Multifield International Holdings Limited — Proxy Solicitation & Information Statement 2003

Apr 30, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt about this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitors, professional accountant or other professional adviser.

If you have sold all your shares in MULTIFIELD INTERNATIONAL HOLDINGS LIMITED (the “Company”), you should at once hand this circular to the purchaser or to the bank or stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

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

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Multifield International Holdings Limited ( )[*]

(Incorporated in Bermuda with limited liability)

CIRCULAR ON ADOPTION OF NEW SHARE OPTION SCHEME TERMINATION OF EXISTING SHARE OPTION SCHEME AND

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

This circular explains, among other things, the adoption of new share option scheme and the repurchase mandate to be passed as ordinary resolutions at the Annual General Meeting of the Company to be held on 27 June 2003 at 3:30 p.m. at 1st Floor, Multifield Centre, 426 Shanghai Street, Kowloon, Hong Kong or any adjournment thereof.

A notice convening the Annual General Meeting is set out on pages 59 to 62 of the Annual Report of the Company sent to you. A form of proxy for use at the Annual General Meeting is enclosed together with the Annual Report. Whether or not you are able to attend the meeting, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon as soon as possible to the Company’s Branch Share Registrar in Hong Kong, Tengis Limited at G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting at the meeting or any adjournment thereof should you so desire.

*For identification purpose only

24 April 2003

EXPECTED TIMETABLE

2003
Latest time for lodging forms of transfer
in order to be entitled for Entitlements . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. Tuesday, 24 June
Closure of register of members
(both days inclusive) . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 25 June — Friday, 27 June
Latest time for lodging forms of proxy
for the Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 3:30 p.m. Wednesday, 25 June
Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3:30 p.m. Friday, 27 June
Record Date for Entitlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 27 June
Despatch final dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 18 July

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DEFINITIONS

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

“Adoption Date” the date on which the New Option Scheme is adopted by passing a resolution of the Company in general meeting

“AGM”	the annual general meeting of the Company convened to be held on
	Friday, 27 June 2003, notice of which is set out on pages 59 to 62
	of the Annual Report of the Company sent to Shareholders, and any
	adjournment thereof
“AGM Notice”	the notice convening the AGM set out on pages 59 to 62 of the
	Annual Report of the Company dated 16 April 2003
“Associate”	has the meaning ascribed thereto in the Listing Rules
“Board”	the Board of Directors
“Branch Share Registrar”	Tengis Limited, G/F., Bank of East Asia Harbour View Centre, 56
	Gloucester Road, Wanchai, Hong Kong
“Business Day”	a day, other than Saturday, on which banks in Hong Kong are
	generally open for business
“Buyback Mandate”	a mandate enabling the Company to repurchase the Shares of the
	Company
“Companies Act”	the Companies Act 1981 of Bermuda (as amended)
“Companies Ordinance”	the Companies Ordinance (Chapter 32 of the Laws of Hong Kong)
“Company”	Multifield International Holdings Limited, an exempted company
	incorporated in Bermuda with limited liability, the shares of which
	are listed on the Stock Exchange
“Connected Person”	has the meaning ascribed thereto in the Listing Rules
“Current Option Scheme”	the share option scheme of the Company adopted on 10 July 1998
“Directors”	the directors of the Company
“Entitlements”	entitlement to a proposed final dividend for the year ended 31
	December 2002 of 0.25 HK cents per Share
“General Mandate”	a mandate enabling the Directors of the Company to issue and allot
	new shares

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DEFINITIONS

“Grantee”	any Participant (as defined in Appendix I to this circular) who
	accepts an offer in accordance with the terms of the New Option
	Scheme, or where the context so permits (in the case of any
	individual) any person who is entitled to any Option in
	consequence of the death of the original Grantee (including without
	limitation his/her legal personal representative(s))
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Latest Practicable Date”	24 April 2003, 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 Option Scheme”	the new share option scheme of the Company proposed to be
	adopted under Ordinary Resolution No. 8A as set out in the AGM
	Notice
“Option(s)”	the right to subscribe for Shares to be granted under the New
	Option Scheme and “Options” shall be construed accordingly
“Participant(s)”	as defined in Appendix I to this circular
“PRC”	the People’s Republic of China which for the purposes of this
	circular, excludes Hong Kong, Macau and Taiwan
“Record Date”	27 June 2003
“Scheme Mandate Limit”	the total number of Shares which may be issued upon exercise of
	all options to be granted under the New Option Scheme and all
	other share option scheme(s) of the Company
“Share(s)”	share(s) of HK$0.01 each in the capital of the Company
“Shareholder(s)”	holders of Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subsidiary”	a company which is for the time being and from time to time a
	subsidiary (within the meaning of section 2 of the Companies
	Ordinance) of the Company

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DEFINITIONS

“Substantial Shareholder(s)”	has the meaning ascribed thereto in the Listing Rules
“Takeover Code”	Hong Kong Code on Takeovers and Mergers
“HK$” and “cents”	Hong Kong dollars and cents respectively

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LETTER FROM THE BOARD

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Multifield International Holdings Limited

(

)[*]

(Incorporated in Bermuda with limited liability)

Executive Directors: Lau Chi Yung, Kenneth (Chairman) Tsang Pak Chung, Eddy (Vice-Chairman) Lau Michael Kei Chi Cho Po Hong, Jimmy

Registered Office: Cedar House 41 Cedar Avenue Hamilton HM12 Bermuda

Non-Executive Directors:

Tong Wui Tung, Ronald Choy Tak Ho Lee Siu Man, Ervin

Principal Place of Business: 3rd Floor Multifield Centre 426 Shanghai Street Kowloon Hong Kong

** Independent Non-executive Directors

24 April 2003

To the Shareholders

Dear Sir or Madam,

CIRCULAR ON

ADOPTION OF NEW SHARE OPTION SCHEME TERMINATION OF EXISTING SHARE OPTION SCHEME

AND

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

1. INTRODUCTION

The purpose of this circular is to provide you with information regarding the following resolutions to be proposed at the AGM to be held on 27 June 2003 relating to:

• (a) adoption of the New Option Scheme;

• (b) termination of the Current Option Scheme;

• For identification purpose only

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LETTER FROM THE BOARD

• (c) General Mandate;

• (d) Buyback Mandate; and

• (e) a general extension mandate to extend the General Mandate to include Shares repurchased under the Buyback Mandate.

2. ADOPTION OF NEW OPTION SCHEME

Background as to the adoption of the New Option Scheme

The Company adopted the Current Option Scheme on 10 July 1998. The Current Option Scheme is the only outstanding share option scheme of the Company. As at the Latest Practicable Date, no option had been granted under the Current Option Scheme.

The latest amendments by the Stock Exchange of the requirements for share option schemes under Chapter 17 of the Listing Rules came into effect on 1 September 2001. In compliance with the new rules, the Directors propose to terminate the Current Option Scheme and adopt the New Option Scheme with terms conforming to the new rules.

The Directors believe that the New Option Scheme will provide the Company with a more flexible and effective means of rewarding, remunerating and compensating those who may contribute or have contributed to the Group, therefore the Directors propose that subject to and conditional on the Stock Exchange granting approval of the listing of and permission to deal in the Shares falling to be issued upon exercise of the Options, the New Option Scheme be approved and adopted at the forthcoming AGM.

The terms of the New Option Scheme

A summary of the principal terms of the New Option Scheme is set out in the Appendix I headed “Summary of the Principal Terms of the New Option Scheme” to this circular.

Conditions

The New Option Scheme is conditional on:

• (a) the passing of the Ordinary Resolution No. 8A as set out in the AGM Notice by the Shareholders at the AGM to approve and adopt the New Option Scheme; and

• (b) the Listing Committee of the Stock Exchange granting the approval of the listing of, and permission to deal in, any Shares falling to be issued upon exercise of the Options which may be granted under the New Option Scheme, being 10 per cent. of the Shares in issue on the Adoption Date.

Maximum number of Shares subject to the New Option Scheme

Subject to the approval of the Shareholders of the adoption of the New Option Scheme at the AGM and conditional upon the Stock Exchange granting approval of the listing of, and permission to deal in, any Shares falling to be issued upon exercise of the Options, the Board will have the right to grant Options to the Participants to subscribe for Shares such that the Scheme Mandate Limit shall not exceed 10 per cent. of the Shares in issue as at the Adoption Date, unless the Company obtains an

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LETTER FROM THE BOARD

approval from the Shareholders to refresh the Scheme Mandate Limit such that the total number of Shares which may be issued upon exercise of all Options and any other share option schemes of the Company shall not exceed 10 per cent. of the issued share capital of the Company as at the date of such Shareholders’ approval, but provided always that the maximum number of Shares which may be issued upon exercise of all outstanding Options granted and yet to be exercised under the New Option Scheme and any other share option schemes of the Company shall not in aggregate exceed 30 per cent. of the Shares in issue from time to time.

As at the Latest Practicable Date, there were 4,000,526,323 Shares in issue. Assuming that no further Shares will be issued prior to the date of approving the adoption of the New Option Scheme, the maximum number of Shares which may be issued upon exercise of all options to be granted under the New Option Scheme and any other share option schemes of the Company is 400,052,632 Shares, being 10 per. cent. of the Shares in issue on the Adoption Date.

As at the Latest Practicable Date, no option had been granted or agreed to be granted under the Current Option Scheme.

Application will be made to the Stock Exchange for the approval of the listing of, and permission to deal in, any Shares falling to be issued upon exercise of the Options, representing a maximum of not more than 10% of the Shares in issue as at the Adoption Date.

Purpose & value of Option

Although the terms of the New Option Scheme do not impose strict requirements on the Grantee for particular achievement of any performance targets or holding Options for a certain period before exercise, the Board believes that the requirements of a minimum subscription price as well as the selection criteria prescribed in the terms of the New Option Scheme will serve to achieve the purpose of the New Option Scheme as set out on page 11 of this circular.

The Directors consider that it is inappropriate to state the value of all Options on the assumption that they had been granted on the Latest Practicable Date as a number of factors crucial for the valuation cannot be determined. Such factors include the exercise period and the conditions that the Options are subject to. Accordingly, any valuation of the Options based on various speculative assumptions would not be meaningful but would be misleading to the Shareholders.

Document available for inspection

A copy of the New Option Scheme is available for inspection during normal business hours at the head office and principal place of business of the Company at 3rd Floor, Multifield Centre, 426 Shanghai Street, Kowloon, Hong Kong from the date of this circular up to and including the date of the AGM and at the AGM.

The Company will publish an announcement in the newspapers on the outcome of the AGM for the adoption of the New Option Scheme on the Business Day following the date of the AGM.

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LETTER FROM THE BOARD

3. TERMINATION OF THE CURRENT OPTION SCHEME

Under the Current Option Scheme, the Company may by ordinary resolution in general meeting at any time terminate the operation of such scheme. The Ordinary Resolution No. 8B as set out in the AGM Notice will therefore be proposed for the approval of the Shareholders at the AGM that the Current Option Scheme be terminated effective immediately thereafter, subject to the passing of Ordinary Resolution No. 8A as set out in the AGM Notice approving and adopting the New Option Scheme. Upon termination of the Current Option Scheme, the New Option Scheme will become the only outstanding share option scheme of the Company.

4. GENERAL MANDATE TO ISSUE SHARES

It is proposed that the General Mandate be granted to the Directors to issue further Shares prevailing up to 20 per cent. of the issued share capital of the Company as at the date of passing the relevant resolution. The Directors have no present intention to issue any new Shares.

5. GENERAL MANDATE TO REPURCHASE SHARES

On 21 June 2002, a general mandate was given to the Directors to exercise all the powers of the Company to repurchase its own Shares which will lapse at the conclusion of the forthcoming AGM. An ordinary resolution will therefore be proposed at the AGM to approve the grant of the Buyback Mandate to the Directors to repurchase on the Stock Exchange Shares up to a maximum of 10 per cent. of the issued share capital of the Company as at the date of passing the relevant resolution.

An explanatory statement to provide Shareholders with all the information reasonably necessary for them to make an informed decision in relation to this proposed resolution as required by the Listing Rules concerning the regulation of repurchases by companies of their own securities on the Stock Exchange is set out in the Appendix II to this circular.

6. GENERAL EXTENSION MANDATE

It is recommended that the general extension mandate (the “General Extension Mandate”) be granted to the Directors permitting them, after the grant of the Buyback Mandate referred to above, to add to the General Mandate any Shares representing the aggregate nominal value of the Shares repurchased pursuant to the Buyback Mandate.

The authority conferred on the Directors by the General Mandate, the Buyback Mandate and the General Extension Mandate would continue in force until the conclusion of the next annual general meeting of the Company or the expiry date for the holding of the next annual general meeting unless it is renewed at such meeting or until revoked or varied by ordinary resolution of the Shareholders in general meeting prior to the next annual general meeting.

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LETTER FROM THE BOARD

7. ANNUAL GENERAL MEETING

A notice convening the AGM to be held on 27 June 2003 is set out on pages 59 to 62 of the Annual Report of the Company dated 16 April 2003 and a form of proxy for use at the AGM is herein enclosed.

Whether or not you intend to be present at the AGM, you are requested to complete the form of proxy and return it to the Company’s Branch Share Registrar, Tengis Limited at G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong in accordance with the instructions printed thereon not later than 48 hours before the time for holding the AGM. Completion and delivery of the form of proxy will not prevent Shareholders from attending and voting at the AGM if they so wish.

8. CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from Wednesday, 25 June 2003 — Friday, 27 June 2003, both days inclusive, during which period no transfer of Shares will be registered.

In order to qualify for the Entitlements, shareholders are reminded that they must lodge completed transfer forms and share certificates with the Company’s Branch Share Registrar in Hong Kong, Tengis Limited at G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Tuesday, 24 June 2003.

9. RECOMMENDATION

The Directors consider that the proposals are in the interests of the Company and the Shareholders. They therefore recommend that the Shareholders should vote in favour of resolutions nos. 5 to 8 set out in the notice of the AGM as they intend to do themselves in respect of the shares controlled by them.

10. RESPONSIBILITY STATEMENT

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

By Order of the Board Tsang Pak Chung, Eddy Vice-Chairman

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW OPTION SCHEME

APPENDIX I

The following is a summary of the principal terms of the New Option Scheme to be adopted at the AGM. For the purpose of this section, references to “Board” shall mean the Board or a duly authorised committee thereof, references to “Employee” shall mean any full time or part time employee (including any executive and non-executive Director or proposed executive and nonexecutive Director) of the Group, references to “Participant” shall mean any Employee, adviser, consultant, agent, contractor, client or customer, or supplier of any member of the Group. Unless the context otherwise requires, references to “Shares” in this section shall include shares in the Company of any other nominal amount which shall result from a sub-division, consolidation or reduction of the share capital of the Company from time to time.

1. Participants of the New Option Scheme

The Participants of the New Option Scheme to whom Options may be granted by the Board shall include any Employee, adviser, consultant, agent, contractor, client or customer, or supplier of any member of the Group.

2. Purpose of the New Option Scheme

The purpose of the New Option Scheme is to recognise and motivate the contribution of Participants and to provide incentives and help the Company in retaining its existing Employees and recruiting additional Employees and to provide them with a direct economic interest in attaining the long term business objectives of the Company.

3. Life of the New Option Scheme

The Company, by resolution in general meeting, or the Board may at any time terminate the operation of the New Option Scheme and in such event no further Options will be offered but the provisions of the New Option Scheme shall remain in full force and effect in all other respects. In other words, Options granted but not exercised before the termination of the New Option Scheme will still be exercisable. The terms and conditions of the New Option Scheme including those governing the mode of exercise of an Option will continue in full force and effect with the exception that no further Option will be granted. Subject to the aforesaid, the New Option Scheme shall be valid and effective for a period of 10 years commencing from the Adoption Date, after which period no further Options will be granted but in respect of the options granted and outstanding the provisions of the New Option Scheme shall remain in full force and effect in all other respects.

4. Subscription Price

The subscription price for Shares under the New Option Scheme will be a price determined by the Board and notified to each Grantee but in any case will not be less than the higher of (a) the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet on the date of grant, which must be a trading day; (b) the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets for the 5 trading days immediately preceding the date of grant; and (c) the nominal value of a Share. Upon acceptance of the Option, the Grantee shall pay HK$1.00 to the Company by way of consideration for the grant.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW OPTION SCHEME

APPENDIX I

5. Restriction on the Time of Grant of Option

No offer 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 announced pursuant to the requirements of the Listing Rules. In particular, during the period commencing one month immediately preceding the earlier of (a) the date of the board meeting for approval of the Company’s interim or annual results and (b) the deadline for the Company to publish its interim or annual results announcement under the Listing Rules and ending on the date of the results announcement, no Option shall be granted until such information has been announced pursuant to the requirements of the Listing Rules.

6. Maximum Number of Shares

• 6.1. The Scheme Mandate Limit shall not exceed 10 per cent. of the total number of Shares in issue as at the Adoption Date (being 400,052,632 Shares) unless the Company obtains a refresh approval from the Shareholders pursuant to paragraph 6.2 below. Options lapsed in accordance with the terms of the New Option Scheme or any other share option schemes of the Company under which such options are granted, as the case may be, shall not be counted for the purpose of calculating whether the Scheme Mandate Limit has been exceeded.

• 6.2. The Company may seek approval of the Shareholders in general meetings to renew the Scheme Mandate Limit provided that the Scheme Mandate Limit so renewed must not exceed 10 per cent. of the Shares in issue at the date of the approval of the renewal by the Shareholders. Upon any such renewal, all options granted under the New Option Scheme and any other share option schemes of the Company (including those outstanding, cancelled, lapsed in accordance with the New Option Scheme and any other share option schemes of the Company and exercised options) prior to the approval of such renewal shall not be counted for the purpose of calculating whether the renewed Scheme Mandate Limit has been exceeded. In seeking the approval, the Company shall send a circular to the Shareholders.

• 6.3. The Company may grant Options to Participant(s) beyond the Scheme Mandate Limit if the grant of such Options is specifically approved by the Shareholders in general meeting. In seeking such approval, a circular must be sent to the Shareholders containing a generic description of the identified Participant(s), the number and terms of the Options to be granted, the purpose of granting Options to the identified Participant(s), and how these Options serve such purpose.

Notwithstanding the above, the maximum number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Option Scheme and any other share option schemes of the Company shall not exceed 30 per cent. (or such higher percentage as may be allowed under the Listing Rules) of the total number of Shares in issue from time to time.

7. Option Shares Entitled by Each Grantee

No Participant shall be granted an Option if the total number of Shares issued and to be issued upon exercise of the Options granted and to be granted (including exercised, cancelled and outstanding Options) in 12 months period up to and including the date of grant to such Participant would exceed 1 per cent. of the Shares for the time being in issue unless the proposed grant has been approved by

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW OPTION SCHEME

APPENDIX I

the Shareholders in general meeting with the proposed Grantee and his Associates abstaining from voting. A circular must be sent to the Shareholders disclosing the identity of the proposed Grantee, the number and terms of the Options granted and to be granted. The number and terms of Options to be granted to such proposed Grantee must be fixed before the Shareholders’ approval and the date of meeting of the Board for proposing such further grant should be taken as the date of grant for the purpose of calculating the subscription price.

8. Requirements on Granting Options to Connected Persons

• 8.1. Any grant of Option to a director, chief executive or substantial shareholder of the Company or any of their respective Associates must be approved by the independent non-executive Directors (excluding any independent non-executive Director who is the Grantee of the Option).

• 8.2. Where any grant of Option to a Substantial Shareholder or an independent non-executive 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 months period up to and including the date of such grant representing in aggregate over 0.1 per cent. of the total Shares in issue for the time being and having an aggregate value of HK$5 million based on the closing price of the Shares at the date of each grant, then the proposed grant of Option must be subject to approval by Shareholders on a poll in a general meeting where all Connected Persons must abstain from voting (except where such Connected Person(s) intend(s) to vote against the proposed grant of Option and his/their intention to do so has/have been stated in the circular). A Shareholders’ circular must be prepared by the Company explaining the proposed grant of Option, disclosing the number and terms of the Option proposed to be granted and the recommendation from the independent non-executive Directors (excluding any independent non-executive Director who is the Grantee of the Option) as to voting. The Shareholders’ approval as described above will also be required for any change in the terms of any Options granted to a Substantial Shareholder of the Company or an independent non-executive Director or any of their respective Associates.

• 8.3. Additional disclosures will be made in the annual and interim reports of the Company including details of the Options granted to the following persons: (i) each director, chief executive or substantial shareholder of the Company or any of their respective Associates; (ii) each Participant with Options granted in excess of the individual limit; (iii) aggregate figures for the Employees; (iv) aggregate figures for suppliers of goods or services; and (v) all other Participants as an aggregate whole.

The requirements for the granting of Options to a Director set out in paragraphs 8.1 and 8.2 above shall not apply where the Participant is only a proposed executive or non-executive Director.

9. Time of Exercise of Option

An Option may be exercised in accordance with the terms of the New Option Scheme at any time during a period as the Board may determine which shall not be more than 10 years from the date of

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW OPTION SCHEME

APPENDIX I

grant of the Option subject to the provisions of early termination thereof and the Board may provide restrictions (including without limitation a minimum period after which the holder may be entitled to exercise the Option granted to him or her) on the exercise of an Option during the period an Option may be exercised.

10. Rights are Personal to Grantee

An Option shall be personal to the Grantee and shall not be assignable and no Grantee shall sell, transfer, charge, mortgage, encumber or create any interest in favour of any third party over or in relation to any Option.

11. Rights on Ceasing Employment

In the event of the Grantee, being an Employee at the date of grant, ceasing to be an Employee for any reasons, other than death or the termination of employment on any of the grounds referred to in paragraph 13 below, the Grantee may exercise the Option up to his entitlement at the date of cessation (to the extent which has become exercisable and not already exercised) within the period of 3 months following the date of such cessation, which date shall be the last actual working day with the Company or the relevant members of the Company or the relevant members of the Group whether salary is paid in lieu of notice or not (provided that the retirement of director(s) of the Group by rotation pursuant to the by-laws of the Company or the relevant members of the Group at annual general meeting of such member who is/are re-elected at the same annual general meeting shall not be regarded as ceasing employment for the purpose of this paragraph);

12. Rights on Death

In the event of the death of the Grantee (provided that none of the events which would be a ground for termination of employment referred to in paragraph 13 below arises prior to the death, in the case the Grantee is an Employee at the date of grant), the legal personal representative(s) of the Grantee shall be entitled within a period of 12 months from the date of death to exercise the Option up to the entitlement of such Grantee as at the date of death (to the extent which has become exercisable and not already exercised);

13. Rights on Dismissal

In the event the Grantee, being an Employee at the date of grant, ceases to be an Employee by reason of termination of employment on the grounds that he has been guilty of misconduct, or has committed an act of bankruptcy or has become insolvent or has made any arrangement or composition with his creditors generally, or has been convicted of any criminal offence involving his integrity or honesty or on any other ground on which an employer would be entitled to terminate his employment at common law or pursuant to any applicable laws or under the Grantee’s service contract, his Option shall lapse automatically (to the extent not already exercised) on the date on which the Grantee ceases to be an Employee.

14. Effect of Alterations to Capital

In the event of any alterations in the capital structure of the Company (other than an issue of Shares as consideration in respect of a transaction to which the Company is a party) pursuant to a capitalisation issue, rights issue, sub-division or consolidation of shares or reduction of capital whilst

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW OPTION SCHEME

APPENDIX I

any Option remains exercisable, such corresponding alterations (if any) certified by an independent financial adviser or the auditors of the Company for the time being as fair and reasonable and in accordance with the requirements set out in this paragraph shall be made in the number of Shares subject to the Option so far as unexercised; and/or the subscription price; provided that no 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 was previously entitled.

15. Rights on a General Offer

If a general offer (whether by takeover offer or scheme of arrangement or otherwise in like manner) is made to all the Shareholders (or all such Shareholders 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 such offer becomes or is declared unconditional, the Grantee (or, as the case may be, his legal personal representatives) shall be entitled to exercise the Option in full (to the extent which has become exercisable and not already exercised) at any time within 14 days after the date on which the offer becomes or is declared unconditional.

16. Rights on Winding Up

In the event a notice is given by the Company to its members to convene a general meeting for the purposes of considering, and if thought fit, approving a resolution to voluntarily wind-up the Company, the Company shall on the same date as or soon after it despatches such notice to each member of the Company give notice thereof to all Grantees and thereupon, each Grantee (or, as the case may be, his legal personal representatives) shall be entitled to exercise all or any of his Options at any time not later than 2 Business Days prior to the proposed general meeting of the Company (to the extent which has become exercisable and not already exercised) whereupon the Company shall as soon as possible and, in any event, no later than the Business Day immediately prior to the date of the proposed general meeting allot the relevant Shares to the Grantee credited as fully paid.

17. Rights on a Compromise or Arrangement

If an application is made to the court (otherwise than where the Company is being voluntarily wound up) in connection with a proposed compromise or arrangement between the Company and its creditors (or any class of them) or between the Company and its members (or any class of them), the Grantee may by notice in writing to the Company within 21 days after the date of such application, exercise the Option in full (to the extent which has become exercisable and not already exercised) or to the extent specified in such notice.

18. Lapse of Option

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

• 18.1. the expiry of the Option period;

• 18.2. the expiry of any of the periods referred to in paragraphs 11, 12, 15 or 16 above;

• 18.3. subject to paragraph 16 above, the date of the commencement of the winding-up of the Company;

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW OPTION SCHEME

APPENDIX I

• 18.4. the date on which the Grantee ceases to be an Employee by reason of paragraph 13 above;

• 18.5. subject to the proposed compromise or arrangement becoming effective, the expiry of the period referred to in paragraph 17 above; or

• 18.6. the date on which the Grantee commits a breach of paragraph 10 above.

19. Ranking of Shares

The Shares to be allotted upon the exercise of an Option will be subject to all the provisions of the bye-laws of the Company for the time being in force and will rank pari passu in all respects with the fully paid Shares in issue on the date of allotment and accordingly will entitle the holders of Options to participate in all dividends or other distributions paid or made on or after the date of allotment 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 allotment.

20. Alterations to Share Option Scheme

The New Option Scheme may be altered in any respect by resolution of the Board except that alterations of the provisions of the New Option Scheme relating to (i) matters set out in Rule 17.03 of the Listing Rules to the advantage of Participants; (ii) any change to the authority of the Board in relation to any alterations to the terms of the New Option Scheme; (iii) the terms and conditions of the New Option Scheme which are of a material nature; or (iv) any change to the terms of Options granted (except where such alterations take effect automatically under the existing terms of the New Option Scheme) shall not be made except with the prior sanction of a resolution by the Shareholders, provided that no such alterations shall operate to affect adversely the terms of issue of any Option granted or agreed to be granted prior to such alterations.

The amended terms of the scheme or the options must still comply with the relevant requirements of Chapter 17 of the Listing Rules.

21. Cancellation of Options Granted

Any cancellation of Options granted but not exercised must be approved by the Board. Any Options cancelled cannot be re-granted. No Option may be granted to a Participant in place of his or her cancelled Options unless there are available unissued Options (excluding the cancelled Options) within the Scheme Mandate Limit as mentioned in paragraph 6 above.

22. Performance Target

There is no performance target that must be achieved before the Options can be exercised.

23. Conditions of Share Option Scheme

The New Option Scheme is conditional upon (i) the passing of the necessary resolutions by the Shareholders in general meeting to approve and adopt the New Option Scheme; (ii) the Listing Committee of the Stock Exchange granting approval of the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of Options under the New Option Scheme.

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EXPLANATORY STATEMENT FOR SHARE REPURCHASE

APPENDIX II

1. REASONS FOR REPURCHASES

The Directors of the Company have no present intention to repurchase any shares of the Company but believe that it is in the best interests of the Company and its shareholders to have a general authority from shareholders to enable the Directors to repurchase its own shares in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net value of the Company and its assets and/or its earnings per share and will only be made when the Directors believe that such repurchases will benefit the Company and its shareholders.

2. SHARE CAPITAL

As at 24 April 2003 (the Latest Practicable Date prior to the printing of this circular), the issued share capital of the Company comprised 4,000,526,323 shares of HK$0.01 each.

Subject to the passing of the resolution no. 6, the Company would be allowed under the Buyback Mandate to repurchase a maximum of 400,052,632 shares (10% of the issued share capital as at 24 April 2003) on the basis that no further shares will be issued or repurchased prior to the date of the forthcoming AGM.

3. FUNDING OF REPURCHASES

Repurchases must be funded entirely from the Company’s available cash flow or working capital facilities, which will be legally available for the purpose in accordance with the Company’s bye-laws and the laws of Bermuda. The Company is empowered by its memorandum of association and bye-laws to purchase its shares. Bermuda law provides that the amount of capital repaid in connection with a share repurchase may only be paid out of either the capital paid up on the relevant shares, or the profits that would otherwise be available for distribution by way of dividend or the proceeds of a new issue of shares made for such purpose. The amount of premium payable on repurchase may only be paid out of either the profits that would otherwise be available for distribution by way of dividend or out of the share premium or contributed surplus accounts of the Company. Under Bermuda law, the shares so repurchased will be treated as cancelled but the aggregate amount of authorised share capital will not be reduced so that the shares may be subsequently re-issued.

If the Buyback Mandate were exercised in full, there might be a material adverse effect on the working capital or gearing position of the Company (as compared with the position disclosed in the audited financial statements contained in the annual report of the Company for the year ended 31 December 2002). However, the Directors do not propose to exercise the Buyback Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements or the gearing levels of the Company which in the opinion of the Directors are from time to time appropriate for the Company.

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EXPLANATORY STATEMENT FOR SHARE REPURCHASE

APPENDIX II

4. DIRECTORS’ DEALINGS AND CONNECTED PERSONS

None of the Directors of the Company nor, to the best of their knowledge and belief, having made all reasonable enquiries, any of their associates have notified the Company that they currently intend to sell shares to the Company or its subsidiaries in the event that the proposal is approved by shareholders.

No connected person of the Company (as defined in the Listing Rules) has notified the Company that he or she currently intends to sell shares to the Company nor has he/she undertaken not to sell any of such shares held by him/her to the Company in the event that the Company is authorised to make repurchases of its own shares.

5. SHARE PRICES

The highest and lowest prices at which the shares were traded on the Stock Exchange during each of the previous twelve months were as follows:

	**PER **	SHARE
	Highest	Lowest
	HK$	HK$
2002
April	0.325	0.250
May	0.320	0.242
June	0.330	0.200
July	0.305	0.295
August	0.192	0.184
September	0.275	0.142
October	0.125	0.071
November	0.094	0.093
December	0.173	0.076
2003
January	0.180	0.180
February	0.170	0.170
March	0.153	0.144

6. SHARE REPURCHASES MADE BY THE COMPANY

During the six months preceding the date of this circular, no shares have been repurchased by the Company.

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EXPLANATORY STATEMENT FOR SHARE REPURCHASE

APPENDIX II

7. DIRECTORS’ UNDERTAKING

The Directors of the Company have undertaken to the Stock Exchange that they will exercise the Buyback Mandate in accordance with the Listing Rules and the laws of Bermuda so far as the same may be applicable and in accordance with the regulations set out in the bye-laws of the Company.

8. TAKEOVER CODES CONSEQUENCES

If, as a result of a repurchase of securities, a substantial shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of The Codes on Takeovers and Mergers (the “Takeover Codes”). Accordingly, a shareholder or group of shareholders acting in concert, could obtain or consolidate control of the Company or become obliged to make a mandatory offer in accordance with Rule 26 of the Takeover Codes.

At present, the Company’s substantial shareholder, Power Resources Holdings Limited (“Power Resources”), holds 2,327,424,000 shares, representing 58.18% of the Company’s issued share capital. In the event that the Directors of the Company exercise in full the power to repurchase the shares, the percentage shareholding of Power Resources would be increased to approximately 64.64%. The Directors of the Company are not aware of any consequences which may arise under the Takeover Codes as a result of any purchase to be made under the Buyback Mandate and have no intention to exercise the Buyback Mandate to such extent as to result in the number of shares which are in the hands of the public falling below 25% of the issued share capital of the Company.

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