Goldstream Investment Limited — Proxy Solicitation & Information Statement 2009

Oct 30, 2009

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 a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your securities of Imagi International Holdings Limited you should at once hand this circular to the purchaser or transferee or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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

==> picture [217 x 61] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

(Stock Code: 00585)

(1) REFRESHMENT OF EXISTING SCHEME MANDATE LIMIT UNDER THE SHARE OPTION SCHEME; (2) CONDITIONAL GRANT OF NEW OPTIONS; (3) CONNECTED TRANSACTION INVOLVING SHARE GRANTS TO DIRECTORS;

AND

(4) NOTICE OF SPECIAL GENERAL MEETING

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 7 to 15 of this circular and a letter from the Independent Board Committee is set out on pages 16 to 17 of this circular. A letter of advice from the independent financial adviser, Access Capital Limited, to the Independent Board Committee and the Independent Shareholders is set out on pages 18 to 25 of this circular.

A notice convening the special general meeting of the Company to be held at 2/F, The Excelsior Hong Kong, 281 Gloucester Road, Causeway Bay, Hong Kong on Tuesday, 17 November 2009 immediately following the conclusion of the annual general meeting to be held on the same date and at the same place, on or around 3:45 p.m., is set out on pages 34 to 37 of this circular. A form of proxy is also enclosed. Whether or not you are able to attend and vote at the SGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the branch registrar of the Company in Hong Kong, Tricor Secretaries Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from subsequently attending and voting at the meeting or any adjournment thereof, should you so wish.

30 October 2009

* for identification purpose only

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Refreshment of Existing Scheme Mandate Limit . . . . . . . . . . . . . . . . . . . . . . .	8
Conditional Grant of New Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Connected Transaction Involving Share Grants to Directors . . . . . . . . . . . . . .	11
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Procedure for Demanding a Poll at a General Meeting of the Company . . . .	14
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Letter from Access Capital Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Appendix I – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	34

– i –

DEFINITIONS

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

• “Access Capital”

• Access Capital Limited, a corporation licensed under the SFO for carrying out type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Share Grant and the Financial Assistance Transaction

• “Acting CEO”

acting chief executive officer of the Company

• “Affected Grantees”

• the grantees whose Share Options, subject to their agreement, will be cancelled pursuant to the Cancellation

• “associate(s)”

has the meaning ascribed to it under the Listing Rules

• “Bank”

Standard Chartered Bank (Hong Kong) Limited

• “Board”

• the board of Directors

• “Bridge Loan Agreements”

collectively, the Mehta-Imagi Bridge Loan Agreement, Asia CGI Bridge Loan Agreement and Evertop Bridge Loan Agreement, as described in announcement of the Company dated 24 February 2009 (as the same may be modified, amended or supplemented from time to time)

• “Bridge Loan Conversion”

the conversion of the outstanding amounts in respect of the bridge loans under the Bridge Loan Agreements into Shares, as contemplated under the Bridge Loan Conversion Agreement

• “Bridge Loan Conversion Agreement”

the agreement dated 15 May 2009 between, among others, the bridge lenders and the Company relating to, among other things, the conversion of all outstanding bridge loans under Bridge Loan Agreements

– 1 –

DEFINITIONS

• “Business Day”

• “Bye-laws”

• “Cancellation”

• “Cancelled Options”

• “Company”

• “Companies Ordinance”

• “connected person(s)”

• “Director(s)”

• “Eligible Participants”

• “Existing Scheme Mandate Limit”

• a day, other than a Saturday and a day on which a tropical cyclone warning no. 8 or above or a “black rainstorm warning signal” is hoisted in Hong Kong at any time between 9:00 a.m. and 5:00 p.m., on which licensed banks are open for general banking business in Hong Kong throughout their normal business hours

• the existing bye-laws of the Company

• the proposed cancellation of the unexercised Share Options in accordance with the terms and conditions of the Share Option Scheme as set out in the section headed “Cancellation of Certain Share Options” in the 28 Aug Announcement

• the Share Options to be cancelled pursuant to the Cancellation

• Imagi International Holdings Limited, a company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the Stock Exchange

• the Companies Ordinance (Chapter 32 of the Laws of Hong Kong)

• has the meaning ascribed to it under the Listing Rules

• the director(s) of the Company

• any full-time or part-time employees (including the Directors), advisers, consultants, distributors, suppliers, agents, customers, partners, joint venture partners, promoters and service providers to the Group who, in the sole discretion of the Board, have contributed or may contribute to the Group

the maximum number of Share Options which may be granted under the Share Option Scheme, being Share Options to subscribe for up to 196,095,385 Shares, representing 10% of the issued share capital of the Company as at the date of the resolution approving the Existing Scheme Mandate Limit, 30 July 2009

– 2 –

DEFINITIONS

• “Grantees”

• “Grant Letter”

• “Group”

• “Hong Kong”

• “Independent Board Committee”

• “Independent Shareholders”

• “Independent Third Party(ies)”

• “Latest Practicable Date”

• “Listing Rules”

• “Mr. Courtauld”

• “Mr. Hung”

• “Mr. Phoon”

• “New Options”

• the persons who were granted the Share Options on 21 August 2009

• the letter dated 21 August 2009 issued by the Company to Mr. Phoon in respect of the Share Grant

• the Company and its subsidiaries

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

• the committee appointed by the Board, consisting of Mr. Richard Arthur Witts, Mr. Ng See Yuen and Mr. Oh Kok Chi, being all the independent non-executive Directors, to advise the Independent Shareholders in respect of the terms of the Share Grant

• Shareholders other than Mr. Courtauld and Mr. Phoon and their respective associates

• independent person(s) not connected with the Group or any of the directors, chief executives, substantial shareholders of the Company or any of its subsidiaries or any of their respective associates

• 27 October 2009, being the latest practicable date prior to the printing of this circular for ascertaining certain information which is contained in this circular

• the Rules Governing the Listing of Securities on the Stock Exchange, as amended from time to time

• Mr. William Montgomerie Courtauld, a non-executive Director of the Company

• Mr. Hung Kam Biu, Kenneth, a substantial Shareholder

• Mr. Phoon Chiong Kit, an executive Director and the Deputy Chairman of the Company

• the share options conditionally granted to the Affected Grantees on 21 August 2009 as described in the section headed “Conditional Grant of New Options” in this circular

– 3 –

DEFINITIONS

• “New Winnington Convertible Note”

• the convertible note to be issued by the Company to Winnington Capital pursuant to a subscription agreement dated 15 May 2009 entered into between the Company and Winnington Capital

• “PIPA”

• Proactive Investment Partners Asia Ltd., a company 50% owned by Mr. Courtauld, with the remaining 50% owned by his wife, Mrs. Caroline Patricia Courtauld

• “PRC”

• the People’s Republic of China (for the purpose of this circular, excluding Hong Kong, the Macau Special Administrative Region and Taiwan)

• “P&A” prints and advertising

• “P&A Financing”

• the prints and advertising financing secured by the Company in connection with the release of its feature film, Astro Boy

• “Refreshed Scheme Mandate Limit”

• the proposed refreshment of the Existing Scheme Mandate Limit at the SGM pursuant to which the Board may grant options to eligible participants under the Existing Scheme Mandate Limit and any other share option schemes of the Company to subscribe for up to 10% of the Shares in issue as at the date of the SGM

• “Refreshment of Existing Scheme Mandate Limit”

• the proposed refreshment of the Existing Scheme Mandate Limit

• “Rights Issue”

• the issue of the rights shares by the Company on the basis of one rights share for every four Shares, further details of which are set out in the prospectus of the Company dated 31 July 2009

• “Scheme Mandate Limit”

• the maximum number of Shares which may be allotted and issued upon the exercise of all Share Options, which shall not in aggregate exceed 10% of the Shares in issue as at the date of the adoption of the Share Option Scheme and thereafter, if refreshed, shall not in aggregate exceed 10% of the Shares in issue as at the date of passing the relevant ordinary resolution

• “Service Agreement”

the service agreement entered into between the Company and Mr. Courtauld dated 21 August 2009

– 4 –

DEFINITIONS

“SFO”

• “SGM”

• “Share(s)”

• “Share Grant”

• “Shareholder(s)”

• “Share Option Scheme”

• “Share Option(s)”

• “Stock Exchange”

• “subsidiary”

• “24 Aug Announcement”

• “28 Aug Announcement”

Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

• the special general meeting of the Company to be convened at 2/F, The Excelsior Hong Kong, 281 Gloucester Road, Causeway Bay, Hong Kong immediately after the conclusion of the annual general meeting of the Company to be held on the same date and at the same place, on or around 3:45 p.m. on Tuesday, 17 November 2009, for the purpose of considering, and if thought fit, approving, among other things, (i) the Refreshment of Existing Scheme Mandate Limit, (ii) the conditional grant of the New Options and (iii) the Share Grant

• ordinary share(s) of a nominal value of HK$0.10 each in the share capital of the Company

• (i) in relation to Mr. Courtauld, the proposed allotment and issue of up to 5,483,870 fully-paid up Shares to Mr. Courtauld under the Service Agreement, and (ii) in relation to Mr. Phoon, the proposed allotment and issue of a fixed number of 2,000,000 fully-paid up Shares to Mr. Phoon under the Grant Letter

• the holder(s) of the Share(s)

• the share option scheme approved and adopted by the Company on 16 August 2002

• the share option(s) granted or to be granted under the Share Option Scheme

• The Stock Exchange of Hong Kong Limited

• has the meaning ascribed thereto under the Companies Ordinance

• the announcement dated 24 August 2009 published by the Company

• the announcement dated 28 August 2009 published by the Company

– 5 –

DEFINITIONS

“30 July SGM” the special general meeting of the Company held on 30 July 2009 “HK$” Hong Kong dollars, the lawful currency of Hong Kong “US$” United States dollars, the lawful currency of the United States of America “%” per cent

– 6 –

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 00585)

Executive Directors:

Ms. Ting Chuk Kwan (Acting Chief Executive Officer) Mr. Phoon Chiong Kit (Deputy Chairman)

Non-executive Directors: Mr. Paul Steven Serfaty Mr. William Montgomerie Courtauld

Independent non-executive Directors: Mr. Richard Arthur Witts (Chairman) Mr. Ng See Yuen Mr. Oh Kok Chi

Registered office: Rosebank Centre 11 Bermudiana Road Pembroke Bermuda

Principal place of business in Hong Kong: 23rd Floor, 8 Commercial Tower 8 Sun Yip Street, Chai Wan Hong Kong 30 October 2009

• To the Shareholders and for information only, holders of the existing Share Options and convertible notes of the Company

Dear Sirs or Madams,

(1) REFRESHMENT OF EXISTING SCHEME MANDATE LIMIT UNDER THE SHARE OPTION SCHEME;

(2) CONDITIONAL GRANT OF NEW OPTIONS; AND

(3) CONNECTED TRANSACTION INVOLVING SHARE GRANTS TO DIRECTORS

INTRODUCTION

The Directors announced on 24 August 2009 that the Board had conditionally agreed to make the Share Grant to Mr. Courtauld and Mr. Phoon subject to the approval of the Independent Shareholders at the SGM. On 28 August 2009, the Company announced that the New Options had been conditionally granted to the Affected Grantees. The Independent Board Committee has been appointed to consider the terms of the Share Grant and to make a recommendation to the Independent Shareholders, and Access Capital has been appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Share Grant.

* for identification purpose only

– 7 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with further information in respect of, among other matters, the resolutions to be proposed at the SGM for the approval of (a) the Refreshment of Existing Scheme Mandate Limit; (b) the conditional grant of the New Options; and (c) the Share Grant, and to set out the advice from Access Capital to the Independent Board Committee and the Independent Shareholders and the recommendation of the Independent Board Committee in respect of the Share Grant.

1. REFRESHMENT OF EXISTING SCHEME MANDATE LIMIT

The Company adopted the Share Option Scheme pursuant to an ordinary resolution passed by the Shareholders on 16 August 2002. As at the Latest Practicable Date, none of the Directors were trustees of the Share Option Scheme or had any direct or indirect interest in the trustees. Pursuant to the Share Option Scheme, the Directors were authorised to grant options to full-time or part-time employees (including the Directors), advisers, consultants, distributors, suppliers, agents, customers, partners, joint venture partners, promoters, service providers to the Group who, in the sole discretion of the Board, have contributed or may contribute to the Group.

At the 30 July SGM, the Existing Scheme Mandate Limit was refreshed to allow the Company to grant options carrying the rights to subscribe for up to a maximum of 196,095,385 Share Options, representing 10% of the Shares in issue as at the 30 July SGM. Subject to the prior approval by the Shareholders, the Company may, at any time, refresh the Scheme Mandate Limit to the extent not exceeding 10% of the Shares in issue as at the date of the aforesaid Shareholders’ approval.

As at the Latest Practicable Date, Share Options to subscribe for 190,738,000 Shares, representing approximately 5.3% of the Shares in issue, had been granted under the Share Option Scheme since the approval of the Existing Scheme Mandate Limit at the 30 July SGM. Set out below are the particulars regarding the Share Options since the approval of the Existing Scheme Mandate Limit:

	Number of
	underlying
	Shares
Granted:	190,738,000
Exercise:	–
Cancelled:	–
Lapsed:	2,000,000
Outstanding:	188,738,000
Unused Existing Scheme Mandate Limit:	5,357,385

Under the rules of the Share Option Scheme, the Company may only grant new options to the Affected Grantees if there are available unissued options (excluding the Cancelled Options) within the Scheme Mandate Limit. As Share Options to subscribe for a total of only 5,357,385 Shares remain available to be granted under the Share Option Scheme (after taking into account the Share Options granted to the Grantees), the Directors believe that the Refreshment of Existing Scheme Mandate Limit is in the best

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LETTER FROM THE BOARD

interests and for the benefit of the Company and its Shareholders as a whole as it will enable the Company to issue the New Options to the Affected Grantees (as described below) and to provide the Company with greater flexibility to provide incentives to, and recognize the contributions of, the Eligible Participants.

The Company may refresh the Existing Scheme Mandate Limit at any time subject to prior Shareholders’ approval provided that:

• (i) the Existing Scheme Mandate Limit so refreshed must not exceed 10% of the Shares in issue as at the date of the Shareholder’s approval of the refreshed Existing Scheme Mandate Limit; and

• (ii) options previously granted under the Share Option Scheme and other share options schemes (including those outstanding, cancelled, lapsed in accordance with the schemes or exercised options) will not be counted for the purpose of calculating the Existing Scheme Mandate Limit as refreshed.

Notwithstanding the foregoing, the number of Shares to be issued upon the exercise of all the options granted and yet to be exercised under the Share Option Scheme and other option schemes must not exceed 30% of the Shares in issue from time to time.

As at the Latest Practicable Date, the total number of Shares in issue was 3,601,518,384. Subject to the approval of the Refreshment of Existing Scheme Mandate Limit and assuming no further issue or repurchase of Share any other change in the issued Share Capital of the Company prior to the SGM, the maximum number of Shares which may be issued upon the exercise of all options to be granted pursuant to the Refreshment of Existing Scheme Mandate Limit will be 360,151,838 Shares, representing 10% of the issued share capital of the Company at the date of the SGM. The total number of Shares which may be issued upon exercise of the Refreshed Existing Scheme Mandate Limit of 360,151,838 Shares together with all outstanding options as at the Latest Practicable Date carrying the right to subscribe 283,729,654 Shares is 643,881,492 Shares, representing 17.88% of the total number of Shares in issue as at the date of the SGM. Following the Refreshment of Existing Scheme Mandate Limit, the Company would have available sufficient unissued options (after excluding the Cancelled Options) for the purpose of granting the Affected Grantees the New Options.

The Refreshment of Existing Scheme Mandate Limit is conditional upon:

• (i) the passing of the necessary ordinary resolution by the Shareholders at the SGM to approve the Refreshment of Existing Scheme Mandate Limit; and

• (ii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of the Share Options to be granted under the refreshed Existing Scheme Mandate Limit.

Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of the Share Options to be granted under the refreshed Existing Scheme Mandate Limit.

– 9 –

LETTER FROM THE BOARD

2. CONDITIONAL GRANT OF NEW OPTIONS

As disclosed in the 28 Aug Announcement, the Board considers that the exercise prices for certain unexercised Share Options were significantly higher than the recent market prices of the Shares and proposes to cancel these Share Options in accordance with the terms of the Share Option Scheme as these Share Options can no longer serve the purpose of providing incentives or rewards to the holders thereof. The total number of Shares subject to the Share Options to be cancelled is 43,580,000 Shares.

The Board therefore considers that the cancellation of these Share Options and conditional grant of the New Options to the Affected Grantees would bring the exercise price to the current trading price level of the Shares which would better serve the purpose of the Share Option Scheme in providing incentives or rewards to the Affected Grantees.

As such, on 21 August 2009, the Board resolved that, subject to and conditional upon (i) the Affected Grantee’s acceptance and consent to the Cancellation; (ii) the passing of the relevant resolutions by the Shareholders at the SGM in relation to (a) the Refreshment of Existing Scheme Mandate Limit and (b) the grant of the New Options as set out above; and (iii) such grant being in compliance with the Listing Rules, the New Options be conditionally granted to the Affected Grantees. Upon the conditions to the grant being satisfied, the New Options will be exercisable for a period of five years after their applicable vesting periods and allow the Affected Grantees to subscribe for up to 43,580,000 Shares at an exercise price of HK$0.315 per Share which is the highest of (a) the closing price of HK$0.28 per Share as stated in the Stock Exchange’s daily quotation sheets on the date of the grant, (b) the average closing price of HK$0.315 per Share as stated in the Stock Exchange’s daily quotation sheets for the five trading days immediately preceding the date of the grant and (c) the nominal value of a Share of HK$0.10. The closing price of the Shares on 21 August 2009, being the date of the conditional grant of the New Options, was HK$0.28 per Share.

The New Options have been granted to the Affected Grantees on the basis that the same number of Share Options would be cancelled under the Cancellation. In addition to these New Options, the Board has also granted certain Affected Grantees additional new Share Options in respect of 88,330,000 Shares (out of the Share Options granted on 21 August 2009 in respect of a total number of 190,738,000 Shares under the Share Option Scheme).

If the conditions to the grant of the New Options are not satisfied, the conditional grant of the New Options will automatically lapse and cease to have any effect.

Save as disclosed in the 28 Aug Announcement, none of the Grantees or Affected Grantees is a Director, chief executive or substantial shareholder (as defined in the Listing Rules) of the Company or an associate of any of them.

– 10 –

LETTER FROM THE BOARD

3. CONNECTED TRANSACTION INVOLVING SHARE GRANTS TO DIRECTORS

(a) Mr. William Montgomerie Courtauld

As disclosed in the 24 Aug Announcement, the Company entered into the Service Agreement with Mr. Courtauld in relation to his appointment as Acting CEO on 21 August 2009. Mr. Courtauld’s remuneration pursuant to the Service Agreement includes a share grant involving the allotment and issue of 1,000,000 fully-paid up Shares for each month of service during the term of the Service Agreement.

The allotment and issue of the Shares to Mr. Courtauld pursuant to the Share Grant is subject to the satisfaction of the following conditions:

• (i) the compliance with all relevant requirements of the Listing Rules to which the Company is subject (including with out limitation, the approval of the Independent Shareholders);

• (ii) the Company obtaining all third party consents or waivers with respect to any restriction on the Company implementing the Share Grant; and

• (iii) the Company complying with all applicable laws and regulations to which it is subject with respect to the Share Grant, including without limitation any restriction under its Bye-laws.

The number of Shares to be issued under the Share Grant shall be prorated to reflect the number of actual days’ service where less than a full month has been served.

The number of Shares to be allotted and issued to Mr. Courtauld under the Share Grant will also be appropriately adjusted in the event of share splits and other standard adjustment events taking place prior to the issuance of Shares to him but shall not be adjusted for (i) the issue of Shares in connection with the Rights Issue, (ii) the issue of Shares pursuant to the New Winnington Convertible Note; and (iii) the Bridge Loan Conversion. No adjustment will be made as a result of the grant or exercise of options granted under the Share Option Scheme.

On 23 September 2009, Mr. Courtauld stepped down from his position as Acting CEO for health reasons. Based on a term of service from 9 May 2009 to 23 October 2009, a total of 5,483,870 Shares will, subject to the satisfaction of the conditions above, be allotted and issued to Mr. Courtauld as part of the Share Grant.

(b) Mr. Phoon Chiong Kit

In recognition of the contributions and services of Mr. Phoon Chong Kit, an executive Director and the deputy chairman of the Company, the Board has also conditionally agreed pursuant to the Grant Letter dated 21 August 2009 that his

– 11 –

LETTER FROM THE BOARD

remuneration shall include a share grant involving the allotment and issue of a fixed number of 2,000,000 fully-paid up Shares. Mr. Phoon has not entered into any service agreement with the Company.

The allotment and issue of the Shares to Mr. Phoon under this Share Grant is also subject to the satisfaction of the following conditions:

• (i) the compliance with all relevant requirements of the Listing Rules to which the Company is subject (including with out limitation, the approval of the Independent Shareholders);

• (ii) the Company obtaining all third party consents or waivers with respect to any restriction on such grant of shares in the Company to which it may be subject; and

• (iii) the Company complying with all applicable laws and regulations to which it is subject with respect to share grant, including without limitation any restriction under its Bye-laws.

The number of Shares to be allotted and issued to Mr. Phoon under the Share Grant will be appropriately adjusted in the event of share splits and other standard adjustment events taking place prior to the issuance of Shares to him but shall not be adjusted for (i) the issue of Shares in connection with the Rights Issue; (ii) the issue of Shares pursuant to the New Winnington Convertible Note and (iii) the Bridge Loan Conversion. No adjustment will be made as a result of the grant or exercise of options granted under the Share Option Scheme.

The number of Shares to be allotted and issued to Mr. Courtauld and Mr. Phoon under the Share Grant were derived based on the arms length negotiations and discussions between the Company and the relevant individuals, having regard to the respective roles, responsibilities and contributions of the particular individuals.

Application will be made to the Stock Exchange for approval for the listing of and permission to deal in the Shares to be issued under the Share Grant.

Reasons for, and benefits of, the Share Grant

The Company believes that the Share Grant to Mr. Courtauld and Mr. Phoon as part of their remuneration package will place a less onerous burden on the cashflow of the Company while enabling the Company to provide an incentive to Mr. Courtauld and Mr. Phoon and for the Company to benefit from the services and experience of Mr. Courtauld and Mr. Phoon during a critical period of time for the Company. The Directors believe that the terms of the Share Grant are fair and reasonable and in the interests of the Shareholders as a whole and that the Share Grants have been made on normal commercial terms and in the ordinary and usual course of business.

– 12 –

LETTER FROM THE BOARD

Mr. Courtauld and Mr. Phoon are Directors and connected persons of the Company pursuant to Rule 14A.11 of the Listing Rules. Accordingly, the allotment and issue of Shares in accordance with each of the Share Grant to Messrs. Courtauld and Phoon constitutes a connected transaction under Chapter 14A of the Listing Rules and is subject to the approval of the Independent Shareholders at the SGM. Mr. Courtauld and Mr. Phoon (to the extent that he holds any Shares) and their respective associates shall abstain from voting on the relevant resolutions approving the Share Grant to each of them at the relevant SGM.

The issue of Shares pursuant to the Share Grant will be made pursuant to a specific mandate to be obtained from Independent Shareholders at the SGM. The Board will seek a specific mandate to allot and issue up to a maximum of 5,483,870 Shares to Mr. Courtauld and 2,000,000 Shares to Mr. Phoon.

GENERAL

The Group is principally engaged in the production of computer graphic imaging animated motion pictures.

To the best knowledge of the Directors, apart from Mr. Courtauld and (to the extent he owns any Shares) Mr. Phoon with respect to the Share Grant, none of the other Shareholders has any material interest in the transactions to be proposed at the SGM and accordingly, no other Shareholders are required to abstain from voting on the resolutions to be proposed at the SGM.

SGM

A notice convening the SGM is set out on pages 34 to 37 of this circular. The SGM is being convened for the purpose of considering and, if thought fit, passing the resolutions to approve (i) the Refreshment of Existing Scheme Mandate Limit, (ii) the conditional grant of New Options and (iii) the Share Grant. The vote of the Shareholders or the Independent Shareholders, as the case may be, at the SGM shall be taken by poll and any Shareholder with a material interest in the transaction must abstain from voting.

A form of proxy for use at the SGM is enclosed. Whether or not you are able to attend the meeting in person, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon to the branch registrar of the Company in Hong Kong, Tricor Secretaries Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible but in any event not later than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting at the SGM or any adjournment thereof should you so wish.

– 13 –

LETTER FROM THE BOARD

PROCEDURE FOR DEMANDING A POLL AT A GENERAL MEETING OF THE COMPANY

Pursuant to Bye-Law 66 of the Bye-Laws, a resolution put to the vote of a meeting shall be decided on a show of hands unless a poll is required under the rules of the Stock Exchange or (before or on the declaration of the result of the show of hands or on withdrawal of any other demand for a poll) a poll is demanded:

• (a) by the chairman of such meeting; or

• (b) by at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or

• (c) by any Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or

• (d) by a Shareholder or Shareholders present in person or in case of a Shareholder being a corporation by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid equal to not less than one-tenth of the total sum paid up on all shares conferring that right; or

• (e) by any of the Directors who individually or collectively (including the chairman of the relevant meeting of the Company) hold proxies in respect of shares representing 5% or more of the total voting rights at a particular meeting of the Company, and if on a show of hands such meeting votes in the opposite manner to that instructed in those proxies, such Directors shall have the right to demand a poll. If a poll is required under these circumstances, the chairman of the meeting should disclose to the meeting of the Company the total number of votes represented by all proxies held by Directors indicating an opposite vote to the votes cast at the meeting on a show of hands.

The votes to be taken at the SGM will be taken on a poll, the results of which will be announced after the SGM.

RECOMMENDATIONS

The Independent Board Committee, having considered the terms of the Share Grant, as well as the advice and recommendations of Access Capital set out in the section headed “Letter from the Independent Financial Adviser” of this circular, consider that the terms of the Share Grant are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends that the Independent Shareholders vote in favour of the ordinary resolution to be proposed at the SGM to approve, among other things, the Share Grant. The “Letter from the Independent Board

– 14 –

LETTER FROM THE BOARD

Committee” is set out on pages 16 to 17 of this circular and the “Letter from Access Capital” is set out on pages 18 to 25 of this circular.

On the basis of the information set out in this circular, the Directors (including the members of the Independent Board Committee) believe that the passing of the resolutions for (i) the Refreshment of the Existing Scheme Mandate Limit, (ii) the conditional grant of New Options and (iii) the Share Grant are fair and reasonable and in the interests of the Company and the Shareholders as a whole and therefore recommended the Independent Shareholders and the Shareholders (as the case may be) to vote in favour of the relevant resolutions as set out in the notice of SGM at the end of this circular.

FURTHER INFORMATION

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

Yours faithfully, For and on behalf of the Board IMAGI INTERNATIONAL HOLDINGS LIMITED Mr. Richard Arthur Witts Chairman

– 15 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [217 x 61] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

(Stock Code: 00585)

30 October 2009

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION INVOLVING SHARE GRANTS TO DIRECTORS

We refer to the circular dated 30 October 2009 issued to the Shareholders (the “Circular”) of which this letter forms part. Capitalized terms used herein shall have the same meanings as defined in the Circular unless otherwise defined therein.

As independent non-executive Directors who are independent of the parties to the Share Grant, we have been appointed by the Board to consider the Share Grant and advise you as to whether, in our opinion, the terms and conditions of the Share Grant are fair and reasonable and in the interests of the Company and the Shareholders as a whole are concerned and to recommend whether the Independent Shareholders should vote in favour of the ordinary resolutions to be proposed at the SGM to approve the Share Grant.

Access Capital Limited has been appointed by the Company as the independent financial adviser to advise us regarding the fairness and reasonableness of the terms and conditions of the Share Grant. Details of its advice, together with the principal factors and reasons taken into consideration in arriving at such opinion, are set out on pages 18 to 25 of the Circular. Your attention is also drawn to the letter from the Board set out on pages 7 to 15 of the Circular and the additional information set out in the appendices to the Circular.

* for identification purpose only

– 16 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the opinion of and the principal factors and reasons considered by Access Capital Limited as stated in its letter of advice, we consider that the terms and conditions of the Share Grant are fair and reasonable and are in the interest of the Company and the Shareholders as a whole. We therefore recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the SGM to approve the Share Grant.

Yours faithfully, For and on behalf of the Independent Board Committee Richard Arthur Witts Ng See Yuen Oh Kok Chi Independent Independent Independent non-executive Director non-executive Director non-executive Director

– 17 –

LETTER FROM ACCESS CAPITAL LIMITED

Set out below is the full text of the letter of advice from Access Capital Limited to the Independent Board Committee and the Independent Shareholders prepared for inclusion in this Circular

==> picture [64 x 41] intentionally omitted <==

Suite 606, 6th Floor Bank of America Tower 12 Harcourt Road Central Hong Kong

30 October 2009

• To: the Independent Board Committee and the Independent Shareholders of Imagi International Holdings Limited

Dear Sirs,

CONNECTED TRANSACTION INVOLVING SHARE GRANTS TO DIRECTORS

1. INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders with respect to (i) the grant of Shares to Mr. Phoon Chiong Kit (“Mr. Phoon”), an executive Director and Deputy Chairman of the Company, as a non-cash bonus in recognition of his services to the Company; and (ii) the grant of Shares to Mr. William Montgomerie Courtauld (“Mr. Courtauld”) as part remuneration in relation to his appointment as acting chief executive officer (“Acting CEO”) for the period between 9 May 2009 to 23 October 2009. The grants of Shares to Messrs. Phoon and Courtauld (the “Share Grants”), have been made in accordance with Mr. Phoon’s grant letter dated 21 August 2009 (the “Grant Letter”) and Mr. Courtauld’s service agreement dated 21 August 2009 (the “Service Agreement”). Details of the Grant Letter and the Service Agreement are set out in the letter from the Board of Directors (the “Letter from the Board”) contained in the circular dated 30 October 2009 issued by the Company to the Shareholders (the “Circular”) of which this letter forms part. Unless otherwise stated, terms defined in the Circular have the same meaning in this letter.

On 15 May 2009, the Company announced that:

• (i) Mr. Phoon had been appointed as Deputy Chairman of the Company and re-designated as an executive Director with effect from 21 April 2009;

• (ii) Mr. Douglas Esse Glen (“Mr. Glen”) had resigned as an executive Director and CEO with effect from 8 May 2009; and

– 18 –

LETTER FROM ACCESS CAPITAL LIMITED

• (iii) Mr. Courtauld had assumed the role of Acting CEO and had been re-designated as an executive Director with effect from 9 May 2009.

On 23 September 2009, the Company further announced that Mr. Courtauld would cease to act as the Acting CEO but would continue as an executive Director until 23 October 2009, following which he will be re-designated as a non-executive Director. As stated in the Letter from the Board, the terms of Mr. Phoon’s non-cash bonus which is comprised of a one-time grant of 2,000,000 Shares, were agreed and approved by the Board under the Grant Letter. As further stated in the Letter from the Board, the terms of Mr. Courtauld’s appointment and remuneration for the period between 9 May 2009 to 23 October 2009, which is comprised of a monthly cash salary of US$25,000 and issue of 1,000,000 Shares per month, have been set out in the Service Agreement. Accordingly, the allotment and issue of Shares in accordance with the Share Grants to Messrs. Phoon and Courtauld, both executive Directors and connected persons of the Company within the meaning of the Listing Rules, constitute connected transactions pursuant to Chapter 14A of the Listing Rules and are each subject to the approval of the Independent Shareholders at SGM.

2. THE INDEPENDENT BOARD COMMITTEE

The Board of Directors currently consists of two executive Directors, namely Mr. Phoon and Ms. Ting Chuk Kwan; two non-executive Directors, namely Mr. Courtauld and Mr. Paul Steven Serfaty; and three independent non-executive Directors, namely Mr. Richard Arthur Witts, Mr. Ng See Yuen and Mr. Oh Kok Chi.

In accordance with the Listing Rules, the Independent Board Committee, comprising only the independent non-executive Directors, namely Mr. Richard Arthur Witts, Mr. Ng See Yuen and Mr. Oh Kok Chi, has been appointed to make recommendations to the Independent Shareholders in respect of voting on the resolution(s) to approve the issue of Shares under the Share Grants by way of poll at SGM.

We have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to (i) whether the terms of the Share Grants are fair and reasonable and in the interests of the Company and the Shareholders as a whole; and (ii) how the Independent Shareholders should vote in respect of the above resolution(s).

3. BASIS AND ASSUMPTIONS OF THE ADVICE

In formulating our opinion, we have relied solely on the statements, information, opinions and representations contained in the Circular and the information and representations provided to us by the Company and/or the Directors. We have assumed that all such statements, information, opinions and representations contained or referred to in the Circular or otherwise provided or made or given by the Company and/or its senior management staff and/or the Directors and for which it is/they are solely responsible were true and accurate and valid at the time they were made and given and continue to be true and valid as at the date of the Circular. We have assumed that all the

– 19 –

LETTER FROM ACCESS CAPITAL LIMITED

opinions and representations made or provided by the Directors and/or the senior management staff of the Company contained in the Circular have been reasonably made after due and careful enquiry. We have also sought and obtained confirmation from the Company and/or its senior management staff and/or the Directors that no material facts have been omitted from the information provided and referred to in the Circular.

We consider that we have reviewed all information and documents which are made available to us to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our advice. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions and representations provided to us by the Company and/or its senior management staff and/or the Directors and their respective advisers or to believe that material information has been withheld or omitted from the information provided to us or referred to in the aforesaid documents. We have not, however, carried out any independent verification of the information provided, nor have we conducted any independent investigation into the business and affairs of the Group.

4. PRINCIPAL FACTORS AND REASONS CONSIDERED

The Company is principally engaged in the production of computer graphic imaging animated motion pictures. The Group is currently engaged in the production, distribution, marketing and related activities of its feature film project, Astro Boy, which is scheduled for release in October 2009. In formulating our opinion, we have taken into consideration the following principal factors and reasons:

4.1 Background and reasons for the Share Grants

As mentioned in the Company’s announcement dated 24 February 2009, due to considerable financial difficulties, the Company adopted a financing plan which included a rights issue, share placement, convertible bridge loan financing and restructuring of a convertible note (the “Financing Plan”) which was aimed at providing the Group with the necessary cash flow and financial stability to complete the production of its Astro Boy feature film.

The background and qualifications of Mr. Phoon and Mr. Courtauld are set out in the Company’s announcement dated 24 February 2009. Their appointments, together with the Financing Plan, form part of the Company’s efforts to stabilize the Group’s critical financial position. Under the direction of the newly constituted Board (and particularly Messrs. Phoon and Courtauld), the Company has successfully implemented the Financing Plan, completed production of the Astro Boy feature film and the associated commercial arrangements for its release in October this year. Beyond the production of the Astro Boy feature film and going forward, the Group is also engaged in the development and production of other new computer animated feature film projects.

– 20 –

LETTER FROM ACCESS CAPITAL LIMITED

The market appeared to react positively to the Financing Plan and the appointment of the newly constituted Board as there were subsequent increases in both the share price and trading volume of the Shares following the resumption in trading of the Shares on 29 May 2009. In recognition of the qualifications and experience of Messrs. Phoon and Courtauld and the need to preserve cash in the Group for its working capital and ongoing development, the Board has considered it appropriate to design the reward and compensation packages of Messrs. Phoon and Courtauld with a significant component of share-based compensation. As such, the value of their compensation becomes directly aligned with the business and financial performance of the Company. We concur with the view of the Board and agree that this share-based compensation strategy aligns with the interests of the Company as a whole.

4.2 Principal terms and analysis of the Share Grants

Mr. Phoon’s Share grant

As mentioned in the announcement of the Company dated 15 May 2009, Mr. Phoon’s Board capacity was re-designated from a non-executive Director to executive Director and Deputy Chairman with effect from 21 April 2009. In this new capacity, he shall not receive any cash salary and in addition, Mr. Phoon shall cease to be entitled to receive the fee as a non-executive Director with effect from the date of his appointment. Mr. Phoon is also an executive director of Winnington Capital, which is a substantial shareholder of the Company.

In accordance with the Grant Letter, Mr. Phoon has been awarded a non-cash bonus of a grant of Shares in recognition of his contributions to the Company, including among others, his services as executive Director and Deputy Chairman. We understand that upon approval by the Independent Shareholders of the Share grant, 2,000,000 Shares shall immediately be issued to Mr. Phoon. The value of the Shares and the cost to the Company of such grant shall be determined by the closing price per Share on the date of the issue.

For the purpose of determining an indicative value for the Shares, we have considered the Company’s highest closing share price (being HK$0.67 on 26 June 2009) and the lowest closing share price (being HK$0.21 on 27 October 2009) since the date of Mr. Phoon’s appointment until the Latest Practicable Date. Based on the proposed number of Shares to be granted to him and the highest and lowest closing share price during the period of his appointment, an ascribed value of the Shares lies in the range of HK$420,000 to HK$1,340,000. On this basis, the range of ascribed total value of Mr. Phoon’s remuneration package is significantly lower than the disclosed

– 21 –

LETTER FROM ACCESS CAPITAL LIMITED

historical value of the total remuneration range of the former Chairman and CEO of the Company as set out below.

Directors’ emoluments Mr. Kao Wai Ho, Francis – Chairman (note 1) Salaries & other benefits Equity-settled share-based payment expense Contributions to retirement benefit scheme Total Mr. Douglas Esse Glen – Chief Executive Officer (note 2) Salaries & other benefits Equity-settled share-based payment expense Contributions to retirement benefit scheme Total	Year ended 2009 2,701,000 0 10,000 2,711,000	31 March 2008 3,540,000 0 12,000
		3,552,000
	3,785,000 5,614,000 12,000	3,515,000 5,156,000 4,000
	9,411,000	8,675,000

Notes:

1. Mr. Kao Wai Ho, Francis resigned as an executive Director on 11 February 2009

2. Mr. Douglas Esse Glen resigned as an executive Director on 8 May 2009

Given that Mr. Phoon is not entitled to receive any cash compensation, we consider the grant of 2,000,000 Shares in recognition of his contributions to the Company to be consistent with the objectives of preserving the cash resources of the Company and also with aligning the value of the share-based compensation with the current and future performance of the Company. Therefore, we are of the view that the grant of Shares to Mr. Phoon is fair and reasonable and is in the interest of the Shareholders and the Company as a whole.

Mr. Courtauld’s Share grant

As mentioned in the announcement of the Company dated 15 May 2009, Mr. Courtauld’s Board capacity was re-designated from a non-executive Director to executive Director and Acting CEO with effect from 9 May 2009. As further announced on 23 September 2009, due to health reasons, Mr. Courtauld has stepped down from his position as Acting CEO with effect from 23 September 2009. Ms. Ting Chuk Kwan has assumed the role of Acting CEO.

– 22 –

LETTER FROM ACCESS CAPITAL LIMITED

The following summarises the key terms of Mr. Courtauld’s Service Agreement during the period of his engagement as Acting CEO:

Date of Board approval 6 July 2009 Term & termination From 9 at the latest notice from Remuneration Cash

From 9 May 2009 until 31 December 2009 at the latest or upon two months written notice from the Company

• (a) Cash of US$25,000 due and payable at the end of each month;

• (b) A grant of one million ordinary Shares of the Company per month, issued at the end of each month;

• (c) No entitlement to Director’s fees; and

• (d) Reimbursement for travel expenses incurred in the fulfillment of duties

For ease of comparison, the following table seeks to quantify the monetary value of the Mr. Courtauld’s compensation package which is calculated on an annualized basis:

Cash salary (US$25,000 per month) HK$2,325,000 Share grant (1,000,000 Shares per month) Highest price since date of appointment HK$8,040,000 (HK$0.67 – 26 June 2009) Lowest price since date of appointment HK$2,520,000 (HK$0.21 – 27 October 2009) Total remuneration range HK$4,845,000 – HK$10,365,000 Remuneration package for period 9 May 2009 – 23 October 2009 Salary and Shares granted based on the price HK$2,214,113 – range above HK$4,736,693

Note: based on the exchange rate of US$1:HK$7.75

– 23 –

LETTER FROM ACCESS CAPITAL LIMITED

Under the terms of appointment, Mr. Courtauld’s term as Acting CEO was scheduled to terminate on 31 December 2009 at the latest, and therefore had a maximum duration of approximately 34 weeks, of which Mr. Courtauld completed approximately 20 weeks. For a short-term appointment with the mandate and responsibilities expected of a chief executive officer during a period of great uncertainty (both financially and as a going concern) before the implementation of the aforementioned Financing Plan, it would not be unreasonable for such a position to warrant a remuneration package denominated wholly or mainly in cash, and probably commanding at a higher premium than the situation of a longer term employment contract (under more stable circumstances). Due to the nature of the short tenure of such an appointment, the offer of share options, which is designed to compensate employees’ performance over the longer term, would therefore be inappropriate in this particular case.

As such, and in addition to his cash salary of US$25,000 per month (approximately HK$193,750 per month), Mr. Courtauld shall be entitled to a grant of one million Shares per month, to be issued as soon as practicable and permissible after the end of each completed month. The value of the Shares and the cost to the Company of the grant shall be determined by the closing price per Share on the date of each issue of Shares and as such may be variable from month to month. Based on an annualised number of Shares issued to Mr. Courtauld and the highest and lowest closing share price from the date of his appointment to the Latest Practicable Date as set out in the above table, an ascribed value of the Shares lies in the range of HK$2,520,000 to HK$8,040,000. However, as Mr. Courtauld has already stepped down from the role of Acting CEO, his final remuneration shall be determined as follows:

2009 May June July August September October Salary (HK$) 143,750 193,750 193,750 193,750 193,750 143,750 No. of Shares granted 741,935 1,000,000 1,000,000 1,000,000 1,000,000 741,935 Total remuneration package (share price as at Latest Practicable Date) (HK$)	Total 1,062,500 5,483,870
	2,214,113

Accordingly, in our analysis, we consider it appropriate to compare Mr. Courtauld’s overall remuneration package with the total value of the remunerative package of Mr. Glen, the former chief executive officer of the Company. As set out in the table above, Mr. Glen’s total emoluments were equal to HK$8,675,000 and HK$9,411,000 for the financial years ended 31 March 2008 and 2009 respectively. Of his total emoluments, Mr. Glen received HK$3,785,000 and HK$3,515,000 for the years ended 31 March 2009 and 2008 respectively as salary and other benefits. In addition, the amounts of HK$5,614,000 and HK$5,156,000 during the same respective periods above, have further been attributed to Mr. Glen’s emoluments in relation to his grant of 15,000,000 Share Options representing the fair value of the Share Options.

– 24 –

LETTER FROM ACCESS CAPITAL LIMITED

On this basis, the range of ascribed total value of Mr. Courtauld’s annualised remuneration package of HK$4,845,000 to HK$10,365,000 (based on the historical range of the price of the Shares since the date of his appointment and his cash salary) is quite comparable with the disclosed historical value of Mr. Glen’s total remuneration as set out above.

Based on the above and having considered the fact that (a) the grant of Shares is part of the total package to secure the services of Mr. Courtauld; (b) the total ascribed value of his remunerative package is comparable to that of his immediate predecessor; (c) the grant of Shares reduces the onerous burden on the cashflow of the Company; and (d) the motivational effect of the grant of Shares aligns with that of the future performance of the Company, we are of the view that the grant of Shares to Mr. Courtauld is fair and reasonable and is in the interest of the Shareholders and the Company as a whole.

5. RECOMMENDATION

In making our recommendation, we have considered the above principal factors, and in particular, we have taken into account the following:

• (i) The specialist management experience and financial expertise of Messrs. Phoon and Courtauld sought by the Company during a period of critical financial instability and beyond the implementation of the financing plan;

• (ii) The need to reduce the burden on the Group’s cashflow and to preserve limited working capital as a factor in the design and structure of Messrs. Phoon and Courtauld’s reward/ compensation which were determined by the Board before the Shareholders’ approval of the new financing plan;

• (iii) The alignment of the performance of Messrs. Phoon and Courtauld with the implementation of the Financing Plan and future performance of the Company; and

• (iv) The remuneration packages of former Chairman and CEO of the Company.

Having considered the factors outlined in this letter, we are of the opinion that the Share Grants to Mr. Courtauld and Mr. Phoon are fair and reasonable and are in the interest of the Company. Furthermore, given the factors mentioned above and in particular the critical need to preserve working capital of the Company, the Directors are of the view that the Share Grants have been made on normal commercial terms and in the ordinary and usual course of business. We concur with this view and accordingly, we advise the Independent Board Committee to advise the Independent Shareholders to vote in favour of the relevant resolution(s) to approve the Share Grants.

Yours faithfully, For and on behalf of Access Capital Limited Ambrose Lam Alexander Tai Principal Director Principal Director

– 25 –

APPENDIX I

GENERAL INFORMATION

A. RESPONSIBILITY STATEMENT

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

B. DISCLOSURE OF INTERESTS BY DIRECTORS

As at the Latest Practicable Date, the interests and short positions of the Directors in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to the Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

• (a) Interests and long/short positions in Shares, underlying Shares and debentures of the Company as at the Latest Practicable Date

				Number of	Approximate
				underlying	percentage of
				Shares held	the Company’s
		Personal		under equity	issued
Name of Directors	Capacity	interests	Position	derivatives	share capital
Richard Arthur Witts	Beneficial owner	1,250,000	Long	–	0.03%
William Montgomerie	Held through	12,170,085	Long	–	0.34%
Courtauld	controlled
	corporation
Ng See Yuen	Beneficial owner	1,000,000	Long	–	0.03%

• (b) Details of outstanding Options (unlisted equity derivatives) granted to the Directors at the Latest Practicable Date were as follows:

Name of			No. of	Exercise price
holder of Options	Date of grant	Exercisable period*	Options	per Share
				HK$
Ng See Yuen	22 July 2008	Between 22 July 2009	551,088	HK$0.78
		and 21 July 2017

– 26 –

APPENDIX I

GENERAL INFORMATION

Name of			No. of	Exercise price
holder of Options	Date of grant	Exercisable period*	Options	per Share
				HK$
	21 August 2009	Between 1 October 2010	1,500,000	HK$0.315
		and 30 September 2017
Oh Kok Chi	22 July 2008	Between 22 July 2009	551,088	HK$0.78
		and 21 July 2017
	21 August 2009	Between 1 October 2010	1,500,000	HK$0.315
		and 30 September 2017
Phoon Chiong Kit	21 August 2009	Between 1 October 2010	10,000,000	HK$0.315
		and 30 September 2017
William Montgomerie	21 August 2009	Between 1 October 2010	2,000,000	HK$0.315
Courtauld		and 30 September 2017
Richard Arthur Witts	21 August 2009	Between 1 October 2010	4,000,000	HK$0.315
		and 30 September 2017
Ting Chuk Kwan	21 August 2009	Between 1 October 2010	2,000,000	HK$0.315
		and 30 September 2017

In November 2007, receivers and managers were appointed to monitor the business of the Company’s 22.5% interest in an associate and its carrying amount in the Group financial statements is zero.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors had any interests or short positions in the securities of the Company or any of its associated corporation (within the meaning of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to section 341 of the SFO (including interest which any such Director was taken or deemed to have under section 344 of SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers to be notified to the Company and the Stock Exchange.

As at the Latest Practicable Date, save for Mr. Phoon and Mr. Paul Steven Serfaty who are currently employed by Winnington Capital, the corporate Shareholder of the Company, as executive Director and the Head of Private Equity and Investments and Head of Legal and Compliance respectively, and Mr. William Courtauld, the Chief Executive Officer and controlling Shareholder of Proactive Investment Partners Asia Limited (“PIPA”) none of the Directors was a director or employee of a company which had an interest in the Shares or underlying shares of the Company which would fall to be disclosed under Divisions 2 and 3 of Part XV of the SFO.

– 27 –

APPENDIX I

GENERAL INFORMATION

C. INTERESTS OF SUBSTANTIAL SHAREHOLDERS/OTHER PERSONS RECORDED IN THE REGISTER KEPT UNDER THE SFO

As at the Latest Practicable Date, so far as is known to any Director or chief executive of the Company, the following persons (other than Directors or chief executive of the Company) had interests or short positions in the Shares, underlying Shares or debentures of the Company which would fall to be disclosed to the Company under the provisions Divisions 2 and 3 of Part XV of the SFO, or, who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

• (a) Interests and long/short positions of substantial shareholders in the Shares and underlying Shares of the Company:

				Approximate
				percentage of
				the Company’s
		No. of Shares		issued share
		and/or		capital at
Name of substantial		underlying		the Latest
shareholder	Nature of interest	Shares held	Position	Practicable Date
HSBC International Trustee	Trustee	831,057,779	Long	23.07%
Limited
Happy Nation Limited	Held by controlled	585,618,505	Long	16.26%
	corporation
	Beneficial owner	12,197,985	Long	0.34%
China Link Holding Limited	Held by controlled	597,816,490	Long	16.60%
	corporation
Sunni International Limited	Beneficial owner	585,618,505	Long	16.26%
(Note 1)
Kao Cheung Chong	Beneficial owner	12,306,765	Long	0.34%
	Held by controlled	9,373,020	Long	0.26%
	corporation
	Beneficiary of a trust	597,816,490	Long	16.60%
Kao Wai Ho, Francis	Beneficiary of a trust	585,618,505	Long	16.26%
Chu Jocelyn	Interest of Spouse	100,000,000	Long	2.78%
	Held by controlled	1,124,040,373	Long	31.21%
	corporation

– 28 –

APPENDIX I

GENERAL INFORMATION

				Approximate
				percentage of
				the Company’s
		No. of Shares		issued share
		and/or		capital at
Name of substantial		underlying		the Latest
shareholder	Nature of interest	Shares held	Position	Practicable Date
Hung Kam Biu	Beneficial owner	100,000,000	Long	2.78%
	Held by controlled	1,124,040,373	Long	31.21%
	corporation
Winnington Capital Limited	Beneficial owner	250,000	Long	0.01%
(Note 2)
	Investment manager	1,123,790,373	Long	31.20%
Trophy Asset Management	Investment manager	1,123,790,373	Long	31.20%
Limited
Trophy Fund	Beneficial owner	910,552,967	Long	25.28%
Citigroup Inc.	Custodian/approved	129,200	Long	0.004%
	lending agent
	Person having	259,741,058	Long	7.21%
	a security interest
	shares
		8,540,000	Short	0.24%
Bosrich Holdings (PTC) Inc.	Trustee	209,950,000	Long	5.83%
(Note 3)				(Note 4)
Lo Hong Sui, Vincent_(Note 3)_	Founder of	209,950,000	Long	5.83%
	discretionary trust			(Note 4)
Shui On Company Limited	Held by controlled	209,950,000	Long	5.83%
(Note 3)	corporation			(Note 4)
Chu Loletta_(Note 3)_	Interest of spouse	209,950,000	Long	5.83%
Shui On Holdings Limited	Held by controlled	209,950,000	Long	5.83%
(Note 3)	corporation
Shui On Investment Company	Held by controlled	209,950,000	Long	5.83%
Limited_(Note 3)_	corporation

– 29 –

APPENDIX I

GENERAL INFORMATION

				Approximate
				percentage of
				the Company’s
		No. of Shares		issued share
		and/or		capital at
Name of substantial		underlying		the Latest
shareholder	Nature of interest	Shares held	Position	Practicable Date
Smart Will Investments	Beneficial Interest	209,950,000	Long	5.83%
Limited_(Note 3)_
Goodyear Group Limited	Beneficial owner	313,333,333	Long	8.70%
Trophy LV Master Fund	Beneficial owner	184,400,933	Long	5.12%

Notes:

1. Sunni International Limited is 54.67% beneficially owned by Mr. Kao Wai Ho, Francis. Happy Nation Limited, is wholly owned by China Link Holding Limited, the entire issued share capital of which is in turn beneficially owned by HSBC International Trustee Limited, acting as trustee for The Cheerco Trust, of which Mr. Kao Cheung Chong, Michael and his family members excluding, Mr. Kao Wai Ho, Francis are discretionary objects.

2. To the best knowledge of the Directors, having made all reasonable enquiries, the 597,219,634 Shares and 57,734,266 Shares out of Winnington Capital’s shareholdings are held by Trophy Fund and Trophy LV Fund, respectively, both capitals of which are managed by Trophy Asset Management Limited, which in turn is wholly owned by Mr. Hung. Trophy Fund is advised by Winnington Capital (delegated management by Trophy Asset Management Limited), which is 50% owned by each of Mr. Hung and his wife, Ms. Chu Jocelyn. In addition, another 28,836,473 Shares out of Winnington Capital’s shareholdings are held by FMG Special Opportunity Fund Ltd., which is advised by Winnington Capital. Mr. Hung and Mr. Wong Joon Kwang (a director of Trophy Fund) hold 100,000,000 and 1,290,000 Shares, respectively.

3. Smart Will Investments Limited is ultimately controlled by Lo Hong Sui, Vincent through Bosrich Holdings (PTC) Inc., Shui On Company Limited, Shui On Holdings Limited and Shui On Investment Company Limited. Chu Loletta is the wife of Lo Hong Sui, Vincent and the sister of Chu Jocelyn.

4. This shareholding percentage was calculated based on a total of 3,601,518,384 Shares in issue at the time the relevant disclosure of interest forms were filed.

Save as disclosed herein, as at the Latest Practicable Date, there was no person known to the Directors or the chief executive of the Company other than Directors or the chief executive of the Company, who had an interest or short position in the Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

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APPENDIX I

GENERAL INFORMATION

(b) Interests and long/short positions in the Shares and underlying Shares of associated corporations of the Company

As at the Latest Practicable Date, there was no person known to the Directors or the chief executive of the Company, including the Directors or the chief executive of the Company, who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any subsidiaries of the Company, or any options in respect of such capital.

D. COMPETING INTERESTS

As at the Latest Practicable Date, the Directors were not aware that any of the Directors has interest in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group which falls to be disclosed under the Listing Rules.

E. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with the Company or any member of the Group which is not expiring or determinable by the Group within one year without payment of compensation other than statutory compensation.

There are no service contracts in force between any Director and the Company or any of its subsidiaries or associated companies which are continuous contracts with a notice period of 12 months or more.

There are no service contracts in force between any Director and the Company or any of its subsidiaries or associated companies which are fixed term contracts with more than 12 months to run irrespective of the notice period.

F. DIRECTOR’S INTERESTS IN ASSETS, CONTRACTS OR ARRANGEMENT OF THE GROUP

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have been since 31 March 2009 (being the date to which the latest published audited consolidated accounts of the Group was made up) acquired or disposed of or leased to or proposed to be acquired or disposed of or leased to any member of the Group.

Save for the (i) the issue of Shares to Evertop Capital Limited (“ Evertop ”), a company wholly-owned by Mr. Hung who also owns 50% of Winnington Capital, on conversion of the bridge loans pursuant to the Bridge Loan Conversion Agreement; (ii) the issue of the New Winnington Convertible Note; and (iii) the entering into of the loan and security arrangements entered into by the Company in favour of Evertop and various lenders under the Evertop Bridge Loan Agreement dated 13 February 2009, (in respect of

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APPENDIX I

GENERAL INFORMATION

which Mr. Paul Steven Serfaty and Mr. Phoon Chiong Kit have an interest by reason of their being employees of Winnington Capital) and (iv) the issue of Shares to Evertop or to its lenders pursuant to the conversion of the amounts outstanding from the Group to Evertop under the Evertop Bridge Loan Agreement dated 13 February 2009 into Shares (in respect of which Mr. Courtauld has interests through PIPA, one of the lenders to Evertop), none of the Directors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Group taken as a whole.

G. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and there is no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Company or any member of the Group.

H. MATERIAL CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position or outlook of the Group since 31 March 2009, the date to which the latest published audited consolidated financial statements of the Group were made up.

I. EXPERTS AND CONSENTS

The following is the qualification of the expert whose opinion or advice which is contained in this circular:

Name Qualification

Access Capital a licensed corporation authorised to conduct type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO

As at the Latest Practicable Date, Access Capital:

• (a) did not have any direct or indirect interest in any asset which were acquired or disposed of by or leased to, or proposed to be acquired or disposed of by or leased to, any member of the Group, since 31 March 2009, the date to which the latest published audited consolidated financial statements of the Group were made up; and

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APPENDIX I

GENERAL INFORMATION

• (b) was not beneficially interested in the share capital of any member of the Group and did not have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

Access Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and/or references to its name in the form and context in which they appear.

J. MISCELLANEOUS

The English texts of this circular and the accompanying form of proxy shall prevail over their respective Chinese texts in case of inconsistencies.

K. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection on the Company’s website at www.imagi.com.hk. These documents are also available for inspections during normal business hours at the Company’s principal place of business in Hong Kong at 23rd Floor, 8 Commercial Tower, 8 Sun Yip Street, Chai Wan, Hong Kong from the date of this circular up to the date of the SGM:

• (a) the Service Agreement;

• (b) the Grant Letter;

• (c) the Bridge Loan Agreements;

• (d) the Bridge Loan Conversion Agreement;

• (e) the letter of advice from Access Capital, the text of which is set out on pages 18 to 25 of this circular;

• (f) the written consent from Access Capital referred to in the paragraph headed “Experts and consents” in this appendix;

• (g) a letter from the Independent Board Committee, the text of which is set out on pages 16 to 17 of this circular; and

• (h) this circular.

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NOTICE OF SGM

==> picture [217 x 61] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

(Stock Code: 00585)

NOTICE IS HEREBY GIVEN that a special general meeting of Imagi International Holdings Limited (the “ Company ”) will be held at 2/F, The Excelsior Hong Kong, 281 Gloucester Road, Causeway Bay, Hong Kong on Tuesday, 17 November 2009 immediately following the conclusion of the annual general meeting of the Company (to be held on the same date and at the same place), on or around 3:45 p.m., for the purpose of considering and, if thought fit, passing the following resolutions (with or without modifications) which will be proposed as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

• (1) “ THAT , subject to and conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of, and permission to deal in, such number of shares of the Company (the “ Shares ”) which may fall to be allotted and issued pursuant to the exercise of options which may be granted under the share option scheme of the Company adopted on 16 August 2002 (the “ Share Option Scheme ”) representing 10% of the issued share capital of the Company as at the date on which this resolution is passed, pursuant to clause 8.2.1 of the Share Option Scheme:

• (a) approval be and is hereby generally and unconditionally granted for refreshing the maximum limit of options which may be granted under the Share Option Scheme (the “ Refreshed Scheme Mandate Limit ”) provided that:

  • (1) the aggregate nominal amount of the total number of Shares which may be allotted and issued upon the exercise of options to be granted under the Refreshed Scheme Mandate Limit shall not exceed 10 per cent. of the aggregate nominal amount of the Shares in issue as at the date of passing of this resolution; and

  • (2) the overall limit on aggregate nominal amount of the total number of Shares which may be allotted and issued upon the exercise of all options to be granted and yet to be exercised under the Share Option Scheme and any other share option schemes of the Company shall not exceed 30 per cent. of the aggregate nominal amount of the Shares in issue from time to time;

* for identification purpose only

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NOTICE OF SGM

• (b) any Director be and is hereby authorised, at his/her absolute discretion, to grant options under the Refreshed Scheme Mandate Limit and to exercise all the powers of the Company to allot, issue and otherwise deal with the Shares pursuant to the exercise of such options; and

• (c) any Director be and is hereby authorised to sign and execute such other documents and (if required) affix the common seal of the Company thereto, and do all such acts and things or as he/she considers necessary, desirable or expedient in connection with the implementation of or giving effect to or otherwise in connection with the foregoing.”

• (2) “ THAT subject to and conditional upon (a) the acceptance and consent by the grantees (the “ Affected Grantees ”) whose share options will be cancelled in accordance with the terms and conditions of the Share Option Scheme; (b) the passing of the resolution by the shareholders to refresh the 10% limited under the Share Option Scheme as set out in resolution (1) above; and (c) the compliance with The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited with respect to the grant of share options to the Affected Grantees, the grant of share options to the Affected Grantees pursuant to the Share Option Scheme as described in the circular dated 30 October 2009 issued by the Company to its shareholders, a copy of which will be produced to the meeting and marked “A” and signed by the chairman of the meeting for the purpose of identification, be and is hereby confirmed, ratified and approved and the board of directors of the Company (or an appointed committee thereof) be and is hereby authorized to do all such acts as may be necessary or expedient in order to give full effect to such grant of an option.”

• (3) “ THAT :

• (a) the terms of the service agreement dated 21 August 2009 entered into between the Company and Mr. William Montgomerie Courtauld (“ Mr. Courtauld ”), a copy of which will be produced to the meeting and marked “A” and signed by the chairman of the meeting for the purpose of identification, be and is hereby approved, ratified and confirmed;

• (b) the allotment and issue of up to 5,483,870 Shares to Mr. William Montgomerie Courtauld (“ Mr. Courtauld ”) pursuant to the service agreement between the Company and Mr. Courtauld dated 21 August 2009 and the allotment and issue of 2,000,000 Shares to Mr. Phoon Chiong Kit (“ Mr. Phoon ”) in accordance with the terms of the grant letter issued by the Company to Mr. Phoon dated 21 August 2009 (together, the “ Share Grant ”) be and are hereby approved and (without prejudice to and as an entirely separate and additional authorization from the mandate to allot, issue and otherwise deal with additional shares in the capital of the Company and the mandate to purchase

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NOTICE OF SGM

shares in the capital of the Company granted to the directors of the Company at the Annual General Meeting of the Company held on 17 November 2009); and

• (c) any Director be and is hereby authorized to sign and execute such other documents and (if required) affix the common seal of the Company thereto, and do all such acts as he/she considers necessary, desirable or expedient in connection with the implementation of or giving effect to or otherwise in connection with the foregoing.”

By Order of the Board Richard Arthur Witts Chairman

Hong Kong, 30 October 2009

Registered office: Rosebank Centre 11 Bermudiana Road Pembroke Bermuda

Principal place of business in Hong Kong:

23rd Floor, 8 Commercial Tower 8 Sun Yip Street, Chai Wan Hong Kong

Notes:

• (1) Any member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one, or if such member is a holder of more than one Share, more proxies to attend and vote in his/her stead. Where a member appoints more than one proxy, the instrument of proxy shall state which proxy is entitled to vote on a poll. A proxy need not be a member of the Company. In addition, a proxy or proxies representing either a member of the Company who is an individual or a member of the Company which is a corporation shall be entitled to exercise the same powers on behalf of the member of the Company which he or they represent as such member of the Company could exercise. If more than one proxy is appointed, the appointment shall specify the number of Shares in respect of which each such proxy is appointed.

• (2) In order to be valid, the form of proxy must be deposited at the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wan Chai, Hong Kong together with a power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of attorney as soon as possible and in any event not less then 48 hours before the time appointed for the holding of such meeting or any adjournment thereof.

• (3) The form of proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same. In the case of a form of proxy purporting to be signed on behalf of a corporation by an officer thereof it shall be assumed, unless the contrary appears, that such officer was duly authorised to sign such form of proxy on behalf of the corporation without further evidence of the fact.

• (4) Completion and return of a form of proxy will not preclude a member from attending in person and voting at the above meeting or any adjournment thereof, should he so wish, and in such event, the form of proxy shall be deemed to be revoked.

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NOTICE OF SGM

• (5) A form of proxy for use at the meeting is enclosed.

• (6) In case of joint holders of a share of the Company, any one of such holders may vote at the meeting either personally or by proxy in respect of such share as if he was solely entitled thereto. However, if more than one such joint holders are present at the meeting personally or by proxy, then one of such holders whose name stands first in the register of member of the Company shall alone be entitled to vote in respect of that share.

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