09:49 MASSIVE RES<00070> - Announcement & Resumption (4) audited consolidated net profit after taxation and minority interests of Walden (before extraordinary items) attributable to the Company for the first year from the commencement date of the operation of the Ship prepared in accordance with the accounting principles generally accepted in Hong Kong (the "Results") will not be less than HK$8,500,000 (the "Guaranteed Profit"). The Guaranteed Profit represents a price earnings multiple of 8 times on the Consideration. The amount of the Guaranteed Profit is determined by reference to Mr. Lin's over 7 years of extensive experience in cruise ship operation in Hong Kong. At present, Mr. Lin is one of the shareholders and directors of a Hong Kong cruise ship operating company. In the event that the Results fall short of the Guaranteed Profit, Mr. Lin shall compensate the Company such shortfall in cash on a dollar to dollar basis. An announcement will be made by the Company in the event of any shortfall in the Guaranteed Profit. Conditions precedent Completion of the S&P Agreement is conditional upon: (i) provision of document confirming the vesting of the title of the Ship with Walden by Mr. Lin to the Company; (ii) the passing by the Shareholders of an ordinary resolution to approve (1) the S&P Agreement and the transaction contemplated therein and (2) the issue of the Consideration Shares to Mr. Lin; and (iii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal, in the Consideration Shares. Completion shall take place within 5 Business Days after the fulfillment of the aforesaid conditions or on a date to be mutually agreed between Mr. Lin and the Company. The S&P Agreement does not provide either party the rights to waive the above conditions. If the above conditions are not fulfilled on or before 31 August 2005, being the long stop date of the S&P Agreement, or such other date as the Company and Mr. Lin may mutually agree in writing or the Ship shall be damaged at any time before Completion and the Company gives notice of termination, the S&P Agreement shall in fact cease and determine and none of the parties shall have any claim against the others for costs, damages, compensation or otherwise, save for any claim by one party against the other party arising from any antecedent breach of the terms in the S&P Agreement. If Completion does not take place, the Company will make an announcement in accordance with the Listing Rules. INFORMATION RELATING TO WALDEN The Company understands from Mr. Lin that Walden is a company solely for the purpose of owning the Ship, which is also the sole asset of Walden as at the date of the S&P Agreement. The Ship, a KM*13 2 passenger ship registered in the Republic of Panama and built in 1976, was acquired by Walden from Wide Asia Shipping S.A. ("WAS"), a company beneficially owned by Mr. Lin and his brother as to 70% in aggregate, at HK$97,000,000 on 6 January 2005. The remaining 30% interest of WAS is owned by individual(s) not connected with the Group or its connected persons, Mr. Lin or his brother, Ms. Lee Lin or Mr. Lee or their respective associates. WAS acquired the Ship in July 2004. During the process of negotiation, WAS and its shareholders, the original owner of the Ship, could not provide the necessary warranties and representations in respect of, among others, the contingent liabilities, if any, of WAS to the full satisfaction of the Company. As such, the Company was only willing to acquire the interest of a newly incorporated company (i.e. Walden), which sole asset is the Ship, instead of WAS. Therefore, Walden was incorporated on 6 January 2005 and on the same day acquired the Ship. The Ship has a gross tonnage of approximately 15,800 and can carry approximately 760 passengers. The Ship will be moored in Hong Kong and is currently under renovation. It is presently intended that the Ship will be engaged in the gaming and entertainment business in international waters. As at the date of the S&P Agreement, Walden has issued share capital of US$10,000 (equivalent to approximately HK$78,000) and loans from its shareholders of HK$97,000,000 in aggregate, which are contributed by each of its existing shareholders in proportion to their respective shareholding therein (i.e. 70% as to Mr. Lin and 30% as to Ms. Lee Lin). The net asset value of Walden as at the date of the S&P Agreement was HK$78,000.