ZO Future Group — Capital/Financing Update 2008

Jun 20, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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 licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Grandtop International 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, licensed securities dealer or other agent through whom the sale or transfer 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.

GRANDTOP INTERNATIONAL HOLDINGS LIMITED 泓鋒國際控股有限公司 *

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2309)

PROPOSED ISSUE OF CONVERTIBLE NOTES

A letter from the Board is set out on pages 4 to 16 of this circular.

A notice convening the extraordinary general meeting of Grandtop International Holdings Limited to be held at Boardroom III & IV, M/F, Renaissance Harbour View Hotel, Hong Kong, 1 Harbour Road, Wanchai, Hong Kong on Monday, 7 July 2008 at 11:00 a.m. is set out on pages 17 to 18 of this circular. Whether or not you are able to attend the meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrar of the Company in Hong Kong, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and 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 in person at the meeting or any adjournment thereof should you so wish.

• For identification purposes only

20 June 2008

CONTENTS

		Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
2.	The Subscription Agreement and the Supplemental Agreement . . . . . . . . .	5
3.	Changes in the Shareholding Structure of the Company . . . . . . . . . . . . . . .	11
4.	Dilution Effect on Shareholders as a result of Conversion
	of any part of the Convertible Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
5.	Information on Pacific Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
6.	Net Proceeds, Reasons for the Issue of Convertible Notes
	and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
7.	General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
8.	Application for Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
9.	EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
10.	Poll Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
11.	Responsibility of the Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
12.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
13.	Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Notice of	Extraordinary General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17

— i —

DEFINITIONS

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

“Board”	the board of Directors of the Company
“business day”	a day, ending at 4:30 p.m. (Hong Kong time), on which the
	Stock Exchange is open for trading
“Closing Date”	in respect of each tranche of Convertible Notes, the date on
	which such tranche is issued and subscribed for
“Closing Day Price”	the last reported transaction price per share of the Shares
	on the Stock Exchange for any business day, or if there has
	been no trading in the Shares on that day, the last reported
	transaction price per share of the Shares for the preceding
	business day
“Company”	GRANDTOP INTERNATIONAL HOLDINGS LIMITED
	(Stock code: 2309), an exempted company incorporated in the
	Cayman Islands with limited liability and whose shares are
	listed on the Main Board of the Stock Exchange
“Connected Person(s)”	has the meaning ascribed thereto under the Listing Rules
“Conversion Date”	the date, which shall be a business day, on which the
	conversion notice is faxed and received by the Company or the
	next business day if the conversion notice is received by the
	Company after 10:00 a.m. (Hong Kong time)
“Conversion Period”	the period commencing on the respective Closing Dates of the
	Convertible Notes and ending on the 7th business day prior to
	the Maturity Date (both days inclusive)
“Conversion Share(s)”	the Share(s) to be allotted and issued upon conversion of the
	Convertible Note(s)
“Convertible Note(s)”	convertible note(s) denominated in Hong Kong dollars to
	be issued by the Company in twenty (20) equal tranches
	(of a principal amount of HK$10,000,000 each) under the
	Subscription Agreement and on terms to be set out in the
	Terms and Conditions

— 1 —

DEFINITIONS

“Directors”	directors of the Company
“EGM”	the extraordinary general meeting of the Company to be
	convened and held on 7 July 2008 to approve, among other
	things, the Subscription Agreement, the Supplemental
	Agreement, the issue of the Convertible Notes and the
	allotment and issue of the Conversion Shares
“Group”	the Company and its Subsidiaries
“HK$” or “HK dollars”	Hong Kong Dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Independent Third	any person or company and their respective ultimate beneficial
Party(ies)”	owner(s), to the best of the Directors’ knowledge, information
	and belief having made all reasonable enquiries, are third
	parties independent of the Company and its Connected
	Persons
“Latest Practicable Date”	18 June 2008, being the latest practicable date prior to the
	printing of this circular for the purposes of ascertaining
	certain information contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Maturity Date”	thirty six (36) months from the Closing Date of tranche 1 of
	the Convertible Notes
“Note Issue”	any issue of notes, notes or other similar securities of the
	Company or any Subsidiary to any other person but shall not
	include the indebtedness constituted by loan agreements from
	lenders not involving the issue of notes, notes or other similar
	securities
“Noteholder(s)”	the person(s) registered in the register of Noteholders of the
	Company as the holder(s) of the Convertible Notes
“Pacific Capital”	Pacific Capital Investment Management Limited, a company
	incorporated in the British Virgin Islands

— 2 —

DEFINITIONS

“Security”	any mortgage, charge, pledge or any other security interest
“Share(s)”	fully paid ordinary share(s) at the par value of HK$0.01 each
	in the share capital of the Company
“Shareholder(s)”	person(s) registered in the books of the Company as the
	holder(s) of Share(s) for the time being
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription Agreement”	the subscription agreement dated 7 May 2008 and made
	between the Company and Pacific Capital in connection with
	the issue of the Convertible Notes, as supplemented by the
	Supplemental Agreement
“Subsidiary”	a company whose financial statements is consolidated for the
	purposes of the Company’s financial reporting
“Supplemental Agreement”	the supplemental agreement dated 4 June 2008 and made
	between the Company and Pacific Capital to supplement the
	Subscription Agreement and the Terms and Conditions
“Takeovers Code”	“The Codes on Takeovers and Mergers and Share Repurchases”
	issued by the Securities and Futures Commission of Hong
	Kong
“Terms and Conditions”	the terms and conditions of the Convertible Notes, as
	supplemented by the Supplemental Agreement, to appear on
	the reverse of each of the definitive certificates evidencing the
	Convertible Notes
“%”	per cent.

— 3 —

LETTER FROM THE BOARD

GRANDTOP INTERNATIONAL HOLDINGS LIMITED 泓鋒國際控股有限公司 *

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2309)

Executive Directors:

Mr. Yeung Ka Sing, Carson Mr. Hui Ho Luek, Vico

Mr. Steven McManaman

Mr. Fan Zhi Yi

Mr. Lee Yiu Tung Mr. Ip Wing Lun Ms. Wong Po Ling, Pauline

Registered Office: Cricket Square Hutchins Drive P. O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Ms. Siu Bessie

Non-executive Directors:

Mr. Christian Lali Karembeu

Mr. Chan Wai Keung

Independent Non-executive Directors:

Head Office and Principal Place of Business in Hong Kong: Unit 3008, 30th Floor West Tower, Shun Tak Centre 168-200 Connaught Road Central Hong Kong

Mr. Chang Kin Man

Mr. Zhou Han Ping

Mr. Yip Man Ki

Mr. Yau Yan Ming, Raymond

20 June 2008

To the Shareholders

Dear Sir or Madam,

PROPOSED ISSUE OF CONVERTIBLE NOTES

1. INTRODUCTION

On 22 May 2008, the Board announced that on 7 May 2008, the Company and Pacific Capital entered into the Subscription Agreement, pursuant to which Pacific Capital has

• For identification purposes only

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LETTER FROM THE BOARD

agreed to subscribe for the Convertible Notes for an aggregate principal amount of up to HK$200,000,000 to be issued by the Company, on the terms and conditions set out in the Subscription Agreement.

On 4 June 2008, the Board announced that on 4 June 2008, the Company and Pacific Capital entered into the Supplemental Agreement to supplement the Subscription Agreement including, among other things, the addition of a conversion restriction in the Terms and Conditions so that no conversion of the Convertible Notes can be made at any time when the Company cannot maintain 25% public float as a result of such conversion.

The purpose of this circular is to provide you with further details of the Subscription Agreement, the Supplemental Agreement and the Convertible Notes, and to give you notice of the EGM.

2. THE SUBSCRIPTION AGREEMENT AND THE SUPPLEMENTAL AGREEMENT

Parties

• (a) the Company; and

• (b) Pacific Capital.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, Pacific Capital and its ultimate beneficial owners are all Independent Third Parties. The Company and Pacific Capital have no prior business relationship.

Subject to the fulfilment of the conditions set out below under the sub-section headed “Conditions Precedent” and pursuant to the terms of the Subscription Agreement, Pacific Capital has agreed to subscribe for the Convertible Notes.

None of the Convertible Notes are being offered to the public in Hong Kong and none of the Convertible Notes will be issued to any Connected Persons of the Company.

— 5 —

LETTER FROM THE BOARD

Conditions Precedent

Completion of the subscription and issue of any tranche of the Convertible Notes is conditional upon, among other things:—

• (a) the passing of an ordinary resolution by the Shareholders to approve the Subscription Agreement, the Supplemental Agreement and the transactions contemplated thereunder, including, but not limited to, the issue of the Convertible Notes and the allotment and issue of the Conversion Shares, at the EGM;

• (b) the Stock Exchange granting listing of, and permission to deal in, the Conversion Shares;

• (c) the issuance of a legal opinion as to the laws of Hong Kong;

• (d) all the representations and warranties of the Company set out in the Subscription Agreement are accurate and correct in all material respects; and

• (e) there shall not have occurred an event, within the control of the Company, which will trigger a change in control in the Company.

Termination

The Subscription Agreement may be terminated in certain circumstances. In particular, Pacific Capital may terminate the Subscription Agreement by notice in writing to the Company at any time before payment of the net subscription monies to the Company for the relevant Convertible Notes on the relevant Closing Date. Such circumstances include, without limitation:—

• (a) if there comes to the notice of Pacific Capital any material breach of, or any event rendering untrue or incorrect in any material respect, any of the representations, warranties and undertakings contained in the Subscription Agreement or any material failure to perform any of the Company’s undertakings or obligations in the Subscription Agreement; and

• (b) if there occurs (i) any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations, or in or affecting the properties, of the Group; or (ii) an imposition of a new legal or regulatory restriction or any change in the interpretation of the existing legal or regulatory restrictions, that materially and adversely affects the financial conditions of the Group, or the offering, delivery of the Convertible Notes or the Conversion Shares.

— 6 —

LETTER FROM THE BOARD

Subject to the foregoing, completion of the subscription and issue of the relevant Convertible Notes shall take place on the relevant Closing Date.

Principal Terms of the Convertible Notes

The principal terms of the Convertible Notes are summarised as follows:—

Issuer the Company

Subscriber Pacific Capital and/or its nominees, being other investment fund(s) managed by Pacific Capital

Principal Amount up to HK$200,000,000 in aggregate

Maturity Date thirty six (36) months from the Closing Date of tranche 1 of the Convertible Notes

• Issue Price 100% of the face value of the principal amount of the Convertible Notes

Interest

the Convertible Notes will not bear any interest

Conversion Subject to the relevant Noteholder complying with the procedures related to conversion, the Convertible Notes are convertible at any time during the Conversion Period into Conversion Shares at the Conversion Price (as described below). Notwithstanding the foregoing, the Noteholders shall not be entitled to exercise the conversion right at any given time if, following the exercise of such conversion right, the number of Shares held by the public (within the meaning of the Listing Rules) will fall below 25% of the aggregate number of (1) the Shares in issue at that relevant time; and (2) the Conversion Shares to be issued upon the exercise of such conversion right.

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LETTER FROM THE BOARD

Conversion Price

The price at which Conversion Shares will be issued shall be either:

• (a) 125% of the average of the Closing Day Price for the thirty (30) business days immediately prior to:

• (i) in respect of tranche 1 of the Convertible Notes, the date of the Subscription Agreement; and

• (ii) in respect of the subsequent tranches of the Convertible Notes, the respective Closing Dates (the “ Fixed Conversion Price ”), subject to adjustment in accordance with the Terms and Conditions; or

• (b) 90% of the average of the Closing Day Price on any five (5) consecutive business days (as selected by the relevant Noteholder) during the thirty (30) business days immediately preceding the relevant Conversion Date (the “ Floating Conversion Price ”)

as selected at the discretion of the relevant Noteholder at the time of exercising the conversion right in respect of the relevant tranche of the Convertible Notes provided always that the Conversion Price shall not in any event be less than HK$0.05 per Conversion Share.

The Fixed Conversion Price will be subject to adjustment for, among other things, capital distribution in cash or specie, subdivision or consolidation of the Shares, bonus issues and other dilutive events such as capitalization of profits or reserves, rights issues, issue of new Shares and/or securities convertible into or exchangeable for Shares.

The overriding principle relating to the adjustment of the conversion price as set in the Stock Exchange’s letter dated 5 September 2005 is that no adjustment to the exercise price or number of shares that benefits the share option scheme participants shall occur without prior Shareholders’ approval. The Directors believe that the adjustment of the Conversion Price set out in the Subscription Agreement is in accordance with the principle.

— 8 —

LETTER FROM THE BOARD

Redemption at Maturity

• Redemption at the option of the Company

Form and Denomination

Status

Negative Pledge

Unless previously redeemed, purchased, converted or cancelled in the circumstances set out in the Terms and Conditions, the Company will redeem the outstanding Convertible Notes on the Maturity Date (as described above) at 100% of the principal amount thereof.

The Company may redeem those Convertible Notes presented by the Noteholder for conversion at the Conversion Redemption Amount (as defined in the Terms and Conditions) if on presentation of such Convertible Notes, the Fixed Conversion Price or the Floating Conversion Price (as the case may be) is less than or equal to 70% of the average of the Closing Day Price for the thirty (30) consecutive business days prior to the relevant Closing Date in respect of such Convertible Notes.

The Convertible Notes will be issued in registered form and in denomination of HK$500,000 or integral multiples thereof and will be serially numbered. A certificate will be issued to each Noteholder in respect of its registered holding of each Convertible Note.

The Convertible Notes will constitute direct, general, unconditional, unsubordinated, and (subject to the Negative Pledge as described below) unsecured obligations of the Company, ranking pari passu and rateably without any preference among themselves, and, save as otherwise provided under any applicable laws or regulations, equally with all other present and future unsecured obligations (other than subordinated obligations) of the Company.

So long as any of the Convertible Notes remains outstanding, the Company and its Subsidiaries have agreed that, unless certain conditions are met, they will not create or allow the creation of any Security upon the whole or any part of their property or assets, present or future, to secure any existing or future Note Issues or any guarantee or indemnity or other like obligation in respect thereof.

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LETTER FROM THE BOARD

Transferability

The Convertible Notes are non-transferable and nonassignable.

Listing Application will be made for the listing of, and permission to deal in, the Conversion Shares on the Stock Exchange.

Governing Law

The Convertible Notes and the Terms and Conditions shall be governed by, and shall be construed in accordance with, the laws of Hong Kong.

Conversion Shares

For illustrative purpose and assuming full conversion at the Conversion Price of HK$0.05 per Conversion Share, the Convertible Notes with an aggregate principal amount of up to HK$200,000,000 are convertible into 4,000,000,000 Conversion Shares, representing approximately 526.09% of the existing issued share capital of the Company and approximately 84.03% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares.

Under the Terms and Conditions:—

• (a) the aggregate number of Shares held by all the Noteholders (including but not limited to the Conversion Shares) at any given time shall not exceed such number of Shares equivalent to 20% of the total number of Shares in issue at that relevant time; and

• (b) the aggregate number of Shares held by all the Noteholders (including but not limited to the Conversion Shares) together with such person acting in concert (within the meaning of the Takeovers Code) at any given time shall not exceed such number of Shares equivalent to 29.9% of the total number of Shares in issue at that relevant time.

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LETTER FROM THE BOARD

3. CHANGES IN THE SHAREHOLDING STRUCTURE OF THE COMPANY

To the best of the knowledge of the Directors, the shareholding of the existing substantial shareholders of the Company as at the Latest Practicable Date and after the issue of the Conversion Shares are summarized as follows:—

Existing shareholding (as at the Latest Practicable Date) Shareholders No. of Shares held % of issued share capital of the Company Great Luck Management Limited_(Note 1) 115,200,000 15.15 Premier Rise Investments Limited (“Premier Rise”) (Note 2) 96,000,000 12.63 Huge Gain Development Limited (“Huge Gain”) (Note 3) 96,000,000 12.63 Mr. Yeung Ka Sing, Carson (“Mr. Yeung”) (Note 4) 23,520,000 3.09 Ms. Leung Choi Fan (“Ms. Leung”) (Note 5)_ 18,975,000 2.49 Noteholder(s) — 0.00 Sub-total 349,695,000 45.99 Public 410,625,000 54.01 Total 760,320,000 100.00	Assuming the Convertible Notes are converted at the Conversion Price of HK$0.05 each (not exceeding 20%) No. of Shares held % of enlarged share capital of the Company 115,200,000 12.12 96,000,000 10.10 96,000,000 10.10 23,520,000 2.47 18,975,000 2.00 190,080,000 20.00 539,775,000 56.79 410,625,000 43.21 950,400,000 100.00	Assuming the Convertible Notes are fully converted at the Conversion Price of HK$0.05 each No. of Shares held % of enlarged share capital of the Company 115,200,000 2.42 96,000,000 2.02 96,000,000 2.02 23,520,000 0.49 18,975,000 0.39 4,000,000,000 84.03 4,349,695,000 91.37 410,625,000 8.63 4,760,320,000 100.00	Assuming the Convertible Notes are fully converted at the Conversion Price of HK$0.05 each No. of Shares held % of enlarged share capital of the Company 115,200,000 2.42 96,000,000 2.02 96,000,000 2.02 23,520,000 0.49 18,975,000 0.39 4,000,000,000 84.03 4,349,695,000 91.37 410,625,000 8.63 4,760,320,000 100.00
			91.37 8.63
			100.00

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LETTER FROM THE BOARD

Notes:

1. Great Luck Management Limited, a company incorporated in the British Virgin Islands and wholly owned by Mr. Yeung, an executive Director

2. Premier Rise, a company incorporated in the British Virgin Islands and wholly owned by Mr. Hui Ho Luek, Vico (“ Mr. Hui ”), an executive Director

3. The entire issued share capital of Huge Gain is owned by Nerine Trust Company Limited (“ Nerine Trust ”) which is the trustee of SB Unit Trust and holds properties for the benefit of holders of units issued by SB Unit Trust. All the units issued by SB Unit Trust were held by the family members of Mr. Siu Ban, co-founder of the Company and its Subsidiaries and the discretionary objects, Ms. Siu Bessie, an executive Director, and Ms. Tsai Lai Wa, Jenny have indirect interest in Nerine Trust

4. Mr. Yeung, the Chairman of the Company and an executive Director

5. Ms. Leung, spouse of Mr. Hui who wholly and beneficially owns Premier Rise

4. DILUTION EFFECT ON SHAREHOLDERS AS A RESULT OF CONVERSION OF ANY PART OF THE CONVERTIBLE NOTES

Assuming that the entire maximum principal amount of HK$200,000,000 under the Convertible Notes is successfully issued and converted at the minimum conversion price of HK$0.05 per Conversion Share, a total of 4,000,000,000 Conversion Shares, representing (i) approximately 526.09% of the existing issued share capital of the Company; and (ii) approximately 84.03% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares, will be issued.

In view of the future dilution effect on the shareholdings in the Company of the existing Shareholders on the exercise of the conversion rights attaching to the Convertible Notes, the Company will keep the Shareholders informed of the level of dilution and details of conversion as follows:

• (a) the Company will make a monthly announcement (the “ Monthly Announcement ”) on the website of the Stock Exchange after the completion of the subscription for and issue of tranche 1 of the Convertible Notes. Such announcement will be made on or before the fifth business day following the end of each calendar month and will include the following details in a tabular form:

• (i) whether there is any conversion of the Convertible Notes during the relevant month. If there is conversion, details of the conversion(s), including the Conversion Date, the number of Conversion Shares issued, Conversion Price for each conversion. If there is no conversion during the relevant month, a negative statement to that effect;

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LETTER FROM THE BOARD

• (ii) the number of outstanding principal amount of the Convertible Notes after the conversion(s), if any;

• (iii) the total number of new Shares issued pursuant to other transactions during the relevant month, including new Shares issued pursuant to exercise of options under any share option scheme(s) of the Company (if any);

• (iv) the total issued share capital of the Company as at the commencement and the last day of the relevant month; and

• (b) in addition to the Monthly Announcement, if the cumulative amount of the Conversion Shares issued reaches 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Notes (as the case may be) (and thereafter in a multiple of such 5% threshold), the Company will make an announcement on the website of the Stock Exchange including details as stated in (a) above for the period commencing from the date of the last Monthly Announcement or any subsequent announcement in respect of the Convertible Notes (as the case may be) up to the date on which the total amount of the Conversion Shares issued amounted to 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Notes (as the case may be).

5. INFORMATION ON PACIFIC CAPITAL

Pacific Capital is an investment fund company principally engaged in investing in listed and unlisted investments.

6. NET PROCEEDS, REASONS FOR THE ISSUE OF CONVERTIBLE NOTES AND USE OF PROCEEDS

The net proceeds from the issue of the Convertible Notes are estimated to be approximately HK$187,000,000.

The Directors believe that the proceeds from the issue of the Convertible Notes will, upon completion, provide additional financing for future expansion, investments, potential corporate acquisitions, and general working capital of the Group. This will enhance the financing flexibility of the Group, which the Directors consider to be beneficial to the Group and the Shareholders taken as a whole. The Directors confirm that no specific project has been identified by the Company and no agreement has been

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LETTER FROM THE BOARD

entered into by the Company in relation to any investments or corporate acquisitions and the Company will make relevant disclosure to the public in accordance with the Listing Rules when appropriate.

The Directors have carefully considered different financing options including bank financing and other corporate financing arrangements. They believe the issue of the Convertible Notes is the best available option since it does not create any interest paying obligations on the Company and does not create security over any of the Company’s assets.

The Directors are of the opinion that the terms of the Subscription Agreement (including the Terms and Conditions) and the issue of the Convertible Notes are fair and reasonable and on normal commercial terms and that the entering into of the Subscription Agreement, the Supplemental Agreement and the issue of the Convertible Notes are in the interests of the Company and the Shareholders as a whole.

7. GENERAL

The Company is an investment holding company. The Group is mainly engaged in apparel sourcing, apparel trading and sales support services.

8. APPLICATION FOR LISTING

No application will be made for listing of, or permission to deal, in the Convertible Notes on the Stock Exchange or any other stock exchange. Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.

The Conversion Shares falling to be allotted and issued upon exercise of the conversion rights attaching to the Convertible Notes will be issued under the special mandate to be sought at the EGM. The special mandate is conditional upon the passing of the relevant resolution by the Shareholders at the EGM.

9. EGM

A notice convening the EGM to be held at Boardroom III & IV, M/F, Renaissance Harbour View Hotel, Hong Kong, 1 Harbour Road, Wanchai, Hong Kong on Monday, 7 July 2008 at 11:00 a.m. is set out on pages 17 to 18 of this circular.

The EGM will be convened at which ordinary resolution will be proposed to consider and, if thought fit, to approve (i) the Subscription Agreement and the Supplemental Agreement; (ii) the issue of the Convertible Notes pursuant to the Subscription Agreement; and (iii) the allotment and issue of Conversion Shares upon the exercise of the conversion rights attaching to the Convertible Notes.

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LETTER FROM THE BOARD

A form of proxy for use at the EGM is enclosed. Whether or not you are able to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrar of the Company in Hong Kong, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

10. POLL DEMAND

Pursuant to Article no. 66 of the Articles of Association of the Company, every resolution put to the vote of a general meeting shall be decided on a show of hands unless (before or on the declaration of the results of the show of hands or on the withdrawal of any other demand for a poll) a poll is duly demanded by:—

• (a) the chairman of such meeting; or

• (b) at least three members present in person or in the case of a member being a corporation by its duly authorized representative or by proxy for the time being entitled to vote at the meeting; or

• (c) a member or members present in person or in the case of a member being a corporation by its duly authorized representative or by proxy and representing not less than one-tenth of the total voting rights of all members having the right to vote at the meeting; or

• (d) a member or members present in person or in the case of a member being a corporation by its duly authorized representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

A poll which is duly demanded shall be then held in such manner prescribed by the Articles of Association of the Company.

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LETTER FROM THE BOARD

11. RESPONSIBILITY OF THE DIRECTORS

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 enquires, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

12. RECOMMENDATION

The Directors consider that the proposed issue of Convertible Notes is in the interests of the Company and the Shareholders as a whole and that the terms of the Subscription Agreement and the Supplemental Agreement are fair and reasonable and are on normal commercial terms. The Directors therefore recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM.

13. MISCELLANEOUS

In the event of inconsistency, the English texts of this circular and form of proxy shall prevail over their respective chinese texts.

Yours faithfully, For and on behalf of

Grandtop International Holdings Limited Ip Wing Lun

Executive Director and Chief Financial Officer

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NOTICE OF EXTRAORDINARY GENERAL MEETING

GRANDTOP INTERNATIONAL HOLDINGS LIMITED 泓鋒國際控股有限公司 *

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2309)

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the “ Extraordinary General Meeting ”) of Grandtop International Holdings Limited (the “ Company ”) will be held at Boardroom III & IV, M/F, Renaissance Harbour View Hotel, Hong Kong, 1 Harbour Road, Wanchai, Hong Kong on Monday, 7 July 2008 at 11:00 a.m. for the purpose of considering and, if thought fit, passing the following resolution as ordinary resolution of the Company:—

ORDINARY RESOLUTION

“ THAT subject to and conditional upon the Listing Committee of the Stock Exchange of Hong Kong Limited granting approval for the listing of and permission to deal in the ordinary shares in the share capital of the Company (the “ Shares ”) to be issued upon the exercise of the conversion rights attaching to the Convertible Notes (as hereinafter defined):

• (a) the entering into of a subscription agreement dated 7 May 2008 and a supplemental agreement dated 4 June 2008 (collectively referred to as the “ Subscription Agreement ”) between the Company and Pacific Capital Investment Management Limited (“ Pacific Capital ”) pursuant to which Pacific Capital has agreed to subscribe for convertible notes for an aggregate principal amount of up to HK$200,000,000 to be issued by the Company (the “ Convertible Notes ”) be and is hereby approved, ratified and confirmed;

• (b) the terms and conditions of the Convertible Notes be and are hereby approved; and

• For identification purposes only

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• (c) the directors of the Company be and are hereby authorised to (i) issue the Convertible Notes; (ii) issue and allot to the holders of the Convertible Notes upon the due exercise of the conversion rights attaching to the Convertible Notes the appropriate number of new Shares; and (iii) do all such acts and things as they consider necessary, desirable or expedient to give effect to any or all other transactions contemplated in this resolution.”

By the order of the Board Grandtop International Holdings Limited Ip Wing Lun

Executive Director and Chief Financial Officer

Hong Kong, 20 June 2008

Registered Office: Principal place of business in Hong Kong: Cricket Square Unit 3008, 30th Floor Hutchins Drive West Tower, Shun Tak Centre P. O. Box 2681 168-200 Connaught Road Central Grand Cayman Hong Kong KY1-1111 Cayman Islands

Notes:

1. A member of the Company entitled to attend and vote at the Extraordinary General Meeting convened by the above notice is entitled to appoint one or more proxies to attend and, on a poll, vote instead of such member. A proxy need not be a member of the Company.

2. In the case of joint holders of shares in the Company, the vote of the senior who tenders a vote whether in person or by proxy, shall be accepted to the exclusion of the vote(s) of the other joint holders, seniority being determined by the order in which names stand in the register of members.

3. In order to be valid, the form of proxy together with a power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof, must be deposited at the branch share registrar of the Company in Hong Kong, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong, not less than 48 hours before the time appointed for holding the Extraordinary General Meeting (or any adjournment thereof).

4. As at the date hereof, the directors of the Company are Mr. Yeung Ka Sing, Carson, Mr. Hui Ho Luek, Vico, Mr. Steven McManaman, Mr. Fan Zhi Yi, Mr. Lee Yiu Tung, Mr. Ip Wing Lun, Ms. Wong Po Ling, Pauline and Ms. Siu Bessie as executive directors, Mr. Christian Lali Karembeu and Mr. Chan Wai Keung as non-executive directors, Mr. Chang Kin Man, Mr. Zhou Han Ping, Mr. Yip Man Ki and Mr. Yau Yan Ming, Raymond as independent non-executive directors.

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