09:10 HERITAGE INT'L<00412>-Announcement&Resumption of Trading(7) Maturity The New Convertible Notes will mature on the fifth anniversary from the date of issue. Interest The New Convertible Notes will be non-interest bearing. Redemption date The Company may redeem the New Convertible Notes at 100% of the outstanding principal amount of the New Convertible Notes at any time from the date of issue until a date 7 days prior to (and excluding) the maturity date of the New Convertible Notes. Conversion The outstanding principal amount of the New Convertible Notes may be converted into the Shares in amounts or integral multiples of HK$500,000 at any time from the date of issue up to 7 days before (and excluding) the maturity date of the New Convertible Notes. Conversion Price The Conversion Price of HK$0.05 per Share (subject to adjustment as provided in the terms and conditions of the New Convertible Notes) represents (i) a premium of approximately 19.05% to the closing price of HK$0.042 per Share quoted on the Stock Exchange on 21st January, 2005 the day prior to suspension of dealings in the Shares; and (ii) a premium of approximately 13.9% to the average closing price of HK$0.0439 per Share as quoted from the Stock Exchange from 10th January, 2005 to 21st January, 2005, both dates inclusive, being the last ten full trading days immediately before the date of suspension of trading in shares (24th January, 2005). The Conversion Price was agreed after arm's length negotiations between the Placing Agent and the Company. The Board considers that the Conversion Price is fair and reasonable and is in the interests of the Shareholders and the Company as a whole. The Board also considers that the timing of the Placing to be appropriate in view of the FM Transactions and market conditions. Shares to be issued upon conversion The Shares to be issued upon conversion of the New Convertible Notes will when issued and rank equally in all respects among themselves and with the Shares in issue on the relevant date of conversion. If all the New Convertible Notes are converted at the Conversion Price of HK$0.05 per Share (subject to adjustment as provided in the terms and conditions of the New Convertible Notes), a total of 3,000 million Shares will be issued. These Shares represent approximately 40.58% of the existing issued share capital of the Company, and approximately 28.87% of the issued share capital of the Company as enlarged by the new Shares to be issued upon conversion of the New Convertible Notes (assuming no further shares are issued by the Company from the date of this announcement till the date of conversion). Voting rights of holders of the New Convertible Notes The holders of the New Convertible Notes will not have any right to attend or vote at any meetings of the Company by virtue of their being the holders of the New Convertible Notes. Transferability The New Convertible Notes will not be transferable to persons who are connected persons of the Company as defined in the Listing Rules without the prior written consent of the Company. The Company will inform the Stock Exchange upon the Company becoming aware that any of the New Convertible Notes have been or are to be transferred to any connected persons of the Company (as defined under the Listing Rules). Application for listings The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Shares which may fall to be issued upon conversion of the New Convertible Notes. No listing of the New Convertible Notes will be sought on the Stock Exchange or any other stock exchanges. TERMINATION The Placing is subject to termination if before 9 a.m. (Hong Kong time) on the date for Completion of the Placing Agreement if in the reasonable opinion of the Placing Agent the success of the Placing or the business or financial prospects of the Group would or might be affected by: 1. any material breach of any of the representations and warranties set out in the Placing Agreement; or 2. any of the following events:- (i) the introduction of any new law or regulation or any change in existing laws or regulations or change in the interpretation or application thereof; or (ii) the occurrence of any event, development or change (whether or not local, national or international or forming part of a series of