Great Eagle Holdings Limited — Proxy Solicitation & Information Statement 2002

Apr 15, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Tian An China Investments Company Limited (the “Company”), you should at once hand this circular and the enclosed form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

==> picture [34 x 34] intentionally omitted <==

==> picture [175 x 34] intentionally omitted <==

(Incorporated in Hong Kong with limited liability)

PROPOSALS FOR GENERAL MANDATES TO REPURCHASE AND ISSUE SECURITIES AND

APPROVAL OF ADOPTION OF 2002 SHARE OPTION SCHEME BY SHANGHAI ALLIED CEMENT LIMITED

A letter from the Board of the Company is set out on pages 1 to 5 of this circular. A notice convening the annual general meeting of the Company to be held at Plaza IV, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Friday, 31st May, 2002 at 9:00 a.m. is set out on pages 34 to 39 of the 2001 annual report of the Company (“2001 Annual Report”).

Whether or not you intend to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible to the Company’s share registrar, Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong and in any event not later than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting at the meeting or any adjourned meeting should you so desire.

15th April, 2002

CONTENTS

		Page
1.	Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	i
2.	Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	iii
3.	Letter from the Board
	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
	General mandate to repurchase securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
	General mandate to issue securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
	Approval of adoption of 2002 Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
	Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
	General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix I : Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		6
Appendix II : 2002 Share Option Scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		9

DEFINITIONS

In this circular, the following expressions shall have the same meanings set out below unless the context requires otherwise:

“Adoption Date”	the date of adoption of the 2002 Share Option Scheme by
	the SAC Shareholders at the annual general meeting of SAC
	which is to be held on 23rd May, 2002
“Annual General Meeting”	the annual general meeting of the Company to be convened
	at 9:00 a.m. on Friday, 31st May, 2002 at Plaza IV, Lower
	Lobby, Novotel Century Hong Kong, 238 Jaffe Road,
	Wanchai, Hong Kong and any adjournment thereof, notice
	of which is set out on pages 34 to 39 of the 2001 Annual
	Report
“Board”	the board of Directors
“Companies Ordinance”	the Companies Ordinance (chapter 32 of the Laws of Hong
	Kong)
“Company”	Tian An China Investments Company Limited, a company
	incorporated in Hong Kong with limited liability and the
	securities of which are listed on the Stock Exchange
“Director(s)”	director(s) of the Company
“Group”	the Company and its Subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Latest Practicable Date”	8th April, 2002, being the latest practicable date prior to
	the printing of this circular for the purpose of ascertaining
	certain information for inclusion in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“PRC”	the People’s Republic of China
“SAC”	Shanghai Allied Cement Limited, a company incorporated
	in Bermuda with limited liability and the shares of which
	are listed on the Stock Exchange and Singapore Exchange
	Trading Securities Limited, a subsidiary of the Company

– i –

DEFINITIONS

“SAC Group”	SAC and its Subsidiaries
“SAC Participant”	means any executive or participant of any company in the
	SAC Group who is employed by the SAC Group when the
	offer of the grant of an option under the 2002 Share Option
	Scheme is made and has been employed by the SAC Group
	on a full time basis for a period of not less than continuous
	6 months immediately prior to the offer of the grant of the
	option under the 2002 Share Option Scheme, any executive
	or non-executive director of the SAC Group and any
	consultant of the SAC Group who have contributed or will
	contribute to the SAC Group
“SAC Share(s)”	share(s) of HK$0.01 each in the share capital of SAC
“SAC Shareholder(s)”	holder(s) of SAC Share(s)
“SAC Subsidiaries”	a company which is for the time being and from time to
	time a subsidiary (within the meaning of section 2 of the
	Companies Ordinance as modified from time to time) of
	SAC, whether incorporated in Hong Kong or not
“Share(s)”	share(s) of HK$0.20 each in the share capital of the
	Company
“Share Option(s)”	outstanding option(s) granted by the Company under the
	share option scheme adopted by the Company on 27th
	January, 1999 for the subscription of Shares
“Shareholder(s)”	holder(s) of Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subsidiaries”	a company which is for the time being and from time to
	time a subsidiary (within the meaning of section 2 of the
	Companies Ordinance as modified from time to time) of
	the Company, whether incorporated in Hong Kong or not
“Warrant(s)”	the warrant(s) issued by the Company conferring upon the
	holders the right to subscribe for Shares on or before 3rd
	December, 2004
“2002 Share Option Scheme”	the proposed share option scheme of SAC to be adopted,
	the principal terms of which are set out in the Appendix II
	to this circular

– ii –

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

– iii –

LETTER FROM THE BOARD

==> picture [34 x 34] intentionally omitted <==

==> picture [176 x 35] intentionally omitted <==

(Incorporated in Hong Kong with limited liability)

Executive Directors:

David Hui Yip Wing (Managing Director) Patrick Lee Seng Wei Edwin Lo King Yau Zhu Xiduo

Registered Office: Level 12 One Pacific Place 88 Queensway Hong Kong

Non-Executive Directors:

Wu Gan Zhang Dong

Independent Non-Executive Directors:

Moses Cheng Mo Chi Lisa Yang Lai Sum

15th April, 2002

To the Shareholders and, for information only, holders of Warrants and Share Options

Dear Sir or Madam,

PROPOSALS FOR GENERAL MANDATES TO REPURCHASE AND ISSUE SECURITIES AND

APPROVAL OF ADOPTION OF 2002 SHARE OPTION SCHEME BY SHANGHAI ALLIED CEMENT LIMITED

1. INTRODUCTION

At an extraordinary general meeting of the Company held on 30th November, 2001, general mandates were granted to the Directors to repurchase on the Stock Exchange Shares and outstanding Warrants up to a maximum of 10% of the aggregate nominal amount of the issued share capital and the outstanding Warrants in issue of the Company as at 30th November, 2001 respectively, and to add such Shares repurchased pursuant to the aforesaid mandate to the general mandate granted on 30th November, 2001 to the Directors to allot, issue or otherwise deal with additional Shares in the capital of the Company. These general mandates will expire at the conclusion of the Annual General Meeting.

– 1 –

LETTER FROM THE BOARD

The Directors consider that it is in the interests of the Company and the Shareholders that the Directors should continue to be granted general mandates (i) to repurchase Shares and Warrants; (ii) to allot, issue or otherwise deal with additional Shares or securities convertible into Shares, or options, warrants or similar rights to subscribe for Shares, and to make or grant offers, agreements or options which would or might require the exercise of such powers; and (iii) to extend the general mandate to issue Shares by adding to it the aggregate nominal amount of such Shares of the Company repurchased under the repurchase mandate.

2. GENERAL MANDATE TO REPURCHASE SECURITIES

Under the Companies Ordinance and the Listing Rules, listed companies are allowed to repurchase their own issued securities. Any securities so purchased shall then be cancelled, and such purchases are subject to measures for the protection and fair treatment of shareholders and creditors of the company, as laid down in the Companies Ordinance, the Code on Share Repurchases issued by the Securities & Futures Commission and the Listing Rules. The Articles of Association of the Company and the instrument constituting the Warrants also permit such securities repurchases. The Directors consider that these provisions increase the flexibility in the conduct of the Company’s affairs in the interests of the Shareholders, and that the appropriate arrangements should continue to be adopted by the Company.

At the Annual General Meeting, an ordinary resolution will be proposed to grant to the Directors a general mandate to exercise all powers of the Company to repurchase Shares and Warrants subject to the criteria set out in this circular. Shareholders should note that the maximum number of securities that may be repurchased pursuant to the mandate as set out in Resolution 4 (A) of the Notice of Annual General Meeting on pages 34 to 35 of the 2001 Annual Report must not exceed 10% of the aggregate nominal amount of the relevant class of securities issued by the Company as at the date of passing the resolution. A resolution authorising the extension of the general mandate to the Directors to issue Shares to include the aggregate nominal amount of such Shares (if any) repurchased under the mandate is to be proposed as Resolution 4(C) at the Annual General Meeting.

The Appendix I to this circular contains an explanatory statement required by the Listing Rules to be given to the Shareholders together with the notice of the Annual General Meeting. The aforesaid securities repurchase mandate will be proposed for the consideration and approval of the Shareholders at the Annual General Meeting.

3. GENERAL MANDATE TO ISSUE SECURITIES

At the Annual General Meeting, an ordinary resolution as set out in Resolution 4(B) of the Notice of Annual General Meeting on pages 35 to 37 of the 2001 Annual Report will be proposed, amongst other things, to grant to the Directors a general mandate to allot, issue and deal with, other than by way of rights, additional Shares or securities convertible into Shares, or options, warrants or similar rights to subscribe for Shares, and to make or grant offers, agreements or options which would or might require the exercise of such powers, with an aggregate nominal value of not exceeding 20% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing the resolution. Such mandate will give the Directors greater flexibility to issue securities when it is in the interests of the Company.

– 2 –

LETTER FROM THE BOARD

4. APPROVAL OF ADOPTION OF 2002 SHARE OPTION SCHEME

In view of the amendments to chapter 17 of the Listing Rules in relation to share option scheme of listed issuer, the board of directors of SAC, will propose to SAC Shareholders (including the Company) at the annual general meeting of SAC to be held on 23rd May, 2002 to adopt the 2002 Share Option Scheme.

Given the Company is the ultimate holding company of SAC, the adoption of the 2002 Share Option Scheme is conditional upon, inter alias, approval by the Shareholders pursuant to chapter 17 of the Listing Rules. A summary of the principal terms of the rules of the 2002 Share Option Scheme which is proposed to be approved by the Company at the Annual General Meeting is set out in Appendix II to this circular.

The Directors consider that the 2002 Share Option Scheme will provide the SAC Participants with the opportunity to acquire proprietary interests in SAC and to encourage the SAC Participants to work towards enhancing the value of SAC and SAC Shares for the benefit of SAC and the SAC Shareholders as a whole. Since SAC is a subsidiary of the Company, the Directors consider that the adoption of the 2002 Share Option Scheme is in the best interests of the Company and the Shareholders as a whole.

For your information, as at the Latest Practicable Date, there were no outstanding options granted under the share option schemes adopted by SAC prior to the existence of the 2002 Share Option Scheme.

The overall limit on the number of SAC Shares which may be issued upon exercise of all options granted and yet to be exercised under the 2002 Share Option Scheme and other share option schemes of SAC must not exceed 30 per cent. of the SAC Shares in issue from time to time.

The maximum number of SAC Shares which may be issued upon exercise of all options to be granted under the 2002 Share Option Scheme and the other share option schemes of SAC shall not exceed 10 per cent. of the SAC Shares in issue at the Adoption Date. As at the Latest Practicable Date, the entire issued share capital of SAC is 36,469,752,178 SAC Shares and therefore 3,646,975,217 SAC Shares are available under the 2002 Share Option Scheme. Such 10 per cent. limit may be refreshed at any time by the approval of the SAC Shareholders in general meeting and the Shareholders in general meeting for so long as SAC remains as a subsidiary of the Company provided that the total number of SAC Shares which may be issued upon exercise of all options to be granted under the 2002 Share Option Scheme and the other share option schemes must not exceed 10 per cent. of the SAC Shares in issue at the date of such SAC Shareholders’ approval. For the avoidance of doubt, options previously granted under the 2002 Share Option Scheme and the other share option schemes (including those outstanding, cancelled, lapsed in accordance with the 2002 Share Option Scheme and the share option schemes of SAC or exercised options) will not be counted for the purpose of calculating the refreshed 10 per cent. limit.

SAC may, by the approval of the SAC Shareholders in general meeting and the Shareholders in general meeting for so long as SAC remains as a subsidiary of the Company, grant options beyond the 10 per cent. limit provided that the options in excess of the 10 per cent. limit are granted only to SAC Participants specifically identified by SAC before such approvals are sought.

– 3 –

LETTER FROM THE BOARD

Unless approved by the SAC Shareholders and the Shareholders set out herein, the total number of SAC Shares issued and to be issued upon exercise of the options granted to each SAC Participant (including both exercised, cancelled and outstanding options) in any 12 month period must not exceed 1 per cent. of the SAC Shares in issue. Where any further grant of options to a SAC Participant would result in the SAC Shares issued and to be issued upon exercise of all options granted and to be granted to such person (including exercised, cancelled and outstanding options) in the 12 month period up to and including the date of such further grant representing in aggregate over 1 per cent. of the SAC Shares in issue, such further grant must be separately approved by the SAC Shareholders in general meeting with such SAC Participant and his associates abstaining from voting and the Shareholders in general meeting for so long as SAC remains as a subsidiary of the Company.

The 2002 Share Option Scheme is subject to and conditional upon:–

• (a) the passing at the annual general meeting of SAC to be held on 23rd May, 2002 of ordinary resolutions by SAC Shareholders approving the 2002 Share Option Scheme and the directors of SAC being authorised to make offer and grant options to subscribe for SAC Shares thereunder and to allot, issue and deal with the SAC Shares pursuant to the exercise of any options granted thereunder;

• (b) the passing of the necessary resolutions approving the 2002 Share Option Scheme by the Shareholders at the Annual General Meeting; and

• (c) the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the SAC Shares which fall to be issued upon the exercise of options granted under the 2002 Share Option Scheme.

The Directors consider that it is inappropriate to value all the options that can be granted under the 2002 Share Option Scheme on the assumption that they were granted on the Latest Practicable Date. As no options have actually be granted under the 2002 Share Option Scheme and the board of SAC has no time frame to grant the options once the 2002 Share Option Scheme is adopted, the Directors have decided not to provide a valuation of the options based on speculative assumptions as this would not be meaningful and would be misleading to the Shareholders.

5. ANNUAL GENERAL MEETING

On pages 34 to 39 of the 2001 Annual Report, you will find a notice convening the Company’s Annual General Meeting to be held at Plaza IV, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Friday, 31st May, 2002 at 9:00 a.m. Resolutions in respect of the general mandates and the 2002 Share Option Scheme as referred to above will be proposed at the Annual General Meeting.

A form of proxy for use at the Annual General Meeting is also enclosed. Whether or not you are able to attend, please complete and return the form of proxy to the Share Registrar of the Company, Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong, as soon as possible, and in any event not less than 48 hours before the time fixed for the Annual General Meeting. Completion and return of the form of proxy will not preclude you from attending and voting at the Annual General Meeting should you so wish.

– 4 –

LETTER FROM THE BOARD

6. GENERAL

The 2002 Share Option Scheme will be approved on the understanding that it will comply with the Listing Rules in force from time to time.

Any persons to whom or for the benefit of whom the share options may be issued under the 2002 Share Option Scheme will abstain from voting in respect of the relevant ordinary resolutions at the Annual General Meeting to approve and adopt the 2002 Share Option Scheme.

The English text of this circular and the enclosed form of proxy shall prevail over the Chinese text.

7. RECOMMENDATION

The Directors consider that the grant of general mandates to repurchase and issue securities; and to add the aggregate nominal amount of Shares that may be repurchased to the aggregate nominal amount of the securities that may be allotted pursuant to the general mandate to issue securities, and the approval of adoption of the 2002 Share Option Scheme are each in the best interests of the Company, and accordingly, recommend all Shareholders to vote in favour of the resolutions to be proposed at the Annual General Meeting.

A copy of the 2002 Share Option Scheme will be available for inspection during normal business hours at the registered office of the Company at Level 12, One Pacific Place, 88 Queensway, Hong Kong from the date of this circular up to the date of the Annual General Meeting.

By Order of the Board of Tian An China Investments Company Limited David Hui Yip Wing Managing Director

– 5 –

EXPLANATORY STATEMENT

APPENDIX I

Information required by the Listing Rules to be disclosed in an explanatory statement.

(a) Securities of the Company

As at the Latest Practicable Date, the issued share capital of the Company comprised 8,490,704,332 fully paid-up Shares and there were 1,698,140,866 outstanding Warrants carrying the rights to subscribe up to an aggregate of HK$339,628,173.20 for new Shares at an initial subscription price of HK$0.20 per Share, subject to adjustments.

Subject to the passing of the relevant resolutions at the Annual General Meeting and on the basis that no further securities are issued prior to the Annual General Meeting, the Company will be allowed under the general mandate to repurchase on the Stock Exchange a maximum of 849,070,433 Shares and 169,814,086 Warrants carrying the rights to subscribe for up to HK$33,962,817.20 Shares.

(b) Shareholders’ Approval

The Listing Rules require that:

• (1) all repurchases of securities must be approved by shareholders in advance by means of an ordinary resolution either by way of a general mandate or by a specific approval in relation to specific transactions; and

• (2) an explanatory statement must be sent to all shareholders of the company in connection with the repurchase of securities (at the same time as the notice of the relevant shareholders’ meeting) to enable the shareholders to make a decision in voting for or against the proposed resolution.

(c) Reason for the Repurchase

The Directors have no present intention of repurchasing securities. However, such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets and/or earnings per share and will only be made when the Directors believe that such a repurchase of securities will benefit the Company and the Shareholders.

(d) Effect of the Codes

If upon the exercise of the power to repurchase Shares pursuant to the repurchase mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of Rule 32 of the Hong Kong Codes on Takeovers and Mergers and Share Repurchase (“Codes”). As a result, a Shareholder or group of Shareholders acting in concert could obtain or consolidate control of the Company and, depending on the level of increase of the Shareholder’s interest, may become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Codes.

– 6 –

EXPLANATORY STATEMENT

APPENDIX I

According to the register maintained under section 16(1) of the Securities (Disclosure of Interests) Ordinance, Sun Hung Kai & Co. Limited (“SHK”), as at the Latest Practicable Date, directly and indirectly owned an aggregate of 3,674,079,379 Shares, representing approximately 43.27% of the issued share capital of the Company. Based on such interests and in the event that the Directors exercise in full the power to repurchase Shares under the repurchase mandate, the interests of SHK would be increased to approximately 48.08% of the issued share capital of the Company. Accordingly, the increase in the interest of SHK will give rise to an obligation to make a mandatory offer in the Rules 26 and 32 of the Codes.

In the event that the repurchase mandate is exercised in full, the number of Shares and Warrants held by the public would not fall below 25% of the total number of Shares and Warrants then in issue.

(e) Source of funds

Repurchases must be financed out of funds legally available for the purpose in accordance with the memorandum and articles of association of the Company and the Companies Ordinance. Such funds include, but are not limited to, profits available for distribution.

(f) Share prices

The highest and lowest prices of the Company’s securities in each of the past twelve months are as follows:–

			Warrants	Warrants	Warrants	Warrants
			trade	under	trade under
	Shares		stock code 565		stock code 390
	Highest	Lowest	Highest	Lowest	Highest	Lowest
	HK$	HK$	HK$	HK$	HK$	HK$
2001
April	0.158	0.122	0.013	0.010	–	–
May	0.202	0.145	0.035	0.010	–	–
June	0.211	0.162	0.038	0.015	–	–
July	0.196	0.156	0.026	0.012	–	–
August	0.173	0.146	0.015	0.010	–	–
September	0.166	0.116	0.010	0.010	–	–
October	0.197	0.122	0.010	0.010	–	–
November	0.202	0.166	–*	–*	–	–
December	0.194	0.167	–	–	0.060	0.040
2002
January	0.181	0.162	–	–	0.053	0.040
February	0.169	0.158	–	–	0.044	0.036
March	0.171	0.159	–	–	0.047	0.036

* There were no transactions during the month.

Note: (i) Warrants traded under stock code 565 expired on 7th November, 2001.

(ii) Warrants traded under stock code 390 commenced dealing on 5th December, 2001.

– 7 –

EXPLANATORY STATEMENT

APPENDIX I

(g) General

The Directors have undertaken to the Stock Exchange that they will exercise the securities repurchase mandate in accordance with the applicable laws of Hong Kong and the Listing Rules.

The Directors anticipate that the repurchase of securities equivalent to 10% of the relevant class of the existing securities under the repurchase mandate may have an adverse effect on the working capital and gearing level of the Company. However, the Directors do not propose to exercise the repurchase mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which, in the opinion of the Directors, are from time to time appropriate for the Company.

None of the Directors, to the best of their knowledge having made all reasonable enquiries, nor their associates (as defined in the Listing Rules) have any present intention to sell any securities of the Company to the Company or its subsidiaries if the repurchase mandate is exercised by the Company.

No other connected persons (as defined in the Listing Rules) of the Company have notified the Company that they have a present intention to sell any securities of the Company held by them to the Company and have undertaken not to sell any of the securities to the Company in the event that the Company is authorised to make repurchases of the securities.

No securities have been repurchased by the Company or any of its subsidiaries during the last six months.

– 8 –

2002 SHARE OPTION SCHEME

APPENDIX II

This Appendix summarises the principal terms of the 2002 Share Option Scheme but does not form part of, nor is it intended to be part of, the 2002 Share Option Scheme nor should it be taken as affecting the interpretation of the rules of the 2002 Share Option Scheme.

The following is a summary of the principal terms of the 2002 Share Option Scheme which is proposed to be approved and adopted by the Company at the Annual General Meeting:–

• (a) the directors of SAC may, at their discretion, invite SAC Participants of any member of the SAC Group to take up options to subscribe for the SAC Shares at a price calculated in accordance with paragraph (b) below. Upon acceptance of the option within 21 days of the grant, the grantee shall pay HK$10 to SAC by way of consideration for the grant;

• (b) the subscription price for the SAC Shares under the 2002 Share Option Scheme shall be a price determined by the directors of SAC being at least the higher of the closing price of the SAC Shares as stated in the Stock Exchange’s daily quotations sheets on the date of grant or the average closing price of the SAC Shares as stated in the Stock Exchange’s daily quotations sheets for the five (5) business days immediately proceeding the date of grant;

• (c) the overall limit on the number of SAC Shares which may be issued upon exercise of all options granted and yet to be exercised under the 2002 Share Option Scheme and other share option schemes (“Other Schemes”) of SAC must not exceed 30 per cent. of the SAC Shares in issue from time to time;

• (d) the maximum number of the SAC Shares which may be issued upon exercise of all options to be granted under the 2002 Share Option Scheme and the Other Schemes shall not exceed 10 per cent. of the SAC Shares in issue at the Adoption Date (the “Mandate Limit”). Options lapsed in accordance with paragraph (p) below will not be counted for the purpose of calculating the Mandate Limit. For the avoidance of doubt, the SAC Shares underlying the options which have been cancelled (and have not lapsed in accordance with paragraph (p) below) will be counted as part of the Mandate Limit;

• (e) the Mandate Limit may be refreshed at any time by the approval of the SAC Shareholders in general meeting and the Shareholders in general meeting for so long as SAC remains as a subsidiary of the Company provided that the total number of the SAC Shares which may be issued upon exercise of all options to be granted under the 2002 Share Option Scheme and the Other Schemes must not exceed 10 per cent. of the SAC Shares in issue at the date of such SAC Shareholders’ approval. For the avoidance of doubt, options previously granted under the 2002 Share Option Scheme and the Other Schemes (including those outstanding, cancelled, lapsed in accordance with the 2002 Share Option Scheme and Other Schemes or exercised options) will not be counted for the purpose of calculating the refreshed 10 per cent.;

• (f) SAC may, by the approval of the SAC Shareholders in general meeting and Shareholders in general meeting for so long as SAC remains as a subsidiary of the Company, grant options beyond the Mandate Limit provided that the options in excess of the Mandate Limit are granted only to the SAC Participants specifically identified by SAC before such approval is sought;

– 9 –

2002 SHARE OPTION SCHEME

APPENDIX II

• (g) unless approved by the SAC Shareholders and the Shareholders as set out herein, the total number of SAC Shares issued and to be issued upon exercise of the options granted to each SAC Participant (including both exercised and outstanding options) in any 12 month period must not exceed 1 per cent. of the SAC Shares in issue. Where any further grant of options to SAC Participant would result in the SAC Shares issued and to be issued upon exercise of all options granted and to be granted to such person (including exercised, cancelled and outstanding options) in the 12 month period up to and including the date of such further grant representing in aggregate over 1 per cent. of the SAC Shares in issue, such further grant must be separately approved by the SAC Shareholders in general meeting with such SAC Participant and his associates abstaining from voting and the Shareholders in general meeting for so long as SAC remains as a subsidiary of the Company;

• (h) each grant of options to a director, chief executive or substantial shareholder of SAC or any of their respective associates must be approved by independent non-executive directors (excluding independent non-executive director who is the grantee). Where any grant of options to a substantial shareholder or an independent non-executive director of SAC or any of their respective associates would result in the SAC Shares issued and to be issued upon exercise of all options already granted and to be granted (including options exercised, cancelled and outstanding) to such person in the 12 month period up to and including such date of grant:

• (i) representing in aggregate over 0.1 per cent. of the SAC Shares in issue; and

• (ii) having an aggregate value, based on the closing price of the SAC Shares at the date of grant, in excess of HK$5 million,

such further grant of options must be approved by the SAC Shareholders in general meeting and the Shareholders in general meeting for so long as SAC remains as a subsidiary of the Company;

• (i) subject to paragraphs (c), (d), (e), (f), (g) and (h) above, the number of SAC Shares subject to options and to the 2002 Share Option Scheme will be adjusted, in such manner as the auditors shall confirm in writing to the board of the SAC that the adjustments satisfy the requirements of the Listing Rules, in the event of capitalisation issue, rights issue, consolidation, subdivision or reduction of the share capital of SAC provided that no such adjustment shall be made in the event of an issue of SAC Shares as consideration in respect of a transaction to which SAC is a party;

• (j) the 2002 Share Option Scheme shall be valid and effective for a period of 10 years commencing from the Adoption Date and an option may be exercised in accordance with the terms of the 2002 Share Option Scheme at any time during the period to be notified by the board of the SAC which shall not be later than 10 years from the date of grant;

• (k) An option may not be transferred or assigned and is personal to the grantee;

• (l) there is no performance target which must be achieved before any of the options can be exercised;

– 10 –

2002 SHARE OPTION SCHEME

APPENDIX II

• (m) in the event of the grantee ceasing to be a SAC Participant for any reason other than under paragraphs (n) and (o) below or the termination of his or her employment on one or more of the grounds specified in paragraph (p)(vi) below, the grantee may exercise the option in full (to the extent not already exercised) or to the extent specified in the notice of exercise of such option within such a period as determined by the board of the SAC as aforesaid or the expiration of the relevant option period expiring upon the earlier of 6 months from the date of such cessation, which date shall be the last date actual working day with SAC or the relevant SAC Subsidiary whether salary paid in lieu or not, or the expiration of the relevant option period;

• (n) in the event that the grantee ceases to be a SAC Participant by reason of ill-health, injury, disability or death or by reason of his or her employing company ceasing to be a SAC Subsidiary and none of the events which would be a ground for termination of his or her employment under paragraph (p) (vi) below arises, the grantee or his or her legal personal representative(s) (as the case may be) may exercise the option in full (to the extent not already exercised) or to the extent specified in the notice to exercise such option within such a period expiring upon the earlier of 6 months from the date of such ill-health, injury, disability, death or cessation (or such longer period as the Board may determine) or the expiration of the relevant period;

• (o) in the event that the grantee ceases to be a SAC Participant by reason of retirement in accordance with his or her contract of employment or upon expiration of his or her term of directorship and none of the events which would be a ground for termination of his or her employment under paragraph (p) (vi) below arises, the grantee may exercise the option in full (to the extent not already exercised) or to the extent specified in the notice to exercise such option within such a period expiring upon the earlier of 6 months from the date of his/her retirement (or such longer period as the board of SAC may determine) or the expiration of the relevant option period;

• (p) An option shall lapse automatically on the earliest of:–

• (i) the expiry of option period as referred to paragraph (j) above;

• (ii) the expiry of the acceptance period as referred to in paragraph (a) above;

• (iii) the determination of the board of the SAC or the expiry of the periods referred to in paragraphs (m), (n), (o), (r), (s) and (t) herein;

• (iv) subject to paragraph (s) below, the date of commencement of winding up of SAC ;

• (v) subject to paragraph (t) below, the proposed compromise or arrangement becoming effective;

• (vi) the date on which the grantee ceases to be a SAC Participant by reason of voluntary resignation or the termination of his or her employment on any one or more of the grounds that he or she has been guilty of misconduct, or has committed an act of bankruptcy or has become insolvent or has made any arrangement or composition with his or her creditors generally, or has been convicted of any criminal offences involving his or her integrity or honesty or

– 11 –

2002 SHARE OPTION SCHEME

APPENDIX II

on any other ground on which an employer would be entitled to terminate his or her employment at common law or pursuant to any applicable laws or under the grantee’s service contract with SAC or the relevant SAC Subsidiary; or

• (vii) the date on which the grantees commits a breach of paragraph (k) above;

• (q) Whilst any option remains exercisable, in the event of capitalisation issue, rights issue, consolidation, sub-division or reduction of the share capital of SAC or otherwise howsoever in accordance with legal requirements and requirements of the Stock Exchange, other than any alteration in the capital structure of SAC as a result of an issue of SAC Shares pursuant to the exercise of an option or as consideration in a transaction to which SAC is a party, such corresponding alterations (if any) shall be made in:

• (i) the number or nominal amount of SAC Shares under option so far as unexercised; or

• (ii) the subscription price

provided that any such adjustments give a grantee the same proportion of the equity capital of SAC as that to which that grantee was previously entitled, but so that no such adjustments shall be made the effect of which would be to enable any SAC Share to be issued at less than its nominal value. In respect of any such adjustments, other than any made on a capitalisation issue, an independent financial adviser or the SAC’s auditors must confirm to the directors of SAC in writing that the adjustments satisfy the requirements set out in the Listing Rules;

• (r) if a general offer is made to all the holders of SAC Shares (or all such holders other than the offeror and/or any person controlled by the offeror and/or any person acting in concert with the offeror) and such offer becomes or is declared unconditional, the grantee (or his or her legal personal representatives) shall be entitled to exercise the option in full (to the extent not already exercised) or to the extent specified in the notice of exercise of such option to exercise such option at any time within 14 days after the date on which the offer becomes or is declared unconditional;

• (s) in the event a notice is given by SAC to all the holders of SAC Shares to convene a general meeting for the purposes of considering, and if thought fit, approving a resolution to voluntarily wind-up the SAC, SAC shall on the same date or as soon as after it despatches such notice to each holder of SAC Shares give notice thereof to all grantees and thereupon, each grantee (or his or her legal personal representative(s)) shall be entitled to exercise all or any of his or her options at any time not later than 7 business days prior to the proposed general meeting of SAC by giving notice in writing to SAC, accompanied by a remittance for the full amount of the aggregate subscription price for SAC Shares in respect of which notice is given whereupon SAC shall as soon as possible and, in any event, no later than the business day immediately prior to the date of the proposed general meeting referred to above, allot the relevant SAC Shares to the grantee credited as fully paid;

– 12 –

2002 SHARE OPTION SCHEME

APPENDIX II

• (t) if an application is made to the court (otherwise than where SAC is being voluntarily wound up) pursuant to the Companies Ordinance in connection with a proposed compromise or arrangement between SAC and its creditors (or any class of them) or between SAC and its members (or any class of them), the grantee may by notice in writing to SAC within 21 days after the date of such application, exercise the option in full (to the extent not already exercised) or to the extent specified in such notice;

• (u) those specific provisions of the 2002 Share Option Scheme which relate to the matters set out in Listing Rule 17.03 cannot be altered to the advantage of the SAC Participants, and no changes to the authority of the directors or administrator of the 2002 Share Option Scheme in relation to any alteration of the terms of the 2002 Share Option Scheme shall be made, without the prior approval of the SAC Shareholders in general meeting and the Shareholders in general meeting for so long as SAC remains as a subsidiary of the Company. Any alterations to the terms and conditions of the 2002 Share Option Scheme which are of a material nature, or any change to the terms of options granted, must also, to be effective, be approved by the SAC Shareholders in general meeting and the Shareholders in general meeting for so long as SAC remains as a subsidiary of the Company, except where the alterations take effect automatically under the existing terms of the 2002 Share Option Scheme and the amended terms of the 2002 Share Option Scheme must still comply with the relevant requirements of chapter 17 of the Listing Rules;

• (v) the SAC Shares to be allotted upon the exercise of an option will be subject to all the provisions of the bye-laws of SAC for the time being in force and will rank pari passu with the fully paid SAC Shares in issue on the date of allotment and accordingly will entitle the holders thereof to participate in all dividends or other distributions paid or made on or after the date of allotment other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date thereof shall be before the date of allotment;

• (w) the 2002 Share Option Scheme is subject to the passing of the necessary resolution to adopt the 2002 Share Option Scheme by the SAC Shareholders in annual general meeting of SAC to be held on 23rd May, 2002 and the Shareholders in Annual General Meeting and is conditional on the Listing Committee of the Stock Exchange granting approval to the listing of, and permission to deal in, the SAC Shares to be issued pursuant to exercise of the options;

• (x) the purpose of the 2002 Share Option Scheme is to provide SAC Participants with the opportunity to acquire proprietary interests in SAC and to encourage SAC Participants to work towards enhancing the value of SAC and SAC Shares for the benefit of SAC and the SAC Shareholders as a whole; and

• (y) where SAC cancels the options granted and issues new options to the same grantee, the issue of such new options may only be made under the 2002 Share Option Scheme with available unissued options (excluding the cancelled options) within the Mandate Limit.

– 13 –