Imperium Global : (I) CONTINUING CONNECTED TRANSACTION; AND (II) WAIVER FROM STRICT COMPLIANCE WITH RULES 14A.52 AND 14A.53 OF THE LISTING RULES

September 14, 2020 at 08:35 am EDT

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

Imperium Group Global Holdings Limited

帝國集團環球控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 0776)

CONTINUING CONNECTED TRANSACTION; AND
1. WAIVER FROM STRICT COMPLIANCE WITH RULES 14A.52 AND 14A.53 OF THE LISTING RULES

FIRST VIE AGREEMENTS

On 28 May 2020, Hainan Seven Elements, Hainan Wanhui and the Registered Shareholders entered into the First VIE Agreements in order to enable the financial results, the entire economic benefits and the risks of the businesses of Hainan Seven Elements to flow into Hainan Wanhui and to enable Hainan Wanhui to have indirect control over Hainan Seven Elements. The acquisition by Hainan Wanhui of the effective control of Hainan Seven Elements from the Registered Shareholders did not involve any consideration.

SECOND VIE AGREEMENTS

On 23 June 2020, Hainan Yihuan, Hainan Wanhui and Ms. Zheng Y.L. entered into the Second VIE Agreements in order to enable the financial results, the entire economic benefits and the risks of the businesses of Hainan Yihuan to flow into Hainan Wanhui and to enable Hainan Wanhui to have indirect control over Hainan Yihuan. The acquisition by Hainan Wanhui of the effective control of Hainan Yihuan from Ms. Zheng Y.L. did not involve any consideration.

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LISTING RULES IMPLICATIONS

As at the date of this announcement, (i) Hainan Seven Elements is owned as to 95% by Ms. Zheng Q.F. and 5% by Ms. Zheng Y.L.; (ii) Hainan Yihuan is wholly-owned by Ms. Zheng Y.L.; and (iii) each of Ms. Zheng Q.F. and Ms. Zheng Y.L. is a relative of Mr. Cheng Ting Kong, an executive Director and the controlling shareholder. As such, each of Ms. Zheng Q.F., Ms. Zheng Y.L., Hainan Seven Elements and Hainan Yihuan is a deemed connected person of the Company under Chapter 14A of the Listing Rules.

As the applicable percentage ratios (other than the profits ratio) in respect of the expected annual services fee payable by each of Hainan Seven Elements and Hainan Yihuan to Hainan Wanhui under each of the First Management Services Agreement and the Second Management Services Agreement respectively during its term may be more than 5%, the transactions contemplated under the VIE Agreements will constitute continuing connected transactions on the part of the Company and may be subject to the reporting, announcement, annual review and the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

Notwithstanding that the transactions contemplated under each of the VIE Agreements technically constitute continuing connected transactions on the part of the Company for the purposes of Chapter 14A of the Listing Rules, the Directors consider that it would be unduly burdensome and impracticable, and would add unnecessary administrative costs to the Company, (i) for the transactions contemplated under each of the First VIE Agreements and the Second VIE Agreements, being the service fees payable under each of the First Management Services Agreement and the Second Management Services Agreement respectively, to be subject to the annual cap requirement under Rule 14A.53 of the Listing Rules; and (ii) for the term of each of the VIE Agreements to be limited to three years or less under Rule 14A.52 of the Listing Rules.

The Company applied for, and the Stock Exchange has granted, a waiver from strict compliance with the requirements of (i) setting annual caps for the transactions contemplated under each of the VIE Agreements under Rule 14A.53 of the Listing Rules; and (ii) limiting the term of each of the VIE Agreements to three years or less pursuant to Rule 14A.52 of the Listing Rules, subject to the conditions set out in this announcement.

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GENERAL

An Independent Board Committee, comprising all the independent non-executive Directors, will be established to advise the Independent Shareholders regarding the VIE Agreements and the transactions contemplated thereunder, and as to whether the VIE Agreements are on normal commercial terms or better, fair and reasonable and in the interests of the Company and the Shareholders as a whole. The Independent Financial Adviser will be appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

The EGM will be convened and held for the Independent Shareholders to consider and, if thought fit, to approve the VIE Agreements and the transactions contemplated thereunder.

A circular containing, among others, further details of (i) the VIE Agreements and the transactions contemplated thereunder; (ii) a letter of recommendations from the Independent Board Committee to the Independent Shareholders in respect of the VIE Agreements; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the VIE Agreements; and (iv) a notice convening the EGM, will be despatched to the Shareholders on or before 7 October 2020.

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INFORMATION ON HAINAN SEVEN ELEMENTS

Hainan Seven Elements is a company established in the PRC with limited liability on 26 December 2017. As at the date of this announcement, Hainan Seven Elements has a registered capital of RMB1,000,000, which has not been paid up and is owned as to 95% by Ms. Zheng Q.F. and 5% by Ms. Zheng Y.L. Ms. Zheng Q.F. is the sole director of Hainan Seven Elements.

Hainan Seven Elements is principally engaged in development and design of online game programs and operation of online games. It currently holds (i) the Business Licence

for Value-added Telecommunications Business issued by Hainan Communications Administration (海南省通信管理局); and (ii) the Permit for Cyber Culture Business

Operations issued by Hainan Provincial Department of Culture, Radio, Film, Television, Publication and Sports (海南省旅遊和文化廣電體育廳). Since its establishment in

December 2017, Hainan Seven Elements has not yet commenced its online game business.

Set out below is the financial information of Hainan Seven Elements for the two financial years ended 31 December 2018 and 31 December 2019 and the six months ended 30 June 2020:

	For the year	For the year	For the six
	ended	ended	months ended
	31 December	31 December	30 June
	2018	2019	2020
	RMB'000	RMB'000	RMB'000
	(approximately)	(approximately)	(approximately)
	(unaudited)	(unaudited)	(unaudited)
Revenue	-	-	-
Profit/(loss) before taxation	-	-	(170)
Profit/(loss) after taxation	-	-	(170)

The major asset of Hainan Seven Elements constitutes of cash and bank balance and its major liability constitutes of other payables.

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Group structure of Hainan Seven Elements

The Company

100%

Profit Business Group Limited

70%

Nova eSports International Limited

100%

Deluxe Trading (HK) Limited
					Offshore PRC

					Onshore PRC
100%

Hainan Wanhui	First VIE Agreements	Ms. Zheng		Ms. Zheng
Q.F.			Y.L.



			95%	5%

Hainan Seven Elements

Holding licence and permit to engage in online game business as restricted business in the PRC

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INFORMATION ON HAINAN YIHUAN

Hainan Yihuan is a company established in the PRC with limited liability on 23 April 2018. As at the date of this announcement, Hainan Yihuan has a registered capital of RMB10,000,000, which has not been paid up and is wholly-owned by Ms. Zheng Y.L., who is also the sole director of Hainan Yihuan.

Hainan Yihuan is principally engaged in development and design of online game programs and operation of online games. It currently holds (i) the Business Licence for Value-added Telecommunications Business issued by Hainan Communications Administration (海南省通信管理局); and (ii) the Permit for Cyber Culture Business Operations issued by Hainan

Provincial Department of Culture, Radio, Film, Television, Publication and Sports (海南省旅遊和文化廣電體育廳). Since its establishment in April 2018, Hainan Yihuan has not yet

commenced its online game business.

Set out below is the financial information of Hainan Yihuan for the two financial years ended 31 December 2018, and 31 December 2019 and the six months ended 30 June 2020:

	For the year	For the year	For the six
	ended	ended	months ended
	31 December	31 December	30 June
	2018	2019	2020
	RMB'000	RMB'000	RMB'000
	(approximately)	(approximately)	(approximately)
	(unaudited)	(unaudited)	(unaudited)
Revenue	-	-	-
Profit/(loss) before taxation	-	-	(8)
Profit/(loss) after taxation	-	-	(8)

The major assets of Hainan Yihuan constitute of cash and bank balance and its major liabilities constitute of other payables.

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Group structure of Hainan Hainan Yihuan

The Company

100%

Profit Business Group Limited

70%

Nova eSports International

Limited

100%

	Deluxe Trading (HK) Limited
			Onshore PRC

100%		Offshore PRC

	Hainan Wanhui		Ms. Zheng Y.L.
		Second VIE
		Agreements	100%


			Hainan Yihuan

Holding licence and permit to engage in online game business as restricted business in the PRC

INFORMATION ON HAINAN WANHUI

Hainan Wanhui is a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company. It is principally engaged in computer technology development, design and development of computer software, mobile phone software and online games, information technology consulting, computer and internet technology consulting, technical services, technology transfer, business management consulting and business information consulting.

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REASON FOR AND BENEFIT OF THE ACQUISITION OF HAINAN SEVEN ELEMENTS AND HAINAN YIHUAN

The principal activity of the Company is investment holding. The subsidiaries of the Company are principally engaged in the manufacturing and sale of furnishings and home products, online game business, property investment and money lending business.

As set out in the annual report of the Company for the year ended 31 December 2019, the Group has been exploring the feasibilities of expansion into the lucrative online game business in the PRC. This will enable the Group's online game business to expand its customer base and increase the economy of scale for its operation. The Group is confident in developing its online game business into a prominent regional game distributor.

Each of Hainan Seven Elements and Hainan Yihuan holds the Business Licence for Value- added Telecommunications Business and the Permit for Cyber Culture Business Operations for carrying on the online games business in the PRC. As part of the Group's plan for expanding its online games business into the PRC market, the Group has been interested in acquiring the equity interests in each of Hainan Seven Elements and Hainan Yihuan. However, due to the PRC legal restrictions on investments in the PRC by foreign investors mentioned in the paragraph headed "Reasons for entering into the VIE Agreements" in this announcement below, the Group could not directly acquire any equity interests in Hainan Seven Elements and Hainan Yihuan.

Although Hainan Seven Elements and Hainan Yihuan are both principally engaged in the same activities and hold the same licence and permit and will serve as a platform for developing the Group's online games business in the PRC, each will be governed by a separate management team and will be serving different operational needs of the Group. Hainan Seven Elements will focus on publishing the Group's online game' titles through partnerships with various game platforms and by utilising traditional advertising methods. On the other hand, Hanan Yihuan will operate in conjunction with the esports business and will focus on publishing the Group's online game titles by utilising the Group's esports club for marketing such game titles to its massive fan base and followers from various social medias. The objective of such arrangement is to enable the development of the esports business as a separate business unit as well as to enable the management of the Group to better monitor and evaluate its business performance.

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REASONS FOR ENTERING INTO THE VIE AGREEMENTS

Investments in the PRC by foreign investors is primarily regulated by 外商投資准入特別管理措施(負面清單) (2019年版) (Special Administrative Measures (Negative List) for the Access of Foreign Investment (2019)*) (the "Negative List"), the version applicable at the time of signing the VIE Agreements, which is promulgated and amended from time to time jointly by the Ministry of Commerce of the PRC and the National Development and Reform Commission of the PRC.

Pursuant to the Negative List, the online game business in the PRC carried on by each of Hainan Seven Elements and Hainan Yihuan falls into (i) the value-added telecommunication services business, which is considered "restricted"; and (ii) the internet cultural services business, which is considered "prohibited". Therefore, foreign investors can only operate the value-added telecommunication business in the PRC under joint ventures with the foreign portion of the total investment and hence shareholding below 50% whereas foreign investors are prohibited from investing in the internet cultural services business in the PRC. As a foreign investor, the Group would be prohibited from owning any equity interests in Hainan Seven Elements or Hainan Yihuan under the current PRC laws. As such, the establishment of the variable interest entity arrangements between (i) Hainan Wanhui and Hainan Seven Elements under the First VIE Agreements; and (ii) Hainan Wanhui and Hainan Yihuan under the Second VIE Agreements, are necessary for the Group to proceed with the acquisition of Hainan Seven Elements and Hainan Yihuan.

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The acquisition of the effective control of Hainan Seven Elements and Hainan Yihuan by Hainan Wanhui at nil consideration was determined after arms' length negotiations between Hainan Wanhui, on the one hand, and the Registered Shareholders or Ms. Zheng Y.L., on the other hand, taking into account the following factors: (i) each of Hainan Seven Elements and Hainan Yihuan has not commenced its online game business and/or recorded any revenue from the date of its establishment and up to the date of this announcement; (ii) the total amount of assets of each of Hainan Seven Elements and Hainan Yihuan is insignificant;

the setup costs of each of Hainan Seven Elements and Hainan Yihuan, including the cost for acquiring the relevant Business Licences for Value-added Telecommunications Business and the relevant Permits for Cyber Culture Business Operations is insignificant;
the Group plans to inject capital into each of Hainan Seven Elements and Hainan Yihuan by way of loans to support their respective general working capital needs; and (v) each of Ms. Zheng Q.F. and Ms. Zheng Y.L. will remain as part of the management team to oversee the operations of Hainan Seven Elements and Hainan Yihuan.

In view of the above, the Directors consider that the entering into of the VIE Agreements and the terms of the VIE Agreements, including the acquisition by Hainan Wanhui of the effective control of Hainan Seven Elements and Hainan Yihuan at nil consideration, are on normal commercial terms or better, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

As at the date of this announcement, the Group has not encountered any interference or encumbrance from any governing bodies in operating its business through Hainan Seven Elements and Hainan Yihuan under the VIE Agreements.

INFORMATION OF THE VIE AGREEMENTS

First VIE Agreements

First Management Services Agreement

Date	:	28 May 2020
Parties	:	(1)	Hainan Seven Elements;
		(2)	Hainan Wanhui; and
		(3)	The Registered Shareholders

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Scope of	:	Hainan Wanhui (a) shall be involved in the business
services		management, project management and technical services,
		personnel arrangement and financial management of Hainan
		Seven Elements; (b) shall provide investment and strategic
		business advice on the operation and technical services of Hainan
		Seven Elements; and (c) shall participate and assist in Hainan
		Seven Elements' operations and project management, complete
		the management consulting services in respect of Hainan Seven
		Elements and provide the relevant report and technical services
		to Hainan Seven Elements in a timely manner.
		The consulting and management services to be provided by
		Hainan Wanhui to Hainan Seven Elements shall include but not
		limited to the following:

to provide Hainan Seven Elements with related software and intellectual property rights owned by Hainan Wanhui;
to conduct research and development, maintenance and upgrading of software in respect of the business of Hainan Seven Elements as well as to provide relevant technical consultation and technical services;
to provide services relating to design, installation, day-to- day management, maintenance and upgrading of network system hardware and database design;
to provide consulting services in respect of the procurement of the necessary equipment, hardware and software systems required for the operation of Hainan Seven Elements;
to provide customer order management services and customer services;
to be engaged in the selection and procurement process for the hiring of qualified persons and experts who have extensive experience in the development and design of online games programs and operation of online games, and where necessary, to provide training to the managers, department heads, administrative personnel and all other employees of Hainan Seven Elements;

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to provide strategic advice to Hainan Seven Elements in relation to contracts to be entered into in its ordinary course of business or contracts reasonably required for its business;
to formulate rules, regulations, internal control policies, risk control management systems, administrative standards and policies for accounting, budget plans, marketing, personnel and operations for Hainan Seven Elements and its business practices as well as to assist Hainan Seven Elements in the implementation of such policies and business practices;
to formulate plans and make preparations for public relations and marketing activities of Hainan Seven Elements and assist Hainan Seven Elements in the entering into of contracts with third parties in relation to the development and design of online game program and the operation of online games;
to review and improve the operations of Hainan Seven Elements;
to carry out such actions as may be reasonably required for the operation of the business of Hainan Seven Elements;
to make business decisions relating to investments, establishing of branch offices and subsidiaries, mergers and acquisitions on behalf of Hainan Seven Elements;
to provide Hainan Seven Elements with global market information, market research data and analysis in relation to the development and design of online game program and the operation of online games; and
to provide investment and strategic business advice on the operation and investment project of Hainan Seven Elements as well as to participate in and assist in the management of the operations of its projects.

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Fee	:	Hainan Seven Elements shall pay to Hainan Wanhui the services
		fee, which shall be equivalent to the total revenue of Hainan
		Seven Elements minus all relevant costs, expenses and taxes
		payable by Hainan Seven Elements, on an annual basis. In the
		event that Hainan Seven Elements is loss-making for a given
		year, then Hainan Seven Elements will not be required to pay
		any Management Services Fee for the relevant year until Hainan
		Seven Elements records a surplus.
Term	:	The First Management Services Agreement has taken effect from
		28 May 2020 and shall remain in effect indefinitely except for
		the First Management Services Agreement to be terminated by
		Hainan Wanhui: (a) by giving Hainan Seven Elements not less
		than 30 days prior notice in writing; or (b) if the entire equity
		interests in and assets of Hainan Seven Elements is transferred to
		Hainan Wanhui or its nominee pursuant to the First Irrevocable
		Option Agreement; or (c) if Hainan Seven Elements ceases to
		operate any business, becomes insolvent or bankrupt or is in the
		process of winding up or liquidation.

First Equity Pledge Agreement

Date	:	28 May 2020
Parties	:	(1)	Hainan Seven Elements;
		(2)	Hainan Wanhui; and
		(3)	The Registered Shareholders
Subject	:	The Registered Shareholders has pledged, by way of first priority
		pledge, the entire equity interests in Hainan Seven Elements
		(including all dividend and interest paid or payable thereon)
		in favour of Hainan Wanhui as security for the performance
		of the obligations of Hainan Seven Elements under the First
		Management Services Agreement.
Term	:	The First Equity Pledge Agreement has taken effect from
		28 May 2020 and shall remain in effect until Hainan Seven

Elements and the Registered Shareholders have unconditionally and irrevocably fulfilled all the obligations (including but not limited to the settlement and/or the payment of the service fee and any liquidated damage) under the First Management Services Agreement.

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First Irrevocable Option Agreement

Date	:	28 May 2020
Parties	:	(1)	Hainan Seven Elements;
		(2)	Hainan Wanhui; and
		(3)	The Registered Shareholders
Subject	:	Hainan Seven Elements and the Registered Shareholders have
		irrevocably granted the right in favour of Hainan Wanhui
		to purchase or for its nominee to purchase the entire equity
		interests in Hainan Seven Elements at nil consideration (or to the
		extent that nil consideration for transfer of the equity interests
		in a company is prohibited under the relevant local laws and
		regulations or prohibited by the local government departments, at
		such consideration to be determined by Hainan Wanhui).
Term	:	The exercise period of the option under the First Irrevocable
		Option Agreement shall remain in effect indefinitely as permitted
		by the relevant laws and regulations and/or until Hainan
		Wanhui exercises such option. Hainan Wanhui may exercise the
		option under the First Irrevocable Option Agreement or assign

its rights under such option at any time by way of serving a notice in writing to Hainan Seven Elements and the Registered Shareholders.

First Powers of Attorney

Date	:	28 May 2020
Parties	:	(1)	Hainan Seven Elements;
		(2)	Hainan Wanhui;
		(3)	Ms. Zheng Q.F.; and
		(4)	The Registered Shareholders

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Subject	:	(i) Ms. Zheng Q.F., as the director, and Hainan Seven
		Elements, as the confirming party, have irrevocably
		executed the director's power of attorney in favour of
		Hainan Wanhui pursuant to which Hainan Wanhui was
		appointed as the exclusive attorney-in-fact of Ms. Zheng
		Q.F. to, among others, (a) exercise all directors' rights of
		Hainan Seven Elements including but not limited to the
		passing of board resolutions and to appoint and remove
		the manager and/or other senior management of Hainan
		Seven Element; and (b) to sign on the director's behalf all
		necessary transfer documents and other documents to give
		effect to the VIE Agreements;

the Registered Shareholders, as the shareholders, and Hainan Seven Elements, as the confirming party, have irrevocably executed the shareholders' power of attorney in favour of Hainan Wanhui pursuant to which Hainan Wanhui was appointed as the exclusive attorney-in- fact of the Registered Shareholders to, among others, (a) exercise all shareholders' rights of Hainan Seven Elements pursuant to its articles of association and the relevant PRC laws including but not limited to convene and attend the shareholders' general meeting, to exercise its voting right at the shareholders' general meeting and to pass shareholders' resolutions; (b) designate and appoint the legal representative, executive director, director, supervisor, general manager and other senior management of Hainan Seven Element; (c) make decisions to sell or dispose of the entire equity interests of Hainan Seven Elements held by the Registered Shareholders; and (d) formulate any profit distribution plan; and
Ms. Zheng Q.F., as the legal representative, and Hainan Seven Elements, as the confirming party, have irrevocably executed the legal representative's power of attorney in favour of Hainan Wanhui pursuant to which Hainan Wanhui was appointed as the exclusive attorney-in-fact of Ms. Zheng Q.F. to, among others, (i) exercise all legal representative's duties of Hainan Seven Elements pursuant to its articles of association and the relevant PRC laws; and (ii) to sign on the legal representative's behalf all necessary transfer documents and other documents to give effect to the First VIE Agreements.

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Term	:	The First Powers of Attorney have taken effect from 28
		May 2020 and shall remain in effect until the revocation or
		termination of the First Management Services Agreement, the
		First Equity Pledge Agreement and the First Irrevocable Option
		Agreement.

First Undertaking Letters

Date	:	28 May 2020
Parties	:	(1)	Hainan Seven Elements;
		(2)	Hainan Wanhui;
		(3)	Ms. Zheng Q.F.; and
		(4)	The Registered Shareholders
Subject	:	(i)	Ms. Zheng Q.F., as the director, and Hainan Seven
			Elements, as the confirming party, have irrevocably and
			unconditionally executed the director's undertaking letter
			in favour of Hainan Wanhui pursuant to which Ms. Zheng
			Q.F. has undertaken, among others, (i) to exercise her
			director's rights including but not limited to voting right
			for board resolutions in accordance with the instructions of
			Hainan Wanhui; and (ii) that Hainan Seven Elements shall
			pay its taxes, social insurance and housing provident fund
			in accordance with the PRC laws; (iii) that Hainan Seven
			Elements shall pay the services fee to Hainan Wanhui
			pursuant to the First Management Services Agreement;
		(ii)	the Registered Shareholders, as the shareholders, and
			Hainan Seven Elements, as the confirming party, have
			irrevocably and unconditionally executed the shareholders'

undertaking letter in favour of Hainan Wanhui pursuant to which the Registered Shareholders have undertaken, among others, (i) to exercise their shareholders' right including but not limited to voting right at shareholders' general meeting in accordance with the instructions of Hainan Wanhui; and (ii) that Hainan Seven Elements shall pay its taxes, social insurance and housing provident fund in accordance with the PRC laws; (iii) that Hainan Seven Elements shall pay the services fee to Hainan Wanhui pursuant to the First Management Services Agreement; and

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		(iii) Ms. Zheng Q.F., as the legal representative, and Hainan
		Seven Elements, as the confirming party, have irrevocably
		and unconditionally executed the legal representative's
		undertaking letter in favour of Hainan Wanhui pursuant to
		which Ms. Zheng Q.F. has undertaken, among others, (i)
		to exercise her legal representative's rights including but
		not limited to the signing of the relevant documents in its
		capacity as legal representative of Hainan Seven Elements
		in accordance with the instructions of Hainan Wanhui; and
		(ii) that Hainan Seven Elements shall pay its taxes, social
		insurance and housing provident fund in accordance with
		the PRC laws; (iii) that Hainan Seven Elements shall pay
		the services fee to Hainan Wanhui pursuant to the First
		Management Services Agreement.
Term	:	The First Undertaking Letters have taken effect from 28 May
		2020.

First Declaration Letter

Date	:	28 May 2020
Parties	:	(1) Ms. Zheng Y.L.; and
		(2) Ms. Zheng Y.L.'s spouse
Subject	:	Ms. Zheng Y.L. and her spouse have irrevocably declare that,
		among other things, (i) acknowledge that the 5% equity interests
		held by Ms. Zheng Y.L. in Hainan Seven Elements do not form
		part of their matrimonial property and Ms. Zheng Y.L. is entitled
		to sign and fulfill the First VIE Agreements in her personal
		capacity; and (ii) the spouse of Ms. Zheng Y.L. undertakes
		that in the event of divorce between Ms. Zheng Y.L. and him,
		he will not make any claim for the assets or profits of Hainan
		Seven Elements or be involved in the day-to-day management of
		Hainan Seven Elements.
		Ms. Zheng Q.F. did not execute any declaration letter in respect
		the variable interest entity arrangement between Hainan Wanhui
		and Hainan Seven Elements as she is not married yet.
Term	:	The First Declaration Letter has taken effect from 28 May 2020.

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Second VIE Agreements

Second Management Services Agreement

Date	:	23 June 2020
Parties	:	(1)	Hainan Yihuan;
		(2)	Hainan Wanhui; and
		(3)	Ms. Zheng Y.L.
Scope of	:	Hainan Wanhui (a) shall be involved in the business
services		management, project management and technical services,
		personnel arrangement and financial management of Hainan
		Yihuan; (b) shall provide investment and strategic business
		advice on the operation and technical services of Hainan Yihuan;
		and (c) shall participate and assist in Hainan Yihuan' operations
		and project management, complete the management consulting
		services in respect of Hainan Yihuan and provide the relevant
		report and technical services to Hainan Yihuan in a timely
		manner.
		The consulting and management services to be provided by
		Hainan Wanhui to Hainan Yihuan shall include but not limited to
		the following:
		(i)	to provide Hainan Yihuan with related software and
			intellectual property rights owned by Hainan Wanhui;
		(ii)	to conduct research and development, maintenance and
			upgrading of software in respect of the business of Hainan
			Yihuan as well as to provide relevant technical consultation
			and technical services;
		(iii)	to provide services relating to design, installation, day-to-
			day management, maintenance and upgrading of network
			system hardware and database design;
		(iv)	to provide consulting services in respect of the procurement
			of the necessary equipment, hardware and software systems
			required for the operation of Hainan Yihuan;

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to provide customer order management services and customer services;
to be engaged in the selection and procurement process for the hiring of qualified persons and experts who have extensive experience in the development and design of online games programs and operation of online games, and where necessary, to provide training to the managers, department heads, administrative personnel and all other employees of Hainan Yihuan;
to provide strategic advice to Hainan Yihuan in relation to contracts to be entered into in its ordinary course of business or contracts reasonably required for its business;
to formulate rules, regulations, internal control policies, risk control management systems, administrative standards and policies for accounting, budget plans, marketing, personnel and operations for Hainan Yihuan and its business practices as well as to assist Hainan Yihuan in the implementation of such policies and business practices;
to formulate plans and make preparations for public relations and marketing activities of Hainan Yihuan and assist Hainan Yihuan in the entering into of contracts with third parties in relation to the development and design of online game program and the operation of online games;
to review and improve the operations of Hainan Yihuan;
to carry out such actions as may be reasonably required for the operation of the business of Hainan Yihuan;
to make business decisions relating to investments, establishing of branch offices and subsidiaries, mergers and acquisitions on behalf of Hainan Yihuan;
to provide Hainan Yihuan with global market information, market research data and analysis in relation to the development and design of online game program and the operation of online games; and

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		(xiv) to provide investment and strategic business advice on the
		operation and investment project of Hainan Yihuan as well
		as to participate in and assist in the management of the
		operations of its projects.
Fee	:	Hainan Yihuan shall pay to Hainan Wanhui the services fee,
		which shall be equivalent to the total revenue of Hainan Yihuan
		minus all relevant costs, expenses and taxes payable by Hainan
		Yihuan, on an annual basis. In the event that Hainan Yihuan is
		loss-making for a given year, then Hainan Yihuan will not be
		required to pay any services fee for the relevant year until Hainan
		Yihuan records a surplus.
Term	:	The Second Management Services Agreement has taken effect
		from 23 June 2020 and shall remain in effect indefinitely
		except for the Second Management Services Agreement to be
		terminated by Hainan Wanhui; (a) by giving Hainan Yihuan
		not less than 30 days prior notice in writing; or (b) if it transfers
		the entire equity interests in and assets of Hainan Yihuan to
		itself or its nominee pursuant to the Second Irrevocable Option
		Agreement; or (c) if Hainan Yihuan ceases to operate any
		business, becomes insolvent or bankrupt or is in the process of
		winding up or liquidation.

Second Equity Pledge Agreement

Date	:	23 June 2020
Parties	:	(1)	Hainan Yihuan;
		(2)	Hainan Wanhui; and
		(3)	Ms. Zheng Y.L.
Subject	:	Ms. Zheng Y.L. has pledged, by way of first priority pledge, the
		entire equity interests in Hainan Yihuan (including all dividend
		and interest paid or payable thereon) in favour of Hainan Wanhui

as security for the performance of the obligations of Hainan Yihuan under the Second Management Services Agreement.

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Term	:	The Second Equity Pledge Agreement has taken effect from 23
		June 2020 and shall remain in effect until Hainan Yihuan and
		Ms. Zheng Y.L. have unconditionally and irrevocably fulfilled all
		the obligations (including but not limited to the settlement and/
		or the payment of the services fee and any liquidated damage)
		under the Second Management Services Agreement.

Second Irrevocable Option Agreement

Date	:	23 June 2020
Parties	:	(1)	Hainan Yihuan;
		(2)	Hainan Wanhui; and
		(3)	Ms. Zheng Y.L.
Subject	:	Hainan Yihuan and Ms. Zheng have irrevocably granted the
		right in favour of Hainan Wanhui to purchase or for its nominee
		to purchase the entire equity interests in Hainan Yihuan at nil
		consideration (or to the extent that nil consideration for transfer
		of the equity interests in a company is prohibited under the
		relevant local laws and regulations or prohibited by the local
		government departments, at such consideration to be determined
		by Hainan Wanhui).
Term	:	The exercise period of the option under the Second Irrevocable
		Option Agreement shall remain in effect indefinitely as permitted

by the relevant laws and regulations and/or until Hainan Wanhui exercises such option. Hainan Wanhui may exercise the option under the Second Irrevocable Option Agreement or assign its rights under such option at any time by way of serving a notice in writing to Hainan Yihuan and Ms. Zheng Y.L..

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Second Powers of Attorney

Date	:	23 June 2020
Parties	:	(1)	Hainan Yihuan;
		(2)	Hainan Wanhui; and
		(3)	Ms. Zheng Y.L.
Subject	:	(i)	Ms. Zheng Y.L., as the director, and Hainan Yihuan, as the
			confirming party, have irrevocably executed the director's
			power of attorney in favour of Hainan Wanhui pursuant
			to which Hainan Wanhui was appointed as the exclusive
			attorney-in-fact of Ms. Zheng Y.L. to, among others, (a)
			exercise all directors' rights of Hainan Yihuan including
			but not limited to the passing of board resolutions and
			to appoint and remove the manager and/or other senior
			management of Hainan Yihuan; and (b) to sign on the
			director's behalf all necessary transfer documents and other
			documents to give effect to the Second VIE Agreements;
		(ii)	Ms. Zheng Y.L., as the shareholder, and Hainan Yihuan,
			as the confirming party, have irrevocably executed the

shareholders' power of attorney in favour of Hainan Wanhui pursuant to which Hainan Wanhui was appointed as the exclusive attorney-in-fact of Ms. Zheng Y.L. to, among others, (a) exercise all shareholders' rights of Hainan Yihuan pursuant to its articles of association and the relevant PRC laws including but not limited to convene and attend the shareholders' general meeting, to exercise its voting right at the shareholders' general meeting and to pass shareholders' resolutions; (b) designate and appoint the legal representative, executive director, director, supervisor, general manager and other senior management of Hainan Yihuan; (c) make decisions to sell or dispose of the entire equity interests in Hainan Yihuan held by Ms. Zheng Y.L.; and (d) formulate any profit distribution plan; and

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		(iii) Ms. Zheng Y.L., as the legal representative, and Hainan
		Yihuan, as the confirming party, have irrevocably executed
		the legal representative's power of attorney in favour of
		Hainan Wanhui pursuant to which Hainan Wanhui was
		appointed as the exclusive attorney-in-fact of Ms. Zheng
		Y.L. to, among others, (i) exercise all legal representative's
		duties of Hainan Yihuan pursuant to its articles of
		association and the relevant PRC laws; and (ii) to sign
		on the legal representative's behalf all necessary transfer
		documents and other documents to give effect to the
		Second VIE Agreements.
Term	:	The Second Powers of Attorney have taken effect from 23
		June 2020 and shall remain in effect until the revocation or
		termination of the Second Management Services Agreement, the
		Second Equity Pledge Agreement and the Second Irrevocable
		Option Agreement.

Second Undertaking Letters

Date	:	23 June 2020
Parties	:	(1)	Hainan Yihuan;
		(2)	Hainan Wanhui; and
		(3)	Ms. Zheng Y.L.
Subject	:	(i)	Ms. Zheng Y.L., as the director, and Hainan Yihuan, as
			the confirming party, have irrevocably and unconditionally
			executed the director's undertaking letter in favour of
			Hainan Wanhui pursuant to which Ms. Zheng Y.L. has

undertaken, among others, (i) to exercise her director's rights including but not limited to voting right for board resolutions in accordance with the instructions of Hainan Wanhui; and (ii) that Hainan Yihuan shall pay its taxes, social insurance and housing provident fund in accordance with the PRC laws; (iii) that Hainan Yihuan shall pay the services fee to Hainan Wanhui pursuant to the Second Management Services Agreement;

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Ms. Zheng Y.L., as the shareholder, and Hainan Yihuan, as the confirming party, have irrevocably and unconditionally executed the shareholders' undertaking letter in favour of Hainan Wanhui pursuant to which Ms. Zheng Y.L. has undertaken, among others, (i) to exercise her shareholder's right including but not limited to voting right at shareholders' general meeting in accordance with the instructions of Hainan Wanhui; and (ii) that Hainan Yihuan shall pay its taxes, social insurance and housing provident fund in accordance with the PRC laws; (iii) that Hainan Yihuan shall pay the services fee to Hainan Wanhui pursuant to the Second Management Services Agreement; and
Ms. Zheng Y.L., as the legal representative, and Hainan Yihuan, as the confirming party, have irrevocably and unconditionally executed the director's undertaking letter in favour of Hainan Wanhui pursuant to which Ms. Zheng Y.L. has undertaken, among others, (i) to exercise her legal representative's rights including but not limited to the signing of the relevant documents in its capacity as legal representative of Hainan Yihuan in accordance with the instructions of Hainan Wanhui; and (ii) that Hainan Yihuan shall pay its taxes, social insurance and housing provident fund in accordance with the PRC laws; (iii) that Hainan Yihuan shall pay the services fee to Hainan Wanhui pursuant to the Second Management Services Agreement.

Term	:	The Second Undertaking Letters have taken effect from 23 June
		2020.

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Second Declaration Letter

Date	:	23 June 2020
Parties	:	(1) Ms. Zheng Y.L.; and
		(2) Ms. Zheng Y.L.'s spouse
Subject	:	Ms. Zheng Y.L. and her spouse have irrevocably declare that,
		among other things, (i) acknowledge that the entire equity
		interests held by Ms. Zheng Y.L. in Hainan Yihuan do not form
		part of their matrimonial property and Ms. Zheng Y.L. is entitled
		to sign and fulfill the Second VIE Agreements in her personal
		capacity; and (ii) the spouse of Ms. Zheng Y.L. undertakes that
		in the event of divorce between Ms. Zheng Y.L. and him, he will
		not make any claim for the assets or profits of Hainan Yihuan or
		be involved in the day-to-day management of Hainan Yihuan.
Term	:	The Second Declaration Letter has taken effect from 23 June
		2020.

Protection of the interest and assets of Hainan Seven Elements and Hainan Yihuan

The VIE Agreements include a provision that each agreement is binding on the liquidators, the successors and permitted assignees of the respective parties. In the event of death, bankruptcy or divorce of any party of registered shareholders of Hainan Seven Elements and/or Hainan Yihuan, Hainan Wanhui may exercise its option(s) under the respective Irrevocable Option Agreement(s) to replace the relevant party of such registered shareholders, thus protecting the interest of the Group and allowing Hainan Wanhui to enforce its rights under the VIE Agreements against the liquidators, the successors and permitted assignees of the shareholders of Hainan Seven Elements and Hainan Yihuan.

In order to have effective control over and to safeguard the assets of Hainan Seven Elements and Hainan Yihuan, the VIE Agreements provide that, without the prior written consent of Hainan Wanhui, Hainan Seven Elements and Hainan Yihuan shall not, in any form, dispose of significant assets (including but not limited to any significant customer resources, fixed assets, trademarks, technical knowhow or other intellectual property rights and/or other equity interests or similar interests held by Hainan Seven Elements or Hainan Yihuan), operating rights and/or dispose of all or part of its business (including sale, replacement, mortgage or disposal in any other ways), with respect to it and/or its subsidiaries (if any).

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The VIE Agreements also provide that, without the prior written consent of Hainan Wanhui,

Hainan Seven Elements and Hainan Yihuan shall not increase or decrease the registered capital or accept any investment or capital increase from the Registered Shareholders or Ms. Zheng Y.L. or any third parties to Hainan Seven Elements or Hainan Yihuan or change the form of the company or make any major adjustments regarding carrying out liquidation or dissolution; or the business scope, mode, profit model, marketing strategy, business policy or customer relationship; (ii) Hainan Seven Elements and Hainan Yihuan shall not enter into any partnership or joint venture or profit sharing arrangement with any third parties, or any other arrangements for the transfer of benefits or profit sharing in the form of royalties, service fees or consultancy fees; and (iii) Hainan Seven Elements and Hainan Yihuan shall not declare or distribute dividends, dividends or any other interests to its shareholders, including the after-tax profits that Seven Elements and Hainan Yihuan has not yet allocated before the commencement of the VIE Agreements.

VIE Agreements confer economic benefits on Hainan Wanhui from Hainan Seven Elements and Hainan Yihuan

The VIE Agreements confer upon the Group the right to enjoy all the economic benefit of Hainan Seven Elements and Hainan Yihuan by the Management Services Agreements under which Hainan Seven Elements and Hainan Yihuan shall pay to Hainan Wanhui the services fee, which shall be equivalent to the total revenue of Hainan Seven Elements and Hainan Yihuan respectively minus all relevant costs, expenses and taxes payable by Hainan Seven Elements and Hainan Yihuan, on an annual basis.

VIE Agreements confer control from Hainan Seven Elements and Hainan Yihuan to Hainan Wanhui

The VIE Agreements confer upon the Group sufficient control over the board and daily operations of Hainan Seven Elements and Hainan Yihuan. The appointment of directors of Hainan Seven Elements and Hainan Yihuan is subject to approval from Hainan Wanhui. If Hainan Wanhui is dissatisfied with the performance of the director(s) of Hainan Seven Elements and/or Hainan Yihuan and proposes to remove such director(s), Hainan Seven Elements and/or Hainan Yihuan shall remove such person(s) as director(s) upon Hainan Wanhui's proposal.

Moreover, under the Management Services Agreements, Hainan Wanhui will formulate rules, regulations, internal control policies, risk control management systems, standards administration, accounting, budget, marketing, human resources and operating policies, as well as the practices which relevant to or affecting the business of Hainan Seven Elements and Hainan Yihuan, and assist Hainan Seven Elements and Hainan Yihuan in the effective implementation of relevant policies and business practices.

- 26 -

Hainan Wanhui will retain the custody of the constitutional items of Hainan Seven Elements and Hainan Yihuan, including the company chop and seal. At the request of Hainan Wanhui, Hainan Seven Elements and Hainan Yihuan will provide Hainan Wanhui with the relevant legal documents and other information on their business operation.

Internal control measures to be implemented by the Group

The VIE Agreements contain certain provisions in order to exercise effective control over and to safeguard the assets of Hainan Seven Elements and Hainan Yihuan. In addition to the internal control measures as provided in the VIE Agreements, the Company plans to adopt additional internal control measures over Hainan Seven Elements and Hainan Yihuan to safeguard the relevant assets, which may include but not limited to the following:

the finance team of the Company shall conduct regular site visits to Hainan Seven Elements and Hainan Yihuan and conduct personnel interviews and submit reports to the Board;
the finance team of the Company shall collect monthly management accounts, bank statements and cash balances and major operational data of Hainan Seven Elements and Hainan Yihuan for review. Upon discovery of any suspicious matters, the finance team of the Company shall report to the Board;
Hainan Seven Elements and Hainan Yihuan shall submit copies of their latest bank statements for every bank accounts within 15 days after the end of each month;
Hainan Seven Elements and Hainan Yihuan shall assist and facilitate the Group to conduct all on-site internal audits, if required;
the Group will consult the Company's PRC legal advisers, if required, in the event of new legal developments in the PRC affecting the arrangement contemplated under the VIE Agreements, and should immediately report to the Board so as to allow the Board to determine if any modification or amendment to the VIE Agreements is required to be made; and
Company shall comply with the conditions prescribed under the waiver granted by the Stock Exchange in connection with the continuing connected transactions contemplated under the VIE Agreements.

- 27 -

Dispute resolutions and dealings with the assets of Hainan Seven Elements and Hainan Yihuan in winding up situation contained in the VIE Agreements

The terms of the VIE Agreements provide that the arbitration tribunal may award (i) remedies over the equity interests or assets of Hainan Seven Elements and Hainan Yihuan; or (ii) injunctive relief (e.g. for the conduct of business or to compel the transfer of assets); or (iii) order the winding up of Hainan Seven Elements and Hainan Yihuan.

The VIE Agreements also include a clause in relation to dispute resolution among the parties whereby, when awaiting the formation of the arbitration tribunal or otherwise under appropriate conditions, the parties thereto may seek temporary injunctive relief or other temporary remedies from the courts in Hong Kong, the Cayman Islands, the PRC and the location where the principal assets of the Company and Hainan Seven Elements and Hainan Yihuan are located.

Rights to consolidate the accounts of Hainan Seven Elements and Hainan Yihuan pursuant to the VIE arrangements

The Company has confirmed with its auditors that it has the right to consolidate the accounts of each of Hainan Seven Elements and Hainan Yihuan pursuant to the VIE arrangements.

VIE Arrangements would be terminated if the Company is allowed to operate without them

The Company agrees that it would unwind the VIE Agreements as soon as the relevant laws and regulations allow the value-added telecommunications business and the internet cultural services business in the PRC to be operated by foreign investors without adopting a VIE structure. However, it is uncertain at this stage when the restrictions on foreign ownership in value-added telecommunications businesses and the internet cultural services business will be lifted in the PRC.

Hainan Seven Elements and Hainan Yihuan to return consideration to Hainan Wanhui upon termination of the VIE Agreements

Under the Irrevocable Option Agreements, upon termination of the VIE arrangements, the respective registered shareholders of Hainan Seven Elements and Hainan Yihuan must return to Hainan Wanhui or its nominee any consideration that such registered shareholders had received from Hainan Wanhui for the acquisition of the equity interests in Hainan Seven Elements and Hainan Yihuan.

- 28 -

Hainan Seven Elements, Hainan Yihuan and their respective registered shareholders' right to terminate any of the VIE Agreements

Hainan Seven Elements, Hainan Yihuan and their respective registered shareholders are generally not entitled to terminate any of the VIE Agreement unless, among others, (a) the laws, regulations and departmental rules prohibit or restrict the carrying out of the terms of the VIE Agreements; (b) Hainan Wanhui breaches the terms of the VIE Agreements and has not rectified such breach within 20 days after receiving the relevant written notice; (c) Hainan Wanhui becomes bankrupt or is unable to repay its debts; (d) the occurrence of a force majeure event which continues for more than 120 days; and (e) if Hainan Wanhui becomes entitled to acquire the equity interests in each of Hainan Seven Elements and Hainan Yihuan directly according to the PRC laws and if such equity interests in Hainan Seven Elements and Hainan Yihuan were transferred to Hainan Wanhui.

PRC legal opinion in respect of the VIE Arrangements

The PRC legal advisers of the Company has confirmed, among others, that (i) save for the clause providing that the arbitration tribunal may award injunctive relief or winding up orders and that the courts in Hong Kong, the Cayman Islands and the PRC may grant temporary injunctive relief or other temporary remedies, the use of the VIE structures and the VIE Agreements do not violate the relevant prevailing laws and regulations in the PRC;

the VIE Agreements would not be deemed as concealing illegal intentions with a lawful form and void under the PRC contract law; and (iii) save for the clause providing that the arbitration tribunal may award injunctive relief or winding up orders and that the courts in Hong Kong, the Cayman Islands and the PRC may grant temporary injunctive relief or other temporary remedies, which may not be enforceable under PRC law, the VIE Agreements are enforceable under the laws of the PRC. Based on the above, the Directors believe that the VIE Agreements conferring significant control and economic benefits from Hainan Seven Elements and Hainan Yihuan to Hainan Wanhui are enforceable under the relevant laws and regulations.

Directors' view

The Directors are of the view that the terms of the VIE Agreements and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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RISKS AND LIMITATIONS RELATING TO THE VIE STRUCTURES

Economic risks of the Company
Hainan Wanhui, as the primary beneficiary of Hainan Seven Elements and Hainan Yihuan, is not obligated under any of the VIE Agreements to share the losses of Hainan Seven Elements and Hainan Yihuan or provide financial support to Hainan Seven Elements and Hainan Yihuan. Moreover, as a limited liability company, each of Hainan Seven Elements and Hainan Yihuan is solely liable for its own debts and losses. However, since the relevant parties have already entered into VIE Agreements, the financial results of Hainan Seven Elements and Hainan Yihuan will be consolidated into the financial statements of the Group and it is likely that the Company's business and financial position will be affected if Hainan Seven Elements and Hainan Yihuan suffer losses or fails to obtain the requisite licenses and approvals to continue operating their respective online games business in the PRC.
Limitations in exercising the options to acquire ownership in Hainan Seven Elements and Hainan Yihuan
In the case that Hainan Wanhui exercises its options to acquire all or part of the equity interests in Hainan Seven Elements and/or Hainan Yihuan under the respective Irrevocable Option Agreement(s), the acquisition of the entire equity interests in Hainan Seven Elements and/or Hainan Yihuan may only be conducted to the extent as permitted by the applicable PRC laws and may be subject to necessary approvals and relevant procedures under applicable PRC laws.
Further, a substantial amount of other costs (if any), expenses and time may be involved in transferring the ownership of Hainan Seven Elements and/or Hainan Yihuan, which may have a material adverse impact on Hainan Wanhui's businesses, prospects and results of operation.
Hainan Wanhui may need to pay a substantial amount of enterprise income tax for the income from the ownership transfer according to the First Irrevocable Option Agreement and the Second Irrevocable Option Agreement.

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Arrangements when potential conflicts of interest arise
Hainan Wanhui shall rely on the VIE Agreements to exercise control over and to draw the economic benefits from Hainan Seven Elements and Hainan Yihuan. Hainan Wanhui may not be able to provide sufficient incentives to the Registered Shareholders or Ms. Zheng Y.L. for the purpose of encouraging them/her to act in the best interests of Hainan Seven Elements and Hainan Yihuan, other than stipulating the relevant obligations in the VIE Agreements. The Registered Shareholders or Ms. Zheng Y.L. may breach the VIE Agreements in the event of conflicts of interest or deterioration of their/her relationship with Hainan Wanhui, the results of which may have a material adverse impact on Hainan Wanhui's business, prospects and results of operation.
It is not assured that if conflicts arise, the Registered Shareholders or Ms. Zheng Y.L. will act in the best interests of Hainan Wanhui or that the conflicts will be resolved in favour of Hainan Wanhui. If any of the Registered Shareholders or Ms. Zheng Y.L. fail to perform their/her obligations under the respective VIE Agreements, Hainan Wanhui may have to rely on legal remedies under the PRC laws through legal proceedings, which may be expensive, time-consuming and disruptive to Hainan Wanhui's operations and will be subject to uncertainties as discussed above.
Other risks relating to the VIE Agreements
Firstly, although (i) there is currently no indication that the VIE Agreements will be interfered or objected by any PRC regulatory authorities; and (ii) the PRC legal adviser of the Company is of the view that save for the clause providing that the arbitration tribunal may award injunctive relief or winding up orders and that the courts in Hong Kong, the Cayman Islands and the PRC may grant temporary injunctive relief or other temporary remedies, the VIE Agreements do not violate any prevailing PRC laws or regulations, uncertainties still exist regarding the interpretation and application of the PRC laws and regulations especially in the areas of value-added telecommunication services business and the internet cultural services business. For instance, the PRC regulatory authorities may issue further guidelines that impose stricter foreign ownership requirements in that area of business. Given the uncertain legal and business environment in the PRC, it is difficult to foresee whether the PRC regulatory authorities will take the same view regarding the VIE Agreements as the PRC legal adviser of the Company in the future.

- 31 -

Secondly, the VIE Agreements may not provide control as effective as direct ownership. Hainan Wanhui does not have any direct equity ownership in Hainan Seven Elements and/or Hainan Yihuan and has relied on the VIE Agreements to effect changes in the management of Hainan Seven Elements and/or Hainan Yihuan and make an impact on its business decision making, as opposed to exercising its rights directly as a shareholder. If Hainan Seven Elements, Hainan Yihuan or their respective shareholder(s) refuse to cooperate, the Company will face difficulties in effecting control over the businesses of Hainan Seven Elements and Hainan Yihuan through the VIE structures, which may adversely affect the Company's business efficiency.

Thirdly, the VIE Agreements may be subject to scrutiny by the tax authorities and additional tax may be imposed. Under the Management Services Agreements, Hainan Seven Elements and/or Hainan Yihuan are required to pay Hainan Wanhui service fees for the services rendered by Hainan Wanhui. Such service fee payments between related parties may be subject to scrutiny or challenge by the PRC tax authorities within ten years after the taxable year when such transactions are conducted.

Fourthly, the VIE Agreements are governed by the PRC laws. When a dispute arises under any of the VIE Agreements, the parties to the dispute may have to rely on legal remedies under the PRC laws. The VIE Agreements provide that dispute will be submitted to Shenzhen Court of International Arbitration for arbitration to be conducted in Shenzhen. The decision of such arbitration is final and binding on the parties to the dispute.

Since the legal environment in the PRC is different from that in Hong Kong and other jurisdictions, the uncertainties in the PRC legal system could limit the ability of Hainan Wanhui to enforce the VIE Agreements. There is no assurance that such arbitration result will be in favour of Hainan Wanhui and/or that there will not be any difficulties in enforcing any arbitral awards granted, including specific performance or injunctive relief and claiming damages by Hainan Wanhui. As Hainan Wanhui may not be able to obtain sufficient remedies in a timely manner, its ability to exert effective control over Hainan Seven Elements and Hainan Yihuan and the conduct of the value-added telecommunication services business and the internet cultural services business could be materially and adversely affected, and may disrupt the business of Hainan Wanhui and have a material adverse impact on Hainan Wanhui's business, prospects and results of operation.

Lastly, the VIE Agreements provide that the arbitration tribunal may award remedies over the equity interests or assets of Hainan Seven Elements and Hainan Yihuan or injunctive relief (e.g. for the conduct of business or to compel the transfer of assets) or order the winding up of Hainan Seven Elements and Hainan Yihuan. The VIE Agreements also include a clause in relation to dispute resolution among the parties where, when awaiting the formation of the arbitration tribunal or otherwise under appropriate conditions, the parties thereto may seek temporary injunctive relief or other temporary remedies from the courts in Hong Kong, Cayman Islands, the PRC and the location where the principal assets of the Company and Hainan Seven Elements and Hainan Yihuan are located.

- 32 -

However, the PRC legal adviser of the Company is of the view that pursuant to the PRC laws, the arbitration tribunal may have no power to grant the aforementioned remedies or injunctive relief or to order the winding up of Hainan Seven Elements and Hainan Yihuan. In addition, even though the VIE Agreements provide that overseas courts (e.g. courts in Hong Kong and Cayman Islands) shall have the power to grant certain relief or remedies, such relief or remedies may not be recognised or enforced under the PRC laws. As a result, in the event that Hainan Seven Elements, Hainan Yihuan or their respective shareholder(s) breaches the terms of the VIE Agreements, the Company may not be able to obtain sufficient remedies in a timely manner, and its ability to exert effective control over Hainan Seven Elements and Hainan Yihuan could be materially and adversely affected.

Hainan Wanhui currently does not maintain any insurance to cover the risks relating to the VIE Agreements.

WAIVER FROM STRICT COMPLIANCE WITH RULES 14A.52 AND 14A.53 OF THE LISTING RULES

Notwithstanding that the transactions contemplated under the VIE Agreements technically constitute continuing connected transaction for the purpose of Chapter 14A of the Listing Rules, the Directors consider that it would be unduly burdensome and impracticable, and would add unnecessary administration costs to the Company, for all transactions contemplated under the VIE Agreements to be subject to strict compliance with the requirements set forth under Rule 14A.53 and Rule 14A.52 of the Listing Rules.

The Company applied to the Stock Exchange, and the Stock Exchange has granted, for a waiver to the Company from (i) setting maximum aggregate annual caps for the management services fee payable by each of Hainan Seven Elements and Hainan Yihuan to Hainan Wanhui under the Management Services Agreements pursuant to Rule 14A.53 of the Listing Rules; and (ii) setting a fixed term for each of the VIE Agreements pursuant to Rule

14A.52 of the Listing Rules, subject to the following conditions:

save as described in paragraph (d) below, no changes to the terms of the VIE Agreements will be made without the approval of the independent Shareholders;
save as described in paragraph (d) below, no changes to the terms of the VIE Agreements will be made without the approval of the independent non-executive Directors;

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the VIE Agreements shall continue to enable the Group to receive the economic benefits derived by each of Hainan Seven Elements and Hainan Yihuan through: (i) Hainan Wanhui's right (if and when so allowed under the applicable PRC laws) to acquire the equity interests in each of Hainan Seven Elements and Hainan Yihuan; (ii) the business structure under which the revenue generated by each of Hainan Seven Elements and Hainan Yihuan is substantially retained by Hainan Wanhui (insofar that no annual caps shall be set on the amount of the management services fees payable by each of Hainan Seven Elements and Hainan Yihuan to Hainan Wanhui under the Management Services Agreements); and (iii) Hainan Wanhui's right to control the management and operation of, as well as, in substance, all of the voting rights of each of Hainan Seven Elements and Hainan Yihuan;
the framework of the VIE structures may be renewed and/or cloned upon the expiry of the existing arrangements or in relation to any existing or new wholly foreign-owned enterprise or operating company (including branch company) that the Group may wish to establish, without obtaining the approval of the independent shareholders of the Company, on substantially the same terms and conditions as the VIE Agreements. The directors, chief executive or substantial shareholders (as defined in the Listing Rules) of any existing or new wholly foreign-owned enterprise or operating company (including branch company) that the Group may establish upon renewal and/or cloning of the VIE Agreements will be treated as the Group's connected persons and transactions between these connected persons and the Group other than those under similar VIE Agreements shall comply with Chapter 14A of the Listing Rules. This condition is subject to compliance with the relevant laws, regulations and approvals of the PRC;
unless the transactions are exempt under the Listing Rules, the Group will disclose details relating to the VIE Agreements on an ongoing basis as follows:
1. the VIE Agreements will be disclosed in the Company's annual reports and accounts in accordance with the relevant provisions of the Listing Rules;

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the independent non-executive Directors will review the VIE Agreements annually and confirm in the Company's annual report and accounts for the relevant year that: (a) the transactions carried out during such year have been entered into in accordance with the relevant provisions of the VIE Agreements and that the revenue generated by each of Hainan Seven Elements and Hainan Yihuan (minus all relevant costs, expenses and taxes payable by each of them) has been substantially retained by Hainan Wanhui; (b) no dividends or other distributions have been made by either Hainan Seven Elements or Hainan Yihuan to the holders of its equity interests which are not otherwise subsequently assigned or transferred to the Group; and (c) any new contracts entered into, renewed and/or cloned between the Group on the one hand and Hainan Seven Elements and/or Hainan Yihuan on the other hand during the relevant financial period under paragraph (d) above are fair and reasonable, or advantageous, so far as the Group is concerned and in the interests of the Company and the Shareholders as a whole;
the Group's auditors will carry out review procedures annually on the transactions carried out pursuant to the VIE Agreements and will provide a letter to the Directors with a copy to the Stock Exchange, at least ten business days before the bulk printing of the Company's annual report, confirming that (a) the transactions have been approved by the Directors; (b) the transactions have been entered into, in all material respects, in accordance with the relevant VIE Agreements; and (c) that no dividends or other distributions have been made by either Hainan Seven Elements or Hainan Yihuan to the holders of its equity interests which are not otherwise subsequently assigned/transferred to the Group;
for the purpose of Chapter 14A of the Listing Rules, each of Hainan Seven Elements and Hainan Yihuan will be treated as the Company's wholly-owned subsidiary, and its directors, chief executives or substantial shareholders and their respective associates (as defined in the Listing Rules) will be treated as connected persons of the Company and transactions between these connected persons and the Group, other than those under the VIE Agreements, will be subject to requirements under Chapter 14A of the Listing Rules; and
each of Hainan Seven Elements, Hainan Yihuan and its registered shareholders will undertake that, for so long as the shares of the Company are listed on the Stock Exchange, each of Hainan Seven Elements, Hainan Yihuan and its registered shareholders will provide the Group's management and the Company's auditors with full access to its relevant records for the purpose of the Company's auditors' review of the connected transactions.

- 35 -

Save as described in paragraph (d) above, if any terms of the VIE Agreements are altered or if the Company enters into any new agreements with any connected persons in the future, the Company must fully comply with the relevant requirements under Chapter 14A of the Listing Rules unless it applies for and obtains a separate waiver from the Stock Exchange.

LISTING RULES IMPLICATIONS

- 36 -

GENERAL

The EGM will be convened and held for the Independent Shareholders to consider and, if thought fit, to approve the VIE Agreements and the transactions contemplated thereunder.

a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the VIE Agreements; and (iv) a notice convening the EGM, will be despatched to the Shareholders on or before 7 October 2020.

DEFINITIONS

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

"Board"	the board of Directors
"Company"	Imperium Group Global Holdings Limited, a company
	incorporated in the Cayman Islands with limited liability
	and the issued Shares of which are listed on the main board
	of the Stock Exchange
"connected person(s)"	has the meaning ascribed to it under the Listing Rules
"controlling shareholder"	has the meaning ascribed to it under the Listing Rules
"Directors"	directors of the Company
"EGM"	the extraordinary general meeting of the Company to be
	convened and held for the purpose of considering and,
	if thought fit, approving the VIE Agreements and the
	transactions contemplated thereunder

- 37 -

"First Declaration Letter"	the declaration letter dated 28 May 2020 entered into
	between Ms. Zheng Y.L. and her spouse in relation to the
	First VIE Agreements
"First Equity Pledge	the equity pledge agreement dated 28 May 2020 and
Agreement"	entered into among Hainan Seven Elements, Hainan
	Wanhui and the Registered Shareholders pursuant to which
	the Registered Shareholders has pledged by way of first
	priority pledge the entire equity interests in Hainan Seven
	Elements in favour of Hainan Wanhui
"First Irrevocable Option	the irrevocable option agreement dated 28 May 2020
Agreement"	and entered into among Hainan Seven Elements, Hainan
	Wanhui and the Registered Shareholders pursuant to which
	Hainan Seven Elements and the Registered Shareholders
	have irrevocably granted the right in favour of Hainan
	Wanhui to purchase or for its nominee to purchase the
	entire equity interests in Hainan Seven Elements
"First Management Services	the management services agreement dated 28 May 2020
Agreement"	and entered into among Hainan Seven Elements, Hainan
	Wanhui and the Registered Shareholders pursuant to
	which Hainan Wanhui shall provide the consulting and
	management services to Hainan Seven Elements
"First Powers of Attorney"	the three powers of attorney each dated 23 May 2020
	and executed by the director, shareholders and legal
	representative of Hainan Seven Elements respectively and
	Hainan Seven Elements, as the confirming party, in favour
	of Hainan Wanhui pursuant to which Hainan Wanhui was
	irrevocably appointed by the director, shareholders and
	legal representative of Hainan Seven Elements (as the case
	may be) to be her/its attorney-in-fact
"First Undertaking Letters"	the three undertaking letters each dated 23 May 2020
	and executed by the director, shareholders and legal
	representative of Hainan Seven Elements respectively and
	Hainan Seven Elements, as the confirming party, in favour
	of Hainan Wanhui in relation to certain undertakings for the
	First VIE Agreements

- 38 -

"First VIE Agreements"	a series of agreements, including but not limited to the First
	Management Services Agreement, the First Equity Pledge
	Agreement, the First Irrevocable Option Agreement, the
	First Powers of Attorney, the First Undertaking Letters
	and the First Declaration Letter, executed for the purpose
	of establishing the variable interest entity arrangement
	between Hainan Wanhui and Hainan Seven Elements,
	through which the financial results of Hainan Seven
	Elements are consolidated with the financial results of
	Hainan Wanhui as "variable interest entity" (as defined
	in Hong Kong and International Financial Reporting
	Standards)
"Group"	the Company and its subsidiaries
"Hainan Seven Elements"	海南七元素網絡科技有限公司 (Hainan Seven Elements
	Network Technology Co., Ltd.*), a company established in
	the PRC with limited liability
"Hainan Wanhui"	海南萬輝網路科技有限公司 (Hainan Wanhui Network
	Technology Co., Ltd.*), a company established in the
	PRC with limited liability and an indirect wholly-owned
	subsidiary of the Company, which directly controls Hainan
	Seven Elements and Hainan Yihuan through the variable
	interest entity arrangements immediately after entering into
	of the VIE Agreements
"Hainan Yihuan"	海南易幻網路科技有限公司 (Hainan Yihuan Network
	Technology Co., Ltd.), a company established in the PRC
	with limited liability
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Independent Board	an independent board committee of the Company,
Committee"	comprising all independent non-executive Directors, which
	will be established by the Board for the purpose of advising
	the Independent Shareholders on the VIE Agreements and
	the transactions contemplated thereunder

- 39 -

"Independent Financial	an independent financial adviser to be appointed to make
Adviser"	recommendation to the Independent Board Committee and
	the Independent Shareholders in respect of the terms and
	conditions of the VIE Agreements and the transactions
	contemplated thereunder
"Independent Shareholders"	Shareholders other than those who have a material interests
	in the VIE Agreements and the transaction contemplated
	thereunder and their associates
"Irrevocable Option	collectively, the First Irrevocable Option Agreement and
Agreement(s)"	the Second Irrevocable Option Agreement
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock
	Exchange
"Management Services	collectively, the First Management Services agreement and
Agreements"	the Second Management Services Agreement
"Ms. Zheng Q.F."	鄭巧芳 (Zheng Qiaofang*)
"Ms. Zheng Y.L."	鄭藝玲 (Zheng Yiling*)
"PRC"	the People's Republic of China, which for the purpose
	of this circular, excludes Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan
"Registered Shareholders"	collectively, Ms. Zheng Q.F. and Ms. Zheng Y.L.
"Second Declaration Letter"	the declaration letter dated 23 June 2020 entered into
	between Ms. Zheng Y.L. and her spouse in relation to the
	Second VIE Agreements
"Second Equity Pledge	the equity pledge agreement dated 23 June 2020 and
Agreement"	entered into among Hainan Yihuan, Hainan Wanhui and
	Ms. Zheng Y.L. pursuant to which Ms. Zheng Y.L. has
	pledged by way of first priority pledge the entire equity
	interests in Hainan Yihuan in favour of Hainan Wanhui

- 40 -

"Second Irrevocable Option	the irrevocable option agreement dated 23 June 2020 and
Agreement"	entered into among Hainan Yihuan, Hainan Wanhui and
	Ms. Zheng Y.L pursuant to which Hainan Yihuan and Ms.
	Zheng Y.L. have irrevocably granted the right in favour of
	Hainan Wanhui to purchase or for its nominee to purchase
	the entire equity interests in Hainan Yihuan

"Second Management Services the management services agreement dated 23 June 2020

Agreement"and entered into among Hainan Yihuan, Hainan Wanhui and Ms. Zheng Y.L. pursuant to which Hainan Wanhui shall provide the consulting and management services to Hainan Yihuan

"Second Powers of Attorney"	the three powers of attorney each dated 23 June 2020 and
	executed by Ms. Zheng Y.L. as the director, shareholder
	and legal representative of Hainan Yihuan respectively
	and Hainan Yihuan, as the confirming party, in favour
	of Hainan Wanhui pursuant to which Hainan Wanhui
	was irrevocably appointed by Ms. Zheng Y.L. to be her
	attorney-in-fact
"Second Undertaking Letters"	the three undertaking letters each dated 23 June 2020 and
	executed by Ms. Zheng Y.L. as the director, shareholder
	and legal representative of Hainan Yihuan respectively
	and Hainan Yihuan, as the confirming party, in favour of
	Hainan Wanhui in relation to certain undertakings for the
	Second VIE Agreements
"Second VIE Agreements"	a series of agreements, including but not limited to the
	Second Management Services Agreement, the Second
	Equity Pledge Agreement, the Second Irrevocable Option
	Agreement, the Second Powers of Attorney, the Second
	Undertaking Letters and the Second Declaration Letter,
	executed for the purpose of establishing the variable interest
	entity arrangement between Hainan Wanhui and Hainan
	Yihuan, through which the financial results of Hainan
	Yihuan are consolidated with the financial results of Hainan
	Wanhui as "variable interest entity" (as defined in Hong
	Kong and International Financial Reporting Standards)
"Shareholders"	holders of the Shares

- 41 -

"Share(s)"	ordinary share(s) of HK$0.01 each in the share capital of
	the Company
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"VIE Agreements"	collectively, the First VIE Agreements and the Second VIE
	Agreements
"HK$"	Hong Kong dollar(s), the lawful currency of Hong Kong
"%"	per cent.

By order of the Board

Imperium Group Global Holdings Limited

Cheng Ting Kong

Chairman

Hong Kong, 14 September 2020

As at the date of this announcement, the executive directors of the Company are Mr. Cheng Ting Kong, Ms. Yeung So Mui, Mr. Luk Wai Keung and Mr. Leung Kwok Yin; and the independent non-executive directors of the Company are Mr. Fung Tze Wa, Mr. Ting Wong Kacee and Mr. Tse Ting Kwan.

*For identification purpose only

- 42 -

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Imperium Group Global Holdings Limited published this content on 14 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 September 2020 12:34:00 UTC

Market Closed - Hong Kong S.E. Other stock markets 04:08:27 2024-07-12 am EDT			5-day change	1st Jan Change
2.1 ^HKD	+1.94%		-4.55%	-63.73%

May. 02	Imperium Technology Group's 2023 Loss Narrows	MT
May. 01	Imperium Technology Group Limited Reports Earnings Results for the Full Year Ended December 31, 2023	CI

Imperium Technology Group's 2023 Loss Narrows	May. 02	MT
Imperium Technology Group Limited Reports Earnings Results for the Full Year Ended December 31, 2023	May. 01	CI
Imperium Technology Group Limited Updates on Delay in Publication of Annual Results	Apr. 08	CI
Imperium Technology Expects Narrower Loss for 2023	Mar. 25	MT
Imperium Technology Group Limited Provides Unaudited Earnings Guidance for the Year Ended 31 December 2023	Mar. 25	CI
Imperium Technology Gets License for Imperium Interactive Entertainment's Online Game; Shares Surge 38%	Jan. 22	MT
Imperium Technology Group Limited Appoints Mr. Hui Ka Lung as an Independent Non-Executive Director with Effect from 1 December 2023	Nov. 30	CI
Imperium Technology Group Limited Announces That Yau Chak Fung Has Tendered His Resignation as an Executive Director	23-08-29	CI
Imperium Technology Group Limited Reports Earnings Results for the Half Year Ended June 30, 2023	23-08-25	CI
Imperium Technology Group Limited Auditor Raises 'Going Concern' Doubt	23-04-26	CI
Imperium Technology Logs 83% Rise in 2022 Loss	23-04-03	MT
Imperium Technology's Loss Widens in 2022	23-04-03	MT
Imperium Technology Group Limited Reports Earnings Results for the Full Year Ended December 31, 2022	23-03-31	CI
Imperium Technology Group Announces Appointment of Mr. Lin Junwei, as the Member of the Remuneration Committee and Nomination Committee	23-03-31	CI
Imperium Technology Forecasts Higher 2022 Loss	23-03-09	MT
Imperium Technology Group Limited Provides Earnings Guidance for the Year Ended 31 December 2022	23-03-09	CI
Esports Team of Imperium Technology's Subsidiary Wins Two Contests; Shares Drop More than 22%	22-10-04	MT
Imperium Technology Group's H1 Net Loss Widens	22-08-21	MT
Imperium Technology Group Limited Reports Earnings Results for the Half Year Ended June 30, 2022	22-08-19	CI
Imperium Technology Forecasts Nearly $13 Million H1 Loss	22-08-02	MT
Imperium Technology Group Limited Provides Earnings Guidance for the Period Ended June 30, 2022	22-08-02	CI
Imperium Technology Group Unit to Acquire 30% Stake in Wanhui Digital	22-07-29	MT
Imperium's Esports Team Wins Gaming Tournament	22-07-11	MT
Imperium Technology Group Limited Enters into a Collaboration and License Contract with Jw Phantaci Limited	22-06-20	CI
Imperium Technology Group Limited Auditor Raises 'Going Concern' Doubt	22-04-25	CI

	1st Jan change	Capi.
IMPERIUM TECHNOLOGY GROUP LIMITED	-63.73%	83.67M
NETEASE, INC.	-0.30%	59.86B
NEXON CO., LTD.	+28.08%	17.34B
KRAFTON, INC.	+44.63%	9.16B
KUNLUN TECH CO., LTD.	-21.10%	4.99B
37 INTERACTIVE ENTERTAINMENT NETWORK TECHNOLOGY GROUP CO., LTD.	-32.43%	3.86B
SQUARE ENIX HOLDINGS CO., LTD.	-1.78%	3.78B
NETMARBLE CORPORATION	+8.95%	3.77B
ZHEJIANG CENTURY HUATONG GROUP CO.,LTD	-34.50%	3.43B
PLAYTIKA HOLDING CORP.	-9.40%	2.93B

Imperium Technology Group Limited

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Imperium Global : (I) CONTINUING CONNECTED TRANSACTION; AND (II) WAIVER FROM STRICT COMPLIANCE WITH RULES 14A.52 AND 14A.53 OF THE LISTING RULES

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