10:26 CENTURY LEGEND<00079> - Announcement & Resumption (5) loan provided by Fastpro to Longnex of approximately HK$17.2 million and HK$17.1 million for the two years ended 31st December, 2004, Longnex recorded an audited net loss of approximately HK$7.6 million for the year ended 31st December, 2003 and an audited net profit for the year ended 31st December, 2004 of approximately HK$3.5 million. Longnex incurred no tax liabilities and had not recorded any extraordinary items for the two years ended 31st December, 2004. According to the audited accounts of Longnex, the net deficit of Longnex was approximately HK$299.7 million as at 31st December, 2004. However, Longnex would have had a net asset value of approximately HK$163.3 million as at 31st December, 2004 if the shareholder's loan due to Fastpro of approximately HK$463 million is treated as part of equity. Fastpro was incorporated on 26th October, 2004 and has not carried out any substantive business since its establishment save for acquiring the entire interests of Longnex and the Hotel. According to the unaudited management accounts of Fastpro for the period from 26th October, 2004 (date of incorporation) to 8th April, 2005, Fastpro recorded an unaudited loss of approximately HK$243,990 and had a net deficit of HK$243,982 as at 8th April, 2005. Deed of novation Upon the request made by LNX and CL Properties jointly at any time during the Option Period and at the cost of LNX and CL Properties, the parties to the Option Agreement will enter into a deed of novation within 14 days from such request for the purpose of releasing CL Properties from the Option Agreement and substituting it with LNX Other terms Upon the request of CL Properties, Keenfull, Fastpro and Longnex shall give reasonable access to documents and information relating to Fastpro, Longnex and the Hotel which are in their possession or control to CL Properties for the purpose of allowing CL Properties to conduct due diligence to its satisfaction before exercise of the Fastpro Call Option. CL Properties shall be entitled to nominate LNX to conduct the due diligence on its behalf provided that LNX shall be subject to the same duty of confidentiality imposed on CL Properties under the Option Agreement THE JV AGREEMENT Date: 3rd May, 2005 Parties: HKM and CL Properties Scope of business LNX is a joint venture company formed for the purpose of entering into the Option Agreement and the Agency Agreement. Board of directors Pursuant to the JV Agreement, HKM and CL Properties are entitled to appoint and remove three directors and two directors of LNX respectively. The chairman of the board of LNX shall be appointed by HKM. On this basis, the results of LNX will be consolidated into accounts of the Group since the completion of the sale and purchase of the shares subject to the Fastpro Call Option. Pre-emptive right HKM or CL Properties (the "Offeror") who wishes to sell its interest in LNX has to first offer (the "Offer") to sell such interest to the other joint venture partner. In the event that the other joint venture partner does not accept the Offer within the period as prescribed in the JV Agreement, the Offeror shall be at liberty to sell its interest in LNX to any third parties at a price not lower than the price offered by the Offeror to the other joint venture partner. Basis of the consideration of the Fastpro Call Option and its exercise price Keenfull acquired the entire issued shares of Longnex from an independent third party at HK$540 million on 1st April, 2005. The Board considers it in the interest of the Company to obtain the Fastpro Call Option as it allows the Group an one year period to observe the property market movement in Macau and arrange the necessary funding to finance the exercise price, if exercise of the Fastpro Call Option is considered appropriate. LNX will be given the rights to manage the Hotel and to receive the net cash receipts from the Hotel Business through the Novation. The one-off payment and the Monthly Option Fee were determined after arms' length negotiation between Keenfull and LNX and has taken into account the aforesaid management rights that will be granted to LNX