Global Mastermind Holdings Limited — Proxy Solicitation & Information Statement 2002

Mar 27, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Trasy Gold Ex Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

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

TRASY GOLD EX LIMITED

(Incorporated in Cayman Islands with limited liability)

PROPOSALS FOR TERMINATION OF EXISTING SHARE OPTION SCHEME AND ADOPTION OF NEW SHARE OPTION SCHEME GENERAL MANDATES TO ISSUE SHARES AND TO REPURCHASE SHARES

A notice convening the annual general meeting of Trasy Gold Ex Limited (the “Company”) to be held at 9:00 a.m. on 30th April, 2002 at 1st Floor, Cheung Fat Building, 7-9 Hill Road, Western District, Hong Kong (the “AGM”) is contained in the annual report of the Company for the year ended 31st December, 2001 (the “Annual Report”). Whether or not you are able to attend the AGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar in Hong Kong, Central Registration Hong Kong Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the AGM or any adjournments thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the AGM or any adjourned meeting should you so wish.

This circular will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for at least 7 days from the date of its publication and on the website of the Company at www.trasy.com.

28th March, 2002

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET OF THE STOCK EXCHANGE OF HONG KONG LIMITED

The Growth Enterprise Market (“GEM”) of the Stock Exchange of Hong Kong Limited (the “Stock Exchange”) has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

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

The principal means of information dissemination GEM is publication on the Internet website operated by the Stock Exchange. GEM-listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website with the domain name of www.hkgem.com in order to obtain up-to-date information on GEM-listed issuers.

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CONTENT

	Page
Responsibility Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Sponsor Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Termination of Existing Share Option Scheme and
Adoption of New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
General mandate to issue Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
General mandate to repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Appendix I – Summary of the principal terms of the New Share Option Scheme. . . . . . .	11
Appendix II – Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19

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RESPONSIBILITY STATEMENT

This circular for which the directors (the “Directors”) of TRASY GOLD EX LIMITED (the “Company”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of the Stock Exchange for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (i) the information contained in this circular is accurate and complete in all material respects and not misleading; (ii) there are no other matters the omission of which would make any statement in this circular misleading; and (iii) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

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SPONSOR INTEREST

Pursuant to the sponsorship agreement dated 30th November, 2000 entered into between the Company and BOCI Asia Limited (“BOCI”). BOCI will receive a fee from acting as the Company’s sponsor for the period from 7th December, 2000 to 31st December, 2002 and the Company shall pay an agreed fee to BOCI for its provision of services.

BOCI has confirmed that, as at the Latest Practicable Date, neither itself nor its associates has, or may have, any interests in the Shares or any rights to subscribe for or to nominate persons to subscribe for Shares.

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DEFINITIONS

In this circular, the following expressions have the meanings respectively set opposite them unless the context otherwise requires:

• “AGM”

the annual general meeting of the Company convened to be held on 30th April, 2002 to approve, inter alia, the proposals for the termination of the Existing Share Option Scheme, the adoption of the New Share Option Scheme, general mandates to issue new Shares and to repurchase Shares, the notice of which is set forth in the annual report of the Company for the year ended 31st December, 2001 sent to the Shareholders together with this circular

• “associate(s)”

has the meaning ascribed to it under the GEM Listing Rules

• “Board”

board of Directors

• “Bonus Share Scheme”

the bonus share scheme of the Company adopted on 6th November, 2000 pursuant to which certain eligible persons were entitled to subscribe for Shares at par value, payable in full upon allotment

• “Company”

Trasy Gold Ex Limited, a company incorporated in Cayman Islands with limited liability and the Shares of which are listed on the Stock Exchange

• “Controlling Company”

• the company/companies which holds or deemed to hold more than 30% equity interest in the Company

• “Directors”

directors of the Company

• “Eligible Employee(s)”

any employees or proposed employees (whether full time or part time) or executives, including executive directors, of the Company, the Controlling Company and their respective Subsidiaries

• “Eligible Participant(s)”

• any Eligible Employees, non-executive directors (including independent non-executive directors) of the Company, any Controlling Company and their respective Subsidiaries; any suppliers, adviser, consultant, contractor, customers, person or entity that provides research, development or other technological support to the Group or any shareholder of any member of the Group or any Invested Entity

• “Existing Share Option Scheme”

the share option scheme of the Company adopted on 6th November, 2000 pursuant to which options to subscribe for Shares may be granted to any Eligible Employees

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DEFINITIONS

“GEM”

the Growth Enterprise Market operated by the Stock Exchange

• “GEM Listing Committee”

• the listing sub-committee of the Stock Exchange with responsibility for GEM

• “GEM Listing Rules”

the Rules Governing the Listing of Securities on GEM

• “Group”

the Company and its subsidiaries

• “Hong Kong”

• the Hong Kong Special Administrative Region of the People’s Republic of China

• “Invested Entity”

• any entity in which any member of the Group holds any equity interest

• “Latest Practicable Date”

• 20th March, 2002, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular

• “New Share Option Scheme”

• a new share option scheme of the Company to be adopted subject to fulfillment of certain conditions, including, among other matters, approval by Shareholders at the AGM

• “Pre-IPO Share Option Plan”

the share option plan adopted by the Company on 6th November, 2000, pursuant to which certain options were granted to eligible persons to subscribe for Shares at HK$0.21 each

• “RNA”

• RNA Holdings Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Stock Exchange and which holds approximately 58.46% interests in the Company

• “Share(s)”

• ordinary share(s) of HK$0.01 each in the share capital of the Company

• “Shareholder(s)” holder(s) of the Share(s)

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

• “Subsidiary”

• a subsidiary within the meaning of the Companies Ordinance (Cap. 32 of the Laws of Hong Kong) for the time being of the Company whether incorporated in Hong Kong or elsewhere

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DEFINITIONS

“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers
“HK$”	Hong Kong dollars
“%”	per cent.

– 5 –

LETTER FROM THE BOARD

TRASY GOLD EX LIMITED

(Incorporated in Cayman Islands with limited liability)

Directors:

SIT Chun Sze (Chairman) CHAN Kee Chee, Keith IP Tak Chuen, Edmond * LEUNG Ping Hung, Karl Richard * CHEUNG Lai Kai, Edwina ** MA Lee Yee **

Registered office: Century Yard Cricket Square Hutchins Drive P.O. Box 2681 GT George Town Grand Cayman British West Indies

• Non-executive Directors

• ** Independent non-executive Directors

Head office and principal place of business: 14th Floor Cheung Fat Building 7-9 Hill Road Western District Hong Kong

28th March, 2002

To the Shareholders

Dear Sir or Madam,

PROPOSALS FOR TERMINATION OF EXISTING SHARE OPTION SCHEME AND

ADOPTION OF NEW SHARE OPTION SCHEME GENERAL MANDATES TO ISSUE SHARES AND TO REPURCHASE SHARES

INTRODUCTION

At the AGM, resolutions will be proposed to seek approvals of the Shareholders in respect of, among other matters, the proposals for the termination of the Existing Share Option Scheme and the adoption of the New Share Option Scheme, general mandates to be given to the Directors to repurchase Shares, to issue Shares and that the general mandate to issue new Shares is extended to include the total number of Shares then repurchased by the Company.

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LETTER FROM THE BOARD

The purpose of this circular is to provide you with further information on the New Share Option Scheme, the general mandates to issue Shares and to repurchase Shares.

TERMINATION OF EXISTING SHARE OPTION SCHEME AND ADOPTION OF NEW SHARE OPTION SCHEME

The Existing Share Option Scheme was adopted by the Company on 6th November, 2000. As the Stock Exchange has recently amended Chapter 23 of the GEM Listing Rules which came into effect on 1st September, 2001, no further options may be granted under the Existing Share Option Scheme unless its terms comply with the newly amended provisions of Chapter 23 of the GEM Listing Rules. Accordingly the Board proposes to recommend to Shareholders at the AGM to approve the adoption of the New Share Option Scheme and simultaneously to terminate the Existing Share Option Scheme. As at the Latest Practicable Date, the Company has not adopted any share option scheme other than the Existing Share Option Scheme, the Bonus Share Scheme and the Pre-IPO Share Option Plan.

The Directors consider that in order to enable the Group to motivate the Eligible Participants to optimise their performance and efficiency for the benefits of the Group and to attract and retain or otherwise maintain ongoing business relationships with the Eligible Participants whose contributions are or will be beneficial to the long-term growth of the Group, it is important that the Group should continue to provide them with an additional incentive by offering them an opportunity to obtain equity interest in the Company and to reward them for contributing to the long-term success of the business of the Group in the following terms:

• (a) there is no minimum period for which the Eligible Participants should hold the Options granted under the New Share Option Scheme before they can be exercised. The Eligible Participants may exercise such Options any time from the grant of such options;

• (b) unless the Board otherwise determine, no performance target is required to be met before the Options granted under the New Share Option Scheme can be exercised. This allows the Eligible Participants to exercise such Options more readily than it would otherwise be had there been any performance target; and

• (c) the exercise price of the Options is to be determined by the Board in its absolute discretion which will not be less than the highest of (a) the closing prices of the Shares as stated in the Stock Exchange’s daily quotations sheet on the date of grant, (b) the average of the closing prices of the Shares as stated in the Stock Exchange’s daily quotations sheet for the five business days immediately preceding the date of grant; and (c) the nominal value of a Share.

It is therefore proposed to the Shareholders to vote for the New Share Option Scheme for the benefits of the Eligible Participants, a summary of the principal terms of which is set out in Appendix I to this circular, at the AGM.

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LETTER FROM THE BOARD

The Directors had granted options under the Pre-IPO Share Option Plan entitling holders thereof to subscribe for up to 234,872,000 Shares, out of which options for 108,820,000 Shares have been cancelled. As at the Latest Practicable Date, the issued share capital of the Company comprised 2,380,000,000 Shares and 126,052,000 Shares may fall to be issued upon exercise of these options representing 5.03% of the issued share capital of the Company as enlarged by the allotment and issue of such Shares.

As at the Latest Practicable Date, no options have been granted under the Existing Share Option Scheme.

As at the Latest Practicable Date, the issued share capital of the Company was 2,380,000,000 Shares. Assuming that no further Shares will be issued before the date of the AGM, and on the basis that the New Share Option Scheme will be approved by the Shareholders at the AGM, options entitling holders thereof to subscribe for up to 238,000,000 Shares can be granted under the New Share Option Scheme in accordance with Rule 23.03(3) of the GEM Listing Rules.

In respect of the operation of the New Share Option Scheme, the Company will, where applicable, comply with the relevant requirements under Chapter 23 of the GEM Listing Rules.

The New Share Option Scheme is conditional on:

• (a) the passing of the necessary resolution by the Shareholders at the AGM to approve and adopt the New Share Option Scheme; and

• (b) the GEM Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Shares falling to be issued upon the exercise of Options granted under the New Share Option Scheme; and

• (c) the shareholders of RNA, the Controlling Company for the time being approving the New Share Option Scheme.

Application will be made to the Stock Exchange for the listing of, and permission to deal in the Shares which may be issued upon the exercise of Options granted under the New Share Option Scheme.

None of the Directors are appointed as trustees of the New Share Option Scheme or have a direct or indirect interest in the trustees of the New Share Option Scheme.

Value of the options

The Directors consider that it is not appropriate or helpful to Shareholders to state the value of all options that can be granted pursuant to the New Share Option Scheme as if they had been granted as at the Latest Practicable Date. The Directors believe that any statement regarding the value of the options as at the Latest Practicable Date will not be meaningful to the Shareholders, since the options to be granted shall not be assignable, and no holder of the options shall in any way sell, transfer, charge, mortgage or create any interest (legal or beneficial) in favour of any third party over or in relation to any of such option.

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LETTER FROM THE BOARD

In addition, the calculation of the value of the options is based on a number of variables such as the exercise price, the exercise period, interest rate, expected volatility and other relevant variables. The Directors believe that any calculation of the value of the options as at the Latest Practicable Date based on a great number of speculative assumptions would not be meaningful and would be misleading to the Shareholders.

GENERAL MANDATE TO ISSUE SHARES

At the AGM, an ordinary resolution will be proposed to grant a general mandate to the Directors to allot, issue and otherwise deal with new Shares with an aggregate nominal amount not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the relevant resolution and the extension of the aforesaid mandate by addition thereto the then number of Shares repurchased pursuant to the proposed general mandate to repurchase Shares as described below. The Directors do not have any present intention to issue any new Shares under the general mandate to be sought at the AGM.

GENERAL MANDATE TO REPURCHASE SHARES

An ordinary resolution will also be proposed at the AGM to grant to the Directors a general mandate to repurchase Shares up to 10% of the total fully paid-up nominal amount of the share capital of the Company in issue at the date of passing the relevant resolution (the “Repurchase Mandate”). The Directors have no present intention to repurchase any Shares under the Repurchase Mandate to be sought at the AGM.

The mandate for repurchase and issue of Shares will remain effective until the conclusion of the Company’s next annual general meeting or the expiration of the period within which the next annual general meeting of the Company is required by any applicable law or the articles of association of the Company to be held or until revoked or varied by an ordinary resolution of the Shareholders, whichever occurs first.

An Explanatory Statement as required under the GEM Listing Rules to provide the requisite information regarding the Repurchase Mandate is set out in Appendix II to this circular.

PROXY

A form of proxy for use at the AGM is enclosed. Whether or not you are able to attend the AGM in person, you are requested to complete and return the form of proxy to the Company’s branch registrars in Hong Kong, Central Registration Hong Kong Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the AGM or any adjournments thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the AGM or any adjourned meeting should you so wish.

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LETTER FROM THE BOARD

RECOMMENDATION

The Board is of the opinion that the proposed resolutions for the adoption of the New Share Option Scheme, termination of the Existing Share Option Scheme and the granting of general mandates to issue Shares and to repurchase Shares are in the interest of the Company. Accordingly, the Board recommends the Shareholders to vote in favour of all the resolutions nos. 4 to 7 as set out in the notice of the AGM.

MISCELLANEOUS

The English text of this circular shall prevail over the Chinese text for the purpose of interpretation.

By Order of the Board Sit Chun Sze Chairman

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

THE NEW SHARE OPTION SCHEME

Summary of terms

The following is a summary of the principal terms of the New Share Option Scheme to be approved at the AGM:

1. Purpose

The purpose of the New Share Option Scheme is a share incentive scheme to enable the Company to grant options to selected participants as incentives or rewards for their contribution to the Group.

2. Who may join

• (a) The Board may, at its discretion, offer to Eligible Participants (as defined in (b) below) options to subscribe for such number of new Shares as the Board may determine at an exercise price to be determined in accordance with paragraph 5 below. Upon acceptance of the option, the grantee shall pay HK$1.00 to the Company by way of consideration for the grant. The eligibility of any of the Eligible Participants shall be determined by the Directors on the basis of their contribution to the development and growth of the Group.

• (b) “Eligible Participants” means:

  • (i) any employees or proposed employees (whether full time or part time) or executives, including executive directors of the Company, the Controlling Company and their respective Subsidiaries or any Invested Entity;

  • (ii) any non-executive director (including independent non-executive directors) of the Company, any subsidiary of the Company and any Controlling Company (including its Subsidiaries);

  • (iii) any supplier, adviser, consultant or contractor for the provision of goods or services to any member of the Group and any customer of the Group;

  • (iv) any person or entity that provides research, development or other technology support to the Group; and

  • (v) any shareholder of 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.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

3. Maximum number of Shares

• (i) 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 Group shall not in aggregate exceed 30% of the Shares in issue from time to time. No options may be granted under any share option scheme of the Group (including the New Share Option Scheme) if this will result in the said 30% limit being exceeded.

• (ii) The total number of Shares may be issued upon exercise of all options to be granted under the New Share Option Scheme must not, in aggregate, exceed 10% of the issued share capital of the Company as at the date of approval of the New Share Option Scheme by the Shareholders unless approval by the Shareholders has been obtained pursuant to sub-paragraph (iii) below. Options lapsed in accordance with the New Share Option Scheme will not be counted for the purpose of calculating the 10% limit.

• (iii) Subject to the issue of a circular by the Company and the approval of the Shareholders in general meeting and, where appropriate, the approval of the shareholders of any holding company which is listed on the Stock Exchange and/or such other requirements prescribed under the GEM Listing Rules from time to time, the Board may:

  • (a) renew this limit at any time to 10% of the Shares in issue as at the date of the approval by the Shareholders in general meeting. However, the total number of Shares which may be issued upon exercise of all options to be granted under the New Share Option Scheme and under any other share option scheme of the Group under the limit must not in aggregate exceed 10% of the Shares in issue as at the date of approval of the renewed limit. Options previously granted under the schemes (including those outstanding, cancelled, lapsed in accordance with the schemes or exercised options) will not be counted for the purpose of calculating the limit as “refreshed”. The Company must send a circular to the Shareholders containing the information required under Rule 23.02(2)(d) and the disclaimer required under Rule 23.02(4) of the GEM Listing Rules; and/or

  • (b) grant options beyond the 10% limit to Eligible Participants specifically identified by the Board whereupon the Company shall send a circular to the Shareholders containing, among others, a generic description of the specified participants who may be granted such options, the number and terms of the options to be granted and the purpose of granting options to the specified participants with an explanation as to how the terms of the options serve such purpose.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

4. Maximum number of options to any one 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 cancelled, exercised and outstanding options) to each Eligible Participant in any 12month period up to the date of grant shall not exceed 1% of Shares in issue as at the date of grant.

Any further grant of options to a participant which would result in the Shares issued and to be issued upon the exercise of all options granted and to be granted to such participant (including exercised, cancelled and outstanding options) in the 12-month period up to and including the date of such further grant representing in aggregate in excess of this 1% limit shall be subject to the issue of a circular by the Company and the approval of the Shareholders in general meeting and, where appropriate, the approval of the shareholders of any holding company which is listed on the Stock Exchange with such Eligible Participant and his associates (as defined in the GEM Listing Rules) abstaining from voting and/or other requirements prescribed under the GEM Listing Rules from time to time. The circular to be issued to the Shareholders must comply with Rules 23.02(c), 23.02(d) and 23.04 of the GEM Listing Rules and contain the identity of the participant and the number and terms of the options to be granted (and options previously granted to such participant). The number and terms (including the exercise price) of the options to be granted to such participant must be fixed before shareholders’ approval and the date of board meeting for proposing such further grant should be taken as the date of grant for the purpose of calculating the exercise price under note (1) to Rule 23.03(9) of the GEM Listing Rules.

5. Price of Shares

The subscription price of a Share in respect of any particular option granted under the New Share Option Scheme shall be such price as the Board in its absolute discretion shall determine, save that such price will not be less than the highest of (a) the closing prices of the Shares as stated in the Stock Exchange’s daily quotations sheet on the date of grant, which must be a business day; (b) the average of the closing prices of the Shares as stated in the Stock Exchange’s daily quotations sheet for the five business days immediately preceding the date of grant; and (c) the nominal value of a Share.

6. Granting options to connected persons

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 is required to be approved by the independent non-executive directors of the Company (excluding any independent non-executive director who is the proposed grantee of the options) and, where appropriate, the independent non-executive directors of any holding company which is listed on the Stock Exchange.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

If the Company proposes to grant options under the New Share Option Scheme to a substantial shareholder (as defined in the GEM Listing Rules) or any independent non-executive director of the Company or their respective associates (as defined in the GEM Listing Rules) which will result in the number of Shares issued and to be issued upon exercise of options granted and to be granted (including options exercised, cancelled and outstanding) to such person in the 12-month period up to and including the date of such grant:

• (a) representing in aggregate over 0.1% of the Shares in issue; and

• (b) having an aggregate value in excess of HK$5 million, based on the closing price of the Shares at the offer date of each offer

such further grant of options will be subject to the issue of a circular by the Company and the approval of the Shareholders in general meeting and, where appropriate, the approval of the shareholders of any holding company which is listed on the Stock Exchange on a poll at which all connected persons (as defined in the GEM Listing Rules) of the Company shall abstain from voting, and/or such other requirements prescribed under the GEM Listing Rules from time to time. A connected person (as defined in the GEM Listing Rules) of the Company will be permitted to vote against the grant only if his intention to do so has been stated in the circular. Any change in the terms of options granted to a substantial shareholder or an independent non-executive director of the Company or any of their respective associates must be approved by the Shareholders in general meeting and, where appropriate, approved by the shareholders of any holding company which is listed on the Stock Exchange.

7. Restrictions on the time of grant of options

A grant of options may not be made after a price sensitive event has occurred or a price sensitive matter has been the subject of a decision until such price sensitive information has been announced pursuant to the relevant requirements of the GEM Listing Rules. In particular, no options may be granted during the period of one month immediately preceding the earlier of (a) the date of the board meeting for the approval of the Company’s annual results, interim results or quarterly results; and (b) the deadline for the Company to publish announcement for its annual results, interim results or quarterly results and announcement under Rule 18.49 or Rule 18.53 of the GEM Listing Rules and ending on the date of actual publication of the results announcement.

8. Rights are personal to grantee

An option is personal to the respective grantees and may be exercised or treated as exercised, as the case may be, in whole or in part, and shall not be transferable or assignable.

9. Time of acceptance and exercise of option

An option may be accepted by a proposed grantee within 7 days from the date of the offer of grant of the option.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

There is no minimum period for which an option must be held before it can be exercised. An option may be exercised in accordance with the terms of the New Share Option Scheme at any time after the date upon which the option is deemed to be granted and accepted and prior to the expiry of ten years from that date. The period during which an option may be exercised will be determined by the Board in its absolute discretion, save that no option may be exercised more than 10 years after it has been granted.

10. Performance target

Unless otherwise determined by the Board, the grantee is not required to achieve any performance targets before any option granted under the New Share Option Scheme can be exercised.

11. Rights on ceasing employment/death

• (a) If the Eligible Participant of an option is under employment with the Company, the Controlling Company and/or any of their respective Subsidiaries, in the event the grantee ceases to be an Eligible Employee by reason of his death, ill-heath or retirement in accordance with his contract of employment before exercising the option in full, his personal representative(s) or, as appropriate, the Eligible Participant may exercise the option up to his or her entitlement at such date of cessation (to the extent not already exercised) within the period of one month following the date of such cessation, which date shall be the last actual working day on which the Eligible Participant was at working with the Company, the Controlling Company or the relevant Subsidiary of the Company or the Controlling Company on which salary is paid in lieu of notice or not, or such longer period as the Board may determine.

• (b) If the Eligible Participant of an option is under employment with the Company, the Controlling Company and/or any of their respective Subsidiaries, in the event the Eligible Participant ceases to be an Eligible Employee by any reason other than his death, ill-health or retirement in accordance with his contract of employment and none of the events which would be a ground for termination of his employment arises, the option shall lapse on the date of cessation or termination and shall not be exercisable unless the Board otherwise determine.

12. Rights on dismissal

If the holder of an option ceases to be an Eligible Participant by reason of being dismissed as an employee of the Company or the Controlling Company or any of their respective Subsidiaries on the grounds that he has been guilty of serious misconduct, or has committed any act of bankruptcy or has become insolvent or has made any arrangements or composition with his creditors generally, or has been convicted of any criminal offence, his option will lapse and not be exercisable after the date of termination of his employment.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

13. Rights on breach of contract

If the Board shall at its absolute discretion determines that (i) the Eligible Participant of any option (other than an Eligible Employee) or his associate has committed any breach of any contract entered into between the grantee or his associate on the one part and the Group or any Invested Entity on the other part or that the Eligible Participant has committed any act of bankruptcy or has become insolvent or is subject to any liquidation or analogous proceedings or has made any arrangement of composition with his creditors generally; and (ii) the option granted to the Eligible Participant under the New Share Option Scheme shall lapse, his option will lapse automatically and will not in any event be exercisable on or after the date on which the Board has so determined.

14. Rights on a general offer, compromise or arrangement

If a general offer 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) and such offer becomes or is declared unconditional during the period in which an option is exercisable according to the terms of the New Share Option Scheme, the Eligible Participant (or his or her legal personal representatives) shall be entitled to exercise the option in full (to the extent not already exercised) at any time within 1 month after the date on which the offer becomes or is declared unconditional.

In the event of a compromise or arrangement between the Company and its members or creditors being proposed 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 any grantee (or his or her legal representatives) may by notice in writing to the Company accompanied by a remittance of the full amount of the price of the Shares as determined according to paragraph 5 in respect of which the notice is given (such notice to be received by the Company not later than 2 business days prior to the proposed meeting) exercise the option (to the extent not already exercised) either to its full extent or to the extent specified in such notice and the Company shall as soon as possible and in any event no later than the day immediately prior to the date of the proposed meeting, allot and issue such number of Shares to the grantee which fall to be issued on such exercise credited as fully paid and register the grantee as holder thereof.

15. Rights of winding-up

In the event a notice is given by the Company to its members to convene a general meeting for the purposes of considering, and if thought fit, approving a resolution to voluntarily wind-up the Company, the Company shall on the same date as or soon after it despatches such notice to each member of the Company give notice thereof to all grantees and thereupon, each grantee (or his or her legal personal representatives) shall be entitled to exercise all or any of his options (to the extent not already exercised) at any time not later than two business days prior to the proposed general meeting of the Company referred to above by giving notice in writing to the Company, accompanied by a remittance for the full amount of the aggregate subscription price for the Shares in respect of which the notice is given, whereupon the Company shall as soon as possible and, in any event, no later than the business day immediately prior to the date of the proposed general meeting, allot the relevant Shares to the grantee credited as fully paid.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

16. Ranking of Shares

The Shares to be allotted upon the exercise of an option will not carry voting rights until completion of the registration of the grantee (or any other person) as the holder thereof. Subject to the aforesaid, Shares allotted and issued on the exercise of options will rank pari passu with and shall have the same voting, dividend, transfer and other rights, including those arising on liquidation of the Company as attached to the other fully-paid Shares in issue on the relevant exercise date, save that they will not rank for any dividend or other distribution declared or recommended or resolved to be paid or made by reference to a record date falling on or before the relevant date of registration of the grantee as the holder of the Shares.

17. Effect of alterations to capital

In the event of a capitalisation issue, rights issue, consolidation, sub-division or consolidation of shares or reduction of capital, such corresponding alterations (if any) shall be made to the number of Shares subject to any options granted so far as unexercised, the exercise prices, the number of Shares comprised in an option, the method of exercise of any option or the maximum number of Shares subject to the New Share Option Scheme. Any such alterations shall be certified by the auditors of the Company in writing to the Board to be in their opinion fair and reasonable. Any such alterations will be made on the basis that a grantee shall have the same proportion of the issued share capital of the Company for which any grantee of an option is entitled to subscribe pursuant to the options held by him before such alteration and the aggregate subscription price payable on the full exercise of any option is to remain as nearly as possible the same (and in any event not greater than) as it was before such event. No such alteration will be made the effect of which would be to enable a Share to be issued at less than its nominal value. The issue of securities as consideration in a transaction is not to be regarded as a circumstance requiring any such alterations.

18. Alterations of the New Share Option Scheme

• (a) The terms and conditions of the New Share Option Scheme relating to the matters set out in Chapter 23 of the GEM Listing Rules shall not be altered to the advantage of grantees of the options except with the approval of the Shareholders at general meeting and, where appropriate, the approval of the shareholders of any holding company which is listed on the Stock Exchange.

• (b) Any alterations to the terms and conditions of the New Share Option Scheme which are of a material nature or any change to the terms of options granted shall be approved by the Shareholders at general meeting and, where appropriate, approved by the shareholders of any holding company which is listed on the Stock Exchange, except where the alterations take effect automatically under the existing terms of the New Share Option Scheme.

• (c) Amended terms of the New Share Option Scheme or the options shall comply with the relevant requirements of Chapter 23 of the GEM Listing Rules and any applicable rules and regulations.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

• (d) Any change to the authority of the Board or the scheme administrators in relation to any alterations to the terms of the New Share Option Scheme shall be approved by the Shareholders at general meeting and, where appropriate, approved by the shareholders of any holding company which is listed on the Stock Exchange.

19. Cancellation of options

The Board shall have the absolute discretion to cancel any options granted but not exercised. New options may be issued to an option holder in place of his cancelled options only if there are available with unissued options (excluding the cancelled options) within the limit approved by Shareholders.

20. 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 period referred to in paragraph 9; and

• (ii) the expiry of the periods or dates referred to in paragraphs 11, 12, 13, 14 and 15.

21. Period of the New Share Option Scheme

The New Share Option Scheme will remain valid for a period of 10 years commencing on the date of which this scheme adopted upon fulfilment of all the conditions. The Company may by resolution in general meeting and, where appropriate, the approval of the shareholders of any holding company which is listed on the Stock Exchange 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 force to the extent necessary to give effect to the exercise of any options granted prior thereto.

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EXPLANATORY STATEMENT

APPENDIX II

The following serves as an explanatory statement, as required by the GEM Listing Rules, containing all the information reasonably necessary to enable the Shareholders to make an informed decision in relation to the proposal of the Repurchase Mandate.

SHARE CAPITAL

It is proposed that up to 10% of the Shares in issue at the date of passing of the necessary ordinary resolution to approve the general mandate for the Shares that may be repurchased. As at the Latest Practicable Date, the number of Shares in issue were 2,380,000,000.

Subject to the passing of the necessary ordinary resolution and on the basis that no further Shares are issued or repurchased prior to the AGM, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 238,000,000 Shares during the period ending on the earlier of the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required to be held by law or the date upon which such authority is revoked or varied by a resolution of the Shareholders in general meeting.

REASON FOR REPURCHASES

The Directors believe that ability to repurchase Shares is in the interest of the Company and Shareholders. Repurchases may, depending on circumstance, result in and increase of net assets and/or earnings per Share.

FUNDING OF REPURCHASES

It is envisaged that the repurchases would be funded entirely from the Company’s available cash flow or working capital facilities which will be funds legally available in accordance with the memorandum and articles of association of the Company and the applicable laws of the Cayman Islands. The Company may not repurchase its own securities on GEM for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

There might be an adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited accounts contained tin the annual report for the year ended 31st December, 2001) in the event that the Repurchase Mandate is exercised in full. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have an adverse effect on the working capital requirements and gearing position of the Company which in the opinion of the Directors are from time to time appropriate for the Company.

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EXPLANATORY STATEMENT

APPENDIX II

SHARE PRICES

In each of the previous twelve months, the highest and lowest prices at which Shares have been traded on the Stock Exchange were as follows:

		Shares
	Highest		Lowest
	HK$		HK$
2001
March	0.231		0.020
April	0.030		0.017
May	0.040		0.020
June	0.062		0.034
July	0.046		0.023
August	0.035		0.022
September	0.030		0.017
October	0.037		0.022
November	0.042		0.029
December	0.035		0.023
2002
January	0.033		0.021
February	0.035		0.020

UNDERTAKING

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

EFFECT OF TAKEOVERS CODE

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

As at the Latest Practicable Date, to the best of the knowledge and belief of the Directors, RNA through its interest in Golden Rabbit Enterprises Limited is beneficially held 1,391,435,322 Shares, representing approximately 58.46% of the issued share capital of the Company. In the event that the Directors exercised in full the power to repurchase Shares in accordance with the terms of the ordinary resolution to be proposed at the AGM, the shareholding of RNA in the Company would be increased to approximately 64.96% of the issued share capital of the Company. The Directors believe that such increase would not give rise to an obligation to make a mandatory offer under the Rule 26 of the Takeovers Code.

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EXPLANATORY STATEMENT

APPENDIX II

SHARE PURCHASE MADE BY THE COMPANY

No purchase has been made by the Company of Shares whether on the Stock Exchange or otherwise in the previous twelve months prior to this circular.

CONNECTED PERSON OR PARTIES

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

To the best of the knowledge of the Directors, having made all reasonable enquiries, none of the Directors or their respective associates (as defined in the GEM Listing Rules) has a present intention, in the event that the Repurchase Mandate is approved by the Shareholders, to sell Shares to the Company.

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