09:26     CHINA AEROSPACE<00031>&CASIL TELECOM<01185>-J.Ann&Resume(3)         

    approximately HK$7,478,000 as announced on 13 October 2004 by CASTEL);    
    and                                                                       
                                                                              
    (f)  the lack of dividend payment by CASTEL since the year ended 31       
    December 1998.                                                            
                                                                              
    The board of directors (excluding the independent non-executive           
    directors who will form their views after considering the advice of       
    their independent financial adviser to be appointed) of CASIL considers   
    that the Sale and Purchase Agreement was entered into on normal           
    commercial terms, the terms of the Sale and Purchase Agreement            
    (including the non-competition and non-disclosure undertakings) are       
    fair and reasonable and in the interests of the shareholders of CASIL     
    as a whole.                                                               
                                                                              
    Non-competition and non-disclosure undertakings                           
                                                                              
    CASIL and CALT agree that upon completion of the Sale and Purchase        
    Agreement, the non-competition undertakings entered into between CASIL    
    and CASTEL at the time of listing of CASTEL in 1997 shall cease to have   
    any effect.                                                               
                                                                              
    Nevertheless, CASIL undertook with CALT that, except with the prior       
    written consent of CALT:                                                  
                                                                              
    (a)  for a period of one year after Completion, CASIL shall not either    
    on its own account or on behalf of any person or company carry on or be   
    engaged, directly or indirectly (whether as shareholder, director,        
    employee, partner, agent or otherwise), in any business carried on by     
    Astrotech or any member of the CASTEL Group during such period;           
                                                                              
    (b)  for a period of one year after Completion, CASIL shall not (i)       
    either on its own account or on behalf of any other person or company     
    solicit or entice away or attempt to solicit or entice away from          
    Astrotech or any member of the CASTEL Group the custom of any person,     
    company or organisation who shall have been a customer, identified        
    prospective customer, agent or correspondent of Astrotech or any member   
    of the CASTEL Group or in the habit of dealing with Astrotech or any      
    member of the CASTEL Group; or (ii) enter into any contract for sale      
    and purchase or accept business from any such person, company or          
    organisation in a business area in which Astrotech or any member of the   
    CASTEL Group competes; and                                                
                                                                              
    (c)  CASIL shall not for a period of three years after the date of the    
    Sale and Purchase Agreement make use of or divulge to any person any      
    information (other than any information properly available to the         
    public or divulged pursuant to an order of a court of competent           
    jurisdiction or any applicable stock exchange or other regulatory         
    requirement) relating to Astrotech or any member of the CASTEL Group,     
    the identity of their customers and suppliers, their products, finance,   
    contractual arrangements, business or methods of business.                
                                                                              
    CASIL shall also procure that any associates controlled by it shall       
    observe the aforesaid non-competition and non-disclosure undertakings.    
                                                                              
    Conditions precedent and Completion                                       
                                                                              
    Completion of the Sale and Purchase Agreement is conditional upon the     
    following major conditions being fulfilled or waived (where applicable)   
    by CALT:                                                                  
                                                                              
    (a)  CALT having obtained all necessary approval documents from (i)       
    State Administration of Foreign Exchange of the PRC, (ii) the State       
    Development and Reform Commission of the PRC, (iii) Ministry of           
    Commerce of the PRC, (iv) the State-owned Assets Supervision and          
    Administration Commission of the State Council, the PRC, and (v) China    
    Securities Regulatory Commission in respect of the transactions           
    contemplated under the Sale and Purchase Agreement;                       
                                                                              
    (b)  the Independent Shareholders of CASIL approving the Sale and         
    Purchase Agreement and the transactions contemplated thereunder at the    
    Extraordinary General Meeting;                                            
                                                                              
    (c)  CASIL having provided CALT with all relevant consent letters from    
    the following banks and creditors of the Company:-                        
                                                                              
    (i)  Citic Ka Wah Bank Limited, one of CASIL's lender banks;              
                                                                              
    (ii)  lender banks and creditors pursuant to subsisting loan agreements   
    or such relevant agreements of CASIL Group, which agreements stipulate    
    that consent or approval will be required from these banks or creditors   
    if there is any material change in the holding of interests in            
    Astrotech or CASTEL (or any of its subsidiaries);