09:43 VISION TECH<00922> - Announcement (8) mechanism, including the sale or placing of sufficient number of Shares to independent third parties not connected or acting in concert with any director, chief executive or substantial shareholder of the Company or any of its subsidiaries or their respective associates, to ensure that not less than 25% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares is in public hands at all times, (a) the Company will not allot and issue the Conversion Shares to the Subscriber if the issue of the Conversion Shares will result in the percentage of the Shares in public hands being less than 25% of the issues share capital of the Company as enlarged by the issued of the Conversion Shares and (b) the Subscriber would not exercise the Conversion Rights if the public float of the Shares will fall below 25% upon a full or partial exercise of the Conversion Rights. It is the intention of the Subscriber to maintain the listing of the Company on the Stock Exchange. The Stock Exchange has stated that it will closely monitor the dealing in the Shares on the Stock Exchange. The Stock Exchange has also stated that, if less than 25% of the issued Shares are in public hands following completion of the Subscription Agreements, or if the Stock Exchange believes that a false market exists or may exist in the trading of the Shares or that there are insufficient Shares in public hands to maintain an orderly market, it will consider exercising its discretion to suspend dealings in the Shares. The Stock Exchange has stated that if the Company remains as a listed company, the Stock Exchange will closely monitor all future acquisitions or disposals of assets by the Company. Any acquisitions or disposals of assets by the Company will be subject to the provisions of the Listing Rules. Pursuant to the Listing Rules, the Stock Exchange has the discretion to require the Company to issue an announcement and/or a circular to its shareholders irrespective of the size of any proposed transaction, particularly when such proposed transaction represents a departure from the principal activities of the Company. The Stock Exchange also has the power pursuant to the Listing Rules to aggregate a series of acquisitions of assets by the Company and any such acquisitions may result in the Company being treated as if it were a new listing applicant and subject to the requirements of new listing applications as set out in the Listing Rules. PROPOSED CHANGE OF BOARD COMPOSITION OF THE COMPANY The Board currently consists of (i) three executive Directors, namely Mrs. Pei Chen Chi Kuen, Dr. Pei Yaw Liang and Mr. Yang Chun Thomas; and (ii) three independent non-executive Directors, namely Mr. Cheng Hong Cheung, Mr. Lam Kwok Ming and Mr. Leung Wing On Louis. As at the date of this announcement, none of the aforesaid Directors has informed the Company of his intention to resign as a result of the Subscription Agreements. Upon completion of the exercise of the Conversion Rights in full, the Subscriber will appoint Mr. Lau and Mr. Choi as Directors. Other than Mr. Lau and Mr. Choi, the Subscriber does not have any other potential candidate in mind as at the date of this announcement. The Subscriber has not decided on the exact composition of the Board (and whether the service of any of the existing Directors will be retained) following completion of exercise of the Conversion Rights in full but will play an active part in the management of the Group in the future. However, the Subscriber has confirmed that upon completion of the exercise of the Conversion Rights to the extent that it will hold controlling shareholding in the Company, then it intends to appoint sufficient executive Directors to represent its interest in the Company. THE LOAN AGREEMENT Kingston, an indirect wholly-owned subsidiary of the Company, entered into the Loan Agreement with the Subscriber on 30th December, 2004. Pursuant to the Loan Agreement, the Subscriber provided a term loan facility on 31st December, 2004 in the amount of up to HK$3 million at the Interest Rate. The loan under the Loan Agreement is guaranteed by Mrs. Pei Chen Chi Kuen Delia, an executive Director and the Chairman of the Company and secured by a share mortgage by the Company over the entire issue share capital of Capital Spirit, an indirect wholly-owned subsidiary of the Company, which holds the entire share capital of Kingston. Kingston is principally engaged in the distribution of digital versatile disc recorders. Kingston has appointed Mr. Lau and Mr. Choi to be two of authorised signatories of Kingston's bank account to monitor the usage of the loan facility of HK$3 million under the Loan Agreement. Save as disclosed, Mr. Lau and Mr. Choi do not have any executive role nor participate in the management of the Group's business operation. INCREASE IN AUTHORISED Share CAPITAL The authorised share capital of the Company consists of 600,000,000 Shares, of which 364,600,000 Shares are in issue as at the date of this announcement. In order to facilitate the issue of the Conversion Shares, the Directors propose to increase the authorised share capital of the