Youzan Technology Limited — AGM Information 2002

Mar 28, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in SYSCAN Technology Holdings Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or 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.

SYSCAN Technology Holdings Limited

(Incorporated in Bermuda with limited liability)

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

AND

GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE NEW SHARES

This circular, for which the directors of SYSCAN Technology Holdings Limited collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to SYSCAN Technology Holdings Limited. The directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief:– (1) the information contained in this circular is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this circular misleading; and (3) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

A notice convening an annual general meeting of SYSCAN Technology Holdings Limited to be held at Banquet Room No. 7, City Garden Hotel, 9 City Garden Road, North Point, Hong Kong on Friday, 26 April 2002 at 10:00 a.m., is set out on pages 23 to 26 of this circular. A form of proxy for use at the annual general meeting is also enclosed.

Whether or not you are able to attend the annual general meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Head Office of the Company c/o the Company Secretary at Unit 808, 8th Floor, K. Wah Centre, 191 Java Road, North Point, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the annual general meeting if you so wish.

28 March 2002

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET OF THE STOCK EXCHANGE OF HONG KONG LIMITED

GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the internet website operated by the Exchange. Listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website in order to obtain up-to-date information on GEM-listed issuers.

– i –

CONTENTS

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
2.	The New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
3.	Application for listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
4.	Reasons for adopting the New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . .	9
5.	Buyback and Issuance Mandates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
6.	Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
7.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
8.	General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Appendix I	– The Principal Terms of the New Share Option Scheme. . . . . . . . . . . . . .	11
**Appendix II **	– Explanatory Statement on the Buyback Mandate . . . . . . . . . . . . . . . . . .	19
Notice of Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		23

– ii –

DEFINITIONS

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

“Adoption Date”	means 26 April 2002, the date on which the New Share
	Option Scheme is conditionally adopted by the Company at
	the Annual General Meeting;
“Annual General Meeting”	an annual general meeting of the Company to be held at
	Banquet Room No. 7, City Garden Hotel, 9 City Garden
	Road, North Point, Hong Kong on Friday, 26 April 2002 at
	10:00 a.m., to consider and, if appropriate, to approve the
	resolutions contained in the notice of the annual general
	meeting which is set out on pages 23 to 26 of this circular;
“associates”	has the same meaning as ascribed in the GEM Listing Rules;
“Board”	the board of Directors;
“Business Day”	means any day on which the Stock Exchange is open for
	the business of dealing in securities;
“Buyback Mandate”	as defined in paragraph 5(a) of the Letter from the Board;
“Company”	SYSCAN Technology Holdings Limited, an exempted
	company incorporated in Bermuda with limited liability,
	the shares of which are listed on GEM;
“connected persons”	has the same meaning as ascribed in the GEM Listing Rules;
“Court”	has the same meaning as ascribed in the Companies
	Ordinance;
“Director(s)”	director(s) of the Company from time to time;
“Eligible Employee”	means any employee or proposed employee (whether full
	time or part time employee, including any executive
	directors but not any non-executive director) of the
	Company, its Subsidiaries or any Invested Entity;
“Eligible Optionee”	means any eligible person who is eligible to be offered an
	Option or Options under Share Option Scheme A and the
	Existing Share Option Scheme;
“Existing Share Option Scheme”	the existing share option scheme B of the Company adopted
	by the Company on 2 March 2000, which is proposed to be
	terminated by the Company at the Annual General Meeting;
“GEM”	the Growth Enterprise Market operated by the Stock
	Exchange;

– 1 –

DEFINITIONS

“GEM Listing Rules”	the Rules Governing the Listing of Securities on GEM of
	the Stock Exchange (as amended from time to time);
“General Mandate Resolutions”	the ordinary resolutions to be proposed and passed at the
	Annual General Meeting for approving the granting of the
	Buyback Mandate and the Issuance Mandate to the
	Directors;
“Group”	the Company and its Subsidiaries;
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China;
“Invested Entity”	any entity in which the Group holds any equity interest;
“Issuance Mandate”	as defined in paragraph 5(b) of the Letter from the Board;
“Latest Practicable Date”	22 March 2002, being the latest practicable date prior to
	the printing of this circular for ascertaining certain
	information in this circular;
“New Share Option Scheme”	the share option scheme C proposed to be adopted by the
	Company at the Annual General Meeting, a summary of
	the principal terms of which is set out in Appendix I;
“Options”	options granted to the Eligible Optionees under Share Option
	Scheme A and the Existing Share Option Scheme or to the
	Participants under the New Share Option Scheme, as the
	context requires;
“Optionee”	means any Eligible Optionee or Participant who accepted
	the offer of the grant of any Option in accordance with the
	terms of Share Option Scheme A and the Existing Share
	Option Scheme or the New Share Option Scheme, as the
	context requires) or (where the context so permits) a person
	entitled to any such Option in consequence of the death of
	the original Optionee;
“Ordinary Resolutions”	the ordinary resolutions to be proposed and passed at the
	Annual General Meeting for the adoption of the New Share
	Option Scheme and the termination of the Existing Share
	Option Scheme as set out in items 4 and 5 of the notice of
	the Annual General Meeting;

– 2 –

DEFINITIONS

“Participant”

means any person who has contributed to, or can contribute to the Group’s business value and/or technology from product development, sales & marketing, manufacturing to enhancing efficiency of operation belonging to any of the following classes of participants:

• (a) any Eligible Employee;

• (b) any non-executive director (including independent non-executive directors) of the Company;

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

• (d) any consultant of the Group or any Invested Entity;

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

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

• (g) any person or entity that promotes the sales and marketing of the goods of, or provides any promotional support to the Group or any Invested Entity;

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

• (i) any professional adviser of the Group or any Invested Entity;

• (j) any provider of financial assistance (directly or indirectly) to the Group or any Invested Entity; and

• (k) any other group or class of persons or entities from time to time determined by the Directors as having contributed or may contribute by way of joint venture, business alliances or other business arrangements to the development and growth of the Group and any Invested Entity;

“Share(s)”

“Shareholder(s)”

share(s) of HK$0.10 each in the capital of the Company or if there has been a subsequent sub-division, consolidation, reclassification or reconstruction of the share capital of the Company, shares forming part of the ordinary equity share capital of the Company;

holder(s) of Share(s);

– 3 –

DEFINITIONS

“Share Option Scheme A”	the share option scheme A of the Company which was
	adopted by the Company on 2 March 2000 and ceased to
	be effective (save for the options already granted but
	unexercised) upon the listing of the Company on 14 April
	2000;
“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 (Chapter 32 of the Laws of Hong
	Kong) as modified from time to time) of the Company,
	whether incorporated in Hong Kong or elsewhere;
“Takeovers Code”	The Hong Kong Code on Takeovers and Mergers; and
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong.

– 4 –

LETTER FROM THE BOARD

SYSCAN Technology Holdings Limited

(Incorporated in Bermuda with limited liability)

EXECUTIVE DIRECTORS

Cheung Wai (Chairman) Darwin Hu Zhang Hongru

REGISTERED OFFICE

Cedar House 41 Cedar Avenue Hamilton, HM12 Bermuda

NON-EXECUTIVE DIRECTORS

Joseph Liu

INDEPENDENT NON-EXECUTIVE DIRECTORS

Lo Wai Ming Lo Hang Fong

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS

Unit 808, 8th Floor K. Wah Centre 191 Java Road North Point Hong Kong

28 March 2002

To Shareholders of the Company

Dear Sir/Madam,

ADOPTION OF NEW SHARE OPTION SCHEME, TERMINATION OF EXISTING SHARE OPTION SCHEME AND GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE NEW SHARES

1. INTRODUCTION

On 26 September 2001, the Stock Exchange announced amendments to the GEM Listing Rules, which came into effect on 1 October 2001. In compliance with the amendments to Chapter 23 of the GEM Listing Rules and for reasons set out in this letter, the Board considers that it is in the interest of the Company to adopt the New Share Option Scheme and to terminate the Existing Share Option Scheme.

The purpose of this circular is to provide you with information in respect of the Ordinary Resolutions to be proposed at the Annual General Meeting for the approval of the adoption of the New Share Option Scheme and the termination of the Existing Share Option Scheme and the General Mandate Resolutions to be proposed at the Annual General Meeting for the approval of the granting of the Buyback Mandate and the Issuance Mandate to the Directors.

– 5 –

LETTER FROM THE BOARD

2. THE NEW SHARE OPTION SCHEME

At the Annual General Meeting, an ordinary resolution will be proposed for the Shareholders to approve the adoption of the New Share Option Scheme pursuant to which the Participants may be granted Options to subscribe for Shares upon and subject to the terms and conditions of the rules of the New Share Option Scheme.

A summary of the principal terms of the rules of the New Share Option Scheme which is proposed to be approved and adopted by the Shareholders at the Annual General Meeting is set out in Appendix I to this circular. A copy of the rules of the New Share Option Scheme is available for inspection at the Head Office of the Company at Unit 808, 8th Floor, K. Wah Centre, 191 Java Road, North Point, Hong Kong during normal business hours from the date hereof up to and including 25 April 2002 and at the Annual General Meeting.

On 2 March 2000, the Company adopted Share Option Scheme A and the Existing Share Option Scheme under which share options to subscribe for Shares of the Company can be granted. Share Option Scheme A ceased to be effective (save for the options already granted but unexercised) upon the listing of the Company on 14 April 2000. Under the Existing Share Option Scheme, the Company refreshed its 10 per cent. scheme limit at a special general meeting (“SGM”) held on 8 January 2001 whereby the Company can grant Options to subscribe for up to 88,886,528 Shares to the Eligible Optionees, representing 10 per cent. of the issued share capital as at SGM. As at the Latest Practicable Date, there are Options to subscribe for up to 39,756,528 Shares available to be granted by the Directors under the Existing Share Option Scheme. The Directors confirm that prior to the Annual General Meeting, they will not grant any further Options under the Existing Share Option Scheme.

As at the Latest Practicable Date, the issued share capital of the Company is 1,022,643,279 Shares and the number of Shares which are to be issued upon exercise of all the outstanding Options is 106,023,334 (representing approximately 10.37 per cent. of the issued share capital of the Company as at the Latest Practicable Date).

– 6 –

LETTER FROM THE BOARD

Particulars of the Options granted under Share Option Scheme A and the Existing Share Option Scheme are set forth below:–

No. of shares to be issued upon exercise of the outstanding options (a) Share Option Scheme A (i) Exercise Price per share (HK$0.04844) 34,553,334 (ii) Exercise Price per share (HK$0.02422) 160,000 34,713,334 (b) Existing Share Option Scheme (i) Exercise Price per share (HK$0.33) 10,000,000 (ii) Exercise Price per share (HK$0.246) 5,480,000 (iii) Exercise Price per share (HK$0.1016) 6,700,000 (iv) Exercise Price per share (HK$0.206) 29,650,000 (v) Exercise Price per share (HK$0.275) 9,480,000 71,310,000	No. of underlying shares comprising the options exercised 2,833,999 nil 2,833,999 nil nil nil nil nil nil	No. of underlying shares comprising the options lapsed 15,236,667 nil 15,236,667 5,000,000 1,180,000 nil 1,350,000 100,000 7,630,000	No. of underlying shares comprising the options cancelled nil nil
			nil
			nil nil nil nil nil
			nil

The New Share Option Scheme is conditional upon:

• (i) the passing of the Ordinary Resolutions at the Annual General Meeting approving the adoption of the New Share Option Scheme and the termination of the Existing Share Option Scheme; and

• (ii) the Listing Committee of the Stock Exchange granting approval of the listing of, and permission to deal in any new Shares which may fall to be allotted and issued upon the exercise of the subscription rights attaching to the options that may be granted under the New Share Option Scheme.

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LETTER FROM THE BOARD

If the above conditions are not satisfied within two calendar months after the Adoption Date, the New Share Option Scheme shall forthwith determine, any Option granted or agreed to be granted pursuant to the New Share Option Scheme and any Offer of such a grant shall be of no effect and no person shall be entitled to any rights or benefits or be under any obligations under or in respect of the New Share Option Scheme.

The Existing Share Option Scheme will be terminated on the New Share Option Scheme coming into effect upon the fulfillment of the conditions set out above. Upon termination of the Existing Share Option Scheme, no further options can be granted thereunder but in all other respects, the provisions of the Existing Share Option Scheme shall remain in force and all Options granted prior to such termination shall continue to be valid and exercisable in accordance therewith.

Subject to the approval of the Shareholders of the adoption of the New Share Option Scheme at the Annual General Meeting and conditional upon the Stock Exchange granting approval of the listing of, and permission to deal in, the Shares or any part thereof that may fall to be issued pursuant to the exercise of the Options, the Directors will have the right to grant Options to the Participants to subscribe for Shares such that the total number of Shares which may be issued upon exercise of all Options to be granted under the New Share Option Scheme and any other outstanding share options schemes of the Company (other than the Shares subject to the Options granted under Share Option Scheme A and the Existing Share Option Scheme) shall not exceed 10 per cent. of the share capital of the Company in issue as at the Annual General Meeting (such 10 per cent. shall represent 102,264,327 on the basis that the issued Shares as at the Annual General Meeting will be 1,022,643,279), unless the Company obtains a fresh approval from the Shareholders to renew such 10 per cent. limit 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 Share Option Scheme and any other share option schemes of the Company (including Share Option Scheme A and the Existing Share Option Scheme) shall not in aggregate exceed 30 per cent. of the share capital of the Company (or such higher percentage as may be allowed by the Stock Exchange from time to time) in issue from time to time.

The Directors consider that it is not appropriate to state the value of all the Options that can be granted under the New Share Option Scheme as if they had been granted at the Latest Practicable Date prior to the approval of the New Share Option Scheme given that the variables which are crucial for the calculation of the value of such Option cannot be determined. The variables which are critical for the determination of the value of such Options include, the subscription price for the Shares upon the exercise of the subscription rights attaching to the Options, whether or not Options will be granted under the New Share Option Scheme and the timing of the granting of such Options, the period during which the subscription rights may be exercised, and any conditions that the Board imposes on the Options and whether or not such Options if granted will be exercised by the Optionees and other relevant variables. The subscription price payable for the Shares depends on the price of the Shares as quoted on the Stock Exchange, which in turn depends on when the Board is to grant Options under the New Share Option Scheme. With a scheme life of ten years, the Board is of the view that it is too premature to state whether or not Options will be granted under the New Share Option Scheme, and if so, the number of Options that may be granted. It is also difficult to ascertain with accuracy the subscription price of the Shares given the volatility the Share price may be subject to during the 10-year life span of the New Share Option Scheme. In the premises, the Directors are of the view that the value of the Options depends on a number of variables which are either difficult to ascertain or can only be ascertained subject to a number of theoretical basis and speculative assumptions. Accordingly, the Directors believe that any calculation of the value of the Options will not be meaningful and may be misleading to Shareholders in the circumstances.

– 8 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, no Options have been or agreed to be granted under the New Share Option Scheme.

No Directors are trustees of the New Share Option Scheme or have a direct or indirect interest in such trustees.

3. APPLICATION FOR LISTING

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

4. REASONS FOR ADOPTING THE NEW SHARE OPTION SCHEME

The purpose of the New Share Option Scheme is to provide incentives or rewards to Participants thereunder for their contribution to the Group and/or to enable the Group to recruit and retain high-calibre employees and attract human resources that are valuable to the Group and any Invested Entity.

The New Share Option Scheme permits the Company to grant Options to a wider category of Participants, not just the Eligible Optionees as under the Existing Share Option Scheme. Under the rules of the New Share Option Scheme, the discretion to set a minimum period for which an Option has to be held before the exercise of the subscription rights attaching thereto, coupled with the power of the Board to impose any performance target as it considers appropriate before any Option can be exercised, enables the Group to provide incentives to the Participants to use their best endeavours in assisting the growth and development of the Group. Although the New Share Option Scheme does not provide for the granting of Options with right to subscribe for Shares at a discount to the trading price of the Shares on the Stock Exchange, the Directors are of the view that the flexibility given to the Board in granting Options to Participants, other than the Eligible Optionees and to impose minimum period for which the Options have to be held and performance targets that have to be achieved before the Options can be exercised, will place the Group in a better position to attract human resources that are valuable to the growth and development of the Group as a whole, than the Existing Share Option Scheme.

5. BUYBACK AND ISSUANCE MANDATES

Ordinary resolutions will be proposed at the Annual General Meeting to approve the grant of new general mandates to the Directors:

• (a) to purchase Shares on the Stock Exchange of an aggregate nominal amount of up to 10 per cent. of the aggregate nominal amount of the issued share capital of the Company on the date of passing such resolution (the “Buyback Mandate”);

• (b) to allot, issue or deal with Shares of an aggregate nominal amount of up to 20 per cent. of the aggregate nominal amount of the share capital of the Company in issue on the date of passing such resolution (the “Issuance Mandate”); and

• (c) to extend the Issuance Mandate by an amount representing the aggregate nominal amount of the Shares repurchased by the Company pursuant to and in accordance with the Buyback Mandate.

– 9 –

LETTER FROM THE BOARD

The Buyback Mandate and the Issuance Mandate will continue in force until the conclusion of the next annual general meeting of the Company or any earlier date as referred to in resolutions numbered 6 and 7 set out in the notice of the Annual General Meeting.

In accordance with the requirements of the GEM Listing Rules, the Company is required to send to the Shareholders an explanatory statement containing all the information reasonably necessary to enable them to make an informed decision on whether to vote for or against the granting of the Buyback Mandate. An explanatory statement as required by the GEM Listing Rules in connection with the Buyback Mandate is set out in Appendix II to this circular.

6. ANNUAL GENERAL MEETING

The notice of the Annual General Meeting is set out on pages 23 to 26 of this circular. At the Annual General Meeting, resolutions will be proposed to approve, inter alia, the adoption of the New Share Option Scheme, the termination of the Existing Share Option Scheme, the granting of the Issuance Mandate and the Buyback Mandate and the extension of the Issuance Mandate by the addition thereto of the number of Shares repurchased pursuant to the Buyback Mandate.

A form of proxy for use at the Annual General Meeting is enclosed with this circular. To be valid, the form of proxy must be completed in accordance with the instructions printed thereon and deposited, together with the power of attorney or other authority (if any) under which it is signed or a certified copy of that power of attorney or authority, at the Head Office of the Company at Unit 808, 8th Floor, K. Wah Centre, 191 Java Road, North Point, Hong Kong not less than 48 hours before the time appointed for holding the Annual General Meeting. Completion and delivery of the form of proxy will not preclude you from attending and voting at the Annual General Meeting if you so wish.

7. RECOMMENDATION

The Directors consider that the proposed adoption of the New Share Option Scheme, termination of the Existing Share Option Scheme, granting of the Buyback Mandate and granting/ extension of the Issuance Mandate are in the interests of the Company and the Group and the Shareholders. Accordingly, the Directors recommend Shareholders to vote in favour of the relevant resolutions to be proposed at the Annual General Meeting.

8. GENERAL INFORMATION

Your attention is drawn to the additional information set out in Appendix I and Appendix II to this circular.

Yours faithfully Cheung Wai Chairman

– 10 –

APPENDIX I THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

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

(a) Purpose of the scheme

The purpose of the New Share Option Scheme is to provide incentives or rewards to Participants thereunder for their contribution to the Group and/or to enable the Group to recruit and retain high-calibre employees and attract human resources that are valuable to the Group and any Invested Entity.

(b) Who may join

The Directors may, at their absolute discretion, invite any person who has contributed to, or can contribute to the Group’s business value and/or technology from product development, sales & marketing, manufacturing to enhancing efficiency of operation belonging to any of the following classes of Participants, to take up Options to subscribe for Shares:

• (aa) any Eligible Employee;

• (bb) any non-executive director (including independent non-executive directors) of the Company;

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

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

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

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

• (gg) any person or entity that promotes the sales and marketing of the goods of, or provides any promotional support to the Group or any Invested Entity;

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

• (ii) any professional adviser of the Group or any Invested Entity;

• (jj) any provider of financial assistance (directly or indirectly) to the Group or any Invested Entity; and

• (kk) any other group or class of persons or entities from time to time determined by the Directors as having contributed or may contribute by way of joint venture, business alliances or other business arrangements to the development and growth of the Group and any Invested Entity;

For the avoidance of doubt, the grant of any options by the Company for the subscription of Shares or other securities of the Group to any person who fall within any of the above classes of Participants shall not, by itself, unless the Board otherwise determined, be construed as a grant of Option under the New Share Option Scheme.

– 11 –

APPENDIX I THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

The basis of eligibility of any of the above classes of Participants to the grant of any Options shall be determined by the Board from time to time on the basis of their contribution to the development and growth of the Group and the Invested Entity.

(c) Maximum number of Shares

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

• (bb) The total number of Shares which may be issued upon exercise of all Options (other than the shares subject to the Options granted under Share Option Scheme A and the Existing Share Option Scheme) to be granted under the New Share Option Scheme and any other share option schemes of the Group must not in aggregate exceed 10 per cent. of the Shares in issue as at the date of the passing of the Ordinary Resolutions (the “General Scheme Limit”).

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

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

(d) Maximum entitlement of each Participant

The total number of Shares issued and which may fall to be issued upon exercise of the Options granted under the New Share Option Scheme and any other share option schemes of the Group (including exercised, cancelled and outstanding Options) to each Participant in any 12month period must not exceed 1 per cent. of the issued share capital of the Company for the time being. Where any further grant of Options to a Participant would result in the total number of Shares issued and to be issued upon exercise of all the Options granted and to be granted to such person (including exercised, cancelled and outstanding Options) in the 12-month period up to and including the date of such further grant representing in aggregate over one (1) per cent. of the total number of Shares in issue, such further grant must be separately approved by the Shareholders in general meeting with such Participant and his associates abstaining from voting. The Company must send a circular to the Shareholders and the circular must disclose the identity of the Participant, the number and terms of the Options to be granted (and Options previously granted to such Participant) and the information as required under the GEM Listing Rules. The number and terms

– 12 –

APPENDIX I THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

(including the Subscription Price) of the Options to be granted to such Participant must be fixed before Shareholders’ approval and the date of the meeting of the Board for proposing such further grant of Option should be taken as the date of Offer for the purpose of calculating the Subscription Price.

(e) Grant of Options to connected persons

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

• (bb) Where any grant of Options to a substantial shareholder or an independent nonexecutive Director, or any of their respective associates, would result in the Shares issued and to be issued upon exercise of all Options already granted and to be granted (including Options exercised, cancelled and outstanding) to such person in the 12-month period up to and including the date of such grant:

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

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

such further grant of Options must be approved by the Shareholders. The Company must send a circular to the Shareholders. All connected persons of the Company must abstain from voting at such general meeting, except that any connected person may vote against the relevant resolution at the general meeting provided that his intention to do so has been stated in the circular. Any vote taken at the meeting to approve the grant of such Options must be taken on a poll. Any change in the terms of the Options granted to a substantial shareholder or an independent non-executive Director of the Company, or any of their respective associates must be approved by the Shareholders in general meeting.

(f) Time of acceptance and exercise of an Option

An offer of grant of an Option may be accepted by a Participant within 21 days from the date of the offer of grant of the Option. A nominal consideration of HK$1 is payable on acceptance of the grant of an Option.

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

(g) Performance targets

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

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APPENDIX I THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

(h) Subscription price for Shares

The subscription price for Shares under the New Share Option Scheme shall be a price determined by the Board, but shall not be less than the higher of (i) the closing price of Shares as stated in the Stock Exchange’s daily quotations sheet on the date of the offer of grant, which must be a Business Day; (ii) the average closing price of Shares as stated in the Stock Exchange’s daily quotations sheets for the five Business Days immediately preceding the date of the offer of grant; and (iii) the nominal value of the Shares. Without prejudice to the generality of the foregoing, the Board may grant Options in respect of which the subscription price is fixed at different prices for different periods during the Option period provided that the subscription price for Shares for each of the different periods shall not be less than the subscription price determined in the manner set out herein.

(i) 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 and will rank pari passu in all respects with the fully paid Shares in issue as from the day when the name of the Optionee is registered on the register of members of the Company and accordingly will entitle the holders to participate in all dividends or other distributions paid or made on or after the date when the name of the Optionee is registered on the register of members of the Company 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 when the name of the Optionee is registered on the register of members of the Company, provided always that when the date of exercise of the Option falls on a day upon which the register of members of the Company is closed then the exercise of the Option shall become effective on the first Business Day on which the register of members of the Company is re-opened. A Share allotted upon the exercise of an Option shall not carry voting rights until the completion of the registration of the Optionee as the holder thereof.

(j) Restrictions on the time of grant of Options

No offer for grant of Options shall be made after a price sensitive event has occurred or a price sensitive matter has been the subject of a decision until such price sensitive information has been announced pursuant to the GEM Listing Rules. In particular, during the period commencing one month immediately preceding the earlier of (i) the date of the Board meeting (as such date is first notified to the Exchange in accordance with the GEM Listing Rules) for approval of the Company’s results for any year, half-year or quarter-year period; and (ii) the deadline for publishing the announcement of the Company’s results for any year, half-year or quarter-year period under the GEM Listing Rules, and ending on the date of the results announcement, no Option should be granted.

(k) Period of the New Share Option Scheme

The New Share Option Scheme will remain in force for a period of 10 years commencing on the Adoption Date.

(l) Rights on ceasing employment

If the Optionee is an Eligible Employee when the relevant Option(s) shall have been granted ceases to be an Eligible Employee for any reason other than his or her death or the termination of his or her employment on one or more of the grounds referred to in sub-paragraph (n) below

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APPENDIX I THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

before exercising his Option in full, the Option (to the extent not already exercised) will lapse on the date of cessation and will not be exercisable unless the Board otherwise determine in which event the Optionee may exercise the Option (to the extent not already exercised) in whole or in part within such period as the Board may determine following the date of such cessation, which will be taken to be the last day on which the Optionee was at work with the Group or the Invested Entity whether salary is paid in lieu of notice or not.

(m) Rights on death

If the Optionee ceases to be a Participant by reason of death (provided that (i) if the Optionee is an Eligible Employee, none of the events which would be a ground for termination of his or her employment under sub-paragraph (n) below arises prior to his or her death or (ii) if the Optionee is not an Eligible Employee, none of the events which would be a ground for termination of his or her relationship with the relevant member of the Group or Invested Entity under subparagraph (o) below arises prior to his or her death), the legal personal representative of this Optionee shall be entitled within a period of 12 months from the date of death (or such longer period as the Board may determine) to exercise the Option in full (to the extent which has become exercisable and not already exercised).

(n) Rights on dismissal

If the Optionee is an Eligible Employee when the relevant Option(s) shall have been granted ceases to be an Eligible Employee by reason that he has been guilty of serious misconduct or has committed an act of bankruptcy or has become insolvent or has made any arrangement or composition with his or her creditors generally, or has been convicted of any criminal offence involving his or her integrity or honesty or (if so determined by the Board) on any ground on which an employer would be entitled to terminate his or her employment at common law or pursuant to any applicable laws or under the Eligible Employee’s service contract with the Company or the relevant Subsidiary or the relevant Invested Entity, his or her Option will lapse automatically on the date of cessation to be an Eligible Employee.

(o) Rights on breach of contract

If the Board at their absolute discretion determine that the Optionee (other than an Eligible Employee) or his or her associate has committed any breach of any contract entered into between the Optionee or his or her associate on the one part and the Group or any Invested Entity on the other part or that the Optionee has committed any act of bankruptcy or has become insolvent or is subject to any winding-up, liquidation or analogous proceedings or has made any arrangement or composition with his or her creditors generally, the Board shall determine that the Options granted to the Optionee under the New Share Option Scheme be lapsed. In such event, his or her Options will lapse automatically and will not in any event be exercisable on or after the date on which the Board has so determined.

(p) Rights on a general offer

• (aa) If a general offer by way of takeover is made to all Shareholders (or all 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 prior to the expiry date of the relevant Option, the Optionee (or his or her legal personal representative(s)) shall be entitled to exercise the Option in full (to the extent not already exercised) at any time within one month after the date on which the offer becomes or is declared unconditional.

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APPENDIX I THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

• (bb) If a general offer by way of scheme of arrangement is made to all Shareholders with such scheme having been approved by the necessary number of Shareholders at the requisite meetings, the Optionee (or his or her personal representative(s)) may thereafter (but before such time as shall be notified by the Company) by notice in writing to the Company exercise the Option (to the extent not already exercised) to its full extent specified in such notice.

(q) Rights on voluntary winding up

In the event of an effective resolution being proposed for the voluntary winding-up of the Company during the option period, the Optionee may, subject to the provisions of all applicable laws, by notice in writing to the Company at any time no later than two business days prior to the date on which such resolution is passed, exercise his or her Option (to the extent not already exercised) either to its full extent or to the extent specified in such notice in accordance with the provisions of the New Share Option Scheme and shall accordingly be entitled, in respect of the Shares falling to be allotted and issued upon the exercise of his or her Option, to participate in the distribution of the assets of the Company available in liquidation pari passu with the Shares in issue on the date prior to the date of the passing of the resolution to wind-up the Company. Subject to the above, an Option will lapse automatically (to the extent not exercised) on the date of the commencement of the winding-up of the Company.

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

In the event of a compromise or arrangement between the Company and its creditors (or any class of them) or between the Company and its members (or any class of them), in connection with a scheme for the reconstruction or amalgamation of the Company, the Company shall give notice thereof to all Optionees on the same day as it gives notice of the meeting to its members or creditors to consider such a scheme or arrangement, and thereupon any Optionee (or his or her legal representative(s)) may forthwith and until the expiry of the period commencing with such date and ending with the earlier of the date falling two calendar months thereafter and the date on which such compromise or arrangement is sanctioned by Court be entitled to exercise his or her Option (to the extent which has become exercisable and not already exercised), but the exercise of the Option shall be conditional upon such compromise or arrangement being sanctioned by the Court and becoming effective. The Company may thereafter require such Optionee to transfer or otherwise deal with the Shares issued as a result of such exercise of his or her Option so as to place the Optionee in the same position as nearly as would have been the case had such Shares been subject to such compromise or arrangement. Subject to the above, an Option will lapse automatically (to the extent not exercised) on the date the proposed compromise or arrangement becoming effective.

(s) Adjustments to the subscription price or other terms

In the event of capitalisation issue, rights issue, sub-division or consolidation of Shares or reduction of capital of the Company (other than an issue of Shares as consideration in respect of a transaction to which the Company is a party) whilst an Option remains exercisable, corresponding adjustments will be made to the number of Shares subject to the Option so far as unexercised and/ or the subscription price, or any combination thereof. In respect of any adjustments, other than a capitalisation issue, the Company’s independent financial adviser or Auditors shall certify in writing to the Board, either generally or as regard any particular Optionee, to have, in their opinion, satisfied the requirement that such adjustments give a Participant the same proportion of the equity

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APPENDIX I THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

capital as that to which that person was previously entitled, but that no such adjustments be made to the extent that a Share would be issued at less than its nominal value. The capacity of the Company’s independent financial adviser or Auditors in this clause is that of experts and not of arbitrators and their certification shall, in the absence of manifest error, be final and binding on the Company and the Optionee. The costs of the Company’s independent financial adviser or Auditors shall be borne by the Company.

(t) Cancellation of Options

Any cancellation of Options granted but not exercised must be approved by the Board. Where the Company cancels options and issues new ones to the same participant, the issue of such new options may only be made under a scheme with available unissued options (excluding the cancelled options) within the General Scheme Limit or the refreshed General Scheme Limit (as the case may be).

(u) Termination of the New Share Option Scheme

The Company, by resolution in general meeting, or the Board may at any time terminate the operation of the New Share Option Scheme and in such event no further Options will be offered but the provisions of the New Share Option Scheme shall remain in full force and effect in all other respects. Options complying with the provisions of Chapter 23 of the GEM Listing Rules which are granted during the life of this New Share Option Scheme and which remain unexpired immediately prior to the termination of the operation of the New Share Option Scheme shall continue to be exercisable thereafter. Details of the Options granted, including Options exercised or outstanding, under the New Share Option Scheme and Options that become void or unexercisable as a result of the termination, will be disclosed in the circular to the Shareholders for seeking the approval of the first new share option scheme to be set up after such termination.

(v) Rights are personal to the Optionee

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

(w) Lapse of Option

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

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

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

• (cc) a breach of the provision restriction on transfer and assignment of an Option referred to in paragraph (v).

(x) Others

• (aa) Subject to the GEM Listing Rules and sub-paragraphs (bb) to (ee) below, all provisions of the New Share Option Scheme may be altered in any respect by resolution of the Board without the approval of Shareholders in general meeting.

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APPENDIX I THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

• (bb) The provisions of the New Share Option Scheme relating to the matters set out in Rule 23.03 of the GEM Listing Rules shall not be altered to the advantage of Participants without the prior approval of the Shareholders in general meeting.

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

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

• (ee) The amended terms of the New Share Option Scheme or the Options must still comply with the relevant requirements of Chapter 23 of the GEM Listing Rules.

– 18 –

APPENDIX II EXPLANATORY STATEMENT ON THE BUYBACK MANDATE

This appendix serves as an explanatory statement, as required by the GEM Listing Rules, to provide requisite information to you for your consideration of the Buyback Mandate.

1. GEM LISTING RULES RELATING TO THE REPURCHASE OF SHARES

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

(a) Shareholders’ approval

The GEM Listing Rules provides that all proposed repurchases of securities (which must be fully paid up in the case of shares) by a company with its primary listing on the Stock Exchange must be approved in advance by an ordinary resolution of the shareholders, either by way of a general mandate or by specific approval with reference to a specific transaction.

(b) Source of funds

Repurchases must be funded out of funds legally available for the purpose and in accordance with the memorandum of association and bye-laws of the Company and the Companies Act 1981 of Bermuda (as amended) (the “Companies Act”). A listed company may not repurchase its own securities on the Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange. Under the Companies Act, a company may only repurchase its shares out of capital paid up on the Shares to be repurchased or out of the funds of the Company which would otherwise be available for dividend or distribution or out of the proceeds of a fresh issue of shares made for the purpose of the repurchase. Any amount of premium payable on a repurchase over the par value of the shares may only be effected out of funds of the Company which would otherwise be available for dividend or distribution or out of the Company’s share premium account.

(c) Trading restrictions

The total number of shares which a company may repurchase on GEM is the number of shares which represent up to a maximum of 10 per cent of the issued share capital as at the date of the passing of the ordinary resolution approving the Buyback Mandate. A company may not issue or announce an issue of new shares of the type that has been repurchased for a period of 30 days immediately following a repurchase (other than the exercise of warrants, an option or similar instruments requiring the company to issue securities which were outstanding prior to the repurchase), without the prior approval of the Stock Exchange. A company is also prohibited from making securities repurchases on GEM if the result of the repurchase would be that the number of listed securities in public hands would be below the relevant prescribed percentage as required by the Stock Exchange. The price at which a company repurchases securities on GEM shall not be higher than the latest (or current) independent bid price or the last independent sale (contract) price quoted or reported on the system (as defined in the Rules of the Stock Exchange), whichever is higher. In addition, a company shall not make the opening bid nor any bid in the last 30 minutes before the close of normal trading hours as stipulated in the Rules of the Stock Exchange.

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APPENDIX II EXPLANATORY STATEMENT ON THE BUYBACK MANDATE

(d) Status of repurchased securities

All repurchased securities (whether on GEM or otherwise) are automatically delisted and the certificates for those securities must be cancelled and destroyed.

Under Bermuda law, a company’s repurchased shares shall be treated as cancelled and the amount of the company’s issued share capital shall be reduced by the aggregate nominal value of the repurchased shares accordingly although the authorised share capital of the company will not be reduced.

(e) Suspension of repurchase

Any securities repurchase programme is required to be suspended after a price sensitive development has occurred or has been the subject of directors’ decision until the price sensitive information has been publicly announced. In particular, during the period of one month immediately preceding either the preliminary announcement of a company’s annual results or the publication of a company’s half-year report or a quarterly report, a company may not purchase shares on GEM unless the circumstances are exceptional. In addition, the Stock Exchange may prohibit a company from making repurchases of its own securities on GEM if a company has breached the GEM Listing Rules.

(f) Reporting requirements

Repurchases of securities on GEM or otherwise must be reported to the Stock Exchange not later than 9:30 a.m. (Hong Kong time) on the following business day. In addition, a company’s annual report and accounts are required to include a monthly breakdown of securities repurchases made during the financial year under review, showing the number of securities repurchased each month (whether on GEM or otherwise), the purchase price per share or the highest and lowest prices paid for all such repurchases and the total prices paid. The directors’ report is also required to contain reference to the purchases made during the year and the directors’ reasons for making such purchases. The company shall make arrangements with its broker who effects the purchase to provide the company in a timely fashion the necessary information in relation to the purchase made on behalf of the company to enable the company to report to the Stock Exchange.

(g) Connected parties

Under the GEM Listing Rules, a company shall not knowingly repurchasing securities from a connected person (as defined under the GEM Listing Rules) and a connected person shall not knowingly sell his shares to the company.

2. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 1,022,643,279 Shares of HK$0.10 each.

Subject to the passing of the resolution in relation to the Repurchase Mandate and on the basis that no Shares are issued or repurchased by the Company prior to the Annual General Meeting, the Company will be allowed under the Buyback Mandate to repurchase a maximum of 102,264,327 Shares of HK$0.10 each.

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APPENDIX II EXPLANATORY STATEMENT ON THE BUYBACK MANDATE

3. REASONS FOR REPURCHASES

Repurchases of Shares will only be made when the Directors believe that such a repurchase will benefit the Company and its members. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value of the Company and/or its earnings per Share.

4. FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with the memorandum of association and bye-laws of the Company, the GEM Listing Rules and the applicable laws of Bermuda. The Company may not purchase securities on GEM for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

5. GENERAL

There might be a material adverse impact on the working capital or gearing position of the Company in the event that the Repurchase Mandate is exercised in full. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or its gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

6. UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Repurchase Mandate in accordance with the GEM Listing Rules, the memorandum of association and the bye-laws of the Company and the applicable laws of Bermuda.

7. TAKEOVERS CODE

If as a result of a repurchase of Shares, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase may be treated as an acquisition for the purpose of the Takeovers Code. Accordingly, a shareholder or group of shareholders acting in concert, depending on the level of increase in the shareholder’s interest, could obtain or consolidate control of the Company and become(s) obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeovers Code.

As at the Latest Practicable Date, Mr Cheung Wai, Chairman of the Company, held approximately 10.79 per cent. of the issued Shares of the Company. In the event that the Directors should exercise in full the power to repurchase Shares of the Company in accordance with the terms of the ordinary resolution to be proposed at the Annual General Meeting, the interest of Mr Cheung in the Shares of the Company would be increased to approximately 11.98 per cent. of the issued Shares of the Company. Accordingly, Mr Cheung will not be obliged to make a mandatory offer under Rules 26 and 32 of the Takeovers Code in this respect.

In fact, the Directors have no present intention to exercise repurchases to such an extent as would result in takeover obligations.

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APPENDIX II EXPLANATORY STATEMENT ON THE BUYBACK MANDATE

8. SHARE REPURCHASE MADE BY THE COMPANY

No purchases of Shares have been made by the Company during the last six months, whether on the Stock Exchange or otherwise.

9. CONNECTED PERSON

None of the Directors or their associates, to the best of the knowledge of the Directors who have made all reasonable enquires, has a present intention to sell Shares to the Company or has undertaken not to do so in the event that the Buyback Mandate is approved by the Shareholders.

10. SHARE PRICES

The highest and lowest price at which Shares have been traded on GEM during each of the previous twelve months before the Latest Practicable Date were as follows:

			Shares
		Highest		Lowest
		HK$		HK$
2001	March	0.160		0.114
	April	0.320		0.110
	May	0.380		0.215
	June	0.345		0.250
	July	0.295		0.242
	August	0.280		0.200
	September	0.206		0.110
	October	0.204		0.120
	November	0.225		0.178
	December	0.207		0.148
2002	January	0.198		0.158
	February	0.191		0.167

– 22 –

NOTICE OF ANNUAL GENERAL MEETING

SYSCAN Technology Holdings Limited

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that an Annual General Meeting of the members of SYSCAN Technology Holdings Limited (the “Company”) will be held at Banquet Room No. 7, City Garden Hotel, 9 City Garden Road, North Point, Hong Kong on Friday, 26 April 2002 at 10:00 a.m., for the following purposes:

1. To receive and consider the audited consolidated financial statements and the Reports of the Directors and of the Auditors for the year ended 31 December 2001;

2. To elect Directors and to authorise the Board of Directors to fix remuneration of the Directors;

3. To re-appoint Messrs Arthur Andersen & Co as the Company’s Auditors and to authorise the Board of Directors to fix their remuneration;

4. To consider as special business and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

“ THAT subject to and conditional upon The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) granting approval of the listing of, and permission to deal in, the ordinary shares of HK$0.10 each in the capital of the Company (or of such other nominal amount as shall result from a sub-division, consolidation or reduction of the share capital of the Company from time to time) (“Shares”) or any part thereof to be issued pursuant to the exercise of any such options to be granted under the share option scheme C of the Company (the “New Share Option Scheme”, the rules of which are contained in the document marked “A” produced to the meeting and for the purpose of identification signed by the Chairman hereof), the New Share Option Scheme be approved and adopted and that the directors of the Company be authorised to do all such acts and to enter into all such transactions, arrangements and agreements as may be necessary or expedient in order to give full effect to the New Share Option Scheme including without limitation to:–

• (a) administering the New Share Option Scheme under which options will be granted to participants eligible under the New Share Option Scheme to subscribe for Shares;

• (b) modifying and/or amending the New Share Option Scheme from time to time provided that such modification and/or amendment is effected in accordance with the provisions of the New Share Option Scheme relating to modification and/or amendment and the requirements of the Rules Governing the Listing of Securities on the Growth Enterprise Market of the Stock Exchange;

• (c) issuing and allotting from time to time such number of Shares in the capital of the Company as may be required to be issued pursuant to the exercise of the options granted under the New Share Option Scheme provided that the total

– 23 –

NOTICE OF ANNUAL GENERAL MEETING

number of Shares which may be issued upon exercise of all options to be granted under the New Share Option Scheme and any other outstanding share option schemes of the Company (other than the Shares subject to the options granted under the Share Option Scheme A and the Existing Share Option Scheme (both as defined in the circular of the Company dated 28 March 2002) shall not exceed ten (10) per cent. of the issued share capital of the Company as at the date of passing this resolution (“General Scheme Limit”), with the acknowledgement that the Company may seek a fresh approval of its shareholders in general meeting to renew the General Scheme Limit from time to time 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 Share Option Scheme and any other share option schemes of the Company (including the Share Option Scheme A and the Existing Share Option Scheme) shall not in aggregate exceed thirty (30) per cent. of the issued share capital of the Company (or such higher percentage as may be allowed by the Stock Exchange) from time to time; and

• (d) making application at the appropriate time or times to the Stock Exchange for the listing of, and permission to deal in, any Shares or any part thereof that may hereafter from time to time be issued and allotted pursuant to the exercise of the options granted under the New Share Option Scheme.”;

• To consider as special business and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

“ THAT conditional on the passing of Ordinary Resolution numbered 4 set out in the notice convening this meeting of which this resolution forms part, the existing employee share option scheme B adopted by the Company on 2 March 2000 (“Existing Share Option Scheme”) be and is hereby terminated with immediate effect and thereafter no further options may be offered but the options which have been granted during the life of the Existing Share Option Scheme shall continue to be exercisable in accordance with their terms of issue and in all other respects the provisions of the Existing Share Option Scheme shall remain in full force and effect.”;

1. To consider as special business and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

“ THAT

• (a) the exercise by the Directors during the Relevant Period of all the powers of the Company to purchase its shares, subject to and in accordance with the applicable laws, be and is hereby generally and unconditionally approved;

• (b) the total nominal amount of shares to be purchased pursuant to the approval in paragraph (a) above shall not exceed ten (10) per cent. of the total nominal amount of the share capital of the Company in issue on the date of passing of this resolution, and the said approval shall be limited accordingly; and

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NOTICE OF ANNUAL GENERAL MEETING

• (c) for the purpose of this resolution, “Relevant Period” means the period from the passing of this resolution until whichever is the earliest of:

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

  • (ii) the revocation or variation of the authority given under this resolution by ordinary resolution passed by the Company’s shareholders in general meetings; and

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

• To consider as special business and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

“ THAT

• (a) the exercise by the Directors during the Relevant Period of all the powers of the Company to issue, allot and deal with additional shares of the Company and to make or grant offers, agreements and options which would or might require shares to be allotted, issued or dealt with during or after the end of the Relevant Period be and is hereby generally and unconditionally approved, provided that, otherwise than pursuant to (i) a rights issue where shares are offered to shareholders on a fixed record date in proportion to their then holdings of shares (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in any territory outside Hong Kong) or (ii) any option scheme or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries and/or any eligible grantee pursuant to the scheme of shares or rights to acquire shares of the Company, or (iii) any scrip dividend scheme or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the bye-laws of the Company, the total nominal amount of additional shares to be issued, allotted, dealt with or agreed conditionally or unconditionally to be issued, allotted or dealt with shall not in total exceed twenty (20) per cent. of the total nominal amount of the share capital of the Company in issue on the date of passing of this resolution and the said approval shall be limited accordingly; and

• (b) for the purpose of this resolution, “Relevant Period” means the period from the passing of this resolution until whichever is the earliest of:

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

• (ii) the revocation or variation of the authority given under this resolution by ordinary resolution passed by the Company’s shareholders in general meetings; and

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NOTICE OF ANNUAL GENERAL MEETING

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

• To consider as special business and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

“ THAT the general mandate granted to the Directors of the Company pursuant to Ordinary Resolution numbered 7 above and for the time being in force to exercise the powers of the Company to allot shares and to make or grant offers, agreements and options which might require the exercise of such powers be and is hereby extended by the total nominal amount of shares in the capital of the Company repurchased by the Company pursuant to the exercise by the Directors of the Company of the powers of the Company to purchase such shares since the granting of such general mandate referred to in the above Ordinary Resolution numbered 6, provided that such amount shall not exceed 10% of the total nominal amount of the share capital of the Company in issue on the date of passing of this resolution.”

By order of the Board Cheung Wai Chairman

Hong Kong, 22 March 2002

Notes:

1. The Register of Members of the Company will be closed from Monday, 22 April 2002 to Friday, 26 April 2002, both days inclusive, during which period no transfer of shares can be registered.

2. A member of the Company entitled to attend and vote at the meeting is entitled to appoint another person as his proxy to attend and, in the event of a poll, vote in his stead. A member who is the holder of two or more shares may appoint more than one proxy to attend and vote on his behalf. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed. A proxy need not be a member of the Company, but must attend the meeting in person to represent you.

3. To be valid, a form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy thereof, must be deposited at the Head Office of the Company in Hong Kong at Unit 808, 8th Floor, K. Wah Centre, 191 Java Road, North Point, Hong Kong not less than 48 hours before the time appointed for the holding of the meeting or any adjourned meeting.

4. Completion and delivery of the form of proxy will not preclude a member from attending and voting in person at the meeting if the member so desires and in such event, the instrument appointing a proxy shall be deemed to be revoked.

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