09:50 COSCO INTL HOLD<00517> - Announcement (3) Conditional upon the requisite resolution being passed by the Independent Shareholders at the SGM to approve the transaction contemplated under this agreement, Japan Kansai shall continue to provide such technology and know-how and the annual technology usage fee shall not exceed the proposed annual cap for the three years ending 31st December 2005, 2006 and 2007. The aggregate annual technology usage fees payable by Kansai Companies to Japan Kansai, for the year ended 31st December 2004 was approximately RMB6,158,000 (approximately HK$5,780,000), which exceeded the annual cap of HK$4,000,000 for the year 2004 for the purpose of the Previous Waiver. 2. Purchase of raw materials from the Kansai Group Shanghai Kansai and Tianjin Kansai have been purchasing raw materials involved in the production of container coatings, marine coatings and anti-corrosion coatings from members of the Kansai Group since 1997 and 1993 respectively. In order to comply with the requirements under the Listing Rules, each of the Kansai Companies entered into a conditional master purchase agreement with Japan Kansai on 25th May 2005 and the Kansai Companies entered into a conditional master purchase agreement with NKM on 31st March 2005. Conditional upon the requisite resolution being passed by the Independent Shareholders at the SGM to approve the said purchase agreements, the Kansai Companies agreed to purchase raw materials from Japan Kansai and NKM for a term of 3 years commencing on the date of signing of the relevant master agreement respectively. The purchase price of the raw materials shall be determined after arms' length negotiations between the parties to the agreements. All such purchases by Shanghai Kansai and Tianjin Kansai of raw materials from Japan Kansai or NKM shall be conducted in the ordinary and usual course of businesses of Shanghai Kansai and Tianjin Kansai and on normal commercial terms. Purchases of raw materials from the Kansai Group accounted for RMB7,238,000 (approximately HK$6,800,000) representing 1.0% of the total purchases of raw materials by the Kansai Companies for the year ended 31st December 2004. The cap amount for purchases of raw materials under the Previous Waiver was HK$45,000,000. 3. Introduction of business by NKM In the course of their ordinary business, NKM will from time to time make recommendations to their customers of the products manufactured by the Kansai Companies. In order to comply with the requirements under the Listing Rules, the Kansai Companies entered into a conditional master introduction agreement with NKM on 25th May 2005. Conditional upon the requisite resolution being passed by the Independent Shareholders at the SGM to approve the said agreement, NKM agreed that NKM will introduce businesses to the Kansai Companies and each of Shanghai Kansai and Tianjin Kansai in turn pays commission to NKM for the businesses successfully introduced by them. The term shall be 3 years commencing on 1st January 2005. The rate of such commission payable to NKM shall be 4% of the value of the order for coatings while commission payable to other independent third party introducer for coatings is usually 3%-6% for container coatings and up to 10% for marine coatings depending on the size of the order. Total commission payable by the Kansai Companies to the Kansai Group amounts to RMB1,814,000 (approximately HK$1,700,000) representing approximately 4.3% of the total commission paid by the Kansai Companies for the year ended 31st December 2004. The cap amount for commissions payable by the Kansai Companies to the Kansai Group under the Previous Waiver was HK$5,000,000. 4. Sale of container coatings and marine coatings to NKM The Kansai Companies will from time to time sell container coatings and marine coatings manufactured by them to NKM. In order to comply with the requirements under the Listing Rules, a conditional master sales agreement was entered into between the Kansai Companies and NKM on 25th May 2005. Conditional upon the requisite resolution being passed by the Independent Shareholders at the SGM to approve the said agreement, the Kansai Companies agreed to sell container coatings and marine coatings to NKM for a term of 10 months commencing on 1st March 2005. The container coatings and marine coatings will be sold to NKM by the Kansai Companies at preferential rates. Such preferential rate also applies to sales to other independent third parties except for odd size orders. In the event that the services were to be provided by the Kansai Companies to NKM for the use of such container coatings and marine coatings for the repairs of ships at the docks, the Kansai Companies will also charge a further 2% of the total costs of repairs of ships at the docks for such services. Usually, Kansai Companies do not levy charge on such kind of services provided to other independent third parties.