Goldstream Investment Limited — Proxy Solicitation & Information Statement 2002

Jul 23, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this document, 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 document.

*

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(Incorporated in Bermuda with limited liability)
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GENERAL MANDATES FOR THE ISSUE OF NEW SECURITIES AND REPURCHASE OF SECURITIES, TERMINATION OF EXISTING SHARE OPTION SCHEME AND

ADOPTION OF NEW SHARE OPTION SCHEME

* For identification only

24th July, 2002

CONTENTS

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Letter from the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
1.	General Mandate to Issue Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
2.	General Mandate to Repurchase Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
3.	Termination of the Existing Share Option Scheme
	and Adoption of the New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . .	4
4.	Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
5.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
**Appendix **	– Summary of Principal Terms of the New Share Option Scheme. . . . . . . . .	7

– i –

DEFINITIONS

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

“Annual General Meeting”	the annual general meeting of the Company to be held at
	16th Floor, Eight Commercial Tower, 8 Sun Yip Street,
	Chai Wan, Hong Kong on 16th August, 2002 at 3:00 p.m.;
“associate”	has the meaning ascribed thereto in the Listing Rules;
“Board”	the board of directors of the Company or a duly authorised
	committee thereof;
“Business Day”	a day on which the Stock Exchange is open for the business
	of dealing in securities;
“Companies Act”	the Companies Act 1981 of Bermuda;
“Companies Ordinance”	the Companies Ordinance (Cap. 32 of the Laws of Hong
	Kong);
“Company”	BOTO International Holdings Limited;
“connected person”	has the meaning ascribed thereto in the Listing Rules;
“Directors”	the directors of the Company;
“Eligible Relationship”	the relationship between a Participant and the Company or
	any Subsidiary;
“Existing Share Option Scheme”	the existing share option scheme of the Company adopted
	on 12th February, 1997 and expiring on 11th February,
	2007;
“General Mandate”	the proposed general mandate to be granted to the Directors
	to permit the allotment and issue of new Shares of HK$0.02
	each in the Company equal in aggregate up to a maximum
	of 20 per cent. of the issued share capital of the Company
	as at the date of the Annual General Meeting;
“Group”	the Company and its Subsidiaries;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong;
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China;
“Latest Practicable Date”	19th July, 2002, being the latest practicable date prior to
	the printing of this document for ascertaining certain
	information contained in this document;

– ii –

DEFINITIONS

“Listing Rules”	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited, as amended from time to
	time;
“New Share Option Scheme”	the proposed share option scheme to be adopted by the
	Company, the principal terms of which are summarised in
	the Appendix to this circular;
“Participant”	any employee (including any executive director), officer
	(including any non-executive director and independent non-
	executive director), consultant, representative, agent,
	professional adviser, customer, business partner, joint
	venture partner, strategic partner, landlord or tenant of, or
	any supplier or provider of goods or services to, the
	Company or any Subsidiary, and any trustee(s) of a
	discretionary trust of which one or more beneficiaries belong
	to any of the abovementioned category(ies) of persons who
	satisfies the criteria set out in the New Share Option Scheme
	rules;
“Repurchase Mandate”	the proposed general mandate to be granted to the Directors
	to permit the repurchase of Shares of up to a maximum of
	10 per cent. of the issued share capital of the Company as
	at the date of the Annual General Meeting;
“Shareholders”	registered holders of the Shares;
“Share(s)”	shares of HK$0.02 each (or of such other nominal amount
	as shall result from a sub-division or a consolidation of
	such shares from time to time) in the capital of the
	Company;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Subsidiary”	a company which is for the time being and from time to
	time a subsidiary (within the meaning of Section 2 of the
	Companies Ordinance) of the Company whether
	incorporated in Hong Kong or elsewhere;
“substantial shareholder”	has the meaning ascribed thereto in the Listing Rules; and
“Takeover Code”	the Hong Kong Code on Takeovers and Mergers

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LETTER FROM THE CHAIRMAN

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(Incorporated in Bermuda with limited liability)

Executive Directors:

Mr. Kao Cheung Chong, Michael (Chairman and Managing Director) Mr. Lam Pak Kin, Philip (Deputy Chairman and Deputy Managing Director) Mr. Kui Yiu Ngok Ms. Tsen Yun Lei, Liliana Mr. Kao Wai Ho, Francis

Non-executive Directors:

Mr. Zhuo Fu Min

Independent Non-executive Directors: Mr. Alexander Reid Hamilton Mr. Oh Kok Chi

Registered Office: Rosebank Centre 11 Bermudiana Road Pembroke Bermuda

Head Office and Principal Place of business: 17th Floor Eight Commercial Tower 8 Sun Yip Street Chai Wan Hong Kong

24th July, 2002

To the Shareholders

Dear Sir or Madam,

GENERAL MANDATES FOR THE ISSUE OF NEW SECURITIES AND REPURCHASE OF SECURITIES, TERMINATION OF EXISTING SHARE OPTION SCHEME AND ADOPTION OF NEW SHARE OPTION SCHEME

1. GENERAL MANDATE TO ISSUE SECURITIES

At the annual general meeting of the Company held on 6th August, 2001, a general mandate was given to the Directors to issue Shares. Such a mandate will lapse at the conclusion of the forthcoming Annual General Meeting to be held on 16th August, 2002. In order to ensure flexibility and discretion to the Directors in the event that it becomes desirable to issue any Shares, approval is being sought from the Shareholders at the Annual General Meeting to be held on 16th August, 2002 to grant a general mandate unconditionally to the Directors to allot or issue new Shares of HK$0.02 each of the Company equal in aggregate up to 20 per cent. of its issued share capital as at the date of passing the proposed ordinary resolution. The obtaining of the General Mandate is in accordance with the Listing Rules.

The proposed ordinary resolution is set out as Resolution 4(I) in the Notice of the Annual General Meeting dated 18th July, 2002.

– 1 –

LETTER FROM THE CHAIRMAN

2. GENERAL MANDATE TO REPURCHASE SECURITIES

The Listing Rules permit companies with a primary listing on the Stock Exchange to repurchase their own securities on the Stock Exchange, subject to certain restrictions. At the annual general meeting of the Company held on 6th August, 2001, a general mandate was given to the Directors to repurchase Shares. Such a mandate will lapse at the conclusion of the forthcoming Annual General Meeting to be held on 16th August, 2002. At the Annual General Meeting, an ordinary resolution (as set out as Resolution 4(II) in the Notice of the Annual General Meeting dated 18th July, 2002) will be proposed to grant to the Directors an unconditional general mandate to, inter alia, repurchase up to 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue, as at the date of the passing of the relevant resolution. The Company is required by the provisions in the Listing Rules regulating such securities repurchases to send to its Shareholders an explanatory statement containing all the information reasonably necessary to enable them to make an informed decision on whether to vote for or against the Repurchase Mandate. Such information is provided below:

(a) Share Capital

As at the Latest Practicable Date, the issued share capital of the Company comprised 3,439,925,000 Shares of HK$0.02 each. As at such date, there were outstanding share options granted under the Company’s Existing Share Option Scheme entitling holders thereof to subscribe for aggregates of 1,000,000 Shares at the exercise prices of HK$0.18944 per Share (subject to adjustments). Subject to the passing of the proposed ordinary resolution and on the basis that no further Shares or options are issued, exercised or repurchased, the Company will be allowed under the Repurchase Mandate to repurchase a maximum of 343,992,500 Shares during the period ending on the earliest of the conclusion of the next annual general meeting of the Company, the date by which the next annual general meeting of the Company is required to be held by the applicable laws or by the Bye-laws of the Company, or the date upon which such authority is revoked or varied by an ordinary resolution of the Shareholders in the general meeting prior to the next annual general meeting.

(b) Reasons for Repurchases

The Directors believe that the Repurchase Mandate is in the best interests of the Company and the Shareholders. Such repurchases may, depending on the market conditions and the funding arrangements at the time, lead to an enhancement of the net value of the securities and its assets and/or its earnings per share and will only be made when and to the extent the Directors believe that such repurchases will benefit the Company and the Shareholders.

(c) Funding the Repurchases

In repurchasing securities, the Company may only apply funds legally available for such purpose in accordance with its Memorandum of Association and the Bye-laws and the laws of Bermuda. It is envisaged that the Company would utilise its distributable profits in repurchasing its securities.

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LETTER FROM THE CHAIRMAN

There might be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the Company’s audited financial statements for the year ended 31st March, 2002) in the event that the mandate to repurchase securities is exercised in full at any time during the period under the Repurchase Mandate. However, the Directors do not propose to exercise the mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing level which in the opinion of the Directors are from time to time appropriate for the Company.

(d) Share Prices

The highest and lowest prices at which the Company’s shares were traded on the Stock Exchange during each of the previous twelve months were as follows:

		Shares
	Highest		Lowest
	HK$		HK$
2001
July	0.340		0.295
August	0.320		0.245
September	0.290		0.236
October	0.315		0.260
November	0.340		0.285
December	0.325		0.295
2002
January	0.335		0.280
February	0.330		0.290
March	0.370		0.320
April	0.400		0.290
May	0.335		0.315
June	0.325		0.310
July (up to 19th July, 2002
being the Latest Practicable Date	0.355		0.310

(e) General

None of the Directors or, to the best of their knowledge, having made all reasonable enquiries, any of their associates have any present intention, if the Repurchase Mandate is approved by the Shareholders at the Annual General Meeting to sell all or any securities to the Company.

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the power of the Company to make repurchases pursuant to the proposed ordinary resolution in accordance with the Listing Rules and the applicable laws of Bermuda.

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LETTER FROM THE CHAIRMAN

The Company has not repurchased any securities of the Company on the Stock Exchange since the last annual general meeting held on 6th August, 2001.

If as a result of the exercise of the power to repurchase securities pursuant to the Repurchase Mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of the Takeover Code. As a result, a Shareholder, or a group of Shareholders acting in concert, depending on the level of increase of the shareholder’s interest, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeover Code.

As at the Latest Practicable Date, to the best of the knowledge and belief of the Company, Sunni International Limited held an aggregate of 1,823,815,030 Shares, representing approximately 53.0 per cent. of the issued share capital of the Company. In the event that the Directors should exercise in full the power to repurchase securities which is proposed to be granted pursuant to the proposed ordinary resolution at the Annual General Meeting, the shareholding of Sunni International Limited would be increased to approximately 58.9 per cent. of the issued share capital of the Company. Such increase would not give rise to an obligation to make a mandatory offer under Rule 26 of the Takeover Code. The Directors are not aware of any consequence which may arise under the Takeover Code as a result of any such repurchase. However, the Listing Rules prohibit a company from making repurchases on the Stock Exchange if the result of the repurchases would cause less than 25 per cent. (or such other prescribed minimum percentage as determined by the Stock Exchange) of the issued share capital in the public hands. The Directors do not propose to repurchase securities which would result in less than the prescribed minimum percentage of securities in the public hands.

No connected persons or their respective associates have notified the Company that they have a present intention to sell securities to the Company, or have undertaken not to do so in the event that the Company is authorised to make repurchases of the securities.

3. TERMINATION OF THE EXISTING SHARE OPTION SCHEME AND ADOPTION OF THE NEW SHARE OPTION SCHEME

The Directors note that on 23rd August, 2001 the Stock Exchange announced amendments to Chapter 17 (share option schemes) of the Listing Rules which came into effect on 1st September, 2001. In compliance with the above amendments to the Listing Rules, the Directors consider that it is in the interest of the Company to terminate the Existing Share Option Scheme and adopt the New Share Option Scheme. The adoption of the New Share Option Scheme is conditional upon:

• (i) the passing by the Shareholders at the Annual General Meeting of an ordinary resolution approving the termination of the Existing Share Option Scheme and the adoption of the New Share Option Scheme; and

• (ii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the new Shares which may fall to be issued upon exercise of the subscription rights under the options that may be granted under the New Share Option Scheme.

A summary of the principal terms of the New Share Option Scheme is set out in the Appendix to this circular.

– 4 –

LETTER FROM THE CHAIRMAN

As at the Latest Practicable Date, the Company had granted options to subscribe for a total of 227,600,000 Shares (representing approximately 6.62% of the issued share capital of the Company) under the Existing Share Option Scheme. Of the options granted, options to subscribe for 226,600,000 Shares (representing approximately 6.59% of the issued share capital of the Company) had been exercised and options to subscribe for 1,000,000 Shares (representing approximately 0.03% of the issued share capital of the Company) remained outstanding. The Directors confirm that, prior to the Annual General Meeting, they will not grant any further options under the Existing Share Option Scheme. Upon termination of the Existing Share Option Scheme, no further options will be granted thereunder. Save for this, the provisions of the Existing Share Option Scheme shall in all other respects remain in full force and effect and all outstanding options granted prior to such termination shall continue to be valid and exercisable in accordance with the provisions of the Existing Share Option Scheme. There is no other share option scheme of the Company besides the Existing Share Option Scheme.

The purpose of the New Share Option Scheme is to provide incentives to Participants to contribute to the Group and/or to enable the Group to recruit high-calibre employees and attract resources that are valuable to the Group. To ensure that this purpose is achieved, the rules of the New Share Option Scheme provide that the Board will grant options only to Participants who have made valuable contribution to the business of the Group based on their performance and/or years of service, or who are regarded as valuable resources of the Group based on their work experience, knowledge in the industry and other relevant factors, or are expected to be able to contribute to the prosperity, business development or growth of the Group based on their business connection or network or other relevant factors.

On the basis of 3,439,925,000 Shares in issue 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 Annual General Meeting, the Company may initially grant options representing 343,992,500 Shares under the New Share Option Scheme (i.e., 10 per cent. of the issued share capital of the Company as at the date of the Annual General Meeting). No trustees will be appointed under the New Share Option Scheme.

Although the rules of the New Share Option Scheme provide that the New Share Option Scheme is not subject to or conditional upon the achievement of any performance target and that there is no vesting period in respect of the options granted under the New Share Option Scheme, the Board believes that the requirement for a minimum subscription price (which is summarised in paragraph (D) in the Appendix hereto) as well as the selection criteria prescribed by the rules (which are summarised in paragraph (B) in the Appendix hereto) of the New Share Option Scheme will serve to protect the value of the Shares as well as to achieve the purpose of the New Share Option Scheme. In essence, a grantee will be able to benefit from an option only if the trading price of the Shares increases after the grant of the option.

The Directors consider that it is not appropriate to state the value of all options that can be granted pursuant to the New Share Option Scheme as if they had been granted on the Latest Practicable Date as a number of variables which are crucial for the calculation of the option value have not been determined. Such variables include but are not limited to the exercise price, the exercise period and other relevant factors. The Directors believe that any calculation of the value of any option which might have been granted on the Latest Practicable Date would be based on a number of speculative assumptions and therefore not only would such calculation not be meaningful or representative, but it could also potentially be misleading to the Shareholders.

– 5 –

LETTER FROM THE CHAIRMAN

Application will be made to the Stock Exchange for approval for listing of, and permission to deal in, the new Shares that may be issued pursuant to the exercise of the options granted under the New Share Option Scheme.

A copy of the New Share Option Scheme in its draft form will be available for inspection at the registered office of the Company during normal business hours from the date of this circular for 14 days and at the Annual General Meeting.

The Directors also believe that the adoption of the New Share Option Scheme is in the best interests of the Company and its Shareholders as a whole.

In accordance with the requirements of the Listing Rules, the Company will publish in the newspaper an announcement on the outcome of the Annual General Meeting relating to the adoption of the New Share Option Scheme on the business day following the date of the Annual General Meeting.

4. 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 facts the omission of which would make any statement herein misleading.

5. RECOMMENDATION

The Directors consider that the General Mandate, the Repurchase Mandate, the termination of the Existing Share Option Scheme and the adoption of the New Share Option Scheme are in the best interests of the Company and the Shareholders and, accordingly, recommend all Shareholders to vote in favour of the ordinary resolutions to be proposed at the Annual General Meeting. They intend to vote in favour of all of such resolutions in respect of their own holdings.

There is a form of proxy for use at the Annual General Meeting accompanying this circular. Whether or not you intend to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it as soon as possible to the Company’s Hong Kong branch share registrar, Secretaries Limited, at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong, and in any event not later than 48 hours before the time appointed for the holding of the Annual General Meeting. Delivery of a form of proxy will not preclude you from attending and voting in person at the Annual General Meeting should you so desire. The notice convening the Annual General Meeting is contained in the accompaning annual report of the Company.

Yours faithfully by Order of the Board

Philip Lam

Deputy Chairman and Deputy Managing Director

– 6 –

SUMMARY OF PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

The following is a summary of the principal terms of the New Share Option Scheme:

(A) PURPOSE

The purpose of the New Share Option Scheme is to provide incentives to Participants to contribute to the Group and/or to enable the Group to recruit high-calibre employees and attract resources that are valuable to the Group.

(B) WHO MAY JOIN

The Board (as hereinafter defined) may grant (subject to acceptance by the Participant in accordance with the terms of the New Share Option Scheme) to any Participant who, the Board may determine in its absolute discretion, has made valuable contribution to the business of the Group based on his performance and/or years of service, or is regarded as valuable resources of the Group based on his work experience, knowledge in the industry and other relevant factors, or is expected to be able to contribute to the prosperity, business development or growth of the Group based on his/its business connection or network or other relevant factors and subject to such conditions as the Board may think fit, an option to subscribe for such number of Shares (as hereinafter defined) as the Board may determine at the subscription price, provided that no such grants shall be made except to such number of Participants and in such circumstances that the Company will not be required under the applicable securities laws and regulations to issue a prospectus or other offer document in respect thereof, and will not result in the breach by the Company or its directors of any applicable securities laws and regulations or in any filing or other requirements arising.

(C) PAYMENT ON ACCEPTANCE OF OPTION

HK$10.00 in cash is payable by the Participant who accepts the grant of an option in accordance with the terms of the New Share Option Scheme on acceptance of the grant of an option.

(D) SUBSCRIPTION PRICE

The subscription price for the Shares under the options to be granted under the New Share Option Scheme will be a price determined by the Board and notified to a Participant at the time the grant of the options is made to (and subject to acceptance by) the Participant and shall be at least the highest of: (a) the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets on the date of the grant (subject to acceptance) of the option, which must be a Business Day; (b) the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets for the 5 Business Days immediately preceding the date of the grant (subject to acceptance) of the option; and (c) the nominal value of the Shares.

(E) MAXIMUM NUMBER OF SHARES

The limit on the total 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 exceed 30% of the number of issued Shares from time to time. Options lapsed or cancelled in accordance with the terms of the relevant share option scheme shall not be counted for the purpose of calculating the said 30%-limit.

– 7 –

SUMMARY OF PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

In addition, subject as provided below in this paragraph (E), 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 represent more than 10% of the nominal amount of all the issued Shares as at the date of approval of the New Share Option Scheme by the Shareholders (the “10% Limit”). Options lapsed in accordance with the terms of the New Share Option Scheme or any other share option scheme(s) of the Company shall not be counted for the purpose of calculating the 10% Limit. The Company may seek approval from its Shareholders in general meeting to refresh the 10% Limit at any time in accordance with the provisions of the Listing Rules, 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 scheme(s) of the Company under the limit as refreshed must not exceed 10% of the number of Shares in issue as at the date of approval of the refresher mandate (the “Refreshed Limit”). Options previously granted to (and subject to acceptance by) a Participant under the New Share Option Scheme and/or any other share option scheme(s) of the Company (including those exercised, outstanding, cancelled or lapsed in accordance with the New Share Option Scheme or such other schemes) shall not be counted for the purpose of calculating the Refreshed Limit.

The Company may also seek separate approval from the Shareholders in general meeting for granting options beyond the 10% Limit, or as the case may be, the Refreshed Limit, to specifically identified Participants in accordance with the provisions of the Listing Rules. Accordingly, if the prior approval of the Shareholders in general meeting is obtained in accordance with the relevant procedural requirements of the Listing Rules, the Board may grant options to such Participants in respect of such number of Shares and on such terms as may be specified in the circular required to be issued under the Listing Rules.

If any grant of options is proposed to be made to a Participant which, if accepted and exercised in full, would result in the Shares issued and which may fall to be issued upon the exercise of such options proposed to be granted and all options already granted or to be granted (including options exercised, cancelled and outstanding) to such person under the New Share Option Scheme and any other share option scheme(s) of the Company in the 12-month period up to and including the proposed date of grant for such options exceeding 1% of the number of Shares in issue as at the proposed date of grant, then such grant of options must first be approved by the Shareholders in general meeting held in accordance with the requirements of the Listing Rules, and such Participant and his associates shall abstain from voting on the relevant resolution at such meeting.

(F) EXERCISE OF OPTION

An option may be exercised in accordance with the terms of the New Share Option Scheme at any time during a period of not more than 10 years to be notified by the Board to the grantee commencing on the grant date and expiring on the last day of the said period. There is no minimum period for which an option must be held before it can be exercised.

The right to exercise an option is not subject to or conditional upon the achievement of any performance target.

– 8 –

SUMMARY OF PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

(G) RIGHTS ARE PERSONAL TO GRANTEE

An option shall be personal to the grantee and shall not be assignable and no grantee shall in any way sell, transfer, assign, charge, mortgage, encumber or create any interest in favour of any third party over or in relation to any option or purport to do any of the foregoing. Any breach of the foregoing shall entitle the Company to cancel any outstanding option, or any part thereof, in favour of such grantee.

(H) RIGHTS ON CEASING EMPLOYMENT OR OFFICE

Where the grantee is an employee (including any executive director) or an officer (including any non-executive director and independent non-executive director) of the Company or any Subsidiary, in the event of the grantee ceasing to be such employee or officer for any reason, other than his death, ill health, disability or insanity or the termination of his employment or office on one or more of the grounds specified in the New Share Option Scheme, then the grantee may exercise the option up to his entitlement at the date of cessation (to the extent not already exercised) until whichever is the earlier of the date of expiry of the option period or the last day of the period of 1 month (or such longer period as the Board may determine) following the date of such cessation, which date shall be the last actual day of employment or office with the Company or the relevant Subsidiary whether payment in lieu of notice is made or not (if applicable).

(I) RIGHTS ON DEATH, ILL HEALTH, DISABILITY OR INSANITY

Where the grantee is an employee (including any executive director) or an officer (including any non-executive director and independent non-executive director) of the Company or any Subsidiary, in the event of the grantee ceasing to be such employee or officer by reason of death and none of the events which would be a ground for termination of his employment or office specified in the New Share Option Scheme has occurred and to the extent that the grantee has outstanding options at the time of such cessation, the legal personal representative(s) of such grantee shall be entitled until the last day of the period of 3 months after the issue of the probate or the letter of administration of the grantee (or such longer period as the Board may determine) to exercise the Option (to the extent not already exercised) in full or to the extent specified in the notice to exercise such option.

Where the grantee is an employee (including any executive director) or an officer (including any non-executive director and independent non-executive director) of the Company or any Subsidiary, in the event of the grantee ceasing to be such employee or officer by reason of ill health, disability or insanity and none of the events which would be a ground for termination of his employment or office specified in the New Share Option Scheme has occurred and to the extent that the grantee has outstanding options at the time of such cessation, such grantee or the legal personal representative(s) of that grantee shall be entitled until the last day of the period of 6 months from the date of cessation (or such longer period as the Board may determine) to exercise the option (to the extent not already exercised) in full or to the extent specified in the notice to exercise such option.

(J) RIGHTS ON TAKEOVER

If a general offer to acquire Shares (whether by takeover offer, merger, privatisation proposal by scheme of arrangement between the Company and its members or otherwise in like manner) is

– 9 –

SUMMARY OF PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

made to all the Shareholders (or all such holders other than the offeror and/or any person controlled by the offeror and/or any person acting in concert with the offeror) and such offer, having been approved in accordance with applicable laws and regulatory requirements, becomes or is declared unconditional, the grantee of the option (or his legal personal representative(s)) shall be entitled to exercise the option (to the extent not already exercised) at any time until whichever is the earlier of the date of expiry of the option period or the last day of the period of 14 days after the date on which the offer becomes or is declared unconditional, after which the option shall lapse.

(K) RIGHTS ON WINDING UP

If 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 legal personal representative(s)) shall be entitled to exercise all or any of his options at any time not later than 2 business days prior to the record date for ascertaining entitlements to attend and vote at the proposed general meeting of the Company 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 record date for ascertaining entitlements to attend and vote at the proposed general meeting referred to above, allot the relevant Shares to the grantee credited as fully paid.

(L) RIGHTS ON COMPROMISE OR ARRANGEMENT

If an application is made to the court (otherwise than where the Company is being voluntarily wound up), pursuant to the Companies Act, in connection with a proposed compromise or arrangement between the Company and its members (or any class of them), the grantee may by notice in writing to the Company within 21 days after the date of such application, exercise the option in full (to the extent not already exercised) or to the extent specified in such notice.

(M) EFFECTS OF ALTERATIONS TO CAPITAL

Subject to the limits on the number of Shares subject to the New Share Option Scheme described in paragraph (E) above, in the event of any capitalisation issue, rights issue, consolidation or sub-division of Shares or reduction of the share capital of the Company (other than an issue of Shares as consideration in respect of a transaction) whilst an option remains outstanding, such corresponding adjustments (if any) will be made to the number of Shares subject to the New Share Option Scheme, the number of Shares subject to outstanding options and/or the subscription price in relation to each outstanding option, provided that any such adjustments shall be made such that the proportion of the issued share capital of the Company to which an option entitles the grantee to subscribe after such adjustment must be the same as that to which the option entitled the grantee to subscribe immediately before such adjustment, but so that no such adjustment shall be made to the extent that the effect of such adjustment would be to enable any Share to be issued at less than its nominal value. In respect of any adjustment required by the foregoing provisions, other than any made on a capitalisation issue, an independent financial adviser or the auditors for the time being of the Company must also confirm to the Board in writing that the adjustments satisfy the foregoing proviso.

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(N) LAPSE OF OPTIONS

An option shall lapse automatically (to the extent not already exercised) on the earliest of:

• (i) subject as provided in paragraph (I) above, the expiry of the option period;

• (ii) the expiry of any of the other periods referred to in paragraphs (H), (I), (J) or (L) above;

• (iii) subject to paragraph (K) above, the earlier of the close of business on the second business day prior to the record date for ascertaining entitlements to attend and vote at the general meeting referred to in paragraph (K) above or the date of commencement of the winding-up of the Company;

• (iv) save as otherwise provided in paragraph (J) above, or by the Court in relation to the scheme in question, upon the sanctioning pursuant to the Companies Act by the Supreme Court of Bermuda of a compromise or arrangement between the Company and its members or creditors for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies;

• (v) where the grantee is an employee (including any executive director) or an officer (including any non-executive director and independent non-executive director) of the Company or any Subsidiary, the date on which the grantee ceases to be such employee or officer by reason of the termination of his employment or office on any one or more of the grounds that he has been guilty of misconduct, or has committed an act of bankruptcy or has become insolvent or has made any arrangement or composition with his creditors generally, or has been convicted of any criminal offence involving his integrity or honesty or (if so determined by the Board) on any other ground on which an employer would be entitled to terminate his employment or office at common law or pursuant to any applicable laws or under the grantee’s service contract or terms of office with the Company or the relevant Subsidiary;

• (vi) where the grantee is in an Eligible Relationship (other than in a position as an employee or officer) with the Company or any Subsidiary, the date on which the grantee ceases to be in such Eligible Relationship with the Company or any Subsidiary for any reason; or

• (vii) the date on which the Board exercises the Company’s right to cancel the option because of a breach by the grantee of the rules summarised in paragraph (G) above.

(O) RANKING AND VOTING RIGHTS OF SHARES

The Shares to be allotted upon the exercise of an option will be subject to all the provisions of the Company’s Bye-Laws and will rank pari passu with the fully paid Shares in issue on the date of allotment or, if that date falls on a day when the register of members of the Company is closed, the first day of the reopening of the register of members and accordingly will entitle the holders to participate in all dividends or other distributions paid or made on or after the date of allotment or, if that date falls on a day when the register of members of the Company is closed, the

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first day of the reopening of the register of members, 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 of allotment, or, if later, before the date of registration of the allotment in the register of members of the Company.

A Share issued upon the exercise of an option shall not carry any voting rights until the registration of the grantee (or any other person) as the holder thereof.

(P) CANCELLATION OF OPTIONS

The Board may effect the cancellation of any options granted but not exercised on such terms as may be agreed with the relevant grantee, as the Board may in its absolute discretion see fit and in a manner that complies with all applicable legal requirements for such cancellation.

Where the Company cancels any options granted but not exercised and grants new options to the same grantee, the grant of such new options may only be made under the New Share Option Scheme if there is available unissued options (excluding the cancelled options) within each of the 10%-limits as referred to in paragraph (E) above.

(Q) ALTERATION TO THE NEW SHARE OPTION SCHEME

The terms of the New Share Option Scheme may be altered in any respect by resolution of the Board except that the provisions of the New Share Option Scheme relating to matters contained in Rule 17.03 of the Listing Rules shall not be altered to the advantage of Participants unless with the prior sanction of a resolution of the Shareholders in general meeting.

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 must first be approved by the Shareholders in general meeting, except where the alterations take effect automatically under the existing terms of the New Share Option Scheme.

The amended terms of the New Share Option Scheme or the options must still comply with the relevant requirements of Chapter 17 of the Listing Rules.

Any change to the authority of the Board in relation to any alteration to the terms of the New Share Option Scheme must first be approved by the Shareholders in general meeting.

(R) TERMINATION OF THE NEW SHARE OPTION SCHEME

The Company by resolution of its Shareholders in general meeting or of the Board may at any time terminate the operation of the New Share Option Scheme and in such event no further options will be granted or accepted but the provisions of the New Share Option Scheme shall remain in force in all other respects. All options granted and accepted prior to such termination and not then exercised shall continue to be valid and exercisable subject to and in accordance with the New Share Option Scheme.

(S) PERIOD OF THE NEW SHARE OPTION SCHEME

Subject to termination as referred to in paragraph (R) above, the New Share Option Scheme shall be valid and effective for a period of 10 years commencing on 16th August, 2002 (being the

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date of approval of the New Share Option Scheme by the Shareholders), after which period no further options will be granted or accepted but the provisions of the New Share Option Scheme shall remain in full force and effect in all other respects.

(T) CONDITIONS

The New Share Option Scheme is conditional upon: (a) the passing by the Shareholders in the Annual General Meeting of an ordinary resolution to approve the termination of the Existing Share Option Scheme and the adoption of the New Share Option Scheme; and (b) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, any Shares which may fall to be issued pursuant to the exercise of options under the New Share Option Scheme.

(U) RESTRICTIONS ON THE TIMING OF GRANT OF OPTION

No option shall be granted to any Participant if the date of grant in respect of that option occurs (or would, in the absence of this provision, occur) after a price sensitive event or a price sensitive matter in relation to the securities of the Company has been the subject of a decision, until such price sensitive information has been published in the newspapers. In particular, no option may be granted within the period commencing 1 month immediately preceding the earlier of: (i) the date of the Board meeting for the approval of the Company’s interim or annual results; and (ii) the deadline for the Company to publish its interim or annual results announcement, and ending on the date of the results announcement.

(V) GRANT OF OPTIONS TO CONNECTED PERSONS

Where any grant of options is proposed to be made to a Participant who is a director, chief executive or substantial shareholder of the Company, or any of their respective associates, such grant must first be approved by the independent non-executive Directors (excluding any independent non-executive Director who is the proposed grantee of the options).

If the grant of options is to be made to a Participant who is a substantial shareholder or an independent non-executive director of the Company, or any of their respective associates, which would result in the Shares issued and to be issued upon exercise of all options already granted and to be granted (including options exercised, cancelled and outstanding) to such person under the New Share Option Scheme and any other scheme(s) of the Company in the 12-month period up to and including the proposed date of the grant (subject to acceptance) of the options: (i) representing in aggregate over 0.1% of the number of Shares then in issue; and (ii) having an aggregate value, based on the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets on each relevant date of the grant (subject to acceptance) of the options, in excess of HK$5 million, then such grant of options must first be approved by the Shareholders in general meeting, with all the connected persons of the Company abstaining from voting on the proposed grant (except that any such connected person may vote against the relevant resolution at the general meeting provided that his intention to do so has been stated in the document required to be issued pursuant to the Listing Rules). Any vote taken at the meeting to approve the proposed grant of such options must be taken on a poll. In addition, any proposed change in the terms of options granted to a Participant who is a substantial shareholder or an independent non-executive director of the Company, or any of their respective associates, must first be approved by the Shareholders in general meeting on a similar basis (as to abstention and voting by poll) as stated above.

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