Midland Holdings Limited — Proxy Solicitation & Information Statement 2002

Apr 11, 2002

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 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 securities in Midland Realty (Holdings) Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, 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.

MIDLAND REALTY (HOLDINGS) LIMITED

(incorporated in Bermuda with limited liability)

PROPOSED ADOPTION OF THE 2002 SHARE OPTION SCHEME AND

GENERAL MANDATES TO ISSUE NEW SHARES

AND TO PURCHASE SECURITIES

A letter from the chairman of Midland Realty (Holdings) Limited is set out on pages 4 to 8 of this circular.

A notice convening a special general meeting of Midland Realty (Holdings) Limited to be held on 30 April 2002 at Rooms 2505-8, 25th Floor, Worldwide House, 19 Des Voeux Road Central, Hong Kong at 11:45 a.m. (or so soon thereafter as the annual general meeting of Midland Realty (Holdings) Limited convened at the same place and date at 11:30 a.m. shall have been concluded or adjourned) is set out on pages 21 to 24 of this circular. Whether or not you are able to attend such meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Hong Kong Branch Share Registrar of Midland Realty (Holdings) Limited, Abacus Share Registrars Limited of 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong as soon as possible and in any event not later than forty-eight (48) hours before the time appointed for holding such meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting at the meeting or any adjourned meeting should you so desire.

12 April 2002

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Appendix I – Summary of the Principal Terms
of the 2002 Share Option Scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Appendix II – Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21

– i –

DEFINITIONS

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

“1995 Share Option Scheme”	the share option scheme adopted by the Company on 12 May
	1995
“2002 Share Option Scheme”	the new share option scheme of the Company proposed to
	be adopted under Ordinary Resolution No.1 set out in the
	SGM Notice
“AGM”	the annual general meeting of the Company to be held at
	Rooms 2505-8, 25th Floor, Worldwide House, 19 Des Voeux
	Road Central, Hong Kong on 30 April 2002 at 11:30 a.m.
“Adoption Date”	the date on which the 2002 Share Option Scheme is adopted,
	conditionally or unconditionally, by the Company in the
	SGM
“associate”	has the meaning ascribed thereto in the Listing Rules
“Board”	the board of Directors
“business day”	has the same meaning ascribed thereto in the Listing Rules
“Commencement Date”	in respect of any particular Option, the date on which the
	Option is granted or deemed to be granted in accordance
	with the terms of the 2002 Share Option Scheme
“Companies Act”	the Companies Act 1981 of Bermuda (as amended)
“Company”	Midland Realty (Holdings) Limited, a company incorporated
	in Bermuda with limited liability and whose shares are listed
	on the Stock Exchange
“Directors”	the directors of the Company
“Eligible Employee”	any employee (whether full or part time and including
	executive director) of any member(s) of the Group or any
	Invested Entity
“Eligible Person”	any person belonging to any of the classes of persons as
	described in paragraph (a) of Appendix I to this circular
“General Mandates”	the Issue Mandate and the Purchase Mandate to be sought
	at the SGM as set out in the SGM Notice

– 1 –

DEFINITIONS

“Grantee”	any Eligible Person who accepts an Offer in accordance
	with the terms of the 2002 Share Option Scheme, or where
	the context so permits (in the case of any individual) any
	person who is entitled to any Option in consequence of the
	death of the original Grantee (including but not limited to
	his/her legal personal representatives)
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“Invested Entity”	any entity in which the Group holds any equity interest
“Issue Mandate”	the mandate to allot and issue Shares as set out in the SGM
	Notice
“Latest Practicable Date”	9 April 2002, being the latest practicable date prior to the
	printing of this circular for the purpose of ascertaining
	certain information contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Offer”	the offer of the grant of an Option made in accordance with
	the 2002 Share Option Scheme
“Offer Date”	the date on which an Offer is made to an Eligible Person,
	which must be a business day
“Option”	a right to subscribe for Shares to be granted under the 2002
	Share Option Scheme and “Options” shall be construed
	accordingly
“Optionholders”	holders of the outstanding options granted under the 1995
	Share Option Scheme
“Option Period”	a period within which the Option may be exercised, to be
	notified by the Board to each Grantee in respect of each
	Option
“Purchase Mandate”	the mandate to purchase securities of the Company as
	described in the explanatory statement set out in Appendix
	II to this circular
“Registrar”	The branch share registrar, warrant registrar and transfer
	office of the Company in Hong Kong, Abacus Share
	Registrars Limited of 5th Floor, Wing On Centre, 111
	Connaught Road Central, Hong Kong

– 2 –

DEFINITIONS

“SGM”	the special general meeting of the Company to be held at
	Rooms 2505-8, 25th Floor, Worldwide House, 19 Des Voeux
	Road Central, Hong Kong on 30 April 2002 at 11:45 a.m.
	(or so soon thereafter as the AGM shall have been concluded
	or adjourned) for the purpose of considering, and if thought
	fit, approving the 2002 Share Option Scheme and the grant
	of the General Mandates
“SGM Notice”	the notice convening the SGM set out on pages 21 to 24 of
	this circular
“Share(s)”	ordinary share(s) of HK$0.10 each in the capital of the
	Company
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Code”	the Hong Kong Codes on Takeovers and Mergers and Share
	Repurchases
“Warrants”	the warrants issued by the Company, conferring rights to
	holders thereof to subscribe for new Shares of the Company
	at an initial subscription price of HK$0.50 per Share, subject
	to adjustment, at any time from 11 January 2000 to
	11 January 2003
“Warrantholders”	holders of Warrants

– 3 –

LETTER FROM THE CHAIRMAN

MIDLAND REALTY (HOLDINGS) LIMITED

(incorporated in Bermuda with limited liability)

Directors: Executive Directors: Mr. Wong Kin Yip, Freddie (Chairman and Managing Director) Ms. Ip Kit Yee, Kitty (Deputy Chairman) Mr. Cheung Kam Shing (Deputy Chairman) Ms. Lam Fung Fong

Independent Non-executive Directors: Mr. Au Son Yiu Mr. Chung Kam Wing, Calvin Mr. Kan Chung Nin, Tony Mr. Lai Dominic

Registered Office: Clarendon House Church Street Hamilton HM 11 Bermuda

Head Office and Principal Place of Business in Hong Kong: Rooms 2505-8, 25th Floor Worldwide House 19 Des Voeux Road Central Hong Kong

12 April 2002

To the Shareholders and, for information only, the Optionholders and Warrantholders

Dear Sir or Madam,

PROPOSED ADOPTION OF THE 2002 SHARE OPTION SCHEME AND GENERAL MANDATES TO ISSUE SHARES AND TO PURCHASE SECURITIES

A. INTRODUCTION

In light of the amendments made to Chapter 17 of the Listing Rules, the Board proposes that, subject to fulfillment of the conditions as described below, the 2002 Share Option Scheme be adopted and the 1995 Share Option Scheme be terminated. The Board will also seek the approval of the Shareholders at the SGM to grant to the Directors the General Mandates.

This circular contains the information relating to, and the reasons for, the adoption of the 2002 Share Option Scheme, the termination of the 1995 Share Option Scheme and the grant of the General Mandates.

B. ADOPTION OF THE 2002 SHARE OPTION SCHEME

In light of the amendments made to Chapter 17 of the Listing Rules, the Board proposes that, subject to fulfillment of the conditions set out below, the 2002 Share Option Scheme be adopted. A summary of the principal terms of the 2002 Share Option Scheme is set out in Appendix I to this circular.

– 4 –

LETTER FROM THE CHAIRMAN

Under the 2002 Share Option Scheme, the Board may grant Options to certain Eligible Persons who, in the opinion of the Board, have contributed or may contribute to the development and growth of the Group and any Invested Entity. By granting Options to such persons to obtain shareholding interests in the Company on the terms of the 2002 Share Option Scheme including, in particular, that the Board may impose such performance targets as it deems appropriate for individual Grantees and determine the Option Period during which the Options may be exercised, the Board considers that it will provide more effective incentives or rewards to them for the better and long term performance of the Group and the Invested Entities.

Furthermore, under the 2002 Share Option Scheme, the Eligible Persons will include, in addition to the Eligible Employees, suppliers, customers, consultants, advisers or agents to and of any member of the Group or any Invested Entity. The Board considers that the flexibility afforded by the terms of the 2002 Share Option Scheme, including that there is no minimum period prescribed therein during which an Option must be held before it can be exercised and that the subscription price of the Options will be determined with reference to recent market price of the Shares, will enable the Board to make use of grant of Options as a tool for structuring suitable compensation or remuneration packages for the services and contribution of the Grantees to the Group and Invested Entities without affecting the Group’s cash and working capital position.

The 2002 Share Option Scheme is conditional on:–

• (a) the passing of Ordinary Resolution No.1 by the Shareholders at the SGM to approve and adopt the 2002 Share Option Scheme; and

• (b) the Listing Committee of the Stock Exchange granting the approval of the listing of, and permission to deal in, any Shares falling to be issued upon exercise of the Options.

Under the 2002 Share Option Scheme, the Board has the right to grant Options to the Eligible Persons to subscribe for Shares such that the total number of Shares which may be issued upon exercise of all options to be granted under the 2002 Share Option Scheme and any other share option schemes of the Company shall not exceed ten (10) per cent. of the Shares in issue as at the Adoption Date and such ten (10) per cent. shall represent 59,568,900 Shares on the basis that the issued Shares of the Company as at the Adoption Date will be 595,689,000. An approval may be obtained from the Shareholders to refresh such ten (10) per cent. limit such that the total number of Shares which may be issued upon exercise of all options to be granted under the 2002 Share Option Scheme and any other share option schemes of the Company shall not exceed ten (10) per cent. of the Shares in issue as at the date of such Shareholders’ approval. However, the maximum number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the 2002 Share Option Scheme and any other share option schemes of the Company (including the 1995 Share Option Scheme) shall not in aggregate exceed thirty (30) per cent. of the Shares in issue from time to time.

Application has been made to the Stock Exchange for the approval of the listing of, and permission to deal in, any Shares or part thereof falling to be issued upon exercise of the Options granted under the 2002 Share Option Scheme.

As at the date hereof, no Options have been granted or agreed to be granted under the 2002 Share Option Scheme.

– 5 –

LETTER FROM THE CHAIRMAN

The Directors consider that it is inappropriate to state the value of all Options that can be granted under the 2002 Share Option Scheme on the assumption that they had been granted on the Latest Practicable Date as a number of variables crucial for the calculation of the Options have not been determined. Such variables include the subscription price for the Shares upon exercise of the Options, the period during which the Options may be exercised, the discretion of the Board to impose any performance target that has to be achieved before the Option may be exercised and other relevant variables. The subscription price payable for the Shares to be issued on exercise of Options depends on the price of the Shares as quoted on the Stock Exchange, which in turn depends on when the Options are granted under the 2002 Share Option Scheme. It is difficult to ascertain with accuracy the subscription price of the Shares given the volatility the Shares may experience during the 10-year scheme life of the 2002 Share Option Scheme. Accordingly, the Directors take the view that any calculation of the value of the Options as at the Latest Practicable Date based on various speculative assumptions would not be meaningful and would be misleading to the Shareholders.

C. THE 1995 SHARE OPTION SCHEME

The 1995 Share Option Scheme is the first and only share option scheme adopted by the Company since its incorporation on 7 October 1993. It is valid and effective for a period of 10 years and is due to expire on 11 May 2005.

Since the adoption of the 1995 Share Option Scheme, options to subscribe for an aggregate of 64,087,000 Shares have been granted under the 1995 Share Option Scheme. The particulars of these options as at the Latest Practicable Date are set out below:

(a)	Number of underlying Shares to be issued upon exercise
	of the outstanding options	8,616,000
(b)	Number of underlying Shares comprised in options exercised	42,869,000
(c)	Number of underlying Shares comprised in options lapsed	12,602,000

The Board confirms that prior to the SGM, they will not grant any further options under the 1995 Share Option Scheme.

Under the 1995 Share Option Scheme, the Directors may terminate such scheme at any time. Accordingly, the Board shall, subject to the 2002 Share Option Scheme being adopted at the SGM, terminate the 1995 Share Option Scheme with immediate effect and no further option be granted under the 1995 Share Option Scheme, provided that the options which have been granted during the life of the 1995 Share Option Scheme shall continue to be exercisable in accordance with their terms of issue and in all other respects the provisions of the 1995 Share Option Scheme shall remain in full force and effect.

– 6 –

LETTER FROM THE CHAIRMAN

D. GENERAL MANDATES

At the annual general meeting of the Company held on 3 May 2001, the Directors were granted general mandates to issue Shares and purchase securities of the Company. Such mandates will lapse at the conclusion of the forthcoming AGM. At the SGM, ordinary resolutions will therefore be proposed:–

• (a) to grant to the Directors the Purchase Mandate to enable them to purchase Shares up to a maximum of ten (10) per cent. of the issued share capital of the Company as at the date of the passing of such resolution and Warrants up to a maximum of ten (10) per cent. of the outstanding Warrants as at the date of the passing of such resolution;

• (b) to grant to the Directors the Issue Mandate to exercise the powers of the Company to allot, issue and otherwise deal with additional Shares up to a maximum of twenty (20) per cent. of the aggregate nominal share capital of the Company in issue as at the date of the passing of such resolution; and

• (c) to increase the number of Shares to be allotted and issued under the Issue Mandate by an additional number representing such number of Shares purchased under the Purchase Mandate.

Under the Listing Rules, the Company is required to give to the Shareholders all information which is reasonably necessary to enable the Shareholders to make an informed decision as to whether to vote for or against the resolution to grant to the Directors the Purchase Mandate. The explanatory statement required by the Listing Rules is set out in Appendix II to this circular.

E. SPECIAL GENERAL MEETING

Set out on pages 21 to 24 of this circular is a notice of the SGM to be held on 30 April 2002 for the purpose of considering and, if thought fit, passing the resolutions to approve and adopt the 2002 Share Option Scheme and to grant to the Directors the General Mandates.

A form of proxy is herewith enclosed for use at the SGM. Whether or not you are able to attend the meeting in person, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Registrar of the Company, Abacus Share Registrars Limited of 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong as soon as possible and in any event not later than forty-eight (48) hours before the time appointed for holding such meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting at the meeting or any adjourned meeting should you so desire.

F. RESPONSIBILITY OF THE DIRECTORS

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 the omission of which would make any statement herein misleading.

– 7 –

LETTER FROM THE CHAIRMAN

G. RECOMMENDATION

The Board believes that the adoption of the 2002 Share Option Scheme and the grant of the General Mandates are in the best interests of the Company and the Shareholders as a whole. The Board recommends that the Shareholders vote in favour of all resolutions to be proposed at the SGM.

A copy of the 2002 Share Option Scheme is available for inspection during normal business hours at the head office and principal place of business of the Company in Hong Kong at Rooms 2505-8, 25th Floor, Worldwide House, 19 Des Voeux Road Central, Hong Kong from the date of this circular up to and including the date of the SGM and at the SGM.

The Company will publish an announcement in the newspapers on the outcome of the SGM for the adoption of the 2002 Share Option Scheme on the business day following the date of the SGM.

Your attention is also drawn to the Appendices to this circular and the SGM Notice set out in this circular.

Yours faithfully,

Wong Kin Yip, Freddie Chairman and Managing Director

– 8 –

SUMMARY OF THE PRINCIPAL TERMS OF THE 2002 SHARE OPTION SCHEME

APPENDIX I

The following is a summary of the principal terms of the 2002 Share Option Scheme to be adopted at the SGM:

(a) Who may join

The Board may invite any person belonging to any of the following classes as the Board may its absolute discretion select, having regard to each person’s qualifications, skills, background, experience, service records and/or contribution or potential value to the relevant member(s) of the Group or any Invested Entity, to take up Options to subscribe for ordinary shares of HK$0.10 each (or of such other nominal amount as shall result from a sub-division, consolidation or reduction of the share capital of the Company from time to time) (“Shares”) at a price calculated in accordance with paragraph (c) below:–

• (i) any Eligible Employee;

• (ii) any non-executive director (including independent non-executive directors) of the Company, any of its subsidiaries or any Invested Entity; and

• (iii) any supplier, customer, consultant, adviser or agent to and of any member of the Group or any Invested Entity.

(b) Purpose of the 2002 Share Option Scheme

The principal purposes of the 2002 Share Option Scheme are to enable the Group to recruit and retain high calibre Eligible Persons and attract human resources that are valuable to the Group or any Invested Entity, to recognize the significant contributions of the Eligible Persons to the growth of the Group or any Invested Entity by rewarding them with opportunities to obtain ownership interest in the Company and to further motivate and give incentives to these persons to continue to contribute to the long term success and prosperity of the Group or any Invested Entity.

(c) Subscription price and acceptance period

The subscription price for the Shares under the 2002 Share Option Scheme shall be a price determined by the Board at its absolute discretion and notified to an Eligible Person but shall not be less than the highest of (i) the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet on the Offer Date; (ii) the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets for the five (5) business days immediately preceding the Offer Date; and (iii) the nominal value of a Share. Provided that where the Board proposes to grant Options under paragraphs (e)(ii) or (f)(ii) below, the date of the meeting of the Board proposing the relevant grant shall be deemed to be the Offer Date for the purpose of calculating the subscription price.

The Eligible Person must accept any such Offer notified to him or her within twentyeight (28) days from the Offer Date, failing which it shall be deemed to have been rejected. Upon acceptance of the Offer, the Grantee shall pay HK$1.00 to the Company as consideration for the grant.

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SUMMARY OF THE PRINCIPAL TERMS OF THE 2002 SHARE OPTION SCHEME

APPENDIX I

(d) Number of Shares subject to the 2002 Share Option Scheme

• (i) Subject to the provisions of paragraph (d)(ii) below:–

• (1) The total number of Shares which may be issued upon exercise of all options to be granted under the 2002 Share Option Scheme and any other share option schemes of the Company must not in aggregate exceed ten (10) per cent. (“Scheme Mandate Limit”) of the Shares in issue as at the date of approval of the 2002 Share Option Scheme by the Shareholders unless the Company obtains a fresh approval from its Shareholders pursuant to paragraphs (d)(i)(2) and/or (3) below. Options lapsed in accordance with the terms of the 2002 Share Option Scheme will not be counted for the purpose of calculating the Scheme Mandate Limit.

• (2) The Company may seek an approval by the Shareholders in general meeting to refresh the Scheme Mandate Limit from time to time such that the total number of Shares which may be issued upon exercise of all options to be granted under the 2002 Share Option Scheme and any other share option schemes of the Company shall not exceed ten (10) per cent. of the Shares in issue as at the date of such Shareholders’ approval. The Company must send a circular containing the information required under rule 17.02(2)(d) and the disclaimer required under rule 17.02(4) of the Listing Rules to the Shareholders.

• (3) The Company may seek separate Shareholders’ approval in general meeting to grant Options over and above the Scheme Mandate Limit provided that the Options in excess of the Scheme Mandate Limit are granted only to the Eligible Persons specified by the Company before such approval is sought and for whom specific approval is then obtained. The Company must issue a circular containing the information required under note 1 to rule 17.03(3) of the Listing Rules to the Shareholders.

• (ii) The maximum number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the 2002 Share Option Scheme and any other share option schemes of the Company (including 1995 Share Option Scheme) shall not in aggregate exceed thirty (30) per cent. of the Shares in issue from time to time. No option may be granted under the 2002 Share Option Scheme and any other option schemes of the Company if such limit is exceeded.

(e) Maximum number per Grantee

• (i) Unless the approval of Shareholders contemplated under paragraph (e)(ii) below is obtained, the total number of Shares issued and may be issued upon exercise of the options granted to each Eligible Person under the 2002 Share Option Scheme and any other share option scheme(s) of the Company (including exercised, cancelled and outstanding options) in any 12-month period must not exceed one (1) per cent. of the Shares in issue.

– 10 –

SUMMARY OF THE PRINCIPAL TERMS OF THE 2002 SHARE OPTION SCHEME

APPENDIX I

• (ii) Where the Board proposes to grant an option to an Eligible Person under the 2002 Share Option Scheme and/or any other share option scheme(s) of the Company and such further grant would result in such Eligible Person becoming entitled to subscribe for such number of Shares as, when aggregated with the total number of Shares (a) already issued under all the options previously granted which have been exercised; (b) issuable under all the options previously granted to him or her which are for the time being subsisting and unexercised; and (c) which were subject to options previously granted to him or her but for the time being having been cancelled in the past 12-month period up to and including the date of such further grant exceed one (1) per cent. of the Shares in issue for the time being, such further grant shall be separately approved by the Shareholders in general meeting (with such Eligible Person and his or her associates abstaining from voting). The relevant requirements under the note to rule 17.03(4) of the Listing Rules must be complied with.

(f) Maximum number per Grantee who is a connected person

• In addition to the Shareholders’ approval as set out in paragraphs (d)(i) and (e):–

• (i) each grant of Option to any Eligible Person who is a director, chief executive or substantial Shareholder of the Company, or any of their respective associates, under the 2002 Share Option Scheme must be approved by independent nonexecutive Director(s) (excluding independent non-executive Director who is the Grantee of the Option); and

• (ii) where the Board proposes to grant any Option to an Eligible Person who is a substantial Shareholder or an independent non-executive Director, or any of their respective associates, and such Option, if exercised in full, would result in such Eligible Person becoming entitled to subscribe for such number of Shares, when aggregated with the total number of Shares (a) already issued under all the Options previously granted to him or her which have been exercised; (b) issuable under all the Options previously granted to him or her which are for the time being subsisting and unexercised; and (c) which were subject to Options previously granted to him or her but for the time being having been cancelled in the past 12-month period up to and including the date of grant:–

• (1) representing in aggregate more than 0.1 per cent. of the Shares in issue; and

• (2) having an aggregate value (on the assumption that all such Options had been exercised and all Shares allotted), based on the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet on the date of each grant or, if that date is not a business day, the business day immediately before, in excess of HK$5,000,000.00,

such further grant of Options must be approved by Shareholders. The Company must send a circular to the Shareholders containing the information required under rule 17.04 of the Listing Rules. All connected persons of the Company

– 11 –

SUMMARY OF THE PRINCIPAL TERMS OF THE 2002 SHARE OPTION SCHEME

APPENDIX I

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 or her intention to do so has been stated in the circular to be sent to the Shareholders. Any vote taken at the meeting to approve the grant of such Options must be taken on a poll.

(g) Exercise period and performance target

Subject to paragraphs (i), (j), (k) and (l) and unless otherwise determined by the Board and notified to the Grantee on or prior to the Offer Date, an Option may be exercised in accordance with the terms of the 2002 Share Option Scheme at any time during the Option Period, subject to any restrictions or conditions on the exercise of the Options as the Board may determine.

The Option Period shall be notified by the Board to each Grantee upon grant of Option in respect of each Option, provided that it shall commence on a date not earlier than the Commencement Date and not be more than ten (10) years from the Commencement Date.

There is no provision in the 2002 Share Option Scheme to require a Grantee to fulfill any achievement or to hold the Option for a certain period before exercising the Option, but the Board may at its absolute discretion from time to time provide such requirements in the Offer.

(h) Non-transferability

An Option shall be 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 determine any outstanding Option or part thereof granted to such Grantee, whereupon the Option outstanding or part thereof shall be deemed to have lapsed.

(i) Rights on ceasing to be an Eligible Person or on death

• (i) Where the Grantee of an Option ceases to be an Eligible Person for any reason other than his or her death or termination of his or her employment or engagement or cessation of his or her directorship on one or more of the grounds set out in paragraph (p)(iv) below, the Grantee may exercise the Option at any time on or before the date which is three (3) months after the date of cessation, to the extent exercisable at the date of cessation but not so exercised, which date of cessation shall be the last actual working day with or for the Group or the relevant Invested Entity whether salary is paid in lieu or not, and the Board’s decision in that regard shall be conclusive.

• (ii) Where the Grantee dies before exercising the Option in full and none of the events which would be a ground for termination of his or her employment or engagement or cessation of his or her directorship set out in paragraph (p)(iv) below arise, the legal personal representatives of the Grantee shall be entitled within a period of twelve (12) months from the date of death to exercise the Option up to the entitlement of such Grantee as at the date of death in part or in full (to the extent not already exercised).

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SUMMARY OF THE PRINCIPAL TERMS OF THE 2002 SHARE OPTION SCHEME

APPENDIX I

(j) Winding-up

In the event a notice is duly given by the Company to its Shareholders to convene a Shareholders’ meeting for the purpose of considering and, if thought fit, approving a resolution to voluntarily wind-up the Company, the Company shall forthwith give notice thereof to the Grantee, the Grantee may by notice in writing to the Company accompanied by a remittance for the full amount of the aggregate subscription price for the Shares in respect of which the notice is given (such notice to be received by the Company not later than four (4) business days prior to the proposed Shareholders’ meeting) exercise the Option (to the extent not already exercised) either to its full extent or to the extent specified in such notice and the Company shall as soon as possible and in any event no later than the business day immediately prior to the date of the proposed Shareholders’ meeting, allot and issue such number of Shares to the Grantee which falls to be issued on such exercise.

(k) General offer

• (i) If a general offer (whether by way of takeover offer, share repurchase offer or otherwise in a like manner) is made to all the Shareholders (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), the Company shall use its reasonable efforts to procure that such offer is extended to all Grantees (on the same terms, mutatis mutandis, and assuming that such Grantees will become, by exercise of the Options granted to them (to the extent not already exercised), Shareholders). If the general offer becomes or is declared unconditional prior to the expiry date of the relevant Option, the Grantee shall be entitled to exercise the Option in full or in part (to the extent not already exercised) at any time within fourteen (14) days after the date when such offer becomes or is declared unconditional. Provided that, if, during such period, such person becomes entitled to exercise rights of compulsory acquisition of Shares pursuant to the Companies Act and gives notices in writing to any holders of Shares that he intends to exercise such rights, Options shall be and remain exercisable until one (1) month from the date of such notice and, to the extent that they have not been exercised, shall thereupon lapse and determine.

• (ii) If a general offer by way of scheme of arrangement is made to all Shareholders and such scheme has been approved by the necessary number of Shareholders at the requisite meetings, the Grantee may thereafter (but before such time as shall be notified by the Company) exercise the Option (to the extent not already exercised) to its full extent or to the extent specified in such notice.

(l) Compromise or arrangement with members or creditors

In the event of a compromise or arrangement between the Company and its members or creditors being proposed in connection with scheme for the reconstruction or amalgamation of the Company under the Companies Act, the Company shall give notice thereof to all Grantees on the same day as it gives notice of the meeting to its members or creditors to consider such a compromise or arrangement and the Grantee may by notice in writing to the Company accompanied by the remittance for the full amount of the aggregate subscription price for the Shares in respect of which the notice is given (such notice to be received by the

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SUMMARY OF THE PRINCIPAL TERMS OF THE 2002 SHARE OPTION SCHEME

APPENDIX I

Company not later than two (2) business days prior to the proposed meeting) exercise the Option (to the extent not already exercised) either to its full extent or to the extent specified in such notice, and the Company shall as soon as possible and in any event not later than the business day immediately prior to the date of the proposed meeting, allot and issue such number of Shares to the Grantee which falls to be issued on such exercise credited as fully paid and register the Grantee as holder thereof. With effect from the date of such meeting, the rights of all Grantees to exercise their respective Options shall forthwith be suspended. Upon such compromise or arrangement becoming effective, all Options shall, to the extent that they have not been exercised, lapse and determine. The Board shall endeavour to procure that the Shares issued as a result of the exercise of Options under this sub-paragraph shall for the purposes of such compromise or arrangement form part of the issued share capital of the Company on the effective date thereof and that such Shares shall in all respects be subject to such compromise or arrangement. If for any reason such compromise or arrangement is not approved by the court (whether upon the terms presented to the court or upon any other terms as may be approved by such court) the rights of the Grantees to exercise their respective Options shall with effect from the date of the making of the order by the court be restored in full but only to the extent not already exercised and shall thereupon become exercisable (but subject to the other terms of the 2002 Share Option Scheme) (provided that the Option Period shall accordingly be extended by the length of the period of the suspension) as if such compromise or arrangement had not been proposed by the Company and no claim shall lie against the Company or any of its officers for any loss or damage sustained by any Grantee as a result of the aforesaid suspension.

(m) Adjustment

• (i) In the event of any alteration in the capital structure of the Company while any Option remains exercisable, whether by way of capitalisation of profits or reserves, rights issue, consolidation, sub-division or reduction of the share capital of the Company, such corresponding alterations (if any) shall be made to:–

• (1) the number of Shares subject to the 2002 Share Option Scheme; and/or

• (2) the number of Shares subject to the Options already granted; and/or

• (3) the subscription price.

provided that any such alteration shall be made on the basis that:–

• (1) 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

• (2) the proportion of the issued share capital of the Company to which a Grantee is entitled after such alteration shall remain the same as that to which he or she was entitled before such alteration,

and provided further that no such alteration shall be made the effect of which would be to enable a Share to be issued at less than its nominal value. In respect of any such alterations, an independent financial adviser of the Company

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SUMMARY OF THE PRINCIPAL TERMS OF THE 2002 SHARE OPTION SCHEME

APPENDIX I

or the auditors of the Company (save those made on a capitalisation issue) must confirm to the directors of the Company in writing that such alterations satisfy the requirements set out in the note to rule 17.03(13) of the Listing Rules.

• (ii) For the avoidance of doubt, the issue by the Company of securities as consideration for or in connection with a transaction will not be regarded as a circumstance requiring adjustment.

• (iii) The capacity of the Company’s independent financial adviser or auditors of the Company in the paragraph (m)(i) is that of expert and not of arbitrator and its certification shall, in the absence of manifest error, be final and binding on the Company and the Grantees.

(n) Alteration of rules

• (i) The rules of the 2002 Share Option Scheme relating to definitions, other than “Eligible Person”, “Grantee” and “Option Period”, and provisions of clauses 1.2, 12, 13 and 16 may be altered from time to time in any respect by resolution of the Board. Certain specified provisions of the 2002 Share Option Scheme relating to, among other things, the definitions of “Eligible Person”, “Grantee” and “Option Period” and the provisions of clauses 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 14 and 15 of the 2002 Share Option Scheme cannot be altered to the advantage of the Grantees or prospective Grantees save with the prior approval of the Shareholders in general meeting.

• (ii) No alteration of 2002 Share Option Scheme shall operate to affect adversely the terms of issue of any Option granted or offered to any Eligible Person for acceptance prior to such alteration, except:

• (1) in the case of the cancellation of any Option, with the consent of the holder of the Option concerned; or

• (2) in the case of an alteration affecting some of but not all outstanding Options, with the written consent or sanction of such number of Grantees as shall together hold Options of the class affected in respect of not less than three fourths in nominal value of all Shares then the subject of such Options or with the sanction, given by resolution at a meeting of the relevant Grantees, passed by such majority of Grantees in respect of the nominal value of all Shares then the subject of the outstanding Options of the class affected as would be required at a meeting of the Shareholders under the bye-laws of the Company for a variation of rights attached to the Shares; or

• (3) in the case of an alteration affecting all Options, with the written consent or sanction of such number of Grantees as shall together hold Options in respect of not less than three fourths in nominal value of all Shares then the subject of such Options or with the sanction, given by resolution at a meeting of the Grantees passed by such majority of the Grantees in

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SUMMARY OF THE PRINCIPAL TERMS OF THE 2002 SHARE OPTION SCHEME

APPENDIX I

respect of the nominal value of all Shares then the subject of the outstanding Options as would be required at a meeting of the Shareholders under the bye-laws of the Company for a variation of rights attached to the Shares.

• (iii) Any alteration to the terms and conditions of the 2002 Share Option Scheme which is of a material nature or any change to the terms of Options granted shall be approved by the Shareholders, save where such alteration takes effect automatically under the existing terms of the 2002 Share Option Scheme.

• (iv) Any change to the authority of the Board in relation to any alteration to the terms of the 2002 Share Option Scheme must be approved by Shareholders in general meeting.

• (v) The amended terms of the 2002 Share Option Scheme or the Options must still comply with the relevant requirements of Chapter 17 of the Listing Rules.

(o) Ranking of the Shares

The 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 with the fully paid Shares in issue on the date of allotment of the Shares 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, and accordingly will entitle the holders to participate in all dividends or other distributions paid or made on or after the date of allotment 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, other than any dividend or other distributions previously declared or recommended or resolved to be paid or made if the record date therefor shall be before the date of allotment, or if later, before the date when the name of Grantee is registered on the register of members of the Company.

(p) Lapse of Option

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

• (i) the expiry of the Option Period;

• (ii) the expiry of the periods referred to in paragraphs (i)(i), (i)(ii) or (l);

• (iii) subject to the scheme of arrangement becoming effective, the expiry of the period referred to in paragraph (k)(ii);

• (iv) the date on which the Grantee ceases to be an Eligible Person by reason of the termination of his or her employment or engagement or cessation of his or her directorship on the grounds that he or she has been guilty of serious misconduct, or appears either to be unable to pay or to have no reasonable prospect of being able to pay debts or has become insolvent or has committed an act of bankruptcy or has made any arrangement or composition with his or her creditors

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SUMMARY OF THE PRINCIPAL TERMS OF THE 2002 SHARE OPTION SCHEME

APPENDIX I

generally, or has been convicted of any criminal offence involving his or her integrity or honesty or on any other ground on which an employer would be entitled to terminate his or her employment or engagement at common law or pursuant to any applicable laws or under the Grantee’s service or engagement contract with the Company or its relevant subsidiaries or the relevant Invested Entity (as the case may be);

• (v) subject to paragraph (j), the date of commencement of the winding-up of the Company; and

• (vi) where the Grantee commits a breach of paragraph (h), the date which the Board shall designate in the exercise of the Company’s right to determine the Option thereunder.

(q) Conditions

The 2002 Share Option Scheme is conditional on (i) the passing of the necessary resolution by the Shareholders in general meeting to approve and adopt the 2002 Share Option Scheme; and (ii) the Stock Exchange granting the approval of the listing of, and permission to deal in, any Shares falling to be issued pursuant to the exercise of Options granted under the 2002 Share Option Scheme.

(r) Term of the 2002 Share Option Scheme

The 2002 Share Option Scheme will remain in force for a period of ten (10) years commencing on the Adoption Date, after which no further Options shall be granted but the Options which are granted during the life of the 2002 Share Option Scheme may continue to be exercisable in accordance with their terms of issue and the provisions of the 2002 Share Option Scheme shall in all other respects remain in full force and effect in respect thereof.

(s) Cancellation of Options

Any cancellation of Options granted but not exercised shall require approval of the Board. Where the Board cancels Options and issues new ones to the same Eligible Person, the issue of such new Options may only be made under the 2002 Share Option Scheme with available unissued Options (excluding the cancelled Options) within the limit approved by the Shareholders as mentioned in paragraph (d).

(t) Early Termination

The Board may at any time terminate the operation of the 2002 Share Option Scheme and in such event no further Options will be offered but the Options which are granted during the life of the 2002 Share Option Scheme may continue to be exercisable in accordance with their terms of issue and in all other respects the provisions of the 2002 Share Option Scheme will remain in full force and effect.

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EXPLANTORY STATEMENT

APPENDIX II

The following information is provided to enable the Shareholders to make an informed decision on whether to vote for or against the resolution to approve the grant of the Purchase Mandate to the Directors to exercise the power of the Company to purchase its own securities:–

(a) Reasons for the Purchase Mandate

The Directors believe that it is in the best interests of the Company and the Shareholders as a whole to have the Purchase Mandate from the Shareholders to enable the Directors to purchase securities in the markets. Such purchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets value of the Company and/or its earnings per Share and/or lessen the dilutive effect on the exercise of the subscription rights attaching to the Warrants and will only be made when the Directors believe that such purchases will benefit the Company and the Shareholders.

(b) Funding of Purchases

Purchases must be funded out of funds legally available for such purpose. A company may not purchase its own securities on the Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange. Purchases must be made in accordance with the memorandum of association and bye-laws of the Company and the applicable laws of Bermuda. Under Bermuda law, the amount of capital repaid in connection with a share purchase may only be paid out of the capital paid up.

(c) Impact on Working Capital or Gearing Position

As compared with the position disclosed in the audited accounts contained in the annual report of the Company for the year ended 31st December, 2001, the Directors consider that there might be material adverse impact on the working capital and on the gearing position of the Company in the event that the Purchase Mandate were exercised in full during the proposed purchase period. Nevertheless, the Directors do not propose to exercise the Purchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

(d) Directors, their Associates and Connected Persons

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

No connected persons (as defined in the Listing Rules) of the Company have notified the Company that they have a present intention to sell securities to the Company or its subsidiaries nor have they undertaken not to sell any of the securities to the Company or its subsidiaries in the event that the Company is authorised to make purchases of securities.

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EXPLANTORY STATEMENT

APPENDIX II

(e) Undertaking of the Directors

The Directors have undertaken to the Stock Exchange to exercise the powers of the Company to make purchases pursuant to the proposed resolution in accordance with the Listing Rules and all applicable laws of Bermuda.

(f) Share Capital and Warrants

As at Latest Practicable Date, the number of Shares in issue was 595,689,000. At the same time, there were outstanding Warrants carrying subscription rights of up to HK$52,054,000.00 in aggregate, equivalent to the aggregate subscription price for a total of 104,108,000 Shares on the basis of the current subscription price of HK$0.50 per Share (subject to adjustment). Subject to the passing the relevant resolution and on the basis that no further Shares are issued or purchased and no Warrants are exercised or purchased prior to the SGM, the Company would be allowed under the relevant resolution to purchase a maximum of 59,568,900 Shares and Warrants carrying subscription rights of up to a limit of HK$5,205,400.00.

(g) Purchases of Shares and Warrants made by the Company

• (i) The Company had not purchased any of the Shares or Warrants on the Stock Exchange in the six months preceding the Latest Practicable Date.

• (ii) During each month of the previous twelve months, the highest and lowest traded prices of the Shares and Warrants on the Stock Exchange are as follows:–

	Shares	Shares	Warrants	Warrants
	Highest	Lowest	Highest	Lowest
	HK$	HK$	HK$	HK$
2001
April	0.690	0.530	0.285	0.190
May	0.760	0.590	0.365	0.245
June	0.770	0.660	0.310	0.250
July	0.770	0.700	0.345	0.280
August	0.730	0.610	0.310	0.250
September	0.720	0.490	0.270	0.185
October	0.590	0.500	0.200	0.150
November	0.650	0.540	0.209	0.160
December	0.730	0.620	0.242	0.171
2002
January	0.720	0.660	0.240	0.180
February	0.680	0.610	0.192	0.183
March	0.700	0.580	0.198	0.173

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EXPLANTORY STATEMENT

APPENDIX II

(h) Takeovers Code

If, on the exercise of the powers to purchase Shares pursuant to the Purchase Mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such an increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers Code. As a result, a shareholder or a group of shareholders acting in concert could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code. As at the Latest Practicable Date, the substantial shareholder, Mr. Wong Kin Yip, Freddie (“Mr. Wong”) holds approximately 32.05 per cent. of the entire issued share capital of the Company. In the event that the Directors exercise in full the powers to purchase the Shares pursuant to the Purchase Mandate, the shareholding of Mr. Wong would be increased to approximately 35.61 per cent. In the opinion of the Directors, such increase may give rise to an obligation to make a mandatory offer under Rules 26 and 32 of the Takeovers Code. The Directors have no present intention to exercise the Purchase Mandate to such an extent that it would trigger a takeover obligation by the controlling shareholder.

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NOTICE OF SPECIAL GENERAL MEETING

MIDLAND REALTY (HOLDINGS) LIMITED

(incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a special general meeting of Midland Realty (Holdings) Limited (the “Company”) will be held at Rooms 2505-8, 25th Floor, Worldwide House, 19 Des Voeux Road Central, Hong Kong on 30 April 2002 at 11:45 a.m. (or so soon thereafter as the annual general meeting of the Company convened at the same place and date at 11:30 a.m. shall have been concluded or adjourned) for the purpose of considering and, if thought fit, passing the following resolutions as ordinary resolutions:–

ORDINARY RESOLUTIONS

1. “ THAT subject to and conditional upon The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) granting the listing of, and permission to deal in, the ordinary shares of HK$0.10 each in the capital of the Company (or of such other nominal amount as shall result from a sub-division, consolidation or reduction of the share capital of the Company from time to time) (“Shares”) or any part thereof to be issued pursuant to the exercise of any options that may be granted under the share option scheme of the Company (the “2002 Share Option Scheme”, the rules of which are contained in the document marked “A” produced to the meeting and for the purpose of identification signed by the Chairman of the meeting), the 2002 Share Option Scheme be and is hereby approved and adopted and the directors of the Company (“Directors”) be and are hereby authorised to do all such acts and to enter into all such transactions, arrangements and agreements as may be necessary or expedient in order to give full effect to the 2002 Share Option Scheme including without limitation:–

2. (a) administering the 2002 Share Option Scheme under which options will be granted to participants eligible under the 2002 Share Option Scheme to subscribe for Shares;

3. (b) modifying and/or amending the 2002 Share Option Scheme from time to time provided that such modification and/or amendment is effected in accordance with the provisions of the 2002 Share Option Scheme relating to modification and/or amendment and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange;

4. (c) issuing and allotting from time to time such number of Shares in the capital of the Company as may be required to be issued pursuant to the exercise of the options granted under the 2002 Share Option Scheme provided that the total number of Shares which may be issued upon exercise of all options to be granted under the 2002 Share Option Scheme and any other share option schemes of the Company shall not exceed ten (10) per cent. of the Shares of the Company in issue as at the date of passing this resolution (“Scheme Mandate Limit”), with the acknowledgement that the Company may seek an approval of its shareholders in general meeting to refresh the Scheme Mandate Limit from time to time but provided always that the maximum number of Shares which may be issued upon exercise of all outstanding options granted and yet to be

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NOTICE OF SPECIAL GENERAL MEETING

exercised under the 2002 Share Option Scheme and any other share option schemes of the Company shall not in aggregate exceed thirty (30) per cent. of the Shares of the Company in issue from time to time; and

• (d) making application at the appropriate time or times to the Stock Exchange for the listing of, and permission to deal in, any Shares or any part thereof that may hereafter from time to time be issued and allotted pursuant to the exercise of the options granted under the 2002 Share Option Scheme.”

• “ THAT :–

• (a) subject to paragraph (c) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements and options (including warrants, bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares of the Company) which would or might require the exercise of such powers be and is hereby generally and unconditionally approved;

• (b) the approval in paragraph (a) above, shall authorise the Directors during the Relevant Period to make and grant offers, agreements and options (including warrants, bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares of the Company) which would or might require the exercise of such powers after the end of the Relevant Period;

• (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors pursuant to the approval in paragraph (a) above, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined); or (ii) the exercise of rights of subscription or conversion under the terms of any existing warrants, bonds, debentures, notes and other securities of the Company; or (iii) the exercise of options granted under any share option scheme or any similar arrangement for the time being adopted for the grant or issue to eligible persons prescribed thereunder of shares or rights to acquire shares in the Company; or (iv) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the bye-laws of the Company, shall not exceed twenty (20) per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this resolution, and the said approval shall be limited accordingly; and

• (d) for the purposes of this resolution:–

“Relevant Period” means the period from the passing of this resolution until whichever is the earliest of:–

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the bye-laws of the Company or any applicable laws of Bermuda to be held; and

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NOTICE OF SPECIAL GENERAL MEETING

• (iii) the date on which the authority set out in this resolution is revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting; and

“Rights Issue” means an offer of shares of the Company or issue of options, warrants or other securities giving the right to subscribe for shares of the Company open for a period fixed by the Directors to holders of shares whose names appear in the register of members of the Company (and, where appropriate, to holders of other securities of the Company entitled to the offer) on a fixed record date in proportion to their then holdings of such shares of the Company or, where appropriate, such other securities (subject in all cases to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any legal or practical restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong).”

1. “ THAT :–

2. (a) subject to paragraph (b) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all powers of the Company to purchase the shares in the capital of the Company and the warrants which carry rights to subscribe for shares in the capital of the Company on the Stock Exchange or on any other stock exchange on which the shares of the Company may be listed and recognised by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange or of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved;

3. (b) the aggregate nominal amount of the shares of the Company which the Company is authorised to purchase pursuant to the approval in paragraph (a) above shall not exceed ten (10) per cent. of the aggregate nominal amount of the share capital of the Company in issue at the date of passing this resolution and the total subscription rights attaching to the warrants to subscribe for shares of the Company to be purchased pursuant to the approval in paragraph (a) above shall not exceed ten (10) per cent. of the total subscription rights attaching to all warrants to subscribe for shares outstanding at the date of passing of this resolution, and the said approval be limited accordingly; and

4. (c) for the purposes of this resolution:–

“Relevant Period” means the period from the passing of this resolution until whichever is the earliest of:–

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the bye-laws of the Company or any applicable laws of Bermuda to be held; and

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NOTICE OF SPECIAL GENERAL MEETING

• (iii) the date on which the authority set out in this resolution is revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting.”

• “ THAT subject to the passing of resolutions numbered 2 and 3 set out in the notice of this meeting, the aggregate nominal amount of shares which are to be purchased by the Company pursuant to the authority granted to the Directors as mentioned in resolution numbered 3 set out in the notice of this meeting shall be added to the aggregate nominal amount of share capital that may be allotted or agreed to be allotted by the Directors pursuant to resolution numbered 2 set out in the notice of this meeting.”

By order of the Board Midland Realty (Holdings) Limited Chan Kin Chu, Harry Company Secretary

Hong Kong, 12 April 2002

Head Office and Principal Place Registered Office: of Business in Hong Kong: Clarendon House Rooms 2505-8, 25th Floor Church Street Worldwide House Hamilton HM 11 19 Des Voeux Road Central Bermuda Hong Kong

Notes:–

1. A member of the Company entitled to attend and vote at the meeting by the above notice is entitled to appoint one or more proxies to attend and vote instead of such member. On a poll, vote may be given either personally or by proxy. A proxy need not be a member of the Company.

2. A form of proxy in respect of the meeting is enclosed. Whether or not you intend to attend the meeting in person, you are urged to complete and return the form of proxy in accordance with the instructions printed thereon.

3. In order to be valid, a form of proxy together with a power of attorney or other authority, if any, under which it is signed, or a notorially certified copy of such power or authority must be deposited with the Hong Kong Branch Share Registrar of the Company, Abacus Share Registrars Limited of 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong, not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

4. Where there are joint holders of a share of the Company, any one of such holders may vote at the meeting either personally or by proxy in respect of such share as if he were solely entitled thereto, but if more than one of such holders are present at the meeting personally or by proxy, that one of such holders so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased member in whose name any share stands shall for this purpose be deemed joint holders thereof.

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