10:25 CLIMAX INT'L<00439> - Announcement (2) Purchaser - Vevion Conditions Precedent : None DESCRIPTION OF THE DISPOSAL Easyfil BVI has sold to Vevion the Sale Shares, being the entire issued voting share capital of Easyfil Hong Kong. Easyfil BVI is an investment holding company holding the ordinary shares of Easyfil Hong Kong. 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, pursuant to the Agreement, 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 referred to above is HK$8,000,000. Upon completion of the Agreement, Easyfil Hong Kong will cease to be a subsidiary of the Company. CONSIDERATION FOR THE DISPOSAL The aggregate consideration for the Disposal is HK$8,000,000, of which, an initial cash deposit of HK$800,000 had been paid on the date of signing of the Agreement. Such amount (together with all interest thereon) shall be (i) repaid by Easyfil BVI to Vevion in the circumstances where Easyfil BVI does not complete the sale and purchase of the Sale Shares in accordance with the terms of the Agreement; or (ii) forfeited by Easyfil BVI in the circumstances where Vevion does not complete the sale and purchase of the Sale Shares or pay the deferred consideration (see paragraph below) in accordance with the terms of the Agreement. The remaining amount of the consideration of HK$7,200,000 shall be payable in five equal instalments of HK$1,440,000 each on 15 May 2005, 15 June 2005, 15 July 2005, 15 August 2005 and 15 September 2005. As security for payment of the consideration of HK$7,200,000 referred to in the above paragraph, Vevion has delivered to Easyfil BVI duly executed documentation enabling it to (i) effect a transfer of the Sale Shares to Easyfil BVI; (ii) assign the Trademarks to Easyfil BVI; and (iii) remove any persons appointed as directors and secretary of Easyfil Hong Kong. The consideration was arrived at after taking into account the net book value of Easyfil Hong Kong after writing off the inter-company Outstanding Balances due between Easyfil Hong Kong, the Company and its subsidiaries, the value of the Trademarks and the net book value of the PRC Distribution Branch. The consideration was determined on an arms length basis through negotiations between Easyfil BVI and Vevion. INFORMATION ON EASYFIL HONG KONG The issued share capital of Easyfil Hong Kong is HK$1,001 comprising of the Sale Shares (owned by Easyfil BVI) and the Non-Voting Share (owned by Ms. Low). Easyfil Hong Kong is an indirect subsidiary of the Company and carries on the business of manufacturing, marketing and distributing paper products, including stationery through the "Easyfil" brand name in Hong Kong. Easyfil Hong Kong recorded unaudited net liabilities of HK$3,789,000 as at 31 March 2005. The net loss (both before and after taxation and