IDT International Limited — Proxy Solicitation & Information Statement 2002

Aug 5, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold all your shares in Asia Commercial Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

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

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ASIA COMMERCIAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

PROPOSALS INVOLVING

ADOPTION OF NEW SHARE OPTION SCHEME

AND

GENERAL MANDATES TO ISSUE SECURITIES AND REPURCHASE SHARES

A notice convening a special general meeting of Asia Commercial Holdings Limited to be held at Plaza 1-3, lower lobby, Novotel Century Hong Kong Hotel, 238 Jaffe Road, Wanchai, Hong Kong on Friday, 20th September, 2002 at 10:45 a.m. (or so soon thereafter as the annual general meeting convened for the same date and place at 10:30 a.m. shall have been concluded or adjourned) is set out on pages 21 to 24 of this circular. Whether or not you are able to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the head office and principal place of business of the Company in Hong Kong at Units 1701-2 & 8-10, 17th Floor, Dominion Centre, 43-59 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time for holding the meeting. Completion and return of the form of proxy shall not preclude you from attending and voting at the special general meeting if you so desire.

30th July, 2002

CONTENTS

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board
–	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
–	Adoption of the New Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
–	General Mandate to repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
–	General Mandate to issue Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
–	Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
–	Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
–	Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
–	Documents available for inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
–	Further information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix I – Explanatory statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		8
Appendix II – Principal terms of the New Scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		12
Notice of Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		21

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DEFINITIONS

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

• “1997 Scheme”

• the share option scheme adopted by the Company on 15th September, 1997 which expired on 15th September, 2000

• “Affiliate” an entity which may be decided by the Board as a business – related affiliate of the Company

• “Board” board of Directors

• “Code on Share Repurchase” the Hong Kong Code on Share Repurchases

• “Company” Asia Commercial Holdings Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the Stock Exchange

• “Companies Act” the Companies Act 1981 of Bermuda

• “Directors” the directors of the Company

• “Employee” any employee of the Company or any Subsidiary or any Affiliate and any officer or director (whether executive or non-executive or independent non-executive) of the Company or any Subsidiary or any Affiliate. An Option Holder shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or any Subsidiary or the relevant Affiliate; or (ii) transfers between the Company or any Subsidiary and any Affiliate or between any of them

• “General Mandates”

the Repurchase Mandate and the New Issue Mandate

• “Group” the Company and its subsidiaries

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC

• “Latest Practicable Date” 25th July, 2002, the latest practicable date for ascertaining certain information for inclusion in this circular

• “Listing Rules”

the Rules Governing the Listing of Securities on the Stock Exchange

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DEFINITIONS

• “New Issue Mandate”

• a general and unconditional mandate to be granted to the Directors to allot, issue, and otherwise deal with new Shares and other securities with an aggregate nominal amount not exceeding 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of the relevant resolutions

• “New Scheme”

• the new share option scheme proposed to be adopted at the Special General Meeting, the principal terms of which are set out in Appendix II

• “Option(s)” option(s) that may be granted pursuant to the New Scheme

• “Option Holder”

• any Qualifying Grantee who accepts an offer in accordance with the terms of the New Scheme, or (where the context so permits) any person who is entitled to such Option in consequence of the death of the original Option Holder, or the legal personal representative of such person

• “PRC”

• the People’s Republic of China

• “Qualifying Grantee”

• (i) any Employee or any business-related consultant, agent, representative or advisor of the Company or any Subsidiary or any Affiliate; or (ii) any supplier, agent or consultant who provide goods or services to the Company or any Subsidiary or any Affiliate; or (iii) any customer of the Company or any Subsidiary or any Affiliate; or (iv) any business ally or joint venture partner of the Company or any Subsidiary or any Affiliate;

• “Repurchase Mandate”

• a general mandate to the Directors to exercise the powers of the Company to repurchase during the period as set out in the Repurchase Resolution Shares up to a maximum of 10% of the issued share capital of the Company as at the date of the passing of the Repurchase Resolution

• “Repurchase Resolution”

• the proposed ordinary resolution as referred to in resolution no. 2 of the notice of the Special General Meeting to approve the Repurchase Mandate

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DEFINITIONS

• “Special General Meeting” a special general meeting of the Company to be convened at which resolutions will be proposed to consider and, if thought fit, to approve the New Scheme and the General Mandates

• “Share(s)” ordinary share(s) of HK$1.00 each in the capital of the Company

• “Shareholder(s)” holder(s) of the Shares “Share Repurchase Rules” the relevant rules set out in the Listing Rules to regulate repurchase of securities by companies with primary listing on the Stock Exchange

• “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 the Companies Ordinance (Chapter 32 of the Laws of Hong Kong )) of the Company, whether incorporated in Hong Kong or elsewhere

• “Takeovers Code” the Hong Kong Code on Takeovers and Mergers “HK$” Hong Kong dollars, the lawful currency in Hong Kong

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LETTER FROM THE BOARD

ASIA COMMERCIAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

Executive Directors: Leung Chung Ping, Owen (Chairman) Sum Pui Ying, Adrian (Managing Director) Wong Wang Chan

Non-executive Director: Leung Miu King, Marina

Independent Non-executive Directors: Sit Kien Ping, Peter Lai Si Ming, Simon

Registered office: Cedar House 41 Cedar Avenue Hamilton HM12 Bermuda

Head office and principal

place of business: Units 1701-2 & 8-10 17th Floor, Dominion Centre 43-59 Queen’s Road East Wanchai, Hong Kong

30th July, 2002

To the Shareholders

Dear Sir or Madam,

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

INTRODUCTION

The purpose of this circular is to provide you with further information regarding the New Scheme, the General Mandates and to give you notice of the Special General Meeting to be convened to consider and if thought fit, to approve the New Scheme and the General Mandates.

ADOPTION OF THE NEW SCHEME

The Directors propose to adopt the New Scheme which will be put to the Shareholders for approval at the Special General Meeting to be held on 20th September, 2002. The existing issued share capital as at the Latest Practicable Date comprised 333,719,516 Shares. On the

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LETTER FROM THE BOARD

basis of the issued Shares, the maximum number of Shares which can be granted pursuant to the New Scheme is 33,371,951 Shares.

The New Scheme constitutes a share option scheme governed by Chapter 17 of the Listing Rules and the adoption of the New Scheme is subject to the approval of the Shareholders at the Special General Meeting.

Application will be made to the Stock Exchange to approve the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of Options to be granted under the New Scheme.

The purpose of the New Scheme is to provide Qualifying Grantees with the opportunity to acquire proprietary interests in the Company and to encourage Qualifying Grantees to work towards enhancing the value of the Company and its Shares for the benefit of the Company and its Shareholders as a whole.

The Directors believe that the New Scheme could provide Qualifying Grantees with opportunities to participate in the growth of the Company by acquiring Shares in the Company. This incentive will assist in attracting and retaining Qualifying Grantees who have contributed to the success of the Company. This may be achieved by granting Options to Qualifying Grantees who are regarded as valuable human resources of the Group based on factors such as years of service, work experience and knowledge in the industry, or who have contributed to the growth and success of the Group based on their performance, provision of goods and services, term of relationship with the Group and other relevant factors. The rules of the New Scheme provide that the Board is empowered with the authority to determine the terms and conditions of any Option based, in each case, on such relevant factors as the Board considers appropriate. The Board believes that its authority under the New Scheme to specify a minimum holding period and/or performance targets as conditions of any Option granted, the requirement for a minimum subscription price, and the selection criteria prescribed by its rules, will serve to protect the value of the Company and achieve the purpose of the New Scheme.

As at the Latest Practicable Date, the Company has granted options relating to 15,200,000 Shares under the 1997 Scheme which represents approximately 4.6% of the issued share capital of the Company. Of those options, options relating to 7,800,000 Shares have been lapsed; and options relating to 7,400,000 Shares representing approximately 2.2% of the issued share capital of the Company are outstanding. The outstanding options relating to 7,400,000 Shares granted under the 1997 Scheme continue to be valid under that scheme and such outstanding options will expire in accordance with the terms of the 1997 Scheme on 24th September 2007.

The Directors consider that it is not appropriate to state the value of all Options that can be granted pursuant to the New Scheme as if they had been granted at the Latest Practicable Date. The Directors believe that any statement regarding the value of the Options as at the Latest Practicable Date will not be meaningful to the Shareholders, taking into account the

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LETTER FROM THE BOARD

number of variables which are crucial for the calculation of the Option value which have not been determined. Such variables include the exercise price, exercise period, any minimum holding period, any performance targets set and other relevant variables.

A summary of the principal terms of the New Scheme is set out in Appendix II to this circular, which serves as a summary of the terms of the New Scheme but does not constitute the full terms of the same. The full terms of the New Scheme may be inspected at the office of the Company during normal business hours at Units 1701-2 & 8-10, 17th Floor, Dominion Centre, 43-59 Queen’s Road East, Wanchai, Hong Kong from the date of this circular up to and including 19th August, 2002 and at the Special General Meeting.

GENERAL MANDATE TO REPURCHASE SHARES

The Directors propose to seek your approval of the Repurchase Resolution to be proposed at the Special General Meeting. An explanatory statement as required under the Share Repurchase Rules to provide the requisite information of the Repurchase Mandate is set out in Appendix I of this circular.

GENERAL MANDATE TO ISSUE SHARES

It will also be proposed at the Special General Meeting, two ordinary resolutions respectively granting to the Directors (i) a general mandate to allot, issue and deal with new Shares and other securities with an aggregate nominal amount not exceeding 20% of the issued share capital of the Company as at the date of passing the relevant resolution; and (ii) adding to such general mandate so granted to the Directors any Shares and other securities representing the aggregate nominal amount of Shares repurchased by the Company after the granting of the general mandate to repurchase up to 10% of the issued share capital of the Company as at the date of the passing of the Repurchase Resolution.

SPECIAL GENERAL MEETING

Set out on pages 21 to 24 of this circular is a notice convening the Special General Meeting which will be held at 10:45 a.m. on Friday, 20th September, 2002 (or so soon thereafter as the annual general meeting convened for the same date and place at 10:30 a.m. shall have been concluded or adjourned) at Plaza 1-3, lower lobby, Novotel Century Hong Kong Hotel, 238 Jaffe Road, Wanchai, Hong Kong, at which resolutions will be proposed to consider and if thought fit, to approve the New Scheme and the General Mandates.

The form of proxy for use at the Special General Meeting is enclosed with this circular. Whether or not you intend to attend the meeting, you are requested to complete the enclosed form of proxy and return it in accordance with the instructions printed thereon as soon as possible to the head office and principal place of business of the Company in Hong Kong at Units 1701-2 & 8-10, 17th Floor, Dominion Centre, 43-59 Queen’s Road East, Wanchai, Hong Kong and in any event not later than 48 hours before the time appointed for the holding of the

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LETTER FROM THE BOARD

meeting. Delivery of a form of proxy will not preclude you from attending and voting in person at the meeting or any adjourned meeting should you so desire.

In accordance with the requirements of the Listing Rules, the Company will publish in the newspapers an announcement of the outcome of the Special General Meeting concerning the resolution relating to the adoption of the New Scheme on the business day following the date of the Special General Meeting.

RECOMMENDATIONS

The Directors believe that the New Scheme and the General Mandates are in the interests of the Company and the Shareholders. Accordingly, the Directors recommend the Shareholders to vote in favour of the ordinary resolutions to approve the New Scheme and the General Mandates.

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.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours (Saturdays and public holidays excepted) at the head office and principal place of business of the Company in Hong Kong at Units 1701-2 & 8-10, 17th Floor, Dominion Centre, 43-59 Queen’s Road East, Wanchai, Hong Kong from the date of this circular up to and including 19th August, 2002 and at the Special General Meeting.

• (a) the memorandum of association and bye-laws of the Company; and

• (b) the rules of the New Scheme.

FURTHER INFORMATION

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

By Order of the Board Sum Pui Ying, Adrian

Secretary

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EXPLANATORY STATEMENT

APPENDIX I

This Appendix serves as an explanatory statement, as required by the Share Repurchase Rules, to provide the requisite information to you for your consideration of the proposal to permit the repurchase of Shares up to a maximum of 10% of the issued share capital of the Company as at the date of passing the Repurchase Resolution. For the purpose of this Appendix, the term “Shares” shall be as defined in the Code on Share Repurchase and the Listing Rules to mean shares of all classes and securities which carry right to subscribe for or purchase shares.

1. THE LISTING RULES

The Listing Rules permit companies whose primary listings are on the Stock Exchange to repurchase their shares on the Stock Exchange or on another stock exchange on which the shares of the companies may be listed and recognised for this purpose by the Securities and Futures Commission and the Stock Exchange subject to certain restrictions.

The Listing Rules provide that all on-market repurchases of shares by a company with a primary listing on the Stock Exchange must be approved in advance by an ordinary resolution of shareholders, either by way of general mandate to the directors of the company to make such repurchases or by way of specific approval of a particular transaction.

2. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 333,719,516 Shares.

Subject to the passing of the Repurchase Resolution and on the basis that no further Shares are issued or repurchased prior to the Special General Meeting, the Company would be allowed under the Repurchase Resolution to repurchase, a maximum of 33,371,951 Shares representing not more than 10% of the issued share capital of the Company as at the Latest Practicable Date.

3. REASONS FOR REPURCHASE

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

4. FUNDING OF REPURCHASE

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its memorandum of association and bye-laws and the Companies

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EXPLANATORY STATEMENT

APPENDIX I

Act. Bermuda law provides that the amount of capital repaid in connection with a share repurchase may only be paid out of either the capital paid up on the relevant shares, or the profits that would otherwise be available for dividend or the proceeds of a fresh issue of shares made for the purpose. The amount of premium payable on repurchase may only be paid out of either the profits that would otherwise be available for dividend or out of the share premium or contributed surplus accounts of the Company.

There might be an adverse impact on the working capital or gearing position of the Company as compared with the position disclosed in the audited accounts contained in the annual report for the year ended 31st March, 2002 in the event that the power to repurchase Shares pursuant to the Repurchase Mandate was to be carried out in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the power to repurchase Shares pursuant to the Repurchase Mandate to such extent that would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

5. SHARE PRICES

The highest and lowest prices at which the Shares have traded on the Stock Exchange during each of the previous twelve months before the Latest Practicable Date are as follows:

	Highest	Lowest
	HK$	HK$
2001
July	0.355	0.34
August	0.36	0.32
September	0.34	0.33
October	0.31	0.31
November	0.31	0.27
December	0.28	0.27
2002
January	0.31	0.27
February	0.27	0.27
March	0.275	0.27
April	0.27	0.27
May	0.30	0.27
June	0.27	0.27

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EXPLANATORY STATEMENT

APPENDIX I

6. UNDERTAKING

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

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, their associates, have any present intention to sell any Shares to the Company or its subsidiaries under the Repurchase Mandate if such is approved by the Shareholders.

No connected persons (as defined in the Listing Rules) have notified the Company that they have a present intention to sell Shares to the Company or its subsidiaries, or have undertaken not to do so, in the event that the Repurchase Mandate is approved by the Shareholders.

7. TAKEOVERS CODE

If on the exercise of the power to repurchase Shares 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 Rule 32 of the Takeovers Code. As a result, a shareholder or group of shareholders acting in concert could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeovers Code.

The register of substantial shareholders maintained by the Company pursuant to Section 16(1) of the SDI Ordinance discloses the following persons as having an interest of 10% or more in the issued share capital of the Company as at the Latest Practicable Date:

			% of issued
		% of	share capital
		the existing	if Repurchase
		issued share	Proposal is
Name	Number of Shares	capital	exercised in full
Leung Shu Wing	55,000,000 (Note 1)	16.48	18.31
Kee Shing (Holdings) Limited	55,000,000 (Note 1)	16.48	18.31
Pacific Apex International Limited	55,000,000	16.48	18.31
Leong Lou Teck	37,550,540 (Note 2)	11.25	12.50
Yap Han Hoe	37,508,000 (Note 2)	11.24	12.49
Galmare Investment Limited	37,500,000	11.24	12.49
Eav Yin	51,239,980 (Note 3)	15.35	17.06
Eav An Unit Trust	32,876,000	9.85	10.95
Chan Chung Wai	42,000,000 (Note 4)	12.59	13.98
Webwork Holdings Limited	42,000,000	12.59	13.98

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EXPLANATORY STATEMENT

APPENDIX I

Notes:

1. These shares refer to the same holding of 55,000,000 shares held by Pacific Apex International Limited. Pacific Apex International Limited is a wholly-owned subsidiary of Kee Shing (Holdings) Limited and Mr. Leung Shu Wing is the chairman and controlling shareholder of Kee Shing (Holdings) Limited.

2. These shares include 37,500,000 shares held through Galmare Investment Limited. Galmare Investment Limited is equally owned by Mr. Leong Lou Teck and Mr. Yap Han Hoe.

3. These shares include 32,876,000 shares held by the Eav An Unit Trust, a family trust the beneficiaries of which include Eav Yin, his wife and children.

4. These shares refer to the same holding of 42,000,000 shares held by Webwork Holdings Limited. Mr. Chan Chung Wai is the beneficial owner of Webwork Holdings Limited. These shares are included under HKSCC Nominees Limited.

Kee Shing (Holdings) Limited, Galmare Investment Limited and Mr. Leung Chung Ping (who/which in aggregate hold 112,500,000 Shares, representing 33.7% of the issued share capital of the Company as at the Latest Practicable Date) have been deemed, pursuant to a ruling by the Securities and Futures Commission dated 21st November, 1996, as parties acting in concert, and on this basis if the Directors exercise in full the power to repurchase Shares under the Repurchase Mandate (except from Kee Shing (Holdings) Limited, Galmare Investment Limited and Mr. Leung Chung Ping) the aggregate shareholding interests of Kee Shing (Holdings) Limited, Galmare Investment Limited and Leung Chung Ping would increase to 37.5% and may become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code. However, the Directors have no present intention to exercise the power to repurchase Shares pursuant to the Repurchase Mandate to such an extent as would result in such takeover obligation being incurred on the part of Kee Shing (Holdings) Limited, Galmare Investment Limited and Mr. Leung Chung Ping. In the event that the Repurchase Mandate is exercised in full, the number of Shares held by the public would not fall below 25%.

Save for the above and based on the above shareholdings but subject to the ruling by the Securities and Futures Commission below, the Directors are not aware of any Shareholder, or a group of Shareholders acting in concert, who may become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code in the event that the Directors exercise the power to repurchase Shares pursuant to the Repurchase Mandate in full.

8. SHARE REPURCHASE MADE BY THE COMPANY

The Company had not repurchased any Shares (whether on the Stock Exchange or otherwise) in the six months preceding the Latest Practicable Date.

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PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX II

The following is a summary of the terms required to be included in the New Scheme as required by the Listing Rules:

1. The purpose of the New Scheme is to provide Qualifying Grantee with the opportunity to acquire proprietary interests in the Company and to encourage Qualifying Grantee to work towards enhancing the value of the Company and its Shares for the benefit of the Company and its shareholders as a whole.

2. The New Scheme is to be administered by the Board, and the decision of the Board shall be final and binding on all parties.

3. On and subject to the terms of the New Scheme and the requirements of the Listing Rules, the Board may offer to grant an Option to any Qualifying Grantee as the Board may in its absolute discretion select.

4. The Board is entitled during the life of the New Scheme to make an offer in writing to any eligible participant in the scheme selected by the Board in its absolute discretion, to take up Options for such number of Shares during such period and at such price determined by the Board.

5. Each grant of Options to any director, chief executive or substantial shareholder of the Company or any of their respective associates (as defined in the Listing Rules) shall be approved by the independent non-executive directors of the Company (excluding independent non-executive director who is the grantee of the Options). Where any grant of Options to a substantial shareholder or an independent nonexecutive director of the Company, or any of their respective associates, 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 in the 12 month period up to and including the date of such grant:

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

7. (b) having an aggregate value, based on the closing price of the Shares as stated in the daily quotations sheets issued by the Stock Exchange on the Date of Grant, in excess of HK$5 million,

such further grant of Options must be approved (voting by way of poll) by the Shareholders. All connected persons (as defined in the Listing Rules) of the Company must abstain from voting at such general meeting, except that any connected person may vote against the relevant resolution at the general meeting provided that his intention to do so has been stated in the circular to be sent to the Shareholders for the relevant resolution.

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PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX II

1. An offer of the grant of an Option may not be made after a price sensitive event or a price sensitive matter has been the subject of a decision, until such price sensitive information has been publicly disseminated in accordance with the Listing Rules. In particular, no Option may be granted during the period commencing one month immediately preceding the earlier of:

2. (a) the date of the Board meeting (as such date is first notified to the Stock Exchange) for the approval of the Company’s interim or annual results; and

3. (b) the deadline for the Company to publish its interim or annual results announcement,

and ending on the date of the results announcement.

1. The overall limit on the number of Shares which may be issued upon exercise of all Options granted and yet to be exercised under the New Scheme and other share option schemes of the Company must not exceed 30% of the Shares in issue from time to time (the “Scheme Limit”).

The total number of Shares which may be issued upon exercise of all Options to be granted under the New Scheme and any other Schemes must not exceed 10% of the Shares in issue on the Adoption Date (the “Scheme Mandate Limit”). Options lapsed in accordance with the terms of the New Scheme shall not be counted for the purpose of calculating the Scheme Mandate Limit.

The Company may renew the Scheme Mandate Limit at any time subject to prior Shareholders’ approval in general meeting. However, the Scheme Mandate Limit as renewed must not exceed 10% of the Shares in issue as at the date of the aforesaid Shareholders’ approval. Options previously granted under the New Scheme and other share option schemes (including those outstanding, cancelled, lapsed in accordance with the schemes or exercised share options) will not be counted for the purpose of calculating the limit as renewed. A circular must be sent to Shareholders in connection with the meeting at which their approval will be sought.

The Company may also seek separate Shareholders’ approval in general meeting for granting Options beyond the Scheme Mandate Limit to Qualifying Grantees specifically identified by the Company before the aforesaid Shareholders’ meeting where such approval is sought. A circular must be sent to Shareholders containing a generic description of the identified Qualifying Grantees, the number and terms of the Options to be granted, the purpose of granting Options to the identified Qualifying Grantees, and how these Options serve such purpose.

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APPENDIX II

PRINCIPAL TERMS OF THE NEW SCHEME

1. The total number of Shares issued and to be issued upon exercise of the Options granted and to be granted to each Qualifying Grantee or Option Holder (as the case may be) (including both exercised and outstanding Options) in any 12-month period must not exceed 1% of the Shares in issue (the “Individual Limit”). Any further grant of Options in excess of the Individual Limit shall be subject to Shareholders’ approval in general meeting with such Qualifying Grantee or Option Holder (as the case may be) and his associates (as such term is defined in the Listing Rules) abstaining from voting. A circular must be sent to the Shareholders disclosing the identity of the Qualifying Grantee or Option Holder (as the case may be) and the number and terms of the Options granted and to be granted. The number and terms of Options to be granted to such Qualifying Grantee or Option Holder, as the case may be, shall be fixed before Shareholders’ approval is sought and the date of the board meeting for proposing such further grant shall be taken as the Date of Grant for the purpose of calculating the Subscription Price.

The maximum number of Shares referred to in paragraph 8 shall be adjusted, in such manner as the Financial Advisor or Auditors shall certify to be appropriate, fair and reasonable in the event of a capitalisation issue, rights issue, consolidation or subdivision of Shares, or reduction of capital of the Company in accordance with paragraph 21.

1. The period (the “Option Period”) within which the Shares must be taken up under an Option shall be determined by the Board in its absolute discretion at the time of grant, but such period must not exceed 10 years from the date of grant of the relevant Option.

2. On and subject to the terms of the New Scheme, the Board shall be entitled at any time within ten years after the Adoption Date to make an Offer to any Qualifying Grantee, as the Board may in its absolute discretion select, to take up an Option pursuant to which such Qualifying Grantee may, during the Option Period, subscribe for such number of Shares as the Board may determine at the Subscription Price. The Offer shall specify the terms and conditions on which the Option is to be granted on a case by case basis. Such terms and conditions may include, but not limited to:

4. the exercise price subject to requirements set out in paragraph 12;

5. the period within which the Shares must be taken up under the Option, which must not be more than 10 years from the Date of Grant;

6. the minimum period, if any, for which an Option must be held before it can be exercised (the New Scheme itself does not specify any minimum holding period); and

7. the performance targets, if any, that must be achieved before the Option can be exercised (the New Scheme itself does not specify any performance targets).

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PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX II

1. An Offer shall be deemed to have been accepted and the Option to which the Offer relates shall be deemed to have been granted and to have taken effect when the duplicate of the offer letter comprising acceptance of the Offer duly signed by the Qualifying Grantee with the number of Shares in respect of which the Offer is accepted clearly stated therein, together with a remittance in favour of the Company of HK$1.00 by way of consideration for the grant thereof, is received by the Company. Such remittance shall not be refundable in any circumstances.

2. The Subscription Price shall be such price determined by the Board at its absolute discretion and notified to the Qualifying Grantee in the Offer and shall be no less than the highest of:

3. (a) the closing price of the Shares as stated in the daily quotations sheets issued by the Stock Exchange on the Date of Grant;

4. (b) the average closing price of the Shares as stated in the daily quotations sheets issued by the Stock Exchange for the five business days immediately preceding the Date of Grant; and

5. (c) the nominal value of a Share

6. The Shares to be allotted and issued upon the exercise of an Option shall be subject to all the provisions of the memorandum of association and bye-laws of the Company for the time being in force and will rank pari passu with the fully paid Shares in issue on the date the name of the Option Holder is registered on the register of members of the Company. Prior to the Option Holder being registered on the register of members of the Company, the Option Holder shall not have any voting rights, or rights to participate in any dividends or distributions of any rights arising on a liquidation of the Company, in respect of the Shares to be issued upon the exercise of the Option.

7. Subject to the provisions of the New Scheme, the New Scheme shall be valid and effective for a period of ten years commencing on the Adoption Date. After the expiry of the ten-year period, no further Options shall be offered or granted but in all other respects the provisions of the New Scheme shall remain in full force and effect. Options complying with the provisions of Chapter 17 of the Listing Rules which are granted during the life of the New Scheme shall continue to be exercisable in accordance with their terms of issue after the end of the ten-year period.

8. In the event the Option Holder ceasing to be a Qualifying Grantee for any reason (including his or her death) other than:

9. (i) the termination of his or her employment on one or more of the grounds specified in paragraph 20(g); or

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PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX II

• (ii) the termination of his or her employment for any reason during the one month period following the commencement date of the Option Period in respect of his or her Option,

the Option Holder (or his or her legal personal representatives) may, subject to paragraph 20(a), exercise the Option up to his or her entitlement at such date of cessation (to the extent not already exercised) within the period of 3 months following the date of such cessation, which date shall be the last actual working day on which the Option Holder was at work with the Company or any relevant Subsidiary or Affiliate on which salary is paid whether in lieu of notice or not or the date on which his contractual notice period expires, whichever is later or such longer period as the Board may determine;

1. If a general offer by way of takeover (other than by way of scheme of arrangement pursuant to paragraph 17 below) is made to all the holders of Shares (or all such holders other than the offeror, any person controlled by the offeror and any person acting in association or concert with the offeror) and such offer becomes or is declared unconditional prior to the expiry date of the relevant Option, the Company shall forthwith give notice thereof to the Option Holder and the Option Holder shall be entitled to exercise the Option either to its full extent or to the extent notified by the Company at any time within such period as shall be notified by the Company.

2. If a general offer by way of scheme of arrangement is made to all the holders of Shares and has been approved by the necessary number of holders of Shares at the requisite meetings, the Company shall forthwith give notice thereof to the Option Holder and the Option Holder may at any time thereafter (but before such time as shall be notified by the Company) exercise the Option either to its full extent or to the extent notified by the Company.

3. In the event a notice is given by the Company to its Shareholders to convene a shareholders’ meeting for the purpose of considering and, if thought fit, approving a resolution to voluntarily wind-up the Company, the Company shall forthwith give notice thereof to the Option Holder and the Option Holder may at any time thereafter but before such time as shall be notified by the Company, by notice in writing to the Comany, exercise the Option either to its full extent or to the extent notified by the Company, such notice to be accompanied by a remittance of the full amount of the subscription price of the Shares in respect of such exercise, and the Company shall as soon as possible and in any event no later than three days prior to the date of the proposed shareholders’ meeting, allot, issue and register in the name of the Option Holder such number of fully paid Shares which fall to be issued on exercise of such Option.

4. In the event of a compromise or arrangement, other than a scheme of arrangement contemplated in paragraph 17 above, between the Company and its members or creditors being proposed in connection with a scheme for the reconstruction or

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APPENDIX II

PRINCIPAL TERMS OF THE NEW SCHEME

amalgamation of the Company, the Company shall give notice thereof to all Option Holders on the same day as it gives notice of the meeting to its members or creditors to consider such a scheme or arrangement and the Option Holders may at any time thereafter but before such time as shall be notified by the Company, by notice in writing to the Company, exercise the Option either to its full extent or to the extent notified by the Company, such notice to be accompanied by a remittance of the full amount of the subscription price of the Shares in respect of such exercise, and the Company shall as soon as possible and in any event no later than three days prior to the date of the proposed meeting, allot, issue and register in the name of the Option Holders such number of fully paid Shares which fall to be issued on exercise of such Option.

1. Subject to the provisions of the New Scheme, an Option shall lapse automatically (to the extent not already exercised) on the earliest of:

2. (a) the expiry of the Option Period;

3. (b) the expiry of the periods for exercising the Option as referred to in paragraph 15, 18 and 19;

4. (c) subject to any court of competent jurisdiction not making an order the effect of which is to prohibit the offeror acquiring the remaining Shares in the offer, the expiry of the period referred to in paragraph 17;

5. (d) subject to the scheme of arrangement (referred to in paragraph 17) becoming effective, the expiry of the period for exercising the Option as referred to in paragraph 17;

6. (e) subject to paragraph 18, the date of the commencement of the winding-up of the Company;

7. (f) the date on which the Option Holder commits a breach of paragraph 25;

8. (g) the date on which the Option Holder, if an employee, ceases to be an employee of the Group or its Affiliate by reason of the termination of his or her employment on the grounds that he or she has been guilty of serious misconduct, or appears either to be unable to pay or to have no reasonable prospect of being able to pay his debts or has become bankrupt or has made any arrangement or composition with his or her creditors generally, or has been convicted of any criminal offence involving his or her integrity or honesty or on any other ground on which an employer would be entitled to terminate his or her employment summarily; and

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PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX II

• (h) subject to paragraph 15, the date the Option Holder, if an employee of a member of the Group or its Affiliate, ceases to be an employee of the Group or its Affiliate by any other reason.

• In the event of a capitalisation issue, rights issue, consolidation or sub-division of Shares, or reduction of capital of the Company, such corresponding alterations (if any) shall be made to:

• (i) the number or nominal amount of Shares subject to the Option so far as unexercised; and/or

• (ii) the Subscription Price,

or any combination thereof, as the Financial Advisor or the Auditors shall, at the request of the Company, certify in writing, either generally or as regards any particular Option Holder, to be in their opinion fair and reasonable, provided that any such adjustments give an Option Holder the same proportion of the equity capital of the Company as that to which that Option Holder was previously entitled, but so that no such adjustments be made to the extent that a Share would be issued at less than its nominal value. The capacity of the the Financial Advisor or the Auditors in this paragraph is that of experts and not of arbitrators and their certification shall, in the absence of manifest error, be final and binding on the Company and the Option Holders. The costs of the Financial Advisor or the Auditors shall be borne by the Company.

For the avoidance of doubt, the issue of securities as consideration in a transaction shall not be regarded as a circumstance requiring any such alteration.

1. Options granted but not exercised may be cancelled by the Company with the approval of the Option Holder. Where the Company cancels Options and offers to issue new ones to the same Qualifying Grantee, the issue of such new Options may only be made under the New Scheme with available unissued Options (excluding the cancelled Options) within the limits set out in paragraph 7 above.

2. The Shares issued on exercise of the Options will on issue be identical to the then existing issued Shares.

3. The Company by ordinary resolution in general meeting or the Board may at any time terminate the operation of the New Scheme and in such event no further Options will be offered or granted but in all other respects the provisions of the New Scheme shall remain in full force and effect. Options complying with the provisions of Chapter 17 of the Listing Rules which are granted during the life of the New

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PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX II

Scheme and remain unexpired immediately prior to the termination of the operation of the New Scheme shall continue to be exercisable in accordance with their terms of issue after the termination of the New Scheme.

1. An Option shall be personal to the Option Holder and shall not be assignable and no Option Holder shall in any way sell, transfer, charge, mortgage, encumber or create any interest in favour of any other person over or in relation to any Option. Any breach of the foregoing shall entitle the Company to cancel any outstanding Option or part thereof granted to such Option Holder without incurring any liability on the part of the Company.

2. Those specific provisions of the New Scheme which relate to the matters set out in Rule 17.03 of the Listing Rules cannot be altered to the advantage of Qualifying Grantees without prior approval of Shareholders in general meeting. Any change to the authority of the Directors or administrators of the New Scheme in relation to any alteration to the terms of the New Scheme shall be approved by Shareholders in general meeting. Any alterations to the terms and conditions of the New Scheme which are of a material nature, or any change to the terms of Options granted, must be approved by the Shareholders in general meeting, except where the alterations take effect automatically under the existing terms of the New Scheme. The New Scheme so altered must comply with Chapter 17 of the Listing Rules.

3. On exercise of an Option by an Option Holder, the Company may at its sole discretion (which discretion may or may not be exercised on request from a Qualifying Grantee) select to cancel such exercised Option and instead of issuing new Shares to the Option Holder, pay to the Option Holder the aggregate of:

4. (a) the subscription price received by the Company from the Option Holder with the notice of exercise of the Option; and

5. (b) if the average closing price of the Shares (as stated in the daily quotations sheets issued by the Stock Exchange for the five business days immediately preceding the date the Company receives notice of exercise of the Option) exceeds the subscription price, an amount equal to such excess multiplied by the number of Shares in respect of which the Option was exercised.

Any payment made by the Company pursuant to paragraph (b) above shall be charged to its retained profits or otherwise dealt with in accordance with applicable laws and the generally accepted accounting principles in force at the time of such payment.

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PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX II

For the purpose of this section:–

“Adoption Date” means the date of adoption of the New Scheme;

“Affiliate” means an entity which may be decided by the Board as a business – related affiliate of the Company;

“Auditors” means the auditors of the Group;

“Board” means the board of directors of the Company or a committee thereof appointed for the purpose of administering the New Scheme;

“Date of Grant” means in respect of an Option, the date on which the Board resolves to make an offer to the Qualifying Grantee, which date must be a business day;

“Employee” means any employee of the Company or any Subsidiary or any Affiliate and any officer or director (whether executive or non-executive or independent non-executive) of the Company or any Subsidiary or any Affiliate. An Option Holder shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or any Subsidiary or the relevant Affiliate; or (ii) transfers between the Company or any Subsidiary and any Affiliate or between any of them;

“Financial Advisor” means an independent financial advisor who is appointed by the Board from time to time for the purpose of paragraph 21 above;

“New Scheme” means the share option scheme of the Company to be adopted on 20th September, 2002;

“Offer” means the offer of the grant of an Option;

“Option” means a right granted to subscribe for Shares pursuant to the New Scheme;

“Option Holder” means any Qualifying Grantee who accepts an offer in accordance with the terms of the New Scheme, or (where the context so permits) any person who is entitled to such Option in consequence of the death of the original Option Holder, or the legal personal representative of such person;

“Qualifying Grantee” means (i) any Employee or any business-related consultant, agent, representative or advisor of the Company or any Subsidiary or any Affiliate; or (ii) any supplier, agent or consultant who provide goods or services to the Company or any Subsidiary or any Affiliate; or (iii) any customer of the Company or any Subsidiary or any Affiliate; or (iv) any business ally or joint venture partner of the Company or any Subsidiary or any Affiliate; and

“Subscription Price” means the price per Share at which an Option Holder may subscribe for Shares upon exercise of an Option.

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NOTICE OF SPECIAL GENERAL MEETING

ASIA COMMERCIAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a special general meeting of Asia Commercial Holdings Limited will be held at Plaza 1-3, lower lobby, Novotel Century Hong Kong Hotel, 238 Jaffe Road, Wanchai, Hong Kong at 10:45 a.m. on Friday, 20th September, 2002 (or so soon thereafter as the annual general meeting convened for the same date and place at 10:30 a.m. shall have been concluded or adjourned) for the purpose of considering and, if thought fit, passing the following resolutions, as ordinary resolutions:

ORDINARY RESOLUTIONS

1. “ THAT , conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited (“ Stock Exchange ”) granting approval of the share option scheme (“ Scheme ”), (a copy of which marked “A” produced to this meeting and for the purpose of identification signed by the chairman of this meeting) and any options which may be granted thereunder and granting or agreeing to grant the listing of and permission to deal in the shares of the Company falling to be issued pursuant to the exercise of any such options, the Scheme be and is hereby approved and adopted by the Company and the directors of the Company be and are hereby authorised to grant options to subscribe for shares of the Company thereunder and to allot and issue shares in the capital of the Company pursuant to the exercise of any such options which may be granted under the Scheme.”

2. “ THAT :

3. (a) subject to paragraph (b) below, the exercise by the directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase shares in the capital of the Company on The Stock Exchange of Hong Kong Limited (“ Stock Exchange ”) or on any other stock exchange on which the shares of the Company may be listed and recognized by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange or of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved;

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NOTICE OF SPECIAL GENERAL MEETING

• (b) the aggregate nominal amount of shares of the Company which the directors of the Company is authorized to repurchase pursuant to the approval in paragraph (a) above shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this Resolution, and the said approval shall be limited accordingly; and

• (c) for the purposes of this Resolution, “Relevant Period” means the period from the passing of this Resolution until whichever is the earliest of:

  • (i) the conclusion of the next annual general meeting of the Company;

  • (ii) the expiration of the period within which the next annual general meeting of the Company is required by any applicable law or the bye-laws of the Company to be held; and

  • (iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting.”

• “ THAT :

• (a) subject to paragraph (c) below, the exercise by the directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements and options (including bonds, warrants and debentures convertible into shares of the Company) which would or might require the exercise of such power be and is hereby generally and unconditionally approved;

• (b) the approval in paragraph (a) above shall authorize the directors of the Company during the Relevant Period (as hereinafter defined) to make or grant offers, agreements and options (including bonds, warrants and debentures convertible into shares of the Company) which would or might require the exercise of such power after the end of the Relevant Period;

• (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the directors of the Company pursuant to the approval in paragraph (a) above, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined); (ii) an issue of shares as scrip dividend pursuant to the bye-laws of the Company from time to time; (iii) an issue of shares of the Company upon the exercise of rights of subscription or conversion under the terms of any securities

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NOTICE OF SPECIAL GENERAL MEETING

which are convertible into shares of the Company; or (iv) an issue of shares of the Company under any option scheme or similar arrangement for the time being adopted for the grant or issue to employees of the Company and/or any of its subsidiaries of shares or rights to acquire shares of the Company, shall not exceed 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this Resolution, and the said approval shall be limited accordingly; and

• (d) for the purpose of this Resolution,

“Relevant Period” means the period from the passing of this Resolution until whichever is the earliest of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by any applicable law or the bye-laws of the Company to be held; and

• (iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting; and

“Rights Issue” means an offer of shares of the Company open for a period fixed by the directors of the Company to the holders of shares of the Company whose names appear on the register of members of the Company on a fixed record date in proportion to their then holdings of such shares as at that date (subject to such exclusions or other arrangements as the directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognized regulatory body or any stock exchange in, any territory applicable to the Company).”

1. “ THAT subject to the passing of Resolutions No. 2 and No. 3 set out in the notice convening the special general meeting of the Company of which this resolution forms past (“ Notice ”), the general mandate granted to the directors of the Company to allot, issue and deal with additional shares pursuant to Resolution No. 3 set out in the Notice be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of shares in the capital of the Company

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NOTICE OF SPECIAL GENERAL MEETING

repurchased by the Company under the authority granted pursuant to Resolution No. 2 set out in the Notice, provided that such amount of shares so repurchased shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the said Resolution.”

By Order of the Board Sum Pui Ying, Adrian Secretary

Hong Kong, dated 30th July, 2002

Head Office and

Principal place of business in Hong Kong:

Units 1701-2 & 8-10 17th Floor, Dominion Centre 43-59 Queen’s Road East Wanchai Hong Kong

Notes:

1. Any member of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and on a poll, vote instead of him. A proxy need not be a member of the Company.

2. To be valid, a proxy form, together with any power of attorney or other authority (if any) under which it is signed, or a notarially certified copy thereof, must be lodged with the head office and principal place of business of the Company in Hong Kong at Units 1701-2 & 8-10, 17th Floor, Dominion Centre, 43-59 Queen’s Road East, Wanchai, Hong Kong not later than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

3. A form of proxy for use at the meeting is enclosed herewith.

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