MEMORANDUM OF UNDERSTANDING Between PUN LUEN SHOE FACTORY - ------------------------ And TUNG SHING DEVELOPMENT LIMITED - --------------------------------- This is to confirm that the shareholders of Shenzhen Pun Luen Industrial Co., Ltd ("SPL") agrees to sell and Tung Shing Development Limited ("TSD") agrees to purchase 75% of the ownership of "SPL" under the following terms and conditions: 1. "SPL" is a China registered company. 2. "SPL" is in the business of shoes manufacturing. 3. The price As agreed by both parties, the purchase price of 75% of the ownership is fixed at C$2,585,495.00. 4. The Management Both parties agree that TSD will elect two directors to the board and retain the current management of "SPL" until further notice. 5. The Business Both parties agree to further develop and expand the current core business through corporate restructure and acquisition. 6. Payment Both parties agree that "TSD" will pay by the Tagalder common shares for the purchase. The price: C$0.17 Total quantity of shares: 15,208,798 shares 7. Official Approval This agreement is conditional upon the following official approval: - - Tagalder's Board - - Regulatory Approval - - Tagalder shareholders 8. This Memorandum of understanding is signed on January 10,2001 by: "Mr. Ng Tung Wo Paul" "Mr.Cheung Kwai Woon" - ------------------------ ---------------------- Tung Shing Development Limited Pun Luen Industrial Co., Ltd Date: January 10,2001 Date: January 10, 2001