Rego Interactive Co., Ltd — Capital/Financing Update 2004

Apr 15, 2004

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(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock code: 1065)

Announcement Resolutions passed at the Fifth Meeting of the Third Board of Directors

The Company and all members of the Board hereby warrant the truth, accuracy and completeness of the contents in the Announcement, and accept joint responsibilities for any false information, misleading statement or material omission in the Announcement.

The Fifth Meeting of the Third Board of Directors of Tianjin Capital Environmental Protection Company Limited (the “Company”) was held on 13th April 2004, at 10:30 a.m . at the Company’s third floor conference room. The meeting was chaired by Mr. Gu Qifeng, a Director. Nine Directors should be present in the meeting, and six had attended the meeting. Ms. Ma Baiyu, the Chairman of the Company, Mr. Wang Zhanying, a Director and Mr. Ko Po Ming, an Independent Director were unable to attend the meeting due to personal reasons. Ms. Ma Baiyu and Mr. Wang Zhanying appointed Mr. Gu Qifeng in writing, and Mr. Ko Po Ming appointed Mr. Gao Zhongze in writing to exercise the voting rights on their behalf. The members of the Supervisory Committee and the senior management of the Company attended the meeting.

The procedure for the convening of the Board meeting complied with the relevant requirements under the “Company Law of the People’s Republic of China” and the Articles of Association. The Directors attending at the meeting considered and passed the following resolutions:

• I. The resolution regarding the amendment of certain terms of the issue of the Company’s A Shares Convertible Bonds was considered and approved;

• Types of bonds and target subscribers

The type of bonds to be issued by the Company is a corporate bond that is convertible into the Company’s floating A Shares (hereinafter referred to as the “Convertible Bonds” or “Convertible Bonds of Tianjin Capital”).

The target subscribers are holders of A Shares whose names appear on the issuer’s register of members after the close of business of the record date as well as the natural persons, legal persons and other institutions (except those restricted by the PRC laws and regulations) that have A Share stock trading accounts with the Shanghai Stock Exchange.

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1. Total Issue Amount and its Basis of Determination

Pursuant to the relevant laws and regulations and the Company’s state of affairs, financial position and the funding requirements of the investment projects, the issue amount of the Convertible Bonds is RMB1,200 million in total.

1. Nominal Value and Issue Price

The Convertible Bonds will be issued at par, the nominal value of each bond is RMB100, with 12 million in total at a board lot of 10 bonds each, and 1.2 million board lots in total.

1. Maturity

The maturity date is the date 5 years after the date of issue of the Convertible Bonds.

1. Nominal interest rates and its payment

2. (1) Nominal interest

The nominal interest rates of the Convertible Bonds are: 1.7% p.a. for the first year, 1.9% p.a. for the second year, 2.1% p.a. for the third year, 2.4% p.a. for the fourth year, and 2.7% p.a. for the fifth year.

• (2) Compensation Interest

In addition to the above interests for the fifth year, the Company will also pay the compensation interest (“Compensation Interest”) to the holders of unconverted Convertible Bonds (the “Debt Conversion upon Maturity”) within five trading days upon the maturity of the Convertible Bonds.

The formula for the calculation of Compensation Interest is as follows:

Compensation Interest = Total nominal value of the Debt Conversion upon Maturity as held by the holders of the Convertible Bond x 2.7% x 5 less total interests paid to the holder of the Convertible Bonds during the five years prior to the maturity of the Convertible Bonds.

• (3) Method of interest payment and annual interest calculation

The interest of the Convertible Bonds is payable annually. The first annual interest is calculated from the issue date of the Convertible Bond to the Registration Date of the first interest become payable, and thereafter, between every two nearest interest payable dates.

• (4) Interest payable registration date

During the term of the Convertible Bonds, the interest payable registration date (the “Registration Date”) is the date of the issue date of the Convertible Bonds 12 months after.

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Holders of the Convertible Bonds whose names appear on the register of members as maintained at the Shanghai Stock Exchange as at the Registration Date shall be entitled to the interests payable to the Convertible Bonds. For holders of the Convertible Bonds who have converted into A Shares or have applied for conversion into A Shares on the Registration Date, shall not entitle any interest payment.

• (5) Interest payment date

For holders of the Convertible Bonds whose names appear in the register of members on the Registration Date, the Company will calculate the interests payable in accordance with the formula under item (6), and pay the interests within five working days after the Registration Date.

(6) Interests payable

During the term of the Convertible Bonds, the formula for the calculation of the annual interests payable is as follows:

I = B x i

• I: Annual interests payable

• B: Total nominal value of the Convertible Bonds held by the holders

• i: Nominal interest rate as determined pursuant to item (1) of this section

Of which, the interest to be paid in the fifth year is the nominal interest payable plus the Compensation Interests.

The interests payable shall be rounded up to RMB cents.

• (7) Interest tax

Holders of the Convertible Bonds shall bear the taxes payable of the interest income.

6. Conversion period

The conversion period of the Convertible Bonds is 12 months after the date of the issue of the Convertible Bonds up to the maturity date of the Convertible Bonds.

Pursuant to item (2) of article 7 of this announcement, holders of the Convertible Bonds may apply for conversion into shares at any time within the conversion period. Trading for the Convertible Bonds will be suspended for 10 trading days before the expiry of the conversion period. After the trading of the Convertible Bonds suspended and prior to the expiry of the conversion period, the rights of the holders of the Convertible Bonds for the conversion into shares under the agreed conditions will not be prejudiced.

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1. Conversion procedures

2. (1) The procedures for the application of conversion and the statement for the application of such conversion

Application for share conversion shall be processed by way of booking on trading system of the Shanghai Stock Exchange. Application for share conversion booking and its confirmation procedures shall be in accordance with the relevant requirements of the Shanghai Stock Exchange.

Holders of the Convertible Bonds may convert part or all of the Convertible Bonds held into the A Shares of the Company within the conversion period. The smallest unit for such conversion is 1 share. Once confirmed, the application is irrevocable.

• (2) Application time for the share conversion

Holders of the Convertible Bonds must submit its share conversion application within the time designated for the submission of share conversion application during the conversion period.

The time designated for the submission of share conversion application refers to the normal transaction time in the trading days of the Shanghai Stock Exchange within the conversion period, except for the following:

• Period of which the trading of the Convertible Bonds suspended prior to the maturity of the Convertible Bonds;

• Period of which the trading of shares of the Company suspended; or

• Period of which the Company has to apply for suspension under the relevant requirement.

• (3) Suspension and cancellation of the Convertible Bonds

After the applications for share conversions confirmed as valid by the Shanghai Stock Exchange, the number of the Convertible Bonds held by the holder will be reduced (suspended and cancelled), whilst the corresponding number of shares of the holder will be increased accordingly.

• (4) Share registration and interests entitled upon the allotment of shares as a result of the share conversion

Pursuant to the valid applications of the holders of the Convertible Bonds in its trust, the China Securities Registration Settlement Company Limited Shanghai Branch will register the changes in the number of the shares in the securities account and the number of Convertible Bonds held by the holders.

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Under the prevailing requirements of the Shanghai Stock Exchange, upon the confirmation of settlement for share conversion application, the shares as allotted to the holders of the Convertible Bonds upon share conversion application will rank pari passu with the shares of the Company as listed and traded on the next trading day. Please see article 16 for the interests conferred by the shares as allotted upon such share conversion.

• (5) The relevant taxation in the course of conversion

In the event of any tax arising in the course of the share conversion of the Convertible Bonds, it shall be borne by the holder of the convertible Bonds.

1. Initial share conversion price

2. (1) Determination of the initial share conversion price

The initial share conversion price will be based on the arithmetic mean of the closing price of the Company’s A Shares in the 30 trading days preceding the prospectus date, with a positive margin of 0.5%.

• (2) Formula for calculation of the initial share conversion price

Share conversion price = (� Pi)� 30 x (1 + S)

Among which, Pi is the daily closing price of “Tianjin Capital” during the 30 trading days preceding to the prospectus date;

S is the premium rate of the share conversion, which is 0.5%.

1. Adjustment to the conversion price

2. (1) Conditions for the adjustment of conversion price and the adjustment date of the conversion price

Prior to the maturity of the Convertible Bonds, in the event of the distribution of dividends, bonus issue, capitalisation, new issue (other than the increase in the share capital as result of the share conversion of the Convertible Bonds), rights issue, repurchase of Shares, mergers, subdivision and any event resulting in the change in the class of Shares, number and/or equity interests of the Company, whereby the gain to be derived from the difference in the share prices by the holder of the Convertible Bonds upon the exercise of its conversion rights may be affected, the Company must make adjustments to the conversion price in accordance with the related requirements of this issue terms.

In the event that there will be change to the above shares and/or equity interests, the adjustment date of the share conversion price shall be the corresponding share registration date or the date of which the changes in the shares and/or equity interests occurred.

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(2) Method of adjustment

In the event that bonus issue, capitalisation, issue of new shares (other than the increase in the share capital as result of the share conversion of the Convertible Bonds), rights issue and distribution of dividends, the Company shall make aggregate adjustments to the conversion price in the sequence of the occurrence of the above conditions, and details of adjustments are as follows:

By assuming the conversion price before the adjustment as Po, the number of bonus share on capitalisation for each Share as N, the number of new Shares or rights issue of each Share as K, the price of the new Shares or rights issue as A, distribution of dividend for each Share as D, conversion price after the adjustment as P (the adjustment values are reserved up to two digits after the decimal point, and rounding the last figure), then

Dividend distribution: P = Po - D;

Bonus Issue or capitalisation: P = Po/(1 + N);

Issue of new Shares or Rights Issue: P = (Po + AK)/(1 + K);

Combination of the three items: P = (Po - D + AK)/(1 + N + K).

In the event that there are changes to the Shares and/or equity interests, the conversion price shall be adjusted by sequence, and an announcement of the Board resolution shall be published on listed companies information disclosure media designated by China Securities Regulatory Commission (“CSRC”), stating the price adjustment date of the share conversion, adjustment method and suspension of the conversion period (if necessary). In the event the price adjustment date of the share conversion being on or after the application date of the holder of the Convertible Bonds, and prior to the registration date of the share conversion, then the share conversion application of such holder will be executed on the share conversion price after the adjustment.

In the event the Company may repurchase, merge, subdivide or any condition resulting in the changes in the class of Shares, number and/or equity interests of the Company, whereby the interests of the holder of the Convertible Bonds or interests accruable from the share conversion may be affected, the Company shall make adjustment to the conversion price in accordance with the principles of fair, impartial and just (as the case may be), and the interests of the holder of the Convertible Bonds shall be fully protected. The contents and operation methods regarding the adjustment of the share conversion price shall be in accordance with the relevant laws and regulations and the related requirements of the securities regulatory departments.

10. Provision for downward adjustments

During the conversion period of the Convertible Bonds, in the event that the closing prices of the Company’s Shares for 20 consecutive trading days are lower

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than 80% of the then conversion price, the Board of the Company is entitled to make downward adjustment of the conversion price, provided that the adjusted price shall not be lower than the average closing price of the Company’s Shares of five trading days preceding the holding of the Board meeting to amend the conversion price. In the event the amendment is higher than 20% of the then conversion price, it shall be proposed by the Board, and submitted for the consideration and approval in the shareholders general meeting.

In the event the Company decides to revise the conversion price, the Company shall make an announcement of the Board resolution on the listed companies information disclosure media designated by CSRC, stating the price adjustment date of the share conversion, adjustment method and suspension of the conversion period (if necessary). After the formal publication of the announcement, changes in the share prices shall not affect the Company’s decisions on the adjustment of the share prices.

In the event the price adjustment date of the share conversion being on or after the application date of the holder of the Convertible Bonds, and prior to the registration date of the share conversion, then the share conversion application of such holder will be executed on the share conversion price after the adjustment.

11. Provisions on redemption

During the share conversion period of the Convertible Bonds, in the event that the closing price of the Company’s A Shares in any discretionary 20 trading days of any 30 consecutive trading days shall not be lower than 130% of the then conversion price (in the event of adjustments to the conversion price, or adjustments to the share prices due to ex-rights, ex-dividends during the 30 trading days, then the trading days before the adjustments shall be calculated on the conversion price and closing price before the adjustment, and the trading days on or after the adjustment shall be calculated on the conversion price and closing price after the adjustment), and the Company shall be entitled to redeem all or a proportion of the outstanding Convertible Bonds at 102% of the nominal value plus the annual interest for the interest calculating year.

The Company is entitled to exercise the redemption right once every interest calculating year. In any interest calculating year, after the initial satisfaction of the redemption conditions, the Company may conduct the redemption. For those outstanding in the initial redemption, no further redemption shall be made in that interest calculating year.

12. Provisions for sale back

• (1) Conditional sale back in advance

During the conversion period of the Convertible Bonds, in the event that the closing price of the Company’s A Shares in any discretionary 20 trading days of any 30 consecutive trading days shall be lower than 70% of the then

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conversion price, holder of the Convertible Bonds of Tianjin Capital may sell back of all or part of the Convertible Bonds held to the Company at 102%, 103%, 104%, 105% of the nominal values of the Convertible Bonds respectively after the expiry of one year, two years, three years and four years. Holder of the Convertible Bonds may conditionally exercise its right of sale back once in every interest calculating year. In any interest calculating year, after the initial satisfaction of the sale back conditions, the holder of the Convertible Bonds may conduct the sale back. For those outstanding in the initial sale back, no further sale back shall be made in that interest calculating year.

(2) Additional sale back

In the event of any changes in the actual situation in the investment projects of the proceeds of the issue of the Convertible Bonds from the undertakings as set out in the prospectus, it may be deemed to be a change to the use of proceeds under the requirements of CSRC or deemed to be a change in the use of proceeds by CSRC, whereas the holder is entitled to make additional sale back of the Convertible Bonds to the Company at 105% of the nominal value (including interests of the respective interest calculating year). After the initial satisfaction of the sale back conditions, the holder of the Convertible Bonds may conduct the sale back within the additional sale back application period as announced by the Company.

1. Interests payable upon maturity and compensation interest

Within five trading days upon the maturity of the Company’s Convertible Bonds, in addition to the repayment of the principal and interests for the fifth year of the outstanding Convertible Bonds (“Debt Conversion Upon Maturity”), the Company shall also make compensation to the holder of the outstanding Convertible Bonds for the Compensation Interest.

The formula for the calculation of Compensation Interests is set out in item (2) of article 5.

1. Disposal of Convertible Bonds of less than RMB30 million

During the listing period of the Convertible Bonds, in the event the outstanding Convertible Bonds shall be less than RMB30 million, the Shanghai Stock Exchange will immediately issue an announcement, and transactions of shall be suspended three trading days thereafter. Upon the suspension of the transactions the Convertible Bonds and before the maturity of the conversion period, holders of the Convertible Bonds may still apply for share conversion in accordance with the agreed conditions.

1. Disposal of Fractional Share Arising upon Share Conversion

Upon share conversion application, as to the remaining fractional shares arising upon conversion, the Company shall convert such portion of the Convertible Bond in cash pursuant to the relevant requirements of the Shanghai Stock Exchange, plus interest accruable in the interest calculating year up to the application date of the share conversion.

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1. Disposal of the Company’s un-appropriated profits

Once confirmed by the trading system of the Shanghai Stock Exchange, the shares in respect of the share conversion application of the holder of the Convertible Bonds shall be automatically credited to the stock account of the applicant, and the rights of such holders shall rank pari passu with the existing shareholders of the Company commencing from the date the shares as converted are credited into the account of the original holder, whilst both the old and new shareholders shall be entitled to the un-appropriated profits of the Company.

1. Regarding arrangement of preference placing to existing shareholders

The issue of the Convertible Bonds will make use of the trading system of the Shanghai Stock Exchange to offer preference placing in the proportion of RMB0.75 Convertible Bond for every 1 Share to the existing shareholders of the Company, and to convert into board lots of RMB1,000 per board lot. Placement of less than 1 board lot shall be rounded down.

• II. The Resolutions regarding the authorisation to the Board for the issue of A Share Convertible Bonds for submission to the shareholders general meeting were considered and approved:

• (1) To authorise the Board to set up and implement a detail plan for the issue of the Convertible Bonds, and to determine the time of issue as to the actual circumstances;

• (2) To authorise the Board to make appropriate adjustments to the issue plan and subscription method of the issue of the Convertible Bonds prior to the issue within the scope as permitted by the laws, regulations and the Articles of Association, in accordance with the requirements of the regulatory department, as to the actual situations;

• (3) To authorise the Board to handle the changes in the registered capital of the Company and to amend the Articles of Association as a result of the issue of the Convertible Bonds; and

• (4) To authorise the Board to deal with all other matters in relation to the issue of the Convertible Bonds.

• III. The proposal regarding the convening of the Extraordinary General Meeting (the “EGM”) for 2004 and the convening of the General Meeting of H Share class and Domestic Share class shareholders regarding amendment to some of the issue terms of the Company’s A Share Convertible Bonds, and the consent to issue the notice of the general meeting were considered and approved.

(The above items II(1), II(2) should be submitted for consideration in the EGM for 2004 and the general meeting of H Share class and Domestic Share class shareholders and will be implemented upon the approval of CSRC.)

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Board of Directors of Tianjin Capital Environmental Protection Company Limited

14th April 2004

Please also refer to the published version of this announcement in The Standard.

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