EXHIBIT 4(kk)


                               Dated 5 March 2004





                                  PCCW LIMITED

                                      and

                         DONG FANG GAS HOLDINGS LIMITED




                          SALE AND PURCHASE AGREEMENT

   relating to the sale and purchase of the whole of the issued share capital
                                       of
                            Ipswich Holdings Limited
                                and other assets




Linklaters

10th Floor, Alexandra House
Chater Road
Hong Kong

Telephone (852) 2842 4888
Facsimile (852) 2810 8133/2810 1695


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                          Sale and Purchase Agreement

This Agreement is made on 5 March 2004

Between:

(1)      PCCW LIMITED, a company incorporated in Hong Kong whose registered
         office is at 39/F, PCCW Tower, TaiKoo Place, 979 King's Road, Quarry
         Bay, Hong Kong (the "Seller"); and

(2)      DONG FANG GAS HOLDINGS LIMITED, a company incorporated in Bermuda with
         limited liability whose registered office is at Clarendon House, 2
         Church Street, Hamilton HM11 Bermuda and whose principal place of
         business in Hong Kong is at 9th Floor, Paul Y Centre, 51 Hung To Road,
         Kwun Tong, Kowloon, Hong Kong (the "Purchaser").

Whereas:

(A)      The Seller has agreed to sell (or procure the sale of) the Sale Shares
         and the Sale Assets and to assume the obligations imposed on the
         Seller under this Agreement.

(B)      The Purchaser has agreed to purchase the Sale Shares and the Sale
         Assets from the Seller and to assume the obligations imposed on the
         Purchaser under this Agreement.

It is agreed as follows:

1        Interpretation

         In this Agreement and the Recitals, unless the context otherwise
         requires, the provisions in this Clause 1 apply:

1.1      Definitions

         "Accounts" means the unaudited combined accounts of the Group for the
         twelve month period ended on the Accounts Date;

         "Accounts Date" means 31 December 2002;

         "Agreed Terms" means, in relation to a document, such document in the
         terms agreed between the Seller and the Purchaser and signed for
         identification by the Purchaser's Lawyers and the Seller's Lawyers
         (with such alterations as may be agreed in writing between the Seller
         and the Purchaser from time to time);

         "Business Day" means a day which is not a Saturday, Sunday or a public
         holiday in Hong Kong;

         "Capital Reorganisation" means the reduction of the nominal value of
         each Existing Issuer's Share in issue, the 10:1 share consolidation,
         the cancellation of each unissued Existing Issuer's Share and the
         cancellation of the share premium account of the Purchaser, as
         contemplated in the Condition Precedent set out in Clause 4.1.1;

         "Certificates" means the relevant certificates to be issued in respect
         of the Tranche A Note and the Tranche B Note substantially in the form
         set out in Schedule 8;

         "Charts" means the corporate charts of the Group which are attached to
         the Seller's Disclosure Letter;

         "Companies Ordinance" means the Companies Ordinance (Cap. 32 of the
         Laws of Hong Kong);


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         "Company" means Ipswich Holdings Limited, details of which are set
         out in paragraph 1 of Schedule 1;

         "Completion" means the completion of the sale of the Sale Shares and
         the Sale Assets pursuant to Clause 6 of this Agreement;

         "Completion Date" means the date on which Completion takes place;

         "Confidentiality Agreement" means the confidentiality agreement dated
         21 February 2004 between the Seller and the Buyer pursuant to which
         the parties made available to each other certain confidential
         information relating to the Group and the Purchaser's Group;

         "Consent" includes any licence, consent, approval, authorisation,
         permission, waiver, order or exemption;

         "Conditions" means the terms and conditions to be attached to the
         Certificate substantially in the form set out in Schedule 8 (with such
         amendments thereto as the Purchaser and the Seller may agree), and
         "Condition" refers to the relative numbered paragraph of the
         Conditions;

         "Conditions Precedent" means the conditions precedent to this
         Agreement set out in Clause 4.1;

         "Consideration" means the consideration for the transfer of the Sale
         Shares and the Sale Assets pursuant to Clause 3.1 in the aggregate
         amount of HK$6,557 million, which shall be satisfied in accordance
         with Clause 3;

         "Consideration Shares" means the 1,648,333,333 New Shares to be
         allotted and issued to the Seller to satisfy part of the Consideration
         payable by the Purchaser to the Seller pursuant to Clause 3;

         "Conversion Date" means any date on which the Conversion Rights (or
         any of them) are exercised in accordance with the Conditions;

         "Conversion Price" means HK$2.25 per New Share and HK$3.60 per New
         Share in respect of the Tranche A Note and the Tranche B Note
         respectively (subject to adjustments pursuant to the Conditions);

         "Conversion Rights" means the rights attached to the Convertible Notes
         to convert the principal amount (or any part thereof) thereof into New
         Shares;

         "Conversion Shares" means the New Shares to be issued by the Purchaser
         upon exercise by the Noteholder of the Conversion Rights, and a
         "Conversion Share" shall be construed accordingly;

         "Convertible Notes" means the Tranche A Note and the Tranche B Note;

         "Developer" means Cyber-Port Limited, which will be a wholly-owned
         subsidiary in the Group after the Restructuring and immediately before
         Completion;

         "Development Right" means the future rights (if any) of the Exchange
         Company (or, if applicable, another member of the Seller's Group) to
         redevelop the Telecom Exchanges;

         "Encumbrance" means any claim, charge, mortgage, lien, option, equity,
         power of sale, hypothecation, retention of title, right of
         pre-emption, right of first refusal or other third party right or
         security interest of any kind or an agreement, arrangement or
         obligation to create any of the foregoing;


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         "Equity Share Capital" means (for the purposes of the Conditions) the
         issued share capital of the Purchaser excluding any part thereof which
         does not either as respects dividends or as respects capital carry any
         right to participate beyond a specified amount or beyond an amount
         calculated by reference to a specified rate in a distribution;

         "Exchange Company" means PCCW-HKT Telephone Limited, being a
         wholly-owned subsidiary of the Seller;

         "Exchange Developer" means Smart Phoenix Limited, which will be a
         wholly-owned subsidiary in the Group after the Restructuring and
         immediately before Completion;

         "Executive" means the Executive Director of the Corporate Finance
         Division of the Securities and Futures Commission or any delegate for
         the time being of the Executive Director;

         "Existing Issuer's Shares" means the ordinary shares of HK$0.40 each
         in the share capital of the Purchaser;

         "Group" means the Group Companies, taken as a whole, after the
         Restructuring;

         "Group Companies" means the Company and the Subsidiaries, and "Group
         Company" means any one of them;

         "HK$" or "Hong Kong Dollars" means Hong Kong dollars, the lawful
         currency of Hong Kong;

         "Hong Kong" means the Hong Kong Special Administrative Region of the
         PRC;

         "Intellectual Property" means trade marks, service marks, trade names,
         domain names, logos, get-up, patents, inventions, registered and
         unregistered design rights, copyrights, semi-conductor topography
         rights, database rights and all other similar rights in any part of
         the world (including Know-how) including, where such rights are
         obtained or enhanced by registration, any registration of such rights
         and applications and rights to apply for such registrations;

         "Issuer's Shares" means the ordinary shares of HK$0.10 each in the
         share capital of the Purchaser;

         "JV" means a joint venture between the Exchange Developer and the
         Exchange Company (or, if applicable, another member of the Seller's
         Group) to redevelop each relevant Telecom Exchange if and when that
         company obtains that Development Right in the future;

         "Know-how" means confidential and proprietary industrial and
         commercial information and techniques in any form including (without
         limitation) drawings, formulae, test results, reports, project reports
         and testing procedures, instruction and training manuals, tables of
         operating conditions, market forecasts, lists and particulars of
         customers and suppliers;

         "Listing Rules" means the Rules Governing the Listing of Securities on
         the Stock Exchange;

         "Loan Assignment" means the loan assignment in respect of the Loans
         set out in Annexure A;

         "Loans" means some of the shareholder loans owing or to be owed by the
         relevant Group Companies to the Seller, details of which are set out
         in the Loan Assignment;

         "Losses" means all losses, liabilities, costs (including without
         limitation legal costs and experts' and consultants' fees), charges,
         expenses, actions, proceedings, claims and demands;


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         "Management Accounts" means the unaudited combined accounts of the
         Group drawn up to 31 December 2003 (the "Management Accounts Date");

         "material subsidiary" means (for the purposes of the Conditions) any
         subsidiary of the Issuer whose gross revenue exceeds 10% of the
         Purchaser's consolidated gross revenue or whose gross assets exceed
         10% of the Purchaser's consolidated gross assets, as shown in the
         Purchaser's latest consolidated audited accounts at the time of such
         determination;

         "New Shares" means new Reorganised Issuer's Shares;

         "Noteholder" means a registered holder of any Convertible Note;

         "PRC" means the People's Republic of China;

         "Properties" means the properties set out in Parts 1 and 2 of Schedule
         3, and "Property" means any one of them;

         "Project Agreement" means the project agreement relating to the
         Cyberport project dated 17 May 2000 between the Seller, the Developer,
         Hong Kong Cyberport Development Holdings Limited, Hong Kong Cyberport
         Management Company Limited and Hong Kong Cyberport (Ancillary
         Development) Limited;

         "Purchaser" means the Purchaser, further details of which are set out
         in paragraph 1 of Schedule 2;

         "Purchaser's Accounts" means the audited consolidated accounts of the
         Purchaser's Group for the twelve month period ended on the Purchaser's
         Accounts Date;

         "Purchaser's Accounts Date" means 31 March 2003;

         "Purchaser's Chart" means the corporate chart of the Purchaser's Group
         which is attached to the Purchaser's Disclosure Letter;

         "Purchaser's Disclosure Letter" means the letter dated on the same
         date as this Agreement from the Purchaser to the Seller disclosing:

         (i) information constituting exceptions to the Purchaser's Warranties;
             and

         (ii) details of other matters referred to in this Agreement;

         "Purchaser's Group" means the Purchaser's Group Companies, taken as a
         whole;

         "Purchaser's Group Companies" means the Purchaser and the Purchaser's
         Subsidiaries, and "Purchaser's Group Company" means any one of them;

         "Purchaser's Lawyers" means Richards Butler of 20/F, Alexandra House,
         16-20 Chater Road, Central, Hong Kong;

         "Purchaser's Management Accounts" means the unaudited interim accounts
         relating to the Purchaser's Group drawn up to 30 September 2003 (the
         "Purchaser's Management Accounts Date");

         "Purchaser's Properties" means the properties set out in Parts 1 and 2
         of Schedule 4, and "Purchaser's Property" means any one of them;

         "Purchaser's Subsidiaries" means the subsidiaries listed in paragraph
         2 of Schedule 2, and "Purchaser's Subsidiary" means any one of them;


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         "Purchaser's Warranties" means the warranties and representations
         given by the Purchaser pursuant to Clause 8.4 and Schedule 7, and
         "Purchaser's Warranty" means any one of them;

         "Queen's Road Exchange" means the building(s) and erection(s) at Ko
         Shing Street and Wo Fung Street erected on Subsection 3 of Section F
         of Marine Lot No.58, Subsection 5 of Section F of Marine Lot No.58,
         The Remaining Portion of Section F of Marine Lot No.58, Subsection 2
         of Section F of Marine Lot No.58 and Subsection 1 of Section C of
         Marine Lot No.58;

         "Reduced Issuer's Shares" means shares of HK$0.01 each in the share
         capital of the Purchaser immediately after the cancellation of HK$0.39
         of capital paid up on each issued Existing Issuer's Share;

         "Reorganised Issuer's Shares" means the Issuer's Shares of HK$0.10
         each after completion of the Capital Reorganisation;

         "Restructuring" means the restructuring of the Group before Completion
         as described in the Seller's Disclosure Letter;

         "S&P Agreement" means the sale and purchase agreement in respect of
         the Queen's Road Exchange set out in Annexure B;

         "Sale Assets" means the Loans and the Queen's Road Exchange;

         "Sale Shares" means the two ordinary shares of US$1.00 each in the
         issued capital of the Company, being the whole of the issued share
         capital of the Company;

         "Seller's Disclosure Letter" means the letter dated on the same date
         as this Agreement from the Seller to the Purchaser disclosing:

         (i) information constituting exceptions to the Seller's Warranties;
             and

         (ii) details of other matters referred to in this Agreement;

         "Seller's Group" means the Seller and its subsidiaries;

         "Seller's Lawyers" means Linklaters of 10th Floor, Alexandra House,
         Chater Road, Hong Kong;

         "Seller's Warranties" means the warranties and representations given
         by the Seller pursuant to Clause 8.1 and Schedule 6, and "the Seller's
         Warranty" means any one of them;

         "Senior Employee" means any employee employed or engaged in relation
         to the Group on an annual salary (on the basis of full-time
         employment) in excess of HK$3,000,000;

         "Senior Purchaser Employee" means any employee employed or engaged in
         relation to the Purchaser's Group on an annual salary (on the basis of
         full-time employment) in excess of HK$1,000,000;

         "Stock Exchange" means The Stock Exchange of Hong Kong Limited;

         "Subsidiaries" means the subsidiaries listed in paragraph 2 of
         Schedule 1, and "Subsidiary" means any one of them;

         "Takeovers Code" means the Hong Kong Code on Takeovers and Mergers;

         "Taxation" or "Tax" means all forms of taxation whether direct or
         indirect and whether levied by reference to income, profits, gains,
         net wealth, asset values, turnover, added value or other reference and
         statutory, governmental, state, provincial, local governmental or
         municipal


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         impositions, duties, contributions, rates and levies (including
         without limitation social security contributions and any other payroll
         taxes), whenever imposed (whether imposed by way of a withholding or
         deduction for or on account of tax or otherwise) and in respect of any
         person and all penalties, charges, costs and interest relating
         thereto;

         "Tax Authority" means any taxing or other authority (in Hong Kong, the
         PRC and the British Virgin Islands) competent to impose any liability
         in respect of Taxation or responsible for the administration and/or
         collection of Taxation or enforcement of any law in relation to
         Taxation;

         "Telecom Exchanges" means the premises which are mostly held at
         present under private treaty grants from the Hong Kong Government and
         used by the Exchange Company primarily for the purpose of allowing
         telephone lines to be connected to one another for the provision of
         telecommunications services to the public (excluding the Queen's Road
         Exchange);

         "Tranche A Note" means the Tranche A convertible note in the principal
         sum of HK$1,170 million to be issued by the Purchaser to the Seller in
         accordance with the terms and conditions of this Agreement;

         "Tranche B Note" means the Tranche B convertible note in the principal
         sum of HK$2,420 million to be issued by the Purchaser to the Seller in
         accordance with the terms and conditions of this Agreement;

         "US" means the United States of America;

         "US$" means United States dollars, the lawful currency of the US.

1.2      Modification etc. of Ordinances

         References to an ordinance or statutory provision include:

         1.2.1    that ordinance or provision as from time to time modified,
                  re-enacted or consolidated whether before or after the date
                  of this Agreement;

         1.2.2    any past ordinance or statutory provision (as from time to
                  time modified, re-enacted or consolidated) which that
                  ordinance or provision has directly or indirectly replaced;
                  and

         1.2.3    any subordinate legislation made from time to time under that
                  ordinance or statutory provision, which is in force at the
                  date of this Agreement,

         except to the extent that any statute, statutory provision or
         subordinate legislation made or enacted after the date of this
         Agreement would create or increase a liability of the Seller under
         this Agreement.

1.3      Singular, plural, gender

         References to one gender include all genders and references to the
         singular include the plural and vice versa.

1.4      References to persons and companies

         References to:

         1.4.1    a person include any company, partnership or unincorporated
                  association (whether or not having separate legal
                  personality); and

         1.4.2    a company shall include any company, corporation or any body
                  corporate, wherever incorporated.


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1.5      References to subsidiaries and holding companies

         The words "holding company" and "subsidiary" shall have the same
         meaning in this Agreement as their respective definitions in the
         Companies Ordinance.

1.6      Accounts

         Any reference to "accounts" shall include the directors' and auditors'
         reports, relevant balance sheets and profit and loss accounts and
         related notes together with all documents which are or would be
         required by law to be annexed to the accounts of the company concerned
         to be laid before that company in general meeting in respect of the
         accounting reference period in question.

1.7      Schedules etc.

         References to this Agreement shall include any Schedules to it and
         references to Clauses and Schedules are to Clauses of, and Schedules
         to, this Agreement. References to paragraphs and Parts are to
         paragraphs and Parts of the Schedules.

1.8      Headings

         Headings shall be ignored in interpreting this Agreement.

1.9      Legal Terms

         References to any Hong Kong legal term shall, in respect of any
         jurisdiction other than Hong Kong, be construed as references to the
         term or concept which most nearly corresponds to it in that
         jurisdiction.

2        Agreement to Sell and Purchase

         2.1.1    On and subject to the terms of this Agreement, the Seller
                  agrees to sell (or procure the sale), and the Purchaser
                  agrees to purchase, the Sale Shares and the Sale Assets.

         2.1.2    The Sale Shares and the Sale Assets shall be sold (or procure
                  to be sold) by the Seller free from Encumbrances and together
                  with all rights and advantages attaching to them as at
                  Completion (including, without limitation, the right to
                  receive all dividends or distributions declared, made or paid
                  on or after Completion).

         2.1.3    The Seller shall procure that on or prior to Completion any
                  and all rights of pre-emption over the Sale Shares are waived
                  irrevocably by the persons entitled thereto.

3        Consideration

3.1      Subject to fulfilment of the Conditions Precedent, the Consideration
         shall be satisfied at Completion:

         3.1.1    as to HK$2,967 million, by way of the issue and allotment of
                  the Consideration Shares at an issue price of HK$1.80 per
                  share by the Purchaser to the Seller;

         3.1.2    as to HK$3,590 million, by way of the issue of the
                  Convertible Notes by the Purchaser to the Seller in their
                  full face value, upon and subject to the Conditions and the
                  Certificate.


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3.2      The Consideration Shares shall be allotted and issued in accordance
         with Clause 3.1 credited as fully paid at the issue price and shall
         rank pari passu among themselves and with all Issuer's Shares in issue
         on or after the date of Completion.

3.3      The Convertible Notes shall be issued in accordance with Clause 3.1
         credited as fully paid at its full face value.

3.4      The parties agree that the Consideration is to be allocated as
         follows:

         3.4.1    as to the Loans in respect of Gain Score Limited, US$150
                  million by way of the Tranche A Note;

         3.4.2    as to the Loans in respect of Partner Link Investments
                  Limited, HK$2,359 million by way of part of the Tranche B
                  Note;

         3.4.3    as to the Queen's Road Exchange, HK$61 million by way of the
                  Tranche B Note and HK$97 million by way of Consideration
                  Shares; and

         3.4.4    as to the Sale Shares, by way of the remaining part of the
                  Consideration Shares.

4        Conditions

4.1      Conditions Precedent

         The agreement to sell and purchase the Sale Shares and the Sale Assets
         contained in Clause 2 is conditional upon satisfaction of the
         following Conditions Precedent, or their satisfaction subject only to
         Completion:

         4.1.1    the passing of a resolution by the shareholders of the
                  Purchaser at a general meeting of the Purchaser approving:

                  (i)    the reduction of the nominal value of every Existing
                         Issuer's Share of HK$0.40 by the cancellation of
                         HK$0.39 of the capital paid up on each issued Existing
                         Issuer's Share so as to form a Reduced Issuer's Share
                         of HK$0.01;

                  (ii)   the consolidation of every 10 issued Reduced Issuer's
                         Share into one Reorganised Issuer's Share of HK$0.10
                         each;

                  (iii)  the cancellation of an amount of approximately
                         HK$47.14 million standing to the credit of the share
                         premium account of the Purchaser as at the date of
                         this Agreement;

                  (iv)   the transfer of the aggregate amount of credit balance
                         of the share premium account of the Purchaser as at
                         the date of this Agreement and the credit arising from
                         the Capital Reorganisation to the contributed surplus
                         account of the Purchaser; and

                  (v)    upon the reduction and the consolidation referred to
                         sub-paragraphs (i) and (ii) above taking effect, the
                         cancellation of each unissued Existing Issuer's Share
                         comprised in the Purchaser's authorised share capital
                         and, thereafter, the increase in the authorised share
                         capital of the Purchaser from HK$11,612,654 to
                         HK$1,000,000,000 by the creation of an additional
                         9,883,873,460 Reorganised Issuer's Shares;

         4.1.2    approval by the independent shareholders of the Purchaser of:
                  (i) the acquisition by the Purchaser of the Sale Shares and
                  the Sale Assets; (ii) issue and allotment of the


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                  Consideration Shares to the Seller; (iii) issue of the
                  Convertible Notes to the Seller; (iv) issue and allotment of
                  the New Shares to be issued from time to time upon any
                  exercise of the Conversion Rights; and (v) all other
                  transactions contemplated under this Agreement, at a general
                  meeting of the Purchaser;

         4.1.3    approval by the shareholders of the Seller of the disposal by
                  the Seller of: (i) the Sale Shares and the Sales Assets; and
                  (ii) all other transactions contemplated under this
                  Agreement, at a general meeting of the Seller;

         4.1.4    (i)    the passing of an ordinary resolution by an
                         independent vote (within the meaning of Note 1 of the
                         Notes on dispensations from Rule 26 of the Takeovers
                         Code or as may be required by the Executive) of the
                         shareholders of the Purchaser approving a waiver of
                         the obligation of the Seller and parties acting in
                         concert with it to make a mandatory offer for all the
                         Issuer's Shares under Rule 26 of the Takeovers Code as
                         a result of the issue of the Consideration Shares to
                         the Seller (or as it may direct); and

                  (ii)   such a waiver having been obtained from the Executive
                         and not having been revoked or amended and, where such
                         waiver is granted subject to conditions, such
                         conditions being reasonably acceptable to the Seller
                         and, to the extent any such conditions are required to
                         be fulfilled before the waiver becomes effective, they
                         are so fulfilled;

         4.1.5    (i)    the passing of an ordinary resolution by an
                         independent vote (within the meaning of Note 1 of the
                         Notes on dispensations from Rule 26 of the Takeovers
                         Code or as may be required by the Executive) of the
                         shareholders of the Purchaser approving a waiver of
                         the obligation of the Seller and parties acting in
                         concert with it to make a mandatory offer for all the
                         Issuer's Shares under Rule 26 of the Takeovers Code as
                         a result of the issue of New Shares to the Seller (or
                         as it may direct) pursuant to a partial or full
                         exercise of the Conversion Rights; and

                 (ii)    such a waiver having been obtained from the Executive
                         and not having been revoked or amended and, where such
                         waiver is granted subject to conditions, such
                         conditions being reasonably acceptable to the Seller
                         and, to the extent any such conditions are required to
                         be fulfilled before the waiver becomes effective, they
                         are so fulfilled;

         4.1.6    the Listing Committee of the Stock Exchange granting the
                  listing of and permission to deal in the Consideration Shares
                  and the Conversion Shares (in each case, subject only to
                  conditions to which the Seller and the Purchaser have no
                  reasonable objection);

         4.1.7    (i)    the compliance of announcement and shareholders'
                         approval requirements under the Listing Rules or
                         otherwise of the Stock Exchange in relation to present
                         and future transactions contemplated as at the date of
                         this Agreement which will constitute continuing
                         connected transactions of the Purchaser following
                         Completion, including, if required, the approval by
                         independent shareholders of the Purchaser in respect
                         of those connected transactions and in respect of any
                         waivers relating thereto (if required under the
                         Listing Rules) as referred to in Clause 4.1.7(ii)
                         below; and


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                  (ii)   the granting by the Stock Exchange of such waivers (if
                         required under the Listing Rules) relating to those
                         connected transactions on such terms as may be
                         reasonably acceptable to both the Seller and the
                         Purchaser;

         4.1.8    the compliance of any other requirements under the Listing
                  Rules or otherwise of the Stock Exchange which requires
                  compliance at any time prior to Completion in relation to the
                  sale and purchase of the Sale Shares and the Sales Assets,
                  the issue of the Consideration Shares, the issue of the
                  Convertible Notes, the issue of the Conversion Shares upon
                  any exercise of the Conversion Rights, and the other
                  transactions contemplated under this Agreement, to the
                  reasonable satisfaction of the Seller and the Purchaser;

         4.1.9    (where required) the Bermuda Monetary Authority granting its
                  permission to the issue of the Convertible Notes, and the
                  issue and allotment of the Consideration Shares, and the
                  issue and allotment of the Conversion Shares;

         4.1.10   the obtaining of all Consents from the Government of Hong
                  Kong and any other relevant persons which are necessary or
                  desirable in connection with the transfer of the Sale Shares
                  (and, where such Consents are given subject to conditions,
                  such conditions are on terms as may be reasonably acceptable
                  to the Seller);

         4.1.11   the obtaining of all Consents from government or regulatory
                  authorities or other third parties which are necessary or
                  desirable in connection with the execution and performance of
                  this Agreement and any of the transactions contemplated under
                  this Agreement;

         4.1.12   the Seller having obtained a legal opinion of a firm of
                  Bermuda lawyers acceptable to the Seller covering such issues
                  and matters of laws and requirements in Bermuda in respect of
                  the Purchaser, this Agreement, the issue of the Consideration
                  Shares, the issue of the Convertible Notes and the issue of
                  the Conversion Shares, in such form and substance reasonably
                  satisfactory to the Seller;

         4.1.13   all the Consents referred to above remaining in full force
                  and effect at Completion;

         4.1.14   completion of legal and financial due diligence on the
                  Purchaser's Group to the reasonable satisfaction of the
                  Seller;

         4.1.15   completion of legal and financial due diligence on the Group
                  to the reasonable satisfaction of the Purchaser;

         4.1.16   all the Seller's Warranties being true and correct in all
                  material respects as at the Completion Date by reference to
                  the facts and circumstances subsisting as at that date; and

         4.1.17   all the Purchaser's Warranties being true and correct in all
                  material respects as at the Completion Date by reference to
                  the facts and circumstances subsisting as at that date.

4.2      Fulfilment

         4.2.1    The Seller shall use all reasonable endeavours to procure the
                  fulfilment of the Conditions Precedent set out in Clauses
                  4.1.3, 4.1.10 to 4.1.14 and 4.1.16 (in the case of Clauses
                  4.1.11 and 4.1.13, as far as Consents relating to the Seller
                  are concerned);

         4.2.2    the Purchaser shall use all reasonable endeavours to procure
                  the fulfilment of the Conditions Precedent set out in Clauses
                  4.1.1, 4.1.2, 4.1.4 to 4.1.9, 4.1.11, 4.1.13,


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<PAGE>


                  4.1.15 and 4.1.17 (in the case of Clauses 4.1.11 and
                  4.1.13, as far as Consents relating to the Purchaser are
                  concerned),

         as soon as reasonably practicable and in any event before 30 June 2004
         (or such later date as the Seller and the Purchaser may agree in
         writing).

4.3      Subject to compliance with relevant laws, rules and regulations,
         approval from shareholders or independent shareholders of the
         Purchaser in respect of the matters required to be so approved as
         referred to in Clauses 4.1.1, 4.1.2, 4.1.4, 4.1.5 and 4.1.7 shall be
         sought in such number and combination of resolutions as the Seller and
         the Purchaser may require, so that some or all of those matters shall
         be contained in the same resolution in the notice of the relevant
         general meeting or meetings of the Purchaser.

4.4      The Purchaser may at any time waive in writing the Conditions
         Precedent set out in Clauses 4.1.15 and/or 4.1.16 and such waiver may
         be made subject to such terms and conditions as are determined by the
         Purchaser.

4.5      The Seller may at any time waive in writing any of the Conditions
         Precedent set out in Clauses 4.1.4, 4.1.5, 4.1.12, 4.1.14 and/or
         4.1.17 and such waiver may be made subject to such terms and
         conditions as are determined by the Seller. The Seller shall not waive
         the Condition Precedent set out in Clause 4.1.4 unless it shall have
         demonstrated to the satisfaction of the Executive that it has
         sufficient financial resources to fulfil its obligations under Rule 26
         of the Takeovers Code (unless the Executive has in writing waived such
         a requirement). The Seller hereby undertakes that it shall make an
         offer for all the securities of the Purchaser (as required by the
         Takeovers Code) and shall comply with its obligations thereunder in
         respect of such an offer, if it waives the Condition Precedent set out
         in Clause 4.1.4.

4.6      The Seller and the Purchaser may at any time jointly waive in writing
         the Condition Precedent set out in Clauses 4.1.1 (except the part for
         the increase of authorised capital), 4.1.11 and/or 4.1.13 if it is
         agreed that the Consents which have not been obtained are not material
         to the business of the Purchaser's Group and the Group taken as a
         whole, and such waiver may be made subject to such terms and
         conditions determined by the Seller and the Purchaser jointly.

4.7      The Seller and the Purchaser shall each provide such reasonable
         assistance as requested to procure the fulfilment of those Conditions
         Precedent set out in Clauses 4.1.1 to 4.1.15 which the other is to
         procure to fulfil.

4.8      If any of the Conditions Precedent set out in Clause 4.1 has not been
         fulfilled (or waived by the relevant party) by 30 June 2004 (or such
         other date as the parties may agree in writing), except the Conditions
         Precedent set out in Clauses 4.1.16 and 4.1.17 which shall be
         fulfilled simultaneously upon Completion, this Agreement shall lapse
         and be terminated and thereafter all rights, obligations and
         liabilities of all parties hereunder shall cease and determine and no
         party shall have any claim against the others under this Agreement
         except for antecedent breach.

4.9      The Purchaser shall, as soon as practicable after the fulfillment of
         any of the Conditions Precedent set out in Clause 4.2.2 (as far as
         Consents relating to the Purchaser are concerned), provide to the
         Seller certified copies of the documents (or such other evidence as is
         satisfactory to the Seller) which evidence such fulfillment.


                                      11
<PAGE>


4.10     The Seller shall, as soon as practicable after the fulfillment of any
         of the Conditions Precedent set out in Clause 4.2.1 (as far as
         Consents relating to the Seller are concerned) provide to the
         Purchaser certified copies of the documents (or such other evidence as
         is reasonably satisfactory to the Purchaser) which evidence such
         fulfillment.

5        Pre-Completion

5.1      The Seller's Obligations in Relation to the Conduct of Business

         The Seller undertakes to use reasonable endeavours to procure that,
         between the date of this Agreement and Completion (unless the prior
         consent of the Purchaser has been obtained), each Group Company:

         5.1.1    shall carry on its business as a going concern in the
                  ordinary course as carried on prior to the date of this
                  Agreement, save in so far as agreed in writing by the
                  Purchaser (such consent not to be unreasonably withheld or
                  delayed);

         5.1.2    shall (or shall procure that the relevant members of the
                  Seller's Group shall) maintain in force all existing
                  insurance policies in all material respects on the same terms
                  and similar level of cover prevailing at the date of this
                  Agreement for the benefit of the Group Companies;

         5.1.3    without prejudice to the generality of Clause 5.1.1, shall
                  not except as may be required to give effect to and to comply
                  with this Agreement without the prior written consent of the
                  Purchaser (such consent not to be unreasonably withheld or
                  delayed):

                  (i)    enter into any agreement or incur any commitment
                         involving any capital expenditure in excess of
                         HK$30,000,000 per item and HK$200,000,000 in
                         aggregate;

                  (ii)   acquire or dispose of, or agree to acquire or dispose
                         of, any material asset or material stock, or enter
                         into or amend any agreement or incur any commitment to
                         do so, in each case involving consideration,
                         expenditure or liabilities in excess of HK$10,000,000,
                         other than in the ordinary course of business;

                  (iii)  incur any additional borrowings or incur any other
                         indebtedness in each case in excess of HK$10,000,000
                         and otherwise than in the ordinary course of business
                         (except inter-group borrowings or indebtedness within
                         the Group);

                  (iv)   create, allot or issue any share capital or loan
                         capital of any Group Company or any option to
                         subscribe for the same;

                  (v)    repay, redeem or repurchase any share capital or loan
                         capital of any Group Company;

                  (vi)   declare, make or pay any dividend or other
                         distribution to shareholders (other than to a Group
                         Company);

                  (vii)  save as required by law:

                         (a)  make any material amendment to the terms and
                              conditions of employment (including, without
                              limitation, remuneration, pension entitlements
                              and other benefits) of any Senior Employee (other
                              than minor increases in the ordinary course of
                              business which the Seller shall notify to the
                              Purchaser as soon as reasonably possible);


                                      12
<PAGE>


                         (b)  dismiss any Senior Employee; or

                         (c)  engage or appoint any additional Senior Employee;

                  (viii) make any change to its accounting practices or
                         policies or amend its memorandum or articles of
                         association or bye-laws.

5.2      The Seller's other Rights and Obligations Prior to Completion

         5.2.1    Without prejudice to the generality of Clause 5.1, prior to
                  Completion, the Seller shall procure that the Group Companies
                  shall collaborate with the Purchaser in relation to all
                  material matters concerning the running of the Group.

         5.2.2    Notwithstanding any other provisions in this Agreement:

                  (i)    the Purchaser agrees that the Seller shall implement
                         the Restructuring without any restrictions under this
                         Agreement; and

                  (ii)   the Seller shall complete the Restructuring at its own
                         costs and at least five Business Days before
                         Completion.

         5.2.3    The Seller shall deliver at it own costs to the Purchaser as
                  soon as practicable (but in any event not later than five
                  Business Days prior to the date of despatch of the
                  Purchaser's circular to its shareholders in connection with
                  this Agreement) certificates of title in respect of the Hong
                  Kong Properties referred to in Part 1 of Schedule 3 (issued
                  to the Seller or the relevant property holding company) by a
                  firm of Hong Kong lawyers acceptable to the Purchaser, acting
                  reasonably, and a legal opinion as to the matters which are
                  required to be covered under Practice Note 12 of the Listing
                  Rules in respect of the PRC Properties referred to in Part 1
                  of Schedule 3 (issued to the Seller or the relevant property
                  holding company) by a firm of PRC lawyers acceptable to the
                  Purchaser, acting reasonably.

5.3      The Purchaser's Obligations in relation to the Conduct of Business

         The Purchaser undertakes to use reasonable endeavours to procure
         that, between the date of this Agreement and Completion (unless the
         prior consent of the Seller has been obtained), each Purchaser's
         Group Company:

         5.3.1    shall carry on its business as a going concern in the
                  ordinary course as carried on prior to the date of this
                  Agreement, save in so far as agreed in writing by the Seller
                  (such consent not to be unreasonably withheld or delayed);

         5.3.2    shall (or shall procure that the relevant members of the
                  Purchaser's Group shall) maintain in force all existing
                  insurance policies in all material respects on the same terms
                  and similar level of cover prevailing at the date of this
                  Agreement for the benefit of the Purchaser's Group Companies;

         5.3.3    without prejudice to the generality of Clause 5.3.1, shall
                  not except as may be required to give effect to and to comply
                  with this Agreement without the prior written consent of the
                  Seller (such consent not to be unreasonably withheld or
                  delayed):

                  (i)    enter into any agreement or incur any commitment
                         involving any capital expenditure in excess of
                         HK$3,000,000 per item and HK$10,000,000 in aggregate;

                  (ii)   acquire or dispose of, or agree to acquire or dispose
                         of, any material asset or material stock, or enter
                         into or amend any agreement or incur any commitment


                                      13
<PAGE>


                         to do so, in each case involving consideration,
                         expenditure or liabilities in excess of HK$3,000,000,
                         other than in the ordinary course of business;

                  (iii)  incur any additional borrowings or incur any other
                         indebtedness in each case in excess of HK$3,000,000
                         and otherwise than in the ordinary course of business
                         (except inter-group borrowings or indebtedness within
                         the Purchaser's Group);

                  (iv)   create, allot or issue any share capital or loan
                         capital of any Purchaser's Group Company or any option
                         to subscribe for the same;

                  (v)    repay, redeem or repurchase any share capital or loan
                         capital of any Purchaser's Group Company;

                  (vi)   declare, make or pay any dividend or other
                         distribution to shareholders (other than to a
                         Purchaser's Group Company);
                  (vii)   save as required by law:

                         (a)  make any material amendment to the terms and
                              conditions of employment (including, without
                              limitation, remuneration, pension entitlements
                              and other benefits) of any Senior Purchaser
                              Employee (other than minor increases in the
                              ordinary course of business which the Purchaser
                              shall notify to the Seller as soon as reasonably
                              possible);

                         (b)  dismiss any Senior Purchaser Employee; or

                         (c)  engage or appoint any additional Senior Purchaser
                              Employee;

                  (viii) make any change to its accounting practices or
                         policies or amend its memorandum or articles of
                         association or bye-laws.

5.4      The Purchaser's other Obligations Prior to Completion

         Without prejudice to the generality of Clause 5.3, prior to
         Completion, the Purchaser shall procure that the Purchaser's Group
         Companies shall collaborate with the Seller in relation to all
         material matters concerning the running of the Purchaser's Group.

6        Completion

6.1      Date and Place

         Subject to Clause 4, Completion shall take place at 2:00 pm at the
         Seller's office on the fifth Business Day following fulfilment or
         waiver of the last of the Conditions Precedent (other than those set
         out in Clauses 4.1.8, 4.1.11, 4.1.16 and 4.1.17, provided that no
         notice has been received by either the Purchaser or the Seller that
         such Conditions Precedent will not be fulfilled at or before
         Completion) (or at such other location, time or date as may be agreed
         between the Purchaser and the Seller).

6.2      Completion Events

         On Completion, the Seller and the Purchaser shall comply with their
         respective obligations specified in Schedule 5.

6.3      Payment on Completion

         On Completion, the Purchaser shall pay the Consideration to the
         Seller.


                                      14
<PAGE>


7        Specific Undertakings

7.1      Payment of Proceeds

         7.1.1    In respect of the Developer, the Seller represents and
                  warrants in favour of the Purchaser that:

                  (i)    the Developer is indebted to the Seller, which
                         indebtedness amounted to HK$4,503 million as at 31
                         January 2004 and is repayable on demand (but the
                         Seller agrees that no demand can be made unless: (a)
                         the Developer fails to comply with its obligations
                         under Clause 7.1.2(i); (b) there is a material adverse
                         change in the business or financial position or
                         prospects of the Developer; or (c) the Developer is
                         the subject of any of the events described in
                         paragraph 15 of Schedule 6), without interest;

                  (ii)   the indebtedness was used solely for the purpose of
                         financing the development by the Developer of its
                         business and its overhead expenses (incurred in the
                         ordinary and usual course of it business);

                  (iii)  the principal amount of the indebtedness set out in
                         Clause 7.1.1(i) outstanding as at Completion will not
                         exceed HK$4,860 million;

                  (iv)   as at the date of this Agreement and as at Completion,
                         the Developer does not and will not have any
                         indebtedness which is required (whether as a matter of
                         contract or otherwise) to be repaid in priority to the
                         indebtedness to the Seller referred to in
                         sub-paragraph (i) above; and

                  (v)    the Developer's business since its incorporation has
                         been and still is the execution of the Project
                         Agreement (and related agreements) and the performance
                         of its obligations thereunder.

         7.1.2    Subject to Completion, the Purchaser undertakes to procure
                  that the Developer:

                  (i)    (to the extent that it could lawfully do so) repays
                         its indebtedness to the Seller referred to in Clause
                         7.1.1 in priority to all other debts which may be owed
                         by the Developer as and when the Developer has the
                         funds (and is not prohibited or prevented, whether
                         under applicable laws or the terms of any contract or
                         undertaking entered into or given by the Developer at
                         or prior to Completion, to do so) to repay all or part
                         of such indebtedness to the Seller; and

                  (ii)   as soon as practicable after Completion, ascertains
                         the audited accounting profit of the Developer (from
                         the date of its incorporation up to the Completion
                         Date) attributable to the shareholders of the
                         Developer calculated on a basis consistent with the
                         Management Accounts, subject to adjustment, (the
                         "Profit") and the Purchaser shall procure the
                         Developer to pay an amount equivalent to the Profit to
                         the Seller (by way of adjustment to the Consideration)
                         within 14 days of the Profit being ascertained (or, if
                         later, after the indebtedness to the Seller referred
                         to in Clause 7.1.1(i) has been repaid in full and the
                         Developer has the funds to pay the Profit).

         7.1.3    For the purposes of Clause 7.1.2(ii), the Profit shall be
                  adjusted downwards (to the extent so attributable) by the
                  amount of any claim, loss or damage incurred or suffered by
                  the Developer as a result of any act, omission or default on
                  the part of any member of the Seller's Group before
                  Completion which may be ascertained before payment of the
                  Profit. For the purpose of this Clause 7.1.3, if before any
                  payment of the Profit is


                                      15
<PAGE>


                  made by the Developer, the Developer has in writing to the
                  Seller notified it of the amount by which the Profit should
                  be adjusted downwards pursuant to this Clause, giving brief
                  particulars of the basis of such claim, that amount (not
                  exceeding the amount of the Profit payable) shall not be
                  paid over to the Seller until such time the actual amount
                  of adjustment is finally determined by written agreement
                  between the Seller and the Developer or by a court or
                  arbitrator of competent jurisdiction.

         7.1.4    For the avoidance of doubt:

                  (i)    notwithstanding anything to the contrary in this
                         Agreement, but without prejudice to the Seller's
                         rights if the Purchaser is in breach of its
                         procurement obligations under Clause 7.1.2, the
                         Purchaser shall have no liability (whether actual or
                         contingent) to pay to the Seller any of the sums
                         payable by the Developer under Clause 7.1; and

                  (ii)   any priority payment made by the Developer pursuant to
                         Clause 7.1.2 shall not constitute any variation of the
                         terms of the Project Agreement.

7.2      Development Right

         7.2.1    The Seller and the Purchaser acknowledge that the Exchange
                  Company or another member of the Seller's Group (the
                  "Relevant Company") may obtain rights to redevelop any or all
                  of the Telecom Exchanges in the future, but there is no
                  assurance that any such redevelopment right will be obtained
                  by the Relevant Company.

         7.2.2    Subject to Completion, the Seller undertakes to procure the
                  Relevant Company to grant (with effect from Completion) a
                  right of first refusal in favour of the Exchange Developer to
                  participate in each JV on no less favourable terms which the
                  Relevant Company is prepared to enter into such JV with any
                  bona fide third party. For that purpose, the Relevant Company
                  shall present its proposed terms of joint venture for each JV
                  to the Exchange Developer, and the Exchange Developer shall
                  have 45 days (the "Period") to consider whether to accept the
                  offer and if the Exchange Developer fails to accept such
                  offer within the Period, the Relevant Company may enter into
                  such JV with any bona fide third party on no less favourable
                  terms than those offered to the Exchange Developer within 120
                  days after the expiry of the Period.

         7.2.3    The key terms of each JV shall be as follows:

                  (i)    the Relevant Company shall pay for any new equipments
                         necessitated by vacating the existing premises;

                  (ii)   the Exchange Developer shall pay for all the costs of
                         relocating the equipments, demolition, land premium,
                         development, construction and marketing in connection
                         with the redevelopment; and

                  (iii)  the Relevant Company will share in 15% of the net
                         profit from the JV,

                  in respect of each relevant Telecom Exchange.

8        Warranties

8.1      Seller's Warranties

         8.1.1    Subject to Clause 8.2, the Seller warrants to the Purchaser
                  that the statements set out in Schedule 6:


                                      16
<PAGE>


                  (i)    are true and accurate in all material respects and not
                         misleading in any material respect as at the date of
                         this Agreement (save for those statements which relate
                         to the ownership of the Group Companies or any other
                         matters affected by or in connection with the
                         Restructuring, which will be true and accurate in all
                         material respects and not misleading in any material
                         respect as at the date of completion of the
                         Restructuring); and

                  (ii)   will be true and accurate in all material respects and
                         not misleading in any material respect as at the
                         Completion Date.

         8.1.2    The Seller acknowledges that the Purchaser has entered into
                  this Agreement in reliance upon the Seller's Warranties.

         8.1.3    The Seller's Warranties shall be separate and independent and
                  shall not be limited by reference to any other paragraph of
                  Schedule 6 or by anything in this Agreement.

         8.1.4    Any Seller's Warranty qualified by the expression "to the
                  best of the Seller's knowledge, information and belief" or
                  any similar expression shall, unless otherwise stated, be
                  deemed to refer to the knowledge of the executive directors
                  of the Seller.

8.2      Seller's Disclosures

         The Seller's Warranties are subject to the specific matters which are
         fairly disclosed in or pursuant to this Agreement or the Seller's
         Disclosure Letter.

8.3      Effect of Completion

         The Seller's Warranties and all other provisions of this Agreement, to
         the extent that they have not been performed by Completion, shall not
         be extinguished or affected by Completion or by any other event or
         matter (including, without limitation, any satisfaction and/or waiver
         of any Conditions Precedent), except by a specific and duly authorised
         written waiver or release by the Purchaser.

8.4      The Purchaser's Warranties

         8.4.1    Subject to Clause 8.5, the Purchaser warrants to the Seller
                  that the statements set out in Schedule 7:

                  (i)    are true and accurate in all material respects and not
                         misleading in any material respect as at the date of
                         this Agreement; and

                  (ii)   will be true and accurate in all material respects and
                         not misleading in any material respect as at the
                         Completion Date.

         8.4.2    The Purchaser acknowledges that the Seller has entered into
                  this Agreement in reliance upon the Purchaser's Warranties.

         8.4.3    The Purchaser's Warranties shall be separate and independent
                  and shall not be limited by reference to any other paragraph
                  of Schedule 7 or by anything in this Agreement.

         8.4.4    Any Purchaser's Warranty qualified by the expression "to the
                  best of the Purchaser's knowledge, information and belief" or
                  any similar expression shall, unless otherwise stated, be
                  deemed to refer to the knowledge of the executive directors
                  of the Purchaser.


                                      17
<PAGE>


8.5      Purchaser's Disclosures

         The Purchaser's Warranties are subject to the specific matters which
         are fairly disclosed in or pursuant to this Agreement or the
         Purchaser's Disclosure Letter.

8.6      Effect of Completion

         The Purchaser's Warranties and all other provisions of this Agreement,
         to the extent that they have not been performed by Completion, shall
         not be extinguished or affected by Completion or by any other event or
         matter (including, without limitation, any satisfaction and/or waiver
         of any Conditions Precedent), except by a specific and duly authorised
         written waiver or release by the Seller.

9        Limitation of Seller's Liability

9.1      Time Limitation for Claims

         The Seller shall not be liable under this Agreement in respect of any
         claim unless a notice of the claim is given by the Purchaser to the
         Seller:

         9.1.1    in the case of any claim under paragraph 12 of Schedule 6
                  (tax warranties), within three years following Completion;
                  and

         9.1.2    in the case of any other claim, within 18 months following
                  Completion,

         except that there shall be no time limitation for giving notice of any
         claim under paragraphs 1.1 and 14 of Schedule 6.

         Any claim notified by the Purchaser to the Seller pursuant to this
         Clause shall specify the matters set out in Clause 10.2.

9.2      Minimum Claims

         9.2.1    The Seller shall not be liable under this Agreement in
                  respect of any individual claim (or a series of claims
                  arising from substantially identical facts or circumstances)
                  where the liability agreed or determined (disregarding the
                  provisions of this Clause 9.2) in respect of any such claim
                  or series of claims does not exceed HK$5,000,000.

         9.2.2    Where the liability agreed or determined in respect of any
                  such claim or series of claims exceeds HK$5,000,000, the
                  liability of the Seller shall be for the whole amount of
                  liability and not only the excess.

9.3      Aggregate Minimum Claims

         9.3.1    The Seller shall not be liable under this Agreement in
                  respect of any claim unless the aggregate amount of all
                  claims for which the Seller would otherwise be liable under
                  this Agreement (disregarding the provisions of this Clause
                  9.3) exceeds HK$100,000,000.

         9.3.2    Where the liability agreed or determined in respect of all
                  claims referred to in Clause 9.3.1 exceeds HK$100,000,000,
                  the liability of the Seller shall be for the whole amount of
                  the liability and not only the excess.

9.4      Maximum Liability

         The aggregate liability of the Seller in respect of all breaches of
         this Agreement shall not exceed the Consideration.


                                      18
<PAGE>


9.5      Provisions

         The Seller shall not be liable under this Agreement in respect of any
         claim if and to the extent that proper allowance, provisions or
         reserve is made in the Accounts or the Management Accounts for the
         matter giving rise to the claim.

9.6      Matters Arising Subsequent to this Agreement

         The Seller shall not be liable under this Agreement in respect of any
         matter to the extent that the same would not have occurred but for:

         9.6.1    Agreed matters

                  any matter or thing done or omitted to be done pursuant to and
                  in compliance with this Agreement or otherwise at the request
                  in writing or with the approval in writing of the Purchaser;

         9.6.2    Changes in legislation

                  (i)    the passing of, or any change in, after the date of
                         this Agreement, any law, rule, regulation or
                         administrative practice of any government,
                         governmental department, agency or regulatory body
                         including (without prejudice to the generality of the
                         foregoing) any increase in the rates of Taxation or
                         any imposition of Taxation or any withdrawal of relief
                         from Taxation not actually (or prospectively) in
                         effect at the date of this Agreement; or

                  (ii)   any change after the date of this Agreement of any
                         generally accepted interpretation or application of
                         any legislation;

         9.6.3    Accounting and Taxation Policies

                  any change in accounting or Taxation policy, advance ruling,
                  standards, bases or practice of the Purchaser or any of the
                  Group Companies introduced or having effect after Completion.

9.7      Recovery from Third Parties following Recovery from the Seller

         If the Seller has paid an amount in discharge of any claim under this
         Agreement and the Purchaser or any Group Company is entitled to
         recover (whether by payment, discount, credit, relief, insurance or
         otherwise) from a third party a sum which indemnifies or compensates
         the Purchaser or any Group Company (in whole or in part) in respect
         of the loss or liability which is the subject matter of the claim,
         the Purchaser or the relevant Group Company shall pay to the Seller
         as soon as practicable after receipt an amount equal to (i) any sum
         recovered from the third party less any costs and expenses incurred
         in obtaining such recovery (less any Taxation attributable to the
         recovery after taking account of any tax relief available in respect
         of any matter giving rise to the claim) or, if less (ii) the amount
         previously paid by the Seller to the Purchaser less any Taxation
         attributable to it.

9.8      Mitigation of Losses

         The Purchaser shall procure that all reasonable steps are taken and
         all reasonable assistance is given to avoid or mitigate any Losses
         which in the absence of mitigation might give rise to a liability in
         respect of any claim under this Agreement.


                                      19
<PAGE>


9.9      Fraud

         None of the limitations contained in this Clause 9 shall apply to any
         claim which arises or is increased, or to the extent to which it
         arises or is increased, as the consequence of, or which is delayed as
         a result of, fraud by the Seller, any Group Company or any of their
         respective directors, officers, employees or agents.

10       Claims Against the Seller

10.1     Notification of Potential Claims

         10.1.1   If the Purchaser or any Group Company becomes aware of any
                  fact, matter or circumstance that may give rise to a claim
                  against the Seller under this Agreement, the Purchaser shall
                  as soon as reasonably practicable give a notice in writing to
                  the Seller setting out such information as is available to
                  the Purchaser or Group Company as is reasonably necessary to
                  enable the Seller to assess the merits of the claim, to act
                  to preserve evidence and to make such provision as the Seller
                  may consider necessary.

         10.1.2   In the event of any Tax claim arising, the Purchaser or any
                  Group Company which becomes aware of that event shall give
                  notice (and the Purchaser shall procure that such notice is
                  given by the relevant Group Company) in writing to the Seller
                  as soon as reasonably practicable and, in any event, in the
                  case of the receipt of any written assessment from any Tax
                  Authority which constitutes a Tax claim, within 10 days of
                  the date of issue of such Tax claim.

10.2     Notification of Claims under this Agreement

         Notices of claims under this Agreement shall be given by the Purchaser
         to the Seller within the time limits specified in Clause 9.1,
         specifying full information in relation to the legal and factual basis
         of the claim and the evidence on which the Purchaser relies and, if
         practicable, an estimate of the amount of Losses which are, or are to
         be, the subject of the claim (including any Losses which are
         contingent on the occurrence of any future event).

10.3     Commencement of Proceedings

         Any claim notified pursuant to Clause 10.2 shall (if it has not been
         previously satisfied, settled or withdrawn) be deemed to be
         irrevocably withdrawn six months after the notice is given pursuant to
         Clause 10.2 or in the case of any contingent liability, six months
         after such contingent liability becomes an actual liability and is due
         and payable unless legal proceedings in respect of it: (i) have been
         commenced by being both issued and served; and (ii) are being and
         continue to be pursued with reasonable diligence.

10.4     Investigation by the Seller

         In connection with any matter or circumstance that may give rise to a
         claim against the Seller under this Agreement:

         10.4.1   the Purchaser shall allow, and shall procure that the
                  relevant Group Company allows, the Seller and their tax,
                  financial, accounting or legal advisers to investigate the
                  matter or circumstance alleged to give rise to a claim and
                  whether and to what extent any amount is payable in respect
                  of such claim; and

         10.4.2   the Purchaser shall disclose to the Seller all material of
                  which the Purchaser is aware which relates to the claim and
                  shall (and shall procure that any other relevant members of
                  the Purchaser's Group shall) give, subject to their being
                  paid all


                                      20
<PAGE>


                  reasonable costs and expenses, all such information and
                  assistance (including access to premises and personnel, and
                  the right to examine and copy or photograph any assets,
                  accounts, documents and records) as the Seller or its tax,
                  financial, accounting or legal advisers may reasonably
                  request, subject to the Seller agreeing in such form as the
                  Purchaser may reasonably require to keep all such
                  information confidential and to use it only for the purpose
                  of investigating and defending the claim in question.

10.5     Conduct of Third Party Claims

         If the matter or circumstance that may give rise to a claim against
         the Seller under this Agreement is a result of or in connection with a
         claim by or liability to a third party, then the Purchaser or other
         member of the Purchaser's Group shall be entitled, in its absolute
         discretion, to take such action as it shall deem necessary to avoid,
         dispute, deny, defend, resist, appeal, compromise or contest such
         claim or liability (including, without limitation, making
         counterclaims or other claims against third parties) but shall, so far
         as practicable, consult with the Seller before taking any such action.

11       Limitation of Purchaser's Liability

11.1     Time Limitation for Claims

         The Purchaser shall not be liable under this Agreement in respect of
         any claim unless a notice of the claim is given by the Seller to the
         Purchaser:

         11.1.1   in the case of any claim under paragraph 12 of Schedule 7
                  (tax warranties), within three years following Completion;
                  and

         11.1.2   in the case of any other claim, within 18 months following
                  Completion,

         except that there shall be no time limitation for giving notice of any
         claim under paragraphs 1.1 and 14 of Schedule 7.

         Any claim notified by the Seller to the Purchaser pursuant to this
         Clause shall specify the matters set out in Clause 12.2.

11.2     Minimum Claims

         11.2.1   The Purchaser shall not be liable under this Agreement in
                  respect of any individual claim (or a series of claims
                  arising from substantially identical facts or circumstances)
                  where the liability agreed or determined (disregarding the
                  provisions of this Clause 11.2) in respect of any such claim
                  or series of claims does not exceed HK$1,000,000.

         11.2.2   Where the liability agreed or determined in respect of any
                  such claim or series of claims exceeds HK$1,000,000, the
                  liability of the Purchaser shall be for the whole amount of
                  the liability and not only the excess.

11.3     Aggregate Minimum Claims

         11.3.1   The Purchaser shall not be liable under this Agreement in
                  respect of any claim unless the aggregate amount of all
                  claims for which the Purchaser would otherwise be liable
                  under this Agreement (disregarding the provisions of this
                  Clause 11.3) exceeds HK$20,000,000.

         11.3.2   Where the liability agreed or determined in respect of all
                  claims referred to in Clause 11.3.1 exceeds HK$20,000,000,
                  the liability of the Purchaser shall be for the whole amount
                  of the liability and not only the excess.


                                      21
<PAGE>


11.4     Maximum Liability

         The aggregate liability of the Purchaser in respect of all breaches of
         this Agreement shall not exceed the Consideration.

11.5     Provisions

         The Purchaser shall not be liable under this Agreement in respect of
         any claim if and to the extent that proper allowance, provisions or
         reserve is made in the Purchaser's Accounts or the Purchaser's
         Management Accounts for the matter giving rise to the claim.

11.6     Matters Arising Subsequent to this Agreement

         The Purchaser shall not be liable under this Agreement in respect of
         any matter to the extent that the same would not have occurred but
         for:

         11.6.1   Agreed matters

                  any matter or thing done or omitted to be done pursuant to and
                  in compliance with this Agreement or otherwise at the request
                  in writing or with the approval in writing of the Seller;

         11.6.2   Changes in legislation

                  (i)    the passing of, or any change in, after the date of
                         this Agreement, any law, rule, regulation or
                         administrative practice of any government,
                         governmental department, agency or regulatory body
                         including (without prejudice to the generality of the
                         foregoing) any increase in the rates of Taxation or
                         any imposition of Taxation or any withdrawal of relief
                         from Taxation not actually (or prospectively) in
                         effect at the date of this Agreement; or

                  (ii)   any change after the date of this Agreement of any
                         generally accepted interpretation or application of
                         any legislation;

         11.6.3   Accounting and Taxation Policies

                  any change in accounting or Taxation policy, advance ruling,
                  standards, bases or practice of the Seller or any of the
                  Purchaser's Group Companies introduced or having effect after
                  Completion.

11.7     Recovery from Third Parties following Recovery from the Purchaser

         If the Purchaser has paid an amount in discharge of any claim under
         this Agreement and the Seller is entitled to recover (whether by
         payment, discount, credit, relief, insurance or otherwise) from a
         third party a sum which indemnifies or compensates the Seller (in
         whole or in part) in respect of the loss or liability which is the
         subject matter of the claim, the Seller shall pay to the Purchaser as
         soon as practicable after receipt an amount equal to (i) any sum
         recovered from the third party less any costs and expenses incurred
         in obtaining such recovery (less any Taxation attributable to the
         recovery after taking account of any tax relief available in respect
         of any matter giving rise to the claim) or, if less (ii) the amount
         previously paid by the Purchaser to the Seller less any Taxation
         attributable to it.

11.8     Mitigation of Losses

         The Seller shall procure that all reasonable steps are taken and all
         reasonable assistance is given to avoid or mitigate any Losses which
         in the absence of mitigation might give rise to a liability in respect
         of any claim under this Agreement.


                                      22
<PAGE>


11.9     Fraud

         None of the limitations contained in this Clause 11 shall apply to any
         claim which arises or is increased, or to the extent to which it
         arises or is increased, as the consequence of, or which is delayed as
         a result of, fraud by the Purchaser, any Purchaser's Group Company or
         any of their respective directors, officers, employees or agents.

12       Claims Against the Purchaser

12.1     Notification of Potential Claims

         12.1.1   If the Seller becomes aware of any fact, matter or
                  circumstance that may give rise to a claim against the
                  Purchaser under this Agreement, the Seller shall as soon as
                  reasonably practicable give a notice in writing to the
                  Purchaser setting out such information as is available to the
                  Seller as is reasonably necessary to enable the Purchaser to
                  assess the merits of the claim, to act to preserve evidence
                  and to make such provision as the Purchaser may consider
                  necessary.

         12.1.2   In the event of any Tax claim arising, the Seller on becoming
                  aware of that event shall give notice in writing to the
                  Purchaser as soon as reasonably practicable and, in any
                  event, in the case of the receipt of any written assessment
                  from any Tax Authority which constitutes a Tax claim, within
                  10 days of the date of issue of such Tax claim.

12.2     Notification of Claims under this Agreement

         Notices of claims under this Agreement shall be given by the Seller to
         the Purchaser within the time limits specified in Clause 11.1,
         specifying full information in relation to the legal and factual basis
         of the claim and the evidence on which the Seller relies and, if
         practicable, an estimate of the amount of Losses which are, or are to
         be, the subject of the claim (including any Losses which are
         contingent on the occurrence of any future event).

12.3     Commencement of Proceedings

         Any claim notified pursuant to Clause 12.2 shall (if it has not been
         previously satisfied, settled or withdrawn) be deemed to be
         irrevocably withdrawn six months after the notice is given pursuant to
         Clause 12.2 or in the case of any contingent liability, six months
         after such contingent liability becomes an actual liability and is due
         and payable unless legal proceedings in respect of it: (i) have been
         commenced by being both issued and served; and (ii) are being and
         continue to be pursued with reasonable diligence.

12.4     Investigation by the Purchaser

         In connection with any matter or circumstance that may give rise to a
         claim against the Purchaser under this Agreement:

         12.4.1   the Seller shall allow the Purchaser and its tax, financial,
                  accounting or legal advisers to investigate the matter or
                  circumstance alleged to give rise to a claim and whether and
                  to what extent any amount is payable in respect of such
                  claim; and

         12.4.2   the Seller shall disclose to the Purchaser all material of
                  which the Seller is aware which relates to the claim and
                  shall give, subject to their being paid all reasonable costs
                  and expenses, all such information and assistance (including
                  access to premises and personnel, and the right to examine
                  and copy or photograph any assets, accounts, documents and
                  records) as the Purchaser or its tax, financial, accounting
                  or legal advisers may reasonably request, subject to the
                  Purchaser agreeing in such form


                                      23
<PAGE>


                  as the Seller may reasonably require to keep all such
                  information confidential and to use it only for the purpose
                  of investigating and defending the claim in question.

12.5     Conduct of Third Party Claims

         If the matter or circumstance that may give rise to a claim against
         the Purchaser under this Agreement is a result of or in connection
         with a claim by or liability to a third party, then the Seller shall
         be entitled, in its absolute discretion, to take such action as it
         shall deem necessary to avoid, dispute, deny, defend, resist, appeal,
         compromise or contest such claim or liability (including, without
         limitation, making counterclaims or other claims against third
         parties) but shall, so far as practicable, consult with the Purchaser
         before taking any such action.

13       Confidentiality

13.1     Announcements

         Pending Completion, no announcement or circular in connection with the
         existence or the subject matter of this Agreement shall be made or
         issued by or on behalf of the Seller or the Purchaser without the
         prior written approval of the Seller and the Purchaser. This shall not
         affect any announcement or circular required by law or any regulatory
         body or the rules of any recognised stock exchange but the party with
         an obligation to make an announcement or issue a circular shall
         consult with the other party insofar as is reasonably practicable
         before complying with such an obligation.

13.2     Confidentiality

         13.2.1   The Confidentiality Agreement shall cease to have any force
                  or effect from the date of this Agreement.

         13.2.2   Subject to Clause 13.1 and Clause 13.2.3:

                  (i)    the Seller and the Purchaser shall treat as strictly
                         confidential and not disclose or use any information
                         received or obtained as a result of entering into this
                         Agreement (or any agreement entered into pursuant to
                         this Agreement) which relates to:

                         (a)  the provisions of this Agreement and any
                              agreement entered into pursuant to this
                              Agreement; or

                         (b)  the negotiations relating to this Agreement (and
                              any such other agreements);

                  (ii)   the Seller shall treat as strictly confidential and
                         not disclose or use any information relating to the
                         Group Companies following Completion and any other
                         information relating to the business, financial or
                         other affairs (including future plans and targets) of
                         the Purchaser's Group;

                  (iii)  the Purchaser shall treat as strictly confidential and
                         not disclose or use any information relating to the
                         business, financial or other affairs (including future
                         plans and targets) of the Seller's Group including,
                         prior to Completion, the Group Companies.

         13.2.3   Clause 13.2.2 shall not prohibit disclosure or use of any
                  information if and to the extent:


                                      24
<PAGE>


                  (i)    the disclosure or use is required by law, any
                         government or regulatory body or any recognised stock
                         exchange;

                  (ii)   the disclosure or use is required to vest the full
                         benefit of this Agreement in the Seller or the
                         Purchaser;

                  (iii)  the disclosure or use is required for the purpose of
                         any judicial proceedings arising out of this Agreement
                         or any other agreement entered into under or pursuant
                         to this Agreement or the disclosure is made to a Tax
                         Authority in connection with the Tax affairs of the
                         disclosing party;

                  (iv)   the disclosure is made to professional advisers of the
                         Seller or the Purchaser on terms that such
                         professional advisers undertake to comply with the
                         provisions of Clause 13.2.2 in respect of such
                         information as if they were a party to this Agreement;

                  (v)    the information is or becomes publicly available
                         (other than by breach of the Confidentiality Agreement
                         at any time prior to the signing of this Agreement or
                         of this Agreement);

                  (vi)   the other party has given prior written approval for
                         the disclosure or use; or

                  (vii)  the information is independently developed after
                         Completion,

                 provided that prior to disclosure or use of any information
                 pursuant to Clause 13.2.3(i), (ii) or (iii), the party
                 concerned shall promptly notify the other parties of such
                 requirement with a view to providing the other parties with
                 the opportunity to contest such disclosure or use or otherwise
                 to agree the timing and content of such disclosure or use.

14       Other Provisions

14.1     Further Assurances

         14.1.1   The Seller and the Purchaser shall (and shall use reasonable
                  endeavours to procure that any necessary third party shall)
                  from time to time execute such documents and perform such
                  acts and things, as either of the Seller or the Purchaser may
                  reasonably require, to transfer the Sale Shares and the Sale
                  Assets to the Purchaser and to give each of them the full
                  benefit of this Agreement. Each of the Seller and the
                  Purchaser undertakes to the other promptly to provide all
                  information and assistance which the other may reasonably
                  request from time to time for the purpose of facilitating
                  prompt and full compliance with the public disclosure
                  requirements of the Listing Rules and the Takeovers Code
                  applicable to the requesting party.

         14.1.2   The Purchaser shall (and shall procure that the relevant
                  Group Companies shall) retain for a reasonable period from
                  Completion the books, records and documents of the Group
                  Companies to the extent they relate to the period prior to
                  Completion and shall (and shall procure that the relevant
                  Group Companies shall) allow the Seller reasonable access to
                  such books, records and documents, including the right to
                  take copies.

14.2     Whole Agreement

         14.2.1   This Agreement contains the whole agreement between the
                  Seller and the Purchaser relating to the subject matter of
                  this Agreement at the date of this Agreement, to the


                                      25
<PAGE>


                  exclusion of any terms implied by law which may be excluded
                  by contract, and supersedes any previous written or oral
                  agreement between the Seller and the Purchaser in relation to
                  the matters dealt with in this Agreement.

         14.2.2   The Purchaser acknowledges that it has not been induced to
                  enter into this Agreement by any representation, warranty or
                  undertaking not expressly incorporated into it.

         14.2.3   The Seller acknowledges that it has not been induced to enter
                  into this Agreement by any representation, warranty or
                  undertaking not expressly incorporated into it.

         14.2.4   So far as is permitted by law and except in the case of
                  fraud, the Seller and the Purchaser agrees and acknowledges
                  that its only right and remedy in relation to any
                  representation, warranty or undertaking made or given in
                  connection with this Agreement shall be for breach of the
                  terms of this Agreement to the exclusion of all other rights
                  and remedies (including those in tort or arising under
                  statute).

         14.2.5   In Clauses 14.2.1 to 14.2.3 and 14.3, "this Agreement"
                  includes the Seller's Disclosure Letter, the Purchaser's
                  Disclosure Letter and all documents entered into pursuant to
                  this Agreement.

14.3     Reasonableness

         The Seller and the Purchaser confirms it has received independent
         legal advice relating to all the matters provided for in this
         Agreement, including the terms of Clause 14.2 (Whole Agreement), and
         agrees that the provisions of this Agreement are fair and reasonable.

14.4     Assignment

         14.4.1   Except as otherwise expressly provided in this Agreement,
                  neither the Seller nor the Purchaser may without the prior
                  written consent of the other parties, assign, grant any
                  security interest over, hold on trust or otherwise transfer
                  the benefit of the whole or any part of this Agreement.

         14.4.2   Except as otherwise expressly provided in this Agreement, the
                  Seller or the Purchaser may, without the consent of the other
                  parties, assign to a connected company the benefit of the
                  whole or any part of this Agreement, provided that:

                  (i)    such assignment shall not be absolute but shall be
                         expressed to have effect only for so long as the
                         assignee remains a connected company of the party
                         concerned;

                  (ii)   the assignee shall not be entitled to receive under
                         this Clause any greater amount than that to which the
                         assignor would have been entitled; and

                  (iii)  it shall be a term of the assignment that the assignee
                         takes the subject matter subject to any prior equities
                         in favour of the Purchaser or the Seller (as the case
                         may be).

                 For the purposes of this Clause, a "connected company" is a
                 company which is a subsidiary of the party concerned or which
                 is a holding company of such party or a subsidiary of such
                 holding company.

         14.4.3   For the avoidance of doubt, this Clause 14.4 shall survive
                  the termination of this Agreement.


                                      26
<PAGE>


14.5     Variation

         No variation of this Agreement shall be effective unless in writing
         and signed by or on behalf of the Seller and the Purchaser.

14.6     Time of the Essence

         Time shall be of the essence of this Agreement both as regards any
         dates, times and periods mentioned and as regards any dates, times and
         periods which may be substituted for them in accordance with this
         Agreement or by agreement in writing between the Seller and the
         Purchaser.

14.7     Method of Payment

         Wherever in this Agreement provision is made for the payment by one
         party to the other, such payment shall be effected by crediting for
         same day value the account specified by the payee to the payer,
         reasonably in advance and in sufficient detail to enable payment by
         telegraphic or other electronic means to be effected on or before the
         due date for payment.

14.8     Costs

         14.8.1   The Seller shall bear all costs incurred by it in connection
                  with the preparation, negotiation and entry into of this
                  Agreement.

         14.8.2   The Purchaser shall bear all such costs incurred by it in
                  connection with the preparation, negotiation and entry into
                  of this Agreement.

14.9     Stamp Duty, Fees and Taxes

         The Purchaser shall bear the cost of all stamp duty and all
         registration and transfer taxes and duties or their equivalents in all
         jurisdictions where such fees, taxes and duties are payable as a
         result of the transactions contemplated by this Agreement. The
         Purchaser shall be responsible for arranging the payment of such stamp
         duty and all other such fees, taxes and duties, including fulfilling
         any administrative or reporting obligation imposed by the jurisdiction
         in question in connection with the payment of such taxes and duties.
         The Purchaser shall indemnify the Seller or any other member of the
         Seller's Group against any Losses suffered by the Seller or member of
         the Seller's Group as a result of the Purchaser failing to comply with
         its obligations under this Clause 14.9.

14.10    Interest

         If the Seller or the Purchaser defaults in the payment when due of any
         sum payable under this Agreement, its liability shall be increased to
         include interest on such sum from the date when such payment is due
         until the date of actual payment (after as well as before judgment) at
         a rate per annum of two per cent above the best lending rate for HK$
         from time to time of The Hongkong and Shanghai Banking Corporation
         Limited. Such interest shall accrue from day to day and shall be
         compounded monthly.

14.11    Grossing-up of Indemnity Payments

         14.11.1  Where any payment is made under this Agreement pursuant to an
                  indemnity, compensation or reimbursement provision and that
                  sum is subject to a charge to Taxation in the hands of the
                  recipient (other than Taxation attributable to a payment
                  being properly treated as an adjustment to the consideration
                  paid by the Purchaser for the Group), the sum payable shall
                  be increased to such sum as will ensure that, after


                                      27
<PAGE>


                  payment of such Taxation (and after giving credit for any
                  tax relief available to the recipient in respect of the
                  matter giving rise to the payment), the recipient shall be
                  left with a sum equal to the sum that it would have
                  received in the absence of such a charge to taxation.

         14.11.2  Where any sum constituting an indemnity, compensation or
                  reimbursement to any party to this Agreement (the "Party") is
                  paid to a person other than the Party, but is treated as
                  taxable in the hands of the Party, the payer shall promptly
                  pay to the Party such sum as shall reimburse the Party for
                  all Taxation suffered by it in respect of the payment (after
                  giving credit for any tax relief available to the Party in
                  respect of the matter giving rise to the payment).

14.12    Notices

         14.12.1  Any notice or other communication in connection with this
                  Agreement (each, a "Notice") shall be:

                  (i)    in writing;

                  (ii)   delivered by hand, fax, pre-paid first class post or
                         courier.

         14.12.2  A Notice to the Seller shall be sent to the following
                  address, or such other person or address as the Seller may
                  notify to the Purchaser from time to time:

                  39/F
                  PCCW Tower
                  TaiKoo Place
                  979 King's Road
                  Quarry Bay
                  Hong Kong

                  Fax:                             2962 5725

                  Attention:                       Company Secretary

         14.12.3  A Notice to the Purchaser shall be sent to the following
                  address, or such other person or address as the Purchaser may
                  notify to the Seller from time to time:

                  9th Floor, Paul Y Centre
                  51 Hung To Road
                  Kwun Tong
                  Kowloon
                  Hong Kong

                  Fax:                             2372 0611

                  Attention:                       Company Secretary

         14.12.4  A Notice shall be effective upon receipt and shall be deemed
                  to have been received:

                  (i)    two Business Days after posting, if delivered by
                         pre-paid first class post;

                  (ii)   at the time of delivery, if delivered by hand or
                         courier;

                  (iii)  at the time of transmission in legible form, if
                         delivered by fax.


                                      28
<PAGE>


14.13    Invalidity

         14.13.1  If any provision in this Agreement shall be held to be
                  illegal, invalid or unenforceable, in whole or in part, the
                  provision shall apply with whatever deletion or modification
                  is necessary so that the provision is legal, valid and
                  enforceable and gives effect to the commercial intention of
                  the parties.

         14.13.2  To the extent it is not possible to delete or modify the
                  provision, in whole or in part, under Clause 14.13.1, then
                  such provision or part of it shall, to the extent that it is
                  illegal, invalid or unenforceable, be deemed not to form part
                  of this Agreement and the legality, validity and
                  enforceability of the remainder of this Agreement shall,
                  subject to any deletion or modification made under Clause
                  14.13.1, not be affected.

14.14    Counterparts

         This Agreement may be entered into in any number of counterparts, all
         of which taken together shall constitute one and the same instrument.
         The Seller and the Purchaser may enter into this Agreement by signing
         any such counterpart.

14.15    Governing Law and Submission to Jurisdiction

         14.15.1  This Agreement shall be governed by and construed in
                  accordance with the laws of Hong Kong.

         14.15.2  The Seller and the Purchaser irrevocably agrees that the
                  courts of Hong Kong are to have exclusive jurisdiction to
                  settle any dispute which may arise out of or in connection
                  with this Agreement and that accordingly any proceedings
                  arising out of or in connection with this Agreement shall be
                  brought in such courts. The Seller and the Purchaser
                  irrevocably submits to the jurisdiction of such courts and
                  waives any objection to proceedings in any such court on the
                  ground of venue or on the ground that proceedings have been
                  brought in an inconvenient forum.


                                      29
<PAGE>


In witness whereof this Agreement has been duly executed.



SIGNED by                     )
on behalf of the Seller       )
in the presence of:           )





SIGNED by                     )
on behalf of the Purchaser    )
in the presence of:           )


                                      30
<PAGE>


                                   Schedule 1

                                   The Group


<TABLE>
<S>    <C>                                                   <C>
1      Particulars of the Company

       Name of Company:                                      Ipswich Holdings Limited

       Registered number:                                    370317

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      18 February 2000, British Virgin Islands

       Issued share capital:                                 USD1.00 divided into 1 share of USD1.00

       Authorised share capital:                             USD50,000.00 divided into 50,000 shares
                                                             of USD1.00

       Registered shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):

       Beneficial shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):

       Registered shareholders and shares held               PCCW Limited (2 shares)
       (immediately after the Restructuring):

       Beneficial shareholders and shares held               PCCW Limited (2 shares)
       (immediately after the Restructuring):

       Directors:                                            Peter Anthony Allen
                                                             Yuen Tin Fan
                                                             Wayne Michael Verge
                                                             Mak Chi Kin
                                                             Lui Kon Wai
                                                             Alexander Anthony Arena

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      31
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
2      Particulars of the Subsidiaries

       Name of Company:                                      Extra Lite International Limited

       Registered number:                                    337656

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      6 August 1999, British Virgin Islands

       Issued share capital:                                 USD1.00 divided into 1 share of USD1.00

       Authorised share capital:                             USD50,000.00 divided into 50,000 shares
                                                             of USD1.00

       Registered shareholders and shares held               Asian Motion Limited (1 share)
       (as at the date of this Agreement):

       Beneficial shareholders and shares held               Asian Motion Limited (1 share)
       (as at the date of this Agreement):

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):

       Beneficial shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):

       Directors:                                            Lee Chi Hong, Robert
                                                             Alexander Anthony Arena
                                                             Wayne Michael Verge
                                                             Peter Anthony Allen
                                                             Yuen Tin Fan
                                                             Mak Chi Kin

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      32
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Cyber-Port Management Limited

       Registered number:                                    700578

       Registered office:                                    39th Floor, PCCW Tower, TaiKoo Place, 979
                                                             King's Road, Quarry Bay, Hong Kong

       Date and place of incorporation:                      12 January 2000, Hong Kong

       Issued share capital:                                 HKD2.00 divided into 2 shares of HKD1.00

       Authorised share capital:                             HKD10,000 divided into 10,000 shares of
                                                             HKD1.00

       Registered shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):                   PCCW Nominees Limited (1 share)

       Beneficial shareholders and shares held               PCCW Properties Limited (2 shares)
       (as at the date of this Agreement):

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):                Excel Bright Properties Limited
                                                             (1 share)

       Beneficial shareholders and shares held               Ipswich Holdings Limited (2 shares)
       (immediately after the Restructuring):

       Directors:                                            Alexander Anthony Arena
                                                             William John Latter
                                                             Wayne Michael Verge
                                                             Peter Anthony Allen
                                                             Yuen Tin Fan
                                                             Lee Chi Hong, Robert

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      33
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      PCCW Real Estate Agency Limited

       Registered number:                                    706704

       Registered office:                                    39th Floor, PCCW Tower, TaiKoo Place, 979
                                                             King's Road, Quarry Bay, Hong Kong

       Date and place of incorporation:                      6 March 2000, Hong Kong

       Issued share capital:                                 HKD2.00 divided into 2 shares of HKD1.00

       Authorised share capital:                             HKD10,000 divided into 10,000 shares of
                                                             HKD1.00

       Registered shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):                   Pacific Century Regional Services
                                                             Limited (1 share)

       Beneficial shareholders and shares held               PCCW Properties Limited (2 shares)
       (as at the date of this Agreement):

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):                Excel Bright Properties Limited
                                                             (1 share)

       Beneficial shareholders and shares held               Ipswich Holdings Limited (2 shares)
       (immediately after the Restructuring):

       Directors:                                            Alexander Anthony Arena
                                                             Gan Kim See, Wendy
                                                             Wayne Michael Verge
                                                             Peter Anthony Allen
                                                             Yuen Tin Fan
                                                             Lee Chi Hong, Robert
       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      34
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Pride Pacific Limited

       Registered number:                                    832235

       Registered office:                                    39th Floor, PCCW Tower, TaiKoo Place, 979
                                                             King's Road, Quarry Bay, Hong Kong

       Date and place of incorporation:                      5 February 2003, Hong Kong

       Issued share capital:                                 HKD2.00 divided into 2 shares of HKD1.00

       Authorised share capital:                             HKD10,000 divided into 10,000 shares of
                                                             HKD1.00

       Registered shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):                   PCCW Nominees Limited (1 share)

       Beneficial shareholders and shares held               PCCW Properties Limited (2 shares)
       (as at the date of this Agreement):

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):                Excel Bright Properties Limited
                                                             (1 share)

       Beneficial shareholders and shares held               Ipswich Holdings Limited (2 shares)
       (immediately after the Restructuring):

       Directors:                                            Alexander Anthony Arena
                                                             Gan Kim See, Wendy
                                                             Wayne Michael Verge
                                                             Yuen Tin Fan
                                                             Lee Chi Hong, Robert

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      35
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Island South Property Management Limited

       Registered number:                                    831223

       Registered office:                                    39th Floor, PCCW Tower, TaiKoo Place, 979
                                                             King's Road, Quarry Bay, Hong Kong

       Date and place of incorporation:                      24 January 2003, Hong Kong

       Issued share capital:                                 HKD2.00 divided into 2 shares of HKD1.00

       Authorised share capital:                             HKD10,000 divided into 10,000 shares of
                                                             HKD1.00

       Registered shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):                   PCCW Nominees Limited (1 share)

       Beneficial shareholders and shares held               PCCW Properties Limited (2 shares)
       (as at the date of this Agreement):

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):                Excel Bright Properties Limited
                                                             (1 share)

       Beneficial shareholders and shares held               Ipswich Holdings Limited (2 shares)
       (immediately after the Restructuring):

       Directors:                                            Alexander Anthony Arena
                                                             Gan Kim See, Wendy
                                                             Wayne Michael Verge
                                                             Yuen Tin Fan
                                                             Lee Chi Hong, Robert
                                                             Mak Chi Kin

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      36
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Midgre Properties Limited

       Registered number:                                    361474

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      5 January 2000, British Virgin Islands

       Issued share capital:                                 USD1.00 divided into 1 share of USD1.00

       Authorised share capital:                             USD50,000.00 divided into 50,000 shares
                                                             of USD1.00

       Registered shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):

       Beneficial shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):

       Beneficial shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):

       Directors:                                            Peter Anthony Allen
                                                             Yuen Tin Fan
                                                             Wayne Michael Verge
                                                             Lee Chi Hong, Robert
                                                             Mak Chi Kin
                                                             Martin John Mitchell Coombes
                                                             Lui Kon Wai

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      37
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Partner Link Investments Limited

       Registered number:                                    488877

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      26 March 2002, British Virgin Islands

       Issued share capital:                                 USD1.00 divided into 1 share of USD1.00

       Authorised share capital:                             USD50,000.00 divided into 50,000 share of
                                                             USD1.00

       Registered shareholders and shares held               Midgre Properties Limited (1 share)
       (as at the date of this Agreement):

       Beneficial shareholders and shares held               Midgre Properties Limited (1 share)
       (as at the date of this Agreement):

       Registered shareholders and shares held               Midgre Properties Limited (1 share)
       (immediately after the Restructuring):

       Beneficial shareholders and shares held               Midgre Properties Limited (1 share)
       (immediately after the Restructuring):

       Directors:                                            Peter Anthony Allen
                                                             Yuen Tin Fan
                                                             Wayne Michael Verge
                                                             Martin John Mitchell Coombes
                                                             Mak Chi Kin
                                                             Lee Chi Hong, Robert
                                                             Lui Kon Wai

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      38
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Excel Bright Properties Limited

       Registered number:                                    469846

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      16 November 2001, British Virgin Islands

       Issued share capital:                                 USD1.00 divided into 1 share of USD1.00

       Authorised share capital:                             USD50,000.00  divided into 50,000 shares
                                                             of USD1.00

       Registered shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):

       Beneficial shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):

       Beneficial shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):

       Directors:                                            Yuen Tin Fan
                                                             Peter Anthony Allen
                                                             Wayne Michael Verge
                                                             Lee Chi Hong, Robert
                                                             Lui Kon Wai
                                                             Martin John Mitchell Coombes
                                                             Mak Chi Kin

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      39
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Monance Limited

       Registered number:                                    322881

       Registered office:                                    39th Floor, PCCW Tower, TaiKoo Place, 979
                                                             King's Road, Quarry Bay, Hong Kong

       Date and place of incorporation:                      22 August 1991, Hong Kong

       Issued share capital:                                 HKD1,000 divided into 100 shares of
                                                             HKD10.00

       Authorised share capital:                             HKD1,000 divided into 100 shares of
                                                             HKD10.00

       Registered shareholders and shares held               Midgre Properties Limited (98 shares)
       (as at the date of this Agreement):                   PCCW Nominees Limited (1 share)
                                                             PCCW-HKT Limited (1 share)

       Beneficial shareholders and shares held               PCCW-HKT Limited (2 shares)
       (as at the date of this Agreement):                   Midgre Properties Limited (98 shares)

       Registered shareholders and shares held               Midgre Properties Limited (98 shares)
       (immediately after the Restructuring):                PCCW Nominees Limited (1 share)
                                                             PCCW-HKT Limited (1 share)

       Beneficial shareholders and shares held               PCCW-HKT Limited (2 shares)
       (immediately after the Restructuring):                Midgre Properties Limited (98 shares)

       Directors:                                            Yuen Tin Fan
                                                             Alexander Anthony Arena
                                                             Mak Chi Kin

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      40

<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Gain Score Limited

       Registered number:                                    217595

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      5 February 1997, British Virgin Islands

       Issued share capital:                                 USD1.00 divided into 1 share of USD1.00

       Authorised share capital:                             USD50,000.00 divided into 50,000 shares
                                                             of USD1.00

       Registered shareholders and shares held               Excel Bright Properties Limited
       (as at the date of this Agreement):                   (1 share)

       Beneficial shareholders and shares held               Excel Bright Properties Limited
       (as at the date of this Agreement):                   (1 share)

       Registered shareholders and shares held               Excel Bright Properties Limited
       (immediately after the Restructuring):                (1 share)

       Beneficial shareholders and shares held               Excel Bright Properties Limited
       (immediately after the Restructuring):                (1 share)

       Directors:                                            Peter Anthony Allen
                                                             Wayne Michael Verge
                                                             Yuen Tin Fan
                                                             Lee Chi Hong, Robert
                                                             Lui Kon Wai
                                                             Martin John Mitchell Coombes
                                                             Mak Chi Kin

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      41

<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Beijing Jing Wei House & Land Estate
                                                             Development Co Limited

       Registered number:                                    006816

       Registered office:                                    Unit 1318, IBM Tower,
                                                             Pacific Century Place,
                                                             2A Gong Ti,
                                                             Bei Lu,
                                                             Chaoyang District,
                                                             Beijing
                                                             PRC 100027

       Date and place of incorporation:                      29 November 1993, The People's Republic
                                                             of China

       Issued share capital:                                 USD50,000,000.00

       Authorised share capital:                             USD100,000,000

       Registered shareholders and shares held               BMEI Co. Ltd.
      (as at the date of this Agreement):                    Gain Score Limited
                                                             Beijing JingGong Real and Estate Development Head Company

       Beneficial shareholders and shares held               BMEI Co. Ltd.
       (as at the date of this Agreement):                   Gain Score Limited
                                                             Beijing JingGong Real and Estate Development Head Company

       Registered shareholders and shares held               BMEI Co. Ltd.
       (immediately after the Restructuring):                Gain Score Limited
                                                             Beijing JingGong Real and Estate Development Head Company

       Beneficial shareholders and shares held               BMEI Co. Ltd.
       (immediately after the Restructuring):                Gain Score Limited
                                                             Beijing JingGong Real and Estate Development Head Company

       Directors:                                            Lee Chi Hong, Robert
                                                             Zhang, Zi Li
                                                             Fu Lian Jun
                                                             Mak Chi Kin
                                                             Lui Kon Wai
                                                             Martin John Mitchell Coombes
                                                             Tan Phiak Chuan, Andrew
                                                             Ma, Guang Xin
                                                             Kang, Shao Peng

       Secretary:                                            n/a
</TABLE>


                                      42
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      PCCW Properties (HK) Limited

       Registered number:                                    675179

       Registered office:                                    39th Floor, PCCW Tower, TaiKoo Place, 979
                                                             King's Road, Quarry Bay, Hong Kong

       Date and place of incorporation:                      10 May 1999, Hong Kong

       Issued share capital:                                 HKD2.00 divided into 2 shares of HKD1.00

       Authorised share capital:                             HKD10,000.00 divided into 10,000 shares
                                                             of HKD1.00

       Registered shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):                   Pacific Century Regional Services Limited
                                                             (1 share)

       Beneficial shareholders and shares held               PCCW Properties Limited (2 shares)
       (as at the date of this Agreement):

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):                Excel Bright Properties Limited
                                                             (1 share)

       Beneficial shareholders and shares held               Ipswich Holdings Limited (2 shares)
       (immediately after the Restructuring):

       Directors:                                            Peter Anthony Allen
                                                             Wayne Michael Verge
                                                             Lee Chi Hong, Robert
                                                             Mak Chi Kin
                                                             Gan Kim See, Wendy

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      43
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      PCCW Property Management Limited

       Registered number:                                    290458

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      10 August 1998, British Virgin Islands

       Issued share capital:                                 USD1.00 divided into 1 share of USD1.00

       Authorised share capital:                             USD50,000.00 divided into 50,000 shares
                                                             of USD1.00

       Registered shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):

       Beneficial shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):

       Beneficial shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):

       Directors:                                            Peter Anthony Allen
                                                             Wayne Michael Verge
                                                             Mak Chi Kin
                                                             Martin John Mitchell Coombes

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      44
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      PCCW Facilities Management Limited

       Registered number:                                    724020

       Registered office:                                    39th Floor, PCCW Tower, TaiKoo Place, 979
                                                             King's Road, Quarry Bay, Hong Kong

       Date and place of incorporation:                      14 July 2000, Hong Kong

       Issued share capital:                                 HKD2.00 divided into 2 shares of HKD1.00

       Authorised share capital:                             HKD10,000.00 divided into 10,000 shares
                                                             of HKD1.00

       Registered shareholders and shares held               PCCW Services Limited (1 share)
       (as at the date of this Agreement):                   PCCW Property Management Limited (1 share)

       Beneficial shareholders and shares held               PCCW Property Management Limited (2
       (as at the date of this Agreement):                   shares)

       Registered shareholders and shares held               PCCW Property Management Limited (1 share)
       (immediately after the Restructuring):                Excel Bright Properties Limited
                                                             (1 share)

       Beneficial shareholders and shares held               PCCW Property Management Limited (2
       (immediately after the Restructuring):                shares)

       Directors:                                            Alexander Anthony Arena
                                                             Yuen Tin Fan
                                                             Martin John Mitchell Coombes
                                                             Mak Chi Kin

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      45
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Wise Union Enterprises Limited

       Registered number:                                    491332

       Registered office:                                    P. O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      12 April 2002, British Virgin Islands

       Issued share capital:                                 USD1.00 divided into 1 share of USD1.00

       Authorised share capital:                             USD50,000.00 divided into 50,000 shares
                                                             of USD1.00

       Registered shareholders and shares held               PCCW Property Management Limited (1 share)
       (as at the date of this Agreement):

       Beneficial shareholders and shares held               PCCW Property Management Limited (1 share)
       (as at the date of this Agreement):

       Registered shareholders and shares held               PCCW Property Management Limited (1 share)
       (immediately after the Restructuring):

       Beneficial shareholders and shares held               PCCW Property Management Limited (1 share)
       (immediately after the Restructuring):

       Directors:                                            Alexander Anthony Arena
                                                             Yuen Tin Fan
                                                             Martin John Mitchell Coombes
                                                             Mak Chi Kin

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      46
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Beijing Jingwei Property Management Co
                                                             Limited

       Registered number:                                    014097

       Registered office:                                    A2, Workers' Gymnasium North Road, Chaoyang District, Beijing, PRC

       Date and place of incorporation:                      29 July 1999, The People's Republic of
                                                             China

       Issued share capital:                                 USD150,000

       Authorised share capital:                             USD150,000

       Registered shareholders and shares held               Wise Union Enterprises Limited
       (as at the date of this Agreement):

       Beneficial shareholders and shares held               Wise Union Enterprises Limited
       (as at the date of this Agreement):

       Registered shareholders and shares held               Wise Union Enterprises Limited
       (immediately after the Restructuring):

       Beneficial shareholders and shares held               Wise Union Enterprises Limited
       (immediately after the Restructuring):

       Directors:                                            Lee Chi Hong, Robert
                                                             Martin John Mitchell Coombes
                                                             Mak Chi Kin
                                                             Tan Phiak Chuan, Andrew
                                                             Li Gao Qian

       Secretary:                                            n/a
</TABLE>


                                      47
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Carmay Investment Limited

       Registered number:                                    367862

       Registered office:                                    39th Floor, PCCW Tower, TaiKoo Place, 979
                                                             King's Road, Quarry Bay, Hong Kong

       Date and place of incorporation:                      9 July 1992, Hong Kong

       Issued share capital:                                 HKD2.00 divided into 2 shares of HKD1.00

       Authorised share capital:                             HKD10,000.00 divided into 10,000 shares
                                                             of HKD1.00

       Registered shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):                   PCCW Nominees Limited (1 share)

       Beneficial shareholders and shares held               PCCW Properties Limited (2 shares)
       (as at the date of this Agreement):

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):                Excel Bright Properties Limited
                                                             (1 share)

       Beneficial shareholders and shares held               Ipswich Holdings Limited (2 shares)
       (immediately after the Restructuring):

       Directors:                                            Alexander Anthony Arena
                                                             Peter Anthony Allen
                                                             Yuen Tin Fan
                                                             Wayne Michael Verge
                                                             Lui Kon Wai
                                                             Mak Chi Kin

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      48
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      ACCA Investment Limited

       Registered number:                                    382126

       Registered office:                                    39th Floor, PCCW Tower, TaiKoo Place, 979
                                                             King's Road, Quarry Bay, Hong Kong

       Date and place of incorporation:                      29 September 1992, Hong Kong

       Issued share capital:                                 HKD2.00 divided into 2 shares of HKD1.00

       Authorised share capital:                             HKD10,000.00 divided into 10,000 shares
                                                             of HKD1.00

       Registered shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):                   PCCW Nominees Limited (1 share)

       Beneficial shareholders and shares held               PCCW Properties Limited (2 shares)
       (as at the date of this Agreement):

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):                Excel Bright Properties Limited
                                                             (1 share)

       Beneficial shareholders and shares held               Ipswich Holdings Limited (2 shares)
       (immediately after the Restructuring):

       Directors:                                            Alexander Anthony Arena
                                                             Peter Anthony Allen
                                                             Yuen Tin Fan
                                                             Wayne Michael Verge
                                                             Lui Kon Wai
                                                             Mak Chi Kin

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      49
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Smart Phoenix Limited

       Registered number:                                    578934

       Registered office:                                    P.O. Box 957
                                                             Offshore Incorporations Centre,
                                                             Road Town,
                                                             Tortola,
                                                             British Virgin Islands

       Date and place of incorporation:                      22 January 2004, British Virgin Islands

       Issued share capital                                  -
       (as at the date of this Agreement):

       Issued share capital                                  USD1.00 divided into 1 share of USD1.00
       (immediately after the Restructuring):

       Authorised share capital:                             USD50,000.00 divided into 50,000 shares
                                                             of USD1.00

       Registered shareholders and shares held               Shelf Company to be transferred to
       (as at the date of this Agreement):                   Ipswich Holdings Limited

       Beneficial shareholders and shares held               Shelf Company to be transferred to
       (as at the date of this Agreement):                   Ipswich Holdings Limited

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):

       Beneficial shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):

       Directors                                             -
       (as at the date of this Agreement):

       Secretary                                             -
       (as at the date of this Agreement):
</TABLE>


                                      50
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Talent Master Investments Limited

       Registered number:                                    576896

       Registered office:                                    P.O. Box 957,
                                                             Offshore Incorporations Centre,
                                                             Road Town,
                                                             Tortola,
                                                             British Virgin Islands

       Date and place of incorporation:                      8 January 2004, British Virgin Islands

       Issued share capital                                  -
       (as at the date of this Agreement):

       Issued share capital                                  USD1.00 divided into 1 share of USD1.00
       (immediately after the Restructuring):

       Authorised share capital:                             USD50,000.00 divided into 50,000 shares
                                                             of USD1.00

       Registered shareholders and shares held               Shelf Company to be transferred to
       (as at the date of this Agreement):                   Ipswich Holdings Limited

       Beneficial shareholders and shares held               Shelf Company to be transferred to
       (as at the date of this Agreement):                   Ipswich Holdings Limited

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):

       Beneficial shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):

       Directors                                             -
       (as at the date of this Agreement):

       Secretary                                             -
       (as at the date of this Agreement):
</TABLE>


                                      51
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Madeline Investments Limited

       Registered number:                                    703664

       Registered office:                                    39th Floor, PCCW Tower, TaiKoo Place, 979
                                                             King's Road, Quarry Bay, Hong Kong

       Date and place of incorporation:                      9 February 2000, Hong Kong

       Issued share capital:                                 HKD2.00 divided into 2 shares of HKD1.00

       Authorised share capital:                             HKD10,000.00 divided into 10,000 shares
                                                             of HKD1.00

       Registered shareholders and shares held               PCCW Properties Limited (1 share)
       (as at the date of this Agreement):                   Ipswich Holdings Limited (1 share)

       Beneficial shareholders and shares held               Ipswich Holdings Limited (2 shares)
       (as at the date of this Agreement):

       Registered shareholders and shares held               Ipswich Holdings Limited (1 share)
       (immediately after the Restructuring):                Excel Bright Properties Limited
                                                             (1 share)

       Beneficial shareholders and shares held               Ipswich Holdings Limited (2 shares)
       (immediately after the Restructuring):

       Directors:                                            Alexander Anthony Arena
                                                             Peter Anthony Allen
                                                             Yuen Tin Fan
                                                             Wayne Michael Verge
                                                             Lui Kon Wai
                                                             Mak Chi Kin

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      52
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Atkins Developments Limited

       Registered number:                                    336917

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      30 July 1999, British Virgin Islands

       Issued share capital:                                 USD1.00 divided into 1 share of USD1.00

       Authorised share capital:                             USD50,000.00 divided into 50,000 shares
                                                             of USD1.00

       Registered shareholders and shares held               Extra Lite International Limited
       (as at the date of this Agreement):                   (1 share)

       Beneficial shareholders and shares held               Extra Lite International Limited
       (as at the date of this Agreement):                   (1 share)

       Registered shareholders and shares held               Extra Lite International Limited
       (immediately after the Restructuring):                (1 share)

       Beneficial shareholders and shares held               Extra Lite International Limited
       (immediately after the Restructuring):                (1 share)

       Directors:                                            Lee Chi Hong, Robert
                                                             Alexander Anthony Arena
                                                             Wayne Michael Verge
                                                             Peter Anthony Allen
                                                             Yuen Tin Fan
                                                             Mak Chi Kin

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      53
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Cyber-Port Limited

       Registered number:                                    669442

       Registered office:                                    39th Floor, PCCW Tower, TaiKoo Place, 979
                                                             King's Road, Quarry Bay, Hong Kong

       Date and place of incorporation:                      12 March 1999, Hong Kong

       Issued share capital:                                 HKD2.00 divided into 2 shares of HKD1.00

       Authorised share capital:                             HKD10,000.00 divided into 10,000 shares
                                                             of HKD1.00

       Registered shareholders and shares held               Asian Motion Limited (1 share)
       (as at the date of this Agreement):                   Atkins Developments Limited
                                                             (1 share)

       Beneficial shareholders and shares held               Atkins Developments Limited
       (as at the date of this Agreement):                   (2 shares)

       Registered shareholders and shares held               Atkins Developments Limited
       (immediately after the Restructuring):                (1 share)
                                                             Excel Bright Properties Limited
                                                             (1 share)

       Beneficial shareholders and shares held               Atkins Developments Limited
       (immediately after the Restructuring):                (2 shares)

       Directors:                                            Lee Chi Hong, Robert
                                                             Alexander Anthony Arena
                                                             Wayne Michael Verge
                                                             Peter Anthony Allen
                                                             Yuen Tin Fan
                                                             William John Latter
       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      54
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Name of Company:                                      Carlyle International Limited

       Registered number:                                    685589

       Registered office:                                    39th Floor, PCCW Tower, TaiKoo Place, 979
                                                             King's Road, Quarry Bay, Hong Kong

       Date and place of incorporation:                      18 August 1999, Hong Kong

       Issued share capital:                                 HKD2.00 divided into 2 shares of HKD1.00

       Authorised share capital:                             HKD10,000.00 divided into 10,000 shares
                                                             of HKD1.00

       Registered shareholders and shares held               Asian Motion Limited (1 share)
       (as at the date of this Agreement):                   Extra Lite International Limited
                                                             (1 share)

       Beneficial shareholders and shares held               Extra Lite International Limited
       (as at the date of this Agreement):                   (2 shares)

       Registered shareholders and shares held               Extra Lite International Limited
       (immediately after the Restructuring):                (1 share)
                                                             Excel Bright Properties Limited
                                                             (1 share)

       Beneficial shareholders and shares held               Extra Lite International Limited
       (immediately after the Restructuring):                (2 shares)

       Directors:                                            Alexander Anthony Arena
                                                             William John Latter
                                                             Wayne Michael Verge
                                                             Peter Anthony Allen
                                                             Yuen Tin Fan
                                                             Lee Chi Hong, Robert

       Secretary:                                            PCCW Secretaries Limited
</TABLE>


                                      55
<PAGE>


                                   Schedule 2
                             The Purchaser's Group


<TABLE>
<S>    <C>                                                   <C>
1      Particulars of the Purchaser

       Name of Company:                                      Dong Fang Gas Holdings Limited

       Registered number:                                    25074 (Bermuda) / F9193 (HK)

       Registered office:                                    Clarendon House, 2 Church Street,
                                                             Hamilton HM11, Bermuda

       Date and place of incorporation:                      19-06-1998        Bermuda

       Issued share capital:                                 HK$464,506,162.40 divided into
                                                             1,161,265,406 shares

       Authorised share capital:                             HK$600,000,000 divided into 1,500,000,000
                                                             shares of HK$0.40 each

       Shareholders:                                         China Strategic Holdings Limited

       No. of shares held:                                   500,000,000 shares*

       Executive Directors:                                  Dr. Chan Kwok Keung, Charles
                                                             Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung
                                                             Mr. Zhang Shi Chen

       Independent Non-executive Directors:                  Mr. Zhao Wenfu
                                                             Mr. Tsang Link Carl, Brian

       Secretary:                                            Ng Yuk Yee, Feona
</TABLE>



*The 500,000,000 shares are held by Great Joint Profits Limited, a wholly-owned
subsidiary of China Strategic (B.V.I.) Limited which is in turn a wholly-owned
subsidiary of China Strategic Holdings Limited. Both China Strategic (B.V.I.)
Limited and China Strategic Holdings Limited are deemed to be interested in
500,000,000 shares in the Company held by Great Joint Profits Limited.


                                      56
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
2      Particulars of the Purchaser's Subsidiaries

       Name of Company:                                      Dong Fang Gas (B.V.I.) Limited

       Registered number:                                    513189

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      12-09-2002  British Virgin Islands

       Issued share capital:                                 US$1.00 divided into 1 share

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1.00 each

       Registered and beneficial shareholders:               Dong Fang Gas Holdings Limited

       No. of shares held:                                   1 share

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            Dong Fang Gas Management Limited
</TABLE>


                                      57
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Digital Delight Limited

       Registered number:                                    502871

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      02-07-2002  British Virgin Islands

       Issued share capital:                                 US$1.00 divided into 1 share

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1.00 each

       Registered and beneficial shareholders:               Dong Fang Gas (B.V.I.) Limited
                                                             (formerly known as Growth Choice Limited)

       No. of shares held:                                   1 share

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            Dong Fang Gas Management Limited
</TABLE>


                                      58
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Success Trinity Limited

       Registered number:                                    501388

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      02-07-2002  British Virgin Islands

       Issued share capital:                                 US$1.00 divided into 1 share

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1.00 each

       Registered and beneficial shareholders:               Dong Fang Gas (B.V.I.) Limited
                                                             (formerly known as Growth Choice Limited)

       No. of shares held:                                   1 share

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            Dong Fang Gas Management Limited
</TABLE>


                                      59
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Emporium Profits Limited

       Registered number:                                    512134

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      06-09-2002  British Virgin Islands

       Issued share capital:                                 US$1.00 divided into 1 share

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1.00 each

       Registered and beneficial shareholders:               Dong Fang Gas (B.V.I.) Limited (formerly
                                                             known as Growth Choice Limited)

       No. of shares held:                                   1 share

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            Dong Fang Gas Management Limited
</TABLE>


                                      60
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Ample Master Resources Limited

       Registered number:                                    513167

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      12-09-2002  British Virgin Islands

       Issued share capital:                                 US$1.00 divided into 1 share

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1.00 each

       Registered and beneficial shareholders:               Dong Fang Gas (B.V.I.) Limited (formerly
                                                             known as Growth Choice Limited)

       No. of shares held:                                   1 share

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            Dong Fang Gas Management Limited
</TABLE>


                                      61
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Chance Gateway Limited

       Registered number:                                    513270

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      12-09-2002  British Virgin Islands

       Issued share capital:                                 US$1.00 divided into 1 share

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1.00 each

       Registered and beneficial shareholders:               Dong Fang Gas (B.V.I.) Limited
                                                             (formerly known as Growth Choice Limited)

       No. of shares held:                                   1 share

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            Dong Fang Gas Management Limited
</TABLE>


                                      62
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Easy Accurate Profits Limited

       Registered number:                                    513206

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      12-09-2002  British Virgin Islands

       Issued share capital:                                 US$1.00 divided into 1 share

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1.00 each

       Registered and beneficial shareholders:               Dong Fang Gas (B.V.I.) Limited
                                                             (formerly known as Growth Choice Limited)

       No. of shares held:                                   1 share

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            Dong Fang Gas Management Limited
</TABLE>


                                      63
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Global High Profits Limited

       Registered number:                                    513307

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      12-09-2002  British Virgin Islands

       Issued share capital:                                 US$1.00 divided into 1 share

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1.00 each

       Registered and beneficial shareholders:               Dong Fang Gas (B.V.I.) Limited
                                                             (formerly known as Growth Choice Limited)

       No. of shares held:                                   1 share

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            Dong Fang Gas Management Limited
</TABLE>


                                      64
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Chief Atlantic Profits Limited

       Registered number:                                    514108

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      18-09-2002  British Virgin Islands

       Issued share capital:                                 US$1.00 divided into 1 share

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1.00 each

       Registered and beneficial shareholders:               Dong Fang Gas (B.V.I.) Limited
                                                             (formerly known as Growth Choice Limited)

       No. of shares held:                                   1 share

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            Dong Fang Gas Management Limited
</TABLE>


                                      65
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Dong Fang Gas Management Limited

       Registered number:                                    789983

       Registered office:                                    9th Floor,  Paul Y. Centre, 51 Hung To
                                                             Road, Kowloon, Hong Kong

       Date and place of incorporation:                      20-03-2002  Hong Kong

       Issued share capital:                                 HK$2.00 divided into 2 shares

       Authorised share capital:                             HK$10,000 divided into 10,000 shares of
                                                             HK$1.00 each

       Shareholders and shares held:                         Dong Fang Gas (B.V.I.) Limited
                                                             (formerly known as Growth Choice Limited)
                                                             1 share
                                                             Dong Fang Gas Limited
                                                             1 share (held for and on behalf of Dong
                                                             Fang Gas (B.V.I.) Limited)

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            Dong Fang Gas Limited
</TABLE>


                                      66
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      China Crystal Investment Ltd.

       Registered number:                                    512773

       Registered office:                                    Beaufort House, P.O. Box 438, Road Town,
                                                             Tortola, British Virgin Islands

       Date and place of incorporation:                      10-09-2002  British Virgin Islands

       Issued share capital:                                 US$1.00 divided into 1 share

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1.00 each

       Registered and beneficial shareholders:               Dong Fang Gas (B.V.I.) Limited

       No. of shares held:                                   1 share

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:
</TABLE>


                                      67
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Dong Fang Gas Limited

       Registered number:                                    815429

       Registered office:                                    9th Floor, Paul Y. Centre, 51 Hung To
                                                             Road, Kwun Tong, Kowloon, Hong Kong

       Date and place of incorporation:                      25-09-2002  Hong Kong

       Issued share capital:                                 HK$2.00 divided into 2 shares

       Authorised share capital:                             HK$10,000 divided into 10,000 shares of
                                                             HK$1.00 each

       Shareholders and shares held:                         Dong Fang Gas (B.V.I.) Limited
                                                             (formerly known as Growth Choice Limited)
                                                             1 share
                                                             Dong Fang Gas Management Limited
                                                             1 share (held on trust for and on behalf
                                                             of Dong Fang Gas (B.V.I.) Limited)

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            Dong Fang Gas Management Limited
</TABLE>


                                      68
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Dong Fang Gas (China) Limited

       Registered number:                                    545923.

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      16-05-2003  British Virgin Islands

       Issued share capital:                                 US$1.00 divided into 1 share

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1.00 each

       Registered and beneficial shareholders:               Dong Fang Gas (B.V.I.) Limited
                                                             (formerly known as Growth Choice Limited)

       No. of shares held:                                   1 share

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            Dong Fang Gas Management Limited
</TABLE>


                                      69
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:
                                                             Top Power Holdings Limited

       Registered number:                                    465762

       Registered office:                                    3rd Floor, Omar Hodge Building, Wickhams
                                                             Cay I, P.O. Box 362, Road Town, Tortola,
                                                             British Virgin Islands

       Date and place of incorporation:                      08-10-2001  British Virgin Islands

       Issued share capital:                                 US$100 divided into 100 shares

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1.00 each

       Registered and beneficial shareholders                Dong Fang Gas (China.) Limited
       and shares held:                                      73 shares
                                                             Realux Limited
                                                             27 shares

       Directors:                                            Realux Limited
                                                             Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            Dong Fang Gas Management Limited
</TABLE>


                                      70
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Beijing Continental Gas Co. Ltd.

       Registered number:                                    N/A

       Registered office:                                    Technology Training Center, 30 Bai Shi Qiao Road, Haidian District,
                                                             Beijing, PRC

       Date and place of incorporation:                      15-07-1997  People's Republic of China

       Issued share capital:                                 RMB 10 million

       Authorised share capital:                             RMB 10 million

       Registered and beneficial shareholders                Top Power Holdings Limited
       and shares held:                                      70%

       Directors:                                            Yeung Dik Man
                                                             Ho Chak Man
                                                             Dr. Yap, Allan
                                                             Chan Kwok Hung

       Secretary:                                            N/A
</TABLE>


                                      71

<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Apex Landmark Limited

       Registered number:                                    558122

       Registered office:                                    P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      28-08-2003   British Virgin Islands

       Issued share capital:                                 US$1.00 divided into 1 share

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1.00 each

       Registered and beneficial shareholders:               Companion Building Material (Holdings)
                                                             Limited

       No. of shares held:                                   1 share

       Directors:                                            Dr. Yap, Allan
                                                             Mr. Chan Kwok Hung

       Secretary:                                            N/A
</TABLE>


                                      72
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Companion-China Limited
                                                             (formerly known as Taico
                                                             Investments Limited) - 27/10/1992)

       Registered number:                                    369349

       Registered office:                                    Suites 1307-8, 13/F., Great Eagle Centre,
                                                             23 Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      16-07-1992       Hong Kong

       Issued share capital:                                 HK$137,839,000 divided into 137,839,000
                                                             shares of HK$1 each

       Authorised share capital:                             HK$137,839,000 divided into 137,839,000
                                                             shares of HK$1 each

       Registered Shareholders:                              Companion Building Material
                                                               (Holdings) Limited
                                                             (137,838,999 Shares)
                                                             Ng Kwun Wan (1 Share)

       Beneficial Shareholder:                               Companion Building Material
                                                               (Holdings) Limited
                                                             137,839,000 Shares

       Directors:                                            Leung Kwok Wa
                                                             Ng Kwun Wan

       Secretary:                                            Leung Ying Mei Florice

       Auditors:                                             Deloitte Touche Tohmatsu

       Business                                              Manufacturing, Building Material Supplies
</TABLE>


                                      73
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Companion-China (Supplies) Limited

       Registered number:                                    607499

       Registered office:                                    Suites 1307-8, 13/F., Great Eagle Centre,
                                                             23 Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      12-05-1997       Hong Kong

       Issued share capital:                                 HK$10,000 divided into 5,000 shares  of
                                                             HK$2 each

       Authorised share capital:                             HK$10,000 divided into 5,000 shares of
                                                             HK$2 each

       Registered Shareholders:                              Companion-China Limited (1 Share)
                                                             Ng Kwun Wan (1 Share)

       Beneficial Shareholder:                               Companion-China Limited (2 Shares)

       Directors:                                            Leung Kwok Wa
                                                             Ng Kwun Wan

       Secretary:                                            Leung Ying Mei, Florice
</TABLE>


                                      74
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      King Unity Investments Limited

       Registered number:                                    405845

       Registered office:                                    Suites 1307-8, 13/F., Great Eagle Centre,
                                                             23 Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      02-03-1993       Hong Kong

       Issued share capital:                                 HK$20,000 divided into 20,000 shares of
                                                             HK$1 each

       Authorised share capital:                             HK$20,000 divided into 20,000 shares of
                                                             HK$1 each

       Registered Shareholders:                              Companion-China Limited
                                                             (5,999 Shares)
                                                             Chen Ming Yin, Tiffany
                                                             (2,600 Shares)
                                                             Chiu Mei Ku
                                                             (1,400 Shares)
                                                             Ng Kwun Wan
                                                             (1 Share)
                                                             Placemakers Limited
                                                             (10,000 Shares)

       Shareholding beneficially held by Companion-China     16,000 Shares
       Limited:

       Directors:                                            Leung Kwok Wa
                                                             Ng Kwun Wan
                                                             Chen Ming Yin, Tiffany

       Secretary:                                            Leung Ying Mei Florice
</TABLE>


                                      75
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Saint Galerie Tiles Limited

       Registered number:                                    92453

       Registered office:                                    Suites 1307-8, 13/F., Great Eagle Centre,
                                                             23 Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      23-01-1981       Hong Kong

       Issued share capital:                                 HK$13,750,000 divided into 13,750,000
                                                             shares

       Authorised share capital:                             HK$80,000,000 divided into 80,000 shares
                                                             of HK$1,000 each

       Registered Shareholders:                              Super Trend Limited
                                                             (13,749 Shares)
                                                             Ng Kwun Wan
                                                             (1 Share)

       Beneficial Shareholders                               Super Trend Limited
                                                             (13,750 Shares)

       Directors:                                            Leung Kwok Wa
                                                             Ng Kwun Wan

       Secretary:                                            Leung Ying Mei Florice
</TABLE>


                                      76
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Saint Galerie Trading Company Limited

       Registered number:                                    30983

       Registered office:                                    Suites 1307-8, 13/F., Great Eagle Centre,
                                                             23 Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      15-12-1972       Hong Kong

       Issued share capital:                                 HK$4,000 divided into 400 shares

       Authorised share capital:                             HK$500,000 divided into 500,000 shares of
                                                             HK$1 each

       Registered Shareholders:                              Super Trend Limited
                                                             (399 Shares)
                                                             Saint Galerie Tiles Limited
                                                             (1 Share)

       Beneficial Shareholders                               Super Trend Limited
                                                             (400 Shares)

       Directors:                                            Leung Kwok Wa
                                                             Ng Kwun Wan

       Secretary:                                            Leung Ying Mei Florice
</TABLE>


                                      77
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Super Trend Limited

       Registered office:                                    80 Broad Street, Morovia, Liberia

       Date and place of incorporation:                      13-05-1987       Republic of Liberia

       Issued share capital:                                 US$4 divided into 4 shares of US$1 each

       Authorised share capital:                             US$500 divided into 500 shares of US$1
                                                             each

       Shareholder:                                          Companion-China Limited (4 shares)

       Directors:                                            Leung Kwok Wa
                                                             Ng Kwan Wan

       Secretary:                                            Ng Kwun Wan
</TABLE>


                                      78
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Asean Fortune Corporation

       Registered number:                                    208190

       Registered office:                                    Offshore Incorporations Limited
                                                             P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      03-12-1996       BVI

       Issued share capital:                                 US$60 divided into 60 shares of US$1 each

       Authorised share capital:                             US$50,000 divided into 50,000 shares  of
                                                             US$1 each of US$1 each

       Shareholders:                                         Eminent Development Limited
                                                             (30 Shares)
                                                             Companion-China Limited
                                                             (30 Shares)

       Directors:                                            Leung Kowk Wa
                                                             Chow Yu Chun, Alexander
                                                             Ki Man Fung, Leonie
                                                             Chan Ching (alternate to Mr Chow Yu Chun
                                                             Alexander)
                                                             Ng Kwun Wan
</TABLE>


                                      79
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Brightsilver Investments Limited

       Registered number:                                    215795

       Registered office:                                    Offshore Incorporations Limited
                                                             P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      23-01-1997       BVI

       Issued share capital:                                 US$2 divided into 2 shares of US$1 each

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1 each of US$1 Each

       Registered Shareholders:                              Companion-China Limited
                                                             (2 Shares)

       Directors:                                            Leung Kwok Wa
                                                             Ng Kwun Wan
</TABLE>


                                      80
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Wenzhou Xishan United Ceramics Co., Ltd

       Registered number:                                    0063860
                                                             Approved Certificate by
                                                             Zhejiang Bureau of Foreign Trade & Economic Cooperation
                                                             Ref No: 199202316

       Registered office:                                    229 Xishan East Road, Wenzhou City, Zhejiang, PRC

       Date and place of incorporation:                      30-11-1992       PRC

       Registered capital:                                   US$6,800,000

       Total Investment:                                     US$13,600,000

       Shareholders:                                         Wenzhou Xishan Wall Tile Factory
                                                             (US$1,800,000)
                                                             Companion-China Limited
                                                             (US$5,000,000)

       Directors:                                            Leung Kwok Kui
                                                             Tsui Hin Kit
                                                             Ng Tik Hong
                                                             Ng Sai Hung
                                                             Ng Kwun Wan
                                                             Cheung Ben Yee
                                                             Lee Wah Ching
                                                             Ha Ka Lam
                                                             Chiang Ching Fat
                                                             Chu Ding Sun
                                                             Chan King Wai
</TABLE>


                                      81
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Chongqing Golden City Ceramics Co Ltd

       Registered number:                                    0080095
                                                             Approved Certificate by:
                                                             Chongqing Foreign Economic Relations and Trade Commission
                                                             Ref Number: 199202316

       Registered office:                                    No. 49, Gong Kuang Road, Li Jia Tuo, Jiu Long Po District,
                                                             Chongqing City, PRC

       Date and place of incorporation:                      03-08-1993       PRC

       Registered Capital:                                   US$5,500,000

       Total Investment:                                     US$11,000,000

       Shareholders:                                         Chongqing Sixth Cotton Mill Yakka Service Co.
                                                             (US$1,650,000)
                                                             King Unity Investment Limited
                                                             (US$3,850,000)

       Directors:                                            Leung Kwok Wa
                                                             Tang Wei
                                                             Ng Kwun Wan
                                                             Ng Tik Hong
                                                             Chu Ding Sun
                                                             Lee Hiu Ling
                                                             Wong Tak
                                                             Cheung Wing Ching
</TABLE>


                                      82
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      YiXing United Ceramics Co., Ltd

       Registered number:                                    0086239
                                                             Approved Certificate by:
                                                             Department of Foreign Trade and Economic Cooperation, Jiangsu
                                                             Ref Number: 19939958

       Registered office:                                    Industrial Park for Environmental Science and Technology, YiXing, PRC

       Date and place of incorporation:                      06-03-1993       PRC

       Registered Capital:                                   US$11,360,000

       Total Investment:                                     US$27,160,000

       Shareholders:                                         Asean Fortune Corporation
                                                             (US$15,560,000)
                                                             YiXing Economic Development Zone Corporations
                                                             (US$800,000)

       Directors:                                            Leung Kwok Wa
                                                             Chu Ding Sun
                                                             Ng Kwun Wan
                                                             Ng Tik Hong
                                                             Ki Man fung, Leonie
                                                             Wong Wing Shu
                                                             Mok Hak Ming
                                                             Shum Ming Ming
</TABLE>


                                      83
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Companion-China Limited Manufacturer of Ceramics Tiles

       Registered number:                                    19950059
                                                             Approved Certificate by:
                                                             Department of Foreign Trade and Economics Relations of Guangdong
                                                             Province Ref Number: 19950059

       Registered office:                                    Industrial Development Zone, Shuang Shui Town, Xinhui, Guangdong, PRC

       Date and place of incorporation:                      13-07-1998       PRC

       Registered Capital:                                   US$2,600,000

       Total Investment:                                     US$2,700,000

       Shareholders:                                         Companion-China Limited
                                                             (US$2,600,000)

       Directors:                                            Leung Kwok Wa
                                                             Chu Ding Sun
                                                             Tai Kin Fai
</TABLE>


                                      84
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Shanghai Companion Building Material Co., Ltd

       Registered number:                                    19950059
                                                             Approved Certificate by:
                                                             Shanghai Minhang Foreign Economic Relations and Trade Commission
                                                             Ref Number: 1997501

       Registered office:                                    Li An West Road, Minhang District, Shanghai, PRC

       Date and place of incorporation:                      27-12-1997       PRC

       Registered Capital                                    US$3,000,000

       Total Investment                                      US$5,000,000

       Shareholders:                                         Shanghai Xin Wu Group Co., Ltd.
                                                             Companion-China Limited
                                                             90%

       Directors:                                            Leung Kwok Wa
                                                             Chu Ding Sun
                                                             Ng Dai Shan
</TABLE>


                                      85
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Companion Building Material (BVI) Limited

       Registered number:                                    274121

       Registered office:                                    Offshore Incorporations Limited
                                                             P.O. Box 957, Offshore Incorporations
                                                             Centre, Road Town, Tortola, British
                                                             Virgin Islands

       Date and place of incorporation:                      31-03-1998       BVI

       Issued share capital:                                 US$2 divided into 2 shares of US$1 each

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1 each

       Shareholder:                                          The Purchaser
                                                             (2 Shares)

       Directors:                                            Ng Sai Hung
                                                             Ng Tik Hong
</TABLE>


                                      86
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Companion Building Material (Holdings)
                                                             Limited

       Registered number:                                    33493

       Registered office:                                    Suite 2901, 29/F., Great Eagle Centre, 23
                                                             Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      18-05-1973       Hong Kong

       Issued share capital:                                 HK$490,385,924 divided into 2,451,929,620
                                                             shares of HK$0.20 each

       Authorised share capital:                             HK$600,000,000 divided into 3,000,000,000
                                                             shares of HK$0.20 each

       Registered Shareholders:                              Companion Building Material
                                                               (BVI) Limited
                                                             (2,451,929,619 shares)
                                                             Ng Kwun Wan (1 Share)

       Beneficial Shareholder:                               Companion Building Material (BVI) Limited
                                                             (2,451,929,620 Shares)

       Directors:                                            Leung Kwok Wa
                                                             Ng Kwun Wan
                                                             Ng Sai Hung
                                                             Ng Tik Hong

       Secretary:                                            Wah Pui Shan
</TABLE>


                                      87

<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Companion - First Top Limited

       Registered number:                                    492285

       Registered office:                                    Suite 2901, 29/F., Great Eagle Centre, 23
                                                             Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      27-09-1994       Hong Kong

       Issued share capital:                                 HK$1,000,000 divided into 1,000,000
                                                             shares of HK$1 each

       Authorised share capital:                             HK$1,000,000 divided into 1,000,000
                                                             shares of HK$1 each

       Shareholders:                                         Companion Building Material
                                                               (Holdings) Limited
                                                             (750,000 Shares)
                                                             Danta Enterprises (International)
                                                               Corporation
                                                             (250,000 Shares)

       Directors:                                            Ng Tik Hong
                                                             Ng Sai Hung
                                                             Tsoi Chi Yin

       Secretary:                                            Wah Pui Shan
</TABLE>


                                      88
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Companion Finance Limited

       Registered number:                                    138959

       Registered office:                                    P.O Box 71, Craigmuir Chambers, Road
                                                             Town, Tortola,
                                                             British Virgin Islands

       Date and place of incorporation:                      05-01-1995       BVI

       Issued share capital:                                 US$100 divided into 100 shares of US$1
                                                             each

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1 each

       Registered and Beneficial Shareholder:                Companion Building Material
                                                               (Holdings) Limited
                                                             (100 shares)

       Directors:                                            Siu York Chee
                                                             Shiu Yeuk Yuen
                                                             Leung Kwok Kui
                                                             Ng Tik Hong
                                                             Ng Sai Hung
                                                             Ng Kwun Wan

       Secretary:                                            Leung Kwok Kui
</TABLE>


                                      89
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Companion Transport Limited

       Registered number:                                    488079

       Registered office:                                    Suite 2901, 29/F., Great Eagle Centre, 23
                                                             Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      09-08-1994       Hong Kong

       Issued share capital:                                 HK$1,500,000 divided into 1,500,000
                                                             shares of HK$1 each

       Authorised share capital:                             HK$1,500,000 divided into 1,500,000
                                                             shares of HK$1 each

       Registered Shareholders:                              Companion Building Material
                                                               (Holdings) Limited
                                                             (1,499,999 shares)
                                                             Ng Kwun Wan (1 share)

       Beneficial Shareholder:                               Companion Building Material
                                                               (Holdings) Limited
                                                             (1,500,000 shares)

       Directors:                                            Ng Sai Hung
                                                             Ng Kwun Wan

       Secretary:                                            Wah Pui Shan
</TABLE>


                                      90
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Crown Empire Limited

       Registered number:                                    613748

       Registered office:                                    Suite 2901, 29/F., Great Eagle Centre, 23
                                                             Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      20-06-1997       Hong Kong

       Issued share capital:                                 HK$2 divided into 2 shares of HK$1 each

       Authorised share capital:                             HK$10,000 divided into 10,000 shares of
                                                             HK$1 each

       Registered Shareholders:                              Companion Building Material
                                                               (Holdings) Limited (1 share)
                                                             Ng Kwun Wan (1 share)
       Beneficial Shareholder:                               Companion Building Material
                                                               (Holdings) Limited (2 shares)

       Directors:                                            Ng Tik Hong
                                                             Ng Sai Hung

       Secretary:                                            Wah Pui Shan
</TABLE>


                                      91
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Crown Rise Investments Limited

       Registered number:                                    661824

       Registered office:                                    Suite 2901, 29/F., Great Eagle Centre, 23
                                                             Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      07-12-1998       Hong Kong

       Issued share capital:                                 HK$2 divided into 2 shares of HK$1 each

       Authorised share capital:                             HK$10,000 divided into 10,000 shares of
                                                             HK$1 each

       Registered Shareholders:                              Companion Building Material
                                                               (Holdings) Limited (1 share)
                                                             Ng Kwun Wan (1 share)

       Beneficial Shareholder:                               Companion Building Material
                                                               (Holdings) Limited (2 shares)

       Directors:                                            Ng Tik Hong
                                                             Ng Kwun Wan
                                                             Ng Sai Hung

       Secretary:                                            Wah Pui Shan
</TABLE>


                                      92
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Ellca Company Limited

       Registered number:                                    109767

       Registered office:                                    Suite 2901, 29/F., Great Eagle Centre, 23
                                                             Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      12-03-1982       Hong Kong

       Issued share capital:                                 HK$10,000 divided into 10,000 shares of
                                                             HK$1 each

       Authorised share capital:                             HK$1,000,000 divided into 1,000,000
                                                             shares of HK$1 each

       Registered Shareholders:                              Companion Building Material
                                                               (Holdings) Limited (9,999 shares)
                                                             Ng Kwun Wan (1 share)

       Beneficial Shareholder:                               Companion Building Material
                                                               (Holdings) Limited (10,000 shares)

       Directors:                                            Ng Sai Hung
                                                             Ng Kwun Wan

       Secretary:                                            Wah Pui Shan
</TABLE>


                                      93
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Four Strong Winds Limited

       Registered number:                                    435936

       Registered office:                                    Suite 2901, 29/F., Great Eagle Centre, 23
                                                             Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      15-07-1993       Hong Kong

       Issued share capital:                                 HK$20 divided into 2 shares of HK$10 each

       Authorised share capital:                             HK$1,000 divided into 100 shares of HK$10
                                                             each

       Registered Shareholders:                              Companion Building Material
                                                               (Holdings) Limited (1 share)
                                                             Ng Kwun Wan (1 share)

       Beneficial Shareholder:                               Companion Building Material
                                                               (Holdings) Limited (2 shares)

       Directors:                                            Ng Sai Hung
                                                             Ng Kwun Wan
                                                             Ng Tik Hong

       Secretary:                                            Wah Pui Shan
</TABLE>


                                      94
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      New Oriental Management Limited

       Registered number:                                    611272

       Registered office:                                    Suite 2901, 29/F., Great Eagle Centre, 23
                                                             Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      04-06-1997       Hong Kong

       Issued share capital:                                 HK$2 divided into 2 shares of HK$1 each

       Authorised share capital:                             HK$10,000 divided into 10,000 shares of
                                                             HK$1 each

       Registered Shareholders:                              Companion Building Material
                                                               (Holdings) Limited (1 share)
                                                             Ng Kwun Wan (1 share)

       Beneficial Shareholder:                               Companion Building Material
                                                               (Holdings) Limited (2 shares)

       Directors:                                            Ng Sai Hung
                                                             Ng Kwun Wan

       Secretary:                                            Wah Pui Shan
</TABLE>


                                      95
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Placemakers Limited

       Registered number:                                    133996

       Registered office:                                    P.O Box 71, Craigmuir Chambers, Road
                                                             Town, Tortola,
                                                             British Virgin Islands

       Date and place of incorporation:                      22-11-1994       BVI

       Issued share capital:                                 US$100 divided into 100 shares of US$1
                                                             each

       Authorised share capital:                             US$50,000 divided into 50,000 shares of
                                                             US$1 each

       Registered and Beneficial Shareholder:                Companion Building Material
                                                               (Holdings) Limited (100 shares)

       Directors:                                            Ng Sai Hung
                                                             Ng Tik Hong
</TABLE>


                                      96
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Sino Pearl Limited

       Registered number:                                    662361

       Registered office:                                    Suite 2901, 29/F., Great Eagle Centre, 23
                                                             Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      11-12-1998       Hong Kong

       Issued share capital:                                 HK$2 divided into 2 shares of HK$1 each

       Authorised share capital:                             HK$10,000 divided into 10,000 shares of
                                                             HK$1 each

       Registered Shareholders:                              Companion Building Material
                                                               (Holdings) Limited (1 share)
                                                             Ng Kwun Wan (1 share)

       Beneficial Shareholders:                              Companion Building Material
                                                               (Holding) Limited (2 shares)
       Directors:                                            Ng Tik Hong
                                                             Ng Kwun Wan
                                                             Ng Sai Hung
       Secretary:                                            Wah Pui Shan
</TABLE>


                                      97
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Union Faith Enterprises Limited

       Registered number:                                    646709

       Registered office:                                    Suite 2901, 29/F., Great Eagle Centre, 23
                                                             Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      05-06-1998       Hong Kong

       Issued share capital:                                 HK$2 divided into 2 shares of HK$1 each

       Authorised share capital:                             HK$10,000 divided into 10,000 shares of
                                                             HK$1 each

       Registered Shareholders:                              Companion Building Material
                                                               (Holdings) Limited (1 share)
                                                             Ng Kwun Wan (1 share)

       Beneficial Shareholder                                Companion Building Material
                                                               (Holdings) Limited (2 shares)

       Directors:                                            Ng Tik Hong
                                                             Ng Kwun Wan

       Secretary:                                            Wah Pui Shan
</TABLE>


                                      98
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Weber Trading Company Limited

       Registered number:                                    120007

       Registered office:                                    Suite 2901, 29/F., Great Eagle Centre, 23
                                                             Harbour Road, Wanchai, Hong Kong

       Date and place of incorporation:                      21-12-1982       Hong Kong

       Issued share capital:                                 HK$20 divided into 2 shares of HK$10 each

       Authorised share capital:                             HK$10,000 divided into 1,000 shares of
                                                             HK$10 each

       Registered Shareholders:                              Companion Building Material
                                                               (Holdings) Limited (1 share)
                                                             Ng Kwun Wan (1 share)

       Beneficial Shareholder:                               Companion Building Material
                                                               (Holdings) Limited (2 shares)

       Directors:                                            Ng Tik Hong
                                                             Ng Kwun Wan
                                                             Ng Sai Hung

       Secretary:                                            Wah Pui Shan
</TABLE>


                                      99
<PAGE>


<TABLE>
<S>    <C>                                                   <C>
       Particulars of the Purchaser's Subsidiaries (cont'd)

       Name of Company:                                      Companion (Malta) Limited

       Registered number:

       Date and place of incorporation:                      25-04-1994       Malta

       Issued share capital:                                 US$6,000 divided into 6,000 shares of
                                                             US$1 each

       Authorised share capital:                             US$6,000 divided into 6,000 shares of
                                                             US$1 each

       Registered Shareholders:

       Beneficial Shareholder:                               Companion Building Material
                                                             (Holdings) Limited
                                                             (6,000 shares)

       Directors:                                            Carniel Buttiging
                                                             John A. Psaile
                                                             John J. Attenrd
</TABLE>


                                      100
<PAGE>


                                   Schedule 3
                                 The Properties
                                  (Clause 1.1)


                                     Part 1
                   Particulars of Properties owned by a Group Company


<TABLE>
Name of Group Company owning the Property         Address of Property
-----------------------------------------         -------------------------------------------------------
<S>    <C>                                        <C>    <C>
1      Carmay Investment Limited                  (1)    Units 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13,
                                                         14 and 15 on 18th Floor;

                                                  (2)    Female Disable Lavatory; Male Lavatory; and
                                                         Disable Lavatory and Lift Lobby and Corridor on
                                                         18th Floor;

                                                  (3)    Parking Space Nos.5, 6 and L5 on 1st Floor of
                                                         Paramount Building,No.12 Ka Yip Street, Hong Kong

2      ACCA Investment Limited                    (1)    Units 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13,
                                                         14 and 15 on 20th Floor;

                                                  (2)    Roof;

                                                  (3)    Female Disable Lavatory; Male Lavatory; and
                                                         Disable Lavatory and Lift Lobby and Corridor on
                                                         20th Floor;

                                                  (4)    Parking Space Nos.7, 8, L3 and L4 on 1st Floor

                                                  of Paramount Building, No.12 Ka Yip Street, Hong Kong

3      Beijing Jing Wei House and Land Estate     Pacific Century Place, Beijing, 2A Worker's Stadium Road
       Development Company Limited                North, Chaoyang District, Beijing PRC
</TABLE>


                                      101
<PAGE>


                                     Part 2
              Particulars of Properties leased by a Group Company


The following details to be completed in respect of each Property leased by a
Group Company:

Address of Property:         PCCW Tower, Taikoo Place, 979 King's Road,
                             Quarry Bay, Hong Kong comprising the following
                             portions of the building known as Dorset House
                             (which comprises a 4 level basement car park, a
                             podium and 2 contiguous tower blocks above the
                             podium) (the "Building") erected on Portions of
                             Section S and the Remaining Portion of Quarry
                             Bay Marine Lot No. 1:

                             1  those portions of the Building now
                                known as PCCW Tower (formerly known at
                                the date of the Lease as Hongkong
                                Telecom Tower (Tower A)) as shown
                                coloured Yellow on Plans 2 to 51
                                annexed to the lease; and

                             2  those loading and unloading bays on
                                the Ground Floor of the Building as
                                shown coloured Yellow hatched Black on
                                Plan 6 annexed to the lease; and

                             3  those car parking spaces on Basement
                                Levels 1 to 4 of the Building as shown
                                coloured Yellow hatched Black on Plans
                                2 to 5 annexed to the lease.

Original parties to lease:   Taikoo Place Holdings Limited (1) (as Owner)
                             Monance Limited (2) (as Lessee)
                             Swire Properties Limited (3) (as Owner's Guarantor)
                             PCCW-HKT Limited (4) (as Lessee's Guarantor)

Date of lease:               13 December 2000

Term:                        999 years from and including 2 February 1882
                             (less the last 3 days thereof)

Rent:                        HK$1.00 per annum (if demanded)

Current lessee:              Partner Link Investments Limited by virtue of an
                             assignment of the lease dated 6 September 2002
                             made between Monance Limited (as assignor),
                             Partner Link Investments Limited (as assignee) and
                             PCCW-HKT Limited (as assignee's guarantor)


                                      102
<PAGE>


                                   Schedule 4
                           The Purchaser's Properties
                                  (Clause 1.1)


LEASED PROPERTIES

<TABLE>
Company                           Location of Leased Properties                                               Leased Term

<S>                               <C>
Digital Delight Limited           Units 01-03 & 08-11, 9/F, Paul Y Centre, 51 Hung To Road               21/10/02 to 20/12/04
                                  Kwun Tong, Kowloon, Hong Kong

Beijing Continental Gas           2nd Floor, Technology and Training Centre                              15/01/01 to 14/01/04
Co. Ltd.                          Zhongguancun Science Park, Chinese Academy of Agriculture Sciences,
                                  12 Zhongguancun South Road, Haidian District, Beijing, PRC

Companion China Limited           Units 1307-8, Great Eagle Centre, Wanchai,                             16/06/03 to 15/06/06
                                  Hong Kong

Chongqing Golden Unity            No. 3456, Chongqing Ceramics Market,                                   25/06/03 to 25/06/04
Ceramics Co Ltd                   Da Du Kou District, Chongqing, PRC.
</TABLE>


                                      103
<PAGE>


LIST OF LAND AND BUILDINGS

<TABLE>
Held by Chongqing Golden Unity Ceramics (56% effectively held by Companion China Ltd)
-------------------------------------------------------------------------------------

Year          Nature                     Location                        Area/description
<S>           <C>                        <C>                             <C>
12/1993       Land Use Right             No. 49, Gong Kuang Road,        720 sq.m
              Certificate                Li Jia Tou, Jiu Long Po
                                         District
12/1993       Land Use Right             No. 49, Gong Kuang Road,        16,569 sq.m
              Certificate                Li Jia Tou, Jiu Long Po
                                         District
12/1993       Land Use Right             No. 49, Gong Kuang Road,        44sq.m
              Certificate                Li Jia Tou, Jiu Long Po
                                         District
10/1996       Building Ownership         No. 49 Gong Kuang Road,         1 machine room , 1 Gas
              Certificate                Li Jia Tou Ma Wang Ping,        station
                                         Banan District.
10/1996       Building Ownership         No. 49 Gong Kuang Road,         1 Ball Mill Machine
              Certificate                Li Jia Tou Ma Wang Ping,
                                         Banan District
10/1996       Building Ownership         No. 49 Gong Kuang Road,         5 Auxiliary Units
              Certificate                Li Jia Tou Ma Wang Ping,        (Southern)
                                         Banan District
10/1996       Building Ownership         Qun Le Village, Hua Xi,         5 Residential Units in 1
              Certificate                Banan District, Chongqing       floor
10/1996       Building Ownership         Qun Le Village, Hua Xi,         5 Residential Units in 1
              Certificate                Banan District, Chongqing       Floor
</TABLE>


<TABLE>
Held by Wenzhou Xishan United Ceramics Co Ltd (73.5% effectively held by Companion China Ltd)
---------------------------------------------------------------------------------------------

Year          Nature                      Location                      Area/Description      Terms
<S>           <C>                         <C>                           <C>                   <C>
8/1998        Land Use Right             No. 229, Xishan East Road,      53,216.7 sq.m
              Certificate                Wenzhou City,
                                         ZheJiang
1/2000        Building Ownership         No. 229, Xishan East Road,      6 storeys of Commercial
              Certificate                Wenzhou City,                   Building
                                         ZheJiang
1/2000        Building Ownership         No. 229, Xishan East Road,      2 storeys of Factory
              Certificate                Wenzhou City,                   Building
                                         Zhejiang
1/2000        Building Ownership         No. 229, Xishan East Road,      2 storeys of Factory
              Certificate                Wenzhou City,                   Building
                                         Zhejiang



</TABLE>


<TABLE>
Held by Xinhui (100% subsidiary of Companion China)
---------------------------------------------------

Year          Nature                      Location                      Area/Description      Terms
<S>           <C>                         <C>                           <C>                   <C>
              Factory, Godown and        Industrial Development          11,000 m2            25 years
              Office                     Zone, Shuang Shui Town,
                                         Xinhui, Jiangmen City,
                                         Guangdong Province
              Workers' Flat (vacant)     Room 202, 2nd Floor, 4          86.86 m2
                                         Agricultural and Science
                                         New Village Road West,
                                         Xinhui, Jiangmen City,
                                         Guangdong Province
</TABLE>


<TABLE>
Held by Companion China Limited
-------------------------------

Year          Nature                      Location                      Area/Description      Terms
<S>           <C>                         <C>                           <C>                   <C>
              Worker's Flat (vacant)     Room 603 (6th Floor) and        127.42 m2 (apartment)
                                         Room 36 (1st Floor),            and 14.6 m2 (car park)
                                         Block 3, Prince
                                         Apartment, 118 Pun Yu
                                         Road, Shanghai
</TABLE>


                                      104
<PAGE>


                                   Schedule 5
                             Completion Obligations
                                   (Clause 6)

1        Seller's Obligations

1.1      General Obligations

         On Completion, the Seller shall deliver or make available to the
         Purchaser the following:

         1.1.1    evidence of the due fulfilment of the Conditions Precedent
                  for which the Seller are responsible;

         1.1.2    transfers of the Sale Shares duly executed by the registered
                  holders in favour of the Purchaser (or as it may direct)
                  accompanied by the relative share certificates (or an express
                  indemnity in a form satisfactory to the Purchaser in the case
                  of any certificate found to be missing);

         1.1.3    the Loan Assignment duly executed by the Seller in favour of
                  the Purchaser (or as it may direct);

         1.1.4    the S&P Agreement duly executed by the Exchange Company in
                  favour of the Purchaser (or as it may direct) and accompanied
                  by the related title documents;

         1.1.5    application by the Seller (or such person as it may direct)
                  to subscribe for the Consideration Shares;

         1.1.6    a certified true copy or certified extracts of the
                  resolutions of the board of directors of the Seller (and, if
                  applicable, resolutions of the shareholders of the Seller)
                  approving this Agreement and the transactions contemplated in
                  this Agreement; and

         1.1.7    all such other documents as may reasonably be required to
                  enable the Purchaser and/or its nominees to be registered as
                  holder(s) of the Sale Shares and the Sale Assets.

2        The Purchaser's Obligations

2.1      Delivery Obligations

         On Completion, the Purchaser shall deliver or make available to the
         Seller:

         2.1.1    evidence of the due fulfilment of the Conditions Precedent
                  for which the Purchaser is responsible;

         2.1.2    the Consideration Shares duly issued and allotted (credited
                  as fully paid) to the Seller (or as it may direct), and
                  procure that the name(s) of the person or persons (including,
                  where appropriate, HKSCC Nominees Limited) so notified by the
                  Seller shall be entered in the register of the members of the
                  Purchaser accordingly (without payment of any registration
                  fee);

         2.1.3    the Certificates in respect of the Convertible Notes duly
                  issued and allotted (credited as fully paid) to the Seller
                  (or as it may direct);


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         2.1.4    a certified true copy of the approval from the Stock Exchange
                  granting listing of and permission to deal in the
                  Consideration Shares and the Conversion Shares upon any
                  exercise of the Conversion Rights (if not already delivered
                  before Completion);

         2.1.5    a certified true copy of the resolutions of the board of
                  directors of the Purchaser approving this Agreement and the
                  issue and allotment of the Consideration Shares to the Seller
                  (or as it may direct), the issue of the Convertible Notes to
                  the Seller (or as it may direct) and the issue of the
                  Conversion Shares upon any exercise of the Conversion Rights;

         2.1.6    in accordance with the written directions of the Seller
                  (issued by the Seller and to the Purchaser at least one
                  Business Day before the expected date of Completion): (1)
                  share certificates for such number of the Consideration
                  Shares as so directed in the name of the Seller (or as it may
                  direct); and (2) share certificates for such number of the
                  Consideration Shares as so directed in the name of HKSCC
                  Nominees Limited to be delivered through the facilities of
                  HKSCC for immediate credit to such CCASS stock accounts
                  pursuant to paragraph 2.2.1 below;

         2.1.7    a copy of the Purchaser's written instruction to its branch
                  share registrar in Hong Kong to update the register of
                  members to reflect the issue of the Consideration Shares, and
                  evidence that the Seller (or the person(s) nominated by it)
                  and/or HKSCC Nominees Limited (if so directed by the Seller
                  pursuant to paragraph 2.1.2 above) has been registered as a
                  shareholder of the Purchaser as to such number of the
                  Consideration Shares as directed by the Seller under
                  paragraph 2.1.2 above;

         2.1.8    certified true copies of resolutions of the board of
                  directors of the Purchaser Group Companies appointing the
                  five nominees of the Seller to be directors of the Purchaser
                  (such appointment to take effect at the earliest time
                  permissible under the Takeovers Code);

         2.1.9    the Loan Assignment duly executed by the Purchaser (or the
                  assignee as it may direct);

         2.1.10   the S&P Agreement duly executed by the Purchaser in favour of
                  the Exchange Company (or as it may direct);

         2.1.11   copies of the instruction letters, placing forms and other
                  documents issued by the Purchaser to its branch share
                  registrar in Hong Kong required for the deposit by the Seller
                  (or any others as the Seller may direct) of the Consideration
                  Shares or any part thereof in CCASS; and

         2.1.12   unless otherwise retained by the Seller, resignations of each
                  director of the Purchaser with an acknowledgement that such
                  director has no claim against the Purchaser for wrongful
                  dismissal or otherwise (such resignation to take effect at
                  the earliest time permissible under the Takeovers Code or
                  such later time as the Seller may require).

2.2      Procurement Obligations

         On Completion, the Purchaser shall:

         2.2.1    (where the directions from the Seller relating to the issue
                  and delivery of the Consideration Shares are such that any
                  part of those shares are to be delivered through the
                  facilities of HKSCC) procure that the relevant Consideration
                  Shares shall be delivered through the facilities of HKSCC for
                  immediate credit to the


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                  relevant CCASS stock accounts as shall be notified by the
                  Seller to the Purchaser for such purpose; and

         2.2.2    promptly execute and deliver to the Seller (or as it may
                  direct) such other forms, instruments or documents, and do
                  such acts as the Seller may require from time to time to
                  facilitate the settlement of any placing of the Consideration
                  Shares which the Seller (or any other persons to whom the
                  Consideration Shares or any part thereof are to be allotted
                  and issued at the direction of the Seller) may have
                  undertaken.


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                                   Schedule 6
                Warranties given by the Seller under Clause 8.1


1        Corporate Information

1.1      The Sale Shares and the Group Companies

         1.1.1    The Seller will be the sole legal and beneficial owner of the
                  Sale Shares after the Restructuring and immediately before
                  Completion and has the right to exercise all voting and other
                  rights over the Sale Shares.

         1.1.2    The Sale Shares comprise the whole of the issued and allotted
                  share capital of the Company, have been properly and validly
                  issued and allotted and are each fully paid or credited as
                  fully paid.

         1.1.3    The shareholders specified in paragraph 2 of Schedule 1 are
                  the sole legal and beneficial owners of the shares in the
                  Subsidiaries and have the right to exercise all voting and
                  other rights over such shares.

         1.1.4    The shares in the Subsidiaries comprise the relevant
                  percentage of the issued and allotted share capital of the
                  Subsidiaries as set out in the Charts, have been properly and
                  validly issued and allotted and each are fully paid or
                  credited as fully paid.

         1.1.5    The particulars contained in Schedule 1 are true, accurate
                  and not misleading.

         1.1.6    No person has the right (whether exercisable now or in the
                  future and whether contingent or not) to call for the
                  allotment, conversion, issue, registration, sale or transfer,
                  amortisation or repayment of any share or loan capital or any
                  other security giving rise to a right over, or an interest
                  in, the capital of any Group Company under any option,
                  agreement or other arrangement (including conversion rights
                  and rights of pre-emption).

         1.1.7    There are no Encumbrances on the shares in any Group Company.

         1.1.8    No Group Company:

                  (i)    has any interest in, or has agreed to acquire, any
                         share capital or other security referred to in
                         paragraph 1.1.6 of any other company (wherever
                         incorporated) other than the Subsidiaries set out in
                         Schedule 1; and

                  (ii)   has any branch, division, establishment or operations
                         outside the jurisdiction in which it is incorporated.

         1.1.9    The Charts contain an accurate description of the corporate
                  structure of the Group before and immediately after
                  Restructuring.

1.2      Constitutional Documents, Corporate Registers and Minute Books

         1.2.1    The constitutional documents of the Group Companies contain
                  full details of the rights and restrictions attached to the
                  share capital of the relevant Group Company and (to the best
                  of the Seller's knowledge, information and belief) there have
                  not been and are not any breaches by any Group Company which
                  would have a material adverse effect on the business of the
                  Group.


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         1.2.2    The statutory books, books of account and other records of
                  whatsoever kind of each Group Company are in all material
                  respects up-to-date, maintained in accordance with applicable
                  law on a proper and consistent basis, contain complete and
                  accurate records of all matters required to be dealt with in
                  such books and records and have attached to them copies of
                  all such resolutions and agreements as are required by law to
                  be delivered to the Hong Kong Registrar of Companies or
                  analogous authority in the relevant incorporation
                  jurisdiction of the Group Companies and all other resolutions
                  passed by the relevant Group Company or any class of members
                  or shareholders, other than resolutions relating to ordinary
                  business at any annual general meeting.

         1.2.3    All books and records referred to in paragraph 1.2.2 and all
                  other documents (including documents of title and copies of
                  all subsisting agreements to which any Group Company is a
                  party) which are the property of each Group Company or ought
                  to be in its possession are in the possession (or under the
                  control) of the relevant Group Company.

         1.2.4    All accounts, documents and returns required by law to be
                  delivered or made to the Hong Kong Registrar of Companies or
                  analogous authority in relevant incorporation jurisdiction of
                  the Group Companies have been duly and correctly delivered or
                  made on a timely basis.

         1.2.5    The register of members of the Company is maintained in the
                  British Virgin Islands and transfer of the Sale Shares are
                  only required to be registered in the British Virgin Islands
                  and not elsewhere.

2        Accounts

         The Accounts and the Management Accounts:

         (a)      have been prepared in accordance with applicable law and in
                  accordance with the accounting principles, standards and
                  practices generally accepted in Hong Kong, and have been
                  prepared in accordance with accounting policies used in
                  preparing the published accounts of the Seller applied on a
                  consistent basis; and

         (b)      having regard to the purpose for which they were drawn up
                  (and except for any audit adjustments in the Accounts and the
                  Management Accounts arising out of the differences between
                  the generally accepted accounting principles in the PRC and
                  those in Hong Kong) do not materially misstate the assets and
                  liabilities of the Group as at the Accounts Date or the
                  Management Accounts Date (as the case may be) nor the profits
                  or losses of the Group for each period concerned.

3        Financial Obligations

3.1      Financial Facilities

         To the best of the Seller's knowledge, information and belief, there
         are no circumstances whereby the continuation of any financial
         facilities material to the businesses of the Group as a whole might be
         prejudiced or affected as a result of a transaction effected by this
         Agreement.


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3.2      Guarantees

         Other than in the ordinary and usual course of business, there is no
         outstanding guarantee, indemnity, suretyship or security (whether or
         not legally binding) given by, or for the benefit of, any Group
         Company.

3.3      No Undisclosed Liabilities

         There are no liabilities, whether actual or contingent, of the Group
         Companies other than: (i) liabilities disclosed or provided for in the
         Management Accounts; (ii) liabilities incurred in the ordinary course
         of business since the Management Accounts Date, none of which is
         material to the business of the Group as a whole; or (iii) liabilities
         disclosed elsewhere in this Agreement.

3.4      No Liabilities

         Save as fully and specifically disclosed in the Seller's Disclosure
         Letter, the Company has no liabilities at all (whether actual or
         contingent).

4        Property

4.1      The Property

         The Properties comprise all of the premises and land owned by the
         Group Companies or in which the Group Companies have any right or
         interest in the nature of ownership.

4.2      Title

         In relation to each Property referred to in Part 1 of Schedule 3, to
         the best of the Seller's knowledge, information and belief, the Group
         Company named in Part 1 of Schedule 3 as owner of the Property has
         good title to the Property and is beneficially entitled to the whole
         of the proceeds of sale of the Property.

4.3      Properties Leased to or by a Group Company

         In relation to each tenancy, lease, sub-lease or licence entered into
         by the Group Companies (whether as landlord, licensor, tenant or
         licensee), so far as the Seller is aware, there is no material
         subsisting breach nor any material non-observance of any covenants,
         condition or agreement contained therein on the part of either the
         relevant landlord, licensor, tenant or licensee.

4.4      The Developer

         The Developer has in all material respects complied with its
         obligations under the Project Agreement and all other agreements
         entered into by it in connection with the Project Agreement. There has
         not been any material misrepresentation to any purchaser of any part
         of the property which has been and is being developed by the
         Developer.

5        Assets

5.1      Ownership of Assets

         All assets which are reasonably necessary for the operations of the
         Group, other than the Properties, the Intellectual Property and any
         assets disposed of or realised in the ordinary course of business are
         legally and beneficially owned by the Group Companies and are


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<PAGE>


         free from Encumbrances (other than lien arising by operation of law
         in the ordinary course of business).

5.2      Debts

         None of the debts receivable or due to any Group Company of an amount
         more than HK$5,000,000 and which are included in the Management
         Accounts or which have subsequently arisen has been outstanding for
         more than six months from its due date for payment or has been
         released on terms that the debtor has paid less than the full value of
         his debt.

5.3      Sufficiency of Assets

         To the best of the Seller's knowledge, information and belief, the
         property, rights and assets owned or leased by the Group Companies
         comprise all the property, rights and assets necessary for the
         carrying on of the business of each Group Company substantially in the
         manner in, and to the extent to, which it is presently conducted.

5.4      Sale Assets

         5.4.1    The Seller will be the legal and beneficial owner of the
                  Loans and has the power and authority to enter into the Loan
                  Assignment at Completion. The total outstanding principal
                  amount of the Loans as at Completion will not be less than
                  the amount stated in the attached form of the Loan
                  Assignment. Save for the Loans and the indebtedness owing by
                  the Developer referred to in Clause 7.1.1(i), immediately
                  after Completion, the Group does not have any other
                  indebtedness due to the Seller's Group (excluding the
                  Purchaser Group and the Group) save for those which arise in
                  the ordinary course of business.

         5.4.2    The Queen's Road Exchange is owned by a wholly-owned
                  subsidiary of the Seller (free from Encumbrances) and that
                  subsidiary has good title to that property and the power and
                  authority to enter into the S&P Agreement at Completion.

         5.4.3    Once the relevant Development Right has been obtained, the
                  Relevant Company (as defined in Clause 7.2) will have the
                  right to enter into a JV for the purpose of Clause 7.2.

6        Intellectual Property and Information Technology

6.1      Infringement

         So far as the Seller is aware, no claims of infringement of any third
         party Intellectual Property rights or interests of material importance
         have been made against the Seller by any third party.

6.2      Information Technology

         In the 12 months prior to the date of this Agreement, there have been
         no failure or breakdown of any computer systems, communication
         systems, software and hardware owned or used by the Group which have
         caused material disruption to the business of the Group.


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7        Contracts

7.1      Contracts

         No Group Company is a party to or subject to any contract,
         transaction, arrangement, understanding or obligation which is
         material to the business of the Group as a whole which is outstanding
         and which:

         7.1.1    is not in the ordinary course of business;

         7.1.2    is not wholly on an arm's length basis;

         7.1.3    restricts its freedom to carry on its business in any part of
                  the world in such manner as it thinks fit so as to have a
                  material adverse effect on the Group.

7.2      Compliance with Agreements

         To the best of the Seller's knowledge, information and belief:

         7.2.1    all the material contracts and all leases, tenancies,
                  licences, concessions and agreements of a material nature to
                  which any of the Group Companies is a party are valid,
                  binding and enforceable obligations of the parties thereto
                  and the terms thereof have been complied with in all material
                  respects by the relevant Group Company;

         7.2.2    no notice of termination or of intention to terminate has
                  been received in respect of any of them.

7.3      Effect of Sale of the Sale Shares and the Sale Assets

         To the best of the knowledge, information and belief of the Seller
         neither entering into, nor compliance with, nor completion of this
         Agreement will, or is likely to result in a material breach of, or
         give any third party a right to terminate or vary, or result in any
         Encumbrance under, any contract or arrangement to which any Group
         Company is a party which is material to the business of the Group as a
         whole.

8        Employees

         All employees engaged in the operation of the business of the Group
         are employed by the relevant Group Companies.

9        Licences and Consents

9.1      All licences, consents, authorisations, orders, warrants,
         confirmations, permissions, certificates, approvals, registrations and
         authorities material to the business of the Group and necessary for
         the carrying on of the business of the Group ("Licences") have been
         obtained, are in full force and effect and have been and are being
         complied with in all material respects.

9.2      To the best of the Seller's knowledge, information and belief, there
         is no reason why any Licence should be suspended, modified or revoked.


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10       Litigation

10.1     Current Proceedings

         No Group Company is involved whether as claimant or defendant or other
         party in any claim, legal action, proceeding, suit, litigation,
         prosecution, investigation, enquiry, mediation or arbitration (other
         than as claimant in the collection of debts arising in the ordinary
         and usual course of its business) which is material to the business of
         the Group as a whole.

10.2     Pending or Threatened Proceedings

         To the best of the Seller's knowledge, information and belief, no such
         claim, legal action, proceeding, suit, litigation, prosecution,
         investigation, enquiry, mediation or arbitration of material
         importance is pending or threatened by or against any Group Company.

11       Insurance

11.1     All assets material to the business of the Group as a whole which are
         capable of being insured have at all material times been and are
         insured in amounts reasonably regarded as adequate against fire and
         other risks normally insured against by companies carrying on similar
         businesses or owning assets of a similar nature.

11.2     Each Group Company has at all material times been and is adequately
         covered against accident, physical loss or damage, third party
         liability and other risks normally covered by insurance by such
         companies.

12       Tax

12.1     All returns, computations, notices and information which are or have
         been required to be made or given by each Group Company for any
         Taxation purpose: (i) have been made or given within the requisite
         periods and on a proper basis and are up-to-date and correct; and (ii)
         none of them is the subject of any dispute with the Inland Revenue
         Department or other Taxation authorities.

12.2     Each Group Company is in possession of sufficient information or has
         reasonable access to such information to enable it to compute its
         liability to Taxation insofar as it depends on any transaction
         occurring on or before Completion.

13       Important Business Issues Since the Management Accounts Date

         Since the Management Accounts Date as regards each Group Company:

         (a)      there has been no material adverse change in the financial
                  position (other than a change affecting or likely to affect
                  all companies carrying on business in similar countries in
                  which the Group carries on business);

         (b)      the business of the Group has been carried on as a going
                  concern in the ordinary and usual course;

         (c)      no Group Company has declared, made or paid any dividend or
                  other distribution to its members;

         (d)      no Group Company has issued or allotted or agreed to issue or
                  allot any share capital or any other security giving rise to
                  a right over its capital;


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<PAGE>


         (e)      no Group Company has redeemed or purchased or agreed to
                  redeem or purchase any of its share capital.

14       General

14.1     The Seller and each of the Group Companies is validly existing and is
         a company duly incorporated under the law of its jurisdiction of
         incorporation.

14.2     The Seller has the legal right and full power and authority to enter
         into and perform this Agreement and any other documents to be executed
         by it pursuant to or in connection with this Agreement.

14.3     The documents referred to in paragraph 14.2 will, when executed,
         constitute valid and binding obligations on the Seller, in accordance
         with their respective terms.

14.4     The Seller has taken all corporate action required by it to authorise
         it to enter into and to perform this Agreement, and any other
         documents to be executed by it pursuant to or in connection with this
         Agreement.

15       Insolvency etc.

15.1     No Group Company is insolvent or unable, whether as defined by Section
         178 of the Companies Ordinance or otherwise, to pay its debts,
         including its future and prospective debts.

15.2     No Group Company has proposed or intends to propose any arrangement of
         any type with its creditors or any group of creditors whether by court
         process or otherwise under which such creditors shall receive or be
         paid less than the amounts contractually or otherwise due to them.

15.3     No Group Company nor any creditor of any Group Company has presented
         any petition, application or other proceedings for any administration
         order, creditors' voluntary arrangement or similar relief by which the
         affairs, business or assets of the company concerned are managed by a
         person appointed for the purpose by a Court, governmental agency or
         similar body, or by any creditor or by the company itself nor has any
         such order or relief been granted or appointment made.


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                                   Schedule 7
               Warranties given by the Purchaser under Clause 8.4


1        Corporate Information

1.1      The Purchaser's Group Companies

         1.1.1    The whole of the issued and allotted share capital of the
                  Purchaser comprise of 1,161,265,406 Existing Issuer's Shares,
                  have been properly and validly issued and allotted and are
                  each fully paid or credited as fully paid.

         1.1.2    The shareholders specified in paragraph 2 of Schedule 2 are
                  the sole legal and beneficial owners of the shares in the
                  Purchaser's Subsidiaries and have the right to exercise all
                  voting and other rights over such shares.

         1.1.3    The shares in the Purchaser's Subsidiaries comprise the whole
                  of the issued and allotted share capital of the Purchaser's
                  Subsidiaries, have been properly and validly issued and
                  allotted and each are fully paid or credited as fully paid.

         1.1.4    The particulars contained in Schedule 2 are true, accurate
                  and not misleading.

         1.1.5    No person has the right (whether exercisable now or in the
                  future and whether contingent or not) to call for the
                  allotment, conversion, issue, registration, sale or transfer,
                  amortisation or repayment of any share or loan capital or any
                  other security giving rise to a right over, or an interest
                  in, the capital of any Purchaser's Group Company under any
                  option, agreement or other arrangement (including conversion
                  rights and rights of pre-emption).

         1.1.6    There are no Encumbrances on the shares in any Purchaser's
                  Subsidiaries.

         1.1.7    No Purchaser's Group Company:

                  (i)    has any interest in, or has agreed to acquire, any
                         share capital or other security referred to in
                         paragraph 1.1.5 of any other company (wherever
                         incorporated) other than the Purchaser's Subsidiaries
                         set out in Schedule 2; and

                  (ii)   has any branch, division, establishment or operations
                         outside the jurisdiction in which it is incorporated.

         1.1.8    The Purchaser's Chart contains an accurate description of the
                  corporate structure of the Purchaser's Group.

1.2      Constitutional Documents, Corporate Registers and Minute Books

         1.2.1    The constitutional documents of the Purchaser's Group
                  Companies contain full details of the rights and restrictions
                  attached to the share capital of the relevant Purchaser's
                  Group Company and (to the best of the Purchaser's knowledge,
                  information and belief) there have not been and are not any
                  breaches by any Purchaser's Group Company which would have a
                  material adverse effect on the business of the Purchaser's
                  Group.

         1.2.2    The statutory books, books of account and other records of
                  whatsoever kind of each Purchaser's Group Company are in all
                  material respects up-to-date,


                                      115
<PAGE>


                  maintained in accordance with applicable law on a proper
                  and consistent basis, contain complete and accurate records
                  of all matters required to be dealt with in such books and
                  records and have attached to them copies of all such
                  resolutions and agreements as are required by law to be
                  delivered to the Hong Kong Registrar of Companies or
                  analogous authority in the relevant incorporation
                  jurisdiction of the Purchaser's Group Companies and all
                  other resolutions passed by the relevant Purchaser's Group
                  Company or any class of members or shareholders, other than
                  resolutions relating to ordinary business at any annual
                  general meeting.

         1.2.3    All books and records referred to in paragraph 1.2.2 and all
                  other documents (including documents of title and copies of
                  all subsisting agreements to which any Purchaser's Group
                  Company is a party) which are the property of each
                  Purchaser's Group Company or ought to be in its possession
                  are in the possession (or under the control) of the relevant
                  Purchaser's Group Company.

         1.2.4    All accounts, documents and returns required by law to be
                  delivered or made to the Hong Kong Registrar of Companies or
                  analogous authority in relevant incorporation jurisdiction of
                  the Purchaser's Group Companies have been duly and correctly
                  delivered or made on a timely basis.

2        Purchaser's Accounts

2.1      Latest Purchaser's Accounts

         The Purchaser's Accounts have been prepared in accordance with
         applicable law and in accordance with the accounting principles,
         standards and practices generally accepted in Hong Kong and give a
         true and fair view of the assets, liabilities and state of affairs of
         the Purchaser's Group at the Purchaser's Accounts Date and of the
         profits or losses of the Purchaser's Group for the period concerned.

2.2      Purchaser's Management Accounts

         The Purchaser's Management Accounts have been prepared in accordance
         with accounting policies used in preparing the Purchaser's Accounts
         applied on a consistent basis and having regard to the purpose for
         which they were drawn up do not materially misstate the assets and
         liabilities of the Purchaser's Group as at the Relevant Purchaser's
         Management Accounts Date nor the profits or losses of the Purchaser's
         Group for the period concerned.

3        Financial Obligations

3.1      Financial Facilities

         To the best of the Purchaser's knowledge, information and belief,
         there are no circumstances whereby the continuation of any financial
         facilities material to the businesses of the Purchaser's Group as a
         whole might be prejudiced or affected as a result of a transaction
         effected by this Agreement.

3.2      Guarantees

         Other than in the ordinary and usual course of business, there is no
         outstanding guarantee, indemnity, suretyship or security (whether or
         not legally binding) given by, or for the benefit of, any Purchaser's
         Group Company.


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<PAGE>


3.3      No Undisclosed Liabilities

         There are no liabilities, whether actual or contingent, of the
         Purchaser's Group Companies other than: (i) liabilities disclosed or
         provided for in the Purchaser's Management Accounts; (ii) liabilities
         incurred in the ordinary course of business since the Purchaser's
         Management Accounts Date, none of which is material to the business of
         the Purchaser's Group as a whole; or (iii) liabilities disclosed
         elsewhere in this Agreement.

3.4      No Liabilities

         Save as fully and specifically disclosed in the Purchaser's Disclosure
         Letter, the Purchaser has no liabilities at all (whether actual or
         contingent).

4        Property

4.1      The Property

         The Purchaser's Properties comprise all of the premises and land owned
         by the Purchaser's Group Companies or in which the Purchaser's Group
         Companies have any right or interest in the nature of ownership.

4.2      Title

         In relation to each Purchaser's Property referred to in Schedule 4, to
         the best of the Purchaser's knowledge, information and belief, the
         Purchaser's Group Company named in Schedule 4 as owner of the
         Purchaser's Property has good title to the Purchaser's Property and is
         beneficially entitled to the whole of the proceeds of sale of the
         Purchaser's Property.

4.3      Properties Leased to or by a Purchaser's Group Company

         In relation to each tenancy, lease, sub-lease or licence entered into
         by the Purchaser's Group Companies (whether as landlord, licensor,
         tenant or licensee), so far as the Purchaser is aware, there is no
         material subsisting breach nor any material non-observance of any
         covenants, condition or agreement contained therein on the part of
         either the relevant landlord, licensor, tenant or licensee.

5        Assets

5.1      Ownership of Assets

         All assets which are reasonably necessary for the operations of the
         Purchaser's Group, other than the Purchaser's Properties, the
         Intellectual Property and any assets disposed of or realised in the
         ordinary course of business are legally and beneficially owned by the
         Purchaser's Group Companies and are free from Encumbrances (other than
         lien arising by operation of law in the ordinary course of business).

5.2      Debts

         None of the debts receivable or due to any Purchaser's Group Company
         of an amount more than HK$1,000,000 and which are included in the
         Purchaser's Management Accounts or which have subsequently arisen has
         been outstanding for more than six months from its due date for
         payment or has been released on terms that the debtor has paid less
         than the full value of his debt.


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<PAGE>


5.3      Sufficiency of Assets

         To the best of the Purchaser's knowledge, information and belief, the
         property, rights and assets owned or leased by the Purchaser's Group
         Companies comprise all the property, rights and assets necessary for
         the carrying on of the business of each Purchaser's Group Company
         substantially in the manner in, and to the extent to, which it is
         presently conducted.

6        Intellectual Property and Information Technology

6.1      Infringement

         So far as the Purchaser is aware, no claims of infringement of any
         third party Intellectual Property rights or interests of material
         importance have been made against the Purchaser by any third party.

6.2      Information Technology

         In the 12 months prior to the date of this Agreement, there have been
         no failure or breakdown of any computer systems, communication
         systems, software and hardware owned or used by the Purchaser's Group
         which have caused material disruption to the business of the
         Purchaser's Group.

7        Contracts

7.1      Contracts

         No Purchaser's Group Company is a party to or subject to any contract,
         transaction, arrangement, understanding or obligation which is
         material to the business of the Purchaser's Group as a whole which is
         outstanding and which:

         7.1.1    is not in the ordinary course of business;

         7.1.2    is not wholly on an arm's length basis;

         7.1.3    restricts its freedom to carry on its business in any part of
                  the world in such manner as it thinks fit so as to have a
                  material adverse effect on the Purchaser's Group.

7.2      Compliance with Agreements

         To the best of the Purchaser's knowledge, information and belief:

         7.2.1    all the material contracts and all leases, tenancies,
                  licences, concessions and agreements of a material nature to
                  which any of the Purchaser's Group Companies is a party are
                  valid, binding and enforceable obligations of the parties
                  thereto and the terms thereof have been complied with in all
                  material respects by the relevant Purchaser's Group Company;

         7.2.2    no notice of termination or of intention to terminate has
                  been received in respect of any of them.

7.3      Effect of Purchase of the Sale Shares and the Sale Assets

         To the best of the knowledge, information and belief of the Purchaser
         neither entering into, nor compliance with, nor completion of this
         Agreement will, or is likely to result in a material breach of, or
         give any third party a right to terminate or vary, or result in any
         Encumbrance


                                      118
<PAGE>


         under, any contract or arrangement to which any Purchaser's Group
         Company is a party which is material to the business of the
         Purchaser's Group as a whole.

8        Employees

         All employees engaged in the operation of the business of the
         Purchaser's Group are employed by the relevant Purchaser's Group
         Companies.

9        Licences and Consents

9.1      All licences, consents, authorisations, orders, warrants,
         confirmations, permissions, certificates, approvals, registrations and
         authorities material to the business of the Purchaser's Group and
         necessary for the carrying on of the business of the Purchaser's Group
         ("Licences") have been obtained, are in full force and effect and have
         been and are being complied with in all material respects.

9.2      To the best of the Purchaser's knowledge, information and belief,
         there is no reason why any Licence should be suspended, modified or
         revoked.

10       Litigation

10.1     Current Proceedings

         No Purchaser's Group Company is involved whether as claimant or
         defendant or other party in any claim, legal action, proceeding, suit,
         litigation, prosecution, investigation, enquiry, mediation or
         arbitration (other than as claimant in the collection of debts arising
         in the ordinary and usual course of its business) which is material to
         the business of the Purchaser's Group as a whole.

10.2     Pending or Threatened Proceedings

         To the best of the Purchaser's knowledge, information and belief, no
         such claim, legal action, proceeding, suit, litigation, prosecution,
         investigation, enquiry, mediation or arbitration of material
         importance is pending or threatened by or against any Purchaser's
         Group Company.

11       Insurance

11.1     All assets material to the business of the Purchaser's Group as a
         whole which are capable of being insured have at all material times
         been and are insured in amounts reasonably regarded as adequate
         against fire and other risks normally insured against by companies
         carrying on similar businesses or owning assets of a similar nature.

11.2     Each Purchaser's Group Company has at all material times been and is
         adequately covered against accident, physical loss or damage, third
         party liability and other risks normally covered by insurance by such
         companies.

12       Tax

12.1     All returns, computations, notices and information which are or have
         been required to be made or given by each Purchaser's Group Company
         for any Taxation purpose: (i) have been made or given within the
         requisite periods and on a proper basis and are up-to-date


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<PAGE>


         and correct; and (ii) none of them is the subject of any dispute with
         the Inland Revenue Department or other Taxation authorities.

12.2     Each Purchaser's Group Company is in possession of sufficient
         information or has reasonable access to such information to enable it
         to compute its liability to Taxation insofar as it depends on any
         transaction occurring on or before Completion.

13       Important Business Issues Since the Purchaser's Management Accounts
         Date

         Since the Purchaser's Management Accounts Date as regards each
         Purchaser's Group Company:

         (a)      there has been no material adverse change in the financial
                  position (other than a change affecting or likely to affect
                  all companies carrying on business in similar countries in
                  which the Purchaser's Group carries on business);

         (b)      the business of the Purchaser's Group has been carried on as
                  a going concern in the ordinary and usual course;

         (c)      no Purchaser's Group Company has declared, made or paid any
                  dividend or other distribution to its members;

         (d)      no Purchaser's Group Company has issued or allotted or agreed
                  to issue or allot any share capital or any other security
                  giving rise to a right over its capital;

         (e)      no Purchaser's Group Company has redeemed or purchased or
                  agreed to redeem or purchase any of its share capital.

14       General

14.1     The Purchaser and each of the Purchaser's Group Companies is validly
         existing and is a company duly incorporated under the law of its
         jurisdiction of incorporation.

14.2     The Purchaser has the legal right and full power and authority to
         enter into and perform this Agreement and any other documents to be
         executed by it pursuant to or in connection with this Agreement.

14.3     The documents referred to in paragraph 14.2 will, when executed,
         constitute valid and binding obligations on the Purchaser, in
         accordance with their respective terms.

14.4     The Purchaser has taken all corporate action required by it to
         authorise it to enter into and to perform this Agreement, and any
         other documents to be executed by it pursuant to or in connection with
         this Agreement.

15       Insolvency etc.

15.1     No Purchaser's Group Company is insolvent or unable, whether as
         defined by Section 178 of the Companies Ordinance or otherwise, to pay
         its debts, including its future and prospective debts.

15.2     No Purchaser's Group Company has proposed or intends to propose any
         arrangement of any type with its creditors or any group of creditors
         whether by court process or otherwise under which such creditors shall
         receive or be paid less than the amounts contractually or otherwise
         due to them.


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<PAGE>


15.3     No Purchaser's Group Company nor any creditor of any Purchaser's Group
         Company has presented any petition, application or other proceedings
         for any administration order, creditors' voluntary arrangement or
         similar relief by which the affairs, business or assets of the company
         concerned are managed by a person appointed for the purpose by a
         Court, governmental agency or similar body, or by any creditor or by
         the company itself nor has any such order or relief been granted or
         appointment made.


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<PAGE>


                                   Schedule 8
                            Form of the Certificate

                         Dong Fang Gas Holdings Limited
           (a company incorporated in Bermuda with limited liability)


                                                           Certificate No.: [o]

                     HK$[o] TRANCHE [A/B] CONVERTIBLE NOTE

Issued pursuant to the memorandum of association and bye-laws of Dong Fang Gas
Holdings Limited (the "Issuer"), a resolution of the board of directors of the
Issuer passed on [o] 2004 and a resolution of the shareholders of the Issuer
passed on [o] 2004.

THIS IS TO CERTIFY that [o] whose registered office is situate at 39/F, PCCW
Tower, TaiKoo Place, 979 King's Road, Quarry Bay, Hong Kong is the registered
holder (the "Noteholder") of the above-mentioned Convertible Note (the "Note").
The Noteholder is entitled to require the Issuer to convert the whole or any
part(s) of the principal amount outstanding under this Note into ordinary
shares in the capital of the Issuer subject to and in accordance with the terms
and conditions attached hereto which shall form an integral part of this
Certificate (the "Conditions").

Subject to the foregoing, the Issuer, for value received, promises to redeem
the Note and pay the principal sum of HK$[o] to the Noteholder in accordance
with the Conditions.

The Issuer shall pay interest on the principal amount of the Note in accordance
with the Conditions.

GIVEN under the seal of the Issuer on [o] 2004.





-----------------------
Director



-----------------------
Secretary/Director



Notes:

The Note cannot be transferred to bearer on delivery and is only transferable
to the extent permitted by Condition 2. This Certificate must be delivered to
the company secretary of the Issuer for cancellation and reissue of an
appropriate certificate in the event of any such transfer.


(For endorsement in the event of partial conversion or redemption)

Date               Amount Converted/Redeemed                 Amount Outstanding
                   (please specify)



                                   122
<PAGE>


                        TERMS AND CONDITIONS OF THE NOTE

The Note shall be held subject to and with the benefit of the terms and
conditions set out below and such terms and conditions shall be binding on Dong
Fang Gas Holdings Limited (the "Issuer") and the Noteholder. Expressions
defined in the agreement between PCCW Limited and the Issuer dated 5 March 2004
relating to, inter alia, the acquisition of the entire issued share capital of
Ipswich Holdings Limited and the issue of the Note (the "Agreement") shall bear
the same meaning in this Certificate. In addition, "Issue Date" means the date
of issue of the Note. The definitions and rules of construction set out in the
Agreement shall apply in the interpretation of the Conditions.

1        PERIOD

         Subject as provided herein, the Issuer shall repay the outstanding
         principal amount of the Note (together with all unpaid interest
         accrued thereon up to and including the date of actual repayment)
         subject to and in accordance with the Conditions on the Business Day
         immediately preceding the [seventh/tenth] {for the Tranche A Note and
         Tranche B Note respectively} anniversary of the Issue Date ("Maturity
         Date").

2        STATUS AND TRANSFER

2.1      The obligations of the Issuer arising under the Note constitute
         general unsubordinated, direct, unconditional, unsecured obligations
         of the Issuer and shall at all times rank equally among themselves and
         pari passu with all other present and future unsecured and
         unsubordinated obligations of the Issuer except for obligations
         accorded preference by mandatory provisions of applicable law. No
         application will be made for a listing of the Note on any stock
         exchange.

2.2      Subject to the conditions, approvals, requirements and any other
         provisions of or under: (a) the Stock Exchange (and any other stock
         exchange on which the Issuer's Shares may be listed at the relevant
         time) or their rules and regulations; (b) the approval for listing in
         respect of the Conversion Shares; and (c) all applicable laws and
         regulations, the Note may (subject further to Condition 2.4) be
         transferred to any person.

2.3      Any assignment or transfer of the Note shall be of the whole or any
         part of the outstanding principal amount of the Note in whole
         multiples of HK$1,000,000 and the Issuer shall use all reasonable
         endeavours to facilitate any such assignment or transfer of the Note,
         including making any necessary applications to the Stock Exchange for
         approval. As a condition precedent to any such assignment or transfer
         (other than an assignment or transfer of the entire Note), the
         Noteholder and the Issuer shall execute such deed or other document as
         may be necessary or desirable in the reasonable opinion of the Issuer:
         (i) to provide for a new form of the Conditions by excluding
         cross-references to the Agreement; (ii) to provide for meetings of
         holders of Notes of the same series (being Notes derived from this
         Note); and (iii) to amend the terms of this Note so that (where the
         consent, agreement or approval of the Noteholder is required under
         these Conditions) the approval by a simple majority of the Noteholders
         notified to the Issuer shall suffice and the right of the Noteholder
         under Condition 10 may not be exercisable unless a simple majority of
         the Noteholders approving the exercise of such right shall have been
         obtained. For this purpose, "simple majority" of the Noteholders shall
         be a resolution passed by not less than holders of 50% of the
         principal amount of the Notes then outstanding and attending the
         meeting of Noteholders (or by way of a written confirmation signed by
         the relevant majority of Noteholders).


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<PAGE>


2.4      In relation to any assignment or transfer of the Note permitted under
         or otherwise pursuant to this Condition 2:

         (a)      The Note may only be transferred by execution of a form of
                  transfer ("Transfer Form") which shall be in a form
                  previously agreed between the Issuer and the Noteholder by
                  the transferor and the transferee (or their duly authorised
                  representatives). In this Condition, "transferor" shall,
                  where the context permits or requires, include joint
                  transferors or can be construed accordingly.

         (b)      The Certificate of the Note must be delivered to the Issuer
                  accompanied by: (i) a duly executed (and if required, duly
                  stamped) Transfer Form; and (ii) in the case of the execution
                  of the Transfer Form on behalf of a corporation by its
                  officers, the authority of that person or those persons to do
                  so and a copy of the constitutional document of such
                  corporation. The Issuer shall, within three (3) Business Days
                  of receipt of such documents from the Noteholder, cancel the
                  existing Certificate and issue a new certificate under the
                  seal of the Issuer, in favour of the transferee or assignee
                  in respect of the Note (or the transferred or assigned part
                  of the Note) as applicable and, if the Note is assigned or
                  transferred in part only, issue a new certificate under the
                  seal of the Issuer, in favour of the transferor in relation
                  to the part of the Note not assigned or transferred.

3        INTEREST

         [The Note will bear no interest.]/

3.1      [Subject to Condition 3.2, the Note will bear interest from the Issue
         Date at a rate of one per cent. (1%) per annum on the principal amount
         of the Note outstanding from time to time. The interest will, subject
         as provided herein, be payable by the Issuer once every six (6) months
         in arrear on 30 June and 31 December of each year after the Issue Date
         and before the Maturity Date (pro-rata for the actual number of days
         in case the relevant period is less than six months).

3.2      If the Noteholder has converted any part or the whole of the principal
         amount of the Note and upon delivery to the Issuer of the Certificate
         for the Note, the Noteholder shall be entitled to interest in respect
         of such part or the whole of the principal amount being converted for
         the period from the immediately preceding interest payment date (or
         the Issue Date, as the case may be) up to and including the Conversion
         Date concerned.

3.3      Interest shall accrue from day to day and shall be calculated on the
         basis of the actual number of days elapsed and a 365-day year,
         including the first day of the period during which it accrues and
         including the last.]

         {for the Tranche A Note and Tranche B Note respectively}

4        PAYMENTS

4.1      Payment of the interest and principal (if any) in respect of the Note
         shall be made for value on the due dates into such bank account in
         Hong Kong as the Noteholder may notify the Issuer in writing from time
         to time. All payments by the Issuer shall be made in Hong Kong dollars
         in immediately available funds free and clear of any withholding or
         deduction for any present or future taxes, imposts, levies, duties or
         other charge payable by the Issuer. If the Issuer is required by law
         to make any such deduction or withholding from any amount paid (except
         where such deduction or withholding represents tax on the overall
         income of


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<PAGE>


         the Noteholder), the Issuer shall pay to the Noteholder such
         additional amount as shall be necessary so that the Noteholder
         receives an amount equal to the amount which it would have received
         if such withholding or deduction had not been made.

4.2      All payments by the Issuer hereunder shall be made, not later than
         11:00 a.m. (Hong Kong time) on the due date.

4.3      If the due date for payment of any amount in respect of the Note is
         not a Business Day, the Noteholder will be entitled to payment on the
         next following Business Day in the same manner together with interest
         accrued in respect of any such delay.

4.4      The Issuer shall not be liable to make any payment in respect of the
         outstanding principal amount of the Note unless and until the original
         of the Certificate is presented to the Issuer at its address specified
         in Condition 16. The Issuer shall retain the original of the
         Certificate upon the redemption or conversion thereof in full.

4.5      Save as provided under the Conditions, the outstanding principal
         amount of the Note or any part thereof shall not be repaid or prepaid
         by the Issuer.

4.6      If the Issuer defaults in the payment of any sum due and payable under
         this Note, the Issuer shall pay interest on such sum to the Noteholder
         from the due date to the date of actual payment in full (both before
         and after judgment) calculated at the rate of three per cent. (3%) per
         annum.

5        REDEMPTION

         Unless previously converted in accordance with these Conditions, upon
         presentation on the Maturity Date of the original of the Certificate
         to the Issuer at its address specified in Condition 16, the Issuer
         shall redeem the Note at [its principal amount outstanding together
         with accrued interest thereon up to and including the Maturity
         Date]/[120% of its principal amount outstanding] {for the Tranche A
         Note and Tranche B Note respectively} in Hong Kong dollars as provided
         in Condition 4.

6        CONVERSION

         The Noteholder may at any time on or after the Issue Date and on or
         prior to the Maturity Date, in compliance with the provisions of
         Condition 8, require the Issuer to convert the whole or any part of
         the principal amount outstanding (in whole multiples of HK$100,000 or,
         if less, the then outstanding principal amount of the Note) under this
         Note into Shares at the Conversion Price. The New Shares shall be
         allotted and issued in the name of the Noteholder or if it so directs
         any other persons pursuant to such conversion and shall be delivered
         to the Noteholder within three (3) Business Days after the date of
         presentation of the relevant original Certificate. No fraction of a
         Share will be issued on conversion but (except in cases where any such
         cash payment would amount to less than HK$10) a cash payment will be
         made to the Noteholder in respect of such fraction. Such Shares shall
         rank pari passu in all respects with all other Shares in issue on the
         date of the conversion notice and shall be entitled to all dividends,
         bonuses and other distributions the record date of which falls on a
         date on or after the date of the conversion notice.

7        ADJUSTMENTS

7.1      Subject as hereinafter provided, the Conversion Price shall from time
         to time be adjusted in accordance with the following relevant
         provisions and so that if the event giving rise to any


                                      125
<PAGE>


         such adjustment shall be such as would be capable of falling within
         more than one of sub-paragraphs (a) to (g) inclusive of this
         Condition 7.1, it shall fall within the first of the applicable
         paragraphs to the exclusion of the remaining paragraphs provided that
         if such event would be capable of falling within sub-paragraph (h) as
         well, sub-paragraph (h) shall apply:

         (c)      If and whenever the Issuer's Shares by reason of any
                  consolidation or sub-division become of a different nominal
                  amount, the Conversion Price in force immediately prior
                  thereto shall be adjusted by multiplying it by the following
                  fraction:

                                       A
                                    --------
                                       B
                  where:

                  A = the revised nominal amount; and

                  B = the former nominal amount.

                  Each such adjustment shall be effective from the close of
                  business in Hong Kong on the day immediately preceding the
                  date on which the consolidation or sub-division becomes
                  effective.

         (d)      If and whenever the Issuer shall issue (other than in lieu of
                  a cash dividend) any Shares credited as fully paid by way of
                  capitalisation of profits or reserves (including any share
                  premium account or capital redemption reserve fund), the
                  Conversion Price in force immediately prior to such issue
                  shall be adjusted by multiplying it by the following
                  fraction:

                                       C
                                    --------
                                       D
                  in each case, where:

                  C = the aggregate nominal amount of the issued Shares
                      immediately before such issue; and

                  D = the aggregate nominal amount of the issued Shares
                      immediately after such issue.

                  Each such adjustment shall be effective (if appropriate,
                  retroactively) from the commencement of the day next
                  following the record date for such issue.

         (e)      If and whenever the Issuer shall make any Capital
                  Distribution (as defined in Condition 7.2) to holders (in
                  their capacity as such) of Shares (whether on a reduction of
                  capital or otherwise) or shall grant to such holders rights
                  to acquire for cash assets of the Issuer or any of its
                  subsidiaries, the Conversion Price in force immediately prior
                  to such distribution or grant shall be adjusted by
                  multiplying it by the following fraction:

                                     A - B
                                  ------------
                                       A
                  where:

                  A = the market price (as defined in Condition 7.2) on
                      the date on which the Capital Distribution or, as the
                      case may be, the grant is publicly announced


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<PAGE>


                      or (failing any such announcement) the date immediately
                      preceding the date of the Capital Distribution or, as the
                      case may be, of the grant; and

                  B = the fair market value on the day of such
                      announcement or (as the case may require) the
                      immediately preceding day, as determined in good faith
                      by an approved merchant bank of the portion of the
                      Capital Distribution or of such rights which is
                      attributable to one Share,

                  Provided that:

                  (i)    if in the opinion of the relevant approved merchant
                         bank, the use of the fair market value as aforesaid
                         produces a result which is significantly inequitable,
                         it may instead determine (and in such event the above
                         formula shall be construed as if B meant) the amount
                         of the said market price which should properly be
                         attributed to the value of the Capital Distribution or
                         rights; and

                  (ii)   the provisions of this sub paragraph (c) shall not
                         apply in relation to the issue of Shares paid out of
                         profits or reserves and issued in lieu of a cash
                         dividend.

                  Each such adjustment shall be effective (if appropriate,
                  retroactively) from the commencement of the day next following
                  the record date for the Capital Distribution or grant.

         (f)      If and whenever the Issuer shall offer to holders of Shares
                  new Shares for subscription by way of rights, or shall grant
                  to holders of Shares any options or warrants to subscribe for
                  new Shares, at a price which is less than ninety five per
                  cent. (95%) of the market price (as defined in Condition 7.2)
                  at the date of the announcement of the terms of the offer or
                  grant, the Conversion Price shall be adjusted by multiplying
                  the Conversion Price in force immediately before the date of
                  the announcement of such offer or grant by the following
                  fraction:

                                      Q x R
                                 P + -------
                                        S
                                 -----------
                                    P + Q

         where:

                  P =    the number of Shares in issue immediately before the
                         date of such announcement;

                  Q =    the aggregate number of Shares so offered for
                         subscription;

                  R =    the amount (if any) payable for the right, option or
                         warrant to subscribe for each new Share, plus the
                         subscription price payable for each new Share;

                  S =    the market price of one Share on the trading day
                         immediately prior to such announcement.

                  Such adjustment shall become effective (if appropriate
                  retroactively) from the commencement of the day next following
                  the record date for the offer or grant.

         (g)      (i)    If and whenever the Issuer shall issue wholly for cash
                         any securities which by their terms are convertible
                         into or exchangeable for or carry rights of
                         subscription for new Shares, and the total Effective
                         Consideration per


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<PAGE>


                         Share (as defined below) initially receivable for such
                         securities is less than ninety five per cent. (95%) of
                         the market price (as defined in Condition 7.2) at the
                         date of the announcement of the terms of issue of such
                         securities, the Conversion Price shall be adjusted by
                         multiplying the Conversion Price in force immediately
                         prior to the issue by a fraction of which the
                         numerator is the number of Shares in issue immediately
                         before the date of the issue plus the number of Shares
                         which the total Effective Consideration for the
                         securities issued would purchase at such market price
                         and the denominator is the number of Shares in issue
                         immediately before the date of the issue plus the
                         number of Shares to be issued upon conversion or
                         exchange of, or the exercise of the subscription
                         rights conferred by, such securities at the initial
                         conversion or exchange rate or subscription price.
                         Such adjustment shall become effective (if appropriate
                         retrospectively) from the close of business in Hong
                         Kong on the Business Day next preceding whichever is
                         the earlier of the date on which the issue is
                         announced and the date on which the issuer determines
                         the conversion or exchange rate or subscription price

                  (ii)   If and whenever the rights of conversion or exchange
                         or subscription attached to any such securities as are
                         mentioned in section (i) of this sub-paragraph (e) are
                         modified so that the total Effective Consideration per
                         Share (as defined below) initially receivable for such
                         securities shall be less than ninety five per cent.
                         (95%) of the market price (as defined in Condition
                         7.2) at the date of announcement of the proposal to
                         modify such rights of conversion or exchange or
                         subscription, the Conversion Price shall be adjusted
                         by multiplying the Conversion Price in force
                         immediately prior to such modification by a fraction
                         of which the numerator is the number of Shares in
                         issue immediately before the date of such modification
                         plus the number of Shares which the total Effective
                         Consideration receivable for the securities issued at
                         the modified conversion or exchange price would
                         purchase at such market price and of which the
                         denominator is the number of Shares in issue
                         immediately before such date of modification plus the
                         number of Shares to be issued upon conversion or
                         exchange of or the exercise of the subscription rights
                         conferred by such securities at the modified
                         conversion or exchange rate or subscription price.
                         Such adjustment shall become effective (if
                         appropriate, retrospectively) as at the date upon
                         which such modification shall take effect. A right of
                         conversion or exchange or subscription shall not be
                         treated as modified for the foregoing purpose where it
                         is adjusted to take account of rights or
                         capitalisation issues and other events which have
                         given rise to adjustment of the Conversion Price under
                         this Condition 7.

                  For the purpose of this sub-paragraph (e), the "total
                  Effective Consideration" receivable for the securities issued
                  shall be deemed to be the consideration receivable by the
                  Issuer for any such securities plus the additional minimum
                  consideration (if any) to be received by the Issuer upon (and
                  assuming) the conversion or exchange thereof or the exercise
                  of such subscription rights, and the "total Effective
                  Consideration per Share" initially receivable for such
                  securities shall be such aggregate consideration divided by
                  the number of Shares to be issued upon (and assuming) such
                  conversion or exchange at the initial conversion


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<PAGE>


                  or exchange rate or the exercise of such subscription rights
                  at the initial subscription price, in each case without any
                  deduction for any commissions, discounts or expenses paid,
                  allowed or incurred in connection with the issue.

         (h)      If and whenever the Issuer shall issue wholly for cash any
                  Shares at a price per Share which is less than ninety five
                  per cent. (95%) of the market price (as defined in Condition
                  7.2) at the date of the announcement of the terms of such
                  issue, the Conversion Price shall be adjusted by multiplying
                  the Conversion Price in force immediately before the date of
                  such announcement by a fraction of which the numerator is the
                  number of Shares in issue immediately before the date of such
                  announcement plus the number of Shares which the aggregate
                  amount payable for the issue would purchase at such market
                  price and the denominator is the number of Shares in issue
                  immediately before the date of such announcement plus the
                  number of Shares so issued. Such adjustment shall become
                  effective on the date of the issue.

         (i)      If and whenever the Issuer shall issue Shares for the
                  acquisition of any asset at a total Effective Consideration
                  per Share (as defined in this sub-paragraph (g) below) which
                  is less than ninety five per cent. (95%) of the market price
                  (as defined in Condition 7.2) at the date of the announcement
                  of the terms of such issue, the Conversion Price shall be
                  adjusted in such manner as may be determined by an approved
                  merchant bank (as defined in Condition 7.2). Such adjustment
                  shall become effective on the date of issue. For the purpose
                  of this sub-paragraph (g) "total Effective Consideration"
                  shall be the aggregate consideration credited as being paid
                  for such Shares by the Issuer on acquisition of the relevant
                  asset without any deduction of any commissions, discounts or
                  expenses paid, allowed or incurred in connection with the
                  issue thereof, and the "total Effective Consideration per
                  Share" shall be the total Effective Consideration divided by
                  the number of Shares issued as aforesaid.

         (j)      If the Issuer or the Noteholder determines that an adjustment
                  should be made to the Conversion Price as a result of one or
                  more events or circumstances (whether or not referred to in
                  sub-paragraphs (a) to (g) above) (even if the relevant event
                  or circumstance is specifically excluded in the Conditions
                  from the operation of sub-paragraphs (a) to (g) above), or
                  that an adjustment should be made in a manner other than in
                  accordance with sub-paragraphs (a) to (g) above, or that an
                  adjustment should not be made (even if the relevant event or
                  circumstance is specifically provided for in sub-paragraphs
                  (a) to (g) above), or that the effective date for the
                  relevant adjustment should be a date other than that
                  mentioned in sub-paragraphs (a) to (g) above, the Issuer or
                  the Noteholder may, at its own expense, request an approved
                  merchant bank, acting as expert, to determine as soon as
                  practicable (i) what adjustment (if any) to the Conversion
                  Price is fair and reasonable to take account thereto and is
                  appropriate to give the result which the approved merchant
                  bank considers in good faith to reflect the intentions of the
                  provisions of this Condition 7; and (ii) the date on which
                  such adjustment should take effect; and upon such
                  determination such adjustment (if any) shall be made and
                  shall take effect in accordance with such determination,
                  provided that an adjustment shall only be made pursuant to
                  this sub-paragraph (i) if the approved merchant bank is so
                  requested to make such a determination.

7.2      For the purposes of this Condition 7:


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         "announcement" shall include the release of an announcement to the
         press or the delivery or transmission by telephone, telex or otherwise
         of an announcement to the Stock Exchange and "date of announcement"
         shall mean the date on which the announcement is first so released,
         delivered or transmitted and "announced" shall have a corresponding
         meaning;

         "approved merchant bank" means a merchant bank of repute in Hong Kong
         selected by the Issuer and agreed by the Noteholder for the purpose of
         providing a specific opinion or calculation or determination hereunder
         or, in the absence of such appointment, such merchant bank as may be
         appointed by the President for the time being of The Hong Kong Society
         of Accountants upon the request of either the Issuer or the
         Noteholder;

         "Capital Distribution" shall mean any cash dividend or a distribution
         in specie and any dividend charged or provided for in the accounts for
         any financial period shall (whenever paid and however described) be
         deemed to be a Capital Distribution provided that any such dividend
         shall not be so deemed if

         (a)      it is paid out of the aggregate of the net profits (less
                  losses) attributable to the holders of Shares for all
                  financial periods after that ended 31 December, 2003 as shown
                  in the audited consolidated profit and loss account of the
                  Issuer and its subsidiaries for each such financial period;
                  or

         (b)      to the extent that (a) above does not apply, the rate of that
                  dividend, together with all other dividends on the class of
                  capital in question charged or provided for in the accounts
                  for the financial period in question, does not exceed the
                  aggregate rate of dividend on such class of capital charged
                  or provided for in the accounts for the last preceding
                  financial period. In computing such rates, such adjustments
                  may be made as are in the opinion of an approved merchant
                  bank appropriate to the circumstances and shall be made if
                  the lengths of such periods differ materially;

         "issue" shall include allot;

         "market price" means the average closing price of Shares on the Stock
         Exchange for each of the last twenty (20) Stock Exchange dealing days
         on which dealings in the Issuer's Shares on the Stock Exchange took
         place ending on the last such dealing day immediately preceding the
         day on or as of which the market price is to be determined;

         "reserves" includes unappropriated profits;

         "rights" includes rights in whatsoever form issued; and

         "Shares" includes, for the purpose of Shares comprised in any offer
         pursuant to paragraphs (c), (d), (e) or (f) of Condition 7.1, any such
         ordinary shares of the Issuer as, when fully paid, will be Shares.

7.3      The  provisions of  sub-paragraphs  (b), (c), (d), (e) and (f) of
         Condition 7.1 shall not apply to:

         (a)      an issue of fully paid Shares upon the exercise of any
                  conversion rights attached to securities convertible into
                  Shares or upon exercise of any rights (including any
                  conversion of part or the whole of the Note) to acquire
                  Shares (except a rights issue) provided that an adjustment
                  (if required) has been made under this Condition 7 in respect
                  of the issue of such securities or granting of such rights
                  (as the case may be);


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         (b)      an issue of Shares or other securities of the Issuer or any
                  subsidiary of the Issuer wholly or partly convertible into,
                  or rights to acquire, Shares pursuant to any share option
                  scheme of the Issuer adopted in accordance with the Listing
                  Rules;

         (c)      an issue of fully paid Shares by way of capitalisation of all
                  or part of any subscription right reserve, or any similar
                  reserve which has been or may be established pursuant to the
                  terms of any securities wholly or partly convertible into or
                  rights to acquire Shares; or

         (d)      an issue of Shares pursuant to a scrip dividend scheme where
                  an amount not less than the nominal amount of the Issuer's
                  Shares so issued is capitalised and the market value of such
                  Shares is not more than 110 per cent. of the amount of
                  dividend which holders of the Issuer's Shares could elect to
                  or would otherwise receive in cash, for which purpose the
                  "market value" of a Share shall mean the average of the
                  closing prices for such Stock Exchange dealing days on which
                  dealings in the Issuer's Shares took place (being not less
                  than twenty (20) such days) as are selected by the directors
                  of the Issuer in connection with determining the basis of
                  allotment in respect of the relevant scrip dividend and which
                  fall within the period of one month ending on the last day on
                  which holders of Shares may elect to receive or (as the case
                  may be) not to receive the relevant dividend in cash.

7.4      Any adjustment to the Conversion Price shall be made to the nearest
         one tenth of a cent so that any amount under one twentieth of a cent
         shall be rounded down and any amount of one twentieth of a cent or
         more shall be rounded up and in no event shall any adjustment
         (otherwise than upon the consolidation of Shares into Shares of a
         larger nominal amount) involve an increase in the Conversion Price. In
         addition to any determination which may be made by the directors of
         the Issuer, every adjustment to the Conversion Price shall be
         certified by an approved merchant bank.

7.5      Notwithstanding anything contained herein, no adjustment shall be made
         to the Conversion Price in any case in which the amount by which the
         same would be reduced in accordance with the foregoing provisions of
         this Condition would be less than one-tenth of a cent and any
         adjustment that would otherwise be required then to be made shall be
         carried forward.

7.6      If the Issuer or any subsidiary of the Issuer shall modify the rights
         attached to any share or loan capital so as wholly or partly to
         convert or make convertible such share or loan capital into, or attach
         thereto any rights to acquire, Shares, the Issuer shall appoint an
         approved merchant bank to consider whether any adjustment to the
         Conversion Price is appropriate (and if such approved merchant bank
         shall certify that any such adjustment is appropriate, the Conversion
         Price shall be adjusted accordingly and the provisions of Conditions
         7.4, 7.5, 7.7, 7.8 and 7.9 shall apply).

7.7      Whenever the Conversion Price is adjusted as herein provided, the
         Issuer shall as soon as possible but not later than seven (7) Business
         Days after the relevant adjustment has been determined give notice to
         the Noteholder that the Conversion Price has been adjusted (setting
         out brief particulars of the event giving rise to the adjustment, the
         Conversion Price in effect prior to such adjustment, the adjusted
         Conversion Price and the effective date thereof) and shall at all
         times thereafter so long as the Note remains outstanding make
         available for inspection at its principal place of business in Hong
         Kong a signed copy of the said certificate of the approved merchant
         bank.


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<PAGE>


7.8      Notwithstanding any other provision of this Condition 7, no adjustment
         shall be made which would (but for this Condition 7.8) result in the
         Conversion Price being reduced so that on conversion, Shares shall
         fall to be issued at a discount to their nominal value, and in such
         case an adjustment shall be made to the effect that the Conversion
         Price will be reduced to the nominal value of a Share.

8        PROCEDURE FOR CONVERSION

8.1      The Conversion Rights may, subject as provided herein and in Condition
         6.1, be exercised on any Business Day on or prior to the Maturity Date
         by the Noteholder delivering to the Issuer in accordance with
         Condition 16 a written notice stating the intention of the Noteholder
         to convert and the address in Hong Kong for the delivery of the share
         certificates of the Conversion Shares pursuant to Condition 8.2
         together with the original of the Certificate. The conversion notice
         shall be in the form annexed to these Conditions. The Issuer shall be
         responsible for payment of all taxes and stamp, issue and registration
         duties (if any), and Stock Exchange levies and charges (if any)
         arising on any such conversion.

8.2      The Conversion Shares shall be allotted and issued by the Issuer,
         credited as fully paid, to the Noteholder or as it may direct within
         three (3) Business Days after, and with effect from, the date the
         conversion notice is served by the Noteholder against delivery of the
         original Certificate (which the Noteholder is obliged to deliver to
         the Issuer following such conversion), and the Issuer shall issue
         certificates for the Conversion Shares to which the Noteholder or such
         person as it may direct shall become entitled in consequence of
         exercising its Conversion Rights in board lots with one certificate
         for any odd lot of Shares arising from conversion and shall deliver
         the share certificates to the Noteholder in Hong Kong at its address
         set out in Condition 16, (if appropriate) together with the original
         Certificate with an endorsement on it by a director of the Issuer for
         any balance of the Note not converted within the three (3) Business
         Day period referred to above.

9        PROTECTION OF THE NOTEHOLDER

9.1      So long as the Note is outstanding, unless with the prior written
         approval of the Noteholder:

         (a)      the Issuer shall not amend and/or repeal any provision of its
                  memorandum of association or bye-laws (save for any amendment
                  required by the Listing Rules);

         (b)      the Issuer shall not issue or authorise the issue of any
                  securities of any class having any right, preference or
                  priority superior to or on a parity with the Note;

         (c)      the Issuer shall not declare or pay any dividend on any
                  securities other than the Issuer's Shares;

         (d)      the Issuer shall not authorise or effect a merger, sale or
                  lease of all or substantially all the assets of the Issuer or
                  a voluntary liquidation, recapitalisation or reorganisation
                  of the Issuer;

         (e)      the Issuer shall not change the nature of its business;

         (f)      the Issuer shall keep available for issue, free from
                  pre-emptive rights, out of its authorised but unissued
                  capital, sufficient Shares to satisfy in full the Conversion
                  Rights at the Conversion Price from time to time and all
                  other rights for the time being outstanding of subscription
                  for and conversion into Shares;


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         (g)      the Issuer shall not in any way modify the rights attached to
                  the Issuer's Shares (except as contemplated under Condition
                  7) as a class or attach any special restrictions thereto;

         (h)      the Issuer shall procure that at no time shall there be in
                  issue Shares of different nominal values;

         (i)      other than as a result of, or in circumstances where, an
                  offer made to holders of Shares to acquire all or any
                  proportion of the Issuer's Shares becoming unconditional, the
                  Issuer shall use all reasonable endeavours: (i) to maintain a
                  listing for all the issued Shares on the Stock Exchange; (ii)
                  to obtain and maintain a listing on the Stock Exchange for
                  all the Conversion Shares issued on the exercise of the
                  Conversion Rights attaching to the Note; and (iii) to obtain
                  a listing for all the Issuer's Shares issued on the exercise
                  of the Conversion Rights attaching to the Note on any other
                  stock exchange on which any of the Issuer's Shares are for
                  the time being listed and will forthwith give notice to the
                  holder of the Note in accordance with Condition 16 of the
                  listing or delisting of the Issuer's Shares by any such stock
                  exchange;

         (j)      the Issuer shall provide the Noteholder with (i) a copy of
                  its annual reports, annual financial statements, interim
                  reports and all other statements and circulars sent by the
                  Issuer to its shareholders within three (3) Business Days
                  after the Issuer sends the same to its shareholders, and (ii)
                  a copy of each press announcement and press release, teletext
                  announcement released or made by the Issuer in accordance
                  with the Listing Rules within three (3) Business Days after
                  date of release;

         (k)      the Issuer shall ensure that all the Conversion Shares will
                  be duly and validly issued fully paid and registered;

         (l)      the Issuer shall comply with and procure the compliance of
                  all conditions imposed by the Stock Exchange or by any other
                  competent authority (in Hong Kong or elsewhere) for approval
                  of the issue of the Note or for the listing of and permission
                  to deal in the Conversion Shares issued or to be issued on
                  the exercise of the Conversion Rights and to ensure the
                  continued compliance thereof (provided in each case that the
                  Noteholder complies with and satisfies all such conditions
                  applicable to it);

         (m)      the Issuer shall not issue or pay up any securities by way of
                  capitalisation of profits or reserves other than (i) by the
                  issue of fully paid Shares to holders of its Shares; or (ii)
                  as mentioned in Condition 7.3(c); or (iii) by the issue of
                  Shares in lieu of a cash dividend in the manner referred to
                  in Condition 7.3(d);

         (n)      the Issuer shall not create or permit to be in issue any
                  Equity Share Capital other than Shares, provided that nothing
                  in this Condition 9.1(o) shall prevent (i) any consolidation
                  or sub-division of the Issuer's Shares; or (ii) the issue of
                  Equity Share Capital which does not participate in dividends
                  in respect of a certain financial period but is pari passu in
                  all other respects with the Issuer's Shares;

         (o)      the Issuer shall procure that (i) no securities issued by the
                  Issuer shall be converted into Shares or exchanged for Shares
                  except in accordance with the terms of issue thereof, and
                  (ii) no securities issued by the Issuer without rights to


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<PAGE>


                  convert into Shares or to be exchanged for Shares shall
                  subsequently be granted such rights;

         (p)      the Issuer shall not make any issue, grant or distribution or
                  take any other action if the effect thereof would be that on
                  the exercise of the Conversion Rights, it would but for
                  Condition 7.8 be required to issue Shares at a discount to
                  their nominal value or to adjust the Conversion Price to a
                  level below the nominal value of the Issuer's Shares;

         (q)      if an offer is made to holders of Shares to acquire all or
                  any proportion of the Issuer's Shares, the Issuer shall
                  forthwith give notice of such offer to the Noteholder and
                  shall use all reasonable endeavours to procure that a similar
                  offer is extended in respect of the Note or in respect of any
                  Shares issued on conversion of the Note during the period of
                  the offer;

         (r)      the Issuer shall not make any distribution in specie to
                  holders of Shares unless the Noteholder is entitled to the
                  Specie Distribution Right in accordance with Condition 11;

         (s)      the Issuer shall not, subject as hereinafter provided, make
                  any reduction or redemption of share capital, share premium
                  account or capital redemption reserve involving the repayment
                  of money to shareholders of the Issuer (other than to
                  shareholders of the Issuer having the right on a winding up
                  to a return of capital in priority to the holders of Shares)
                  or reduce any uncalled liability in respect thereof unless,
                  in any such case, the same gives rise (or would, but for the
                  provisions of Conditions 7.5 or 7.8 give rise) to an
                  adjustment of the Conversion Price in accordance with
                  Condition 7; and

         (t)      the Issuer shall not enter into any deed, agreement,
                  assignment, instrument or documents whatsoever binding on it
                  which may result in any breach of any of the terms and
                  conditions of the Note.

10       EVENTS OF DEFAULT

         If any of the following events ("Events of Default") occurs, the
         Noteholder may give notice to the Issuer that the Note has, on the
         giving of such notice, become immediately due and payable at its
         principal amount then outstanding together with any accrued and unpaid
         interest under Condition 3.1 calculated up to and including the date
         of payment:

         (a)      other than as a result of, or in circumstances where, an
                  offer made to holders of Shares to acquire all or any
                  proportion of the Issuer's Shares becoming unconditional, the
                  listing of the Issuer's Shares (as a class) on the Stock
                  Exchange:

                  (i)    ceases; or

                  (ii)   is suspended for a continuous period of fifteen (15)
                         days on each of which the Stock Exchange is generally
                         open for trading due to the default of the Issuer or
                         any of its directors, officers, employees or agents;
                         or

         (b)      (i)    the breach of any of the Purchaser's Warranties which
                         will have a material adverse effect on the Purchaser's
                         Group or on the Issuer's ability to perform any of its
                         obligations contemplated hereunder; or

                  (ii)   the Issuer defaults in performance or observance or
                         compliance with any of its material obligations
                         contained in the terms and conditions of the Note,


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<PAGE>


                         and such event continues to subsist for a continuous
                         period of fifteen (15) Business Days after notice of
                         such event is sent from the Noteholder to the Issuer;
                         or

         (c)      the Issuer fails to pay the principal when due or the Issuer
                  fails to pay interest on the Note when due unless non payment
                  of such interest is due solely to administrative or technical
                  error and payment is made within three (3) Business Days of
                  the due date thereof; or

         (d)      (i)    any amounts of principal repayment or interest payment
                         in relation to bank borrowings of the Issuer or any of
                         its subsidiaries are not paid when due, or as the case
                         may be, within any applicable grace period and the
                         relevant bank notifies the Issuer or the relevant
                         subsidiary that such non-payment constitutes an event
                         of default under the terms of relevant loan; or

                  (ii)   the Issuer or any of its material subsidiaries fails
                         to pay when due or expressed to be due any amounts
                         payable or expressed to be payable by it under any
                         present or future guarantee for any moneys borrowed
                         from or raised through a financial institution and the
                         relevant financial institution notifies the Issuer or
                         the relevant subsidiary that such failure to pay
                         constitutes an event of default under the terms of the
                         guarantee or the loan in relation to which the
                         guarantee was given; or

         (e)      an encumbrancer takes possession or a receiver, manager or
                  other similar officer is appointed of the whole or any
                  material part of the undertaking, property, assets or
                  revenues of the Issuer or any of its subsidiaries; or

         (f)      the Issuer or any of its material subsidiaries becomes
                  insolvent or is unable to pay its debts as they mature or
                  applies for or consents to or suffers the appointment of any
                  administrator, liquidator or receiver of the Issuer or any of
                  its material subsidiaries or the whole or any material part
                  of the undertaking, property, assets or revenues of the
                  Issuer or any of its material subsidiaries or takes any
                  proceeding under any law for a readjustment or deferment of
                  its obligations or any part of them or makes or enters into a
                  general assignment or compromise with or for the benefit of
                  its creditors; or

         (g)      an order is made or an effective resolution passed for
                  winding-up of the Issuer or any of its material subsidiaries,
                  except in the case of winding up of subsidiaries in the
                  course of internal reorganisation; or

         (h)      a moratorium is agreed or declared in respect of any
                  indebtedness of the Issuer or any of its subsidiaries or any
                  governmental authority or agency condemns, seizes,
                  compulsorily purchases or expropriates all or any material
                  part of the assets of the Issuer or any of its subsidiaries;
                  or

         (i)      the Issuer or any of its material subsidiaries consolidates
                  or amalgamates with or merge into any other corporation
                  (other than a consolidation, amalgamation or merger in which
                  the Issuer or such material subsidiary is the continuing
                  corporation), or the Issuer or any of its material
                  subsidiaries sells or transfers all or substantially all of
                  its assets, or

         (j)      at any time any indebtedness, including any obligation
                  (whether present or future, actual or contingent, secured or
                  unsecured, as principal or surety or otherwise) for the
                  payment or repayment of money, of any member of the
                  Purchaser's Group


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<PAGE>


                  becomes  due and payable prior to its stated maturity by
                  reason of default, or event of default (howsoever described)
                  by any member of the Purchaser's Group.

         Provided that notwithstanding the foregoing, if the Issuer shall fail
         to issue the Conversion Shares in accordance with the Conditions, the
         Noteholder shall be entitled to bring an action against the Issuer for
         either specific performance or damages. The Issuer will forthwith on
         becoming aware of any such event as is mentioned in this Condition
         give notice in writing thereof to the Noteholder. At any time after
         any interest amount or the principal amount of the Note has become
         payable and payment of which has not been made, the Noteholder may
         without further notice institute such proceedings as it may think fit
         to enforce payment of the monies due.

         [In the event that the Noteholder gives notice to the Issuer that the
         Note has become immediately due and payable on the occurrence of any
         Event of Default, the Issuer shall immediately repay the principal
         amount then outstanding together with any accrued and unpaid interest
         under Condition 3.1 and a proportionate part of the 20% redemption
         premium under Condition 5, calculated up to and including the date of
         payment.] {for the Tranche B Note only}

11       DISTRIBUTION IN SPECIE

         If the Issuer declares a distribution in specie other than an issue of
         Shares in lieu of a cash dividend falling under Condition 7.3(d) (a
         "Specie Distribution") to shareholders at any time during the period
         in which the Noteholder can exercise its Conversion Rights, the
         Noteholder will, unless an adjustment to the Conversion Price has been
         made under Condition 7 in respect of the Specie Distribution in full,
         be entitled to an amount (the "Specie Distribution Right") which shall
         be determined as follows:

         (a)      the Issuer and the Noteholder will on the date of
                  announcement of the Specie Distribution instruct an approved
                  merchant bank (as defined in Condition 7.2) to value the
                  Specie Distribution which would have been payable to the
                  Noteholder on the Issuer's Shares falling to be issued if the
                  Noteholder had exercised its Conversion Rights immediately
                  prior to the record date for the Specie Distribution in
                  respect of the whole of the principal amount of the Note then
                  outstanding (the "Notional Specie Distribution"); and

         (b)      upon the determination of the approved merchant bank's
                  valuation of the Notional Specie Distribution (which
                  valuation shall be final and binding on both the Issuer and
                  the Noteholder) the Issuer will pay a cash amount equal to
                  the value of the Notional Specie Distribution to the
                  Noteholder.

12       VOTING

         The Noteholder will not be entitled to receive notices of, attend or
         vote at any meetings of the Issuer by reason only of it being the
         Noteholder.

13       SELLING RESTRICTIONS
         The Noteholder agrees not to offer the Note or Shares issued and
         allotted to it upon any exercise of the Conversion Rights for sale or
         subscription to the public pursuant to a prospectus within the meaning
         of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong)
         except such as, and under circumstances that are, permitted under the
         Companies Ordinance.


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<PAGE>



14       EXPERTS

         In giving any certificate or making any adjustment hereunder, any
         approved merchant bank appointed by the Issuer shall be deemed to be
         acting as experts and not as arbitrators and, in the absence of
         manifest error, their decision shall be conclusive and binding on the
         Issuer and the Noteholder and all persons claiming through or under
         them respectively.

15       REPLACEMENT NOTE

         If the Certificate is lost or mutilated, the Noteholder shall notify
         the Issuer as soon as practicable and a replacement Certificate shall
         be issued if the Noteholder provides the Issuer with: (a) the
         mutilated Certificate or a declaration by the Noteholder or its
         officer that the Certificate had been lost or mutilated (as the case
         may be) or other evidence that the Certificate had been lost or
         mutilated; and (b) an appropriate indemnity in such form and content
         as the Issuer may reasonably require. Any Certificate replaced in
         accordance with this Condition shall forthwith be cancelled.

16       NOTICES

         Each notice, demand or other communication to be given or made under
         this Agreement shall be in writing and delivered or sent to the
         relevant party at its respective address or facsimile number set out
         below (or such other address or facsimile number as the addressee has
         by five (5) days' prior written notice specified to the other party):

         To the Issuer:

                              Facsimile:         2372 0611
                              Attention:         Company Secretary

         To the Noteholder:

                              Facsimile:         2962 5725
                              Attention:         Company Secretary

         Any notice, demand or other communication so addressed to the relevant
         party shall be deemed to have been delivered: (a) if given or made by
         letter and delivered by hand or courier when actually delivered to the
         relevant address; (b) if given or sent by registered mail, on the date
         which is two (2) Business Days (in the case of mail sent to a local
         address) or five (5) Business Days (in the case of mail sent to an
         overseas address) after the posting thereof; and (c) if given or made
         by facsimile, when despatched with confirmation of successful
         transmission (and if the deemed date of delivery is not a Business
         Day, on the immediately following Business Day).

17       AMENDMENT

         The terms and conditions of the Note may be varied, expanded or
         amended by agreement in writing between the Issuer and the Noteholder.

18       GOVERNING LAW AND JURISDICTION

         The Note and the Conditions are governed by and shall be construed in
         accordance with the laws of Hong Kong and the Parties agree to submit
         to the non-exclusive jurisdiction of the courts of Hong Kong.


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<PAGE>


                               CONVERSION NOTICE

Terms defined in the agreement between PCCW Limited and Dong Fang Gas Holdings
Limited (the "Issuer") dated 5 March 2004 relating to, inter alia, the
acquisition of the entire issued share capital of Ipswich Holdings Limited and
the issue of the Note and in the Certificate relating to the Note (as may be
amended) shall bear the same meaning in this Conversion Notice.

The undersigned hereby irrevocably elects to convert the following amount of
the Note into shares of the Issuer in accordance with the Conditions, as of the
date specified below, such shares to be issued in the name of the Shareholder
set out below.

Name of Noteholder:

Certificate Number(s):

Amount to be converted:

Conversion Date:
(being the date of this notice and on which the original Certificate is
presented to the Issuer)

Applicable Conversion Price:

Name in which shares are to be issued:

Address of Shareholder:

Signature of Noteholder:



Dated [o] 200[o]


                                      138
<PAGE>




                                   Annexure A
                                Loan Assignment



                                      139
<PAGE>




                                   Annexure B
                                 S&P Agreement



                                      140
<PAGE>


                               Table of Contents

Contents                                                                   Page

1        Interpretation.......................................................1

2        Agreement to Sell and Purchase.......................................7

3        Consideration........................................................7

4        Conditions...........................................................8

5        Pre-Completion......................................................12

6        Completion..........................................................14

7        Specific Undertakings...............................................15

8        Warranties..........................................................16

9        Limitation of Seller's Liability....................................18

10       Claims Against the Seller...........................................20

11       Limitation of Purchaser's Liability.................................21

12       Claims Against the Purchaser........................................23

13       Confidentiality.....................................................24

14       Other Provisions....................................................25

Schedule 1 The Group.........................................................31

Schedule 2 The Purchaser's Group.............................................56

Schedule 3 The Properties (Clause 1.1)......................................101

Schedule 4 The Purchaser's Properties (Clause 1.1)..........................103

Schedule 5 Completion Obligations (Clause 6)................................105

Schedule 6 Warranties given by the Seller under Clause 8.1..................108

Schedule 7 Warranties given by the Purchaser under Clause 8.4...............108

Schedule 8 Form of the Certificate..........................................122

Annexure A Loan Assignment..................................................139


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Annexure B S&P Agreement....................................................140



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