Long Investment Corp — Proxy Solicitation & Information Statement 2002

Jul 31, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular, 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 Shui On Construction and Materials 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 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, 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.

SHUI ON CONSTRUCTION AND MATERIALS LIMITED

*

(Incorporated in Bermuda with limited liability)

ADOPTION OF NEW SHARE OPTION SCHEME

TERMINATION OF EXISTING SHARE OPTION SCHEME

AND

GRANT OF OPTIONS TO PARTICIPANTS IN EXCESS OF 1% ENTITLEMENT

A notice convening the special general meeting of the Company to be held at Salon 1-3, Marriott Function Room, 3/F., JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong on 27th August, 2002 at 4:00 p.m., or immediately after the annual general meeting of the Company to be held at the same place on the same day at 3:00 p.m., is set out on pages 24 to 25 of this circular. Whether or not you intend to attend the meeting, you are advised to read the notice and complete the form of proxy for use at the meeting in accordance with the instructions printed thereon and return it to the head office and principal place of business of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong not later than 48 hours before the time fixed for holding the meeting. Completion and return of the form of proxy will not prevent shareholders from attending and voting in person at the meeting if they so wish.

• For identification purpose only

30th July, 2002

Shui On Construction and Materials Limited

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Company. The directors of the Company 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.

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Shui On Construction and Materials Limited

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Proposed termination of the Existing Share Option Scheme and
adoption of the New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Proposed grant of options under the New Share Option Scheme to
4 Eligible Participants in excess of 1% entitlement . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Appendix — Summary of the principal terms of
the New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24

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Shui On Construction and Materials Limited

DEFINITIONS

In this circular, except where the context otherwise requires, the following expressions shall have the following meanings:

“associates”	has the same meaning ascribed to such term in the Listing
	Rules
“Auditors”	the auditors of the Company
“Board”	the board of Directors
“Companies Ordinance”	Companies Ordinance, Chapter 32 of the Laws of Hong Kong,
	as amended from time to time
“Company”	Shui On Construction and Materials Limited, a company
	incorporated in Bermuda with limited liability, the securities
	of which are listed on the Stock Exchange
“connected person”	has the same meaning ascribed to such term in the Listing
	Rules
“Directors”	the directors of the Company
“Eligible Participants”	the persons or parties who or which are eligible to participate
	as grantee in and receive options under the New Share Option
	Scheme, as set out in paragraph 2 of the Appendix
“Existing Share Option Scheme”	the existing share option scheme adopted by the Company on
	20th January, 1997
“Group”	the Company and the Subsidiaries
“HK$”	Hong Kong dollars
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Invested Entity”	any entity in which any member of the Group holds any
	interest from time to time
“Latest Practicable Date”	24th July, 2002, 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 of Hong Kong Limited

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Shui On Construction and Materials Limited

DEFINITIONS

“New Share Option Scheme”	the new share option scheme proposed to be adopted by the
	Company at the Special General Meeting, a summary of the
	principal terms of which is set out in of the Appendix
“PRC”	the People’s Republic of China
“Shareholders”	holders of Shares
“Shares”	ordinary shares of HK$1.00 each in the capital of the
	Company
“Special General Meeting”	the special general meeting of the Company to be held on
	27th August, 2002
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subsidiary”	a corporation (wherever incorporated) which is for the time
	being and from time to time a subsidiary of the Company
	(within the meaning of section 2 of the Companies Ordinance
	or section 86 of the Companies Act 1981 of Bermuda (as
	amended)), and “Subsidiaries” means all of them
“substantial shareholder”	has the same meaning ascribed to such term in the Listing
	Rules
“%”	per cent.
“4 Eligible Participants”	Mr. Wong Ying Wai, Wilfred, Mr. Wong Yuet Leung, Frankie,
	Mr. Choi Yuk Keung, Lawrence and Mr. Wong Hak Wood,
	Louis

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Shui On Construction and Materials Limited

LETTER FROM THE BOARD

SHUI ON CONSTRUCTION AND MATERIALS LIMITED

*

(Incorporated in Bermuda with limited liability)

Executive Directors: Registered office: Lo Hong Sui, Vincent GBS JP, Chairman Clarendon House Wong Ying Wai, Wilfred, Vice-chairman 2 Church Street Wong Yuet Leung, Frankie, Vice-chairman Hamilton Choi Yuk Keung, Lawrence, Managing Director HM11 Wong Hak Wood, Louis, Deputy Managing Director Bermuda Wong Fook Lam, Raymond Lowe Hoh Wai Wan, Vivien Head office and

Head office and principal place of business: 34th Floor, Shui On Centre 6-8 Harbour Road Hong Kong

Non-executive Directors: Cheng Bing Chark, Henry Griffiths, Anthony[#] Professor Enright, Michael John[#]

# Independent non-executive Directors

30th July, 2002

To the Shareholders and, for information only,

holders of options under the Existing Share Option Scheme

Dear Sir or Madam,

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

GRANT OF OPTIONS TO PARTICIPANTS IN EXCESS OF 1% ENTITLEMENT

INTRODUCTION

In response to the recent changes in the Listing Rules governing share option schemes of listed companies and their subsidiaries, the Board proposes that the Existing Share Option Scheme be replaced by a new share option scheme of the Company which complies with the new requirements

• For identification purposes only

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Shui On Construction and Materials Limited

LETTER FROM THE BOARD

of the Listing Rules. Subject to the adoption of the New Share Option Scheme, the Board proposes to make an offer of grant of options thereunder to the Eligible Participants, the grant to 4 of whom will be in excess of each of their maximum entitlement, that is, 1% of the Shares in issue in the 12-month period up to and including the date of the further grant.

The purpose of this circular is to provide you with: (1) a summary of the principal terms of the New Share Option Scheme; (2) information relating to the grant of options under the New Share Option Scheme to 4 Eligible Participants, in each case in excess of the participant’s 1% entitlement in the 12-month period up to and including the date of the further grant; and (3) information reasonably necessary to enable the Shareholders to make an informed decision on whether to vote in favour of or against the ordinary resolutions to approve the adoption of the New Share Option Scheme, the termination of the Existing Share Option Scheme and the grant of options under the New Share Option Scheme to 4 Eligible Participants, in each case in excess of the participant’s 1% entitlement in the 12-month period up to and including the date of the further grant.

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

1. Current status of the Existing Share Option Scheme

The Existing Share Option Scheme was adopted by the Company on 20th January, 1997 and will expire on 20th January, 2007. As at the Latest Practicable Date, there were 264,514,000 Shares in issue. Under the Existing Share Option Scheme, a total of 15,820,000 options have been granted as at the Latest Practicable Date. Out of these options, 4,514,000 have been exercised, 296,000 have been cancelled and none has lapsed. The remaining 11,010,000 options have been granted but remain unexercised.

Upon termination of the Existing Share Option Scheme, no further option can be granted thereunder but in all other respects, the provisions of the Existing Share Option Scheme shall remain in force and all options granted prior to such termination shall continue to be valid and exercisable in accordance therewith.

Assuming the New Share Option Scheme is adopted at the Special General Meeting and on the basis that the number of issued Shares remains to be 264,514,000 on the date of adoption of the New Share Option Scheme, the total number of Shares that are issuable pursuant to the New Share Option Scheme is 26,451,400 Shares.

2. Reasons for the adoption of the New Share Option Scheme and the termination of the Existing Share Option Scheme

On 23rd August, 2001, the Stock Exchange announced amendments to Chapter 17 of the Listing Rules, which came into effect on 1st September, 2001. In compliance with the amendments to the Listing Rules and the announcement of the Stock Exchange and for reasons set out in this letter, the Board considers that it is in the interest of the Company to terminate the Existing Share Option Scheme and adopt the New Share Option Scheme.

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Shui On Construction and Materials Limited

LETTER FROM THE BOARD

Chapter 17 of the Listing Rules deals with the share option schemes of companies listed on the Stock Exchange and share option schemes of the subsidiaries of such listed companies. The amendments introduced expand the classes of potential grantees of share options, relax certain requirements relating to the maximum number of shares comprised in share options that can be granted under the share option schemes of listed companies and their subsidiaries and at the same time, impose new disclosure and approval requirements on listed companies. In general, these amendments are designed to facilitate the giving of incentives and rewards to employees and other stakeholders of listed companies and their subsidiaries through the grant of share options while improving transparency and accountability over the grant of share options by these listed companies and their subsidiaries.

The Board considers that it would be advantageous to the Group’s development for the Company to adopt the New Share Option Scheme. By granting options to the employees, directors or other eligible persons, the New Share Option Scheme will provide to the participants a personal stake in the Group, which the Directors believe will help the building of common objectives of the Group and the participants for the betterment of business and profitability of the Group. According to the New Share Option Scheme, the grant of options may be subject to conditions which may include a minimum period for which such options must be held and performance target that must be achieved before such options can be exercised and the basis for determination of the exercise price. With such conditions, together with the incentive that the options will bring about, the Group will be able to ensure that the relevant grantee will perform services for the Group for a minimum period and will reach a specified level of standard in their performance, which the Board believes will serve the purposes of the New Share Option Scheme.

Options may no longer be granted under the Existing Share Option Scheme by the Company unless such grants are made in compliance with the amended Listing Rules. In this connection, the Board wishes to propose to the Shareholders that the Company terminates the Existing Share Option Scheme and adopts the New Share Option Scheme, the terms of which comply with the amended Chapter 17 of the Listing Rules. A summary of the principal terms of the New Share Option Scheme is set out in the Appendix.

3. Valuation of share options

The Board considers that it is inappropriate to state the value of all options that can be granted pursuant to the New Share Option Scheme as if they had been granted on the Latest Practicable Date prior to the approval of such Scheme, given that the variables which are crucial for the calculation of the value of such options cannot be determined. The variables which are critical for the determination of the value of such options include the subscription price, whether or not options will be granted under the New Share Option Scheme, the timing of the grant of such options, the period during which the subscription rights may be exercised and any other condition that the Board may impose on the options and whether or not such options if granted will be exercised by the grantees. With a scheme life of 10 years, it is too premature to state whether or not options will be granted under the New Share

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Shui On Construction and Materials Limited

LETTER FROM THE BOARD

Option Scheme and, if so, the number of options that may be granted. It is also difficult to ascertain with accuracy the subscription price given the volatility the price of the Shares may be subject to during the 10-year life span of the New Share Option Scheme. On these premises, the Board is 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 bases and speculative assumptions. Accordingly, the Board believes that any calculation of the value of the options will not be meaningful and may be misleading to Shareholders in the circumstances.

4. Interest of Directors

None of the Directors is a trustee of the New Share Option Scheme nor does any of them have a direct or indirect interest in such a trustee.

PROPOSED GRANT OF OPTIONS UNDER THE NEW SHARE OPTION SCHEME TO 4 ELIGIBLE PARTICIPANTS IN EXCESS OF 1% ENTITLEMENT

1. Introduction

Under Rule 17.03 (4) of the Listing Rules, the total number of Shares issued and to be issued upon exercise of the options granted to each participant (including both exercised and outstanding options) in the 12-month period up to and including the date of the further grant must not exceed 1% of the Shares in issue, unless approval of the Shareholders is obtained.

Subject to the Shareholders approving the adoption of the New Share Option Scheme at the Special General Meeting, the Board proposes to grant options thereunder to the Eligible Participants, the grant to 4 of whom will be in excess of each of their maximum 1% entitlement as mentioned above. According to Rule 17.03(4), the following information relating to such grant has to be provided in this circular in connection with seeking Shareholders’ approval for the grant of options to these 4 Eligible Participants in excess of their maximum entitlement. At the Special General Meeting, all the 4 Eligible Participants (except Mr. Wong Ying Wai, Wilfred who is not a Shareholder) and their associates will abstain from voting on the resolution approving the grant of such options to them.

2. Information required by Rule 17.03 (4)

• (a) Identity of the 4 Eligible Participants

The 4 Eligible Participants who will be granted options in excess of their 1% entitlement are all executive Directors and they are Mr. Wong Ying Wai, Wilfred (also the Vice-chairman of the Company), Mr. Wong Yuet Leung, Frankie (also the Vice-chairman of the Company), Mr. Choi Yuk Keung, Lawrence (also the Managing Director of the Company) and Mr. Wong Hak Wood, Louis (also the Deputy Managing Director of the Company).

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Shui On Construction and Materials Limited

LETTER FROM THE BOARD

• (b) Terms of the options granted and to be granted

Of these 4 Eligible Participants, Mr. Frankie Wong, Mr. Lawrence Choi and Mr. Louis Wong have been granted options under the Existing Share Option Scheme. The Shares issued and to be issued upon exercise of the options granted to Mr. Frankie Wong, Mr. Lawrence Choi and Mr. Louis Wong (including both exercised and outstanding options) under the Existing Share Option Scheme in the 12-month period immediately prior to the Latest Practicable Date were 624,000 Shares, 1,024,000 Shares and 840,000 Shares respectively. It is proposed that options for 2,160,000 Shares, 5,280,000 Shares and 2,220,000 Shares be granted to Mr. Frankie Wong, Mr. Lawrence Choi and Mr. Louis Wong respectively under the New Share Option Scheme subject to such Scheme being approved by the Shareholders. Of these Shares, 160,000 Shares, 280,000 Shares and 220,000 Shares will be granted under the usual annual grant by the Company (the “annual grant”), and 2,000,000 Shares, 5,000,000 Shares and 2,000,000 Shares will be granted as a special grant with vesting conditions and restrictions on disposal attached, as mentioned below (the “mega grant”). The aggregate number of Shares issued and to be issued upon exercise of all the options granted under the Existing Share Option Scheme and to be granted under the New Share Option Scheme (including both the annual grant and the mega grant) to Mr. Frankie Wong, Mr. Lawrence Choi and Mr. Louis Wong in the 12-month period up to and including the date of such grant will therefore be 2,784,000 Shares, 6,304,000 Shares and 3,060,000 Shares respectively, assuming all the options to be granted are accepted and immediately exercisable. Such Shares represent approximately 1.05%, 2.38% and 1.16% respectively of the Shares in issue as at the date of such grant and are in excess of the 1% maximum entitlement of each participant in the 12-month period up to and including the date of such grant under Rule 17.03(4) of the Listing Rules.

It is proposed that options for 5,200,000 Shares be granted to Mr. Wilfred Wong under the New Share Option Scheme, subject to the New Share Option Scheme being approved by the Shareholders on the date of the Special General Meeting. Of these Shares, 200,000 Shares will be granted under the annual grant and 5,000,000 Shares will be granted under the mega grant with vesting conditions and restrictions on disposal attached. The 5,200,000 Shares represent approximately 1.97% of the total Shares in issue as at the date of the Special General Meeting. Assuming all the options to be granted are accepted and immediately exercisable, the Shares to be issued to Mr. Wong in the 12-month period up to and including the date of the grant will be in excess of his 1% maximum entitlement under Rule 17.03(4) of the Listing Rules.

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Shui On Construction and Materials Limited

LETTER FROM THE BOARD

The terms of the options (including exercised and outstanding options) granted to Mr. Frankie Wong, Mr. Lawrence Choi and Mr. Louis Wong under the Existing Share Option Scheme in the 12-month period immediately prior to the Latest Practicable Date are as follow:

		Approximate %
		of the Shares
		in issue as at
	Number of	the Latest	Exercise
	underlying	Practicable	price per
Name	Shares	Date	Share	Exercise period
Mr. Frankie Wong	624,000	0.24%	HK$4.14 to	at various periods in
			HK$11.21	respect of different
				batches of options
				granted, up to 16th
				July 2006
Mr. Lawrence Choi	1,024,000	0.39%	HK$4.14 to	various periods in
			HK$11.21	respect of different
				batches of options
				granted, up to 16th
				July 2006
Mr. Louis Wong	840,000	0.32%	HK$4.14 to	at various periods in
			HK$11.21	respect of different
				batches of options
				granted, up to 16th
				July 2006

The terms of the options proposed to be granted to Mr. Wilfred Wong, Mr. Frankie Wong, Mr. Lawrence Choi and Mr. Louis Wong under the New Share Option Scheme are as follow:

	Number of	Maximum number	Approximate % of
	underlying	of underlying	the Shares to be
	Shares under	Shares proposed to	issued under the
	the options	be granted under	options proposed
	proposed to	the mega grant	to be granted (A +
	be granted	(subject to full	B) in relation to
	under the	satisfaction of the	the total Shares in
	annual grant	vesting conditions)	issue immediately
Name	(A)	(B)	after such grant	Exercise price per Share	Exercise period
Mr. Wilfred Wong	200,000	5,000,000	1.97%	To be determined by the Board,	Options under the
				but will be at least the highest	annual grant: 5 years
				of: (a) the closing price of a	from the date of grant
				Share on the date of grant; (b)
				the average closing price of the	Options under the mega
				Shares for the 5 business days	grant: 8 years from the
				immediately preceding the date	date of grant
				of grant; and (c) the nominal
				value of a Share

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Shui On Construction and Materials Limited

LETTER FROM THE BOARD

	Number of	Maximum number	Approximate % of
	underlying	of underlying	the Shares to be
	Shares under	Shares proposed to	issued under the
	the options	be granted under	options proposed
	proposed to	the mega grant	to be granted (A +
	be granted	(subject to full	B) in relation to
	under the	satisfaction of the	the total Shares in
	annual grant	vesting conditions)	issue immediately
Name	(A)	(B)	after such grant	Exercise price per Share	Exercise period
Mr. Frankie Wong	160,000	2,000,000	0.82%	To be determined by the Board,	Options under the
				but will be at least the highest	annual grant: 5 years
				of: (a) the closing price of a	from the date of grant
				Share on the date of grant; (b)
				the average closing price of the	Options under the mega
				Shares for the 5 business days	grant: 8 years from the
				immediately preceding the date	date of grant
				of grant; and (c) the nominal
				value of a Share
Mr. Lawrence Choi	280,000	5,000,000	2.00%	To be determined by the Board,	Options under the
				but will be at least the highest	annual grant: 5 years
				of: (a) the closing price of a	from the date of grant
				Share on the date of grant; (b)
				the average closing price of the	Options under the mega
				Shares for the 5 business days	grant: 8 years from the
				immediately preceding the date	date of grant
				of grant; and (c) the nominal
				value of a Share
Mr. Louis Wong	220,000	2,000,000	0.84%	To be determined by the Board,	Options under the
				but will be at least the highest	annual grant: 5 years
				of: (a) the closing price of a	from the date of grant
				Share on the date of grant; (b)
				the average closing price of the	Options under the mega
				Shares for the 5 business days	grant: 8 years from the
				immediately preceding the date	date of grant
				of grant; and (c) the nominal
				value of a Share

(c) Vesting of options

The options proposed to be granted to each of these 4 Eligible Participants under the annual grant will be immediately exercisable, whereas those proposed to be granted under the mega grant will vest and be exercisable 3 years after the date of grant, provided the vesting conditions set out below are satisfied. All options, whether they will be granted under the annual grant or the mega grant, may not be exercised 10 years after the date of grant.

The vesting conditions attached to the options proposed to be granted under the mega grant include financial and performance targets, all of which must be achieved before the options to be granted will vest and be exercisable. Of the options proposed to be granted under the mega grant to Mr. Wilfred Wong, Mr. Frankie Wong and Mr. Louis Wong, 50% will vest if all the financial targets are achieved and the remaining 50% will vest if all the performance targets are achieved. Of the options proposed to be granted under the mega grant to Mr. Lawrence Choi, 100% will vest if all the financial targets are achieved.

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Shui On Construction and Materials Limited

LETTER FROM THE BOARD

(i) Financial targets

The consolidated net profits of the Group (after taxation and minority interests) for each of the 3 years after the grant (the “Net Earnings”), as shown in the audited consolidated income statement of the Group for the 3 financial years ending 31st March, 2003, 2004 and 2005, must achieve a minimum percentage of the budgeted Net Earnings for that year (the “Target Figure”).

If the actual Net Earnings for any of the 3 financial years is less than the Target Figure by 20% or less, only some (ranging between 50% to 70%) of the options proposed to be granted under the mega grant will vest and be exercisable. If the actual Net Earnings for any of the 3 financial years is less than the Target Figure by more than 20%, none of the options proposed to be granted under the mega grant will vest or be exercisable.

(ii) Performance targets

Each of the 4 Eligible Participants mentioned above will have to achieve a satisfactory level of performance in his responsibility areas, as assessed by the Remuneration Committee comprising the Chairman and 2 independent non-executive directors, within the 3 year period mentioned above. Depending on the individual’s performance level, some or all of the options proposed to be granted under the mega grant may vest and be exercisable. If the individual fails to achieve at least a satisfactory performance, none of the options proposed to be granted under the mega grant will vest or be exercisable.

(d) Restrictions on disposal

There is no restriction on disposal attached to the Shares to be issued to all the 4 Eligible Participants mentioned above upon the exercise of options proposed to be granted to them under the annual grant. Shares to be issued upon the exercise of options proposed to be granted under the mega grant are subject to the restrictions on disposal set out in this paragraph. Each of such participants can only sell up to 50% of the Shares issued to him within a period of 12 months from the date when such Shares are issued.

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Shui On Construction and Materials Limited

LETTER FROM THE BOARD

CONDITIONS

The adoption of the New Share Option Scheme, the termination of the Existing Share Option Scheme and the grant of options under the New Share Option Scheme to 4 Eligible Participants, in each case in excess of the participant’s maximum 1% entitlement in the 12-month period up to and including the date of the further grant are conditional upon the following:

1. the passing of an ordinary resolution at the Special General Meeting approving the adoption of the New Share Option Scheme;

2. the passing of an ordinary resolution at the Special General Meeting resolving the termination of the Existing Share Option Scheme;

3. the passing of an ordinary resolution at the Special General Meeting approving the grant of options to each of the 4 Eligible Participants mentioned above in excess of his maximum 1% entitlement in the 12-month period up to and including the date of the further grant, with the 4 Eligible Participants (except Mr. Wilfred Wong who is not a Shareholder) and their associates abstaining from voting on such resolution; and

4. the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in the Shares (such Shares representing 10% of the total issued Shares as at the date of the Special General Meeting) which may fall to be issued upon the exercise of the subscription rights attaching to the options to be granted under the New Share Option Scheme.

Application will be made to the Listing Committee of the Stock Exchange for approval of the listing of, and permission to deal in, the Shares (such Shares representing 10% of the total issued Shares as at the date of the Special General Meeting) which may be issued pursuant to the exercise of subscription rights attaching to the options to be granted under the New Share Option Scheme.

SPECIAL GENERAL MEETING

The notice convening the Special General Meeting is set out on pages 24 to 25 of this circular and the form of proxy for use at the Special General Meeting is enclosed in this circular. The form of proxy, in order to be valid, must be deposited in accordance with the instructions printed thereon not less than 48 hours before the time for holding the meeting. Completion and delivery of the form of proxy will not prevent the Shareholders from attending and voting at the Special General Meeting if they so wish.

The Company will publish in the newspapers an announcement on the outcome of the Special General Meeting on 28th August, 2002.

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Shui On Construction and Materials Limited

LETTER FROM THE BOARD

RECOMMENDATION

The Directors consider that the proposals of adoption of the New Share Option Scheme, the termination of the Existing Share Option Scheme and the grant of options under the New Share Option Scheme to 4 Eligible Participants mentioned in this circular, in each case in excess of the participant’s maximum 1% entitlement in the 12-month period up to and including the date of the further grant are in the best interests of the Company and the Shareholders and accordingly recommend that all Shareholders vote in favour of the resolutions set out in the notice convening the Special General Meeting, save that the 4 Eligible Participants (except Mr. Wilfred Wong who is not a Shareholder) will abstain from voting on the resolution relating to approval of the proposed grant of options to them in excess of their 1% entitlement. A copy of the proposed New Share Option Scheme will be available for inspection during normal business hours at the head office and principal place of business of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong during the 14-day period immediately preceding the Special General Meeting and at the Special General Meeting itself.

By order of the Board Choi Yuk Keung, Lawrence Managing Director

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Shui On Construction and Materials Limited

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

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

1. Purpose of the New Share Option Scheme

2. (a) The New Share Option Scheme is a share incentive scheme and is established to recognize and acknowledge the contributions which the Eligible Participants have made or may make to the Group.

3. (b) The New Share Option Scheme will provide the Eligible Participants an opportunity to have a personal stake in the Company with a view to achieving the following objectives:

   • (i) motivate the Eligible Participants to utilise their performance and efficiency for the benefit of the Group; and

   • (ii) attract and retain or otherwise maintain on-going relationship with the Eligible Participants whose contributions are or will be beneficial to the long term growth of the Group.

4. Who may join

5. (a) The Board may at its discretion invite anyone belonging to any of the following classes of persons to take up options to subscribe for Shares, subject to such conditions (including performance targets, restrictions on disposals, etc.) as the Board may think fit: any director (whether executive or non-executive or independent non-executive), employee (whether full time or part time), officer, consultant, customer, supplier, agent, partner or adviser of or contractor to the Group or any Invested Entity and for the purpose of the New Share Option Scheme, the options may be granted to any corporation which is 100% beneficiary owned by any person mentioned in this paragraph.

6. (b) The eligibility of any of the above persons to the grant of any option shall be determined by the Board from time to time on the basis of his contribution to the development and growth of the Group. The Company shall be entitled to cancel any option granted to a grantee but not exercised if such grantee fails to meet the eligibility criteria determined by the Board after an option is granted but before it is exercised.

7. (c) Any person being an Eligible Participant must remain eligible during the period when any option granted to him remains outstanding. If he ceases to be eligible by reason of any of the events set out in sub-paragraphs (a) and (b) of paragraph 13, then the provisions of such sub-paragraphs shall apply in respect of the exercise of any option granted to him which remains outstanding.

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Shui On Construction and Materials Limited

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

3. Maximum number of Shares available for subscription under the New Share Option Scheme

(a) 10% limit

Subject to the following paragraphs, the total number of Shares which may be issued upon exercise of all options to be granted under the New Share Option Scheme and any other share option scheme of the Company must not in aggregate exceed 10% of the Shares in issue as at the date of approval of the New Share Option Scheme (excluding options which have lapsed in accordance with the terms of the New Share Option Scheme) (the “Scheme Mandate Limit”).

The Company may seek approval by Shareholders in general meeting for refreshing the Scheme Mandate Limit under the New Share Option Scheme. However, the total number of Shares which may be issued upon exercise of all options to be granted under all the share option schemes of the Company under the Scheme Mandate Limit as refreshed must not exceed 10% of the Shares in issue as at the date of approval of the Scheme Mandate Limit as refreshed. Options previously granted under the share option schemes of the Company (including those outstanding, cancelled, lapsed in accordance with such schemes or exercised options) will not be counted for the purpose of calculating the Scheme Mandate Limit as refreshed. The Company must send a circular to the Shareholders containing the information required under the Listing Rules.

The Company may seek separate approval by the Shareholders in general meeting for granting options beyond the Scheme Mandate Limit provided the options in excess of such limit are granted only to participants specifically identified by the Company before such approval is sought. The Company must send a circular to the Shareholders containing a generic description of the specified participants who may be granted such options, the number and terms of the options to be granted, the purpose of granting options to the specified participants with an explanation as to how the terms of the options serve such purpose and all the other information required by the Listing Rules.

(b) 30% limit

The limit on the number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Share Option Scheme and any other share option scheme of the Company must not exceed 30% of the total Shares in issue from time to time. No options may be granted under any share option scheme of the Company if this will result in the 30% limit being exceeded.

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Shui On Construction and Materials Limited

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

4. Maximum entitlement of each grantee

Unless approved by Shareholders, the total number of Shares issued and to be issued upon exercise of the options granted to each Eligible Participant (including both exercised and outstanding options) in any 12-month period must not exceed 1% of the Shares in issue. Where any further grant of options to any Eligible Participant would result in the 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% of the Shares in issue, such further grant must be separately approved by the Shareholders in general meeting, with such Eligible Participant and his associates abstaining from voting. The Company must send a circular to the Shareholders containing the identity of the participant, the number and terms of the options to be granted (and options previously granted to such participant) and all the other information required by the Listing Rules. The number and terms (including the exercise price) of the options to be granted to such participant must be fixed before Shareholders’ approval and the date of the Board meeting for proposing such further grant should be taken as the date of grant for the purpose of calculating the exercise price under paragraph 7 below.

5. Performance target

The New Share Option Scheme allows the Board, when offering the grant of any option, to impose any condition including any performance target which must be met before the option shall vest and become exercisable. Such conditions are not currently set out in the New Share Option Scheme.

6. Minimum period for which an option must be held

The New Share Option Scheme allows the Board, when offering the grant of any option, to impose any minimum period for which an option must be held. Such minimum period is not currently set out in the New Share Option Scheme.

7. Price of shares

The exercise price shall be determined by the Board but shall be at least the highest of: (a) the closing price of a Share as stated in the daily quotations sheet of the Stock Exchange on the date of grant; and (b) the average closing price of the Shares as shown on the daily quotations sheets of the Stock Exchange for the five business days immediately preceding the date of grant; and (c) the nominal value of a Share.

8. Amount payable upon acceptance of option

HK$1.00 is payable by each Eligible Participant to the Company on acceptance of an offer of an option, which shall be paid within 28 days from the date of the offer.

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Shui On Construction and Materials Limited

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

9. Term of the New Share Option Scheme

The New Share Option Scheme shall commence on the day it becomes unconditional and shall continue in force until the tenth anniversary of such date.

10. Rights personal to the option holder

An option shall be personal to the option holder and shall not be assignable and no option holder 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.

11. Time of exercise of option

An option shall be exercisable at any time during such period(s) to be notified by the Board to each grantee, provided that no option shall be exercisable later than 10 years after the date of grant.

1. Grant of option to director, chief executive or substantial shareholder

2. (a) Any grant of options to a Director, chief executive or substantial shareholder of the Company or any of their respective associates under the New Share Option Scheme must be approved by the independent non-executive Directors (excluding any independent non-executive Director who is a grantee of such option).

3. (b) Where an option is proposed to be granted to a substantial shareholder of the Company or an independent non-executive Director, or any of their respective associates, and where the Shares issued and to be issued upon exercise of all options granted and to be granted to such person under the New Share Option Scheme (including options exercised, cancelled and outstanding) in the 12-month period up to and including the date of such grant:

   • (i) represent in aggregate over 0.1% of the Shares in issue as at such date of grant; and

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

then the proposed grant must be subject to the approval by the Shareholders at a general meeting taken on a poll. The connected persons involved and all other connected persons of the Company must abstain from voting in such general meeting (except where any connected person intends to vote against the proposed grant and where his intention to do so has been stated in the circular to be issued by the Company in connection with the proposed grant).

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Shui On Construction and Materials Limited

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

1. Rights on ceasing to be Eligible Participant

2. (a) If the grantee (being an individual) ceases to be an Eligible Participant by reason of his death before exercising his option in full, such option period shall be deemed to expire 12 months after the date of such grantee’s death and, if none of the events under paragraphs 14 and 15 existed with respect to such grantee at the time of his death, his personal representative(s) may exercise such option (to the extent not already exercised) in whole or in part within such period of 12 months, provided that where any of the events set out in paragraphs 14 and 15 occurs prior to his death or within such period of 12 months following his death, then his personal representative(s) may so exercise the option within such of the various periods respectively set out in such paragraphs, and any option not so exercised shall lapse and determine at the expiry of such 12 months or any applicable shorter period set out in paragraph 14 or 15.

3. (b) If:

   • (i) the grantee in sub-paragraph (a) of paragraph 2 ceases to be an Eligible Participant by reason of his employing or engaging company (in the case of the grantee being a director, employee, officer, consultant, adviser or contractor) or the company to which he belongs (in the case of the grantee being a customer, supplier, agent or partner) ceases to be a member of the Group or an Invested Entity; or

   • (ii) the employment of the grantee (being a director, employee or officer) is terminated as a result of resignation, whether on notice in accordance with the provisions of his contract of employment or with payment in lieu of such notice; or

   • (iii) the engagement or appointment of the grantee (being a consultant, adviser, contractor, agent or supplier) is terminated as a result of expiration or termination of his contract of engagement or appointment, whether in accordance with its terms or by agreement between the parties thereto; or

   • (iv) the grantee (being a partner) resigns from the partnership,

then, subject to sub-paragraph (c) below, the options (to the extent not already exercised) shall lapse and determine on the date of cessation, termination or resignation, provided that the Board may within one month from the date of such cessation, termination or resignation otherwise determine that the options shall be exercisable within such period not exceeding 12 months from the date of cessation, termination or resignation as the Board may determine.

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Shui On Construction and Materials Limited

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

• (c) If a grantee ceases to be an Eligible Participant as a result of one or more of the events specified in sub-paragraph (c) of paragraph 18 at a time when such grantee has exercised his option in whole or in part, but Shares have not been allotted to him, such grantee shall be deemed not to have so exercised such option and the Company shall return to the grantee the amount of the subscription price for the Shares in respect of the purported exercise of such option.

14. Effect on takeover on reconstruction

If a general offer (whether by way of takeover offer or scheme of arrangement or otherwise in like manner) is made to all the Shareholders (or all such Shareholders 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 or (in the case of a scheme of arrangement) is approved by the requisite majority at the relevant meeting(s) of Shareholders and is sanctioned by the court, any grantee (or his personal representative(s)) shall be entitled to exercise his option (to the extent not already exercised) at any time within one month after the date on which the offer becomes or is declared unconditional, or in the case of a scheme of arrangement, prior to such time and date as shall be notified by the Company.

15. Effect of winding up

If an effective resolution is passed for a members’ voluntary winding-up of the Company, any grantee may by notice in writing to the Company within 21 days after the date of such resolution elect to be treated as if his option had been exercised immediately before the passing of such resolution either to its full extent or to the extent specified in such notice and shall accordingly be entitled to receive out of the assets available in the liquidation pari passu with the Shareholders such sum as would have been received in respect of the Shares the subject of such election reduced by an amount equal to the subscription price which would otherwise have been payable in respect thereof.

16. Ranking of Shares

Shares to be allotted upon the exercise of an option will be subject to all the provisions of the Bye-laws of the Company for the time being in force and will rank pari passu in all respects with the existing fully paid Shares in issue on the date on which the option is duly exercised or, if that date falls on a day when the register of members of the Company is closed, the first day of the re-opening of the register of members (the “Allotment Date”) and accordingly will entitle the holders thereof to participate in all dividends or other distributions paid or made on or after the Allotment Date other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefor shall be before the Allotment Date. A Share allotted and issued upon the exercise of an option shall not carry voting rights until the name of the grantee has been duly entered onto the register of members of the Company as the holder thereof.

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Shui On Construction and Materials Limited

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

17. Effect of alteration to capital

If there is any alteration in the capital structure of the Company whilst any option remains exercisable or the New Share Option Scheme remains in effect, and such event arises from a capitalisation issue, rights issue, consolidation, sub-division of Shares or reduction of share capital of the Company, then, in any such case (other than in the case of capitalisation of profits or reserves), the Board shall instruct the auditors of the Company (the “Auditors”) or an independent financial adviser to certify in writing the adjustment, if any, that ought in their opinion fairly and reasonably to be made either generally or as regards any particular grantee, to:

• (a) the number or nominal amount of Shares to which the New Share Option Scheme or any option(s) relates (insofar as it is/they are unexercised); and/or

• (b) the subscription price; and/or

• (c) the maximum number of Shares referred to in paragraph 3,

and an adjustment as so certified by the Auditors or the independent financial adviser shall be made, provided that:

• (i) any such adjustment shall be made on the basis that the proportion of the issued share capital of the Company for which any grantee would have been entitled had he exercised all the options held by him immediately prior to such adjustment shall equal to the proportion of the issued share capital of the Company for which he would have been entitled had he exercised all the options held by him immediately after such adjustment;

• (ii) any such adjustment shall be made on the basis that 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;

• (iii) no such adjustment shall be made the effect of which would be to enable a Share to be issued at less than its nominal value; and

• (iv) the issue of Shares as consideration in a transaction shall not be regarded as a circumstance requiring any such adjustment; and

the adjustment (other than an adjustment made in the event of a capitalisation issue) so made satisfy the requirements set out in sub-paragraphs (i), (ii), (iii) and (iv) above.

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Shui On Construction and Materials Limited

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

18. Lapse of option

An option shall lapse automatically and not be exercisable (to the extent not already exercised) on the earliest of:

• (a) subject to sub-paragraph (b) of this paragraph 18, the expiry of the option period in respect of such option;

• (b) the expiry of any of the periods referred to in paragraph 13(a), 13(b), 14 or 15;

• (c) the date on which the grantee ceases to be an Eligible Participant by reason of:

• (i) in the case of the grantee being a director, employee or officer of any member of the Group or an Invested Entity, a termination of his employment on the grounds that:

  • (aa) he has been guilty of persistent or serious misconduct; or

  • (bb) he has committed any act of bankruptcy or has become insolvent or has made any arrangements or composition with his creditors generally; or

  • (cc) he has been convicted of any criminal offence involving his integrity or honesty; or

• (ii) in the case of the grantee being a consultant, adviser, agent, contractor or supplier of any member of the Group or an Invested Entity, the termination of his contract of engagement or appointment due to the default or a breach of such contract by the grantee; or

• (iii) in the event of the grantee being a partner of the Group or an Invested Entity, the cessation of the grantee as such a partner as a result of his default or breach of the partnership agreement or arrangement;

for such purpose, a resolution of the Board to the effect that any of the events in this sub-paragraph (c) has occurred shall be conclusive;

• (d) the date of commencement of the winding up of the Company;

• (e) the date on which the grantee sells, transfers, charges, mortgages, encumbrances or creates any interest in favour of any other party, over or in relation to any option in breach of the rules of the New Share Option Scheme;

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Shui On Construction and Materials Limited

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

• (f) the date on which any of the following events, unless otherwise waived by the Board, happens:

  • (i) any liquidator, provisional liquidator, receiver or any person carrying out any similar function has been appointed anywhere in the world in respect of the whole or any part of the assets or undertaking of the grantee (being a corporation) of such option;

  • (ii) the grantee (being a corporation) of such option has ceased or suspended payment of its debts, become unable to pay its debts or otherwise become insolvent;

  • (iii) there is unsatisfied judgment, order or award outstanding against the grantee of such option;

  • (iv) there are circumstances which entitle any person to take any action, appoint any person, commence proceedings or obtain any order of the type mentioned in sub-paragraphs (i), (ii) and (iii) above in respect of the grantee of such option;

  • (v) a bankruptcy order has been made against any director of the grantee (being a corporation) of such option in any jurisdiction; or

  • (vi) a petition for bankruptcy has been presented against any director of the grantee (being a corporation) of such option in any jurisdiction;

• (g) the date on which the grantee commits a breach of any condition, restriction or limitation attached to the grant of any option, if the Board shall exercise the Company’s right to cancel such option; or

• (h) the date on which the Board considers that the grantee fails to meet any eligibility criteria set out by the Board, if the Board shall exercise the Company’s right to cancel the option.

• Restriction on the time of grant of option

No offer of any option shall be made by the Board in the following circumstances:

• (a) after a price sensitive event of the Company has occurred or a price sensitive matter has been the subject of a decision until such price sensitive information has been announced by the Company pursuant to the requirements of the Listing Rules; and

• (b) during the period of one month immediately preceding the earlier of:

• (i) the date of the Board meeting for the approval of the Company’s interim or annual result; and

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Shui On Construction and Materials Limited

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

• (ii) the deadline for the Company to publish its interim or annual results announcement under the Listing Rules;

and ending on the date of the results announcement.

20. Alteration of the New Share Option Scheme

The New Share Option Scheme may be altered in any respect by a resolution of the Board, save

that:

• (a) the provisions of the New Share Option Scheme relating to matters set out in Rule 17.03 of the Listing Rules shall not be altered to the advantage of any grantee or prospective grantee except with the prior sanction of an ordinary resolution of the Company in general meeting;

• (b) any alteration to the terms and conditions of the New Share Option Scheme which are of a material nature or any change to the terms of the options granted prior to such alteration shall be approved by the Shareholders, except where the alteration takes effect automatically under the existing terms of the New Share Option Scheme;

• (c) the amended terms of the New Share Option Scheme or the amended options shall continue to comply with the relevant requirements of the Listing Rules;

• (d) any change to the authority of the Board in relation to any alteration to the terms of the New Share Option Scheme must be approved by the Shareholders in a general meeting; and

• (e) where there is any proposed change to the terms of any option granted to an Eligible Participant who is a substantial shareholder of the Company or an independent nonexecutive Director, or any of their respective associates, then the proposed change must be subject to the approval of the Shareholders in accordance with Note (1) to Rule 17.04 of the Listing Rules.

• Termination

• (a) The Company may, by an ordinary resolution at a general meeting or a resolution of the Board, at any time terminate the operation of the New Share Option Scheme and in such event options granted prior to such termination will continue to be valid and exercisable in accordance with the provisions of the New Share Option Scheme.

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Shui On Construction and Materials Limited

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

• (b) The Board or the Shareholders (by an ordinary resolution) shall have the right, at any time and from time to time, by notice to a grantee forthwith to cancel, whether conditionally or unconditionally, any option granted to the grantee but not exercised. For the avoidance of doubt, new options may be issued to an option holder in place of his cancelled options only if there are available unissued options (excluding cancelled options) within the limit approved by the Shareholders as mentioned in paragraph 3 above. The Board may also in its absolute discretion determine that against cancellation of all or any part of the outstanding options held by a grantee, a sum shall be paid to the grantee which sum shall be equal to the excess (if any) of the price of the Shares comprised in the outstanding options or the relevant part thereof calculated at the average of the closing prices of the Shares on the Stock Exchange according to the daily quotations published by the Stock Exchange during the 5 business days immediately preceding the date of the cancellation notice over the aggregate subscription price comprised in the outstanding options or the relevant part thereof.

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Shui On Construction and Materials Limited

NOTICE OF SPECIAL GENERAL MEETING

**SHUI ON CONSTRUCTION AND MATERIALS LIMITED ***

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a special general meeting of Shui On Construction and Materials Limited (the “Company”) will be held at Salon 1-3, Marriott Function Room, 3/F, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong on 27th August, 2002 at 4:00 p.m., or immediately after the annual general meeting of the Company to be held at the same place on the same day at 3:00 p.m., for the purpose of considering and, if thought fit passing, the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

1. “ THAT , subject to the passing of ordinary resolution no.2 set out in the notice convening this Meeting, the existing share option scheme of the Company adopted on 20th January, 1997 be terminated with effect from the conclusion of this Meeting.”

2. “ THAT , conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting approval of the listing of, and permission to deal in, the shares of HK$1.00 each in the capital of the Company (the “Shares’) (which Shares represent 10% of the total issued Shares as at the date of the approval of the New Share Option Scheme (as defined below)) which may fall to be issued upon the exercise of the subscription rights attaching to the options to be granted under the new share option scheme to be adopted by the Company (the “New Share Option Scheme”), a copy of which is marked “A” and produced to the Meeting and for the purpose of identification signed by the Chairman of the Meeting, the New Share Option Scheme be and is hereby approved and adopted to be the share option scheme of the Company with effect from the conclusion of this Meeting and that the Board of Directors of the Company be and is hereby authorized to grant options to subscribe for Shares in accordance with the rules of the New Share Option Scheme and to do all such acts and enter into all such transactions and arrangements as may be necessary or expedient in order to give effect to the New Share Option Scheme.”

3. For identification purpose only

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Shui On Construction and Materials Limited

NOTICE OF SPECIAL GENERAL MEETING

1. “ THAT , subject to the passing of ordinary resolutions no.1 and 2 set out in the notice convening this Meeting, the grant of options under the New Share Option Scheme to Mr. Wong Ying Wai, Wilfred and the grant of options (including exercised and outstanding options) under the Existing Share Option Scheme and the New Share Option Scheme to Mr. Wong Yuet Leung, Frankie, Mr. Choi Yuk Keung, Lawrence and Mr. Wong Hak Wood, Louis in the 12-month period up to and including the date of such grant for Shares representing approximately 1.97%, 1.05%, 2.38% and 1.16% respectively of the total issued Shares as at the date of this Meeting on the terms set out in the Circular be and is hereby authorized and approved.”

By order of the Board Wong Wai Man, Antonio Company Secretary

Hong Kong, 30th July, 2002

Head office and principal place of business:

34th Floor, Shui On Centre

6-8 Harbour Road Hong Kong

Notes:

• (i) Any member entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and, on a poll, vote in his stead. A proxy need not be a member of the Company.

• (ii) To be valid, a form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy thereof, must be lodged with the head office and principal place of business of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong before the time fixed for holding the meeting.

• (iii) Delivery of an instrument appointing a proxy shall not preclude a member from attending and voting in person at the meeting and in such event, the instrument appointing a proxy shall be deemed to be revoked.

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Shui On Construction and Materials Limited