TOM Group Limited — Capital/Financing Update 2005

Jan 5, 2005

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 stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in TOM Group Limited , you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or the 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.

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(Stock Code: 2383)

DISCLOSEABLE TRANSACTIONS

(1) Proposed establishment of the Jinzhao Joint Venture in Chongqing, the People’s Republic of China and

Proposed grant of the put and call options AND

(2) Proposed establishment of the Lineland Joint Venture in Wuhan, the People’s Republic of China and Proposed grant of the put and call options

* for identification purpose

5 January 2005

CONTENTS

		Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		6
A.	INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
B.	THE JINZHAO AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
	1. Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
	2. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
	3. Assets to be acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
	4. Establishment of the Jinzhao Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
	5. Proposed shareholding structure chart of the Jinzhao Joint Venture . . . . . . . . . . . . . . .	11
	6. Conditions precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
	7. Jinzhao Asset Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
	8. Share conversion, and put and call options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
C.	INFORMATION ON JINZHAO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
D.	REASONS FOR ENTERING INTO THE JINZHAO AGREEMENT . . . . . . . . . . . . . . . . . . .	13
E.	THE LINELAND AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
	1. Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
	2. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
	3. Assets to be acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
	4. Establishment of the Lineland Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
	5. Proposed shareholding structure chart of the Lineland Joint Venture . . . . . . . . . . . . . .	17
	6. Conditions precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
	7. Lineland Asset Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
	8. Lineland Asset Lease Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
	9. Share conversion, and put and call options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
F.	INFORMATION ON LINELAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
G.	REASONS FOR ENTERING INTO THE LINELAND AGREEMENT . . . . . . . . . . . . . . . . . .	21
H.	GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
APPENDIX – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		22

– i –

DEFINITIONS

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

(a) General

“associates”

has the same meaning as ascribed to it under the Listing Rules

“Board”

the board of directors of the Company

• “Business Day”

a day (excluding Saturday) on which banks are generally open for business in the PRC

• “Company”

TOM Group Limited, a company incorporated in the Cayman Islands with limited liability, whose shares are listed on the Stock Exchange

• “Contractual Arrangements”

a series of contracts under which the Company is able to enjoy the economic benefits and consolidate the accounts of the entity which it does not have legal ownership. Please refer to the listing document dated 29 June 2004 of the Company for details of the Contractual Arrangements

• “Director(s)”

the director(s) of the Company

• “Group”

the Company and its subsidiaries

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “HK GAAP”

the generally accepted accounting principles in Hong Kong

• “Hong Kong”

the Hong Kong Special Administrative Region of the PRC

• “Latest Practicable Date”

• 30 December 2004, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

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

• “PRC” the People’s Republic of China

• “Pre-IPO Share Option Plan” the pre-IPO share option plan adopted by the Company on 11 February 2000

• “RMB” Renminbi, the lawful currency of the PRC

– 1 –

DEFINITIONS

“SFO”

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

• “Share Option Scheme”

the share option scheme adopted by the Company on 11 February 2000 (as amended)

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

• “TOM Nominee”

• �� !�"#$%&'()*+, (Kunming Fench Star Information Industry Limited), a purely domestic PRC entity to be nominated by TOM Outdoor Media to acquire 51% of the equity interest in each of the Jinzhao Joint Venture and the Lineland Joint Venture. The shareholders of TOM Nominee have granted options to a wholly-owned subsidiary of the Company, under which such subsidiary has the right at any time to acquire all of the equity interest in TOM Nominee from the shareholders of TOM Nominee

• “TOM Online”

• TOM Online Inc., a company incorporated in the Cayman Islands with limited liability, whose shares are listed on the Growth Enterprise Market of the Stock Exchange

• “TOM Online Share(s)”

ordinary share(s) of HK$0.01 each in the capital of TOM Online

• “TOM Outdoor Media”

• TOM Outdoor Media Group Limited, a company incorporated in the British Virgin Islands with limited liability and a whollyowned subsidiary of the Company

• “TOM Share(s)”

ordinary share(s) of HK$0.1 each in the capital of the Company

• (b) In respect of the Jinzhao Joint Venture

• “Effective Date”

the date on which the last of the Conditions is fulfilled or waived

• “Jinzhao”

• �� ! " # $ % & ' (Chongqing Jinzhao Advertising Company Limited), a limited liability company established in Chongqing, the PRC and is owned as to 90% by Mr. Xiong and as to 10% by Mr. Wang as at the date of the Jinzhao Agreement. Jinzhao is a third party independent of and not connected with the Company or any of its connected persons (as defined in the Listing Rules) or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company

– 2 –

DEFINITIONS

• “Jinzhao Agreement”

a conditional co-operative framework agreement dated 15 December 2004 entered into between TOM Outdoor Media, Jinzhao, Mr. Xiong and Mr. Wang in respect of, among other things, the proposed establishment of the Jinzhao Joint Venture

• “Jinzhao Asset Acquisition Agreement”

• an asset acquisition agreement to be entered into between Jinzhao, Mr. Xiong, Mr. Wang and the Jinzhao Joint Venture on the date of establishment of the Jinzhao Joint Venture, under which Jinzhao will transfer RMB8.84 million (equivalent to approximately HK$8.31 million) worth of its advertising assets/businesses and other related businesses to the Jinzhao Joint Venture

• “Jinzhao Contributing Assets”

• has the meaning ascribed to it in paragraph 2 headed “Registered Capital” in the section headed “Establishment of the Jinzhao Joint Venture” below

• “Jinzhao Joint Venture”

• a domestic joint venture enterprise to be established in Chongqing, the PRC as contemplated under the Jinzhao Agreement

• “Mr. Wang”

• Mr. Wang Changyu (�� ), who holds 10% of the equity interest in Jinzhao. Mr. Wang is a third party independent of and not connected with the Company or any of its connected persons (as defined in the Listing Rules) or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company. Mr. Wang is not connected with Mr. Xiong

• “Mr. Xiong”

• Mr. Xiong Fan (�� ), who holds 90% of the equity interest in Jinzhao. Mr. Xiong is a third party independent of and not connected with the Company or any of its connected persons (as defined in the Listing Rules) or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company. Mr. Xiong is not connected with Mr. Wang

(c) In respect of the Lineland Joint Venture

• “Effective Date”

the date on which the last of the Conditions is fulfilled or waived

• “Lineland”

• �� !"#$%&'()* (Wuhan Lineland Advertising and Art Company Limited), a limited liability company established in Wuhan, the PRC and is owned as to 51% by Ms. Liu, 47% by Mr. H Chen, 1% by Mr. G Chen and 1% by Mr. Feng as at the date of the Lineland Agreement. Lineland is a third party independent of and not connected with the Company or any of its connected persons (as defined in the Listing Rules) or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company

– 3 –

DEFINITIONS

• “Lineland Agreement”

• “Lineland Asset Acquisition Agreement”

• “Lineland Asset Lease Agreement”

• “Lineland Contributing Assets”

• “Lineland Joint Venture”

• “Mr. H Chen”

• “Mr. G Chen”

a conditional co-operative framework agreement dated 15 December 2004 entered into between TOM Outdoor Media, Lineland, Mr. H Chen, Mr. G Chen, Mr. Feng and Ms. Liu in respect of, among other things, the proposed establishment of the Lineland Joint Venture

an asset acquisition agreement to be entered into between Lineland, Mr. H Chen, Mr. G Chen, Mr. Feng, Ms. Liu and the Lineland Joint Venture on the date of establishment of the Lineland Joint Venture, under which Lineland will transfer RMB4.41 million (equivalent to approximately HK$4.15 million) worth of its advertising assets/businesses and other related businesses to the Lineland Joint Venture

• an asset lease agreement to be entered into between the Lineland Joint Venture, Lineland, Mr. H Chen, Mr. G Chen, Mr. Feng and Ms. Liu on the date of establishment of the Lineland Joint Venture, under which Lineland will lease certain outdoor media assets to the Lineland Joint Venture

• has the meaning ascribed to it in paragraph 2 headed “Registered Capital” in the section headed “Establishment of the Lineland Joint Venture” below

• a domestic joint venture enterprise to be established in Wuhan, the PRC as contemplated under the Lineland Agreement

• Mr. Chen Huashan (�� ), who holds 47% of the equity interest in Lineland. Mr. H Chen is a third party independent of and not connected with the Company or any of its connected persons (as defined in the Listing Rules) or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company. Mr. H Chen is the spouse of Ms. Liu and not connected with Mr. G Chen or Mr. Feng

• Mr. Chen Gang (�� ), who holds 1% of the equity interest in Lineland. Mr. G Chen is a third party independent of and not connected with the Company or any of its connected persons (as defined in the Listing Rules) or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company. Mr. G Chen is not connected with any of Mr. H Chen, Mr. Feng or Ms. Liu

– 4 –

DEFINITIONS

• “Mr. Feng”

“Ms. Liu”

Mr. Feng Xiang (�� ), who holds 1% of the equity interest in Lineland. Mr. Feng is a third party independent of and not connected with the Company or any of its connected persons (as defined in the Listing Rules) or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company. Mr. Feng is not connected with any of Mr. H Chen, Mr. G Chen or Ms. Liu

Ms. Liu Fang (�� ), who holds 51% of the equity interest in Lineland. Ms. Liu is a third party independent of and not connected with the Company or any of its connected persons (as defined in the Listing Rules) or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company. Ms. Liu is the spouse of Mr. H Chen and not connected with Mr. G Chen or Mr. Feng

RMB1 = HK$0.94

– 5 –

LETTER FROM THE BOARD

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(Stock Code: 2383)

Directors: Frank Sixt (Chairman) Sing Wang (Chief Executive Officer) Tommei Tong Henry Cheong # Anna Wu # James Sha # Debbie Chang Susan Chow Edmond Ip Angelina Lee * Holger Kluge Wang Lei Lei

• Non-executive Directors

Registered office: P.O. Box 309 Ugland House South Church Street George Town Grand Cayman Cayman Islands British West Indies

Head office and principal place of business: 48th Floor, The Center 99 Queen’s Road Central Central Hong Kong

• # Independent non-executive Directors

5 January 2005

To the shareholders of the Company

Dear Sir or Madam,

DISCLOSEABLE TRANSACTIONS

(1) Proposed establishment of the Jinzhao Joint Venture in Chongqing, the People’s Republic of China and

Proposed grant of the put and call options AND

(2) Proposed establishment of the Lineland Joint Venture in Wuhan, the People’s Republic of China and Proposed grant of the put and call options

A. INTRODUCTION

On 15 December 2004, the Company announced that TOM Outdoor Media had entered into the following agreements with certain independent third parties:

* for identification purpose

– 6 –

LETTER FROM THE BOARD

• (1) the Jinzhao Agreement for the establishment of a domestic joint venture enterprise in Chongqing, the PRC which will be engaged in the advertising business.

The Jinzhao Joint Venture will be owned as to 51% by TOM Nominee and as to 49% by Jinzhao. The registered capital of the Jinzhao Joint Venture is RMB6 million (equivalent to approximately HK$5.64 million), of which TOM Nominee will contribute RMB3.06 million (equivalent to approximately HK$2.88 million) in cash and Jinzhao will contribute RMB2.94 million (equivalent to approximately HK$2.76 million) worth of assets. In addition, TOM Outdoor Media (through TOM Nominee) will provide an amount of RMB9.19 million (equivalent to approximately HK$8.64 million) in cash to the Jinzhao Joint Venture for funding its capital expenditure and working capital requirements.

Subject to certain conditions as set out in the Jinzhao Agreement, Jinzhao has been granted the Jinzhao Put Option (as defined below) and the Jinzhao Call Option (as defined below). Pursuant to the Jinzhao Put Option, Jinzhao has a right to sell all (but not part) of its equity interest in the Jinzhao Joint Venture to TOM Outdoor Media (or to an affiliated company nominated by TOM Outdoor Media). Pursuant to the Jinzhao Call Option, Jinzhao and/or Mr. Xiong and/or Mr. Wang has a right to acquire 51% of the equity interest in the Jinzhao Joint Venture held by TOM Nominee and/or its affiliated companies, together with the rights in and to the Jinzhao TOM Loan (as defined below).

• (2) the Lineland Agreement for the establishment of a domestic joint venture enterprise in Wuhan, the PRC which will be engaged in the advertising business.

The Lineland Joint Venture will be owned as to 51% by TOM Nominee and as to 49% by Lineland. The registered capital of the Lineland Joint Venture is RMB3 million (equivalent to approximately HK$2.82 million), of which TOM Nominee will contribute RMB1.53 million (equivalent to approximately HK$1.44 million) in cash and Lineland will contribute RMB1.47 million (equivalent to approximately HK$1.38 million) worth of assets. In addition, TOM Outdoor Media (through TOM Nominee) will provide an amount of RMB4.59 million (equivalent to approximately HK$4.31 million) in cash to the Lineland Joint Venture for funding its capital expenditure and working capital requirements.

Subject to certain conditions as set out in the Lineland Agreement, Lineland has been granted the Lineland Put Option (as defined below) and the Lineland Call Option (as defined below). Pursuant to the Lineland Put Option, Lineland has a right to sell all (but not part) of its equity interest in the Lineland Joint Venture to TOM Outdoor Media (or to an affiliated company nominated by TOM Outdoor Media). Pursuant to the Lineland Call Option, Lineland and/or Mr. H Chen and/or Mr. G Chen and/or Mr. Feng and/or Ms. Liu has a right to acquire 51% of the equity interest in the Lineland Joint Venture held by TOM Nominee and/or its affiliated companies, together with the rights in and to the Lineland TOM Loan (as defined below).

Each of (i) the formation of the Jinzhao Joint Venture and the grant of the Jinzhao Put Option contemplated under the Jinzhao Agreement; and (ii) the formation of the Lineland Joint Venture and the grant of the Lineland Put Option contemplated under the Lineland Agreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. Each

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LETTER FROM THE BOARD

of (i) the grant of the Jinzhao Call Option contemplated under the Jinzaho Agreement; and (ii) the grant of the Lineland Call Option contemplated under the Lineland Agreement also constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

The purpose of this circular is to provide the shareholders of the Company with further information relating to the Jinzhao Joint Venture and the Lineland Joint Venture, the Jinzhao Put Option, the Jinzhao Call Option, the Lineland Put Option and the Lineland Call Option. This circular also contains information in compliance with the Listing Rules.

B. THE JINZHAO AGREEMENT

1. Date

15 December 2004

2. Parties

• (1) TOM Outdoor Media

• (2) Jinzhao

• (3) Mr. Xiong

• (4) Mr. Wang

3. Assets to be acquired

51% of the equity interest in the Jinzhao Joint Venture, which will be established by TOM Outdoor Media (through TOM Nominee) and Jinzhao in Chongqing, the PRC.

4. Establishment of the Jinzhao Joint Venture

Pursuant to the Jinzhao Agreement, TOM Nominee and Jinzhao, as shareholders, will jointly sign all necessary documents for the establishment of the Jinzhao Joint Venture, including, without limitation, the articles of association in respect of the Jinzhao Joint Venture, in accordance with the provision of the Jinzhao Agreement.

Details of the Jinzhao Joint Venture are as follows:

1. Shareholders

• (a) TOM Nominee (51%)

• (b) Jinzhao (49%)

– 8 –

LETTER FROM THE BOARD

2. Registered capital

• (a) The registered capital of the Jinzhao Joint Venture is RMB6 million (equivalent to approximately HK$5.64 million), of which TOM Nominee will contribute RMB3.06 million (equivalent to approximately HK$2.88 million) in cash and Jinzhao will contribute RMB2.94 million (equivalent to approximately HK$2.76 million) worth of assets (such as unipoles, billboards, lightboxes and novation of certain advertising agreements (between Jinzhao and its customers), media leasing agreements and advertising licenses, permits, etc.) (“Jinzhao Contributing Assets”).

• (b) The aforesaid cash capital contribution by TOM Nominee will be paid within 10 Business Days after the date the capital verification report (�� ! ) of Jinzhao in connection with its contribution of the Jinzhao Contributing Assets to the Jinzhao Joint Venture becomes available. TOM Nominee’s share of the capital contribution will be funded by internal resources of the Company.

• (c) Jinzhao will transfer all of the Jinzhao Contributing Assets to the Jinzhao Joint Venture prior to the establishment of the Jinzhao Joint Venture. The valuation of the Jinzhao Contributing Assets will be assessed by a PRC accounting firm approved by TOM Outdoor Media. The Jinzhao Joint Venture will be entitled to the profit generated by the Jinzhao Contributing Assets with effect from 1 October 2004.

The Jinzhao Joint Venture will be treated as a non wholly-owned subsidiary of the Company.

3. Additional funding

TOM Outdoor Media (through TOM Nominee) will provide an unsecured interest-free shareholder’s loan of RMB9.19 million (equivalent to approximately HK$8.64 million) to the Jinzhao Joint Venture (“Jinzhao TOM Loan”) for funding its capital expenditure and working capital requirements within 5 Business Days from the date of the Jinzhao Asset Acquisition Agreement. The timing of repayment of Jinzhao TOM Loan will be determined by the board of directors of the Jinzhao Joint Venture.

The additional funding by TOM Outdoor Media will be funded by internal resources of the Company.

As at the date hereof, TOM Outdoor Media has no other financial commitment to the Jinzhao Joint Venture other than Jinzhao TOM Loan.

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LETTER FROM THE BOARD

4. Scope of business

The design, production and distribution of all types of advertisements (including, without limitation, outdoor advertisements), and acting as an advertising agent for the distribution of all types of advertisements (including, without limitation, outdoor advertisements).

5. Management

The board of directors of the Jinzhao Joint Venture will comprise 5 directors, of which 3 will be nominated by TOM Outdoor Media and 2 will be nominated by Jinzhao.

Jinzhao has the right to nominate the first chairman of the board of directors of the Jinzhao Joint Venture. Subsequent chairmen will be appointed by the board of directors of the Jinzhao Joint Venture.

6. Future funding

If the board of directors of the Jinzhao Joint Venture determines that the Jinzhao Joint Venture requires additional funding, such additional funding may be provided in the following manner and in the following order of preference:

• (a) bank loans; or

• (b) if bank loan is unavailable or insufficient, both TOM Nominee and Jinzhao will provide funding in the form of shareholders’ loan in proportion to their then respective shareholding in the Jinzhao Joint Venture with or without interest as determined by the board of directors of the Jinzhao Joint Venture.

If the Jinzhao Joint Venture fails to be established within 90 days from the Effective Date, TOM Outdoor Media may, by giving written notice to the other parties, terminate the Jinzhao Agreement, upon which Jinzhao, Mr. Xiong and Mr. Wang will return in one lump sum all payments made by TOM Outdoor Media or TOM Nominee to the Jinzhao Joint Venture within 14 Business Days from the date of such written notice given by TOM Outdoor Media.

– 10 –

LETTER FROM THE BOARD

5. Proposed shareholding structure chart of the Jinzhao Joint Venture

==> picture [315 x 190] intentionally omitted <==

----- Start of picture text -----

Company
100%
Mr. Xiong Mr. Wang TOM Outdoor
Media
90% 10%
Contractual Arrangements
Jinzhao TOM Nominee
49% 51%
Jinzhao Joint
Venture
----- End of picture text -----

6. Conditions precedent

The Jinzhao Agreement conditional upon the following conditions (“Conditions”) being fulfilled or waived by TOM Outdoor Media within 90 days after the date of the Jinzhao Agreement (or other date as the parties may agree):

1. there being no material adverse change in the business operation of Jinzhao between the date of the Jinzhao Agreement and the Effective Date;

2. a legal opinion (in such form and substance satisfactory to TOM Outdoor Media) opining on the legality of the transactions contemplated under the Jinzhao Agreement having been issued by such PRC legal counsels approved by TOM Outdoor Media; and

3. if required under the Listing Rules, the Board and/or the shareholders of the Company having approved the transactions contemplated under the Jinzhao Agreement.

As at the Latest Practicable Date, Condition (3) has been fulfilled.

7. Jinzhao Asset Acquisition Agreement

Pursuant to the Jinzhao Agreement, the Jinzhao Joint Venture, Mr. Xiong, Mr. Wang and Jinzhao will enter into the Jinzhao Asset Acquisition Agreement on the date of establishment of the Jinzhao Joint Venture, under which Jinzhao will transfer RMB8.84 million (equivalent to approximately HK$8.31 million) worth of its advertising assets/businesses and other related businesses (such as unipoles, billboards and lightboxes) to the Jinzhao Joint Venture and the Jinzhao Joint Venture will be entitled to the profit generated by such assets/businesses with effect from 1 October 2004. The Jinzhao Joint Venture will not be required to pay the consideration (being RMB8.84 million (equivalent to approximately HK$8.31 million), which is interest free and unsecured) for such acquisition of assets until such times when the Jinzhao Joint Venture repays all or part of Jinzhao TOM Loan, in which case, the parties will procure that the Jinzhao Joint Venture makes such repayment and payment in proportion to TOM Nominee’s and Jinzhao’s respective shareholding in the Jinzhao Joint Venture at that time.

– 11 –

LETTER FROM THE BOARD

8. Share conversion, and put and call options

• 8.1 Subject to, among other things, the advices of the professional advisers of Listco (as defined below) and the profitability of the Jinzhao Joint Venture, TOM Outdoor Media undertakes that in the event that the shares in the Jinzhao Joint Venture or the shares in another company, whose business comprises the Jinzhao Joint Venture’s outdoor advertising business (“Listco”) are listed on any recognised stock exchange (“Listing”), it will procure that Jinzhao’s equity interest in the Jinzhao Joint Venture be converted into shares in Listco (“Listco Shares”) either during the pre-listing restructuring or at the time of the initial listing of the Listco Shares. The number of Listco Shares to be so converted will depend on the amount of the after-tax profit of Listco contributed by the Jinzhao Joint Venture in the year immediately preceding the year in which the Listing takes place.

• 8.2 Subject to: (a) the Listing not having taken place by 31 December 2008; (b) Jinzhao not having exercised the Jinzhao Call Option (as defined below); (c) the after-tax profit of the Jinzhao Joint Venture in the year ending 31 December 2008 having reached a minimum of RMB10 million (equivalent to approximately HK$9.4 million); and (d) all outstanding loans granted to the Jinzhao Joint Venture by TOM Nominee and/or its affiliated companies (other than the Jinzhao TOM Loan) having been repaid in full, Jinzhao has a right to sell all (but not part) of its equity interest in the Jinzhao Joint Venture to TOM Outdoor Media (or to an affiliated company nominated by TOM Outdoor Media) (“Jinzhao Put Option”) at any time during the year ending 31 December 2009 at an exercise price of three times (or such other multiple as the parties may agree) the average value of the audited after-tax profit of the Jinzhao Joint Venture for the three years ending 31 December 2007 (subject to a cap of RMB25 million (equivalent to approximately HK$23.5 million)).

• 8.3 Subject to: (a) the Listing not having taken place by 31 December 2008; (b) Jinzhao not having exercised the Jinzhao Put Option; and (c) all outstanding loans granted to the Jinzhao Joint Venture by TOM Outdoor Media and/or its affiliated companies (other than Jinzhao TOM Loan) having been repaid in full, Jinzhao and/or Mr. Xiong and/or Mr. Wang has a right to acquire the 51% equity interest in the Jinzhao Joint Venture held by TOM Nominee and/or its affiliated companies, together with the rights in and to Jinzhao TOM Loan, (“Jinzhao Call Option”) at any time during the year ending 31 December 2009 at an exercise price calculated in accordance with the following formula:

==> picture [64 x 8] intentionally omitted <==

Where:

• A = the Jinzhao Call Option exercise price

• B = (i) RMB12.25 million (equivalent to approximately HK$11.52 million) x 1.2[4] ; or

• (ii) RMB12.25 million (equivalent to approximately HK$11.52 million) if, in the opinion of Listco’s professional advisers, the reasons for the Listing not having taken place by 31 December 2008 are not attributable to Jinzhao, Mr. Xiong or Mr. Wang

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LETTER FROM THE BOARD

• C = the aggregate amount of all dividends (if any) received by TOM Outdoor Media from the Jinzhao Joint Venture

• D = the aggregate principal amount of Jinzhao TOM Loan repaid by the Jinzhao Joint Venture to TOM Outdoor Media

Assuming that TOM Outdoor Media does not receive any dividend from the Jinzhao Joint Venture, the maximum amount of the Jinzhao Call Option exercise price will be RMB25,401,600 (equivalent to approximately HK$23,877,504).

C. INFORMATION ON JINZHAO

Jinzhao is a domestic company established in Chongqing, the PRC in 1997 and owned as to 90% by Mr. Xiong and as to 10% by Mr. Wang. Jinzhao is principally engaged in the outdoor media advertising business and has established dominant presence in Chongqing with a high quality portfolio of unipoles and billboards in prime locations, accounting for 87% of total revenue and 88% of total media asset area of Jinzhao. Jinzhao is one of the largest outdoor advertising companies in Chongqing in terms of revenue and scale of media assets. All the outdoor advertising assets/businesses of Jinzhao will be injected to the Jinzhao Joint Venture pursuant to the Jinzhao Agreement and the Jinzhao Asset Acquisition Agreement.

Based on the management accounts of Jinzhao, the unaudited net revenues of Jinzhao prepared in accordance with HK GAAP for the year ended 31 December 2003 and six months ended 30 June 2004 were approximately RMB35,612,000 (equivalent to approximately HK$33,475,000) and approximately RMB23,816,000 (equivalent to approximately HK$22,387,000) respectively. The unaudited profit before taxation of Jinzhao prepared under HK GAAP for the years ended 31 December 2002, 31 December 2003 and six months ended 30 June 2004 were approximately RMB5,712,000 (equivalent to approximately HK$5,369,000), approximately RMB8,630,000 (equivalent to approximately HK$8,112,000) and approximately RMB4,717,000 (equivalent to approximately HK$4,434,000) respectively. The unaudited profit after taxation of Jinzhao prepared under HK GAAP for the years ended 31 December 2002, 31 December 2003 and six months ended 30 June 2004 were approximately RMB3,827,000 (equivalent to approximately HK$3,597,000), approximately RMB5,782,000 (equivalent to approximately HK$5,435,000) and approximately RMB3,161,000 (equivalent to approximately HK$2,971,000) respectively. As at 30 June 2004, the unaudited net assets of Jinzhao prepared in accordance with HK GAAP was approximately RMB16,000,000 (equivalent to approximately HK$15,040,000).

The Board does not expect the establishment of the Jinzhao Joint Venture will have any immediate material impact on either the earnings or the assets and liabilities of the Group.

D. REASONS FOR ENTERING INTO THE JINZHAO AGREEMENT

As Chongqing is the only municipality located in southwest of the PRC, the Directors considered that the quality and scale of Jinzhao’s outdoor media assets in Chongqing is valuable to the Company’s outdoor media consolidation strategy as it will enhance the dominant position of the Group in the region.

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LETTER FROM THE BOARD

With the establishment of the Jinzhao Joint Venture, the Company would further expand its outdoor media advertising business in Chongqing and the Southwest region of the PRC. Together with TOM Outdoor Media’s existing presence in Chengdu and Kunming, the PRC, TOM Outdoor Media’s leadership in the outdoor advertising industry in the Southwest region of the PRC will be further strengthened.

The Directors consider that the Jinzhao Agreement is entered into on normal commercial terms in the ordinary and usual course of business of the Company and that the terms of the Jinzhao Agreement are fair and reasonable and in the interests of the Company so far as the shareholders of the Company are concerned.

E. THE LINELAND AGREEMENT

1. Date

15 December 2004

2. Parties

• (1) TOM Outdoor Media

• (2) Lineland

• (3) Mr. H Chen

• (4) Mr. G Chen

• (5) Mr. Feng

• (6) Ms. Liu

3. Assets to be acquired

51% of the equity interest in the Lineland Joint Venture, which will be established by TOM Outdoor Media (through TOM Nominee) and Lineland in Wuhan, the PRC.

4. Establishment of the Lineland Joint Venture

Pursuant to the Lineland Agreement, TOM Nominee and Lineland, as shareholders, will jointly sign all necessary documents for the establishment of the Lineland Joint Venture, including, without limitation, the articles of association in respect of the Lineland Joint Venture, in accordance with the provision of the Lineland Agreement.

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LETTER FROM THE BOARD

Details of the Lineland Joint Venture are as follows:

1. Shareholders

• (a) TOM Nominee (51%)

• (b) Lineland (49%)

2. Registered capital

• (a) The registered capital of the Lineland Joint Venture is RMB3 million (equivalent to approximately HK$2.82 million), of which TOM Nominee will contribute RMB1.53 million (equivalent to approximately HK$1.44 million) in cash and Lineland will contribute RMB1.47 million (equivalent to approximately HK$1.38 million) worth of assets (such as unipoles, billboards, lightboxes and novation of certain advertising agreements (between Lineland and its customers), media leasing agreements and advertising licenses, permits, etc.) (“Lineland Contributing Assets”).

• (b) The aforesaid cash capital contribution by TOM Nominee will be paid within 10 Business Days after the date the capital verification report (�� ! ) of Lineland in connection with its contribution of the Lineland Contributing Assets to the Lineland Joint Venture becomes available. TOM Nominee’s share of the capital contribution will be funded by internal resources of the Company.

• (c) Lineland will transfer all of the Lineland Contributing Assets to the Lineland Joint Venture prior to the establishment of the Lineland Joint Venture. The valuation of the Lineland Contributing Assets will be assessed by a PRC accounting firm approved by TOM Outdoor Media. The Lineland Joint Venture will be entitled to the profit generated by the Lineland Contributing Assets with effect from 1 October 2004.

The Lineland Joint Venture will be treated as a non wholly-owned subsidiary of the Company.

3. Additional funding

TOM Outdoor Media (through TOM Nominee) will provide an unsecured interest-free shareholder’s loan of RMB4.59 million (equivalent to approximately HK$4.31 million) to the Lineland Joint Venture (“Lineland TOM Loan”) for funding its capital expenditure and working capital requirements within 5 Business Days from the date of the Lineland Asset Acquisition Agreement. The timing of repayment of the Lineland TOM Loan will be determined by the board of directors of the Lineland Joint Venture.

The additional funding by TOM Outdoor Media will be funded by internal resources of the Company.

As at the date hereof, TOM Outdoor Media has no other financial commitment to the Lineland Joint Venture other than the Lineland TOM Loan.

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LETTER FROM THE BOARD

4. Scope of business

The design, production and distribution of all types of advertisements (including, without limitation, outdoor advertisements), and acting as an advertising agent for the distribution of all types of advertisements (including, without limitation, outdoor advertisements).

5. Management

The board of directors of the Lineland Joint Venture will comprise 5 directors, of which 3 will be nominated by TOM Outdoor Media and 2 will be nominated by Lineland.

Lineland has the right to nominate the first chairman of the board of directors of the Lineland Joint Venture. Subsequent chairmen will be appointed by the board of directors of the Lineland Joint Venture.

6. Future funding

If the board of directors of the Lineland Joint Venture determines that the Lineland Joint Venture requires additional funding, such additional funding may be provided in the following manner and in the following order of preference:

• (a) bank loans; or

• (b) if bank loan is unavailable or insufficient, both TOM Nominee and Lineland will provide funding in the form of shareholders’ loan in proportion to their then respective shareholding in the Lineland Joint Venture with or without interest as determined by the board of directors of the Lineland Joint Venture.

7. Dividend

The parties agree that the dividend distributable by the Lineland Joint Venture to TOM Nominee for the next three years shall not be less than the aggregate amount of TOM Nominee’s cash capital contribution to the Lineland Joint Venture and the loans granted to the Lineland Joint Venture by TOM Nominee or an affiliated company nominated by TOM Outdoor Media. Any shortfall will be compensated by Lineland, Mr. H Chen, Mr. G Chen, Mr. Feng and Ms. Liu in cash.

If the Lineland Joint Venture fails to be established within 90 days from the Effective Date, TOM Outdoor Media may, by giving written notice to the other parties, terminate the Lineland Agreement, upon which Lineland, Mr. H Chen, Mr. G Chen, Mr. Feng and/or Ms. Liu will return in one lump sum all payments made by TOM Outdoor Media or TOM Nominee to the Lineland Joint Venture within 14 Business Days from the date of such written notice given by TOM Outdoor Media.

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LETTER FROM THE BOARD

5. Proposed shareholding structure chart of the Lineland Joint Venture

==> picture [381 x 210] intentionally omitted <==

----- Start of picture text -----

Company
100%
Mr. H Chen Ms. Liu Mr. Feng Mr. G Chen
TOM Outdoor
Media
47% 51% 1% 1%
Contractual Arrangements
Lineland TOM Nominee
49% 51%
Lineland
Joint Venture
----- End of picture text -----

6. Conditions precedent

The Lineland Agreement conditional upon the following conditions (“Conditions”) being fulfilled or waived by TOM Outdoor Media within 90 days after the date of the Lineland Agreement (or other date as the parties may agree):

1. there being no material adverse change in the business operation of Lineland between the date of the Lineland Agreement and the Effective Date;

2. a legal opinion (in such form and substance satisfactory to TOM Outdoor Media) opining on the legality of the transactions contemplated under the Lineland Agreement having been issued by such PRC legal counsels approved by TOM Outdoor Media; and

3. if required under the Listing Rules, the Board and/or the shareholders of the Company having approved the transactions contemplated under the Lineland Agreement.

As at the Latest Practicable Date, Condition (3) has been fulfilled.

7. Lineland Asset Acquisition Agreement

Pursuant to the Lineland Agreement, the Lineland Joint Venture, Mr. H Chen, Mr. G Chen, Mr. Feng and Ms. Liu and Lineland will enter into the Lineland Asset Acquisition Agreement on the date of establishment of the Lineland Joint Venture, under which Lineland will transfer RMB4.41 million (equivalent to approximately HK$4.15 million) worth of its advertising assets/businesses and other related businesses (such as unipoles, billboards and lightboxes) to the Lineland Joint Venture and the Lineland Joint Venture will be entitled to the profit generated by such assets/businesses with effect from 1 October 2004. The Lineland Joint Venture will not be required to pay the consideration (being RMB4.41 million (equivalent to approximately HK$4.15 million), which is interest free and unsecured) for such acquisition

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LETTER FROM THE BOARD

of assets until such times when the Lineland Joint Venture repays all or part of the Lineland TOM Loan, in which case, the parties will procure that the Lineland Joint Venture makes such repayment and payment in proportion to TOM Nominee’s and Lineland’s respective shareholding in the Lineland Joint Venture at that time.

8. Lineland Asset Lease Agreement

Pursuant to the Lineland Agreement, the Lineland Joint Venture, Mr. H Chen, Mr. G Chen, Mr. Feng and Ms. Liu and Lineland will enter into the Lineland Asset Lease Agreement on the date of establishment of the Lineland Joint Venture, under which Lineland will lease certain outdoor media assets (i.e. the airport highway unipoles, which are currently not transferable) to the Lineland Joint Venture from the date of delivery of such assets to 31 December 2007 at the rental payable in the following manner:

Period	Annual Rental Amount
	RMB
1/10/2004 – 31/12/2004	50,000
1/1/2005 – 31/12/2007	200,000

The rental payable by the Lineland Joint Venture for the year 2004 will be calculated with effect from 1 October 2004. The Lineland Joint Venture will pay 50% of the relevant rental amount of the year to Lineland at the end of June and December of such year.

The Lineland Joint Venture will be entitled to the profit generated by such assets with effect from 1 October 2004.

During the term of the Lineland Asset Lease Agreement, Lineland will use its best endeavour to transfer the operating rights of the aforesaid outdoor media assets to the Lineland Joint Venture. The consideration for such transfer has not yet been determined. If and when the transfer is to be effected, the Company will comply with the relevant requirements of the Listing Rules.

The signing of the Lineland Asset Lease Agreement will constitute a continuing connected transaction of the Company under Chapter 14A of the Listing Rules. As the applicable percentage ratio(s) will on annual basis, be less than 0.1%, such transaction will fall within the exemption under Rule 14A.33(3) of the Listing Rules, and are exempt from the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Directors (including the independent non-executive Directors) are of the view that the aforesaid transaction under the Lineland Asset Lease Agreement is to be entered into on normal commercial terms and the terms of the Lineland Asset Lease Agreement are fair and reasonable and in the interest of the shareholders of the Company as a whole.

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LETTER FROM THE BOARD

9. Share conversion, and put and call options

• 9.1 Subject to, among other things, the advices of the professional advisers of Listco (as defined below) and the profitability of the Lineland Joint Venture, TOM Outdoor Media undertakes that in the event that the shares in the Lineland Joint Venture or the shares in another company, whose business comprises the Lineland Joint Venture’s outdoor advertising business (“Listco”) are listed on any recognised stock exchange (“Listing”), it will procure that Lineland’s equity interest in the Lineland Joint Venture be converted into shares in Listco (“Listco Shares”) either during the pre-listing restructuring or at the time of the initial listing of the Listco Shares. The number of Listco Shares to be so converted will depend on the amount of the after-tax profit of Listco contributed by the Lineland Joint Venture in the year immediately preceding the year in which the Listing takes place.

• 9.2 Subject to: (a) the Listing not having taken place by 31 December 2008; (b) Lineland and/or Mr. H Chen and/or Mr. G Chen and/or Mr. Feng and/or Ms. Liu not having exercised the Lineland Call Option (as defined below); (c) the after-tax profit of the Lineland Joint Venture in the year ending 31 December 2008 having reached a minimum of RMB6 million (equivalent to approximately HK$5.64 million); and (d) all outstanding loans granted to the Lineland Joint Venture by TOM Nominee and/or its affiliated companies (other than the Lineland TOM Loan) having been repaid in full, Lineland has a right to sell all (but not part) of its equity interest in the Lineland Joint Venture to TOM Outdoor Media (or to an affiliated company nominated by TOM Outdoor Media) (“Lineland Put Option”) at any time during the year ending 31 December 2009 at an exercise price of three times (or such other multiple as the parties may agree) the average value of the audited after-tax profit of the Lineland Joint Venture for the three years ending 31 December 2007 (subject to a cap of RMB20 million (equivalent to approximately HK$18.8 million)).

• 9.3 Subject to: (a) the Listing not having taken place by 31 December 2008; (b) Lineland not having exercised the Lineland Put Option; and (c) all outstanding loans granted to the Lineland Joint Venture by TOM Outdoor Media and/or its affiliated companies (other than the Lineland TOM Loan) having been repaid in full, Lineland and/or Mr. H Chen and/or Mr. G Chen and/or Mr. Feng and/or Ms. Liu has a right to acquire the 51% equity interest in the Lineland Joint Venture held by TOM Nominee and/or its affiliated companies, together with the rights in and to the Lineland TOM Loan, (“Lineland Call Option”) at any time during the year ending 31 December 2009 at an exercise price calculated in accordance with the following formula:

==> picture [64 x 8] intentionally omitted <==

Where:

• A = the Lineland Call Option exercise price

• B = (i) RMB6.12 million (equivalent to approximately HK$5.75 million) x 1.2[4] ; or

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LETTER FROM THE BOARD

• (ii) RMB6.12 million (equivalent to approximately HK$5.75 million) if, in the opinion of Listco’s professional advisers, the reasons for the Listing not having taken place by 31 December 2008 are not attributable to Lineland, Mr. H Chen, Mr. G Chen, Mr. Feng or Ms. Liu

• C = the aggregate amount of all dividends (if any) received by TOM Outdoor Media from the Lineland Joint Venture

• D = the aggregate principal amount of the Lineland TOM Loan repaid by the Lineland Joint Venture to TOM Outdoor Media

Assuming that TOM Outdoor Media does not receive any dividend from the Lineland Joint Venture, the maximum amount of the Lineland Call Option exercise price will be RMB12,690,432 (equivalent to approximately HK$11,929,006).

F. INFORMATION ON LINELAND

Lineland is a domestic company established in Wuhan, the PRC in 1997 and owned as to 51% by Ms. Liu, 47% by Mr. H Chen, 1% by Mr. G Chen and 1% by Mr. Feng. Lineland is principally engaged in the outdoor media advertising business and has established dominant presence in Wuhan with a high quality portfolio of unipoles along Wuhan airport highway and billboards in prime locations. Lineland is the largest outdoor advertising company in Wuhan in terms of revenue and scale of media assets. All the outdoor advertising assets/businesses of Lineland will be injected to the Lineland Joint Venture pursuant to the Lineland Agreement, the Lineland Asset Acquisition Agreement and the Lineland Asset Lease Agreement.

Based on the management accounts of Lineland, the unaudited net revenues of Lineland prepared in accordance with HK GAAP for the year ended 31 December 2003 and six months ended 30 June 2004 were approximately RMB14,310,000 (equivalent to approximately HK$13,451,000) and approximately RMB7,526,000 (equivalent to approximately HK$7,074,000) respectively. The unaudited profit before taxation of Lineland prepared under HK GAAP for the years ended 31 December 2002, 31 December 2003 and six months ended 30 June 2004 were approximately RMB3,560,000 (equivalent to approximately HK$3,346,000), approximately RMB4,485,000 (equivalent to approximately HK$4,216,000) and approximately RMB2,472,000 (equivalent to approximately HK$2,324,000) respectively. The unaudited profit after taxation of Lineland prepared under HK GAAP for the years ended 31 December 2002, 31 December 2003 and six months ended 30 June 2004 were approximately RMB2,385,000 (equivalent to approximately HK$2,242,000), approximately RMB3,005,000 (equivalent to approximately HK$2,825,000) and approximately RMB1,656,000 (equivalent to approximately HK$1,557,000) respectively. As at 30 June 2004, the unaudited net assets of Lineland prepared in accordance with HK GAAP was approximately RMB9,438,000 (equivalent to approximately HK$8,872,000).

The Board does not expect the establishment of the Lineland Joint Venture will have any immediate material impact on either the earnings or the assets and liabilities of the Group.

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LETTER FROM THE BOARD

G. REASONS FOR ENTERING INTO THE LINELAND AGREEMENT

As Wuhan is one of the commercial centres of the PRC’s central region, the Directors considered that the quality and scale of Lineland’s outdoor media assets in Wuhan is valuable to the Company’s outdoor media consolidation strategy as it will enhance the dominant position of the Group in the region.

With the establishment of the Lineland Joint Venture, the Company would further expand its outdoor media advertising business in Wuhan and the central region of the PRC. Together with TOM Outdoor Media’s existing presence in Chengzhou, the PRC, TOM Outdoor Media’s leadership in the outdoor advertising industry in the central region of the PRC will be further strengthened.

The Directors consider that the Lineland Agreement is entered into on normal commercial terms in the ordinary and usual course of business of the Company and that the terms of the Lineland Agreement are fair and reasonable and in the interests of the Company so far as the shareholders of the Company are concerned.

H. GENERAL

Each of (i) the formation of the Jinzhao Joint Venture and the grant of the Jinzhao Put Option contemplated under the Jinzhao Agreement; and (ii) the formation of the Lineland Joint Venture and the grant of the Lineland Put Option contemplated under the Lineland Agreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. Each of (i) the grant of the Jinzhao Call Option contemplated under the Jinzaho Agreement; and (ii) the grant of the Lineland Call Option contemplated under the Lineland Agreement also constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

The Company (HKSE stock code: 2383) is listed on the Main Board of the Stock Exchange. A leading Chinese-language media group in the Greater China region, the Group has diverse business interests in five key areas: Internet (TOM Online) (Hong Kong GEM stock code: 8282, NASDAQ stock symbol: TOMO), outdoor media, publishing, sports, television and entertainment across markets in Mainland China, Taiwan and Hong Kong.

Your attention is drawn to the additional information set out in the Appendix to this circular.

Yours faithfully, By Order of the Board

TOM GROUP LIMITED Sing Wang

Chief Executive Officer and Executive Director

– 21 –

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. 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.

2. DISCLOSURE OF INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in TOM Shares, underlying TOM Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the “Model Code”), to be notified to the Company and the Stock Exchange, were as follows:

A. The Company

• (a) Long positions in TOM Shares

Number of TOM Shares

							Approximate
Name of		Personal	Family	Corporate	Other		percentage of
Directors	Capacity	Interests	Interests	Interests	Interests	Total	shareholding
Sing Wang	Beneficial	10,000,000	–	–	–	10,000,000	0.26%
	owner
	Interest of a	–	–	5,898,000	–	5,898,000	0.15%
	controlled			(Note 2)
	corporation
	(Note 1)
Wang Lei Lei	Beneficial	300,000	–	–	–	300,000	0.01%
	owner

Notes:

• (1) By virtue of the SFO, Mr. Sing Wang is deemed to be interested in 5,898,000 TOM Shares held by Amerinvest Technology Associates I Limited, which is wholly-owned by him.

• (2) All the 5,898,000 TOM Shares have been pledged as a security against his personal loan.

– 22 –

GENERAL INFORMATION

APPENDIX

• (b) Rights to acquire TOM Shares

Pursuant to the Pre-IPO Share Option Plan and the Share Option Scheme, certain Directors were granted share options to subscribe for Shares, details of which as at the Latest Practicable Date were as follows:

		Number of share
		options outstanding		Subscription
	Date	as at the Latest		price per
Name of Directors	of grant	Practicable Date	Option period	TOM Share
				HK$
Sing Wang	30/6/2000	3,000,000	30/6/2000-29/6/2010	5.27
	8/8/2000	2,138,000	8/8/2000-7/8/2010	5.30
	7/2/2002	20,000,000	7/2/2002-6/2/2012	3.76
	9/10/2003	38,000,000	9/10/2003-8/10/2013	2.505
Tommei Tong	9/10/2003	15,000,000	9/10/2003-8/10/2013	2.505
James Sha	15/11/2000	15,000,000	15/11/2000-14/11/2010	5.30
Wang Lei Lei	11/2/2000	9,080,000	11/2/2000-10/2/2010	1.78
	9/10/2003	6,850,000	9/10/2003-8/10/2013	2.505

B. Associated Corporations (within the meaning of the SFO)

• (a) Long positions in TOM Online Shares

Number of TOM Online Shares

							Approximate
Name of		Personal	Family	Corporate	Other		percentage of
Directors	Capacity	Interests	Interests	Interests	Interests	Total	shareholding
Sing Wang	Interest of a	–	–	83,142	–	83,142	0.002%
(Note)	controlled
	corporation
Wang Lei Lei	Beneficial
	owner	5,000,000	–	–	–	5,000,000	0.128%

Note: By virtue of the SFO, Mr. Sing Wang is deemed to be interested in 83,142 TOM Online Shares held by Amerinvest Technology Associates I Limited, which is wholly-owned by him.

– 23 –

GENERAL INFORMATION

APPENDIX

• (b) Right to acquire TOM Online Shares

Pursuant to the pre-IPO share option plan adopted by TOM Online, a Director was granted share options to subscribe for the TOM Online Shares, details of which as at the Latest Practicable Date were as follows:

			Number of share		Subscription
			options outstanding		price per
		Date	as at the Latest		TOM Online
Name	of Director	of grant	Practicable Date	Option period	Share
					HK$
Wang	Lei Lei	16/2/2004	165,000,000	16/2/2004-15/2/2014	1.50

• (c) Short positions in associated corporations

Mr. Wang Lei Lei has as of 12 June 2001 (as supplemented on 26 September 2003) granted an option to a subsidiary of the Company in respect of his 20% (RMB2,200,000) equity interest in Beijing Lei Ting Wan Jun Network Technology Limited (“Beijing Lei Ting”) whereby such subsidiary of the Company has the right at any time within a period of 10 years commencing from 26 September 2003 (which may be extended for another 10 years at the option of such subsidiary of the Company) to acquire all of Mr. Wang Lei Lei’s equity interest in Beijing Lei Ting at an exercise price of RMB2,200,000.

Mr. Wang Lei Lei has also as of 19 November 2003 granted an option to a subsidiary of the Company in respect of his 80% (RMB8,000,000) equity interest in Beijing Leitingwuji Network Technology Company Limited (“LTWJi”) whereby such subsidiary of the Company has the right at any time within a period of 10 years commencing from 19 November 2003 (which may be extended for another 10 years at the option of such subsidiary of the Company) to acquire all of Mr. Wang Lei Lei’s equity interest in LTWJi at an exercise price of RMB8,000,000.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in any TOM Shares, underlying TOM Shares or debentures of, the Company or any associated corporations (within the meaning of Part XV of the SFO) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO), or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

– 24 –

GENERAL INFORMATION

APPENDIX

3. INTERESTS AND SHORT POSITIONS OF SHAREHOLDERS

So far as is known to any Director or chief executive of the Company, as at the Latest Practicable Date, the persons/companies (not being a Director or chief executive of the Company) who have interests or short positions in TOM Shares or underlying TOM Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO are as follows:

			Approximate
			percentage
Name	Capacity	No. of TOM Shares held	of shareholding
Li Ka-shing	Founder of discretionary	1,429,024,545 (L)	36.74%
	trusts & interest of	(Notes 1 & 2)
	controlled corporations
Li Ka-Shing Unity Trustee	Trustee & beneficiary	1,429,024,545 (L)	36.74%
Corporation Limited	of a trust	(Notes 1 & 2)
(as trustee of The
Li Ka-Shing Unity
Discretionary Trust)
Li Ka-Shing Unity	Trustee & beneficiary	1,429,024,545 (L)	36.74%
Trustcorp Limited	of a trust	(Notes 1 & 2)
(as trustee of another
discretionary trust)
Li Ka-Shing Unity Trustee	Trustee	1,429,024,545 (L)	36.74%
Company Limited		(Notes 1 & 2)
(as trustee of The
Li Ka-Shing Unity Trust)
Cheung Kong (Holdings)	Interest of controlled	1,429,024,545 (L)	36.74%
Limited	corporations	(Notes 1 & 2)
Cheung Kong Investment	Interest of controlled	476,341,182 (L)	12.25%
Company Limited	corporations	(Note 1)
Cheung Kong Holdings	Interest of controlled	476,341,182 (L)	12.25%
(China) Limited	corporations	(Note 1)
Sunnylink Enterprises Limited	Interest of a controlled	476,341,182 (L)	12.25%
	corporation	(Note 1)
Romefield Limited	Beneficial owner	476,341,182 (L)	12.25%
		(Note 1)

– 25 –

GENERAL INFORMATION

APPENDIX

			Approximate
			percentage
Name	Capacity	No. of TOM Shares held	of shareholding
Hutchison Whampoa Limited	Interest of a controlled	952,683,363 (L)	24.49%
	corporation	(Note 2)
Hutchison International Limited	Interest of a controlled	952,683,363 (L)	24.49%
	corporation	(Note 2)
Easterhouse Limited	Beneficial owner	952,683,363 (L)	24.49%
		(Note 2)
Chau Hoi Shuen	Interest of controlled	952,683,363 (L)	24.49%
	corporations	(Note 3)
Cranwood Company Limited	Beneficial owner &	952,683,363 (L)	24.49%
	interest of controlled	(Note 3)
	corporations
Schumann International	Beneficial owner	580,000,000 (L)	14.91%
Limited		(Note 3)
Handel International Limited	Beneficial owner	348,000,000 (L)	8.95%
		(Note 3)
Lehman Brothers Holdings Inc.	Interest of controlled	315,667,052 (L)	8.11%
	corporations	146,418,004 (S)	3.76%
		(Note 4)
Lehman Brothers U.K.	Interest of controlled	207,115,389 (L)	5.32%
Holdings (Delaware) Inc.	corporations	142,068,004 (S)	3.65%
		(Note 4)
Lehman Brothers Spain	Interest of controlled	207,115,389 (L)	5.32%
Holdings Limited	corporations	142,068,004 (S)	3.65%
		(Note 4)
Lehman Brothers Luxembourg	Interest of controlled	207,115,389 (L)	5.32%
Investments Sarl	corporations	142,068,004 (S)	3.65%
		(Note 4)
Lehman Brothers UK Holdings	Interest of controlled	207,115,389 (L)	5.32%
Limited	corporations	142,068,004 (S)	3.65%
		(Note 4)

– 26 –

GENERAL INFORMATION

APPENDIX

				Approximate
				percentage
Name		Capacity	No. of TOM Shares held	of shareholding
Lehman Brothers Holdings Plc.		Interest of controlled	207,115,389 (L)	5.32%
		corporations	142,068,004 (S)	3.65%
			(Note 4)
Lehman Brothers International		Beneficial owner	207,115,389 (L)	5.32%
(Europe)			142,068,004 (S)	3.65%
			(Note 4)
(L)	denotes a long position
(S)	denotes a short position

Notes:

• (1) Romefield Limited is a wholly-owned subsidiary of Sunnylink Enterprises Limited, which in turn is a whollyowned subsidiary of Cheung Kong Holdings (China) Limited. Cheung Kong Holdings (China) Limited is a wholly-owned subsidiary of Cheung Kong Investment Company Limited, which in turn is a wholly-owned subsidiary of Cheung Kong (Holdings) Limited.

By virtue of the SFO, Cheung Kong Investment Company Limited, Cheung Kong Holdings (China) Limited and Sunnylink Enterprises Limited are all deemed to be interested in the 476,341,182 TOM Shares held by Romefield Limited.

Li Ka-Shing Unity Holdings Limited, of which each of Mr. Li Ka-shing, Mr. Li Tzar Kuoi, Victor and Mr. Li Tzar Kai, Richard is interested in one-third of the entire issued share capital, owns the entire issued share capital of Li Ka-Shing Unity Trustee Company Limited. Li Ka-Shing Unity Trustee Company Limited as trustee of The Li KaShing Unity Trust, together with certain companies which Li Ka-Shing Unity Trustee Company Limited as trustee of The Li Ka-Shing Unity Trust is entitled to exercise or control the exercise of more than one-third of the voting power at their general meetings, hold more than one-third of the issued share capital of Cheung Kong (Holdings) Limited.

In addition, Li Ka-Shing Unity Holdings Limited also owns the entire issued share capital of Li Ka-Shing Unity Trustee Corporation Limited (“TDT1”) as trustee of The Li Ka-Shing Unity Discretionary Trust (“DT1”) and Li Ka-Shing Unity Trustcorp Limited (“TDT2”) as trustee of another discretionary trust (“DT2”). Each of TDT1 and TDT2 hold units in The Li Ka-Shing Unity Trust.

• (2) Easterhouse Limited is a wholly-owned subsidiary of Hutchison International Limited, which in turn is a whollyowned subsidiary of Hutchison Whampoa Limited. By virtue of the SFO, Hutchison Whampoa Limited and Hutchison International Limited are deemed to be interested in the 952,683,363 TOM Shares held by Easterhouse Limited.

In addition, subsidiaries of Cheung Kong (Holdings) Limited are entitled to exercise or control the exercise of more than one-third of the voting power at the general meetings of Hutchison Whampoa Limited. By virtue of the SFO, Mr. Li Ka-shing, being the settlor and may being regarded as a founder of each of DT1 and DT2 for the purpose of the SFO, Li Ka-Shing Unity Trustee Corporation Limited, Li Ka-Shing Unity Trustcorp Limited, Li Ka-Shing Unity Trustee Company Limited and Cheung Kong (Holdings) Limited are all deemed to be interested in the 476,341,182 TOM Shares and 952,683,363 TOM Shares held by Romefield Limited and Easterhouse Limited respectively.

– 27 –

GENERAL INFORMATION

APPENDIX

• (3) Schumann International Limited and Handel International Limited are companies controlled by Cranwood Company Limited and Ms. Chau Hoi Shuen is entitled to exercise more than one-third of the voting power at the general meetings of Cranwood Company Limited.

By virtue of the SFO, Cranwood Company Limited is deemed to be interested in the 580,000,000 TOM Shares and 348,000,000 TOM Shares held by Schumann International Limited and Handel International Limited respectively in addition to 24,683,363 TOM Shares held by itself.

By virtue of the SFO, Ms. Chau Hoi Shuen is deemed to be interested in 24,683,363 TOM Shares, 580,000,000 TOM Shares and 348,000,000 TOM Shares held by Cranwood Company Limited, Schumann International Limited and Handel International Limited respectively.

• (4) Lehman Brothers International (Europe) is a wholly-owned subsidiary of Lehman Brothers Holdings Plc. which in turn is a wholly-owned subsidiary of Lehman Brothers UK Holdings Limited. Lehman Brothers UK Holdings Limited is a wholly-owned subsidiary of Lehman Brothers Luxembourg Investments Sarl which in turn is a wholly-owned subsidiary of Lehman Brothers Spain Holdings Limited. Lehman Brothers Spain Holdings Limited is a wholly-owned subsidiary of Lehman Brothers U.K. Holdings (Delaware) Inc. which in turn is a whollyowned subsidiary of Lehman Brothers Holdings Inc. By virtue of the SFO, Lehman Brothers Holdings Inc., Lehman Brothers U.K. Holdings (Delaware) Inc., Lehman Brothers Spain Holdings Limited, Lehman Brothers Luxembourg Investments Sarl, Lehman Brothers UK Holdings Limited and Lehman Brothers Holdings Plc. are deemed to be interested in the 207,115,389 TOM Shares and short position in 142,068,004 TOM Shares held by Lehman Brothers International (Europe).

By virtue of the SFO, Lehman Brothers Holdings Inc. is also deemed to be interested in the 100,231,642 TOM Shares, 8,320,021 TOM Shares and short position in 4,350,000 TOM Shares held by its subsidiaries, namely, Lehman Brothers Finance S.A., Lehman Brothers Commercial Corporation Asia Limited and Lehman Brothers Inc. respectively.

So far as is known to any Director or chief executive of the Company, as at the Latest Practicable Date, the following companies/persons were interested in 10% or more of the equity interests of the subsidiaries of the Company:

		No. and class	Percentage of
Name of subsidiaries	Name of shareholders	of shares held	shareholding
Y.C. Press Advertising Limited	Yangcheng Enterprise Limited	1,200 ordinary shares	20%
YCP Advertising Limited	Yangcheng Enterprise Limited	2 ordinary shares	20%
Beijing GreaTom United	Great Wall Technology	Registered capital	10%
Technology Company	Company Ltd.	RMB2,500,000
Limited
�� !"#$%	�� !"#$%&'(	Registered capital	20%
�� !"#	(Yangcheng Evening News	RMB1,000,000
(Guangdong Yangcheng	Economic Development
Press Sports Development	Corporation)
Limited)
�� !�"#$%&	�� !"#$%&'(	Registered capital	20%
(Guangdong Yangcheng	(Yangcheng Evening News	RMB1,000,000
Advertising Company	Economic Development
Limited)	Corporation)

– 28 –

GENERAL INFORMATION

APPENDIX

		No. and class	Percentage of
Name of subsidiaries	Name of shareholders	of shares held	shareholding
Yazhou Zhoukan Holdings	Skyland International	5,000 ordinary shares	50%
Limited	Investment Limited
Cernet Information	�� !"#$%	Registered capital	49%
Technology	(Cernet Network	RMB29,400,000
Company Limited	Company Limited)
Nong Nong Magazine	Barbizon Interculture	431,000 ordinary shares	17.24%
Company Limited	Publication Company
	Limited
Panasia Publishing	Weider Publications, LLC	700,000 ordinary shares	35%
Company Limited
Panasia Publishing	Barbizon Interculture	200,000 ordinary shares	10%
Company Limited	Publication Company
	Limited
Tennis Management Limited	Spectrum International	40 ordinary shares	40%
	Holding Limited
Shandong Longjun Media	Jinan Qilu Advertising	Registered capital	40%
Company Limited	Company Limited	RMB4,400,000
Liaoning New Star	Liaoning New Star	Registered capital	40%
Guangming Media Assets	Shengshi Advertising	RMB4,000,000
Company Limited	Company Limited
Shenyang Sano Global	Wang Cheng Cheng	Registered capital	40%
Media Company Limited		RMB1,200,000
Xiamen Bomei Lianhe	Xiamen Bomei Advertising	Registered capital	40%
Advertising Company	Company Limited	RMB1,000,000
Limited
Henan New Tianming	Beijing Tianming	Registered capital	50%
Advertising & Information	International Investment	RMB3,000,000
Chuanbo Company Limited	Management Company
	Limited
Qingdao Chunyu Advertising	Qingdao Chunyu Advertising	Registered capital	30%
Chuanbo Company Limited	and Decor Construction	RMB450,000
	Company Limited

– 29 –

GENERAL INFORMATION

APPENDIX

		No. and class	Percentage of
Name of subsidiaries	Name of shareholders	of shares held	shareholding
Sichuan Southwest Outdoor	Sichuan Southwest	Registered capital	30%
Media Company Limited	International Advertising	RMB900,000
	Company
Fujian Seeout Guangming	Fujian Seeout Outdoor	Registered capital	30%
Media Advertising	Advertising Company	RMB1,500,000
Company Limited	Limited
Guangzhou Tianyu	Deng Jian Ming	Registered capital	35%
Tenglong Advertising		RMB350,000
Company Limited
CNPIT TOM Culture	�� !"#$%&'	Registered capital	30%
Company Limited	(CNPIT Information	RMB1,500,000
	Technology Company
	Limited)
China Entertainment	Turner Broadcasting System	10,778 ordinary shares	35.93%
Television Broadcast	Asia Pacific, Inc.
Limited
Cite (H.K.) Publishing	Wong Shun Hing	1,000,000 ordinary shares	23.81%
Group Limited
Cite (Malaysia) SDN. BHD.	Chew Kim Ming	40,000 ordinary shares	10%
Cite (Malaysia) SDN. BHD.	Brain Network (M)	60,000 ordinary shares	15%
	SDN. BHD

Save as disclosed above, as at the Latest Practicable Date, the Directors are not aware of any other person who has an interest or short position in TOM Shares or underlying TOM Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

– 30 –

GENERAL INFORMATION

APPENDIX

4. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

Mr. Frank Sixt and Mrs. Susan Chow, the Chairman of the Company and a non-executive Director respectively, are executive directors of Hutchison Whampoa Limited (“HWL”), Cheung Kong Infrastructure Holdings Limited (“CKI”) and Hutchison Global Communications Holdings Limited (“HGCH”) and directors of certain of their respective associates (collectively referred to in this paragraph as “HWL Group”, “CKI Group” and “HGCH Group” respectively). Mr. Frank Sixt is also a non-executive director of Cheung Kong (Holdings) Limited (“CKH”) and director of certain of its associates (collectively referred to as “CKH Group”). Mr. Frank Sixt and Mrs. Susan Chow are also non-executive directors of Hutchison Telecommunications International Limited and directors of certain of its associates (collectively referred to as “HTIL Group”). Mr. Edmond Ip, a non-executive Director, is an executive director of CKH and a director of certain of its associates. HWL Group is engaged in e-commerce and general information portals, event production, broadband content, sports-related content, event management and advertising and outdoor media. Both the CKH Group and the CKI Group are engaged in information technology, e- commerce and new technology. HGCH Group is engaged in systems integration and development of software and computer network systems. HTIL Group is engaged in providing mobile and fixed-line telecommunications services, including broadband data services, multimedia services and mobile and fixed-line Internet services and Intranet services. The Directors believe that there is a risk that such businesses may compete with those of the Group.

Mr. Sing Wang, an executive Director and Chief Executive Officer of the Company, holds 4.55% of the equity interests in �� !"#$%&'() (“Yabuy Online”) whose main business consists of the operation of yabuy.com, an online auction website in the PRC. The Directors believe that there is a risk that the business of Yabuy Online may compete with those of the Group.

Ms. Tommei Tong, an executive Director and Chief Financial Officer of the Company, is a beneficial owner of less than 1% of the equity interest in Qin Jia Yuan Media Services Company Limited (“Qin Jia Yuan”) whose principal business engaged in the provision of media services in the PRC. The Directors believe that there is a risk that the business of Qin Jia Yuan may compete with those of the Group.

Save as disclosed above, none of the Directors or their respective associates have any interests in a business, which competes or may compete with the business of the Group.

– 31 –

GENERAL INFORMATION

APPENDIX

5. OUTSTANDING SHARE OPTIONS

As at the Latest Practicable Date, options to subscribe for an aggregate of 198,995,000 TOM Shares granted pursuant to the Pre-IPO Share Option Plan and the Share Option Scheme were outstanding. Details of which are as follows:

(1) Pre-IPO Share Option Plan

As at the Latest Practicable Date, options to subscribe for an aggregate of 16,196,000 TOM Shares at a subscription price of HK$1.78 per TOM Share were outstanding. These options were granted to 3 persons who are employees of the Group at the date of grant. All of these options have a duration of 10 years from 11 February, 2000, but shall lapse where the grantee ceases to be employed by the Group or the HWL group of companies.

(2) Share Option Scheme

Options to subscribe for an aggregate of 182,799,000 TOM Shares (which includes the options granted to the Directors as disclosed above) were outstanding as at the Latest Practicable Date, breakdown of which are set out below:

				Option period*
				(commencing from date
	No. of	No. of	Subscription price	of grant and terminating
Date of grant	share options	employees	per TOM Share	ten years thereafter)
			HK$
23/3/2000	2,068,000	51	11.30	23/3/2000-22/3/2010
31/5/2000	2,332,000	1	4.685	31/5/2000-30/5/2010
26/6/2000	928,000	27	5.89	26/6/2000-25/6/2010
30/6/2000	3,000,000	1	5.27	30/6/2000-29/6/2010
8/8/2000	15,626,000	125	5.30	8/8/2000-7/8/2010
15/11/2000	15,000,000	1	5.30	15/11/2000-14/11/2010
7/2/2002	30,000,000	2	3.76	7/2/2002-6/2/2012
9/10/2003	103,845,000	52	2.505	9/10/2003-8/10/2013
16/2/2004	10,000,000	1	2.55	16/2/2004-15/2/2014

• Those options that have been vested may be exercised within the option period, unless they have been cancelled. Generally, the options are vested in different tranches (subject to conditions set out in the offer letters).

– 32 –

GENERAL INFORMATION

APPENDIX

6. LITIGATION

As at the Latest Practicable Date, save as mentioned below, no litigation or claim of material importance is known to the Directors to be pending or threatened against any member of the Group.

Three wholly-owned subsidiaries of the Company, being (1) York Island (Guangzhou) Limited as plaintiff; (2) York Island (Chengdu) Limited as claimant; and (3) York Island (Beijing) Limited as claimant, have been involved in three separate proceedings initiated in 2003 before �� !"#$% � (the Guangzhou Intermediary People’s Court) and ��� !"#$%&'() (China International Economic and Trade Arbitration Commission) in the PRC respectively, concerning disputes in connection with agreements entered into by the respective subsidiaries relating to the leasing, construction or delivery of (i) bus shelter with light boxes; (ii) street name light boxes; and (iii) light boxes of bicycle shelters respectively by the respective defendant or respondents. No decision has been made by the respective court and tribunals yet. However, full provisions have been made during the three months ended 31 March, 2004 against the book value in the aggregate amount of approximately HK$27.8 million in respect of the three proceedings abovementioned. Notwithstanding the provisions made, the management of the respective subsidiaries will continue to pursue recovery of the sum paid.

7. SERVICE CONTRACTS

Each of Mr. Sing Wang and Ms. Tommei Tong, being all the executive Directors has entered into a continuous service contract with the Group commencing from 1 June 2000 in the case of Mr. Sing Wang and 17 March 2003 in the case of Ms. Tommei Tong. Mr. Wang Lei Lei, being a non-executive Director, has also entered into a continuous service contract with TOM Online commencing from 1 January 2004. The terms of the contracts with Mr. Sing Wang and Ms. Tommei Tong are continuous unless terminated by not less than three months’ notice in writing served by either party on the other. The term of the contract with Mr. Wang Lei Lei is fixed at three years and thereafter will be continuous unless terminated by not less than three months’ notice served by either party on the other. Each of the three Directors is entitled to the basic salary set out below (subject to review in December of each year).

In addition, Mr. Sing Wang and Ms. Tommei Tong are entitled to a bonus payable for each twelve month period at the discretion of the Board. Mr. Wang Lei Lei is also entitled to an annual bonus payable for each twelve months period completed by him commencing on 1 January of each calendar year immediately following the date he entered into his service contract. The amount of the bonus for Mr. Wang Lei Lei shall be determined at the discretion of the board of directors of TOM Online. Each of Mr. Sing Wang, Ms. Tommei Tong and Mr. Wang Lei Lei is entitled to certain allowances, medical benefits and reimbursement of all reasonable out of pocket expenses. Neither of the above Directors is entitled to vote on the relevant board resolutions relation to any bonus payable to him or her. The current basic annual salaries of the above Directors are as follows:

	HK$
Sing Wang	2,768,016
Tommei Tong	1,502,040
Wang Lei Lei	1,053,919

– 33 –

GENERAL INFORMATION

APPENDIX

Save as disclosed above, none of the Directors has entered into any service agreements with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation other than statutory compensation).

8. GENERAL

• (a) The registered office of the Company is at P.O. Box 309, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, British West Indies.

• (b) The head office and principal place of business of the Company is at 48th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong. The share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17 Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (c) The Qualified Accountant of the Company as required under Rule 3.24 of the Listing Rules is Ms. Tommei Tong. She holds a Bachelor of Social Sciences Degree from the University of Hong Kong in 1986. She is also a Fellow of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants.

• (d) The Company Secretary of the Company is Ms. Angela Mak. Ms. Mak holds a Bachelor of Commerce degree and a Bachelor of Laws degree from the University of New South Wales in Australia and has been admitted as a solicitor in New South Wales (Australia), England and Wales and Hong Kong.

• (e) The English text of this circular shall prevail over the Chinese text.

– 34 –