General Announcement Reference No O&-040511-61945

Submitting Merchant Bank	:	K & N KENANGA BHD
Company Name	:	ASIAEP BHD (MESDAQ Market)
Stock Name	:	ASIAEP
Date Announced	:	11/05/2004

Type	:	Announcement
Subject	:	ASIAEP BERHAD ("asiaEP" OR "COMPANY") PROPOSED ESTABLISHMENT OF AN EMPLOYEE SHARE OPTION SCHEME ("PROPOSED ESOS")

Contents :

1. INTRODUCTION

On behalf of the Board of Directors of asiaEP ("Board"), K & N Kenanga Bhd is pleased to announce that asiaEP proposes to implement an employee share option scheme ("ESOS") of up to fifteen per centum (15%) of the issued and paid-up share capital of asiaEP ("Proposed ESOS").

2. DETAILS OF PROPOSED ESOS

The Proposed ESOS will involve the granting of new options to eligible employees and executive directors involved in the day to day management of asiaEP and its subsidiaries ("Executive Directors"), who meet the criteria of eligibility for participation in the Proposed ESOS ("Eligible Employees") as set out in the by-laws containing the terms and conditions of the Proposed ESOS ("By-Laws"). The Eligible Employees will be granted options in accordance with the By-Laws which will entitle them to subscribe for new ordinary shares of RM0.10 each in asiaEP ("asiaEP Shares") at a specified subscription price ("Options").

The Proposed ESOS will be governed by a set of By-Laws that shall, inter alia, stipulate the following:-

(i) Maximum number of new shares available under the Proposed ESOS

The maximum number of new shares of asiaEP to be offered under the Proposed ESOS ("ESOS Shares") shall not be more than fifteen percent (15%) of the issued and paid-up capital of asiaEP at any point of time during the existence of the Proposed ESOS.

(ii) Eligibility

The Executive Directors and/or employees who are on the payroll of asiaEP and its subsidiaries (save for dormant companies) and who fulfill the conditions as set out in the By-Laws shall be eligible to participate in the Proposed ESOS.

(iii) Duration

The Proposed ESOS shall be in force for a period of three (3) years from the date of implementation and subject to a renewal option for an additional three (3) years, to be determined by the Board upon recommendation by the Options Committee.

(iv) Pricing

The exercise price for the Option shall be set at the weighted average market price of the asiaEP Shares as shown in the Daily Official List of Bursa Malaysia Securities Berhad ("BMSB") for the five (5) market days immediately preceding the date of offer with an allowance for a discount of not more than ten per centum (10%) therefrom at the Option Committee's discretion, (or such other pricing mechanism as may be permitted by BMSB or any other relevant regulatory authorities, from time to time) provided that the exercise price shall in no event be less than the par value of asiaEP Shares.

(v) Rights attaching to the ESOS Shares

The ESOS Shares to be allotted and issued upon any exercise of the Options will upon such allotment and issuance rank pari passu in all respects with the then existing, issued and fully paid-up share capital of the Company, save and except that the ESOS Shares so issued will not be entitled to any dividends, rights, allotments or other distributions declared by the Company prior to the date of allotment of the ESOS Shares.

3. RATIONALE FOR THE PROPOSED ESOS

The implementation for the Proposed ESOS will serve the following purposes:-

(i) To recognise the contribution of Eligible Employees whose services are valued and considered vital to the operations and continued growth of the Company;

(ii) To motivate Eligible Employees of the Company towards better performance through greater productivity and loyalty;

(iii) To stimulate a greater sense of belonging and dedication since Eligible Employees are given the opportunity to participate directly in the equity of the Company;

(iv) To encourage Eligible Employees to remain with the Company thus ensuring that loss of key personnel is kept to a minimum; and

(v) To reward Eligible Employees by allowing them to participate in the Company's profitability and eventually realise capital gains arising from any appreciation in the value of the Company's shares.

4. EFFECTS OF THE PROPOSED ESOS

4.1 Share Capital

The issued and paid-up share capital of the Company will increase progressively depending on the number of new asiaEP Shares to be issued pursuant to the exercise of the Options to be granted under the Proposed ESOS. Please refer to Table 1 for the effect of the Proposed ESOS on the issued and paid-up share capital of asiaEP.

4.2 Net Tangible Assets ("NTA")

The effect on the NTA will depend on the number of Options granted and exercised at any point in time as well as the price of Options upon the exercise of the Options.

4.3 Earnings

Any potential effects on the earnings and earnings per share of asiaEP in the future would depend on the number of Options granted and exercised at any point in time as well as the price of Options upon the exercise of the Options.

4.4 Substantial Shareholders' Shareholdings

The effect of the Proposed ESOS on the substantial shareholding structure of asiaEP cannot be determined at this juncture as the detailed basis of allocation is still pending finalisation by the Board. Further details will be set out in a circular to shareholders to be issued at a later date.


4.5 Dividends

The Company did not declare any dividend for the financial year ended 29 February 04. Any declaration of future dividends will be dependent upon the retained profits, cashflow position and the funding requirements of asiaEP.

5. APPROVALS REQUIRED

The Proposed ESOS is conditional upon approvals being obtained from the following:-

(a) the BMSB for the listing of and quotation for the new asiaEP shares to be issued pursuant to the exercise of the Options to be granted under the Proposed ESOS;
(b) the shareholders of asiaEP at an Extraordinary General Meeting ("EGM") to be convened; and
(c) any other relevant authorities.

6. DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTERESTS

Save as disclosed below, none of the Directors and/or substantial shareholders of asiaEP and persons connected to them have any interest, direct or indirect, in the Proposed ESOS.

(i) Dr Tan Boon Nunt
(ii) Lee Suet Hong
(iii) Koh Jee Kuan; and
(iv) Song Mun Wai.

(collectively known as "Interested Directors")
These Interested Directors have and will continue to abstain from all deliberations and voting in respect of their respective entitlements under the Proposed ESOS at the relevant meetings of the Board of asiaEP. They will also abstain from voting in respect of their direct and indirect shareholdings in the Company on the ordinary resolutions pertaining to their respective entitlements under the Proposed ESOS at the EGM of the Company.
The Interested Directors also undertake to ensure that any other persons connected to them will abstain from all deliberations and voting in respect of the Interested Directors' entitlements under the Proposed ESOS, where applicable, at the forthcoming EGM.

7. DIRECTORS' STATEMENT

With the exception of the Interested Directors, who have abstained from making any recommendation on their respective entitlements under the Proposed ESOS, the Board, having taken into consideration all aspects of the Proposed ESOS, is of the opinion that the Proposed ESOS is in the best interest of the Company.

8. SUBMISSION TO THE RELEVANT AUTHORITIES

Barring any unforeseen circumstances, the submission to the relevant authorities in relation to the Proposed ESOS will be made within two (2) months from the date of this announcement.

9. ADVISER

K & N Kenanga Bhd has been appointed as the Adviser for the Proposed ESOS.

This announcement is dated 11 May 2004.