10:57 <00613> & <01224>-Joint Announcement & Resumption (5) Name Position Contract period Per annum emoluments Chau Tin Ping Managing 2 years from HK$668,200 director of the Completion Hoi Date Tin Tse On Kuen General 2 years from HK$449,800 and manager of An the Completion RMB102,000 He Date Factory Wong Kam Hoi General 2 years from HK$449,800 and manager of Jin the Completion RMB114,000 He Date Factory Wong Kong Marketing 2 years from HK$633,000 manager and the Completion general Date manager of Hoi Tin Suzhou As each of the Vendors will remain as directors of Hoi Tin after the Completion, they will become connected persons of Yugang and Qualipak and the entering into of the service contracts by members of the Hoi Tin Group with the Vendors will be continuing connected transactions of Yugang and Qualipak but will be exempted from the reporting, announcement and independent shareholders' approval requirements under the Listing Rules. REASONS FOR AND BENEFITS OF THE ACQUISITION As mentioned in Qualipak's interim report for the six months ended 30 June 2004, the Qualipak Group has been exploring business opportunities for growth through horizontal expansion that will generate revenue and cash flow and provide a reliable source of income to the Qualipak Group. Reference was made to the profile of Hong Kong's travel goods and handbags industry provided by Hong Kong Trade Development Council that the total exports of travel goods and handbags from Hong Kong increased by 12% in the first nine months of 2004. The directors of Qualipak believe that Hoi Tin is a successful entity in the production of soft luggage, travel bags, backpacks, and brief cases with well-established manufacturing facilities in the PRC to capitalize on the cheaper labour and land costs. The growth prospect of the Hoi Tin Group and the luggage industry is promising and the Acquisition will provide the Qualipak Group with an opportunity to gain access to the trading and manufacturing operations of luggage products, which are essentially packaging products. The management of the Qualipak Group has substantial experience in business development and investment and in assisting entrepreneurial companies like the Hoi Tin Group to manage and further expand their business and market share. Furthermore, the relative strength of the Qualipak Group in strategic planning, financial management, corporate development, and international markets are expected to bring strong synergies and additional depth and strength to the present management team of the Hoi Tin Group. The Acquisition, if completed, will be a step in diversification of Qualipak Group's products and a key development in Qualipak Group's business strategy. The directors of Qualipak consider that the Acquisition will bring additional earnings and long term value to the Qualipak Group. As a long term investment, the Acquisition will contribute positively to Qualipak Group's future development and growth through broadening base of business opportunities. The directors of Qualipak consider that the terms of the Acquisition are fair and reasonable and in the interests of the Qualipak Group and the shareholders of Qualipak as a whole. The directors of Yugang also consider that the terms of the Acquisition are fair and reasonable and in the interests of Yugang and its subsidiaries and the shareholders of Yugang as a whole. MAJOR TRANSACTION OF YUGANG AND QUALIPAK AND THE YUGANG SGM As the amount of the relevant percentage ratio calculated pursuant to Rule 14.07(3) of the Listing Rules exceeds 25% for each of Yugang and Qualipak, the Acquisition constitutes a major transaction for each of Yugang and Qualipak under the Listing Rules. The Acquisition is therefore subject to approval by the shareholders of Yugang and the shareholders of Qualipak, and in each case, by a majority vote given at a general meeting or a written approval approving the Acquisition obtained from a shareholder or a closely allied group of shareholders of Yugang and Qualipak (as the case may be) which in aggregate hold more than 50% of the issued share capital giving the right to attend and vote at that general meeting of Yugang and Qualipak (as the case may be), provided that no shareholder of Yugang and Qualipak is required to abstain from voting at the respective meetings. In respect of the general meetings of each of Yugang and Qualipak approving the Acquisition, no shareholder of Yugang and no