Futong Technology Development Holdings Limited — Capital/Financing Update 2011

Dec 9, 2011

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

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of Futong Technology Development Holdings Limited.

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Futong Technology Development Holdings Limited 富通科技發展控股有限公司

(Incorporated in the Cayman Islands with limited liability) web site: www.futong.com.hk (Stock Code: 465)

ANNOUNCEMENT

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO DEEMED DISPOSAL OF INTEREST IN THE JOINT VENTURE COMPANY DISCLOSEABLE TRANSACTION IN RELATION TO ENTERING INTO OF THE DEED OF CROSS INDEMNITY

THE DEEMED DISPOSAL

Reference is made to the announcement of the Company dated 21 September 2011 in relation to the proposed joint venture. The Board is pleased to announce that on 9 December 2011, the Joint Venture Company, the PRC Subsidiary and Etong, as the covenantors, entered into (a) the GW Subscription Agreement with GW, pursuant to which GW has agreed to subscribe the GW Shares; and (b) the Existing Shareholder Subscription Agreement, pursuant to which EMC has agreed to subscribe the EMC Shares.

Upon Closing, Etong’s shareholding in the Joint Venture Company will be diluted from 81% to 36% and the entire issued share capital of the Joint Venture Company shall be held as to 36% by Etong, as to 19% by EMC and as to 45% by GW.

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THE DEED OF CROSS INDEMNITY

Upon Closing of the Subscriptions, Etong as the guarantor will enter into the Deed of Cross Indemnity in favour of GW, pursuant to which Etong will indemnify GW against 45% of actual liabilities or apportioned liabilities suffered by the Joint Venture Company and the PRC Subsidiary arising out of any breaches of covenants, warranties and representations given by the covenantors to the subscribers under the Subscription Agreements which occur on or before the date of Closing.

LISTING RULES IMPLICATIONS

The Subscriptions constitute a deemed disposal of the Company. As the applicable percentage ratios (as defined in the Listing Rules) in respect of the deemed disposal exceed 5% but are less than 25%, the deemed disposal constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is subject to notification and publication requirements as set out in Chapter 14 of the Listing Rules. As the applicable percentage ratios (as defined in the Listing Rules) in respect of the entering into of the Deed of Cross Indemnity by Etong exceeds 5% but are less than 25%, the entering into of the Deed of Cross Indemnity by Etong constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is subject to notification and publication requirements as set out in Chapter 14 of the Listing Rules.

As at the date of this announcement, EMC is a substantial shareholder of the Joint Venture Company, a subsidiary of the Company, EMC is a connected person of the Company. The entering into of the Existing Shareholder Subscription Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As the issue of Shares to EMC is a pro rata entitlement in its capacity as shareholder of the Joint Venture Company, the Existing Shareholder Subscription Agreement is exempt from reporting, announcement and independent shareholders’ approval requirement under Chapter 14A of the Listing Rules. No directors have a material interest in the Subscriptions and the Deed of Cross Indemnity and are not required to abstain from voting on the board resolution approving the Subscriptions and the Deed of Cross Indemnity.

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INTRODUCTION

Reference is made to the announcement of the Company dated 21 September 2011 in relation to the proposed joint venture. The Board is pleased to announce that on 9 December 2011, the Joint Venture Company, the PRC Subsidiary and Etong, as the covenantors, entered into (a) the GW Subscription Agreement with GW, pursuant to which GW has agreed to subscribe the GW Shares; and (b) the Existing Shareholder Subscription Agreement, pursuant to which EMC has agreed to subscribe the EMC Shares. The material terms of the Subscription Agreements are set out below.

EXISTING SHAREHOLDER SUBSCRIPTION AGREEMENT

Date

9 December 2011

Parties:

• (a) the Joint Venture Company (a non wholly-owned subsidiary of Etong, which in turn is held as to 81% indirectly by the Company) as the covenantor;

• (b) the PRC Subsidiary (a wholly-owned subsidiary of the Joint Venture Company, which in turn is held as to 81% indirectly by the Company) as the covenantor;

• (c) Etong (a wholly-owned subsidiary of the Company) as the covenantor; and

• (d) EMC (a connected person of the Company and holds 19% of the Joint Venture Company) as the subscriber.

Subscription of Shares

As at the date of this announcement, the Joint Venture Company has an authorised share capital of HK$10,000 divided into 10,000 Shares of HK$1.00 each, of which 81 Shares and 19 Shares have been issued and are currently held by Etong and EMC, respectively. The PRC Subsidiary is the wholly-owned subsidiary of the Joint Venture Company.

At or prior to the Closing, the Joint Venture Company shall sub-divide its share capital from HK$10,000 divided into 10,000 shares of HK$1.0 each to HK$10,000 divided into 1,000,000 shares of HK$0.01 each. Immediately upon completion of the Sub-division of Shares and before Closing, EMC will hold 1,900 Ordinary Shares (of par value HK$0.01 per share) and Etong will hold 8,100 Ordinary Shares (of par value HK$0.01 per share).

Etong has agreed to subscribe for the Etong Shares at a subscription price of RMB5,000 (equivalent to approximately HK$6,135) per Share and amounting to RMB11,875,000 (equivalent to approximately HK$14,570,552) in aggregate.

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Consideration

The subscription prices payable by EMC shall be the foreign currency equivalent of RMB and will be settled in cash at Closing.

The consideration for the EMC Shares was arrived at after arm’s length negotiation among the parties to the Existing Shareholder Subscription Agreement with reference to the (a) the subscription price to be paid by the subscribers under the Subscription Agreements; (b) the net asset value of the Target Group; (c) the future business prospects and development potential of the Target Group; (d) the intellectual property rights, sales network and experience of EMC and GW to the Target Group; and (e) the dilution effect to the shareholding of Etong upon Closing. The consideration for the EMC Shares represent the increase in net asset value of the Target Group caused by the subscription prices to be settled for the GW Shares in order to maintain EMC’s percentage interest in the Joint Venture Company unchanged.

Conditions Precedent

Closing is conditional upon the following conditions being fulfilled or waived (where applicable):

• (a) all approvals, consents and waivers necessary for consummation of the transactions contemplated by the Existing Shareholder Subscription Agreement having been made or obtained by the parties;

• (b) the passing of resolution by the shareholders of the Joint Venture Company approving the Sub-division of Shares;

• (c) simultaneous completion of the subscription of GW Shares under the GW Subscription Agreement;

• (d) the Second Shareholders’ Agreement having been entered into by the parties;

• (e) the representations and warranties made by the parties being true and correct and complete when made and remaining so as at Closing;

• (f) all agreements, obligations and conditions in the Existing Shareholder Subscription Agreement being performed and complied with by the parties;

• (g) all corporate and other proceedings in connection with and incidental to the transactions contemplated by the Existing Shareholder Subscription Agreement being satisfactory to EMC;

• (h) a compliance certificate having been delivered to EMC by each of the Joint Venture Company, the PRC Subsidiary and Etong;

• (i) the Restated Articles having been duly adopted by the Joint Venture Company and delivered to the Companies Registry in Hong Kong for filing;

• (j) a copy of the Joint Venture Company’s register of members, certified by a director of the Joint Venture Company having been received by EMC;

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• (k) EMC having completed its business, legal and financial due diligence investigations of the Target Group to its satisfaction;

• (l) the Target Group having prepared a detailed business plan satisfactory to EMC;

• (m) a consolidated balance sheet, income statement and cash flow statement of the Target Group dated within ten Business Days prior to the Closing, prepared in accordance with Hong Kong Financial Reporting Standards having been provided to EMC;

• (n) the new business address of the PRC Subsidiary having been updated with the business and taxation authorities in the PRC; and

• (o) the Termination Agreement having been entered into by the parties.

Conditions (e) to (n) above may be waived by EMC and conditions (e) to (f) above may be waived by the Joint Venture Company, the PRC Subsidiary and Etong. If any of the conditions precedent stipulated in the Existing Shareholder Subscription Agreement have not been fulfilled or waived (where applicable) in part or in whole in accordance with the provisions of the Existing Shareholder Subscription Agreement or for any other reasons, Closing does not take place on or prior to the Tentative Closing Date, the Existing Shareholder Subscription Agreement may be terminated by the parties thereto on or after the Tentative Closing Date but without prejudice to any claims for damages or other remedies that the parties may have under the Existing Shareholder Subscription Agreement or the applicable law.

Covenants by the Covenantors

The Joint Venture Company, the PRC Subsidiary and Etong will give customary warranties and representations to EMC as the subscriber in respect of the corporate status and matters relating to the Target Group as at Closing.

Claims arising from the breach of any covenants given by the parties shall be raised by 31 December 2013 and maximum liability shall not exceed the subscription price paid by EMC for the EMC Shares.

Closing

Closing shall take place on the second Business Day after all the conditions set out in the Existing Shareholder Subscription Agreement are fulfilled (or waived where applicable) and shall be no later than the Tentative Closing Date or such other date as the parties may agree. Upon Closing, EMC shall execute the Release to Deed of Guarantee in favour of the Company.

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GW SUBSCRIPTION AGREEMENT

Date

9 December 2011

Parties:

• (a) the Joint Venture Company as the covenantor;

• (b) the PRC Subsidiary as the covenantor;

• (c) Etong as the covenantor; and

• (d) GW as the subscriber.

As at the date of this announcement, to the best of knowledge, information and belief of the Directors having made all reasonable enquiries, GW and its ultimate beneficial owners are Independent Third Parties.

Subscription of GW Shares

GW has agreed to subscribe for the GW Shares at a subscription price of RMB5,000 (equivalent to approximately HK$6,135) per Share and amounting to RMB50,625,000 (equivalent to approximately HK$62,116,564) in aggregate.

Consideration

The subscription prices payable by GW shall be the foreign currency equivalent of RMB and will be settled in cash at Closing.

The consideration for the GW Shares was arrived at on the same basis as set out in the section ‘‘Consideration’’ under the Existing Shareholder Subscription Agreement above.

Conditions Precedent

Closing is conditional upon the same conditions (a) to (n) as set out in the section ‘‘Conditions Precedent’’ under the Existing Shareholder Subscription Agreement above being fulfilled or waived (where applicable) and references to EMC shall be to GW.

Conditions (e) to (n) may be waived by GW and conditions (e) to (f) above may be waived by the Joint Venture Company, the PRC Subsidiary and Etong. If any of the conditions precedent stipulated in the GW Subscription Agreement have not been fulfilled or waived (where applicable) in part or in whole in accordance with the provisions of the GW Subscription Agreement or for any other reasons, Closing does not take place on or prior to the Tentative Closing Date or such other date as the parties may agree, the GW Subscription Agreement may be terminated by the parties thereto on or after the Tentative Closing Date (or such other date as the parties may agree) but without prejudice to any claims for damages or other remedies that the parties may have under the GW Subscription Agreement or the applicable law.

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Covenants by the Covenantors

The Joint Venture Company, the PRC Subsidiary and Etong will give the same customary warranties and representations to GW as the subscriber as set out in the section ‘‘Covenants by the Covenantors’’ under the Existing Shareholder Subscription Agreement above and the maximum liability shall not exceed the subscription price paid by GW for the GW Shares.

Closing

Closing shall take place on the second Business Day after all the conditions set out in the GW Subscription Agreement are fulfilled (or waived where applicable) and shall be no later than the Tentative Closing Date. Upon Closing, Etong shall execute the Deed of Cross Indemnity in favour of GW.

SECOND SHAREHOLDERS’ AGREEMENT

Parties:

• (a) the Joint Venture Company;

• (b) the PRC Subsidiary;

• (c) Etong;

• (d) EMC; and

• (e) GW.

As at the date of this announcement, to the best of knowledge, information and belief of the Directors having made all reasonable enquiries, GW and their respective ultimate beneficial owners are Independent Third Parties.

Principal Terms of the Second Shareholders’ Agreement

Termination of Prior Shareholders’ Agreement

The Joint Venture Company, the PRC Subsidiary, Etong, EMC and the Company have agreed to terminate the Prior Shareholders’ Agreement upon the execution of the Second Shareholders’ Agreement and the Termination Agreement will be entered into by the parties.

Change of name of the Joint Venture Company and the PRC Subsidiary

The Joint Venture Company shall change its name to ‘‘Greatwall Etong Technology Development Holdings (HK) Limited 長城易通科技發展控股(香港)有限公司’’ and cause the PRC Subsidiary to change its name to ‘‘Greatwall Etong Computer System Services (China) Co., Ltd. 長城易通計算機系統服務(中國)有限公司’’.

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Composition of the Board

The board of directors of the Joint Venture Company shall consist of seven (7) directors, four (4) of which shall be nominated by GW and three (3) of which shall be nominated by Etong. EMC shall have the option to nominate one (1) representative to serve as a director on the board of directors of the Joint Venture Company. If EMC exercises its option to nominate and appoint a representative to serve as a director of the Joint Venture Company, the number of directors on the board of directors of the Joint Venture Company shall remain at seven (7) and the director nominated and appointed by EMC shall replace one (1) director nominated by Etong.

Board Observer

So long as EMC remains to be a shareholder of the Joint Venture Company, EMC is entitled to appoint a representative to attend all board meetings of the Joint Venture Company and the PRC Subsidiary in a non-voting observer capacity. Such observer shall have access to all information and materials that are made available to the board members of the Joint Venture Company and the PRC Subsidiary. The observer shall be subject to a duty to hold such information and materials in confidence.

Restriction on transfer of the Shares

During a lock-up period of five (5) years commencing on the date of the Second Shareholders’ Agreement, neither of GW, EMC or Etong may dispose of or encumber the whole or any part of its shareholding in the Joint Venture Company.

Right of First Refusal and Tag-along

Prior to accepting any offer for the transfer of shares in the Joint Venture Company, the shareholders shall have first offered to sell the shares to the other existing shareholders and shall procure the prospective transferree to offer to purchase all the shares held by other existing shareholders.

Management of the Target Group

Prior unanimous written approval of the shareholders of the Joint Venture Company is required for certain matters relating to the Target Group, which include, among others:

• (a) establishment of new entities by the Target Group;

• (b) amendments of the business plan or authorized business scope of the Target Group;

• (c) any transaction between the Target Group and affiliates, directors, officers, shareholders or related parties of the Joint Venture Company not in the ordinary course of business;

• (d) effecting any merger, consolidation, sale of control, voluntary dissolution or liquidation of the Target Group, or the sale or exclusive license of all or substantially all of the intellectual property of any member of the Target Group;

• (e) the sale, lease, encumbrance or other disposition of any assets of the Target Group other than in the ordinary course of business;

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• (f) the incurring of any indebtedness or fixed operating leases on behalf of the Target Group in excess of US$30 million in the aggregate;

• (g) any alteration or amendment to the articles of association (or equivalent document), or any other right or privilege of a shareholder, of the Target Group;

• (h) any action to increase, decrease or alter the authorized or issued share capital or registered capital of the Target Group;

• (i) any action to reclassify or recapitalize the issued share capital or registered capital of the Target Group;

• (j) allot or issue, offer to allot or issue or grant any option, right, or warrant to subscribe for any equity interests in the Target Group;

• (k) any change of the corporate form of the Target Group;

• (l) incurring any capital expenditure by the Target Group in excess of US$20 million individually or in the aggregate;

• (m) change the number of directors on the board of directors of the Joint Venture Company;

• (n) any acquisition of (including by merger, consolidation or acquisition of stock or assets) all or any portion of the assets, business or properties of any other entity by the Target Group; and

• (o) any guarantee or surety or any arrangement to assume liability for a person other than a direct or indirect wholly owned subsidiary of the Joint Venture Company.

Allotment of Shares in the PRC Subsidiary to the Senior Management

After Closing, the shareholders of the Joint Venture Company shall procure to commence procedures to increase the authorized share capital in the PRC Subsidiary to enable a legal entity controlled by the senior management of the PRC Subsidiary to become a shareholder of the PRC Subsidiary by paying up the increased portion of the authorized capital of the PRC Subsidiary. Upon completion of the paying up of the equity interest by the entity controlled by the senior management of the PRC Subsidiary, the Joint Venture Company shall own 80.36% of the equity interest of the PRC Subsidiary and the entity controlled by the senior management of the PRC Subsidiary shall own 19.64% of the equity interest of the PRC Subsidiary. The Company will publish further announcement as and when appropriate under the Listing Rules.

DEED OF CROSS INDEMNITY

Parties:

Upon Closing, the Deed of Cross Indemnity will be executed by Etong in favour of GW.

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Principal Terms of the Deed

As the Joint Venture Company and the PRC Subsidiary are covenantors in the Subscription Agreements giving customary warranties and representations to the subscribers therein, Etong agrees to indemnify GW against actual liabilities or apportioned liabilities suffered by the Joint Venture Company and the PRC Subsidiary arising out of any breaches of covenants, warranties and representations given to the subscribers under the Subscription Agreements which occur on or before the Closing.

Liability under the Deed

The liability of Etong shall not exceed 45% (equivalent to the shareholding of GW in the Joint Venture Company) of the actual liabilities suffered or paid by the Joint Venture Company and the PRC Subsidiary and shall in no event exceed the subscription price for the GW Shares.

Validity of the Deed

The Deed of Cross Indemnity shall remain valid and effective until the expiration of the claim limitation period stipulated in the Subscription Agreements, i.e. 31 December 2013.

TERMINATION AGREEMENT

Parties:

• (a) the Company;

• (b) the Joint Venture Company;

• (c) the PRC Subsidiary;

• (d) Etong; and

• (e) EMC.

Principal Terms of the Termination Agreement

On or before Closing, the parties will enter into the Termination Agreement to terminate the Prior Shareholders’ Agreement and any liability of the parties accrued prior to termination shall not be affected.

RELEASE TO DEED OF GUARANTEE

Upon Closing, the Release to Deed of Guarantee will be executed by EMC in favour of the Company.

Principal Terms of the Release to Deed of Guarantee

EMC will release and discharge the Company’s obligations under the guarantee executed by the Company in favour of EMC dated 3 December 2010 in relation to certain obligations under the Prior Shareholders’ Agreement.

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EFFECTS OF THE SUBSCRIPTIONS

Immediately after the Closing, the Joint Venture Company shall have a total issued share capital of HK$225 consisting of 22,500 Shares of HK$0.01 each. Etong’s shareholding in the Joint Venture Company will be diluted from 81% to 36%. The subscription of the EMC Shares represents a pro rata entitlement in its capacity as shareholder of the Joint Venture Company and its shareholding will remain unchanged at 19%. Upon the Closing, the entire issued share capital of the Joint Venture Company shall be held as to 36% by Etong, as to 19% by EMC and as to 45% by GW. The EMC Shares and the GW Shares shall be issued as fully paid and rank pari passu in all respects with the Share then in issue in the share capital of the Joint Venture Company.

The Target Group will cease to be subsidiaries of the Company after the Closing. The Subscriptions will constitute a deemed disposal of the Company’s interest in the Joint Venture Company from 81% to 36%. The Group may record a gain or loss in its financial statements. As advised by the auditors, the financial effect of the deemed disposal cannot be ascertained as at the date of this announcement and will be reflected in the subsequent financial statements.

REASONS FOR THE DEEMED DISPOSAL AND USE OF PROCEEDS

GW is one of the leading developers in server technology in the PRC. The Group wishes to expand its market share and business development in the PRC. The joint venture cooperation could leverage GW’s server technology and EMC’s information infrastructure, storage virtualization and cloud computing technologies and utilize branded products of GW and EMC to create an integrated cloud computing data centre solution and provide customers in the PRC market with professional consulting and value-added services.

The proceeds from the Subscriptions will be used for capital expenditures and as general working capital of the Target Group in connection with its business.

The Directors (including the independent non-executive Directors) believe that the terms and conditions of the Subscription Agreements, the Second Shareholders’ Agreement, the Deed of Cross Indemnity, the Termination Agreement and the Release to Deed to Guarantee, which have been negotiated on an arm’s length basis and on normal commercial terms, are fair and reasonable and in the interests of the Group and the Shareholders as a whole.

INFORMATION ON GW

GW is the world’s largest developer and manufacturer of monitor, the fourth largest manufacturer of LCD television and a leading developer and manufacturer of computer power supplies in the PRC. GW is engaged in manufacturing, design and marketing of computer core parts, broadband network and digital products, such as desktops, notebooks, monitors, power supplies, servers, printers, and consumable electronics products for over 20 years. In addition, GW also provides technical support services to its customers. Since 1997, GW has become a publicly traded company listed on the Stock Exchange of Shenzhen (stock code 000066).

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INFORMATION ON EMC

EMC is a connected person of the Company and holds 19% of the issued share capital of the Joint Venture Company as at the date of this announcement. EMC is a wholly owned subsidiary of EMC Corporation, which is a U.S. Fortune 500 and S & P 500, is a provider of information infrastructure systems, software and services with over 30 years history. EMC Corporation has developed a worldwide customer base and provides technology, products and services to customers in more than 80 countries. EMC Corporation is also a strategic investor and has acquired and integrated more than 50 growth-oriented technology and services companies. EMC Corporation is a publicly traded company listed on the New York Stock Exchange. EMC is holding 19% of the equity interest of the Joint Venture Company prior to Closing.

INFORMATION ON THE GROUP

The Group is the leading distributor of enterprise IT products in the PRC and is principally engaged in the provision of IT solutions and IT technical support services, distribution of enterprise IT products including enterprise servers, system storage products, software in association with servers and system storage products in the PRC.

Etong is an investment holding company incorporated under the laws of the British Virgin Islands and is a wholly owned subsidiary of the Company and holding 81% of the issued share capital of the Joint Venture Company prior to Closing.

INFORMATION ON THE TARGET GROUP

As at the date of this announcement, the Joint Venture Company is incorporated under the laws of Hong Kong and is held as to 81% by Etong and as to 19% by EMC. It holds the entire equity interest in the PRC Subsidiary.

The PRC Subsidiary is incorporated under the laws of PRC and it is a wholly-owned subsidiary of the Joint Venture Company. The registered capital of the PRC Subsidiary is RMB50,000,000 (equivalent to approximately HK$61,349,693).

The Target Group’s business shall be solutions selling, market development, channel development, distribution of products supplied by EMC Corporation and its subsidiary, and the provision of value added services for such products including software development, business consulting and implementation services based on EMC storage virtualization and business continuity solutions.

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Set out below is a summary of the audited consolidated financial information of the Target Group for the two years ended 31 December 2010:

			For the year	ended
			31 December
			2009	2010
			HK$’000	HK$’000
Net	loss	before taxation and extraordinary items	(2,139)	(7)
Net	loss	after taxation and extraordinary items	(2,043)	(7)

The unaudited consolidated net asset value of the Joint Venture Company amounted to approximately HK$54.1 million as at 30 June 2011 and the unaudited net loss for the six months ended 30 June 2011 amounted to approximately HK$2.3 million.

LISTING RULES IMPLICATIONS

The Subscriptions constitute a deemed disposal of the Company. As the applicable percentage ratios (as defined in the Listing Rules) in respect of the deemed disposal exceed 5% but are less than 25%, the deemed disposal constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is subject to notification and publication requirements as set out in Chapter 14 of the Listing Rules. As the applicable percentage ratios (as defined in the Listing Rules) in respect of the entering into of the Deed of Cross Indemnity by Etong exceeds 5% but are less than 25%, the entering into of the Deed of Cross Indemnity by Etong constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is subject to notification and publication requirements as set out in Chapter 14 of the Listing Rules.

As EMC is a substantial shareholder of a subsidiary of the Company, EMC is a connected person of the Company. The entering into of the Existing Shareholder Subscription Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As the issue of Shares to EMC is a pro rata entitlement in its capacity as shareholder of the Joint Venture Company, the Existing Shareholder Subscription Agreement is exempt from reporting, announcement and independent shareholders’ approval requirement under Chapter 14A of the Listing Rules. No directors have a material interest in the Subscriptions and the Deed of Cross Indemnity and are not required to abstain from voting on the board resolution approving the Subscriptions and the Deed of Cross Indemnity.

DEFINITIONS

‘‘Board’’ board of Directors

‘‘Business Day’’ any day (excluding public holidays in Hong Kong, the United States and the PRC) on which banks generally are open for business in the United States, Hong Kong and the PRC, excluding Saturdays and Sundays

‘‘Closing’’ closing of the Subscriptions pursuant to the Subscription Agreements

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‘‘Company’’

Futong Technology Development Holdings Limited (stock code: 465), a company incorporated in the Cayman Islands with limited liability and listed on the Main Board of the Stock Exchange

• ‘‘Deed of Cross Indemnity’’ a deed of cross indemnity to be entered into by Etong in favour of GW upon Closing in respect of the apportionment of liabilities incurred by the Joint Venture Company and/or the PRC Subsidiary from matters arising before Closing

• ‘‘Directors’’ directors of the Company ‘‘EMC’’ EMC Computer Systems (FE) Limited, a limited company incorporated in Hong Kong and is a wholly owned subsidiary of EMC Corporation

• ‘‘EMC Shares’’ 2,375 Shares to be subscribed for by EMC under the Existing Shareholder Subscription Agreement

• ‘‘Etong’’ Etong Technology Holdings Limited, a company incorporated under the laws of the British Virgin Islands and a wholly-owned subsidiary of the Company

• ‘‘Existing Shareholder a share subscription agreement entered into by the Joint Subscription Agreement’’ Venture Company, the PRC Subsidiary, Etong and EMC on 9 December 2011

• ‘‘Group’’ the Company and its subsidiaries ‘‘GW’’ China Greatwall Computer Shenzhen Co. Ltd., a company incorporated under the laws of the PRC and listed on the Stock Exchange of Shenzhen, PRC (stock code 000066)

• ‘‘GW Shares’’ 10,125 Shares to be subscribed for by GW under the GW Subscription Agreement

• ‘‘GW Subscription a Share subscription agreement entered into by the Joint Agreement’’ Venture Company, the PRC Subsidiary, Etong and GW on 9 December 2011

• ‘‘HK$’’ Hong Kong dollar, the lawful currency of Hong Kong ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC ‘‘IBM’’ International Business Machines Corporation and its group of companies, which is a supplier of the Group

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• ‘‘Independent Third Parties’’ person(s) or company(ies) and their respective ultimate beneficial owner(s) which, to the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, are third parties independent of the Group and its connected persons (as defined under the Listing Rules)

‘‘IT’’ information technology

• ‘‘Joint Venture Company’’

• Futong Technology Development Holdings (HK) Limited, a company incorporated in Hong Kong and is held as to 81% by Etong and as to 19% by EMC as at the date of this announcement

• ‘‘Listing Rules’’

• Rules Governing the Listing of Securities on the Stock Exchange

• ‘‘Person’’

• any individual, partnership, joint venture, corporation, limited liability company, limited liability partnership, trust, unincorporated organization or governmental authority or any department or agency thereof

• ‘‘PRC’’ People’s Republic of China which, for the purpose of this announcement, excludes Hong Kong, Macau and Taiwan

• ‘‘PRC Subsidiary’’

• Beijing Etong Dong Fang Computer System Services Co. Ltd., a wholly foreign-owned enterprise established in the PRC and a wholly-owned subsidiary of the Joint Venture Company

• ‘‘Prior Shareholders’ Agreement’’

• a shareholders agreement entered into on 3 December 2010 by the Company, the PRC Subsidiary, the Joint Venture Company, Etong and EMC

• ‘‘Release to Deed of Guarantee’’

• the release to deed of guarantee to be entered into by EMC in favour of the Company upon Closing in respect of the guarantee entered into by the Company in favour of EMC on 3 December 2010

• ‘‘Restated Articles’’ the amended articles of association of the Joint Venture Company with certain amendments made to reflect the terms under the Second Shareholders’ Agreement

• ‘‘RMB’’

• Renminbi, the lawful currency of the PRC

• ‘‘Second Shareholders’ Agreement’’

• a Shareholders’ Agreement to be entered into by Etong, EMC, the Joint Venture Company, the PRC Subsidiary and GW on or before Closing

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‘‘Shares’’ and each a ‘‘Share’’ ordinary share(s) of HK$1.00 each, or ordinary share(s) of HK$0.01 each after the Sub-division of Shares, in the share capital of the Joint Venture Company ‘‘Shareholders’’ shareholders of the Company ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘Sub-division of Shares’’ the sub-division of Shares by the Joint Venture Company from HK$10,000 divided into 10,000 shares of HK$1.0 each to HK$10,000 divided into 1,000,000 shares of HK$0.01 each ‘‘Subscription Agreements’’ the Existing Shareholder Subscription Agreement and the GW Subscription Agreement ‘‘Subscriptions’’ subscription of the EMC Shares by EMC pursuant to the Existing Shareholder Subscription Agreement and of the GW Shares by GW pursuant to the GW Subscription Agreement ‘‘Target Group’’ the Joint Venture Company and its subsidiaries ‘‘Tentative Closing Date’’ 15 April 2012, the date on or prior to which the parties to the Subscription Agreements have tentatively agreed that Closing shall take place ‘‘Termination Agreement’’ the termination agreement to be entered into by the Joint Venture Company, the PRC Subsidiary, the Company, Etong and EMC in respect of the termination of the Prior Shareholders’ Agreement ‘‘US$’’ United States dollar, the lawful currency of the United States of America

For the purpose of this announcement, the exchange rate of RMB0.815 = HK$1.00 has been used, where applicable, for the purpose of illustration only and does not constitute a representation that any amount have been, could have been or may be exchanged, at this or any other rates.

By order of the Board

Futong Technology Development Holdings Limited Chen Jian Chairman

Hong Kong, 9 December 2011

As at the date of this announcement, the executive Directors are Mr. Chen Jian, Ms. Zhang Yun and Mr. Guan Tao and the independent non-executive Directors are Mr. Lee Kwan Hung, Mr. Yuan Bo and Mr. Ho Pak Tai Patrick.

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