JOINT VENTURE AGREEMENT EXECUTED BETWEEN IRIS CORPORATION BERHAD (“ICB”) AND ALVERY RESOURCES LIMITED (“ALVERY”) FOR THE DEVELOPMENT OF LAND MEASURING 100,000 HECTARES FOR AGRICULTURAL AND BUSINESS PURPOSES IN PAPUA NEW GUINEA.

INTRODUCTION

The Board of Directors of IRIS Corporation Berhad (“ICB”) wishes to announce that ICB, had on 14^th April, 2014 entered into a Joint Venture Agreement (“Agreement”) with Alvery Resources Limited  (“ALVERY”) a company incorporated in Papua New Guinea for the proposed development of 100,000 hectares (247,105 acres) of land described as Portion No 17C, Milinch Gora & Safia (NW), Bibira (NF & SE) Town Tufi & Moresby in Oro District, Papua New Guinea. (“Subleased Land”) for agricultural and business purposes including but not limited to  land clearing, logging, plantation and setting up of factories for various agricultural commodities. (“the Project”).

The total investment cost of the Project is approximately United States Dollars Twenty Two Million (USD22,000,000) equivalent to Ringgit Malaysia Seventy One Million Two Hundred Thirty One Thousand And Six Hundred (RM71,231,600) subject to and conditional upon the procurement of all approvals , fulfilment of conditions precedents and terms and conditions under the Agreement.

2. INFORMATION ON ALVERY

Alvery Resources Limited (Company No: 1-55166) or ALVERY is a private limited company incorporated under the laws of Papua New Guinea (“PNG”) has its principal place of business at L3-Suite 07C, Garden City Building, Angau Drive, Boroko P.O Box 398, Konedobu- National Capital District, Papua New Guinea and is in the business of property development and other related activities in PNG.

Musa Valley Management Company Limited (MVMCL) the lawful proprietor of land measuring approximately 320,060 hectares  (“said Land” ) including the Subleased Land had on 11/09/2013 issued a Power of Attorney to ALVERY to undertake all necessary steps to give effect to a Memorandum of Agreement signed between ALVERY and MVMCL to develop 100,000 hectares part thereof the said Land. Pursuant to the Memorandum of Agreement, ALVERY shall nominate a new company to be incorporated in Papua New Guinea to be the Developer of the Subleased Land. 

3.  CONTENTS OF THE JOINT VENTURE AGREEMENT

The salient terms of the Joint Agreement inter alia are Clause 4 on the Legal Due Diligence, Clause 5 on the Conditions Precedent and Clause 8 on the milestones for the Investments Sums.

3.1 Purpose and business plan of the Joint Venture Company (“JVCo”)

The JVCo upon incorporation shall undertake the Project by first acquiring the titles to the Subleased Land from ALVERY and thereafter procure the relevant approvals including the extraction rights over all timbers which parties agree shall be transferred to ICB or its subsidiary exclusively. In consideration for the said extraction rights, ICB shall from the sales of the timber pay a royalty to MVMCL and ALVERY in accordance to the terms and conditions of the proposed Project Agreement. Parties agree that ICB shall be entitled to sell such extraction rights or part thereof to any third party to recover the Investment Sum. For the avoidance of doubt in the event such rights are acquired by any third party from ICB such third party shall undertake to pay the equivalent sum agreed between ICB and MVMCL and ALVERY in royalties to MVMCL and ALVERY directly.

3.2 Conditions Precedent

The Agreement shall be conditional upon the Conditions Precedent being fulfilled within TWELVE (12) months from the date of the Agreement being:-

(a).the satisfactory completion of the Due Diligence by IRIS with the assistance of ALVERY and notification by IRIS to ALVERY of IRIS’ reasonable satisfaction with the results of the Due Diligence within 2 weeks of the execution of the Agreement failing which the Agreement is terminated and AlVERY shall refund USD500,000 being half of the first installment of payment under Clause 8 of the Agreement.  

(b).ALVERY shall upon the execution of the Agreement establish and incorporate the JVCo with an authorized and fully paid up capital of 10,000 Kina  and held in the relevant proportions of ICB holding 3,500 ordinary shares representing 35% and ALVERY holding 6,500 ordinary shares representing 65% of the JVCo for the implementation of the Project. 

(c).ALVERY shall upon the execution of this Agreement procure the Approvals being (i) the approval for the sub lease and transfer of the Subleased Land to the JVCo from the Commissioner of Land; (ii) Agricultural Permit issued by the Department of Agriculture; (iii) Environmental License issued by the Department of Environment; and (iv) Forest Clearing License (FCA) issued by the Forest Authority; and 

(d) ALVERY shall undertake to maintain the validity of the PA for the purpose of transferring the title of the Subleased Land from ALVERY to the JVCo and ALVERY shall execute all legal documentation for the purpose of a valid and legally binding transfer.

The Agreement shall become unconditional on the date when the Conditions Precedent have been fulfilled. In the event the Conditions Precedent remains unconditional upon the expiry of the twelfth month and any extensions herein granted, this Agreement may be terminated immediately by IRIS hereto by sending to ALVERY a written notice of termination. In the event of such termination, ALVERY shall not be entitled to (i) any further payments under Clause 8 and (ii) shall agree to the sale of Subleased Land to compensate IRIS accordingly for all costs expended under the Project as per Clause 8 or in the alternative pay an amount proportionate to IRIS’ shareholding. Each party shall agree to bear its own expenses incurred prior to termination. 

3.3 Payment milestones

 Subject to Clause 5 and in consideration of ALVERY agreeing to fulfill its  right and obligations on a joint venture basis upon the terms and conditions of the Agreement  IRIS shall invest an amount of USD22Million (“Investment Sum”) which shall be paid to ALVERY or its nominees in accordance to the milestones appended herein below:-

4. RATIONALE OF THE AGREEMENT

 The proposed Agreement is to enable the ICB Group to expand its business in the realty and development industry overseas, expanding on plantation and plantation commodities and related businesses.

 5.  RISK FACTORS

 Like all business entities, risk factors involved in this Project include but are not limited to execution risks, such as business expansion, prudent financial management, changes in price materials, and changes in political environment, economics and regulatory conditions. In addition like all new ventures there is also no definitive assurance that the anticipated benefits from the Agreement will be realized expeditiously however ICB is encouraged that will be able to generate sufficient revenue from the Project to off-set the associated cost.

 Nevertheless the Board of Directors has and will continue to exercise due care in considering the risks and benefits associated with this Agreement and will take appropriate measures in planning the successful implementation of the Project with its current business operations. Further, ICB Group is committed towards the close monitoring of the development of the Project.

6. FINANCIAL EFFECTS ON THE AGREEMENT

 The Project is not expected to have any material effect on the issued and paid-up capital, substantial shareholders’ shareholding, net assets per share and gearing of the ICB Group for the financial year ending on 31^st March 2015. Barring unforeseen circumstances, the Board is of the opinion that the Project will contribute positively to the earnings of the ICB Group in the future.

7. APPROVALS REQUIRED

 This Project does not require the approval of ICB shareholders or any relevant government authority.

8. DIRECTORS AND MAJOR SHARE HOLDERS INTERESTS

 None of the directors, major shareholders, persons connected with the directors or major shareholders of ICB or any of its subsidiaries have any interest, direct or indirect, in the Project.

9. STATEMENT OF THE BOARD OF DIRECTORS

 The Board of Directors of ICB , after taking into consideration all aspects of the Joint Venture Agreement,  is of the opinion that the Agreement is fair, reasonable and is in the best interest of the ICB group.

10 DOCUMENT FOR INSPECTION

 The Agreement shall be available for inspection at the registered office of ICB during office hours at Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra , 59200 Kuala Lumpur for period of three (3) months from the date of this announcement.