Crypto Flow Technology Limited - Proxy Solicitation & Information Statement 2012

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in 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 MelcoLot Limited (the “ Company ”), you should at once hand this circular together with 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.

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

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MelcoLot Limited

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 8198)

(I) PROPOSED GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES,

(II) PROPOSED ADOPTION OF NEW SHARE OPTION SCHEME, (III) PROPOSED RE-ELECTION OF DIRECTORS AND

(IV) NOTICE OF ANNUAL GENERAL MEETING

A notice convening the annual general meeting of the Company (the “ AGM ”) to be held at Units 31012A, 31st Floor, The Centrium, 60 Wyndham Street, Central, Hong Kong on Friday, 18 May 2012 at 11:00 a.m. is set out on pages 26 to 31 of this circular. Whether or not you are able to attend the AGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M 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 of the AGM or any adjournment thereof. Completion and return of the accompanying form of proxy will not preclude you from attending and voting in person at the AGM or any adjournment thereof should you so wish.

This circular will remain on the “Latest Company Announcements” page of the GEM website at www. hkgem.com for a minimum period of 7 days from the date of its publication and on the Company’s website at www.melcolot.com.

Hong Kong, 30 March 2012

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Proposed general mandates to issue and repurchase shares . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Proposed adoption of the 2012 Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Re-election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Responsibility statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Appendix I – Explanatory statement to repurchase mandate. . . . . . . . . . . . . . . . . . . . . . . . . 10
Appendix II – Details of Directors proposed to be re-elected. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Appendix III – Summary of the principal terms of the 2012 Share Option Scheme. . . . . . . . . 17
Notice of AGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

DEFINITIONS

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

“2012 Share Option Scheme”	the share option scheme propose to be approved by the
	Shareholders by Ordinary Resolution no. 7 at the AGM
“Adoption Date”	the date on which the 2012 Share Option Scheme has been
	adopted by the Company by way of Shareholders’ resolution
“AGM”	the annual general meeting of the Company to be held at Units
	3101-2A, 31st Floor, The Centrium, 60 Wyndham Street, Central,
	Hong Kong on Friday, 18 May 2012 at 11:00 a.m.
“AGM Notice”	the notice convening the AGM as set out on pages 26 to 31 of this
	circular
“Annual Report”	the annual report of the Company for the year ended 31 December
	2011
“Articles of Association”	the articles of association of the Company as may be amended
or “Article(s)”	from time to time
“associate(s)”	has the meaning ascribed to it under the GEM Listing Rules
“Board”	the board of Directors or a duly authorized committee thereof
	from time to time
“Company”	MelcoLot Limited, a company incorporated in the Cayman Islands
	with limited liability, the issued shares of which are listed on
	GEM
“Directors”	the directors of the Company from time to time
“Eligible Participants”	full time or part time employees of the Group (including any
	directors, whether executive or non-executive and whether
	independent or not, of the Company or any subsidiary) and any
	suppliers, consultants, agents and advisers eligible for Options
	under the 2012 Share Option Scheme
“Existing Share Option Scheme”	the share option scheme adopted by the Company by way of
	shareholders’ resolution on 20 April 2002 which came into effect
	after the initial listing of the Shares on GEM on 17 May 2002 and
	will expire on 20 April 2012
“GEM”	the Growth Enterprise Market of the Stock Exchange

DEFINITIONS

“GEM Listing Rules” the Rules Governing the Listing of Securities on GEM as may be amended from time to time
“Group” the Company and its subsidiaries “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China
“Latest Practicable Date” 28 March 2012, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular
“Listing Committee” the Listing Committee of the Stock Exchange “month” calendar month “New Issue Mandate” a proposed general unconditional mandate to be granted to the Directors to exercise the power of the Company to allot, issue and deal with Shares during the period as set out in Ordinary Resolution no. 4 in the AGM Notice up to twenty percent (20%) of the issued share capital of the Company as at the date of passing such Ordinary Resolution
“Options” any options granted under the Pre-IPO Share Option Scheme, the Existing Share Option Scheme or the 2012 Share Option Scheme (as the case may be) conferring a right to subscribe for Shares
“Optionholders” the relevant holders of the Options “Ordinary Resolution(s)” the proposed ordinary resolution(s) as referred to in the AGM Notice
“ Pre-IPO Share Option Scheme” the share option scheme adopted by the Company on 20 April 2002 which came into effect prior to the initial listing of the Shares on GEM on 17 May 2002
“Repurchase Mandate” a proposed general unconditional mandate to be granted to the Directors to exercise the power of the Company to repurchase Shares during the period as set out in Ordinary Resolution no. 5 in the AGM Notice up to ten percent (10%) of the issued share capital of the Company as at the date of passing such Ordinary Resolution
“SFO” Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong)

DEFINITIONS

“Share(s)” share(s) of HK$0.01 each in the capital of the Company “Shareholder(s)” holders of Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Takeovers Code” the Hong Kong Code on Takeovers and Mergers “HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent.

LETTER FROM THE BOARD

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MelcoLot Limited

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 8198)

Executive Directors: Mr. Ko Chun Fung, Henry (Chief Executive Officer) Mr. Moumouris, Christos

Non-executive Directors: Mr. Chan Sek Keung, Ringo (Chairman) Mr. Wang, John Peter Ben

Independent Non-executive Directors: Mr. Tsoi, David Mr. Pang Hing Chung, Alfred Mr. So Lie Mo, Raymond

Registered office: 4th Floor, Scotia Centre P.O. Box 2804 George Town Grand Cayman Cayman Islands

Head office and principal place of business in Hong Kong: Units 3101-2A, 31st Floor The Centrium 60 Wyndham Street Central, Hong Kong

30 March 2012

To the Shareholders

Dear Sir or Madam,

(I) PROPOSED GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES, (II) PROPOSED ADOPTION OF NEW SHARE OPTION SCHEME, (III) PROPOSED RE-ELECTION OF DIRECTORS AND

(IV) NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

The purpose of this circular is to provide you with information regarding Ordinary Resolutions to be proposed at the AGM for, inter alia, (i) the granting to the Directors of general mandates for the issue and repurchase of Shares; (ii) the extension of the general mandates to issue additional Shares; (iii) the adoption of the 2012 Share Option Scheme; and (iv) the re-election of three Directors and the other relevant information regarding the AGM.

LETTER FROM THE BOARD

PROPOSED GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

At the annual general meeting held on 12 May 2011, resolutions were passed by the then Shareholders giving general unconditional mandates to the Directors to:

(a) allot, issue and deal with Shares with a total nominal value not exceeding twenty percent (20%) of the total issued share capital of the Company as at the date of passing of the relevant Ordinary Resolution approving such new issue mandate;
(b) repurchase such number of Shares representing up to ten percent (10%) of the total issued share capital of the Company as at the date of passing of the relevant Ordinary Resolution approving such repurchase mandate; and
(c) add to the general mandate for issuing Shares set out in paragraph (a) above an amount representing the aggregate nominal value of the share capital of the Company repurchased by the Company pursuant to the repurchase mandate set out in paragraph (b) above.

The above mentioned general mandates will expire at the conclusion of the AGM to be held on Friday, 18 May 2012. It is therefore proposed to seek your approval to renew these general mandates at the AGM.

The Appendix I to this circular contains an explanatory statement to Repurchase Mandate, as required by Rule 13.08 of the GEM Listing Rules, to provide the requisite information to the Shareholders to enable the Shareholders to make an informed decision on whether to vote for or against the Ordinary Resolution in relation to the Repurchase Mandate.

New Issue Mandate

At the AGM, an Ordinary Resolution will be proposed to grant to the Directors the New Issue Mandate, details of which are set out in Ordinary Resolution no. 4 in the AGM Notice. The Shares which may be allotted, issued and dealt with pursuant to the New Issue Mandate is limited to a maximum of twenty percent (20%) of the issued share capital of the Company as at the date of passing of the Ordinary Resolution approving the New Issue Mandate. In addition, conditional upon the Ordinary Resolutions to grant to the Directors the New Issue Mandate and the Repurchase Mandate being passed, an Ordinary Resolution will be proposed that the New Issue Mandate be extended so as to authorize the Directors to allot, issue and otherwise deal with further Shares up to an aggregate nominal amount equal to the aggregate nominal amount of the share capital of the Company repurchased by the Company under the Repurchase Mandate.

LETTER FROM THE BOARD

Based on the 502,966,933 Shares in issue as at the Latest Practicable Date and on the basis that no further Shares will be issued and/or repurchased by the Company between the Latest Practicable Date and the date of the AGM, if the New Issue Mandate is approved at the AGM, the total number of new Shares that may be issued under the New Issue Mandate will be 100,593,386 Shares, representing 20% of the 502,966,933 Shares in issue as at the date of the AGM. If the New Issue Mandate is approved by the Shareholders at the AGM, it will be and will continue to be in force from the date of the AGM until the earliest of (i) the conclusion of the next annual general meeting of the Company; or (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Company’s Articles of Association or any applicable laws of the Cayman Islands to be held; or (iii) the passing of an Ordinary Resolution by the Shareholders in a general meeting revoking or varying such mandate, whichever occurs first.

Repurchase Mandate

At the AGM, an Ordinary Resolution will be proposed to grant to the Directors the Repurchase Mandate, details of which are set out in Ordinary Resolution no. 5 in the AGM Notice. The Shares which may be repurchased pursuant to the Repurchase Mandate is limited to a maximum of ten percent (10%) of the issued share capital of the Company as at the date of passing of the Ordinary Resolution approving the Repurchase Mandate.

With respect to the New Issue Mandate and the Repurchase Mandate, the Directors confirm that they have no current intention of exercising them.

PROPOSED ADOPTION OF THE 2012 SHARE OPTION SCHEME

The 2012 Share Option Scheme

The Existing Share Option Scheme was adopted by the Company on 20 April 2002 by way of Shareholder’s resolution. The Existing Share Option Scheme was valid and effective for a period of ten years from its date of adoption. The Existing Share Option Scheme will expire on 20 April 2012. No further options have been and will be granted under the Existing Share Option Scheme upon its expiry. As at the Latest Practicable Date, the Company has not adopted any share option scheme. Accordingly, the Company proposes to adopt the 2012 Share Option Scheme which complies with Chapter 23 of the GEM Listing Rules. As at the Latest Practicable Date, 111,862,000 Options was granted under the Existing Share Option Scheme entitling the holders thereof to subscribe for 111,862,000 Shares are outstanding. The 3,000,000 Options was granted under the Pre-IPO Share Option Scheme entitling the holders thereof to subscribe for 3,000,000 Shares will be lapsed as at 29 April 2012. The expiration of the Existing Share Option Scheme will not affect the rights of the 111,862,000 outstanding Options granted under the Existing Share Option Scheme those outstanding Options will continue to be valid and effective.

LETTER FROM THE BOARD

At the AGM, an Ordinary Resolution will be proposed for the Company to approve and adopt the 2012 Share Option Scheme, details of which are set out in Ordinary Resolution no. 7 in the AGM Notice, which will take effect on the date of its adoption at the AGM subject to the Stock Exchange granting approval for the listing of and dealing in the shares to be issued and allotted pursuant to the exercise of Options in accordance with the terms and conditions of the 2012 Share Option Scheme. The purpose of the 2012 Share Option Scheme is to enable the Company to grant Options to the Eligible Participants to motivate the contribution of the employees of the Group and to provide incentives and help the Group in retaining its existing employees and recruiting additional employees and to provide them with a direct economics interest in attaining the long term business objectives of the Group. Eligible Participants to whom Options shall be granted, are entitled to subscribe for the number of Shares at a subscription price specified in each Option granted under the 2012 Share Option Scheme. The basis for determining the subscription price is also specified precisely in the rules of the 2012 Share Option Scheme. There is no performance target specified in the 2012 Share Option Scheme. There is no specified minimum period under the 2012 Share Option Scheme for which an Option must be held pursuant to the terms of the 2012 Share Option Scheme. The Directors consider that the aforesaid criteria and rules will serve to preserve the value of the Company and encourage Eligible Participants to acquire proprietary interests in the Company.

As at the Latest Practicable Date, the Company has 502,966,933 Shares in issue. Assuming that there is no change in the issued share capital between the period from the Latest Practicable Date and the Adoption Date, the number of Shares issuable pursuant to the 2012 Share Option Scheme on the Adoption Date will be 50,296,693 Shares represents approximately 10% of the existing issued share capital of the Company. The Directors consider that it is not appropriate to state the value of all Options that can be granted pursuant to the 2012 Share Option Scheme as if they had been granted on the Latest Practicable Date as a number of variables which are crucial for the calculation of the Option value have not been determined. Such variables include but are not limited to the exercise price, exercise period, lock-up period (if any), and predetermined performance targets (if any). The Directors believe that any calculation of the value of the Options as at the Latest Practicable Date based on a number of speculative assumptions would not be meaningful and would be misleading to Shareholders.

None of the Directors is trustee of the 2012 Share Option Scheme or has a direct or indirect interest in the trustee. With respect to the operation of the 2012 Share Option Scheme, the Company will, where applicable, comply with the relevant requirements under Chapter 23 of the Listing Rules.

Conditions precedent of the 2012 Share Option Scheme

The adoption of the 2012 Share Option Scheme is conditional upon:

(a) the Listing Committee of the Stock Exchange granting the listing of and permission to deal in any Shares which may fall to be issued by the Company pursuant to the exercise of Options in accordance with the terms and conditions of the 2012 Share Option Scheme; and
(b) the passing of an ordinary resolution to adopt the 2012 Share Option Scheme by the shareholders at general meeting.

LETTER FROM THE BOARD

Subject to the obtaining of Shareholders’ approval with respect to the adoption of the 2012 Share Option Scheme at the AGM, the total number of Shares which may be issued upon exercise of all Options to be granted under the 2012 Share Option Scheme and any Other Schemes must not in aggregate exceed 10% of the total issued capital of the Company as at the Adoption Date unless the Company obtains a fresh approval from Shareholders to renew the 10% limit on the basis that the maximum number of Shares in respect of which Options may be granted under the 2012 Share Option Scheme together with any Options outstanding and yet to be exercised under the 2012 Share Option Scheme and any other share option schemes must not exceed 30% of the issued share capital of the Company from time to time.

A summary of the principal terms of the 2012 Share Option Scheme which is proposed to be approved and adopted by the Company at the AGM is set out in Appendix III to this circular from pages 17 to 25. A copy of the 2012 Share Option Scheme is available for inspection at the Company’s principal place of business at Units 3101-2A, 31st Floor, The Centrium, 60 Wyndham Street, Central, Hong Kong during normal business hours from the date hereof up to and including the date of the AGM.

Application for listing

Application will be made to the Listing Committee of the Stock Exchange for the approval of the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of the Options granted under the 2012 Share Option Scheme.

RE-ELECTION OF DIRECTORS

In accordance with Article 87 of the Articles of Association, Mr. Ko Chun Fung, Henry, Mr. Chan Sek Keung, Ringo and Mr. So Lie Mo, Raymond retire by rotation and, being eligible, offer themselves for re-election at the AGM.

Brief biographical details of the retiring Directors proposed for re-election at the AGM are set out in Appendix II of this circular.

AGM

The notice convening the AGM is set out on pages 26 to 31 of this circular and a form of proxy for use at the AGM is also enclosed with this circular. To be valid, the enclosed form of proxy, together with any power of attorney or other authority under which it is signed must be completed in accordance with the instructions printed thereon and delivered to the branch share registrar of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the AGM or any adjourned meeting. The completion and return of the form of proxy will not preclude you from attending and voting at the AGM or any adjourned meeting in person if you so wish.

LETTER FROM THE BOARD

According to Rule 17.47(4) of the GEM Listing Rules, any voting of the Shareholders at the AGM will be taken by way of poll and an announcement will be made after the AGM on the results of the AGM. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder will be required to abstain from voting on any resolutions to be approved at the AGM.

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM 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 the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

RECOMMENDATION

The Directors are of the opinion that the above proposals for general mandates to issue and repurchase Shares, extend the general mandate to issue Shares to cover Share repurchased, the proposed adoption of the 2012 Share Option Scheme and re-election of Directors are in the best interests of the Company and the Shareholders and therefore recommend the Shareholders to vote in favour of the resolutions at the AGM.

Yours faithfully, For and on behalf of the Board of MelcoLot Limited Ko Chun Fung, Henry

Executive Director and Chief Executive Officer

APPENDIX I EXPLANATORY STATEMENT TO REPURCHASE MANDATE

This is an explanatory statement given to all Shareholders relating to the Ordinary Resolution to be proposed at the AGM authorizing the Repurchase Mandate. This explanatory statement contains all the information required pursuant to Rule 13.08 of the GEM Listing Rules and other relevant provisions of the GEM Listing Rules.

1. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 502,966,933 Shares.

Subject to the passing of the Ordinary Resolution no. 5 in the AGM Notice and on the basis that no further Shares are issued or repurchased by the Company prior to the AGM, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 50,296,693 Shares, representing approximately 10% of the issued share capital of the Company during the period from the date of the passing of such Ordinary Resolution until (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 Articles of Association or any applicable laws of the Cayman Islands to be held; or (iii) the revocation, variation or renewal of the Repurchase Mandate by Ordinary Resolution of the Shareholders in general meeting, whichever occurs first.

2. REASON FOR REPURCHASES

The Directors believe that it is in the best interests of the Company and the Shareholders for the Directors to have general authority from Shareholders to enable the Company to repurchase Shares in the market. Repurchases of Shares will only be made when the Directors believe that such repurchase will benefit the Company and the Shareholders. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value and/or its earnings per Share of the Company.

3. FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its memorandum of association and Articles of Association, the GEM Listing Rules and the applicable laws and regulations of the Cayman Islands. The Company may not repurchase its own Shares on GEM for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

There might be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited financial statements contained in the Annual Report) in the event that the Repurchase Mandate is exercised in full. However, the Directors do not propose to exercise the Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or on the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

EXPLANATORY STATEMENT TO REPURCHASE MANDATE

APPENDIX I

4. SHARE PRICES

The highest and lowest prices at which the Shares have traded on GEM in each of the previous twelve months preceding the Latest Practicable Date were as follows:

	Price per Share	Price per Share
Month	Highest	Lowest
	HK$	HK$
2011
March	0.147	0.120
April	0.200	0.120
May	0.183	0.142
June	0.170	0.122
July	0.160	0.124
August	0.139	0.081
September	0.115	0.080
October	0.129	0.081
November	0.115	0.071
December	0.200	0.080
2012
January	suspended	suspended
February	0.215	0.128
March (up to the Latest Practicable Date)	0.195	0.150

5. DIRECTORS’ UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Repurchase Mandate in accordance with the GEM Listing Rules, the memorandum of association and Articles of Association and the applicable laws of the Cayman Islands.

6. THE TAKEOVERS CODE

If as a result of a repurchase of Shares, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers Code. As a result, a Shareholder, or a group of Shareholders acting in concert (within the meaning under the Takeovers Code), depending on the level of increase in the Shareholder’s interests, could obtain or consolidate control of the Company and become(s) obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

APPENDIX I EXPLANATORY STATEMENT TO REPURCHASE MANDATE

As at the Latest Practicable Date, the following Shareholders are interested in more than 10% of the Shares in issue and in the event that the Directors exercise in full the power to repurchase Shares in accordance with the Repurchase Mandate, the percentage interest in the Shares:

			Approximate
			percentage of
		Approximate	interest when
		percentage of	exercise in full
		issued share	the power
		capital of the	to repurchase
Name of Shareholder	Number of Shares	Company	Shares
		(Note 1)
Melco International Development	58,674,619	11.67%	12.96%
Limited (“Melco International”)	(Note 2)
Mr. Ho, Lawrence Yau Lung	58,674,619	11.67%	12.96%
(“Mr. Ho”)	(Note 3)
Mr. Chan Sek Keung, Ringo	53,276,000	10.59%	11.77%
(“Mr. Chan”)	(Note 4)
Intralot S.A. Integrated Lottery	52,973,779	10.53%	11.70%
Systems and Services	(Note 5)
(“Intralot S.A.”)

Notes:

(1) As at the Latest Practicable Date, the total number of issued Shares of the Company was 502,966,933.
(2) Melco International is deemed by the SFO to be interested in 58,674,619 Shares by virtue of its indirect holding of its wholly-owned subsidiaries, Melco Leisure and Entertainment Group Limited and Melco LottVentures Holdings Limited.
(3) Mr. Ho is deemed by the SFO to be interested in 58,674,619 Shares by virtue of his controlling interests in Melco International, which is held by his controlled corporations, and his indirect holding of Melco Leisure and Entertainment Group Limited and Melco LottVentures Holdings Limited.
(4) Mr. Chan, chairman and non-executive Director, is deemed, by virtue of the SFO, to be interested in the 34,400,000 Shares held by Woodstock Management Limited, a company wholly-owned by him, in addition to 18,876,000 Shares held by him personally.
(5) Intralot S.A. is deemed by the SFO to be interested in 52,973,779 Shares by virtue of its indirect holding of its wholly owned subsidiaries, Intralot Holdings International Limited and Intralot International Limited.

APPENDIX I EXPLANATORY STATEMENT TO REPURCHASE MANDATE

The Directors are not aware of any consequences which may arise under the Takeovers Code as a consequence of any purchase made under the Repurchase Mandate. However, the Company may not repurchase Shares which would result in the number of Shares held by the public being reduced to less than 25 per cent.

The GEM Listing Rules prohibit the Company from knowingly purchasing its securities on GEM from a “connected person”, that is, a director, chief executive or substantial shareholder of the Company or any of its subsidiaries or their respective associates.

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

No connected person (as defined in the GEM Listing Rules) of the Company has notified the Company that it has a present intention to sell Shares to the Company or its subsidiaries, or has undertaken not to do so, in the event that the Repurchase Mandate is approved by the Shareholders.

7. SHARES REPURCHASE MADE BY THE COMPANY

No repurchases of Shares have been made by the Company (whether on the GEM or otherwise) during the six months immediately preceding the Latest Practicable Date.

APPENDIX II DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED

1. Mr. Ko Chun Fung, Henry

Mr. Ko, aged 52, is an executive Director and Chief Executive Officer of the Company and the Group. He is also a member of the nomination committee of the Board, the compliance officer and an authorised representative of the Company to the Stock Exchange. Mr. Ko was first appointed to the Board in January 2008. He retires by rotation under Article 87 of the Articles of Association and, being eligible, offers himself for re-election.

Mr. Ko is a seasoned professional with a strong track record of successful senior positions in Asia. He has led various high profile ventures in the telecom industry. Prior to entering the lottery industry, he was a founder of iAsia Online Systems Limited, and in his capacity as CEO and executive director, nurtured its growth into a leading financial trading solutions vendor in Hong Kong and mainland China. Mr. Ko then went on the setting up of the lottery business which was subsequently acquired by the Group in late 2007, in his capacity as CEO and executive director of PAL Development Limited. Upon the acquisition of the lottery business, Mr. Ko was appointed to the Board and CEO of the Company and continues to lead the lottery business of the Group.

Mr. Ko obtained a Bachelor of Engineering degree (first class honours) in 1982. In 1990 he received an Australian Postgraduate Course Award to study at the Australian Graduate School of Management, where he obtained his Master of Business Administration degree. Apart from being a director of the Company, Mr. Ko did not hold any directorship in other public companies the securities of which are listed on any securities market in Hong Kong or overseas in the past three years.

Mr. Ko will enter into a service contract with the Company in April 2012, in which either party may terminate the contract by giving no less than six months’ notice to the other in writing. Mr. Ko’s annual remuneration will be HK$2,160,000 which is subject to annual review. The amount of emolument is determined by the remuneration committee of the Company with reference to Mr. Ko’s duties and level of responsibilities, the remuneration policy of the Company and the prevailing market conditions. Mr. Ko is also entitled to an annual bonus to be determined at the discretion of the remuneration committee after due consideration of his performance and that of the Group and/or the relevant Group companies in the previous year.

Mr. Ko’s interests in the Shares, within the meaning of Part XV of the SFO as at the Latest Practicable Date are (i) 4,354,000 share options granted to him on 31 March 2008 at the exercise price of HK$0.89 per Share, (ii) 4,000,000 shares options granted to him on 10 July 2009 at the exercise price of HK$0.367 per Share and (iii) 5,000,000 shares options granted to him on 18 November 2010 at the exercise price of HK$0.152 per Share. The above options granted to Mr. Ko will expire, if not exercised, on the anniversary of 10 years from the date of grant. Save as disclosed, Mr. Ko does not have any other interest in the securities within the meaning of Part XV of the SFO.

Mr. Ko does not have any relationships with any Directors, senior management or substantial or controlling Shareholders and there is no other information required to be disclosed pursuant to the requirements of rule 17.50(2)(h) to 17.50(2)(v) of the GEM Listing Rules.

APPENDIX II DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED

2. Mr. Chan Sek Keung, Ringo

Mr. Chan, aged 52, is the founder and non-executive chairman of the Group and also a member of the remuneration committee of the Board.

Mr. Chan was first appointed to the Board in November 1998 and was the chairman of the Board between 24 September 2001 and 30 December 2009. He has resumed being the chairman of the Board from 5 March 2010 after being re-designated as the non-executive Director on 30 December 2009. He retires by rotation under Article 87 of the Articles of Association and, being eligible, offers himself for reelection.

Apart from being a Director, Mr. Chan did not hold any directorship in other public companies the securities of which are listed on any securities market in Hong Kong or overseas in the past three years.

Mr. Chan holds a Bachelor of Science degree in Electrical Engineering from the University of Hong Kong and is a Fellow Member of the Hong Kong Institute of Directors, and a deputy of the Chinese People’s Political Consultative Conference (CPPCC) for both cities of Jinan, Shandong Province and of Chengdu, Sichuan Province, the People’s Republic of China.

Mr. Chan has entered into a letter of appointment with the Company for a term of two years commencing from 30 December 2011 to 29 December 2013 as a non-executive Director unless terminated by not less than one month’s notice in writing served by either party. Pursuant to the letter of appointment, Mr. Chan is entitled to an annual director’s fee of HK$120,000, which is determined by reference to the prevailing market conditions and his roles and responsibilities in the Company.

Mr. Chan’s interests in the Shares, within the meaning of Part XV of the SFO as at the Latest Practicable Date are (i) 18,876,000 Shares beneficially owned by him, (ii) 34,400,000 Shares through his wholly-owned company Woodstock Management Limited, (iii) 3,000,000 share options granted to him on 30 April 2002 at the exercise price of HK$0.55 per Share, (iv) 1,200,000 shares options granted to him on 20 February 2003 at the exercise price of HK$0.138 per Share, (v) 3,000,000 shares options granted to him on 10 July 2009 at the exercise price of HK$0.367 per Share and (vi) 2,000,000 shares options granted to him on 18 November 2010 at the exercise price of HK$0.152 per Share. The above options granted to Mr. Chan will expire, if not exercised, on the anniversary of 10 years from the date of grant. Save as disclosed, Mr. Chan does not have any other interest in the securities within the meaning of Part XV of the SFO.

Mr. Chan does not have any relationships with any Directors, senior management or substantial or controlling Shareholders and there is no other information required to be disclosed pursuant to the requirements of rule 17.50(2)(h) to 17.50(2)(v) of the GEM Listing Rules.

APPENDIX II DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED

3. Mr. So Lie Mo, Raymond

Mr. So, aged 62, is an independent non-executive Director, chairman of the nomination committee and a member of both the audit committee and remuneration committee of the Board. Mr. So was first appointed to the Board in September 2007. He retires by rotation under Article 87 of the Articles of Association and, being eligible, offers himself for re-election. Apart from being a Director of the Company, Mr. So did not hold any directorship in other public companies the securities of which are listed on any securities market in Hong Kong or overseas in the past three years.

Mr. So holds a Bachelor of Business Administration degree from The Chinese University of Hong Kong.

Mr. So has entered into a letter of appointment with the Company for a term of two years commencing from 5 September 2011 to 4 September 2013 as an independent non-executive Director unless terminated by not less than one month’s notice in writing served by either party. Pursuant to the letter of appointment, Mr. So is entitled to an annual director’s fee of HK$132,000, which is determined by reference to the prevailing market conditions and his roles and responsibilities in the Company.

Mr. So’s interests in the Shares, within the meaning of Part XV of the SFO as at the Latest Practicable Date are (i) 200,000 share options granted to him on 10 July 2009 at the exercise price of HK$0.367 per Share; and (ii) 200,000 share options granted to him on 18 November 2010 at the exercise price of HK$0.152 per Share. The above options granted to Mr. So will expire, if not exercised, on the anniversary of 10 years from the date of grant. Save as disclosed, Mr. So does not have any other interest in the securities within the meaning of Part XV of the SFO.

Mr. So does not have any relationships with any Directors, senior management or substantial or controlling Shareholders and there is no other information required to be disclosed pursuant to the requirements of rule 17.50(2)(h) to 17.50(2)(v) of the GEM Listing Rules.

SUMMARY OF THE PRINCIPAL TERMS OF THE 2012 SHARE OPTION SCHEME

APPENDIX III

This appendix sets out further information of the 2012 Share Option Scheme and also summarises the rules of the 2012 Share Option Scheme but does not form part of nor was it intended to be, part of the 2012 Share Option Scheme nor should it be taken as affecting the interpretation of the rules of the 2012 Share Option Scheme:

2012 SHARE OPTION SCHEME

Summary of terms

The following is a summary of the principal terms of the 2012 Share Option Scheme proposed to be approved by a resolution of the Shareholders at the AGM, notice of which is set out on pages 26 to 31 of this circular:

(a) Purpose of the 2012 Share Option Scheme

The purpose of the 2012 Share Option Scheme is to enable the Company to grant Options to the Eligible Participants in order to recognize and motivate the contribution of the employees of the Group and to provide incentives and help the Group in retaining its existing employees and recruiting additional employees and to provide them with a direct economics interest in attaining the long term business objectives of the Group.

(b) Administration of the 2012 Share Option Scheme

The 2012 Share Option Scheme shall be subject to the administration by the Board which may include a duly authorised committee thereof and the decision of the Board shall be final, conclusive and binding on all parties.

(c) Grant and acceptance of Options

Subject to the terms of the 2012 Share Option Scheme, the Board may, in its absolute discretion, invite any Eligible Participant to take up Options to subscribe for Shares at a price calculated in accordance with paragraph (d) below. The Eligible Participants will be any employee of the Company or any of its subsidiaries including any executive and non-executive directors of the Company or any of its subsidiaries, and any suppliers, consultants, agents and advisers.

An offer of the grant of an Option shall be made to Eligible Participants in writing (and unless so made shall be invalid) in such form as the Board may from time to time determine and shall remain open for acceptance by the Eligible Participant concerned for a period of 28 days from the date upon which it is made provided that no such offer shall be open for acceptance after the earlier of the 10th anniversary of the Adoption Date or the termination of the 2012 Share Option Scheme or the Eligible Participant to whom such offer is made has ceased to be an Eligible Participant.

SUMMARY OF THE PRINCIPAL TERMS OF THE 2012 SHARE OPTION SCHEME

APPENDIX III

A non-refundable nominal consideration of HK$1.00 is payable by the grantee upon acceptance of an Option. An Option shall be deemed to have been accepted when the duplicate letter comprising acceptance of the Option duly signed by the Eligible Participant together with the said consideration of HK$1.00 is received by the Company.

Any offer of the grant of an Option may be accepted in respect of less than the number of Shares in respect of which it is offered provided that it is accepted in such number of Shares as represents a board lot for the time being for the purpose of trading on GEM or an integral multiple thereof.

(d) Exercise of Options and Price of Shares

An Option may be exercised in whole or in part by the grantee giving notice in writing to the Company stating that the Option is thereby exercised and the number of Shares in respect of which it is exercised. Each such notice must be accompanied by a remittance for the full amount of the subscription price for the Shares in respect of which the notice is given. Within 28 days after receipt of the notice and the remittance and, where appropriate, receipt of the certificate of the Company’s auditors or independent financial advisers, the Company shall allot and issue the relevant Shares to the grantee (or his legal personal representative(s)) credited as fully paid.

Shares to be allotted and issued upon the exercise of an Option will be subject to all the provisions of the Articles of Association for the time being in force and will rank pari passu in all respects with the existing fully paid Shares in issue on the date on which the Option is duly exercised 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 (the “Exercise Date”) and accordingly will entitle the holders thereof to participate in all dividends or other distributions paid or made on or after the Exercise Date other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefor shall be before the Exercise Date. A Share allotted upon the exercise of an Option shall not carry voting rights until the name of the grantee has been duly entered onto the register of members of the Company as the holder thereof.

The exercise price for Shares under the 2012 Share Option Scheme may be determined by the Board at its absolute discretion but in any event will not be less than the highest of: (i) the closing price of the Shares as stated in the daily quotations sheet of the Stock Exchange on the date of grant, which must be a Business Day; (ii) the average closing price of the Shares as stated in the daily quotations sheets of the Stock Exchange for the five business days immediately preceding the date of grant; and (iii) the nominal value of the Share on the date of grant.

(e) Maximum number of Shares available for issue

(i) Subject to the Listing Rules, the overall limit on the number of Shares which may be issued upon exercise of all outstanding Options granted and yet to be exercised under the 2012 Share Option Scheme and any other share option schemes of the Company must not exceed 30% of the relevant class of Shares in issue from time to time. No Options may be granted under the 2012 Share Option Scheme or any other share option schemes of the Company if this will result in this limit being exceeded.

SUMMARY OF THE PRINCIPAL TERMS OF THE 2012 SHARE OPTION SCHEME

APPENDIX III

(ii) Subject to the limit mentioned in (e)(i) above, the total number of Shares which may be issued upon exercise of all Options to be granted under the 2012 Share Option Scheme and any other share option schemes of the Company adopted by the Group must not, in aggregate, exceed 10% of the Shares in issue as at the date of the approval of the 2012 Share Option Scheme (the “Scheme Mandate Limit”), unless Shareholders’ approval has been obtained pursuant to sub-paragraphs (iii) and (iv) below. Options lapsed in accordance with the terms of the 2012 Share Option Scheme will not be counted for the purpose of calculating the Scheme Mandate Limit.
(iii) Subject to the limit mentioned in (e)(i) above, the Company may refresh the Scheme Mandate Limit at any time subject to approval of the Shareholders in general meeting, provided that the Scheme Mandate Limit as refreshed must not exceed 10% of the Shares in issue as at the Adoption Date. Options previously granted under the 2012 Share Option Scheme and any other share option schemes of the Company (including those outstanding, cancelled, lapsed in accordance with such schemes or exercised Options) will not be counted for the purpose of calculating this limit. The Company must send a circular to the Shareholders containing such information as required under the GEM Listing Rules.
(iv) Subject to the limit mentioned in (e)(i) above, the Company may also seek separate approval of the Shareholders in general meeting for granting Options beyond the Scheme Mandate Limit provided that the Options in excess of the Scheme Mandate Limit are granted only to Eligible Participants specifically identified by the Company before such approval is sought. The Company must send a circular to the Shareholders containing a generic description of the specified Eligible Participants, the number and terms of Options to be granted, the purpose of granting Options to the specified Eligible Participants with an explanation as to how the terms of the Options serve such purpose and such other information as required under the GEM Listing Rules.
(f) Grant of Options to connected persons or any of their associates

Any grant of Options to a connected person (including but not limited to a Director, chief executive or substantial Shareholder) or its associates must be approved by the independent non-executive Directors (excluding any independent non-executive Director who is the grantee of the Options). Where Options are proposed to be granted to a connected person who is also a substantial Shareholder or an independent non-executive Director or their respective associates and if such grant would result in the total number of Shares issued and to be issued upon exercise of the Options granted and to be granted (including Options exercised, cancelled and outstanding) in any 12-month period up to and including the date of grant to such person representing in aggregate over 0.1 % of the total issued Shares and having an aggregate value, based on the closing price of the securities at the date of each grant, in excess of HK$5 million, then the proposed grant must be subject to the approval of Shareholders taken on a poll in a general meeting. All connected persons of the Company must abstain from voting at such general meeting (except where any connected person intends to vote against the proposed grant provided that his intention to do so has been stated in the shareholders’ circular to be issued as stated below).

SUMMARY OF THE PRINCIPAL TERMS OF THE 2012 SHARE OPTION SCHEME

APPENDIX III

A circular must be prepared by the Company explaining the proposed grant, disclosing (i) the number and terms of the Options to be granted, (ii) containing a recommendation from the independent non-executive Directors (excluding any independent non-executive Director who is a grantee) on whether or not to vote in favour of the proposed grant, (iii) containing information relating to any Directors who are trustees of the scheme or have a direct or indirect interest in the trustees.

Any change in the terms of Options granted to a connected person or its associates must be approved by Shareholders in a general meeting.

(g) Maximum entitlement of each Eligible Participant

The total number of Shares issued and to be issued upon exercise of the options granted to each Eligible Participant or grantee (including exercised and outstanding options) in any twelve (12)-month period up to the date of grant shall not exceed 1% of the Shares in issue. Where it is proposed that any offer is to be made to an Eligible Participant (or where approximate, an existing grantee) which would result in the Shares issued and to be issued upon exercise of all options granted and to be granted to such person (including exercised, cancelled and outstanding options) in the twelve (12)-month period up to and including the relevant date of grant to exceed such limit, such offer and any acceptance thereof must be conditional upon Shareholders’ approval in general meeting with such Eligible Participant (or where appropriate, an existing grantee) and his, her or its associates abstaining from voting. The Company must send a circular to the Shareholders disclosing the identity of the Eligible Participant or grantee, the number and terms of options to be granted (and options previously granted) to such Eligible Participant, the information required under the Listing Rules. The number and terms (including the subscription price) of options to be granted to such Eligible Participant must be fixed before the date on which Shareholders’ approval is sought and the date of the Board meeting for proposing such further grant should be taken as the date of grant for the purpose of calculating the subscription price.

(h) Time of Exercise of Options

Subject to the terms of the 2012 Share Option Scheme, an Option may be exercised in whole or in part at any time during the period to be determined and identified by the Board to each grantee at the time of making an offer for the grant of an Option, but in any event no later than 10 years from the date of grant but subject to the early termination of the 2012 Share Option Scheme (the “Option Period”).

There is no specified minimum period under the 2012 Share Option Scheme for which an Option must be held or the performance target which must be achieved before an Option can be exercised under the terms of the 2012 Share Option Scheme.

(i) Restrictions on the time of grant of Options

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 announced in accordance with the relevant requirements of the GEM Listing Rules. In particular, no Option may be granted during the period commencing 30 days immediately preceding the earlier of (i) the date of the Board meeting for the approval of the Company’s quarterly or interim results (and 60 days in the event of annual results) and (ii) the deadline for the Company to publish its quarterly, interim or annual results announcement and ending on the date of such results announcement.

SUMMARY OF THE PRINCIPAL TERMS OF THE 2012 SHARE OPTION SCHEME

APPENDIX III

(j) Rights are personal to grantees

An Option shall be personal to the grantee and shall not be assignable and no grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest whatsoever in favour of any third party over or in relation to any Option or enter into any agreement so to do. Any breach of the foregoing by a grantee shall entitle the Company to cancel any Option or part thereof granted to such grantee to the extent not already exercised.

(k) Rights on cessation of employment by dismissal

If the grantee of an Option is an employee and ceases to be an employee on one or more of the grounds that he or she has been guilty of persistent or serious misconduct, bankruptcy, insolvency, composition with his or her creditors generally or conviction of any criminal offence or other grounds on which an employer would be entitled to terminate his or her employment pursuant to any applicable law, his or her Option (to the extent not already exercised) will lapse on the date of cessation of his or her employment.

(l) Rights on death

If the grantee of an Option is an employee and ceases to be an employee by reason of his or her death before exercising the Options in full and none of the events referred to in paragraph (m) below as ground for termination of his or her Options arises, his or her personal representative(s) may exercise the Option (to the extent not already exercised) within a period of 12 months following the date of death (or such longer period as the Board may determine), failing which it will lapse.

(m) Rights on cessation of employment for other reasons

If the grantee of an Option who is an employee and ceases to be an Eligible Participant for any other reason he or she may exercise the Options (to the extent not already exercised) in whole or in part within a period of three months following the date of such cessation, which date shall be the last actual working with the Group, whether salary is paid in lieu of notice or not. If any of the events referred to in paragraph (n) to (p) below occurs during such period, he or she may exercise the Option pursuant to paragraphs (n) to (p) respectively.

(n) Rights on a general offer

In the event of a general offer being made to all Shareholders (or all such holders other than the offeror and/or person controlled by the offeror and/or any person acting in concert (as defined in The Hong Kong Codes on Takeovers and Mergers) with the offeror) and such offer becomes or is declared unconditional during the Option Period of the relevant Option, the grantee (or his personal representative(s)) shall be entitled to exercise the Option in full (to the extent not already exercised) at any time within thereafter and up to the close of such offer.

SUMMARY OF THE PRINCIPAL TERMS OF THE 2012 SHARE OPTION SCHEME

APPENDIX III

(o) Rights on winding up

In the event a notice is given by the Company to its members to convene a general meeting for the purpose of considering and, if thought fit, approving a resolution to voluntarily wind-up the Company, the Company shall on the same date as it despatches such notice to each member of the Company give notice thereof to all grantees and any grantee (or his or her personal representative(s) may by notice in writing to the Company accompanied by a remittance for the full amount of the aggregate subscription price in respect of the relevant Option (such notice to be received by the Company no later than two business days prior to the propose general meeting)) exercise the Option (to the extent not already exercised) either to its full extent or to the extent that he or she may specify in his or her notice and 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 and issue such number of Shares to the grantee credited as fully paid.

(p) Rights on reconstruction, compromise or arrangement

If a compromise or arrangement between the Company and its members or creditors is proposed for the purpose of or in connection with a scheme for the reconstruction or amalgamation of the Company, the Company shall give notice to the grantee on the same date as it despatches the notice to each member or creditor of the Company to consider such a compromise or arrangement, and thereupon the grantee (or his or her personal representative(s)) may by notice in writing to the Company accompanied by a remittance of the full amount of the subscription price in respect of which the notice is given (such notice to be received by the Company no later than two business days prior to the proposed meeting) exercise the Option (to the extent not already exercised) either to its full extent or to the extent specified in the notice and 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 allot and issue such number of Shares to the grantee credited as fully paid.

(q) Cancellation of Options

The Board may at any time cancel any Option granted but not exercised if the grantee so agrees. Any cancellation of Options granted but not exercised and the issuance of new Options to the same grantee may only be made under the 2012 Share Option Scheme with available unissued Options (excluding the cancelled Options) within the Scheme Mandate Limit referred to in paragraph (e) above. Options lapsed in accordance with the terms of the 2012 Share Option Scheme will not be counted for the purpose of calculating the Scheme Mandate Limit.

SUMMARY OF THE PRINCIPAL TERMS OF THE 2012 SHARE OPTION SCHEME

APPENDIX III

(r) Effect of alterations to share capital

In the event of any alteration in the capital structure of the Company by way of capitalisation of profits or reserved, 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 while any Option remains exercisable), such corresponding alterations (if any) will be made in (i) the numbers or nominal amount of Shares subject to any Option so far as such Option remains unexercised and/or (ii) the subscription price per Share and/or (iii) the maximum number of Shares available for subscription and/ or; (iv) the method of exercise of the Option as the auditors or independent financial advisers for the time being of the Company shall at the request of the Company or any grantee certify in writing to be in their opinion fair and reasonable, provided that any such alterations shall be made on the basis that the grantee shall have the same proportion of the issued share capital of the Company to which he was entitled before such alteration and the aggregate subscription price payable by the grantee on the full exercise of any Option shall remain as nearly as possible the same as (but not greater than) it was before such event, but so that no such alterations shall be made the effect of which would be to enable a Share to be issue at less than its nominal value. Save in the case of a capitalisation issue, the auditors or independent financial advisers for the time being of the Company must confirm to the Directors in writing that such adjustment(s) satisfy the aforesaid requirements.

(s) Ranking of Shares

The Shares to be allotted upon the exercise of an Option will be subject to all the provisions of the Articles of Associations for the time being in force and will rank pari passu in all respects with the fully paid Shares in issue on the date on which the Option is exercised and accordingly will entitle the holders of Shares to participate in all dividends or other distributions paid or made on or after the date on which the Option is exercised other than any dividends or other distributions 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.

(t) Duration of the 2012 Share Option Scheme

The 2012 Share Option Scheme shall continue in force for the period commencing from the Adoption Date, which is expected to be the date of the AGM, and expiring at the close of business on the tenth anniversary thereof, after such period no further Options will be granted but the provisions of the 2012 Share Option Scheme shall remain in full force and effect in respect of any Options granted before its expiry or termination but not yet exercised. The life of the 2012 Share Option Scheme shall be for ten years commencing from the Adoption Date.

(u) Alterations to the terms of the 2012 Share Option Scheme

(i) The provisions relating to the matters set out in Rule 23.03 of the GEM Listing Rules cannot be altered to the advantage of Eligible Participants without the prior approval of Shareholders in a general meeting.

SUMMARY OF THE PRINCIPAL TERMS OF THE 2012 SHARE OPTION SCHEME

APPENDIX III

(ii) Any alterations to the terms and conditions of the 2012 Share Option Scheme which are of a material nature or any change to the terms of Options granted must be approved by Shareholders, except where the alterations take effect automatically under the existing terms of the 2012 Share Option Scheme.
(iii) The amended terms of the 2012 Share Option Scheme or the Options must still comply with the relevant requirements of Chapter 23 of the GEM Listing Rules.
(iv) Any change to the authority of the Directors or the administrator of the 2012 Share Option Scheme in relation to any alteration to the terms of the 2012 Share Option Scheme must be approved by Shareholders in a general meeting.
(v) Conditions of the 2012 Share Option Scheme

The 2012 Share Option Scheme is conditional upon:

(a) the Listing Committee of the Stock Exchange granting the listing of and permission to deal in any Shares which may fall to be issued by the Company pursuant to the exercise of Options in accordance with the terms and conditions of the 2012 Share Option Scheme; and
(b) the passing of an ordinary resolution to adopt the 2012 Share Option Scheme by the Shareholders at general meeting.

(w) 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 periods referred to in paragraphs (k) to (p);
(iii) the date on which the Directors shall exercise the Company’s right to cancel the Option by reason of a breach of paragraph (j) by the grantee of the Option in respect of that or any other Option; and
(iv) the date of the commencement of the winding-up of the Company.

(x) Termination

The Company by ordinary resolution in general meeting may at any time terminate the operation of the 2012 Share Option Scheme and in such event no further Options will be offered but in all other respects the provisions of the 2012 Share Option Scheme shall remain in force to the extent necessary to give effect to the exercise of any Options granted prior to such termination. Details of the Options granted, including Options exercised or outstanding, under the 2012 Share Option Scheme shall be disclosed in the circular to Shareholders seeking approval of any subsequent share option scheme to be established after such termination.

SUMMARY OF THE PRINCIPAL TERMS OF THE 2012 SHARE OPTION SCHEME

APPENDIX III

(y) Miscellaneous

The terms of the 2012 Share Option Scheme (and any other schemes adopted by the Company from time to time) shall be in accordance with the new requirements set out in Chapter 23 of the GEM Listing Rules.

The Company will comply with the relevant statutory requirements and the GEM Listing Rules from time to time in force on a continuing basis in respect of the 2012 Share Option Scheme and any other schemes of the Company.

Any dispute arising in connection with the number of Shares of an Option and any of the matters referred to in paragraph (r) above shall be referred to the decision of the auditors or the independent financial advisers of the Company who shall act as experts and not as arbitrators and whose decision, in the absence of manifest error, shall be final and binding.

NOTICE OF AGM

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MelcoLot Limited

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 8198)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the annual general meeting (the “ Meeting ”) of MelcoLot Limited (the “ Company ”) will be held at Units 3101-2A, 31st Floor, The Centrium, 60 Wyndham Street, Central, Hong Kong on Friday, 18 May 2012 at 11:00 a.m. for the purpose of considering and, if thought fit, passing the following resolutions of the Company:

To consider and approve the audited financial statements and the reports of the directors and the auditor for the year ended 31 December 2011;
To re-elect the directors and to authorize the board of directors to fix the remuneration of the directors; (note 7)
To re-appoint the auditor and to authorize the board of directors to fix the remuneration of the auditor; and

As special business, to consider and, if thought fit, pass the following resolutions as Ordinary Resolutions:

ORDINARY RESOLUTIONS

Grant of general mandate to issue shares

“ THAT:
(a) subject to paragraph (c) of this resolution, and pursuant to the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited, 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 in the capital of the Company and to make or grant, whether conditionally or unconditionally, offers, agreements and options (including warrants, bonds, debentures, notes and any securities which carry rights to subscribe for or are convertible into the shares in the Company) which would or might require the exercise of such powers, be and is hereby generally and unconditionally approved;

NOTICE OF AGM

(b) the approval in paragraph (a) of this resolution shall authorize the directors of the Company during the Relevant Period to make or grant offers, agreements and options (including warrants, bonds, debentures, notes and any securities which carry rights to subscribe for or are convertible into the shares in the Company) which would or might require the exercise of such powers after the end of the Relevant Period;
(c) the aggregate nominal amount of share capital allotted, issued or dealt with or agreed conditionally or unconditionally to be allotted, issued or dealt with (whether pursuant to options or otherwise) by the directors of the Company pursuant to the approval in paragraph (a) of this resolution, otherwise than pursuant to:
(i) a Rights Issue (as hereinafter defined); or
(ii) the grant or exercise of any option under any share option scheme of the Company or any other option, scheme or similar arrangement for the time being adopted for the grant or issue to employee, director, advisor or business consultant of the Company and/or any of its subsidiaries of shares in the Company or rights to acquire shares in the Company; or
(iii) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares in the Company in accordance with the Articles of Association of the Company in force from time to time; or
(iv) any issue of shares in the Company upon the exercise of rights of subscription or conversion under the terms of any warrants or convertible bonds issued by the Company or any securities which carry rights to subscribe for or are convertible into shares in 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 the passing this resolution and the authority pursuant to paragraph (a) of this resolution shall be limited accordingly; and

NOTICE OF AGM

(d) for the purpose of this resolution,

“Relevant Period” means the period from the date of the passing 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 Articles of Association of the Company or any applicable law of the Cayman Islands to be held; and
(iii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given to the directors of the Company by this resolution.

“Rights Issue” means an offer of shares in the Company, or offer or issue of warrants, options or other securities giving rights to subscribe for shares open for a period fixed by the directors of the Company to holders of shares in the Company on the register on a fixed record date in proportion to their then holdings of such shares (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, or the expense or delay which may be involved in determining the existence or extent of any restrictions or obligations under the laws of, or the requirements of, any jurisdiction applicable to the Company, or any recognized regulatory body or any stock exchange in any territory applicable to the Company).”

Grant of the general mandate to repurchase shares

“ THAT:
(a) subject to paragraph (b) of this resolution, 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 in the capital of the Company on the Growth Enterprise

NOTICE OF AGM

Market of The Stock Exchange of Hong Kong Limited or any other stock exchange on which the shares in the Company may be listed and recognized by the Securities and Futures Commission and The Stock Exchange of Hong Kong Limited for such purpose, subject to and in accordance with the rules and regulations of the Securities and Future Commission, The Stock Exchange of Hong Kong Limited, the Companies Law of the Cayman Islands and all other applicable laws in this regard, be and the same is hereby generally and unconditionally approved;

(b) the aggregate nominal amount of shares in the Company which the Company is authorized to repurchase pursuant to the approval in paragraph (a) of this resolution during the Relevant Period shall not exceed 10 per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of the passing of this resolution and the authority pursuant to paragraph (a) of this resolution shall be limited accordingly;
(c) for the purpose of this resolution,

“Relevant Period” means the period from the date of 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 Articles of Association of the Company or any other applicable law of the Cayman Islands to be held; and
(iii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given to the directors of the Company by this resolution.”

Extension of Resolution 4 to number of shares repurchased in Resolution 5

“ THAT conditional upon the passing of resolution nos. 4 and 5 of the notice convening this meeting, the general mandate granted to the directors of the Company to allot, issue and deal with additional shares in the Company pursuant to the said resolution no. 4 be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of shares in the capital of the Company which are repurchased by the Company under the authority granted to the directors of the Company pursuant to the said resolution no. 5.”

NOTICE OF AGM

Adoption of 2012 share option scheme

“ THAT
(a) conditional upon the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Shares falling to be issued pursuant to the share option scheme (the “2012 Share Option Scheme”), the terms of which are set out in the document marked “A” which has been produced to the AGM and signed by the chairman of the AGM for the purpose of identification, the rules of the 2012 Share Option Scheme be and are hereby approved and adopted and the Directors be and are hereby authorised to grant options and to allot, issue and deal with Shares pursuant to the exercise of any option granted thereunder and to take all such steps as they may consider necessary or expedient to implement the 2012 Share Option Scheme.”
(b) the aggregate nominal amount of share capital to be allotted and issued pursuant to resolution numbered 2(a) above, together with any issue of Shares upon the exercise of any options granted under any other share option schemes of the Company as may from time to time adopted by the Company, shall not exceed 10 per cent. of the Shares in issue as at the date of passing of this resolution.”

By Order of the Board of MelcoLot Limited Ko Chun Fung, Henry

Executive Director and Chief Executive Officer

Hong Kong, 30 March 2012

Registered office: 4th Floor, Scotia Centre P.O. Box 2804 George Town Grand Cayman Cayman Islands

Head office and principal place of business in Hong Kong: Units 3101-2A, 31st Floor The Centrium 60 Wyndham Street Central, Hong Kong

NOTICE OF AGM

Notes:

A shareholder entitled to attend and vote at the above Meeting is entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not be a shareholder of the Company.
Where there are joint holders of any share of the Company, any one of such joint holders may vote at the Meeting, either personally or by proxy, in respect of such share as if he was 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 shareholders of the Company in respect of such share shall alone be entitled to vote in respect thereof.
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 such power of attorney or authority, must be lodged with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not less than 48 hours before the time appointed for holding the Meeting (or any adjournment thereof).
Completion and return of the form of proxy will not preclude a shareholder from attending the Meeting and voting in person at the Meeting or any adjournment thereof if he so desires. If a shareholder attends the Meeting after having deposited the form of proxy, his form of proxy will be deemed to have been revoked.
With regard to ordinary resolution no. 5 of this notice, an explanatory statement containing information regarding the repurchase by the Company of its own shares are set out in Appendix I to the circular of the Company to shareholders dated 30 March 2012 together with the 2011 Annual Report of the Company.
Article 66 of the Company’s articles of association sets out the procedure by which shareholders of the Company may demand a poll at general meetings.

According to Rule 17.47(4) of the GEM Listing Rules, any voting of the shareholders of the Company at the annual general meeting will be taken by way of a poll and an announcement of the voting results will be made after the annual general meeting. Accordingly, the resolutions will be taken by way of a poll at the annual general meeting.

The biographical details on Mr. Ko Chun Fung, Henry, Mr. Chan Sek Keung, Ringo and Mr. So Lie Mo, Raymond are set out in Appendix II to the circular of the Company dated 30 March 2012.
The translation into Chinese language of this notice is for reference only. In case of any inconsistency, the English version shall prevail.

AI assistant

Crypto Flow Technology Limited — Proxy Solicitation & Information Statement 2012

51323_rns_2012-03-30_6fe3486a-1fc7-4dbc-94bb-249f832d0af7.pdf

MelcoLot Limited

(I) PROPOSED GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES,

(II) PROPOSED ADOPTION OF NEW SHARE OPTION SCHEME, (III) PROPOSED RE-ELECTION OF DIRECTORS AND

(IV) NOTICE OF ANNUAL GENERAL MEETING

CHARACTERISTICS OF GEM

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

MelcoLot Limited

(I) PROPOSED GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES, (II) PROPOSED ADOPTION OF NEW SHARE OPTION SCHEME, (III) PROPOSED RE-ELECTION OF DIRECTORS AND

(IV) NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

LETTER FROM THE BOARD

PROPOSED GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

New Issue Mandate

LETTER FROM THE BOARD

Repurchase Mandate

PROPOSED ADOPTION OF THE 2012 SHARE OPTION SCHEME

The 2012 Share Option Scheme

LETTER FROM THE BOARD

Conditions precedent of the 2012 Share Option Scheme

LETTER FROM THE BOARD

Application for listing

RE-ELECTION OF DIRECTORS

AGM

LETTER FROM THE BOARD

RESPONSIBILITY STATEMENT

RECOMMENDATION

1. SHARE CAPITAL

2. REASON FOR REPURCHASES

3. FUNDING OF REPURCHASES

4. SHARE PRICES

5. DIRECTORS’ UNDERTAKING

6. THE TAKEOVERS CODE

7. SHARES REPURCHASE MADE BY THE COMPANY

1. Mr. Ko Chun Fung, Henry

2. Mr. Chan Sek Keung, Ringo

3. Mr. So Lie Mo, Raymond

2012 SHARE OPTION SCHEME

Summary of terms

(d) Exercise of Options and Price of Shares

(e) Maximum number of Shares available for issue

(g) Maximum entitlement of each Eligible Participant

(h) Time of Exercise of Options

(i) Restrictions on the time of grant of Options

(j) Rights are personal to grantees

(k) Rights on cessation of employment by dismissal

(l) Rights on death

(m) Rights on cessation of employment for other reasons

(n) Rights on a general offer

(o) Rights on winding up

(p) Rights on reconstruction, compromise or arrangement

(q) Cancellation of Options

(r) Effect of alterations to share capital

(s) Ranking of Shares

(t) Duration of the 2012 Share Option Scheme

(u) Alterations to the terms of the 2012 Share Option Scheme

(w) Lapse of Options

(x) Termination

NOTICE OF AGM

MelcoLot Limited

NOTICE OF ANNUAL GENERAL MEETING

ORDINARY RESOLUTIONS

Grant of general mandate to issue shares

NOTICE OF AGM

NOTICE OF AGM

Grant of the general mandate to repurchase shares

NOTICE OF AGM

Extension of Resolution 4 to number of shares repurchased in Resolution 5

Adoption of 2012 share option scheme

By Order of the Board of MelcoLot Limited Ko Chun Fung, Henry

NOTICE OF AGM

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Crypto Flow Technology Limited Proxy Solicitation & Information Statement 2012