STAR SHINE HOLDINGS GROUP LIMITED — Proxy Solicitation & Information Statement 2002

May 2, 2002

IMPORTANT

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

If you have sold or transferred all your shares in EC-Founder (Holdings) Company Limited you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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.

EC-FOUNDER (HOLDINGS) COMPANY LIMITED 方 正 數 碼 （ 控 股 ）有 限 公 司 [*]

(Incorporated in Bermuda with limited liability)

DISCLOSEABLE AND CONNECTED TRANSACTIONS

Independent financial adviser to the Independent Board Committee

KINGSTON CORPORATE FINANCE LIMITED

A notice convening a special general meeting of the Company to be held at Unit 1408, 14th Floor, Cable TV Tower, 9 Hoi Shing Road, Tsuen Wan, New Territories, Hong Kong at 9:30 a.m. on Friday, 24 May 2002 is set out on pages 23 and 24 of this circular. Whether or not you propose to attend the special general meeting, 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 principal office of the Company at Unit 1408, 14th Floor, Cable TV Tower, 9 Hoi Shing Road, Tsuen Wan, New Territories, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the special general meeting or any adjournment thereof. Completion of the form of proxy shall not preclude you from attending and voting at the special general meeting or any adjourned meeting should you so wish.

29 April 2002

* For identification purpose only

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The Disposal Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Reasons for the Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Letter from Kingston. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix — General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23

— i —

DEFINITIONS

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

“associate(s)”	has the meaning as ascribed to it in the Listing Rules
“Board”	board of Directors
“Company”	EC-Founder (Holdings) Company Limited, a company
	incorporated in Bermuda with limited liability, the shares
	of which are listed on the Main Board of the Stock
	Exchange
“Completion”	completion of the Disposal Agreement in accordance with
	its terms
“Director(s)”	director(s) of the Company
“Disposal”	the disposal of the entire issued share capital of Yung
	Wen and the assignment of the Indebtedness to Ricwinco
“Disposal Agreement”	the conditional agreement made between the Company
	and Ricwinco dated 4 April 2002 regarding, among other
	matters, the Disposal and the Remaining Guarantee
“Group”	the Company and its subsidiaries, other than the Yung
	Wen Group
“Indebtedness”	the indebtedness due from the Yung Wen Group to the
	Group as at Completion
“Independent Board Committee”	the independent board committee established to advise
	the independent shareholders of the Company in respect
	of the Disposal Agreement comprising Mr. Yang Lin,
	Richard and Mr. Lee Ying Biu, Andrew, who are
	independent non-executive Directors
“Independent Shareholders”	Shareholders other than Mr. Yung, Ricwinco and their
	respective associates
“Kingston”	Kingston Corporate Finance Limited, an investment
	adviser registered under the Securities Ordinance
	(Chapter 333 of the Laws of Hong Kong)
“Latest Practicable Date”	25 April 2002, being the latest practicable date prior to
	the printing of this circular for ascertaining certain
	information disclosed herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange

— 1 —

DEFINITIONS

“Management Agreement”	the management agreement entered into between the
	Company and Ricwinco dated 17 May 2000 relating to,
	among other matters, the appointment of Ricwinco to
	manage the business of the Yung Wen Group for the
	Company
“MITC Group”	Management Investment & Technology Company
	Limited, a wholly-owned subsidiary of the Company, and
	its subsidiaries
“Mr. Yung”	Mr. Yung Chih Shin, Richard, a non-executive Director
	and the beneficial owner of Ricwinco
“Remaining Guarantee”	the corporate guarantee which the Company has agreed
	to provide in favour of a trade creditor of the Yung Wen
	Group subject to restructuring of the relevant liabilities
	from a revolving trading line to, among other facilities,
	a term loan
“Ricwinco”	Ricwinco Investment Limited, a company incorporated
	in Hong Kong with limited liability, which is beneficially
	wholly-owned by Mr. Yung
“SDI Ordinance”	Securities (Disclosure of Interests) Ordinance (Chapter
	396 of the Laws of Hong Kong)
“SGM”	the special general meeting of the Company to be held
	on Friday, 24 May 2002 for the purpose of considering
	and, if thought fit, approving the Disposal Agreement
	(including the entering into of the Remaining Guarantee),
	notice of which is set out on pages 23 and 24 of this
	circular
“Share(s)”	share(s) of HK$0.10 each in the share capital of the
	Company
“Shareholders”	holders of Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Yung Wen”	Yung Wen Investment & Finance Limited, a company
	incorporated in the British Virgin Islands and a wholly-
	owned subsidiary of the Company
“Yung Wen Group”	Yung Wen and its subsidiaries and an associated company
“HK$” and “cents”	Hong Kong dollars and cents respectively, the lawful
	currency of Hong Kong

— 2 —

LETTER FROM THE BOARD

EC-FOUNDER (HOLDINGS) COMPANY LIMITED 方 正 數 碼 （ 控 股 ）有 限 公 司 [*]

(Incorporated in Bermuda with limited liability)

Executive Directors: Mr. Cheung Shuen Lung (Chairman) Mr. Lei Hon Sang Professor Wei Xin Professor Zou Wei Mr. Yung Richard, Jr.

Registered Office: Cedar House 41 Cedar Avenue Hamilton HM12 Bermuda

Principal place of

Non-executive Director: Mr. Yung Chih Shin, Richard (Honorary Chairman)

Independent non-executive Directors: Mr. Yang Lin, Richard Mr. Lee Ying Biu, Andrew

business in Hong Kong: Unit 1408, 14th Floor Cable TV Tower 9 Hoi Shing Road Tsuen Wan New Territories Hong Kong 29 April 2002

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTIONS

INTRODUCTION

The Company refers to its announcement dated 4 April 2002.

The Company entered into the Disposal Agreement with Ricwinco on 4 April 2002. Pursuant to the Disposal Agreement, the Company has conditionally agreed to sell the entire issued share capital of Yung Wen and assign the Indebtedness to Ricwinco for a total consideration of HK$15.0 million.

Under the Disposal Agreement, Ricwinco has conditionally agreed to procure the release of the Company from all existing corporate guarantees and undertakings it has given in respect of liabilities of the Yung Wen Group under the trade and banking facilities available to the Yung Wen Group on or before Completion and the Company has agreed to enter into the Remaining Guarantee on Completion.

* For identification purpose only

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LETTER FROM THE BOARD

The Disposal constitutes a discloseable and connected transaction for the Company and the Remaining Guarantee constitutes a connected transaction for the Company under the Listing Rules. Consequently, the Disposal and the Remaining Guarantee are subject to approval of the Independent Shareholders.

THE DISPOSAL AGREEMENT

Date

4 April 2002

Parties

Vendor: the Company Purchaser: Ricwinco

Assets to be sold/assigned

The entire issued share capital of Yung Wen and the Indebtedness.

The Yung Wen Group is principally engaged in the manufacture and sale of semi-conductor products. The Indebtedness was provided by the Group to the Yung Wen Group as a source of working capital. The Indebtedness amounted to approximately HK$26.9 million as at the Latest Practicable Date. It is not expected that the Indebtedness will exceed such balance prior to Completion.

Consideration of the Disposal

HK$15.0 million which shall be payable by Ricwinco to the Company as to:

• HK$12.5 million upon Completion; and

• HK$2.5 million within 6 months after Completion.

Mr. Yung will, upon Completion, provide a personal guarantee in favour of the Company in respect of Ricwinco’s obligation to make the HK$2.5 million deferred payment.

The consideration was determined after arm’s length negotiations between the parties, in particular, with reference to the net estimated realizable asset value of the Yung Wen Group calculated based on the valuations of the realizable values of the major assets of the Yung Wen Group including its properties, plant and equipment and stocks (with an aggregate book value of approximately HK$79.6 million as at 31 December 2001), the face value of the Indebtedness and the contingent liabilities of the Company under the existing corporate guarantees given by

— 4 —

LETTER FROM THE BOARD

the Company in respect of certain liabilities of the Yung Wen Group as at 31 December 2001. Such aggregate net estimated realizable asset value of the Yung Wen Group as at 31 December 2001 was approximately HK$28.4 million based on the valuation by an independent valuer.

The Company intends to use the net proceeds from the Disposal of approximately HK$13.5 million to fund the remaining businesses and operations of the Group, including its business in software solutions and services and business in the manufacture and sale of electronic products.

Release of corporate guarantees and undertakings

The Company currently provides corporate guarantees in respect of certain liabilities of the Yung Wen Group under the trade and banking facilities available to the Yung Wen Group. The amount of the liabilities of the Yung Wen Group guaranteed by the Company amounted to approximately HK$58.0 million as at 31 December 2001.

During the negotiations with Ricwinco regarding the Disposal, the Company requested Ricwinco to procure the release of all existing corporate guarantees and undertakings given by the Company in respect of the liabilities of the Yung Wen Group under the trade and banking facilities available to the Yung Wen Group on or before Completion. However, the Company was informed by Ricwinco that it was not possible for Ricwinco to procure that all such corporate guarantees and undertakings be released in full on Completion.

Under the Disposal Agreement, Ricwinco has irrevocably undertaken to procure the release of the Company from the existing corporate guarantees and undertakings it has given in respect of the liabilities of the Yung Wen Group under the trade and banking facilities available to the Yung Wen Group on or before Completion and the Company has agreed to enter into the Remaining Guarantee in respect of the liabilities owing by the Yung Wen Group to a trade creditor which, following restructuring, will amount to up to HK$28.0 million in form of a fixed term loan which is not repayable on or before 31 March 2003.

Ricwinco has undertaken to procure:

• (i) repayment of the remaining guaranteed liabilities (that is the HK$28.0 million fixed term loan as described above) in full on or before 31 March 2003; or

• (ii) if the repayment referred to (i) above cannot be made in full by 31 March 2003, the release and cancellation of the Remaining Guarantee on or before 31 March 2003.

Ricwinco has also agreed to indemnify the Company in respect of any claims and/or liabilities which may be made against or suffered by the Company pursuant to the Remaining Guarantee.

— 5 —

LETTER FROM THE BOARD

Ricwinco has further irrevocably undertaken to the Company to procure that any payment (directly or indirectly) made by the Yung Wen Group (or any other third party at the instruction of any member of the Yung Wen Group or Ricwinco or any person or company related to any of them) to the trade creditor which is the beneficiary of the Remaining Guarantee (or any of its agents or representatives) will be applied towards the settlement of such guaranteed indebtedness first before being applied towards repayment of any other outstanding sum due from any member of the Yung Wen Group to the trade creditor (or any of its agents or representatives) until full settlement of such guaranteed indebtedness or the release and cancellation of the Remaining Guarantee, whichever occurs first.

As security for the indemnity provided by Ricwinco and the undertakings given by Ricwinco regarding the Remaining Guarantee, fixed charges will be created over 41,227,917 Shares currently held by Ricwinco and all the issued shares of Yung Wen to be held by Ricwinco upon Completion in favour of the Group. The charges will become enforceable if any of the undertakings or the indemnity given by Ricwinco has not been discharged by it.

Ricwinco has also irrevocably undertaken to the Company that if any part of the Remaining Guarantee is still not released after enforcing the charges in full and applying the proceeds from the sale of the charged assets to reduce the guaranteed liabilities, Ricwinco will pay to the Company an amount equal to:

• (i) the remaining liabilities of the Yung Wen Group guaranteed by the Company, so as to enable the Company to apply such cash amount to settle all the relevant liabilities on behalf of the Yung Wen Group; or

• (ii) the liabilities suffered or incurred by the Company pursuant to the Remaining Guarantee,

whichever is applicable.

Conditions

Completion is conditional upon the following conditions being fulfilled on or before 5:00 p.m. on 28 June 2002 or such other date as the parties to the Disposal Agreement may otherwise agree:

1. the obtaining of approvals of the Independent Shareholders for the Disposal and the Remaining Guarantee; and

2. the making of arrangement for the release of the Company’s liabilities and obligations under each of the aforesaid existing corporate guarantees and undertakings to the reasonable satisfaction of the Company.

— 6 —

LETTER FROM THE BOARD

THE MANAGEMENT AGREEMENT

The Directors refer to the announcement of the Company dated 24 May 2000. The Company entered into the Management Agreement on 17 May 2000 with Ricwinco, pursuant to which Ricwinco was appointed as manager of certain businesses of the Group, including that of the Yung Wen Group, for a period of three years commencing on 30 September 2000. Pursuant to the Management Agreement, Ricwinco unconditionally guaranteed and undertook to the Company that the aggregate of the audited consolidated profit after taxation and minority interests of the Yung Wen Group and the MITC Group for each of the financial years/periods during the term of the Management Agreement would not be less than an amount equal to 6% of the aggregate of the “Opening Net Worth” of the Yung Wen Group (that is the audited net asset value of the Yung Wen Group as at 30 September 2000 which is equal to approximately HK$36.6 million) and the “Opening Net Worth” of the MITC Group (that is the audited net asset value of the MITC Group as at 30 September 2000 which is equal to approximately HK$67.7 million), subject to such adjustments as may be specified in the Management Agreement. If a loss is recorded by the Yung Wen Group and/or the MITC Group, the amount of such loss will form part of the profit shortfall. Ricwinco has to make a payment to the Company in an amount equal to the shortfall of the guaranteed profit but excluding any part of the shortfall represented by any net loss after tax and minority interests of the Yung Wen Group and to make a payment to Yung Wen in an amount equal to such net loss. Ricwinco has fulfilled its obligations under the profit guarantee for the year ended 31 December 2000.

Pursuant to the Management Agreement, the Company has conditionally agreed to sell and Ricwinco has conditionally agreed to purchase the Yung Wen Group. This possible disposal contemplated under the Management Agreement is conditional on, inter alia, Ricwinco having the financial resources to pay the consideration as stipulated in the Management Agreement. The Management Agreement specifies that Ricwinco will be deemed to have such financial resources if and only if:

• (i) the reserve share proceeds (being the sale proceeds of 33 million Shares beneficially owned by Ricwinco and placed in an escrow arrangement) (currently being HK$0 because Ricwinco has not sold any of the Shares in the escrow arrangement) exceeds the amount of the “Opening Net Worth” of the Yung Wen Group; or

• (ii) an unconditional bona fide offer in writing has been received from a reputable investment bank or other institution (whether as agent or principal or underwriter) for the purchase of the Shares for the time being in the escrow arrangement (that is 33 million Shares) at a total consideration which when aggregated with the amount of the reserve share proceeds for the time being (if any) is equal to or exceeds the “Opening Net Worth” of the Yung Wen Group.

Such condition has not been satisfied and the Directors believe it is unlikely that such condition will be satisfied and therefore it is unlikely that the possible disposal on the terms contemplated in the Management Agreement would take place. Accordingly, to dispose of the Yung Wen Group, the Company has entered into the Disposal Agreement. Should the Disposal Agreement fail to be completed, the Management Agreement (including the terms regarding the conditional agreement to sell the Yung Wen Group to Ricwinco) will continue to be in effect.

— 7 —

LETTER FROM THE BOARD

As part and parcel of the Disposal, the Disposal Agreement will release Ricwinco from its profit guarantee obligations in respect of the Yung Wen Group under the Management Agreement (including such obligation in relation to the year ended 31 December 2001 and thereafter) immediately after Completion. Such obligations will be suspended pending Completion. Should the Disposal Agreement fail to be completed, the relevant provisions of the Management Agreement will continue in full force and effect.

The release and suspension of Ricwinco’s profit guarantee obligation in respect of the Yung Wen Group will not prejudice Ricwinco’s profit guarantee obligation in respect of the MITC Group under the Management Agreement.

Save as disclosed above, the provisions of the Management Agreement remain unchanged.

REASONS FOR THE DISPOSAL

The Group is principally focused in the provision of software solutions and services.

The Yung Wen Group is principally engaged in the manufacture and sale of semi-conductor products. The audited consolidated net tangible assets of the Yung Wen Group was approximately HK$36.6 million as at 31 December 2000 and the audited consolidated net tangible assets of the Yung Wen Group (after taking into account the effect of the profit guarantee arrangement under the Management Agreement) was approximately HK$36.6 million as 31 December 2001. For illustration purpose only, based on the audited net asset value of the Yung Wen Group as at 31 December 2001 and the Indebtedness as at the Latest Practicable Date, an accounting loss of approximately HK$21.3 million may be recorded by the Group as a result of the Disposal. However, the actual gain or loss of the Group as a result of the Disposal depends on the actual net asset value of the Yung Wen Group as at the date of the Completion.

The audited consolidated net (loss)/profit before and after taxation for the three years ended 31 December 2001 for the Yung Wen Group (before taking into account the effect of the profit guarantee arrangement under the Management Agreement) were as follows:

	For the year ended 31 December	For the year ended 31 December	For the year ended 31 December
	2001	2000	1999
	HK$’000	HK$’000	HK$’000
Consolidated net (loss)/profit
before taxation	(38,549)	(15,566)	1,823
after taxation	(38,549)	(15,566)	1,970

It is one of the strategies of the Group to move from an old economy manufacturing business to the information technology business. The business environment and prospects of the Yung Wen Group have been deteriorating during the past few years. As the business of the Yung Wen Group is not the main focus of the Company, the Directors consider that it will not be in the interest of the Company to continue to invest in such non-core business. The Directors also consider that the Disposal will allow the Group to focus its resources in the development of its core information technology business.

— 8 —

LETTER FROM THE BOARD

SGM

Ricwinco is wholly and beneficially owned by Mr. Yung, a non-executive Director. Ricwinco holds approximately 10.68% of the issued share capital of the Company and is a substantial shareholder, and thus a connected person (within the meaning of the Listing Rules), of the Company. The Disposal constitutes a discloseable and connected transaction for the Company and the Remaining Guarantee constitutes a connected transaction for the Company under the Listing Rules, approval of the Independent Shareholders is required. Mr. Yung, Ricwinco and their respective associates will abstain from voting in the SGM on the resolution to approve the Disposal (including the entering into of the Remaining Guarantee).

Set out on pages 23 and 24 of this circular is a notice convening the SGM to consider the ordinary resolution relating to the Disposal (including the entering into of the Remaining Guarantee).

A form of proxy for use at the SGM is enclosed. Whether or not you intend to be present at the SGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the principal office of the Company in Hong Kong, at Unit 1408, 14th Floor, Cable TV Tower, 9 Hoi Shing Road, Tsuen Wan, New Territories, Hong Kong not less than 48 hours before the time appointed for the holding of the SGM. Completion and delivery of the form of proxy will not preclude you from attending and voting at the SGM if you so wish.

RECOMMENDATION

The Directors consider that the terms of the Disposal (including the entering into of the Remaining Guarantee) are fair and reasonable so far as interests of the Shareholders are concerned and are in the best interests of the Company and the Shareholders taken as a whole. Accordingly the Directors recommend you to vote in favour of the resolution to be proposed at the SGM.

The Independent Board Committee has been appointed by the Board to advise the Independent Shareholders in respect of the Disposal and the Remaining Guarantee. Kingston has been appointed as the independent financial adviser to the Independent Board Committee to opine as to the fairness and reasonableness of the terms and conditions of the Disposal (including the entering into of the Remaining Guarantee).

Your attention is drawn to the letter from the Independent Board Committee containing its recommendation regarding the resolution to be proposed at the SGM to approve the Disposal (including the entering into of the Remaining Guarantee), the letter of advice from Kingston containing its opinion in respect of the Disposal (including the entering into of the Remaining Guarantee) and the information set out in the appendix to this circular.

Yours faithfully,

For and on behalf of the Board

EC-Founder (Holdings) Company Limited Cheung Shuen Lung

Chairman

— 9 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

EC-FOUNDER (HOLDINGS) COMPANY LIMITED 方 正 數 碼 （ 控 股 ）有 限 公 司 [*]

(Incorporated in Bermuda with limited liability)

29 April 2002

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTIONS

We refer to the circular of the Company dated 29 April 2002 (the “Circular”) of which this letter forms part. Terms defined in the Circular shall have the same meanings in this letter unless the context otherwise requires.

As members of the Independent Board Committee, we have been appointed by the Board to advise the Independent Shareholders as to whether the terms of the Disposal (including the entering into of the Remaining Guarantee), details of which are contained in the text of the letter from the Board as set out in the Circular, are fair and reasonable so far as the interests of the Independent Shareholders are concerned. Kingston has been appointed as the independent financial adviser to advise the Independent Board Committee in this regard.

Having taken into consideration the advice from Kingston and in particular the principal factors set out in the letter from Kingston as set out on pages 11 to 17 of the Circular, we are of the view that the terms of the Disposal (including the entering into of the Remaining Guarantee) are fair and reasonable so far as interests of the Independent Shareholders are concerned and the Disposal (including the entering into of the Remaining Guarantee) are in the best interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution relating to the Disposal (including the entering into of the Remaining Guarantee) to be proposed at the SGM.

Yours faithfully, For and on behalf of

Independent Board Committee

Yang Lin, Richard Lee Ying Biu, Andrew

Independent non-executive directors

* For identification purpose only

— 10 —

LETTER FROM KINGSTON

The following is the text of a letter received from Kingston in respect of the Disposal, prepared for the purpose of incorporation in this circular:

KINGSTON CORPORATE FINANCE LIMITED

Suite 2801, 28th Floor

One International Finance Centre 1 Harbour View Street Central Hong Kong

29 April 2002

To the Independent Board Committee of

EC-Founder (Holdings) Company Limited

Dear Sir and Madam,

CONNECTED AND DISCLOSEABLE TRANSACTIONS

INTRODUCTION

We refer to the circular (the “Circular”) dated 29 April 2002 issued to the Shareholders, of which this letter forms part, and our appointment as the independent financial adviser to the Independent Board Committee in respect of the Disposal, details of which are set out in the letter from the Board in the Circular. Terms used in this letter shall have the same respective meanings as those defined in the Circular unless the context requires otherwise.

On 4 April 2002, the Company entered into the Disposal Agreement with Ricwinco. Pursuant to the Disposal Agreement, the Company has conditionally agreed to sell the entire issued share capital of Yung Wen and assign the Indebtedness to Ricwinco for a total consideration of HK$15.0 million. In addition, Ricwinco has conditionally agreed to procure the release of the Company from all existing corporate guarantees and undertakings it has given in respect of the liabilities of the Yung Wen Group under trade and banking facilities available to the Yung Wen Group on or before Completion and the Company has agreed to enter into the Remaining Guarantee on Completion.

Ricwinco holds about 10.68% of the issued share capital of the Company and is a substantial shareholder, and thus a connected person of the Company. Ricwinco is wholly and beneficially owned by Mr. Yung, a non-executive Director. The Disposal constitutes a discloseable and connected transaction for the Company and the Remaining Guarantee constitutes a connected transaction for the Company under the Listing Rules. The Disposal and the Remaining Guarantee are subject to the approval of the Independent Shareholders. Mr. Yung, Ricwinco and their respective associates will abstain from voting in the SGM to be convened for approving the Disposal (including the entering into of the Remaining Guarantee).

— 11 —

LETTER FROM KINGSTON

As the independent financial adviser to the Independent Board Committee, our role is to give an independent opinion to the Independent Board Committee as to whether the terms of the Disposal Agreement (including the entering into of the Remaining Guarantee) are fair and reasonable so far as the Independent Shareholders are concerned. We are independent of the Company and its associates.

In formulating our opinion, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations contained or referred to in the Circular and all information and representations which have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so at the date hereof. We have also assumed that all statements of belief, opinions and intention made by the Directors in the Circular were reasonably made after due enquiry. We consider that the information reviewed by us is sufficient for the purpose of our recommendations set out in this letter and we have no reason to doubt the truth, accuracy, or completeness of the information provided to us by the Company or the Directors. We have not, however, conducted any form of in-depth investigation into the businesses and affairs or the prospect of the Company and the Yung Wen Group or any of their respective subsidiaries and associates.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion as to the fairness and reasonableness of the terms of the Disposal Agreement, we have considered, among other things, the following principal factors:

Background of and reasons for the Disposal

The background of and reasons for the Disposal are set out in the letter from the Board in the Circular. The Group is principally focused in the provision of software solutions and services. The Yung Wen Group is principally engaged in the manufacture and sale of semi-conductor products and is a non-core business of the Group.

We have discussed with the Directors about the reasons for the Disposal. The Yung Wen Group recorded the audited consolidated loss after taxation of about HK$15.6 million for the year ended 31 December 2000 and the audited consolidated loss after taxation of about HK$38.5 million for the year ended 31 December 2001 (before taking into account of the effect of the profit guarantee arrangement). According to the Directors, the business environment and prospects of the Yung Wen Group have been deteriorating during the past few years. Given this, the Directors are pessimistic about the future development and prospects of the Yung Wen Group and do not intend to allocate further resources to the Yung Wen Group.

The Directors have also advised that it is the Group’s strategy to shift from an old economy manufacturing business to the information technology business and thus the business focus of the Group will be diverted towards its business in the provision of software solutions and

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LETTER FROM KINGSTON

services. The Directors consider that the Disposal would enable the Company to focus on its core business and is in the best interests of the Company and the Shareholders. Furthermore, the proceeds from the Disposal can be used to fund the remaining businesses and operations of the Group, including its business in software solutions and services as well as in the manufacture and sale of electronic products. We are of the view that the Disposal will not only generate cash inflow of net proceeds of approximately HK$13.5 million for the Group but also avoid unnecessary funding requirement of the Group in the loss-making and non-focused business of the Yung Wen Group.

In addition, the Disposal would enable the Company to be released from all existing corporate guarantees and undertakings it has given in respect of liabilities of the Yung Wen Group under the trade and banking facilities available to the Yung Wen Group, save for the Remaining Guarantee which Company has agreed to enter into on Completion and is expected to be released on or before 31 March 2003.

In view of (1) the poor performance of the Yung Wen Group during the two years ended 31 December 2001; (2) the pessimistic view of the Directors towards the future business environment of the Yung Wen Group; (3) the intention of the Directors not to continue investing in the Yung Wen Group; (4) the Group’s strategy to move from the old economy manufacturing business to the information technology business; (5) the availability of funds from the Disposal for developing its focused business; and (6) the release of the corporate guarantees and undertakings given by the Company in respect of the liabilities of the Yung Wen Group under the trade and banking facilities available to the Yung Wen Group, we concur with the Directors’ view that the Disposal is an appropriate and reasonable step to strengthen the overall competitive edge of the Group.

Basis of consideration

The consideration for the disposal of the entire interest in the Yung Wen Group and the Indebtedness of HK$15.0 million was arrived at after arm’s length negotiation between the Company and Ricwinco and with reference to the estimated net realizable asset value of the Yung Wen Group calculated based on the net realizable value of the major assets of the Yung Wen Group, including its properties, plant and equipment and stocks, of about HK$28.4 million as at 31 December 2001 based on the valuation report prepared by an independent valuer, the face value of the Indebtedness and the contingent liabilities of the Company under the existing corporate guarantees given by the Company in respect of certain liabilities of the Yung Wen Group under the trade and banking facilities available to the Yung Wen Group as at 31 December 2001. Pursuant to the Disposal Agreement, HK$12.5 million of the consideration shall be payable upon Completion and the remaining HK$2.5 million shall be payable within six months after Completion. Furthermore, Mr. Yung has agreed to provide a personal guarantee in favour of the Company in respect of Ricwinco’s obligation to make the deferred payment of HK$2.5 million.

— 13 —

LETTER FROM KINGSTON

The audited consolidated net asset value of the Yung Wen Group (after taking into account the effect of the profit guarantee arrangement under the Management Agreement) amounted to about HK$36.6 million as at 31 December 2001. As net realizable value of the major assets of the Yung Wen Group, with an aggregate book value of about HK$79.6 million, is valued as about HK$28.4 million, the net asset value of the Yung Wen Group would be adjusted down by about HK$51.2 million. Taking into account of the Indebtedness amounting to about HK$26.9 million, the net realizable asset value of the Yung Wen Group plus the face value of the Indebtedness would be about HK$12.3 million. As such, the consideration represents a premium of about 22.0% over the net realizable asset value of the Yung Wen Group plus the face value of the Indebtedness.

Since the Yung Wen Group recorded consolidated net loss for the two year ended 31 December 2001, the use of price/earnings multiple as reference to assess the value of the Yung Wen Group would not be applicable. As it is unlikely that any third party would be willing to purchase the Yung Wen Group which is loss making, we consider that it is fair and reasonable to use the net realizable asset value of the Yung Wen Group as reference for determining the consideration for the Disposal.

Moreover, the Disposal enables the Company be released from all existing corporate guarantees and undertakings provided by the Company in respect of the liabilities of the Yung Wen Group under the trade and banking facilities available to the Yung Wen Group on or before Completion and the Remaining Guarantee is expected to be released on or before 31 March 2003. The amount of the liabilities of the Yung Wen Group guaranteed by the Company amounted to about HK$58.0 million as at 31 December 2001 as detailed in the letter from the Board in the Circular.

The Company has agreed to enter into the Remaining Guarantee on Completion in respect of the liabilities owing by the Yung Wen Group to a trade creditor amounting to up to HK$28.0 million in form of a fixed term loan which is not repayable on or before 31 March 2003. Although the Remaining Guarantee will not be released until 31 March 2003, there would not be any risks to the Company in respect of its obligations thereunder taking into account the undertakings and indemnities given by Ricwinco in favour of the Company in respect of the Remaining Guarantee as set out in the letter from the Board in this Circular.

Taking into consideration (1) the continuous losses incurred by the Yung Wen Group; (2) the premium of about 22.0% of the consideration over the net realizable asset value of the Yung Wen Group plus the face value of the Indebtedness; and (3) the release of all existing corporate guarantees and undertakings provided by the Company in respect of the liabilities of the Yung Wen Group under the trade and banking facilities available to the Yung Wen Group on or before Completion save for the Remaining Guarantee which is expected to be released on or before 31 March 2003, we are of the view that the consideration is fair and reasonable and the Disposal is in the interests of the Company and the Shareholders as a whole.

— 14 —

LETTER FROM KINGSTON

Management Agreement

On 17 May 2000, the Company and Ricwinco entered into the Management Agreement, pursuant to which Ricwinco was appointed as manager of certain businesses of the Group, including that of the Yung Wen Group for a period of three years commencing on 30 September 2000. Ricwinco agreed to provide the Company with a profit guarantee in respect of the Yung Wen Group and the MITC Group under the Management Agreement, details of which are set out in the letter from the Board in this Circular. Ricwinco has fulfilled its obligations under the profit guarantee for the year ended 31 December 2000.

Pursuant to the Disposal Agreement, Ricwinco will be released from its profit guarantee obligations in respect of the Yung Wen Group under the Management Agreement (including such obligations in relation to the year ended 31 December 2001 and thereafter) immediately after Completion. Nevertheless, it should be highlighted that the release of the Ricwinco’s profit guarantee obligation in respect of the Yung Wen Group will not prejudice Ricwinco’s profit guarantee obligation in respect of the MITC Group under the Management Agreement.

According to the audited accounts of the Group for the year ended 31 December 2001, the shortfall of the guaranteed profit in respect of the Yung Wen Group for that financial year amounted to about HK$40.7 million. As mentioned above, Ricwinco’s obligation to pay for such shortfall amount shall be released upon Completion of the Disposal Agreement. Assuming the amount of the shortfall of the guaranteed profit in respect of the Yung Wen Group remains the same for the following financial year, the loss to the Group would be about HK$81.4 million for the two years ended 31 December 2002 due to the release of the profit guarantee given by Ricwinco in respect of the Yung Wen Group under the Management Agreement if the Group enters into the Disposal Agreement. However, the Disposal Agreement would release the Group from the corporate guarantees given by the Company in respect of the liabilities of the Yung Wen Group amounting to HK$58.0 million as at 31 December 2001 (save for the Remaining Guarantee) on or before Completion as well as the Remaining Guarantee amounting to HK$28.0 million on or before 31 March 2003. As such, we consider that the Disposal is in the interest of the Company.

Furthermore, the Management Agreement will expire on 30 September 2003. The Directors have advised that after expiry of the Management Agreement, the Group would not have adequate expertise to manage the business of the Yung Wen Group. Also considering the release of profit guarantee given by Ricwinco in respect of the Yung Wen Group and the MITC Group upon expiry of the Management Agreement in September 2003 and the losses of the Yung Wen Group for its past two financial years, we consider that the Disposal would be in the interest of the Company.

Although the Disposal Agreement will release Ricwinco from its profit guarantee obligations in respect of the Yung Wen Group under the Management Agreement (including such obligation in relation to the year ended 31 December 2001 and thereafter), as part and parcel of the Disposal, should the Group not enter into the Disposal Agreement, it would have to bear a loss-making business of the Yung Wen Group which the Group does not have adequate expertise to manage after expiry of the Management Agreement in September 2003.

— 15 —

LETTER FROM KINGSTON

Pursuant to the Management Agreement, the Company has agreed to sell and Ricwinco has agreed to purchase the Yung Wen Group on the condition that Ricwinco has the financial resources to pay the consideration as stipulated therein. The condition under which Ricwinco is deemed to have such financial resources as specified under the Management Agreement has been set out in the letter from the Board in this Circular. As advised by the Company, such condition has not been satisfied. Furthermore, the Directors believe it is unlikely that such condition will be satisfied and therefore it is unlikely that the possible disposal on the terms contemplated in the Management Agreement would take place.

However, the fact that such condition is not satisfied only renders Ricwinco being deemed to be not having the financial resources to pay the consideration for the possible disposal contemplated under the Management Agreement. However, it does not mean that Ricwinco has no financial resources at all to enforce its indemnity and undertakings given in respect of the Remaining Guarantee.

We also consider that the indemnity and the undertakings given by Ricwinco regarding the Remaining Guarantee are secured by fixed charges created over 41,227,917 Shares currently held by Ricwinco and all the issued shares of Yung Wen to be held by Ricwinco upon Completion in favour of the Group. The charges will become enforceable if any of the undertakings or the indemnity given by Ricwinco has not been discharged by it. Based on the closing price of HK$0.49 per Share on the Latest Practicable Date as quoted on the Stock Exchange, assuming the 41,227,917 Shares are sold at a discount of 15% of such closing price, the gross proceeds of such Shares would amount to about HK$17.2 million. In addition, the net realizable asset value of the major assets of the Yung Wen Group is valued to be about HK$28.4 million as at 31 December 2001 by the independent valuer. Assuming no further depreciation to the major assets of the Yung Wen Group during the period up to 31 March 2003, the major assets of the Yung Wen Group could be disposed of for a gross cash inflow of about HK$28.4 million. As such, we are satisfied that the undertakings can be discharged of when called upon.

In light of (1) the unlikeness that the possible disposal on the terms contemplated in the Management Agreement would take place; (2) the lack of expertise of the Group to manage the business of the Yung Wen Group and the release of the profit guarantee given by Ricwinco under the Management Agreement upon the expiry of the Management Agreement on 30 September 2003; (3) the reasons for the Disposal as mentioned above; and (4) the fairness and reasonableness of the consideration, we consider that the Disposal is fair and reasonable and is in the interests of the Company and the Shareholders as a whole.

Estimated financial effects

Net asset value and profit/loss account

The audited consolidated net assets of the Group and the Yung Wen Group (together, the “ECF Group”) was about HK$184.4 million as at 31 December 2001. Assuming the Disposal has been completed and the consideration has been paid in full, the pro forma consolidated net asset value of the ECF Group as at 31 December 2001 would be about HK$164.3 million.

— 16 —

LETTER FROM KINGSTON

Based on 820,562,040 Shares in issue as at the Latest Practicable Date, the pro forma consolidated net asset value per Share would have decreased from about 22.5 cents to about 20.0 cents.

According to the letter of the Board in this Circular, based on the audited net asset value of the Yung Wen Group as at 31 December 2001, and the Indebtedness as at the Latest Practicable Date, an accounting loss of approximately HK$21.3 million may be recorded by the Group as a result of the Disposal. Notwithstanding the decrease of the net asset value of the Group and the accounting loss on the profit/loss account of the Group as a result of the Disposal, we consider that the Disposal is in the interest of the Group in the long run after taking into account the fact that the Disposal would enable the Group to dispose of a loss making business and focus on the development of its core business and be released from all existing corporate guarantees and undertakings its has given in respect of the liabilities of the Yung Wen Group. Furthermore, upon expiry of the Management Agreement on 30 September 2003, the Group would not have adequate expertise to manage the business of the Yung Wen Group. Given the poor performance of the Yung Wen Group for the past two years, we condider that the Disposal would be in the interest of the Company in the long run.

Earnings

The Yung Wen Group recorded the audited consolidated loss after taxation of about HK$15.6 million for the year ended 31 December 2000 and the audited consolidated loss after taxation of about HK$38.5 million for the year ended 31 December 2001. As the Yung Wen Group is loss making and is a non-core business of the Group, we consider that the Disposal would not have any adverse impact on the Group’s earnings.

Working capital

The Disposal will generate cash inflow of net proceed of approximately HK$13.5 million to the Group as well as reduce unnecessary funding requirement of the Group in non-core business. As advised by the Directors, the net proceeds from the Disposal are intended to be used to fund the remaining businesses and operations of the Group, including its business in software solutions and services as well as in the manufacture and sale of electronic products.

RECOMMENDATION

Having taken into account the factors and reasons above, we are of the opinion that the terms and conditions of the Disposal (including the entering into of the Remaining Guarantee) are fair and reasonable so far as the Independent Shareholders are concerned and are in the interest of the Company and its Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Disposal (including the entering into of the Remaining Guarantee).

Yours faithfully, For and on behalf of

Kingston Corporate Finance Limited Hans Wong

Director

— 17 —

GENERAL INFORMATION

APPENDIX

RESPONSIBILITY STATEMENT

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

DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests of the Directors and chief executives of the Company in the securities of the Company and its associated corporations (within the meaning of the SDI Ordinance) which have been notified to the Company and the Stock Exchange pursuant to section 28 of the SDI Ordinance (including the interests which they were deemed or taken to have under section 31 or Part 1 of the Schedule to the SDI Ordinance) or which are required, pursuant to section 29 of the SDI Ordinance, to be entered in the register referred to therein or which are required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, were as follows:

(a) Interests in ordinary shares of the Company

Name of director Mr. Yung_(Note)_ Mr. Cheung Shuen Lung Mr. Lei Hon Sang Professor Wei Xin	Number of Shares held and nature of interest Corporate Personal 87,680,000 — — 36,890,100 — 21,890,100 — 3,956,000 87,680,000 62,736,200	Number of Shares held and nature of interest Corporate Personal 87,680,000 — — 36,890,100 — 21,890,100 — 3,956,000 87,680,000 62,736,200
		62,736,200

Note: Mr. Yung is interested in these Shares through Ricwinco, a company which is beneficially owned by him.

(b) Interests in a subsidiary of the Company

	Subsidiary in	Number of	Nature of
Name of director	which shares are held	shares held	interest
Mr. Yung_(Note)_	Management Investment &	20,000,000	Corporate
	Technology Company	non-voting
	Limited	deferred shares

Note: Mr. Yung is interested in these shares through Ricwinco, a company which is beneficially owned by him.

— 18 —

GENERAL INFORMATION

APPENDIX

In addition to the above, certain Directors have non-beneficial personal equity interests in certain subsidiaries held for the benefit of the Company solely for the purpose of complying with the minimum company membership requirements.

(c) Interests in share options granted under the share option scheme of the Company

	Number of		Exercise
	outstanding	Exercise	price of
	share options	period of	share
	at the Latest	share	options
Name of director	Practicable Date	options	HK$
Mr. Yung	3,000,000	1.8.1997 to	0.507
		31.7.2002
Mr. Yung Richard, Jr.	2,400,000	1.8.1997 to	0.507
		31.7.2002
Mr. Yung Richard, Jr.	2,700,000	15.12.2001 to	0.450
		14.12.2006
Mr. Cheung Shuen Lung	2,000,000	18.5.2001 to	0.450
		17.5.2011
Mr. Lei Hon Sang	2,000,000	18.5.2001 to	0.450
		17.5.2011
Professor Wei Xin	2,000,000	18.5.2001 to	0.450
		17.5.2011
Professor Zou Wei	2,000,000	18.5.2001 to	0.450
		17.5.2011
	16,100,000

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors had any interest in the securities of the Company or any associated corporations which were required to be notified to the Company and the Stock Exchange pursuant to section 28 of the SDI Ordinance (including the interests which they were deemed or taken to have under section 31 of, or Part I of the Schedule to, the SDI Ordinance) or pursuant to the Model Code for Securities Transactions by Directors of Listed Companies or which are required, pursuant to section 29 of the SDI Ordinance, to be entered in the register referred to therein.

— 19 —

GENERAL INFORMATION

APPENDIX

SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, according to the register kept by the Company pursuant to Section 16(1) of the SDI Ordinance, the following persons or corporations were interested in 10 per cent. or more of the issued share capital of the Company:

			Percentage
		Number of	of the
		ordinary	Company’s
Name of shareholder	Notes	shares held	share capital
Peking University Founder Group Corporation
(“Peking Founder”)	1	323,690,000	39.45
Founder Holdings Limited (“FHL”)		323,690,000	39.45
Yahoo! Inc.		93,240,000	11.36
Ricwinco	2	87,680,000	10.68
Mr. Yung	2	87,680,000	10.68

Notes:

1. Peking Founder is deemed to be interested in the 323,690,000 Shares under the SDI Ordinance by virtue of its interest in FHL.

2. Ricwinco is beneficially owned by Mr. Yung. The interests disclosed under Mr. Yung represent his deemed interests in the Shares by virtue of his interest in Ricwinco.

As at the Latest Practicable Date, the following persons or corporations (other than a Director or chief executive of the Company or his/her respective associate(s) or a member of the Group or the Yung Wen Group) were directly or indirectly interested in 10 per cent. or more of the issued share capital of the following subsidiaries of the Company:

		Percentage of
Name of subsidiary	Name of shareholder	issued share capital
Founder E-Town Ltd.	Panoramic View Group Ltd.	40
正呈資訊科技股份有限公司	吉呈科技股份有限公司	30
San Yung Enterprises Limited	Mr. David Yung	33
MFM Technology (HK) Limited	Shanghai Fudan Microelectronics	20
	Company Limited

— 20 —

GENERAL INFORMATION

APPENDIX

Name of subsidiary

Name of subsidiary
being a joint venture company
established in the People’s		Percentage of
Republic of China	Name of shareholder	registered capital
Dongguan Chang Yeung	東莞市長安鎮對外經濟	15
Electronic Co., Ltd.	發展總公司
	(Changan Foreign
	Economic Development Co.)

Save as disclosed herein, the Directors and the chief executive of the Company are not aware of any person (other than a Director or chief executive of the Company or his/her respective associate(s) or a member of the Group or the Yung Wen Group) who was directly or indirectly interested in 10 per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any of the Company or its subsidiaries as at the Latest Practicable Date.

LITIGATION

Neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and there is no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Company or any of its subsidiaries.

MATERIAL CHANGE

The Directors are not aware of any material adverse change in the financial or trading positions of the Group (including the Yung Wen Group) since 31 December 2001 (the date to which the latest published audited consolidated accounts of the Group (including the Yung Wen Group) were made up).

SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has entered into any service contracts with the Company or any other member of the Group (including the Yung Wen Group) (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

EXPERT AND CONSENT

Kingston is a registered investment adviser under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong).

Kingston has given and has not withdrawn its written consent to the issue of this circular with copy of its letter and references to its name included herein in the form and context in which it appears.

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GENERAL INFORMATION

APPENDIX

MISCELLANEOUS

• (a) Save as disclosed in this circular, no Director is materially interested in any contract or arrangement subsisting as at the date hereof which is significant in relation to the business of the Group (including the Yung Wen Group) taken as a whole.

• (b) Since 31 December 2001, the date to which the latest published audited account of the Group (including the Yung Wen Group) have been made up, none of the Directors or Kingston has, or has had, any direct or indirect interest in any assets which have been acquired, disposed of by or leased to or which are proposed to be acquired, disposed of by or leased to, any member of the Group (including the Yung Wen Group).

• (c) Kingston does not have any shareholding in the Company or in any of its subsidiaries and/or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any securities in the Company or in any of its subsidiaries.

• (d) The secretary of the Company is Ms. Tang Yuk Bo, Yvonne, ACIS, ACS.

• (e) The head office and principal place of business of the Company in Hong Kong is at Unit 1408, 14th Floor, Cable TV Tower, 9 Hoi Shing Road, Tsuen Wan, New Territories, Hong Kong. The registered office of the Company is at Cedar House, 41 Cedar Avenue, Hamilton HM 12, Bermuda.

• (f) The Hong Kong branch share registrar and transfer office of the Company is Tengis Limited at 4th Floor, Hutchison House, 10 Harcourt Road, Hong Kong.

• (g) In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the principal place of business in Hong Kong of the Company at Unit 1408, 14th Floor, Cable TV Tower, 9 Hoi Shing Road, Tsuen Wan, New Territories, Hong Kong from the date of this circular up to and including 24 May 2002.

• (a) the Disposal Agreement;

• (b) the letter from the Independent Board Committee, the text of which is set out on page 10 of this circular;

• (c) the letter from Kingston to the Independent Board Committee, the text of which is set out on pages 11 to 17 of this circular; and

• (d) the letter of consent from Kingston referred to in this appendix.

— 22 —

NOTICE OF SPECIAL GENERAL MEETING

EC-FOUNDER (HOLDINGS) COMPANY LIMITED 方 正 數 碼 （ 控 股 ）有 限 公 司 [*]

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a special general meeting of EC-Founder (Holdings) Company Limited (the “Company”) will be held at Unit 1408, 14th Floor, Cable TV Tower, 9 Hoi Shing Road, Tsuen Wan, New Territories, Hong Kong at 9:30 a.m. on Friday, 24 May 2002 to consider and, if thought fit, pass the following resolution as an ordinary resolution:

RESOLUTION

“ THAT the conditional sale and purchase agreement (the “Agreement”) dated 4 April 2002 made between the Company as vendor and Ricwinco Investment Limited as purchaser regarding, among other matters, the sale and purchase of the entire issued share capital of, and the assignment of all the indebtedness owing to the Company from, Yung Wen Investment & Finance Limited, a copy of which is marked “A” and produced to this meeting for identification purpose, be and is hereby approved and that the directors (the “Directors”) of the Company be and are hereby authorised to take all actions which are in their opinion necessary, appropriate, desirable or expedient for the implementation and completion of the transactions therein contemplated and all other matters incidental thereto or in connection therewith (including but not limited to the entering into of the Remaining Guarantee (as defined in the Agreement)) and to agree to such variation and the waiver of matters relating thereto as are, in the opinion of the Directors, not material to the transactions contemplated therein as a whole and are in the best interest of the Company.”

By Order of the Board

EC-Founder (Holdings) Company Limited Tang Yuk Bo Yvonne Company Secretary

Hong Kong, 29 April 2002

Principal office:

Unit 1408, 14th Floor Cable TV Tower 9 Hoi Shing Road Tsuen Wan New Territories Hong Kong

* For identification purpose only

— 23 —

NOTICE OF SPECIAL GENERAL MEETING

Notes:

1. A member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one or more proxy to attend and, subject to the provisions of the bye-laws of the Company, vote in his/her stead. A proxy need not be a member of the Company.

2. In order to be valid, a form of proxy completed in accordance with the instructions printed thereon must be deposited together with a power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority, at the principal office of the Company in Hong Kong, at Unit 1408, 14th Floor, Cable TV Tower, 9 Hoi Shing Road, Tsuen Wan, New Territories, Hong Kong not less than 48 hours before the time for holding the meeting or adjourned meeting.

3. Completion and return of the form of proxy will not preclude a shareholder from attending and voting at the meeting if he/she so wishes. In such event, his/her form of proxy will be deemed to have been revoked.

4. In the case of joint registered holders of any shares of the Company, any one of such persons may vote at the meeting, either personally or by proxy, in respect of such shares as if he/she was solely entitled thereto, but if more than one of such joint registered holders be present at the meeting, either personally or by proxy, that one of the holders so present whose name stands first on the register of members in respect of such shares shall be accepted to the exclusion of the votes of the other joint registered holders.

5. Mr. Yung Chih Shin, Richard, Ricwinco Investment Limited and their respective associates (as such term is defined in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited) will abstain from voting at the meeting.

— 24 —