Automated Systems Holdings Limited — Proxy Solicitation & Information Statement 2003

Apr 30, 2003

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold all your shares or warrants in CHINA ONLINE (BERMUDA) LIMITED (the “Company”), you should at once hand this document to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this document, 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 document.

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(Incorporated in Bermuda with limited liability)

Executive directors: Registered office: Ms. Chong Sok Un (Chairman) Cedar House Dato’ Wong Peng Chong 41 Cedar Avenue Mr. Kong Muk Yin Hamilton HM12 Bermuda

Independent non-executive directors: Mr. Cheng Mo Chi, Moses Head office and principal Mr. Tan Shao Hua place of business in Hong Kong: Mr. Lo Wai On 47th Floor China Online Centre 333 Lockhart Road Wan Chai Hong Kong 30th April, 2003

To shareholders and, for information only, the warrantholders of the Company

Dear Sir or Madam,

GENERAL MANDATES TO REPURCHASE SECURITIES AND ISSUE SHARES

1. Introduction

The purpose of this document is to provide you with information regarding the resolutions to be proposed at a special general meeting of the Company to be held on 3rd June, 2003 (the “Special General Meeting”) immediately following the annual general meeting of the Company to be held on the same date (the “Annual General Meeting”).

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2. Mandates for the repurchase by the Company of its own securities and the issue of shares

At the special general meeting of the Company held on 31st May, 2002, a general mandate was given to the directors of the Company (the “Directors”) to exercise the powers of the Company to repurchase shares of the Company. Such mandate will lapse at the conclusion of the Annual General Meeting.

The Directors propose to seek your approval of an ordinary resolution (the “Ordinary Resolution No. 1”) to be proposed at the Special General Meeting to give a fresh general mandate to the Directors to exercise the powers of the Company to repurchase, at any time until the next annual general meeting or such earlier as stated in the Ordinary Resolution No. 1, shares of HK$0.01 each of the Company (the “Shares”) up to a maximum of 10% of the issued share capital of the Company at the date of the Ordinary Resolution No.1 and warrants issued by the Company to subscribe for Shares at a price of HK$0.30 per Share (the “Warrants”) up to a maximum of 10% of the aggregate amount of the Warrants outstanding at the date of the Ordinary Resolution No. 1 (the “Repurchase Mandate”).

An explanatory statement as required under the relevant rules set out in the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) to regulate the repurchase by companies with primary listings on the Stock Exchange of their own securities on the Stock Exchange (the “Share Repurchase Rules”) to provide the requisite information of the Repurchase Mandate is set out in the appendix hereto.

Two other ordinary resolutions will also be proposed at the Special General Meeting, one (the “Ordinary Resolution No. 2”) granting to the Directors a general mandate (the “Issue Mandate”) to allot, issue and deal with additional Shares not exceeding 20% of the issued share capital of the Company at the date of Ordinary Resolution No. 2; and another adding to such general mandate if granted to the Directors any Shares representing the aggregate nominal amount of the Shares in the capital of the Company repurchased by the Company under the Repurchase Mandate (the “Extension Mandate”).

3. Special General Meeting

The ordinary resolutions are set out in full in the notice of the Special General Meeting dated 30th April, 2003 (the “Notice of Special General Meeting”). Whether or not you intend to attend the Special General Meeting, you are requested to complete the proxy form and return it to the branch share registrars of the Company in Hong Kong, Tengis Limited at G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the Special General Meeting. The return of a proxy form will not preclude a shareholder from attending the Special General Meeting and voting in person.

4. Recommendation

The Directors believe that the ordinary resolutions for the Repurchase Mandate, Issue Mandate and Extension Mandate are all in the best interests of the Company and its shareholders as a whole. Accordingly, the Directors recommend that all shareholders to vote in favour of all the resolutions set out in the Notice of Special General Meeting.

Chairman

By Order of the Board Chong Sok Un

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APPENDIX EXPLANATORY STATEMENT

This appendix serves as an explanatory statement, as required by the Share Repurchase Rules, to provide requisite information to you for your consideration of the Repurchase Mandate. For this purpose, “shares” is defined in the Share Repurchase Rules to mean shares of all classes and securities which carry a right to subscribe or purchase shares.

1. Share Capital and Warrants

As at 23rd April, 2003 (the latest practicable date prior to the printing of this document), the issued share capital of the Company comprised 9,286,462,340 Shares. In addition, there were outstanding Warrants in the value of HK$556,999,874.40 to subscribe up to 1,856,666,248 in aggregate for Shares at HK$0.30 each (subject to adjustment).

Subject to the passing of the Ordinary Resolution No. 1 and on the basis that no further Shares or Warrants are issued or repurchased or exercised prior to the Special General Meeting to be held on 3rd June, 2003, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 928,646,234 Shares, and Warrants in the value of HK$55,699,987.44 carrying rights to subscribe up to 185,666,624 in aggregate for Shares at HK$0.30 each (subject to adjustment).

2. Reasons for Repurchase

The Directors believe that the Repurchase Mandate is in the best interests of the Company and its shareholders as a whole. Such purchase may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets and/or earnings per Share and will only be made when the Directors believe that such a purchase will benefit the Company and its shareholders as a whole.

3. Funding of Repurchase

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its Memorandum of Association and Bye-Laws and the laws of Bermuda. Bermuda laws provides that the amount of capital repaid in connection with a share repurchase may only be paid out of either the capital paid up on the relevant shares, or the profits that would otherwise be available for dividend or the proceeds of a fresh issue of shares made for the purpose. The amount of premium payable on repurchase may only be paid out of either the profits that would otherwise be available for dividend or out of the share premium or contributed surplus accounts of the Company.

There might be an adverse impact on the working capital or gearing position of the Company as compared with the position disclosed in the audited accounts contained in the annual report for the year ended 31st December, 2002 in the event that the Repurchase Mandate were to be carried out in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements or the gearing levels of the Company which in the opinion of the Directors are from time to time appropriate for the Company.

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1. Shares and Warrants Prices

The highest and lowest prices at which the Shares have traded on the Stock Exchange during each of the previous twelve months before the printing of this document were as follows:–

		Shares
	Highest		Lowest
	HK$		HK$
April 2002	0.065		0.043
May 2002	0.074		0.053
June 2002	0.064		0.050
July 2002	0.058		0.026
August 2002	0.042		0.030
September 2002	0.039		0.027
October 2002	0.035		0.020
November 2002	0.035		0.027
December 2002	0.040		0.026
January 2003	0.032		0.025
February 2003	0.029		0.025
March 2003	0.026		0.018

There was no transaction for the Warrants during the period from April 2002 to March 2003.

5. Undertaking and Miscellaneous

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchases pursuant to the Ordinary Resolution No.1 and in accordance with the Listing Rules and the laws of Bermuda.

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, their associates as defined in the Listing Rules, have any present intention to sell any securities of the Company to the Company or its subsidiaries under the Repurchase Mandate if such is approved by the shareholders.

No connected persons (as defined in the Listing Rules) have notified the Company that they have a present intention to sell securities of the Company to the Company or its subsidiaries or have undertaken not to do so, in the event that the Repurchase Mandate is approved by the shareholders of the Company.

If a shareholder’s proportionate interest in the voting rights of the Company increases on exercise of the powers to repurchase securities of the Company pursuant to the Repurchase Mandate, such increase will be treated as an acquisition for the purposes of the Hong Kong Code on Takeovers and Mergers (the “Takeovers Code”). As a result, a shareholder or group of shareholders acting in concert, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeovers Code.

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As at 23rd April, 2003, (the latest practicable date prior to the printing of this document), Ms. Chong Sok Un (“Ms. Chong”) beneficially held 2,631,200,000 Shares (Note) , representing approximately 28.33% of the issued share capital of the Company. To the best of the knowledge and belief of the Company, no other person, together with his/her associates, was beneficially interested in Shares of the Company representing 10% or more of the issued share capital of the Company.

In the event that the Directors exercise in full the power to repurchase Shares which is proposed to be granted pursuant to the Repurchase Mandate then (if the present shareholdings otherwise remained the same) the attributable shareholding of Ms. Chong in the Company would be increased to approximately 31.48% of the issued share capital of the Company. Such increase may give rise to an obligation to make a mandatory offer under Rule 26 of the Takeover Code. However, the Directors have no current intention to exercise the Repurchase Mandate to such an extent as would give rise to this obligation. In any event, the Repurchase Mandate will be exercised only if the number of Shares held by the public would not fall below 25%.

Note: The 2,631,200,000 Shares are held by Vigor Online Offshore Limited, a 67.7% owned subsidiary of China Spirit Limited in which Ms. Chong maintains a beneficial interest of 100%.

6. Securities Purchase made by the Company

The Company has not purchased any securities of the Company (whether on the Stock Exchange or not) in the six months preceding the date of this document.

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(Incorporated in Bermuda with limited liability)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a Special General Meeting of the Company will be held at Board Room, 7th Floor, The Dynasty Club Limited, South West Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong on Tuesday, the 3rd day of June, 2003 at 10:10 a.m. (or so soon thereafter as the Annual General Meeting of the Company convened on the same date and place at 10:00 a.m. shall have been concluded or adjourned) for the purpose of considering and, if thought fit, passing the following resolutions which will be proposed as ordinary resolutions:-

ORDINARY RESOLUTIONS

1. “THAT:-

2. (a) subject to paragraph (b) below, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase shares of HK$0.01 each in the capital of the Company and warrants issued by the Company to subscribe for shares in the capital of the Company through the facilities of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or of another exchange recognized by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange or of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved;

3. (b) the aggregate nominal amount of share capital of the Company to be repurchased by the Company pursuant to the approval in paragraph (a) above shall not exceed ten per cent. (10%) of the aggregate nominal amount of the share capital of the Company in issue at the date of this Resolution and the aggregate amount of warrants to be repurchased by the Company pursuant to such approval shall not exceed ten per cent. (10%) of the aggregate amount of warrants of the Company outstanding at the date of this resolution, and the approval in paragraph (a) above shall 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 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 laws of Bermuda to be held; and

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

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1. “THAT:-

2. (a) subject to paragraph (c) below, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares of HK$0.01 each in the capital of the Company and to make or grant offers, agreements and options which would or might require the exercise of such power be and is hereby generally and unconditionally approved;

3. (b) the approval in paragraph (a) above shall authorise the Directors of the Company during the Relevant Period (as hereinafter defined) to make or grant offers, agreements and options which would or might require the exercise of such power after the end of the Relevant Period;

4. (c) the aggregate nominal amount of share capital to be allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the Directors of the Company pursuant to the approval in paragraph (a) above, otherwise than pursuant to (i) a Rights Issue, (ii) an issue of shares as scrip dividends pursuant to the Bye-Laws of the Company from time to time, (iii) an issue of shares under any option scheme or similar arrangement for the time being adopted for the grant or issue to employees of the Company and/or any of its subsidiaries of shares or rights to acquire shares of the Company, or (iv) an issue of shares upon the exercise of rights of subscription or conversion under the terms of any warrants of the Company, shall not exceed twenty per cent. (20%) of the aggregate nominal amount of the issued share capital of the Company at the date of passing this Resolution, and the said approval in paragraph (a) above shall be limited accordingly; and

5. (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 laws of Bermuda or the Company’s Bye-Laws to be held; and

• (iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders in general meeting; and

“Rights Issue” means an offer of shares open for a period fixed by the Directors of the Company to the holders of shares of the Company on the register on a fixed record date in proportion to their then holdings of such shares as at that date (subject to such exclusions or other arrangements as the Directors of the Company 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 any territory outside Hong Kong applicable to the Company).”

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1. “ THAT conditional upon the passing of Ordinary Resolutions Nos. 1 and 2 above, the general mandate granted to the Directors of the Company to allot, issue and deal with additional shares pursuant to Ordinary Resolution No. 2 above be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of share capital of the Company repurchased by the Company under the authority granted pursuant to the Ordinary Resolution No. 1 above, provided that such amount shall not exceed ten per cent. (10%) of the aggregate nominal amount of the issued share capital of the Company at the date of the Ordinary Resolution No. 1 above.”

By Order of the Board Chong Sok Un Chairman

Hong Kong, 30th April, 2003

Notes:

• (1) Any member of the Company entitled to attend and vote at a meeting of the Company or a meeting of the holders of any class of shares in the Company shall be entitled to appoint another person as his proxy to attend and vote on a poll instead of him. A proxy need not be a member of the Company. A member may appoint more than one proxy to attend on the same occasion.

• (2) The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under seal, or under the hand of an officer or attorney duly authorised.

• (3) The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the Company’s branch share registrars in Hong Kong, Tengis Limited at G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not less than forty-eight hours before the time appointed for holding the meeting or adjourned meeting at which the person named in such instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid.

• (4) Delivery of an instrument appointing a proxy shall not preclude a member from attending and voting in person at the meeting and in such event, the instrument appointing a proxy shall be deemed to be revoked.

• (5) Where there are joint registered holders of any share, any one of such persons may vote at any meeting either personally or by proxy, in respect of such share as if he were solely entitled thereto; but if more than one of such joint holders be present at the meeting personally or by proxy, that one of the said persons so present whose name stands first on the register of members in respect of such share shall alone be entitled to vote in respect thereof.

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