Ares Asia Limited — Proxy Solicitation & Information Statement 2002

Aug 1, 2002

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in KTP Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

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KTP HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

ADOPTION OF SHARE OPTION SCHEME

AND

GENERAL MANDATES TO ISSUE SHARES

AND REPURCHASE SHARES

A notice convening an annual special general meeting of KTP Holdings Limited to be held at 2:30 p.m. on 30th August 2002 at Block C, 1st Floor, Wong King Industrial Building, 2-4 Tai Yau Street, Sanpokong, Kowloon, Hong Kong is set out in Appendix III to this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s Hong Kong branch registrar, Computershare Hong Kong Investor Services Limited (formerly known as Central Registration Hong Kong Limited) of Rooms 1901-1905, 19th Floor, Hopewell Centre, 183 Queen’s Road East, WanChai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjourned meeting. Completion and return of the form of proxy shall not preclude you from attending and voting at the meeting or any adjourned meeting should you desire.

30th July 2002

CONTENTS

	Page
DEFINITIONS................................................................................................................	1-2
LETTER FROM THE BOARD
I. Introduction ................................................................................................	3-4
II. General Mandates........................................................................................	4
III. The Scheme ................................................................................................	5-6
IV. Annual General Meeting............................................................................	6
V. Recommendation........................................................................................	6
VI. Responsibility Statement ............................................................................	7
VII. General........................................................................................................	7
APPENDIX I — EXPLANATORY STATEMENT................................................	8-10
APPENDIX II — SUMMARY OF THE SCHEME................................................	11-18
APPENDIX III— NOTICE OF AGM........................................................................	19-23

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DEFINITIONS

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

“AGM”	the annual general meeting of the Company to be held at
	2:30 p.m. on 30th August 2002 at Block C, 1st Floor, Wong
	King Industrial Building, 2-4 Tai Yau Street, Sanpokong,
	Kowloon, Hong Kong or any adjournment thereof
“Auditors”	the auditors for the time being of the Company
“Board”	the board of Directors
“Company”	KTP Holdings Limited, a company incorporated in Bermuda
	with limited liability and the ordinary shares of which are
	listed on the Stock Exchange
“Director(s)”	the director(s) of the Company
“Eligible Participant”	any employees or executives or officers of the Group
	(including executive, non-executive and independent non-
	executive directors of the Group)
“Grantee”	any Eligible Participant who accepts the offer of the grant in
	accordance with the terms of the Scheme
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Latest Practicable Date”	29th July 2002, being the latest practicable date prior to
	printing of this circular for ascertaining certain information
	in this circular
“Listing Rules”	Rules Governing the Listing of Securities on The Stock
	Exchange

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	DEFINITIONS
“Mandate Limit”	10 per cent. of the issued share capital of the Company at
	the adoption date of the Scheme subject to renewal and
	adjournment pursuant to the Scheme
“Option”	an option to subscribe for Shares granted pursuant to the
	Scheme and for the time being subsisting
“Ordinary Resolutions”	the proposed ordinary resolutions as referred to the notice
	of AGM
“Registrar”	Computershare Hong Kong Investor Services Limited
	(formerly known as Central Registration Hong Kong
	Limited), the share branch registrar of the Company in Hong
	Kong at Rooms 1901-1905, 19th Floor, Hopewell Centre,
	183 Queen’s Road East, WanChai, Hong Kong
“Scheme”	the share option scheme which is proposed to be adopted by
	the Company, further information and summary of the
	principal terms are set out in the Appendix II to this circular
“Share(s)”	ordinary share(s) of HK$0.01 each in the capital of the
	Company or such nominal amount of shares comprising the
	share capital of the Company as shall result from any
	subdivision, reduction, consolidation, reclassification, or
	reconstruction full paid share in the share capital of the
	Company
“Share Buy Back Rules”	the applicable provisions under the Listing Rules to regulate
	the repurchase by companies with primary listing on The
	Stock Exchange of their own securities on The Stock
	Exchange
“Shareholder(s)”	a holder of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited

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LETTER FROM THE BOARD

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KTP HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

Directors:

Lee Chi Keung, Russell (Chairman) Yu Mee See, Maria Ng Wai Hung Lee Siu Leung

Registered office: Clarendon House Church Street Hamilton HM 11 Bermuda

* Independent non-executive Directors

Head office and principal place of business in Hong Kong: Block C, 1st Floor Wong King Industrial Building 2-4 Tai Yau Street Sanpokong, Kowloon Hong Kong 30th July 2002

To the Shareholders

Dear Sir or Madam,

ADOPTION OF SHARE OPTION SCHEME

AND

GENERAL MANDATE TO ISSUE SECURITIES

AND REPURCHASE SHARES

I. INTRODUCTION

At the annual general meeting and special general meeting of the Company held on 26th September 2001 and 29th November 2001 respectively, resolutions were passed by the then Shareholders giving general mandates to the Directors to issue and allot Shares and to exercise the powers of the Company to repurchase its own Shares. Such general mandates will lapse at

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LETTER FROM THE BOARD

the conclusion of the forthcoming AGM. Resolutions will therefore be proposed by the Directors to the Shareholders at the AGM to renew the grant of these general mandates.

The Directors would also take the opportunity to put forward to the Shareholders ordinary resolution to approve the adoption of the Scheme.

The purpose of this circular is to provide you with information relating to the proposed renewal of the general mandates to issue and allot Shares and to repurchase Shares as well as the Scheme so as to give you all information reasonably necessary to enable you to make an informed decision on whether to vote for or against the ordinary resolutions in relation thereto.

II. GENERAL MANDATES

(a) General Mandate to Repurchase Shares

Ordinary resolution no. 6 will be proposed at the AGM to grant the Board a general and unconditional mandate to exercise all the powers of the Company to purchase an amount of Shares not exceeding 10 per cent of the Company’s issued share capital as at the date of such resolution, for the period until the conclusion of the next annual general meeting of the Company (or such earlier period as state in the resolution) (“ Repurchase Mandate ”).

An explanatory statement required under the Share Buy Back Rules providing the requisite information in respect of the Repurchase Mandate is set out in Appendix I to this circular.

(b) General Mandate to Issue Shares

It will also be proposed at the AGM Ordinary Resolution no. 7 to grant the Board a general and unconditional mandate to allot, issue, grant, distribute and otherwise deal with additional Shares, not exceeding 20 per cent. of the Company’s issued share capital as at the date of such resolution (as adjusted in accordance with the resolution), for the period until the conclusion of the next annual general meeting of the Company (or such earlier period as stated in the resolution) (“ General Mandate ”). Conditional upon the passing of ordinary resolutions nos. 6 and 7 to grant the Repurchase Mandate and the General Mandate, ordinary resolution no. 8 will be further proposed at the AGM granting authorization to the Board to exercise all powers to allot, issue, grant, distribute and otherwise deal with additional Shares under the General Mandate in respect of the aggregate nominal amount of share capital in the Company repurchased by the Company.

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LETTER FROM THE BOARD

III. THE SCHEME

The adoption of the Scheme is subject to the followings:—

• (1) the Shareholders to approve and adopt the Scheme and to allot and issue Shares pursuant to the exercise of any Options; and

• (2) the Listing Committee of The Stock Exchange granting the approval for the listing of, and permission to deal in, the shares or any part thereof to be issued and allotted pursuant to the exercise of the Options granted under the Scheme, representing 10% of the issued share capital of the Company as at the date of AGM.

A summary of the particulars of the Scheme is contained in Appendix II to this circular.

None of Director is appointed a trustee of the Scheme or have a direct interest or indirect interest in the trustee of the Scheme.

(a) Purpose of the Scheme

The Scheme, by granting options to the Eligible Participants, will provide to the Eligible Participants a personal stake in the Company, which the Directors believe, will help the building of common objective of the Group and the Eligible Participants for the betterment of business and profitability of the Group. According to the Scheme, the grant of Options may be subject to conditions which may include the minimum period that must be held, and the performance target that must be achieved before the options can be exercised and the basis for determination of the exercise price. With such conditions, together with the incentive that the Option will bring about, the Group would be able to ensure that the relevant Grantee would preform services for a minium period, as well as reaching a specified level of standard, which the Directors believe, will serve the purposes of the Scheme.

As at the Latest Practicable Date, the number of Shares in issue was 340,616,934. Assuming that there is no change in the issued share capital between the period from the Latest Practicable Date and the date of the adoption of the Scheme, the number of Shares that may be issued pursuant to the Scheme and any other share option schemes will be 34,061,693 Shares, being 10 per cent. of the Shares in issue as at the Latest Practicable Date. The Company may however obtain approval from its shareholders to refresh the Mandate Limit in accordance with the Listing Rules provided that the maximum number of Shares to be issued upon exercise of all outstanding options under the Scheme and any other schemes must not exceed 30 per cent. of the Shares in issue from time to time.

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LETTER FROM THE BOARD

(b) Value of the Options

The Directors consider that it is inappropriate to value all the options that can be granted pursuant to the Scheme as at the Latest Practicable Date on the ground that certain crucial factors for such valuation are variables which cannot be reasonably determined at this stage. Such factors include without limitation the exercise price, the exercise period and the restrictions, conditions and limitations (if any) imposed by the Board at its absolute discretion upon the granting of the options. The Directors consider that any valuation of the options based on speculative assumptions in respect of such variables would not be meaningful and the results thereof may be misleading to the shareholders. Shareholders should note that The Stock Exchange recommends that estimated valuations of options should be determined by reference to the Black-Scholes option pricing model, the binomial model or a comparable generally accepted methodology.

(c) Application for listing

Application will be made to the Listing Committee of The Stock Exchange for approval of the granting the listing of, the permission to deal in, the Shares that may fall to be issued pursuant to the exercise of the subscription rights attached to the Options granted under the Scheme, representing 10% of the issued share capital of the Company at the date of the AGM.

IV. ANNUAL GENERAL MEETING

A notice convening the AGM for the purpose of, inter alia, considering and, if thought fit, passing the Ordinary Resolutions is set out in Appendix III to this circular. A form of proxy is enclosed for use by shareholders at the AGM. Shareholders are requested to complete and return the form of proxy to the Registrar as soon as possible, but in any event not less than 48 hours before the scheduled time of the AGM. The lodging of the form of proxy will not preclude the Shareholders from attending the AGM and voting in person should he/she so wish.

In accordance with the requirement of the Listing Rules, Shareholders who are directors, senior executives and employees of the Group and their respective associates (as defined in the Listing Rules) will abstain from voting on the ordinary resolution no. 5 to be proposed at the AGM for the approval of the Scheme.

V. RECOMMENDATION

The Directors believe that the Repurchase Mandate, the general Mandate and the proposed adoption of the Scheme are all in the best interests of the Company and its shareholders. Accordingly, the Directors recommend you to vote in favour of all the Ordinary Resolutions to be proposed at the AGM.

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LETTER FROM THE BOARD

VI. RESPONSIBILITY STATEMENT

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

VII. GENERAL

A copy of the Scheme will be available for inspection at the head office and principal place of business of the Company in Hong Kong at Block C, 1st Floor, Wong King Industrial Building, 24 Tai Yau Street, Sanpokong, Kowloon, Hong Kong during the normal business hours up to and including 30th August 2002. Your attention is also drawn to Appendix I to this circular headed “Explanatory Statement” for the information relating to the granting of the Repurchase Mandate and Appendix II to this circular headed “Summary of the Scheme” for a summary of the principal terms of the Scheme.

The English text of this circular and the accompanying proxy form shall prevail over the Chinese text in case of inconsistency.

Yours faithfully, On behalf of the Board Lee Chi Keung, Russell Chairman

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EXPLANATORY STATEMENT

APPENDIX I

This Appendix serves as an explanatory statement, as required by the Share Buy Back Rules, to provide requisite information to the Shareholders in order for them to consider the Repurchase Mandate.

1. SHARE CAPITAL

As at the Latest Practicable Date, there were in issue an aggregate of 340,616,934 Shares. Exercise in full of the mandate, on the basis that no further Shares are issued or repurchased prior to the date of the AGM, could accordingly result in up to 34,061,693 Shares being repurchased by the Company. The mandate allows the Company to make or agree to make repurchases only during the period ending on the earliest of the date of the next annual general meeting, the date by which the next annual general meeting of the Company is required to be held by law and the date upon which such authority is revoked or varied.

2. REASON FOR REPURCHASE

The Directors have no present intention to repurchase any shares but consider that the mandate will provide the Company the flexibility to make such repurchases when appropriate and beneficial to the Company. Such repurchases may enhance the net asset value of the Company and/or earnings per share. As compared with the financial position of the Company as at 31st March 2002 (being the date of its latest audited accounts), the Directors consider that there would be a material adverse impact on the working capital and on the gearing position of the Company in the event that the proposed repurchases were to be carried out in full during the proposed repurchase period. No repurchase would be made in circumstances that would have a material adverse impact on the working capital or gearing ratio of the Company.

3. FUNDING OF REPURCHASES

The Company is empowered by its Memorandum of Association and Bye-laws to repurchase its Shares. Repurchases will be funded entirely from the funds legally available for that purpose. Bermudian law provides that the purchase of Shares may only be effected out of the capital paid up on the purchased Shares, the profits otherwise available for dividend or out of the proceeds of a new issue of Shares of the Company made for the purpose. Any amount of premium payable on the purchase over the par value of the shares of the Company to be purchased must be out of either the profits otherwise available for dividend or out of the Company’s share premium account or out of contributed surplus. Such purchase may only be made if at least two directors by affidavit declare that taking into account the purchase, the Company is solvent or that its creditors have consented to the purchase.

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EXPLANATORY STATEMENT

APPENDIX I

4. UNDERTAKING

None of the Directors nor, to the best of the knowledge of the Directors having made all reasonable enquiries, any of the associates (as defined in the Listing Rules) of any of the Directors has any present intention, in the event that the proposal is approved by shareholders, to sell Shares to the Company.

No connected person, that is, a director, chief executive or substantial shareholder of the Company or its subsidiaries or their associates (as defined in the Listing Rules) of the Company has a present intention to sell Shares to the Company nor has he/she/it undertaken not to sell any of the Shares held by him/her/it to the Company in the event that the Company is authorized to make repurchases of Shares.

The Directors have undertaken to The Stock Exchange to exercise the power of the Company to make repurchases pursuant to the proposed resolution in accordance with the Listing Rules, the laws of Hong Kong and all applicable laws of Bermuda, and in accordance with the regulations set out in the Memorandum of Association and Bye-laws of the Company.

5. TAKEOVER CODE

A repurchase of shares by the Company may result in an increase in the proportionate interests of a substantial shareholder of the Company in the voting rights of the Company, which could give rise to an obligation to make a mandatory offer in accordance with Rule 26 of the Hong Kong Code on Takeovers and Mergers (the “Code”).

As at the Latest Practicable Date, to the best of the knowledge and belief of the Directors, Wonder Star Securities Limited (“Wonder Star”) and its wholly-owned subsidiary, Top Source Securities Limited (“Top Source”), who beneficially holds approximately 73.93% and 32.47% respectively of the issued share capital of the Company, are the substantial shareholders holding more than 10% of the issued share capital of the Company. In the event that the Directors should exercise in full the power to repurchase Shares under the Repurchase Mandate, the shareholding of Wonder Star and Top Source in the Company would be increased to approximately 82.14% and 36.08% respectively of the issued share capital of the Company. Such an increase would give rise to an obligation to make a mandatory offer under Rule 26 of the Code and will result in the aggregate amount of the share capital of the Company in public hands be reduced to less than 25%. The Directors have no present intention to repurchase shares to such extent which will result in the amount of Shares held by the public of being reduced to less than 25% and would give rise to an obligation to make a mandatory offer under Rule 26 of the Code.

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EXPLANATORY STATEMENT

APPENDIX I

6. SHARE PRICES

The highest and lowest prices at which the Shares have traded on The Stock Exchange in each of the previous twelve months were as follows:

		Shares
	Highest	Lowest
	Traded price	Traded price
	HK$	HK$
Month/Year
July 2001	0.410	0.340
August 2001	0.365	0.345
September 2001	0.400	0.330
October 2001	0.335	0.300
November 2001	0.500	0.290
December 2001	0.750	0.295
January 2002	0.540	0.250
February 2002	0.490	0.280
March 2002	0.340	0.295
April 2002	—*	—*
May 2002	0.390	0.300
June 2002	0.310	0.300

• No trading of shares on The Stock Exchange during April 2002.

7. SHARES REPURCHASED MADE BY THE COMPANY

During each of the six months preceding the date of this circular, no Shares have been repurchased by the Company.

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SUMMARY OF THE SCHEME

APPENDIX II

The following is a summary of the principal terms of the Scheme to be adopted at the AGM:

1. PURPOSE OF THE SCHEME

The Scheme, by granting options to the Eligible Participants, will provide to the Eligible Participants a personal stake in the Company, which the Directors believe, will help the building of common objective of the Group and the Eligible Participants for the betterment of business and profitability of the Group.

2. WHO MAY JOIN

The Board shall be entitled in its absolute discretion, to grant Eligible Participants Options to subscribe for Shares at the exercise price calculated in accordance with paragraph 7 below.

3. GRANT AND ACCEPTANCE OF OPTIONS

Subject to the terms of the Scheme, the Board may, at its absolute discretion, invite any Eligible Participants to take up Options to subscribe for Shares at a price calculated in accordance with paragraph 7 below. To the extent that the offer of the grant of an Option is not accepted within 14 days from the date upon which it is made, it will be deemed to have been irrevocably declined and lapsed.

An option shall be deemed to have been granted and accepted and to have taken effect when the duplicate offer document (“Offer Document”) comprising acceptance of the Option duly signed by the Grantee is received by the Company together with a remittance in favour of the Company of HK$1.00 by way of consideration for the grant thereof shall have been received by the Company on or before the date of acceptance of the grant.

4. RESTRICTIONS ON THE TIME OF GRANT OF OPTIONS

A grant of Options may not be made after a price sensitive event has occurred or a price sensitive matter has been the subject of a decision until such price sensitive information has been published in the newspaper. In particular, no Options may be granted during the period commencing one month immediately preceding the earlier of:

• (a) the date of the board meeting for the approval of the Company’s annual or interim results; and

• (b) the deadline for the Company to publish its interim or annual results announcement under the listing agreement,

ending on the date of actual publication of the results announcement.

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SUMMARY OF THE SCHEME

APPENDIX II

5. MAXIMUM NUMBER OF SHARES

The total number of Shares which may be issued upon exercise of all Options to be granted under the Scheme and options to be granted under any other schemes will not in aggregate exceed the Mandate Limit. Options lapsed in accordance with the terms of the Scheme will not be counted for the purpose of calculating the Mandate Limit.

As at the Latest Practicable Date, the number of Shares in issue was 340,616,934. Assuming that there is no change in the issued share capital between the period from the Latest Practicable Date and the date of the adoption of the Scheme, the number of Shares that may be issued pursuant to the Scheme and any other share option schemes will be 34,061,693 Shares, being 10 per cent. of the Shares in issue as at the Latest Practicable Date.

The Company may seek approval of its Shareholders in general meeting to refresh the Mandate Limit such that the total number of Shares which may be issued upon exercise of all Options to be granted under the Scheme and options to be granted under all other schemes under the Mandate Limit as refreshed will not exceed 10 per cent. of the issued share capital of the Company as at the date of approval of the refreshing of the Mandate Limit by Shareholders in general meeting. For the avoidance of doubt, Options previously granted under the Scheme and options previously granted under any other schemes (including those outstanding, cancelled or lapsed in accordance with the Scheme and any other schemes or options exercised pursuant to the Scheme and any other schemes) will not be counted for the purpose of calculating the refreshed Mandate Limit.

The Mandate Limit will be adjusted, in such manner as the Auditors shall certify to be appropriate, in the event of any alterations in the capital structure of the Company as mentioned in paragraph 16 below or otherwise howsoever.

The Company may, by the approval of Shareholders in general meetings, grant Options beyond the Mandate Limit provided that the Options in excess of the Mandate Limit are granted only to Eligible Participants specifically identified by the Company before such approval is sought.

Notwithstanding the foregoing, the Shares which may be issued upon exercise of all outstanding Options granted and yet to be exercised under the Scheme and any other schemes of the Company at any time shall not exceed 30 per cent. of the Shares in issue from time to time.

6. MAXIMUM ENTITLEMENT OF EACH ELIGIBLE PARTICIPANTS

The total number of Shares issued and to be issued upon exercise of the Options granted to each Eligible Participant (including both exercised and outstanding options) under the Scheme and other schemes of the Group in any 12-month period up to the date of grant must not exceed 1% of the Shares in issue at the date of grant unless approved by the Shareholders in general meeting. Where any further grant of options to a Eligible Participant would result in

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SUMMARY OF THE SCHEME

APPENDIX II

the number of Shares issued and to be issued upon exercise of all options granted and to be granted to such Eligible Participant (including exercised, cancelled and outstanding options) in the 12-month period up to and including the date of such further grant representing in aggregate over 1% of the Shares in issue, such further grant must be separately approved by the Shareholders in general meeting with such Eligible Participant and his associates (having the same meaning ascribed to it in Rule 1.01 of Chapter 1 of the Listing Rules in relation to any director, chief executive or substantial director (being an individual) of an issuer) abstaining from voting, and the number and terms (including the subscription price) of options to be granted to such Eligible Participant must be fixed before the Shareholders’ approval. The date of meeting of the Board for proposing such further grant should be taken as the date when an offer is made to a Eligible Participant for the purpose of calculating the subscription price. The Company must send a circular disclosing the identity of the Eligible Participant, the number and terms of the options to be granted (and options previously granted) to such Eligible Participant, and the information required under Rule 17.02(2)(d) of the Listing Rules and the disclaimer under Rule 17.02(4) of the Listing Rules to the Shareholders in accordance with the Listing Rules.

7. EXERCISE PRICE

The exercise price of a Share in respect of any particular Option granted under the Scheme shall be such price as the Board in its absolute discretion shall determine, save that such price will not be less than the highest of:—

• (a) the closing prices of the Shares as stated in The Stock Exchange’s daily quotations sheet on the date of grant, which must be a day on which The Stock Exchange is open for the business of dealing in securities;

• (b) the average of the closing prices of the Shares as stated in The Stock Exchange’s daily quotations sheet for the five business days immediately preceding the date of grant; and

• (c) the nominal value of a Share.

8. GRANTING OPTIONS TO CONNECTED PERSONS

Any grant of Options to a director, chief executive or substantial shareholder of the Company or any of its associates (as defined in the Listing Rules) is required to be approved by the independent non-executive directors of the Company (excluding any independent non-executive director who is the Grantee of the Options).

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SUMMARY OF THE SCHEME

APPENDIX II

If the Company proposes to grant Options to a substantial shareholder (as defined in the Listing Rules) or any independent non-executive director of the Company or their respective associates (as defined in the Listing Rules) which will result in the number of Shares issued and to be issued upon exercise of Options granted and to be granted (including options exercised, cancelled and outstanding) to such person in the 12-month period up to and including the date of such grant:

• (a) representing in aggregate over 0.1 per cent. of the Shares in issue; and

• (b) having an aggregate value in excess of HK$5 million, based on the closing price of the Shares at the date of each grant.

such further grant of Options will be subject to the issue of a circular by the Company and the approval of the Shareholders in general meeting on a poll at which all connected persons (as defined in the Listing Rules) of the Company shall abstain from voting, and/or such other requirements prescribed under the Listing Rules from time to time. A connected person (as defined in the Listing Rules) will be permitted to vote against the grant only if his intention to do so has been stated in the circular.

9. EXERCISE OF OPTION

Unless otherwise provided in the terms of the Scheme, the period which the Option may be exercised shall be the period as set out in the Offer Document, save that no Option may be exercised more than ten years after it has been granted during the Option period. Subject to earlier termination of the Scheme by Shareholders at general meetings or by the Board, the Scheme shall be valid and effective for a period of ten years after the date of adoption of the Scheme. The minimum period for which an Option must be held before it can be exercised is to be determined by the Directors after having regard to the particular circumstances of each Grantee. The exercise of Options may be subject to achievement of performance targets as determined by the Board in its absolute discretion when the Option is granted.

10. RANKING OF SHARES

The Shares to be allotted upon the exercise of an Option will be subject to all the provisions of the bye-laws of the Company for the time being in force and will rank pari passu in all respects with the fully paid Shares in issue on the date of allotment and accordingly will entitle the holders thereof to participate in all dividends or other distributions paid or made on or after the date of allotment other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date thereof shall be before the date of allotment.

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SUMMARY OF THE SCHEME

APPENDIX II

11. RIGHTS ARE PERSONAL TO GRANTEE

An Option is personal to the Grantee and shall not be assignable and no Grantee shall in any way sell, transfer, charge, mortgage, encumber or in any manner dispose of or create any interest in favour of any third party over or in relation to any Option. Any breach of the foregoing by a Grantee of the Option shall entitle the Company to cancel any outstanding Option or part thereof granted to such Grantee.

12. RIGHTS ON CEASING EMPLOYMENT/DEATH

If the Grantee being an employee ceases to be an Eligible Participant for any reason (including his death) other than:—

• (a) the cessation of employment during the 12-month period following the date upon which such Option is deemed to granted and accepted; and

• (b) those grounds specified in paragraph 17(iv),

the termination of, the Grantee may exercise the Option (to the extent not already exercised) within one month following the cessation of employment which date shall be the last day on which the Grantee was at work with the Company or the relevant subsidiary whether salary is paid in lieu of notice or not, or such longer period as the Directors may determine.

13. RIGHTS ON GENERAL OFFER

In the event of a general offer is made to all the Shareholders (or all such holders other than the offeror and/or any person controlled by the offeror and/or any person acting in concert with the offeror (as defined in the Code) and such offer becomes or is declared unconditional during the Option period of the relevant Option, the Grantee shall be entitled to exercise the Option in full (to the extent not already exercised) at any time within one month after the date on which the offer becomes or is declared unconditional.

14. RIGHTS ON WINDING-UP

In the event a notice is given by the Company to its members to convene a general meeting for the purposes of considering, and if thought fit, approving a resolution to voluntarily wind-up the Company, the Company shall on the same date as or soon after it despatches such notice to each member of the Company give notice thereof to all Grantees and thereupon, each Grantee (or his or her legal personal representatives) shall be entitled to exercise all or any of his Options (to the extent not already exercised) at any time not later than two business days

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SUMMARY OF THE SCHEME

APPENDIX II

prior to the proposed general meeting of the Company referred to above by giving notice in writing to the Company, accompanied by a remittance for the full amount of the aggregate exercise price for the Shares in respect of which the notice is given, whereupon the Company shall as soon as possible and, in any event, no later than the business day immediately prior to the date of the proposed shareholder’s meeting, allot the relevant Shares to the Grantee credited as fully paid.

15. RIGHTS ON A COMPROMISE OR ARRANGEMENT

In the event of a compromise or arrangement between the Company and its members or creditors is proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies, the Company shall give notice thereof to all Grantees on the same date as it despatches the notice which is sent to each member or creditor of the Company summoning the meeting to consider such a compromise or arrangement, and thereupon each Grantee may shall be entitled to exercise all or any of his Options (to the extent not already exercised) at any time not later than two business days prior to the proposed general meeting of the Company referred to above by giving notice in writing to the Company, accompanied by a remittance for the full amount of the aggregate exercise price for the Shares in respect of which the notice is given, whereupon the Company shall as soon as possible and, in any event, no later than the business day immediately prior to the date of the proposed shareholder’s meeting, allot the relevant Shares to the Grantee credited as fully paid. Upon such compromise or arrangement becoming effective, all Options shall, to the extent that they have not been exercised, lapse and determine.

16. EFFECT OF ALTERATIONS TO SHARE CAPITAL

In the event of any alteration in the capital structure of the Company whilst any Option remains exercisable, whether by way of capitalisation of profits or reserves, rights issue, consolidation, subdivision or reduction of the share capital of the Company (other than an issue of securities by the Company as consideration in a transaction), such corresponding alterations (if any) shall be made in:

• (a) the nominal amount of Shares under the Option so far as unexercised;

• (b) the exercise price per Share ;

• (c) the number of Shares subject to outstanding Option; and/or

• (d) the method of exercise of the Option,

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SUMMARY OF THE SCHEME

APPENDIX II

as the Auditors shall certify in writing to the Board (except for any adjustments made on a capitalisation issue) either generally in respect of all options granted or specifically as regards any particular Option(s) to be in their opinion fair and reasonable and confirming that the adjustments satisfy the requirements set out in the Listing Rules, provided that:

• (i) any such alterations shall be made on the basis that the aggregate exercise price payable by a grantee on the full exercise of any Option shall remain as nearly as possible the same (but shall not be greater than) it was before such event;

• (ii) no such alteration shall be made the effect of which would be to enable any Share to be issued at less than its nominal value; and

• (iii) the proportion of the issued share capital of the Company to which a Grantee is entitled after such alteration shall remain the same as that to which he was entitled before such alteration if the Shares can be proportionate to an exact figure and, in case the Shares may not be perfectly proportionate to an exact figure, the proportion of the issued share capital of the Company to which a Grantee is entitled after such alteration will be adjusted to remain as nearly a possible the same to which he was entitled before such alteration (and in any event not greater than the same).

17. EXPIRY OF OPTION

An Option shall lapse automatically (to the extent not already exercised) on the earliest of:

• (i) the expiry of the Option period;

• (ii) the expiry of any of the other periods referred to in paragraphs 12, 13, 14 or 15;

• (iii) subject to paragraph 14, the date of the commencement of the winding-up of the Company;

• (iv) the date on which the Grantee ceases to be an Eligible Participant by reason of being dismissed as an employee of the Group on the grounds that he has been guilty of serious misconduct, or has committed any act of bankruptcy or has become insolvent or has made any arrangements or composition with his creditors generally, or has been convicted of any criminal offence involving his integrity or honesty, his Option will lapse and not be exercisable after the date of termination of his employment; and

• (v) the date on which the Board shall exercise the Company’s right to cancel the Option at any time after the Grantee commits a breach of paragraph 11 or the Options are cancelled in accordance with paragraph 19.

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SUMMARY OF THE SCHEME

APPENDIX II

18. ALTERATION OF THE SCHEME

The Scheme may be altered in any respect by resolution of the Board except that:

• (a) any alteration to the advantage of the Grantees or the Eligible Participants (as the case may be) in respect of the matters contained in Rule 17.03 of the Listing Rules; and

• (b) any material alteration to the terms and conditions of the Scheme or any change to the terms of options granted,

shall first be approved by the Shareholders in general meeting provided that if the proposed alteration shall adversely affect an option granted or agreed to be granted prior to the date of alteration, such alteration shall be further subject to the Grantees’ approval in accordance with the terms of the Scheme. The amended terms of the Scheme shall still comply with the Chapter 17 of the Listing Rules and any change to the authority of the Board in relation to any alteration to the terms of the Scheme must be approved by Shareholders in general meeting.

19. CANCELLATION OF OPTIONS

Subject to the consent from the relevant Grantee, the Board may in its discretion cancel Options previously granted to, and yet to be exercised by, such Grantee. Any cancellation of Options granted but not exercised and the granting of new Options to the same Grantee may only be made under the Scheme with available unissued options (excluding the cancelled options) within the Mandate Limit.

20. TERMINATION OF THE SCHEME

The Company may by resolution in general meeting or the Board at any time terminate the Scheme and in such event no further Option shall be offered but the provisions of the Scheme shall remain in force to the extent necessary to give effect to the exercise of any Option granted prior thereto or otherwise as may be required in accordance with the provisions of the Scheme.

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NOTICE OF ANNUAL GENERAL MEETING

APPENDIX III

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KTP HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that an annual general meeting of the shareholders of KTP Holdings Limited (the “Company”) will be held at 2:30 p.m. on 30th August 2002 at Block C, 1st Floor, Wong King Industrial Building, 2-4 Tai Yau Street, Sanpokong, Kowloon, Hong Kong, for the following purposes:

1. to receive and consider the audited financial statements and the reports of the directors and auditors for the year ended 31st March 2002;

2. to declare a final dividend;

3. to re-elect directors and authorize the board of directors to fix the directors’ remuneration;

4. to appoint auditors of the Company and to authorize the board of directors to fix their remuneration;

and as special business, to consider and, if thought fit, pass the following resolutions as ordinary resolutions of the Company:

1. “ THAT , subject to and conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of, the permission to deal in, the ordinary shares in the capital of the Company (the “Shares”) that may fall to be issued pursuant to the exercise of the options (the “Options”) granted under the share option scheme of the Company (the “Scheme”), a copy of the rules thereof are contained in the document marked “A” produced to the meeting and for the purposes of identification signed by the Chairman thereof, the rules of the Scheme be and are hereby approved and adopted and the directors of the Company be and are hereby authorised to administer the Scheme, grant Options to subscribe for Shares thereunder and to allot, issue and deal with the Shares pursuant to the exercise of the Options that may be granted under the Scheme and to do all such acts and to enter into all such transactions, arrangements and agreements as may be necessary or expedient in order to give full effect to the Scheme.”

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NOTICE OF ANNUAL GENERAL MEETING

APPENDIX III

1. “ THAT ,

2. (a) subject to paragraph (b) of hereunder the exercise by the directors of the Company during the Relevant Period (as defined in paragraph (c) below) of all the powers of the Company to purchase shares of the Company, subject to and in accordance with all applicable laws, be and is hereby generally and unconditionally approved;

3. (b) the aggregate nominal amount of shares of the Company which may be purchased or agreed conditionally or unconditionally to be purchased pursuant to the approval in paragraph (a) above shall not exceed 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of this resolution, and the said approval be limited accordingly; and

4. (c) For the purposes of this resolution:—

“Relevant Period” means the period from the passing of this resolution until whichever is the earliest of:—

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

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

  - (iii) the revocation or variation of this resolution by an ordinary resolution of the shareholders of the Company in general meeting;

1. “ THAT :

2. (a) subject to paragraphs (b) and (c) hereunder, the granting of an unconditional general mandate to the board of directors (the “Board”), during the Relevant Period (as defined in paragraph (d) below) to issue, allot and deal with additional shares in the capital of the Company, and to make or grant offers, agreements and options which would or might require shares in the capital of the Company, to be issued, allotted or dealt with, be and is hereby generally and unconditionally approved;

3. (b) the unconditional general mandate under paragraph (a) above shall not extend beyond the Relevant Period save the Board may during the Relevant Period make or grant offers, agreement and options which might require the exercise of such powers after the end of the Relevant Period;

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NOTICE OF ANNUAL GENERAL MEETING

APPENDIX III

• (c) the aggregate nominal amount of shares in the capital of the Company allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Board otherwise than pursuant to:

• (i) a Rights Issue (as defined in paragraph (d) below);

• (ii) the exercise of options granted under any option scheme or similar arrangement for the time being adopted for the grant of issue of shares or rights to acquire shares in the capital of the Company to officers and/or employees of the Company and/or any of its subsidiaries; and

• (iii) any scrip dividend or similar arrangement providing for the allotment of shares in the share capital of the Company implemented in accordance with the byelaws of the Company,

shall not exceed 20 per cent. of the aggregate nominal amount of the share capital of the Company in issue on the date of this resolution; and

• (d) for the purpose of this resolution:

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

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

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

• (iii) the date on which the authority set out under this resolution is revoked or varied by an ordinary resolution of the Company’s shareholders in general meeting.

“ Rights Issue ” means the allotment, issue or grant of shares in the capital of the Company pursuant to an offer of shares open for a period fixed by the Directors made to holders of shares in the capital of the Company on the register of members of the Company on a fixed record date in proportion to their then holdings of such shares (subject to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of, any recognised regulatory body or any stock exchange in, or in any territory application to the Company); and

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APPENDIX III

NOTICE OF ANNUAL GENERAL MEETING

1. “ THAT , the aggregate number of shares in the capital of the Company which shall have been repurchased by the Company subsequent and pursuant to the passing of resolution no.6 (up to a maximum of 10 per cent. of the issued shares at the date of passing resolution no.6) shall be added to the aggregate number of shares that may be allotted or agreed conditionally or unconditionally to be allotted by the directors of the Company pursuant to resolution no.7 above.”

By order of the Board Lee Chi Keung, Russell Chairman

Hong Kong, 26th July 2002

Head office and principal place of business in Hong Kong:

Block C, 1st Floor

Wong King Industrial Building 2-4 Tai Yau Street, Sanpokong Kowloon

Hong Kong

Notes:

• (1) Any member entitled to attend and vote at the meeting is entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a member of the Company.

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

• (3) The instrument appointing a proxy must be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under its seal or under the hand of any officer, attorney or other person authorized to sign the same.

• (4) In order to be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, must be deposited at the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited (formerly known as Central Registration Hong Kong Limited) at Rooms 1910-1915, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

• (5) Completion and return of the form of proxy will not preclude a member from attending and voting in person at the meeting and in such event, the form of proxy will be deemed to be revoked.

• (6) Where there are joint holders of any Share, any one of such joint holders may vote, either in person or by proxy, in respect of such Shares as if he/she was solely entitled thereto, but if more than one of such joint holders are present at the meeting, the most senior shall alone be entitled to vote, whether in person or by proxy. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joints holding.

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NOTICE OF ANNUAL GENERAL MEETING

APPENDIX III

• (7) The register of members will be closed from Monday, 26th August 2002 to Friday, 30th August 2002, both days inclusive, during which no transfer of shares will be effected. In order to qualify for the proposed final dividend, all transfer documents, accompanied by the relevant shares certificates, must be lodged with the Company’s Hong Kong Branch Registrar, Computershare Hong Kong Investor Services Limited (formerly known as Central Registration Hong Kong Limited), at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration not later than 4:00 p.m. on Friday, 23rd August 2002.

• (8) In relation to resolution no. 6 above, the directors wish to state that they will exercise the powers conferred thereby to repurchase the shares in the Company in circumstances which they deem appropriate for the benefits of the shareholders. The Explanatory Statement containing the information necessary to enable shareholders to make an informed decision to vote on this resolution as required by the Listing Rules is set out in Appendix I to this circular.

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