Culturecom Holdings Limited - Proxy Solicitation & Information Statement 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular, you should consult your stockbroker, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or otherwise transferred all your shares in YOSHIYA INTERNATIONAL CORPORATION, LIMITED 慶屋國際有限公司, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited 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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(Incorporated in Hong Kong with limited liability)
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PROPOSED ADOPTION OF THE NEW SHARE OPTION SCHEME, TERMINATION OF THE EXISTING SHARE OPTION SCHEME, AMENDMENTS TO THE COMPANY’S ARTICLES OF ASSOCIATION

AND

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

A notice convening an extraordinary general meeting of YOSHIYA INTERNATIONAL CORPORATION, LIMITED 慶屋國際有限公司 to be held at Gemini, Level 33, Best Western Rosedale on the Park, 8 Shelter Street, Causeway Bay, Hong Kong on 30th December, 2002 at 9:45 a.m. (or so soon thereafter as the annual general meeting of the Company convened at the same place and date at 9:30 a.m. shall have been concluded or adjourned) is set out on pages 26 to 33 of this circular. Whether or not the shareholders are able to attend the meeting, they are requested to complete the accompanying proxy form for use at the extraordinary general meeting in accordance with the instructions printed thereon and return it to the registered office of the Company at Room 2207, 22nd Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, 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 adjourned meeting thereof (as the case may be). Completion and return of the proxy form will not preclude the shareholders from attending and voting in person at the meeting should they so wish.

28th November, 2002

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Chairman
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Adoption of the New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Status of the 1997 Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Termination of the 1997 Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Amendments to the Articles of Association of the Company . . . . . . . . . . . . . . . . .	8
General Mandates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Responsibility of the Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Appendix I – Summary of the principal terms
of the New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix II – Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26

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DEFINITIONS

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

“1997 Share Option Scheme” the share option scheme adopted by the Company on 7th March, 1997
“Adoption Date”
the date on which the New Share Option Scheme is adopted, conditionally or unconditionally, by the Company in the EGM
“AGM” the annual general meeting of the Company to be held at Gemini, Level 33, Best Western Rosedale on the Park, 8 Shelter Street, Causeway Bay, Hong Kong on 30th December, 2002 at 9:30 a.m.
“Articles of Association” the articles of association of the Company
“associate” has the meaning ascribed thereto in the Listing Rules
“Board” the board of Directors
“Cancelled Shares”
those Shares which were the subject of options which had been granted and accepted under the New Share Option Scheme or any of the other schemes but subsequently cancelled. For the avoidance of doubt, “Cancelled Shares” shall exclude “Lapsed Shares”
“Commencement Date”
in respect of any particular Option, the date upon which the Option is granted or deemed to be granted and accepted in accordance with the New Share Option Scheme
“Companies Ordinance”
the Companies Ordinance, Chapter 32 of the Laws of Hong Kong
“Company”
Yoshiya International Corporation, Limited 慶屋國際有限公司 , a company incorporated in Hong Kong with limited liability and whose securities are listed on the Stock Exchange
“Directors”

the directors of the Company

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DEFINITIONS

“EGM” the extraordinary general meeting of the Company to be held at Gemini, Level 33, Best Western Rosedale on the Park, 8 Shelter Street, Causeway Bay, Hong Kong on 30th December, 2002 at 9:45 a.m. (or so soon thereafter as the AGM shall have been concluded or adjourned)
“EGM Notice” the notice convening the EGM which is set out on pages 26 to 33 of this circular
“General Mandates” the Issue Mandate and the Repurchase Mandate
“Grantee” any Participant who accepts the offer of the grant of an Option in accordance with the rules of the New Share Option Scheme or (where the context so permits) a person or persons who, in accordance with the laws of succession applicable in respect of the death of such Participant is, or are entitled to exercise the Option accepted by such Participant (to the extent not already exercised) in consequence of the death of such Participant and “Grantees” shall be construed accordingly
“Group” the Company and its subsidiaries and “member of the Group” shall be construed accordingly
“HK$” Hong Kong dollars
“Invested Entity” any entity in which the Group holds any equity interest and “Invested Entities” shall be construed accordingly
“Issue Mandate” a mandate proposed to be sought at the EGM to authorize the Directors to allot and issue new Shares or convertible securities or similar rights to subscribe for any Shares or convertible securities of the Company in the manner set out in Ordinary Resolution number 2 in the EGM Notice
“Lapsed Shares” those Shares which were the subject of options which had been granted and accepted under the New Share Option Scheme or any of the other schemes but subsequently lapsed. For the avoidance of doubt, “Lapsed Shares” shall exclude “Cancelled Shares”
“Latest Practicable Date” 18th November, 2002, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular

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DEFINITIONS

“Listing Rules”
the Rules Governing the Listing of Securities on the Stock Exchange
“Memorandum of Association” the memorandum of association of the Company
“New Share Option Scheme” the new share option scheme of the Company proposed to be adopted under Ordinary Resolution number 1 set out in the EGM Notice
“Offer Date” in respect of an Option, the date (being a business day) on which such Option is offered to a Participant
“Option”
an option to subscribe for Shares granted pursuant to the New Share Option Scheme and “Options” shall be construed accordingly
“Option Period” in respect of an Option, a period to be notified by the Board to each Grantee and in any event such period of time shall not exceed a period of ten years commencing on the Commencement Date or such later date as the Board may decide
“other schemes”
other than the New Share Option Scheme, all the schemes including the 1997 Share Option Scheme involving the grant by the Company or any of its subsidiaries of options over securities of the Company or any of its subsidiaries to, or for the benefit of, specified participants of such schemes or any arrangement involving the grant of options to participants over securities of the Company or any of its subsidiaries which, in the opinion of the Stock Exchange, is analogous to a share option scheme as described in Chapter 17 of the Listing Rules
“Participant”
any person belonging to any of the following classes:
(i) any employee (whether full time or part time and including executive director) of any member(s) of the Group or any Invested Entity;
(ii) any non-executive director (including independent non-executive directors) of any member of the Group or any Invested Entity;

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DEFINITIONS

(iii) any consultant, adviser or agent (legal, financial or professional) engaged by any member of the Group or any Invested Entity, who, under the terms of relevant engagement with the Group or the relevant Invested Entity, is eligible to participate in a share option scheme of the Company; and
(iv) any vendor, supplier of goods or services or customer of or to any member of the Group or Invested Entity who, under the terms of relevant agreement with the Group or the relevant Invested Entity, is eligible to participate in a share option scheme of the Company

and “Participants” shall be construed accordingly

“Registrar”

Computershare Hong Kong Investor Services Limited of Rooms 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, being the Hong Kong Share Registrar of the Company
“Repurchase Mandate” a mandate proposed to be sought at the EGM to authorize the Directors to repurchase fully paid Shares in manner set out in Ordinary Resolution number 3 in the EGM Notice
“Share(s)”
ordinary share(s) of HK$0.01 each in the capital of the Company and a “Share” shall be construed accordingly
“Shareholder(s)”
holder(s) of Share(s)
“Stock Exchange”

The Stock Exchange of Hong Kong Limited

“Summary Financial Report”
a summary financial report which is derived from and summaries the annual report of the Company
“Takeovers Code”

the Hong Kong Code on Takeovers and Mergers

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LETTER FROM THE CHAIRMAN

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(Incorporated in Hong Kong with limited liability)

Executive Directors:

Mr. Tse Cho Tseung (Chairman) Ms. Lin Fung Yi (Deputy Chairman)

Mr. Ding Chung Keung, Vincent (Managing Director)

Independent non-executive Directors:

Mr. Li Chok Sun, Sean Mr. Hong Ka Kei

Registered office:

Room 2207, 22nd Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong.

Mr. Masuo Yoshimochi

28th November, 2002

To the Shareholders

Dear Sir or Madam,

PROPOSED ADOPTION OF THE NEW SHARE OPTION SCHEME, TERMINATION OF THE EXISTING SHARE OPTION SCHEME, AMENDMENTS TO THE COMPANY’S ARTICLES OF ASSOCIATION AND GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

INTRODUCTION

In light of the amendments made to Chapter 17 of the Listing Rules, the Board proposes that, subject to fulfillment of the conditions as described below, the New Share Option Scheme be adopted and the 1997 Share Option Scheme be terminated. The Stock Exchange has introduced further amendments to the Listing Rules with the aim of reducing the volume of printed documents generated by the listed issuers. Accordingly, the Board proposes to amend the Articles of Association with such effect as to save the printing costs for the benefit of the Shareholders. The Board will also seek the approval of the Shareholders at the EGM to grant to the Directors the General Mandates.

The purpose of this circular is to provide the Shareholders with further details of the abovementioned proposals and recommendation and to convene the EGM to consider and, if thought fit, approve the resolutions necessary for the proposals and recommendation to be implemented.

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LETTER FROM THE CHAIRMAN

ADOPTION OF THE NEW SHARE OPTION SCHEME

In light of the requirements of Chapter 17 of the Listing Rules, the Board proposes that, subject to fulfillment of the conditions set out below, the New Share Option Scheme be adopted at the EGM. A summary of the principal terms of the New Share Option Scheme is set out in Appendix I to this circular.

Under the New Share Option Scheme, the Board may grant Options to those Participants who, in the opinion of the Board, have contributed or may contribute to the development and growth of the Group and any Invested Entity. By granting Options to such persons to obtain shareholding interests in the Company on the terms of the New Share Option Scheme including, in particular, that the Board may determine the Option Period during which the Options may be exercised, the Board considers that it will provide more effective incentives or rewards to them for the better and long term performance of the Group and the Invested Entities.

Under the New Share Option Scheme, the Participants will include any employee, executive or officer of the Company or any of its subsidiaries, vendors, suppliers, customers, consultants, advisers or agents (legal, financial or professional) to and of any member of the Group or any Invested Entity. The Board considers that the flexibility afforded by the terms of the New Share Option Scheme, including that there is no minimum period prescribed therein for which an Option must be held before it can be exercised and that the exercise price of the Options will be determined with reference to recent market price of the Shares, will enable the Board to make use of grant of Options as a tool for structuring suitable remuneration packages and the terms of the relevant engagement with those Grantees who are vendors, suppliers, customers, consultants, advisers or agents to and of the Group and/or Invested Entities, and to encourage placing of orders by and promote customer loyalty of those Grantees who are customers of the Group and/or Invested Entities, without material adverse effect on the Group’s cash and working capital position.

The New Share Option Scheme is conditional on:

(a) the passing of the ordinary resolution set out in the EGM Notice by the Shareholders at the EGM to approve and adopt the New Share Option Scheme; and
(b) the Listing Committee of the Stock Exchange granting the approval of the listing of, and permission to deal in, any Shares falling to be issued upon exercise of the Options which may be granted under the New Share Option Scheme, being ten (10) per cent. of the Shares in issue on the Adoption Date.

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LETTER FROM THE CHAIRMAN

Under the New Share Option Scheme, the Board has the right to grant Options to the Participants to subscribe for Shares such that the total number of Shares which may be issued upon exercise of all options to be granted under the New Share Option Scheme and any other share option schemes of the Company shall not exceed ten (10) per cent. of the Shares in issue as at the Adoption Date.

On the basis that no Shares will be issued or repurchased from the Latest Practicable Date to the Adoption Date, there will be in issue 482,399,556 Shares as at the Adoption Date and such ten (10) per cent. shall represent 48,239,955 Shares. Approval may be obtained from the Shareholders to refresh such ten (10) per cent. limit such that the total number of Shares which may be issued upon exercise of all options to be granted under the New Share Option Scheme and any other share option schemes of the Company shall not exceed ten (10) per cent. of the Shares in issue as at the date of such Shareholders’ approval. However, the maximum number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Share Option Scheme and any other share option schemes of the Company (including the 1997 Share Option Scheme) shall not in aggregate exceed thirty (30) per cent. of the Shares in issue from time to time.

Application will be made to the Stock Exchange for the approval of the listing of, and permission to deal in, any Shares falling to be issued upon exercise of the Options which may be granted under the New Share Option Scheme, being ten (10) per cent. of the Shares in issue on the Adoption Date.

As at the date hereof, no Options have been granted or agreed to be granted under the New Share Option Scheme. No Option will be granted unless it is in full compliance with the provisions of Chapter 17 of the Listing Rules.

The Directors consider that it is inappropriate to state the value of all Options that can be granted under the New Share Option Scheme on the assumption that they had been granted on the Latest Practicable Date as a number of variables crucial for the calculation of the value of the Options have not been determined. Such variables include but not limited to the exercise price for the Shares upon exercise of the Options, the period during which the Options may be exercised, the discretion of the Board to impose any performance target that has to be achieved before the Options may be exercised and other relevant variables. The exercise price payable for the Shares to be issued on exercise of Options depends on the price of the Shares as quoted on the Stock Exchange, which in turn depends on when the Options are granted under the New Share Option Scheme. It is difficult to ascertain with accuracy the exercise price of the Shares given the volatility the Shares may experience during the 10-year scheme life of the New Share Option Scheme. Accordingly, the Directors take the view that any calculation of the value of the Options as at the Latest Practicable Date based on various speculative assumptions would not be meaningful and would be misleading to the Shareholders.

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LETTER FROM THE CHAIRMAN

A copy of the New Share Option Scheme in its draft form will be available for inspection at the EGM and the registered office of the Company at Room 2207, 22nd Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong during normal business hours from the date of this circular up to and including the date of the EGM.

The Company will publish an announcement in the newspapers on the outcome of the EGM for the adoption of the New Share Option Scheme on the business day following the date of the EGM.

STATUS OF THE 1997 SHARE OPTION SCHEME

As at the Latest Practicable Date, no option to subscribe for Shares was outstanding under the 1997 Share Option Scheme.

The Board confirms that prior to the EGM, it will not grant any further options under the 1997 Share Option Scheme.

TERMINATION OF THE 1997 SHARE OPTION SCHEME

Under the 1997 Share Option Scheme, the Board or the Company in general meeting may at any time terminate such scheme. Accordingly, the Board shall, upon the New Share Option Scheme becoming unconditional, terminate the 1997 Share Option Scheme with immediate effect and no further options may be granted under the 1997 Share Option Scheme, provided that the options which have been granted during the life of the 1997 Share Option Scheme shall continue to be exercisable in accordance with their terms of issue and in all other respects, the provisions of the 1997 Share Option Scheme shall remain in full force and effect.

AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

According to the recent amendments of the Companies Ordinance and the Listing Rules which came into effect in January and February 2002 respectively, the Company is permitted, inter alia, (1) to offer the Shareholders the choice to receive, in place of the annual report of the Company, the Summary Financial Report; and (2) to offer the Shareholders the choice to receive corporate communications, including but not limited to, the annual report of the Company, the Summary Financial Report, the interim report of the Company, notices of general meetings and circulars through electronic means and in either English or Chinese only or in both English and Chinese.

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LETTER FROM THE CHAIRMAN

In order to achieve such flexibility under the new legislation and rules, the Directors proposed to introduce certain amendments to the Articles of Association which will enable the Company, subject to the extent as permitted by the Companies Ordinance, the Listing Rules and any applicable laws, rules and regulations:

(a) to offer the Shareholders the choice to receive the Summary Financial Report in place of the annual report of the Company;
(b) to the extent permitted by the Articles of Association and with the Shareholders’ prior consent, to send or otherwise make available the Company’s corporate communication (within the meaning ascribed thereto under the Listing Rules) using electronic means; and
(c) to send the Company’s corporate communication to the Shareholders in either the English language only, the Chinese language only or in both the English language and the Chinese language.

GENERAL MANDATES

Ordinary resolutions will also be proposed to the Shareholders at the EGM to grant new General Mandates to the Directors to exercise all powers of the Company:

(a) to allot, issue and deal with new Shares or convertible securities of the Company or similar rights to subscribe for any new Shares or convertible securities of the Company up to an amount not exceeding twenty (20) per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing Ordinary Resolution number 2 set out in the EGM Notice;
(b) to repurchase on the Stock Exchange fully paid up Shares up to a maximum of ten (10) per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of passing Ordinary Resolution number 3 set out in the EGM Notice; and
(c) to extend the Issue Mandate by an amount representing the aggregate nominal amount of the Shares repurchased by the Company pursuant to and in accordance with the Repurchase Mandate.

The General Mandates will continue in force until the conclusion of the next annual general meeting of the Company or until 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 to be held or until revoked or varied by ordinary resolutions of the Shareholders in an extraordinary general meeting held prior to the next annual general meeting of the Company.

Shareholders should refer to the explanatory statement contained in Appendix II to this circular which sets out further information in relation to the Repurchase Mandate.

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LETTER FROM THE CHAIRMAN

EXTRAORDINARY GENERAL MEETING

The EGM Notice is set out on pages 26 to 33 of this circular for the purpose of considering and, if thought fit, passing the special resolution in respect of the amendments to the Articles of Association, and the ordinary resolutions in respect of:

(a) the adoption of the New Share Option Scheme; and
(b) the General Mandates.

A form of proxy for use by the Shareholders at the EGM is enclosed. Whether or not you intend to attend the EGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return it to the registered office of the Company at Room 2207, 22nd Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, 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 adjourned meeting thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the meeting should you so wish.

RESPONSIBILITY OF THE DIRECTORS

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

RECOMMENDATION

The Board believes that the adoption of the New Share Option Scheme, the amendments to the Articles of Association and the grant of the General Mandates are all beneficial to, and in the best interests of, the Company and its Shareholders as a whole.

The Board recommends the Shareholders to vote in favour of the resolutions set out in the EGM Notice.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the Appendices to this circular and the EGM Notice set out in this circular.

Yours faithfully, For and on behalf of

Yoshiya International Corporation, Limited Tse Cho Tseung

Chairman

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

The following is a summary of the principal terms of the New Share Option Scheme to be adopted at the EGM.

(a) Who may join

The Board may invite any person belonging to any of the following classes as the Board may in its absolute discretion select, having regard to each person’s qualifications, skills, background, experience, service records and/or contribution or potential value to the relevant member(s) of the Group or any Invested Entity, to take up Options to subscribe for Shares at a price calculated in accordance with paragraph (c) below:

(i) any employee (whether full time or part time and including executive director) of any member(s) of the Group or any Invested Entity;
(ii) any non-executive director (including independent non-executive directors) of any member of the Group or any Invested Entity;
(iii) any consultant, adviser or agent (legal, financial or professional) engaged by any member of the Group or any Invested Entity, who, under the terms of relevant engagement with the Group or the relevant Invested Entity, is eligible to participate in a share option scheme of the Company; and
(iv) any vendor, supplier of goods or services or customer of or to any member of the Group or Invested Entity who, under the terms of relevant agreement with the Group or the relevant Invested Entity, is eligible to participate in a share option scheme of the Company.

(b) Purposes of the New Share Option Scheme

The principal purposes of the New Share Option Scheme are:

(i) to enable the Group to recruit and retain high calibre employees and attract human resources that are valuable to the Group or any Invested Entity;
(ii) to recognize the significant contributions of the Participants to the growth of the Group or any Invested Entity by rewarding them with opportunities to obtain ownership interest in the Company; and
(iii) to further motivate and give incentives to these persons to continue to contribute to the long term success and prosperity of the Group or any Invested Entity.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

(c) Exercise price and acceptance period

The exercise price for the Shares under the New Share Option Scheme shall be a price determined by the Board in its absolute discretion but in any event shall not be less than the highest of:

(i) the official closing price of the Shares as stated in the daily quotation sheets of the Stock Exchange on the Offer Date;
(ii) the average of the official closing price of the Shares as stated in the daily quotation sheets of the Stock Exchange for the five (5) business days immediately preceding the Offer Date; and
(iii) the nominal value of a Share.

Unless provided otherwise in the Listing Rules, the date of the Board meeting at which the Board proposes to grant the proposed Options under paragraphs (e)(ii) and (f)(ii) below to that Participant shall be taken as the Offer Date for the purpose of calculating the exercise price.

The Participant must accept any such Offer notified to him or her within twenty-eight (28) days from the Offer Date, failing which it shall be deemed to have been rejected. Upon acceptance of the Offer, the Grantee shall pay HK$1.00 to the Company as consideration for the grant.

(d) Number of Shares subject to the New Share Option Scheme

(i) Unless further approval has been obtained pursuant to sub-paragraphs (ii) and/or (iii) below and subject to sub-paragraphs (iv) and (v) below, as at the Adoption Date the maximum number of Shares in respect of which Options may be granted when aggregated with the maximum number of Shares in respect of which options may be granted under all the other schemes (the “Scheme Limit”) is 48,239,955 Shares, being ten (10) per cent. of the Shares in issue on the Adoption Date on the basis that no share will be issued or repurchased after the Latest Practicable Date. As at the Offer Date of any proposed grant of Options, the maximum number of Shares in respect of which Options may be granted is 48,239,955 Shares less the aggregate of the following Shares as at that Offer Date:
(a) the number of Shares which would be issued on the exercise in full of the Options which have been granted but not cancelled, lapsed or exercised;
(b) the number of Shares which would be issued on the exercise in full of the options which have been granted after the Adoption Date under the other scheme(s) but not cancelled, lapsed or exercised;

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

(c) the number of Shares which have been issued and allotted pursuant to the exercise of any Options;
(d) the number of Shares which have been issued and allotted pursuant to the exercise of any options granted after the Adoption Date under the other scheme(s);
(e) the number of Cancelled Shares which were the subject of Options; and
(f) the number of Cancelled Shares which were the subject of options granted after the Adoption Date under the other scheme(s).
(ii) Subject to sub-paragraph (iv) below, the issue of a circular by the Company which complies with Note (1) to Rule 17.03(3) and Rule 17.06 of the Listing Rules and the approval of the Shareholders in general meeting and/or such other requirements prescribed under the Listing Rules from time to time, the Scheme Limit may be refreshed such that the total number of Shares which may be issued upon exercise of all options to be granted under the New Share Option Scheme and any other scheme(s) shall not exceed ten (10) per cent. of the Shares in issue (“New Scheme Limit”) as at the date of such Shareholders’ approval (“New Approval Date”). Options previously granted under the New Share Option Scheme and any other scheme(s) (including those outstanding, cancelled, lapsed or exercised options) will not be counted for the purpose of calculating the New Scheme Limit. Thereafter, as at the Offer Date of any proposed grant of Options, the maximum number of Shares in respect of which Options may be granted is the New Scheme Limit less the aggregate of the following Shares:
(a) the number of Shares which would be issued on the exercise in full of the Options or options under the other scheme(s) granted on or after the New Approval Date but not cancelled, lapsed or exercised;
(b) the number of Shares which have been issued and allotted pursuant to the exercise of any Options or options under the other scheme(s) granted on or after the New Approval Date; and
(c) the number of Cancelled Shares which are the subject of Options or options under the other scheme(s) granted on or after the New Approval Date.
(iii) Subject to sub-paragraph (iv) below, the issue of a circular by the Company to its Shareholders and the approval of the Shareholders in general meeting in compliance with Rules 17.03(3) and 17.06 of the Listing Rules and/or such other requirements prescribed under the Listing Rules from time to time, the Board may grant Options exceeding the Scheme Limit to Participants specifically identified by the Board before the Shareholders’ approval for the increase in the Scheme Limit is sought.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

(iv) The Scheme Limit and any increase in the Scheme Limit pursuant to subparagraphs (ii) and/or (iii) above shall in no event result in the number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Share Option Scheme and the other scheme(s) of the Company exceed thirty (30) per cent. of the Shares in issue from time to time. No options may be granted under the New Share Option Scheme and any other schemes of the Company if such limit is exceeded.
(v) The Scheme Limit referred to in sub-paragraph (i) above (or as increased in accordance with sub-paragraphs (ii) and/or (iii) above, as the case may be) shall be adjusted, in such manner as the auditors of the Company or the approved independent financial adviser shall certify to be appropriate, fair and reasonable in the event of any alteration in the capital structure of the Company in accordance with paragraph (m) below whether by way of capitalisation issue, rights issue, sub-division or consolidation of shares or reduction of capital of the Company but in any event shall not exceed the limit prescribed in sub-paragraph (iv) above.

(e) Maximum number per Grantee

(i) Unless the approval of Shareholders contemplated under paragraph (e)(ii) below is obtained, the maximum number of Shares in respect of which Options may be granted under the New Share Option Scheme to any Participant shall not, when aggregated with:
(a) any Shares issued upon exercise of Options or options under the other schemes which have been granted to that Participant;
(b) any Shares which would be issued upon the exercise of outstanding Options or options under the other scheme(s) granted to that Participant; and
(c) any Cancelled Shares which were the subject of Options or options under the other scheme(s) which had been granted to and accepted by that Participant,

in any 12-month period up to the Offer Date, exceed one (1) per cent. of the number of Shares in issue on the Offer Date.

(ii) If the Board determines to offer Options to a Participant which exceed the limit set out in sub-paragraph (i) above, that grant shall be subject to (1) the issue of a circular by the Company to its Shareholders which shall comply with Rules 17.03(4) and 17.06 of the Listing Rules and/or such other requirements as prescribed under the Listing Rules from time to time; and (2) the approval of the Shareholders in general meeting at which that Participant and his or her associates shall abstain from voting.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

(f) Maximum number per Grantee who is a connected person

(i) Subject to sub-paragraph (ii) below, if the Board determines to offer to grant Options to a director, chief executive or substantial Shareholder or any of his or her associates, such grant shall be subject to the approval by the independent non-executive directors of the Company (excluding the independent non-executive director of the Company who is the relevant Participant).
(ii) If the Board determines to offer to grant Options to a substantial Shareholder or an independent non-executive director of the Company (or any of his or her associates) and that grant 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 Share Option Scheme and the other schemes in the 12-month period up to and including the Offer Date:
(a) representing in aggregate over 0.1 per cent. of the Shares in issue on the Offer Date; and
(b) having an aggregate value, based on the official closing price of the Shares as stated in the daily quotation sheets of the Stock Exchange on the Offer Date, in excess of HK$5 million,
such grant shall be subject to the issue of a circular by the Company to its Shareholders and the approval of the Shareholders in general meeting on a poll at which all connected persons of the Company shall abstain from voting except that a connected person of the Company may vote against the relevant resolution at the general meeting provided that his or her intention to do so has been stated in that circular which shall comply with Rules 17.04 and 17.06 of the Listing Rules and/or such other requirements as prescribed under the Listing Rules from time to time.

(g) Exercise period and performance target

Subject to paragraphs (i), (j), (k) and (l) and unless otherwise determined by the Board and notified to the Grantee on or prior to the Offer Date, an Option may be exercised in accordance with the terms of the New Share Option Scheme at any time during the Option Period, subject to any restrictions or conditions on the exercise of the Options as the Board may determine.

The Option Period shall be notified by the Board to each Grantee upon grant of Option in respect of each Option, provided that it shall commence on a date not earlier than the Commencement Date and not be more than ten (10) years from the Commencement Date.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

There is no provision in the New Share Option Scheme to require a Grantee to fulfill any performance target or to hold the Option for a certain period before exercising the Option, but the Board may at its absolute discretion from time to time provide such requirements in the offer of grant of Options.

(h) Non-transferability

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 (legal or beneficial) in favour of any third party over or in relation to any Option or attempt to do so (save that the Grantee may nominate a nominee in whose name the Shares issued pursuant to the New Share Option Scheme may be registered). Any breach of the foregoing shall entitle the Company to cancel any outstanding Options or any part thereof granted to such Grantee.

(i) Rights on ceasing to be a Participant or on death

(i) Where the Grantee ceases to be a Participant for any reason other than his or her ill-health, injury or disability (all evidenced to the satisfaction of the Board) or death or termination of his or her employment or engagement or cessation of his or her directorship on one or more of the grounds set out in paragraph (p)(iv) below, the Grantee may exercise the Option up to his or her entitlement at the date of cessation of his or her employment (to the extent not already exercised) on or before the earlier of (i) a period of six (6) months following the date of such cessation, which date shall be the last actual working day with or for the Group or the relevant Invested Entity whether salary or compensation is paid in lieu of notice or not (or such longer period as the Board may determine) or (ii) the relevant Expiry Date and the Board’s decision in this regard shall be conclusive.
(ii) Where the Grantee ceases to be a Participant by reason of ill-health, injury or disability (all evidenced to the satisfaction of the Board) or death and none of the events which would be a ground for termination of his or her employment or engagement or cessation of his or her directorship under paragraph (p)(iv) below has occurred, the Grantee or the legal personal representative(s) of the Grantee, as the case may be, shall be entitled to exercise the Option in full (to the extent not already exercised) on or before the earlier of (i) the last day in the 12-month period commencing from the date of ceasing to be a Participant or death (or such longer period as the Board may determine) or (ii) the relevant Expiry Date.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

(j) Winding-up

In the event a notice is given by the Company to its Shareholders to convene a Shareholders’ meeting for the purpose of considering and, if thought fit, approving a resolution for the voluntary winding-up of the Company, the Company shall forthwith give notice thereof to the Grantee and the Grantee (or his or her legal personal representative(s)) may by notice in writing to the Company accompanied by a remittance for the full amount of the aggregate exercise price for the Shares in respect of which the notice is given (such notice to be received by the Company not later than five (5) business days prior to the proposed Shareholders’ meeting) exercise the Option (to the extent not already exercised) either to its full extent or to the extent specified in such notice and the Company shall as soon as possible and in any event no later than the two (2) business days immediately prior to the date of the proposed Shareholders’ meeting, allot and issue such number of Shares to the Grantee which falls to be issued on such exercise.

(k) General offer

If a general offer (whether by way of take-over offer, share repurchase offer or scheme of arrangement or otherwise in like manner) is made to all the holders of Shares (or all such holders other than the offeror and/or any person controlled by the offeror and/or any person acting in association or in concert with the offeror), the Company shall use its reasonable endeavors to procure that such offer is extended to all Grantees (on the same terms, mutatis mutandis, and assuming that they shall become, by the exercise in full of the Options granted to them, Shareholders). If such offer having been approved in accordance with applicable laws and regulatory requirements becomes or is declared unconditional, the Grantee (or his or her legal personal representative(s)) shall be entitled to exercise the Option in full (to the extent not already exercised) at any time within fourteen (14) days after the date on which such general offer becomes, or is declared unconditional, provided that, if, during such period, such person becomes entitled to exercise rights of compulsory acquisition of Shares pursuant to the Companies Ordinance and gives notices in writing to any holders of Shares that he intends to exercise such rights, Options shall be and remain exercisable until one (1) month from the date of such notice and, to the extent that they have not been exercised, shall thereupon lapse and determine.

(l) Compromise or arrangement with members or creditors

If, pursuant to the Companies Ordinance, a compromise or arrangement between the Company and its members and/or creditors is proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies, the Company shall give notice thereof to all the Grantees (together with a notice of the existence of the provisions of this paragraph) on the same day as it despatches to members and/or creditors of the Company a notice summoning the meeting to consider such a compromise or arrangement, and thereupon each Grantee shall be entitled to

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

exercise all or any of his or her Options in whole or in part at any time prior to 12 noon (Hong Kong time) on the business day immediately preceding the date of the meeting directed to be convened by the relevant court for the purposes of considering such compromise or arrangement and if there are more than one meeting for such purpose, the date of the first meeting. With effect from the date of such meeting, the rights of all Grantees to exercise their respective Options shall forthwith be suspended. Upon such compromise or arrangement becoming effective, all Options shall, to the extent that they have not been exercised, lapse and determine. The Board shall endeavour to procure that the Shares issued as a result of the exercise of Options under this paragraph shall for the purposes of such compromise or arrangement form part of the issued share capital of the Company on the effective date thereof and that such Shares shall in all respects be subject to such compromise or arrangement. If for any reason such compromise or arrangement is not approved by the relevant court (whether upon the terms presented to the relevant court or upon any other terms as may be approved by such court) the rights of the Grantees to exercise their respective Options shall with effect from the date of the making of the order by the relevant court be restored in full as if such compromise or arrangement had not been proposed by the Company and no claim shall lie against the Company or any of its officers for any loss or damage sustained by any Grantee as a result of the aforesaid suspension.

(m) Adjustment

(i) In the event of any capitalisation issue, rights issue, sub-division or consolidation of shares or reduction of capital of the Company, such corresponding alterations (if any) shall be made (except on an issue of securities of the Company as consideration in a transaction which shall not be regarded as a circumstance requiring alteration or adjustment) in:
(a) the number of Shares subject to any outstanding Options;
(b) the exercise price; and/or
(c) the number of Shares in respect of which any further Options may be granted within the limits set out in the New Share Option Scheme (including without limitation, the Scheme Limit or if applicable, the New Scheme Limit referred to in paragraph (d) above),

as the auditors of the Company or an approved independent financial adviser shall at the request of the Company or any Grantee, certify in writing either generally or as regards any particular Grantee, to be in their opinion fair and reasonable, provided that any such alterations shall be made on the basis that a Grantee shall have the same proportion of the equity capital of the Company as that to which he or she was entitled to subscribe had he or she exercised all the Options held by him or her immediately before such adjustments and the aggregate

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

exercise price payable by a Grantee on the full exercise of any Option shall remain as nearly as possible the same as (but shall not be greater than) it was before such event and that no such alterations shall be made if the effect of such alterations would be to enable a Share to be issued at less than its nominal value. The capacity of the auditors of the Company or the approved independent financial adviser, as the case may be, in this sub-paragraph is that of experts and not arbitrators and their certificate shall, in the absence of manifest error, be final, conclusive and binding on the Company and the Grantees. The cost of the auditors of the Company or the independent financial adviser shall be borne by the Company.

(ii) In respect of any adjustments required by sub-paragraph (i) above, other than any made on a capitalisation issue, the auditors of the Company or the approved independent financial adviser, as the case may be, shall confirm to the Board in writing that the adjustments satisfy the requirements set out in Rule 17.03(13) of the Listing Rules and the note thereto and/or such other requirement prescribed under the Listing Rules from time to time.

(n) Alteration of rules

(i) The terms and conditions of the New Share Option Scheme and the regulations for the administration and operation of the New Share Option Scheme (provided that the same are not inconsistent with the Listing Rules) may be altered in any respect by resolution of the Board except that:
(1) any alteration to the advantage of the Grantees or the Participants (as the case may be) in respect of the matters contained in Rule 17.03 of the Listing Rules, including without limitation, the definitions of “Participant”, “Expiry Date”, “Grantee” and “Option Period” in paragraph 1.1 of the New Share Option Scheme and the provisions in paragraphs (a) to (m) above, (o), (p), (r), (s) and (t) below and this paragraph (n); or
(2) any material alteration to the terms and conditions of the New Share Option Scheme or any change to the terms of Options granted (except any alterations which take effect automatically under the terms of the New Share Option Scheme),

must be made with the prior approval of the Shareholders in general meeting at which any persons to whom or for whose benefit the Shares may be issued under the New Share Option Scheme and their respective associates shall abstain from voting provided that the amended terms of the New Share Option Scheme or the Options shall remain in compliance with Chapter 17 of the Listing Rules and no alteration shall operate to affect adversely the terms of issue of any Option granted

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

or agreed to be granted prior to such alteration or to reduce the proportion of the equity capital to which any person was entitled pursuant to such Option prior to such alteration except with:

(aa) the consent in writing of Grantees holding in aggregate Options which if exercised in full on the date immediately preceding that on which such consent is obtained would entitle them to the issue of three-fourths in nominal value of all Shares which would fall to be issued upon the exercise of all Options outstanding on that date; or
(bb) the sanction of a special resolution in a meeting of the Grantees.

Written notice of any alterations made in accordance with this sub-paragraph shall be given to all Grantees.

(ii) Any alteration to the terms and conditions of the New Share Option Scheme which is of a material nature or any change to the terms of Options granted shall be approved by the Shareholders, save where such alteration takes effect automatically under the existing terms of the New Share Option Scheme.
(iii) Any change to the authority of the Board in relation to any alteration to the terms of the New Share Option Scheme must be approved by the Shareholders in general meeting.
(iv) The amended terms of the New Share Option Scheme or the Options must still comply with the relevant requirements of Chapter 17 of the Listing Rules.

(o) Ranking of the Shares

The Shares to be allotted and issued upon the exercise of an Option shall not carry voting rights until completion of the registration of the Grantee (or such other person nominated by the Grantee) as the holder thereof. Subject as aforesaid, the Shares to be allotted upon the exercise of an Option shall be subject to all the provisions of the constitutional documents of the Company for the time being in force and shall rank pari passu in all respects with and shall have the same voting, dividend, transfer and other rights, including those arising on liquidation of the Company as attached to the fully-paid Shares in issue on the date of issue, in particular but without prejudice to the generality of the foregoing, in respect of voting, transfer and other rights including those arising on a liquidation of the Company and rights in respect of any dividend or other distributions paid or made on or after the date of issue.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

(p) Lapse of Option

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

(i) the expiry of the Option Period;
(ii) the expiry of the periods referred to in paragraphs (i) or (k);
(iii) the date on which the scheme for the reconstruction of the Company or its amalgamation with any other company or companies, becomes effective as referred to in paragraph (l);
(iv) the date on which the Grantee ceases to be a Participant by reason of the termination of his or her employment or engagement or cessation of his or her directorship on any one or more of the grounds that he or she has been guilty of misconduct, or has been convicted of any criminal offence involving his or her integrity or honesty or (if so determined by the Board) on any other ground on which an employer would be entitled to terminate his or her employment or engagement at common law or pursuant to any applicable laws or under the Grantee’s service or engagement contract with the relevant member of the Group or the relevant Invested Entity. A resolution of the Board or the board of directors of the relevant subsidiary of the Company or the relevant Invested Entity to the effect that the employment or engagement of a Grantee has or has not been terminated on one or more of the grounds specified in this sub-paragraph shall be conclusive;
(v) the date of commencement of the winding-up of the Company (as determined in accordance with the applicable law) as referred to in paragraph (j);
(vi) the date on which the Grantee ceases to be a Participant on or after committing any act of bankruptcy or becoming insolvent or making any arrangements or composition with his/her creditors generally;
(vii) where the Grantee commits a breach of paragraph (h), the date which the Board shall designate in the exercise of the Company’s right to cancel the Option thereunder; and
(viii) in the case of a Grantee who is vendor, supplier of goods and services or customer of or to any member of the Group or the relevant Invested Entity, in accordance with the terms of the relevant engagement or agreements between such persons and the relevant member of the Group or the relevant Invested Entity (as the case may be).

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

(q) Conditions

The New Share Option Scheme is conditional on (i) the passing of the necessary resolution by the Shareholders in general meeting to approve and adopt the New Share Option Scheme; and (ii) the Listing Committee of the Stock Exchange granting the approval of the listing of, and permission to deal in, any Shares falling to be issued pursuant to the exercise of Options granted under the New Share Option Scheme.

(r) Term of the New Share Option Scheme

The New Share Option Scheme will remain in force for a period of ten (10) years commencing on the Adoption Date, after which no further Options shall be granted but the Options which are granted during the life of the New Share Option Scheme may continue to be exercisable in accordance with their terms of issue and the provisions of the New Share Option Scheme shall in all other respects remain in full force and effect in respect thereof.

(s) Cancellation of Options

Any cancellation of Options granted but not exercised must be approved by the Grantees of the relevant Options. Where the Board cancels Options and issues new ones to the same Participant, the issue of such new Options may only be made under the New Share Option Scheme with available unissued Options (excluding the cancelled Options) within the limit approved by the Shareholders as mentioned in paragraph (d).

(t) Early Termination

The Company by resolutions in general meeting or the Board may at any time resolve to terminate the operation of the New Share Option Scheme and in such event no further Options shall be offered but the provisions of the New Share Option Scheme shall remain in full to the extent necessary to give effect to the exercise of any Option granted prior to the termination or otherwise as may be required in accordance with their terms and the Options granted prior to such termination shall continue to be valid and exercisable in accordance with the New Share Option Scheme.

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EXPLANATORY STATEMENT

APPENDIX II

The following information is provided to enable the Shareholders to make an informed decision on whether to vote for or against the resolution to approve the grant of the Repurchase Mandate to the Directors to exercise the power of the Company to purchase its own securities:

1. SHARE CAPITAL

On the basis of 482,399,556 Shares in issue as at the Latest Practicable Date, and on the basis that (i) Ordinary Resolution number 3 set out in the EGM Notice approving the Repurchase Mandate are passed at the EGM; and (ii) no further Shares are issued or repurchased between the Latest Practicable Date and the date of the EGM, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 48,239,955 Shares.

2. REASONS FOR REPURCHASE

The Directors believe that the Repurchase Mandate affords the Company the flexibility and ability in pursuing the best interests of the Company and its Shareholders. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset and/or earnings per Share and will only be made when the Directors believe that such repurchases will benefit the Company and its Shareholders.

3. FUNDING OF REPURCHASES

Repurchase would be funded entirely from the Company’s available cash flow or working capital facilities which will be funds legally available for the purpose and in accordance with the Memorandum of Association and the Articles of Association and the laws of Hong Kong.

The Directors propose that such repurchase of Shares would be appropriately funded by the Company’s internal resources and/or available banking facilities. As compared with the position disclosed in the audited accounts contained in the annual report for the year ended 31st July, 2002, the Directors consider that there might be material adverse impact on the working capital requirements or gearing position of the Company in the event that the Repurchase Mandate were exercised in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

4. 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 Listing Rules and the Companies Ordinance.

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EXPLANATORY STATEMENT

APPENDIX II

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

As at the Latest Practicable Date, no connected person (as defined in the Listing Rules) had notified the Company that it has a present intention to sell any of the Shares to the Company, or has undertaken not to do so, in the event that the Repurchase Mandate is approved by the Shareholders.

5. SHARE PRICES

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

	Highest	Lowest
	Traded Price	Traded Price
	HK$	HK$
2001
November	0.250	0.130
December	0.185	0.131
2002
January	0.169	0.122
February	0.129	0.114
March	0.125	0.114
April	0.150	0.110
May	0.280	0.124
June	0.250	0.165
July	0.183	0.060
August	0.100	0.078
September	0.084	0.072
October	0.084	0.067

6. TAKEOVERS CODE

If, on the exercise of the power to repurchase Shares pursuant to the Repurchase Mandate, 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 interest, 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.

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EXPLANATORY STATEMENT

APPENDIX II

As at the Latest Practicable Date, by virtue of the Securities (Disclosure of Interests) Ordinance (Chapter 396 of the Laws of Hong Kong), Tellus Investments Limited, which is a substantial Shareholder, was beneficially interested in 143,000,000 Shares, representing approximately 29.6% of the issued share capital of the Company. In the event that the Directors exercise in full the power to repurchase Shares in accordance with the terms of the Ordinary Resolution numbered 3 to be proposed at the EGM, then (if the present shareholdings otherwise remain the same) the shareholding of Tellus Investments Limited in the Company would be increased to approximately 32.9% of the issued share capital of the Company. Such increase may give rise to an obligation to make a mandatory offer under Rules 26 and 32 of the Takeovers Code. At present, the Directors do not intend to exercise the Repurchase Mandate to such extent as will give rise to such obligation.

7. SHARE REPURCHASES MADE BY THE COMPANY

The Company had not repurchased any Shares (whether on the Stock Exchange or otherwise) in the six months preceding the Latest Practicable Date.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [161 x 76] intentionally omitted <==

(Incorporated in Hong Kong with limited liability)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Yoshiya International Corporation, Limited慶屋國際有限公司(the “Company”) will be held at Gemini, Level 33, Best Western Rosedale on the Park, 8 Shelter Street, Causeway Bay, Hong Kong on 30th December, 2002 at 9:45 a.m. (or so soon thereafter as the annual general meeting of the Company convened at the same place and date at 9:30 a.m. shall have been concluded or adjourned) for the purpose of considering and, if thought fit, passing, with or without modification, the following resolutions as special and ordinary resolutions (as the case may be) of the Company:

SPECIAL RESOLUTION

“ THAT the Articles of Association of the Company be and are hereby amended in the following manner:
(a) By adding the following definition immediately after the definition of “the Companies Ordinance” in Article 2:

“the Listing Rules” shall mean the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and any amendments thereto for the time being in force;

(b) By adding the following definitions immediately after the definition of “dollars” in Article 2:

“electronic communication” shall mean a communication sent by electronic transmission in any form through any medium;

“Entitled Person” shall mean an “entitled person” as defined under section 2(1) of the Companies Ordinance;

“relevant financial documents” shall mean the “relevant financial documents” as defined under section 2(1) of the Companies Ordinance;

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NOTICE OF EXTRAORDINARY GENERAL MEETING

“summary financial report” shall mean the “summary financial report” as defined under section 2(1) of the Companies Ordinance;

(d) By deleting Article 167 in its entirety and substituting therefor the following Article:
(A) The Board shall from time to time in accordance with the provisions of the Companies Ordinance cause to be prepared and laid before the Company at its annual general meeting the relevant financial documents.
- (B) Subject to paragraph (C) below, the Company shall send to every Entitled Person a copy of the relevant financial documents or (subject to compliance with the relevant provisions of the Companies Ordinance and the Listing Rules) the summary financial report not less than twenty-one days before the date of general meeting before which the relevant financial documents shall be laid.
- (C) Where any Entitled Person (“Consenting Person”) has, in accordance with the Companies Ordinance, the Listing Rules and any applicable laws, rules and regulations, consented or is deemed to have consented to treat the publication of the relevant financial documents and/or the summary financial report (as the case may be) on the Company’s computer network to which such person may have access as discharging the Company’s obligation under the Companies Ordinance to send a copy of the relevant financial documents and/or the summary financial report (as the case may be) to such person, then the publication by the Company on its computer network of the relevant financial documents and/or the summary financial report (as the case may be) not less than twenty-one days before the date of the relevant general meeting shall, in relation to such Consenting Person, be deemed to discharge the Company’s obligations under paragraph (B).
(e) By inserting the following new Article 167A after Article 167:
167A. Any notice or document to be given or issued under these Articles shall be in writing, except that any such notice or document to be given or issued by or on behalf of the Company under these Articles (including any “corporate communication” within the meaning ascribed thereto in the Listing Rules) shall be in writing which may or may not be in a transitory form and may be recorded or stored in

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NOTICE OF EXTRAORDINARY GENERAL MEETING

any digital, electronic, electrical, magnetic or other retrievable form or medium and information in visible form (including an electronic communication and publication on a computer network) whether having physical substance or not and may be served or delivered by the Company by any of the following means subject to and to such extent permitted by and in accordance with the Companies Ordinance, the Listing Rules and any applicable laws, rules and regulations:

(i) personally;
(ii) by sending it through the post in a properly prepaid letter, envelope or wrapper addressed to a member at his registered address as appearing in the register (in case of other Entitled Person, to such address as he may provide);
(iii) by delivering or leaving it at such address as aforesaid;
(iv) by advertisement in an English language newspaper and a Chinese language newspaper in Hong Kong;
(v) by transmitting it as an electronic communication to the Entitled Person at his electronic address as he may provide; or
(vi) by publishing it on the Company’s computer network, giving access to such network to the Entitled Person and giving to such person a notice of publication of such notice or document.

In the case of joint holders of a share, all notices shall be given to that one of the joint holders whose name stands first in the register and notice so given shall be sufficient notice to all the joint holders.

(f) By deleting Article 169 in its entirety and substituting therefor the following Article:
Any notice or document (including any “corporate communication” within the meaning ascribed thereto in the Listing Rules) given or issued by or on behalf of the Company:
- (i) if sent by post, shall be deemed to have been served on the day following that on which the envelope or wrapper containing the same is put into a post office situated within Hong Kong and in proving such service it shall be sufficient to prove that the envelope or wrapper containing the notice or document was properly prepaid (and in the case of an address outside

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NOTICE OF EXTRAORDINARY GENERAL MEETING

Hong Kong where airmail service can be extended thereto airmail postage prepaid), addressed and put into such post office and a certificate in writing signed by the Secretary or other person appointed by the Board that the envelope or wrapper containing the notice or document was so properly prepaid, addressed and put into such post office shall be conclusive evidence thereof;

  - (ii) if sent as an electronic communication, shall be deemed to have been served at the time when the notice or document is transmitted electronically provided that no notification that the electronic communication has not reached its recipient has been received by the sender, except that any failure in transmission beyond the sender’s control shall not invalidate the effectiveness of the notice or document being served; and

  - (iii) if published on the Company’s computer network, shall be deemed to have been served on the day on which the notice or document is published on the Company’s computer network to which the Entitled Person may have access and the notice of such publication is given to such person.

(g) By deleting Article 170 in its entirety and substituting therefor the following Article:
A notice or document may be given by or on behalf of the Company to the person entitled to a share in consequence of the death, mental disorder or bankruptcy of a member in such manner as provided in Article 167A in which the same might have been given if the death, mental disorder or bankruptcy had not occurred.
(h) By deleting the words “by post to, or left at the registered address of any member” in the first and second lines of Article 172 and substituting therefor the words “to any member in such manner as provided in Article 167A”.
(i) By deleting Article 173 in its entirety and substituting therefor the following Article:
(A) The signature to any notice or document by the Company may be written, printed or made electronically.
- (B) Subject to any applicable laws, rules and regulations, any notice or document, including but not limited to the documents referred to in Article 167 and any “corporate communication” within

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NOTICE OF EXTRAORDINARY GENERAL MEETING

the meaning ascribed thereto in the Listing Rules, may be given in the English language only, in the Chinese language only or in both the English language and the Chinese language.”

ORDINARY RESOLUTIONS

“ THAT subject to and conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) granting the listing of, and permission to deal in, the ordinary shares of HK$0.01 each in the capital of the Company (“Shares”) or any part thereof to be issued pursuant to the exercise of any option that may be granted under the share option scheme of the Company (the “New Share Option Scheme”, the rules of which are contained in the document marked “A” produced to the meeting and for the purposes of identification signed by the Chairman of the meeting), the New Share Option Scheme be and is hereby approved and adopted with effect from the date of the passing of this resolution in substitution of the existing share option scheme of the Company adopted on 7th March, 1997 which shall be terminated and the directors of the Company (“Directors”) be and are hereby authorised to do all such acts and to enter into all such transactions, arrangements and agreements as may be necessary or expedient in order to give full effect to the New Share Option Scheme including without limitation:
(a) administering the New Share Option Scheme and granting options under the New Share Option Scheme;
(b) modifying and/or amending the New Share Option Scheme from time to time provided that such modification and/or amendment is effected in accordance with the provisions of the New Share Option Scheme relating to modification and/or amendment and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange;
(c) issuing and allotting from time to time such number of Shares in the capital of the Company as may be required to be issued pursuant to the exercise of the options granted under the New Share Option Scheme provided that the total number of Shares which may be issued upon exercise of all options to be granted under the New Share Option Scheme and any other outstanding share option schemes of the Company (excluding those options that have already been granted by the Company prior to the date of passing of this resolution) shall not exceed ten (10) per cent. of the Shares in issue as at the date of passing this resolution; and
(d) making application at the appropriate time or times to the Stock Exchange for the listing of, and permission to deal in, any Shares or any part thereof that may hereafter from time to time be allotted and issued pursuant to the exercise of the options granted under the New Share Option Scheme.”

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NOTICE OF EXTRAORDINARY GENERAL MEETING

“ THAT :
(a) subject to paragraph (c) of this Resolution, the exercise by the Directors 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 or options, warrants or similar rights to subscribe for any shares and to make or grant offers, agreements and options (including warrants, bonds, debentures, notes or other securities which carry rights to subscribe for or are convertible into shares of the Company) which would or might require the exercise of such powers be and is hereby generally and unconditionally approved;
(b) the approval in paragraph (a) of this Resolution shall authorise the Directors during the Relevant Period to make or grant offers, agreements and options (including warrants, bonds, debentures, notes or other securities which carry rights to subscribe for or are convertible into shares of 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 or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the Directors pursuant to the approval in paragraph (a) of this Resolution, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined); or (ii) the exercise of rights of subscription or conversion under the terms of any existing warrants, bonds, debentures, notes or other securities which carry rights to subscribe for or are convertible into shares of the Company; or (iii) the exercise of any option granted under any share option scheme or any similar arrangement for the time being adopted by the Company for the grant or issue to the eligible persons prescribed thereunder to subscribe for, or rights to acquire, shares in the Company; or (iv) an issue of shares of the Company by way of scrip dividend pursuant to the Articles of Association of the Company from time to time, shall not in aggregate exceed 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this Resolution, and the said approval shall be limited accordingly; and
(d) for the purposes of this Resolution:
- “Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:
- (i) the conclusion of the next annual general meeting of the Company;

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NOTICE OF EXTRAORDINARY GENERAL MEETING

(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 laws to be held; or
(iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting; and

“Rights Issue” means an offer of shares of the Company or issue of options, warrants or other securities giving the right to subscribe for shares of the Company open for a period fixed by the Directors made to the holders of shares whose names appear on the register of members of the Company (and, where appropriate, to holders of other securities of the Company entitled to the offer) on a fixed record date in proportion to their then holdings of such shares of the Company or, where appropriate, such other securities (subject in all cases to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong).”

“ THAT :
(a) subject to paragraph (b) of this Resolution, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase shares of the Company on the Stock Exchange or on any other stock exchange on which the shares of the Company may be listed and recognised by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws, the requirements of the Rules Governing the Listing of Securities on the Stock Exchange or of any other stock exchange as amended from time to time and the Articles of Association of the Company, be and is hereby generally and unconditionally approved;
(b) the aggregate nominal amount of shares of the Company which the Company is authorised to repurchase pursuant to the approval in paragraph (a) of this Resolution shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing this Resolution, and the said approval shall be limited accordingly;
(c) for the purpose of this Resolution, “Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:
- (i) the conclusion of the next annual general meeting of the Company;

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NOTICE OF EXTRAORDINARY GENERAL MEETING

(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 laws to be held; or
(iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting.”
“ THAT subject to the passing of Ordinary Resolution Nos. 2 and 3 set out in the notice convening this meeting, the general mandate granted to the Directors to exercise all the powers of the Company to allot, issue and deal with additional securities pursuant to Ordinary Resolution No. 2 set out in the notice convening this meeting be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the authority granted pursuant to Ordinary Resolution No. 3 set out in the notice convening this meeting, provided that such extended amount shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing this Resolution.”

By Order of the Board Lin Fung Yi Company Secretary

Hong Kong, 28th November, 2002

Registered office: Room 2207, 22nd Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong.

Notes:

A member of the Company entitled to attend and vote at the meeting by the above notice is entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a member of the Company.
To be valid, a form of proxy, together with any power of attorney or other authority (if any) under which it is signed or a certified copy of such power or authority must be deposited at the registered office of the Company at Room 2207, 22nd Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong not less than 48 hours before the time fixed for holding the meeting or any adjournment thereof.
Completion and return of the proxy form shall not preclude a member of the Company from attending and voting in person at the meeting or on the poll concerned and, in such event, the instrument appointing a proxy shall be deemed to be revoked.
Where there are joint holders of any share, any one of such 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, then the one of such holders whose name stands first on the register of members in respect of such share shall alone be entitled to vote in respect thereof.

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AI assistant

Culturecom Holdings Limited — Proxy Solicitation & Information Statement 2002

49144_rns_2002-11-28_6f463ac0-b4fa-4ca9-870d-8cba7d13efff.pdf

AND

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

Registered office:

PROPOSED ADOPTION OF THE NEW SHARE OPTION SCHEME, TERMINATION OF THE EXISTING SHARE OPTION SCHEME, AMENDMENTS TO THE COMPANY’S ARTICLES OF ASSOCIATION AND GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

INTRODUCTION

ADOPTION OF THE NEW SHARE OPTION SCHEME

LETTER FROM THE CHAIRMAN

STATUS OF THE 1997 SHARE OPTION SCHEME

TERMINATION OF THE 1997 SHARE OPTION SCHEME

AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

GENERAL MANDATES

EXTRAORDINARY GENERAL MEETING

RESPONSIBILITY OF THE DIRECTORS

RECOMMENDATION

ADDITIONAL INFORMATION

(a) Who may join

(b) Purposes of the New Share Option Scheme

(c) Exercise price and acceptance period

(d) Number of Shares subject to the New Share Option Scheme

(e) Maximum number per Grantee

(f) Maximum number per Grantee who is a connected person

(g) Exercise period and performance target

(h) Non-transferability

(i) Rights on ceasing to be a Participant or on death

(j) Winding-up

(k) General offer

(l) Compromise or arrangement with members or creditors

APPENDIX I

(m) Adjustment

(n) Alteration of rules

(o) Ranking of the Shares

(p) Lapse of Option

(q) Conditions

(r) Term of the New Share Option Scheme

(s) Cancellation of Options

(t) Early Termination

1. SHARE CAPITAL

2. REASONS FOR REPURCHASE

3. FUNDING OF REPURCHASES

4. UNDERTAKING

5. SHARE PRICES

6. TAKEOVERS CODE

APPENDIX II

7. SHARE REPURCHASES MADE BY THE COMPANY

SPECIAL RESOLUTION

ORDINARY RESOLUTIONS

Notes:

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Culturecom Holdings Limited Proxy Solicitation & Information Statement 2002