Heng Tai Consumables Group Limited — Proxy Solicitation & Information Statement 2003

Apr 30, 2003

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or otherwise transferred all your shares in Continental Mariner Investment Company Limited, you should at once hand this circular and the form of proxy to the purchaser(s) or the transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s) .

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

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CONTINENTAL MARINER INVESTMENT COMPANY LIMITED 新海康航業投資有限公司

(Incorporated in Hong Kong with limited liability)

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES AND ADOPTION

OF NEW SHARE OPTION SCHEME AND TERMINATION OF EXISTING SHARE OPTION SCHEME

A notice convening an annual general meeting of Continental Mariner Investment Company Limited to be held at Aberdeen Room, Level 3, J.W. Marriott Hotel, 88 Queensway, Hong Kong on 28th May, 2003 at 11:00 a.m. is set out in pages 3 to 6 of the 2002 Annual Report of the Company. Whether or not you intend to attend and vote at the Annual General Meeting in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s share registrar, Computershare Investor Services Hong Kong Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not later than 48 hours before the time appointed for holding of such meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Annual General Meeting or any adjourned meeting should you so wish.

30th April, 2003

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
General Mandate to Issue and Repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Adoption of New Share Option Scheme and
Termination of Existing Share Option Scheme
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Existing Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Reasons for adopting the New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . .	5
Conditions of the New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Application for Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Value of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Documents for Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix I – Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Appendix II – Summary of Terms of the New Share Option Scheme. . . . . . . . . .	11

– i –

DEFINITIONS

In this circular, unless the content otherwise requires, the following expressions shall have the following meanings:

• “Affiliate”

any entity in which the Group holds an interest

• “Annual General Meeting”

• the 2003 annual general meeting of the Company to be held at Aberdeen Room, Level 3, J.W. Marriott Hotel, 88 Queensway, Hong Kong on 28th May, 2003 at 11:00 a.m.

• “Annual Report” the annual report of the Company in respect of the financial year ended 31st December, 2002

• “associates” has the same meaning as ascribed in the Listing Rules

• “Board”

• the Board of Directors

• “Company”

• Continental Mariner Investment Company Limited, a company incorporated in Hong Kong with limited liability and whose shares are listed on the Stock Exchange

• “Directors”

the directors of the Company

• “Eligible Participant(s)”

has the meaning ascribed to it in paragraph (B) of Appendix II to this circular

• “Employee”

any employee or officer (whether full time or part time) under employment of the Company

• “Existing Share Option Scheme”

the existing share option scheme of the Company, which was approved and adopted by an ordinary resolution of the Shareholders at the extraordinary general meeting of the Company held on 16th June, 1993

• “Grantee(s)”

means any Eligible Participant who accepts the offer of the grant of an Option in accordance with the rules of the New Share Option Scheme or (where the context so permits) a person or persons who, in accordance with the laws of succession applicable in respect of the death of such Eligible Participant is, or are entitled to exercise the Option accepted by such Eligible Participant (to the extent not already exercised) in consequence of the death of such Eligible Participant.

– 1 –

DEFINITIONS

• “Group”

the Company and its subsidiaries

• “Hong Kong”

• Hong Kong Special Administrative Region of the People’s Republic of China

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “Issue Mandate”

• the general mandate to issue Shares of the Company to be granted to the Directors at the Annual General Meeting

• “Latest Practicable Date”

• 24th April, 2003 being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• “Listing Rules”

• the Rules Governing the Listing of Securities on the Stock Exchange

• “New Share Option Scheme”

• a new option scheme to be approved and adopted by an ordinary resolution of the Shareholders at the Annual General Meeting

• “Option(s)”

• a right to subscribe for Shares granted under the Existing Share Option Scheme or to be granted under the New Share Option Scheme

• “Repurchase Mandate”

• the general mandate to repurchase Shares of the Company to be granted to the Directors at the Annual General Meeting

• “Share(s)”

• share(s) of HK$0.50 each in the share capital of the Company

• “Shareholder(s)”

• holder(s) of Shares

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

“Takeovers Code” The Codes on Takeovers and Mergers

– 2 –

LETTER FROM THE BOARD

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CONTINENTAL MARINER INVESTMENT COMPANY LIMITED 新海康航業投資有限公司

(Incorporated in Hong Kong with limited liability)

Directors: WANG Jun (Chairman) HE Ping (Vice-Chairman) LI Shi Liang (Managing Director) XIE Da Tong William CHAN Tak Chi YAO Kang (Independent Non-Executive Director) Robert IP Chun Chung (Independent Non-Executive Director) LAM Tak Shing (Independent Non-Executive Director)

Registered Office: Room 2503 Admiralty Centre Tower 1 18 Harcourt Road Hong Kong

30th April, 2003

To the Shareholders

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES AND ADOPTION OF NEW SHARE OPTION SCHEME AND TERMINATION OF EXISTING SHARE OPTION SCHEME

INTRODUCTION

It was proposed that at the Annual General Meeting of the Company to be held on 28th May, 2003, resolutions will be proposed to approve (i) the grant of the Issue Mandate to the Directors; (ii) the grant of the Repurchase Mandate to the Directors; and (iii) the adoption of the New Share Option Scheme and the termination of the Existing Share Option Scheme.

The purpose of this circular is to provide you with all the information reasonably necessary to enable you to make an informed decision on whether to vote for and against the proposed resolutions at the Annual General Meeting.

– 3 –

LETTER FROM THE BOARD

GENERAL MANDATE TO ISSUE AND REPURCHASE SHARES

At the 2002 annual general meeting of the Company held on 23rd May, 2002, ordinary resolutions were passed granting to the Directors the general mandates to issue and repurchase Shares of the Company. These general mandates will lapse upon the conclusion of the Annual General Meeting of the Company. It was therefore proposed that ordinary resolutions be proposed at the Annual General Meeting to grant to the Directors the Issue Mandate and the Repurchase Mandate.

In accordance with the Listing Rules, the Company is required to send to the Shareholders an explanatory statement containing all information reasonably necessary to enable them to make an informed decision on whether to vote for or against the ordinary resolutions to renew the grant of the Issue Mandate and the Repurchase Mandate. Such explanatory statement is set out in Appendix I to this circular.

ADOPTION OF NEW SHARE OPTION SCHEME AND TERMINATION OF EXISTING SHARE OPTION SCHEME

Introduction

The Existing Share Option Scheme was adopted by the Company on 16th June, 1993 and will expire on 15th June, 2003. The Stock Exchange has announced amendments to Chapter 17 of the Listing Rules, which has come into effect on 1st September, 2001. In view of the impending expiry of the Existing Share Option Scheme and in compliance with the amendments to the Listing Rules, the Board considers that it is in the best interest of the Company to adopt the New Share Option Scheme.

Existing Share Option Scheme

As at the Latest Practicable Date, there were outstanding Options granted under the Existing Share Option Scheme entitling the holders to subscribe for a total of 73,975,000 Shares. Immediately upon the adoption of the New Share Option Scheme, the Existing Share Option Scheme will be terminated and no further Options will be granted under the Existing Share Option Scheme but the Options which have been previously granted thereunder shall continue to be exercisable in accordance with their terms of issue and in all other respects. The provisions of the Existing Share Option Scheme shall remain in full force and effect. The Directors have no intention to grant further Options under the Existing Share Option Scheme prior to the adoption of the New Share Option Scheme at the Annual General Meeting. No other share scheme has been adopted by the Company other than the Existing Share Option Scheme.

– 4 –

LETTER FROM THE BOARD

New Share Option Scheme

At the Annual General Meeting, an ordinary resolution will be proposed to the Shareholders to approve the adoption of the New Share Option Scheme pursuant to which the Eligible Participants may be granted Options to subscribe for Shares upon and subject to the terms and conditions of the rules of the New Share Option Scheme. A summary of the principal terms of the rules of the New Share Option Scheme which is proposed to be approved and adopted by the Company at the Annual General Meeting is set out in the Appendix II to this circular.

Reasons for adopting the New Share Option Scheme

The purpose of the New Share Option Scheme is to provide incentives or rewards to Eligible Participants thereunder for their contribution to the Group and/or to enable the Group to recruit and retain high calibre employees and attract human resources that are valuable to the Group.

Under the rules of the New Share Option Scheme, the Board has discretion to set a minimum period for which an Option has to be held before the exercise of the subscription rights attaching thereto. This discretion allows the Board to provide incentive to an Eligible Participant to remain as an Eligible Participant during the minimum period and thereby enable the Group to continue to benefit from the services of such Eligible Participant during such period. This discretion coupled with the power of the Board to impose any performance target as it consider appropriate before any Option can be exercised, enable the Group to provide incentives to the Eligible Participants to use their best endeavours in assisting the growth and development of the Group. The Directors are of the view that the flexibility given to the Board in granting Options to Eligible Participants, to impose minimum period for which the Options have to be held and performance targets that have to be achieved before the Options can be exercised, will place the Group in a better position to attract human resources that are valuable to the growth and development of the Group as a whole.

Conditions of the New Share Option Scheme

The New Share Option Scheme is conditional upon:

• (i) the passing of an ordinary resolution at the Annual General Meeting approving the adoption of the New Share Option Scheme; and

• (ii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in any new Shares which may fall to be allotted and issued upon the exercise of the subscription rights attaching to the Options that may be granted under the New Share Option Scheme up to 10% of the Shares in issue as at the date of the adoption of the New Share Option Scheme.

– 5 –

LETTER FROM THE BOARD

Application for Listing

Application has been made to the Listing Committee of the Stock Exchange for approval of the listing of, and permission to deal in, the Shares which may fall to be issued pursuant to the exercise of any Options that may be granted under the New Share Option Scheme.

Value of Options

The Directors consider that it is not appropriate to state the value of all the Options that can be granted under the New Share Option Scheme as if they had been granted at the Latest Practicable Date prior to the approval of the New Share option Scheme given that the variable which are critical for the calculation of the value of such Option cannot be determined. The variables which are critical for the determination of the value of such Options include, the subscription price for the Shares upon the exercise of the subscription rights attaching to the Options, whether or not Options will be granted under the New Share Option Scheme and the timing of the granting of such Options, the period during which the subscription rights may be exercised, the discretion of the Board to impose any performance target that has to be achieved before the subscription right attaching to the options can be exercised and any other conditions that the Board imposed on the Options and whether or not such Options if granted will be exercised by the Grantees. The subscription price payable for the Shares depends on the price of the Shares as quoted on the Stock Exchange, which in turn depends on when the Board is to grant Options under the New Share Option Scheme. With a scheme life of ten years, the Board is of the view that it is too premature to state whether or not Options will be granted under the New Share Option Scheme, and if so, the number of Options that may be granted. It is also difficult to ascertain with accuracy the subscription price of the Shares given the volatility the Share price may be subject to during the ten-year life span of the New Share Option Scheme. In the premises, the Directors are of the view that the value of the Options depends on a number of variables which are either difficult to ascertain or can only be ascertained subject to a number of theoretical basis and speculative assumptions. Accordingly, the Directors believe that any calculation of the value of the Options will not be meaningful and may be misleading to Shareholders in the circumstances.

ANNUAL GENERAL MEETING

Forming part of the Annual Report is the notice of the Annual General Meeting. At the Annual General Meeting, and as part of the special businesses of the Annual General Meeting, ordinary resolutions will be proposed to approve (i) the grant of the Issue Mandate to the Directors; (ii) the grant of the Repurchase Mandate to the Directors; and (iii) the adoption of the New Share Option Scheme and the termination of the Existing Share Option Scheme.

– 6 –

LETTER FROM THE BOARD

Whether or not you intend to attend the Annual General Meeting, you are requested to complete and return the form of proxy accompanying the Annual Report in accordance with the instructions printed thereon not less than 48 hours before the time appointed for holding the Annual General Meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person if you so wish.

DOCUMENTS FOR INSPECTION

Copy of the New Share Option Scheme will be available for inspection during normal business hours on week days (except public holidays) at the registered office of the Company at Room 2503, Admiralty Centre, Tower 1, 18 Harcourt Road, Hong Kong up to and including 28th May, 2003 and will also be available at the Annual General Meeting.

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. 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 not contained in this circular the omission of which would make any statement in this circular misleading.

RECOMMENDATION

The Directors believe that (i) the grant of the Issue Mandate to the Directors; (ii) the grant of the Repurchase Mandate to the Directors; and (iii) the adoption of the New Share Option Scheme and the termination of the Existing Share Option Scheme are all in the best interest of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that all the Shareholders should vote in favour of all the relevant resolutions to be proposed at the Annual General Meeting as set out in the notice of Annual General Meeting.

By Order of the Board LI Shi Liang Managing Director

– 7 –

EXPLANATORY STATEMENT

APPENDIX I

This Appendix serves as an explanatory statement required by the Listing Rules to provide you with all the information reasonably necessary to enable you to make an informed decision on whether to vote for or against the proposed resolution in respect of the grant of the Repurchase Mandate.

LISTING RULES

The Listing Rules permit companies whose primary listings are on the Stock Exchange to repurchase their own shares on the Stock Exchange subject to certain restrictions, the most important of which are summarised below:

(a) Shareholders’ approval

All proposed repurchases of shares on the Stock Exchange by a company with its primary listing on the Stock Exchange must be approved in advance by an ordinary resolution, either by way of a general mandate or by specific approval.

(b) Source of funds

Repurchases of shares must be funded out of funds legally available for such purpose in accordance with the company’s memorandum and articles of association and the laws of Hong Kong.

SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 807,522,200 Shares of HK$0.50 each. Subject to the passing of the relevant resolution, the Company will be allowed to repurchase a maximum of 80,752,220 Shares on the assumption that there will be no change in the issued share capital prior to the Annual General Meeting.

REASONS FOR REPURCHASES

The Directors believe that it is in the best interest of the Company and its Shareholders to have general authority from Shareholders to enable the Directors to exercise the Company’s powers to repurchase Shares of the Company on the Stock Exchange. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share and/or earnings per Share and will only be made when the Directors believe that such repurchases will benefit the Company and its Shareholders.

FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available, being distributable profit of the Company or the proceeds of a fresh issue of ordinary Shares of the Company made for such purpose in accordance with its memorandum and articles of association and the laws of Hong Kong.

– 8 –

EXPLANATORY STATEMENT

APPENDIX I

There might be material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited accounts contained in the Annual Report for the year ended 31st December, 2002) in the event that the proposed repurchases were to be carried out in full at any time during the proposed repurchase period. 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.

DISCLOSURE OF INTERESTS

None of the Directors nor, to the best of the knowledge of the Directors having made all reasonable enquiries, any of their associates (as defined in the Listing Rules), has any present intention to sell any shares to the Company or any of its subsidiaries in the event that the Repurchase Mandate is approved by the Shareholders.

No connected person of the Company (as defined in the Listing Rules) has notified the Company that he/she has a present intention to sell any Shares to the Company or he/she has undertaken not to sell any of the Shares held by him/her to the Company, in the event that the Company is authorised to exercise the Repurchase Mandate.

UNDERTAKING OF THE DIRECTORS

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the power of the Company to make repurchases pursuant to the proposed resolution in accordance with the Listing Rules and the applicable laws of Hong Kong.

EFFECT OF THE TAKEOVER CODE

If as a result of a repurchase of Shares, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers Code. In certain circumstances, a shareholder or a group of shareholders acting in concert could as a result of such increase obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeovers Code.

As at the Latest Practicable Date, Ringo Trading Limited (“Ringo”) beneficially owned 537,778,036 shares, representing approximately 66.59% of the total issued share capital of the Company. Ringo is ultimately beneficially owned by China Poly Group Corporation which is a state-owned enterprise established in the People’s Republic of China. In the event that the Directors exercise in full the power to repurchase the Shares, the shareholdings of Ringo

– 9 –

EXPLANATORY STATEMENT

APPENDIX I

would be increased to about 73.99%. The Company would comply in full with the obligations to make a mandatory offer (if any) in accordance with Rules 26 and 32 of the Takeovers Code. The Directors are not aware of any consequences which may arise under the Takeovers Code as a result of any purchase made under the Repurchase Mandate and the Directors have no present intention to exercise the power to repurchase Shares to the extent that it would affect the public float of the Shares.

SHARE REPURCHASES MADE BY THE COMPANY

No repurchase of Shares has been made by the Company or any of its subsidiaries on the Stock Exchange in the six months preceding the Latest Practicable Date.

SHARE PRICES

The highest and lowest prices at which the Shares of the Company were traded on the Stock Exchange during each of the previous 12 months were as follows:

	Highest	Lowest
	HK$	HK$
2002
April	0.860	0.740
May	0.860	0.780
June	0.880	0.740
July	0.880	0.640
August	0.760	0.590
September	0.680	0.460
October	0.570	0.435
November	0.530	0.435
December	0.530	0.440
2003
January	0.610	0.440
February	0.610	0.440
March	0.600	0.455

– 10 –

SUMMARY OF TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

This Appendix summaries the principal terms of the New Share Option Scheme but does not form part of, nor was it intended to be, part of the New Share Option Scheme nor should it be taken as effecting the interpretation of the rules of the New Share Option Scheme.

(A) PURPOSE OF THE SCHEME

The purpose of the New Share Option Scheme is to provide incentives or rewards to participants thereunder for their contribution to the Group and/or to enable the Group to recruit and retain high-calibre employees and attract human resources that are valuable to the Group.

(B) WHO MAY JOIN

The Directors may, at their absolute discretion, invite any person belonging to any of the following classes of participants, to take up Options to subscribe for Shares:

• (aa) any executive, non-executive or independent non-executive director of the Group or an Affiliate;

• (bb) any Employee of the Group or an Affiliate;

• (cc) any customer, supplier, agent, partner, consultant, adviser or shareholder of or contractor to the Group or an Affiliate;

• (dd) the trustee of any trust the beneficiary of which or any discretionary trust the discretionary objects of which include any Director, Employee, customer, supplier, agent, partner, consultant, adviser or shareholder of or contractor to the Group or an Affiliate; or

• (ee) a company beneficially owned by any Director, Employee, consultant, customer, supplier, agent, partner, shareholder, adviser of or contractor to the Group or an Affiliate.

(C) MAXIMUM NUMBER OF SHARES

• (aa) The maximum number of Shares to be issued upon exercise of all outstanding options granted under the New Share Option Scheme and any other share option scheme of the Company must not in aggregate exceed 30% of the issued share capital of the Company from time to time.

– 11 –

SUMMARY OF TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

• (bb) The total number of Shares which may be issued upon exercise of all options (excluding, for this purpose, options which have lapsed in accordance with the terms of the New Share Option Scheme and any other share option scheme of the Company) to be granted under the New Share Option Scheme and any other share option scheme of the Group must not in aggregate exceed 10% of the Shares in issue as at the day of the passing of the resolution at the Annual General Meeting (the “General Scheme Limit”).

• (cc) Subject to (aa) above and without prejudice to (dd) below, the Company may seek approval of the Shareholders in general meeting to refresh the General Scheme Limit provided that the total number of Shares which may be issued upon exercise of all options to be granted under the New Option Scheme and any other share option scheme of the Company must not exceed 10% of the Shares in issue as at the date of approval of the limit and for the purpose of calculating the limit as refreshed, options previously granted under the New Option Scheme or any other share option scheme of the Company (including those outstanding, cancelled, lapsed or exercised in accordance with the New Share Option Scheme and any other share option scheme of the Company) will not be counted.

• (dd) Subject to (aa) above and without prejudice to (cc) above, the Company may issue a circular to the Shareholders and seek separate Shareholders’ approval in general meeting to grant Options beyond the General Scheme Limit or, if applicable, the limit referred to in (cc) above to Eligible Participants specifically identified by the Company before such approval is sought.

(D) MAXIMUM ENTITLEMENT OF EACH ELIGIBLE PARTICIPANT

The total number of Shares issued and which may fall to be issued upon exercise of the options granted under the New Share Option Scheme and any other share option scheme of the Company (including both exercised or outstanding options) to each Eligible Participant in any 12-month period shall not exceed 1% of the issued share capital of the Company for the time being (the “Individual Limit”). Any further grant of options in excess of the Individual Limit in any 12-month period up to and including the date of such further grant, shall be subject to the issue of a circular to the Shareholders and the Shareholders’ approval in general meeting of the Company with such Eligible Participant and his associates abstaining from voting.

(E) GRANT OF OPTIONS TO CONNECTED PERSONS

• (aa) Any grant of Options under the New Share Option Scheme to a director, chief executive (other than a proposed director or a proposed chief executive of the Company) or substantial shareholder of the Company or any of their respective associates must be approved by independent non-executive Directors (excluding any independent non-executive Director who is the Grantee of the Options).

– 12 –

SUMMARY OF TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

• (bb) In the event of any change in the terms of Options granted to a substantial shareholder or an independent non-executive Director or any of their respective associates; or where any grant of Options to a substantial shareholder or an independent non-executive Director, or any of their respective associates, would result in the 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 the date of such grant;

• (i) representing in aggregate over 0.1% of the Shares in issue; and

• (ii) having an aggregate value, based on the closing price of the Shares at the date of each grant, in excess of HK$5,000,000,

such further grant of options must be approved by the Shareholders. The Company must send a circular to the Shareholders. All connected persons of the Company must abstain from voting at such general meeting, except that any connected person may vote against the relevant resolution at the general meeting provided that his intention to do so has been stated in the circular. Any vote taken at the meeting to approve the grant of such options must be taken on a poll.

(F) TIME OF ACCEPTANCE AND EXERCISE OF AN OPTION

An offer of grant of an Option may be accepted by an Eligible Participant within 28 days from the date of the offer of grant of the Option. A consideration of HK$1 is payable on acceptance of the offer of grant of an Option.

An Option may be exercised in accordance with the terms of the New Share Option Scheme at any time during a period to be determined and notified by the Directors to each Grantee, which period may commence on the date on which the offer for the grant of Options is made but shall end in any event not later than 10 years from the date of grant of the Option subject to the provisions for early termination thereof.

(G) PERFORMANCE TARGETS

Unless the Directors otherwise determine and state in the offer of the grant of Options to an Eligible Participant, an Eligible Participant is not required to achieve any performance targets before any Options granted under the New Share Option Scheme can be exercised.

– 13 –

SUMMARY OF TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

(H) SUBSCRIPTION PRICE FOR SHARES

The subscription price per Shares under the New Share Option Scheme shall be a price determined by the Directors, but shall not be lower than the highest of (i) the closing price of Shares as stated in the Stock Exchange’s daily quotation sheet on the date of the grant, which must be a trading day; (ii) the average closing price of Shares as stated in the Stock Exchange’s daily quotation sheet for the five trading days immediately preceding the date of the grant; and (iii) the nominal value of a Share. Without prejudice to the generality of the foregoing, the Directors may grant Options in respect of which the subscription price is fixed at different prices for each different period during the option period provided that the subscription price per Share for each of the different periods shall not be less than the subscription price determined in the aforesaid manner.

(I) RANKING OF SHARES

• (aa) Shares allotted upon the exercise of an Option will be subject to all the provisions of the Articles of Association of the Company and will rank pari passu in all respects with the fully paid Shares in issue as from the day when the name of the Grantee is registered on the register of members of the Company and accordingly will entitle the holders to participate in all dividends or other distributions paid or made on or after the date when the name of the Grantee is registered on the register of members of the Company other than any dividend or other distribution previously declared or recommended or resolved to be paid or made with respect to a record date which shall be before the date when the name of the Grantee is registered on the register of members of the Company, provided always that when the date of exercise of the Option falls on a day upon which the register of members of the Company is closed then the exercise of the Option shall become effective on the first business day in Hong Kong on which the register of members of the Company is re-opened. A Share allotted upon the exercise of an Option shall not carry voting rights until the completion of the registration of the Grantee as the holder thereof.

• (bb) Unless the context otherwise requires, references to “Shares” in this paragraph include references to shares in the ordinary equity share capital of the Company of such nominal amount as shall result from a sub-division, consolidation, reclassification or reduction of the share capital of the Company from time to time.

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SUMMARY OF TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

(J) RESTRICTIONS ON THE TIME OF GRANT OF OPTIONS

No offer for grant of Options shall be made after a price sensitive event has occurred or a price sensitive matter has been the subject of a decision until such price sensitive information has been published in the newspapers. In particular, during the period commencing one month immediately preceding the earlier of (i) the date of the meeting of the Directors for the approval of the Company’s interim or annual results, and (ii) the last date on which the Company must publish its interim or annual results announcement under its listing agreement with the Stock Exchange and ending on the date of the announcement of the results, no Option may be granted.

The Directors may not grant any Option to an Eligible Participant who is a Director during the periods or times in which Directors are prohibited from dealing in Shares pursuant to the Model Code for Securities Transactions by Directors of Listed Companies prescribed by the Listing Rules or any corresponding code or securities dealing restrictions adopted by the Company.

(K) PERIOD OF THE NEW SHARE OPTION SCHEME

The New Share Option Scheme will remain in force for a period of 10 years commencing on the date on which the New Share Option Scheme becomes unconditional.

(L) RIGHTS ON CEASING EMPLOYMENT

If the Grantee of an Option is an Employee and ceases to be an Employee for any reason other than death or other grounds referred to in sub-paragraph (N) below before exercising his or her Option in full, the Option (to the extent not already exercised) shall lapse on the date of cessation of such appointment and not to be exercisable which date of cessation will be taken to be the last actual working day of the Employee with the Group or the Affiliate whether salary is paid in lieu of notice or not.

(M) RIGHTS ON DEATH

If the Grantee of an option is an Employee and ceases to be an Employee by reason of his or her death before exercising the Option in full, his or her personal representative(s) may exercise the Option (to the extent not already exercised) in full within a period of 12 months from the date of death or such longer period as the Board may determine.

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SUMMARY OF TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

(N) RIGHTS ON DISMISSAL

If the Grantee of an option is an Employee and ceases to be an Employee by reason that he has been guilty of misconduct or has committed an act of bankruptcy or has become insolvent or has made any arrangements or composition with his or her creditors generally, or has been convicted of any criminal offence involving his or her integrity or honesty or (if so determined by the Board) on any 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 Employee’s service contract with the Company or the relevant subsidiary or the relevant Affiliate, his or her Option will lapse automatically on the date the Employee ceases to be Employee.

(O) RIGHTS ON A GENERAL OFFER

In the event of a general offer, whether by way of take-over offer, share re-purchase offer or scheme of arrangement or otherwise in like manner, is made to all the holders of Shares, or all such holders other than the offeror and/or any person controlled by the offeror and/or any person acting in association or concert with the offeror and such offer becomes or is declared unconditional, the grantee (or his or her legal personal representative(s)) shall be entitled to exercise the Option in full at any time within such period as shall be notified by the Company after the date on which such general offer becomes or is declared unconditional. Subject to the above, an Option will lapse automatically on the date on which such offer (or, as the case may be, revised offer) closes.

(P) RIGHTS ON WINDING UP

In the event that a notice is given by the Company to its Shareholders to convene a Shareholders’ meeting for the purposes of considering and, if thought fit, approving a resolution to voluntarily wind up the Company, the Company shall forthwith give notice thereof to each Grantee and thereupon, every Grantee shall be entitled to exercise his Option (if not ready exercised) to its full extent or to the extent specified (such exercise to occur not later than three business days prior to the proposed Shareholders’ meeting referred to above) by notice in writing to the Company, stating that the Option is thereby exercised and the number of Shares in respect of which it is exercised, accompanied by a remittance for the full amount of the subscription price for the Shares in respect of which the notice is given, and the Company shall, as soon as possible and, in any event, no later than the day immediately prior to the date of the proposed Shareholders’ meeting, allot such number of Shares to the Grantee which fall to be issued pursuant to the exercise of the Option. The Company shall give notice to the Grantees of the passing of such resolution within seven days after the passing thereof.

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SUMMARY OF TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

(Q) ADJUSTMENTS TO THE SUBSCRIPTION PRICE

In the event of capitalisation of profits or reserves, rights issue or consolidation, subdivision or reduction of the share capital of the Company whilst an Option remains exercisable, such corresponding alterations (if any) certified by the auditors for the time being of or an independent financial adviser to the Company as fair and reasonable will be made to the number of Shares subject to the option so far as unexercised and/or the subscription price for Shares and/or the method of exercise of the option concerned and/or the maximum number of shares referred to in paragraph (C) and (D) in this Appendix, provided that (i) any alterations shall give a Grantee the same proportion of the issued share capital to which he was entitled prior to such alteration; (ii) the aggregate subscription price payable by a Grantee on the full exercise of any Option shall remain as nearly as possible the same (but shall not be greater than) as it was before such event; and (iii) no alteration shall be made the effect of which would be to enable a Share to be issued at less than its nominal value. In addition, in respect of any such alteration, other than any made on a capitalisation issue, such auditors or independent financial adviser must confirm to the Directors in writing that the alteration satisfies the requirements of the relevant provisions of the Listing Rules. No adjustment will be required in circumstances when there is an issue of Shares as consideration in a transaction.

(R) CANCELLATION OF OPTIONS

Any cancellation of Options granted but no exercised must be approved by the Board at the request of the Grantee.

(S) TERMINATION OF THE NEW SHARE OPTION SCHEME

The Company may by resolution in general meeting or the Board of Directors may at any time terminate the New Share Option Scheme and in such event no further Options shall be offered but in all other respects the provisions of the New Share Option Scheme shall remain in force to the extent necessary to give effect to the exercise of any Options (to the extent not already exercised) granted prior to the termination or otherwise as may be required in accordance with the provisions of the New Share Option Scheme. Options (to the extent not already exercised) granted prior to such termination shall continue to be valid and exercisable in accordance with the New Share Option Scheme.

(T) RIGHTS ARE PERSONAL TO THE GRANTEE

An Option is personal to the Grantee and shall not be assignable and no Grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest in favour of any third party over or in relation to any Option. Any breach of the foregoing shall entitle the Company to cancel any outstanding Option or part thereof granted to such Grantee.

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SUMMARY OF TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

(U) LAPSE OF OPTION

An Option shall lapse automatically (to the extent not already exercised) on the earliest

of:

• (aa) the expiry of the periods or dates as referred to in paragraphs (L) to (P); and

• (bb) the date on which a breach of the provision restriction on transfer and assignment of an Option referred to in paragraph (T) is committed.

(V) OTHERS

• (aa) The terms and conditions of the New Share Option Scheme relating to the matters set out in Rule 17.03 of the Listing Rules shall not be altered except with the approval of the Shareholders in general meeting.

• (bb) Any alterations to the terms and conditions of the New Share Option Scheme which are of a material nature or any change to the terms of Options granted must be approved by the Shareholders in general meeting, except where the alterations take effect automatically under the existing terms of the New Share Option Scheme.

• (cc) The amended terms of the New Share Option Scheme or the Options must still comply with the relevant requirements of Chapter 17 of the Listing Rules.

• (dd) Any change to the authority of the Board of Directors in relation to any alteration to the New Share Option Scheme shall be approved by the Shareholders in general meeting.

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