10:29     HON PO GROUP<00228> - Announcement (5)                              

    issue of the Conversion Shares will be sought at the EGM. At the request  
     of the Stock Exchange, the controlling shareholder of the Company will   
    abstain from voting on that resolution and an independent financial       
    adviser will be appointed to advise on the fairness of the Conversion     
    Price in the context of the Convertible Notes issue.                      
                                                                              
    Conversion Period                                                         
                                                                              
    Each of the holders of the Convertible Notes shall have the right at any  
     time after the date of issue of the relevant Convertible Note to         
    convert all or part (in the amount or integral multiple of HK$50,000) of  
     the principal amount of the relevant Convertible Note outstanding at     
    any time into new Conversion Shares at the Conversion Price.              
                                                                              
    Ranking                                                                   
                                                                              
    The Conversion Shares will rank pari passu in all respects among          
    themselves and with all other Shares in issue on the date of such         
    allotment and issue.                                                      
                                                                              
    Placing Limit                                                             
                                                                              
    The Placing Agreement provides that principal amount of the Convertible   
    Notes to be placed to each Placee shall not exceed an amount which if     
    immediately converted in full at the initial Conversion Price will        
    entitle that Placee to be issued with Shares which represent in           
    aggregate 10% or more of the issued share capital of the Company as at    
    the date of completion of the Placing as enlarged by the issue of         
    Conversion Shares assuming conversion at the initial Conversion Price.    
    The conversion rights of each holder of Convertible Note is to be         
    similarly restricted so that they may not exercise their conversion       
    rights to such an extent that the total number of Conversion Shares       
    which fall to be issued will represent 10% or more of the issued share    
    capital of the Company at the date of the relevant conversion (including  
     the Conversion Shares which fall to be issued on that conversion).       
                                                                              
    The restrictions described above also apply to the First Convertible      
    Notes. In the case of the First Convertible Notes, these restrictions     
    had been requested by the Company with the intention of reducing the      
    chances of (i) public float in the Shares falling under the minimum       
    public float requirements under the Listing Rules and (ii) any single     
    holder of the First Convertible Notes having on conversion a block of     
    Shares which is larger than that of the existing controlling shareholder  
     of the Company, on a fully diluted basis. These restrictions are         
    imposed on the Convertible Notes mainly in view of (i) above.             
                                                                              
    Redemption by the Company                                                 
                                                                              
    The Company shall be entitled at any time after the expiry of nine        
    months from the date of the issue of a Convertible Note being redeem the  
     whole or any part of the outstanding principal amount of the relevant    
    Convertible Note at 5% premium over the outstanding principal amount.     
                                                                              
    Status of the Convertible Notes                                           
                                                                              
    The Convertible Notes constitute general and unsecured obligations of     
    the Company and shall rank equally among themselves and pari passu with   
    all other present and future unsecured and unsubordinated obligations of  
     the Company except for obligations accorded preference by mandatory      
    provisions of applicable law.                                             
                                                                              
    No application will be made for listing of the Convertible Notes.         
    Application will be made to the Listing Committee of the Stock Exchange   
    for the listing of and permission to deal in the Shares which fall to be  
     issued upon exercise of the conversion rights to the Convertible Notes.  
                                                                              
                                                                              
    Transferability                                                           
                                                                              
    The Convertible Notes are freely transferable subject to compliance with  
     the conditions of the Convertible Notes and the Listing Rules, provided  
     that the holders of the Convertible Notes must inform the Company of     
    each transfer or assignment made by them.                                 
                                                                              
    Voting                                                                    
                                                                              
    The holder of the Convertible Notes shall not be entitled to attend on    
    vote at any meeting of the Company by virtue only of it being the holder  
     of the Convertible Note.                                                 
                                                                              
    Events of default                                                         
                                                                              
    All Convertible Notes will contain events of default provisions which     
    provides that on the occurrence of certain events of default specified    
    in the Convertible Notes (e.g. liquidation), each of the holders of the