CIRCULAR TO SHAREHOLDERS - Kobay Technology Bhd

DEFINITIONSExcept where the context otherwise requires, the following definitions shall apply throughout thisCircular:-“Act” : The Companies Act, 1965“AGM” : Annual general meeting“A-PAC” : A-Pac Multimedia Sdn Bhd (495452-P)“Bonus Shares” : Up to 14,283,000 new shares in Kobay to be issuedpursuant to the Proposed Bonus Issue“BWE” : Bend Weld Engineering Sdn Bhd (203565-P)“CDS” : Central Depository System“Code” : The Malaysian Code on Take-overs and Mergers,1998“EGM” : Extraordinary general meeting“Entitlement Date” : The date and time to be determined by the Board ofDirectors Kobay on which the Record of Depositorswith the MCD will be closed to determine theentitlements of the shareholders of Kobay to theProposed Bonus Issue“EPS” : Earnings per share“ESOS” : The Kobay Technology Bhd. Employee Share OptionScheme“KA” : Kobay Assets Sdn Bhd (124270-M)(formerly known as Polytool Engineering Sdn Bhd)“KHSB” : Kobay Holdings Sdn Bhd (280918-D)“KLSE” : Kuala Lumpur Stock Exchange“Kobay” or the “Company” : Kobay Technology Bhd. (308279-A)(formerly known as THB Industries Bhd.)“Kobay Group” or the “Group” : Kobay and its subsidiary/ associate/ investmentcompanies“KT” : Kobay Tecnica Sdn Bhd (565652-D)(formerly known as Aigmatech Sdn Bhd)“KTM” : Kobay Tecnica Manufacturing Sdn Bhd (567614-A)(formerly known as GMC Technology Sdn Bhd)“KTMT” : KT Machine Tools Sdn Bhd (568463-X)(formerly known as Sysronic Sdn Bhd)i

“Lipo” : Lipo Corporation Berhad (491485-V)“Listing Requirements” : Listing Requirements of the KLSE“MAKER” : Maker Technologies Sdn Bhd (413580-V)(formerly known as AV Mould Engineering Sdn Bhd)“MCD” : Malaysian Central Depository Sdn Bhd“MIMB” : Malaysian International Merchant Bankers Berhad“MP” : Megatool Precision Sdn Bhd (251883-K)“MPS” : Megatool Precision (Suzhou) Co. Ltd.“NTA” : Net tangible assets“OPAR” : Opar Holdings Sdn Bhd (276729-T)“Outstanding ESOS Options” : The options outstanding as at 15 May 2002 relatingto 3,125,000 new shares to be issued pursuant to theESOS which remain unexercised“PA” : Polytool Automation Sdn Bhd (267261-U)“PI” : Polytool Industries Sdn Bhd (207441-M)“PIN” : Polytool Integration Sdn Bhd (558907-K)“PNS” : Penang Network Services Sdn Bhd (390460-W)“PNT” : Penang Network Technologies Sdn Bhd (533651-W)“PP” : Polytool Precision Sdn Bhd (456164-X)“Proposals” : Comprising collectively the Proposed Share Buy-Back and Proposed Shareholders’ Mandate“Proposed Bonus Issue” : Proposed bonus issue of up to a maximum of14,283,000 new shares in Kobay on the basis of one(1) new share for every four (4) existing shares held“Proposed Shareholders’ Mandate” : Proposed shareholders’ mandate to be obtained byKobay pursuant to Chapter 10, Paragraph 10.09 of theListing Requirements in relation to RRPTs“Proposed Share Buy-Back” : The proposed purchase by Kobay of its own sharesof up to 10% of its issued and paid-up share capitalat any given point in time, if deemed fit andexpedient by the Directors of the Company“PT” : Polytool Technologies Sdn Bhd (522554-K)ii

“Related Party(ies)” : A director or major shareholder of Kobay or personsconnected with such a director or major shareholderas defined under Chapter 1 and Chapter 10 of theListing Requirements“RM” and “sen” : Ringgit Malaysia and sen respectively“RRPTs” : Recurrent related party transactions of a revenueand/or trading nature, which are necessary for theday-to-day operations of the Kobay Group,entered/to be entered into by Kobay and/or itssubsidiary/ associate/ investment companies, whichinvolves the interest, direct or indirect, of the RelatedParties“SC” : Securities Commission“share(s)” : Ordinary share(s) of RM1.00 each“UP” : Unitedprise Sdn Bhd (456157-P)iii

CONTENTSPAGEPART A - DIRECTORS' LETTER TO SHAREHOLDERS CONTAINING:-1.0 INTRODUCTION................................................................................................................ ….12.0 DETAILS OF THE PROPOSED BONUS ISSUE .............................................................. …13.0 RATIONALE FOR THE PROPOSED BONUS ISSUE ...................................................... …34.0 FINANCIAL EFFECTS OF THE PROPOSED BONUS ISSUE......................................... …35.0 HISTORICAL SHARE PRICES............................................................................................... 66.0 APPROVALS REQUIRED ...................................................................................................... 67.0 DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS ........................................... 68.0 OUTSTANDING CORPORATE EXERCISE ..................................................................... …69.0 DIRECTORS’ RECOMMENDATION................................................................................ …710.0 EGM.......................................................................................................................................... 711.0 FURTHER INFORMATION................................................................................................ …7PART B - DIRECTORS' LETTER TO SHAREHOLDERS CONTAINING:-1.0 INTRODUCTION..................................................................................................................... 82.0 PROPOSED SHARE BUY - BACK......................................................................................... 83.0 PROPOSED SHAREHOLDERS’ MANDATE...................................................................... 134.0 DIRECTORS’ RECOMMENDATION.................................................................................. 355.0 EGM........................................................................................................................................ 356.0 FURTHER INFORMATION.................................................................................................. 36APPENDIX IFURTHER INFORMATION............................................................................................................... 37NOTICE OF EGM ............................................................................................................. ENCLOSEDFORM OF PROXY.......................................................................................................... ENCLOSEDiv

PART ADIRECTORS’ LETTER TO SHAREHOLDERS IN RELATION TO THEPROPOSED BONUS ISSUE

KOBAY TECHNOLOGY BHD.(Company No.: 308279-A )(Incorporated in Malaysia)BOARD OF DIRECTORSREGISTERED OFFICEKoay Hean Eng (Chairman/Group Managing Director) Lot 1.02 First FloorKoay Cheng LyeAcctax Corporate CentreKoay Ah Bah @ Koay Cheng HockNo. 2 Jalan BawasahOng Teik Kooi10050 PenangTan Yok ChengDato’ Abdul Rahman Bin Mohammed Hashim 18 June 2002Dr. Mohamad Zabdi Bin ZamrodLim Swee ChuanTo : The Shareholders of KobayDear Sir/Madam,PROPOSED BONUS ISSUE OF UP TO A MAXIMUM OF 14,283,000 NEW SHARES ONTHE BASIS OF ONE (1) NEW SHARE FOR EVERY FOUR (4) EXISTING SHARES HELD1. INTRODUCTION1.1 On 21 May 2002, MIMB, on behalf of the Board of Directors of Kobay, announced to theKLSE that the Company proposes to undertake a bonus issue of up to a maximum of14,283,000 new shares on the basis of one (1) new share for every four (4) existing sharesheld on a date to be determined later.1.2 The purpose of Part A of this Circular is to provide you with the relevant details of theProposed Bonus Issue and to seek your approval for the resolution to be tabled at theforthcoming EGM to be convened on Wednesday, 3 July 2002. The Notice of the EGMtogether with the accompanying Form of Proxy are enclosed in this Circular.2.0 DETAILS OF THE PROPOSED BONUS ISSUE2.1 The Proposed Bonus Issue will involve an issue of up to a maximum of 14,283,000 newshares to be credited as fully paid-up on the basis of one (1) new share for every four (4)existing shares held as at the Entitlement Date.1

2.2 The Proposed Bonus Issue is to be effected by capitalising an amount of up to a maximumof RM14,283,000 from the retained profits account of the Company, as illustrated below:-Retained profitsCompanyRMAudited as at 30 June 2001 26,615,749Less: Amount to be capitalised for the Proposed Bonus Issue 14,283,000Retained profits after the Proposed Bonus Issue 12,332,7492.3 The maximum number of RM14,283,000 Bonus Shares is arrived at based on the issued andpaid-up share capital of Kobay as at 13 June 2002 of RM54,007,000 and assuming that allOutstanding ESOS Options are exercised prior to the Entitlement Date.2.4 Based on the existing issued and paid-up share capital of Kobay as at 13 June 2002 of54,007,000 shares, the Proposed Bonus Issue would involve the following number of BonusShares:-Outstanding ESOSOptionsScenario AAssuming that none of theOutstanding ESOS Options isexercised from now until theentitlement date for theProposed Bonus IssueScenario BAssuming that all the OutstandingESOS Options are fully exercisedinto 3,125,000 new shares prior tothe entitlement date for theProposed Bonus IssueNumber of BonusShares13,501,750 14,283,0002.5 The Bonus Shares shall, upon allotment and issue, rank pari passu in all respects with theexisting shares of Kobay except that they shall not be entitled to any dividend, rights,allotment or other distribution which may be declared prior to the date of allotment of theBonus Shares.2.6 KLSE has already prescribed the securities of Kobay which are listed on the Official List ofthe Main Board of the KLSE to be deposited with the MCD. Accordingly, any dealings inthe Bonus Shares will be subject to the Securities industry (Central Depositories) Act, 1991and the Rules of the MCD. The Bonus Shares will be deposited and credited directly intothe CDS accounts of the entitled shareholders and no physical share certificates will beissued. The Directors shall deal with fractions of the Bonus Shares in such manner, as theymay deem fit.2.7 The Company shall, within ten (10) market days from the Entitlement Date, shall allot andissue the Bonus Shares and despatch notices of allotment as well as to make an applicationto the KLSE for the listing of and quotation for the Bonus Shares.2

3.0 RATIONALE FOR THE PROPOSED BONUS ISSUE3.1 The Proposed Bonus Issue serves to reward the shareholders of Kobay for their past supportby giving them a greater participation in the equity of the Company in terms of the numberof shares held, without depleting the cash resources of the Company. The Proposed BonusIssue will also increase the issued and paid-up share capital of Kobay to a level which wouldbe more reflective of the operations and assets of the Kobay Group. In addition, theProposed Bonus Issue would further enhance the liquidity of Kobay shares quoted andtraded on the KLSE.4.0 FINANCIAL EFFECTS OF THE PROPOSED BONUS ISSUE4.1 On share capital4.1.1 The effects of the Proposed Bonus Issue on the issued and paid-up share capital of Kobayare illustrated as follows:-Scenario A : Assuming none of the Outstanding ESOS Options are exercised prior to theEntitlement DateNo. of sharesShare capital as at 13 June 2002 54,007,000To be issued pursuant to the Proposed Bonus Issue 13,501,750Enlarged share capital 67,508,750Scenario B : Assuming all the Outstanding ESOS Options are exercised prior to theEntitlement DateNo. of sharesShare capital as at 13 June 2002 54,007,000Assuming all the Outstanding ESOS Options are exercised 3,125,00057,132,000To be issued pursuant to the Proposed Bonus Issue 14,283,000Enlarged share capital 71,415,0004.2 On earnings4.2.1 The Proposed Bonus Issue will not have any effect on the earnings of the Kobay Groupexcept for the corresponding dilution in the EPS of the Company and the Kobay Group as aresult of the enlarged share capital of the Company after the Proposed Bonus Issue.3

4.3 On NTAScenario A : Assuming none of the Outstanding ESOS Options are exercised prior to theEntitlement DateCompanyAs at30 June 2001After ProposedBonus IssueRMRMShare capital 54,007,000 67,508,750Share premium 1,565,686 1,475,686 *Reserve 3,793,592 3,793,592Retained profits 26,615,749 13,113,999NTA 85,982,027 85,892,027NTA per share (RM) 1.59 1.27GroupAs at30 June 2001After ProposedBonus IssueRMRMShare capital 54,007,000 67,508,750Share premium 1,565,686 1,475,686 *Reserves 1,203,350 1,203,350Retained profits 46,787,646 33,285,896103,563,682 103,473,682Less: Goodwill on consolidation (4,351,866) (4,351,866)NTA 99,211,816 99,121,816NTA per share (RM) 1.84 1.474.3.1 The proforma effects of the Proposed Bonus Issue on the NTA per share of Kobay and theGroup based on the audited accounts as at 30 June 2001, are illustrated as follows:-Note:-* After deducting estimated expenses of RM90,000 relating to the Proposed Bonus Issue.Scenario B : Assuming all of the Outstanding ESOS Options are exercised prior to theEntitlement DateAfter FullCompanyAs at30 June2001Exercise ofOutstandingESOS OptionsAfterProposedBonus IssueRM RM RMShare capital 54,007,000 57,132,000 # 71,415,000Share premium 1,565,686 8,648,486 # 8,558,486 *Reserve 3,793,592 3,793,592 3,793,592Retained profits 26,615,749 26,615,749 12,332,749NTA 85,982,027 96,189,827 96,099,827NTA per share (RM) 1.59 1.68 1.354

GroupAs at30 June2001After FullExercise ofOutstandingESOS OptionsAfterProposedBonus IssueRM RM RMShare capital 54,007,000 57,132,000 # 71,415,000Share premium 1,565,686 8,648,486 # 8,558,486 *Reserves 1,203,350 1,203,350 1,203,350Retained profits 46,787,646 46,787,646 32,504,646103,563,682 113,771,482 113,681,482Less: Goodwill on consolidation (4,351,866) (4,351,866) (4,351,866)NTA 99,211,816 109,419,616 109,329,616NTA per share (RM) 1.84 1.92 1.53Notes:-Based on the assumptions that:-# The Outstanding ESOS Options are fully exercised into 3,125,000 new Kobay shares asfollows:-No. of Outstanding ESOS Options Price (RM)2,870,000 3.24141,000 3.52114,000 3.62* After deducting estimated expenses of RM90,000 relating to the Proposed Bonus Issue.4.4 On major shareholding structure4.4.1 The Proposed Bonus Issue will increase the shareholdings of the major shareholders ofKobay in proportion to their respective entitlements to the Proposed Bonus Issue as at theEntitlement Date.4.5 On dividends4.5.1 Kobay declared the first and final tax-exempt dividend of 2% amounting to RM1,080,140for the financial year ended 30 June 2001. Barring unforeseen circumstances, the Directorsof Kobay anticipate that the Company will be in a position to maintain at least the samequantum of dividend (which will not be the same rate of dividend) for the financial yearending 30 June 2002.4.6 On the Outstanding ESOS Options4.6.1 As a result of the Proposed Bonus Issue, the Company will make the necessary adjustmentsto the option price, terms of the exercise of the options, and the number of new sharesrelating to the options under the ESOS so far unexercised as at the Entitlement Date inaccordance with the Bye-Laws of the ESOS.5

5.0 HISTORICAL SHARE PRICES5.1 The monthly highest and lowest prices of Kobay shares traded on the KLSE for the past 12-month period ended 31 May 2002 are as follows:-HighRMLowRM2001June 1.97 1.78July 2.00 1.77August 2.33 1.81September 2.31 1.36October 3.36 1.49November 3.02 2.31December 3.96 2.442002January 3.58 2.52February 2.97 2.49March 2.77 2.50April 2.79 2.51May 2.67 2.41Source: BloombergLast transacted market prices of Kobay shares on 20 May 2002, prior to the RM 2.52announcement by Kobay of the Proposed Bonus Issue.Last transacted market prices of Kobay shares on 14 June 2002, being the latest RM 2.43practicable date prior to printing of this Circular.6.0 APPROVALS REQUIRED6.1 The Proposed Bonus Issue is subject to, inter-alia, the approvals of the following:-(a)(b)the KLSE, for the additional listing of and quotation for the Bonus Shares; andthe shareholders of Kobay at an EGM to be convened.7.0 DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS7.1 None of the Directors or major shareholders of Kobay or any persons connected to theDirectors and/or major shareholders of Kobay have any interest, direct or indirect, in theProposed Bonus Issue, apart from their entitlements to the Proposed Bonus Issue whichwould be proportionate with their shareholdings in the Company, if any.8.0 OUTSTANDING CORPORATE EXERCISE8.1 The Board of Directors of Kobay confirms that there are currently no outstanding proposalswhich have been announced to the KLSE by Kobay but are pending implementation.6

9.0 DIRECTORS’ RECOMMENDATION9.1 The Board of Directors of Kobay is of the opinion that the Proposed Bonus Issue is in the bestinterest of the Company and accordingly, recommends that you vote in favour of the resolutionto be tabled at the forthcoming EGM to approve the Proposed Bonus Issue.10.0 EGM10.1 An EGM, notice of which is enclosed in this Circular, will be held at Plot 30, Hilir SungaiKluang Satu, Bayan Lepas Industrial Park, Phase 4, 11900 Penang on Wednesday, 3 July2002 at 11.00 a.m. for the purpose of considering and if thought fit, passing the resolutionto approve the Proposed Bonus Issue.10.2 If you are unable to attend and vote in person at the EGM, you should complete, sign andreturn the enclosed Form of Proxy in accordance with the instructions printed therein as soonas possible, so as to arrive at the Registered Office of the Company not later than forty-eight(48) hours before the time appointed for holding the EGM. The lodgement of the Form ofProxy will not preclude you from attending and voting in person at the EGM should yousubsequently wish to do so.11.0 FURTHER INFORMATION11.1 Shareholders are requested to refer to the attached appendix for further information.Yours faithfullyFor and on behalf of the Board of DirectorsKOBAY TECHNOLOGY BHD.KOAY HEAN ENGCHAIRMAN / GROUP MANAGING DIRECTOR7

PART BDIRECTORS' LETTER TO SHAREHOLDERS IN RELATION TO THEPROPOSED SHARE BUY-BACK AND PROPOSED SHAREHOLDERS’MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONSOF A REVENUE OR TRADING NATURE

KOBAY TECHNOLOGY BHD.(Company No.: 308279-A )(Incorporated in Malaysia)BOARD OF DIRECTORSREGISTERED OFFICEKoay Hean Eng (Chairman/Group Managing Director) Lot 1.02 First FloorKoay Cheng Lye Ah Bah @ Koay Cheng HockAcctax Corporate CentreKoay Ah Bah @ Koay Cheng HockNo. 2 Jalan BawasahOng Teik Kooi10050 PenangTan Yok ChengDato’ Abdul Rahman Bin Mohammed Hashim 18 June 2002Dr. Mohamad Zabdi Bin ZamrodLim Swee ChuanTo : The Shareholders of KobayDear Sir/Madam,PROPOSED SHARE BUY-BACKPROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTYTRANSACTIONS OF A REVENUE OR TRADING NATURE1.0 INTRODUCTION1.1 The Board of Directors of Kobay had on 21 May 2002 announced to the KLSE that theCompany intends to seek from its shareholders, the following:-(a)(b)a mandate to authorise the Company to purchase its own shares on the KLSE up toa maximum of ten per cent (10%) of the issued and paid-up share capital of theCompany; anda mandate in accordance with Paragraph 10.09 Part E of Chapter 10 of the ListingRequirements in relation to RRPTs.1.2 The purpose of Part B of this Circular is to provide you with the information on theProposed Share Buy-Back and Proposed Shareholders’ Mandate and to seek your approvalfor the resolutions to be tabled at the forthcoming EGM to be convened on Wednesday, 3July 2002. The Notice of EGM together with the accompanying Form of Proxy are enclosedin this Circular.2.0 PROPOSED SHARE BUY-BACK2.1 Details of the Proposed Share Buy-Back2.1.1 The Board of Directors of Kobay proposes to seek the mandate from the shareholders of theCompany to authorise the Company to purchase and/or hold its own shares up to a maximumof ten per cent (10%) of the issued and paid-up share capital of the Company subject tocompliance with Section 67A of the Act and any prevailing laws, rules, regulations, orders,guidelines and requirements issued by the relevant authorities. The Proposed Share Buy-Back will be carried out through the KLSE via a stockbroker to be appointed at a later date.8

2.1.2 The approval from the shareholders for the Proposed Share Buy-Back would be effectiveimmediately upon the passing of the ordinary resolution for the Proposed Share Buy-Backand would continue to be in force until:-(i)(ii)(iii)the conclusion of the next AGM of the Company following the forthcoming EGM,at which time it shall lapse unless by ordinary resolution passed at that meeting, theauthority is renewed, either unconditionally or subject to conditions; orthe expiration of the period within which the next AGM is required by law to beheld; orrevoked or varied by ordinary resolution passed by the shareholders in a generalmeeting,whichever occurs first.2.1.3 Kobay may purchase its own shares or resell its treasury shares (if any) on the KLSE, subjectto:-(a)(b)a price for the purchase of own shares of not more than fifteen per cent (15%) abovethe weighted average market price of Kobay shares for the five (5) market daysimmediately prior to the purchase; ora price for the resale of treasury shares of not less than the weighted average marketprice of Kobay shares for the five (5) market days immediately prior to the resale.2.1.4 The Proposed Share Buy-Back shall be made wholly out of the retained profits and/or sharepremium accounts of the Company. In order to implement the Proposed Share Buy-Back, anappropriate amount of internally generated funds of the Group would need to be allocatedby the Company and such allocation (the final quantum of which is to be determined laterby the Directors of the Company) shall not exceed the aggregate balance standing in theretained profits and/or share premium accounts of the Company. The audited retainedprofits and share premium accounts of the Company as at 30 June 2001 are RM26,615,749and RM1,565,686 respectively. As at 31 March 2002, the retained profits and sharepremium accounts of the Company stood at RM48,840,000 and RM1,566,000 respectively.2.1.5 The actual number of shares to be purchased and the timing of such purchase(s) woulddepend on, inter-alia, market conditions, retained profits and share premium accounts of theCompany as well as the availability of financial resources/funds necessary to give effect tosuch purchase(s).2.1.6 The Company intends to treat the shares so purchased in accordance with the provisions ofthe Act, which allows a company that has purchased its own shares to either retain theshares as treasury shares or to cancel the shares, or a combination of both. The shares sopurchased and retained as treasury shares by the Company may either be cancelled,distributed as share dividends or resold on the KLSE at a price which is not less than theweighted average market price for the shares for five (5) market days immediatelypreceding the date of such resale.2.1.7 For shares held as treasury shares, the rights attached thereto, including voting right, rightsto dividends and participation in other distributions are suspended and the treasury sharesshall not be taken into account in calculating the number or percentage of shares or of aclass of shares in the Company for any purposes, including major shareholdings, takeoversand quorum for meetings.9

2.2 Rationale for the Proposed Share Buy-Back2.2.1 The Proposed Share Buy-Back would enable Kobay to utilise its financial resources, whichare not immediately required, for the purpose of purchasing its own shares, if deemed fitand expedient by the Directors of the Company. The Proposed Share Buy-Back mayenhance the EPS and reduce the liquidity level of the shares of the Company on the KLSE,which, in turn is expected to benefit the shareholders of the Company.2.2.2 In addition, the purchased shares can be held as treasury shares and re-sold on the KLSEwith the intention of realising a potential gain without affecting the total issued and paid-upshare capital of the Company. Should any treasury shares be distributed as share dividends,this would serve to reward the shareholders of the Company.2.3 Potential advantages and disadvantages of the Proposed Share Buy-Back(i)(ii)allows the Company the flexibility in attaining its desired capital structure; andrewards the shareholders in the event the treasury shares are distributed as sharedividends.2.3.1 The potential advantages and disadvantages of the Proposed Share Buy-Back to theCompany and its shareholders are as follows:-Advantages:-Disadvantages:-(i)(ii)the Proposed Share Buy-Back will reduce the financial resources of the Group andmay result in the Group forgoing better investment opportunities that may emerge inthe future; andas the Proposed Share Buy-Back can only be made out of retained profits and sharepremium accounts of the Company, it may result in the reduction of financialresources available for distribution to shareholders in the immediate future.The Board of Directors will be mindful of the Company and its shareholders in undertakingthe Proposed Share Buy-Back and in the subsequent resale of treasury shares on the KLSE,if any.2.4. Financial effects of the Proposed Share Buy-Back2.4.1 On share capitalThe effects of the Proposed Share Buy-Back on the issued and paid-up share capital ofKobay would depend on the timing and the number of shares so purchased, if any.However, for illustration only, the Proposed Share Buy-Back would have the followingeffect on the issued and paid-up share capital of the Company, assuming that a maximumnumber of 5,400,700 shares or ten per cent (10%) of the Company's issued and paid-upshare capital of 54,007,000 shares as at 13 June 2002 are purchased by the Company andthereafter, immediately cancelled:-10

No. of shares %Issued and paid-up share capital as at 13 June 2002 54,007,000 100.00Maximum number of shares to be purchased under theProposed Share Buy-Back(5,400,700) (10.00)Reduced issued and paid-up share capital 48,606,300 90.002.4.2 On earningsThe Proposed Share Buy-Back is not expected to have any material impact on the earningsof the Group. However, the resultant reduction in the number of Kobay shares in issuewould be expected to correspondingly increase the EPS of Kobay, at Company and Grouplevels, if the shares so purchased are cancelled or retained as treasury shares.2.4.3 On NTAThe Proposed Share Buy-Back may increase or decrease the NTA of Kobay depending onvarious factors which include the treatment of the shares purchased, ie. to cancel or retainas treasury shares, the timing, purchase price and the number of shares so purchased, ifany, and the eventual treatment of any treasury shares arising.The Proposed Share Buy-Back will reduce the NTA per share of Kobay Group when thepurchase price exceeds the NTA per share of Kobay Group at the relevant point in time. Onthe contrary, the NTA per share of Kobay Group will be increased when the purchase priceis less than the NTA per share of Kobay Group at the relevant point in time.2.4.4 On working capitalAlthough the Proposed Share Buy-Back would reduce the working capital of the Group tothe extent of the amount of funds utilised for the purchase of the Company’s shares, it is notexpected to have a material effect on the working capital of the Group.2.4.5 On shareholdings of the Directors and major shareholdersThe effects of the Proposed Share Buy-Back on the shareholdings of the Directors andmajor shareholders of Kobay would depend on the timing and the number of shares sopurchased, if any. However, for illustration, the Proposed Share Buy-Back would have thefollowing effect on the percentage of the shareholdings of the Directors and majorshareholders of Kobay, assuming that a maximum number of 5,400,700 shares arepurchased from the public shareholders :-DirectorsAfter ProposedExisting as at 13 June 2002Share Buy-BackDirect Indirect Direct IndirectNo. of shares No. of shares No. of shares No. of sharesKoay Hean Eng 1,323,323(2.45%)Koay Cheng Lye 469,595(0.87%)Koay Ah Bah @ KoayCheng Hock455,732(0.84%)* 14,018,406(25.96%)* 14,018,406(25.96%)* 14,018,406(25.96%)Ong Teik Kooi - ** 3,440,000(6.37%)1,323,323(2.72%)469,595(0.97%)455,732(0.94%)14,018,406(28.84%)14,018,406(28.84%)14,018,406(28.84%)- 3,440,000(7.08%)11

Tan Yok Cheng 1,000#Dato’ Abdul RahmanBin MohammedHashimAfter ProposedExisting as at 13 June 2002Share Buy-BackDirect Indirect Direct IndirectNo. of shares No. of shares No. of shares No. of shares1,000#Dr. Mohamad ZabdiBin ZamrodLim Swee Chuan 2,000#Major ShareholdersKHSB 14,018,406(25.96%)Noorzalila Binti Ismail 3,440,000(6.37%)- 1,000#- 1,000#- - - -- 2,000#- 14,018,406(28.84%)- 3,440,000(7.08%)* Deemed interest by virtue of their major shareholdings in KHSB, a major shareholder of Kobay** Deemed interest by virtue of his spouse’s major shareholding in Kobay# Interest is less than 0.01%2.5 Public shareholding2.5.1 According to the Record of Depositors and the Register of Major Shareholders of theCompany, the total percentage of the issued and paid-up share capital of Kobay which isheld by the public (in accordance with the public shareholding spread requirements of theKLSE and SC) as at 13 June 2002, was 63.5%, representing 34,293,331 shares in Kobay.Pursuant to the Proposed Share Buy-Back, the aforesaid public shareholding of Kobaywould be reduced to approximately 59% or 28,892,631 shares in Kobay based on theassumptions that the maximum number of 5,400,700 shares are purchased, and that all theshares so purchased are from the public shareholders of Kobay.2.6 Previous purchase or resale by Kobay of its own shares2.6.1 Kobay has not made any purchase or resale of its own shares in the previous twelve (12)months and does not have any treasury shares.2.7 Approvals required2.7.1 The Proposed Share Buy-Back is subject to the approval of the shareholders of Kobay at theforthcoming EGM.2.8 Directors’ and major shareholders’ interests, and implications relating to the Code2.8.1 None of the Directors and major shareholders of Kobay or any other companies which is itssubsidiary and/or persons connected with them has any interest, whether direct or indirect,in the Proposed Share Buy-Back.2.8.2 Based on the shareholdings as set out in Section 2.4.5 above, the percentage shareholdingsof the major shareholders and Directors of Kobay (whether acting individually or in concertwith other shareholders) will not be increased in a manner which would give rise to amandatory offer obligation under the Code in relation to the remaining shares held in Kobayas a result of the Proposed Share Buy-Back.-----12

2.9 Historical share prices2.9.1 The monthly highest and lowest prices of Kobay shares traded on the KLSE for the past 12-month period ended 31 May 2002 are as follows:-HighRMLowRM2001June 1.97 1.78July 2.00 1.77August 2.33 1.81September 2.31 1.36October 3.36 1.49November 3.02 2.31December 3.96 2.442002January 3.58 2.52February 2.97 2.49March 2.77 2.50April 2.79 2.51May 2.67 2.41Source: BloombergLast transacted market prices of Kobay shares on 20 May 2002, prior to the RM 2.52announcement by Kobay of the Proposed Share-Buy Back.Last transacted market prices of Kobay shares on 14 June 2002, being the latest RM 2.43practicable date prior to printing of this Circular.3.0 PROPOSED SHAREHOLDERS’ MANDATE3.1 Introduction3.1.1 Under Part E, Paragraph 10.09 of the Listing Requirements, a listed issuer may seekshareholders’ mandate in respect of related party transactions involving RRPTs of a revenueor trading nature which are necessary for its day-to-day operations subject to the following:-(a)(b)(c)the transactions are in the ordinary course of business and are on terms not morefavourable to the related party than those generally available to the public;the shareholders’ mandate is subject to annual renewal and disclosure is made in theannual report of the aggregate value of transactions conducted pursuant to theshareholders’ mandate during the financial year; andin a meeting to obtain shareholders’ mandate, the interested director, interestedmajor shareholder or interested person connected with a director or majorshareholder; and where it involves the interest of an interested person connectedwith a director or major shareholder, such director or major shareholder must notvote on the resolution approving the transactions. An interested director orinterested major shareholder must ensure that persons connected with him abstainfrom voting on the resolution approving the transactions.13

3.1.2 The Listing Requirements define “director”, “major shareholder”, “related party” and“related party transaction” as follows:-“Director” shall have the meaning given in Section 4 of the Act and includes any personwho is or was within the preceding 12 months of the date on which the terms of thetransaction were agreed upon, a director of the listed issuer (or any other company which isits subsidiary or holding company or a subsidiary of its holding company).“Major shareholder” means a person who has an interest or interests in one or more votingshares in a company and the nominal amount of that share, or the aggregate of the nominalamounts of those shares, is not less than 5% of the aggregate of the nominal amounts, of allthe voting shares in the company. For the purpose of this definition, “interest in shares”shall have the meaning given in Section 6A of the Act. Major shareholder shall include anyperson who is or was within the preceding 12 months of the date on which the terms oftransaction were agreed upon, a major shareholder of the listed issuer (or any othercompany which is its subsidiary or holding company or a subsidiary of its holdingcompany).“Related party” means a director, major shareholder or person connected with such directoror major shareholder.“Related party transaction” means a transaction entered into by the listed issuer or itssubsidiaries which involves the interest, direct or indirect, of a related party.3.2 Principal activities of the Kobay Group3.2.1 Kobay is principally an investment holding and management services company, whilst theprincipal activities of its subsidiary and associated companies are as follows:-CompanyCountry ofincorporationEffectiveequityinterestPrincipal activitiesSubsidiary companiesPI Malaysia 100% Manufacture of carbide tooling parts andautomated machinesKA Malaysia 100% Letting of propertiesBWE Malaysia 100% Manufacture of all types of metal works andequipmentPA Malaysia 90% Designing and manufacturing of automatedmachine and automated machine partsMP Malaysia 95% Manufacture of high end steel and carbideprecision parts for tools, dies and moulds andprecision tools, dies and mouldsPP Malaysia 100% Manufacture of jigs and fixtures, precision tools,dies and mouldsUP Malaysia 100% General tradingPT Malaysia 100% Manufacture of measuring devices, industrialequipment, machining parts and toolingsPIN Malaysia 90% Designing and manufacturing of automatedmachine and automated machine parts14

A-PAC Malaysia 60% Investment holdingOPAR Malaysia 100% Investment holdingKT Malaysia 61% Investment holdingMPS China 100% Manufacture of precision components of moulds,dies, tools and jig fixturesElite Paper TradingSdn Bhd (Formerlyknown as FortuneVenue Sdn BhdMalaysia 55% Distribution of all kinds of paper productsKewjaya Sdn Bhd Malaysia 100% DormantAssociate company of A-PACPNS Malaysia 21.36% Provide a state-of-the-art multimedia visualnetwork via internet and/or private networkSubsidiary company of PNSPNT Malaysia 18.2% Provide a system integration services, internetvalue added services and trading of relatedproductsSubsidiary companies of KTKTM Malaysia 61% Manufacture all types of computer numericcontrolled (“CNC”) machinesKTMT Malaysia 42.7% Servicing and trading of machinery and machinetoolsAssociate companyLipo Malaysia 45.33% Investment holding and management servicescompanyInvestment companyMAKER Malaysia 19% Manufacture all kinds of precision moulds andparts3.3 Transacting parties3.3.1 The principal activities of Lipo (an associate company of Kobay) and its subsidiarycompanies with whom the Kobay Group is/will be transacting with are as follows:-CompanyCountry ofincorporationEquityinterestPrincipal activitiesLipo Malaysia Investment holding andmanagement services companySubsidiary companies of LipoParadigm PrecisionComponents Sdn BhdAllied StampingCorporation Sdn BhdMalaysia 100% Manufacture of precisionmachined componentsMalaysia 100% Manufacture of precision metalstamping parts15

3.4 Details of the Proposed Shareholders’ Mandate3.4.1 The RRPTs which are carried out with the Related Parties are mainly for its day-to-dayoperations. The Related Parties are both good customers as well as reliable suppliers ofgoods and services required by the Kobay Group. Except for transactions involvingpayment of rental of office and factory and payment of management fee which occurmonthly, other transactions mentioned and disclosed in Section 3.4.2 below could arise asand when the situation warrants.3.4.2 The RRPTs are entered into at arm’s length based on Kobay’s normal commercial termsand are not prejudicial to the shareholders nor are they on terms more favourable to theRelated Parties than those generally available to the public and are also not to the detrimentof the minority shareholders of the Company. Such RRPTs will be subject to the reviewprocedures as set out in Section 3.8 below:-THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK16

The details of the RRPTS are set out below:-Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRMMPPAPINKTMAKERKobayDirectors- KoayHean Eng- KoayCheng LyeKoay Hean Eng is a Director ofPA, PIN, KT, MAKER, andKobay and was a Director of MP.He has 2.45% direct and 25.96%indirect interests in Kobay.Koay Cheng Lye is a Director ofKobay and was a Director of MP.He has 0.87% direct and 25.96%indirect interests in Kobay.Payment ofmanagementfee by MP,PA,PIN, KT andMAKER toKobay197,000 83,000- LimSweeChuanLim Swee Chuan is a Director ofMP, PA, PIN, KT and Kobay andwas a Director of MAKER. Hehas a direct interest of 0.004% inKobay.- OngTeikKooiOng Teik Kooi is a Director ofKobay and was a Director of PAand PIN. He is deemed to beinterested by virtue of hisspouse’s interest of 6.37% inKobay.MPMAKERBWE #Directors-KoayHean Eng-KoayCheng Lye- LimSweeChuanKoay Hean Eng is a Director ofMAKER, BWE and Kobay andwas a Director of MP. He has2.45% direct and 25.96% indirectinterests in Kobay.Koay Cheng Lye is a Director ofKobay and was a Director of MPand BWE. He has 0.87% directand 25.96% indirect interests inKobay.Lim Swee Chuan is a Director ofMP and Kobay and was aDirector of MAKER and BWE.He has 0.004% direct interest inKobay.Receipt ofmetal worksservices inrespect ofstainless steelequipment,clean- roomtrolleys,custom madecabinet to jigand fixtures,aluminiumdeckformwork, dieset andmachine partsby MP andMAKER fromBWE.65,000 130,00017

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRMMAKER BWE # Directors- Koay HeanEng-KoayCheng LyeKoay Hean Eng is a Director ofMAKER, BWE and Kobay. Hehas a 2.45% direct and 25.96%indirect interests in Kobay.Koay Cheng Lye is a Director ofKobay and was a Director ofBWE. He has 0.87% direct and25.96% indirect interests inKobay.Manufacturingand provisionof machiningpart services byMAKER toBWE38,000 6,000- LimSweeChuanLim Swee Chuan is a Director ofKobay and was a Director ofMAKER and BWE. He has0.004% direct interest in Kobay.MP PP # Directors-KoayHean Eng-KoayCheng Lye- LimSweeChuanKoay Hean Eng is a Director ofKobay and was a Director of MPand PP. He has 2.45% direct and25.96% indirect interests inKobay.Koay Cheng Lye is a Director ofKobay and was a Director of MPand PP. He has 0.87% direct and25.96% indirect interests inKobay.Lim Swee Chuan is a Director ofMP and Kobay and was aDirector of PP. He has 0.004%direct interest in Kobay.Receipt ofprecisiontoolingservices by MPfrom PPManufacturingand provisionof steel andcarbideprecision partsservices by MPto PP13,00052,000--MP PT # Directors-KoayHean Eng- KoayCheng LyeKoay Hean Eng is a Director ofKobay and was a Director of MPand PT. He has 2.45% direct and25.96% indirect interests inKobay.Koay Cheng Lye is a Director ofKobay and was a Director of MP.He has 0.87% direct and 25.96%indirect interests in Kobay.Manufacturingand provisionof carbidetooling partsand precisiontooling servicesby MP to PT50,000 6,00018

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRM- LimSweeChuanLim Swee Chuan is a Director ofMP, PT and Kobay. He has0.004% direct interest in Kobay.- Ong TeikKooiOng Teik Kooi is a Director ofPT and Kobay. He is deemed tobe interested by virtue of hisspouse’s interest of 6.37% inKobay.- KoayAhBah @KoayChengHockKoay Ah Bah @ Koay ChengHock is a Director of PT andKobay. He has 0.84% direct and25.96% indirect interests inKobay.UP MP # Directors-KoayHean Eng- KoayCheng Lye- LimSweeChuan- KoayAhBah @KoayChengHockKoay Hean Eng is a Director ofUP and Kobay and was a Directorof MP. He has 2.45% direct and25.96% indirect interests inKobay.Koay Cheng Lye is a Director ofKobay and was a Director of MPand UP. He has 0.87% direct and25.96% indirect interests inKobay.Lim Swee Chuan is a Director ofMP and Kobay. He has 0.004%direct interest in Kobay.Koay Ah Bah @ Koay ChengHock is a Director of Kobay andwas a Director of UP. He has0.84% direct and 25.96% indirectinterests in Kobay.Sale ofmeasuringequipment,general tradingof machineandmeasurementequipmentaccessories byUP to MPCalibration andprovision ofmeasuringequipmentservices by UPto MP9,0003,0002,0002,00019

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRMPAPINKTMBWE #Directors- Koay HeanEng- KoayCheng Lye- LimSweeChuan-OngTeikKooiKoay Hean Eng is a Director ofPA,PIN,KTM,BWEandKobay. He has 2.45% direct and25.96% indirect interests inKobay.Koay Cheng Lye is a Director ofKobay and was a Director ofBWE. He has 0.87% direct and25.96% indirect interests inKobay.Lim Swee Chuan is a Director ofPA, PIN, KTM and Kobay andwas a Director of BWE. He has0.004% direct interest in Kobay.Ong Teik Kooi is a Director ofKobay and was a Director of PAand PIN. He is deemed to beinterested by virtue of hisspouse’s interest of 6.37% inKobay.Receipt ofmetal worksservices inrespect ofstainless steelequipment,clean- roomtrolleys,custom madecabinet to jigand fixtures,aluminiumdeckformwork, dieset andmachine partsby PA,PIN andKTM fromBWE125,000 148,000PIN BWE # Directors- Koay HeanEng- KoayCheng LyeKoay Hean Eng is a Director ofPIN, BWE and Kobay. He has2.45% direct and 25.96% indirectinterests in Kobay.Koay Cheng Lye is a Director ofKobay and was a Director ofBWE. He has 0.87% direct and25.96% indirect interests inKobay.Manufacturingand provisionof automatedmachine partsservices byPIN to BWE1,000 3,000- LimSweeChuanLim Swee Chuan is a Director ofPIN and Kobay and was aDirector of BWE. He has 0.004%direct interest in Kobay.- Ong TeikKooiOng Teik Kooi is a Director ofKobay and was a Director ofPIN. He is deemed to beinterested by virtue of hisspouse’s interest of 6.37% inKobay.20

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRMPAPINKA #Directors- Koay HeanEng-KoayCheng Lye- LimSweeChuanKoay Hean Eng is a Director ofPA, PIN and Kobay. He has2.45% direct and 25.96% indirectinterests in Kobay.Koay Cheng Lye is a Director ofKA and Kobay. He has 0.87%direct and 25.96% indirectinterests in Kobay.Lim Swee Chuan is a Director ofPA, PIN and Kobay. He has adirect interest of 0.004% inKobay.Payment ofrental of officebuilding andfactory locatedat Plot 30,Hilir SungaiKluang Satu,Bayan LepasIndustrial Park,Phase 4, 11900Penang by PAand PIN to KA97,000 45,000- OngTeikKooiOng Teik Kooi is a Director ofKobay and was a Director of PAand PIN. He is deemed to beinterested by virtue of hisspouse’s interest of 6.37% inKobay.-KoayAhBah @KoayChengHockKoay Ah Bah @ Koay ChengHock is a Director of KA andKobay. He has 0.84% direct and25.96% indirect interests inKobay.PA PP # Directors- Koay HeanEng- KoayCheng LyeKoay Hean Eng is a Director ofPA and Kobay and was a Directorof PP. He has 2.45% direct and25.96% indirect interests inKobay.Koay Cheng Lye is a Director ofKobay and was a Director of PP.He has 0.87% direct and 25.96%indirect interests in Kobay.Manufacturingand provisionof automatedmachine andautomatedmachine partsservices by PAto PP63,000 -- LimSweeChuanLim Swee Chuan is a Director ofPA and Kobay and was a Directorof PP. He has 0.004% directinterest in Kobay.- OngTeikKooiOng Teik Kooi is a Director ofKobay and was a Director of PA.He is deemed to be interested byvirtue of his spouse’s interest of6.37% in Kobay.21

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRMPIN PP # Directors- Koay HeanEng- KoayCheng Lye- LimSweeChuanKoay Hean Eng is a Director ofPIN and Kobay and was aDirector of PP. He has 2.45%direct and 25.96% indirectinterests in Kobay.Koay Cheng Lye is a Directorof Kobay and was a Director ofPP. He has 0.87% direct and25.96% indirect interests inKobay.Lim Swee Chuan is a Directorof PIN and Kobay and was aDirector of PP. He has 0.004%direct interest in Kobay.Manufacturingand provisionof automatedmachine andautomatedmachine partsservices byPIN to PPReceipt ofmanufacturingof machiningparts andprovision oftooling servicesby PIN fromPP11,0005,00033,00016,000-OngTeikKooiOng Teik Kooi is a Director ofKobay and was a Director ofPIN. He is deemed to beinterested by virtue of hisspouse’s interest of 6.37% inKobay.PAPINPT #Directors- Koay HeanEng- LimSweeChuan- Ong TeikKooiKoay Hean Eng is a Director ofPA, PIN and Kobay and was aDirector of PT. He has 2.45%direct and 25.96% indirectinterests in Kobay.Lim Swee Chuan is a Directorof PA, PIN, PT and Kobay. Hehas 0.004% direct interest inKobay.Ong Teik Kooi is a Director ofPT and Kobay and was aDirector of PA and PIN. He isdeemed to be interested byvirtue of his spouse’s interest of6.37% in Kobay.Manufacturingand provisionof automatedmachine andautomatedmachine partsservices by PAand PIN to PTReceipt ofmanufacturingof machiningparts andprovision oftooling servicesby PA and PINfrom PT239,00045,00051,00033,000- KoayAhBah @KoayChengHockKoay Ah Bah @ Koay ChengHock is a Director of PT andKobay. He has 0.84% directand 25.96% indirect interests inKobay.22

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRMUP PA #PIN #Directors- Koay HeanEng- Koay ChengLyeKoay Hean Eng is a Director ofPA, PIN, UP and Kobay. Hehas 2.45% direct and 25.96%indirect interests in Kobay.Koay Cheng Lye is a Directorof Kobay and was a Director ofUP. He has 0.87% direct and25.96% indirect interests inKobay.Sale ofmachinecomponents,generaltrading ofmachine andmeasurementequipmentaccessories byUP to PA andPIN3,000 3,000- LimSweeChuanLim Swee Chuan is a Directorof PA, PIN and Kobay. He has0.004% direct interest inKobay.- Ong TeikKooiOng Teik Kooi is a Director ofKobay and was a Director ofPA and PIN. He is deemed tobe interested by virtue of hisspouse’s interest of 6.37% inKobay.- KoayAh Bah@KoayCheng HockKoay Ah Bah @ Koay ChengHock is a Director of Kobayand was a Director of UP. Hehas 0.84% direct and 25.96%indirect interests in Kobay.PAPINMAKER @Directors- Koay HeanEng- LimSweeChuanKoay Hean Eng is a Director ofPA,PIN,MAKERandKobay.He has 2.45% direct and25.96% indirect interests inKobay.Lim Swee Chuan is a Directorof PA, PIN and Kobay and wasa Director of MAKER. He has0.004% direct interest inKobay.Receipt ofmanufacturingof machiningparts servicesby PA andPIN fromMAKER12,000 18,000- Ong TeikKooiOng Teik Kooi is a Director ofKobay and was a Director ofPA and PIN. He is deemed tobe interested by virtue of hisspouse’s interest of 6.37% inKobay.23

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRMPA PIN # Directors- Koay HeanEng- LimSweeChuanKoay Hean Eng is a Director ofPA, PIN, and Kobay. He has2.45% direct and 25.96%indirect interests in Kobay.Lim Swee Chuan is a Directorof PA, PIN and Kobay. He has0.004% direct interest inKobay.Manufacturingand provisionof automatedmachine andautomatedmachine partsservices by PAto PIN- 2,000,000- Ong TeikKooiOng Teik Kooi is a Director ofKobay and was a Director ofPA and PIN. He is deemed tobe interested by virtue of hisspouse’s interest of 6.37% inKobay.PIN MAKER @ Directors- Koay HeanEng- LimSweeChuanKoay Hean Eng is a Director ofPIN, MAKER and Kobay. Hehas 2.45% direct and 25.96%indirect interests in Kobay.Lim Swee Chuan is a Directorof PIN and Kobay and was aDirector of MAKER. He has0.004% direct interest inKobay.Manufacturingand provisionof automatedmachine andautomatedmachine partsservices byPIN toMAKER60,000 270,000- Ong TeikKooiOng Teik Kooi is a Director ofKobay and was a Director ofPIN. He is deemed to beinterested by virtue of hisspouse’s interest of 6.37% inKobay.KTM BWE #KTMT #PT #Directors- Koay HeanEngKoay Hean Eng is a Director ofKTM, BWE, KTMT andKobay and was a Director ofPT. He has 2.45% direct and25.96% indirect interests inKobay.Sale ofmachine byKTM to BWE,KTMT and PT237,000 850,000- Koay ChengLyeKoay Cheng Lye is a Directorof Kobay and was a Directorof BWE. He has 0.87% directand 25.96% indirect interests inKobay.24

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRM- LimSweeChuanLim Swee Chuan is a Directorof KTM, KTMT, PT andKobay and was a Director ofBWE. He has 0.004% directinterest in Kobay.- Ong TeikKooiOng Teik Kooi is a Director ofPT and Kobay. He is deemedto be interested by virtue of hisspouse’s interest of 6.37% inKobay.- KoayAh Bah@KoayCheng HockKoay Ah Bah @ Koay ChengHock is a Director of PT andKobay. He has 0.84% directand 25.96% indirect interests inKobay.KTMT KT # Directors- Koay HeanEngKoay Hean Eng is a Director ofKT, KTMT and Kobay. He has2.45% direct and 25.96%indirect interests in Kobay.Payment ofmanagementfee by KTMTto KT4,000 6,000- LimSweeChuanLim Swee Chuan is a Directorof KT, KTMT and Kobay. Hehas 0.004% direct interest inKobay.KTM KTMT # Directors- Koay HeanEngKoay Hean Eng is a Director ofKTM, KTMT and Kobay. Hehas 2.45% direct and 25.96%indirect interests in Kobay.Payment ofcommission onsale of machineby KTM toKTMT160,000 480,000- LimSweeChuanLim Swee Chuan is a Directorof KTM, KTMT and Kobay.He has 0.004% direct interestin Kobay.KTMT MAKER @ Directors- Koay HeanEngKoay Hean Eng is a Director ofKTMT, MAKER and Kobay.He has 2.45% direct and25.96% indirect interests inKobay.Sale ofmachineaccessories byKTMT toMAKER1,000 -25

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRM- LimSweeChuanLim Swee Chuan is a Directorof KTMT and Kobay and was aDirector of MAKER. He has0.004% direct interest inKobay.MAKER PT # Directors- Koay HeanEng- LimSweeChuan- Ong TeikKooiKoay Hean Eng is a Director ofMAKER and Kobay and was aDirector of PT. He has 2.45%direct and 25.96% indirectinterests in Kobay.Lim Swee Chuan is a Directorof PT and Kobay and was aDirector of MAKER. He has0.004% direct interest inKobay.Ong Teik Kooi is a Director ofPT and Kobay. He is deemedto be interested by virtue of hisspouse’s interest of 6.37% inKobay.Receipt ofmanufacturingof machiningparts andtooling servicesby MAKERfrom PTManufacturingand provisionof machiningparts servicesby MAKER toPT35,00030,0009,00031,800- KoayAh Bah@KoayCheng HockKoay Ah Bah @ Koay ChengHock is a Director of PT andKobay. He has 0.84% directand 25.96% indirect interests inKobay.UP MAKER @ Directors- Koay HeanEng- Koay ChengLye- LimSweeChuanKoay Hean Eng is a Director ofMAKER, UP and Kobay. Hehas 2.45% direct and 25.96%indirect interests in Kobay.Koay Cheng Lye is a Directorof Kobay and was a Director ofUP. He has 0.87% direct and25.96% indirect interests inKobay.Lim Swee Chuan is a Directorof Kobay and was a Director ofMAKER. He has 0.004%direct interest in Kobay.Sale ofconsumabletools, generaltrading ofmachine andmeasurementequipmentaccessories byUP to MAKERReceipt ofmanufacturingof machiningparts servicesby UP fromMAKER2,0002,0001,0001,000- KoayAh Bah@KoayCheng HockKoay Ah Bah @ Koay ChengHock is a Director of Kobayand was a Director of UP. Hehas 0.84% direct and 25.96%indirect interests in Kobay.26

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRMBWEPIKobayPTPPMPPAPINPNT, asubsidiarycompany ofPNS #Directors- Koay HeanEng- Koay ChengLyeKoay Hean Eng is a Director ofPNS, BWE, PA, PIN, MPS,Lipo and Kobay and was aDirector of PI, PT, PP andMP. He has 2.45% direct and25.96% indirect interests inKobay.Koay Cheng Lye is a Directorof Lipo and Kobay and was aDirector of BWE, PP and MP.He has 0.87% direct and25.96% indirect interests inKobay.Purchase ofcomputerhardware/software,systemintegration andservices byBWE,PI,Kobay, PT,PP, MP,PA,PIN, MPS andLipo from PNT127,000 546,000MPSLipo- LimSweeChuanLim Swee Chuan is a DirectorofPT,MP,PA,PIN,MPS,Lipo and Kobay and was aDirector of BWE, PI and PP.He has 0.004% direct interestin Kobay.- Ong TeikKooiOng Teik Kooi is a Director ofPI, PT, and Kobay and was aDirector of PA and PIN. He isdeemed to be interested byvirtue of his spouse’s interest of6.37% in Kobay.- KoayAh Bah@KoayCheng HockKoay Ah Bah @ Koay ChengHock is a Director of PI, PTand Kobay. He has 0.84%direct and 25.96% indirectinterests in Kobay.KA Lipo + Directors- Koay HeanEng- Koay ChengLyeKoay Hean Eng is a Director ofLipo and Kobay. He has 2.45%direct and 25.96% indirectinterests in Kobay, as well asindirect interest of 45.33% inLipo.Koay Cheng Lye is a Directorof KA, Lipo and Kobay. Hehas 0.87% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.Receipt ofrental of officelocated at Plot30, HilirSungai KluangSatu, BayanLepasIndustrial Park,Phase 4, 11900Penang by KAfrom Lipo- 7,20027

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRM- LimSweeChuanLim Swee Chuan is a Directorof Lipo and Kobay. He has0.004% direct interest inKobay.- KoayAh Bah@KoayCheng HockKoay Ah Bah @ Koay ChengHock is a Director of KA andKobay. He has 0.84% directand 25.96% indirect interests inKobay, as well as indirectinterest of 45.33% in Lipo.MPPPC, asubsidiarycompany ofLipoDirectors- Koay HeanEngKoay Hean Eng is a Director ofPPC, Lipo and Kobay and wasa Director of MP. He has2.45% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.Manufacturingand provisionof precisionparts servicesby MP to PPC3,000 -- Koay ChengLyeKoay Cheng Lye is a Directorof PPC, Lipo and Kobay andwas a Director of MP. He has0.87% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.- LimSweeChuanLim Swee Chuan is a Directorof MP, PPC, Lipo and Kobay.He has 0.004% direct interestin Kobay.- KoayAh Bah@KoayCheng HockKoay Ah Bah @ Koay ChengHock is a Director of Kobayand was a Director of PPC. Hehas 0.84% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.PABWEPPC, asubsidiarycompany ofLipoDirectors- Koay HeanEngKoay Hean Eng is a Director ofPA,BWE,PPC,LipoandKobay. He has 2.45% direct and25.96% indirect interests inKobay, as well as indirectinterest of 45.33% in Lipo.Fabrication ofprecisioncomponents byPA and BWE toPPCReceipt ofplatelet materialand extrudedaluminium barsby PA andBWE from PPC979,000308,0001,260,000633,00028

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRM- Koay ChengLyeKoay Cheng Lye is a Directorof PPC, Lipo and Kobay andwas a Director of BWE. He has0.87% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.- LimSweeChuanLim Swee Chuan is a Directorof PA, PPC, Lipo and Kobayand was a Director of BWE. Hehas 0.004% direct interest inKobay.-KoayAhBah@KoayCheng HockKoay Ah Bah @ Koay ChengHock is a Director of Kobay andwas a Director of PPC. He has0.84% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.BWEASC, asubsidiarycompany ofLipoDirectors- Koay HeanEngKoay Hean Eng is a Director ofBWE, Lipo and Kobay. He has2.45% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.Fabrication ofprecisioncomponents byBWE to ASC17,000 -- Koay ChengLyeKoay Cheng Lye is a Directorof ASC, Lipo and Kobay andwas a Director of BWE. He has0.87% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.- LimSweeChuanLim Swee Chuan is a Directorof ASC, Lipo and Kobay andwas a Director of BWE. He has0.004% direct interest inKobay.29

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRMMAKERASC, asubsidiarycompany ofLipoPPC, asubsidiarycompany ofLipoDirectors- Koay HeanEng- Koay ChengLyeKoay Hean Eng is a Director ofMAKER, PPC, Lipo andKobay. He has 2.45% directand 25.96% indirect interests inKobay, as well as indirectinterest of 45.33% in Lipo.Koay Cheng Lye is a Directorof ASC, PPC, Lipo and Kobay.He has 0.87% direct and25.96% indirect interests inKobay, as well as indirectinterest of 45.33% in Lipo.Manufacturingand provisionof machiningparts, jigs andfixturesservices byMAKER toASC and PPC5,000 3,000- LimSweeChuanLim Swee Chuan is a Directorof ASC, PPC, Lipo and Kobayand was a Director ofMAKER. He has 0.004%direct interest in Kobay.- KoayAh Bah@KoayCheng HockKoay Ah Bah @ Koay ChengHock is a Director of Kobayand was a Director of PPC. Hehas 0.84% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.MAKERPPC, asubsidiarycompany ofLipoDirectors- Koay HeanEng- Koay ChengLyeKoay Hean Eng is a Director ofMAKER, PPC, Lipo andKobay. He has 2.45% directand 25.96% indirect interests inKobay, as well as indirectinterest of 45.33% in Lipo.Koay Cheng Lye is a Directorof PPC, Lipo and Kobay. Hehas 0.87% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.Receipt ofmanufacturingof precisionparts andcomponentsservices byMAKER fromPPC10,000-- LimSweeChuanLim Swee Chuan is a Directorof PPC, Lipo and Kobay andwas a Director of MAKER. Hehas 0.004% direct interest inKobay.30

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRM- KoayAh Bah@KoayCheng HockKoay Ah Bah @ Koay ChengHock is a Director of Kobayand was a Director of PPC. Hehas 0.84% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.UPPPC, asubsidiarycompany ofLipoDirectors- Koay HeanEng- Koay ChengLyeKoay Hean Eng is a Director ofUP, PPC, Lipo and Kobay. Hehas 2.45% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.Koay Cheng Lye is a Directorof PPC, Lipo and Kobay andwas a Director of UP. He has0.87% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.Sale ofproductionconsumables,general tradingof machineandmeasurementequipmentaccessories byUP to PPC16,000 -- LimSweeChuanLim Swee Chuan is a Directorof PPC, Lipo and Kobay. Hehas 0.004% direct interest inKobay.- KoayAh Bah@KoayCheng HockKoay Ah Bah @ Koay ChengHock is a Director of Kobayand was a Director of UP andPPC. He has 0.84% direct and25.96% indirect interests inKobay.PTPPC, asubsidiarycompany ofLipoDirectors- Koay HeanEngKoay Hean Eng is a Director ofPPC, Lipo and Kobay and wasa Director of PT. He has2.45% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.Fabrication ofprecisioncomponents byPT to PPC55,000 36,000- Koay ChengLyeKoay Cheng Lye is a Directorof PPC, Lipo and Kobay. Hehas 0.87% direct and 25.96%indirect interests in Kobay, aswell as indirect interest of45.33% in Lipo.31

Companieswithin theKobayGroupTransactingpartiesInterestedpartiesNature of relationshipNature oftransactions^Aggregatevalue from1 June2001tothedate ofEGMRM*Estimatedaggregatevalue fromdate ofEGM to thedate of thenext AGMRM- LimSweeChuanLim Swee Chuan is a Directorof PT, PPC, Lipo and Kobay.He has 0.004% direct interestin Kobay.- KoayAh Bah@KoayCheng HockKoay Ah Bah @ Koay ChengHock is a Director of PT andKobay and was a Director ofPPC. He has 0.84% direct and25.96% indirect interests inKobay, as well as indirectinterest of 45.33% in Lipo.- Ong TeikKooiOng Teik Kooi is a Director ofPT and Kobay. He is deemedto be interested by virtue of hisspouse’s interest of 6.37% inKobay.TOTAL 3,232,000 6,713,000Notes:- ^ The transaction values from 1 June 2001 to 10 May 2002 are based on the actual transactions enteredinto with the Related Parties. The transaction values from 11 May 2002 up to the date of the EGM arebased on the estimated transactions expected to be entered into with the Related Parties* The estimated transaction values for the period from the date of the EGM up to the date of the next AGMare based on the information available at the point of estimation which include business trend, agreement,orders, project estimate cost and sales forecast. Due to the nature of the transactions, the actual value oftransactions may vary from the estimated value disclosed above# Subsidiary company of Kobay@A 19% owned company of Kobay3.5 Validity period+ Associate company of Kobay3.5.1 If approved at the forthcoming EGM, the Proposed Shareholders’ Mandate, which is subject toannual renewal, will take effect from the date of the passing of the Ordinary Resolution theretoand will continue to be in force until:-(a)(b)(c)the conclusion of the next AGM of the Company following the forthcoming EGM, atwhich time it shall lapse unless by ordinary resolution passed at that meeting, theauthority is renewed, either unconditionally or subject to conditions; orthe expiration of the period within which the next AGM of the Company after the dateit is required to be held pursuant to section 143(1) of the Act (but shall not extend tosuch extension as may be allowed pursuant to section 143(2) of the Act); orrevoked or varied by resolution passed by the shareholders in a general meeting,whichever is earlier.32

3.6 Rationale for the Proposed Shareholders’ Mandate3.6.1 The Proposed Shareholders’ Mandate is to enable Kobay to seek ratification and mandate forthe RRPTs entered/to be entered into by the Group. The RRPTs are necessary for the day-todayoperations of the Group and contribute to its operational sales revenue. By obtaining theProposed Shareholders’ Mandate and where appropriate, the renewal thereof on an annualbasis, the necessity to announce or convene separate general meetings from time to time toprocure shareholders' prior approval for such transactions would not arise. This would reducesubstantially the administrative time and expenses associated with the convening of suchmeetings, without compromising the corporate objectives of the Group or adversely affectingthe business opportunities available to the Group.3.7 Financial effects of the Proposed Shareholders’ Mandate3.7.1 The Proposed Shareholders’ Mandate will not have any effect on the issued and paid-up sharecapital and major shareholders’ shareholdings of Kobay, and are not expected to have anyeffect on the earnings and NTA of Kobay for the current financial year ending 30 June 2002.3.8 Review procedures3.8.1 To ensure that the RRPTs are undertaken on arm’s length basis and on normal commercialterms, which are consistent with Kobay’s usual business practices and policies (taking intoconsideration the prevailing market rate/prices of products/services rendered, preferential ratesand discounts for bulk purchases, rental of premises by Related Parties) and are on terms notmore favourable to the Related Parties than those extended to third parties/ the public and arenot to the detriment of the minority shareholders of Kobay, the audit committee (“AuditCommittee”) has been tasked with the review and approval of such transactions.The Audit Committee currently comprises of:-NameTan Yok ChengDato’ Abdul Rahman Bin Mohammed HashimLim Swee ChuanDesignationIndependent Non-Executive Director / ChairmanIndependent Non-Executive Director / MemberExecutive Director /Member3.8.2 To monitor the RRPTs, the following review procedures have been implemented by theCompany:-(i)(ii)(iii)the internal auditor will review the terms of the RRPTs;records, agreements, contracts and other relevant documents on all RRPTs will bemade available to the Audit Committee for review; andthe Audit Committee will review any RRPTs that may arise within the Company toensure that such transactions will be carried out at arm’s length, and on normalcommercial terms, and the terms are not more favourable than those generallyavailable to the public and are not to the detriment of the minority shareholders. TheAudit Committee shall assist to ascertain that all procedures established to monitorRRPTs have been complied with. The review shall be done half yearly.33

3.8.3 Disclosure will be made in the Company’s Annual Report of the breakdown of the aggregatevalue of transactions conducted, types of transactions made, names of related parties involvedand their relationship with the Company pursuant to the Proposed Shareholders’ Mandateduring the financial year, and in the Annual Reports for subsequent financial years that theProposed Shareholders’ Mandate continues to be in force.3.9 Statement by the Audit Committee3.9.1 The Audit Committee of Kobay has considered the review procedures mentioned in Section 3.8above and is of the view that the said procedures are adequate to ensure that all RRPTs will becarried out at arm's length basis, and on normal commercial terms which are not morefavourable to the related parties than those generally available to the public and are not to thedetriment of the minority shareholders of the Company.The Audit Committee may, at its discretion adopt new review and disclosure procedures and/oramend the existing procedures to ensure that the RRPTs are at all times, on the termsconsistent with the Group's practices.3.10 Approval required3.10.1 The Proposed Shareholders’ Mandate is subject to the approval of the shareholders of Kobay atthe forthcoming EGM.3.11 Directors’ and major shareholders’ interestsNo. of shares held in KobayName Direct % Indirect %DirectorsKoay Hean Eng 1,323,323 2.45 * 14,018,406 25.96Koay Cheng Lye 469,595 0.87 ** 14,018,406 25.96Koay Ah Bah @ Koay Cheng Hock 455,732 0.84 *** 14,018,406 25.96OngTeikKooi - - @ 3,440,000 6.37Lim Swee Chuan 2,000 # - -Major ShareholdersKHSB 14,018,406 25.96 - -Noorzalila Binti Ismail 3,440,000 6.37 - -3.11.1 The details of the Directors and/or major shareholders and their shareholdings in Kobay as at13 June 2002 are as follows:-Notes:-* Deemed interest by virtue of his 75% direct interest in KHSB, a major shareholder of Kobay** Deemed interest by virtue of his 15% direct interest in KHSB, a major shareholder of Kobay*** Deemed interest by virtue of his 10% direct interest in KHSB, a major shareholder of Kobay@ Deemed interest by virtue of his wife’s shareholding, i.e Noorzalila Binti Ismail in Kobay# Interest is less than 0.01%34

3.11.2 Accordingly Koay Hean Eng, Koay Cheng Lye, Koay Ah Bah @ Koay Cheng Hock, Ong TeikKooi and Lim Swee Chuan, who are deemed to be interested in the Proposed Shareholders’Mandate have abstained and will continue to abstain from all Board deliberations on theRRPTs. KHSB is an interested party by virtue of its shareholders’ (namely Koay Hean Eng,Koay Cheng Lye and Koay Ah Bah @ Koay Cheng Hock) directorships in Kobay.KHSB istherefore considered as a person connected to Koay Hean Eng, Koay Cheng Lye and Koay AhBah @ Koay Cheng Hock. Noorzalila Binti Ismail is an interested party by virtue of her beingthe wife of Ong Teik Kooi and is therefore considered as a person connected to Ong TeikKooi.Accordingly,KoayHeanEng,KoayChengLye,KoayAhBah@KoayChengHock,Ong Teik Kooi, Lim Swee Chuan, KHSB and Noorzalila Binti Ismail who are deemed to beinterested in the Proposed Shareholders’ Mandate will also abstain from voting in respect oftheir direct and/or indirect shareholdings in Kobay on the resolution pertaining to the ProposedShareholders’ Mandate to be tabled at the forthcoming EGM of the Company.3.11.3 The interested Directors and/or major shareholders have undertaken to ensure that personsconnected to them as mentioned above shall abstain from voting on the resolution relating tothe Proposed Shareholders’ Mandate at the forthcoming EGM.3.11.4 Save as disclosed above, none of the other Directors and/or major shareholders of Kobayand/or persons connected with them have any interest, direct or indirect in the RRPTs.4.0 DIRECTORS’ RECOMMENDATION4.1 Your Directors are of the opinion that the Proposals are in the interest of the Company.Accordingly, your Directors (except for Koay Hean Eng, Koay Cheng Lye, Koay Ah Bah @Koay Cheng Hock, Ong Teik Kooi and Lim Swee Chuan who are deemed to be interested inthe Proposed Shareholders’ Mandate and have abstained from expressing any recommendationin relation to the Proposed Shareholders’ Mandate) recommend that you vote in favour of theresolutions relating to the Proposals to be tabled at the forthcoming EGM.5.0 EGM5.1 An EGM, notice of which is enclosed in this Circular, will be held at Plot 30, Hilir SungaiKluang Satu, Bayan Lepas Industrial Park, Phase 4, 11900 Penang on Wednesday, 3 July 2002at 11.00 a.m. for the purpose of considering and if thought fit, passing the resolutions toapprove the Proposals.5.2 If you are unable to attend and vote at the EGM in person, please complete, sign and return theForm of Proxy in accordance with the instructions printed therein as soon as possible and inany event, so as to arrive at the Registered Office of the Company not later than forty eight(48) hours before the time appointed for holding the EGM. The completion, signing and returnof the Form of Proxy will not preclude you from attending and voting in person at the EGMshouldyousubsequentlywishtodoso.35

6.0 FURTHER INFORMATION6.1 Shareholders are advised to refer to the attached appendix for further information.Yours faithfully,For and on behalf of the Board of DirectorsKOBAY TECHNOLOGY BHD.DATO’ ABDUL RAHMAN BIN MOHAMMED HASHIMIndependent Non-Executive DirectorTHE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK36

FURTHER INFORMATIONAPPENDIX I1. DIRECTORS’ RESPONSIBILITY STATEMENTThis Circular has been seen and approved by the Directors of Kobay and they collectively andindividually accept full responsibility for the accuracy of the information given and confirmthat after making all reasonable enquiries, to the best of their knowledge and belief, there areno other facts, the omission of which would make any statement herein misleading.2. CONSENTMIMB has given and has not subsequently withdrawn its written consent to the inclusion in thisCircular of its name, in the form and context in which it appears.3. MATERIAL LITIGATIONNeither Kobay nor its subsidiary companies are engaged in any material litigation, claims orarbitration either as plaintiff or defendant, and as at the date of this Circular, the Directors ofKobay are not aware of any proceeding pending or threatened against the Company or itssubsidiary companies or of any facts likely to give rise to any proceeding which may materiallyaffect the position or business of Kobay or its subsidiary companies.4. MATERIAL CONTRACTSSave for the following, there are no other material contracts (not being contracts entered into inthe ordinary course of business) which have been entered into by Kobay and its subsidiarycompanies within the two (2) years preceding the date of this Circular:-(a)(b)(c)Shares Sale Agreement dated 6 September 2001 between the Company and Mr. Ch’ngKean Hong to dispose off 230,000 ordinary shares of RM1.00 representing 10% ofequity interest in Commercial Legacy Sdn. Bhd. for a cash consideration ofRM3,000,000.Shareholders Agreement dated 13 December 2001 between the Company and Mr.Tseng Sheng Lung and Mr. Loh Kok Wah to set up a company, namely KT byinvesting 610,000 shares at a sum of RM610,000 in KT. Under the agreement, theCompany will advance a sum of RM2,790,000 proportionate to the equity interest toKT with the condition that the equity interest to a maximum of 68%.Shareholders Agreement dated 8 March 2002 between KT and Mr. Ng Koon Peng andMiss Lim Lee Ching to invest 116,666 shares of RM1.00 each at RM1.00 each inKTMT representing 70% of the issued share capital of KTMT.37

(d)(e)(f)Subscription by the Company of 550,000 ordinary shares representing 55% equityinterest in Elite Paper Trading Sdn Bhd (formerly known as Fortune Venue Sdn Bhd)(“Elite”) on 9 May 2002 from Elite for a cash consideration of RM550,000.Share Sales Agreement dated 17 May 2002 between the Company and Mr Tai Bee Kiatto acquire additional 10% equity interest in both PA and PIN for a cash considerationof RM412,000 and RM8,000 respectively. Upon completion the acquisition, the equityinterest of Kobay in both companies increased to 90%.Joint venture Agreement dated 21 May 2002 between the Company and ITT IndustriesInc., a corporation incorporated under the law of the State of Indiana, USA (“ITT”) toset up a joint venture company bearing the proposed name of “ITT Kobay Sdn Bhd”,which will engage in manufacture and sale of control systems products.5. DOCUMENTS FOR INSPECTIONCopies of the following documents will be made available for inspection during normalbusiness hours at the Registered Office of Kobay at Lot 1.02 First Floor, Acctax CorporateCentre, No. 2 Jalan Bawasah, 10050 Penang, from the date of this Circular up to and includingthedateoftheEGM:-(a)(b)(c)Memorandum and Articles of Association of Kobay;Letter of consent referred to in Section 2 above;The material contracts referred to in Section 4 above; and(d) The audited accounts of Kobay for the past two(2) financial years ended 30 June 2000and 2001 and the unaudited 9 months results for the period ended 31 March 2002.THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK38

(Company No.: 308279-A)(Incorporated in Malaysia)NOTICE OF EXTRAORDINARY GENERAL MEETINGNOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Kobay Technology Bhd. (“Kobay”or “Company”) will be held at Plot 30, Hilir Sungai Kluang Satu, Bayan Lepas Industrial Park, Phase 4,11900 Penang on Wednesday, 3 July 2002 at 11.00 a.m. for the purpose of considering, and if thought fit,passing the following ordinary resolutions, with or without any modifications:-ORDINARY RESOLUTION IPROPOSED BONUS ISSUE OF 14,283,000 NEW ORDINARY SHARES OF RM1.00 EACH ONTHE BASIS OF ONE (1) NEW ORDINARY SHARES OF RM1.00 EACH FOR EVERY FOUR (4)EXISTING ORDINARY SHARES OF RM1.00 EACH HELD“THAT, subject to the approval of the Kuala Lumpur Stock Exchange for the listing of and quotation for thenew shares in the Company to be issued hereunder, the Directors of Kobay be and are hereby authorised tocapitalise a sum of up to a maximum of RM14,283,000 from the retained profits of the Company in makingpayment in full at par for up to a maximum of 14,283,000 new ordinary shares of RM1.00 each (“share”)inthe share capital of the Company (“Proposed Bonus Issue”), and such new shares to be distributed andcredited as fully paid to all shareholders of the Company whose names appear on the Register of Membersand/or Record of Depositors on a date and time to be determined and announced later by the Directors, on thebasis of one (1) new share for every four (4) existing shares held, fractions to be disregarded and that suchnew shares shall rank pari passu in all respects with the existing issued and paid-up shares of Kobay exceptthat they shall not be entitled to any dividend, rights, allotment or other distribution which may be declared,prior to the date of allotment of the new shares to be issued pursuant to the Proposed Bonus Issue ANDTHAT the Directors be and are hereby authorised to give effect to the aforesaid Proposed Bonus Issue withfull powers to assent to any conditions, modifications, variations and/or amendments in any manner as maybe required by the relevant authorities.”ORDINARY RESOLUTION IIPROPOSED SHARE BUY-BACK“THAT subject to the Companies Act, 1965 (“Act”), the Company’s Memorandum and Articles ofAssociation and all applicable laws, regulations and guidelines and the approvals of all relevant authorities,approval be and is hereby given to the Company to purchase and/or hold such amount of ordinary shares ofRM1.00 each in the Company (“shares”) as may be determined by the Directors of the Company from timeto time through the Kuala Lumpur Stock Exchange upon such terms and conditions as the Directors maydeem fit in the interest of the Company provided that the aggregate number of shares purchased and/or heldpursuant to this resolution does not exceed ten per cent (10%) of the total issued and paid-up share capital ofthe Company at any given point in time and that an amount not exceeding retained profits and/or the sharepremium accounts of the Company be allocated by the Company for the proposed purchase. The auditedretained profits and share premium accounts of the Company as at 30 June 2001 are RM26,615,749 andRM1,565,686 respectively. As at 31 March 2002, the retained profits and share premium accounts of theCompany stood at RM48,840,000 and RM1,566,000 respectively.AND THAT authority be and is hereby given to the Directors to treat the shares so purchased inaccordance with the provisions of the Act, which allows a company that has purchased its own shares toeither retain the shares as treasury shares or to cancel the shares, or a combination of both. The sharesso purchased and retained as treasury shares by the Company may either be cancelled, distributed asshare dividends or resold on the KLSE at a price which is not less than the weighted average marketprice for the shares for five (5) market days immediately preceding the date of such resale.39

AND THAT such authority from the shareholders would be effective immediately upon passing of thisresolution and would continue to be in force until:-(a)(b)(c)the conclusion of the next annual general meeting (“AGM”) of the Company following the AGM atwhich such resolution was passed, at which time it shall lapse unless by ordinary resolution passed at thatmeeting, the authority is renewed either unconditionally or subject to conditions;the expiration of the period within which the next AGM is required by law to be held; orrevoked or varied by ordinary resolution passed by the shareholders of the Company in a generalmeeting,whichever occurs first.AND THAT authority be and is hereby given to the Directors to take all such steps as are necessary(including the opening and maintaining of a central depositories account(s) under the Securities Industry(Central Depositories) Act 1991) and entering into all other agreements, arrangements and guarantees withany party or parties to implement, finalise and give full effect to the aforesaid purchase with full powers toassent to any conditions, modifications, re-valuations, variations and/or amendments (if any) as may beimposed by the relevant authorities from time to time.”ORDINARY RESOLUTION IIIPROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTYTRANSACTIONS OF A REVENUE OR TRADING NATURE“THAT pursuant to Chapter 10.09 of the Listing Requirements of the Kuala Lumpur Stock Exchange, amandate of the shareholders be and is hereby granted to allow recurrent related party transactions of arevenue or trading nature ("RRPTs"), which are necessary for the day-to-day operations of the Companyand/or its subsidiary companies/ associate/ investment (“Kobay Group”), entered into or to be entered into bythe Kobay Group in the ordinary course of business, provided that such transactions are entered into at arm’slength basis and on normal commercial terms which are not more favourable to the related parties than thosegenerally available to the public and are not to the detriment of the minority shareholders of the Company, theparticulars of such transactions are set out in Section 3.4.2 of the Part B of the Circular to Shareholders ofKobay dated 18 June 2002, AND THAT for the avoidance of doubt, all such transactions entered into as setout in Section 3.4.2 of the Part B of the Circular to Shareholders dated 18 June 2002 by the Kobay Groupfrom 1 June 2001 up to the date of this resolution be and are hereby approved and ratified (“ProposedShareholders’ Mandate”);AND THAT disclosure of the breakdown of the aggregate value of transactions conducted will be made basedon the type of RRPTs made, names of the related parties involved in each type of the RRPTs made and theirrelationship with the Company, in the annual report of the Company during the current financial year and inthe annual reports for the subsequent financial years during which the Proposed Shareholders’ Mandate is inforce;AND THAT the authority conferred by this resolution shall commence immediately upon the passing of thisOrdinary Resolution and shall continue to be in force until:-(a)(b)(c)the conclusion of the next Annual General Meeting (“AGM”) of the Company, at which time it shalllapse unless by ordinary resolution passed at that meeting, the authority is renewed, eitherunconditionally or subject to conditions; orthe expiration of the period within which the next AGM of the Company after the date it is required tobe held pursuant to section 143(1) of the Companies Act, 1965 (but shall not extend to such extensionas may be allowed pursuant to section 143(2) of the Companies Act, 1965); orrevoked or varied by resolution passed by the shareholders in a general meeting,whichever is earlier.40

AND THAT the Directors of the Company and/or any of them be and are hereby authorised to give effect tothe Proposed Shareholders’ Mandate with full powers to deal with all matters relating thereto and to completeand do all acts and things (including executing such documents as may be required) in connection with theProposed Shareholders’ Mandate.”BY ORDER OF THE BOARDCHAN MUN SHEE (MAICSA 7003071)WONG MEE CHOON (LS 0040)Company SecretariesPenang18 June 2002Notes:-1. A member entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint aproxy/proxies who may but need not be a member/members of the Company to attend and vote in his/her steadand Section 149 (1)(b) of the Companies Act, 1965 shall not apply.2. When a member appoints two or more proxies the appointments shall be invalid unless he/she specifies theproportions of his/her holdings to be represented by each proxy.3. The instruments appointing a proxy shall be in writing under the hand of the appointer or his/her attorney dulyauthorised in writing or if the appointer is a corporation, either under its common seal or under the hand of anofficer or attorney duly authorised.4. The instruments appointing a proxy must be deposited at the Registered Office of the Company at Lot 1.02 FirstFloor, Acctax Corporate Centre, No.2 Jalan Bawasah, 10050 Penang at least forty-eight (48) hours before thetime appointed for holding the Meeting or any adjournment thereof.41

(Company No.: 308279-A)(Incorporated in Malaysia)I / We ________________________________________________ (Full Name in Block Letters) of_________________________________________________________________________ (Address)being a member / members of Kobay Technology Bhd. hereby appointName Address NRIC /Passport No.Proportion ofShareholdings(%)and / or (delete as appropriate)Name Address NRIC /Passport No.Proportion ofShareholdings(%)or failing him/her, Chairman of the Meeting as my/our proxy/proxies to attend and vote for me/us on my/our behalf, and ifnecessary, to demand a poll, at the Extraordinary General Meeting of the Company to be held at Plot 30, Hilir Sungai KluangSatu, Bayan Lepas Industrial Park, Phase 4, 11900 Penang on Wednesday, 3 July 2002 at 11.00 a.m. or at any adjournmentthereof in the manner indicated below:-I/We direct my/our proxy/proxies to vote for or against the Resolution to be proposed at the meeting as indicated thereunder. If nospecific directions as to voting is given or in the event of any item arising not summarised below, my/our proxy/proxies may vote orabstain from voting at his/her discretion.ORDINARY RESOLUTION IPROPOSED BONUS ISSUE OF 14,283,000 NEW ORDINARY SHARES OF RM1.00 EACH ONTHE BASIS OF ONE (1) NEW ORDINARY SHARE OF RM1.00 EACH FOR EVERY FOUR(4) EXISTING ORDINARY SHARES OF RM1.00 EACH HELDORDINARY RESOLUTION IIPROPOSED SHARE BUY-BACKORDINARY RESOLUTION IIIPROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTYTRANSACTIONS OF A REVENUE OR TRADING NATUREFor*Against** Please indicate your vote “For” or “Against” with an “X” within the box provided.Total number of Shares heldSigned this _________ day of _________ 2002 ---------------------------------------Signature / Common Seal ofShareholder(s)Notes:-1. A member entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint a proxy/proxies who may but neednot be a member/members of the Company to attend and vote in his/her stead and Section 149 (1)(b) of the Companies Act, 1965shall not apply.2. When a member appoints two or more proxies the appointments shall be invalid unless he/she specifies the proportions of his/herholdings to be represented by each proxy.3. The instruments appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writingor if the appointer is a corporation, either under its common seal or under the hand of an officer or attorney duly authorised.4. The instruments appointing a proxy must be deposited at the Registered Office of the Company at Lot 1.02 First Floor, AcctaxCorporate Centre, No.2 Jalan Bawasah, 10050 Penang at least forty-eight (48) hours before the time appointed for holding theMeeting or any adjournment thereof.

Fold this flap for sealingThen fold hereAFFIXSTAMPThe Company SecretaryKobay Technology Bhd.Lot 1.02 First FloorAcctax Corporate CentreNo. 2 Jalan Bawasah10050 Penang1st fold here