Paradise Entertainment Limited — Proxy Solicitation & Information Statement 2007

Dec 13, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your securities in Paradise Entertainment Limited (the “Company”), you should at once hand this circular and the accompanying form of proxy to the purchaser or to the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

PARADISE ENTERTAINMENT LIMITED

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(Incorporated in Bermuda with limited liability)

(Stock Code: 1180)

PROPOSALS INVOLVING REFRESHMENT OF THE ISSUE MANDATE AND RE-ELECTION OF DIRECTOR AND

NOTICE OF SPECIAL GENERAL MEETING

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Independent Board Committee (as defined herein) containing its recommendation to the Independent Shareholders (as defined herein) is set out on page 10 of this circular. A letter from Nuada (as defined herein) containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 11 to 18 of this circular.

A notice convening the special general meeting of the Company to be held at Suite 907-908, 9th Floor, Man Yee Building, No.68 Des Voeux Road Central, Hong Kong on Monday, 31st December 2007 at 11:00 a.m. (the “Special General Meeting”) is set out on pages 19 to 21 of this circular. Whether or not you are able to attend the Special General Meeting, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return it to the branch share registrars of the Company in Hong Kong, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the Special General Meeting or any adjourned meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Special General Meeting or any adjourned meeting should you so wish.

• For identification purposes only

14th December 2007

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Refreshment of the Issue Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Re-election of Director. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Procedure for demanding a poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Responsibility statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Letter from Nuada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Notice of Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19

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DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings:

• “associate(s)” has the meaning ascribed thereto in the Listing Rules “Board” the board of Directors

• “Bye-laws” the bye-laws of the Company

• “Company” Paradise Entertainment Limited, an exempt company incorporated in Bermuda with limited liability, the shares of which are listed on the Stock Exchange

• “Debenture Holder(s)” holder(s) of the Debentures

• “Debentures”

7% convertible debentures with an aggregate principal amount of HK$76,000,000 issued to the Debenture Holders pursuant to a subscription agreement dated 22nd October 2007, details of which have been disclosed in the announcement of the Company dated 23rd October 2007

• “Directors” the directors of the Company

• “Existing General Mandate”

the general mandate granted by the Shareholders at the annual general meeting of the Company held on 30th July 2007 to issue or deal with up to a maximum of 713,179,583 new Shares

• “Group” the Company and its subsidiaries

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC

• “Independent Board Committee”

• an independent committee of the Board comprising the independent non-executive Directors to advise the Independent Shareholders in respect of the refreshment of the Issue Mandate

• “Independent Shareholders”

any Shareholders other than Directors (excluding the independent non-executive Directors) and the chief executive of the Company and their respective associates

– 1 –

DEFINITIONS

• “Issue Mandate” a general and unconditional mandate to the Directors to exercise all powers of the Company to allot and issue Shares not exceeding 20% of the issued share capital of the Company as at the date of the Special General Meeting, a resolution to approve the refreshment thereof is set out as resolution no.1 in the notice convening the Special General Meeting

• “Latest Practicable Date” 12th December 2007, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein

• “Listing Rules”

• the Rules Governing the Listing of Securities on the Stock Exchange

• “Macau”

• the Macau Special Administrative Region of the PRC

• “Nuada” Nuada Limited, a licensed corporation permitted to carry on business in type 6 (advising on corporate finance) regulated activity under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the refreshment of the Issue Mandate

• “PRC” the People’s Republic of China, which for the purpose of this circular excludes Hong Kong, Macau and Taiwan

• “SFO”

• the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong)

• “Share(s)” ordinary share(s) of HK$0.01 each in the capital of the Company

• “Shareholder(s)” holder(s) of the Shares

• “Special General Meeting” the special general meeting of the Company to be held at Suite 907-908, 9th Floor, Man Yee Building, No.68 Des Voeux Road Central, Hong Kong on Monday, 31st December 2007 at 11:00 a.m., notice of which is set out on pages 19 to 21 of this circular, or any adjourned meeting

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “substantial shareholder(s)” has the meaning ascribed thereto in the Listing Rules “Warrantholder(s)” holder(s) of the Warrants

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	DEFINITIONS
“Warrants”	unlisted warrants issued by the Company entitling the
	holders thereof to subscribe for Shares at an initial
	subscription price of HK$0.21 per Share, subject to
	adjustment, exercisable from 3rd April 2007 to 2nd
	April 2008, both days inclusive
“%”	per cent.

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LETTER FROM THE BOARD

PARADISE ENTERTAINMENT LIMITED

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(Incorporated in Bermuda with limited liability)

(Stock Code: 1180)

Executive Directors:

Mr. Jay Chun (Chairman and Managing Director) (alternate director to Mr. Shan Shiyong)

Mr. Shan Shiyong, alias, Sin Sai Yung

Dr. Ma Xianming, alias, Ma Yin Ming Mr. Law Wing Kit, Stephen Mr. Park Aaron Changmin

Head Office and Principal Place of Business: Suite 907-908, 9th Floor Man Yee Building No.68 Des Voeux Road Central Hong Kong

Registered Office:

Independent Non-executive Directors:

Mr. Frank Hu Ms. Ma Shiwei Mr. Li John Zongyang

Clarendon House 2 Church Street Hamilton HM 11 Bermuda

14th December 2007

To the Shareholders, and for information only, the Warrantholders and the Debenture Holders

Dear Sir or Madam,

PROPOSALS INVOLVING REFRESHMENT OF THE ISSUE MANDATE AND RE-ELECTION OF DIRECTOR

AND

NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

The Directors wish to seek the approval of the Shareholders at the Special General Meeting for (i) the refreshment of the Issue Mandate and (ii) the re-election of a Director.

The purpose of this circular is to provide you with details of (i) the refreshment of the Issue Mandate and (ii) the re-election of a Director.

The Independent Board Committee, comprising the independent non-executive Directors, has been established to advise the Independent Shareholders in relation to the refreshment of the Issue Mandate. Nuada has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the refreshment of the Issue Mandate.

* For identification purposes only

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LETTER FROM THE BOARD

REFRESHMENT OF THE ISSUE MANDATE

At the annual general meeting of the Company held on 30th July 2007, the Shareholders approved, among other things, an ordinary resolution to grant to the Directors the Existing General Mandate to allot up to a maximum of 713,179,583 Shares, which is equivalent to 20% of the then issued share capital of the Company. As at the Latest Practicable Date, an aggregate of 713,179,583 Shares, representing the entire Existing General Mandate has been reserved for the issue of the Shares falling to be issued upon exercise of the conversion rights attaching to the Debentures as announced by the Company on 23rd October 2007.

In order to allow more flexibility to the Company for raising further funds for its future business development through the issue of new Shares, the Board proposes to refresh the Issue Mandate to grant an authority to the Directors to issue and allot new Shares not exceeding 20% of the issued share capital of the Company as at the date of the Special General Meeting. As the refreshment of the Issue Mandate is proposed to the Shareholders before the Company’s next annual general meeting, pursuant to Rule 13.36(4) of the Listing Rules, the refreshment of the Issue Mandate will be subject to the Independent Shareholders’ approval by way of poll at the Special General Meeting.

As the Company has no controlling shareholder (as defined in the Listing Rules), the Directors (other than the independent non-executive Directors) and the chief executive of the Company and their respective associates are required to abstain from voting in favour of the resolution to approve the refreshment of the Issue Mandate at the Special General Meeting.

As at the Latest Practicable Date, Mr. Jay Chun (“Mr. Chun”), the Chairman and Managing Director of the Company and August Profit Investments Limited, a company wholly-owned by Mr. Chun who were together beneficially interested in 430,282,000 Shares, Mr. Shan Shiyong, alias, Sin Sai Yung (“Mr. Shan”), an executive Director and Best Top Offshore Limited, a company wholly owned by Mr. Shan, who were together beneficially interested in 353,190,000 Shares, Dr. Ma Xianming, alias, Ma Yin Ming (“Dr. Ma”), an executive Director, who held 6,722,000 Shares, Mr. Park Aaron Changmin (“Mr. Park”), an executive Director, who held 1,666,000 Shares, representing approximately 11.13%, 9.14%, 0.17% and 0.04% respectively of the issued share capital of the Company and Mr. Law Wing Kit, Stephen (“Mr. Law”), an executive Director, held 30,000,000 share options to subscribe for 30,000,000 Shares.

Accordingly, Mr. Chun, Mr. Shan, Dr. Ma, Mr. Park and Mr. Law (should he exercise any of his share options between the Latest Practicable Date and the date of the Special General Meeting and become interested in any Shares) and their respective associates are all required to abstain from voting in favour of the resolution to approve the refreshment of the Issue Mandate at the Special General Meeting.

As at the Latest Practicable Date, there were 3,865,897,919 Shares in issue. Assuming no further allotment and issue or repurchase of Shares between the Latest Practicable Date and the date of the Special General Meeting, subject to the passing of the relevant resolution to approve the refreshment of the Issue Mandate at the Special General Meeting, the Directors will be granted an authority to allot and issue up to a maximum of 773,179,583

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LETTER FROM THE BOARD

Shares under the Issue Mandate. Due to the continuous expansion of the gaming business of the Group, it is expected that the Company may need additional funding to fuel the growth of such business and the Issue Mandate will give the Company more flexibility to tap into the equity market at such time or times in accordance with the funding requirements for the expansion. Accordingly, the Directors consider that the refreshment of the Issue Mandate is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Independent Board Committee, comprising Mr. Frank Hu, Ms. Ma Shiwei and Mr. Li John Zongyang, being the independent non-executive Directors, has been established to advise the Independent Shareholders in relation to the refreshment of the Issue Mandate. Nuada has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the refreshment of the Issue Mandate.

RE-ELECTION OF DIRECTOR

Pursuant to bye-law 86(2) of the Bye-laws, Mr. Li John Zongyang (“Mr. Li”) shall hold office until the Special General Meeting and, being eligible, offers himself for re-election. Biographical details of Mr. Li are set out as follows:

Mr. Li, aged 52, has been appointed as an independent non-executive Director and a member of the Company’s audit committee with effect from 10th September 2007. He holds a bachelor of arts degree in Economics from Peking University in the PRC and a master degree in business administration from Middlesex University Business School in London. He was also a Doctor of Philosophy candidate in accountancy with Bond University in Australia from April 1993 to March 1994. Mr. Li has over 15 years of experience in international finance and corporate management.

Prior to joining the Company, Mr. Li was a Senior Fund Manager (Japan & Far East) and Head of Pacific Region with Framlington Investment Management Limited in London and he also held managerial positions in various publicly-listed companies. Mr. Li was the Group Executive Deputy Chief Executive Officer and Executive Director of Sun Media Group Holdings Limited (now known as Tidetime Sun (Group) Limited), a company listed on the Main Board of the Stock Exchange, from June 2002 to December 2004, the Chief Financial Officer and Executive Director of Panpac Media Group Limited and the Chairman and Chief Executive Officer of Auston International Group Limited, both of which are listed on the Singapore Exchange Securities Trading Limited, from April 2004 to May 2005 and from August 2005 to December 2006 respectively. Mr. Li was also a Co-Chief Executive Officer and Executive Director of Sun New Media Inc., a Nasdaq-listed company, from February 2006 to June 2006 and a Director of Sun 3C Media Plc, a company listed on the London Stock Exchange, from July 2006 to December 2006. Since April 2007, Mr. Li has been the Chief Executive Officer and Executive Director of Kai Yuan Holdings Limited (formerly known as Guo Xin Group Limited), a company listed on the Main Board of the Stock Exchange.

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LETTER FROM THE BOARD

Save as disclosed above, Mr. Li had not held any directorships in any other listed public companies during the three years preceding the Latest Practicable Date and other than being an independent non-executive Director, Mr. Li does not hold any positions with the Company and other members of the Group.

Mr. Li has entered into a service agreement with the Company for an initial term of one year commencing on 10th September 2007 subject to renewal and he is also subject to retirement by rotation and re-election in accordance with the Bye-laws. Mr. Li is entitled to receive an annual director’s fee of HK$120,000, which was determined by the Company’s remuneration committee with reference to his qualifications, experience, time commitment and responsibilities towards the Group as well as the prevailing market conditions.

As at the Latest Practicable Date, Mr. Li did not have any interests or short positions in the shares or underlying shares of the Company or its associated corporations within the meaning of Part XV of the SFO. Save as being an independent non-executive Director, Mr. Li does not have any relationships with any other directors, senior management, substantial shareholders or controlling shareholders of the Company.

In relation to the re-election of Mr. Li as an independent non-executive Director, save as disclosed above, there is no information to be disclosed pursuant to any of the requirements under Rules 13.51(2)(h) to 13.51(2)(v) of the Listing Rules, nor are there other matters concerning him that need to be brought to the attention of the Shareholders.

SPECIAL GENERAL MEETING

A notice convening the Special General Meeting to be held at Suite 907-908, 9th Floor, Man Yee Building, No.68 Des Voeux Road Central, Hong Kong on Monday, 31st December 2007 at 11:00 a.m. is set out on pages 19 to 21 of this circular for the purpose of considering and, if thought fit, passing the resolutions as set out therein.

A form of proxy for use by the Shareholders at the Special General Meeting is enclosed. Whether or not you are able to attend the Special General Meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the branch share registrars of the Company in Hong Kong, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the Special General Meeting or any adjourned meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Special General Meeting or any adjourned meeting thereof should you so wish.

Save that the Directors (excluding the independent non-executive Directors) and the chief executive of the Company and their respective associates are required to abstain from voting in favour of the resolution to approve the refreshment of the Issue Mandate at the Special General Meeting, none of the Shareholders is required to abstain from voting at the Special General Meeting pursuant to the Listing Rules and/or the Bye-laws. To the best of the Directors’ knowledge, no Director nor the chief executive of the Company and their

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LETTER FROM THE BOARD

respective associates who are required to abstain from voting in favour of the resolution to approve the refreshment of the Issue Mandate has indicated that they have a present intention to vote against such resolution at the Special General Meeting.

The vote of the Independent Shareholders to approve the resolution for the refreshment of the Issue Mandate at the Special General Meeting will be taken on a poll pursuant to Rules 13.36(4)(c) and 13.39(4) of the Listing Rules. The results of the poll will be announced by the Company after the Special General Meeting.

PROCEDURE FOR DEMANDING A POLL

Pursuant to bye-law 66 of the Bye-laws, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless voting by way of a poll is required by the Listing Rules or (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded: (i) by the chairman of the meeting; or (ii) by at least three Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or (iii) by a Shareholder or Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or (iv) by a Shareholder or Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee as set out on page 10 of this circular which contains its recommendation to the Independent Shareholders on the proposed refreshment of the Issue Mandate. Your attention is also drawn to the letter of advice from Nuada as set out on pages 11 to 18 of this circular, which contains its advice to the Independent Board Committee and the Independent Shareholders in relation to the proposed refreshment of the Issue Mandate.

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LETTER FROM THE BOARD

The Directors consider that the resolutions as set out in the notice of the Special General Meeting are all in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend you to vote in favour of such resolutions.

Yours faithfully, For and on behalf of Paradise Entertainment Limited Jay Chun Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

PARADISE ENTERTAINMENT LIMITED

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(Incorporated in Bermuda with limited liability) (Stock Code: 1180)

14th December 2007

• To the Shareholders, and for information only, the Warrantholders and the Debenture Holders

• Dear Sir or Madam,

PROPOSED REFRESHMENT OF THE ISSUE MANDATE

We refer to the circular of the Company dated 14th December 2007 (the “Circular”) to the Shareholders, of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context requires otherwise.

We have been appointed by the Board as members of the Independent Board Committee and to advise the Independent Shareholders in respect of the refreshment of the Issue Mandate which will enable the Board to exercise the power of the Company to allot and issue Shares not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of the Special General Meeting.

Nuada has been appointed to advise the Independent Board Committee and the Independent Shareholders as to whether the refreshment of the Issue Mandate is fair and reasonable as far as the Independent Shareholders are concerned and whether it is in the interests of the Company and the Shareholders as a whole. Details of its advice, together with the principal factors and reasons taken into consideration in arriving at such advice, are set out on pages 11 to 18 of the Circular.

Your attention is drawn to the letter from the Board set out on pages 4 to 9 of the Circular.

Having considered the terms of the Issue Mandate and the advice of Nuada, we are of the opinion that the refreshment of the Issue Mandate is fair and reasonable so far as the Independent Shareholders are concerned and that the grant of the Issue Mandate is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the Special General Meeting to approve the refreshment of the Issue Mandate.

Yours faithfully,

Mr. Frank Hu

Ms. Ma Shiwei Mr. Li John Zongyang

Independent Board Committee

* For identification purposes only

– 10 –

LETTER FROM NUADA

The following is the text of the letter from Nuada to the Independent Board Committee and the Independent Shareholders in relation to the refreshment of the Issue Mandate for the purpose of inclusion in this circular:

==> picture [140 x 32] intentionally omitted <==

7th Floor, New York House 60 Connaught Road Central Hong Kong

14th December 2007

• To the Independent Board Committee and the Independent Shareholders of Paradise Entertainment Limited

Dear Sirs,

PROPOSED REFRESHMENT OF GENERAL MANDATE TO ISSUE AND ALLOT SHARES

INTRODUCTION

We refer to the circular to the Shareholders dated 14th December 2007 (the “Circular”) issued by the Company and our appointment as independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the proposed refreshment of general mandate to issue and allot shares of the Company, details of which are set out in the letter from the Board contained in the Circular (the “Letter”). Capitalised terms used in this letter shall have the same meanings ascribed to them in the Circular unless the context otherwise requires.

Pursuant to Rules 13.36(4) of the Listing Rules, the granting of the Issue Mandate is subject to the approval of the Independent Shareholders by way of poll at the Special General Meeting with the controlling Shareholders and their associates or, where there are no controlling Shareholders, Directors (excluding the independent non-executive Directors) and the chief executive and their respective associates abstain from voting in favour. As at the Latest Practicable Date, there are no controlling Shareholders. Accordingly, the Directors (excluding independent non-executive Directors) and the chief executive of the Company and their respective associates shall abstain from voting in favour of the relevant resolutions. As at the Latest Practicable Date, August Profit Investments Limited, a company wholly-owned by Mr. Jay Chun, the Chairman and the Managing Director, and his associates in aggregate held 430,282,000 Shares, representing approximately 11.13% of the existing issued share capital of the Company. Best Top Offshore Limited, a company wholly-owned by Mr. Shan Shiyong, alias, Sin Sai Yung, an executive Director, held 353,190,000 Shares, representing approximately 9.14% of the existing issued share capital of the Company. Dr. Ma Xianming, alias, Ma Yin Ming, an executive Director, held 6,722,000 Shares and Mr. Park Aaron Changmin, also an executive Director, held 1,666,000 Shares, representing approximately 0.17% and 0.04% respectively of the existing issued share capital of the Company. Mr. Law Wing Kit, Stephen, an executive Director, held 30,000,000 share options

– 11 –

LETTER FROM NUADA

of the Company to subscribe for 30,000,000 Shares. As such, Mr. Jay Chun, Mr. Shan Shiyong, alias, Sin Sai Yung, Dr. Ma Xianming, alias, Ma Yin Ming, Mr. Park Aaron Changmin and Mr. Law Wing Kit, Stephen (should he exercise any of his share options between the Latest Practicable Date and the date of the Special General Meeting and become interested in any Shares) and their respective associates shall abstain from voting in favour of the relevant resolution at the Special General Meeting. Save as disclosed, to the best of the Directors’ knowledge, information and belief and having made all reasonable inquiry, no other Directors beneficially hold any Shares as at the Latest Practicable Date.

The Independent Board Committee has been established to advise the Independent Shareholders in relation to the refreshment of the Issue Mandate.

BASIS OF OUR OPINION

In formulating our opinion, we have relied on the information, statements, opinions and representations supplied to us by the Company and the Directors and we have assumed that all such information, statements, opinions and representations contained or referred to in the Circular were true, accurate and complete at the time they were made and continue to be true at the date of the Circular, and we have relied on the same. We have also assumed that all statements of belief, opinion and intention of the Directors as set out in the Letter were reasonably made after due and careful inquiry. We have also sought and obtained confirmation from the Company that no material facts have been omitted from the information provided and referred to in the Circular. We consider that we have been provided sufficient information to enable us to reach an informed view regarding the proposed grant of the Issue Mandate, and to justify reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis of our opinions. We have no reason to suspect that any material facts or information (which is known to the Company) have been omitted or withheld from the information supplied or opinions expressed in the Circular nor to doubt the truth and accuracy of the information and facts, or the reasonableness of the opinions expressed by the Company and the Directors which have been provided to us. We have not, however, carried out any independent verification on the information provided to us by the Directors, nor have we conducted an independent in-depth investigation into the business and affairs of the Group.

– 12 –

LETTER FROM NUADA

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the proposed grant of the Issue Mandate, we have taken the following principal factors and reasons into consideration:

Background

At the annual general meeting of the Company held on 30th July 2007, the Directors were granted the Existing General Mandate to allot and issue up to 713,179,583 Shares, representing 20% of the aggregate nominal amount of the issued share capital of the Company then in issue.

As at the Latest Practicable Date, the Existing General Mandate had been fully utilized in association with the subscription of convertible debentures which was announced by the Company on 23rd October 2007 (the “Debentures Subscription”). To maintain the financial flexibility necessary for the Group’s future business development, the Directors therefore propose to seek the approval of the Independent Shareholders at the Special General Meeting for the grant of the Issue Mandate.

As at the Latest Practicable Date, the Company had an aggregate of 3,865,897,919 Shares in issue. Subject to the passing of the ordinary resolution(s) for the approval of the Issue Mandate and assuming that no Shares are issued and/or repurchased by the Company between the Latest Practicable Date and the date of the Special General Meeting, the Company would be allowed under the Issue Mandate to allot and issue up to 773,179,583 Shares.

Reasons for the Issue Mandate

As advised by the Company, the Directors consider that equity financing to be an important avenue of resources to the Group since it does not create any interest paying obligations on the Group. While the Board considers that there is no immediate funding need for the Group’s current operations and that there is currently no concrete proposal presented by potential investors for investment in Shares, the Board proposes to seek approval of the Independent Shareholders at the Special General Meeting for the grant of the Issue Mandate such that should future funding needs arise or attractive terms for investment in Shares become available from potential investors, the Board will be able to respond to the market and such investment opportunities promptly.

Business development of the Group and flexibility in financing alternatives

The Group is principally engaged in the research, development and sales of biopharmaceutical products. The Group is also engaged in the development, provision and sales of electronic gaming system and related repair, maintenance, consulting and/or marketing services. On 24th August 2007, the Company announced that, a subsidiary of the Company, LT Game Limited (“LT Game”), had entered into the first agreement with an independent supplier (the “Supplier”) whereby LT Game agreed to purchase and the Supplier agreed to manufacture and supply a computerized system in relation to the operation of a real time baccarat

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LETTER FROM NUADA

system and optional jackpot features together with 80 units of related terminals for a consideration of up to US$480,000 (or approximately HK$3,744,000), and that subsequently LT Game entered into the second agreement with the Supplier whereby LT Game agreed to purchase and the Supplier agreed to manufacture and supply a new generation computerized system in relation to the operation of a real time baccarat system plus server base game including slot game function together with 200 units of related terminals for a consideration of up to US$2,046,000 (or approximately HK$15,958,800). As advised by the Company, the Group will continue to seek expansion and development opportunities for its business.

On 22nd October 2007, the Company had entered into a subscription agreement with a subscriber for the subscription of convertible debentures of the Company in an aggregate principal amount of HK$76,000,000. The maximum number of new Shares which may fall to be issued upon exercise of the conversion rights attaching to the convertible debentures amount to 713,179,583 Shares. Such conversion Shares, if converted, will be issued by the Company under the Existing General Mandate. In addition, the Company had entered into another subscription agreement with Fidelity Investments Management (Hong Kong) Limited (“Fidelity”) on 30th October 2007, pursuant to which the Company has agreed to allot and issue of 200,000,000 new Shares to Fidelity at the price of HK$0.19 per subscription share (the “Shares Subscription”). The Directors consider that the issue of Shares to potential investor, such as Fidelity, will broaden the Company’s shareholder base and enhance the corporate profile of the Company in the investment community. As at the Latest Practicable Date, the Shares Subscription was completed.

The Directors have always been proactive in seeking investment opportunities to maximize the Shareholders’ return. The Directors consider that it would be prudent for the Group to have sufficient working capital for its business or to enhance the Company’s corporate profile by issue Shares to potential investor. Therefore, it may require funding or Shares to be issued when such opportunities arise. Nevertheless, the Board has not identified any other specific investment opportunities as at the Latest Practicable Date.

Given that the Existing General Mandate has been utilized in full, should the Company wish to finance any business expansion and development plans or any investment opportunities arise that would require the issuance of new Shares and a specific mandate has to be sought, the Directors are uncertain as to whether the requisite approval from Shareholders or Independent Shareholders, as the case may be, could be obtained in a timely manner. In addition, the Issue Mandate offers an opportunity for the Directors to capture a favourable equity market condition to raise funds by issuing new Shares.

Notwithstanding the fact that the Group had no immediate funding need for its current operations and there is currently no concrete proposal presented by potential investors for investment in Shares, the Directors believe that the Issue Mandate would offer the Group higher flexibility to capture investment opportunities which may arise at any time and require prompt investment decision

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LETTER FROM NUADA

by the Group. The Directors also consider that the Issue Mandate would provide the Company with the maximum flexibility to raise additional capital for any future investment or as working capital of the Group.

In light of the above, we are of the opinion that the Issue Mandate would provide the Company with the necessary flexibility essential for fulfilling any possible funding needs for future business development and/or investment decisions in a timely manner. As such, we are of the view that the grant of the Issue Mandate will be in the interest of the Company and the Shareholders as a whole.

Other financing alternative

As advised by the Company, the Board considers equity financing to be an important avenue of resources for the Group since it does not create any interest paying obligations on the Group. In appropriate circumstances, the Group will also consider other financing methods such as debt financing or internal cash resources to fund its future business development. While sufficient for its present requirements, there is no certainty that such cash resources will be adequate or other financing alternatives will be available for appropriate investment that may be identified by the Company in the future. In addition, debt financing may incur interest burden on the Group and it may subject to lengthy due diligence and negotiations with the banks with reference to the Group’s financial position, capital structure and the financial market condition at that time, the Directors consider that equity financing such as issuance of new Shares for cash or equity swaps may be an appropriate means to fund such investments and/or acquisitions and provide additional working capital for the future development and expansion of the Group.

We consider that the grant of the Issue Mandate will provide the Company with an additional alternative and it is reasonable for the Company to have the flexibility in deciding the financing methods for its future development, including equity issuance. As such, we are of the view that the grant of the Issue Mandate will be in the interest of the Company and the Shareholders as a whole.

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LETTER FROM NUADA

EQUITY FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

Set out below are the fund raising activities conducted by the Company in the past twelve months immediately before the Latest Practicable Date:

				Actual use of
				proceeds as at the
Date of initial		Net proceeds	Intended use of	Latest Practicable
announcement	Description	(approximately)	proceeds	Date
5th March 2007	Issue of the HK$33	HK$31,500,000	About 80% of the net	HK$31,500,000 has
	million convertible		proceeds for the	been fully
	note to Opal Bright		business of LT Game	utilized.
	Group Ltd.		and the rest as
			working capital of the
			Group
20th March	Placing of unlisted	HK$5,600,000	As general working	HK$5,600,000 has
2007	warrants by the		capital of the Group	been fully
	Company at an issue			utilized.
	price of HK$0.02 each
	entitles the holder
	thereof to subscribe in
	cash for one Share at
	an initial subscription
	price of HK$0.21,
	subject to adjustments
	(the “Warrants
	Placing”)
23rd October	The Debentures	HK$75,700,000	As general working	HK$33,400,000 has
2007	Subscription		capital of the Group	been utilized and
				the remaining
				balance of
				HK$42,300,000 of
				the net proceeds
				is kept with the
				banks as deposits.
31st October	The Shares Subscription	HK$37,700,000	As general working	The net proceeds
2007			capital of the Group	are kept with the
				banks as deposits.

Save for disclosed herein, the Company has not conducted any equity fund raising activities in the past twelve months immediately preceding the Latest Practicable Date.

As stated in the above table, we note that the net proceeds from the Debentures Subscription and the Shares Subscription have not been fully utilized as at the Latest Practicable Date. However, having taken into account the Company has been proactive in seeking investment opportunities for enhancing the scope of business of the Group, we consider it is prudent and reasonable for the Group to maintain a strong capital base while additional funding may be needed for acquisition of potential business and/ or investment opportunities as they may arise from time to time. We are of the view that the Issue

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LETTER FROM NUADA

Mandate could provide the Company with flexible financing option to raise additional capital for any future investment or as working capital of the Group and therefore is fair and reasonable.

POTENTIAL DILUTION TO SHAREHOLDINGS OF THE PUBLIC SHAREHOLDERS

Set out below is a table showing the shareholding structure of the Company as at the Latest Practicable Date, and, for illustrative purpose, the potential dilution effect upon full utilization of the Issue Mandate, assuming no other Shares are issued and/or repurchased by the Company.

Shareholders Mr. Jay Chun August Profit Investments Limited (Note 1) Best Top Offshore Limited (Note 2) Dr. Ma Xianming, alias, Ma Yin Ming (Note 3) Mr. Park Aaron Changmin (Note 3) Public: Fidelity Other public Shareholders Shares to be issue under the Issue Mandate Total	As at the Latest Practicable Date No. of Shares held Shareholding % (approximately) 68,568,000 1.77 361,714,000 9.36 353,190,000 9.14 6,722,000 0.17 1,666,000 0.04 200,000,000 5.17 2,874,037,919 74.35 – – 3,865,897,919 100.00	Upon full utilization of the Issue Mandate No. of Shares held Shareholding % (approximately) 68,568,000 1.48 361,714,000 7.80 353,190,000 7.61 6,722,000 0.14 1,666,000 0.04 200,000,000 4.31 2,874,037,919 61.95 773,179,583 16.67 4,639,077,502 100.00	Upon full utilization of the Issue Mandate No. of Shares held Shareholding % (approximately) 68,568,000 1.48 361,714,000 7.80 353,190,000 7.61 6,722,000 0.14 1,666,000 0.04 200,000,000 4.31 2,874,037,919 61.95 773,179,583 16.67 4,639,077,502 100.00
			100.00

Notes:

1. August Profit Investments Limited is a company wholly owned by Mr. Jay Chun, the Chairman and the Managing Director.

2. Best Top Offshore Limited is a company wholly owned by Mr. Shan Shiyong, alias, Sin Sai Yung, an executive Director.

3. Dr. Ma Xianming, alias, Ma Yin Ming and Mr. Park Aaron Changmin are executive Directors.

As illustrated in the table above, the aggregate shareholding of the existing public Shareholders will decrease from approximately 79.52% as at the Latest Practicable Date to approximately 66.26% upon full utilization of the Issue Mandate, assuming no other Shares are issued and/or repurchased by the Company.

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LETTER FROM NUADA

Taking into account the benefits of the Issue Mandate as discussed above and the fact that the shareholdings of all Shareholders will be diluted proportionately, we consider such dilution or potential dilution of shareholding to be acceptable.

TERMS OF THE ISSUE MANDATE

Shareholders should note that in view of the provisions and requirements under Rule 13.36(3) of the Listing Rules, the Existing General Mandate will be revoked upon approval at the Special General Meeting of the Issue Mandate which will be and continue to be in force until the earliest of (i) the conclusion of the Company’s next annual general meeting; (ii) the expiration of the period within which the next annual general meeting of the Company is required by the bye-laws of the Company or any applicable law to be held; and (iii) the revocation or variation of the authority given under the relevant resolution to be proposed at the Special General Meeting by ordinary resolution of the Shareholders in general meeting. We are of the view that the terms of the Issue Mandate are fair and reasonable so far as the Independent Shareholders are concerned.

RECOMMENDATIONS

Having considered the above principal factors and reasons, we are of the view that the grant of the Issue Mandate is fair and reasonable and in the interest of the Company and the Shareholders as a whole. Accordingly, we would recommend the Independent Shareholders and advise the Independent Board Committee to recommend to the Independent Shareholders to vote in favour of the relevant resolution(s) to be proposed at the Special General Meeting.

Independent Shareholders are however advised to take note of the possible dilution effect on their shareholding interests in the Company when and if the Issue Mandate is utilized.

For and on behalf of Nuada Limited Po Chan Executive Director

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NOTICE OF SPECIAL GENERAL MEETING

PARADISE ENTERTAINMENT LIMITED

*

(Incorporated in Bermuda with limited liability)

(Stock Code: 1180)

NOTICE IS HEREBY GIVEN that a special general meeting of the shareholders of Paradise Entertainment Limited (the “Company”) will be held at Suite 907-908, 9th Floor, Man Yee Building, No.68 Des Voeux Road Central, Hong Kong on Monday, 31st December 2007 at 11:00 a.m. for the purpose of considering and, if thought fit, passing the following resolutions:

ORDINARY RESOLUTIONS

1. “ THAT :

2. (a) no issue of shares of the Company pursuant to the Existing General Mandate (as defined in the circular of the Company dated 14th December 2007 (the “Circular”), a copy of which has been tabled at this meeting and initialled by the Chairman for the purpose of identification) be permitted except in connection with any partial or full conversion of the Debentures (as defined in the Circular) in accordance with the terms and conditions thereof;

3. (b) subject to paragraph (d) of this Resolution, the exercise by the directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to issue, allot and deal with additional shares of the Company, and to make or grant offers, agreements and options (including warrants, bonds, notes and debentures convertible into shares of the Company) which would or might require the exercise of such power be and is hereby generally and unconditionally approved;

4. (c) the approval in paragraph (b) of this Resolution shall authorise the directors of the Company during the Relevant Period to make or grant offers, agreements and options (including warrants, bonds, notes and debentures convertible into shares of the Company) which would or might require the exercise of such power after the end of the Relevant Period;

5. (d) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the directors of the Company pursuant to the approval in paragraph (b) of this Resolution, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined); or (ii) an issue of shares of the Company upon the exercise of rights of subscription or conversion under the terms of any warrants of the Company or any bonds, notes, debentures and securities which are convertible into shares of the Company; or (iii) an issue of shares of the Company as scrip dividends pursuant to the bye-laws of the

* For identification purposes only

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NOTICE OF SPECIAL GENERAL MEETING

Company from time to time; or (iv) an issue of shares of the Company under any share option scheme or similar arrangement providing for the grant to employees (including directors) of the Company and/or any of its subsidiaries of the rights to subscribe for shares of the Company, shall not exceed 20 per cent of the aggregate nominal amount of the share capital of the Company in issue as at the date of this Resolution, and the said approval shall be limited accordingly; and

• (e) for the purposes of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the bye-laws of the Company or any applicable laws to be held; or

• (iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting.

“Rights Issue” means an offer of shares of the Company open for a period fixed by the directors of the Company to the holders of shares whose names appear on the register of members of the Company on a fixed record date in proportion to their then holdings of such shares as at that date (subject to such exclusions or other arrangements as the directors of the Company may deem necessary or expedient in relation to overseas shareholders or fractional entitlements or having regard to any restrictions or obligations under the law of, or the requirements of any recognised regulatory body or any stock exchange in, any territory applicable to the Company).”

1. “ THAT Mr. Li John Zongyang be re-elected as an independent non-executive director of the Company.”

By Order of the Board Paradise Entertainment Limited Jay Chun Chairman

Hong Kong, 14th December 2007

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NOTICE OF SPECIAL GENERAL MEETING

Head Office and Principal Place of Business: Suite 907-908, 9th Floor Man Yee Building No.68 Des Voeux Road Central Hong Kong

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Notes:

• (1) A shareholder entitled to attend and vote at the meeting may appoint one or more than one proxy to attend and to vote instead of him. A proxy need not be a shareholder of the Company.

• (2) In the case of joint holders of any share, any one of such persons may vote at the said meeting, either personally or by proxy, in respect of such share as if he was solely entitled thereto, but if more than one of such joint holders is present at the said meeting, personally or by proxy, that one of the said persons so present whose name stands first on the register of members in respect of such share shall alone be entitled to vote in respect thereof.

• (3) In order to be valid, the form of proxy together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or authority, must be deposited at the branch share registrars of the Company in Hong Kong, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding the meeting. Completion and return of a form of proxy will not preclude shareholders from attending and voting in person at the meeting or any adjourned meeting should they so wish.

• (4) A form of proxy for use at the meeting is enclosed herewith.

• (5) As at the date of this Notice, the executive directors of the Company are Mr. Jay Chun (Chairman and Managing Director), Mr. Shan Shiyong, alias, Sin Sai Yung, Dr. Ma Xianming, alias, Ma Yin Ming, Mr. Law Wing Kit, Stephen and Mr. Park Aaron Changmin and the independent non-executive directors of the Company are Mr. Frank Hu, Ms. Ma Shiwei and Mr. Li John Zongyang.

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