Cathay Pacific Airways Limited — Proxy Solicitation & Information Statement 2002

Aug 15, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in IDT International Limited, you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent, through whom the sale 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.

==> picture [104 x 32] intentionally omitted <==

IDT INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

ADOPTION OF A NEW SHARE OPTION SCHEME

A notice convening a special general meeting of IDT International Limited to be held at the Chatham Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 28th August, 2002 at 3:00 p.m. (or as soon as after the conclusion, or any adjournment, of the annual general meeting of IDT International Limited to be held at 2:30 p.m. on the same day) is set out on page 14 of this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the proxy form will not prejudice you from attending and voting in person at the meeting or any adjournment thereof should you so wish.

12th August, 2002

CONTENTS

	Pages
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Chairman
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The New Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Appendix – Principal Terms of the New Scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14

DEFINITIONS

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

“associate”	has the meaning ascribed thereto in the Listing Rules
“Board”	the board of Directors from time to time or a duly authorised
	committee thereof
“Companies Act”	the Companies Act 1981 of Bermuda
“Company”	IDT International Limited, a company incorporated in
	Bermuda with limited liability and whose Shares are listed
	on the Stock Exchange
“connected person”	has the meaning ascribed thereto in the Listing Rules
“Directors”	the directors of the Company
“Existing Scheme”	the share option scheme of the Company adopted by
	resolution of the Shareholders on 28th September, 1993
“Group”	the Company and the Subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of The
	People’s Republic of China
“Latest Practicable Date”	8th August, 2002, being the latest practicable date prior to
	the printing of this circular for ascertaining certain
	information contained in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited, as amended from time to
	time
“New Scheme”	the new share option scheme proposed to be adopted at the
	Special General Meeting in substitution for the Existing
	Scheme, the principal terms of the New Scheme are set out
	in the appendix to this circular
“Participant”	any individual being an employee, officer, agent, consultant
	or representative of the Company or any Subsidiary,
	including executive or non-executive director (including
	independent non-executive director) of the Company or any
	Subsidiary, who satisfies the selection criteria prescribed
	by the rules of the New Scheme, as summarised in paragraph
	(b) of the appendix to this circular
“Shareholders”	holders of Shares in issue
“Shares”	shares of HK$0.10 each in the share capital of the Company

– 1 –

DEFINITIONS

“Special General Meeting”

the special general meeting of the Company to be held at the Chatham Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 28th August, 2002 at 3:00 p.m. (or as soon as after the conclusion, or any adjournment, of the annual general meeting of the Company to be held at 2:30 p.m. on the same day), and any adjournment thereof

“Stock Exchange” The Stock Exchange of Hong Kong Limited “Subsidiary” a company which is for the time being and from time to time a subsidiary (within the meaning of Section 2(4) of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) or Section 86 of the Companies Act) of the Company, whether incorporated in Hong Kong or elsewhere

“substantial shareholder” has the meaning ascribed thereto in the Listing Rules “HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent

– 2 –

LETTER FROM THE CHAIRMAN

==> picture [104 x 32] intentionally omitted <==

IDT INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

Executive Directors: Raymond Chan, Chairman & Chief Executive Officer Alain Jacques Gilbert Li, Chief Financial Officer Chan Pau Shiu Yeng, Shirley Shigenobu Morita

Registered Office: Clarendon House Church Street Hamilton HM 11 Bermuda

Non-Executive Directors: Jack William Edouard Heuer Woo Chia Wei

Independent Non-Executive Directors: Lo Kai Yiu, Anthony Kao Ying Lun Jack Schmuckli

Principal Place of Business: Block C, 9th Floor Kaiser Estate 41 Man Yue Street Hunghom Kowloon Hong Kong

12th August, 2002

To the Shareholders and, for information only, holders of options granted under the Existing Scheme

Dear Sir/Madam,

ADOPTION OF A NEW SHARE OPTION SCHEME

INTRODUCTION

At the annual general meeting of the Company held on 28th September, 1993, the Company adopted the Existing Scheme pursuant to which the Board shall at its discretion grant options to any full-time employee (including executive directors) of the Company or any Subsidiary.

The Board noted that the Stock Exchange had announced on 23rd August, 2001 amendments to Chapter 17 (Share Option Schemes) of the Listing Rules which came into effect on 1st September, 2001. In compliance with the requirements of the amended Listing Rules, the Board proposes to, at the Special General Meeting, adopt the New Scheme in substitution for the Existing Scheme and, subject to and upon the adoption of the New Scheme, to terminate the operation of the Existing Scheme, which will otherwise continue in force until the tenth anniversary of its adoption date. The purpose of this circular is to provide you with information relating to the New Scheme. A summary of the principal terms of the New Scheme is set out in the appendix to this circular.

– 3 –

LETTER FROM THE CHAIRMAN

THE NEW SCHEME

The purpose of the New Scheme is to provide incentives to the Participants to contribute to the Company and to enable the Company to recruit and retain high-calibre employees and attract human resources that are valuable to the Group. To ensure that this purpose is achieved, the rules of the New Scheme provide that the Board will grant options only to Participants who have made contribution to the business of the Group based on their performance and/or years of service, or who are regarded as valuable human resources of the Group based on their work experience, knowledge in the industry and other relevant factors. Although the rules provide that the exercise of option is, unless the Board directs otherwise, not subject to the achievement of any performance targets of the Group, the Board believes that the requirement for a minimum subscription price as well as the selection criteria prescribed by the rules of the New Scheme will serve to protect the value of the Group as well as to achieve the purpose of the New Scheme.

The Directors consider that the adoption of the New Scheme is in the best interests of the Company because, apart from providing the Participants with an opportunity to acquire equity interests in the Company, the New Scheme also permits the holders of the options granted thereunder to exercise the subscription rights attaching to the options at any time during the option period, i.e., a period, to be decided by the Board, commencing on a date after the expiry of a 6-month period after the date on which the grant (subject to acceptance) of the option(s) is made and up to 10 years from such date of grant, thus enabling them to participate in the prosperity of the Group and providing an incentive for them to contribute further to the success of the Group both in the near future and in the long term.

The Existing Scheme is, subject to and upon the adoption of the New Scheme, proposed to be terminated by the Shareholders at the Special General Meeting. Upon adoption of the New Scheme, no further options will be granted under the Existing Scheme, but in all other respects, the provisions of the Existing Scheme shall remain in force and all options granted prior thereto shall continue to be valid and exercisable in accordance with the provisions thereof. As disclosed in the Company’s 2002 annual report, 11,985,750 options, which were granted under the Existing Scheme, were outstanding as at 1st April, 2001, and during the financial year of the Company ended 31st March, 2002, 9,000,000 options were granted under the Existing Scheme, 4,355,500 options were exercised, 2,976,750 were cancelled or lapsed in accordance with the terms of the Existing Scheme, and, as at 31st March, 2002, 13,653,500 options remained outstanding. As at the Latest Practicable Date, 13,101,000 options, which were granted by the Company under the Existing Scheme, remained outstanding. No further options will be granted under the Existing Scheme after the Latest Practicable Date.

The Directors consider that it is not appropriate to state the value of all the options that can be granted under the New Scheme as if they had been granted at the Latest Practicable Date prior to the approval of the New Scheme given that the variables which are crucial for the calculation of the value of such options cannot be determined. Such variables include whether or not options will be granted under the New Scheme, and, if so, the timing of granting of such options, the period during which the subscription rights attaching to the options may be exercised, the subscription price for the Shares upon the exercise of the subscription rights, other conditions that the Board may impose on the options and whether or not such options, if granted, will be exercised by the grantees.

The subscription price depends on the price of the Shares as quoted on the Stock Exchange, which, in turn, depends on when the Board is to grant options under the New Scheme. With a

– 4 –

LETTER FROM THE CHAIRMAN

scheme period of ten years, the Board is of the view that it is too premature to state whether or not options will be granted under the New Scheme, and if so, the number of options that may be granted. It is also difficult to ascertain with accuracy the subscription price given the volatility the Share price may be subject to during the ten-year life span of the New Scheme. In the premises, the Directors are of the view that the value of the options to be ascertained is subject to a number of theoretical basis and speculative assumptions. Accordingly, the Directors believe that any calculation of the value of the options as at the Latest Practicable Date will not be meaningful and may be misleading to the Shareholders in the circumstances.

Application will be made to the Stock Exchange for the listing of and permission to deal in the Shares to be issued pursuant to the exercise of the options granted under the New Scheme. On the basis of 2,071,575,907 Shares in issue as at the Latest Practicable Date, and assuming no further Shares will be issued or repurchased by the Company on or before 28th August, 2002, the Company may initially grant options representing 207,157,590 Shares under the New Scheme (i.e., 10% of the issued share capital of the Company as at the date of the Special General Meeting).

A copy of the New Scheme will be available for inspection at the Company’s principal place of business in Hong Kong at Block C, 9th Floor, Kaiser Estate, 41 Man Yue Street, Hunghom, Kowloon, Hong Kong during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) from the date of this circular up to and including 28th August, 2002 and at the Special General Meeting.

In accordance with the requirements of the Listing Rules, the Company will publish in the newspapers an announcement on the outcome of the Special General Meeting in respect of the resolution relating to the adoption of the New Scheme on the business day following the date of the Special General Meeting.

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief (a) the information contained in this circular is accurate and complete in all material respects and not misleading; (b) there are no other matters not contained herein the omission of which would make any statement in this circular misleading; and (c) all opinions expressed herein have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

SPECIAL GENERAL MEETING

The Special General Meeting is proposed to be held at the Chatham Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 28th August, 2002 at 3:00 p.m. (or as soon as after the conclusion, or any adjournment, of the annual general meeting of the Company to be held at 2:30 p.m. on the same day) for the purpose of considering and, if thought fit, passing the ordinary resolution to, among other things, approve and adopt the New Scheme in substitution for the Existing Scheme and, subject to and upon the adoption of the New Scheme, to terminate the operation of the Existing Scheme. Set out on page 14 of this circular is a notice convening the Special General Meeting.

– 5 –

LETTER FROM THE CHAIRMAN

A proxy form for use at the Special General Meeting is enclosed. Any Shareholder entitled to attend and vote at the Special General Meeting is entitled to appoint one or more proxies to attend and vote at the Special General Meeting on his or her behalf by completing the enclosed proxy form. A proxy need not be a member of the Company.

Whether or not you are able to attend the Special General Meeting, you are requested to complete and return the proxy form (and if the proxy form is signed by an attorney, together with the notarised power of attorney or other documents of authorisation) in accordance with the instructions printed thereon so as to arrive at the Company’s principal place of business in Hong Kong at Block C, 9th Floor, Kaiser Estate, 41 Man Yue Street, Hunghom, Kowloon, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Completion and return of the proxy form will not prejudice you from attending and voting in person at the Special General Meeting or any adjournment thereof should you so wish.

RECOMMENDATION

The Directors believe that the proposal for adopting the New Scheme in substitution for the Existing Scheme is in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that the Shareholders should vote in favour of the resolution as set out in the notice convening the Special General Meeting.

GENERAL

Your attention is also drawn to the appendix to this circular.

Yours faithfully, By order of the Board Raymond Chan Chairman & Chief Executive Officer

– 6 –

PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

The following is a summary of the principal terms of the New Scheme:

(a) Purpose

The purpose of the New Scheme is to provide incentives to the Participants to contribute to the Company and to enable the Company to recruit and retain high-calibre employees and attract human resources that are valuable to the Group.

(b) Who may join

The Board may grant (subject to acceptance in accordance with the terms of the New Scheme) an option to subscribe for such number of Shares as it may determine at a price determined in accordance with paragraph (d) below to any Participant who, the Board may determine in its absolute discretion, has made contribution to the business of the Group based on his performance and/or years of service, or is regarded as valuable human resources of the Group based on his work experience, knowledge in the industry and other relevant factors, subject to such conditions as the Board may think fit, provided that no grants shall be made except to such number of Participants and in such circumstances that: the Company will not be required under applicable securities laws and regulations to issue a prospectus or other offer document in respect thereof; and will not result in the breach by the Company or the Directors of any applicable securities laws and regulations or in any filing or other requirements arising.

(c) Payment on acceptance of option

HK$1.00 is payable by the Participant who accepts the grant of an option in accordance with the terms of the New Scheme on acceptance of the grant of an option.

(d) Subscription price

The subscription price for the Shares under the options to be granted under the New Scheme will be a price determined by the Board and notified to a Participant at the time the grant of the options is made to (and subject to acceptance by) the Participant and will be at least the highest of: (a) the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet on the date of the grant (subject to acceptance) of the option, which must be a business day; (b) the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of the grant (subject to acceptance) of the option; and (c) the nominal value of a Share.

(e) Maximum number of Shares subject to the New Scheme

The limit on the total number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Scheme and any other share option scheme(s) of the Company (including the Existing Scheme) must not exceed 30% of the number of issued Shares from time to time. Options lapsed or cancelled in accordance with the terms of the relevant share option scheme(s) shall not be counted for the purpose of calculating the said 30%-limit.

– 7 –

PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

In addition, subject as provided below in this paragraph (e), the total number of Shares which may be issued upon exercise of all options to be granted under the New Scheme, together with all options to be granted under any other share option scheme(s) of the Company, must not represent more than 10% of the nominal amount of all the issued Shares as at 28th August, 2002, being the date of approval of the New Scheme by the Shareholders (the “Scheme Mandate Limit”). Therefore, it is expected that the Company may grant options in respect of up to 207,157,590 Shares (or such numbers of shares as shall result from a sub-division or a consolidation of such 207,157,590 Shares from time to time), representing 10% of the nominal amount of all the issued Shares as at the date of approval of the New Scheme by the Shareholders, to Participants under the New Scheme. Options lapsed in accordance with the terms of the relevant share option scheme(s) shall not be counted for the purpose of calculating the Scheme Mandate Limit.

The Company may refresh the Scheme Mandate Limit (or further refresh a refreshed Scheme Mandate Limit) at any time, subject to prior Shareholders’ approval given at a general meeting of the Company and the issue of a circular in accordance with the relevant provisions of the Listing Rules, provided that the maximum number of Shares which may be issued under options to be granted under the New Scheme (when aggregated with any Shares which may be issued under options to be granted under any other share option scheme(s) of the Company) under the limit as refreshed must not exceed 10% of the number of issued Shares as at the date of the approval of the refreshed limit, excluding any Shares that are subject to options previously granted (subject to acceptance) under the New Scheme or any other share option scheme(s) of the Company (whether the options are outstanding, cancelled or lapsed or have been exercised). The Company may also seek separate approval from the Shareholders in general meeting in accordance with the relevant procedural requirements (including the issue of a circular) of the Listing Rules for granting options beyond the Scheme Mandate Limit (or refreshed Scheme Mandate Limit) to such Participants specifically identified by the Company before such approval is sought, in respect of such number of Shares and on such terms as may be specified in such approval.

The total number of Shares issued and which may be issued upon exercise of all options (whether exercised, cancelled or outstanding) granted under the New Scheme and any other share option scheme(s) of the Company in any 12-month period immediately preceding any proposed date of the grant (subject to acceptance) of options to each Participant must not exceed 1% of the number of Shares in issue as at the proposed grant date. Any further grant of options in excess of this limit is subject to prior Shareholders’ approval given at a general meeting of the Company in accordance with the relevant procedural requirements (including the issue of a circular) of the Listing Rules, with the relevant Participant and his associates abstaining from voting.

(f) Exercise of option

An option may be exercised in accordance with the terms of the New Scheme at any time during a period to be decided by the Board in its absolute discretion and notified by the Board to the grantee, such period shall commence on a date after the expiry of a 6-month period after the date on which the grant (subject to acceptance) of the option is made and shall not exceed 10 years from such date of grant.

Unless the Board directs otherwise, the right to exercise an option is not subject to or conditional upon the achievement of any performance target.

– 8 –

PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

(g) Rights are personal to grantee

An option shall be personal to the grantee and shall not be assignable and no grantee shall in any way sell, transfer, assign, charge, mortgage, encumber or create any interest in favour of any third party over or in relation to any option or purport to do any of the foregoing. Any breach of the foregoing shall entitle the Company to cancel any outstanding option, or any part thereof, in favour of such grantee.

(h) Rights on ceasing employment or other engagement

If any grantee ceases to be an employee (including any executive director), officer (including any non-executive director), agent, consultant or representative of the relevant member of the Group for any reason other than death, ill health, disability, insanity, misconduct or certain other grounds specified in the New Scheme, then, if the option period has not at the date of cessation commenced, the option shall lapse immediately and automatically; and if the option period has commenced, the grantee may exercise the option up to his entitlement at the date of cessation (to the extent not already exercised) until whichever is the earlier of the date of expiry of the option period or the last day of the period of 3 months (or such other period as the Board may in its sole discretion determine) following the date of such cessation, which date shall be the last actual day of employment, office, agency, consultancy or representation with the relevant member of the Group whether payment in lieu of notice is made or not (if applicable).

For the purposes of this paragraph (h), a grantee shall not be regarded as ceasing to be an employee (including any executive director), officer (including any non-executive director), agent, consultant or representative of the relevant member of the Group if he ceases to hold a position of employment, office, agency, consultancy or representation with a particular member of the Group but at the same time takes up a different position of employment, office, agency, consultancy or representation with another member of the Group.

(i) Rights on death, ill health, disability or insanity

If any grantee ceases to be an employee (including any executive director), officer (including any non-executive director), agent, consultant or representative of the relevant member of the Group by reason of death, ill health, disability or insanity before exercising the option in full and none of certain events which would be a ground for termination of his employment, office, agency, consultancy or representation specified in the New Scheme arises, the grantee or his legal personal representative(s) shall be entitled after commencement of the option period until whichever is the earlier of the date of expiry of the option period or the last day of the period of 12 months from the date of cessation (or such other period as the Board may in its sole discretion determine) to exercise the option (to the extent not already exercised) in full or to the extent specified in the notice to exercise such option.

(j) Rights on takeover

If a general offer to acquire Shares (whether by takeover offer, merger, privatisation proposal by scheme of arrangement between the Company and its members or otherwise in like manner) 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)

– 9 –

PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

and such offer, having been approved in accordance with applicable laws and regulatory requirements, becomes or is declared unconditional, any grantee (or his legal personal representative(s)) shall, even though the option period has not yet commenced, be entitled to exercise the option (to the extent not already exercised) at any time until whichever is the earlier of the date of expiry of the option period or the last day of the period of 14 days after the date on which the offer becomes or is declared unconditional, after which the option shall lapse.

(k) Rights on winding up

If 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 legal personal representative(s)) shall be entitled to exercise all or any of his options at any time not later than seven business days prior to the proposed general meeting of the Company by giving notice in writing to the Company, accompanied by a remittance for the full amount of the aggregate subscription 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 general meeting referred to above, allot the relevant Shares to the grantee credited as fully paid.

(l) Effects of alterations to capital

Subject to the limits on the number of Shares subject to the New Scheme described in paragraph (e) above, in the event of any capitalisation issue, rights issue, consolidation, subdivision or reduction of the share capital of the Company (other than an issue of Shares as consideration in respect of a transaction) whilst an option remains outstanding in that it is granted and yet to be exercised (and has not lapsed or been cancelled), such corresponding adjustments (if any) will be made to the number of Shares subject to the New Scheme, the number of Shares subject to outstanding options and/or the subscription price in relation to each outstanding option, provided that no adjustment shall be made to the extent that the effect of such adjustment would be to enable a Share to be issued at less than its nominal value or which would give a grantee a different proportion of the issued share capital of the Company as to which he was previously entitled. In respect of any adjustment required by the foregoing provisions, other than any made on a capitalisation issue, an independent financial adviser or the auditors for the time being of the Company must also confirm to the Board in writing that the adjustments satisfy the foregoing proviso.

(m) Lapse of options

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 (h), (i) or (j) above;

– 10 –

PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

• (iii) subject to paragraph (k) above, the earliest of the close of business on the seventh business day prior to the general meeting referred to in paragraph (k) above or the date of commencement of the winding-up of the Company;

• (iv) save as otherwise provided in paragraph (j) above, or by the Court in relation to the scheme in question, upon the sanctioning pursuant to the Companies Act by the Supreme Court of Bermuda of a compromise or arrangement between the Company and its members or creditors 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;

• (v) the date on which the grantee ceases to be an employee (including any executive director), officer (including any non-executive director), agent, consultant or representative of the relevant member of the Group by reason of the termination of his employment, office, agency, consultancy or representation on certain grounds specified in the New Scheme including, but not limited to, misconduct, bankruptcy, insolvency, having made any arrangement or composition with his creditors and conviction of any criminal offence involving his integrity or honesty or (if so determined by the Board) on any other ground on which an employer or principal would be entitled to terminate his employment, office, agency, consultancy or representation at common law or pursuant to applicable laws or under the grantee’s contract, agreement or arrangement with the relevant member of the Group;

• (vi) the date on which the grantee ceases to be an employee (including any executive director), officer (including any non-executive director), agent, consultant or representative of the relevant member of the Group for any reason other than death, ill health, disability or insanity if the option period has not then commenced and for these purposes the date of cessation shall be the last actual day of employment, office, agency, consultancy or representation with the relevant member of the Group whether payment in lieu of notice is made or not (if applicable); or

• (vii) the date on which the Board exercises the Company’s right to cancel the option because of a breach by the grantee of the rules summarised in paragraph (g) above.

(n) Ranking and voting rights of Shares

The Shares to be allotted upon the exercise of an option will be subject to all the provisions of the Company’s bye-laws and will rank pari passu with the fully paid Shares in issue on the date of allotment or, if that date falls on a day when the register of members of the Company is closed, the first day of the re-opening of the register of members of the Company and accordingly will entitle the holders to participate in all dividends or other distributions paid or made on or after the date of allotment or, if that date falls on a day when the register of members of the Company is closed, the first day of the re-opening of the register of members of the Company, other than any dividend or other distribution previously declared or recommended or resolved to be paid or made with respect to a record date which shall be before the date of allotment, or, if later, before the date of registration of the allotment in the register of members of the Company.

– 11 –

PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

A Share issued upon the exercise of an option shall not carry any voting rights until the registration of the grantee (or any other person) as the holder thereof.

(o) Cancellation of options

The Board may effect the cancellation of any options granted but not exercised on such terms as may be agreed with the relevant grantee, as the Board may in its absolute discretion see fit and in a manner that complies with all applicable legal requirements for such cancellation.

Where the Company cancels any options granted but not exercised and grants new options to the same grantee, the grant of such new options may only be made under the New Scheme if there is available unissued options (excluding the cancelled options) within each of the 10%-limits as referred to in paragraph (e) above.

(p) Alteration to the New Scheme

The terms of the New Scheme may be altered in any respect by resolution of the Board except that the provisions of the New Scheme relating to matters contained in Rule 17.03 of the Listing Rules shall not be altered to the advantage of Participants unless with the prior sanction of a resolution of the Shareholders in general meeting.

Any alterations to the terms and conditions of the New Scheme which are of a material nature or any change to the terms of options granted must first be approved by the Shareholders in general meeting, except where the alterations take effect automatically under the existing terms of the New Scheme.

The amended terms of the New Scheme or the options must still comply with the relevant requirements of Chapter 17 of the Listing Rules.

Any change to the authority of the Board in relation to any alteration to the terms of the New Scheme must first be approved by the Shareholders in general meeting.

(q) Termination of the New Scheme

The Company by resolution of the Shareholders in general meeting or of the Board may at any time terminate the operation of the New Scheme and in such event no further options will be granted or accepted but the provisions of the New Scheme shall remain in force in all other respects. All options granted and accepted prior to such termination and not then exercised shall continue to be valid and exercisable subject to and in accordance with the New Scheme.

(r) Period of the New Scheme

Subject to termination as referred to in paragraph (q) above, the New Scheme shall be valid and effective for: a period of ten years commencing on 28th August, 2002 (being the date of approval of the New Scheme by the Shareholders) (after which period no further options will be granted or accepted); and thereafter for so long as there are outstanding any unexercised options granted and accepted pursuant thereto prior to the expiration of the said ten-year period and in order to give effect to the exercise of any such options or otherwise as may be required in accordance with the provisions of the New Scheme.

– 12 –

PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

(s) Conditions

The New Scheme is conditional upon the Listing Committee of the Stock Exchange granting the listing of and permission to deal in any Shares to be issued pursuant to the exercise of options under the New Scheme.

(t) Restrictions on the timing of grant of option

A grant (subject to acceptance) of options may not be made after a price sensitive event or a price sensitive matter in relation to the securities of the Company has been the subject of a decision, until such price sensitive information has been published in the newspapers. In particular, no option may be granted within the period commencing one month immediately preceding the earlier of: (i) the date of the Board meeting for the approval of the Company’s interim or annual results; and (ii) the deadline for the Company to publish its interim or annual results announcement, and ending on the date of the results announcement.

(u) Grant of options to connected persons

Where any grant of options is proposed to be made to a Participant who is a director, chief executive or substantial shareholder of the Company or any of their respective associates, such grant must first be approved by all the independent non-executive Directors (excluding any independent non-executive Director who is the proposed grantee of the options).

If the grant of options is to be made to a Participant who is a substantial shareholder of the Company or an independent non-executive Director or any of their respective associates, which would result in the Shares issued and to be issued upon exercise of all options already granted and to be granted (including options exercised, cancelled and outstanding) to such person under the New Scheme and any other scheme(s) of the Company in the 12month period up to and including the proposed date of the grant (subject to acceptance) of the options: (i) representing in aggregate over 0.1% of the number of Shares then in issue; and (ii) having an aggregate value, based on the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets on each relevant date of the grant (subject to acceptance) of the options, in excess of HK$5 million, then such grant of options must first be approved by the Shareholders in general meeting, with all the connected persons of the Company abstaining from voting on the proposed grant (except that any such connected person may vote against the relevant resolution at the general meeting provided that his intention to do so has been stated in the circular required to be issued pursuant to the Listing Rules). Any vote taken at the meeting to approve the proposed grant of such options must be taken on a poll. In addition, any proposed change in the terms of options granted to a Participant who is a substantial shareholder of the Company or an independent nonexecutive Director or any of their respective associates must first be approved by the Shareholders in general meeting on a similar basis (as to abstention and voting by poll) as stated above.

– 13 –

NOTICE OF SPECIAL GENERAL MEETING

==> picture [104 x 32] intentionally omitted <==

IDT INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a special general meeting of the shareholders of IDT International Limited (the “Company”) will be held at the Chatham Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 28th August, 2002 at 3:00 p.m. (or as soon as after the conclusion, or any adjournment, of the annual general meeting of the Company to be held at 2:30 p.m. on the same day) for the purposes of considering and, if thought fit, passing the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“THAT conditional upon The Stock Exchange of Hong Kong Limited granting the listing of and permission to deal in any shares of the Company (the “Shares”) to be issued pursuant to the exercise of options under the new share option scheme of the Company (the “New Scheme”, a copy of which has been produced to this meeting marked “A” and initialled by the Chairman of this meeting for the purpose of identification):

• (a) the New Scheme be and is hereby approved and adopted in substitution for the existing share option scheme of the Company adopted by the Company on 28th September, 1993 (the “Existing Scheme”);

• (b) the Board (as defined in the New Scheme) be and is hereby authorised to administer the New Scheme and to grant options to any Participant (as defined in the New Scheme) in accordance with the rules and the provisions of the New Scheme;

• (c) the exercise by the directors of the Company of all the powers of the Company to allot, issue and deal with any Shares pursuant to the exercise of options under and in accordance with the New Scheme be and is hereby generally and unconditionally approved; and

• (d) subject to and upon the adoption of the New Scheme, the termination of the operation of the Existing Scheme be and is hereby approved.”

By order of the board of directors IDT International Limited Raymond Chan

Chairman & Chief Executive Officer

Hong Kong, 12th August, 2002

Notes:

1. A member entitled to attend and vote at the special general meeting is entitled to appoint one or more proxies to attend and vote in his or her stead. A proxy need not be a member of the Company.

2. In order to be valid, a proxy form together with any power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of such power of attorney or authority, must be deposited at the Company’s principal place of business in Hong Kong at Block C, 9th Floor, Kaiser Estate, 41 Man Yue Street, Hunghom, Kowloon, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the special general meeting or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the meeting or any adjourned meeting should you so wish.

– 14 –