10:19     KANTONE HOLDING<01059>-Announcement&Resumption of Trading-4         

    (as set out above). Such Shares which fall to be issued                   
    on conversion of the Bonds shall rank pari passu in                       
    all respects with Shares in issue on the date of issue                    
    of such Shares pursuant to the conversion.                                
                                                                              
    Early Redemption:                                                         
    If at any time during the relevant conversion period                      
    (as set out above), the closing price per Share is                        
    less than or equal to 65% of the Base Price (the                          
    "Downside Price") on a business day, the Company may                      
    redeem the Bonds on the immediate following date in                       
    cash in an amount determined according to the formula                     
    provided in the terms and conditions of the Bonds (the                    
    "Downside Option"). In respect of the Original                            
    Tranche 1 Bonds, the Downside Price is approximately                      
    HK$0.20. In determining whether the Company will                          
    exercise such right, the Directors will consider,                         
    among others, the market condition and the interests                      
    of the Company and the Shareholders as a whole                            
    including any dilution effect on the Shareholders.                        
                                                                              
    If at any time during the relevant conversion period                      
    (as set out above), the closing price per Share is                        
    less than or equal to 50% of the Base Price (the "Put                     
    Price") for 15 consecutive business days, CSFB shall                      
    not have the right at such time to require the Company                    
    to convert any Bond at conversion price less than or                      
    equal to the Put Price and CSFB may, by giving not                        
    less than 5 business days' notice to the Company,                         
    require the Company to redeem the Bonds in cash in                        
    an amount equal to 110% of the principal amount of                        
    the Bonds plus accrued interests, provided that the                       
    Company shall not be required to redeem Bonds of                          
    principal amount of more than US$2,000,000 in any                         
    calendar month. In respect of the Tranche 1 Bonds,                        
    the Put Price is approximately HK$0.15 per Share.                         
                                                                              
    The above terms have been agreed between the Company                      
    and CSFB after arm's length negotiations.                                 
                                                                              
    Conditions:                                                               
    The obligation of CSFB to subscribe the Tranche 1                         
    Bonds or, as the case may be, the Tranche 2 Bonds,                        
    is conditional on, among other things, the                                
    satisfaction of certain conditions, including:                            
                                                                              
    (i)     if required, the obtaining of the approval from                   
    the shareholders of the Company for the issue of the                      
    relevant Bonds and/or the issue and allotment of the                      
    new Shares and/or the conversion of the relevant Bonds                    
    into Shares not less than one business day prior to                       
    the closing date for the relevant Bonds; and                              
                                                                              
    (ii)    the delivery by the Company to CSFB of certain                    
    documents specified in the Subscription Agreement by                      
    the closing date for the relevant Bonds. These                            
    documents include legal opinions and a comfort letter                     
    from the auditors of the Company.                                         
                                                                              
    Failure to obtain listing approval:                                       
    If the Company has not obtained approval from the                         
    Stock Exchange for the listing on the Stock Exchange                      
    of the new Shares to be issued upon conversion of any                     
    of the Bonds and the number of Shares that could be                       
    required to be issued under the terms of the relevant                     
    Bonds by no later than 14 calendar days after the                         
    relevant closing date for the Bonds, then upon not                        
    less than 2 business days' written notice, CSFB may                       
    require the Company to repurchase all of the relevant                     
    Bonds held by it at 110 per cent. of their principal                      
    amount plus accrued interest.