09:35     SMI CORP<00198> - Announcement (3)                                  

    (iv)   all shares pledged by Alfresco will be released                    
    upon payment of HK$45 million together with Stepwise's                    
    agreement on the HK$3 million worth of films,                             
    television programmes or advertising air-time.                            
                                                                              
    (7) Security                                                              
                                                                              
    As security pending full payment of the consideration,                    
    40% of the issued share capital in Alfaway will be                        
    pledged by Alfresco to Stepwise, of which 25% will be                     
    released by escrow agent on deliver of 1st tranche,                       
    15% will be released by escrow agent on delivery of                       
    2nd tranche. Additionally, Alfresco has undertaken in                     
    the Agreement that, prior to fulfilment of its payment                    
    obligations:                                                              
                                                                              
    (i)   the financial position of the Alfaway Group will                    
    remain substantially the same as reflected in its                         
    consolidated financial statements for the year ended                      
    31 December 2004;                                                         
                                                                              
    (ii)   the principal business activities of the                           
    Alfaway Group will remain substantially the same as                       
    reflected in its consolidated financial statements                        
    for the year ended 31 December 2004;                                      
                                                                              
    (iii)   unless with the consent of Stepwise, Alfaway                      
    will not dispose of its interests in other companies;                     
                                                                              
    (iv)   in the event of a re-organisation involving                        
    Alfaway's assets, business or shareholdings, written                      
    notification must be given to Stepwise;                                   
                                                                              
    (v)   in the event of a re-organisation involving                         
    Alfaway's assets, business or shareholdings, the                          
    re-organised assets, business or shareholdings must                       
    continue to be held or controlled by the existing                         
    ultimate controlling shareholder of Alfresco, Mr Tung                     
    Chiu Fai. Mr. Tung is a director of Alfresco and Alfaway                  
    and an independent third party not connected to the                       
    Company under the Listing Rules;                                          
                                                                              
    (vi)   in the event of a re-organisation involving the                    
    setting up of a new holding company, certain shares                       
    (as shall be agreed between the parties) of the new                       
    holding company will be pledged to Stepwise; and                          
                                                                              
    (vii)   until the terms of the agreement in                               
    sub-paragraph (vi) are agreed, Mr Tung will undertake                     
    to be jointly responsible with Alfresco for the sums                      
    due under the Agreement.                                                  
                                                                              
    (8) Escrow Agent                                                          
                                                                              
    A independent firm of solicitors has been appointed                       
    by the parties as escrow agent who will take custody                      
    of all the share charges referred to in sub-paragraph                     
                                                                              
    (7) above together with all the essential documents                       
    necessary to give effect to the Agreement. The escrow                     
    agent will release the relevant documents to the                          
    parties at the appropriate stage in accordance with                       
    the terms of the escrow agreement.                                        
                                                                              
    (9) Completion                                                            
                                                                              
    Completion will take place within 18 months from the                      
    date of the Agreement. Upon completion, the Group will                    
    cease to hold any interest in Alfaway.                                    
                                                                              
    (10)   Default provisions                                                 
                                                                              
    In addition to the usual remedies in law, Stepwise has                    
    the following options in the event of any default in                      
    payment by Alfresco:                                                      
                                                                              
    Option 1                                                                  
                                                                              
    To forfeit the 40% equity interest in Alfaway and the                     
    shares in the New Holding Company referred to in                          
    sub-paragraph (7) at a price to be determined by one                      
    of the reputable international accounting firms based                     
    on the audited net assets value of Alfaway and the New                    
    Holding Company or dispose of the same to any third                       
    party/parties at a price above the fair market price                      
    and utilise the proceeds to satisfy the unpaid                            
    consideration. If the proceeds are insufficient, the                      
    rights and benefits under the Loan Assignment are to                      
    be transferred back to Stepwise, provided that any                        
    excess after deduction of Stepwise's loss and damage                      
    will be refunded to Alfresco in cash or broadcasting                      
    rights of equivalent value.