CONTINUING CONNECTED TRANSACTIONS Royalty Agreement On 1 January 2004, Global Chemicals and Cristal Marketing entered into the Royalty Agreement, detailed terms of which are set out in the section headed “Royalty Agreement” below. The transactions contemplated under the Royalty Agreement ceased in April 2006 when all the tenancy agreements entered into between the Group (as tenant) and the respective landlords in respect of the Flagship Stores expired. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, at the time when Global Chemicals and Cristal Marketing entered into the Royalty Agreement, each of Cristal Marketing and its ultimate beneficial owners was an independent third party not connected with the Company and its connected persons. Since 18 September 2004, Cristal Marketing had become a connected person of the Company when it acquired 30% interest of Global Cosmetics, a non-wholly owned subsidiary of the Company. As at the date of this announcement, Cristal Marketing held 15.34% of the interests in Global Cosmetics. In or around December 2007, the Company reviewed all previous transactions between the Group and Cristal Marketing and regrettably, it was noted by the Company that it had overlooked that the Royalty Agreement constituted a continuing connected transaction of the Company during the period from 18 September 2004 to April 2006. The said transaction would be subject to reporting and announcement requirements under Chapter 14A of the Listing Rules although the Company has made disclosure in its 2005, 2006 and 2007 annual reports of the Royalty Agreement as related party transactions and has also disclosed the connected relationship between Cristal Marketing and the Group. The Company admits that it has breached the relevant requirements under Chapter 14A of the Listing Rules in respect of the Royalty Agreement. The Company has forthwith notified the Stock Exchange and has taken steps to rectify the breach, including by way of this announcement. As each of the percentage ratios of the Royalty Agreement (calculated on an individual basis and on an aggregated basis after aggregating the transactions contemplated under the Royalty Agreement with the transactions contemplated under the Previous Agreement) on an annual basis was less than 2.5%, the Royalty Agreement was subject to the reporting and announcement requirements under Chapter 14A the Listing Rules. This announcement is made to inform the shareholders of the Company of the major terms of the Royalty Agreement.
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Termination Due To Lack Of Funding Appropriation If, in the judgment of the Director of Accounts and Reports, Department of Administration, sufficient funds are not appropriated to continue the function performed in this agreement and for the payment of the charges hereunder, State may terminate this agreement at the end of its current fiscal year. State agrees to give written notice of termination to contractor at least 30 days prior to the end of its current fiscal year, and shall give such notice for a greater period prior to the end of such fiscal year as may be provided in this contract, except that such notice shall not be required prior to 90 days before the end of such fiscal year. Contractor shall have the right, at the end of such fiscal year, to take possession of any equipment provided State under the contract. State will pay to the contractor all regular contractual payments incurred through the end of such fiscal year, plus contractual charges incidental to the return of any such equipment. Upon termination of the agreement by State, title to any such equipment shall revert to contractor at the end of the State's current fiscal year. The termination of the contract pursuant to this paragraph shall not cause any penalty to be charged to the agency or the contractor.
Material Breach or Early Termination Section 9.1. EVENTS CONSTITUTING MATERIAL BREACH OF AGREEMENT. Applicant shall be in Material Breach of this Agreement if it commits one or more of the following acts or omissions: