-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G7k5hTH5MMM/PH6L4ipsRMCDxmvWOaRyvXY62Rf613UE0fjKLxm2BpCFl6nH6N11 5+mCBufjfj8b69GYKi61tw== 0000943440-06-000437.txt : 20061204 0000943440-06-000437.hdr.sgml : 20061204 20061204145447 ACCESSION NUMBER: 0000943440-06-000437 CONFORMED SUBMISSION TYPE: 10-12G PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20061204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Lunar Growth CORP CENTRAL INDEX KEY: 0001381806 IRS NUMBER: 000000000 STATE OF INCORPORATION: E9 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-12G SEC ACT: 1934 Act SEC FILE NUMBER: 000-52340 FILM NUMBER: 061253919 BUSINESS ADDRESS: STREET 1: C/O STUARTS CORPORATE SERVICES STREET 2: CAYMAN FINANCIAL CENTER, P.O. BOX 2510 CITY: GEORGE TOWN, GRAND CAYMAN STATE: E9 ZIP: KY1-1104 BUSINESS PHONE: 281-488-3883 MAIL ADDRESS: STREET 1: 700 GEMINI STREET 2: SUITE 100 CITY: HOUSTON STATE: TX ZIP: 77027 10-12G 1 lunarfm10.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10 GENERAL FORM FOR REGISTRATION OF SECURITIES Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934 Commission file number ______ Lunar Growth Corporation ------------------------------------------------------ (Exact name of registrant as specified in its charter) Cayman Islands N/A - ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or formation) Identification Number) c/o Nautilus Global Partners, LLC 700 Gemini, Suite 100 Houston, Texas 77058 - ---------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 212-869-7000 -------------- Copies to: Lawrence G. Nusbaum, Esq. Gusrae, Kaplan, Bruno & Nusbaum PLLC 120 Wall Street New York, NY 10005 (212) 269-1400 Securities to be registered under Section 12(b) of the Act: Title of each class Name of Exchange on which to be so registered each class is to be registered ------------------- ------------------------------ None N/A Securities to be registered under Section 12(g) of the Exchange Act: Ordinary Shares, par value $0.0001 ---------------------------------- Title of each class ITEM 1. DESCRIPTION OF BUSINESS General Lunar Growth Corporation ("we", "us", "our" or the "Company") was organized under the laws of the Cayman Islands on September 27, 2006. Since inception, we have been engaged in organizational efforts. We are a blank check development stage company formed for the purpose of acquiring, through a stock exchange, asset acquisition or similar business combination an operating business. We have not conducted negotiations or entered into a letter of intent concerning any target business. Plan of Operation We do not currently engage in any business activities that generate revenue and do not expect to generate revenue until such time as we have successfully completed a business combination. Our operations will consist entirely of identifying, investigating and conducting due diligence on potential businesses for acquisition, none of which will generate revenues. In addition to the costs that we have incurred in connection with our formation and the filing of this registration statement, including legal, accounting and auditing fees, we expect to incur costs associated with identifying acquisition targets and completing necessary due diligence. We believe we will be able to meet the costs of these activities through use of funds that we have raised in private sales of our ordinary shares. If we require additional funds, we will seek additional investments from our shareholders, management or other investors. Narrative Description of Business Although we have not identified or entered into any agreements with a potential target business to date, we intend to focus on targets located primarily in Asia, South America and Eastern Europe, as we believe that businesses with operating history and growth potential in these locations could benefit significantly from access to the United States capital markets and may offer the potential of capital appreciation stemming from economic growth in such emerging markets. The analysis of business opportunities will be undertaken by or under the supervision of our officer and directors who will have a large amount of flexibility in seeking, analyzing and participating in potential business opportunities. In our efforts to analyze potential acquisition targets, we will consider the following kinds of factors: * Potential for growth, indicated by new technology, anticipated market expansion or new products; * Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole; * Strength and diversity of management, either in place or scheduled for recruitment; * Capital requirements and anticipated availability of required funds; * The extent to which the business opportunity can be advanced; * The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and * Other relevant factors. In applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. If necessary, we will retain third party consultants to aid us in our evaluation of potential targets, provided that we have the necessary capital available. 1 We anticipate that the selection of a business combination will be complex and extremely risky. In addition, we believe that as a result of general economic conditions, shortages of available capital, the attractiveness of obtaining access to United States capital markets, and the perceived benefits of becoming a publicly traded company, that there may be numerous firms seeking business combination partners such as ourselves, thus adding to the complexity. Competition In identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business objective similar to ours. There are numerous blank check companies that have gone public in the United States that have significant financial resources, that are seeking to carry out a business plan similar to our business plan. Furthermore, there are a number of additional blank check companies that are still in the registration process or are about to file registration statements, both under the Securities and Exchange Act and under the Securities Act. Additionally, we may be subject to competition from other companies looking to expand their operations through the acquisition of a target business. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there may be numerous potential target businesses that we could acquire with our currently available funds, our ability to compete in acquiring certain sizable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of a target business. Our management believes, however, that our status as a reporting entity and potential access to the United States public equity markets may give us a competitive advantage over privately-held entities having a similar business objective as ours in acquiring a target business with significant growth potential on favorable terms. We also believe that because we are incorporated in the Cayman Islands we may be attractive from a tax perspective to potential targets operating outside of the United States, as the majority of non-operating companies that are seeking reverse merger candidates are incorporated in the United States, which potentially adds an additional layer of taxation. Further, if we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the target business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively. Forms of Acquisition The structure of a potential business combination, either through an acquisition or a merger, will depend upon a number of factors, including, the nature of the target entity's ownership structure, its business structure and the relative negotiating strengths of the parties to the transaction. It is our intention to structure a business combination so that the consideration we offer the owners of the target company consists primarily of ordinary shares. Such a structure provides the benefit of conserving our capital, but has the potential drawback of resulting in our current shareholders no longer having control of a majority of our voting ordinary shares following such a transaction. If a business combination is structured as an acquisition, we may be able to structure the transaction so that the vote or approval by our shareholders is not required. If a business combination is structured as a merger, then we may be required to call a shareholders' meeting and obtain the approval of the holders of a majority of the outstanding ordinary shares. The necessity to obtain such shareholder approval may result in delay and additional expense in the consummation of any proposed transaction and may also give rise to certain appraisal rights to dissenting shareholders. Accordingly, we will seek to structure any such transaction so as not to require shareholder approval. 2 We currently anticipate that we will be able to effect only one business combination, due primarily to our limited financing, and the dilution of interest for present and prospective shareholders, which is likely to occur if we offer our ordinary shares to obtain a target business. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another. Employees We presently have no employees apart from our officers. We expect no significant changes in the number of our employees other than such changes, if any, incident to a business combination. Available Information We have elected to file this Form 10 registration statement on a voluntary basis in order to become a reporting company under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a reporting company, we will be obligated to file with the SEC certain interim and periodic reports including an annual report containing audited financial statements, as required under the Exchange Act. The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800- SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov. ------------------ We are not required to deliver an annual report to security holders and at this time we do not anticipate the distribution of such a report. ENFORCEABILITY OF CIVIL LIABILITIES We are incorporated in the Cayman Islands because our management believes that incorporation in the Cayman Islands offer a number of benefits, including, but not limited to, the following: * political and economic stability; * an effective judicial system; * a favorable tax system; * the absence of exchange control or currency restrictions; and * the availability of professional and support services. However, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include: * the Cayman Islands has a less developed body of securities laws as compared to the United States and provides significantly less protection to investors; and * Cayman Islands companies may not have standing to sue before the federal courts of the United States. We have been advised that there is uncertainty as to whether the courts of the Cayman Islands would: * recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws 3 of the United States or any state in the United States; or * entertain original actions brought in the Cayman Islands or China against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. We have been advised that a final and conclusive judgment in the federal or state courts of the United States under which a sum of money is payable, other than a sum payable in respect of taxes, fines, penalties or similar charges, may be subject to enforcement proceedings as a debt in the courts of the Cayman Islands under the common law doctrine of obligation. ITEM 1A. RISK FACTORS An investment in our ordinary shares is extremely speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties described below and the other information contained in this registration statement before purchasing any of our securities. The risks and uncertainties set forth below are not the only ones facing us. Additional risks and uncertainties may also adversely impact our proposed business plan and prospects. In the event that any of the following risks actually materialize, our proposed business plan, and/or prospects would likely suffer significantly. In such event, you could lose all or a substantial part of the money that you paid for our ordinary shares. We are a development stage company with no operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective. Because we are a recently formed development stage company with no operations and/or functions to date, you will have no basis upon which to evaluate our ability to achieve our business objective, which is to acquire an operating business. We have not conducted any negotiations regarding acquisitions and we have no current plans, arrangements or understandings with any prospective acquisition candidates. We are dependent on the ability of management to locate, attract and effectuate a suitable acquisition candidate; management intends to devote only a limited amount of time to seeking a target company. The nature of our operations is highly speculative and there is a consequent risk of loss of your investment. The success of our plan of operation will depend to a great extent on the operations, financial condition and management of an identified business opportunity. We cannot assure you that we will be successful in locating candidates with established operating histories. In the event we complete a business combination with a privately held company, the success of our operations may be dependent upon management of the successor firm and numerous other factors beyond our control. While seeking a business combination, management anticipates devoting no more than a few hours per week to the Company's affairs. Our officers have not entered into written employment agreements with us and are not expected to do so in the foreseeable future. This limited commitment may adversely impact our ability to identify and consummate a successful business combination. There is no public market for our ordinary shares. There is no public trading market for our ordinary shares and none is expected to develop unless and until, among other things, we complete an acquisition, file a selling shareholder registration statement under the Securities Act, and such ordinary shares are accepted for trading on a trading medium in the United States, the occurrence of any of which no assurances can be given when, if, or ever. Because of our limited resources and intense competition for private companies suitable for an acquisition of the type contemplated by management, we may not be able to consummate an acquisition on suitable terms, if at all. We expect to encounter intense competition from other entities having business objectives similar to ours. The highly competitive 4 market for the small number of business opportunities could reduce the likelihood of consummating a successful business combination. Many of the entities that we will be in competition with are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates. A large number of established and well-financed entities, including small public companies and venture capital firms, are active in mergers and acquisitions of companies that may be desirable target candidates for us. Nearly all these entities have significantly greater financial resources, technical expertise and managerial capabilities than we do; consequently, we will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. These competitive factors may reduce the likelihood of our identifying and consummating a successful business combination. We have no agreements for a business combination or other transaction. We have no arrangement, agreement or understanding with respect to engaging in a merger with, joint venture with or acquisition of, a private or public entity. No assurances can be given that we will successfully identify and evaluate suitable business opportunities or that we will conclude a business combination. Management has not identified any particular industry or specific business within an industry for evaluation. We cannot guarantee that we will be able to negotiate a business combination on favorable terms, and there is consequently a risk that funds allocated to the purchase of our shares will not be invested in a company with active business operations. Management intends to devote only a limited amount of time to seeking a target company which may adversely impact our ability to identify a suitable acquisition candidate. While seeking a business combination, management anticipates devoting no more than a few hours per week to the Company's affairs in total. Our officer has not entered into a written employment agreement with us and is not expected to do so in the foreseeable future. This limited commitment may adversely impact our ability to identify and consummate a successful business combination. The time and cost of preparing a private company to become a public reporting company may preclude us from entering into a merger or acquisition with the most attractive private companies. Target companies that fail to comply with SEC reporting requirements may delay or preclude acquisition. Sections 13 and 15(d) of the Exchange Act require reporting companies to provide certain information about significant acquisitions, including certified financial statements for the company acquired, covering one, two, or three years, depending on the relative size of the acquisition. The time and additional costs that may be incurred by some target entities to prepare these statements may significantly delay or essentially preclude consummation of an acquisition. Otherwise suitable acquisition prospects that do not have or are unable to obtain the required audited statements may be inappropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable. Our business will have no revenues unless and until we merge with or acquire an operating business. We are a development stage company and have had no revenues from operations. We may not realize any revenues unless and until we successfully merge with or acquire an operating business. Further, we anticipate that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention require the expenditure of significant financial resources. If we decide not to participate in a specific business opportunity, or if we fail to consummate a business combination, the costs incurred by us related to a transaction may result in the loss of the related costs incurred. We may require additional funds in order to operate a business that we acquire. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage 5 or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks. If we obtain a business that requires additional capital that we cannot provide, it could have a material adverse effect on our business and could result in the loss of your entire investment. We expect to issue additional ordinary shares in a merger or acquisition, which will result in substantial dilution. Our Memorandum of Association authorizes the issuance of a maximum of 50,000,000 ordinary shares. Any merger or acquisition effected by us may result in the issuance of additional securities without shareholder approval and may result in substantial dilution in the percentage of our ordinary shares held by our then existing shareholders. We have not conducted any market research or identified business opportunities, which may affect our ability to identify a business to merge with or acquire. We have neither conducted nor have others made available to us results of market research concerning prospective business opportunities. Therefore, we have no assurances that market demand exists for a merger or acquisition as contemplated by us. Our management has not identified any specific business combination or other transactions for formal evaluation by us, such that it may be expected that any such target business or transaction will present such a level of risk that conventional private or public offerings of securities or conventional bank financing will not be available. There is no assurance that we will be able to acquire a business opportunity on terms favorable to us. Decisions as to which business opportunity to participate in will be unilaterally made by our management, which may act without the consent, vote or approval of our shareholders. We cannot assure you that following a business combination with an operating business, our ordinary shares will be listed on NASDAQ or any other securities exchange. Following a business combination, we may seek the listing of our ordinary shares on NASDAQ or the American Stock Exchange. However, we cannot assure you that following such a transaction, we will be able to meet the initial listing standards of either of those or any other stock exchange, or that we will be able to maintain a listing of our ordinary shares on either of those or any other stock exchange. After completing a business combination, until our ordinary shares are listed on the NASDAQ or another stock exchange, we expect that our ordinary shares would be eligible to trade on the OTC Bulletin Board, another over-the-counter quotation system, or on the "pink sheets," where our shareholders may find it more difficult to dispose of shares or obtain accurate quotations as to the market value of our ordinary shares. In addition, we would be subject to an SEC rule that, if it failed to meet the criteria set forth in such rule, imposes various practice requirements on broker-dealers who sell securities governed by the rule to persons other than established customers and accredited investors. Consequently, such rule may deter broker-dealers from recommending or selling our ordinary shares, which may further affect its liquidity. This would also make it more difficult for us to raise additional capital following a business combination. Our shareholders may face different considerations in protecting their interests because we are incorporated under Cayman Islands law. Our corporate affairs are governed by our Memorandum and Articles of Association, by the Companies Law (as revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of Cayman Islands. The common law in the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands and from English common law, the decisions of whose courts are of persuasive authority but are not binding on a court in the Cayman Islands. Cayman Islands law relating to the right of shareholders and the fiduciary duties of our directors may not be as established and 6 may differ from provision under statutes or judicial precedent in existence in jurisdictions in the United States. As a result, our public shareholders may have more difficulty in protecting their interests in actions against the management, directors or our controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States. Judgments against us may be difficult or impossible to enforce in foreign jurisdictions. We are a Cayman Islands company and a substantial majority of our assets are located outside the U.S. In addition, a majority of our directors and officers reside outside the U.S. As a result, it may not be possible to effect service of process within the U.S. upon such persons, including with respect to matters arising under U.S. or foreign securities or other applicable laws. There is uncertainty as to whether the courts of the Cayman Islands, Hong Kong or China would recognize or enforce judgments of United States courts obtained against us or such persons based upon the civil liability provisions of the securities laws of the United States, or be competent to hear original actions based upon these laws. In addition, any judgments obtained in the U.S. against us, including judgments predicated on the civil liability provisions of the securities laws of the United States or any state thereof, may be not collectible within the U.S. Moreover, China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts within the U.S., Japan or most western countries. Hong Kong has no arrangement for the reciprocal enforcement of judgments within the U.S. As a result, if you intend to enforce a judgment obtained in the U.S. against our assets located outside the U.S., such judgment may be subject to re-examination of the merits of the action by a foreign court and face additional procedures and other difficulties which would not be required for enforcement of such judgment in the U.S. Enforcing such judgments may be difficult or impossible. If we effect a business combination with a company located outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations. We intend to effect a business combination with a company located outside of the United States. If we do so, we could be subject to special considerations and/or risks associated with companies operating in the target business' home jurisdiction, including any of the following: * rules and regulations or currency conversion or corporate withholding taxes on individuals; * tariffs and trade barriers; * regulations related to customs and import/export matters; * longer payment cycles; * tax issues, such as tax law changes and variations in tax laws as compared to the United States; * currency fluctuations; * challenges in collecting accounts receivable; * cultural and language differences; and * employment regulations. We cannot assure you that we would be able to adequately address these additional risks. If we were unable to do so, our operations, and those of the business that we acquired, could be materially adversely affected. 7 If we effect a business combination with a company located outside of the United States, the laws applicable to such company will likely govern all of our material agreements and we may not be able to enforce our legal rights. If we effect a business combination with a company located outside of the United States, the laws of the country in which such company operates will govern almost all of the material agreements relating to its operations. We cannot assure you that the target business will be able to enforce any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws. Authorization of Preference Shares. Our Memorandum of Association authorizes the issuance of up to 1,000,000 preference shares with designations, rights and preferences determined from time to time by our Board of Directors. Accordingly, our Board of Directors is empowered, without shareholder approval, to issue preference shares with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of our ordinary shares. In the event of issuance, the preference shares could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of our Company. Although we have no present intention to issue any preference shares, we cannot assure you that we will not do so in the future. We may become a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. investors. Based on the nature of our business, we do not expect to be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for our current taxable year. However, whether or not we are a PFIC for any taxable year will be based in part on the character of our income and assets and the value of our assets from time to time, which will be based in part on the trading price of our ordinary shares, once they commence trading, which may be volatile. Accordingly, it is possible that we may be a PFIC for any taxable year. If we were treated as a PFIC for any taxable year during which a U.S. investor held an ordinary share, certain adverse U.S. federal income tax consequences could apply to the U.S. investor. See "Taxation-United States Federal Income Taxation-Passive Foreign Investment Company Rules." If we effect a business combination with a United States corporation we could face adverse tax effects under the United States tax laws. Although we currently intend to focus on Asia, South America and Eastern Europe for potential business combination targets, if we were to effect a business combination with a U.S. corporation, such a combination could subject us to potentially adverse tax effects as a result of changes made to the U.S. Internal Revenue Code of 1986, as amended, by the American Jobs Creation Act of 2004 relating to the treatment of domestic business entities which expatriate from the United States to a foreign jurisdiction. These new provisions generally apply to the direct or indirect acquisition of substantially all of the properties of a domestic enterprise by a foreign corporation if there is at least 60% or 80% of continuing share ownership in the successor foreign entity by the former stockholders of the U.S. corporation and substantial business activities are not conducted in the jurisdiction in which such successor is created or organized. In the event we effected a business combination with a U.S. corporation, and were subsequently subject to these new rules, it could cause us to lose certain tax benefits, which could make the 8 transaction more expensive to us, which could have an adverse effect on our operations. See "Taxation - Certain Material United States Federal Income Tax Considerations - Tax Effects if We Acquire a U.S. Corporation" If we are deemed to be a controlled foreign corporation, or CFC, we may be subject to certain U.S. income tax risks associated with the CFC rules under the U.S. Internal Revenue Code of 1986, as amended. We will be considered a CFC for any year in which our United States shareholders that each own (directly, indirectly or by attribution) at least 10% of our voting shares (each a "10% U.S. Holder") together own more than 50% of the total combined voting power of all classes of our voting shares or more than 50% of the total value of our shares. If we were classified as a CFC, such classification would have many complex results, one of which is that if you are a 10% U.S. Holder on the last day of our taxable year, you will be required to recognize as ordinary income your pro rata share of certain of our income (including both ordinary earnings and capital gains) for the taxable year, whether or not you receive any distributions on your ordinary shares during that taxable year. If we are deemed to be a CFC in the future, these rules would then apply to holders of our ordinary shares. Accordingly, U.S. persons should consider the possible application of the CFC rules before making an investment in our ordinary shares. See "Certain Tax Considerations-Certain Material United States Federal Income Tax Considerations-Controlled Foreign Corporation Status and Related Consequences." ITEM 2. FINANCIAL INFORMATION Critical Accounting Policies and Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, contingent assets and liabilities and the related disclosures in the accompanying financial statements. Changes in these estimates and assumptions could materially affect our financial position, results of operations or cash flows. Management considers an accounting estimate to be critical if: (a) it requires assumptions to be made that were uncertain at the time the estimate was made, and (b) changes in the estimate or different estimates that could have been selected could have a material impact on our consolidated results of operations or financial condition. All other significant accounting policies that we employ are presented in the notes to the consolidated financial statements. The following discussion presents information about the nature of our most critical accounting policies and estimates, our assumptions or approach used and the effects of hypothetical changes in the material assumptions used to develop each estimate. Loss Per Ordinary Share - Basic loss per ordinary share is based on the weighted effect of ordinary shares issued and outstanding, and is calculated by dividing net loss by the weighted average shares outstanding during the period. Diluted loss per ordinary share is calculated by dividing net loss by the weighted average number of ordinary shares used in the basic loss per share calculation plus the number of ordinary shares that would be issued assuming exercise or conversion of all potentially dilutive ordinary shares outstanding. The Company does not present diluted earnings per share for years in which it incurred net losses as the effect is antidilutive. At September 30, 2006, there were no potentially dilutive ordinary shares outstanding. Income Taxes - Lunar Growth Corporation was registered as an Exempted Company in the Cayman Islands, and therefore, is not subject to Cayman Island income taxes for 20 years from the Date of Inception. While the 9 Company has no intentions of conducting business operations in the United States, the Company would be subject to United States income taxes based on activities occurring in the United States. The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. This statement prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. In assessing the realization of deferred tax assets, management considers whether it is likely that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during periods in which those temporary differences become deductible. Recently Issued Accounting Pronouncements - Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements. Selected Financial Data The selected financial data presented below has been derived from our audited financial statements appearing elsewhere herein. Period from September 27, 2006 (Date of Inception) to September 30, 2006 ------------------------------ Revenues $ - Expenses 2,592 Net Loss (2,592) Basic and diluted loss per share $ (.00) Total Assets $ - Management's Discussion and Analysis of Financial Condition and Results of Operations. Disclosure Regarding Forward Looking Statements Statements, other than historical facts, contained in this Registration Statement on Form 10, including statements of potential acquisitions and our strategies, plans and objectives, are "forward- looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Although we believe that our forward looking statements are based on reasonable assumptions, we caution that such statements are subject to a wide range of risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are important factors that could cause actual results to differ materially from the forward looking statements, including, but not limited to; the effect of existing and future laws, governmental regulations and the political and economic climate of the United States; the effect of derivative activities; and conditions in the capital markets. In particular, careful consideration should be given to cautionary statements made in this Form 10 in the Risk Factors section. We undertake no duty to update or revise these forward-looking statements. When used in this Form 10, the words, "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate" and similar expressions are intended to identify forward-looking statements, 10 although not all forward-looking statements contain these identifying words. Because these forward-looking statements involve risks and uncertainties, actual results could differ materially from those expressed or implied by these forward-looking statements for a number of important reasons, including those discussed under Item 1A. "Risk Factors" and elsewhere in this Form 10. General We are a development stage company formed solely for the purpose of identifying and entering into a business combination with a privately held business or company, domiciled and operating in an emerging market, that is seeking the advantages of being a publicly held corporation whose stock is eventually traded on a major United States stock exchange. We intend to focus on targets located primarily in Asia, South America and Eastern Europe, as we believe that businesses with operating history and growth potential in these locations would benefit significantly from access to the United States capital markets and may offer the potential of capital appreciation stemming from the economic growth in such emerging markets. Plan of Operation As of the date of this registration statement, we have not engaged in any business activities that generate revenue. Our activities to date have been primarily focused upon our formation. We may conduct private offerings of our ordinary shares, the proceeds of which we intend to use for payment of costs associated with formation, accounting and auditing fees, legal fees, and costs associated with identifying acquisition targets and completing necessary due diligence. In addition, we expect to incur costs related to filing periodic reports with the Securities and Exchange Commission. If necessary, we believe that we will be able to raise additional funds through additional private sales of ordinary shares, by obtaining loans from our shareholders, management or other investors. We may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering. Liquidity and Capital Resources As of September 30, 2006, we had no cash available, and had current liabilities of $2,482 to a related party. Quantitative Disclosures About Market Risk None. ITEM 3. DESCRIPTION OF PROPERTY We do not own or rent any property. We utilize the office space and equipment of our officer and directors at no cost. ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Security ownership of certain beneficial owners. The following table sets forth, as of November 16, 2006, the number of Ordinary Shares owned of record and beneficially by our 11 executive officers, directors and persons who hold 5% or more of our outstanding Ordinary Shares.
Amount and Nature of Percentage Name and Address Beneficial Ownership of Class ---------------- -------------------- ---------- David Richardson* 100,000 9.1% Joseph Rozelle* 0 Nautilus Global Partners, LLC 700 Gemini, Suite 100 Houston, TX 77058 1,000,000 90.9% Mid-Ocean Consulting Limited Bayside House Bayside Executive Park West Bay Street & Blake Road Nassau, Bahamas 100,000 9.1% All Officers and Directors as a group (2 individuals) 100,000 9.1%
* The address of Messrs. Richardson and Rozelle is c/o Nautilus Global Business Partners, 700 Gemini, Suite 100, Houston, Texas 77058. ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS Our officers and directors and additional information concerning them are as follows:
Name Age Position ---- --- -------- David Richardson 49 Director Joseph Rozelle 33 President, Director
David Richardson. David Richardson has been one of our directors since September 2006. Mr. Richardson is an Executive Director of Lighthouse Capital Insurance Company (Fortis' insurance affiliate in the Cayman Islands), and the President and CEO of Mid-Ocean Consulting Group Ltd., which guides both institutions and individuals on sophisticated international structuring and tax related strategies. From 2003 through 2005, Mr. Richardson served as the President of Oceanic Bank and Trust Limited's Insurance Specialty Unit. Prior thereto, in 1996, he became the Head of Private Banking for MeesPierson, a Dutch merchant/private bank in the Cayman Islands. Following that, he became the Managing Director for MeesPierson (Bahamas) Ltd. and Chairman of Lighthouse Capital Insurance Company. David Richardson began his professional career in the investment business over 20 years ago, working for one of Canada's preeminent investment houses; Walwyn, Stodgell, Cochrane and Murray (now Merrill Lynch Canada). In 1987, he joined the Bank of Bermuda in Bermuda as Portfolio Manager, where he personally oversaw the management of in excess of $350 million for the Bank's top tier clientele. From there he moved to the Bank of Bermuda's wholly owned trust subsidiary, Bermuda Trust Company serving as Assistant Manager and Director of Americas' marketing activities. Mr. Richardson is a graduate of the University of Toronto (Hon.BSc) with a post graduate degree from Northwestern University (NTS Graduate), as well as possessing a number of professional affiliations including a Member of STEP, the ITPA and the Bahamas International Insurance Association. Joseph Rozelle. Joseph Rozelle has been one of our directors since September 2006. Mr. Rozelle is currently the President of 12 Nautilus Global Partners, a Limited Liability Company dedicated to facilitation of "going public" transactions for foreign and domestic operating companies on the public United States Exchanges. Prior to joining Nautilus in 2006, Mr. Rozelle was a consultant with Accretive Solutions, providing Sarbanes-Oxley Compliance consulting and other accounting related consulting services. Prior thereto, Mr. Rozelle worked with Momentum Equity Group, LLC and Momentum Bio Ventures as a Principal Analyst in the spring of 2002 and winter of 2003, respectively. At Momentum, Mr. Rozelle was responsible for financial modeling, due diligence, and preparation of investment summaries for client companies. Prior to joining Momentum, Mr. Rozelle was an associate with Barclays Capital in the Capital Markets Group, specializing in asset securitization. Prior thereto, he was the Assistant Vice President of Planning and Financial Analysis for a regional commercial bank and was responsible for all of the corporate financial modeling, risk analysis, mergers and acquisition evaluation, and corporate budgeting. Before his tenure in commercial banking, Mr. Rozelle served as a senior auditor with Arthur Andersen, where he was involved in a variety of filings with the SEC involving corporate mergers, spin-offs, public debt offerings, and annual reports. Mr. Rozelle holds a Bachelors of Business Administration degree from the University of Houston and a Masters of Business Administration degree from the Jesse H. Jones School of Management at Rice University. In addition, he is a Certified Public Accountant in the State of Texas. Mr. Rozelle is also the sole director and sole executive officer of VPGI, Inc., a public corporation. Each of our directors is elected by holders of a majority of the ordinary shares to serve for a term of one year and until his successor is elected and qualified, which is generally at the annual meeting of shareholders. Officers serve at the will of the board, subject to possible future employment agreements which would establish term, salary, benefits and other conditions of employment. No employment agreements are currently contemplated. Significant Employees None Family Relationships None Involvement in Certain Legal Proceedings There have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of our Company during the past five years. Board Committees Our Board of Directors has no separate committees and our Board of Directors acts as the Audit Committee. We do not have a qualified financial expert serving on our Board of Directors. Involvement of Officers and Directors in Blank Check Companies Other than as set forth below, none of our officers or directors has been or currently is a principal of, or affiliated with, a blank check company. Mr. Rozelle is an officer and Messrs. Richardson and Rozelle are currently serving on the boards of directors for the following entities, each incorporated under the laws of the Cayman Islands: * Dragon Acquisition Corporation * Tiger Growth Corporation * Emerald Acquisition Corporation * Ruby Growth Corporation 13 * Matador Acquisition Corporation * China Growth Corporation * Global Growth Corporation * Action Acquisition Corporation * Pan Asian Corporation * Juniper Growth Corporation * Seven Seas Acquisition Corporation * Summit Growth Corporation * Bering Growth Corporation * Compass Acquisition Corporation Each of the foregoing entities was formed for the purpose of engaging in an acquisition or business combination of an operating business. ITEM 6. EXECUTIVE COMPENSATION None of our officers or directors has received any cash remuneration since inception. Officers will not receive any remuneration until the consummation of an acquisition. No remuneration of any nature has been paid for or on account of services rendered by a director in such capacity. None of the officers and directors intends to devote more than a few hours a week to our affairs. It is possible that, after we successfully consummates a business combination with an unaffiliated entity, that entity may desire to employ or retain one or a number of members of our management for the purposes of providing services to the surviving entity. We have not adopted retirement, pension, profit sharing, stock option or insurance programs or other similar programs for the benefit of our employees. There are no understandings or agreements regarding compensation our management will receive after a business combination that is required to be included in this table, or otherwise. ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE On September 27, 2006, we issued 1,000,000 and 100,000 ordinary shares to Nautilus Global Partners and Mid-Ocean Consulting Limited (collectively, the "Founders") at a price of $0.0001 per share. Mr. Rozelle, one of our directors is the President of Nautilus Global Partners, LLC. All ongoing and future transactions between us and any of our officers and directors or their respective affiliates, including loans by our officers and directors, will be on terms believed by us to be no less favorable than are available from unaffiliated third parties and such transactions or loans, including any forgiveness of loans, will require prior approval in each instance by a majority of our uninterested "independent" directors (to the extent we have any) or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. ITEM 8. LEGAL PROCEEDINGS We are not party to any legal proceedings. 14 ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S ORDINARY EQUITY AND RELATED STOCKHOLDER MATTERS. Our ordinary shares have not been listed for trading on the OTC Bulletin Board or on any stock exchange and we do not anticipate applying for listing on any exchange until after such time that we have completed a business acquisition. As of September 30, 2006, there were 2 record holders of 1,100,000 Ordinary Shares. We have not paid any cash dividends to date and we do not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize available funds for development of our business. ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES. On September 27, 2006, we issued 1,000,000 ordinary shares to Nautilus Global Partners and 100,000 shares to Mid-Ocean Consulting Limited, for aggregate consideration of $110 at a purchase price of $.0001 per share. Such shares were issued in connection with our organization pursuant to the exemption from registration contained in Section 4(2) of the Securities Act as they were sold to sophisticated, accredited, wealthy individuals and entities. No underwriting discounts or commissions were paid with respect to such sales. ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED General We are a Cayman Islands company and our affairs are governed by our memorandum and articles of association and the Companies Law (2004 Revision) of the Cayman Islands, or the Companies Law. The following are summaries of material provisions of our memorandum and articles of association and the Companies Law insofar as they relate to the material terms of our ordinary shares. We have filed copies of our complete memorandum and articles of association and the form of our new amended and restated articles of association as exhibits to this registration statement. The following summary description relating to our share capital does not purport to be complete and is qualified in its entirety by our memorandum and articles of association attached as an exhibit hereto. As of November 20, our authorized share capital consists of 50,000,000 ordinary shares, par value $0.0001 per share and 1,000,000 preference shares, par value $0.0001 per share. As of the date hereof, there are 1,100,000 ordinary shares outstanding and no preference shares outstanding. Ordinary Shares Voting Holders of ordinary shares are entitled to one vote for each ordinary share on all matters to be voted on by the shareholders. Holders of ordinary shares do not have cumulative voting rights. Holders of ordinary shares are entitled to share ratably in dividends, if any, as may be declared from time to time by the Board of Directors in its discretion from funds legally available therefor. In the event of a liquidation, dissolution or winding up of the Company, the holders of ordinary shares are entitled to share pro rata all assets remaining after payment in full of all liabilities. Holders of ordinary shares have no preemptive rights to purchase ordinary shares. There are no conversion or redemption rights or sinking fund provisions with respect to the ordinary shares. Dividends The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors. We have not paid any dividends on our ordinary shares to date and do not intend to pay 15 dividends prior to the completion of a business combination. The payment of dividends in the future will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business combination will be within the discretion of our then board of directors. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board does not anticipate declaring any dividends in the foreseeable future. Preference Shares We are authorized to issue 1,000,000 blank check preference shares, $0.0001 par value per share with designations, rights and preferences determined from time to time by our Board of Directors. TAXATION The following summary of the material Cayman Islands and United States federal income tax consequences of an investment in our ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date hereof, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences under state, local and other tax laws. Certain Cayman Islands Taxation Considerations The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties. There are no exchange control regulations or currency restrictions in the Cayman Islands. Pursuant to Section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, we have obtained an undertaking from the Governor- in-Council: * that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciation shall apply to us or our operations; and * that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on the shares, debentures or other of our obligations. The undertaking for us is for a period of 20 years from inception. Certain Material United States Federal Income Tax Considerations The following is a discussion of the material U.S. federal income tax considerations applicable to the purchase, ownership and disposition of ordinary shares by U.S. Holders (as defined below) and Non-U.S. Holders (as defined below). This discussion deals only with our ordinary shares held as capital assets by holders. This discussion does not cover all aspects of U.S. federal income taxation that may be relevant to the purchase, ownership or disposition of our ordinary shares by investors in light of their particular circumstances. In particular, this discussion does not address all of the tax considerations that may be relevant to certain types of investors subject to special treatment under U.S. federal income tax laws, such as the following: 1. brokers or dealers in securities or currencies; 16 2. financial institutions; 3. pension plans; 4. regulated investment companies; 5. real estate investment trusts; 6. cooperatives; 7. tax-exempt entities; 8. insurance companies; 9. persons holding ordinary shares as part of a hedging, integrated, conversion or constructive sale transaction or a straddle; 10. traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; 11. persons liable for alternative minimum tax; 12. U.S. expatriates; 13. partnerships or entities or arrangements treated as partnerships or other pass through entities for U.S. federal tax purposes (or investors therein); or 14. U.S. Holders (as defined below) whose "functional currency" is not the U.S. dollar. Furthermore, this discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended (the ''Code''), the Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as of the date hereof. Such authorities may be repealed, revoked, modified or subject to differing interpretations, possibly on a retroactive basis, so as to result in U.S. federal income tax consequences different from those discussed below. This discussion does not address any state, local or non-U.S. tax considerations. For purposes of this discussion, you will be considered a "U.S. Holder" if you beneficially own our ordinary shares and you are for U.S. federal income tax purposes one of the following: * a citizen or an individual resident of the United States; * a corporation (or other entity taxable as a corporation) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; * an estate the income of which is subject to U.S. federal income taxation regardless of its source; or * a trust if you (i) are subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all of your substantial decisions or (ii) have a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. You will be considered a "Non-U.S. Holder" if you beneficially own our ordinary shares and your are not a U.S. Holder or a partnership or an entity or arrangement treated as a partnership for U.S. federal income tax purposes. If you are a partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes, the U.S. federal income tax treatment of your partners generally will depend upon the status of such partners and your activities. We urge you to consult your own tax advisors concerning the particular U.S. federal income tax consequences to you of the purchase, ownership and disposition of our ordinary shares, as well as any consequences to you arising under state, local and non-U.S. tax laws. Consequences to U.S. Holders The following discussion applies to you only if you are a U.S. Holder. Dividends Subject to the passive foreign investment company rules and the controlled foreign corporation rules discussed below, distributions of 17 cash or property that we pay in respect of our ordinary shares will constitute dividends for U.S. federal income tax purposes to the extent paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) and will be includible in your gross income upon receipt and taxed at ordinary rates applicable to ordinary income. Distributions to you in excess of our earnings and profits will be treated first as a return of capital (with a corresponding reduction in your tax basis in the ordinary shares) to the extent of your tax basis in the ordinary shares on which the distribution was made, and then as capital gain from the sale or exchange of such ordinary shares. We expect that our distributions will not be eligible for the dividends-received deduction for corporate U.S. Holders or constitute "qualified dividend income" (which is taxable at the rates generally applicable to long- term capital gains) for U.S. Holders taxed as individuals. Subject to applicable limitations, dividends that are "qualified dividend income" paid to a U.S. Holder who is an individual, trust or estate, or a "U.S. Individual Holder," in taxable years beginning before January 1, 2009, will be taxable at a maximum rate of 15%. In order to be treated as "qualified dividend income" and taxable to such U.S. Individual Holders at preferential tax rates the following conditions must be satisfied: (1) the ordinary shares must be readily tradable on an established securities market in the United States (such as the Nasdaq National Market); (2) we are not a passive foreign investment company for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we are or will be); (3) the U.S. Individual Holder has owned the ordinary shares for the required holding period set forth under the Code; and (4) the U.S. Individual Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. There is no assurance that any dividends paid on our ordinary shares will be eligible for these preferential rates in the hands of a U.S. Individual Holder. Any dividends we pay which are not eligible for these preferential rates will be taxed to a U.S. Individual Holder at regular rates applicable to ordinary income. Legislation has been recently introduced in the United States Senate which, if enacted in its present form, would preclude our dividends from qualifying for such preferential rates prospectively from the date of enactment. Sale, Exchange or Other Taxable Disposition of Ordinary Shares Subject to the passive foreign investment company rules and the controlled foreign corporation rules discussed below, upon the sale, exchange or other taxable disposition of ordinary shares, you will recognize capital gain or loss equal to the difference between the amount realized on such sale, exchange or taxable disposition and your tax basis in the ordinary shares sold. Such gain or loss generally will be long-term capital gain or loss if your holding period with respect to such ordinary shares is more than one year at the time of its disposition. The deductibility of capital losses is subject to limitations. Passive Foreign Investment Company Rules Special United States tax rules apply to a company that is considered a passive foreign investment company, or PFIC. Under these rules, we will be classified as a PFIC for United States federal income tax purposes in any taxable year in which either: * at least 75% of our gross income for the taxable year is passive income; or * at least 50% of the gross value, determined on the basis of a quarterly average, of our assets is attributable to assets that produce or are held for the production of passive income. Passive income generally includes dividends, interest, royalties, rents (not including certain rents and royalties derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income. If a foreign corporation owns directly or indirectly at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving directly its proportionate share of the other corporation's income. We do not expect to be a PFIC for our 2006 tax year or in the foreseeable future. We expect to conduct our affairs in a manner so 18 that we will not qualify as a PFIC in the foreseeable future. Our determination of whether we are a PFIC is, however, not binding on the U.S. Internal Revenue Service (the "IRS"). We cannot assure you that we will not be a PFIC in any future year. If we are treated as a PFIC, and you are a U.S. Holder that does not make a mark-to-market election, as described below, you will be subject to special rules with respect to: * any gain you realize on the sale or other disposition of your ordinary shares; and * any excess distribution that we make to you (generally, any distributions to you during a single taxable year that are greater than 125% of the average annual distributions received by you in respect of the ordinary shares during the three preceding taxable years or, if shorter, your holding period for the ordinary shares or ordinary shares). Under these rules: * the gain or excess distribution will be allocated ratably over your holding period for the ordinary shares; * the amount allocated to the taxable year in which you realized the gain or excess distribution will be taxed as ordinary income; * the amount allocated to each prior year, with certain exceptions, will be taxed at the highest tax rate in effect for that year; and * the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such year. Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions by a PFIC. If you own ordinary shares in a PFIC that are treated as marketable stock, you may make a mark-to-market election. If you make this election, you will not be subject to the PFIC rules described above. Instead, in general, you will include as ordinary income each year the excess, if any, of the fair market value of your ordinary shares at the end of the taxable year over your adjusted basis in your ordinary shares. These amounts of ordinary income will not be eligible for the favorable tax rates applicable to qualified dividend income or long- term capital gains. You will also be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of your ordinary shares over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). Your basis in the ordinary shares will be adjusted to reflect any such income or loss amounts. Your gain, if any, recognized upon the sale of your ordinary shares will be taxed as ordinary income. In addition, notwithstanding any election you make with regard to the ordinary shares, dividends that you receive from us will not constitute qualified dividend income to you if we are a PFIC either in the taxable year of the distribution or the preceding taxable year. Dividends that you receive that do not constitute qualified dividend income are not eligible for taxation at the 15% maximum rate applicable to qualified dividend income. Instead, you must include the gross amount of any such dividend paid by us out of our accumulated earnings and profits (as determined for United States federal income tax purposes) in your gross income, and it will be subject to tax at rates applicable to ordinary income. If you own ordinary shares during any year that we are a PFIC, you must file IRS Form 8621. You should consult your own tax advisor regarding the application of the PFIC rules to our ordinary shares in your particular circumstances, including the availability of making an election to avoid adverse United States federal income tax consequences under the PFIC rules in the event we are determined to be a PFIC in a future year. 19 Controlled Foreign Corporation Status and Related Tax Consequences Our status as a CFC depends upon the ownership of our ordinary shares, there can be no assurance that we will not be deemed a CFC in the future. We will be considered a CFC for any year in which U.S. Holders that each own (directly, indirectly or by attribution) at least 10% of our voting shares (each a "10% U.S. Holder") together own more than 50% of the total combined voting power of all classes of our voting shares or more than 50% of the total value of our shares. If we were classified as a CFC, such classification would have many complex results, one of which is that if you are a 10% U.S. Holder on the last day of our taxable year, you will be required to recognize as ordinary income your pro rata share of certain of our income (including both ordinary earnings and capital gains) for the taxable year, whether or not you receive any distributions on your ordinary shares during that taxable year. In addition, special foreign tax credit rules would apply. Your adjusted tax basis in your ordinary shares would be increased to reflect any taxed but undistributed earnings and profits. Any distribution of earnings and profits that previously had been taxed would result in a corresponding reduction in your adjusted tax basis in your ordinary shares and would not be taxed again when you receive such distribution. Subject to a special limitation in the case of individual 10% U.S. Holders that have held their ordinary shares for more than one year, if you are a 10% U.S. Holder, any gain from disposition of your ordinary shares will be treated as dividend income to the extent of accumulated earnings attributable to such ordinary shares during the time you held such ordinary shares. If in any given year we are deemed to be both a PFIC and a CFC, if you are a 10% U.S. Holder, would be subject to the CFC rules and not the PFIC rules with respect to your ownership of ordinary shares. You should consult your own tax advisor regarding the application of the CFC rules to our ordinary shares in your particular circumstances, in the event that we are determined to be a CFC in a future year. Tax Effects if we Acquire a U.S. Corporation The American Jobs Creation Act of 2004 added Section 7874 to the Code which applies to domestic business entities which expatriate from the United States to a foreign jurisdiction, which is referred to as an "inversion". Although we currently do not intend to acquire a U.S. Corporation, if we did affect such an acquisition, we could become subject to certain adverse U.S. federal income tax consequences under the new provisions of Section 7874 of the Code. These new provisions generally apply to the direct or indirect acquisition of substantially all of the properties of a domestic enterprise by a foreign corporation if there is at least 60% or 80% of continuing share ownership in the successor foreign entity by the former stockholders of the U.S. corporation and substantial business activities are not conducted in the jurisdiction in which such successor is created or organized. In cases where the ownership continuity by the former U.S. corporation shareholders is between 60% and 80%, Section 7874 of the Code operates to increase the tax cost of the inversion transaction by denying the U.S. corporation the use of its tax attributes (such as net operating losses) and by imposing a tax on certain income received from related entities during the 10 year period following the inversion transaction. In cases where the ownership continuity by the former U.S. corporation shareholders in the new foreign parent is 80% or more, the new rules deny the traditional benefits of an inversion transaction because they provide that the new foreign parent will, for all tax purposes, be treated as a U.S. corporation. Information Reporting and Backup Withholding In general, information will be reported to the IRS each year regarding the amount of any dividends on our ordinary shares and the proceeds of any sale of our ordinary shares paid to you during such year unless you are an exempt recipient (such as a corporation). A backup withholding tax will apply to such payments if you fail to provide your taxpayer identification number or to make required certifications or you have been notified by the IRS that you are subject to backup withholding. Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules will 20 be allowed as a refund or a credit against your U.S. federal income tax liability provided that you timely furnish the required information to the IRS. If you are a U.S. Holder that owns more than 10% of the aggregate value of our ordinary shares (or you are one of our officers or directors and you are a United States citizen or resident) you may be required to file an information return on IRS Form 5471. A U.S. Holder that purchases ordinary shares with cash generally will be required to file Form 926 with the IRS if (i) immediately after the transfers such investor holds, directly or indirectly, at least 10% of our voting shares, or (ii) the amount of cash transferred in exchange for ordinary shares during the 12-month period ending on the date of the transfer exceeds $100,000. In the event a U.S. Holder fails to file any such required form, such holder could be required to pay a substantial penalty. In addition, depending on your particular circumstances, you may be required to file certain other IRS information returns with respect to an investment in ordinary shares. Consequences to Non-U.S. Holders The following discussion applies you only if you are a Non-U.S. Holder. Special rules may apply to you if you are a CFC or a PFIC or are otherwise subject to special treatment under the Code. In such case, you should consult your own tax advisor to determine the U.S. federal, state, local and non-U.S. tax consequences that may be relevant to you with respect to an investment in ordinary shares. Dividends You generally will not be subject to U.S. federal income tax or withholding tax on dividends received from us with respect to the ordinary shares, unless that income is effectively connected with your conduct of a trade or business in the United States. If you are entitled to the benefits of a U.S. income tax treaty with respect to those dividends, that income is generally taxable only if it is attributable to a permanent establishment maintained by you in the United States. Sale, Exchange or Other Taxable Disposition of Ordinary Shares You generally will not be subject to U.S. federal income tax or withholding tax with respect to any gain recognized on a sale, exchange or other taxable disposition of shares of our ordinary shares unless: * the gain is effectively connected with your conduct of a trade or business in the United States, or, if certain tax treaties apply, is attributable to a permanent establishment you maintain in the United States; or * if you are an individual and you are present in the United States for 183 or more days in the taxable year of the sale, exchange or other taxable disposition, and you meet certain other requirements If you are an individual and are described in the first bullet above, you will be subject to tax on any gain derived from the sale, exchange or other taxable disposition of ordinary shares under regular graduated U.S. federal income tax rates. If you are an individual and are described in the second bullet above, you will be subject to a flat 30% tax on any gain derived from the sale, exchange or other taxable disposition of ordinary shares that may be offset by U.S. source capital losses (even though you are not considered a resident of the United States). If you are a corporation and are described in the first bullet above, you will be subject to tax on your gain under regular graduated U.S. federal income tax rates and, in addition, may be subject to the branch profits tax on your effectively connected earnings and profits for the taxable year, which would include such gain, at a rate of 30%, or at such lower rate as may be specified by an applicable income tax treaty. Information Reporting and Backup Withholding You may be required to establish your exemption from information reporting and backup withholding by certifying your status on IRS Form W-8BEN, W-8ECI or W-8IMY, as applicable. 21 If you are a Non-U.S. Holder and you sell your ordinary shares to or through a U.S. office of a broker, the payment of the proceeds is subject to both U.S. backup withholding and information reporting unless you certify that you are a non-U.S. person, under penalties of perjury, or you otherwise establish an exemption. If you sell your ordinary shares through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to you outside the United States, then information reporting and backup withholding generally will not apply to that payment. However, U.S. information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made to you outside the United States, if you sell your ordinary shares through a non-U.S. office of a broker that is a U.S. person or that has some other contacts with the United States. Such information reporting requirements will not apply, however, if the broker has documentary evidence in its records that you are a non-U.S. person and certain other conditions are met, or you otherwise establish an exemption. The IRS may make information reported to you and the IRS available under the provisions of an applicable income tax treaty to the tax authorities in the country in which you reside. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability, if any, provided the required information is timely furnished by you to the IRS. You should consult your own tax advisors regarding the filing of a U.S. tax return for claiming a refund of any such backup withholding. ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Cayman Islands law does not limit the extent to which a company's articles of association may provide for indemnification of officers and directors, except to the extent any such provision may beheld by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our articles of association provide for indemnification of our officers and directors for any liability incurred in their capacities as such, except through their own willful negligence or default. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is theretofore unenforceable. ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The financial statements required to be included in this registration statement appear at the end of the registration statement beginning on page F-1. ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. There are not and have not been any disagreements between us and our accountants on any matter of accounting principles, practices or financial statement disclosure. ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements: The list of financial statements filed as part of this registration statement is provided on page F-1. 22 (b) Exhibits: Exhibit Number Description ------- ----------- 3.1 Memorandum and Articles of Association 23 Lunar Growth Corporation (A Development Stage Company) Index to Financial Statements PAGE ---- Report of Independent Registered Public Accounting Firm......... F-2 Balance Sheet as of September 30, 2006.......................... F-3 Statement of Operations for the period September 27, 2006 (date of inception) through September 30, 2006.................. F-4 Statement of Shareholders' Deficit for the period September 27, 2006 (date of inception) through September 30, 2006......... F-5 Statement of Cash Flows for the period September 27, 2006 (date of inception) through September 30, 2006........................................................ F-6 Notes to Financial Statements................................... F-7 F-1 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders Lunar Growth Corporation: We have audited the accompanying balance sheet of Lunar Growth Corporation (the Company) (a development stage company) as of September 30, 2006, and the related statements of operations, shareholders' deficit, and cash flows for the period from inception (September 27, 2006) through September 30, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we 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. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lunar Growth Corporation as of September 30, 2006, and the results of its operations and its cash flows for the period from inception (September 27, 2006) through September 30, 2006, in conformity with generally accepted accounting principles in the United States of America. The accumulated deficit during the development stage for the period from date of inception through September 30, 2006 is $2,592. Helin, Donovan, Trubee & Wilkinson, LLP /s/Helin, Donovan, Trubee & Wilkinson, LLP November 17, 2006 Houston, Texas F-2 Lunar Growth Corporation (A Development Stage Company) Balance Sheet As of September 30, 2006 ASSETS Current assets Cash $ - ------------ Total assets $ - ============ LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities Payable to affiliate $ 2,482 ------------ Total current liabilities 2,482 ------------ Commitments and contingencies - ------------ Shareholders' deficit Preference shares, $0.0001 par value, 1,000,000 shares authorized, none issued and outstanding - Ordinary shares, $0.0001 par value, 50,000,000 shares authorized, 1,100,000 shares issued and outstanding 110 Additional paid in capital - Deficit accumulated during the development stage (2,592) ------------ Total Shareholders' Deficit (2,482) ------------ $ - ============ The accompanying notes are an integral part of these financial statements. F-3 Lunar Growth Corporation (A Development Stage Company) Statement of Operations For the period from September 27, 2006 (Date of Inception) through September 30, 2006 Revenues $ - ------------ Expenses Formation and other costs 2,592 ------------ Total operating expenses 2,592 ------------ Operating loss (2,592) Income tax expense (benefit) - ------------ NET LOSS $ (2,592) ============ Basic and diluted loss per share $ (0.00) ============ Weighted average ordinary shares outstanding - basic and diluted 1,100,000 ============ The accompanying notes are an integral part of these financial statements. F-4 Lunar Growth Corporation (A Development Stage Company) Statement of Shareholders' Deficit For the period from September 27, 2006 (Date of Inception) to September 30, 2006
Deficit Accumulated Additional during the Preferred Stock Ordinary Shares Paid In Development Shares Amount Shares Amount Capital Stage Totals ------ ------ ----------- --------- ---------- ----------- -------- Founder shares issued at inception at September 27, 2006 - $ - 1,100,000 $ 110 $ - $ - $ 110 Net loss - - - - - (2,592) (2,592) ------ ------ ----------- --------- ---------- ----------- -------- Balance as of September 30, 2006 - $ - 1,100,000 $ 110 $ - $ (2,592) $ (2,482) ====== ====== =========== ========= ========== =========== ========
The accompanying notes are an integral part of these financial statements. F-5 Lunar Growth Corporation (A Development Stage Company) Statement of Cash Flows For the period from September 27, 2006 (Date of Inception) through September 30, 2006 Cash flows from operating activities Net loss $ (2,592) Adjustments to reconcile net loss to net cash provided by operating activities: Shares issued to founder for payment of formation costs 110 Changes in: Payable to affiliate 2,482 --------- Net cash provided by operating activities - --------- Cash flows from investing activities - --------- Net cash provided by investing activities - --------- Cash flows from financing activities - --------- Net cash provided by financing activities - --------- Net increase in cash - Cash at beginning of the period - --------- Cash at end of the period $ - ========= Supplemental disclosures of cash flow information: Interest paid $ - ========= Income taxes paid - ========= The accompanying notes are an integral part of these financial statements. F-6 Lunar Growth Corporation (A Development Stage Company) Notes to Financial Statements NOTE 1 - Organization, Business and Operations On September 27, 2006, Lunar Growth Corporation (the "Company") was formed in the Cayman Islands with the objective to acquire, or merge with, an operating business. The Company's formation costs of $2,592 were financed through the issuance of 1,100,000 shares of ordinary shares at par value of $0.0001 per share together with a payable to the Founders of $2,482. At September 30, 2006, the Company had not yet commenced any operations. All activity from September 27, 2006 ("Date of Inception") through September 30, 2006 relates to the Company's formation. The Company selected June 30 as its fiscal year-end. The Company, based on its proposed business activities, is a "blank check" company. The Securities and Exchange Commission defines such a company as "a development stage company" as it either has no specific business plan or purpose, or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person; and has issued 'penny stock,' as defined in Rule 3a51-1 under the Securities Exchange Act of 1934. Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in its securities, either debt or equity, until the Company concludes a business combination with an operating entity. The Company was organized to acquire a target company or business seeking the perceived advantages of being a publicly-held company and, to a lesser extent, that desires to employ the Company's funds in its business. The Company's principal business objective for the next 12 months and beyond will be to achieve long-term growth potential through a business combination rather than short-term earnings. The Company will not restrict its potential candidate target companies to any specific business, industry or geographical location. The analysis of new business opportunities will be undertaken by or under the supervision of the officers and directors of the Company. NOTE 2 - Summary of Significant Accounting Policies Basis of Presentation These financial statements are presented on the accrual basis of accounting in accordance with generally accepted accounting principles in the United State of America, whereby revenues are recognized in the period earned and expenses when incurred. The Company also follows Statement of Financial Accounting Standards ("SFAS") No. 7, "Accounting and Reporting for Development Stage Enterprises" in preparing its financial statements. Statement of Cash Flows For purposes of the statement of cash flows, we consider all highly liquid investments (i.e., investments which, when purchased, have original maturities of three months or less) to be cash equivalents. F-7 NOTE 2 - Summary of Significant Accounting Policies (Continued) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Loss Per Common Share Basic loss per common share is based on the weighted effect of common shares issued and outstanding, and is calculated by dividing net loss by the weighted average shares outstanding during the period. Diluted loss per common share is calculated by dividing net loss by the weighted average number of common shares used in the basic loss per share calculation plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding. The Company does not present diluted earnings per share for years in which it incurred net losses as the effect is antidilutive. At September 30, 2006, there were no potentially dilutive common shares outstanding. Income Taxes Lunar Growth Corporation was registered as an Exempted Company in the Cayman Islands, and therefore, is not subject to Cayman Island income taxes for 20 years from the Date of Inception. While the Company has no intention of conducting any business activities in the United States, the Company would be subject to United States income taxes based on such activities that would occur in the United States. The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. This statement prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. In assessing the realization of deferred tax assets, management considers whether it is likely that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during periods in which those temporary differences become deductible. Fair Value of Financial Instruments Our financial instruments consist of a payable to an affiliate. We believe the fair values of our payable reflect its respective carrying amounts. Recently Issued Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements. F-8 NOTE 3 - Liquidity and Capital Resources The Company has no revenues for the period from inception through September 30, 2006, and does not intend to realize revenues until the consummation of a merger with an operating entity. The Company's principal business objective for the next 12 months and beyond will be to achieve long-term growth potential through a business combination rather than short-term earnings. There can be no assurance that the Company will ever consummate the business combination; achieve or sustain profitability or positive cash flows from its operations, reduce expenses or sell ordinary shares. To date, the Company has funded its formation activities primarily through the issuance of its ordinary shares and a payable to affiliate. NOTE 4 - Payable to Affiliate The Company has a payable to affiliate of $2,482 to a Founder of the Company. The payable is non-interest bearing and payable on demand. NOTE 5 - Ordinary shares On September 27, 2006, the Company was formed with 1,100,000 shares of its restricted ordinary shares issued at par value of $0.0001 per share, for consideration of $110 to its founding shareholders. The stock, along with a payable issued to a Founder of $2,482 were the basis of the funding of the Company's formation costs to date. NOTE 6 - Preference shares The Company is authorized to issue 1,000,000 shares of preference shares with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors. At September 30, 2006, there was no preference shares issued or outstanding. NOTE 7 - Commitments and Contingencies The Company may become subject to various claims and litigation. The Company vigorously defends its legal position when these matters arise. The Company is not a party to, nor the subject of, any material pending legal proceeding nor to the knowledge of the Company, are any such legal proceedings threatened against the Company. F-9 SIGNATURES In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. Date: December 1, 2006 LUNAR GROWTH CORPORATION By: /s/ Joseph Rozelle ---------------------------------- Name: Joseph Rozelle Title: President EX-3.1 2 lunarfm10-ex3.txt [EXHIBIT 3.1] THE COMPANIES LAW (2004 REVISION) OF THE CAYMAN ISLANDS COMPANY LIMITED BY SHARES MEMORANDUM OF ASSOCIATION OF LUNAR GROWTH CORPORATION 1. The name of the Company is Lunar Growth Corporation. 2. The registered office of the Company shall be at the offices of Stuarts Corporate Services Ltd., P.O. Box 2510, Grand Cayman KY1-1104, Cayman Islands or at such other place as the directors of the Company may, from time to time, decide. 3. The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the Companies Law (2004 Revision), or as the same may be revised from time to time, or any other law of the Cayman Islands. 4. The Company shall have and be capable of exercising all the functions of a natural person of full capacity or body corporate in doing in any part of the world whether as principal, agent, contractor or otherwise whatever may be considered by it necessary for the attainment of its objects and whatever else may be considered by it as incidental or conducive thereto or consequential thereon, irrespective of any question of corporate benefit as provided by section 27(2) of the Companies Law (2004 Revision) including the power to make any alterations or amendments to its Memorandum and Articles of Association in the manner set out in its Articles of Association and including, but not limited to, the power to pay all expenses of and incidental to the promotion, formation and incorporation of the Company; to register the Company and do business in any other jurisdiction; to sell, lease or dispose of any property of the Company, to draw, make, accept, endorse, discount, execute and issue promissory notes, debentures, bills of exchange, bills of lading, warrants and other negotiable or transferable instruments; to lend money on the security of the undertaking or on all or any of the assets of the Company including uncalled capital or without security; to invest moneys of the Company in such manner as the directors of the Company determine; to promote other companies; to sell the undertaking of the Company for cash or any other consideration; to distribute assets in specie to members of the Company; to make charitable or benevolent donations; to pay pensions or gratuities or provide other benefits in cash or kind to directors, officers and/or employees of the Company, past or present and their families; to purchase directors and officers' liability insurance and to carry on any trade or business and generally to do all acts and things which in the opinion of the Company or the directors of the Company may be conveniently or profitably or usefully acquired and dealt with, carried on, executed or done by the Company in connection with the business aforesaid PROVIDED THAT the Company shall only carry on the businesses for which a license is required under the laws of the Cayman Islands when so licensed under the terms of such laws. 5. The liability of each member of the Company is limited to the amount if any, unpaid on the Shares held by such member. Page 1 Companies Law (2004 Revision) - ----------------------------- 6. The share capital of the Company is be US$5,100 divided into 50,000,000 shares of a par value of US$0.0001 each and 1,000,000 preferred shares of par value US$0.0001 each. Subject to the provisions of the Companies Law (2004 Revision) and the Articles of Association of the Company, the Company shall have the power to redeem or purchase any of its Shares and to increase, reduce, sub-divide or consolidate the share capital and to issue all or any part of its capital whether original, redeemed, increased or reduced with or without any preference, priority or special privilege or subject to any postponement of rights or to any conditions or restrictions whatsoever and so that unless the conditions of issue shall otherwise expressly provide every issue of Shares whether stated to be ordinary, preference or otherwise shall be subject to the powers on the part of the Company hereinbefore provided. 7. If the Company is registered as exempted, its operations shall be carried on subject to section 193 of the Companies Law (2004 Revision). The Company may effect and conclude contracts in the Cayman Islands, and exercise in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands but shall not otherwise trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands. 8. Subject to the provisions of the Companies Law (2004 Revision) and the Articles of Association, the Company may exercise the power contained in section 226 of the Companies Law (2004 Revision) to deregister in the Cayman Islands and register by way of continuation under the laws of any jurisdiction outside the Cayman Islands. Page 2 Companies Law (2004 Revision) - ----------------------------- I the undersigned, whose name and address is subscribed, am desirous of being formed into a Company in pursuance of this Memorandum of Association, and I agree to take the number of shares in the capital of the Company set opposite my name NAME AND ADDRESS NUMBER OF SHARES OF SUBSCRIBER TAKEN BY SUBSCRIBER /s/ Christopher Humphries - ------------------------- Chris Humphries ONE ORDINARY SHARE P.O. Box 2510 Grand Cayman KY1-1104 Cayman Islands Dated this 27 September 2006 /s/ Victoria Banks - ------------------------- Witness to the above signature Victoria J. Banks P.O. Box 2510 Grand Cayman KY1-1104 Cayman Islands I, D. Evadne Ebanks, Asst. Registrar of Companies, in and for the Cayman Islands, HEREBY CERFITY that this is a true copy of the Memorandum of Association of the Company. Dated this 27th of September 2006 /s/ D. Evadne Ebanks ------------------------ Page 3 TABLE OF CONTENTS THE COMPANIES LAW (2004 REVISION)............................. 1 THE COMPANIES LAW (2004 REVISION)............................. 1 TABLE A....................................................... 1 INTERPRETATION................................................ 1 COMMENCEMENT OF BUSINESS...................................... 3 REGISTERED OFFICE............................................. 3 REGISTER OF MEMBERS........................................... 3 SHARE CERTIFICATES............................................ 3 ISSUE OF SHARES............................................... 4 COMMISSION ON SALE OF SHARES.................................. 4 TRANSFER OF SHARES............................................ 4 TRANSMISSION OF SHARES........................................ 5 REDEMPTION AND PURCHASE OF OWN SHARES......................... 5 VARIATION OF RIGHTS ATTACHING TO SHARES....................... 6 FRACTIONAL SHARES............................................. 6 LIEN ON SHARES................................................ 6 CALLS ON SHARES............................................... 7 FORFEITURE OF SHARES.......................................... 8 ALTERATION OF CAPITAL......................................... 9 CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE............. 9 GENERAL MEETING OF MEMBERS.................................... 10 NOTICE OF GENERAL MEETINGS.................................... 10 PROCEEDINGS AT GENERAL MEETINGS............................... 10 VOTES OF MEMBERS.............................................. 11 MEMBERS' PROXIES.............................................. 12 COMPANIES ACTING BY REPRESENTATIVES AT MEETINGS............... 12 APPOINTMENT OF DIRECTORS...................................... 13 ALTERNATE DIRECTORS........................................... 13 POWERS AND DUTIES OF DIRECTORS................................ 14 BORROWING POWERS OF DIRECTORS................................. 14 APPOINTMENT OF OFFICERS....................................... 14 COMMITTEES OF DIRECTORS....................................... 14 PROCEEDINGS OF DIRECTORS...................................... 15 DISQUALIFICATION OF DIRECTORS................................. 17 DIVIDENDS..................................................... 17 FINANCIAL YEAR................................................ 18 ACCOUNTS AND AUDIT............................................ 18 CAPITALIZATION OF PROFITS..................................... 18 SHARE PREMIUM ACCOUNT......................................... 19 NOTICES....................................................... 19 THE SEAL...................................................... 20 INDEMNITY..................................................... 21 NON-RECOGNITION OF TRUSTS..................................... 21 WINDING UP.................................................... 21 AMENDMENT OF MEMORANDUM OF ASSOCIATION........................ 22 AMENDMENT OF ARTICLES OF ASSOCIATION.......................... 22 REGISTRATION BY WAY OF CONTINUATION........................... 22 THE COMPANIES LAW (2004 REVISION) OF THE CAYMAN ISLANDS COMPANY LIMITED BY SHARES ARTICLES OF ASSOCIATION OF LUNAR GROWTH CORPORATION TABLE A ------- 1. Table "A" in the First Schedule of the Companies Law (2004 Revision) shall not apply to this Company and the following shall comprise the Articles of Association of the Company: INTERPRETATION -------------- 2. In these Articles save where the context otherwise requires:- "Articles" or "Articles of Association" means these articles of association as originally adopted or as, from time to time, altered by Special Resolution; "certificate" or "share certificate" means a share certificate of the Company; "Companies Law" means the Companies Law (2004 Revision) of the Cayman Islands and any statutory amendment or re- enactment thereof. Where any provision of the Companies Law is referred to, the reference is to that provision as amended by any law for the time being in force; "Company" means the above named company; "debenture" means debenture stock, mortgages, bonds and any other such securities of the Company whether constituting a charge on the assets of the Company or not; "Directors" and "Board of Directors" means the directors of the Company for the time being or, as the case may be, the directors assembled as a board or as a committee thereof and "Director" means anyone of the Directors; "Members" means those persons who have agreed to become members of the Company and whose names have been entered in the Register of Members and includes each subscriber of the Memorandum and "Member" means any one of them; "Memorandum of Association" means the memorandum of association of the Company, as amended and re-stated from time to time; "month" means calendar month; Page 1 Companies Law (2004 Revision) - ----------------------------- "Ordinary Resolution" means a resolution:- (i) passed by a simple majority of the Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company and where a poll is taken regard shall be had in computing a majority to the number of votes to which each Member is entitled, or (ii) approved in writing by all of the Members entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Members and the effective date of the resolution so adopted shall be the date on which the instrument, or the last of such instruments if more than one, is executed; "paid up" means paid up as to the par value and any premium payable in respect of the issue of any shares and includes credited as paid up; "Registered Office" means the registered office for the time being of the Company; "Register of Members" means the register of members to be kept by the Company in accordance with section 40 of the Companies Law; "Seal" means the common seal of the Company (if adopted) including any facsimile thereof; "Share" and "Shares" means a share or shares in the capital of the Company, including a fraction of a share; "signed" includes a signature or representation of a signature affixed by mechanical means; "Special Resolution" means a resolution passed in accordance with section 60 of the Companies Law, being a resolution:- (i) passed by a majority of not less than two-thirds of such Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company of which notice specifying the intention to propose the resolution as a special resolution has been duly given and where a poll is taken regard shall be had in computing a majority to the number of votes to which each Member is entitled; or (ii) approved in writing by all of the Members entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Members and the effective date of the special resolution so adopted shall be the date on which the instrument or the last of such instruments if more than one, is executed; and "written" and "in writing" includes all modes of representing or reproducing words in visible form. 3 In these Articles save where the context otherwise requires:- 3.1 words importing the singular number shall include the plural number and vice versa; 3.2 words importing the masculine gender only shall include the feminine gender; 3.3 words importing persons only shall include companies or associations or bodies of persons, whether corporate or not; 3.4 "may" shall be construed as permissive and "shall" shall be construed as imperative; Page 2 Companies Law (2004 Revision) - ----------------------------- 3.5 a reference to a dollar or dollars (or $) and to a cent or cents (or c) is a reference to dollars and cents of the United States of America; and 3.6 references to a statutory enactment shall include reference to any amendment or re- enactment thereof for the time being in force 4. Subject to the two preceding Articles, any expressions defined in the Companies Law shall, if not inconsistent with the subject or context of these Articles, bear the same meaning in these Articles. COMMENCEMENT OF BUSINESS ------------------------ 5. The business of the Company may be commenced as soon after incorporation as the Directors see fit, notwithstanding that part only of the Shares may have been allotted or issued. REGISTERED OFFICE ----------------- 6. The Registered Office of the Company shall be at such place in the Cayman Islands as the Directors shall from time to time resolve by resolution. The Company may also establish and maintain such other offices and places of business and agencies outside the Cayman Islands as the Directors decide. REGISTER OF MEMBERS ------------------- 7. The Company shall maintain or cause to be maintained a Register of Members in accordance with the Companies Law. The Directors shall keep at the Registered Office or such other place as determined by them, the Register of Members, which shall contain the following information:- 7.1 the name and address of each Member, a statement of the Shares held by him and a statement of the amount paid or agreed to be considered as paid on such Shares; 7.2 the date on which each person was entered in the register as a Member; and 7.3 the date on which any person ceased to be a Member. SHARE CERTIFICATES ------------------ 8. Every Member shall, without payment, be entitled to a share certificate in such form as determined by the Directors. 9. Share certificates shall be signed by a Director of the Company and shall be numbered consecutively or otherwise identified and shall specify the number of Shares held by the Member and the amount paid up thereon. 10. In respect of a Share or Shares held jointly by several persons the Company shall not be bound to issue more than one certificate and delivery of a certificate for a Share or Shares to one of several joint holders shall be sufficient delivery to all joint holders. Page 3 Companies Law (2004 Revision) - ----------------------------- 11. If a share certificate is defaced, worn out, lost or destroyed it may be renewed on payment of such fee, if any, not exceeding $100 and on such terms, if any, as to evidence and indemnity as the Directors think fit ISSUE OF SHARES --------------- 12. Subject to the provisions, if any, in that behalf of the Memorandum of Association or these Articles, and to any direction that may be given by the Company in general meeting and without prejudice to any special rights previously conferred on the holders of existing Shares, all unissued Shares in the capital of the Company shall be under the control of the Directors, and the Directors may issue, allot, grant options over, re-designate or dispose of such unissued Shares (including fractions of a Share) with or without preferred, deferred or other special rights or such restrictions whether in regard to dividend, voting, return of capital or otherwise and in such manner, to such persons and on such terms as the Directors in their absolute discretion think fit. 13. The Company shall not issue Shares in bearer form. COMMISSION ON SALE OF SHARES ---------------------------- 14. The Company may in so far as may be permitted by law, pay a commission to any person in consideration of his subscribing or agreeing to subscribe whether absolutely or conditionally for any Shares. Such commission may be satisfied by the payment of cash or the lodgment of fully or partly paid-up Shares or partly in one way and partly in the other. The Company may also on any issue of Shares pay such brokerage as may be lawful. TRANSFER OF SHARES ------------------ 15. The instrument of transfer of any Share shall be in writing in any usual or common form or such other form approved by the Directors. 16. The instrument of transfer of any Share shall be executed by or on behalf of the transferor and the transferee and shall be accompanied by any certificate of the Shares to which it relates and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. 17. All share certificates surrendered to the Company for transfer shall be cancelled and the Directors shall issue a new share certificate for a like number of Shares as those which have been surrendered and cancelled. 18. The Directors may in their absolute discretion decline to register any transfer of Shares without assigning any reason for so doing If the Directors refuse to register a transfer of any Shares, they shall send notice of the refusal to the transferee within two months of the date on which the transfer was lodged with the Company. 19. The registration of transfers may be suspended at such times and for such periods as the Directors may from time to time determine, provided always that such registration shall not be suspended for more than 45 days in any year. Page 4 Companies Law (2004 Revision) - ----------------------------- TRANSMISSION OF SHARES ---------------------- 20. The legal personal representative of a deceased sole holder of a Share shall be the only person recognized by the Company as having any title to the Share. In the case of a Share registered in the name of two or more holders, the survivors or survivor, or the legal personal representatives of the deceased survivor, shall be the only person recognized by the Company as having any title to the Share. 21. Any person becoming entitled to a Share in consequence of the death, bankruptcy, liquidation or dissolution of a Member shall upon such evidence being produced as may from time to time be properly required by the Directors, have the right either to be registered as a member in respect of the Share (and if he so elects shall deliver to the Company a notice in writing signed by him stating his election to be registered as holder) or, instead of being registered himself, to make such transfer of the Share as the deceased or bankrupt person could have made; but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the deceased or bankrupt person before the death or bankruptcy. 22. A person becoming entitled to a Share by reason of the death, bankruptcy liquidation or dissolution of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the Share, except that he shall not, before being registered as a Member in respect of the Share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company PROVIDED THAT the Directors may at any time give notice requiring any such person to elect either to be registered himself or to transfer the Share and if the notice is not complied with within ninety days the Directors may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the Share until the requirements of the notice have been complied with. REDEMPTION AND PURCHASE OF OWN SHARES ------------------------------------- 23. Subject to the provisions of the Companies Law, the Company may:- 23.1 issue Shares on terms that they are to be redeemed or are liable to be redeemed at the option of the Company or the Member on such terms and in such manner as the Directors may, before the issue of such Shares, determine; 23.2 purchase its own Shares (including fractions of a Share and any redeemable Shares) on such terms and in such manner as the Directors may determine and agree with the Member; and 23.3 make a payment in respect of the redemption or purchase of its own Shares in any manner authorized by the Companies law including out of capital. 24. A Share which is liable to be redeemed by either the Company or the Member shall be redeemed by the entitled party giving to the other notice in writing of the intention to redeem such Shares (a "Redemption Notice") and specifying the date of such redemption which must be a day on which banks in the Cayman Islands are open for business. 25. Any Share in respect of which a Redemption Notice has been given shall not be entitled to participate in the profits of the Company in respect of the period after the date specified as the date of redemption in the Redemption Notice. 26. The redemption or purchase of any Share shall not be deemed to give rise to the redemption or purchase of any other Share. Page 5 Companies Law (2004 Revision) - ----------------------------- 27. At the date specified in the Redemption Notice, or the date on which the Shares are to be purchased, the holder of the Shares being redeemed or purchased shall be bound to deliver up to the Company at its Registered Office the certificate thereof for cancellation and thereupon the Company shall pay to him the redemption or purchase moneys in respect thereof. 28. The Directors may, when making payments in respect of the redemption or purchase of Shares, if authorized by the terms of issue of the Shares being redeemed or purchased or with the agreement of the holder of such Shares, make such payment either in cash or in specie. VARIATION OF RIGHTS ATTACHING TO SHARES --------------------------------------- 29. If at any time the share capital of the Company is divided into different classes of Shares, the rights attaching to any class (unless otherwise provided by the terms of issue of the Shares of that class) may be varied with the consent in writing of the holders of two-thirds of the issued Shares of that class, or with the sanction of a Special Resolution passed at a general meeting of the holders of the issued Shares of that class present in person or by proxy. 30. The provisions of these Articles relating to general meetings of the Company shall mutatis mutandis apply to every such general meeting of the holders of such class of Shares, but so that the necessary quorum shall be at least one person holding or representing by proxy at least one-- third of the issued Shares of the class and so that any holder of Shares of the class present in person or by proxy may demand a poll. 31. The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking pari passu therewith or by the redemption or purchase of Shares of any class by the Company. FRACTIONAL SHARES ----------------- 32. The Directors may issue fractions of a Share of any class of Shares, and, if so issued, a fraction of a Share (calculated to three decimal points) shall be subject to and carry the corresponding fraction of liabilities (whether with respect to any unpaid amount thereon, contribution, calls or otherwise), limitations, preferences, privileges, qualifications, restrictions, rights (including, without limitation, voting and participation rights) and other attributes of a whole Share of the same class of Shares If more than one fraction of a Share of the same class is issued to or acquired by the same Member such fractions shall be accumulated. LIEN ON SHARES -------------- 33. The Company shall have a first priority lien and charge on every partly paid Share for all moneys (whether presently payable or not) called or payable at a fixed time in respect of that Share, and the Company shall also have a first priority lien and charge on all partly paid Shares registered in the name of a Member (whether held solely or jointly with another person) for all moneys presently payable by him or his estate to the Company; but the Directors may at any time declare any Share to be wholly or in part exempt from the provisions of this Article. The Company's lien, if any, on a Share shall extend to all dividends and other moneys payable in respect thereof. 34. The Company may sell, in such manner as the Directors think fit, any Shares on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of 14 days after a notice in writing, stating and Page 6 Companies Law (2004 Revision) - ----------------------------- demanding payment of such part of the amount in respect of which the lien exists as is presently payable, has been given to the registered holder for the time being of the Share, or the persons entitled thereto of which the Company has notice, by reason of his death or bankruptcy. 35. To give effect to any such sale the Directors may authorize some person to transfer the Shares sold to the purchaser thereof The purchaser shall be registered as the holder of the Shares comprised in any such transfer and he shall not be bound to see to the application of the purchase money, nor shall his title to the Shares be affected by any irregularity or invalidity in the proceedings in reference to the sale. 36. The proceeds of such sale shall be received by the Company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable, and the residue (if any) shall (subject to a like lien for sums not presently payable as existed upon the Shares prior to the sale) be paid to the person entitled to the Shares at the date of the sale. CALLS ON SHARES --------------- 37. The Directors may from time to time make calls upon the Members in respect of any moneys unpaid on their Shares (whether on account of the nominal value of the Shares or by way of premium or otherwise) and each Member shall (subject to receiving at least 14 days' notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount called on his Shares. 38. A call shall be deemed to have been made at the time that the Directors have resolved by resolution to make such call. 39. The joint holders of a Share shall be jointly and severally liable to pay calls in respect thereof. 40. Any sum which by the terms of issue of a Share becomes payable on allotment or at any fixed date, whether on account of the nominal value of the Share or by way of premium or otherwise, shall for the purposes of these Articles be deemed to be a call duly made, notified and payable on the date on which by the terms of issue the same becomes payable, and in the case of nonpayment all the relevant provisions of these Articles as to payment of interest, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified. 41. If a sum called in respect of a Share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest upon the sum at the rate of eight per centum per annum from the day appointed for the payment thereof to the time of the actual payment, but the Directors shall be at liberty to waive payment of that interest wholly or in part. 42. The provisions of these Articles as to the liability of joint holders and as to payment of interest shall apply in the case of non-payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed time, whether on account of the amount of the Share, or by way of premium, as if the same had become payable by virtue of a call duly made and notified. 43. The Directors may make arrangements on the issue of Shares for a difference between the Members, or the particular Shares, in the amount of calls to be paid and in the times of payment and may revoke or postpone a call in their discretion. 44. The Directors may, if they think fit, receive from any Member willing to advance the same all or any part of the moneys uncalled and unpaid upon any Shares held by him, and upon all or any of the moneys so advanced may (until the same would, but for such advance, become presently payable) pay interest at such rate (not exceeding without the sanction of an Ordinary Resolution Page 7 Companies Law (2004 Revision) - ----------------------------- eight per centum per annum) as may be agreed upon between the Member paying the sum in advance and the Directors. FORFEITURE OF SHARES -------------------- 45. If a Member fails to pay any call or installment of a call together with any interest which may have accrued within 10 days of the day appointed for payment thereof, the Directors may, at any time thereafter during such time as any part of such call or installment remains unpaid, enforce any of the provisions of, and take such action as is referred to in these Articles, including but not limited to, forfeiting any Share in respect of which the call or installment of a call remains unpaid. No further notice demanding payment of the amount due need be given to the registered holder of the Share or the persons entitled thereto by reason of his death or bankruptcy of the Shares to be forfeited. 46. A forfeited Share may be sold, cancelled or otherwise disposed of on such terms and in such manner as the Directors in their absolute discretion think fit, and at any time before a sale, cancellation or disposition the forfeiture may be cancelled on such terms as the Directors in their absolute discretion think fit The Company may indirectly procure the purchase of a Share forfeited pursuant to the previous sentence without being required to comply with the redemption provisions of these Articles The proceeds of the sale or disposition of a forfeited Share after deduction of expenses, fees and commissions incurred by the Company in connection with the sale and after the deduction of all other amounts including accrued interest shall be received by the Company and applied in payment of such part of the amount in respect of which any lien or obligation exists as is presently payable on other Shares held by that Member, and the residue shall (subject to a like lien for sums not presently payable as existed upon the Shares prior to such sale or disposition) be disposed of on such terms as the Directors in their absolute discretion think fit. 47. A statutory declaration in writing that the declarant is a Director, and that a Share in the Company has been duly forfeited on a date stated in the declaration, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the Share The Company may receive the consideration, if any, given for the Share on any sale or disposition thereof and may execute a transfer of the Share in favour of the person to whom the Share is sold or disposed of and he shall thereupon be registered as the holder of the Share, and shall not be bound to see to the application of the purchase money, if any, nor shall his title to the Share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the Share. 48. The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which by the terms of issue of a Share becomes payable at any time, whether on account of the amount of the Share, or by way of premium, as if the same had been payable by virtue of a call duly made and notified. 49. A person whose Shares have been forfeited shall cease to be a Member in respect of the forfeited Shares, but shall, notwithstanding, remain liable to pay to the Company all moneys which at the date of forfeiture were payable by him to the Company in respect of the Shares, but his liability shall cease if and when the Company receives payment in full of the fully paid up amount of the Shares. Page 8 Companies Law (2004 Revision) - ----------------------------- ALTERATION OF CAPITAL --------------------- 50. The Company may from time to time by Ordinary Resolution increase the share capital by such sum, to be divided into Shares of such classes and amount, as the resolution shall prescribe. 51. The Company may by Ordinary Resolution:- 51.1 consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares; 51.2 subdivide its existing Shares, or any of them into Shares of a smaller amount provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced Share shall be the same as it was in the case of the Share from which the reduced Share is derived; 51.3 cancel any Shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the Shares so cancelled; and 51.4 convert all or any of its paid up Shares into stock and reconvert that stock into paid up Shares of any denomination. 52. The Company may by Special Resolution reduce its share capital and any capital redemption reserve in any manner authorized by the Companies Law CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE ------------------------------------------------- 53. For the purpose of determining those Members that are entitled to receive notice of, attend or vote at any meeting of Members or any adjournment thereof, or those Members that are entitled to receive payment of any dividend, or in order to make a determination as to who is a Member for any other purpose, the Directors may provide that the Register of Members shall be closed for transfers for a stated period but not to exceed in any case 40 days. If the Register of Members shall be so closed for the purpose of determining those Members that are entitled to receive notice of, attend or vote at a meeting of Members such register shall be so closed for not more than 10 days immediately preceding such meeting and the record date for such determination shall be the first date of the closure of the Register of Members. 54. In lieu of or apart from closing the Register of Members, the Directors may fix in advance a date as the record date for any such determination of those Members that are entitled to receive notice of, attend or vote at a meeting of the Members and for the purpose of determining those Members that are entitled to receive payment of any dividend the Directors may, at or within 90 days prior to the date of declaration of such dividend fix a subsequent date as the record date for such determination. 55. If the Register of Members is not so closed and no record date is fixed for the determination of those Members that are entitled to receive notice of, attend or vote at a meeting of Members or those Members that are entitled to receive payment of a dividend, the date on which notice of the meeting is posted 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 Members. When a determination of those Members that are entitled to receive notice of, attend or vote at a meeting of Members has been made as provided in this section, such determination shall apply to any adjournment thereof. Page 9 Companies Law (2004 Revision) - ----------------------------- GENERAL MEETINGS OF MEMBERS --------------------------- 56. The Directors may, whenever they think fit, convene a general meeting of the Company. 57. The Directors shall convene a general meeting of the Company on the written requisition of any Member or Members entitled to attend and vote at general meetings of the Company who hold(s) not less than 10 per cent of the paid up voting share capital of the Company, such requisition to be deposited at the Registered Office. 58. The Members' requisition shall specify the objects of the meeting and shall be signed by the requisitionists If the Directors do not convene a requisitioned meeting within 21 days of the deposit of the requisition (such meeting to be convened no less than 30 days from the date of deposit of the requisition), the requisitionists themselves may convene the general meeting in the same manner, as nearly as possible, as that in which meetings may be convened by the Directors, and all reasonable expenses incurred by the requisitionists as a result of the failure of the Directors to convene the general meeting shall be reimbursed to them by the Company. 59. If at any time there are no Directors of the Company, any two Members (or if there is only one Member then that Member) entitled to vote at general meetings of the Company may convene a general meeting in the same manner as nearly as possible as that in which meetings may be convened by the Directors. NOTICE OF GENERAL MEETINGS -------------------------- 60. At least seven days' notice (excluding the day that notice is deemed to be given and the day the meeting is to be held) shall be given of an annual general meeting or any other general meeting Notice shall be given in the manner hereinafter provided or in such other manner (if any) as may be prescribed by the Company by Ordinary Resolution to such persons as are, under these Articles, entitled to receive such notices from the Company and shall specify the place, the day and the hour of the meeting and, in case of special business, the general nature of that business. 61. With the consent of all the Members entitled to receive notice of some particular meeting and attend and vote thereat, a meeting may be convened by such shorter notice or without notice and in such manner as those Members may think fit 62 The accidental omission to give notice of a meeting to or the non-receipt of a notice of a meeting by any Member shall not invalidate the proceedings at any meeting. PROCEEDINGS AT GENERAL MEETINGS ------------------------------- 63. No business shall be transacted at any general meeting unless a quorum of Members is present at the time when the meeting proceeds to business. Save as otherwise provided by these Articles, one or more Members holding at least a majority of the paid up voting share capital of the Company present in person or by proxy shall be a quorum. 64. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of Members, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week, at the same time and place, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting the Member or Members present and entitled to vote shall be a quorum. Page 10 Companies Law (2004 Revision) - ----------------------------- 65. The chairman, if any, of the Board of Directors shall preside as chairman at every general meeting of the Company. 66. If there is no such chairman, or if at any meeting he is not present within fifteen minutes after the time appointed for holding the meeting or is unwilling to act as chairman, the Members present shall choose one of their number to be chairman. 67. The chairman may with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting) adjourn a meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting is adjourned for 10 days or more, notice of the adjourned meeting shall be given as in the case of an original meeting Save as aforesaid it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. 68. All business carried out at a general meeting shall be deemed special with the exception of sanctioning a dividend, the consideration of the accounts, balance sheets, and financial report of the Directors and the Company's auditors, and the appointment and removal of Directors and the fixing of the remuneration of the Company's auditors. No special business shall be transacted at any general meeting without the consent of all Members entitled to receive notice of that meeting unless notice of such special business has been given in the notice convening that meeting. VOTES OF MEMBERS ---------------- 69. Subject to any rights and restrictions for the time being attached to any class or classes of Shares, on a show of hands every Member present in person and every person representing a Member by proxy shall at a general meeting of the Company have one vote and on a poll every Member and every person representing a Member by proxy shall have one vote for each Share of which he or the person represented by proxy is the holder. 70. At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by one or more Members present in person or by proxy entitled to vote and who together hold not less than 10 per cent of the paid up voting share capital of the Company, and unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book of the proceedings of the Company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, that resolution. 71. If a poll is duly demanded it shall be taken in such manner as the chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. 72. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall be entitled to a second or casting vote. 73. A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time as the chairman of the meeting directs. 74. In the case of joint holders the vote of the senior who tenders a vote whether in person or by proxy, shall be accepted to the exclusion of the votes of the joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members. Page 11 Companies Law (2004 Revision) - ----------------------------- 75. A Member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, or other person in the nature of a committee appointed by that court, and any such committee or other person, may on a poll, vote by proxy. 76. No Member shall be entitled to vote at any general meeting unless all calls or other sums presently payable by him in respect of Shares in the Company held by him and carrying the right to vote have been paid. 77. On a poll votes may be given either personally or by proxy. 78. A resolution in writing signed by all the Members for the time being entitled to receive notice of and to attend and vote at general meetings (or being companies by their duly authorized representatives) shall be as valid and effective as if the same had been passed at a general meeting of the Company duly convened and held. MEMBERS' PROXIES ---------------- 79. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorized. A proxy need not be a Member of the Company. 80. The instrument appointing a proxy shall be deposited at the Registered Office or at such other place as is specified for that purpose in the notice convening the meeting no later than the time for which the meeting or adjourned meeting is scheduled PROVIDED THAT the chairman of the meeting may at his discretion direct that an instrument of proxy shall be deemed to have been duly deposited upon receipt by confirmation from the appointor that the instrument of proxy duly signed is in the course of transmission to the Company. 81. An instrument appointing a proxy may be in any usual or common form or such other form as the Directors may approve. 82. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of proxy or of the authority under which the proxy was executed, or the transfer of the Share in respect of which the proxy is given provided that no intimation in writing of such death, insanity, revocation or transfer as aforesaid shall have been received by the Company at the Registered Office before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy. 83. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll. COMPANIES ACTING BY REPRESENTATIVES AT MEETINGS ----------------------------------------------- 84. Any company which is a Member or a Director may, by resolution of its directors or other governing body, authorize such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members or of the Board of Directors or of a committee of Directors, and the person so authorized shall be entitled to exercise the same powers on behalf of such company which he represents as that company could exercise if it were an individual Member or Director. Page 12 Companies Law (2004 Revision) - ----------------------------- APPOINTMENT OF DIRECTORS ------------------------ 85. The first Director(s) shall be appointed at a meeting or by written resolution of the subscribers to the Memorandum of Association. 86. The Company may by Ordinary Resolution appoint any person to be a Director. 87. Subject to the provisions of these Articles, a Director shall hold office until such time as he is removed from office by the Company by Ordinary Resolution. 88. The Company may by Ordinary Resolution from time to time fix the maximum and minimum number of Directors to be appointed but unless such number is fixed as aforesaid the minimum number of Directors shall be one and the maximum number of Directors shall be unlimited. 89. The remuneration of the Directors from time to time shall be determined by the Company by Ordinary Resolution. 90. The shareholding qualification for Directors may be fixed by the Company by Ordinary Resolution and unless and until so fixed no Share qualification shall be required. 91. The Directors shall have power at any time and from time to time to appoint a person as Director, either as a result of a casual vacancy or as an additional Director, subject to the maximum number (if any) imposed by the Company by Ordinary Resolution. ALTERNATE DIRECTORS ------------------- 92. Any Director may in writing appoint another person to be his alternate to act in his place at any meeting of the Directors at which he is unable to be present and may at any time in writing revoke the appointment of an alternate appointed by him. Every such alternate shall be entitled to notice of meetings of the Directors and to attend and vote thereat as a Director when the person appointing him is not personally present and to do in the place and stead of his appointor, any other act or thing which the appointor is permitted or required to do by virtue of his being a Director as if the alternate were the appointor, other than the appointment of an alternate himself. Where the alternate is a Director he shall have a separate vote on behalf of the Director he is representing in addition to his own vote. 93. An alternate shall not be an officer of the Company and shall be deemed to be the agent of the Director appointing him and the remuneration of such alternate (if any) shall be payable out of the remuneration of the Director appointing him and the proportion thereof shall be agreed between them. 94. The alternate shall ipso facto vacate office if and when his appointor ceases to be a Director or removes the appointee from office. 95. Any Director may appoint any person, whether or not a Director, to be the proxy of that Director to attend and vote on his behalf, in accordance with instructions given by that Director, or in the absence of such instructions at the discretion of the proxy, at a meeting or meetings of the Directors which that Director is unable to attend personally. The instrument appointing the proxy shall be in writing under the hand of the appointing Director and shall be in any usual or common form or such other form as the Directors may approve, and must be lodged with the chairman of the meeting of the Directors at which such proxy is to be used, or first used, prior to the commencement of the meeting. Page 13 Companies Law (2004 Revision) - ----------------------------- POWERS AND DUTIES OF DIRECTORS ------------------------------ 96. Subject to the provisions of the Companies Law, these Articles and to any resolutions made by the Company in general meeting, the business of the Company shall be managed by the Directors, who may pay all expenses incurred in setting up and registering the Company and may exercise all powers of the Company. No resolution made by the Company in general meeting shall invalidate any prior act of the Directors which would have been valid if that resolution had not been made. 97. The Directors may from time to time and at any time by power of attorney appoint any company, firm or person or body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretion (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Directors may think fit, and may also authorize any such attorney to delegate all or any of the powers, authorities and discretion vested in him. BORROWING POWERS OF DIRECTORS ----------------------------- 98. The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party. APPOINTMENT OF OFFICERS ----------------------- 99. The Directors may from time to time appoint any person, whether or not a director of the Company to hold such office in the Company as the Directors may think necessary for the administration of the Company, including without prejudice to the foregoing generality, the office of president, one or more vice-presidents, treasurer, assistant treasurer, manager or controller, and for such term and at such remuneration (whether by way of salary or commission or participation in profits or partly in one way and partly in another), and with such powers and duties as the Directors may think fit. The Directors may also appoint one or more of their number to the office of managing director upon like terms, but any such appointment shall ipso facto determine if any managing director ceases from any cause to be a Director, or if the Company by Ordinary Resolution resolves that his tenure of office be terminated. 100. The Directors may appoint a secretary or secretaries of the Company (and if need be an assistant secretary or assistant secretaries) who shall hold office for such term, at such remuneration and upon such conditions and with such powers as they think fit. 101. Any person appointed by the Directors pursuant to Articles 99 and 100 may be removed by the Directors. COMMITTEES OF DIRECTORS ----------------------- 102. The Directors may from time to time and at any time establish any committees, local boards or agencies for managing any of the affairs of the Company and may appoint any persons to be members of such committees or local boards and may appoint any managers or agents of the Company and may fix the remuneration of any of the aforesaid. Page 14 Companies Law (2004 Revision) - ----------------------------- 103. The Directors may delegate any of their powers to committees and any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the Directors. 104. The Directors may from time to time provide for the management of the affairs of the Company in such manner as they shall think fit and the provisions contained in the three next following paragraphs shall be without prejudice to the general powers conferred by this paragraph. 105. The Directors may from time to time and at any time delegate to any committee, local board, manager or agent any of the powers, authorities and discretions for the time being vested in the Directors and may authorize the members for the time being of any such local board, or any of them, to fill up any vacancies therein and to act notwithstanding vacancies and any such appointment or delegation may be made on such terms and subject to such conditions as the Directors may think fit and the Directors may at any time remove any person so appointed and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby. 106. Any such delegates as aforesaid may be authorized by the Directors to sub-delegate all or any of the powers, authorities, and discretion for the time being vested in them. 107. A committee appointed by the Directors may elect a chairman of its meetings. If no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the memberspresent may choose one of their number to be chairman of the meeting. 108. A committee appointed by the Directors may meet and adjourn as it thinks proper. Questions arising at any meeting shall be determined by a majority of votes of the committee members present and in case of an equality of votes the chairman shall have a second or casting vote. PROCEEDINGS OF DIRECTORS ------------------------ 109. The Directors may meet together (either within or without the Cayman Islands) for the despatch of business, adjourn, and otherwise regulate their meetings and proceedings as they think fit A Director or a Director's duly appointed alternate may, at any time, and any secretary or assistant secretary shall on the requisition of a Director summon a meeting of the Directors. 110. The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors, and unless so fixed, if there be two or more Directors shall be two, and if there be less than two Directors shall be one. A Director represented by proxy or by duly appointed alternate at any meeting shall be deemed to be present for the purposes of determining whether or not a quorum is present. 111. The Directors may elect a chairman of their meetings and determine the period for which he is to hold office but if no such chairman is elected, or if at any meeting the chairman is not present within fifteen minutes after the time appointed for holding the same, the Directors present may choose one of their number to be chairman of the meeting. 112. Questions arising at any meeting shall be decided by a majority of votes of the Directors and duly appointed alternates present, the vote of an alternate not being counted if his appointor is also present at such meeting. In the case of an equality of votes the chairman shall have a second or casting vote. 113. A Director or Directors and any duly appointed alternates may participate in any meeting of the Board of Directors, or of any committee appointed by the Board of Directors of which such Page 15 Companies Law (2004 Revision) - ----------------------------- Director or Directors are members, by means of telephone or similar communication equipment by way of which all persons participating in such meeting can hear each other and such participation shall be deemed to constitute presence in person at the meeting. 114. A Director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the Company shall declare the nature of his interest at a meeting of the Directors A general notice given to the Directors by any Director to the effect that he is a member of any specified company or firm and is to be regarded as interested in any contract which may thereafter be made with that company or firm shall be deemed a sufficient declaration of interest in regard to any contract so made. A Director may vote in respect of any contract or proposed contract or arrangement notwithstanding that he may be interested therein and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of the Directors at which any such contract or proposed contract or arrangement shall come before the meeting for consideration. 115. A Director may hold any other office or place of profit under the Company (other than the office of auditor) in conjunction with his office of Director for such period and on such terms (as to remuneration and otherwise) as the Directors may determine and no Director or intending Director shall be disqualified by his office from contracting with the Company either with regard to his tenure of any such other office or place of profit or as vendor, purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any Director is in any way interested, be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realized by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relation thereby established. A Director, notwithstanding his interest, may be counted in the quorum present at any meeting whereat he or any other Director is appointed to hold any such office or place of profit under the Company or whereat the terms of any such appointment are arranged and he may vote on any such appointment or arrangement. 116. Any Director may act by himself or his firm in a professional capacity for the Company, and he or his firm shall be entitled to remuneration for professional services as if he were not a Director, provided that nothing herein contained shall authorize a Director or his firm to act as auditor to the Company. 117. The Directors shall cause minutes to be made for the purpose of recording:- 117.1 all appointments of officers made by the Directors; 117.2 the names of the Directors present at each meeting of the Directors and of any committee of the Directors; and 117.3 all resolutions and proceedings at all meetings of the Company, and of the Directors and of committees of Directors 118. When the chairman of a meeting of the Directors signs the minutes of such meeting the same shall be deemed to have been duly held notwithstanding that all the Directors have not actually come together or that there may have been a technical defect in the proceedings. 119. A resolution signed by all the Directors (in one or more counterparts) shall be as valid and effectual as if it had been passed at a meeting of the Directors duly called and constituted When signed a resolution may consist of several documents each signed by one or more of the Directors. 120. The continuing Directors may act notwithstanding any vacancy in their body but if and so long as their number is reduced below the number fixed by or pursuant to the Articles of the Company as Page 16 Companies Law (2004 Revision) - ----------------------------- the necessary quorum of Directors, the continuing Directors may act for the purpose of increasing the number, or of summoning a general meeting of the Company, but for no other purpose. 121. All acts done by any meeting of the Directors or of a committee of Directors, or by any person acting as a Director, shall notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such Director or person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director. DISQUALIFICATION OF DIRECTORS ----------------------------- 122. The office of Director shall be automatically vacated, if the Director:- 122.1 dies; 122.2 resigns his office by notice in writing to the Company; 122.3 becomes bankrupt or makes any arrangement or composition with his creditors; 122.4 is found to be or becomes of unsound mind; 122.5 is removed from office by a vote of a majority of the Directors; or 122.6 is removed from office by Ordinary Resolution. DIVIDENDS --------- 123. Subject to any rights and restrictions for the time being attached to any class or classes of Shares, the Directors may from time to time declare interim dividends on Shares of the Company in issue and authorize payment of the same out of the funds of the Company lawfully available therefor. 124. Subject to any rights and restrictions for the time being attached to any class or classes of Shares, the Company may by Ordinary Resolution declare final dividends, but no dividend shall exceed the amount recommended by the Directors. 125. The Directors may, before recommending or declaring any dividend, set aside out of the funds legally available for distribution such sums as they think proper as a reserve or reserves which shall, in the absolute discretion of the Directors be applicable for meeting contingencies, or for equalizing dividends or for any other purpose to which those funds may be properly applied and may pending such application, in the Directors' absolute discretion, either be employed in the business of the Company or be invested in such investments (other than Shares of the Company) as the Directors may from time to time think fit. 126. Any dividend may be paid by cheque or warrant sent through the post to the registered address of the Member or person entitled thereto, or in the case of joint holders, to anyone of such joint holders at his registered address or to such person and such address as the Member or person entitled, or such joint holders as the case may be, may direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or to the order of such other person as the Member or person entitled, or such joint holders as the case may be, may direct. Page 17 Companies Law (2004 Revision) - ----------------------------- 127. The Directors may when paying dividends to the Members in accordance with the foregoing provisions, make such payment either in cash or in specie. 128. No dividend shall be paid otherwise than out of profits or, subject to the restrictions of the Companies Law, the share premium account. 129. Subject to the rights of persons, if any, entitled to Shares with special rights as to dividends, all dividends shall be declared and paid according to the amounts paid on the Shares, but if and so long as nothing is paid up on any of the Shares in the Company dividends may be declared and paid according to the amounts of the Shares. No amount paid on a Share in advance of calls shall, while carrying interest, be treated for the purposes of this Article as paid on the Share. 130. If several persons are registered as joint holders of any Share, any of them may give effectual receipts for any dividend or other moneys payable on or in respect of the Share. 131. No dividend shall bear interest against the Company. FINANCIAL YEAR -------------- 132. Unless the Directors otherwise resolve, the financial year end of the Company shall be 31 st December in each year and following the year of incorporation shall begin on 1 st January of each year. ACCOUNTS AND AUDIT ------------------ 133. The Directors shall cause books of account relating to the Company's affairs to be kept in such manner as may be determined from time to time by the Directors. 134. The books of account shall be kept at the Registered Office, or at such other place or places as the Directors think fit, and shall always be open to the inspection of the Directors. 135. The Directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors, and no Member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by law or authorized by the Directors or by the Company by Ordinary Resolution. 136. The accounts relating to the Company's affairs shall be audited in such manner as may be determined from time to time by the Company by Ordinary Resolution or, failing any such determination, by the Directors or, failing any determination as aforesaid, shall not be audited. 137. The auditors, if any, shall be appointed by the Directors and shall hold office until removed by Ordinary Resolution or by resolution of the Directors. 138. The remuneration of any auditors, if any, appointed by the Directors, may be fixed by the Directors. CAPITALIZATION OF PROFITS ------------------------- 139. Subject to the Companies Law, the Directors may, with the authority of an Ordinary Resolution: Page 18 Companies Law (2004 Revision) - ----------------------------- 139.1 resolve to capitalize an amount standing to the credit of reserves (including a share premium account, capital redemption reserve and profit and loss account), or otherwise available for distribution; 139.2 appropriate the sum resolved to be capitalized to the Members in proportion to the nominal amount of Shares (whether or not fully paid) held by them respectively and apply that sum on their behalf in or towards:- 139.2.1 paying up the amounts (if any) for the time being unpaid on Shares held by them respectively, or 139.2.2 paying up in full unissued Shares or debentures of a nominal amount equal to that sum, and allot the Shares or debentures, credited as fully paid, to the Members (or as they may direct) in those proportions, or partly in one way and partly in the other; 139.3 make any arrangements they think fit to resolve a difficulty arising in the distribution of a capitalized reserve and in particular, without limitation, where Shares or debentures become distributable in fractions Directors may deal with the fractions as they think fit; 139.4 generally do all acts and things required to give effect to the resolution. SHARE PREMIUM ACCOUNT --------------------- 140. The Directors shall in accordance with section 34 of the Companies Law establish a share premium account and shall carry to the credit of such account from time to time a sum equal to the amount or value of the premium paid on the issue of any Share. 141. There shall be debited to any share premium account on the redemption or purchase of a Share the difference between the nominal value of such Share and the redemption or purchase price provided always that at the discretion of the Directors such sum may be paid out of the profits of the Company or, if permitted by section 37 of the Companies Law, out of capital. NOTICES ------- 142. Notices shall be in writing and may be given by the Company or by the person entitled to give notice to any Member either personally, by facsimile or by sending it through the post in a prepaid letter or via a recognized courier service, fees prepaid, addressed to the Member at his address as appearing in the Register of Members. In the case of joint holders of a Share, all notices shall be given to that one of the joint holders whose name stands first in the Register of Members in respect of the joint holding, and notice so given shall be sufficient notice to all the joint holders. 143. Where notice or other documents are sent by:- 143.1 post, notice shall be deemed to have been served five days after the time when the letter containing the same is posted and if sent by courier, shall be deemed to have been served five days after the time when the letter containing the same is delivered to the courier (in proving such service it shall be sufficient to prove that the letter containing the notice or document was properly addressed and duly posted or delivered to the courier); or Page 19 Companies Law (2004 Revision) - ----------------------------- 143.2 facsimile, notice shall be deemed to have been served upon confirmation of receipt. 144. Any Member present, either personally or by proxy, at any meeting of the Company shall for all purposes be deemed to have received due notice of such meeting and, where requisite, of the purposes for which such meeting was convened. 145. Any notice or document delivered or sent by post to or left at the registered address of any Member in accordance with the terms of these Articles shall notwithstanding that such Member be then dead or bankrupt, and whether or not the Company has notice of his death or bankruptcy, be deemed to have been duly served in respect of any Share registered in the name of such Member as sale or joint holder, unless his name shall at the time of the service of the notice or document, have been removed from the Register of Members as the holder of the Share, and such service shall for all purposes be deemed a sufficient service of such notice or document on all persons interested (whether jointly with or as claiming through or under him) in the Share. 146. Notice of every general meeting shall be given in the manner hereinbefore authorized to:- 146.1 all Members who have a right to receive notice and who have supplied the Company with an address for the giving of notices to them and in the case of joint holders, the notice shall be sufficient if given to the first named joint holder in the Register of Members; and 146.2 every person entitled to a Share in consequence of the death or bankruptcy of a Member, who but for his death or bankruptcy would be entitled to receive notice of the meeting. No other person shall be entitled to receive notice of general meetings. THE SEAL -------- 147. The Company shall not have a Seal unless otherwise resolved by the Directors Any such Seal shall not be affixed to any instrument except by the authority of a resolution of the Board of Directors or of a committee of directors authorized by the Directors in that behalf provided always that such authority may be given prior to or after the affixing of the Seal and if given after may be in general form confirming a number of affixings of the Seal. Every instrument to which the Seal is affixed shall be signed by a Director of the Company or by anyone or more persons as the Directors may appoint for that purpose. 148. The Company may maintain a duplicate or duplicates of the Seal but such duplicate{s) shall not be affixed to any instrument except by the authority of a resolution of the Board of Directors provided always that such authority may be given prior to or after the affixing of such duplicate and if given after may be in general form confirming a number of affixings of such duplicate. Every instrument to which a duplicate of the Seal is affixed shall be signed by a Director of the Company or by anyone or more persons as the Directors may appoint for that purpose and such affixing of a duplicate of the Seal and signing as aforesaid shall have the same meaning and effect as if the Seal had been affixed and the instrument signed by a Director of the Company. 149. Notwithstanding the foregoing, a director or officer, representative or attorney of the Company shall have the authority to affix the Seal, or a duplicate of the Seal, over his signature alone on any instrument or document required to be authenticated by him under seal or to be filed with the Registrar of Companies in the Cayman Islands or elsewhere wheresoever. Page 20 Companies Law (2004 Revision) - ----------------------------- INDEMNITY --------- 150. Every Director (including for the purposes of this Article any alternate appointed pursuant to the provisions of these Articles), managing director, agent, secretary, assistant secretary or other officer for the time being and from time to time of the Company (but not including the Company's auditor) and the personal representatives of the same shall be indemnified and secured harmless out of the assets and funds of the Company against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by him in or about the conduct of the Company's business or affairs or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by him in defending (whether successfully or otherwise) any civil proceedings concerning the Company or its affairs in any court whether in the Cayman Islands or elsewhere. 151. No such Director, duly appointed alternate, managing director, agent, secretary, assistant secretary or other officer of the Company (but not including the Company's auditor) shall be liable (i) for the acts, receipts, neglects, defaults or omissions of any other such Director or officer or agent of the Company or (ii) by reason of his having joined in any receipt for money not received by him personally or (iii) for any loss on account of defect of title to any property of the Company or (iv) on account of the insufficiency of any security in or upon which any money of the Company shall be invested or (v) for any loss incurred through any bank, broker or other agent or (vi) for any loss occasioned by any negligence, default, breach of duty, breach of trust, error of judgment or oversight on his part or (vii) for any loss, damage or misfortune whatsoever which may happen in or arise from the execution or discharge of the duties, powers, authorities, or discretions of his office or in relation thereto, unless the same shall happen through his own dishonesty. NON-RECOGNITION OF TRUSTS ------------------------- 152. No person shall be recognized by the Company as holding any Share upon any trust and the Company shall not, unless required by law, be bound by or be compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any of its Shares (or fraction thereof) or any other rights in respect thereof except an absolute right to the entirety thereof in each Member registered in the Register of Members. WINDING UP ---------- 153. If the Company shall be wound up the liquidator may, with the sanction of an Ordinary Resolution and any other sanction required by the Companies Law, divide amongst the Members in specie or cash the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributors as the liquidator shall think fit, but so that no Member shall be compelled to accept any Shares or other securities whereon there is any liability 154. Without prejudice to the rights of holders of Shares issued upon special terms and conditions, if the Company shall be wound up, and the assets available for distribution among the Members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the capital paid-up, or which ought to have been paid-up, at the commencement of the winding up on the Shares held by them respectively. If on a winding up the assets available for Page 21 Companies Law (2004 Revision) - ----------------------------- distribution among the Members shall be more than sufficient to repay the whole of the capital paid-up at the commencement of the winding up, the excess shall be distributed among the Members in proportion to the capital paid up at the commencement of the winding up on the Shares held by them respectively. AMENDMENT OF MEMORANDUM OF ASSOCIATION -------------------------------------- 155. Subject to and insofar as permitted by the Companies Law, the Company may at any time and from time to time by Special Resolution alter or amend its Memorandum of Association with respect to any objects, powers or other matters specified therein. AMENDMENT OF ARTICLES OF ASSOCIATION ------------------------------------ 156. Subject to the Companies Law and the rights attaching to the various classes of Shares, the Company may at any time and from time to time by Special Resolution alter or amend these Articles in whole or in part. REGISTRATION BY WAY OF CONTINUATION ----------------------------------- 157. The company may by Special Resolution resolve to be registered by way of continuation as a body corporate under the laws of any jurisdiction outside the Cayman Islands. The Directors may make application to the Registrar of Companies to deregister the Company in the Cayman Islands and may take all such further steps as they consider appropriate to be taken, in accordance with the Companies Law, to effect the transfer by way of continuation of the Company. Page 22 Companies Law (2004 Revision) - ----------------------------- NAME AND ADDRESS OF SUBSCRIBER /s/ Christopher Humphries - -------------------------- Chris Humphries ONE ORDINARY SHARE P.O. Box 2510 Grand Cayman KY1-1104 Cayman Islands Dated this 27 September 2006 /s/ Victoria J. Banks - -------------------------- Witness to the above signature Victoria J. Banks P.O. Box 2510 Grand Cayman KY1-1104 Cayman Islands I, D. EVADNE EBANKS Asst. registrar of companies, in and for the Cayman Islands, HEREBY CERTIFY that this is a true copy of the Articles of Association of the Company. Dated this 27 of September, 2006 /s/ D. Evadne Ebanks ------------------------- Page 23 -----END PRIVACY-ENHANCED MESSAGE-----