Inspur Digital Enterprise Technology Limited — Proxy Solicitation & Information Statement 2008

Oct 16, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferre d all your shares in Inspur International Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser(s) or the transferee(s) or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

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

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

CONTINUING CONNECTED TRANSACTION, ADOPTION OF NEW SHARE OPTION SCHEME AND AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

Independent financial adviser to the independent board committee and the independent shareholders of the Company

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REXCAPITAL (Hong Kong) Limited

The notice convening an extraordinary general meeting (“ EGM ”) of Inspur International Limited (the “ Company ”) to be held at Hong Kong International Trade & Exhibition Centre, Meeting Room 5, 7th Floor, 1 Trademart Drive, Kowloon Bay, Kowloon, Hong Kong at 10:00 a.m. on Monday, 10 November 2008 is set out on pages 38 to 43 of this circular. Shareholders of the Company are advised to read the notice and complete and return the form of proxy for use at the EGM enclosed with this circular in accordance with the instructions printed thereon.

A form of proxy for the EGM is enclosed with this circular. Whether you are able to attend or not, please complete and return the enclosed form of proxy to the branch share registrar of the Company, Computershare Hong Kong Investor Services Limited, Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. The completion and delivery of a form of proxy will not preclude you from attending and voting at the EGM or any adjournment thereof in person.

• For identification purpose only

17 October 2008

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Master Services Agreement and MSA Supplemental Agreement . . . . . . . . . . . . . . . . . . . .	6
Annual Caps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Implication under the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Adoption of 2008 Share Option Scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Proposed amendments to the Existing Memorandum and Articles . . . . . . . . . . . . . . . . . . .	10
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Letter from the Independent Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Letter of Advice From REXCAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Appendix I — Summary of the Principal Terms of the 2008 Share Option Scheme .	22
Appendix II — General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31
Notice of Extraordinary General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38

— i —

DEFINITIONS

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

“2004 Share Option Scheme” the share option scheme adopted by the Company on 8 April 2004 and terminated on 29 August 2008 (effective date of the Transfer of Listing) “2008 Share Option Scheme” the proposed share option scheme to be adopted by the Company at the EGM “associates” has the meaning ascribed to it under the Listing Rules “Board” the board of Directors “Caps” the caps of the Transactions to be entered into for the periods of: 3 July 2008 to 31 December 2008, year ending 31 December 2009, year ending 31 December 2010 and year ending 31 December 2011 (covering only the six months ending 30 June 2011) “Company” Inspur International Limited, an exempted company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Stock Exchange “connected person(s)” has the meaning ascribed to it under the Listing Rules “Director(s)” the director(s) of the Company “EGM” the extraordinary general meeting of the Company to be convened and held for the approving, amongst other things, the Master Services Agreement, the MSA Supplemental Agreement and the Caps, adoption of 2008 Share Option Scheme and amendments to Existing Memorandum and Articles “Existing Memorandum and the existing memorandum and articles of association of the Articles” Company “GEM” The Growth Enterprise Market of the Stock Exchange “GEM Listing Rules” Rules Governing the Listing of Securities on GEM “GEM Share Option Schemes” the Pre-IPO Share Option Scheme and the 2004 Share Option Scheme “Group” the Company and its subsidiaries

— 1 —

DEFINITIONS

“Hong Kong”

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

“Independent Board Committee” an independent board committee, comprising Mr. Meng Xiang Xu, Mr. Liu Ping Yuan and Mr. Wong Lit Chor, Alexis, all being the independent non-executive Directors, to advise the Independent Shareholders as to the fairness and reasonableness of the MSA Supplemental Agreement and the Caps

• “Independent Shareholders”

• Shareholders other than Microsoft and its associates

• “Inspur Group” Inspur Group Limited[#] (浪潮集團有限公司), which is a company incorporated in the PRC and through its wholly owned subsidiary, Inspur Electronics (HK) Limited, being the controlling shareholder (as defined in the Listing Rules) interested in approximately 43.95% of the total issued Shares as at the Latest Practicable Date

• “Inspur Worldwide Services” Inspur Worldwide Services Limited[#] (浪潮世科(山東)信息技 術有限公司)

• “Latest Practicable Date” 16 October 2008, being the latest practicable date prior to printing of this circular for ascertaining certain information contained herein

• “Listing Rules” The Rules Governing the Listing of Securities on the Stock Exchange

• “Main Board” the securities market operated by the Stock Exchange prior to the establishment of GEM (excluding the options market) which stock market continues to be operated by the Stock Exchange in parallel with GEM. For avoidance of doubt, the Main Board does not include GEM

• “Master Services Agreement” the agreement dated 1 April 2005 between Microsoft and Inspur Worldwide Services in relation to Services for an initial term of three years (to be supplemented by the MSA Supplemental Agreement)

“Microsoft”

• Microsoft Corporation, a corporation incorporated in the USA and holder of the Preferred Shares

• ”MSA Supplemental Agreement”

the supplemental agreement to the Master Services Agreement dated 26 September 2008 between Microsoft and Inspur Worldwide Services in relation to extension of the term of Master Services Agreement

— 2 —

DEFINITIONS

“PRC”	the People’s Republic of China
“Pre-IPO Share Option Scheme”	the pre-IPO share option scheme adopted by the Company on
	4 April 2004
“Preferred Shares”	234,279,559 series A senior redeemable convertible voting
	preferred shares of HK$0.01 each in the share capital of the
	Company attached with rights of conversion to 1,171,397,795
	Shares issued by the Company to Microsoft Corporation
“REXCAPITAL”	REXCAPITAL (Hong Kong) Limited, a licensed corporation
	to carry on type 6 regulated activity under the SFO, being the
	independent financial adviser appointed to advise the
	Independent Board Committee and the Independent
	Shareholders on the fairness and reasonableness of the MSA
	Supplemental Agreement and the proposed Caps and the
	transactions contemplated thereunder
“Services”	the services provided by Inspur Worldwide Services to
	Microsoft pursuant to the terms of the Master Services
	Agreement (the term of which to be extended under the MSA
	Supplemental Agreement) which may include, but not limited
	to, the development and/or delivery of any materials,
	inventions, ideas, designs, concepts, techniques, discoveries,
	or improvements in relation to software development
“SFO”	Securities and Futures Ordinance (Chapter 571 of the laws of
	Hong Kong)
“Share(s)”	ordinary share(s) of HK$0.002 each in the share capital of the
	Company
“Shareholder(s)”	holder(s) of the Share(s) and the Preferred Share(s)
“Share Option(s)”	outstanding share options granted by the Company pursuant
	to Pre-IPO Share Option Scheme, 2004 Share Option Scheme
	and 2008 Share Option Scheme
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Target”	Langchao Worldwide Services Limited
“Transactions”	the provision of the Services by Inspur Worldwide Services
	from time to time under the Master Services Agreement (the
	term of which to be extended under the MSA Supplemental
	Agreement)

— 3 —

			DEFINITIONS
“Transfer	of	Listing”	the transfer of listing of the Shares from GEM to the Main
			Board according to Chapter 9A of the Listing Rules
“HK$”			Hong Kong dollars, the lawful currency of Hong Kong
“US$”			US dollars, the lawful currency of the United States of
			America
“%”			per cent

In this circular, unless otherwise stated, figures in US$ are translated into HK$ at the approximate exchange rate of HK$7.80 to US$1.00, for the purpose of illustration only and such translation does not constitute a representation that any amount has been, could have been, or may otherwise be exchanged or converted at the above rate.

The English translation of Chinese names or words in this circular is included for information purpose only, and should not be regarded as the official English translation of such Chinese names or words.

— 4 —

LETTER FROM THE BOARD

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

Executive Directors:

Mr. Sun Pishu ( Chairman ) Mr. Zhang Lei Mr. Wang Miao Mr. Leung Chi Ho

Non-executive Directors: Mr. Xin Wei Hua Mr. Wang Hung, Alex

Independent Non-executive Directors:

Mr. Meng Xiang Xu Mr. Liu Ping Yuan Mr. Wong Lit Chor, Alexis

Registered Office:

Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head office and principal place of business in Hong Kong: Room 726 Nan Fung Commercial Centre 19 Lam Lok Street Kowloon Bay Kowloon Hong Kong

17 October 2008

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS, ADOPTION OF NEW SHARE OPTION SCHEME AND AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

INTRODUCTION

On 28 September 2008, the Board announced that on 26 Septmber 2008, Inspur Worldwide Services (a wholly owned subsidiary of the Company) entered into the MSA Supplemental Agreement with Microsoft in relation to provision of Services (including outsourcing development services) for the term from 1 July 2008 to 30 June 2011. As Microsoft is a connected person of the Company, the Transactions constitute continuing connected transactions on the part of the Company under the Listing Rules.

• For identification purpose only

— 5 —

LETTER FROM THE BOARD

In connection with the Transfer of Listing, the Directors proposed to the Shareholders, to adopt the 2008 Share Option Scheme and to approve the proposed amendments to the Existing Memorandum and Articles.

The purpose of this circular is to provide you with information regarding, among other things, (i) further information about the Master Services Agreement, the MSA Supplemental Agreement and the Caps, (ii) the recommendation from the Independent Board Committee to the Independent Shareholders, (iii) the letter from REXCAPITAL to the Independent Board Committee and the Independent Shareholders, (iv) the summary of the principal terms of 2008 Share Option Scheme, (v) the proposed amendments to the Existing Memorandum and Articles, and (vi) notice of the EGM.

MASTER SERVICES AGREEMENT AND MSA SUPPLEMENTAL AGREEMENT

Reference is made to the announcement and the circular issued by the Company on 8 May 2008 and 13 June 2008 respectively in relation to the major and connected transaction on the Group’s acquisition of the entire issued share capital of Langchao Worldwide Services Limited (“ Target ”) which in turn owns the entire issued share capital of Inspur Worldwide Services. The aforesaid acquisition was duly approved by the independent shareholders at the extraordinary general meeting of the Company on 30 June 2008 and the completion of the acquisition of the Target took place on 3 July 2008 and the Target and Inspur Worldwide Services become wholly owned subsidiaries of the Company thereafter.

Inspur Worldwide Services was appointed by Microsoft under the Master Services Agreement to provide Services (including outsourcing development services) for three years commencing on 1 April 2005 unless terminated earlier under the Master Services Agreement. For the work to be performed under the Master Services Agreement, the parties will agree upon delivery and payment schedule. Inspur Worldwide Services will send invoices to Microsoft on the progress payments in accordance with the agreed schedule and usually the full payments will be made upon the completion of the work. Upon receipt of a correct and undisputed invoice from Inspur Worldwide Services, Microsoft is required to pay either (i) within 60 days with no discount on the invoiced amount; or (ii) within 10 days less two percent (2%) discount on the invoiced amount. The Master Services Agreement is in the standard form of services agreement used by Microsoft. Under the Master Services Agreement, Inspur Worldwide Services will provide to Microsoft the Services with the related particulars set forth in the schedules that Inspur Worldwide Services and Microsoft may execute from time to time pursuant to the general terms and conditions set forth in the Master Services Agreement. The schedules will include detailed description of the work to be performed by Inspur Worldwide Services, delivery schedule, amount of fee and payment timing and method, and other terms (including technical details of the projects involved).

On 26 September 2008, Inspur Worldwide Services entered into the MSA Supplemental Agreement with Microsoft whereby the original term of the Master Services Agreement shall extend from 1 July 2008 and expire on 30 June 2011 so that Inspur Worldwide Services can continue to provide the Services within the renewed term which is aligned with the period of the annual Caps. Either party may terminate the Master Services Agreement upon sixty days prior written notice to the other party provided that Inspur Worldwide Services has satisfactorily completed all the work (unless otherwise agreed in writing by Microsoft).

— 6 —

LETTER FROM THE BOARD

Pursuant to the MSA Supplemental Agreement, the aggregate value of the fees in respect of the work performed by Inspur Worldwide Services under the Master Services Agreement shall not exceed the following limits in respect of their respective periods:

Period

Annual Limit

1 July 2008 to 30 June 2009 US$12,000,000 (equivalent to about HK$93,600,000) 1 July 2009 to 30 June 2010 US$23,000,000 (equivalent to about HK$179,400,000) 1 July 2010 to 30 June 2011 US$45,000,000 (equivalent to about HK$351,000,000)

Note : the year end date of the above annual limits is set at 30 June as this coincides with the financial year end date of Microsoft.

The MSA Supplemental Agreement is conditional upon the approval of the Independent Shareholders on the MSA Supplemental Agreement in the EGM.

Under the MSA Supplemental Agreement, other than the extension of the term of the Master Services Agreement and inclusion of the above annual limits in the Master Services Agreement, all other terms and conditions of the Master Services Agreement remain in force and unchanged.

The aggregate amount of the Transactions from 3 July 2008 to the Latest Practicable Date is about US$933,279 (equivalent to about HK$7,279,576) which is below the thresholds under Rule 14A.34 of the Listing Rules. Prior to the obtaining of the Independent Shareholders’ approval, the Company will ensure the amount of the Transactions from 3 July 2008 will not exceed the thresholds under Rule 14A.34 of the Listing Rules.

ANNUAL CAPS

Historical amounts of Transactions for the recent years

Set out below are the historical amounts of Transactions for the two years ended 31 December 2007 and the six months ended 30 June 2008:-

			Year ended	Year ended	Six months ended
			31 December 2006	31 December 2007	30 June 2008
Value	of	Transactions	US$2,017,500	US$5,198,700	US$3,575,900
			(equivalent to about	(equivalent to about	(equivalent to about
			HK$15,736,500)	HK$40,549,860)	HK$27,892,020)

— 7 —

LETTER FROM THE BOARD

Proposed caps in respect of Transactions for the three years

The amounts of the proposed caps (“ Caps ”) in respect of the Transactions subject to the Independent Shareholders’ approval for the following periods are set out as below:

Year ending 31 December 2011 (for the six months 3 July 2008 - Year ending 31 Year ending 31 from 1 January 2011 31 December 2008 December 2009 December 2010 to 30 June 2011) (note 2) Proposed Caps US$5,540,000 US$13,670,000 US$20,510,000 US$14,150,000 (equivalent to about (equivalent to about (equivalent to about (equivalent to about HK$43,212,000) HK$106,626,000) HK$159,978,000) HK$110,370,000)

Notes:

1. The Transactions become continuing connected transactions of the Company with effect from 3 July 2008 which is the date of the completion of the acquisition of the Target by the Company, since then Inspur Worldwide Services becomes a subsidiary of the Group.

2. The financial year ending 31 December 2011 only covers the six months ending 30 June 2011 (not the full year) as 30 June 2011 is the expiry date of the MSA Supplemental Agreement.

The Caps in respect of the Transactions are proposed by reference to historical amounts of the Transactions, the recent trend in the growth of the Transactions and the growth rate of the outsourcing development industry in the PRC.

Reasons for and benefits of entering into MSA Supplemental Agreement

By entering into the MSA Supplemental Agreement, Inspur Worldwide Services can continue the provision of Services which will generate significant revenue to Inspur Worldwide Services.

The Directors consider that the transactions under the Master Services Agreement are on normal commercial terms and entered in the ordinary and usual course of business of the Group. In view of the above reasons, the Directors are also of the view that the terms of the Transactions (including the Caps) are fair and reasonable and the Transactions are in the interest of the Company and the Shareholders as a whole.

IMPLICATION UNDER THE LISTING RULES

Information on the Group and Microsoft

The Group is an integrated IT services provider with services covering taxation, finance, ERP, telecommunication, e-government sectors and software outsourcing services. Inspur Worldwide Services is a domestic company established in the PRC and is principally engaged in provision of outsourcing development services in the PRC.

— 8 —

LETTER FROM THE BOARD

Microsoft is a leading software company in the world and is listed on NASDAQ National Market. Microsoft is principally engaged in developing, manufacturing, licensing, and supporting a wide range of software products (including operating systems for servers, personal computers and intelligent devices, server applications and others) for many computing devices. They also provide consulting and product support services.

Implication under the Listing Rules

As Microsoft is the holder of the Preferred Shares and is entitled to voting rights of 1,171,397,795 Shares (representing approximately 27.54% of the total voting rights of the holders of the Shares and Preferred Shares), Microsoft is a connected person of the Company and the Transactions constitute continuing connected transactions on the part of the Company under the Listing Rules. As the amounts of the proposed Caps of the Transactions exceed the thresholds set out in Rule 14A.34 of the Listing Rules, the Transactions will be subject to the reporting, announcement and Independent Shareholders’ approval requirements pursuant to Rules 14A.35 of the Listing Rules. Microsoft and its associates will abstain from voting in connection with the resolution to be proposed at the EGM for the approval of the Transactions and the proposed Caps in relation to the Transactions.

The Company will seek the approval by the Independent Shareholders by way of a poll in the EGM of the MSA Supplemental Agreement and the proposed Caps.

Independent Board Committee comprising the independent non-executive Directors has been formed to advise the Independent Shareholders on the terms of the MSA Supplemental Agreement and the proposed Caps and REXCAPITAL has been appointed as an independent financial adviser to advise the Independent Board Committee in respect of the terms of the MSA Supplemental Agreement and the proposed Caps in relation to the Transactions.

ADOPTION OF 2008 SHARE OPTION SCHEME

Reference is made to the announcement of the Company dated 21 August 2008 in relation to Transfer of Listing. The Pre-IPO Share Option Scheme was expired on 29 April 2004, being the date of the Company’s listing on the GEM and the 2004 Share Option Scheme was terminated with effect on 29 August 2008, being the effective date of Transfer of Listing. As at the Latest Practicable Date, there were 398,150,000 outstanding Share Options with 398,150,000 underlying Shares (representing 12.9% of the total issued Shares as at the Latest Practicable Date) under the GEM Share Option Schemes, which will remain valid and exercisable with their respective terms of issue.

After the Transfer of the Listing, the Directors propose to adopt the 2008 Share Option Scheme, the provisions of which comply with the requirements of Chapter 17 of the Listing Rules. A summary of the principal terms of the 2008 Share Option Scheme is set out in Appendix I to this circular.

The 2008 Share Option Scheme shall take effect subject to the passing of the resolution of the Shareholders of the Company in the EGM to adopt the 2008 Share Option Scheme and is conditional upon the Listing Committee of the Stock Exchange granting approval of listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of options granted under the 2008 Share Option Scheme.

— 9 —

LETTER FROM THE BOARD

As at the Latest Practicable Date, the issued ordinary share capital of the Company comprises 3,081,971,029 Shares. Assuming there is no change in the issued ordinary share capital of the Company during the period from the Latest Practicable Date to the date of adoption of 2008 Share Option Scheme, the number of Shares issuable pursuant to the 2008 Share Option Scheme under the scheme limit prescribed in Note (1) of Rule 17.03(3) of the Listing Rule will be 308,197,102 Shares, representing approximately 10% of the total number of Shares in issue as at the date of approval of the 2008 Share Option Scheme. The Company will apply to the Stock Exchange for the listing of, and permission to deal in, on the Stock Exchange any Shares which may be issued and allotted upon the exercise of any options which may be granted under the 2008 Share Option Scheme.

PROPOSED AMENDMENTS TO THE EXISTING MEMORANDUM AND ARTICLES

Reference is made to the announcement of the Company dated 21 August 2008 in relation to Transfer of Listing. The Board advised that the Existing Memorandum and Articles will be revised to reflect that a Director shall not vote (nor be counted in the quorum) and shall excuse himself from any meeting or part of a meeting of the Board approving any contract or arrangement or any other proposal in which he or any of his associates is materially interested. Furthermore, the Directors who are the directors of both the Company and the Inspur Group shall not participate in any resolution where any contract or arrangement or any other proposal involving the Inspur Group.

Proposed amendments to the Existing Memorandum and Articles are set out in the notice of the EGM and are summarised as follows:

• (a) implement the proposed amendments as suggested in the announcement of the Company dated 21 August 2008 in relation to the Transfer of Listing;

• (b) reflect the change of the name of the Company from the old name of “Lang Chao International Limited” to the current name of “Inspur International Limited”;

• (c) reflect the latest authorised and issued share capital of the Company comprising ordinary shares and preferred shares;

• (d) reflect the requirements under Rule 13.39(3) of the Listing Rules in relation to voting by poll;

• (e) reflect the requirements under paragraph 5(1) of Appendix 13 — Part B (Cayman Islands) Section 1 to the Listing Rules in relation to removal of director by ordinary resolution; and

• (f) reflect the requirements under paragraph A.4.2 of Appendix 14 (Code on Corporate Governance Practices) to the Listing Rules in relation to the retirements by rotation of directors at least every three years.

— 10 —

LETTER FROM THE BOARD

EGM

Set out on pages 38 to 43 of this circular is a notice convening the EGM which will be held at Hong Kong International Trade & Exhibition Centre, Meeting Room 5, 7th Floor, 1 Trademart Drive, Kowloon Bay, Kowloon, Hong Kong at 10:00 a.m. on Monday, 10 November 2008 at which resolutions will be proposed to approve, among others, (i) the MSA Supplemental Agreement and the proposed Caps; (ii) adoption of 2008 Share Option Scheme; and (iii) proposed amendments to the Existing Memorandum and Articles.

The MSA Supplemental Agreement and the proposed Caps are subject to, among other things, the approval by the Independent Shareholders at the EGM to be taken by way of a poll. Microsoft and its associates shall abstain from voting for the relevant resolution approving the MSA Supplmental Agreement and the proposed Caps at the EGM due to their interest in the concerned transactions. Other than the above, no other Shareholders have material interest in the above transactions and will abstain from voting at the EGM. As at the Latest Practicable Date, Microsoft is the holder of the Preferred Shares and is entitled to voting rights of 1,171,397,795 Shares (representing approximately 27.54% of the total voting rights of the holders of the Shares and Preferred Shares). Microsoft (including its associates) controls or is entitled to control over the entire voting right in respect of its Preferred Shares. There is (i) no voting trust or other agreement or arrangement or understanding entered into by or binding upon Microsoft (including its associates); and (ii) no obligation or entitlement of Microsoft (including its associates) as at the Latest Practicable Date, whereby it has or may have temporarily or permanently passed control over the exercise of the voting right in respect of its Preferred Shares to a third party, either generally or on a case-by-case basis. There is no holder of the Shares and the Preferred Shares who is required to abstain from voting in respect of the resolutions approving the adoption of 2008 Share Option Scheme and the proposed amendments to the Existing Memorandum and Articles.

A form of proxy for the EGM is enclosed. Whether or not you wish to attend the EGM, you are requested to complete the form of proxy and return the same to Computershare Hong Kong Investor Services Limited, the Company’s branch share registrar in Hong Kong, at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time appointed for the meeting (or any adjourned meeting). Completion and delivery of the form of proxy will not preclude you from attending and voting at the meeting (or any adjourned meeting) if you so wish.

According to Existing Memorandum and Articles, a resolution put to the vote of a general meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the 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

— 11 —

LETTER FROM THE BOARD

• (c) by a 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 the 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 up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

Notwithstanding the above, the resolution approving the MSA Supplemental Agreement and the proposed Caps will be voted on by way of a poll in the EGM.

RECOMMENDATIONS

The Independent Board Committee has been established to advise the Independent Shareholders whether the terms of the MSA Supplemental Agreement and the proposed Caps are fair and reasonable so far as the Independent Shareholders are concerned and REXCPAITAL has been appointed to advise the Independent Board Committee and the Independent Shareholders in that connection.

The text of the letter from REXCAPITAL containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 14 to 21 of this circular and the text of the letter from the Independent Board Committee to the Independent Shareholders is set out on page 13 of this circular.

The Independent Board Committee, having taken into account the advice of REXCAPITAL, is of the opinion that the terms of the MSA Supplemental Agreement and the proposed Caps to be fair and reasonable and are in the interests of the Company and the Shareholders as a whole and recommends the Independent Shareholders to vote in favour of the relevant resolution to be proposed at EGM.

The Board considers that the entering into the MSA Supplemental Agreement, the approval of proposed Caps, the adoption of the 2008 Share Option Scheme and the amendments of the Existing Memorandum and Articles are in the interests of the Company and the Shareholders as a whole and recommends the Shareholders and the Independent Shareholders (as the case may be) to vote in favour of the resolutions to be proposed at EGM.

ADDITIONAL INFORMATION

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

By Order of the Board Inspur International Limited Sun Pishu Chairman

— 12 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

17 October 2008

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to the circular dated 17 October 2008 issued by the Company (the “ Circular ”), of which this letter forms part. Terms used in this letter shall bear the same meanings as given to them in the Circular unless the context otherwise requires.

We have been appointed as members of the Independent Board Committee to consider the MSA Supplemental Agreement and the proposed Caps and to advise the Independent Shareholders as to the fairness and reasonableness of the aforesaid matters, and to recommend how the Independent Shareholders should vote at the EGM. REXCAPITAL has been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

We wish to draw your attention to the letter from the Board, as set out on pages 5 to 12 of the Circular, and the letter from REXCAPITAL to the Independent Board Committee and the Independent Shareholders which contains its advice to us in respect of the MSA Supplemental Agreement and the proposed Caps, as set out on pages 14 to 21 of the Circular.

Having taken into account of the advice of REXCAPITAL, we consider that (i) the MSA Supplemental Agreement to be entered into upon normal commercial terms, and the continuing connected transactions contemplated thereunder to be entered into in the ordinary and usual course of business of the Group and they are fair and reasonable and in the interests of the Company and the Shareholders as whole, and (ii) the proposed Caps are fair and reasonable insofar as the Company and the Shareholders as whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the MSA Supplemental Agreement and the proposed Caps.

Yours faithfully,

the Independent Board Committee

Meng Xiang Xu Liu Ping Yuan Wong Lit Chor, Alexis Independent non-executive Independent non-executive Independent non-executive Director Director Director

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LETTER OF ADVICE FROM REXCAPITAL

The following is the text of a letter of advice from REXCAPITAL to the Independent Board Committee and the Independent Shareholders in respect of the Master Services Agreement and the MSA Supplemental Agreement, and is prepared for inclusion in this circular.

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REXCAPITAL (Hong Kong) Limited

34th Floor, COSCO Tower Grand Millennium Plaza 183 Queen’s Road Central Hong Kong

17 October 2008

The Independent Board Committee and the Independent Shareholders

Inspur International Limited

Room 726, Nan Fung Commercial Centre 19 Lam Lok Street Kowloon Bay, Kowloon Hong Kong

Dear Sirs,

CONTINUING CONNECTED TRANSACTION

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the fairness and reasonableness of the terms of the Master Services Agreement and the MSA Supplemental Agreement (collectively, the “Agreements”), details of which are set out in this circular (the “Circular”), of which this letter forms a part. We have been retained by the Company to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Agreements (i) are in the ordinary and usual course of business of the Group, (ii) are based on normal commercial terms and are fair and reasonable, and (iii) are in the interests of the Company and its Shareholders as a whole, and to advise the Independent Shareholders on how to vote. Unless the context otherwise requires, terms used in this letter shall have the same meaning as those defined in the Circular.

Inspur Worldwide Services was appointed by Microsoft under the Master Services Agreement to provide Services (including outsourcing development services) for three years commencing on 1 April 2005. On 26 September 2008, Inspur Worldwide Services entered into the MSA Supplemental Agreement with Microsoft whereby the original term of the Master Services Agreement shall extend from 1 July 2008 and expire on 30 June 2011 so that Inspur Worldwide Services can continue to provide the Services within the renewed term.

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LETTER OF ADVICE FROM REXCAPITAL

Upon completion of the acquisition of the entire issued share capital of the Target on 3 July 2008, the Target which owns the entire issued share capital of Inspur Worldwide Services, have become wholly owned subsidiary of the Company. As Microsoft is the holder of the Preferred Shares and is entitled to the voting rights of 1,171,397,795 Shares (representing approximately 27.54% of the total voting rights of the holders of the Shares and Preferred Shares), Microsoft is a connected person of the Company and the Transactions constitute continuing connected transactions on the part of the Company under the Listing Rules. Also, as the amounts of the proposed Caps of the Transactions exceed the thresholds set out in Rule 14A.34 of the Listing Rules, the Transactions will be subject to the reporting, announcement and Independent Shareholders’ approval requirements pursuant to Rule 14A.35 of the Listing Rules. Microsoft and its associates will abstain from voting in the EGM to be convened for the approval of the Transactions and the proposed Caps in relation to the Transactions.

The Independent Board Committee, comprising Mr. Meng Xiang Xu, Mr. Liu Ping Yuan and Mr. Wong Lit Chor, Alexis, all being independent non-executive Directors, has been established to consider the terms of the Agreements and their relevant annual caps, and to advise the Independent Shareholders on whether the Agreements and the proposed Caps are fair and reasonable.

BASIS OF OUR OPINION

In formulating our opinion and advice, we have relied upon accuracy of the information and representations contained in the Circular and information provided to us by the Company and the Directors, for which they are solely responsible. We have assumed that all statements, information and representations made or referred to in the Circular and all information and representations which have been provided by the Company and the Directors, for which they are solely and wholly responsible, were true at the time they were made and continue to be true as at the date hereof. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due and careful enquiry and were based on honestly-held opinions.

We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and have been confirmed by the Directors that no material facts and representations the omission of which would make any statement in the Circular, including this letter, misleading. We have not, however, conducted any independent in-depth investigation into the business affairs, financial position or future prospects of the Group, nor have we carried out any independent verification of the information provided by the Directors and management of the Company. We consider that we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information and representations contained in the Circular and to provide a reasonable basis for our recommendation regarding the Agreements.

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LETTER OF ADVICE FROM REXCAPITAL

PRINCIPAL FACTORS CONSIDERED

In giving our recommendation to the Independent Board Committee and the Independent Shareholders in respect of the fairness and reasonableness of the terms of the Agreements, we have taken into consideration the following factors and reasons:

I. Background and Reasons

The Group is integrated IT services provider with services covering taxation, finance, ERP, telecommunication, e-government sectors and software outsourcing services.

Inspur Worldwide Services is a domestic company established in the PRC and is principally engaged in provision of outsourcing development services in the PRC.

Microsoft is a leading software company in the world and is listed on NASDAQ National Market. Microsoft is principally engaged in developing, manufacturing, licensing, and supporting a wide range of software products (including operating systems for servers, personal computers and intelligent devices, server applications and others) for many computing devices. They also provide consulting and product support services.

As set out in the Letter from the Board in the Circular (the “Letter”), by entering into the MSA Supplemental Agreement, Inspur Worldwide Services can continue the provision of the Services to Microsoft and which in turn will generate significant revenue to Inspur Worldwide Services. As advised by the Company, the Directors consider that the Transactions under the Agreements are on normal commercial terms and entered in the ordinary and usual course of business of the Group. In view of the above reasons, the Directors are also of the view that the terms of the Transactions (including the Caps) are fair and reasonable and the Transactions are in the interests of the Company and the Independent Shareholders as a whole.

We have reviewed the relevant invoices regarding the Transactions carried out during the years 2006, 2007 and the first half year of 2008 and discussed with the Company, among others, the revenue arising from the Transactions carried out under the Master Services Agreement and its proportion to the total revenue of the Target. We noted that the revenue generated from the Transactions represented approximately 32% and 48% respectively of the total revenue of the Target for the years ended 31 December 2006 and 2007.We were advised by the Directors that the terms of the Agreements were negotiated on an arm’s length basis and the Agreements are in the standard form of services agreement used by Microsoft. Also advised by the Directors, the Agreements are for the purpose of provision of a framework of the general terms and conditions for the provision of the Transactions. Each project to be undertaken by Inspur Worldwide Services under the Agreements will be subject to particulars set forth in the schedules that Inspur Worldwide Services and Microsoft may execute from time to time pursuant to the general terms and conditions set forth in the Master Services Agreement.

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LETTER OF ADVICE FROM REXCAPITAL

Having consider:

• the nature of the Transactions falls within the principal business of the Group;

• the leading position of Microsoft in the worldwide software industry;

• the benefits of the Agreements to be concurred to the Group whereby (a) the Agreements can continue to secure the co-operation relationship with Microsoft so as to be available for pursuing and take advantage of future co-operation opportunities as they may arise from time to time in future; and (b) the Group can make use of the business relationship with Microsoft to enhance the Group’s market reputation and open up more worldwide business opportunities for the Group;

• the proportion of revenue generated from the provision of Services to the total revenue of the Target; and

• the Transactions are of revenue nature which will generate income to the Group should they become materialized,

we concur with the views of the Directors that the Agreements were entered into in the ordinary and usual course of business of the Group and the continual provision of the Services to Microsoft will enhance the revenue bases of the Group. As such, we consider the Agreements are in the interests of the Company and the Shareholders as a whole.

II. The Agreements

1. Descriptions

Major terms

• Provision of Services : the services provided by Inspur Worldwide Services to Microsoft pursuant to the terms of the Master Services Agreement (the term of which to be extended under the MSA Supplemental Agreement) which may include, but not limited to, the development and/or delivery of any materials, inventions, ideas, designs, concepts, techniques, discoveries, or improvements in relation to software development

• Payment schedule : for the work to be performed under the Master Services Agreement, the parties will agree upon delivery and payment schedule. Inspur Worldwide Services will send invoices to Microsoft on the progress payments in accordance with the agreed schedule and usually the full payments will be made upon the completion of the work. Upon receipt of a correct and undisputed invoice from Inspur Worldwide Services, Microsoft is required to pay either (i) within 60 days with no discount on the invoiced amount; or (ii) within 10 days less two percent (2%) discount (the “Discount”) on the invoiced amount.

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LETTER OF ADVICE FROM REXCAPITAL

As set out in the Letter, the Master Services Agreement is in the standard form of services agreement used by Microsoft. Under the Master Services Agreement, Inspur Worldwide Services will provide to Microsoft the Services with the related particulars set forth in the schedules that Inspur Worldwide Services and Microsoft may execute from time to time pursuant to the general terms and conditions set forth in the Master Services Agreement. The schedules will include detailed description of the work to be performed by Inspur Worldwide Services, delivery schedule, amount of fee and payment timing and method, and other terms (including technical details of the projects involved). Also set out in the Letter, under the MSA Supplemental Agreement, other than the extension of the term of the Master Services Agreement and inclusion of the annual limits on the fees in respect of the work performed under the Master Services Agreement, all other terms and conditions of the Master Services Agreement remain in force and unchanged.

We have reviewed the Agreements and were advised by the Directors that there is no contractual obligation on the part of the Group to provide Microsoft any minimum amount of the Services, and the Group is not and will not be restricted from providing similar services to third parties.

We have reviewed (i) the order receipts/contracts of historical Transactions carried out by Inspur Worldwide Services to Microsoft; (ii) the order receipts/contracts of similar transactions carried out by Inspur Worldwide Services to third parties independent of the Company and its connected persons (the “Independent Third Parties”); and (iii) statistics provided by the Company in respect of the average revenue per man-hour on similar projects carried out for Microsoft and other major customers of Inspur Worldwide Services. Based on such statistics provided by the Company, we observed that the average revenue per man-hour for Microsoft is no less favorable than those of Independent Third Parties. As such, we consider the pricing policy to Microsoft is fair and reasonable.

We also noted from the order receipts/contracts of similar transactions carried out by Inspur Worldwide Services to Independent Third Parties that generally Independent Third Parties customers are required to settle the payment around 30 to 40 days with no discount.

Considering (i) the size of revenue generated from the Services and its portion to the total revenue of the Target; and (ii) the high and increasing trend of business with Microsoft, we consider it is a normal business practice to offer a slight discount to such a major customer. In addition, in view (i) the Discount provided an incentive for early settlement and hence enhance the cash inflow and operation liquidity of the Group; and (ii) the size of the Discount is relatively small, we consider the Discount is acceptable.

In view of the foregoings, we consider the terms (including the settlement terms) under the Agreements are fair and reasonable.

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LETTER OF ADVICE FROM REXCAPITAL

1. Annual Caps

Set out below is the proposed Caps in respect of the Transactions:

Proposed Caps

Year ending 31 December 2011 (for the six 3 July 2008 — Year ending Year ending months from 31 December 31 December 31 December 1 January 2011 2008 2009 2010 to 30 June 2011) (Note 2) US$5,540,000 US$13,670,000 US$20,510,000 US$14,150,000 (equivalent to (equivalent to (equivalent to (equivalent to about about about about HK$43,212,000) HK$106,626,000) HK$159,978,000) HK$110,370,000)

Notes:

1. The Transactions becomes continuing connected transactions of the Company with effect from 3 July 2008 which is the date of the completion of the acquisition of the Target by the Company, since then Inspur Worldwide Services becomes a subsidiary of the Group.

2. The financial year ending 31 December 2011 only covers the six months ending 30 June 2011(not the full year) given 30 June 2011 is the expiry date of the MSA Supplemental Agreement.

As advised by the Company, set out below are the historical amounts of the Transactions carried out by Inspur Worldwide Services to Microsoft for the nine months ended 31 December 2005 (commencing from 1 April 2005), the two years ended 31 December 2007 and the six months ended 30 June 2008.

	Nine months
	ended 31
	December 2005	Year ended	Year ended	Six months
	(commencing from	31 December	31 December	ended 30 June
	1 April 2005)	2006	2007	2008
Value of	US$1,122,600	US$2,017,500	US$5,198,700	US$3,575,900
Transactions	(equivalent to	(equivalent to	(equivalent to	(equivalent to
	about	about	about	about
	HK$8,756,280)	HK$15,736,500)	HK$40,549,860)	HK$27,892,020)

We observed that the historical value for the Transactions for the year ended 31 December 2007 represent a percentage increment of approximately 157.68% to the historical value of Transactions for the year ended 31 December 2006. We have reviewed and discussed with the management the projected revenue information (including its basis) provided by the Group in connection with the

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LETTER OF ADVICE FROM REXCAPITAL

Transactions and were advised that the proposed Cap for the period from 3 July to 31 December 2008 was based on the continuous discussions with Microsoft on the approximate potential amount of Transactions will be carried out for the second half year of 2008 and the proposed Caps for the years 2009, 2010 and 2011 are based on the prior year growth rate and the growth rate for the software outsourcing business industry in PRC.

As advised by the Company, the aggregate amount of the Transactions from 3 July 2008 up to and including the Latest Practicable Date is approximately US$933,279 (equivalent to approximately HK$7,279,576) (including approximately US$101,200 (equivalent to about HK$789,360) generated from new Transactions carried out from 3 July 2008 up to and including the date of the announcement of the Company dated 28 September 2008 in respect of the Agreements). As advised by the Company, based on continuous discussions with Microsoft, the Company expected to have further approximately US$3,766,721 orders from Microsoft for the remaining period of the year 2008 and the Company is confident in fulfilling such orders. On top of the above, the Company has provided a US$840,000 buffer, which together with the Transactions completed up to Latest Practicable Date and the expected orders of US$3,766,721 made up the Cap for the period from 3 July to 31 December 2008. Based on the above, we are of the view that the Cap for the period from 3 July to 31 December 2008 is acceptable.

We have searched through and reviewed articles in relation to, among others, software outsourcing industry and noted from an independent industry research report (source: Annual Industry Research Report of Software Outsourcing in PRC for the year 2007 to 2008 issued in 2008 conducted by CCID Consulting Company Limited) that the turnovers of software outsourcing in PRC for the years 2006 and 2007 have been increased by approximately 55.4% and approximately 40.6% respectively as compared to the previous year, representing an average increment of approximately 48% each year. For the proposed Caps, by addition of the transacted amount from 1 January 2008 up to and including 2 July 2008 and the proposed Cap for the period from 3 July to 31 December 2008, we noted that the Caps (in annualized basis) for the three years ending 31 December 2011 represent increases of approximately 49.96%, 50.04% and 37.98% respectively from the previous years, representing an average growth of approximately 45.99% per annum.

Having considered (i) the historical transacted amounts of Inspur Worldwide Services with Microsoft and its growth rate; (ii) the average annual growth rate of the software outsourcing industry in PRC; and (iii) potential business opportunities with Microsoft in the future given the strong market position of Microsoft in the information technology industry, the Group may be able to expose to other potential business opportunities, we consider the proposed Caps which based on the prior year growth rate and market growth rate of the software outsourcing industry in PRC are fair and reasonable.

RECOMMENDATION

Having taken into account the rationale and consideration set out above, we are of the view that each of the Agreements are (i) carried out in the ordinary and usual course of the Group’s business; (ii) based on normal commercial terms and are fair and reasonable; and (iii) in the interests of the Company and the Shareholders as a whole. We are also of the view that the terms of the Agreements, including the proposed Caps, are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

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LETTER OF ADVICE FROM REXCAPITAL

On such basis, we advise (i) the Independent Board Committee to recommend the Independent Shareholders; and (ii) the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM for approving the MSA Supplemental Agreement and the proposed Caps.

Yours faithfully, For and on behalf of REXCAPITAL (Hong Kong) Limited Sam Lum

Executive Director

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SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

APPENDIX I

2008 SHARE OPTION SCHEME

The following is a summary of the principal terms of the 2008 Share Option Scheme, which will be put forward to the Shareholders for consideration and adoption at the EGM.

(a) Purpose of the scheme

The purpose of the 2008 Share Option Scheme is to enable the Group to grant options to selected participants as incentives or rewards for their contribution to the Group and/or to enable the Group to recruit and retain high-calibre employees and attract human resources that are valuable to the Group and any Invested Entity (as defined in paragraph (b)(aa) below).

(b) Who may join

The Board may, at its absolute discretion, invite any person belonging to any of the following classes of participants who, in the absolute determination of the Directors, will contribute or have contributed to the Company and/or any of its subsidiaries, to take up options to subscribe for the Shares:

• (aa) any employee (whether full time or part time employee, including any executive directors) of the Company, its subsidiaries and any entity in which the Group holds any equity interest (“ Invested Entity ”) (“ eligible employee ”);

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

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

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

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

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

and, for the purposes of the 2008 Share Option Scheme, the options may be granted to any company wholly-owned by one or more persons belonging to any of the above classes of participants or any discretionary object of a participant which is a discretionary trust. However, the granting of option under the 2008 Share Option Scheme to any grantee which is a company or is a discretionary object of a participant which is a discretionary trust shall be subject to the execution by the grantee or trustee and/ or the beneficial owners in favour of the Company of any undertaking not to effect or permit any change in the ultimate beneficial ownership of the grantee so long as the option so granted to the grantee or any part thereof remains exercisable.

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APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

• (c) Maximum number of Shares

• (aa) The maximum number of Shares which may be issued upon exercise of all options granted under the 2008 Share Option Scheme and any other schemes of the Group must not in aggregate exceed 30 per cent. of the total number of Shares in issue from time to time.

• (bb) The total number of Shares which may be issued upon exercise of all options (including for this purpose, options which have lapsed in accordance with the terms of the 2008 Share Option Scheme and any other schemes of the Group) to be granted under the 2008 Share Option Scheme and any other schemes of the Group shall not in aggregate exceed 308,197,102 Shares, being 10 per cent of the total number of Shares in issue on the date of adoption of the 2008 Share Option Scheme (the “ General Scheme Limit ”).

• (cc) Subject to (aa) above and without prejudice to (dd) below, the Company may seek approval of its shareholders in general meeting to refresh the General Scheme Limit provided that the total number of Shares which may be issued upon exercise of all options to be granted under the 2008 Share Option Scheme and any other schemes of the Group as “refreshed” shall not exceed 10 per cent of the total number of Shares in issue as at the date of approval of the limit and for the purpose of calculating the limit as “refreshed”, options (including those outstanding, cancelled, lapsed or exercised in accordance with the 2008 Share Option Scheme and any other share option scheme of the Group) previously granted under the 2008 Share Option Scheme and any other schemes of the Group will not be counted.

• (dd) Subject to (aa) above and without prejudice to (cc) above, the Company may issue a circular to its shareholders and seek separate shareholders’ approval in general meeting to grant options beyond the General Scheme Limit, or, if applicable, the limit referred to in (cc) above to participants specifically identified by the Company before such approval is sought.

(d) Maximum entitlement of each participant

The total number of Shares issued and which may fall to be issued upon exercise of the options granted under the 2008 Share Option Scheme and any other share option scheme of the Group (including both exercised or outstanding options) to each participant in any 12-month period shall not exceed 1 per cent of the total number of Shares of the Company in issue for the time being (the “ Individual Limit ”). Any further grant of options in excess of the Individual Limit in any 12-month period up to and including the date of such further grant shall be subject to the issue of a circular to the shareholders and the shareholders’ approval in general meeting of the Company with such participant and his associates abstaining from voting.

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APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

• (e) Grant of options to connected persons

• (aa) Any grant of options under the 2008 Share Option Scheme or any other schemes of the Group to a director, chief executive (other than a proposed director or proposed chief executive of the Company), or substantial shareholder of the Company or any of their respective associates must be approved by the independent non-executive directors of the Company (excluding the independent non-executive Director who is a grantee of the options).

• (bb) Where any grant of options to a substantial shareholder or an independent non-executive 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:

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

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

such further grant of options must be approved by shareholders of the Company. The Company must send a circular to the shareholders. All connected persons of the Company must abstain from voting in favour at such general meeting. Pursuant to Rule 13.39(4) of the Listing Rules, a vote taken at the meeting to approve the grant of such options must be taken on a poll. The Company must comply with Rules 13.39(5), 13.40, 13.41 and 13.42 of the Listing Rules. Any change in the terms of the options granted to a substantial shareholder or an independent non-executive director of the Company, or any of their respective associates must be approved by the shareholders of the Company in general meeting.

(f) Time of acceptance and exercise of option

An option may be accepted by a participant by payment of HK$1.00 to the Company within 28 days from the date of the offer of grant of the option. An option may be exercised in accordance with the terms of the 2008 Share Option Scheme at any time during a period to be determined and notified by the Board to each grantee, save that such period shall end in any event not later than ten years from the date of grant of the option subject to the provisions for early termination thereof.

(g) Performance targets

Unless the Directors otherwise determined and stated in the offer of the grant of options to a participant, a participant is not required to achieve any performance targets before any options granted under the 2008 Share Option Scheme can be exercised.

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APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

(h) Subscription Price for Shares

The subscription price for Shares under the 2008 Share Option Scheme will be a price to be determined by the Directors, but may not be less than the higher of (i) the closing price of Shares on the Stock Exchange on the date of grant of the particular option; (ii) the average closing price of the Shares on the Stock Exchange for the five trading days immediately preceding the date of the grant of the particular option; or (iii) the nominal value of a Share.

(i) Ranking of Shares

• (aa) Shares allotted and issued upon the exercise of an option will be subject to all the provisions of the articles of association of the Company and will rank pari passu in all respects with the fully paid Shares in issue on the date when the name of the grantee is registered on the register of members of the Company (the “Exercise Date”) and accordingly will entitle the holders thereof to participate in all dividends or other distributions paid or made on or after the Exercise Date other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefor shall be before the Exercise Date, provided always that when the Exercise Date falls on a day upon which the register of members is closed then the exercise of the option shall become effective on the first business day in Hong Kong on which the register of members of the Company is re-opened. A Share allotted and issued upon the exercise of an option shall not carry voting rights until the completion of the registration of the grantee as the holder thereof.

• (bb) Unless the context otherwise requires, references to “Shares” in this paragraph include references to shares in the ordinary share capital of the Company of such nominal amount as shall result from a sub-division, consolidation, re-classification or reduction of the share capital of the Company from time to time.

(j) Period of the Share Option Scheme

The 2008 Share Option Scheme will remain in force for a period of ten years commencing on the date on which the 2008 Share Option Scheme is adopted by shareholders of the Company in general meeting, which is expected to be around 10 November 2008.

(k) Restriction on time of grant of option

No offer of options shall be made after a price sensitive development has occurred or a price sensitive matter has been the subject of a decision, until such price sensitive information has been announced pursuant to the requirements of the Listing Rules. In particular, during the period commencing one month immediately preceding the earlier of (i) the date of the board meeting (as such is first notified to the Stock Exchange in accordance with the Listing Rules) for approval of the results of the Company for any year, half-year or quarter-year period or any other

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SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

APPENDIX I

interim period (whether or not required under the Listing Rules) and (ii) the deadline for publishing an announcement of its results for any year, half-year or quarterly or any other interim period (whether or not required under the Listing Rules), and ending on the date of the announcement of the results, no options may be granted.

(l) Rights on dismissal, bankruptcy or insolvency

If a grantee of an option ceases to be an eligible employee of the Group on the grounds that he has been guilty of misconduct, or has committed any act of bankruptcy or has become insolvent or has made any arrangement or composition with his or her creditors generally, or has been convicted of any criminal offence involving his or her integrity or honesty or (if so determined by the Board) on any other ground on which an employer would be entitled to terminate his or her employment at common law or pursuant to any applicable laws or under the grantee’s service contract with the Company or the relevant subsidiary of the Company or the relevant Invested Entity before exercising his option in full, the option (to the extent not already exercised) will lapse on the date of cessation and will not be exercisable.

(m) Rights on death

If a grantee of an option ceases to be an eligible employee of the Group by reason of his death before exercising the option in full, his or her personal representative(s) may exercise the option (to the extent which has become exercisable but not already exercised prior to the date of death of the grantee) in whole or in part within a period of 12 months following the date of death or such longer period as the Board may determine.

(n) Rights on ceasing employment

If a grantee of an option is an eligible employee and ceases to be an eligible employee for any reason other than death or for serious misconduct of other ground referred to in sub-paragraph (l) above before exercising his or her option in full, the grantee may exercise the option up to his or her entitlement at the date of cessation in whole or in part (to the extent which has become exercisable and not already exercised), which date shall be the last day on which the grantee was at work with the Group or the Invested Entity whether salary is paid in lieu of notice or not, or such longer period following the date of cessation as the Board may determine.

(o) Rights on breach of contract

If the Directors shall at their absolute discretion determine that the grantee of any option (other than an eligible employee) or his or her associate has committed any breach of any contract entered into between the grantee or his or her associate on the one part and the Group or any Invested Entity on the other part or that the grantee has committee any act of bankruptcy or has become insolvent or is subject to any winding-up, liquidation or analogous proceedings

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SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

APPENDIX I

or has made any arrangement or composition with his creditors generally, the Directors shall determine that the outstanding option granted to the grantee (whether exercisable or not) shall lapse. In such event, his or her or its option will lapse automatically and will not in any event be exercisable on or after the date on which the Directors have so determined.

(p) Rights on a general offer

If a general or partial offer, whether by way of take-over offer, share repurchase offer, or scheme of arrangement or otherwise in like manner is made to all the holders of Shares, or all such holders other than the offeror and/or any person controlled by the offeror and/or any person acting in association or concert with the offeror, the Company shall use all reasonable endeavours to procure that such offer is extended to all the grantees on the same terms, mutatis mutandis, and assuming that they will become, by the exercise in full of the options granted to them, shareholders of the Company. If such offer becomes or is declared unconditional, a grantee shall be entitled to exercise his or her or its option (to the extent not already exercised) to its full extent or to the extent specified in the grantee’s notice to the Company in exercise of his or her or its option at any time before the close of such offer (or any revised offer).

(q) Rights on winding up

In the event a notice is given by the Company to its members to convene a general meeting to consider and approve a resolution for the voluntary winding up of the Company during the option period, the grantee may, subject to the provisions of all applicable laws, by notice in writing to the Company at any time no later than two business days prior to the proposed date of the general meeting, exercise his or her option (to the extent which has become exercisable and not already exercised) either to its full extent or to the extent specified in such notice in accordance with the provisions of the 2008 Share Option Scheme (accompanied by a remittance for the full amount of the aggregate subscription price for the Shares in respect of the notice is given) and be allotted the relevant shares credited as fully paid no later than the business day immediately prior to the date of the proposed general meeting and shall accordingly be entitled, in respect of the Shares falling to be allotted and issued upon the exercise of his or her option, to participate in the distribution of the assets of the Company available in liquidation pari passu with the Shares in issue on the day prior to the date of such resolution.

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

In the event of a compromise or arrangement between the Company and its creditors (or any class of them) or between the Company and its members (or any class of them), in connection with a scheme for the reconstruction or amalgamation of the Company, the Company shall give notice thereof to all grantees on the same day as it gives notice of the meeting to its members or creditors to considers such a scheme or arrangement, and thereupon any grantee (or his or her legal representative(s)) may forthwith and until the expiry of the period commencing with such date and ending with the earlier of the date falling two calendar months thereafter and the date on which such compromise or arrangement is sanctioned by the Court be entitled to exercise his or her or its option (to the extent which has become exercisable and not already exercised), but

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APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

the exercise of the option shall be conditional upon such compromise or arrangement being sanctioned by the Court and becoming effective. The Company may thereafter require such grantee to transfer or otherwise deal with the Shares issued as a result of such exercise of his or her or its option so as to place the grantee in the same position as nearly as would have been the case had such Shares been subject to such compromise or arrangement.

(s) Adjustment to the subscription price

In the event of a capitalisation issue, right issue, sub-division or consolidation of shares or reduction of capital of the Company whilst an option remains exercisable, such corresponding alterations (if any) certified by the auditors for the time being of or an independent financial adviser to the Company as fair and reasonable will be made to the number of Shares the subject matter of the 2008 Share Option Scheme and the option so far as unexercised and/or the subscription price and/or the method of exercise of the option concerned, provided that (i) any alteration shall give the grantee the same proportion of the issued share capital to which he or she or it was entitled prior to such alteration and that the aggregate subscription price payable by the grantee on the full exercise of any option shall remain as nearly as possible the same (but shall not be greater than) as it was before such event; (ii) no alteration shall be made the effect of which would be to enable a Share to be issued at less than its nominal value; and (iii) no such adjustment will be required in circumstances whether there is an issue of Shares or other securities of the Group as consideration in a transaction. In addition, in respect of any such adjustments, other than any adjustments made on a capitalization issue, such auditors or independent financial adviser must confirm to the Directors in writing that the adjustments satisfy the requirements of the relevant provision of the Listing Rules.

(t) Cancellation of options

Any cancellation of options granted but not exercised must be approved by shareholders of the Company in general meeting, with participants and their associates abstaining from voting. Any vote taken at the general meeting to approve such cancellation shall be taken by poll.

(u) Termination of the 2008 Share Option Scheme

The Company, by resolution in general meeting at any time terminate the operation of the 2008 Share Option Scheme and in such event no further option will be offered but the provisions of the 2008 Share Option Scheme shall remain in full force and effect to the extent necessary to give effect to the exercise of any options (to the extent not already exercised) granted prior to the termination or otherwise as may be required in accordance with the provisions of the 2008 Share Option Scheme. Options (to the extent not already exercised) granted prior to such termination shall continue to be valid and exercisable in accordance with the 2008 Share Option Scheme.

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SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

APPENDIX I

(v) Rights are personal to grantee

An option is personal to a grantee and shall not be assignable and no grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest in favour of any third party 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 grantee.

(w) Lapse of Option

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

• (aa) the expiry of the period referred to paragraph (j);

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

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

• (x) Other terms of the 2008 Share Option Scheme

• (aa) The terms and conditions of the 2008 Share Options Scheme relating to the matters set out in Rule 17.03 of the Listing Rules shall not be altered except with the approval of the shareholders of the Company in general meeting, except where such alterations take effect automatically under the existing terms of the 2008 Share Option Scheme.

• (bb) Any alterations to the terms and conditions of the 2008 Share Option Scheme which are of a material nature or any change to the terms of options granted must be approved by the shareholders of the Company in general meeting, except where the alterations take effect automatically under the existing terms of the 2008 Share Option Scheme.

• (cc) The amended terms of the 2008 Share Option Scheme or the options must still comply with the relevant requirements of Chapter 17 of the Listing Rules.

• (dd) Any change to the authority of the Directors or the scheme administrators in relation to any alteration to the term of the 2008 Share Option Scheme shall be approved by the shareholders of the Company in general meeting except where the alteration take effect automatically under the existing terms of the 2008 Share Option Scheme.

• (ee) The 2008 Share Option Scheme shall be subject to the administration of the Board (including the independent non-executive Directors).

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APPENDIX I SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

(y) Present status of the 2008 Share Option Scheme

At the Latest Practicable Date, no option has been granted or agreed to be granted under the 2008 Share Option Scheme.

Application will be made to the Stock Exchange for listing of, and permission to deal in, on the Stock Exchange any Shares which may be issuable upon the exercise of any options which may be granted under the 2008 Share Option Scheme.

(z) Values of all options that can be granted under the 2008 Share Option Scheme

The Directors consider that it is not appropriate or helpful to the Shareholders to state the value of all options that can be granted pursuant to the 2008 Share Option 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, since the options to be granted shall not be assignable, and no holder of the options shall in any way sell, transfer, charge, mortgage or create any interest (legal or beneficial) in favour of any third party over or in relation to any option.

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

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GENERAL INFORMATION

APPENDIX II

1. 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 resonable 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.

2. DISCLOSURE OF INTERESTS

(a) Interests and short positions of the Directors and the chief executive of the Company in the securities of the Company and its associated corporations

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

• (i) Long positions in Shares

			Number	Percentage
**Name **	of Director	Type of interests	of Shares	of interests
Wang	Miao	Beneficial owner	75,000,000	2.43%
Wang	Hung, Alex	Beneficial owner	75,000,000	2.43%

• (ii) Long positions in underlying Shares of the Company

		Description	Number of
		of equity	underlying	Percentage
Name of Director	Type of interests	derivatives	Shares	of interests
		(Note 1)
Sun Pishu	Beneficial owner	share option	20,000,000	0.65%
Zhang Lei	Beneficial owner	share option	20,000,000	0.65%
Leung Chi Ho	Beneficial owner	share option	20,000,000	0.65%
Wang Miao	Beneficial owner	share option	20,000,000	0.65%
Wang Hung, Alex	Beneficial owner	share option	20,000,000	0.65%
Xin Wei Hua	Beneficial owner	share option	20,000,000	0.65%

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GENERAL INFORMATION

APPENDIX II

Note 1: The share options were granted under the pre-IPO share option scheme adopted by the Company on 8 April 2004 at a subscription price of HK$0.0648 per Share. Up to the Latest Practicable Date, none of the above share options had been exercised.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) to be notified to the Company and the Stock Exchange pursuant to the Model Code.

• (b) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO and substantial Shareholders

So far as is known to the Directors and the chief executive, as at the Latest Practicable Date, the following person (not being Director or chief executive of the Company) had, or was deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or who were 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 member of the Group:

Long positions in Shares

			Approximate
		Number of	percentage of
Name of Shareholders	Type of interests	Shares	interests
Inspur Group Limited (Note 2)	Interest in a	1,354,390,000	43.95%
	controlled
	corporation (Note 1)
Inspur Electronics (HK) Limited	Beneficial owner	1,354,390,000	43.95%
(Note 3)

• Note 1: Inspur Group Limited is taken to be interested in 1,354,390,000 Shares because it is being 100% shareholder in the issued share capital of Inspur Electronics (HK) Limited.

• Note 2 : Mr Sun Pishu and Mr Xin Wei Hua, who are directors of the Company, are also directors of Inspur Group Limited.

• Note 3 : Mr Sun Pishu, Mr Wang Miao, Mr Xin Wei Hua and Mr Wang Hung, Alex, who are directors of the Company, are also directors of Inspur Electronics (HK) Limited.

— 32 —

APPENDIX II

GENERAL INFORMATION

Long positions in series A senior redeemable convertible voting preferred shares of the Company

Number of Number of Approximate Preferred underlying percentage of Name of Shareholders Type of interests Shares Shares interests (Note 1) Microsoft Corporation Beneficial owner 234,279,559 1,171,397,795 100%

• Note 1 : Holder of each Preferred Share shall be entitled to have five votes on a show of hands or five votes for each Preferred Share as if each Preferred Share registered in its name in the register of members of the Company had been converted into five Shares at the time of any general meeting of the Company. Microsoft Corporation has agreed that in the event that it becomes entitled to exercise or control the exercise of more than 28% of the voting rights at general meetings of the Company (other than meeting of the holder(s) of Preferred Shares), it shall not and shall procure its nominee(s) not to exercise such portion of the voting rights attaching to the Preferred Shares and/or Shares in excess of 28% of the total voting rights at any general meeting of the Company. At the Latest Practicable Date, the above 1,171,397,795 underlying Shares representing approximately 27.54% of the issued share capital of the Company as enlarged by the full exercise of the conversation rights attaching to the Preferred Shares.

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GENERAL INFORMATION

APPENDIX II

Long positions in members of the Group

			Approximate
			percentage of
			shareholding in
			the members of
Name of shareholders	Types of Interest	Equity interest held	the Group
Shandong Inspur Cheeloosoft	Beneficial owner	RMB19,442,624.48 in the	48.69%
Company Limited		registered capital of Inspur
		Group Shandong Genersoft
		Incorporation
Shandong Inspur Cheeloosoft	Beneficial owner	RMB7,000,000 in the registered	46.67%
Company Limited		capital of Shandong Langchao
		Electronic Business Software
		Company Limited
Shanghai Huili Co. Ltd.#	Beneficial owner	RMB50,000 in the registered	10%
(上海滙力有限公司)		capital of Shanghai Guoqiang
		Genersoft Incorporation
Wang Xingshan	Beneficial owner	RMB300,000 in the registered	10%
		capital of Inspur Guangdong
		Genersoft Technology
		Incorporation
Webgroup Co.	Beneficial owner	US$14,504 in the registered	10.36%
		capital of Langchao Gaoyou
		(Shanghai) Services
		Incorporation#
		高優(上海)信息科技有限公司

# English name is for identification purpose only

— 34 —

GENERAL INFORMATION

APPENDIX II

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person (other than the Directors and the chief executive of the Company) who had, or was deemed to have, interests or short positions in the Shares or underlying Shares (including any interests in options in respect of such capital), which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was expected, directly or indirectly, to be 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 member of the Group.

3. DIRECTORS’ OTHER INTEREST

As at the Latest Practicable Date, so far as the Directors are aware of, none of themselves or their respective associates had any interest in a business which competes or may compete with the business of the Group or any other conflicts of interest with the Group.

As at the Latest Practicable Date, none of the Directors has any interest, either direct or indirect, in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2007, being the date to which the latest published audited financial statements of the Company were made up.

There is no contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date in which any Director is materially interested and which is significant to the business of the Group.

4. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with the Group (excluding contracts expiring or terminable by the employer within one year without payment of compensation other than statutory compensation).

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2007, being the date to which the latest audited financial statements of the Company were made up.

6. EXPERT

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

— 35 —

GENERAL INFORMATION

APPENDIX II

The following are the qualifications of the expert who has provided its advice and reports (as the case may be), which are contained in this circular:

Name

Qualification

REXCAPITAL

A licensed corporation to carry on type 6 (advising on corporate finance) of the regulated activity under the SFO

As at the Latest Practicable Date, REXCAPITAL was not beneficially interested in the share capital of any member of the Group nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any Shares, convertible securities, warrants, options or derivatives which carry voting rights in any member of the Group nor did it have any interest, either direct or indirect, in any assets which have been, since the date to which the latest published audited financial statements of the Company were made up (i.e. 31 December 2007), acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

7. MISCELLANEOUS

• (a) The registered office of the Company is at Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands, and the head office and principal place of business in Hong Kong of which is at Room 726, Nan Fung Commercial Centre, 19 Lam Lok Street, Kowloon Bay, Kowloon, Hong Kong.

• (b) The principal share registrar and transfer office of the Company is Butterfield Fund Services (Cayman) Limited at Butterfield House, 68 Fort Street, P.O. Box 705, Grand Cayman KY1-1107, Cayman Islands and the Hong Kong branch share registrar and transfer office of which is Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong

• (c) The company secretary and qualified accountant of the Company is Ms. Chan Wing who is an associate member of the Hong Kong Institute of Certified Public Accountants.

• (d) The English text of this circular and the accompanying form of proxy shall prevail over their respective Chinese texts in case of inconsistency.

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GENERAL INFORMATION

APPENDIX II

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the Company’s principal place of business in Hong Kong from the date of this circular up to and including the date of the EGM:

• (a) The Existing Memorandum and Articles;

• (b) Newly restated Memorandum and Articles of Association of the Company stipulating all the updating changes;

• (c) The rules of the 2008 Share Option Scheme;

• (d) Master Services Agreement; and

• (e) MSA Supplemental Agreement.

— 37 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (“ EGM ”) of Inspur International Limited (the “ Company ”) will be held at 10:00 a.m. on Monday, 10 November 2008 at Hong Kong International Trade & Exhibition Centre, Meeting Room 5, 7th Floor, 1 Trademart Drive, Kowloon Bay, Kowloon, Hong Kong for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolutions numbered 1 and 2 as ordinary resolutions and resolution numbered 3 as special resolution:

ORDINARY RESOLUTIONS

1. “ THAT :

2. (a) the supplemental agreement dated 26 September 2008 to the master services agreement (the “ MSA Supplemental Agreement ”) entered into between Inspur Worldwide Services Limited (浪潮世科(山東)信息技術有限公司) and Microsoft Corporation in relation to extension of the original term of the master services agreement dated 1 April 2005 entered into by the aforesaid parties regarding the provision of computer software development services (details of the MSA Supplemental Agreement are set out in the Company’s circular dated 17 October 2008 (the “ Circular ”), copies of the MSA Supplemnetal Agreement and the Circular have been tabled at the meeting and marked “A” and “B” respectively initialled by the Chairman of the meeting for the purpose of identification) and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified;

3. (b) the Caps (as defined and more particularly described in the Circular) be and are hereby approved and confirmed; and

4. (c) the directors of the Company be and are hereby authorized to do such acts and execute such other documents as they may consider necessary, desirable or expedient to carry out or give effect to or otherwise in connection with or in relation to the MSA Supplemental Agreement, the Caps and all transactions contemplated thereunder.”

* For identification purpose only

— 38 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

1. “ THAT :

2. (a) subject to and conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the approval for the listing of, and permission to deal in, the ordinary shares (currently of HK$0.002 each) in the capital of the Company (the “ Shares ”) or any part thereof to be issued pursuant to the exercise of any options that may be granted under the new share option scheme (“ 2008 Share Option Scheme ”), the rules of which are summarized in the Circular and contained in the document marked “C” produced to this meeting and initialed by the Chairman of the meeting for the purpose of identification, the 2008 Share Option Scheme be and is hereby approved and adopted by the Company; and

3. (b) the directors of the Company be and are hereby authorised to grant options to subscribe for Shares thereunder and to allot, issue and deal with any Shares pursuant to the exercise of the subscription rights under any options which may be granted from time to time in accordance with the terms of the 2008 Share Option Scheme and to do all such acts as they may in their absolute discretion consider necessary or expedient in order to give full effect to the 2008 Share Option Scheme.

SPECIAL RESOLUTION

• 3(A) “ THAT the Memorandum of Association of the Company be and are hereby amended in the following manner:

• (a) Clause No. 1

By deleting the sentence “The name of the Company is LANG CHAO INTERNATIONAL LIMITED.” and replacing with the sentence “The name of the Company is INSPUR INTERNATIONAL LIMITED.”

• (b) Clause No. 8

By deleting the following words:

“The share capital of the Company is HK$13,000,000 divided into 1,000,000,000 ordinary shares of par value of HK$0.01 each and 300,000,000 series A senior redeemable convertible cumulative voting preferred shares of par value HK$0.01 each,”

from the first three lines of the clause and replacing with the following words:

“The share capital of the Company is HK$13,000,000 comprising two classes of shares: (i) HK$10,000,000 divided into 5,000,000,000 ordinary shares of par value of HK$0.002 each, and (ii) 300,000,000 series A senior redeemable convertible cumulative voting preferred shares of par value HK$0.01 each,”.

— 39 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

• 3(B) “ THAT the Articles of Association of the Company be and are hereby amended in the following manner:

• (a) Article 1

By adding the number “2007” before the word “Revised” in the parentheses.

• (b) Article 2(1)

By deleting in its entirety the definition “Company”, in Article 2(1) and replacing with the following new definition:

““Company” Inspur International Limited.”

• (c) Article 3(1)

By deleting the words “ The authorised share capital of the Company shall comprise ordinary shares of par value HK$0.01 each and Preferred Shares ” from the existing Article 3(1) and replacing with the words “ Unless otherwise determined in accordance with these Articles, the authorised share capital of the Company shall comprise ordinary shares of par value HK$0.002 each and Preferred Shares ”.

(d) Article 56

By deleting the following words “or not more than eighteen (18) months after the date of adoption of these Articles” from the existing Article 56.

• (e) Article 66

• (i) By deleting the full stop at the end of the sentence of the existing Article 66(d) and replacing with the words “; or”.

• (ii) By adding a new paragraph (e) to the existing Article 66 as follows:

  • “(e) if the chairman of such meeting and/or the Directors individually or collectively hold proxies in respect of shares holding 5% or more of the total voting rights at such meeting, and if on a show of hands a meeting votes in the opposite manner to that instructed in those proxies, the chairman of such meeting and/or the Directors and the chairman of such meeting holding proxies as aforesaid collectively shall demand a poll; provided that if it is apparent from the total proxies held that a vote taken on a poll will not reverse the vote taken on a show of hands, then the Directors and/or the chairman of such meeting shall not be required to demand a poll.”

• (f) Article 68

By deleting the sentence “There shall be no requirement for the chairman to disclose the voting figures on a poll.” from the existing Article 68 and replacing with the sentence “The Company shall only be required to disclose the voting figures on a poll if such disclosure is required by the rules of the Designated Stock Exchange.”.

— 40 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

• (g) Article 86(3)

By deleting the word “annual” before the words “general meeting” from the existing Article 86(3).

• (h) Article 86(5)

By deleting the words “special resolution” from the existing Article 86(5) and replacing with the words “ordinary resolution”.

• (i) Article 87(1)

• (i) By deleting the words “ not greater than ” from the third line of the existing Article 87(1) and replacing with the following words “ not less than ”.

• (ii) By deleting the words “notwithstanding anything herein, the chairman of the Board and/or the managing director of the Company shall not, whilst holding such office, be subject to retirement by rotation or be taken into account in determining the number of Directors to retire in each year.” from the existing Article 87(1) and replacing with the words “every Director (including those appointed for a specific term) shall be subject to retirement by rotation at least once every 3 years. A retiring Director shall be eligible for re-election. The Company at the general meeting at which a Director retires may fill the vacated office.”.

• (j) Article 103(1)

By deleting the words “ A Director shall not vote (nor be counted in the quorum) on any resolution of the Board ” from the existing Article 103(1) and replacing with the words “ A Director shall not attend, vote or be counted in the quorum in any meeting or part of a meeting of the Board ”.

• (k) Article 103(5)

By adding a new paragraph 5 to the existing Article 103 as follows:

• “ (5) Without affecting the generality of Article 103(1), for so long Lang Chao Group remains a controlling shareholder (as defined in the rules of the Designated Stock Exchange) of the Company, the Overlapping Directors (as defined below) shall not attend, vote or be counted in the quorum in any meeting or part of a meeting of the Board approving any contract or arrangement or any other proposal involving Lang Chao Group (as defined below). ”

— 41 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

• (l) Article 103(6)

By adding a new paragraph 6 to the existing Article 103 as follows:

• “ (6) For the purpose of Article 103(5), “Lang Chao Group” means 浪潮集團有限公司 (Lang Chao Group Limited), a company established under the laws of the People’s Republic of China and a controlling shareholder (as defined in the rules of the Designated Stock Exchange) of the Company; and

“Overlapping Directors” means the directors of the Company who are also directors of Lang Chao Group.”.

• 3(C) “ THAT the new restated Memorandum and Articles of Association, consolidating all of the proposed amendments referred to in paragraphs 3(A) and 3(B) above and all previous amendments made in compliance with applicable laws in the form produced to the meeting be and are hereby adopted as the Memorandum and Articles of Association of the Company with immediate effect in replacement of the existing Memorandum and Articles of Association.”

By Order of the Board

Inspur International Limited Sun Pishu Chairman

Hong Kong, 17 October 2008

— 42 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

Registered Office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head office and Principal place of business in Hong Kong: Room 726

Nan Fung Commercial Centre 19 Lam Lok Street Kowloon Bay Kowloon Hong Kong

Notes:

1. A member entitled to attend and vote at the EGM is entitled to appoint one or more proxy to attend and, subject to the provisions of the articles of association of the Company, to vote on his behalf. A proxy need not be a member of the Company but must be present in person at the EGM to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.

2. In order to be valid, the form of proxy must be duly completed and signed in accordance with the instructions printed thereon and deposited together with a power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority, at the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the EGM or any adjournment thereof, should he so wish.

3. In the case of joint holders of shares, any one of such holders may vote at the EGM, either personally or by proxy, in respect of such share as if he was solely entitled thereto, but if more than one of such joint holder are present at the EGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such shares shall alone be entitled to vote in respect thereof.

4. The voting on the resolution numbered 1 at the EGM will be conducted by way of a poll.

— 43 —