10:24 CLIMAX INT'L<00439> - Announcement (1) The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. CLIMAX INTERNATIONAL COMPANY LIMITED (Incorporated in Bermuda with limited liability) (Stock code: 439) DISCLOSEABLE AND CONNECTED TRANSACTION The Directors are pleased to announce that on 31 March 2005, Easyfil BVI, a wholly-owned subsidiary of the Company, entered into the Agreement with Vevion. As part of its business, the Company manufactures, markets and distributes paper products under the "Easyfil" brand name through Easyfil Hong Kong and the PRC Distribution Branch in Hong Kong and the PRC. The Trademarks in respect of the "Easyfil" brand business conducted by Easyfil Hong Kong and the PRC Distribution Branch are held by the Assignors. The Company has agreed to dispose of the "Easyfil" brand business conducted through Easyfil Hong Kong and the PRC Distribution Branch, together with the Trademarks in respect of the "Easyfil" brand business to Vevion. Accordingly, pursuant to the Agreement, Easyfil BVI has sold and Vevion has purchased the Sale Shares, representing the entire issued voting share capital of Easyfil Hong Kong. In addition, Easyfil BVI has undertaken that it shall and warranted that it can procure that within 90 days of completion of the Agreement (i) each of the Assignors shall assign to Vevion (or its nominees) the Trademarks registered in the name of such Assignor, together with the goodwill of the business concerned in the goods for which the Trademarks are registered or are in the process of being registered; (ii) the Company and all its subsidiaries will write-off all inter-company Outstanding Balances due to and from Easyfil Hong Kong; (iii) the PRC Subsidiary shall transfer the operation and business of the PRC Distribution Branch to Vevion; and (iv) Ms. Low, an independent third party, shall transfer all rights, title, benefits and interests in the Non-Voting Share to Vevion for nominal consideration. The aggregate consideration for the Disposal is HK$8,000,000, which will be satisfied as to HK$800,000 by way of initial cash deposit, with the balance to be paid by five equal monthly instalments of HK$1,440,000 on each of 15 May 2005, 15 June 2005, 15 July 2005, 15 August 2005 and 15 September 2005. Upon completion of the Agreement, Easyfil Hong Kong will cease to be a subsidiary of the Company. The principal terms of the Agreement are set out below in this announcement. Mr. Chan is an executive director of the Company and is, therefore, a connected person of the Company under the Listing Rules. Vevion is wholly owned by Mr. Chan, and is therefore an associate and connected person of the Company for the purposes of the Listing Rules. As such, the Disposal constitutes a connected transaction of the Company. The Disposal is a connected transaction on normal commercial terms where each of the percentage ratios (other than the revenue ratio, which is less than 2.5%) equal to or more than 2.5% but less than 25% and the total consideration is less than HK$10,000,000. In accordance with the provisions of Rule 14A.32 of the Listing Rules, the Disposal is only subject to the reporting and announcement requirements set out therein and is exempt from the independent shareholders' approval requirements of Chapter 14A of the Listing Rules. The Disposal also constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules. A circular containing details of the Disposal will be sent to Shareholders as soon as practicable. THE DISPOSAL The Directors are pleased to announce that on 31 March 2005, Easyfil BVI, a wholly-owned subsidiary of the Company, entered into the Agreement with Vevion, a company controlled by Mr. Chan, in relation to the Disposal. DETAILS OF THE AGREEMENT Date : 31 March 2005 Parties : Vendor - Easyfil BVI