Luye Pharma Group Limited — Proxy Solicitation & Information Statement 2004

Aug 5, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in 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 Takson Holdings Limited , you should at once hand this circular and accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

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TAKSON HOLDINGS LIMITED 第一德勝控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 918)

PROPOSED AMENDMENTS TO THE BYE-LAWS OF THE COMPANY ADOPTION OF NEW SHARE OPTION SCHEME AND TERMINATION OF EXISTING SHARE OPTION SCHEME

AND

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

The notice convening a special general meeting of Takson Holdings Limited (the “Company”) to be held at Salon III, 1st Floor, Harbour Plaza Hong Kong, 20 Tak Fung Street, Hunghom, Kowloon, Hong Kong on 27th August, 2004 at 4:30 p.m. (or so soon thereafter as the Annual General Meeting of the Company to be convened at the same day and place shall have been concluded or adjourned) is set out on pages 24 to 34 of this circular.

Whether you are able to attend the meeting or not, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Abacus Share Registrars Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time for holding the meeting. Completion and return of the form of proxy will not prevent you from subsequently attending and voting at the meeting or any adjourned meeting should you so wish.

4th August, 2004

CONTENTS

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Chairman
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
2.	Amendments to the Bye-laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
3.	Proposed adoption of New Share Option Scheme and
	Termination of the Existing Share Option Scheme . . . . . . . . . . . . . . . . . .	7
4.	General mandate to issue Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
5.	General mandate to repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
6.	Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
7.	Action to be taken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
8.	Procedure to demand a poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
9.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
10.	Document available for inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix I	— Summary of the principal terms of
	the New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Appendix II — Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		20
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		24

— i —

DEFINITIONS

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

“Adoption Date”	the date on which the New Share Option Scheme is adopted
	by the Company, which is expected to be 27th August, 2004,
	being the date of the SGM
“AGM” or	the annual general meeting of the Company to be held at
“Annual General Meeting”	Salon III, 1st Floor, Harbour Plaza Hong Kong, 20 Tak
	Fung Street, Hunghom, Kowloon, Hong Kong on 27th
	August, 2004 at 4:00 p.m.
“associate”	has the meaning as ascribed under the Listing Rules
“associated companies”	those companies and/or enterprises which were defined and/
	or disclosed as the associates and/or associated companies
	of the Company in the latest audited financial statements of
	the Company
“Auditors”	the auditors of the Company for the time being
“Board”	the board of Directors of the Company
“Bye-laws”	the bye-laws of the Company as may be amended from
	time to time
“Companies Act”	the Companies Act 1981 of Bermuda
“Company”	Takson Holdings Limited, a company incorporated in
	Bermuda with limited liability, the Shares of which are listed
	on the Stock Exchange
“Directors”	the directors of the Company for the time being
“Existing Share Option	the share option scheme for a term of ten years adopted
Scheme”	by the Company on 23rd September, 1997
“Grantee”	any Participant who accepts an offer in accordance with the
	terms of the New Share Option Scheme or (where the context
	so permits) his personal representatives
“Group”	the Company and its subsidiaries

— 1 —

DEFINITIONS

“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“Latest Practicable Date”	2nd August, 2004, being the latest practicable date prior to
	the printing of this circular for ascertaining certain
	information contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“New Share Option Scheme”	the new share option scheme to be adopted by the Company
	at the SGM
“Offer”	the offer of the grant of an Option to a Participant pursuant
	to the New Share Option Scheme
“Option”	a right to subscribe for Shares pursuant to the terms of the
	New Share Option Scheme
“Option Period”	a period to be determined by the Board and notified by the
	Board to each Grantee as being the period during which an
	Option may be exercised
“Ordinary Resolution(s)”	the proposed ordinary resolution(s) as referred to in the
	SGM Notice
“Participant”	means (i) any executive or non-executive directors including
	independent non-executive directors or any employees
	(whether full-time or part-time) of each member of the
	Group; (ii) any discretionary objects of a discretionary trust
	established by any substantial shareholders of the Company
	or any employees, executive or non-executive directors of
	each member of the Group; (iii) any consultants,
	professionals and other advisers to each member of the
	Group; (iv) any chief executives or substantial shareholders
	of each member of the Group; (v) any associates of director,
	chief executive or substantial shareholder of each member
	of the Group; (vi) any employees (whether full-time or part-
	time) of substantial shareholder of each member of the
	Group; (vii) any suppliers of goods or services to any
	member of the Group; and (viii) any customers of any
	member of the Group, provided that the Board shall have
	absolute discretion to determine whether one falls within
	the aforesaid categories

— 2 —

DEFINITIONS

• “Repurchase Mandate” a generate mandate to the Directors to exercise the power of the Company to repurchase Shares during the period as set out in Ordinary Resolution no. 1 up to 10% of the issued share capital of the Company as at the date of passing Ordinary Resolution no. 1

• “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “SGM” or “Special the special general meeting of the Company to be held at General Meeting” Salon III, 1st Floor, Harbour Plaza Hong Kong, 20 Tak Fung Street, Hunghom, Kowloon, Hong Kong on 27th August, 2004 at 4:30 p.m. (or so soon thereafter as the AGM to be convened for the same day and place shall have been concluded or adjourned), the notice of which is enclosed with this circular

• “SGM Notice” the notice convening the SGM as set out on pages 24 to 34 of this circular

• “Share(s)” ordinary share(s) of HK$0.10 each in the capital of the Company (or of such other nominal amount as shall result from a sub-division, consolidation, reclassification or reconstruction of the share capital of the Company from time to time)

• “Share Issue Mandate” a general mandate to the Directors to exercise the power of the Company to allot and issue Shares during the period as set out in Ordinary Resolution no. 2 up to 20% of the issued share capital of the Company as at the date of passing Ordinary Resolution no. 2

• “Share Repurchase Rules” the relevant rules set out in the Listing Rules to regulate the repurchase by companies with primary listing of their own securities on the Stock Exchange

• “Shareholder(s)” the holder(s) of Shares

• “Special Resolution” the proposed special resolution as referred to in the SGM Notice

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

— 3 —

DEFINITIONS

“Takeovers Code” the Hong Kong Code on Takeovers and Mergers and Share Repurchases “HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent.

— 4 —

LETTER FROM THE CHAIRMAN

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TAKSON HOLDINGS LIMITED 第一德勝控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 918)

Directors:

Mr. Wong Tek Sun, Takson (Chairman)

• Ms. Pang Shu Yuk, Adeline Rita (Deputy Chairman)

• Mr. Tsao Kwang Yung, Peter

• Mr. Lee Kwok Cheung

• ∆ Mr. Wong Tak Yuen

Head Office and Principal Place of Business in Hong Kong: 5th Floor, South Wing Harbour Centre Tower One 1 Hok Cheung Street Hunghom, Kowloon Hong Kong

• Independent non-executive Director

• ∆ Non-executive Director

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

4th August, 2004

To the Shareholders

Dear Sir or Madam,

PROPOSED AMENDMENTS TO THE BYE-LAWS OF THE COMPANY ADOPTION OF NEW SHARE OPTION SCHEME AND TERMINATION OF EXISTING SHARE OPTION SCHEME

AND GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

1. INTRODUCTION

At the SGM, resolutions will be proposed to amend the Bye-laws, to adopt the New Share Option Scheme and terminate the Existing Share Option Scheme and to grant to the Directors general mandates to allot, issue and deal with new Shares and to repurchase Shares.

— 5 —

LETTER FROM THE CHAIRMAN

The purpose of this circular is to provide you with information regarding the proposed amendments to the Bye-laws, a summary of the principal terms of the New Share Option Scheme and the Share Issue Mandate and the Repurchase Mandate and to seek your approval of the resolutions relating to these matters at the SGM.

2. AMENDMENTS TO THE BYE-LAWS

The amendments to the Listing Rules have come into effect on 31st March, 2004. Those amendments include, amongst others, the amendments to Appendix 3 of the Listing Rules governing the constitutional documents of a listed issuer. In this connection, the Special Resolution as set out in the SGM Notice is proposed to make amendments to the existing Bye-laws to comply with the requirements of the amended Appendix 3 of the Listing Rules.

In addition, the SFO has come into effect on 1st April, 2003. In this regard, certain amendments to the existing Bye-laws to reflect such legislative changes will also be proposed at the SGM.

To align the existing Bye-laws with the Listing Rules (amended) and the SFO, the Board proposes the existing Bye-laws be amended in the manner as set out in the Special Resolution. The full text of the proposed amendments to the existing Bye-laws are set out in the SGM Notice set out on pages 24 to 34 of this circular. The background for the proposed amendments to the Bye-laws, amongst others, is set out below :—

(a) Bye-law 1 To add the definition of “associate” and to delete the reference to the repealed Securities and Futures (Clearing Houses) Ordinance of Hong Kong in the definition of “clearing house”.

(b) Bye-law 2 To extend the construction of expressions referring to writing in the Bye-laws to include representations made in the form of electronic display.

(c) Bye-law 68 To amend the provision in relation to the disclosing of the voting figures on a poll.

(d) Bye-law 77A To add the restriction on voting by those shareholders whom the Company has knowledge is restricted from voting, as required by the provisions of the amended Appendix 3 of the Listing Rules.

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LETTER FROM THE CHAIRMAN

• (e) Bye-law 88

• To conform with the provisions of the amended Appendix 3 of the Listing Rules which stipulates the minimum seven-day period for lodgment by a shareholder of the notice to nominate a director and the nomination shall commence no earlier than the day after the despatch of the notice of the meeting appointed for such election and end no later than seven days before the date of such meeting.

• (f) Bye-law 103 To conform with the provisions of the amended Appendix 3 of the Listing Rules so that subject to certain exceptions, a director shall abstain from voting at the board meeting on any contract or arrangement or proposal in which he or any of his associates has a material interest nor shall he be counted towards the quorum of the relevant board meeting.

• (g) Bye-laws 153A and To reflect the change on requirements regarding financial 153B reports in light of the amended Listing Rules and to allow the Company to distribute summarized financial statements in place of a full annual report and to permit the Company to send summary financial statements to shareholders by electronic means.

• (h) Bye-law 160 To permit the Company to send notices or otherwise make available corporate communication to shareholders in person, by post, by telex or facsimile transmission, by electronic communication or by press advertisement.

• (i) Bye-law 161 To amend the provision for deemed services of notice or other document delivered by post, electronic communication or by press advertisement.

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

The Existing Share Option Scheme was adopted by the Company on 23rd September, 1997 whereby the Board may at any time within 10 years commencing from 23rd September, 1997 grant options to the participants of the Existing Share Option Scheme as the Board may in its absolute discretion determine. In view of the amendments made to Chapter 17 (Share option schemes) of the Listing Rules, the Board proposes to terminate the Existing Share Option Scheme and adopt a New Share Option Scheme at the SGM.

— 7 —

LETTER FROM THE CHAIRMAN

The Existing Share Option Scheme is still subsisting until its termination. As at the Latest Practicable Date, a total of 36,000,000 options have been granted under the Existing Share Option Scheme and out of which, all 36,000,000 options have been exercised and no option is remaining outstanding or was lapsed. No further options will be granted under the Existing Share Option Scheme before the date of the AGM. Save from the Existing Share Option Scheme, the Company does not have any other share option scheme as at the Latest Practicable Date.

As at the Latest Practicable Date, the issued share capital of the Company comprised 389,500,000 Shares. 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 the SGM, the number of Shares issuable pursuant to the New Share Option Scheme on the date of its adoption will be 38,950,000 Shares, being 10% of the total issued share capital of the Company as at the Latest Practicable Date.

The New Share Option Scheme is conditional upon:

• (i) the passing of an Ordinary Resolution at the SGM approving the adoption of the New Share Option Scheme; and

• (ii) the Listing Committee of the Stock Exchange granting approval of the listing of, and permission to deal in, any Shares to be issued pursuant to the exercise of Options under the New Share Option Scheme (up to an initial limit of 10 per cent. of the Shares in issue at the date of the passing of the resolution to adopt the New Share Option Scheme).

Application has been made to the Stock Exchange for obtaining the approval mentioned above.

Upon satisfaction of the above conditions, the Board will have the right to grant to the Participants Options to subscribe for Shares, which when aggregated with Shares to be granted under any other share option schemes of the Company, representing up to 10% of the total number of Shares in issue as at the date of approval of the New Share Option Scheme, unless the Company obtains an approval from the Shareholders in general meeting for “refreshing” the 10% limit under the New Share Option Scheme. The maximum number of Shares which may be issued upon the exercise of all outstanding Options granted and yet to be exercised under the New Share Option Scheme and any other share option schemes of the Company shall not exceed 30% of the issued share capital of the Company from time to time.

A summary of the principal terms of the rules of the New Share Option Scheme which is proposed to be approved and adopted by the Company at the SGM is set out in Appendix II to this circular.

— 8 —

LETTER FROM THE CHAIRMAN

4. GENERAL MANDATE TO ISSUE SHARES

An ordinary resolution will also be proposed at the SGM to grant to the Directors the Share Issue Mandate. In addition, an ordinary resolution will also be proposed to authorise an extension of the Share Issue Mandate by adding to the aggregate number of Shares which may be allotted or agreed conditionally or unconditionally to be allotted by the Directors pursuant to the Share Issue Mandate the number of Shares purchased under the Repurchase Mandate, if granted. The Share Issue Mandate shall be exercisable during the period from the passing of Ordinary Resolutions nos. 2 and 3 until whichever is the earliest of :

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

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

• (iii) the date on which the authority set out in such Ordinary Resolution is revoked or varied by an ordinary resolution or ordinary resolutions of the Shareholders in general meeting.

Details of the Share Issue Mandate and the extension of the Share Issue Mandate are set out in Ordinary Resolutions no. 2 and no. 3 in the SGM Notice.

5. GENERAL MANDATE TO REPURCHASE SHARES

An ordinary resolution will be proposed at the SGM to grant to the Directors the Repurchase Mandate, details of which are set out in Ordinary Resolution no. 1 in the SGM Notice. The Shares which may be repurchased pursuant to the Repurchase Mandate is up to 10% of the issued share capital of the Company at the date of passing of the resolution approving the Repurchase Mandate.

An explanatory statement as required under the Share Repurchase Rules, containing all relevant information relating to the Repurchase Mandate is set out in the Appendix to this circular. The information in the explanatory statement provides you with information reasonably necessary to enable you to make an informed decision on whether to vote for or against the resolution to grant to the Directors the Repurchase Mandate.

— 9 —

LETTER FROM THE CHAIRMAN

6. SPECIAL GENERAL MEETING

Set out on pages 24 to 34 of this circular is the SGM Notice at which the Special Resolution will be proposed to amend the Bye-laws and the Ordinary Resolutions will be proposed to adopt the New Share Option Scheme and to terminate the Existing Share Option Scheme and to grant to the Directors the Share Issue Mandate, the Repurchase Mandate and the extension of the Share Issue Mandate.

7. ACTION TO BE TAKEN

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you intend to attend the SGM, you are requested to complete the form of proxy and return it to the Company’s branch share registrar in Hong Kong, Abacus Share Registrars Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM.

8. PROCEDURE TO DEMAND A POLL

Pursuant to the existing Bye-law 66, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded:—

• (i) by the Chairman of the meeting; or

• (ii) 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

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

• (iv) by any Shareholder or Shareholders present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy and 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.

— 10 —

LETTER FROM THE CHAIRMAN

9. RECOMMENDATION

The Directors believe that the proposed amendments to the Bye-laws, adoption of the New Share Option Scheme and termination of the Existing Share Option Scheme, the Share Issue Mandate, the Repurchase Mandate, and the extension of the Share Issue Mandate as set out in the SGM Notice are in the best interests of the Company as well as its Shareholders. Accordingly, the Directors recommend that all Shareholders should vote in favour of each of the Ordinary Resolutions and the Special Resolution as set out in the SGM Notice.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copy of the New Share Option Scheme will be available for inspection at the registered office of the Company during normal business hours for a period of 14 days before and at the SGM.

Yours faithfully, By Order of the Board Wong Tek Sun, Takson Chairman

— 11 —

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

This Appendix summarize the principal terms of the New Share Option Scheme but does not form part of, nor was it intended to be, part of the New Share Option Scheme nor should it be taken as affecting the interpretation of the rules of the New Share Option Scheme.

a. Purpose of the scheme

The purpose of the New Share Option Scheme is to provide the Company with a flexible means of giving incentive to, rewarding, remunerating, compensation and/or providing benefits to the Participants thereunder and for such other purposes as the Board may approve from time to time.

b. Who may join

The Directors may, at their absolute discretion, invite any person belonging to any of the following classes of Participants, to take up Options to subscribe for Shares:

• (i) any executive or non-executive directors including independent non-executive directors or any employees (whether full-time or part-time) of each member of the Group;

• (ii) any discretionary objects of a discretionary trust established by any substantial shareholders of the Company or any employees, executive or non-executive directors of each member of the Group;

• (iii) any consultants, professionals and other advisers to each member of the Group;

• (iv) any chief executives or substantial shareholders of each member of the Group;

• (v) any associates of director, chief executive or substantial shareholder of each member of the Group;

• (vi) any employees (whether full-time or part-time) of substantial shareholder of each member of the Group;

• (vii) any suppliers of goods or services to any member of the Group; and

(viii) any customers of any member of the Group.

— 12 —

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

c. Maximum number of Shares

• (i) The maximum number of Shares to be issued upon exercise of all outstanding Options granted and yet to be exercised under the New Share Option Scheme and any other share option schemes of the Company must not in aggregate exceed 30% of the issued share capital of the Company from time to time.

• (ii) 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 the terms of the New Share Option Scheme and any other share option schemes of the Company) to be granted under the New Share Option Scheme and any other share option schemes of the Company must not in aggregate exceed 10% of the Shares in issue as at the date of the passing of the Ordinary Resolution to approve the New Share Option Scheme (the “General Scheme Limit”).

• (iii) Subject to (i) above and without prejudice to (iv) below, the Company may seek approval of the 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 New Share Option Scheme and any other share option schemes of the Company under the limit as refreshed must not exceed 10% of the 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 New Share Option Scheme and any other share option schemes of the Company) previously granted under the New Share Option Scheme and any other share option schemes of the Company will not be counted.

• (iv) Subject to (i) above and without prejudice to (iii) above, the Company may issue a circular to the 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 (iii) 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 New Share Option Scheme and any other share option schemes of the Company (including both exercised and outstanding Options) to each Participant in any 12-month period must not exceed 1% of the issued share capital of the Company for the time being. Any further grant of Options to a Participant in excess of 1% (including exercised, cancelled and outstanding Options) in any 12-month period up to and including the date of such further grant must be subject to the issue of a circular

— 13 —

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

containing such information as required by the Listing Rules to the Shareholders and the Shareholders’ approval in general meeting of the Company with such Participant and his associates abstaining from voting.

e.

Grant of Options to connected persons

• (i) Any grant of Options under the New Share Option Scheme to a Director, chief executive (other than a proposed director or a proposed chief executive of the Company) or substantial shareholder of the Company or any of their respective associates must be approved by independent non-executive Directors (excluding any independent non-executive Director who is the Grantee of the Options).

• (ii) Where any grant of Options to a substantial shareholder or an independent nonexecutive Director, 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:

• (1) representing in aggregate more than 0.1% of the Shares in issue; and

• (2) having an aggregate value, based on the closing price of the Shares at the date of each grant, in excess of HK$5,000,000;

such further grant of Options must be approved by the Shareholders. The Company must send a circular containing such information as required by the Listing Rules to the Shareholders. All connected persons of the Company must abstain from voting at such general meeting, except that any connected person may vote against the relevant resolution at the general meeting provided that his intention to do so has been stated in the circular. Any vote taken at the meeting to approve the grant of such Options must be taken on a poll.

f. Time of acceptance and exercise of an Option

An offer of grant of Option may be accepted by a Participant within 14 days from the date of the offer of grant of the Option. A consideration of HK$1 is payable on acceptance of the offer of grant of an Option.

An Option shall be exercised in accordance with the terms of the New Share Option Scheme at any time during a period to be determined and notified by the Board to each Grantee, which period may commence on the day on which the offer for the grant of Options is made but shall end in any event not later than 10 years from the date the Board makes an offer of the grant of an Option subject to the provisions for early termination thereof.

— 14 —

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

Unless the Board otherwise determines and states in the offer of the grant of Options to a Participant, there is no minimum period for which an Option granted under the New Share Option Scheme must be held before it can be exercised.

g. Performance targets

Unless the Board otherwise determines and states 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 New Share Option Scheme can be exercised.

h. Subscription price for Shares

The subscription price for Shares under the New Share Option Scheme shall be a price determined by the Board, but shall not be less than the highest of (i) the closing price of Shares as stated in the Stock Exchange’s daily quotations sheet on the date of the offer of grant, which must be a trading day; (ii) the average closing price of Shares as stated in the Stock Exchange’s daily quotations sheets for the five trading days immediately preceding the date of the offer of grant; and (iii) the nominal value of a Share.

i. Ranking of Shares

• (i) Shares allotted upon the exercise of an Option will be subject to all the provisions of the Bye-laws of the Company and will rank pari passu in all respects with the fully paid Shares in issue as from the date and accordingly will entitle the holders to participate in all dividends or other distributions paid or made on or after the date of their allotment and issue other than any dividend or other distribution previously declared or recommended or resolved to be paid or made with respect to a record date which shall be before the date of their allotment and issue.

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

j. Restrictions on the time of grant of Options

No offer for grant of Options shall be made after a price sensitive event has occurred or a price sensitive matter has been the subject of a decision until such price sensitive information has been published 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 meeting of the Board (as such date is first notified to the Stock

— 15 —

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

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) and (ii) the deadline for the Company to publish its results announcement under the Listing Rules, and ending on the date of the results announcement, no Option may be granted.

k. Period of the New Share Option Scheme

The New Share Option Scheme will remain valid and effective for a period of 10 years commencing on the date on which the New Share Option Scheme becomes unconditional.

l. Rights on ceasing employment

If the Grantee of an Option ceases to be a Participant for any reason other than death or the termination of the Grantee’s employment, directorship, office or appointment on one or more of the grounds referred to in sub-paragraph (n) below, the Grantee may exercise the Option up to the Grantee’s entitlement at the date of cessation the Option (to the extent which has become exercisable and not already exercised) within the period of 3 months (or such longer period as the Board may determine) following the date of such cessation, which will be taken to be the last day on which the Grantee was with the relevant company whether salary is paid in lieu of notice or not.

m. Rights on death

If the Grantee ceases to be a Participant by reason of death before exercising the Option in full (provided that none of the events which would be a ground for termination of his or her employment under sub-paragraph (n) below arises prior to his or her death), the personal representative of this Grantee shall be entitled within a period of 6 months or such longer period as the Board may determine from the date of death to exercise the Option (to the extent which has become exercisable and not already exercised).

n. Rights on dismissal

If the Grantee ceases to be a full-time or part-time employee, director, consultant, professional or other adviser or chief executive of the relevant company or substantial shareholder of the Company by reason of the termination of this employment, directorship, office or appointment on the grounds that he has been guilty of misconduct or appears either to be unable to pay or have no reasonable prospect to be able to pay debts or has become insolvent or has made any arrangements or composition with his or her creditors generally, or has been convicted of any criminal offence involving his or her integrity or honesty, his or her Option will lapse automatically on the date the Grantee ceases to be a Participant.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

o. Rights on a general offer

If a general offer by way of take-over or scheme or 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, and if such offer becomes or is declared unconditional, a Grantee shall be entitled to exercise his or her Option (to the extent not already exercised) to its full extent or to the extent specified in the Grantee’s notice.

p. Rights on compromise or arrangement between the Company and its creditors

If a compromise or arrangement between the Company and its shareholders or creditors is proposed of or in connection with a scheme for the reconstruction or amalgamation of the Company, the Company shall give notice there to all Grantees on the same day as it gives notice of the meeting to its members or creditors to consider such a compromise or arrangement, and thereupon any Grantee (or his or her personal representative(s)) may forthwith and until the expiry of the period commencing with such date and ending with the earlier of the date ending with the earlier of two months thereafter and the date on which such compromise or arrangement is sanctioned by the Court be entitled to exercise his or her Option (to the extent which has become exercisable and not already exercised), but the exercise of the Option shall be conditional upon such compromise or arrangement being sanctioned by the Court and becoming effective. Upon such compromise or arrangement becoming effective, all Options shall lapse except in so far as previously exercised under the New Share Option Scheme. 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 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.

q. Rights on winding up

In the event a notice is given by the Company to its shareholders to convene a shareholders’ meeting for the purposes of considering, and if thought fit, approving a resolution to voluntarily wind-up the Company, other than for the purposes of a reconstruction, amalgamation or scheme of arrangement, the Company shall on the same date as or soon after it despatches such notice to convene the shareholders’ meeting, give notice thereof to all Grantees. Each Grantee may by notice in writing to the Company at any time no later than two Trading Days prior to the proposed 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.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

r. Adjustments of the subscription price or other terms

In the event of a capitalisation issue, rights issue, sub-division, consolidation 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 far and reasonable and at the same time satisfy with the requirements of the Listing Rules will be made to the number of Shares and/or the subscription price for Shares subject to Option already granted; and/or the maximum number of Shares subject to the New Share Option Scheme provided that any adjustments shall give a Grantee the same proportion of the issued share capital to which he was entitled prior to such adjustments and no adjustments shall be made the effect of which would be to enable a Share to be issued at less than its nominal value. In addition, in respect of any such adjustments, other than any made on a capitalisation issue, the Company’s 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.

s. Cancellation of Options

The Board may, with the consent of the Grantee, at any time at its absolute discretion cancel any option granted but not exercised.

Where the Company cancels Options and issues new ones to the same Grantee, the grant of such new options may only be made under the New Share Option Scheme and any other share option schemes of the Company (to the extent not yet granted and excluding the cancelled Options) within the limit approved by Shareholders as mentioned in note (1) to Rule 17.03(3) of the Listing Rules.

t. Termination of the New Share Option Scheme

The Company may by resolution in general meeting or the Board may at any time terminate the New Share Option Scheme and in such event no further Option Scheme shall remain in force and effect. Upon the termination of the New Share Option Scheme, any Options granted but not yet exercised shall continue to be valid and exercisable in accordance with the New Share Option Scheme.

u. Rights are personal to the Grantee

An Option is personal to the 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.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX I

v. Lapse of Option

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

• (i) the expiry of the period referred to in paragraph (f);

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

• (iii) the date on which a breach of the provision of restriction on transfer and assignment of an Option referred to in paragraph (u) is committed.

w. Others

• (i) The terms and conditions of the New Share Option Scheme relating to the matters set out in Rule 17.03 of the Listing Rules shall not be altered to the advantage of the Participants except with the prior approval of the Shareholders in general meeting.

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

• (iii) The amended terms of the New Share Option Scheme or the Options must still comply with the relevant requirements of Chapter 17 of the Listing Rules.

• (iv) Any change to the authority of the Directors or the scheme administrators in relation to any alternation to the terms of the New Share Option Scheme must be approved by the Shareholders in general meeting.

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EXPLANATORY STATEMENT

APPENDIX II

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

1. SHARE REPURCHASE RULES

The Share Repurchase Rules permit companies whose primary listing are on the Stock Exchange to repurchase their fully paid up shares on the Stock Exchange subject to certain restrictions, the most important of which are summarised below:

(a) Shareholders’ Approval

The Share Repurchase Rules provide that all on-market share repurchases by a company with its primary listing on the Stock Exchange must be approved in advance by an ordinary resolution, either by way of a specific approval in relation to specific transactions or by a general mandate to the directors of the company to make such repurchase.

(b) Source of Funds

Repurchase must be made out of funds which are legally available for the purpose and in accordance with the laws of Bermuda and the memorandum of association and bye-laws of the Company.

The Company is empowered by its memorandum of association and bye-laws to purchase its shares. The laws of Bermuda provide that the amount of capital paid in connection with a share repurchase may only be paid out of either the capital paid up on the relevant shares, or out of funds of the Company otherwise available for dividend or distribution or the proceeds of a fresh issue of shares made for the purpose. The amount of premium payable on repurchase may only be paid out of funds of the Company otherwise available for dividend or distribution or out of the share premium account of the Company.

2. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 389,500,000 Shares.

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EXPLANATORY STATEMENT

APPENDIX II

Subject to the passing of the ordinary resolution regarding the Repurchase Mandate and on the basis that no further Shares are issued or repurchased prior to the SGM, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 38,950,000 Shares representing not more than 10% of the issued share capital of the Company at the Latest Practicable Date.

If as a result of the exercise of the power to repurchase Shares pursuant to the Repurchase Mandate, if so approved, the number of Shares which are in the hands of the public falls below the prescribed minimum of 25% as required by the Stock Exchange, the Company will not exercise the power to repurchase Shares. The Company has no intention to repurchase Shares to such an extent that the public float of the Company will fall below 25%.

3. REASONS FOR REPURCHASES

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

4. FUNDING OF REPURCHASES

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

On the basis of the consolidated financial position of the Company as at 31st March, 2004 being the date to which the latest published accounts of the Company were made up, the Directors consider that in the event that the Repurchase Mandate were to be carried out in full at any time during the proposed repurchase period, there might be an adverse impact on the working capital position of the Company (as compared with the position in the latest published audited financial statements of the Company as at 31st March, 2004). However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirement of the Company or 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 II

5. SHARE PRICES

The highest and lowest traded prices at which the Shares have been traded on the Stock Exchange during each of the previous 12 months before the Latest Practicable Date were as follows:

	Shares
	Highest	Lowest
	HK$	HK$
2003
August	0.188	0.162
September	0.210	0.168
October	0.225	0.185
November	0.223	0.191
December	0.209	0.181
2004
January	0.200	0.180
February	0.195	0.180
March	0.200	0.175
April	0.180	0.175
May	0.178	0.168
June	0.186	0.177
July	0.177	0.142

6. GENERAL

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

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

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

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EXPLANATORY STATEMENT

APPENDIX II

7. TAKEOVERS CODE

If on exercise of the power of repurchasing Shares pursuant to the Repurchase Mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers Code. As a result, a Shareholder or group of Shareholders acting in concert could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeovers Code.

As at the Latest Practicable Date, Takson International Holdings Limited was interested in 237,600,000 Shares, representing 61.00% of the issued share capital of the Company and Wangkin Investment Inc. was deemed to be interested in 61.00% of the issued share capital of the Company by virtue of its 100% shareholding interest in Takson International Holdings Limited. To the best knowledge and belief of the Company, no other person, together with his/her associates, was beneficially interested in Shares representing 10% or more of the issued share capital of the Company.

The Directors are not presently aware of any consequences which may arise under the Takeover Code as a result of any repurchases made under the Repurchase Mandate. In the event that the Repurchase Mandate is exercised in full and on basis that no further shares are issued, the number of Shares held by Wangkin Investments Inc. and Takson International Holdings Limited would be increased to approximately 67.78% of the total number of Shares in issue. The Directors will take all reasonable steps to ensure compliance with the prescribed minimum percentage requirement of 25% of the issued share capital of the Company to be held in public hands pursuant to the Listing Rules.

8. SHARE PURCHASE MADE BY THE COMPANY

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

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NOTICE OF SPECIAL GENERAL MEETING

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TAKSON HOLDINGS LIMITED 第一德勝控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 918)

NOTICE IS HEREBY GIVEN that a special general meeting of Takson Holdings Limited (“the Company”) will be held at Salon III, 1st Floor, Harbour Plaza Hong Kong, 20 Tak Fung Street, Hunghom, Kowloon, Hong Kong, on 27th August, 2004 at 4:30 p.m. (or so soon thereafter as the Annual General Meeting of the Company to be convened at the same day and place shall have been concluded or adjourned) for the purpose of considering and, if thought fit, passing the following resolutions, with or without modification, as ordinary resolutions and special resolution of the Company:—

AS ORDINARY RESOLUTIONS

1. “ THAT :

2. (i) subject to paragraph (ii) of this Resolution, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all powers of the Company to repurchase shares in the capital of the Company on the Stock Exchange or on any other stock exchange on which the shares of the Company may be listed and recognised by the Securities and Futures Commission and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange or of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved;

3. (ii) the aggregate nominal amount of shares of the Company to be repurchased by the Company pursuant to the approval in paragraph (i) of this Resolution shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of this Resolution, and the said approval shall be limited accordingly; and

4. (iii) for the purposes of this Resolution,

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

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

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NOTICE OF SPECIAL GENERAL MEETING

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

  - (c) the revocation or variation of the authority given under this Resolution by ordinary resolution of the shareholders of the Company in general meeting.”

1. “ THAT :

2. (i) subject to paragraph (iii) of this Resolution, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make and grant offers, agreements and options (including warrants, bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares of the Company) which would or might require shares to be allotted be and is hereby generally and unconditionally approved;

3. (ii) the approval in paragraph (i) of this Resolution shall authorise the Directors of the Company during the Relevant Period to make and grant offers, agreements and options (including warrants, bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares of the Company) which would or might require shares to be allotted after the end of the Relevant Period;

4. (iii) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors of the Company pursuant to the approval in paragraph (i) of this Resolution, otherwise than pursuant to (a) a Rights Issue (as hereinafter defined); or (b) an issue of shares upon the exercise of subscription rights under any option scheme or similar arrangement for the time being adopted for the grant or issue to the Grantees as specified in such scheme or similar arrangement of shares or rights to acquire shares of the Company; or (c) any issue of shares pursuant to the exercise of rights of subscription or conversion under the terms of any existing warrants, bonds, debentures, notes and other securities of the Company which carry rights to subscribe for or are convertible into shares of the Company; or (d) an issue of shares pursuant to any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of the dividend on shares of the Company in accordance with the Bye-laws of the Company, shall not exceed 20% of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of this Resolution and the said approval shall be limited accordingly; and

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NOTICE OF SPECIAL GENERAL MEETING

• (iv) for the purposes of this Resolution:—

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

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

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

• (c) the revocation or variation of the authority given under this Resolution by ordinary resolution of the shareholders of the Company in general meeting; and

“Rights Issue” means an offer of shares of the Company or issue of option, warrants or other securities giving the right to subscribe for shares of the Company, open for a period fixed by the Directors of the Company to holders of shares, or any class of shares, whose names appear on the register of members of the Company (and, where appropriate, to holders of other securities of the Company entitled to the offer) on a fixed record date in proportion to their holdings of such shares (or, where appropriate, such other securities) as at that date (subject to such exclusions or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory applicable to the Company).”

1. “ THAT the general mandate granted to the Directors of the Company to exercise the powers of the Company to allot, issue and deal with any additional shares of the Company pursuant to Ordinary Resolution no. 2 set out in the notice convening this meeting be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the authority granted pursuant to Ordinary Resolution no. 1 set out in the notice convening this meeting, provided that such extended amount shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of this Resolution.”

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NOTICE OF SPECIAL GENERAL MEETING

AS SPECIAL RESOLUTION

1. “ THAT the existing Bye-laws of the Company be and are hereby amended in the following manner:—

(A) Bye-law 1

• (i) By adding the following new definition immediately after the definition of “Act”:

• ““associate(s)” the meaning attributed to it in the rules of the Designated Stock Exchange.”

• (ii) By deleting the following words from the definition of “clearing house”:

• “a recognised clearing house within the meaning of Section 2 of the Securities and Futures (Clearing Houses) Ordinance of Hong Kong or”

(B) Bye-law 2

• (i) By adding the words “, and including where the representation takes the form of electronic display, provided that both the mode of service of the relevant document or notice and the Member’s election complies with all applicable Statutes, rules and regulations” after the words “visible form” at the end of Bye-law 2(e).

• (ii) By deleting the full stop “.” at the end of Bye-law 2(j) and substituting therefor a semi-colon “;”.

• (iii) By adding the following new Bye-law 2(k) immediately after Bye-law 2(j):

• “references to a document being executed include references to it being executed under hand or under seal or by electronic signature or by any other method and references to a notice or document include a notice or document recorded or stored in any digital, electronic, electrical, magnetic or other retrievable form or medium and information in visible form whether having physical substance or not.”

(C) Bye-law 44

By adding the words “or by any means in such manner as may be accepted by the Designated Stock Exchange” immediately after the words “any other newspapers in accordance with the requirements of any Designated Stock Exchange” in Byelaw 44.

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NOTICE OF SPECIAL GENERAL MEETING

(D) Bye-law 51

By adding the words “or by any means in such manner as may be accepted by the Designated Stock Exchange” after the words “any other newspapers in accordance with the requirements of any Designated Stock Exchange” in Bye-law 51.

(E) Bye-law 68

By deleting the sentence “There shall be no requirement for the chairman to disclose the voting figures on a poll.” in Bye-law 68.

(F) Bye-law 77A

By adding the following new Bye-law 77A immediately after Bye-law 77:

• “77A. Where the Company has knowledge that any Member is, under the rules of the Designated Stock Exchange, required to abstain from voting on any particular resolution of the Company or restricted to voting only for or only against any particular resolution of the Company, any votes cast by or on behalf of such Member in contravention of such requirement or restriction shall not be counted.”

(G) Bye-law 88

By deleting Bye-law 88 in its entirety and substituting therefor the following new Bye-law:

• “88. No person other than a Director retiring at the meeting shall, unless recommended by the Directors for election, be eligible for election as a Director at any general meeting, unless a Notice signed by a Member (other than the person to be proposed) duly qualified to attend and vote at the meeting for which such notice is given of his intention to propose such person for election and also a Notice signed by the person to be proposed of his willingness to be elected shall have been lodged at the head office or at the Registration Office provided that the minimum length of the period, during which such Notice(s) are given, shall be at least 7 days and that the period for lodgement of such Notice(s) shall commence no earlier than the day after the despatch of the notice of the general meeting appointed for such election and end no later than 7 days prior to the date of such general meeting.”

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NOTICE OF SPECIAL GENERAL MEETING

(H) Bye-law 103

By deleting Bye-law 103 in its entirety and substituting therefor the following new Bye-law:

• “103 (1) Save as otherwise provided by these Bye-laws, a Director shall not vote (nor be counted in the quorum) on any resolution of the Board approving any contract or arrangement or any other proposal whatsoever in which he or any of his associate(s) is materially interested, but this prohibition shall not apply to any of the following matters:

• (i) any contract or arrangement for the giving of any security or indemnity to the Director or his associate(s) in respect of money lent or obligations incurred or undertaken by him or any of them at the request of or for the benefit of the Company or any of its subsidiaries;

• (ii) any contract or arrangement for the giving of any security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director or his associate(s) has himself/themselves assumed responsibility in whole or in part and whether alone or jointly under a guarantee or indemnity or by the giving of security;

• (iii) any proposal concerning an offer of shares or debentures or other securities of or by the Company or of its subsidiaries or any other company which the Company may promote or be interested in for subscription or purchase where the Director or his associate(s) is/are or is/are to be interested as a participant in the underwriting or sub-underwriting of the offer;

• (iv) any proposal concerning any other company in which the Director or his associate(s) is/are interested only, whether directly or indirectly, as an officer or executive or shareholder or in which the Director or his associate(s) is/are beneficially interested in shares of that company, provided that the Director and any of his associates are not in aggregate beneficially interested in five per cent. or more of the issued shares or of the voting rights of any class of such company (or of any third company through which his interest or that of any of his associates is derived);

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NOTICE OF SPECIAL GENERAL MEETING

• (v) any proposal concerning the adoption, modification or operation of a share option scheme, a pension fund or retirement, death or disability benefits scheme or other arrangement which relates both to Directors, his associate(s) and employees of the Company or any of its subsidiaries and does not provide in respect of any Director or his associate(s), as such any privilege or advantage not generally accorded to the class of persons to which such scheme or fund relates;

• (vi) any contract or arrangement in which the Director or his associate(s) is/are interested in the same manner as other holders of shares or debentures or other securities of the Company by virtue only of his/their interest in shares or debentures or other securities of the Company.”

• (2) A company shall be deemed to be a company in which a Director and/or his associate(s) own(s) five (5) per cent. or more if and so long as (but only if and so long as) he and/or his associate(s) (either directly or indirectly) are the holder(s) of or beneficially interested in five (5) per cent. or more of any class of the equity share capital of such company or of the voting rights available to members of such company (or of any third company through which his interest or that of any of his associate(s) is derived). For the purpose of this paragraph there shall be disregarded any shares held by a Director or his associate(s) as bare or custodian trustee and in which he or any of them has no beneficial interest, any shares comprised in a trust in which the interest of the Director or his associate(s) is/are in reversion or remainder if and so long as some other person is entitled to receive the income thereof, and any shares comprised in an authorised unit trust scheme in which the Director and/or his associate(s) is/are interested only as a unit holder and any shares which carry no voting right at general meetings and very restrictive dividend and return of capital right.

• (3) Where a company in which a Director and/or his associate(s) holds five (5) per cent. or more is materially interested in a transaction, then that Director and/or his associate(s) shall also be deemed materially interested in such transaction.

• (4) If any question shall arise at any meeting of the Board as to the materiality of the interest of a Director (other than the chairman of the meeting) or his associate(s) or as to the entitlement of any Director (other than such chairman) to vote and such question is not resolved

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NOTICE OF SPECIAL GENERAL MEETING

by his voluntarily agreeing to abstain from voting, such question shall be referred to the chairman of the meeting and his ruling in relation to such other Director shall be final and conclusive except in a case where the nature or extent of the interest of the Director and/ or his associate(s) concerned as known to such Director has not been fairly disclosed to the Board. If any question as aforesaid shall arise in respect of the chairman of the meeting such question shall be decided by a resolution of the Board (for which purpose such chairman shall not vote thereon) and such resolution shall be final and conclusive except in a case where the nature or extent of the interest of such chairman as known to such chairman has not been fairly disclosed to the Board.”

(I) Bye-law 153

by adding the words “and Bye-law 153A” after the words “Subject to Section 88 of the Act” in Bye-law 153.

(J) Bye-laws 153A and 153B

By adding the following new Bye-laws 153A and 153B immediately after Byelaw 153:

• “153A. To the extent permitted by and subject to due compliance with all applicable Statutes, rules and regulations, including, without limitation, the rules of the Designated Stock Exchange, and to obtaining all necessary consents, if any, required thereunder, the requirements of Bye-law 153 shall be deemed satisfied in relation to any person by sending to the person in any manner not prohibited by the Statutes, a summary financial statement derived from the Company’s annual accounts and the directors’ report which shall be in the form and containing the information required by applicable laws and regulations, provided that any person who is otherwise entitled to the annual financial statements of the Company and the directors’ report thereon may, if he so requires by notice in writing served on the Company, demand that the Company sends to him, in addition to a summary financial statement, a complete printed copy of the Company’s annual financial statement and the directors’ report thereon.

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NOTICE OF SPECIAL GENERAL MEETING

• 153B. The requirement to send to a person referred to in Bye-law 153 the documents referred to in that Bye-law or a summary financial report in accordance with Bye-law 153A shall be deemed satisfied where, in accordance with all applicable Statutes, rules and regulations, including, without limitation, the rules of the Designated Stock Exchange, the Company publishes copies of the documents referred to in Bye-law 153 and, if applicable, a summary financial report complying with Bye-law 153A, on the Company’s computer network or in any other permitted manner (including by sending any form of electronic communication), and that person has agreed or is deemed to have agreed to treat the publication or receipt of such documents in such manner as discharging the Company’s obligation to send to him a copy of such documents.”

(K) Bye-law 154

By deleting the words “fourteen (14)” after the words “not less than” in Bye-law 154(2) and substituting therefor the words “twenty-one (21).”

(L) Bye-law 160

By deleting Bye-law 160 in its entirety and substituting therefor the following new Bye-law:

• “160. Any Notice or document (including any “corporate communication” within the meaning ascribed thereto under the rules of the Designated Stock Exchange), whether or not, to be given or issued under these Byelaws from the Company to a Member shall be in writing or by cable, telex or facsimile transmission message or other form of electronic transmission or communication and any such Notice and document may be served or delivered by the Company on or to any Member either personally or by sending it through the post in a prepaid envelope addressed to such Member at his registered address as appearing in the Register or at any other address supplied by him to the Company for the purpose or, as the case may be, by transmitting it to any such address or transmitting it to any telex or facsimile transmission number or electronic number or address or website supplied by him to the Company for the giving of Notice to him or which the person transmitting the notice reasonably and bona fide believes at the relevant time will result in the Notice being duly received by the Member or may also be served by advertisement in appointed newspapers (as defined in the Act) or in newspapers circulating generally in the territory of and in accordance with the requirements of the Designated Stock Exchange or, to the extent permitted by the applicable laws, by placing it on the Company’s website or the website of the Designated Stock Exchange and giving to the

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NOTICE OF SPECIAL GENERAL MEETING

Member a notice stating that the notice or other document is available there (a “notice of availability”). The notice of availability may be given to the Member by any of the means set out above. In the case of joint holders of a share, all notices shall be given to that one of the joint holders whose name stands first in the Register and notice so given shall be deemed a sufficient service on or delivery to all the joint holders.”

(M) Bye-law 161

By deleting Bye-law 161 in its entirety and substituting therefor the following new Bye-law:—

• “161. Any Notice or other document:

• (a) if served or delivered by post, shall where appropriate be sent by airmail or an equivalent service that is no slower and shall be deemed to have been served or delivered on the day following that on which the envelope containing the same, properly prepaid and addressed, is put into the post; and in proving such service or delivery, it shall be sufficient to prove that the envelope or wrapper containing the notice or document was properly addressed and put into the post and a certificate in writing signed by the Secretary or other officer of the Company or other person appointed by the Board that the envelope or wrapper containing the notice or other document was so addressed and put into the post shall be conclusive evidence thereof;

• (b) if sent by electronic communication, shall be deemed to be given on the day on which it is transmitted from the server of the Company or its agent. A notice placed on the Company’s website or the website of the Designated Stock Exchange is deemed given by the Company to a Member on the day following that on which a notice of availability is deemed served on the Member;

• (c) if served or delivered in any other manner contemplated by these Bye-laws, shall be deemed to have been served or delivered at the time of personal service or delivery or, as the case may be, at the time of the relevant despatch, transmission or publication; and in proving such service or delivery a certificate in writing signed by the Secretary or other officer of the Company or other person appointed by the Board as to the fact and time of such service, delivery, despatch, transmission or publication shall be conclusive evidence thereof;

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NOTICE OF SPECIAL GENERAL MEETING

• (d) if served by advertisement in appointed newspapers (as defined in the Act) or newspapers in accordance with the requirements of any Designated Stock Exchange, shall be deemed to have been served on the day on which such notice or document is first published; and

• (e) may be given to a Member either in the English language or the Chinese language, subject to due compliance with all applicable Statutes, rules and regulations.””

By Order of the Board Lau Hin Hung Company Secretary

Hong Kong, 4th August, 2004

Notes:

1. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint one or, if he is the holder of two or more shares, more than one proxy to attend and to vote instead of him. A proxy need not be a member of the Company.

2. In order to be valid, the form of proxy together with any power of attorney or other authority (if any) under which it is signed or a certified copy of that power or authority, must be deposited at the Company’s branch share registrar in Hong Kong, Abacus Share Registrars Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

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