09:21 MAN YUE INT'L<00894> - Announcement (3) Composition of the board for Ever Reliance: Maximum number of board member for Ever Reliance shall be 5. 2 directors shall be appointed by Man Yue Technology, 2 directors shall be appointed by Golden Faith and 1 director shall be appointed by Wintop. None of the shareholders will have absolute control over the board. Call option: A call option was granted to Man Yue Technology by Golden Faith and Wintop pursuant to which Man Yue Technology is entitled to acquire from Golden Faith and Wintop, at any time commencing from the 7th year of the Shareholders' Agreement, at the pre-determined price their entire shareholding and the relevant shareholders' loans in Ever Reliance. As agreed by Man Yue Technology, Golden Faith and Wintop, the pre-determined price shall be equal to the net asset value per share of Ever Reliance, taking into account the valuation adjustments for the land and the industrial buildings thereon based on independent professional valuation as at the date when Man Yue Technology serves the notice to exercise its call option. Should Man Yue Technology elect to exercise the option, the Company will comply with the Listing Rules and make further announcement(s) as and when necessary. Funding requirements of the Project Company: Ever Reliance shall contribute HK$60,000,000 to fund the Project Company. Non-interest bearing shareholders' loans of HK$28,800,000, HK$29,400,000 and HK$1,800,000 shall be contributed by Man Yue Technology, Golden Faith and Wintop respectively to Ever Reliance in accordance with their shareholding percentage in Ever Reliance. All funds have to be contributed as and when requested by the board, but in any event on or before 14 July 2007. In the event that a defaulting shareholder fails to remedy its breach of any of the terms of the Shareholders' Agreement within 21 days upon the serving of a notice by the other non-defaulting shareholder(s), any non-defaulting shareholder(s) shall be entitled to acquire the entire interest from the defaulting shareholder(s) at 75% of the value of the shares of the defaulting shareholder. The value of such shares shall be based on the net asset value of Ever Reliance as calculated by its auditors. SHAREHOLDER'S LOAN PROVIDED BY MAN YUE TECHNOLOGY TO EVER RELIANCE The shareholder's loan of HK$28,800,000 to be advanced to Ever Reliance by Man Yue Technology will be funded out of the internal resources of the Group. The shareholders' loan is capital in nature and is non-interest bearing, without security and with no fixed repayment terms. REASONS FOR INVESTING IN EVER RELIANCE The Group is principally engaged in the manufacture and trading of electronic components, the trading of electrical products, raw materials and production machinery. The Company intends to invest in Ever Reliance with a view that Samxon Electronics, a wholly-owned subsidiary of the Company which currently leases industrial land and buildings for its operation, will in future lease part of the industrial buildings and related ancillary facilities of the Project Company. Since the Company holds partial interest in the Project Company through Ever Reliance, the net effect to the Group will be a reduction in the overall rental cost. The Company has yet to agree the terms of the lease with the Project Company but the indicative rate in discussion is at a discount to the current market rate. In addition, the Group is also granted the right to acquire the remaining indirect interest in the Project Company, through acquiring the interest of Golden Faith and Wintop by exercising the call option as mentioned above, should it find this beneficial and in the Company's interest to do so. The Directors are of the view that the terms of the Shareholders' Agreement are fair and reasonable and investing in Ever Reliance is in the interests of the Company and the Shareholders as a whole.