising & Public Relations Payroll $ 1,000 annually
Administrative & Support Payroll $ 5,000 annually
--------------------
Total $46,000 annually
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, 1997 and 1996 should be read in
conjunction with the more detailed audited statements for such
years presented elsewhere herein.
1998 1997 1996 1995 1994
Revenues $ $ $ $ $
<PAGE>
(Loss): Continuing Operations $ $ $ $ $
Net (Loss):
Loss per Common Share:
. Loss before extraordinary
item
. Extraordinary item
. Net loss
Dividends Per Share
Weighted Average Shares
Outstanding
BALANCE SHEET DATA
Total Assets $ $ $ $ $
Long-term Obligations $ $ $ $ $
Total Liabilities $ $ $ $ $
B. Management's Discussion and Analysis of
Financial Condition and Results of Operation
Management's Discussion and Analysis of Financial Condition
And Results of Operations
Years ended March 31. 1999 and March 3, 1998
Revenues and operations are solely generated from the Company' s
Chinese subsidiary, Kunming Xinmao Petrochemical Industrial Co.,
Ltd. ("Xinmao"). The United States entities have no revenues.
Revenues for fiscal 1998 of approximately $2.2 million decreased
to approximately $1.4 million in fiscal l999. The LPG market in
Yunnan province has been unstable and in disarray over the past
eighteen months. Additionally, the Company has more competitors
both legal and illegal.
The Company anticipates increases in revenue from expanded
marketing efforts, price increases and expansion into other lines
of business, and mergers and acquisitions.
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 less expensive product.
General and administrative expenses decreased from approximately
$2.6 million in fiscal 1998 to approximately $1.3 million in
fiscal l999. The Company anticipates improving general and
administrative expenses going forward by implementing strict cost
control measures both in China and the United States
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 might
increase the Company's revenues from Xinmao as well as other
anticipated projects.
World geopolitical uncertainties, such as the United States
bombing of the Chinese consulate in Belgrade, Yugoslavia and the
resulting unrest and hostility towards Americans in China, as well
as trade conflicts are trends that might lessen the prospects for
the Company's Success in China.
On a micro basis, local political developments in Kunming, China
could favorably or unfavorably impact on the Company's ability to
obtain required licenses, franchises, operating rights, etc.. In
addition, even though Chinese management feels it can still obtain
credit, the trend in China is for the banks to tighten loan
eligibility for businesses, especially unprofitable businesses.
Additionally, the Company is searching for joint venture partners
in various potential Chinese projects.
<PAGE>
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. Year 2000 issues affect: (1)
Information Technology (IT) utilized in the company's business
information systems, (2) non-IT systems utilized by the Company,
such as communications, facilities management, and manufacturing
and service equipment containing embedded computer chips, and (3)
IT and non-IT systems of significant customers, suppliers,
business partners and equity investees.
Largo Vista and its subsidiaries could by adversely affected if
Year 2000 issues are not resolved by Largo Vista or its
significant customers, suppliers, business partners or equity
invests before the Year 2000. Possible adverse consequences
include but are not limited to; (1) the inability to obtain
products or services used in business operations, (2) the
inability to transact business with key customers, (3) the
inability to execute transactions through the financial markets,
(4) the inability to manufacture or 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 l99S (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 risks,
<PAGE>
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 from those expressed or forecasted in forward-looking
statements.
<PAGE>
1. Results of Operations
The Company incurred net losses of $1,095,991 and $2,732,268 for
the years ended March 31, 1992, and 1998, respectively.
Additionally, current liabilities exceed current assets by
$4,873,675 at March 31,1999.
Year Ended December 31, 1998 Compared to Year Ended December 31,
1997
Year End December 31, 1997 Compared to Year End December 31, 1996
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.
<PAGE>
3. Year 2000
The Company has completed an evaluation of Year 2000 (Y2K)
computer information processing problems and Year 2000 program
requirements for internal operations and Company products. With
proposed computer and software upgrades in place by the third
quarter of 1999, the Company does not expect to experience Year
2000 problems in those areas. The Company does not believe it has
significant exposure to Year 2000 problems and does not expect
that the Year 2000 issue will have a material cost or impact on
Company operations. However, there can be no assurance that the
systems of other companies on which the Company relies will not
have an adverse effect on the Company.
The Company does not have a contingency plan, but is currently
working on one. The Company is evaluating the operational effect,
if any, that Y2K issues will have on the Company.
Forward Looking Statement
The above paragraphs and other parts of this Form 10 Registration
Statement include "Forward Looking Statements". All statements
other than statements of historical fact included herein,
including any statements with respect to sales forecast, future
product acceptance or other future matters, are Forward Looking
Statements. Although the Company believes that there is a
reasonable basis for the projections reflected in such Forward
Looking Statements, it can give no assurance that such
expectations will prove to be correct. 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, new Government regulations adverse to the Company's
operations and/or worldwide or China specific factors.
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 provides for month to month tenancy at $4,000 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 metric tons of LPG, which is sufficient to supply
83,000 users assuming consumption of 12 kg. of LPG per household
per month. The depot, operating at full capacity, can turn over
two times per month.
<PAGE>
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".
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 $1000US 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 June 1, 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.
Beneficial Percentage
Name and Address Ownership of Class
Daniel Mendez 14,420,473 7.82%
4570 Campus Drive
Newport Beach, CA 92660*
Albert Figueroa 2,237,733 1.21%
All current directors and
officers as a group (3 persons) 16,658,206 9.03%
Proton Technology Corp., Ltd. 89,503,890 48.54%
*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 June 1, 1999, are as follows:
Name Age Position Since
Daniel J. Mendez 47 President and a Director 4/94
Albert N. Figueroa 32 Secretary/Treasurer, and 5/95
a Director
Deng Shan 48 Director 1/99
The Directors serve until the next annual meeting of shareholders,
or until their successors are elected.
Daniel J. Mendez, 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 Mr. Mendez was involved with
real estate investments and partnerships.
Albert N. Figueroa, 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, 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 represented an investment
company, which acquired Kunming Xinmao Petrochemical Industrial
Co., Ltd. Mr. Deng has established strategic networks in both
business and government arenas and is considered one of the
leading authorities on foreign companies doing business in China.
<PAGE>
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 $100,000,
including cash and issuance of securities.
Summary Compensation
Annual Compensation Awards Payouts
Other Secur-
Name Annual Restricted ities
All Other
and Compen- Stock Underlying
LTIP Compen-
Principal Salary Bonus sation Award(s)
Options/ Payouts sation
Position Year ($) ($) $ ($)
SARs (#) ($) ($)
Daniel
Mendez 1996 131,150 0 0 2,345,454 0 0
0
Daniel
Mendez 1997 220,000 0 0 0 5,701,952 0
0
Daniel
Mendez 1998 220,000 0 0 0 0 0
0
Daniel
Mendez 1999 150,000 0 0 0 0 0
0
Albert
Figueroa 1996 89,799.86 0 0 1,597,979 0 0
0
Albert
Figueroa 1997 100,000 0 0 0 2,591,796 0
0
Albert
Figueroa 1998 100,000 0 0 0 0 0
0
Albert
Figueroa 1999 100,000 0 0 0 0 0
0
<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). Both Everlasting and Proton were paper entities
created for the purpose of effectuating this transaction.
Mr. Shan Deng is currently both a Director of the Company and the
sole shareholder of Proton Technology Corporation, Ltd., currently
the Company's principal shareholder.
B. Certain officers of Kunming Xinmao Petrochemical Industrial
Co., Ltd. had loans from that entity. In 1998, approximately
US$500,000 of these loans were written off by the Company as
uncollectible.
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
Orange County Superior Court Case No. 757285, filed December
30,1995, Bernard F. Kruer represented the Company in this matter.
The settlement agreement was signed on October 4, 1996, and a
Notice of Settlement and Conditional Dismissal was filed on
November 6, 1996.
Although the matter has been settled, one unresolved issue
remains. The case involved several large hotel bills incurred b
former CEO, John A. Jones. On January 30,1995, Mr. Jones assigned
one of his personal company stock certificates (Certificate No.
12570 in the amount of 315,000 shares) over to the hotel to cover
the bill, and the Plaintiff has transferred the certificate to its
name without restrictive legend, which makes the certificate
immediately tradable in the market. The settlement agreement
contains one provision which may expose the Company to potential
liability in that the Company has agreed to make up any difference
between the settlement amount of $70,000 and the actual sales
price of the stock.
In addition, the Company has unpaid judgments totaling
approximately $55,000, 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
Kunming Xinmao Petrochemical Industrial Co. Ltd. For approximately
US$452,000 During the fiscal year ended March 31, 1999, a
significant portion of the Company's physical assets, including
most of its rail cars and trucks, were attached and executed upon
based upon this judgment. Subsequently, Everlasting
International, Ltd. Sued the plaintiff in this matter in a Hong
Kong Court 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 June 1, 1999
was $0.10 bid and $0.125 ask.
<PAGE>
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.
High Low
Period Bid Bid
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
At June 1, 1999, the Company had approximately 504 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 sold the following unregistered securities.
From January 1, 1997 through December 31, 1997, the Company sold 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 Loan 59,842 4(2)
10/27/97 687,379 Albert Figueroa Loan 21,695 4(2)
10/27/97 391,788 John Prentice Loan 50,932 4(2)
10/27/97 55,000 William Vauthrin Loan 7,150 4(2)
------------
Total 2,995,194
</TABLE>
From January 1, 1998 through December 31, 1998, the Company sold 3,939,058
shares of its common stock that was valued at $322,912 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>
2/4/98 373,224 Albert Figueroa Loan 7,065 4(2)
2/4/98 1,553,921 Daniel Mendez Loan 29,414 4(2)
2/4/98 422,345 Albert Figueroa Loan 17,950 4(2)
2/4/98 1,039,568 Daniel Mendez Loan 44,182 4(2)
9/24/98 350,000 Saddington Settle 78,256 4(2)
9/24/98 200,000 Equitrade Settle 146,045 4(2)
Securities debt
-------------
3,939,058
</TABLE>
From January 1, 1999 through March 31, 1999, the Company sold no shares of
its common stock.
<PAGE>
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. There are 200,000,000 authorized shares of
Common Stock of which 18,863,021 shares were issued/outstanding as
of March 31, 1998.
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>
Largo Vista Group,
Ltd.
Financial Statements
March 31, 1999
<PAGE>
JAAK (JACK) OLESK
Certified Public Accountant
270 North Canon Drive, Suite 203
Beverly Hills, California 90210
(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 March 31, 1999, and the related
consolidated statements of operations, stockholders' equity
<deficit> and cash flows for each of the two years in the period
ended March 31, 1999. 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 March 31,
1999, and results of its operations and its cash flows for each of
the two years in the period ended March 31, 1999, in conformity
with generally accepted accounting principles.
International Accounting Standards vary in certain significant
respects from generally accepted accounting principles in the
United States. Application of generally accepted accounting
principles in the United States would have affected results of
operations for each of the years in the two-year period ended
March 31, 1999 and shareholders' <deficit> as of March 31, 1999 to
the extent summarized in Note 5 to the consolidated financial
statements.
The accompanying consolidated financial statements as of and for
the two year period ended March 31, 1999 are stated in United
States dollars. See Note 5 for basis of translation of operations
of the Chinese subsidiary.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Balance Sheet
March 31, 1999
ASSETS
<S> <C>
Current Assets
Cash (Note 5) $ 23,361
Inventories 261,749
Prepaid expenses and
advances to suppliers 79,041
------------
Total current assets 364,151
Fixed assets
Property and equipment 953,627
<Less> accumulated depreciation <334,256>
-------------
Total fixed assets 619,371
Other Assets
Deferred expenses 41,499
-------------
Total other assets 41,499
-------------
$ 1,025,021
=============
</TABLE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY <DEFICIT>
<S> <C>
Current Liabilities
Accounts payable $ 1,109,406
Accrued expenses 166,923
Taxes Payable 46,558
Notes Payable 1,644,927
Advances and Other 2,270,012
-------------
Total current liabilities 5,237,826
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> <12,534,913>
------------
Total stockholders' equity <deficit> <4,212,805>
------------
$ 1,025,021
============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Operations
For the Year Ended
March 31, March 31,
1999 1998
<S> <C> <C>
Revenue $ 1,353,868 $ 2,192,751
Cost of sales 1,241,115 2,161,744
------------ ------------
Gross profit 112,753 31,007
Expenses:
General and administrative
and Other 1,266,536 2,648,087
------------- -------------
<Loss> From operations <1,153,783> <2,617,080>
------------- -------------
Other income <expense>:
Interest <expense> <190,176> <185,615>
Other income 247,968 70,427
------------ ------------
<Loss> before income taxes <1,095,991> <2,732,268>
Income taxes - -
------------ ------------
NET <LOSS> $ <1,095, 991> $ <2,732,268>
============= ============
<LOSS> per share of
common stock $ <.01> $ <.02>
============ ===========
Weighted average
shares outstanding 182,878,257 179,635,655
============ ===========
</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>
Net< loss> for
the three
months ended
March 31,
1998 - - - <273,998> <273,998>
----------- -------- -------- ------------ -----------
Balance at
March 31,
1998 179,923,963 179,924 7,819,273 <11,438,922> <3,439,725>
Common shares
issued for
services
and debt
extinguishment
during the
year ended
March 31,
1999 3,939,058 3,939 318,972 - 322,911
Net <loss> for
the year
ended March
31, 1999
- - - <1,095,991> <1,095,991>
----------- -------- ----------- ------------ --------------
Balance at
March 31,
1999 183,863,021 $183,863 $8,138,245 $<12,534,913> $<4,212,805>
============= ========= =========== ============= ===============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Largo Vista Group, Ltd.
Consolidated Statements of Cash Flows
For the Year Ended
March 31, March 31,
1999 1998
<S> <C> <C>
Cash flows from <for>
Operating activities:
Net <loss> $<1,095,991> $<2,732,268
Adjustments to reconcile
net<loss> to cash flows
<for> operating activities:
Changes in assets and
liabilities:
Accounts payable 205,614 615,617
Accrued expenses 15,615 7,595
Other 527,632 1,299,393
------------ ------------
Net cash flows <for>
operating activities: <347,130> <809,663>
Cash flows from
investing activities: - -
Cash flows from
financing activities:
Issuance of
common stock 322,911 804,588
------------- ------------
Increase <decrease> in cash <24,219> <5,075>
Cash at beginning of year 47,580 52,655
------------- -------------
Cash at end of year $ 23,361 $ 47,580
============= =============
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>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements
March 31, 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, (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.
Cash and Cash Equivalents
The Company does not have a cash equivalents policy.
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)
March 31, 1999
Note 1 - Summary of Significant Accounting Policies (continued)
Property and equipment and depreciation
Property and equipment valuation is discussed in Note 5.
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 seven years. (Also see Note 6 - Litigation).
Notes payable
Notes payable consists primarily of short-term loans,
primarily non-interest bearing demand notes.
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.
Changes in Fiscal Year
In 1996, the Company changed its fiscal year from the year
ending September 30 to a calendar year. In 1998, the Company
changed its fiscal year from a calendar year to the year ending
March 31. As the Company operates at substantial losses during all
parts of the year, management believes these changes will not
mislead a reader of the financial statements.
Reclassifications
Certain prior year amounts have been reclassified to conform
with 1999 classifications.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
March 31, 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
$1,095,991, and $2,732,268 for the years ended March 31, 1999, and
1998, respectively. Additionally, current liabilities exceed
current assets by $4,873,675 at March 31, 1999. The Company also
has litigation contingencies (see Note 6) 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. 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
March 31, 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 March 31, 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)
March 31. 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 Runming 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)
March 31, 1999
Note 5 - Chinese subsidiary
Kunming Xinmao Petrochemical
Industrial Co., Ltd.
(Stated in United States dollars)
Condensed Balance Sheet-March 31, 1999
(Separate Financial Statements)
ASSETS
<S> <C>
Current Assets
Cash $ 23,361
Inventories 261,749
Prepaid expenses and
advances to suppliers 79,041
----------
Total current assets 364,151
Fixed assets
Property and equipment 953,627
<Less> accumulated depreciation <334,256>
-----------
Total fixed assets 619,371
Other Assets
Deferred expense 41,499
-----------
Total other assets 41,499
-----------
$ 1,025,021
===========
</TABLE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY <DEFICIT>
<S> <C>
Current Liabilities
Accounts payable $ 684,627
Accrued expenses 166,923
Taxes payable 46,558
Notes payable 1,644,927
Advances and other 2,270,012
----------
Total current liabilities 4,813,047
Shareholders' Equity <Deficit> <3,788,026>
-----------
$ 1,025,021
============
</TABLE>
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
March 31, 1999
Note 5 - Chinese subsidiary (continued)
Kunming Xinmao Petrochemical
Industrial Co., Ltd.
(Stated in United States dollars)
Condensed Statement of Operations
For the Year Ended March 31, 1999
(Separate Financial Statements)
<TABLE>
<S> <C>
Sales $ 1,353,868
Cost of sales 1,241,115
-----------
Gross profit 112,753
Expenses 783,964
-----------
NET <LOSS> $ <671,211>
============
</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 March 31, 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
March 31, 1999, or any other date.
At March 31, 1999 the entire cash balance of $23,361 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 March 31, 1999 Largo Vista Group, Ltd.,
including all its subsidiaries, had no United States dollars on
hand or in banks, anywhere in the world.
Valuation of property and equipment under international
accounting standards involves revaluation if certain conditions are
met. United States generally accepted accounting ("US GAAP")
principles do not recognize this treatment. US GAAP would have
resulted in approximately $100,000 in additional losses for the
year ended March 31, 1999 and an approximately $200,000 greater
shareholders deficit as of March 31, 1999.
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)
March 31, 1999
Note 6 - Litigation Contingencies
Miramar International Hotel Management Corp. vs. Largo Vista Group,
Ltd.
As of May 15, 1999
Orange County Superior Court Case No. 757285, filed December
30,1995, Bernard F. Kruer represented the Company in this matter.
The settlement agreement was signed on October 4, 1996, and a
Notice of Settlement and Conditional Dismissal was filed on
November 6, 1996.
Although the matter has been settled, one unresolved issue
remains. The case involved several large hotel bills incurred by
former CEO, John A. Jones. On January 30, 1995, Mr. Jones
assigned one of his personal Company stock certificates
(Certificate No. 12570 in the amount of 315,000 shares) over to the
hotel to cover the bill, and the Plaintiff has transferred the
certificate to its name without restrictive legend which makes the
certificate immediately tradable in the market. The settlement
agreement contains one provision which may expose the Company to
potential liability in that the Company has agreed to make up any
difference between the settlement amount of $70,000 and the actual
sales price of the stock.
The attorney for the Plaintiff has possession of the stock
certificate and is the process of opening an account with Sutro &
Co., Newport Beach, California. The Company has agreed to assist
the Plaintiff in establishing the trading account. The only
remaining task for the Plaintiff is to open the account, deliver
the stock certificate and sell the stock. Until the stock is sold,
it will be impossible to determine the amount of further liability,
if any. Assuming the 315,000 shares of stock will sell for $0.16
per share ($50,400), the remaining liability to the Company is
$19,600 plus interest @ 10%. At April 24, 1999 the Company's
shares were trading only at approximately $0.10. The outcome of
this matter is uncertain.
<PAGE>
Notes to Consolidated Financial Statements (continued)
March 31, 1999
Note 6 - Litigation Contingencies (continued)
Harry H.L. Wang, et.al. vs. Largo Vista, Inc.
As of May 15, 1999
Orange County Superior Court Case No. 725161, filed February
14, 1994, the Company was not represented by counsel in the matter.
This was a shareholder's derivative action resulting from the
actions of former CEO John A. Jones in 1993. The cause of action
was misrepresentation.
Judgment entered in favor of Plaintiff against Largo Vista,
Inc. on July 13, 1994 in the amount of $35,350 and has not been
satisfied. An abstract of judgment was filed on August 12, 1994,
and recorded in the office of the Orange County Recorder on August
23, 1994 as document number 94-517890. There is no documentation
regarding interest, but it should be assumed interest is accruing
at the legal rate (10%) from the date of judgment. Management has
made several attempts to settle the matter, but has been unable to
do so as of this date. The Plaintiff has not made any attempts to
levy on the judgment.
Sheraton Hua Ting vs. Largo Vista, Inc.
As of May 15, 1999
Orange County Municipal Court, Harbor Judicial District, Case
No. 94C1071, filed February 23, 1994. The Company was not
represented by counsel in the matter. This was a breach of
contract action.
Default Judgment entered in favor of Plaintiff against Largo
Vista, Inc. on May 9, 1994 in the amount of $9,095 has not been
satisfied. Interest is accruing at the legal rate (10%) from the
date of judgment. The judgment still stands and no effort has been
made by the Plaintiff to collect on the judgment, or by Largo
Vista, Inc. to settle the matter.
<PAGE>
Largo Vista Group, Ltd.
Notes to Consolidated Financial Statements (continued)
March 31, 1999
Note 6 - Litigation Contingencies (continued)
Office of Telephone Management vs. Largo Vista Group, Ltd.
As of Hay 15, 1999
Orange County Municipal Court, Harbor Judicial District, Case
No. 95C1833, filed April 3, 1995, the Company was not represented
by counsel in the matter. This was a breach of contract action.
Judgment was entered in favor of Plaintiff against Largo Vista
Group, Ltd. on June 26, 1995, in the amount of $7,229.57 has not
been satisfied. A Writ of Execution was filed on July 5, 1995 plus
$7.00 costs plus interest @ amount of $1.98 per day from June 26,
1995. The judgment still stands and no effort has been made by the
Plaintiff to collect on the judgment, or by the Company to settle
the matter.
L.A. Commercial Group, Inc. vs. Largo Vista Group, Ltd.
As of May 15, 1999
Orange County Municipal Court, Harbor Judicial District, Case
No. 97HC6402, the Company was not represented by counsel in the
matter. This was a breach of contract action.
Judgment entered in favor of Plaintiff against Largo Vista
Group, Ltd. on March 25, 1998, in the amount of $3,566.27 has not
been satisfied. A Writ of Execution was filed on April 10, 1998.
The judgment still stands and no effort has been made by the
Plaintiff to collect on the judgment, or by the Company to settle
the matter.
Chinese litigation
As of May 15, 1999
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 Kunming
Xinmao Petrochemical Industrial Co. Ltd. for approximately
US$452, 000. During the fiscal year ended March 31, 1999 a
significant portion of the Company's physical assets, including
most of its railcars and trucks, were attached and executed upon
based upon this judgment. Subsequently, Everlasting International,
Ltd. sued the plaintiff in this matter in a Hong Kong court and
prevailed. However, the other party has appealed. The final
resolution of this matter is uncertain.
None 7 - Related party transactions
Certain officers of Kunming Xinmao Petrochemical Industrial
Co., Ltd. had loans from that entity. In 1998, approximately
US$500, 000 of these loans were written off by the Company as
uncollectible.
<PAGE>
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
Beverly Hills, California
April 24, 1999
(except for note 6 which is dated May 15, 1999)
<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
3(ii) Bylaws
4 Instruments defining rights of security holders, including
indentures.
None.
9 Voting Trust Agreement
None
10 Material Contracts
(a) Joint Venture Agreement
(b)
(c)
(d)
(e)
(f)
21 Subsidiaries of the Registrant
Name Domicile
24 Power(s) of Attorney
27 Financial Data Schedule
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
President /s/Daniel J. Mendes July 19, 1999
Daniel J. Mendez
Secretary/Treasurer /s/Albert N. Figueroa July 19, 1999
Albert N. Figueroa
Director /s/ Deng Shan July 19, 1999
Deng Shan
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 Yangizi 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 projccts 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 Whithin 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;
<PAGE>
7 Both parties agree that within the next six months after the
signing of this mou, 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: Kunmi xinmmao petrochemical Industry Co. Ltd.
Chairman of the Board: Deng Shan
Date: March 14, 1999
Memorandum
Nama, 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 Yangitzi River:
Whereas Xinmoa 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 Xinmoa 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 diligeance 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.
<PAGE>
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
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, Kunminmg
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. Mergence 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)
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: _______________________
Agreement and Plan of Reorganization
Largo & Everlasting
(b_reorg1.lvg)
Page 1 of 17
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.
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.
<PAGE>
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.
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
<PAGE>
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 100,000,000 shares at a par
value of $.002 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.
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.
<PAGE>
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.
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.
<PAGE>
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.
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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
Restated Articles of Incorporation
Largo Vista Group, Ltd.
(AOI_Rstd-3 1998)
Page 1 of 7
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.
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.
<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
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
<PAGE>
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
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
<PAGE>
No.0320559
Name of Chinese
Company
English Kunmin 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
Part A: Kunmin
916,600 USD
Kumin Haowei Enterprise (Group)
Co., Ltd.
Part 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
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
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
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.
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
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
August28, 1998
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
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.
<PAGE>
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:
(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)
11
