Natural Beauty brand, the provision of beauty training courses and assisting Beijing NB with the
development of franchise networks. The appointment of the Operator is effective for a period of 5
years from 2 July 2002 to 1 July 2007. After taking into account the product life cycles of most of
the cosmetic equipments situated in the Natural Beauty spas and the average depreciation period
of the Entrusted Assets, the Directors believe the Entrusted Period of 5 years is reasonable.
During the term of the appointment, the Operator shall in each year prepay to Beijing NB an
annual asset management fee for the following year in the amount of RMB4,204,000 (equivalent
to approximately HK$3,966,000) being 1/5 of the value of the Entrusted Assets. The value of the
Entrusted Assets determined with reference to the audited net asset value of Beijing NB was
RMB21,022,135 (equivalent to approximately HK$19,832,203) as at 1 July 2002. The Operator
shall be entitled to retain any profits generated by the Entrusted Assets under her management and
operation during the Entrusted Period. On the other hand, the Operator shall be obligated to
undertake any losses arising from the Entrusted Assets under her management and operation
during the Entrusted Period.
Security Deposit
As security for the Operator's obligations under the Assets Entrusted Agreement, the Operator
shall deposit a security deposit with Beijing NB in an amount equivalent to the aggregate Annual
Asset Management Fee payable by the Operator during the Entrusted Period. The Operator has
paid 50% of the Security Deposit by cash upon signing of the Assets Entrusted Agreement. The
remaining 50% of the Security Deposit was to be satisfied by way of a mortgage on the Operator's
property. Pursuant to the terms of the Assets Entrusted Agreement, the Operator and Beijing NB
shall enter into a Property Mortgage Agreement. In the event that the Operator shall fail to remit

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