09:52 E-LIFE INT'L<00370> - Announcement (4) the conditions have been satisfied or otherwise waived and the relevant documents have been provided to Funeway or such other date as mutually agreed by the parties to the Subscription Agreement. In the event completion of the Subscription Agreement does not take place by six months after the date of the Subscription Agreement and no extension agreement has been entered into between the parties to the Subscription Agreement, the Subscription Agreement will lapse and no party shall have any liability under it and Shanxi Changxing shall refund Funeway all monies paid by Funeway together with the relevant interest. Warranties Shanxi Changxing's existing shareholders jointly and severally, among other things: (a) warrant that prior to obtaining the Certificate of Approval for Foreign Investment Enterprise from the relevant authorities, Shanxi Changxing will have ceased operation of its existing 100,000 tonnes coke factory, and all the relevant costs of the demolition will be borne by the existing shareholders of Shanxi Changxing; (b) undertake to be responsible for and to compensate all the losses (including penalty fees, if any) suffered by Shanxi Changxing as a result of Shanxi Changxing's illegal operation and/or violating the environmental protection laws arising prior to the Completion Date; and (c) warrant that the coke production of Shanxi Changxing will not be less than 300,000 tonnes and 500,000 tones for 2005 and 2006 respectively. Board of directors of Shanxi Changxing Upon completion of the Subscription, it is anticipated that the board of Shanxi Changxing will compose of directors nominated by Funeway, Mr. Yu-wen and Ms. Yu-wen in proportion to their respective shareholding. INFORMATION ON SHANXI CHANGXING Shanxi Changxing was established in the PRC on 23 May 1995. Shanxi Changxing currently has a registered capital of RMB20,000,000 and is currently owned as to 70% by Mr. Yu-wen and as to 30% by Ms. Yu-wen. Mr. Yu-wen is the founder of Shanxi Changxing and Ms. Yu-wen become holder of 30% interest in Shanxi Changxing in March 2004. Mr. Yu-wen is involved in the management of Shanxi Changxing. Ms. Yu-wen does not involve in the management of Shanxi Changxing. The principal business of Shanxi Changxing is the manufacture and sale of coke and certain by-products in the PRC. Shanxi Changxing currently has coke production facilities with an annual capacity of 100,000 tonnes. The principal product of Shanxi Changxing is metallurgical coke, which is used mainly for the production of steel. The coke produced by Shanxi Changxing are mainly sold to steel manufacturers in Tianjin and Jiangxi province, the PRC and trading companies in Shanxi province, the PRC. As by-products, Shanxi Changxing also produces coal tar and coke oven gas which are mainly sold to local carbon manufacturers. On 26 May 2004, the Shanxi Provincial People's Government issued the Decision on the Consolidation of Coking Industry (*) setting out new environmental protection rules and regulations governing the coke refinery operation in the PRC, which became effective on 31 December 2004. As the existing production facilities of Shanxi Changxing fail to meet the standards as stipulated in the abovementioned Decision on the Consolidation of Coking Industry, Shanxi Changxing has violated the relevant rules and regulations and therefore maybe subject to penalty. Pursuant to the Subscription Agreement, Shanxi Changxing's existing shareholders jointly and severally undertake to be responsible for and to compensate all the losses (including penalty fees) suffered by Shanxi Changxing as a result of Shanxi Changxing's illegal operation and/or violating the environmental protection laws. Pursuant to the Subscription Agreement, in compliance with environmental rules and laws, Shanxi Changxing will demolish its existing 100,000 tonnes coke factory prior to the obtaining of the Certificate of Approval for Foreign Investment Enterprise from the relevant authorities. To continue its coking business, since 2002, Shanxi Changxing has commenced the construction of new production facilities comprise of a coal preparation plant with an annual capacity of 900,000 tonnes and a new coking facilities with an annual capacity of 600,000 tonnes. Total amount of investment in the new production facilities is estimated to amount to RMB130 million of which RMB64 million has been invested as of 31 December 2004. Further investment of RMB66 million will be funded from the increase in registered capital in Shanxi Changxing. No further capital commitment is required under the Subscription Agreement. The first phase of the new coking facilities with an annual capacity of 300,000 tonnes is expected to commence operation by the end of February 2005 while the second phase with an annual capacity of 300,000 tonnes is