<PAGE>
                                                                EXHIBIT 4.11


                      Dated the 26th day of September 2002



                       TCL INTERNATIONAL HOLDINGS LIMITED
                                (the "Company")

                                      and

                      Subscribers as set out in Schedule 1



                      ------------------------------------

                             SUBSCRIPTION AGREEMENT

                in respect of the issue of convertible notes by

                       TCL INTERNATIONAL HOLDINGS LIMITED

                      ------------------------------------



                              CHEUNG, TONG & ROSA
                             Solicitors & Notaries
                       Rooms 1621-33, Sun Hung Kai Centre
                                30 Harbour Road

                Tel: (852) 2868 0393        Fax: (852) 2810 0556
                       e-mail: contact@ctrlawyers.com.hk

<PAGE>
T H I S   A G R E E M E N T is made on the 26th day of September Two thousand
                            and Two.

1)   TCL INTERNATIONAL HOLDINGS LIMITED a company incorporated in the Cayman
     Islands and whose registered office is situate at Ugland House, South
     Church Street, P.O. Box 309, George Town, Grand Cayman, Cayman Islands,
     British West Indies with principal place of business in Hong Kong at 13th
     Floor, TCL Tower, 8 Tai Chung Road, Tsuen Wan, New Territories, Hong Kong
     (the "Company"); and

2)   Such persons more particularly set out in Schedule 1 hereto who have
     executed this Subscription Agreement

     (the "Subscribers" and each a "Subscriber").


WHEREAS:

A)   The Company was incorporated in the Cayman Islands under the Company Law of
     the Cayman Islands as an exempted company on 23 April 1999 and presently
     has an authorised share capital of HK$500,000,000 divided into
     5,000,000,000 Shares (as hereinafter defined) and issued share capital of
     HK$259,447,460 divided into 2,594,474,602 Shares.

B)   The Company is entitled to grant Options (as hereinafter defined) to its
     employees. As at the date hereof, certain Options have been granted but
     upon the grant and exercise of the subscription rights in full under the
     Options (subject to any adjustment provided under the Share Option Scheme)
     83,255,313 Shares will be allotted and issued on or before the 28 April
     2005.

C)   The Company has agreed to issue and the Subscribers have agreed to
     subscribe for the Notes to the extent of the face value as more
     particularly set out in column 5 against their respective name in Schedule
     1 hereto and subject to the terms and conditions set out in this Agreement.

D)   It is intended by the parties hereto that the proceeds from the issue of
     the Notes will be applied towards the acquisition under the S&P Agreement.


NOW IT IS HEREBY AGREED AS FOLLOWS:-

PURPOSE AND DEFINITION

                                       1

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     1.   The Schedules form an integral part of this Agreement and shall be
          construed and have the same full force and effect as if expressly set
          out in the main body of this Agreement.

     2.   The words and expressions set out below shall have the meanings
          attributed to them below unless the context otherwise requires:-

     "Accounts"          the latest published audited consolidated accounts of
                         the Company and its subsidiaries comprising their
                         consolidated balance sheet as at 31 December 2001 and
                         their consolidated profit and loss account in respect
                         of the financial year ended 31 December 2001;

     "Agreement"         this Subscription Agreement;

     "Business Day"      a day (other than Saturday) on which banks in Hong Kong
                         are open to conduct business generally;

     "Certificates"      the certificates to be issued in respect of the Notes
                         substantially in the form set out in Schedule 2;

     "Companies          Companies Ordinance (Cap. 32) of the Laws of Hong Kong;
     Ordinance"

     "Completion"        completion of the transaction contemplated herein
                         pursuant to Clause 15 and Schedule 3;

     "Completion Date"   the third Business Day following the date on which the
                         Condition Precedent is fulfilled or such other date as
                         the parties hereto may agree, provided that the date of
                         Completion shall not be earlier than the date of
                         completion of the S&P Agreement;

     "Conditions"        the terms and conditions to be attached to the
                         Certificate substantially in the form set out in
                         Schedule 2 (with such minor amendments thereto as the
                         parties may agree), and "Condition" refers to the
                         relative numbered paragraph of the Conditions;

     "Condition          the condition(s) precedent set out in Clause 12;
     Precedent"

     "Conversion Date"   the date on which the Conversion Rights are exercised
                         in accordance with Conditions 24 to 25 of Schedule 2;

     "Conversion Rights" the rights attached to the Notes to convert the same or
                         a part thereof into Conversion Shares;

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     "Conversion Shares" the Shares to be issued by the Company upon exercise by
                         the Noteholder of the Conversion Rights;

     "Equity Share       the issued share capital of the Company excluding any
     Capital"            part thereof which does not either as respects
                         dividends or as respects capital carry any right to
                         participate beyond a specified amount or beyond an
                         amount calculated by reference to a specified rate in a
                         distribution;

     "Hong Kong"         the Hong Kong Special Administrative Region of the
                         People's Republic of China;

     "Listing Rules"     the Rules Governing the Listing of Securities on the
                         Stock Exchange;

     "Notes"             notes for the principal amounts aggregating up to
                         HK$350,000,000 to be issued by the Company under this
                         Agreement with the benefit of and subject to the
                         provisions of the Conditions and each a Note;

     "Noteholder"        the person who is for the time being the registered
                         holder of a Note;

     "Options"           options granted under the old share option scheme of
                         the Company adopted on 15 November 1999 and options
                         granted or to be granted to employees and executive
                         directors of the Company pursuant to the existing share
                         option scheme (the "Share Option Scheme") adopted by
                         the Company on 30 October 2001 under which scheme the
                         directors of the Company are entitled to grant options
                         to subscribe, subject to adjustments, up to 10% of the
                         aggregate nominal amount of the issued share capital of
                         the Company as at the date of approval of the Share
                         Option Scheme (as amended by the Listing Rules);

     "S&P Agreement"     the sale and purchase agreement dated 26 September 2002
                         entered into between Mate Fair Group Limited as the
                         vendor and TCL Holdings (BVI) Limited as the purchaser
                         and Mr. Wong Toe Yeung as the guarantor in relation to
                         the acquisition by TCL Holdings (BVI) Limited of a
                         13.8% equity interest in Huizhou TCL Mobile
                         Communication Co. Ltd., a Sino-foreign equity joint
                         venture established in March 1999 in the PRC;

     "Shares"            the shares of HK$0.10 each in the issued share capital
                         of the Company existing on the date of this Agreement
                         and

                                       3

<PAGE>
                         all other (if any) stock or shares from time to time
                         and for the time being ranking pari passu therewith and
                         all other (if any) shares or stock in the Equity Share
                         Capital of the Company resulting from any sub-division,
                         consolidation or re-classification of Shares;

     "Stock Exchange"    The Stock Exchange of Hong Kong Limited;

     "Warranties"        the representations, warranties and undertakings under
                         Clause 17 and Schedule 4;

     "HK$"               Hong Kong dollars.

3.   Except as otherwise expressly provided, expressions defined in the
     Companies Ordinance have the same meaning in this Agreement.

4.   A reference to a statute or statutory provision includes a reference:-

     4.1  to that statute or provisions as from time to time modified or
          re-enacted;

     4.2  to any repealed statute or statutory provision which it re-enacts
          (with or without modification); and

     4.3  to any orders, regulations, instruments or other subordinate
          legislation made under the relevant statute or statutory provision.

5.   Unless the context otherwise requires:-

     5.1  words in the singular include the plural, and vice versa;

     5.2  words importing any gender include all genders; and

     5.3  a reference to a person includes a reference to a body corporate and
          to an unincorporated body of persons.

6.   A reference to a Clause, Sub-Clause or Schedule is to a clause, sub-clause
     or schedule (as the case may be) of or to this Agreement.

7.   The headings are for convenience only and do not affect interpretation.

8.   The definitions adopted in the recitals apply throughout this Agreement.



ISSUE AND SUBSCRIPTION OF THE NOTES

9.   Subject to fulfilment of the Condition Precedent and on Completion, the
     Subscribers shall subscribe for the Notes to the extent of the face value
     as more particularly set out in column 5 against their respective name in
     Schedule 1 hereto and shall pay or procure

                                       4

<PAGE>
     that there by paid to the Company the amount of the face value of the Notes
     to be subscribed being the subscription moneys for the Notes.

10.  Subject to fulfilment of the Condition Precedent and on Completion, the
     Company shall upon receipt of the sum as specified in Clause 9 issue the
     Notes at its full face value as subscribed to the Subscribers provided that
     all (but not part only) of the Notes are subscribed, otherwise the Company
     is under no obligation to issue any of the Notes.

11.  It is expressly agreed and understood that the subscription of all (but not
     part only) Notes shall be completed simultaneously.



CONDITION PRECEDENT

12.  It shall be a condition precedent of Completion that prior thereto:-

     12.1 the Stock Exchange shall have approved and not withdrawn approval for
          the issue of the Notes (either unconditionally or subject only to
          conditions to which neither the Company nor the Subscribers reasonably
          object and the satisfaction of such conditions);

     12.2 the Listing Committee of the Stock Exchange shall have granted (either
          unconditionally or subject only to conditions to which neither the
          Company nor the Subscribers reasonably object) listing of and
          permission to deal in the Conversion Shares;

     12.3 the shareholders of the Company shall have approved at an
          extraordinary general meeting the issue of the Notes and the allotment
          and issue of the Conversion Shares upon the exercise of the Conversion
          Rights attaching thereto (at which the Subscribers and their
          respective associates shall abstain from voting); and

     12.4 all the conditions precedent as set out in Clauses 6.2 to 6.7 of the
          S&P Agreement have been fulfilled.

13.  The Company undertakes to the Subscribers to use its best endeavours to
     ensure that the Condition Precedent is fulfilled as early as practicable
     and in any event not later than 31 January 2003 or such later date as the
     Subscribers and the Company may agree.

14.  If the Condition Precedent has not been fulfilled on or before 31 January
     2003 or such later date as may be agreed between the Subscribers and the
     Company, this Agreement will lapse and become null and void and the parties
     will be released from all obligations hereunder, save the liabilities for
     any antecedent breaches hereof.



COMPLETION

15.  Subject to fulfilment of the Condition Precedent and Clause 16, Completion
     shall take place at the office of the solicitors for the Company, Messrs.
     Cheung, Tong & Rosa at

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     Rooms 1621-33, 16/F., Sun Hung Kai Centre, 30 Harbour Road, Hong Kong on
     the Completion Date and each party shall perform its respective obligations
     set out in Schedule 3.

16.  In no event shall Completion take place earlier than the date and time at
     which completion of the S&P Agreement takes place in accordance with the
     terms and conditions thereof.


REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

17.  The Company hereby represents, warrants and undertakes to the Subscribers
     in the terms set out in Clauses 17 to 19 and Schedule 4 as at the date
     hereof and that each of the Warranties is now and will at Completion and
     will at all times between the date of this Agreement and the Completion
     Date, be true, complete and accurate in all respects and the Company hereby
     agrees and acknowledges that the Subscribers are entering into this
     Agreement in reliance on the Warranties.

18.  The Company shall notify the Subscribers upon it becoming aware prior to
     Completion of any event which could reasonably be expected to cause any of
     the Warranties to be incorrect, misleading or breached in any material
     respect or which may have any material adverse effect on the assets or
     liabilities of the Company.

19.  If any party fails to perform any of its obligations in any material
     respect (including its obligation at Completion) under this Agreement or
     breaches any of the terms or Warranties set out in this Agreement in any
     material respect prior to Completion then without prejudice to all and any
     other rights and remedies available at any time to a non-defaulting party
     (including but not limited to the right to damages for any loss suffered by
     that party) any non-defaulting party may, by notice either require the
     defaulting party to perform such obligations or, insofar as the same is
     practicable, remedy such breach, or to the extent it relates to the failure
     of the defaulting party to perform any of its obligations on or prior to
     Completion  in any material respect treat the defaulting party as having
     repudiated this Agreement and rescind the same. The rights conferred upon
     the respective parties by the provision of this Clause 19 are additional to
     and do not prejudice any other rights the respective parties may have.
     Failure to exercise any of the rights herein conferred shall not constitute
     a waiver of any such rights.


THE SUBSCRIBERS' UNDERTAKING

20.  Each of the Subscribers hereby specifically undertakes in favour of the
     Company that it will not exercise any of the conversion rights in and under
     the Notes if immediately after such conversion there shall be less than the
     prescribed minimum percentage of securities of the Company in the hands of
     the public within the meaning of Rule 8.08 of the Listing Rules by reason
     of such conversion. This undertaking shall survive Completion.

                                       6

<PAGE>
21.  Each of the Subscribers represents and warrants, and agrees, that it shall
     not, for a period of six months from the date of issue of the Notes, offer
     for sale, sell, transfer or otherwise dispose of any Notes or Shares to be
     issued upon conversion of the Notes unless the prior written consent of the
     Company to such offer for sale, sale, transfer or disposal is obtained.


ANNOUNCEMENT

22.  Save as required by law or by the Stock Exchange or by any relevant
     regulatory authority, neither of the parties hereto shall make any
     announcement in relation to this Agreement without the consent of the other
     party (such consent not to be unreasonably withheld).


NOTICES

23.  Any notice required or permitted to be given by or under this Agreement
     shall be in writing and shall be given by delivering it to the address of
     the relevant party concerned

     23.1.     in the case of the Company to its principal place of business
               address in Hong Kong shown on the first page of this Agreement
               (marked for the attention of Li Dong Sheng); or

     23.2.     in the case of the Subscribers to their respective correspondence
               address in Hong Kong shown in column 4 against their respective
               names in Schedule 1 and marked for attention of the person named
               thereunder.

     or to such other address in Hong Kong as the party concerned may have been
     notified to the other party pursuant to this Clause 23 and may be given by
     sending it by hand or in a prepaid envelope by post to such address or (in
     either case) to such other address in Hong Kong as the party concerned may
     have notified to the other party in accordance with this Clause 23 and such
     notice shall be deemed to be served at the time of delivery or (as the case
     may be) 48 hours after posting, or if sooner upon acknowledgement of
     receipt by or on behalf of the party to which it is addressed.


COSTS AND EXPENSES

24.  Each party shall bear its own legal, accountancy and other costs and
     expenses incurred in connection with preparation, negotiation and
     settlement of this Agreement. Capital fees or stamp duty (if any) relating
     to the issue and delivery of the Notes shall be borne by the Company.


GENERAL PROVISIONS RELATING TO AGREEMENT

25.  Any date or period of time shall be of the essence of this Agreement.

                                       7

<PAGE>
26.  Each party undertakes to the other to execute or procure to be executed all
     such documents and to do or procure to be done all such other acts and
     things as may be reasonable and necessary to give all parties the full
     benefit of this Agreement.

27.  This Agreement shall be binding on and enure for the benefit of the
     successors of each of the parties and shall not be assignable.

28.  The exercise of or failure to exercise any right or remedy in respect of
     any breach of this Agreement shall not, save as provided herein, constitute
     a waiver by such party of any other right or remedy it may have in respect
     of that breach.

29.  Any right or remedy conferred by this Agreement on any party for breach of
     this Agreement (including without limitation the breach of any
     representations and warranties) shall be in addition and without prejudice
     to all other rights and remedies available to is in respect of that breach.

30.  Any provision of this Agreement which is capable of being performed after
     Completion but which has not been performed at or before Completion and all
     representations and warranties and other undertakings contained in or
     entered into pursuant to this Agreement shall remain in full force and
     effect notwithstanding Completion.

31.  This Agreement constitutes the entire agreement between the parties with
     respect to its subject matter (neither party having relied on any
     representation or warranty made by the other party which is not contained
     in this Agreement) and no variation of this Agreement shall be effective
     unless made in writing and signed by all of the parties.

32.  This Agreement supersedes all and any previous agreements, arrangements or
     understanding between the parties relating to the matters referred to in
     this Agreement and all such previous agreements, understanding or
     arrangements (if any) shall cease and determine with effect from the date
     hereof.

33   If at any time any provision of this Agreement is or becomes illegal, void
     or unenforceable in any respect, the remaining provisions hereof shall in
     no way be affected or impaired thereby.


GOVERNING LAW AND JURISDICTION

34.  This Agreement shall be governed by and construed in accordance with the
     laws of Hong Kong and each party hereby submits to the non-exclusive
     jurisdiction of the courts of Hong Kong as regards any claim or matter
     arising under this Agreement and agrees that process may be served at the
     address for service of notices pursuant to Clause 23.


COUNTERPARTS

35.  This Agreement may be executed by the parties hereto in any number of
     counterparts and on separate counterparts, each of which when so executed
     shall be deemed an

                                       8

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     original but all of which shall constitute one and the same instrument and
     is binding on all parties.

                                       9

<PAGE>
                                   SCHEDULE 1
                              (the "Subscribers")

<Table>
<Caption>
Column 1         Column 2            Column 3                      Column 4                                Column 5
--------         --------            --------                      --------                                --------
Name             Place of            Registered Office             Hong Kong Correspondence Address        Face Value of Notes
                 Incorporation                                                                             Subscribed For
----             --------------      -----------------             --------------------------------        -------------------
<S>              <C>                 <C>                           <C>                                     <C>
1 United Asset   British Virgin      Offshore Incorporations       Address:  Room 904, Tower 1, China      HK$210,000,000
  Investments    Islands             Limited, P.O. Box 957,                  Hong Kong City, 33 Canton
  Limited                            Offshore Incorporations                 Road, Tsimshatsui, Kowloon
                                     Centre, Road Town, Tortola,   Fax No.:  2302 0996
                                     British Virgin Islands        Attn.:    Wong Toe Yeung

2 Go-Win         British Virgin      Sea Meadow House,             Address:  Room 904, Tower 1, China      HK$100,000,000
  Limited        Islands             Blackburne Highway, P.O.                Hong Kong City, 33 Canton
                                     Box 116, Road Town,                     Road, Tsimshatsu, Kowloon
                                     Tortola, British Virgin       Fax No.:  2302 0996
                                     Islands                       Attn.:    Wong Toe Yeung

3 Nam Tai        British Virgin      P.O. Box 3342, Road Town,     Address:  15th Floor, China Merchants   HK$40,000,000
  Electronics,   Islands             Tortola, British Virgin                 Tower, Shun Tak Centre,
  Inc.                               Islands                                 168-200 Connaught Road
                                                                             Central, Hong Kong
                                                                   Fax No.:  2263 1224
                                                                   Attn.:    Li Shi Yuen, Joseph
</Table>

                                       10

<PAGE>
                                   SCHEDULE 2

                       TCL INTERNATIONAL HOLDINGS LIMITED
                          (TCL [CHINESE CHARACTERS])*

          (Incorporated in the Cayman Islands with limited liability)

             3% CONVERTIBLE NOTES AGGREGATING UP TO HK$350,000,000


Issued pursuant to the Memorandum of Association and Articles of Association
of TCL International Holdings Limited (the "Company") and a resolution of its
Board of Directors passed on the 26 day of September, 2002 and pursuant to an
ordinary resolution of the Company passed at an extraordinary general meeting
held on [*], 2002.

                               THIS IS TO CERTIFY

     that [*] whose registered office is situate at [*] is, at the date hereof,
     entered in the register of holders of 3% convertible notes due 2005 (the
     "Notes") as the holder of the Note with a principal amount of [HK$*]). The
     Notes are issued with the benefit of and subject to the terms and
     conditions attached hereto which shall form an integral part of this
     Certificate.


     GIVEN under the Seal of the Company this [*] day of [*], 2002


----------------------------        Director


----------------------------  Secretary/Director


Notes:-

The Notes cannot be transferred to bearer on delivery and is only transferable
to the extent permitted by Condition 5 of the terms and conditions thereof.
This Certificate must be delivered to the secretary of TCL International
Holdings Limited for cancellation and reissue of an appropriate certificate in
the event of any such transfer.

* for identification purpose only


                                   ----------

              (For endorsement in the event of partial conversion)


     Date                 Amount Converted              Amount Outstanding
     ----                 ----------------              ------------------


                                       11

<PAGE>
                       TERMS AND CONDITIONS OF THE NOTES



The Notes shall be held subject to and with the benefit of the terms and
conditions set out below and such terms and conditions shall be binding on TCL
INTERNATIONAL HOLDINGS LIMITED ("the Company"). Expressions defined in the
Subscription Agreement (the "Agreement") dated 26th September 2002 between the
subscribers as set out in Schedule 1 to the Agreement and TCL INTERNATIONAL
HOLDINGS LIMITED relating to the Notes shall bear the same meaning in this
Certificate:-

FORM AND TITLE

     FORM

1.   The Notes are in registered form and represented by note certificates
     ("Certificates") in which the principal amount is specified. Each
     Certificate will have an identifying number which will be recorded on the
     relevant Certificate and in the register of Noteholders (the "Register")
     which the Company will keep in compliance with Condition 8.

     TITLE

2.   Title to the Note passes by transfer and registration in the Register of
     Noteholders as described in the Conditions 5 to 7. The registered holder of
     any Note will (except as otherwise required by applicable law or statutory
     requirements) be treated as its absolute owner for all purposes (whether or
     not it is overdue and regardless of any notice of ownership, trust or any
     interest thereof or therein, any writing thereon, or any theft or loss
     thereof) and no person shall be liable for so treating such holders. Any
     Note held jointly shall be delivered to that one of the joint holders whose
     name stands first in the Register in respect of the joint holding.

PERIOD

3.   Subject as provided herein, the Company shall repay such principal moneys
     outstanding under the Notes to the Noteholder together with all interest
     accrued thereon up to and including the date of repayment on the third
     anniversary of the date of issue of the Notes (the "Maturity Date").

STATUS AND TRANSFER

4.   The obligations of the Company arising under each of the Notes constitute
     general, unsecured obligations of the Company, and will 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 a listing of the Notes.

5.   No assignment or transfer or part only of the Notes may be made. Any
     assignment or transfer of the Notes (in whole) within 6 months from the
     date of issue must be made with the prior consent of the board of directors
     of the Company and (if required) the Stock Exchange of Hong Kong Limited
     (the "Stock Exchange"). Thereafter, unless prior consent of Stock Exchange
     is otherwise required, the Notes are freely transferable


                                       12


<PAGE>
          in whole.

      6.  The Notes may only be transferred by execution of a form of transfer
          (the "Transfer Form") which shall be in a form previously agreed
          between the Company and the Noteholder under the hand of the
          transferor and the transferee (or their duly authorized
          representatives) or, where either the transferor or transferee is a
          corporation, under its common seal (if any) and under the hand of one
          of its officers duly authorized in writing or otherwise executed by a
          duly authorized officer thereof. In this Condition 6 "transferor"
          shall, where the context permits or requires, include joint
          transferors or can be construed accordingly.

      7.  The certificate of the Notes must be delivered for registration to
          the Company accompanied by (i) a duly executed Transfer Form; (ii) in
          the case of the execution of the Transfer Form on behalf of a
          corporation by its officers, the authority of that person or those
          persons to do so; and (iii) such other evidence (including legal
          opinions) as the Company may reasonably require if the Transfer Form
          is executed by some other person on behalf of the Noteholder. The
          Company shall, within 7 Business Days of receipt of such documents
          from the Noteholder, cancel the existing Certificate and issue a new
          certificate under the seal of the Company, in favour of the transferee
          or assignee as applicable.

      8.  The Company shall maintain and keep a full and complete register at
          such location in the Cayman Islands as it shall from time to time
          determine of the Notes and the Noteholders from time to time recording
          its conversion and/or cancellation and the destruction of any
          replacement Notes issued in substitution for any mutilated, defaced,
          lost, stolen or destroyed Notes and of sufficient identification
          details of all Noteholders from time to time holding the Notes. The
          Company shall further procure that such register shall be made
          available to any holder of the Notes at all reasonable times.

      INTEREST

      9.  Subject to Condition 10, the Notes will bear interest from the date
          of issue at the rate of 3 per cent per annum on the principal amount
          of the Notes from time to time outstanding, which subject as provided
          herein, will be calculated on the basis of 365-day year and in the
          case of an incomplete month, the number of actual days elapsed and be
          payable by the Company semi-annually in arrears on dates falling six
          calendar months and one year after the date of issue of the Notes and
          on the anniversaries of such dates for each year thereafter. The
          first payment shall be made on the date falling six calendar months
          after the date of issue of the Notes.

      10. In the event that the Noteholder has converted part or whole of the
          principal amount of the Notes, the Noteholder shall not be entitled
          to interest in respect of such part or whole as the case may be of
          the principal amount for the period from the immediately preceding
          interest payment date to the Conversion Date concerned both dates
          inclusive.

      PAYMENTS

      11. Payment of the principal in respect of the Notes will be made on the
          due date by way of the Company's cheque drawn on a licensed bank in
          Hong Kong to be delivered to the Noteholder at the address as set out
          in Condition 31. Payments of interest in respect of the Notes will be
          made semi-annually by way of the Company's cheque drawn on a

                                       13
<PAGE>
          licensed bank in Hong Kong to be delivered to the Noteholder at the
          address as set out in Condition 31. All Payments by the Company shall
          be made in Hong Kong Dollars.

      12. If the due date for payment of any amount in respect of the Notes is
          not a Business Day, the Noteholder will be entitled to payment on the
          next following Business Day in the same manner and will not be
          entitled to any further interest or other payment in respect of any
          such delay.

      CONVERSION

      13. Subject as hereinafter provided (for the avoidance of doubt,
          including Clause 26.1), each Noteholder will have the right to
          convert the whole or part of the principal amount of the Note into
          Shares at any time and from time to time, from the date of issue up
          to the third anniversary of the date of issue of the Note in amounts
          of not less than HK$10,000,000 on each conversion, save that if at
          any time, the principal outstanding amount of the Note is less than
          HK$10,000,000, the whole (but not part only) of the principal
          outstanding amount of the Note may be converted. The price at which
          each Share shall be issued upon conversion shall be HK$2.556 (being
          120% of the average closing price of the Shares of the Company quoted
          on the Stock Exchange for the last 10 trading days immediately before
          the date of the Subscription Agreement) subject to adjustment as
          hereafter described (the "Conversion Price"). No fraction of a Share
          will be issued on conversion but (except in cases where any such cash
          payment would amount to less than HK$10) an equivalent cash payment
          in Hong Kong dollars will be made to the Noteholder in respect of
          such fraction. Shares issued upon conversion shall rank pari passu in
          all respect with all other existing Shares outstanding on the date of
          the conversion notice (the "Conversion Notice") (being a notice
          received in accordance with Condition 24) and be entitled to all
          dividends and other distribution the record date for which falls on a
          date on or after the date of the Conversion Notice PROVIDED ALWAYS,
          the Noteholder shall not be entitled to exercise the conversion right
          hereunder if immediately after such conversion there shall be less
          than the prescribed minimum percentage of securities of the Company
          in the hands of the public within the meaning of Rule 8.08 of the
          Rules Governing the Listing of Securities (the "Listing Rules") of
          the Stock Exchange by reason of such conversion.

      ADJUSTMENTS

      14. Subject as hereinafter provided, the Conversion Price shall from time
          to time be adjusted in accordance with the following relevant
          provisions so that if the event giving rise to any such adjustment
          shall be such as would be capable of falling within more than one of
          Conditions 14.1 to 14.6 inclusive then it shall deemed to fall within
          the first of the applicable paragraphs to the exclusion of the
          remaining paragraphs:-

          14.1. If and whenever the Shares by reason of any consolidation or
                sub-division become of a different nominal amount, the
                Conversion Price in force immediately prior thereto shall be
                adjusted by multiplying it by the revised nominal amount and
                dividing the result by the former nominal amount. Each such
                adjustment shall be effective from the close of business in Hong
                Kong on the day immediately preceding the date on which the
                consolidation or sub-division becomes effective.

          14.2. If and whenever the Company shall issue (other than in lieu of a
                cash dividend)

                                       14
<PAGE>
     any Shares credited as fully paid by way of capitalisation of profits or
     reserves (including any share premium account or capital redemption reserve
     fund), the Conversion Price in force immediately prior to such issue shall
     be adjusted by multiplying it by the aggregate nominal amount of the issued
     Shares immediately before such issue and dividing the result by the sum of
     such aggregate nominal amount and the aggregate nominal amount of the
     Shares issued in such capitalisation. Each such adjustment shall be
     effective (if appropriate retroactively) from the commencement of the day
     next following the record date for such issue.

14.3 If and whenever the Company shall make any Capital Distribution (as defined
     in Condition 15) to holders (in their capacity as such) of Shares (whether
     on a reduction of capital or otherwise) or shall grant to such holders
     rights to acquire for cash assets of the Company or any of its
     subsidiaries, the Conversion Price in force immediately prior to such
     distribution or grant shall be adjusted by multiplying it by the following
     fraction:-

     A-B
     ---
      A


     where:-

     A =  the market price (as defined in Condition 15) on the date on which the
          Capital Distribution or, as the case may be, the grant is publicly
          announced or (failing any such announcement) next preceding the date
          of the Capital Distribution or, as the case may be, of the grant; and

     B =  the fair market value on the day of such announcement or (as the case
          may require) the next preceding day, as determined in good faith by an
          approved merchant bank, of the portion of the Capital Distribution or
          of such rights which is attributable to one Share,

     Provided that:-

     (aa) if in the opinion of the relevant approved merchant bank, the use of
          the fair market value as aforesaid produces a result which is
          significantly inequitable, it may instead determine (and in such event
          the above formula shall be construed as if B meant) the amount of the
          said market price which should properly be attributed to the value of
          the Capital Distribution or rights; and

     (bb) the provisions of this Condition 14.3 shall not apply in relation to
          the issue of Shares paid out of profits or reserves and issued in lieu
          of a cash dividend.

     Each such adjustment shall be effective (if appropriate retroactively) from
     the commencement of the day next following the record date for the Capital
     Distribution or grant.

14.4 If and whenever the Company shall offer to holders of Shares new Shares for
     subscription by way of rights, or shall grant to holders of Shares any
     options or

                                       15

<PAGE>
          warrants to subscribe for new Shares, at a price which is less than
          the market price at the date of the announcement of the terms of the
          offer or grant, the Conversion Price shall be adjusted by multiplying
          the Conversion Price in force immediately before the date of the
          announcement of such offer or grant by a fraction of which the
          numerator is the number of Shares in issue immediately before the date
          of such announcement plus the number of Shares which the aggregate of
          the amount (if any) payable for the rights, options or warrants and of
          the amount payable for the total number of new Shares comprised
          therein would purchase at such market price and the denominator is the
          number of Shares in issue immediately before the date of such
          announcement plus the aggregate number of Shares offered for
          subscription or comprised in the options or warrants (such adjustment
          to become effective (if appropriate retroactively) from the
          commencement of the day next following the record date for the offer
          or grant).

     14.5 If and whenever the Company shall issue wholly for cash any securities
          which by their terms are convertible into or exchangeable for or carry
          rights of subscription for new Shares:-

          (a)  if the total Effective Consideration per Share (as defined below)
               initially receivable for such securities is less than the market
               price at the date of the announcement of the terms of issue of
               such securities, the Conversion Price shall be adjusted by
               multiplying the Conversion Price in force immediately prior to
               the issue by a fraction of which the numerator is the number of
               Shares in issue immediately before the date of the issue plus the
               number of Shares which the total Effective Consideration
               receivable for the securities issued would purchase at such
               market price and the denominator is the number of Shares in issue
               immediately before the date of the issue plus the number of
               Shares to be issued upon conversion or exchange of, or the
               exercise of the subscription rights conferred by, such securities
               at the initial conversion or exchange rate or subscription price.
               Such adjustment shall become effective (if appropriate
               retrospectively) from the close of business in Hong Kong on the
               Business Day next preceding whichever is the earlier of the date
               on which the issue is announced and the date on which the issuer
               determines the conversion or exchange rate or subscription price.

          (b)  if and whenever the rights of conversion or exchange or
               subscription attached to any such securities as are mentioned in
               Condition 14.5(a) are modified so that the total Effective
               Consideration per Share initially receivable for such securities
               shall be less than the market price at the date of announcement
               of the proposal to modify such rights of conversion or exchange
               or subscription, the Conversion Price shall be adjusted by
               multiplying the Conversion Price in force immediately prior to
               such modification by a fraction of which the numerator is the
               number of Shares in issue immediately before the date of such
               modification plus the number of Shares which the total Effective
               Consideration receivable for the securities issued at the
               modified conversion or exchange price would purchase at such
               market price and of which the denominator is the number of Shares
               in issue immediately before such date of modification plus the
               number of Shares to be issued upon conversion or exchange of or
               the exercise of the subscription rights conferred by such
               securities at the modified conversion or exchange rate or
               subscription price. Such adjustment shall become effective as at
               the date upon which such

                                       16

<PAGE>
               modification shall take effect. A right of conversion or exchange
               or subscription shall not be treated as modified for the
               foregoing purposes where it is adjusted to take account of rights
               or capitalisation issues and other events normally giving rise to
               adjustment of conversion or exchange terms.

          (c)  for the purposes of Condition 14.5, the "total Effective
               Consideration" receivable for the securities issued shall be
               deemed to be the consideration receivable by the Company for any
               such securities plus the additional minimum consideration (if
               any) to be received by the Company upon (and assuming) the
               conversion or exchange thereof or the exercise of such
               subscription rights, and the total Effective Consideration per
               Share initially receivable for such securities shall be such
               aggregate consideration divided by the number of Shares to be
               issued upon (and assuming) such conversion or exchange at the
               initial conversion or exchange rate or the exercise of such
               subscription rights at the initial subscription price, in each
               case without any deduction for any commissions, discounts or
               expenses paid, allowed or incurred in connection with the issue.

     14.6 If and whenever the Company shall issue wholly for cash any Shares at
          a price per Share which is less than the market price at the date of
          the announcement of the terms of such issue, the Conversion Price
          shall be adjusted by multiplying the Conversion Price in force
          immediately before the date of such announcement by a fraction of
          which the numerator is the number of Shares in issue immediately
          before the date of such announcement plus the number of Shares which
          the aggregate amount payable for the issue would purchase at such
          market price and the denominator is the number of Shares in issue
          immediately before the date of such announcement plus the number of
          Shares so issued. Such adjustment shall become effective on the date
          of the issue.

15.  For the purposes of the provisions under the heading "ADJUSTMENTS" (for the
     avoidance of doubt, including Conditions 14 to 22):-

     "announcement"      shall include the release of an announcement to the
                         press or the delivery or transmission by telephone,
                         telex or otherwise of an announcement to the Stock
                         Exchange and "date of announcement" shall mean the date
                         on which the announcement is first so released,
                         delivered or transmitted;

     "approved merchant  means a merchant bank of repute in Hong Kong selected
     bank"               by the Company and agreed by the Noteholder for the
                         purpose of providing a specific opinion or calculation
                         or determination hereunder and in the absence of such
                         agreement shall be Cazenove Asia Limited;

                                       17

<PAGE>
     "Capital            shall (without prejudice to the generality of that
     Distribution"       phrase) include distributions in cash or specie. Any
                         dividend charged or provided for in the accounts for
                         any financial period shall (whenever paid and however
                         described) be deemed to be a Capital Distribution
                         Provided that any such dividend shall be automatically
                         deemed not a Capital distribution if it is paid out of
                         the aggregate of the net profits (less losses)
                         attributable to the holders of Shares for all financial
                         periods after 31 December 2001 as shown in the audited
                         consolidated profit and loss account of the Company and
                         its subsidiaries for each financial period ended 31
                         December;

     "issue"             shall include allot;

     "market price"      means the average of the closing prices of one Share on
                         the Stock Exchange for each of the last five Stock
                         Exchange dealing days on which dealings in the Shares
                         on the Stock Exchange took place ending on the last
                         such dealing day preceding the day on or as of which
                         the market price is to be ascertained;

     "Shares"            includes, for the purposes of Shares comprised in any
                         issue, distribution or grant pursuant to Conditions
                         14.3, 14.4, 14.5, or 14.6, any such ordinary shares of
                         the Company as, when fully paid, will be Shares;

     "reserves"          includes unappropriated profits;

     "rights"            includes rights in whatsoever form issued.

16.  The provisions of Conditions 14.2, 14.3, 14.4, 14.5 and 14.6 shall not
     apply to:-

     16.1 an issue of fully paid Shares upon the exercise of any conversion
          rights attached to securities convertible into Shares or upon exercise
          of any rights (including any conversion of the Notes) to acquire
          Shares provided that an adjustment has been made under the provisions
          under the heading "ADJUSTMENTS" in respect of the issue of such
          securities or granting of such rights (as the case may be);

     16.2 an issue of fully paid Shares upon the exercise of the Option;

     16.3 an issue of Shares or other securities of the Company or any
          subsidiary of the Company wholly or partly convertible into, or rights
          to acquire, Shares to officers or employees of the Company or any of
          its subsidiaries pursuant to any employee or executive share scheme in
          existence as at the date of the issue of Notes;

     16.4 an issue by the Company of Shares or by the Company or any subsidiary
          of the Company of securities wholly or partly convertible into or
          rights to acquire Shares, in any such case in consideration or part
          consideration for the acquisition of any other securities, assets or
          business provided that an adjustment has been made (if appropriate)
          under the provisions under the heading "ADJUSTMENTS" in respect of the
          issue of such securities or granting of such rights (as the case

                                       18

<PAGE>
          may be);

     16.5. an issue of fully paid Shares by way of capitalisation of all or part
           of any subscription right reserve, or any similar reserve which has
           been or may be established pursuant to the terms of any securities
           wholly or partly convertible into or rights to acquire Shares; or

     16.6. an issue of Shares pursuant to a scrip dividend scheme where an
           amount not less than the nominal amount of the Shares so issued is
           capitalised and the market value of such Shares is not more than 110
           per cent of the amount of dividend which holders of the Shares could
           elect to or would otherwise receive in cash, for which purpose the
           "market value" of a Share shall mean the average of the closing
           prices for such Stock Exchange dealing days on which dealings in the
           Shares took place (being not less than five such days) as are
           selected by the directors of the Company in connection with
           determining the basis of allotment in respect of the relevant scrip
           dividend and which fall within the period of one month ending on the
           last day on which holders of Shares may elect to receive or (as the
           case may be) not to receive the relevant dividend in cash.

17.  Any adjustment to the Conversion Price shall be made to the nearest one
     cent so that any amount under half a cent shall be rounded down and any
     amount of half a cent or more shall be rounded up and in no event shall any
     adjustment (otherwise than upon the consolidation of Shares into Shares of
     a larger nominal amount) involve an increase in the Conversion Price. In
     addition to any determination which may be made by the directors of the
     Company every adjustment to the Conversion Price shall be certified either
     (at the option of the Company) by the auditors of the Company for the time
     being or by an approved merchant bank.

18.  Notwithstanding anything contained herein, no adjustment shall be made to
     the Conversion Price in any case in which the amount by which the same
     would be reduced in accordance with the foregoing provisions of this
     Condition 18 would be less than one cent and any adjustment that would
     otherwise be required then to be made shall not be carried forward.

19.  If the Company or any subsidiary of the Company shall in any way modify the
     rights attached to any share or loan capital so as wholly or partly to
     convert or make convertible such share or loan capital into, or attach
     thereto any rights to acquire, Shares, the Company shall appoint an
     approved merchant bank to consider whether any adjustment to the Conversion
     Price is appropriate (and if such approved merchant bank shall certify that
     any such adjustment is appropriate the Conversion Price shall be adjusted
     accordingly and the provisions of Conditions 17, 18 and 21 shall apply).

20.  Notwithstanding the provisions of Condition 14, in any circumstances where
     the Directors of the Company shall consider that an adjustment to the
     Conversion Price provided for under the said provisions should not be made
     or should be calculated on a different basis or that an adjustment to the
     Conversion Price should be made notwithstanding that no such adjustment is
     required under the said provisions or that an adjustment should take effect
     on a different date or with a different time from that provided for under
     the provisions, the Company may appoint an approved merchant bank to
     consider whether for any reason whatever the adjustment to be made (or the
     absence of adjustment) would or might not fairly and appropriately reflect
     the relative interests of the persons affected thereby and, if such
     approved merchant bank shall consider this to be the case, the adjustment
     shall be modified or nullified or an

                                       19

<PAGE>
     adjustment made instead of no adjustment in such manner including without
     limitation, making an adjustment calculated on a different basis) and/or
     the adjustment shall take effect from such other date and/or time as shall
     be certified by such approved merchant bank to be in its opinion
     appropriate.

21.  Whenever the Conversion Price is adjusted as herein provided the Company
     shall give notice to the holder of the Notes that the Conversion Price has
     been adjusted (setting forth the event giving rise to the adjustment, the
     adjustment Conversion Price in effect prior to such adjustment, the
     adjusted Conversion Price and the effective date thereof) and shall at all
     times thereafter so long as the Notes remains outstanding make available
     for inspection at its principal place of business in Hong Kong a signed
     copy of the said certificate of the auditors of the Company or (as the case
     may be) of the relevant approved merchant bank and a certificate signed by
     a director of the Company setting forth brief particulars of the event
     giving rise to the adjustment, the Conversion Price in effect prior to
     such adjustment, the adjusted Conversion Price and the effective date
     thereof and shall, on request, send a copy thereof to the Noteholder.

22.  If application of any of the provisions of the provisions under the heading
     "ADJUSTMENTS" would but for this Condition 22 result in the Conversion
     Price being reduced so that on conversion Shares shall fall to be issued at
     a discount to their nominal value, then the Conversion Price shall be
     adjusted to an amount equal to the nominal value of one Share.



PROTECTION OF THE NOTEHOLDER

23.  So long as the Notes is outstanding, and subject to any approvals otherwise
     given in writing by the Noteholder:-

     23.1. the Company shall keep available for issue, free from pre-emptive
           rights, out of its authorised but unissued capital sufficient Shares
           to satisfy in full the Conversion Rights at the Conversion Price from
           time to time and all other rights for the time being outstanding of
           subscription for and conversion into Shares;

     23.2. the Company shall not in any way modify the rights attached to the
           Shares as a class or attach any special restrictions thereto;

     23.3. the Company shall not issue or pay up any securities by way of
           capitalisation of profits or reserves other than (i) by the issue of
           fully paid Shares to holders of its Shares; or (ii) as mentioned in
           Condition 16.4; or (iii) by the issue of Shares in lieu of a cash
           dividend in the manner referred to in Condition 16.5;

     23.4. the Company shall not create or permit to be in issue any Equity
           Share Capital other than Shares, provided that nothing in this
           Condition 23.4 shall prevent (i) any consolidation or sub-division of
           the Shares; or (ii) the issue of Equity Share Capital which does not
           participate in dividend before a certain date or in respect of a
           certain financial period but is pari passu in all other respects with
           the Shares; or (iii) the issue of Equity Share Capital to officers or
           employees of the Company or any of its subsidiaries pursuant to an
           employee or executive share scheme in existence as at the date of
           issue of the Notes or pursuant to the Share Option Scheme;

     23.5. the Company shall procure that (i) no securities issued by the
           Company shall be

                                       20

<PAGE>
            converted into Shares or exchanged for Shares except in accordance
            with the terms of issue thereof, (ii) no securities issued by the
            Company without rights to convert into Shares or to be exchanged for
            Shares shall subsequently be granted such rights and (iii) at no
            time shall there be in issue Shares of differing nominal values;

     23.6.  the Company shall not make any issue, grant or distribution or take
            any other action if the effect thereof would be that on the exercise
            of the Conversion Rights it would but for Condition 22 be required
            to issue Shares at a discount to their nominal value;

     23.7.  if an offer is made to the holders of Shares (or such holders other
            than the offeror and/or any company controlled by the offeror and/or
            persons acting in concert with the offeror) to acquire all or a
            proportion of the Shares, the Company shall forthwith give notice of
            such offer to the Noteholder and use all its reasonable endeavours
            to procure that a similar offer is extended in respect of the Notes
            or in respect of any Shares issued on conversion of the Notes during
            the period of the offer;

     23.8.  the Company shall not make any distribution in specie to holders of
            Shares unless the Noteholder is entitled to the Specie Distribution
            Right in accordance with Condition 28;

     23.9.  the Company shall not, subject as hereinafter provided, make any
            reduction or redemption of share capital, share premium account or
            capital redemption reserve involving the repayment of money to
            shareholders (other than to shareholders having the right on a
            winding-up to a return of capital in priority to the holders of
            Shares) or reduce any uncalled liability in respect thereof unless,
            in any such case, the same gives rise (or would, but for the
            provisions of Conditions 18or 20 give rise) to an adjustment of the
            Conversion Price in accordance with the provisions under the heading
            "ADJUSTMENTS";

     23.10. the Company shall use its best endeavours (a) to maintain a listing
            for all the issued Shares on the Stock Exchange or on such other
            equivalent internationally recognised stock exchange (a "recognised
            stock exchange") as the Company may from time to time determine (b)
            to obtain and maintain a listing on the Stock Exchange (or a
            recognised stock exchange) for all the Shares issued on the exercise
            of the Conversion Rights attaching to the Notes and (c) to obtain a
            listing for all the Shares issued on the exercise of the Conversion
            Rights attaching to the Notes on any other stock exchange on which
            any of the Shares are for the time being listed and will forthwith
            give notice to the holder of the Notes in accordance with Condition
            31 of the listing or delisting of the Shares by any such stock
            exchange;

     23.11. as soon as possible and in any event not later than 14 Business Days
            after the announcement of the terms of any issue referred to in the
            provisions under the heading "ADJUSTMENTS" give notice to the
            Noteholder advising it of the date on which the relevant adjustment
            of the Conversion Price is likely to become effective and of the
            effect of exercising their Conversion Rights pending such date;

     23.12. the Company shall comply with and procure the compliance of all
            conditions imposed by the Stock Exchange or by any other competent
            authority (in Hong

                                       21

<PAGE>
            Kong or elsewhere) for approval of the issue of the Notes or for the
            listing of and permission to deal in the Shares issued or to be
            issued on the exercise of the Conversion Rights and to ensure the
            continued compliance thereof;

     23.13. The Company shall ensure that all Shares issued upon conversion of
            the Notes will be duly and validly issued fully paid and registered
            in the name of the Noteholder or its nominee(s).

     23.14. The Company shall not enter into any deed, agreement, assignment,
            instrument or documents whatsoever which may result in any breach of
            the terms of the Notes.


PROCEDURE FOR CONVERSION

24.  The Conversion Rights may, subject as provided herein, be exercised on any
     Business Day prior to maturity of the Notes by the Noteholder delivering to
     the principal place of business address of the Company in Hong Kong a
     written notice stating of the outstanding principal amount of the Note that
     the Noteholder intends to convert together with the Certificate. The
     Noteholder shall be responsible for payment of all taxes and stamp duty,
     issue and registration duties (if any) and Stock Exchange levies and
     charges (if any) arising on conversion.

25.  The Shares arising on conversion shall be allotted and issued by the
     Company to the Noteholder or as it may direct within 14 Business Days
     after, and with effect from, the date the Conversion Notice is served by
     the Noteholder and certificates for the Shares to which the Noteholder
     shall become entitled in consequence of exercising his Conversion Rights
     shall be issued in board lots and (if appropriate) together with an
     endorsement on the Certificate by a director of the Company for any balance
     of the Notes not converted.

26.  The Company shall be entitled to redeem the outstanding Notes in accordance
     with the following provisions:

     26.1.  Unless (and to the extent not) previously redeemed or converted and
            in each case cancelled as herein provided and subject to Condition
            26.2 below, the Company may at its option at any time after the
            expiry of a period of 18 months from the date of issue of the Notes
            by giving notice in writing (the "Early Redemption Notice") to the
            Noteholders (which notice shall specify the date of such redemption
            (the "Early Redemption Date") and shall be irrevocable) redeem all,
            or some (being HK$10,000,000 in principal amount or an integral
            multiple thereof), of the principal amount of the Notes outstanding
            on the Early Redemption Date (which shall not be more than 10
            Business Days after the date on which such notice is given) provided
            that the closing price of the Shares on the Stock Exchange (as
            derived from the Daily Quotations Sheet of the Stock Exchange) for
            at least 20 dealing days in a period of 30 consecutive dealing days
            ending on the day immediately preceding the date of the Early
            Redemption Notice is at least 130 per cent. of the Conversion Price
            in effect on such dealing day. Such notice shall oblige the Company
            to redeem the principal amount of the Notes outstanding on such
            Early Redemption Date (the "Principal Redemption Amount") at 100 per
            cent. of its principal amount together with interest accrued on such
            Principal Redemption Amount from the Interest Payment Date last
            preceding the Early Redemption Date to but excluding the Early
            Redemption Date. For the purpose of this Condition 26.1, the term
            "dealing


                                       22
<PAGE>
           day" means a day on which the Stock Exchange is open for business. If
           there shall occur an event giving rise to a change in the Conversion
           Price during any such 30 dealing day period, appropriate adjustments
           for the relevant days shall be made for the purpose of calculating
           the closing price for such days. If no price as aforesaid is reported
           on the Stock Exchange for one or more consecutive dealing days, such
           day or days will be disregarded in the relevant calculation and will
           be deemed not to have existed when ascertaining such 30 dealing day
           period.

     26.2. In the event that a Noteholder serves a Conversion Notice at the same
           time or prior to the service by the Company of an Early Redemption
           Notice in accordance with Condition 26.1, the Conversion Notice shall
           prevail and accordingly if the outstanding principal amount of the
           Note held by such Noteholder is less than the aggregate of the
           principal amount of the Note to be converted pursuant to such
           Conversion Notice plus the Principal Redemption Amount, the
           outstanding principal amount of the Note held by such Noteholder (or
           relevant part thereof specified in such Conversion Notice) shall be
           converted in accordance with such Conversion Notice pursuant to these
           Conditions and the Early Redemption Notice shall be of effect only to
           the extent of the outstanding principal amount of the Note held by
           such Noteholder exceeds the principal amount of the Note to be
           converted pursuant to such Conversion Notice, if any. In the event
           that an Early Redemption Notice is served on a Noteholder prior to
           the service of a Conversion Notice by such Noteholder, the Early
           Redemption Notice shall prevail and accordingly if the outstanding
           principal amount of the Note held by such Noteholder is less than the
           aggregate principal amount of the Note to be converted pursuant to
           such Conversion Notice plus the Principal Redemption Amount, the
           outstanding principal amount of the Note held by such Noteholder (or
           relevant part thereof specified in such Early Redemption Notice)
           shall be redeemed in accordance with Condition 26.1 and the
           Conversion Notice shall be of effect only to the extent of the
           outstanding principal amount of the Note held by such Noteholder
           exceeds the Principal Redemption Amount, if any.

     26.3. Subject to Condition 26.1 above, and to the Noteholders' right to
           have the Notes redeemed on the Maturity Date in accordance with
           Condition 3, Noteholders shall not be entitled to redeem the Notes in
           whole or in part at any other time.

     26.4. Upon the redemption or conversion of the Notes, the Notes will
           forthwith be cancelled and may not be re-issued or re-sold.


EVENTS OF DEFAULT

27.  If any of the following events occurs, a Noteholder may give notice to the
     Company that the Notes is, and it shall on the giving of such notice
     immediately become, due and payable at its principal amount together with
     any accrued interest calculated up to and including the date of repayment:-

     27.1. the Company fails to pay the principal when due or the Company fails
           to pay interest on the Notes when due unless non-payment of such
           interest is due solely to administrative or technical error and
           payment is made within seven Business Days of the due date thereof;
           or

     27.2. the Company defaults in performance or observance or compliance with
           any of its other obligations set out herein which default is
           incapable of remedy or, if



                                       23
<PAGE>
           capable of remedy, is not in the reasonable opinion of the Noteholder
           remedied within 14 Business Days after notice of such default shall
           have been given to the Company by such Noteholder; or

     27.3. any bank borrowings of the Company or its subsidiaries ("Major
           Subsidiaries") with net asset value as shown in the respective latest
           published accounts thereof amounts to 50% or more of that of the
           Company are not paid when due, or as the case may be, within any
           applicable grace period; or

     27.4. the Company or its Major Subsidiaries fails to pay when due or
           expressed to be due any amounts payable or expressed to be payable by
           it under any present or future guarantee for any moneys borrowed from
           or raised through a financial institution; or

     27.5. an encumbrancer takes possession or a receiver, manager or other
           similar officer is appointed on the whole or any substantial part of
           the undertaking, property, assets or revenues of the Company or its
           Major Subsidiaries; or

     27.6. the Company or its Major Subsidiaries becomes insolvent or is unable
           to pay its debts as they mature or applies for or consents to or
           suffers the appointment of any administrator, liquidator or receiver
           of the Company or its Major Subsidiaries on the whole or any part of
           the undertaking, property, assets or revenues of the Company or its
           Major Subsidiaries or takes any proceeding under any law for a
           readjustment or deferment of its obligations or any part of them or
           makes or enters into a general assignment or compromise with or for
           the benefit of its creditors; or

     27.7. an order is made or an effective resolution passed for winding-up of
           the Company or any of its Major Subsidiaries except in the case of
           winding-up for the purpose of the reorganisation of the Group
           structure of the Company and its Major Subsidiaries; or

     27.8. a moratorium is agreed or declared in respect of any indebtedness of
           the Company or any of its Major Subsidiaries or any governmental
           authority or agency condemns, seizes, compulsorily purchases or
           expropriates all or a substantial part of the assets of the Company
           or any of its Major Subsidiaries; or

     27.9. the Shares (as a class) cease to be listed on the Stock Exchange or a
           recognised stock exchange or are suspended from trading on the Stock
           Exchange for a continuous period of 14 trading days due to the
           default of the Company.

     The Company will forthwith on becoming aware of any such event as is
     mentioned in this Condition 27 give notice in writing thereof to the
     Noteholder. At any time after the Notes has become payable the Noteholder
     may without further notice institute such proceedings as it may think fit
     to enforce payment of the monies due.


DISTRIBUTION IN SPECIE

28.  If the Company declares a distribution in specie other than an issue of
     Shares in lieu of a cash dividend (a "Specie Distribution") to shareholders
     at any time during the period in which the Noteholder can exercise its
     Conversion Rights, the Noteholder will, unless an adjustment to the
     Conversion Price has been made under the provisions under the

                                       24


<PAGE>
     heading "ADJUSTMENTS" in respect of the Specie Distribution in full, be
     entitled to an amount (the "Specie Distribution Right") which shall be
     determined as follows:-

     28.1. the Company and the Noteholder will forthwith on the date of
           announcement of the Specie Distribution instruct the approved
           merchant bank as defined in Condition 15 to value the Specie
           Distribution which would have been payable to the Noteholder on the
           Shares failing to be issued if the Noteholder had exercised its
           Conversion Rights immediately prior to the record date for the Specie
           Distribution in respect of the whole of the principal amount of the
           Notes then outstanding (the "Notional Specie Distribution"); and

     28.2. upon the determination of the approved merchant bank's valuation of
           the Notional Specie Distribution (which valuation shall be final and
           binding on both the Company and the Noteholder) the Company will pay
           a cash amount equal to the value of the Notional Specie Distribution
           to the Noteholder.


VOTING

29.  The Noteholder will not be entitled to attend or vote at any meetings of
     the Company by reason only it being the Noteholder.


EXPERTS

30.  In giving any certificate or making any adjustment hereunder, the auditors
     of the Company or (as the case may be) the approved merchant bank shall be
     deemed to be acting as experts and not as arbitrators and, in the absence
     of manifest error, their decision shall be conclusive and binding on the
     Company and the Noteholder and all persons claiming through or under them
     respectively.


NOTICES

31.  Any notice required or permitted to be given shall be given by delivering
     it to the party:-

     31.1. in the case of Noteholder(s) to their address in Hong Kong as
           specified in the register of Noteholders

     31.2. in the case of the Company to 13th Floor, TCL Tower, 8 Tai Chung
           Road, Tsuen Wan, New Territories, Hong Kong

     or to such other address as the party concerned may have notified to the
     other party pursuant to this Condition 31 and may be given by sending it by
     hand or in a prepaid envelope by registered mail to such address or (in
     either case) to such other address as the party concerned may have notified
     to the other parties in accordance with this Condition 31 and such notice
     shall be deemed to be served at the time of delivery or (as the case may
     be) 48 hours after posting, or if sooner upon acknowledgement of receipt by
     or on behalf of the party to which it is addressed.

                                       25

<PAGE>
AMENDMENT

32.  The terms and conditions of the Notes may be varied, expanded or amended
     by agreement in writing between the Company and the Noteholder.


GOVERNING LAW AND JURISDICTION

33.  The Notes and the terms of the Notes are governed by and shall be
     construed in accordance with Hong Kong law and the parties agree to submit
     to the non-executive jurisdiction of the courts of Hong Kong.


                                       26
<PAGE>
                                   SCHEDULE 3
                           (Completion Requirements)


Obligations of the Company

1.   At Completion, the Company shall deliver to each of the Subscribers (or to
     such person at such place as the Subscribers may direct):-

     1.1. a certified copy of the board resolution of the Company approving and
          authorising the execution and completion of this Agreement and the
          issue of the Notes and the Certificate(s) upon the terms and subject
          to the Conditions contained therein;

     1.2. evidence reasonably satisfactory to the Subscribers that the
          Condition Precedent have been fulfilled; and

     1.3. the Certificates duly issued in favour of the Subscribers in respect
          of the Notes subscribed.

Obligations of the Subscribers

2.   At Completion each of the Subscribers shall:-

     2.1. deliver to the Company a certified copy of its board resolution
          approving and authorising the execution of this Agreement; and

     2.2. pay the subscription moneys for the full face value of the Note(s)
          being subscribed in the manner as the Company may direct.


                                       27
<PAGE>
                                   SCHEDULE 4

                                  (Warranties)


1.   The entire existing issued share capital of the Company is listed on the
     Stock Exchange and the Company is not aware of any circumstance whereby
     such listing will be suspended, cancelled or revoked before or after
     Completion as a result of the transactions contemplated by this Agreement.

2.   Save as mentioned in this Agreement, the Company has the authority to
     enter into and perform this Agreement and that in entering into this
     Agreement, the Company does not do so in breach of any existing obligation
     or applicable legislation.

3.   The Company has full power and authority to issue the Notes and perform
     its obligations thereunder subject to the fulfilment of the Condition
     Precedent.

4.   Subject to the fulfilment of the Condition Precedent, all necessary
     consents, authorisations and approvals of and all necessary registrations
     and filings with any governmental or regulatory agency or body required in
     Hong Kong, the Cayman Islands or elsewhere for or in connection with this
     Agreement and the Notes and the performance of the terms thereof have been
     obtained or made or will have been obtained or made by Completion.

5.   Subject as otherwise provided herein, the issue of the Notes and the
     Certificates will not infringe and will not be contrary to any laws or
     regulations of any government or regulatory body of Hong Kong, the Cayman
     Islands or elsewhere, as the case may be, and will not result in any
     breach of the terms of the Memorandum of Associated and Articles of
     Association of the Company or constitute a default under any deed,
     agreement, mortgage or other instrument to which the Company is a party.

6.   Upon the issue of the Notes and the execution of the Certificates by and
     delivery of the same, the Notes and the Certificates will constitute the
     legal, valid and binding obligations of the Company enforceable against
     the Company in accordance with its terms.

7.   The Company and its subsidiaries are not involved in any litigation,
     arbitration or administrative proceedings relating to claims or amounts
     which are material in the context of the issue of the Notes.

8.   No event exists or has occurred and no condition is in existence which
     would be (after the issue of the Notes) an event of default under
     Condition 27 of the Conditions and no event or act has occurred which,
     with the giving of notice, or the lapse of time, or both, would (after the
     issue of the Notes), constitute such an event of default.

9.   A copy of the Memorandum of Association and Articles of Association of the
     Company which have been supplied to the Subscribers and for the purposes
     of identification, signed by a director of the Company is complete and
     accurate in all


                                       28
<PAGE>
     material respects.

10.  Save for the Options and as contemplated under the Subscription Agreement,
     there are no options, rights to acquire, or any other form of security or
     encumbrance on, over or affecting any part of the unissued share capital
     of the Company and there is no agreement or commitment to give or create
     any of the foregoing and no claim has been made by any person to be
     entitled to any of the foregoing.

11.  The particulars relating to the share capital of the Company as set out in
     Recital (A) of this Agreement are correct and accurate and, subject to the
     fulfilment of the Condition Precedent, the Company will on Completion
     have sufficient authorised share capital to satisfy the Company's
     obligation under the Notes.

12.  From the date hereof until the issue of the Notes no act will be done and
     no circumstances will arise which will (or but for Condition 18 of the
     Conditions would) give rise to an adjustment of the Conversion Price (as
     defined in the Conditions) under the provisions under the heading
     "ADJUSTMENTS" (for the avoidance of doubt including Conditions 14 to 22)
     of the Notes if the act were done or the circumstances arose after the
     issue of the Notes.

13.  The Accounts:-

     13.1. have been prepared on a basis consistent with those of the previous
           financial year in accordance with generally accepted accounting
           principles and practices including all applicable statements of
           standard accounting practice generally accepted in Hong Kong. The
           Accounts make proper provisions for all of the actual and contingent
           liabilities of the Company or any of its subsidiaries and comply
           with the disclosure requirements of the Companies Ordinance as if
           the Company were a company incorporated under the Companies
           Ordinance; and

     13.2. show a true and fair view of the state of affairs and financial
           position of the Company as at 31 December 2001 and of its results
           for the financial period ended on that date.

14.  Since 31 December 2001, to the date of this Agreement:-

     14.1. there has been no material adverse change in the financial condition
           or prospects of the Company;

     14.2. no dividend or any other distribution has been or will be declared,
           made or paid by the Company other than a final dividend of HK$0.03
           per Share for the year ended 31 December 2001; and

     14.3. The Company has not incurred any material additional liabilities
           whether actual or contingent, otherwise than in the ordinary course
           of business and except as already announced by the Company to the
           public and/or its shareholders in accordance with the Listing Rules
           of the Stock Exchange before the date hereof.

15.  The Company is deemed to have repeated all the Warranties on the basis
     that such


                                       29
<PAGE>
Warranties will at all times from the date of this Agreement up to and
including the date of Completion be true complete and accurate in all respects
and such Warranties shall have effect as if given at Completion as well as the
date of this Agreement.








                                       30

<PAGE>
EXECUTION PAGE


     AS WITNESS whereof this Agreement has been duly executed on the date
first above written.


SIGNED by Li Dong Sheng              )
duly authorised for and on behalf    )
of TCL INTERNATIONAL                 )    For and on behalf of
HOLDINGS LIMITED                     )    TCL INTERNATIONAL HOLDINGS LIMITED
whose signature                      )
is verified by:                           /s/ Li Dong Sheng
                                          --------------------------------------
[Illegible]                                      Authorized Signature(s)


SIGNED by Wong Toe Yeung             )
duly authorised for and on behalf    )
of United Asset Investments Limited  )    For and on behalf of
whose signature                      )    UNITED ASSET INVESTMENTS LIMITED
is verified by:
                                          /s/ Wong Toe Yeung
                                          --------------------------------------
[Illegible]                                      Authorized Signature(s)


SIGNED by Wong Toe Yeung             )
duly authorised for and on behalf    )
of Go-Win Limited                    )    For and on behalf of
whose signature                      )    GO-WIN LIMITED
is verified by:
                                          /s/ Wong Toe Yeung
                                          --------------------------------------
[Illegible]                                      Authorized Signature(s)


SIGNED by Li Shi Yuen, Joseph      )
duly authorised for and on behalf  )
of Nam Tai Electronics, Inc.       )    For and on behalf of
in the presence of:                )    NAM TAI ELECTRONICS, INC.

                                        /s/ Li Shi Yuen, Joseph
                                        ----------------------------------------
[Illegible]                                   Authorized Signature


                                       31