G-Resources Group Limited — Proxy Solicitation & Information Statement 2004

Jul 13, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Credit Card DNA Security System (Holdings) Limited, you should at once hand this circular with the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer 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 takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

==> picture [347 x 113] intentionally omitted <==

(incorporated in Bermuda with limited liability)

Stock code: 1051

PROPOSED ADOPTION OF NEW SHARE OPTION SCHEME

A notice convening the special general meeting to be held at the office of the Company at 4/F., Tai Sang Bank Building, 130-132 Des Voeux Road, Central, Hong Kong on 30 July, 2004 at 10:00 a.m., is set out on page 18 of this circular.

Whether or not you are able to attend the meeting, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon as soon as possible but 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 form of proxy will not preclude you from subsequently attending and voting at the meeting or any adjourned meeting thereof should you so wish.

• The Chinese name is for identification purpose only

13 July, 2004

CONTENTS

	Page
Responsibility statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Adoption of the New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
The Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix – Principal terms of the New Share Option Scheme . . . . . . . . . . . . . . . .	8
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18

– i –

RESPONSIBILITY STATEMENT

This circular includes particulars given 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.

– ii –

DEFINITIONS

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

“Associate”	has the same meaning ascribed thereto in the Listing
	Rules;
“Board”	the board of Directors;
“Business Day”	any day on which the Stock Exchange is open for the
	business of dealing in securities;
“Company”	Credit Card DNA Security System (Holdings) Limited,
	an exempted company incorporated with limited liability
	in Bermuda, the Shares of which are listed on the Stock
	Exchange;
“Director(s)”	director(s) of the Company;
“Eligible Employees”	any employee (whether full time or part time employee,
	including any executive directors but not any non-
	executive director) of the Company, its Subsidiaries or
	any Invested Entity;
“Eligible Participant(s)”	any person(s) belonging to any of the following classes
	of participants:

• (a) any Eligible Employee;

• (b) any non-executive director (including independent non-executive directors) of the Company, any of its Subsidiaries or any Invested Entity;

• (c) any supplier of goods or services to any member of the Group or any Invested Entity;

• (d) any customer of the Group or any Invested Entity;

• (e) any person or entity that provides research, development or technological support or other services to the Group or any Invested Entity; and

– 1 –

DEFINITIONS

	(f) any shareholder or any member of the Group or
	any Invested Entity or any holder of any securities
	issued by any member of the Group or any Invested
	Entity;
“Expired Share Option Scheme”	the share option scheme of the Company which was
	adopted by the Company on 11 April, 1994 but expired
	on 11 April, 2004;
“General Scheme Limit”	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 scheme of
	the Company and which must not in aggregate exceed
	10 per cent. of the Shares in issue as at the date of the
	passing of the relevant ordinary resolution for the
	approval of the New Share Option Scheme;
“Group”	the Company and its Subsidiaries from time to time;
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China;
“Invested Entity”	any entity in which the Group holds any equity interest;
“Latest Practicable Date”	9 July, 2004, being the latest practicable date prior to
	the printing of this circular for ascertaining certain
	information in this circular;
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange;
“New Share Option Scheme”	the share option scheme proposed to be adopted by the
	Company at the Special General Meeting, a summary of
	the principal terms of which is set out in Appendix to
	this circular;
“Option(s)”	option(s) granted under the Expired Share Option Scheme
	or under the New Share Option Scheme, as the context
	may otherwise require;
“Share(s)”	ordinary share(s) of HK$0.01 each in the capital of the
	Company;

– 2 –

DEFINITIONS

“Shareholder(s)”	holder(s) of Share(s);
“Special General Meeting”	the special general meeting of the Company to be held
	at the office of the Company at 4/F., Tai Sang Bank
	Building, 130-132 Des Voeux Road, Central, Hong Kong
	on 30 July, 2004 at 10:00 a.m., to consider and, if
	appropriate, to approve, among other matters, the New
	Share Option Scheme;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Subsidiary”	has the same meaning ascribed thereto in the Listing
	Rules; and
“HK$” and “cents”	Hong Kong dollars and cents, the lawful currency in
	Hong Kong.

– 3 –

LETTER FROM THE BOARD

==> picture [347 x 113] intentionally omitted <==

(incorporated in Bermuda with limited liability)

Executive Directors: Wong Kam Fu (Chairman) Song Xiao Hai Wong Hoi Keung (Managing Director) Wong Hong Loong Lew Mon Hung

Registered Office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Independent Non-executive Directors: Ha Ping Wong Che Man, Eddy

Head office and principal place of business in Hong Kong: 11th Floor Tai Sang Bank Building 130-132 Des Voeux Road Central Hong Kong

13 July, 2004

To the Shareholders

Dear Sir or Madam,

PROPOSED ADOPTION OF NEW SHARE OPTION SCHEME

INTRODUCTION

The purpose of this circular is to provide you with information necessary to enable you to make an informed decision on whether to vote for and against the proposed resolution at the Special General Meeting relating to the adoption of the New Share Option Scheme.

ADOPTION OF THE NEW SHARE OPTION SCHEME

Introduction

Pursuant to an ordinary resolution passed at a general meeting of the Company held on 11 April, 1994, the Company had adopted the Expired Share Option Scheme which expired on

• The Chinese name is for identification purpose only

– 4 –

LETTER FROM THE BOARD

11 April, 2004 pursuant to the terms thereof. Notwithstanding the expiration of the Expired Share Option Scheme, the provisions of the Expired Share Option Scheme remain in force in all other respects in respect of the outstanding share options granted thereunder.

As at the Latest Practicable Date, there were 100,656,250 outstanding share options granted pursuant to the Expired Share Option Scheme, entitling holders thereof to subscribe for in aggregate 100,656,250 new Shares, representing about 1.05% of the existing issued share capital of the Company. Save as disclosed above, the Group does not have any other subsisting share option scheme.

In this connection, the Board considers that it is in the interests of the Company to adopt the New Share Option Scheme which allows multiple classes of persons and/or entities to be the Eligible Participants and contains terms which are in compliance with the requirements of Chapter 17 of the Listing Rules now in force.

At the Special General Meeting, an ordinary resolution will be proposed to the Shareholders to approve the adoption of the New Share Option Scheme pursuant to which the Eligible Participants may be granted Options to subscribe for Shares upon and subject to the terms and conditions of the rules of the New Share Option Scheme.

Based on the issued share capital of 10,277,550,165 Shares as at the Latest Practicable Date and assuming no further Shares will be issued or repurchased by the Company on or before the date of the Special General Meeting, Options to subscribe for up to 1,027,755,016 Shares, representing 10% of the issued share capital of the Company, may be issued to the Eligible Participants under the New Share Option Scheme under Rule 17.03(3) of the Listing Rules, should the New Share Option Scheme be adopted.

A summary of the principal terms of the New Share Option Scheme which is proposed to be approved and adopted by the Company at the Special General Meeting is set out in Appendix to this circular. A copy of the New Share Option Scheme is available for inspection at the principal place of business of the Company at 11th Floor, Tai Sang Bank Building, 130132 Des Voeux Road Central, Hong Kong during normal business hours from the date hereof up to the date of the Special General Meeting.

Conditions of the adoption of the New Share Option Scheme

The New Share Option Scheme is conditional upon:

• (i) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, any new Shares which may fall to be issued and allotted upon the exercise of the Options that may be granted under the New Share Option Scheme; and

• (ii) the passing of an ordinary resolution at the Special General Meeting approving the adoption of the New Share Option Scheme.

– 5 –

LETTER FROM THE BOARD

Application has been made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Shares which may fall to be issued and allotted pursuant to the exercise of any Options that may be granted under the New Share Option Scheme.

Reasons for adopting the New Share Option Scheme

The purpose of the New Share Option Scheme is to provide incentives or rewards to the Eligible Participants for their contribution to the Group and/or to enable the Group to recruit and retain high-calibre employees and attract human resources that are valuable to the Group and any Invested Entity.

Although the New Share Option Scheme does not specify any minimum period for which the Option must be held before it can be exercised, the Board has discretion to set a minimum period for which an Option has to be held or other restrictions before the exercise of the subscription rights attaching thereto. This discretion allows the Board to provide incentive to an Eligible Participant to remain as an Eligible Participant and thereby enable the Group or the relevant Invested Entity to continue to benefit from the services and contributions of such Eligible Participant. This discretion, coupled with the power of the Board to impose any performance target or other restrictions as it considers appropriate before any Option can be exercised, enable the Group to provide incentives to the Eligible Participants to use their best endeavours in assisting the growth and development of the Group. Although the New Share Option Scheme does not provide for the granting of Options with rights to subscribe for Shares at a discount to the traded prices of the Shares on the Stock Exchange, the Directors are of the view that the flexibility given to the Board in granting Options to Eligible Participants and to impose minimum period for which the Options have to be held and performance targets and other conditions that have to be achieved before the Options can be exercised, will place the Group in a better position to attract human resources that are valuable to the growth and development of the Group as whole.

Value of all Options that can be granted under the New Share Option Scheme

The Directors consider that it is not appropriate to state the value of all the Options that can be granted under the New Share Option scheme as if they had been granted at the Latest Practicable Date prior to the approval of the New Share Option Scheme given that the variables which are critical for the calculation of the value of such Options cannot be determined. The variables which are critical for the determination of the value of such Options include, inter alia, (i) the subscription price for the Shares upon the exercise of the subscription rights attaching to the Options, (ii) whether or not Options will be granted under the New Share Option Scheme and the timing of the granting of such Options, (iii) the period during which the subscription rights may be exercised, (iv) the discretion of the Board to impose any performance target that has to be achieved before the subscription right attaching to the Options can be exercised and any other conditions that the Board imposed on the Options, and (v) whether or not such Options if granted will be exercised by the Eligible Participants. The

– 6 –

LETTER FROM THE BOARD

subscription price payable for the Shares depends on the price of the Shares as quoted on the Stock Exchange, which in turn depends on when the Board is to grant Options under the New Share Option Scheme. With a scheme life of ten years, the Board is of the view that it is too premature to state whether or not Options will be granted under the New Share Option Scheme, and if so, the number of Options that may be granted. It is also difficult to ascertain with accuracy the subscription price of the Shares given the volatility the Share price may be subject to during the 10-year life span of the New Share Option Scheme. In the circumstances, the Directors are of the view that the value of the Options depends on a number of variables which are either difficult to ascertain or can only be ascertained subject to a number of theoretical basis and speculative assumptions. Accordingly, the Directors believed that any calculation of the value of the Options will not be meaningful and may be misleading to the Shareholders in the circumstances.

RECOMMENDATION

The Directors consider that the adoption of the New Share Option Scheme is in the interests of the Company, and in particular, the Group as a whole. The Company will publish an announcement on the outcome of the Special General Meeting on the Business Day immediately following such meeting.

THE SPECIAL GENERAL MEETING

A notice convening the Special General Meeting to be held at the office of the Company at 4/F., Tai Sang Bank Building, 130-132 Des Voeux Road, Central, Hong Kong on 30 July, 2004 at 10:00 a.m., is set out on page 18 of this circular.

Whether or not you are able to attend the Special General Meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the Special General Meeting or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from subsequently attending and voting at the Special General Meeting or any adjourned meeting thereof should you so wish.

Your attention is drawn to the additional information set out in Appendix to this circular.

Yours faithfully,

For and on behalf of the Board of Wong Kam Fu Chairman

– 7 –

THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

Set out below is a summary of the principal terms of the New Share Option Scheme to provide sufficient information to the Shareholders for their consideration.

(a) Purpose of the scheme

The purpose of the New Share Option Scheme is to provide incentives or rewards to the Eligible Participants thereunder for their contribution to the Group and/or to enable the Group to recruit and retain high-calibre employees and attract human resources that are valuable to the Group and any Invested Entity.

(b) Who may join

The Directors may at any time and from time to time within 10 years after the New Share Option Scheme is approved and adopted by the Shareholders, at their absolute discretion and subject to such conditions as the Board may think fit, invite any person belonging to any of the following classes of the Eligible Participants, to take up Options to subscribe for Shares:

• (aa) any Eligible Employee;

• (bb) any non-executive director (including independent non-executive directors) of the Company, any of its Subsidiaries or any Invested Entity;

• (cc) any supplier of goods or services to any member of the Group or any Invested Entity;

• (dd) any customer of the Group or any Invested Entity;

• (ee) any person or entity that provides research, development or technological support or other services to the Group or any Invested Entity; and

• (ff) any shareholder or any member of the Group or any Invested Entity or any holder of any securities issued by any member of the Group or any Invested Entity;

and, for the purposes of the New Share Option Scheme, Options may be granted to any company wholly owned by one or more persons belonging to any of the above classes of the Eligible Participants or any discretionary object of an Eligible Participant which is a discretionary trust.

The basis of eligibility of any of the Eligible Participants to the grant of any Options shall be determined by the Board from time to time on the basis of their contribution to the development and growth of the Group and any Invested Entity.

– 8 –

THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

(c) Maximum number of Shares

• (aa) 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 must not in aggregate exceed 30 per cent. of the issued share capital of the Company from time to time. No options may be granted under the New Share Option Scheme or any other share option schemes of the Company if this will result in this limit being exceeded.

• (bb) 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 must not in aggregate exceed the General Scheme Limit (i.e. 1,027,755,016 Shares (assuming no further issue or repurchase of Shares from the Latest Practicable Date)).

• (cc) Subject to (aa) above and without prejudice to (dd) below, the Company may seek approval of the Shareholders in general meeting to refresh the General Scheme Limit 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 share option schemes of the Company must not exceed 10 per cent. of the Shares in issue as at the date of approval of the limit and for the purpose of calculating the limit, options previously granted (including those outstanding, cancelled, lapsed in accordance with the terms of the New Share Option Scheme and any other share option schemes of the Company or exercised) will not be counted.

• (dd) Subject to (aa) above and without prejudice to (cc) above, the Company may seek separate Shareholders’ approval in general meeting to grant options beyond the General Scheme Limit or, if applicable, the limit referred to in (cc) above to Eligible Participants specifically identified by the Company before such approval is sought. The Company must send a circular to the Shareholders containing a generic description of the specified grantees who may be granted such options, the number and terms of the options to be granted, the purpose of granting such options to the grantees with an explanation as to how the terms of options serve such purpose and the information as required under the Listing Rules.

(d) Maximum entitlement of each Eligible Participant

The total number of Shares issued and which may fall to be issued upon exercise of the options granted under the New Share Option Scheme and any other share option schemes of the Company (including both exercised and outstanding options) to each Eligible Participant in any 12-month period shall not exceed 1 per cent. of the issued share capital of the Company in issue (the “ Individual Limit ”). Any further grant of options to an Eligible Participant in excess of the Individual Limit in any 12-month period up to and including the date of such

– 9 –

THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

further grant, shall be subject to which the Shareholders’ approval in general meeting of the Company with such Eligible Participant and his Associates abstaining from voting. The Company must send a circular which discloses the identity of the Eligible Participant, the number and terms of the options to be granted and options previously granted to such Eligible Participant and the information as required under the Listing Rules to the Shareholders. The number and terms (including the subscription price) of the Options to be granted to such Eligible Participant must be fixed before the Shareholders’ approval and the date of the meeting of the Board for proposing such further grant of Option should be taken as the date of grant for the purpose of calculating the subscription price.

(e) Grant of Options to connected persons

• (aa) Any grant of Options under the New Share Option Scheme to a Director, chief executive or substantial shareholder of the Company or any of their respective Associates must be approved by independent non-executive Directors (excluding any independent non-executive Director who is the grantee of the Options).

• (bb) Where any grant of Options to a substantial shareholder of the Company or an independent non-executive Director, or any of their respective Associates, would result in the number of 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(s) in the 12-month period up to and including the date of such grant:

• (i) representing in aggregate over 0.1 per cent. of the Shares in issue; and

• (ii) having an aggregate value, based on the closing price of the Shares at the date of each grant, in excess of HK$5,000,000,

such further grant of Options must be approved by the Shareholders in general meeting. The Company must send a circular to the Shareholders containing the information required under the Listing Rules. All connected persons of the Company (within the meaning as defined in the Listing Rules) must abstain from voting in favour at such general meeting. Any vote taken at the meeting to approve the grant of such Options must be taken on a poll.

Shareholders’ approval as required under this sub-paragraph (e)(bb) is also required for any change in the terms of Options granted to an Eligible Participant who is a substantial shareholder of the Company or an independent non-executive Director, or any of their respective Associates.

– 10 –

THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

(f) Time of acceptance and exercise of an Option

An offer of the grant of an Option may be accepted by an Eligible Participant within 28 days from the date upon which it is made. A consideration of HK$1.00 is payable on acceptance of the offer of grant of an Option.

An Option may be exercised in accordance with the terms of the New Share Option Scheme at any time during a period to be determined and notified by the Directors to each grantee, which period may commence from the date of acceptance of the offer for the grant of Options but shall end in any event not later than 10 years from the date of grant of the Option subject to the provisions for early termination thereof.

No minimum period for which the Option must be held before it can be exercised is specified in the New Share Option Scheme.

(g) Performance targets

Unless the Board otherwise determined and stated in the offer of the grant of Options to an Eligible Participant, an Eligible Participant is not required to achieve any performance targets before any Options can be exercised.

(h) Subscription price for Shares

The subscription price for Shares under the New Share Option Scheme shall be a price determined by the Board, but shall not be lower than the highest of (i) the closing price of Shares as stated in the Stock Exchange’s daily quotations sheet on the date on which the Board approve the making of the offer for the grant of Options (the “ Date of Grant ”), which must be a trading day; (ii) the average closing price of Shares as stated in the Stock Exchange’s daily quotations sheet for the five trading days immediately preceding the Date of Grant; and (iii) the nominal value of a Share. Without prejudice to the generality of the foregoing, the Board may grant Options in respect of which the subscription price is fixed at different prices for different periods during the option period provided that the subscription price for Shares for each of the different periods shall not be less than the subscription price determined in the aforesaid manner.

(i) Ranking of Shares

Shares to be issued and allotted upon the exercise of an Option will be subject to all the provisions of the bye-laws of the Company and the Companies Act 1981 of Bermuda (as amended) and will rank pari passu in all respects with the fully paid Shares in issue as from the day when the name of the grantee is registered on the register of members of the Company and accordingly will entitle the holders to participate in all dividends or other distributions paid or made on or after the date when the name of the grantee is registered on the register of

– 11 –

THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

members of the Company other than any dividend or other distribution previously declared or recommended or resolved to be paid or made with respect to a record date which shall be before the date when the name of the grantee is registered on the register of members of the Company, provided always that when the date of exercise of the Option falls on a day upon which the register of members of the Company is closed then the exercise of the Option shall become effective on the first Business Bay in Hong Kong on which the register of members of the Company is re-opened. A Share issued and allotted upon the exercise of an Option shall not carry any voting rights until completion of the registration of the grantee as the holder thereof.

(j) Restrictions on the time of grant of Options

No offer for grant of Options shall be made after a price sensitive development has occurred or a price sensitive matter has been the subject of a decision until such price sensitive information has been published in the newspapers. In particular, during the period commencing one month immediately preceding the earlier of (i) the date of the meeting (as such date is first notified to the Stock Exchange in accordance with the Listing Rules for the approval of the Company’s results for any year, half-year, quarterly or any interim period (whether or not required under the Listing Rules); and (ii) the deadline for publishing an announcement of the results of the Company for any year or half-year under the Listing Rules, or quarterly or any other interim period, (whatever or not required under the Listing Rules), with the Stock Exchange and ending on the date of the announcement of the results, no Option may be granted.

The Board may not grant any Option to an Eligible Participant who is a Director during the periods or times in which Directors are prohibited from dealing in shares pursuant to the Model Code for Securities Transactions by Directors of Listed Companies prescribed by the Listing Rules or any corresponding code or securities dealing restrictions adopted by the Company.

(k) Duration of the New Share Option Scheme

The New Share Option Scheme will remain in force for a period of 10 years commencing from the date on which the New Share Option Scheme becomes unconditional. Options complying with the provisions of the Listing Rules which are granted during the duration of the New Share Option Scheme and remain unexercised immediately prior to the end of the 10year period shall continue to be exercisable in accordance with their terms of grant within the option period for which such Options are granted, notwithstanding the expiry of the New Share Option Scheme.

– 12 –

THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

(l) Rights on ceasing employment

If the grantee of an Option is an Eligible Employee and ceases to be an Eligible Employee for any reason other than his or her death or the termination of his or her employment on one or more of the grounds referred to in sub-paragraph (n) below before exercising his/her Option in full, the Option (to the extent which has become exercisable and not already exercised) will lapse on the date of cessation, which date shall be the last actual working day, whether salary is paid in lieu of notice or not and will not be exercisable unless the Board otherwise determine a longer period following the date of such cessation.

(m) Rights on death

If the grantee of an Option ceases to be an Eligible Participant by reason of his or her death (provided that none of the grounds referred to in sub-paragraph (n) below arises prior to his or her death) before exercising the Option in full, his or her legal personal representative(s) may exercise the Option (to the extent which has become exercisable not already exercised) in whole or in part within a period of 12 months, from the date of death or such longer period as the Board may determine.

(n) Rights on dismissal

If the grantee of an Option is an Eligible Employee and ceases to be an Eligible Employee by reason that he or her has been guilty of persistent or serious misconduct or has committed an act of bankruptcy or has become insolvent or has made any arrangement or composition with his or her creditors generally, or has been convicted of any criminal offence involving his or her integrity or honesty or (if so determined by the Board) on any ground on which an employer would be entitled to terminate his or her employment at common law or pursuant to any applicable laws or under the Eligible Employee’s service contract with the Company or the relevant Subsidiary or the relevant Invested Entity, his or her Option will lapse automatically on the date the Eligible Employee ceases to be an Eligible Employee.

(o) Rights on breach of contract

If the Directors at their absolute discretion determine that the grantee of any Option (other than an Eligible Employee) or his or her Associate has committed any breach of any contract entered into between the grantee or his or her Associate on the one part and the Group or any Invested Entity on the other part or that the grantee has committed any act of bankruptcy or has become insolvent or is subject to any winding-up, liquidation or analogous proceedings or has made any arrangement or composition with his or her creditors generally, the Directors shall determine that the outstanding Options granted to the grantee shall lapse. In such event, his or her Option will lapse automatically and will not in any event be exercisable on or after the date on which the Directors have so determined.

– 13 –

THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

(p) Rights on a general offer

If a general or partial offer, whether by way of take-over offer, share re-purchase 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 concert with the offeror, the Company shall use all reasonable endeavours to procure that such offer is extended to all the grantees on the same terms, mutatis mutandis, and assuming that they will become, by the exercise in full of the Options granted to them, Shareholders. If such offer becomes or is declared unconditional, a grantee shall be entitled to exercise his or her Option (to the extent not already exercised) to its full extent or to the extent specified in the grantee’s notice to the Company in exercise of his or her Option at any time before the close of such offer (or any revised offer). Subject to the above, an Option will lapse automatically (to the extent not exercised) on the date on which such offer (or, as the case may be, revised offer) closes.

(q) Rights on winding up

In the event of an effective resolution being proposed for the voluntary winding-up of the Company during the option period, the grantee may, subject to the provisions of all applicable laws, by notice in writing to the Company at any time no later than two Business Days prior to the proposed general meeting of the Company for the passing of such resolution, exercise all or any of his or her Option (to the extent which has become exercisable and not already exercised) in accordance with the provisions of the New Share Option Scheme, whereupon the Company shall as soon as possible and, in any event, no later than the Business Day immediately prior to the date of the proposed general meeting referred to above, issue and allot the relevant Shares to the grantee credited as fully paid, which Shares shall rank pari passu with all other Shares in issue on the date prior to the passing of the resolution to windup the Company to participate in the distribution of the assets of the Company available in liquidation. Subject to the above, an Option will lapse automatically (to the extent not exercised) on the date of the commencement of the winding-up of the Company.

(r) Rights on compromise or arrangement between the Company and its creditors

In the event of a compromise or arrangement between the Company and its creditors (or any class of them) or between the Company and its members (or any class of them), in connection with a scheme for the reconstruction or amalgamation of the Company, the Company shall give notice thereof to all grantees on the same day as it gives notice of the meeting to its members or creditors to consider such a scheme or arrangement, and thereupon any grantee (or his or her legal representative(s)) may forthwith and until the expiry of the period commencing with such date and ending with the earlier of the date falling two calendar months thereafter or the date on which such compromise or arrangement is sanctioned by Court be entitled to exercise his or her Option (to the extent which has become exercisable

– 14 –

THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

and not already exercised), but the exercise of the Option shall be conditional upon such compromise or arrangement being sanctioned by the Court and becoming effective. The Company may thereafter require such grantee to transfer or otherwise deal with the Shares issued as a result of such exercise of his or her Option so as to place the grantee in the same position as nearly as would have been the case had such Shares been subject to such compromise or arrangement. Subject to the above, an Option will lapse automatically (to the extent not exercised) on the date the proposed compromise or arrangement becomes effective.

(s) Adjustments to the subscription price

In the event of any alteration in the capital structure of the Company (including capitalisation of profits or reserves, rights issue, consolidation, subdivision or reduction of the share capital of the Company (other than an issue of Shares as consideration in respect of a transaction to which the Company is a party)) whilst an Option remains exercisable but the New Share Option Scheme remains in effect, such corresponding alterations (if any) certified by the auditors for the time being of or an independent financial adviser to the Company as fair and reasonable will be made in (i) the number of Shares subject to the Options so far as unexercised; and/or (ii) the subscription price for Shares; and/or (iii) the maximum number of Shares available for subscription referred to in paragraph (c) above.

Any adjustments made in respect of any alteration aforesaid shall give a grantee the same proportion of the issued share capital to which he was entitled prior to such alteration and the aggregate subscription price payable by a grantee on the full exercise of any Option shall remain as nearly as possible the same (but shall not be greater than) as it was before such event. No alteration shall be made the effect of which would be to enable a Share to be issued at less than its nominal value and no such adjustment will be required in circumstances whether there is an issue of Shares or other securities of the Group as consideration in a transaction. In addition, in respect of any such adjustments, other than any made on a capitalisation issue, such auditors or independent financial adviser must confirm to the Directors in writing that the adjustments satisfy the requirements of the relevant provision of the Listing Rules.

(t) Cancellation of Options

Any cancellation of Options granted but not exercised must be approved by the Board. Where the Company cancels Options and issues new ones to the same grantees, the grant of such new Options may only be made under the New Share Option Scheme with available unissued Options (excluding the cancelled Options) within the General Scheme Limit.

– 15 –

THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

(u) Termination of the New Share Option Scheme

The Company may, by resolution in general meeting, at any time terminate the New Share Option Scheme and in such event no further Option shall be offered but the provisions of the New Share Option Scheme shall remain in full force to the extent necessary to give effect to the exercise of the Options (to the extent not already exercised) granted prior to the termination or otherwise as may be required in accordance with the provisions of the New Share Option Scheme. Options (to the extent not already exercised) granted prior to such termination shall continue to be valid and exercisable in accordance with the New Share Option Scheme.

(v) Rights are personal to the grantee

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

(w) Lapse of Option

An Option shall lapse automatically (to the extent not already exercised) on the earliest

of:

• (aa) the expiry of the option period referred to in paragraph (f);

• (bb) the expiry of the periods or dates referred to in paragraphs (l), (m), (n), (o), (p) (q) and (r); and

• (cc) the date on which a breach of the provision restricting the transfer and assignment of an Option referred to in paragraph (v) is committed.

(x) Share capital

The exercise of any Option shall be subject to the Shareholders in general meeting approving any necessary increase in the authorised share capital of the Company. Subject thereto, the Board shall make available sufficient authorised but unissued share capital of the Company to meet subsisting requirements on the exercise of Options.

– 16 –

THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

(y) Alteration

The New Share Option Scheme may be altered in any respect by resolution of the Board except that:

• (aa) any changes to the definitions of “Eligible Participant” and “grantee” and “option period”;

• (bb) any changes to the provisions as mentioned in paragraphs (a) to (x) and the provisions relating to the matters set out in rule 17.03 of the Listing Rules to the advantage of grantees of the Options;

• (cc) any alterations to the terms and conditions of the New Share Option Scheme which are of a material nature;

• (dd) any change to the terms of Options granted; and

• (ee) 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 a resolution of the Shareholders in general meeting, except where such alterations take effect automatically under the existing terms of the New Share Option Scheme, provided that:

• (i) the amended terms of the New Share Option Scheme or the Options shall still comply with the requirements of Chapter 17 of the Listing Rules; and

• (ii) no such alteration shall operate to affect adversely the terms of issue of any Option granted or agreed to be granted prior to such alteration except with the consent or sanction in writing of such number of grantees as shall together hold Options in respect of not less than three-fourths in nominal value of all Shares then subject to Options granted under the New Share Option Scheme.

– 17 –

NOTICE OF SPECIAL GENERAL MEETING

==> picture [347 x 113] intentionally omitted <==

(incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a special general meeting of Credit Card DNA Security System (Holdings) Limited (the “ Company ”) will be held at the office of the Company at 4/F., Tai Sang Bank Building, 130-132 Des Voeux Road, Central , Hong Kong on 30 July, 2004 at 10:00 a.m. for the purposes of considering and, if thought fit, passing, with or without modification, the following resolution as an ordinary resolution:

“ THAT , subject to the passing of this resolution and with effect from the close of business of the day on which this resolution is passed, the rules of the share option scheme (the “ New Share Option Scheme ”), the principal terms of which are set out in the circular (the “ Circular ”) to the shareholders of the Company dated 13 July, 2004) (a copy of the New Share Option Scheme and the Circular having been produced to the meeting marked “ A ” and “ B ”, respectively, and signed by the chairman of the meeting for the purposes of identification), be approved and adopted and the Directors be and they are hereby generally and unconditionally authorised to approve any amendments to the rules of the New Share Option Scheme as may be acceptable or not objected to by the Stock Exchange, and at their absolute discretion to grant options to subscribe for Shares thereunder and to issue, allot and deal with shares of HK$0.01 each in the Company pursuant to the exercise of options granted under the New Share Option Scheme and to take all such steps as may be necessary, desirable or expedient to carry into effect the New Share Option Scheme with effect from the close of business of the day on which this resolution is passed.”

By order of the Board of Elaine Tam Company Secretary

Hong Kong, 13 July, 2004

Notes:

1. A shareholder entitled to attend and vote at the above meeting may appoint one or more than one proxy to attend and to vote in his stead. A proxy need not be a shareholder of the Company.

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

3. In order to be valid, the form of proxy duly completed and signed in accordance with the instructions printed thereon together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof must be lodged at the head office and principal place of business in Hong Kong of the Company at 11th Floor, Tai Sang Bank Building, 130-132 Des Voeux Road Central, Hong Kong, not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

* The Chinese name is for identification purpose only

– 18 –