09:20 MAN YUE INT'L<00894> - Announcement (2) FORMATION OF THE PROJECT COMPANY The Project Company was a sino-foreign co-operative joint venture set up under the PRC laws on 14 July 2004 by Ever Reliance and Dongguan Changshi, a collectively-owned enterprise in the PRC. The total investment and registered capital is HK$60,000,000, 15% of which has been contributed by Ever Reliance as at the date of this announcement and the remaining 85% will be contributed solely by Ever Reliance on or before 14 July 2007. All relevant governmental approvals regarding the formation of the Project Company, including the business licence, have been obtained. Save as disclosed, Ever Reliance does not have any other capital commitment relating to the Project Company. Under and by virtue of the co-operative joint venture contract in respect of the Project Company, Dongguan Changshi does not hold an equity interest in the Project Company and is only entitled to a fixed return of about RMB995,000 each year, i.e. it is not entitled to share any profit/loss of the Project Company. Henceforth, Ever Reliance holds 100% equity interest in the Project Company and any profit or loss of the Project Company shall therefore belong to or be borne by Ever Reliance. To the best of the knowledge, information and belief of the Directors, Dongguan Changshi is not related to any of Golden Faith or Wintop or their respective beneficial owners and does not hold any shareholding interest in the Company. The purpose of joining Dongguan Changshi as a partner is that the latter as a collectively-owned enterprise in the PRC has close connection with the local municipal government and can function as an effective liaison person for the Project Company. Dongguan Changshi will also be involved in the daily running of the Project Company. The purpose of the Project Company is to acquire from the Dongguan Land Bureau a parcel of industrial land and to develop it into industrial buildings and ancillary facilities, and to lease out those factory space and facilities upon completion. The land is situated in Xinmin Village (also known as Xin Sing Industrial Zone), Changan Town, Dongguan City, Guangdong Province with a site area of approximately 82,886 square meters. The cost of the development is estimated to be around HK$60,000,000 and will be funded out of the registered capital contributed by Ever Reliance. The development will be carried out by the Project Company in 2 phases and is expected to be completed in 2007. The Project Company has obtained the preliminary approval by Dongguan Land Bureau on the use of that parcel of land for industrial development and will acquire the land shortly after the receipt of necessary funding from Ever Reliance. The land use right will be granted to the Project Company and all facilities on the premise will also become property of the Project Company upon completion. It is the intention of Ever Reliance and the Project Company that Samxon Electronics, a wholly-owned subsidiary of the Company, will lease part of the industrial buildings and related ancillary facilities from the Project Company upon completion of the development. SHAREHOLDING STRUCTURE OF EVER RELIANCE AND PROJECT COMPANY PRINCIPAL TERMS OF THE SHAREHOLDERS' AGREEMENT Date: 24 January 2005 Parties: i) Man Yue Technology ii) Golden Faith iii) Wintop iv) Ever Reliance Purpose of the Shareholders' Agreement: To set out the rights and obligations of each shareholder and to govern the affairs of Ever Reliance, including the funding arrangements for Ever Reliance to invest in the Project Company.