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7 ProVelco Co-operative Limited Investment Statement INVESTMENT STATEMENT ISSUED BY: PROVELCO CO-OPERATIVE LIMITED This Investment Statement is prepared as at 7 February 2011 IMPORTANT INFORMATION (The information in this section is required under the Securities Act 1978) Investment decisions are very important. They often have long-term consequences. Read all documents carefully. Ask questions. Seek advice before committing yourself. Choosing an Investment When deciding whether to invest, consider carefully the answers to the following questions that can be found on the pages noted below: What sort of investment is this? 2 Who is involved in providing it for me? 5 How much do I pay? 5 What are the charges? 5 What returns will I get? 5 What are my risks? 6 Can the investment be altered? 7 How do I cash in my investment? 7 Who do I contact with enquiries about my investment? 8 Page Is there anyone to whom I can complain if I have problems with the investment? 8 What other information can I obtain about this investment? 8 In addition to the information in this document, important information can be found in the current registered Prospectus for the investment. You are entitled to a copy of that Prospectus on request. Engaging an Investment Adviser An investment adviser must give you a written statement that contains information about the adviser and his or her ability to give advice. You are strongly encouraged 1

8 ProVelco Co-operative Limited Investment Statement to read that document and consider the information in it when deciding whether or not to engage an adviser. Tell the adviser what the purpose of your investment is. This is important because different investments are suitable for different purposes, and carry different levels of risk. The written statement should contain important information about the adviser, including relevant experience and qualifications, and whether dispute resolution facilities are available to you; and what types of investments the adviser gives advice about; and whether the advice is limited to investments offered by 1 or more particular financial institutions; and information that may be relevant to the adviser's character, including certain criminal convictions, bankruptcy, any adverse findings by a court against the adviser in a professional capacity, and whether the adviser has been expelled from, or prohibited from joining, a professional body; and any relationships likely to give rise to a conflict of interest. The adviser must also tell you about fees and remuneration before giving you advice about an investment. The information about fees and remuneration must include the nature and level of the fees you will be charged for receiving the advice; and whether the adviser will or may receive a commission or other benefit from advising you. An investment adviser commits an offence if he or she does not provide you with the information required. 1. WHAT SORT OF INVESTMENT IS THIS? Transactor Shares in ProVelco Co-operative Limited ( The Company ) 1.1 The securities being offered are Transactor Shares in the Company. 1.2 Transactor Shares are nominal value shares issued under the Co-operative Companies Act At the date of preparation of this Investment Statement, the nominal value of each Transactor Share is $ Transactor shareholders will be entitled to supply deer antler velvet to the Company for processing, grading, storage, marketing and sale. From 15 March 2011, only producers that are transacting shareholders in the Company, and who hold the required number of Transactor Shares will be entitled to supply all of their velvet through the Company. The Company may continue to accept velvet from producers who are not transacting shareholders for supply through the spot market, but only transacting shareholders will be entitled to use the Velvet Investor Premium system. 1.4 Transactor Shares are only available to deer antler velvet producers, and accordingly give producers the ability to influence the direction of the 2

9 ProVelco Co-operative Limited Investment Statement Company (in particular the appointment of its directors) through the exercise of the voting rights attached to the Transactor Shares. 1.5 Returns to transacting shareholders will be delivered by way of the proceeds of sale of the deer antler velvet supplied to the Company by the transacting shareholder (less the associated costs), or purchased from the transacting shareholder by the Company. Purpose of Issue 1.6 The proceeds from the issue of Transactor Shares will be used to strengthen the working capital of the Company. The Company intends to move from acting as a brokerage company, selling deer antler velvet on behalf of the producers, to a position where it has sufficient market share and financial strength to act as principal. This would enable the Company to purchase the deer antler velvet and then pursue sales and marketing strategies to maximise returns to its transacting shareholders for the deer antler velvet supplied. Price 1.7 The nominal value of each Transactor Share is $1.00, which is the amount that must be paid by a subscriber. Minimum and Maximum Investment 1.8 There is no minimum number of Transactor Shares that must be issued by the Company. 1.9 The minimum number of Transactor Shares required to be held by each shareholder is 250 x $1 shares (i.e. $250.00). The Company reserves the right to waive this minimum requirement at its discretion Every transacting shareholder is also required to hold a specified number of Transactor Shares per kilogram of velvet handled by (or on behalf of) the Company for that shareholder. The number of shares required to be held by each transacting shareholder will be calculated on the average supply for each consecutive season that the shareholder has supplied velvet to the Company. Where the shareholder has supplied velvet for more than 3 consecutive seasons, the number of shares will be calculated on a 3 year rolling average of supply volumes At the date of preparation of this Investment Statement, you will be required to hold five (5) Transactor Shares for every kilogram of deer antler velvet supplied (subject to the minimum holding of 250 Transactor Shares) A new shareholder can nominate (on the application form) to subscribe for a specified number of Transactor Shares based on the quantity of deer velvet they intend to supply over the coming seasons (subject to the minimum subscription of 250 shares) The Company reserves the right to issue up to 5,000,000 Transactor Shares. Accordingly, the maximum number of Transactor Shares that may be subscribed for is 5,000,000. Payment 1.14 Payment for Transactor Shares can be made as follows: 3

10 ProVelco Co-operative Limited Investment Statement By payment in cash on application (in full or in part); or By deduction from the proceeds of velvet antler supplied, at the rate of $1.00 per kilogram of velvet supplied per year as set out below; or By deduction from any rebates otherwise payable to the transacting shareholder (see section 5) Where payment for shares is being made by deduction from sale proceeds, deductions will be made at the rate of $1.00 per kilogram of velvet supplied annually until the shareholder has fully paid up the number of Transactor Shares required to reflect the quantity of velvet supplied. However, the minimum amount payable annually is $50.00 (based on the minimum subscription of 250 shares, representing 50kg of velvet), and the rate of the deduction will be increased accordingly where supply is less than 50kg A shareholder can nominate to accelerate payments at any time by cash or increasing the level of deductions All payments, other than payments made by deduction, are to be made to ProVelco Co-operative Limited at its registered office at Polson Higgs and Co, Level 8, HSBC Tower, 62 Worcester Boulevard, PO Box 4449, Christchurch. Rank of Transactor Shares 1.18 Pursuant to the Company s Constitution, the Shares in the Company are divided into two classes, Investor Shares and Transactor Shares. No Investor Shares are being offered by the Company The rights attached to the Transactor Shares being offered by the Company are as set out below: The Transactor Shares have a nominal value, which is currently $ The Transactor Shares have the right to participate in any annual rebate declared by the Directors of the Company The Transactor Shares carry the first right of redemption on liquidation of the Company at $1.00 per share Transactor Shares collectively always carry at least 60% of the voting rights of all shares on issue The Investor Shares have no par or nominal value. They are held by shareholders who supplied velvet to the Company during the 2002/2003 season. Investor Shares have the right to: Participate in annual dividends declared by the Directors (if any) Participate in any surplus assets upon liquidation of the Company after the holders of Transactor Shares have been paid out. No surplus assets may be returned to the holders of Investor Shares until the Transactor Shareholders have been paid $1.00 per Transactor Share Collectively carry a maximum of 40% of the voting rights of all shares on issue. 4

11 ProVelco Co-operative Limited Investment Statement Issue 1.21 The Transactor Shares will be issued by the Directors by entry of the name of the holder of the Transactor Shares on the share register of the Company as soon as practicable after the Application Form has been received. 2. WHO IS INVOLVED IN PROVIDING IT FOR ME? 2.1 The Issuer under this Investment Statement is the Company. The address at which the company may be contacted is: C/- Polson Higgs & Co Level 8 HSBC Tower 62 Worcester Boulevard P.O. Box 4449 Christchurch 2.2 There are no promoters of the offer. 2.3 The Company carries on the business of collecting, grading, storing, processing and marketing deer antler velvet (either directly or by arranging for third parties to provide those services). 3. HOW MUCH DO I PAY? 3.1 The nominal value of each Transactor Share is $1.00, which is the amount that must be paid by a subscriber. 3.2 The minimum number of Transactor Shares required to be held by each shareholder is 250 x $1 shares (i.e. $250.00). 4. WHAT ARE THE CHARGES? 4.1 No commission or brokerage is to be paid by applicants in respect of this offer. Other than the amount payable for the Transactor Shares, there are no other charges. 5. WHAT RETURNS WILL I GET? 5.1 Transacting shareholders may receive returns by way of rebate. The amount of any rebate is determined by the Board, and will be calculated on the number of kilograms of deer antler velvet supplied to the Company by the transacting shareholder. Rebates will only be paid in cash to fully paid up shareholders. If a shareholder has not completed payment for their full requirement of Transactor Shares, any rebate payable will be credited toward the payment of shares until their shareholding is fully paid up. 5.2 The amount of any rebates will be determined by the success of the business operations of the Company and no promises or guarantees are made as to those returns. The Company can give no assurance about the level of future rebates (if any), the dates on which or frequency with which any rebates will be paid, or the level of imputation credits which might be attached to them. The level of rebates and imputation credits will depend on a number of factors, including the solvency of the Company, requirements for capital and operating conditions, as well as those discussed in this Investment Statement under the heading "What are my Risks" below. 5

12 ProVelco Co-operative Limited Investment Statement 5.3 The Company is legally liable to pay any rebates if and when declared. The Company does not guarantee the return of capital or the amount of returns (if any) in relation to an investment arising from this offer. 5.4 The value of Transactor Shares is fixed at $1.00 by the constitution of the Company. The value of Transactor Shares may decline if the value of the Company s assets is reduced to a level at which the Transactor Shares would not be paid in full on a liquidation. The nominal value of Transactor Shares can also be altered by special resolution of the ordinary shareholders of the Company. Further information is set out below under the heading "What are my Risks?". 5.5 Taxes may affect the return to you. In particular, rebates will be subject to tax. These comments in relation to tax are of a general nature only, and do not constitute legal or financial advice. If you are considering the purchase of Transactor Shares you should consult your own financial or tax advisors concerning the tax consequences of owning shares, in light of your particular situation. 6. WHAT ARE MY RISKS? 6.1 The money paid by you is for Transactor Shares in the Company. 6.2 Your principal risk is that of being unable to recoup your original investment. This could happen for a number of reasons, including: If the Company s operational and financial performance is worse than expected, the underlying value of the Company could be reduced It is possible that in future the nominal value of the Transactor Shares could be reduced by amendment to the constitution of the Company by special resolution of the shareholders You are unable to surrender your Transactor Shares because the Company is in financial difficulties; The Company is placed in receivership or liquidation. If this occurs you may receive nothing, or less than your original investment You may not receive any return on your investment. 6.3 The principal business activity of the Company is collecting, grading, storing, processing and marketing New Zealand deer antler velvet produced by its transacting shareholders. It follows, therefore, that the factors and risks outlined below may have a material impact on the Company's annual financial performance, and on the risk to your investment: Fluctuations in commodity volume and the impact of production volumes on prices, which are key determinants of profitability; Foreign exchange. Any movement in the New Zealand dollar exchange rate may affect antler velvet prices and therefore the Company's profit; The Company's operations are solely within the deer antler velvet industry, and any factors affecting that industry would impact on the Company. 6

13 ProVelco Co-operative Limited Investment Statement Any changes to legislation in either New Zealand or overseas that impact on the production, harvesting, processing or marketing of deer antler velvet that would affect the Company. Consequences of Insolvency 6.4 There is no risk that you will be required to pay more money in respect of the shares other than the price of $1.00 per share. 6.5 You will not be liable to pay any money to any person as a result of the insolvency of the Company, provided your Transactor Shares are fully paid up. If your Shares are not fully paid up, you may be required to pay up the balance outstanding. 6.6 The claims that will or may rank ahead of you in the event of the Company being put into liquidation are those set out in Part XVI and the Seventh Schedule to the Companies Act 1993 and include those of the liquidator, employees, the Inland Revenue Department, secured creditors and unsecured creditors. All creditors of the Company will rank ahead of Shareholder claims if the Company is liquidated. 6.7 After all such Creditors have been paid, the remaining assets will be available for distribution amongst the Shareholders. Shareholders holding Transactor Shares will be paid the nominal value of their shares before the Investor Shareholders of the Company receive anything. 7. CAN THE INVESTMENT BE ALTERED? 7.1 Rights attaching to the Transactor Shares are set out in the Company Constitution. The rights attaching to the Shares may only be altered by special resolution of shareholders (subject to the rights of interest groups under the Companies Act 1993, or in certain circumstances by Court Order). 7.2 Section 117 of the Companies Act 1993 provides that a Company cannot take any action that affects the rights attached to its shares unless that action has been approved by a special resolution (75%) of the shareholders whose rights are affected by the action. Under certain circumstances a shareholder whose rights are affected by a special resolution may require the Company to purchase its shares. 7.3 At the date of preparation of this Investment Statement, the nominal value of Transactor Shares is $1.00. That value is fixed by the Constitution, and can accordingly be altered by special resolution of the shareholders of the Company. It is therefore possible that if further Transactor Shares are required at a later date, the issue price of those new Transactor Shares may be more or less than $1.00. The issue price of Transactor Shares cannot be changed after those Shares have been allotted to you. 8. HOW DO I CASH IN MY INVESTMENT? 8.1 Transactor Shares are nominal value shares under the Co-operative Companies Act That Act contains provisions giving both the Company and the Shareholder certain rights to require or agree upon the surrender of nominal value shares. Subject to the Co-operative Companies Act 1996 and the constitution of the 7

14 ProVelco Co-operative Limited Investment Statement Company, a transacting shareholder can apply to have its Transactor Shares surrendered back to the Company at their nominal value in certain circumstances. 8.3 Transactor Shares can also be sold, but only between existing transacting shareholders or with the approval of the Board to a third party otherwise eligible to be a transacting shareholder. In the opinion of the Company, the market for such sales is limited. 9. WHO DO I CONTACT WITH ENQUIRIES ABOUT MY INVESTMENT? 9.1 If you have any further enquires about the share in the Company then contact: Mr Geoff Bolderston Ph: (03) Polson Higgs & Co Fax: (03) Level 8 HSBC Tower 62 Worcester Boulevard PO Box 4449 Christchurch Ross Chambers Ph: (03) General Manager Fax: (03) ProVelco Co-operative Limited 15 Michelle Rd Wigram Christchurch ross@provelco.co.nz 10. IS THERE ANYONE I CAN COMPLAIN TO IF I HAVE PROBLEMS WITH THE INVESTMENT? 10.1 If you have any complaints or problems with the purchase of the shares, or the Prospectus then in the first instance write to the persons named under the heading Who Do I Contact With Enquiries About My Investment 10.2 There is no ombudsman that your complaint can be referred to. 11. WHAT OTHER INFORMATION CAN I OBTAIN ABOUT THE INVESTMENT? Prospectus and financial statements 11.1 Other information about the securities and the Company is contained in the registered prospectus containing an offer of securities to which this Investment Statement relates To protect you, the Company has been required to give you this Investment Statement and to register the Prospectus in the Companies Office of the Ministry of Economic Development The current registered Prospectus and the most recent financial statements of the Company are attached to this Investment Statement and can also be obtained: 8

15 ProVelco Co-operative Limited Investment Statement free of charge from the Company at the address set out in clause 9 above From the public register at the Companies Office at Annual information 11.4 In accordance with the Companies Act 1993, you have the right to receive a copy of the annual report of the Company and the Company must hold an annual general meeting of shareholders to consider that report. On request information 11.5 You may, by making a request in writing to the Company, request any of the information set out in section 215 of the Companies Act The Company may charge you a reasonable copying and administration fee for providing the information The directors of the Company are, however, more than happy to hear from you and answer any questions in relation to the Company Any other requests should be addressed to the directors of the Company at the address set out in clause 9 above. 12. HOW TO APPLY 12.1 An application will constitute an irrevocable offer by the applicant to acquire the number of Transactor Shares specified in the Application Form on the terms and conditions set out in the Investment Statement, the Prospectus and the Application Form. Read this Investment Statement and the Prospectus carefully before applying for shares. 13. RIGHT TO WITHDRAW APPLICATION FOR SHARES 13.1 If you did not receive this Investment Statement before applying for the shares then you may, within 10 working days of the date on which this Investment Statement was sent to you, withdraw your application by giving written notice to the Company, sent to the Company s registered office: C/- Polson Higgs, PO Box 4449, Christchurch

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17 APPLICATION FORM TO: (Please refer overleaf for details of correct completion) The Directors Provelco Co-operative Ltd In terms of the company s offer in the Prospectus dated 18 November 2010 and the Investment Statement dated 7 February 2011 of which this Application Form is part, I/we hereby apply for Transactor Shares in ProVelco Co-operative Ltd at an issue price of $1.00 each. I / we have recieved and read a copy of the Prospectus and Investment Statement. Name of Subscriber: (The name in which the shares are to be issued) (See overleaf for details of correct completion) Number of Transactor Shares I am/we are subscribing for: (Five shares per kilogram of supply - see Notes 1 & 2 below) Postal Address of Subsciber: (This will be the address for notices from the company). Phone:. Fax: .. IRD Number of the the Subscriber: Payment (Notes 3 & 4): Please select and complete one option I/We authorise Provelco Co-operative Ltd to deduct $1.00 per kilogram from annual sales revenue for velvet supplied. I/We enclose a cheque for $.. in payment of... Transactor Shares I/We enclose a cheque for $.. in part payment of... Transactor Shares, and I/We authorise Provelco Co-operative Ltd to deduct the balance of the payment from sales revenue for velvet supplied at the rate of $1.00 per kilogram. Notes: 1. Currently, all transacting shareholders are required to hold five (5) Transactor Shares for every kilogram of deer antler velvet supplied (subject to the minimum holding below). 2. The minimum shareholding required is 250 x $1 transactor shares. This is for suppliers of 50kg or less per annum. 3. Payment can be made by cheque with this application or by deduction from the proceeds of velvet supplied. If paying by deduction, the rate is currently $1 per kilogram supplied each year for five (5) years. (See item 1.15 of the Investment Statement) 4. Cheques are to be notated Not negotiable/account payee only and made payable to Provelco Cooperative Ltd. Signature(s) of Applicant(s): (This application form must be signed by all applicants.) Applicant s name:. Date:.. Applicant s name:. Date:.. Applicant s name:. Date:..

18 COMPLETING THE APPLICATION FORM 1. Enter your FULL NAME. You should refer to the table below for the correct form of name, which can be registered. 2. Please enter your IRD NUMBER. The Company is required by law to hold it. For joint applicants, please fill in the name of the first applicant. Note that your applications can be rejected if your IRD number is not entered. 3. Insert the NUMBER OF SHARES you wish to apply for. 4. Read the declaration carefully and SIGN the application form. It must be signed by the applicant(s) personally, or by two directors of a company (or one director if there is only one director). Joint applicants must each sign the application form. 5. Note that ONLY LEGAL ENTITIES are able to hold shares. Applications must be in the name(s) of natural persons, companies or other acceptable legal entities. At least one full given name and the surname are required for each natural person. The name of a trust or partnership may be included by way of an account designation if completed exactly as described below: Correct form of registerable names Type of investor Individual Use given name in full, not initials Correct Form Andrew Irvine White Company Trusts Partnerships Use the company title, not abbreviations Do not use the name of the trust, use the trustees names. All trustees must apply as joint applicants. Do not use the name of a partnership, use the partners personal names Andrew White Limited Andrew White and Mary-Anne White as trustees of the White Family Trust Percy White and Lucy White, for the White Partnership 6. Send the completed Application Form to: Provelco Co-operative Ltd c/- Polson Higgs Ltd P.O. Box 4449 CHRISTCHURCH 2

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