Lee's Pharmaceutical Holdings Limited — Proxy Solicitation & Information Statement 2012

Mar 26, 2012

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

If you have sold or transferred all your shares in Lee’s Pharmaceutical Holdings Limited (the “ Company ”), you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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Lee’s Pharmaceutical Holdings Limited 李氏大藥廠控股有限公司[*]

(incorporated in the Cayman Islands with limited liability) (Stock Code: 950)

GENERAL MANDATES TO ISSUE SHARES AND TO REPURCHASE ITS OWN SHARES, RE-ELECTION OF DIRECTORS, AND ADOPTION OF NEW SHARE OPTION SCHEME

A notice convening the annual general meeting of the Company to be held at Unit 102, Bio-Informatics Centre, No. 2 Science Park West Avenue, Hong Kong Science Park, Shatin, New Territories, Hong Kong on 10 May 2012 (Thursday) at 3:00 p.m. (the “ AGM ”) is set out on pages 126 to 130 of the annual report of the Company for the year ended 31 December 2011 (the “ 2011 Annual Report ”).

A form of proxy for the annual general meeting is enclosed with the 2011 Annual Report. Whether or not you propose to attend the annual general meeting, you are requested to complete the form of proxy and return the same to the share registrar of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the meeting. Completion and delivery of the form of proxy will not preclude you from attending and voting at the meeting or any adjourned meeting (as the case may be) if you so wish.

• For identification purpose only

26 March 2012

LETTER FROM THE BOARD OF DIRECTORS

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Lee’s Pharmaceutical Holdings Limited 李氏大藥廠控股有限公司[*]

(incorporated in the Cayman Islands with limited liability) (Stock Code: 950)

Executive Directors:

Ms. Lee Siu Fong (Chairman) Ms. Leelalertsuphakun Wanee Dr. Li Xiaoyi

Registered office: PO Box 309 GT, Ugland House South Church Street, George Town Grand Cayman, Cayman Islands

Non-executive Director: Mr. Mauro Bove

Independent non-executive Directors: Dr. Chan Yau Ching, Bob Mr. Lam Yat Cheong Dr. Tsim Wah Keung, Karl

Principal place of business in Hong Kong: Units 110-111, Bio-Informatics Centre No.2 Science Park West Avenue Hong Kong Science Park Shatin, New Territories Hong Kong

26 March 2012

To shareholders of the Company

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE SHARES AND TO REPURCHASE ITS OWN SHARES, RE-ELECTION OF DIRECTORS, AND ADOPTION OF NEW SHARE OPTION SCHEME

INTRODUCTION

The purpose of this circular is to provide you with the information reasonably necessary to enable you to make a decision on whether to vote for or against the ordinary resolutions to be proposed at the AGM which will be convened for the purpose of considering and if thought fit, approving, inter alia: (i) the granting of the general mandates to issue shares and to repurchase shares of the Company (the “ Shares ”); (ii) the extension of the general mandate to issue Shares; (iii) the re-election of directors of the Company; and (iv) the adoption of the new share option scheme. A notice of the AGM is set out on pages 126 to 130 of the 2011 Annual Report.

• For identification purpose only

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LETTER FROM THE BOARD OF DIRECTORS

GRANT OF GENERAL MANDATES TO ISSUE SHARES AND TO REPURCHASES ITS OWN SHARES AND EXTENSION OF GENERAL MANDATE TO ISSUE SHARES

The Company’s existing mandates to issue and repurchase Shares were approved by the Company’s then shareholders at the annual general meeting held on 12 May 2011. Unless otherwise renewed, the existing mandates to issue and to repurchase Shares will lapse at the conclusion of the coming annual general meeting of the Company to be held at Unit 102, Bio-Informatics Centre, No. 2 Science Park West Avenue, Hong Kong Science Park, Shatin, New Territories, Hong Kong on Thursday, 10 May 2012 at 3:00 p.m. (i.e. the AGM).

In compliance with the Rules Governing the Listing of Securities on the Stock Exchange (the “ Listing Rules ”) and to ensure flexibility when it is desirable to allot additional Shares or to repurchase Shares, the directors of the Company (the “ Directors ”) will seek the approval of shareholders of the Company (the “ Shareholders ”) at the AGM to grant new general mandates to issue and to repurchase Shares.

The purpose of this circular is to provide you with information relating to the ordinary resolutions nos. 5A to 5C (the “ Ordinary Resolutions nos. 5A, 5B and 5C” respectively) to be proposed at the AGM (i) to grant to the Directors a fresh general mandate to allot, issue and deal with new Shares not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the Ordinary Resolution no. 5A (“ New Issue Mandate ”); (ii) to grant to the Directors a fresh general mandate to exercise the powers of the Company to repurchase the Company’s fully paid up Shares not exceeding 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the Ordinary Resolution no. 5B (“ Repurchase Mandate ”); and (iii) by extending the general mandate granted pursuant to Resolution no. 5A, to allot, issue and otherwise deal with Shares with an aggregate nominal amount not exceeding the aggregate nominal amount of the share capital of the Company purchased pursuant to the Repurchase Mandate and not exceeding 10% of the aggregate nominal amount of share capital of the Company in issue at the date of passing this Ordinary Resolution no. 5C (as more particularly described in the Ordinary Resolution no. 5C) (“ Extension Mandate ”).

The previously granted general mandates will lapse at the conclusion of the AGM.

Under Rule 10.06 of the Listing Rules, the Company is required to give its Shareholders all information which is reasonably necessary to enable its Shareholders to make an informed decision as to whether to vote for or against the resolution in respect of the Repurchase Mandate. This circular is prepared for such purpose. The explanatory statement required by the Listing Rules to be included in this circular is set out in Appendix I to this circular. The New Issue Mandate, the Repurchase Mandate and the Extension Mandate will be valid from the date of passing the relevant resolutions and will expire upon (i) the conclusion of the next annual general meeting of the Company; (ii) the expiration of the period within which the next annual general meeting of the Company is required by its memorandum and articles of association or any applicable laws and regulations of the Cayman Islands and Hong Kong to be held; or (iii) the revocation, variation of the Repurchase Mandate by an ordinary resolution of the Shareholders in general meeting, whichever occurs first.

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LETTER FROM THE BOARD OF DIRECTORS

The Company has in issue an aggregate of 470,135,437 Shares as at 21 March 2012, being the latest practicable date (the “ Latest Practicable Date ”) prior to the printing of this circular.

Subject to the passing of the Ordinary Resolution no. 5A and in accordance with the terms therein, the Company would be allowed to allot additional Shares not exceeding the aggregate nominal amount of a maximum of 94,027,087 Shares on the basis that no further Shares will be issued or repurchased prior to the AGM.

Assuming that there is no change in the issued share capital of the Company between the period from the Latest Practicable Date and the date of passing the resolution approving the Repurchase Mandate, the maximum number of Shares which may be repurchased pursuant to the Repurchase Mandate on the date of passing the resolution approving the Repurchase Mandate will be 47,013,543 Shares. However, the Directors believe that such repurchase would not reduce the amount held by the public to less than 25% of the issued share capital of the Company.

RE-ELECTION OF DIRECTORS

Dr. Li Xiaoyi, Mr. Mauro Bove and Mr. Lam Yat Cheong shall retire and, being eligible, will offer themselves for re-election at the AGM in accordance with Articles 95 and 112 of the Company’s articles of association.

Brief biographical details of the retiring Directors who have offered herself/himself to be re-elected at the AGM are set out in Appendix II to this circular.

ADOPTION OF NEW SHARE OPTION SCHEME

On 26 June 2002, the Company adopted the pre-IPO share option scheme (“ Pre-IPO Share Option Scheme ”) and the share option scheme (“ Share Option Scheme ”), both of which will expire on 25 June 2012. As at the Latest Practicable Date, all share options granted under the Pre-IPO Share Option Scheme have been exercised and 17,218,000 options granted under the Share Option Scheme were outstanding. In view of the imminent expiration of the Pre-IPO Share Option Scheme and the Share Option Scheme, in order to enable the Group to continue to grant options to selected participants as incentives or rewards for their contributions to the Group, the Directors propose to recommend to the Shareholders at the AGM to conditionally approve the adoption of the new share option scheme (“ New Share Option Scheme ”). The adoption of the New Share Option Scheme will commence after all the conditions as described below have been fulfilled.

At the AGM, an ordinary resolution will be proposed for the Company to conditionally approve and adopt the New Share Option Scheme. The purpose of the New Share Option Scheme is to recognize and acknowledge the contribution of the employees and other selected grantees (i.e. the Eligible Persons (as defined in Appendix III to this circular)) made or may have made to the Company and its subsidiaries (the “ Group ”). The New Share Option Scheme will provide the Eligible Persons with an opportunity to have a personal stake in the Company with the view of achieving the objectives of motivating the Eligible Persons to optimise their performance efficiency for the benefit of the Company, and to attract and retain or otherwise maintain on-going relationships with the grantees whose contributions are or will be beneficial to the long-term growth of the Group. With respect to the operation of the New Share Option

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LETTER FROM THE BOARD OF DIRECTORS

Scheme, the Company will, where applicable, comply with the relevant requirements under Chapter 17 of the Listing Rules.

The Directors consider that it is not appropriate to state the value of all options that can be granted pursuant to the New Share Option Scheme as if they had been granted on the Latest Practicable Date as a number of variables which are crucial for the calculation of the option value have not been determined. Such variables include but are not limited to the exercise price, exercise period, lock-up period (if any). The Directors believe that any calculation of the value of the options as at the Latest Practicable Date based on a number of speculative assumptions would not be meaningful and would be misleading to shareholders.

None of the Directors is trustee of the New Share Option Scheme or has a direct or indirect interest in the trustee.

The New Share Option Scheme is conditional upon (i) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of options under the New Share Option Scheme; and (ii) the passing of an ordinary resolution by the Shareholders (a) to adopt the New Share Option Scheme; (b) to authorise the Directors to grant the options thereunder; and (c) to allot, issue and deal with the Shares pursuant to the exercise of any options granted under the New Share Option Scheme. The New Share Option Scheme will be effective upon the Listing Committee of the Stock Exchange granting the listing of and permission to deal in any Shares which may fall to be issued by the Company pursuant to the exercise of options in accordance with the terms of the New Share Option Scheme.

Subject to obtaining shareholders’ approval with respect to the adoption of the New Share Option Scheme, the total number of Shares which may be issued upon exercise of all options to be granted under the New Share Option Scheme shall be subject to a maximum limit of 10% of the Shares in issue on the date on which the New Share option Scheme is conditionally adopted and approved by the Shareholders at the AGM (“ Adoption Date ”), unless the Company obtains an approval from the Shareholders in general meeting to refresh such 10% in accordance with the Listing Rules. Options lapsed in accordance with the terms of the New Share Option Scheme will not be counted for the purpose of calculating such 10%. The overall limit on the number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Share Option Scheme and any other share option schemes must not exceed 30% of the Shares in issue from time to time.

Under the rules of the New Share Option Scheme, the Committee (as defined in Appendix III to this circular), a committee formed by the Board, has discretion to provide restrictions on how and when an option during the period an option may be exercised, and the amount of the exercise price in exercising the options, including, if appropriate, a minimum period for which an option must be held or a performance target which must be achieved before an option can be exercised. Such discretion allow the Committee to provide incentives to Eligible Persons to remain employed with the Group during the minimum period and thereby enabling the Group to benefit from the continued services of such Eligible Persons during such period. This discretion, coupled with the power of the Committee to impose any performance target as it considers appropriate before any option can be exercised, enables the Group to incentivise the Eligible Persons. Although the New Share Option Scheme does not specify any performance target that must be achieved before an option can be exercised, the Directors are of the

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LETTER FROM THE BOARD OF DIRECTORS

view that the rules of the New Share Option Scheme provides appropriate flexibility to the Committee in granting options to the Eligible Persons and in particular, imposing minimum holding period, performance targets before an option can be exercised and fixing the exercise price of the options, will place the Group in a better position to attract and retain valuable human resources.

A summary of the principal terms of the New Share Option Scheme which is proposed to be approved and adopted by the Company at the AGM is set out in the Appendix III to this circular on pages 16 to 25. A copy of the proposed New Share Option Scheme will be available for inspection at the Company’s principal place of business in Hong Kong at Units 110-111, Bio-Informatics Centre, No. 2 Science Park West Avenue, Hong Kong Science Park, Shatin, New Territories, Hong Kong during normal business hours from the date hereof up to and including the date of the AGM.

In accordance with the requirements of the Listing Rules, the Company will publish an announcement on the outcome of the AGM in respect of, among others, the resolution relating to the adoption of the New Share Option Scheme on the websites of the Company and of the Stock Exchange by 8:30 a.m. on the day following the date of the AGM.

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

ANNUAL GENERAL MEETING

A notice of the AGM is set out on pages 126 to 130 of the 2011 Annual Report.

Any vote of shareholders at a general meeting must be taken by poll pursuant to Rule 13.39(4) of the Listing Rules. Therefore, all the resolutions put to vote at the AGM shall be taken by poll.

An announcement will be made by the Company following the conclusion of the AGM to inform you of the poll results.

The Notice and a form of proxy for use at the AGM are enclosed with the 2011 Annual Report. To be valid, the form of proxy for use at the AGM must be completed in accordance with the instructions printed thereon and deposited, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power of attorney or authority at the share registrar of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time fixed for holding the AGM or any adjournment thereof. Completion of the form of proxy and returning it to the Company will not preclude you from attending and voting in person at the AGM or any adjourned thereof should you so wish.

No Shareholder is required to abstain from voting with respect to each of the resolutions put to vote at the AGM.

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LETTER FROM THE BOARD OF DIRECTORS

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquires, confirm that, to the best of their knowledge and belief, the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement in this circular or this circular misleading.

RECOMMENDATION

The Directors believe that the granting of the New Issue Mandate, the Repurchase Mandate and Extensions Mandates, the re-election of Directors and the adoption of the New Share Option Scheme are in the best interests and for the benefit of the Company and its Shareholders as a whole. Accordingly, the Directors recommend you to vote in favour of these resolutions to be proposed at the AGM.

Yours faithfully, By order of the Board Lee’s Pharmaceutical Holdings Limited Lee Siu Fong Chairman

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EXPLANATORY STATEMENT

APPENDIX I

1. GENERAL MANDATE TO REPURCHASE SHARES

This appendix I serves as an explanatory statement, as required by Rule 10.06 and other relevant provisions of the Listing Rules, to provide requisite information to you for your consideration of the proposed Repurchase Mandate.

2. LISTING RULES RELATING TO THE REPURCHASE OF SHARES

The Listing Rules permit companies whose primary listing is on the Stock Exchange to repurchase their shares subject to certain restrictions, the more important of which are summarised below. The Company is empowered by its memorandum and articles of association to repurchase its own Shares.

(a) Shareholders’ approval

All repurchase of Shares of the Company must be approved in advance by the Shareholders either by way of a specific approval or a general mandate to the Directors to make such purchase(s), by way of an ordinary resolution which complies with the provisions of the Listing Rules and which has been passed at a general meeting of the Company duly convened and held and the Company has delivered a copy of such resolution, together with the necessary supporting documentation, to the Stock Exchange.

(b) Source of funds

Repurchase must be funded out of funds which are legally available for such purpose in accordance with the memorandum and articles of association of the Company and the laws of Hong Kong and the applicable Companies Law (2004 Revision) of the Cayman Islands (the “ Companies Law ”). A listed company shall not repurchase its own securities for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

(c) Connected persons

The Listing Rules prohibit a company from knowingly repurchasing shares from a “connected person”, that is, a director, chief executive, substantial shareholder or management shareholder of the company or any of its subsidiaries or any of their associates and a connected person is prohibited from knowingly selling his/her shares to the company.

As at the Latest Practicable Date, to the best knowledge of the Directors, no connected person of the Company has notified the Company that he/she has a present intention to sell any Shares to the Company nor has any such connected person undertaken not to sell any Shares held by him/her to the Company, in the event that such mandate as proposed in the Ordinary Resolution no. 5B is approved by the Shareholders at the AGM and is exercised by the Company.

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EXPLANATORY STATEMENT

APPENDIX I

3. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 470,135,437 Shares of HK$0.05 each.

Subject to the passing of the Repurchase Mandate and on the basis that no Shares are issued or repurchased by the Company prior to the AGM, the Company will be allowed under the Repurchase Mandate to repurchase a maximum of 47,013,543 Shares of HK$0.05 each during the period from the date of passing of the Ordinary Resolution no. 5B up to (i) the conclusion of the next annual general meeting of the Company; (ii) the expiration of the period within which the next annual general meeting of the Company is required by its memorandum and articles of association or the applicable laws and regulations of the Cayman Islands and Hong Kong to be held; or (iii) the revocation, variation of the Repurchase Mandate by an ordinary resolution of the Shareholders of the Company in general meeting, whichever occurs first.

4. REASONS FOR THE REPURCHASES

Although the Directors have no present intention of repurchasing any Shares of the Company, they believe that the flexibility afforded by the Repurchase Mandate would be in the best interests of the Company and its Shareholders. An exercise of the Repurchase Mandate may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share and/or earnings and/or dividend per Share and will only be made when the Directors believe that such repurchase of Shares will benefit the Company and its Shareholders.

5. FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its memorandum and articles of association, the Listing Rules and the applicable laws and regulations of the Cayman Islands and Hong Kong.

Pursuant to the proposed Repurchase Mandate, repurchase would be funded entirely from the Company’s available cash flow or working capital facilities which will be funded legally available in accordance with its memorandum and articles of association and the applicable laws and regulations of the Cayman Islands and Hong Kong for such purpose. The Company may not repurchase its own Shares for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

An exercise of the Repurchase Mandate in full could have a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the most recent published audited consolidated accounts contained in the 2011 Annual Report). The Directors do not, however, intend to make any repurchase to such extent as would, in the circumstances, have a material adverse impact on the working capital requirement of the Company or on the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

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EXPLANATORY STATEMENT

APPENDIX I

6. SHARE PRICES

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

	Prices of Shares	Prices of Shares
Month	Highest	Lowest
	HK$	HK$
2011
March	3.100	2.400
April	3.030	2.800
May	3.210	2.750
June	3.170	2.780
July	3.050	2.850
August	3.010	2.410
September	2.820	2.300
October	2.970	2.380
November	3.040	2.810
December	2.980	2.480
2012
January	2.920	2.660
February	2.970	2.850
March (up to and including the Latest Practicable Date)	3.430	2.880

7. DIRECTORS’ INTENTION TO SELL SHARES TO THE COMPANY

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

8. DIRECTORS’ UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchase pursuant to the Repurchase Mandate, if granted, in accordance with the Listing Rules, the memorandum and articles of association of the Company and the applicable laws and regulations of the Cayman Islands and Hong Kong.

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EXPLANATORY STATEMENT

APPENDIX I

In the event that the substantial Shareholders do not dispose of their Shares, if the Repurchase Mandate were exercised in full, the percentage shareholding of the substantial Shareholders of the Company before and after such repurchase would be as follows:

		Before	After
Name	Notes	repurchase	repurchase
Huby Technology Limited	(i)	25.59%	28.43%
Ms. Lee Siu Fong		26.76%	29.73%
Ms. Leelalertsuphakun Wanee		26.65%	29.62%
Dr. Li Xiaoyi	(ii)	11.52%	12.80%
Ms. Lue Shuk Ping, Vicky	(ii)	11.52%	12.80%
Defiante Farmaceutica, S.A.	(iii)	28.15%	31.28%

Notes:

• (i) Huby Technology Limited is beneficially owned as to 50% by Ms. Lee Siu Fong and as to 50% by Ms. Leelalertsuphakun Wanee, both of whom are Directors.

• (ii) Lue Shuk Ping, Vicky is the wife of Dr. Li Xiaoyi.

• (iii) Anna Atti, Enrico Cavazza, Francesca Cavazza, Silvia Cavazza and Martina Cavazza jointly have interest in 134,350,000 shares of the Company, of which 132,350,000 shares are held by Defiante Farmaceutica, S.A.

Paolo Cavazza has interest in 132,350,000 shares of the Company which are held by Defiante Farmaceutica, S.A.

9. TAKEOVER CODE CONSEQUENCES

If a Shareholder’s proportionate interest in the voting rights of the Company increases on the Company exercising its powers to repurchase its Shares pursuant to the Repurchase Mandate, such increase will be treated as an acquisition for the purpose of Rule 32 of the Hong Kong Code on Takeovers and Mergers (the “ Code ”). As a result, a Shareholder or a group of Shareholders acting in concert (within the meaning under the Code), depending on the level of increase of the shareholder’s interest, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Code.

As at the Latest Practicable Date, to the best knowledge and belief of the Directors, each of the substantial Shareholders, namely, Huby Technology Limited, the beneficial owners of Huby Technology Limited, namely, Ms. Lee Siu Fong and Ms. Leelalertsuphakun Wanee, Dr. Li Xiaoyi, Ms. Lue Shuk Ping, Vicky, and Defiante Farmaceutica, S.A., held 25.59%, 26.76%, 26.65%, 11.52%, 11.52% and 28.15% of the issued share capital of the Company respectively. In the event that the Directors exercise in full the power to repurchase Shares in accordance with the terms of the Ordinary Resolution no. 5B to be proposed at the AGM, the total interests of Huby Technology Limited, Ms. Lee Siu Fong, Ms. Leelalertsuphakun Wanee, Dr. Li Xiaoyi, Ms. Lue Shuk Ping, Vicky, and Defiante Farmaceutica, S.A., in the existing share capital of the Company would be proportionally increased to approximately 28.43%, 29.73%, 29.62%, 12.80%, 12.80% and 31.28% respectively. On the basis of the shareholdings held by the substantial Shareholders named above, an exercise of the Repurchase Mandate in full will give rise to an obligation on the part of the substantial Shareholders namely, Huby Technology Limited, Ms. Lee Siu Fong and Ms. Leelalertsuphakun Wanee (in aggregate controlling the voting rights of 26.89% and 29.88%

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EXPLANATORY STATEMENT

APPENDIX I

of the issued share capital of the Company before and after such repurchase respectively), and Defiante Farmaceutica, S.A., to make a mandatory offer under Rule 26 of the Code. However, the Directors have no intention to exercise the Repurchase Mandate to an extent as may result in mandatory offer under Rule 26 and 32 of the Code.

Assuming that there is no issue of Shares between the Latest Practicable Date and the date of repurchase, an exercise of the Repurchase Mandate whether in whole or in part will result in less than 25% of the issued share capital of the Company, being the prescribed minimum percentage of the Shares being held by the public as required by the Stock Exchange. The Directors have no intention to exercise the Repurchase Mandate to an extent as may result in a public shareholding of less than such prescribed minimum percentage.

10. SHARE REPURCHASE MADE BY THE COMPANY

The Company had not repurchased any of its Shares (whether on the Stock Exchange or otherwise) during the previous six months.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED

APPENDIX II

1. Li Xiaoyi

Chief Executive Officer & Chief Technical Officer, 49, PhD

Dr. Li Xiaoyi (“ Dr. Li ”) holds a Ph.D. of Pharmacology from the University of Illinois at Chicago and was a postdoctoral fellow with Warner-Lambert, a major pharmaceutical company. He is the founder of the Group and has been responsible for the daily operation and research and development of the Group since 1994. Dr. Li is the brother of Ms. Lee Siu Fong and Ms. Leelalertsuphakun Wanee, both of them are executive Directors.

Dr. Li Xiaoyi has a service contract with the Company since his appointment as Director of the Company on 1 September 2003 and the contract has been renewed by a number of supplemental agreements previously entered into between Dr. Li and the Company, which has a term of three years from 1 September 2010. In addition, Dr. Li entered into another supplemental agreement dated 1 January 2012 with the Company, pursuant to which, certain terms on the remuneration payable to Dr. Li as an executor Director are changed.

According to the terms of the service contract (as supplemented by the supplemental agreements) entered into between Dr. Li and the Company, Dr. Li is entitled to, among other, the following emoluments:

• (a) annual basic salary of HK$275,290, and annual management bonus (in such sum equivalent to 1.5% to 3.5% on the net profit of the Group for each of the preceding financial year depending on the percentage in the growth in net profit achieved by the Group, and such sum of the management bonus shall be shared between all the executive Directors in such proportion with reference to their monthly salary in the final month of the complete financial year);

• (b) annual salary increment which shall be equal to (i) official inflation rate if the growth in net profits of the Group is equal to or less than 15%; or (ii) the sum of the official inflation rate and half of the positive difference between the growth in net profits and the 15% threshold if the growth in the net profits of the Group exceeds 15%;

• (c) lump sum payment upon retirement and monthly pension payment after retirement if he has engaged in continuous service with the Company for 25 years.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED

APPENDIX II

Both parties shall be entitled to terminate the contract by giving three months’ prior written notice. If both of the substantial shareholders, namely Ms. Lee Siu Fong and Ms. Leelalertsuphakun Wanee, and Dr. Li in aggregate holding less than 30% of the issued share capital of the Company, Dr. Li shall in his absolute discretion terminate the contract and shall be entitled to the payment equivalent to the aggregate of his monthly salary for the remaining term as compensation or damages for or in respect of such termination. In the opinion of the Company’s directors, such arrangement is fair and reasonable and in the interests of the Company and its shareholders as a whole with reference to Dr. Li’s expertise in the pharmaceutical field.

For the year ended 31 December 2011, Dr. Li was entitled to a remuneration including salary, fee, benefits in kind, bonus and retirement contributions from the Company in the total amount of HK$3,315,912.

Except for being a Director, Dr. Li is also a director of certain Group members. Save as disclosed above, Dr. Li does not have any relationship with any Directors, senior management or substantial or controlling shareholders of the Company, and has no previous experience including other directorships held in other listed company in the last three years.

As at the Latest Practicable Date, Dr. Li was directly interested in 38,165,000 Shares and 1,382,000 share options of the Company. In addition, by virtue of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “ SFO ”), he is deemed to be interested in 16,000,000 Shares held by his spouse, Ms. Lue Shuk Ping, Vicky, who held those Shares through High Knowledge Investments Limited, a company wholly-owned by Ms. Lue Shuk Ping, Vicky. Save as disclosed above, he did not have any interests nor deemed to be interested in any shares, underlying shares or debentures of the Company and its associated corporation within the meanings of Part XV of the SFO.

Save as disclosed above, there is also no matter relating to Dr. Li that needed to be brought to the attention of the Shareholders and there is no information which is required to be disclosed herein pursuant to any of the requirements set out in Rule 13.51(2)(h) to (w) of the Listing Rules.

2. Mauro Bove

Non-executive Director, 57

Mr. Mauro Bove (“ Mr. Bove ”) joined the Group on 9 May 2005. Mr. Bove obtained his law degree at the University of Parma, Italy, in 1980. He has more than thirty years of business and management experience within the pharmaceutical industry. He has served in a number of senior positions in business, licensing, M&A and corporate development within Sigma-Tau, one of the leading Italian pharmaceutical groups. He presently heads the corporate and business development department at Sigma-Tau Finanziaria S.p.A., the holding company of Sigma-Tau group. Mr. Bove is connected with Defiante Farmaceutica Lda (“ Defiante ”), a substantial shareholder of the Company, as Defiante is a company belonging to Sigma-Tau group.

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APPENDIX II

Mr. Bove has a three-year service contract with the Company from 3 January 2012. Director’s fee is HK$100,000 per annum and bonus will not be paid. Director’s fee is determined by the Board with reference to the market rate and the size of the Group.

Except for being a Director, Mr. Bove does not hold any other position of the Company and other Group members. Save as disclosed above, Mr. Bove does not have any relationship with any Directors, senior management or substantial or controlling shareholders of the Company, and has no previous experience including other directorships held in other listed company in the last three years.

As at the Latest Practicable Date, Mr. Bove beneficially owned 1,300,000 share options of the Company. Save as disclosed above, he did not have any interests nor deemed to be interested in any shares, underlying shares or debentures of the Company and its associated corporations within the meaning of Part XV of the SFO.

Save as disclosed above, there is also no matter relating to Mr. Bove that needed to be brought to the attention of the Shareholders and there is no information which is required to be disclosed herein pursuant to any of the requirements set out in Rule 13.51(2)(h) to (w) of the Listing Rules.

3. Lam Yat Cheong

Independent non-executive Director & audit committee member, aged 50, CPA (Practising), FCCA, BBA

Mr. Lam Yat Cheong (“ Mr. Lam ”) joined the independent Board on 1 July 2004. Mr. Lam is a sole proprietor of an audit firm and has over twenty four years of auditing and accounting experience. He is a member of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants. Mr. Lam is also an independent non-executive director of Perfectech International Holdings Limited and Wuyi International Pharmaceutical Company Limited, both of the companies are listed in Hong Kong.

Mr. Lam has a three-year service contract with the Company from 1 July 2010. Director’s fee is HK$60,000 per annum and bonus will not be paid. Director’s fee is determined by the Board with reference to the market rate and the size of the Group.

Except for being a Director, Mr. Lam does not hold any other position of the Company and other Group members. Save as disclosed above, Mr. Lam does not have any relationship with any Directors, senior management or substantial or controlling shareholders of the Company, and has no previous experience including other directorships held in other listed company in the last three years.

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APPENDIX II

As at the Latest Practicable Date, Mr. Lam beneficially owned 300,000 Shares of the Company. Save as disclosed above, he did not have any interests nor deemed to be interested in any shares, underlying shares or debentures of the Company and its associated corporation within the meaning of Part XV of the SFO.

Save as disclosed above, there is also no matter relating to Mr. Lam that needed to be brought to the attention of the Shareholders and there is no information which is required to be disclosed herein pursuant to any of the requirements set out in Rule 13.51(2)(h) to (w) of the Listing Rules.

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SUMMARY OF THE PRINCIPAL TERMS OF NEW SHARE OPTION SCHEME

APPENDIX III

The following is a summary of the principal terms of the New Share Option Scheme proposed to be approved at the AGM. This summary does not form part of, nor is it intended to affect the interpretation of, the rules of the New Share Option Scheme:

(a) Purpose of the New Share Option Scheme

The purpose of the New Share Option Scheme is to advance the interests of the Company and its Shareholders by providing to Eligible Persons (as defined below) a performance incentive for continued and improved service with the Group and by enhancing such persons’ contribution to increase profits by encouraging capital accumulation and share ownership.

(b) Who may join

A committee of the Board comprising the two independent non-executive Directors (the “ Committee ”) may, at its discretion, invite the following persons (the “ Eligible Persons ”) to participate in the New Share Option Scheme:

Eligible Persons Basis for determining eligibility

Employees

Persons who are employed by the Company or any of its subsidiaries, and who remain employed, and work in excess of 20 hours per week.

Executive Directors

Subject to the same requirement as employees. Additionally, any grants of options to executive directors require the approval of the independent directors who make up the Committee, as well as compliance with Rule 17.04 of the Listing Rules.

Non-executive Directors, Persons who act as non-executive Directors and who including independent nonremain so engaged, in addition to compliance with Rule executive Directors 3.11 and Rule 17.04 of the Listing Rules.

• Advisers and consultants

Members from time to time of the Company’s scientific advisory board and other persons as long-term advisers or consultants to the Group in any country where it operates. The scientific advisory board provides the Company with guidance and evaluation on the development progress of research project undertaken by the Group.

Upon acceptance of the option, the grantee of an option must pay HK$1 to the Company by way of consideration for the grant thereof.

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(c) Grant of Option

The Committee shall, during the life of the New Share Option Scheme, at its absolute discretion and on and subject to such terms and conditions as it may think fit, offer to grant on one or more occasions to any Eligible Persons as the Committee may in its absolute discretion think fit. No option shall be granted to any Eligible Person after a price sensitive event has occurred or a price sensitive matter has been the subject of a decision, in particular (i) within the period of one month preceding the date of the meeting of the Board (as such date is first notified to the Stock Exchange in accordance with the Listing Rules) for the approval of the Company’s results for any year, half year, quarterly or any other interim period (whether or not required under the Listing Rules); or (ii) within the period of one month preceding the deadline for the Company to publish an announcement of the results of the Group for any financial year or half-year under the Listing Rules or quarterly or any other interim period (whether or not required under the Listing Rules); or (iii) during a general offer or an imminent general offer, until such price sensitive information has been announced pursuant to the Listing Rules. In addition, no Options shall be granted to any Eligible Person who is a director of the Company, on any day on which the financial results of the Company are published and (i) during the period of 60 days immediately preceding the publication date of the annual results or, if shorter, the period from the end of the relevant financial year up to the publication date of the results; and (ii) during the period of 30 days immediately preceding the publication date of the quarterly results (if any) and half-year results or, if shorter, the period from the end of the relevant quarterly or half-year period up to the publication date of the results.

Any grant of an option to a Connected Person (as defined in the Listing Rules) or its associates shall be approved by all the independent non-executive Directors (excluding any independent non-executive Director who is the grantee of such options). Where options are proposed to be granted to a Connected Person of the Company who is also a substantial shareholder (as defined in the Listing Rules) or an independent non-executive Director or any of their respective associates and the proposed grant of options, when aggregated with the options (whether exercised, cancelled, outstanding or granted (whether or not cancelled) under the Share Option Schemes) already granted and to be granted to that Connected Person in the preceding 12-month period, would entitle them to receive more than 0.1% of the total issued Shares for the time being and the value of which by reference to the closing price of Shares at the date of such grant is in excess of HK$5 million, then the proposed grant must be subject to the approval of the Shareholders taken on a poll in general meeting of the Company. For the purpose of the general meeting of the Company, all Connected Persons of the Company must abstain from voting in such general meeting, except where any Connected Person intends to vote against the proposed grant and his or her intention to do so have been stated in the circular to be despatched to the Shareholders. For this purpose, the circular containing the following shall be prepared by the Company and despatched to the Shareholders no later than the date on which the Company gives notice of the general meeting to approve the proposed grant of options:

• (i) details of the number and terms of the options (including the option price) to be granted to each grantee and the date of Board meeting for proposing such further grant is to be taken as the date of grant for the purpose of calculating the exercise price;

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SUMMARY OF THE PRINCIPAL TERMS OF NEW SHARE OPTION SCHEME

APPENDIX III

• (ii) a recommendation from the independent non-executive Directors (excluding one who is the grantee of the relevant options) on whether or not to vote in favour of the proposed grant; and

• (iii) any other information as may be required under the Listing Rules.

Any change in the terms of the options granted to an Eligible Person who is a Director, chief executive, substantial shareholder or a management shareholder of the Company or their respective associates shall be approved by the Shareholders in such manner as set out above.

(d) Exercise price of options granted

The exercise price for Shares under the New Share Option Scheme will be determined by the Committee and notified to each grantee and will be no less than the highest of:

• (i) the closing price of a Share as stated in the Stock Exchange’s daily quotations sheet on the date of grant of such option, which must be a business day;

• (ii) the average closing price of a Share as stated in the Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of grant of such option (subject to adjustments); and

• (iii) the nominal value of the Shares.

(e) Total number of securities that may be issued upon exercise of all options

• (i) As at the Latest Practicable Date, there were 470,135,437 Shares in issue. Assuming that there is no change in the issued share capital between the period from the Latest Practicable Date and the Adoption Date, the total number of Shares which may be issued upon exercise of all options (excluding, for this purpose, options which have lapsed in accordance with terms of the New Share Option Scheme and any other share option scheme of the Group) to be granted under the New Share Option Scheme and any other option scheme of the Group must not in aggregate exceed 47,013,543 Shares, being 10% of the Shares in issue as at the Adoption Date (the “ Scheme Mandate Limit ”), unless the Company obtains a fresh approval from its Shareholders’ pursuant to sub-paragraph e(iii) below. Options lapsed in accordance with the terms of the New Share Option Scheme shall not be counted for the purpose of calculating the Scheme Mandate Limit.

• (ii) The overall limit on the number of Shares, which may be issued upon exercise of all outstanding options, granted and yet to be exercised under the New Share Option Scheme and any other share option schemes must not exceed 30% (or such higher percentage as may from time to time be permitted under the Listing Rules and the Stock Exchange) of the Shares in issue from time to time (the “ Scheme Limit ”).

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APPENDIX III

SUMMARY OF THE PRINCIPAL TERMS OF NEW SHARE OPTION SCHEME

• (iii) The Scheme Mandate Limit may be renewed at any time subject to the Shareholders’ approval. The Scheme Mandate Limit as “refreshed” must not exceed 10% of the total number of Shares in issue at the date of the approval of the Scheme Mandate Limit (the “ Refreshed Limit ”). Options previously granted under the New Share Option Scheme and any other share option schemes of the Company (including those outstanding, cancelled, lapsed in accordance with the Share Option Scheme or exercised options) will not be counted for the purpose of calculating the Refreshed Limit. A circular for the purpose of seeking the Shareholders’ approval on the renewal of the Scheme Mandate Limit, which contains the information as required under the Listing Rules, shall be sent to the Shareholders.

(f) Maximum entitlement of each participant under the New Share Option Scheme

• (i) The total number of the Shares issued and to be issued upon exercise of the options granted (including those granted (whether or not cancelled) under the New Share Option Scheme) and to be granted to any Eligible Persons (including exercised, cancelled and outstanding options) in any 12-month period up to the date of the grant to such Eligible Person shall not exceed 1% of the issued Shares from time to time (the “1 percent Limit”). Any further grant of options in excess of this 1 percent Limit must be subject to (i) the Shareholders’ approval with that Eligible Persons and his or her associates abstaining from voting and (ii) the issue of a circular. The circular must disclose the identity of the participants, the number and the terms of the options granted and to be granted, and such other information as required under the Listing Rules. The number and terms (including the exercise price) of the options to be granted to such participants must be fixed before the Shareholders’ approval and the date of the meeting of the Board for proposing such further grant should be taken as the date of grant for the purpose of calculating the exercise price.

• (ii) The Company may also seek separate Shareholders’ approval and issue a circular to all of the Shareholders for granting options beyond the Scheme Mandate Limit to Eligible Persons specifically identified by the Company before such approval is sought. The circular must contain, amongst other things, a generic description of the identified participants, the number and terms of the options to be granted, the purpose of granting options to the identified participants, an explanation as to how the terms of such options serve the intended purpose and such other information as the Shareholders consider applicable or as required under the Listing Rules.

• (iii) The Company shall make additional disclosures in the annual and interim reports of the Company including details of the options granted and value of the options granted or a negative statement, if such disclosure of value is not appropriate (in the manner as required under the Listing Rules) to:

• each Connected Person (including the Directors, chief executive or Substantial Shareholders of the Company, or their respective associates);

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SUMMARY OF THE PRINCIPAL TERMS OF NEW SHARE OPTION SCHEME

APPENDIX III

• each Eligible Person with options granted in excess of the 1 percent Limit;

• aggregate figures for full time employees working under employment contracts; and

• other participants in aggregate.

(g) Time of exercise of options

An option may be exercised in accordance with the terms of the New Share Option Scheme at any time during a period (the “ Option Period ”) as specified by the Committee in relation to each such option in its terms of grant provided that the period within which the option must be exercised (that is, the final expiration date) shall not be earlier than six months but not more than 10 years from its date of grant (subject to earlier termination in accordance with the rules of the New Share Option Scheme). The Committee may provide restrictions on how and when an option during the period for which an option may be exercised, including, if appropriate, a minimum period for which an option must be held or a performance target, if any, which must be achieved before an option can be exercised. The New Share Option Scheme has not specified any performance target that must be achieved before an option can be exercised.

(h) Terms of the New Share Option Scheme

As the New Share Option Scheme shall remain valid for a period of 10 years commencing on the Adoption Date (the “ Scheme Period ”), all options to be granted pursuant to the New Share Option Scheme must be granted within the Scheme Period but the provision of the New Share Option Scheme shall, subject to the provisions of the New Share Option Scheme, in all other respects remain in full force and effect during the Scheme Period and the Options which are granted during the Scheme Period may continue to be exercisable in accordance with their terms of issue.

(i) Lapse of option

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

• (i) the expiry of the Option Period (subject to sub-paragraphs (g) and (o));

• (ii) the expiry of the periods referred to in sub-paragraphs (l) and (q) respectively;

• (iii) subject to the scheme or amalgamation becoming effective, the expiry of the period referred to in sub-paragraph (m);

• (iv) the date on which the grantee of an option ceases to be an Eligible Person by reason of the termination of his or her employment, directorship, office or appointment on grounds including, but not limited to, misconduct, bankruptcy, insolvency and conviction of any criminal offence involving his or her integrity or honesty;

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SUMMARY OF THE PRINCIPAL TERMS OF NEW SHARE OPTION SCHEME

APPENDIX III

• (v) the close of the two business days prior to the general meeting of the Company held for the purpose of approving the voluntary winding-up of the Company or, if no such general meeting is held, the date of the commencement of the winding-up of the Company; or

• (vi) the date on which the option is cancelled by the Board in accordance with the shareholders’ approval in general meeting as provided in sub-paragraph (n).

(j) Effects of alterations to capital

In the event of an alteration in the share structure of the Company whilst any option remains exercisable by way of capitalisation issue, rights issue, consolidation or sub-division of Shares, or reduction of the share capital of the Company in accordance with legal requirements and requirements of the Stock Exchange (excluding any alteration in the capital structure of the Company as a result of an issue of Shares as consideration in respect of a transaction to which the Company is a party); or any distribution of the Company’s capital assets to the Shareholders pro-rata, whether in cash or specie, except dividend paid out of the net profits attributable to the Shareholders for each financial year of the Company, such corresponding alterations (if any) certified and confirmed by the auditors to the Directors in writing for the time being of the Company as fair and reasonable will be made in the subject matter of the option so far as unexercised the exercise price and/or the method of the exercise of the option, provided that no such alteration shall be made so that a Share would be issued at less than its nominal value or which would give a grantee a different proportion of the issued share capital of the Company as that to which he or she was previously entitled and no alteration shall be made if any alteration in the capital structure of the Company is the result of an issue of Shares in the capital of the Company as consideration in a transaction.

(k) Assignment, ranking and rights of Shares

An option granted under the New Share Option Scheme is personal to the respective grantee and thus may not be transferred or assigned by the grantee.

The Shares to be allotted upon the exercise of an option will be subject to the Company’s articles of association for the time being in force and will rank pari-passu with the fully paid Shares in issue on the date of exercise of the option.

The Share to be allotted upon the exercise of an Option shall not carry voting rights until the registration of the grantee of an option as the holder of the Share in the register of members of this Company. If under the terms of a resolution passed or a press announcement made by the Company prior to the date of exercise of an option becoming effective in the manner referred to in the New Share Option Scheme, a dividend or distribution is to be or is proposed to be paid or made to the Shareholders by reference to a record date prior to the date of exercise, the Shares to be issued upon the exercise will not rank for such dividend or distribution. Subject as aforesaid, Shares allotted upon the exercise of an option shall rank pari passu in all respects with the Shares in issue on the date of the exercise including in respect of those rights arising on liquidation of the Company.

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SUMMARY OF THE PRINCIPAL TERMS OF NEW SHARE OPTION SCHEME

APPENDIX III

(l) Rights on take-over

If an offer is made to the holders of Shares or otherwise, the Committee shall as soon as practicable thereafter notify every option holder accordingly and the Directors shall within 14 days thereafter notify every option holder as to which of the following provision shall apply provided always that in the case of any adjustment proposed to be made to the number of Shares or amount of the exercise price, the relevant requirements in the New Share Option Scheme on adjustments to the number of Shares or amount of exercise price subject to options already granted shall be complied with:

• (i) each option holder shall be entitled at any time to exercise all or any of his or her options in whole or in part; or

• (ii) the Directors may grant a cash bonus award to the option holder for an amount equal to the exercise price in consideration of such option holder surrendering the relevant options for cancellation; or

• (iii) the Director may grant a cash sum equal to the difference between (1) the exercise price and (2) the greater of the offer price for the Shares or the fair market value of the Shares, as determined by the Directors, in consideration of such option holders surrendering the relevant options for cancellation; or

• (iv) the Directors may determine that any or all outstanding options will not vest or become exercisable immediately in the event of a tender offer or exchange offer to acquire the Shares if provision is made to substitute new options that are, in the Directors’ opinion, equivalent to the outstanding options.

(m) Rights on a compromise or arrangement

If a compromise or arrangement between the Company and its members or creditors is proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies, the Company shall give notice thereof to all option holders (together with a notice of the existence of the provisions of this subparagraph) on the same date as it dispatches to each member or creditor of the Company a notice summoning the meeting to consider such a compromise or arrangement, and thereupon and subject to the Directors having complied with relevant requirements in the New Share Option Scheme on adjustments to the number of Shares or amount of exercise price subject to options already granted, each option holder shall be entitled to exercise all or any of his or her option in whole or in any part or any time prior to 12 noon on the business day immediately preceding the date of the meeting directed to be convened by the Court for the purposes of considering such compromise or arrangement. With effect from the date of such meeting, the rights of all option holders to exercise their respective options shall forthwith be suspended. Upon such compromise or arrangement becoming effective, all options shall to the extent that they have not been exercised thereupon lapse and determine.

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SUMMARY OF THE PRINCIPAL TERMS OF NEW SHARE OPTION SCHEME

APPENDIX III

(n) Provision for cancellation of options granted but not exercised

Any cancellation of options granted but not exercised or termination of the New Share Option Scheme before its term must be approved by the Shareholders in general meeting, with the relevant grantees and their associates abstaining from voting. Any vote taken at the meeting to approve such cancellation must be taken by poll. In the event that the Board elects to cancel options but not exercised or termination of the New Share Option Scheme before its term and issue new options to the same grantee, the issue of such new options shall be made in compliance with the terms of the New Share Option Scheme subject to the availability of the unissued options (excluding the cancelled options) within the Scheme Mandate Limit or the Refreshed Limit as the case may be.

(o) Alteration to the New Share Option Scheme

The New Share Option Scheme may be altered in any respect by resolution of the Board except that the provisions of the New Share Option Scheme relating to matters contained in Rule 17.03 of the Listing Rules shall not be altered to the advantage of grantees or prospective grantees; and that alternations to the terms and conditions of the Scheme, which are of a material nature cannot be made, unless in both case, the prior approval of the Shareholders in general meeting of the Company (with participants and their associates abstaining from voting) is obtained. No such alteration shall operate to affect adversely the terms of issue of any option granted or agreed to be granted prior to such alteration except with the consent or sanction of such number of grantees of options as shall together hold options in respect of not less than three-fourths in nominal value of all Shares then subject to options granted under the New Share Option Scheme.

Any alteration to the terms and conditions of the New Share Option Scheme must comply with Chapter 17 of the Listing Rules. Any alternations to the terms and conditions of the Scheme which are of a material nature or any change to the terms of the options granted, must be approved by the Shareholders, except where the alterations take effect automatically under the existing terms of the New Share Option Scheme. Any change to the authority of the Directors or the Committee in relation to any alteration to the terms of the New Share Option Scheme must be approved by the Shareholders in general meeting.

The Company may by ordinary resolution in general meeting at any time terminate the operation of the New Share Option Scheme and in such event no further options shall be offered but the provisions of the New Share Option Scheme shall remain in all other respects in full force and effect in respect of any options granted prior thereto but not yet exercised at the time of termination. Options complying with the provisions of Chapter 17 of the Listing Rules which are granted during the life of the New Share Option Scheme and remain unexpired immediately prior to the termination of the operation of the New Share Option Scheme shall continue to be exercisable in accordance with their terms of issue within one month after the termination of the operation of the New Share Option Scheme. Any options not exercised within this prescribed period shall lapse. In the event of such termination of the New Share Option Scheme, details of the options granted, including options exercised or outstanding, under the New Share Option Scheme, and (if applicable) options that become void or non-exercisable as a result of the termination of the New

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SUMMARY OF THE PRINCIPAL TERMS OF NEW SHARE OPTION SCHEME

APPENDIX III

Share Option Scheme, shall be disclosed in the circular to the Shareholders seeking approval of the first new share option scheme established thereafter.

(p) Conditions of the New Share Option Scheme

The New Share Option Scheme and the grant of any option under the New Share Option Scheme is conditional upon (i) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of the options under the New Share Option Scheme; and (ii) the passing of an ordinary resolution by the Shareholders (1) to adopt the New Share Option Scheme; (2) to authorise the Directors to grant the options thereunder; and (3) to allot, issue and deal with the Shares pursuant to the exercise of any options granted under the New Share Option Scheme.

(q) Rights when the grantees of the option ceases to be an Eligible Person

If a grantee of the option ceases to be an Eligible Person during any relevant Option Period:

• (i) by reason of death (evidenced to the satisfaction of the Board), then any outstanding offer of an option to him shall lapse and his or her personal representative(s) may exercise all his or her options (to the extent not already exercised) within a period of 3 months from the date of such death (or for such a longer period as the Board may determine), failing which they shall lapse and determine at the end of the relevant period;

• (ii) by reason of ill-health, injury or disability (all evidenced to the satisfaction of the Board), or because his or her employing company ceases to be a member of the Group, then any outstanding offer of an option to him shall lapse and he or she may exercise all his or her options (to the extract not already exercised) within a period of 3 months of such ill-health, injury, disability or cessation, failing which they shall lapse and determine at the end of the relevant period;

• (iii) by reason of voluntary resignation, retirement in accordance with his or her contract of employment or upon expiration of his or her employment contract or termination of employment on grounds other than those set out in sub-paragraph i(iv) above, this sub-paragraph q(i) to q(ii), q(iv) or otherwise agree with the Company, then any outstanding offer of an option to him shall lapse and he or she may exercise all his or her options within 3 months of such resignation, retirement, expiration or termination, failing which they shall lapse and determine at the end of the relevant period; and

• (iv) due to any other reasons whatsoever, including termination of his or her employment for serious misconduct or in accordance with the termination provisions of his or her contract of employment by his or her employing company otherwise than by reason of redundancy or on the ground that the grantee of the options commits an act of bankruptcy 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

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SUMMARY OF THE PRINCIPAL TERMS OF NEW SHARE OPTION SCHEME

APPENDIX III

or honesty (and for such purpose, a resolution of the Board to the effect that the employment of such a person has or has not been terminated on one or more of the grounds specified in the New Share Option Scheme shall be conclusive and binding on the relevant grantee of the option), then any outstanding offer of an option to him shall lapse and all his or her options shall lapse and determine on the date of the cessation or termination.

(r) Administration

The Committee will have the responsibility for administrating all matters arising in relation to the New Share Option Scheme and its decision shall be final and binding on all parties. The Committee shall have power from time to time to make or vary regulations for the administration and operation of the New Share Option Scheme, provided that the same are not inconsistent with the New Share Option Scheme.

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