09:42 FONG'S IND<00641> - Announcement (2) these agency and sales coordination arrangements, it will enable the Group to further expand its sales networks and to enhance its position as one of the leading providers of renowned dyeing and finishing machines in the industry in the Latin American and North American markets. The Directors of the Company (including the Independent Non-Executive Directors of the Company) are of the opinion that the Continuing Connected Transactions have been entered into in the usual and ordinary course of businesses of the Group and the terms of the Continuing Connected Transactions have been negotiated and will be conducted on an arm's length basis and on normal commercial terms. The Continuing Connected Transactions and the terms thereof are fair and reasonable and in the best interests of the Group and the shareholders of the Company as a whole. CONTINUING CONNECTED TRANSACTIONS (A) The five agreements entered into with PSP Marketing Inc. (collectively as the "Continuing Connected Transactions") are summarized as follows: 1. Regional Sales Coordination Agreement entered into between Fong's National Engineering Company, Limited and PSP Marketing Inc. on May 1, 2003 (the "Regional Sales Coordination Agreement") Fong's National Engineering Company Limited is a wholly-owned subsidiary of the Group engaged in the trading of FONG'S branded dyeing and finishing machines. Pursuant to the Regional Sales Coordination Agreement, PSP Marketing Inc. has been appointed as the exclusive sales coordinator for an initial term of three years commencing from May 1, 2003 and the term shall be renewed automatically for successive one year thereafter until either party gives a 90 days' notice of termination without cause before expiration of the term. PSP Marketing Inc. shall be responsible for, among other things, promoting by itself or through its appointed regional sales agents, the sales and marketing activities and pursuing sales coordination and sales management in respect of the FONG'S branded products in Central and South America. 2. Sales Agency Agreement entered into between Fong's National Engineering Company, Limited and PSP Marketing Inc. on October 4, 2003 together with the subsequent amendments thereto (the "1st Sales Agency Agreement") Pursuant to the 1st Sales Agency Agreement, PSP Marketing Inc. has been appointed as the sole and exclusive sales agent commencing on October 4, 2003 until being terminated without cause by three months' prior notice in writing given by either party. PSP Marketing Inc. shall serve Fong's National Engineering Company, Limited as the sole and exclusive agent for the sale of the FONG'S branded products in Canada and USA. 3. Technical, Sales and Marketing Support Agreement entered into between Xorella AG and PSP Marketing Inc. on May 14, 2003 (the "Technical, Sales and Marketing Support Agreement") Xorella AG is a 80% subsidiary of the Group engaged in the business of manufacture and sale of CONTEXXOR branded vacuum yarn conditioning and steaming equipment. Pursuant to the Technical, Sales and Marketing Support Agreement, PSP Marketing Inc. has been appointed as the technical support and marketing representative of Xorella AG in Central and South America commencing from May 2, 2003 until terminated without cause by either party by giving six months' prior written notice before the year-end date of each financial year. PSP Marketing Inc. shall be responsible for, among other things, providing technical support, sales support and marketing support in respect of the products of Xorella AG in Central and South America. 4. Sales Agency Agreement entered into between Xorella AG and PSP Marketing Inc. on July 22, 2003 together with subsequent amendments thereto (the "2nd Sales Agency Agreement") Pursuant to the 2nd Sales Agency Agreement, PSP Marketing Inc. has been appointed as the sole and exclusive sales agent for an initial term of 18 months commencing from July 22, 2003 and its term shall be renewed automatically for successive one year thereafter until either party