Sands China Ltd. — Proxy Solicitation & Information Statement 2002

May 16, 2002

IMPORTANT

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

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PACIFIC PLYWOOD HOLDINGS LIMITED

(Incorporated in Bermuda with limited liabilities)

TERMINATION OF EXISTING SHARE OPTION SCHEME AND

ADOPTION OF NEW SHARE OPTION SCHEME

13th May, 2002

DEFINITIONS

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

“Annual General Meeting”	the annual general meeting of the Company to be held at
	Queensway and Victoria Room, Level 3, JW Marriott Hotel,
	Pacific Place, 88 Queensway, Hong Kong on Friday, 21st
	June, 2002 at 10:00 a.m.
“associate”	has the meaning ascribed thereto in the Listing Rules
“Board”	the board of Directors
“business day”	a day on which the Stock Exchange is open for the business
	of dealing in securities
“Companies Act”	the Companies Act 1981 of Bermuda
“Company”	Pacific Plywood Holdings Limited, an exempted company
	incorporated in Bermuda with limited liability, the securities
	of which are listed on the Stock Exchange
“connected person”	has the meaning ascribed thereto in the Listing Rules
“Directors”	the directors of the Company
“Existing Scheme”	the existing share option scheme of the Company adopted
	on 17th October, 1995 and expiring on 16th October, 2005
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“HK$”	Hong Kong dollars
“Latest Practicable Date”	6th May, 2002, being the latest practicable date prior to the
	printing of this document for ascertaining certain
	information contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“New Scheme”	the share option scheme proposed to be adopted at the
	Annual General Meeting, the principal terms of which are
	summarised in the Appendix
“Participant”	any person being an employee, officer, agent, consultant or
	representative of the Group, including any executive or non-
	executive director of the Group, who satisfies the selection
	criteria summarized in paragraph (b) of the Appendix
“Shareholders”	registered holders of Shares
“Shares”	ordinary shares of HK$0.025 each (or of such other nominal
	amount as shall result from a sub-division or a consolidation
	of such shares from time to time) in the capital of the
	Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“substantial shareholder”	has the meaning ascribed thereto in the Listing Rules

LETTER FROM THE BOARD

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PACIFIC PLYWOOD HOLDINGS LIMITED

(Incorporated in Bermuda with limited liabilities)

Executive Directors: Budiono Widodo (Chairman) Peng Chiu Ching Liao Yun Kuang Lau Kam Hung

Registered Office: Cedar House 41 Cedar Avenue Hamilton HM 12 Bermuda

Non-Executive Directors:

Au Son Yiu Chen Chung I Sardjono Widodo Kusnadi Pipin Mohamad Haslah Bin Mohamad Amin Sidhesh Kaul

Principal Place of Business: Room 1802 88 Gloucester Road Wanchai Hong Kong

13th May, 2002

To the Shareholders, and for information only, warrantholders of the Company

Dear Sir or Madam,

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

INTRODUCTION

The purpose of this document is to provide you with details in respect of the proposed adoption of the New Scheme, the termination of the Existing Scheme.

SHARE OPTION SCHEMES

In compliance with the amended Chapter 17 of the Listing Rules, the Board proposes that the New Scheme be adopted and the Existing Scheme be terminated. A summary of the principal terms of the New Scheme is set out in the Appendix to this document. Upon termination of the Existing Scheme, no further options will be granted thereunder but in all other respects, the provisions of the Existing Scheme shall remain in force and all outstanding options granted prior to such termination shall continue to be valid and exercisable in accordance therewith.

As at the Latest Practicable Date, the Company had granted share options in respect of 495,300,000 Shares to certain employees and directors of the Group pursuant to the Existing Scheme, of which 88,000,000 have lapsed and the balance of 407,300,000 were outstanding.

The purpose of the New Scheme is to provide incentives to Participants to contribute to the Group and to enable the Group to recruit high-calibre employees and attract resources that are valuable to the Group. To ensure that this purpose is achieved, the rules of the New Scheme provide that the Board will grant options only to Participants who have made valuable contribution to the business of the Group.

On the basis of 5,580,897,243 Shares in issue as at the Latest Practicable Date, and assuming no further Shares will be issued or repurchased by the Company on or before the date of the

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LETTER FROM THE BOARD

Annual General Meeting, the Company may initially grant options representing 558,089,724 Shares under the New Scheme (i.e. 10 per cent. of the issued share capital of the Company as at the date of the Annual General Meeting).

Although the rules of the New Scheme provide that the New Scheme is not subject to any performance target and does not prescribe any specific minimum period for which an option must be held before it can be exercised, the Board believes that the ability for the Board to prescribe at its discretion a minimum period for which an option must be held before it can be exercised and the requirement for a minimum subscription price (which is summarised in paragraph (d) in the Appendix) as well as the selection criteria prescribed by the rules (which are summarised in paragraph (b) in the Appendix) of the New Scheme will serve to protect the value of the Shares of the Company as well as to achieve the purpose of the New Scheme. No trustees will be appointed under the New Scheme.

The Board considers that it is not appropriate to state the value of all options that can be granted under the New Scheme as if they had been granted on the Latest Practicable Date as a number of variables which are crucial for the calculation of the option value have not been determined. Such variables include the exercise price, exercise period, vesting period (if any) and other relevant factors. The Board believes that any calculation of the value of any option which might have been granted on the Latest Practicable Date would be based on a number of speculative assumptions and therefore not only would such calculation not be meaningful or representative, but it could also potentially be misleading to the Shareholders.

Application has been made to the Listing Committee of the Stock Exchange for listing of and permission to deal in the new Shares which may fall to be issued pursuant to the exercise of the subscription rights under the options that may be granted under the New Scheme.

In accordance with the requirements of the Listing Rules, the Company will publish in the newspapers an announcement on the outcome of the Annual General Meeting in respect of the resolution relating to the adoption of the New Scheme on the business day following the date of the Annual General Meeting.

The Company will comply with the relevant Listing Rules from time to time in force in respect of the New Scheme and any other share option scheme(s) of the Company or any of its subsidiaries.

A copy of the New Scheme will be available for inspection at the principal place of business of the Company at Room 1802, 88 Gloucester Road, Wanchai, Hong Kong during normal business hours up to and including the date of the Annual General Meeting. A copy of the New Scheme will also be available for inspection at the Annual General Meeting.

RESPONSIBILITY STATEMENT

This document 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 document 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.

RECOMMENDATIONS

The Directors consider that the adoption of the New Scheme is in the best interest of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that you vote in favour of the relevant resolution to be proposed at the Annual General Meeting.

Yours faithfully, For and on behalf of the Board Budiono Widodo

Chairman

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APPENDIX SUMMARY OF PRINCIPAL TERMS OF THE NEW SCHEME

The following is a summary of the principal terms of the New Scheme proposed to be approved and adopted at the Annual General Meeting:

(a) Purpose

The purpose of the New Scheme is to provide incentives to Participants to contribute to the Group and to enable the Group to recruit high-calibre employees and attract resources that are valuable to the Group.

(b) Who may join

The Board may grant options at a price calculated in accordance with paragraph (d) below to any Participant who, in the absolute discretion of the Board, has made valuable contribution to the business of the Group.

The New Scheme further provides that no grants of options shall be made except to such number of Participants and in such circumstances that the Company will not be required under applicable securities laws and regulations to issue a prospectus or other offer document in respect thereof, and will not result in the breach by the Company or its Directors of any applicable securities laws and regulations or in any filing or other requirements arising.

(c) Payment on acceptance of option offer

HK$1.00 in cash is payable by the grantee of the option to the Company on acceptance of the offer.

(d) Subscription Price

The subscription price for the Shares in relation to the options to be granted under the New Scheme will be a price determined by the Board and notified to each Participant at the time the grant of the option is made to (subject to acceptance by) the Participant and will be at least the highest of: (a) the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets on the date of grant of the option, which must be a business day; (b) the average closing price of the Shares as stated in the Stock Exchange’s daily quotation sheets for the five business days immediately preceding the date of grant of the option; and (c) the nominal value of the Shares.

(e) Maximum number of Shares subject to the New Scheme

The total number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Scheme and any other schemes of the Company and/or its subsidiaries must not exceed 30% of the number of Shares in issue from time to time. No options may be granted if such grant would result in the 30% limit being exceeded.

In addition, the total number of Shares which may be issued upon exercise of all options to be granted under the New Scheme and any other share option scheme(s) of the Company and/or its subsidiary must not in aggregate exceed 10% of the number of Shares in issue as at the date of approval of the New Scheme (the “10% Limit”). Options lapsed in accordance with the terms of the New Scheme or any other share option scheme(s) of the Company and/or its subsidiary shall not be counted for the purpose of calculating the 10% Limit. The Company may seek approval from its Shareholders in general meeting to refresh the 10% Limit at any time in accordance with

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APPENDIX SUMMARY OF PRINCIPAL TERMS OF THE NEW SCHEME

the provisions of the Listing Rules, provided that the total number of Shares which may be issued upon exercise of all options to be granted under the New Scheme and any other share option scheme(s) of the Company and/or its subsidiary under the limit as refreshed must not exceed 10% of the number of Shares in issue as at the date of approval of the refresher mandate (the “Refreshed Limit”). Options previously granted to (and subject to acceptance by) a Participant under the New Scheme and/or any other share option scheme(s) of the Company and/or its subsidiary (including those exercised, outstanding, cancelled or lapsed in accordance with the New Scheme or such other schemes) shall not be counted for the purpose of calculating the Refreshed Limit.

The Company may also seek separate approval from the Shareholders in general meeting for granting options beyond the 10% Limit, or as the case may be, the Refreshed Limit, in accordance with the provisions of the Listing Rules. Accordingly, if the prior approval of the Shareholders in general meeting is obtained in accordance with the relevant procedural requirements of the Listing Rules, the Board may grant options to such Participants in respect of such number of Shares and on such terms as may be specified in the said Shareholders’ approval.

If any grant of options is proposed to be made to a Participant which, if accepted and exercised in full, would result in such Participant becoming entitled to subscribe for such number of Shares as when aggregated with the total number of Shares already issued and which may fall to be issued upon the exercise of such options proposed to be granted and all options already granted (including options exercised, cancelled and outstanding) under the New Scheme and any other share option scheme(s) of the Company and/or its subsidiary within the 12-month period immediately preceding the proposed date of grant for such options exceeding 1% of the number of Shares in issue as at the proposed date of grant, then such grant of options must first be approved by the Shareholders in general meeting held in accordance with the requirements of the Listing Rules, and such Participant and his associates shall abstain from voting on the relevant resolution at such meeting.

(f) Time of exercise of option

An option may be exercised in accordance with the terms of the New Scheme at any time during a period to be notified by the Board to each grantee at the time of grant of the option, which must not be more than 10 years from the date of grant of the option. Under the New Scheme, the Board may prescribe a minimum period for which an option must be held before it can be exercised.

The exercise of an option is not subject to any performance targets.

(g) Rights are personal to grantee

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

(h) Rights on termination

If the grantee of an option ceases to be an employee (including any executive director), officer (including any non-executive director), agent, consultant or representative of the Company or its subsidiary for any reason other than his death, ill health, disability or insanity or termination

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APPENDIX SUMMARY OF PRINCIPAL TERMS OF THE NEW SCHEME

by virtue of certain grounds specified in the New Scheme (and summarized in sub-paragraph (v) of paragraph (m) below), the grantee may exercise the option up to his entitlement at the date of cessation (to the extent not already exercised) from the later of the date of commencement of the option period and the date of such cessation until whichever is the earlier of the date of expiry of the option period or the last day of the period of 1 month (or such longer period as the Board may determine) following the later of the date of commencement of the option period and the date of such cessation, which date shall be the last actual day of employment, office, agency, consultancy or representation with the Company or the relevant subsidiary and, where applicable, whether payment in lieu of notice is made or not.

(i) Rights on death, ill health, disability or insanity

If the grantee ceases to be an employee (including any executive director), officer (including any non-executive director), agent, consultant or representative of the Company or its subsidiary by reason of death, ill health, disability or insanity and none of certain events which would be a ground for termination of the employment, office, agency, consultancy or representation specified in the New Scheme (and summarized in sub-paragraph (v) of paragraph (m) below) arises, the grantee or his legal personal representative(s) shall be entitled after commencement of the option period until the last day of the period of 12 months from the date of cessation (or such longer period as the Board may determine) to exercise the option (to the extent not already exercised) in full or to the extent specified in the notice to exercise such option.

(j) Rights on takeover

If a general offer to acquire Shares (whether by takeover offer, merger, privatisation proposal by scheme of arrangement between the Company and its members or otherwise in like manner) is made to all the Shareholders and such offer, having been approved in accordance with applicable laws and regulatory requirements, becomes or is declared unconditional, the grantee of the option (or his legal personal representatives) shall, even if the option period has not yet commenced, be entitled to exercise the option (to the extent not already exercised) at any time until whichever is the earlier of the date of expiry of the option period or the last day of the period of 1 month after the date on which the offer becomes or is declared unconditional, after which the option shall lapse.

(k) Rights on winding up

If a notice is given by the Company to its members to convene a general meeting to consider a resolution to voluntarily wind up the Company, the Company shall forthwith after it despatches such notice to each member of the Company give notice thereof to all grantees and thereupon, each grantee (or his legal personal representative(s)) shall, even if the option period has not yet commenced, be entitled to exercise all or any of his options at any time not later than two business days prior to the record date for ascertaining entitlements to attend and vote at the proposed general meeting of the Company by giving 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 whereupon the Company shall as soon as possible and, in any event, no later than the record date referred to above, allot the relevant Shares to the grantee credited as fully paid.

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APPENDIX SUMMARY OF PRINCIPAL TERMS OF THE NEW SCHEME

(l) Effects of alterations to capital

Subject to the limit on the number of Shares subject to the New Scheme described in paragraph (e) above, in the event of any capitalisation issue, rights issue, consolidation, subdivision or reduction of the share capital of the Company (other than an issue of Shares as consideration in respect of a transaction) whilst an option remains outstanding, corresponding adjustments (if any) will be made to the number of Shares subject to the New Scheme, the number of Shares subject to outstanding options, the subscription price and/or the method of exercise of the options, provided that any such adjustments shall be made such that the proportion of the issued share capital of the Company to which an option entitles the grantee to subscribe after such adjustment must be the same as that to which the option entitled the grantee to subscribe immediately before such adjustment, but no such adjustment shall be made to the extent that a Share would be issued at less than its nominal value. In respect of any adjustment required by the foregoing provisions, other than any made on a capitalisation issue, an independent financial adviser or the auditors of the Company must also confirm to the Board in writing that the adjustments satisfy the foregoing proviso.

(m) Lapse of options

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

• (i) save as described in paragraph (i) above, the expiry of the option period;

• (ii) the expiry of any of the other periods referred to in paragraphs (h), (i) or (j);

• (iii) subject to paragraph (k), the earliest of the close of business on the second business day prior to the record date referred to in paragraph (k) or the date of commencement of the winding-up of the Company;

• (iv) save as otherwise provided in paragraph (j), or by the court in relation to the scheme in question, upon the sanctioning pursuant to the Companies Act by the Supreme Court of Bermuda of a compromise or arrangement between the Company and its members or creditors for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies;

• (v) the date on which the grantee ceases to be an employee (including any executive director), officer (including any non-executive director), agent, consultant or representative of the Company or its subsidiary by reason of the termination of his employment, office, agency, consultancy or representation on certain grounds specified in the New Scheme including misconduct, bankruptcy, insolvency, having made any arrangement or composition with his creditors and conviction of any criminal offence involving his integrity or honesty or (if so determined by the Board) on any other ground on which an employer or principal would be entitled to terminate the employment, office, agency, consultancy or representation at common law or pursuant to applicable laws or under contract with the Company or the relevant subsidiary;

• (vi) the date on which the Board exercises the Company’s right to cancel the option because of a breach by the grantee of the rules summarized in paragraph (g) above.

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APPENDIX SUMMARY OF PRINCIPAL TERMS OF THE NEW SCHEME

(n) Ranking of Shares

The Shares to be allotted upon the exercise of an option will be subject to all the provisions of the Company’s Bye-laws and will rank pari passu with the fully paid Shares in issue on 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 reopening 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 reopening of the register of members, other than any dividend or other distribution previously declared or recommended or resolved to be paid or made with respect to a record date which shall be before the date of allotment, or, if later, before the date of registration of the allotment in the register of members of the Company.

(o) Cancellation of options

The Board may effect the cancellation of any outstanding option in a manner that complies with any legal requirements for cancellation, as may be agreed with the relevant grantee.

Where the Company cancels any options granted but not exercised and grants new options to the same grantee, such grant of new options may only be made under the New Scheme if there are available unissued options (excluding the cancelled options) within the limit approved by the Shareholders as referred to in paragraph (e) above.

(p) Alteration to the New Scheme

The terms of the New Scheme may be altered in any respect by resolution of the Board except that the provisions of the New Scheme relating to matters contained in Rule 17.03 of the Listing Rules shall not be altered to the advantage of Participants unless with the prior sanction of a resolution of the Shareholders in general meeting.

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

The amended terms of the New Scheme or the options must still comply with the relevant requirements of Chapter 17 of the Listing Rules.

Any change to the authority of the Board in relation to any alteration to the terms of the New Scheme must first be approved by the Shareholders in general meeting.

(q) Termination of the New Scheme

The Company by resolution passed at a general meeting of its Shareholders or at a meeting of the Board may at any time terminate the operation of the New Scheme and in such event no further options will be granted or accepted but the provisions of the New Scheme shall remain in force in all other respects. All options granted and accepted prior to such termination and not then exercised shall continue to be valid and exercisable subject to and in accordance with the New Scheme.

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APPENDIX SUMMARY OF PRINCIPAL TERMS OF THE NEW SCHEME

(r) Period of the New Scheme

The New Scheme shall be valid and effective for a period of ten years commencing on the adoption date (i.e., 21st June, 2002, being the date on which the New Scheme is proposed to be adopted), after which period no further options will be granted, accepted or exercised but the provisions of the New Scheme shall remain in full force and effect in all other respects.

(s) Conditions

The adoption of the New Scheme is conditional upon: (a) the passing of an ordinary resolution at the Annual General Meeting approving the adoption of the New Scheme and the termination of the Existing Scheme; and (b) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, any new Shares which may fall to be issued pursuant to the exercise of the options that may be granted under the New Scheme.

(t) Restrictions on the time of grant of option

Grant of options may not be made: (a) after a price sensitive event has occurred or a price sensitive matter has been the subject of a decision, until such price sensitive information has been published in the newspapers; or (b) within the period commencing one month immediately preceding the earlier of: (i) the date of the Board meeting for the approval of the Company’s interim or annual results; and (ii) the deadline for the Company to publish its interim or annual results announcement, and ending on the date of the results announcement.

(u) Grant of options to connected persons

Where any grant of options is proposed to be made to a director, chief executive or substantial shareholder of the Company, or any of their respective associates, such offer must first be approved by the independent non-executive directors of the Company (excluding the independent nonexecutive director who is the proposed grantee of the options).

If the grant of options is to be made to a substantial shareholder or an independent nonexecutive director of the Company, or any of their respective associates, which would result in the Shares issued and to be issued upon exercise of the options proposed to be granted and all options already granted or to be granted (including options exercised, cancelled and outstanding) to such person under the New Scheme and any other share option scheme(s) of the Company and/or its subsidiary in the 12 month period up to and including the proposed date of grant of the option: (a) representing in aggregate over 0.1 per cent. (0.1%) of the Shares then in issue; and (b) having an aggregate value, based on the closing price of the Shares at the proposed date of grant of the option, in excess of $5 million, such grant of options must first be approved by the Shareholders in general meeting in accordance with the requirements of the Listing Rules with all the connected persons of the Company abstaining from voting (except that any connected person may vote against the relevant resolution at the general meeting provided that his intention to do so has been stated in the document required to be issued pursuant to the Listing Rules). Any vote taken at the meeting to approve the proposed grant of such options must be taken on a poll. In addition, any proposed change in the terms of options granted to a Participant who is a substantial shareholder or an independent non-executive director of the Company, or any of their respective associates, must first be approved by the Shareholders in general meeting in the same manner as described above.

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