Tencent Holdings Limited — Proxy Solicitation & Information Statement 2002

Oct 24, 2002

IMPORTANT

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

If you have sold or transferred all your shares in Sunlord Chemical Group Limited, you should at once hand this circular with the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the 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.

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(incorporated in the Cayman Islands with limited liability)

PROPOSED CHANGE OF COMPANY NAME, PROPOSED ALTERATIONS TO THE ARTICLES OF ASSOCIATION, PROPOSED TERMINATION OF THE EXISTING SHARE OPTION SCHEME

AND

ADOPTION OF A NEW SHARE OPTION SCHEME

A notice convening an extraordinary general meeting of the Company to be held immediately after the conclusion of the annual general meeting of the Company to be held on Monday, 18 November 2002 at 3:00 p.m. or at 3:15 p.m., whichever is later, at Level 7, Conrad Hong Kong, 88 Queensway, Hong Kong is set out on pages 19 to 27 of this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and deposit the same as soon as possible and in any event not later than 48 hours before the time of the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the meeting or any adjournment thereof should you so wish.

* for identification purpose only

24 October 2002

CONTENTS

		Page
Responsibility Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		2
Letter from the Board
–	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
–	Change of company name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
–	Alterations to the Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
–	The Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
–	Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
–	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
–	Results of the Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . .	10
–	Documents available for inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
–	Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Appendix – Principal Terms of the New Scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		11
Notice of	Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19

– i –

RESPONSIBILITY STATEMENT

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

– 1 –

DEFINITIONS

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

• “Annual General Meeting”

the annual general meeting of the Company convened to be held on Monday, 18 November 2002 at 3:00 p.m. at Level 7, Conrad Hong Kong, 88 Queensway, Hong Kong

• “Articles”

the articles of association of the Company

• “associates”

• has the meaning as defined under the Listing Rules

• “Board”

the board of Directors

• “Company”

• Sunlord Chemical Group Limited, a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Stock Exchange

• “Companies Laws”

• the Companies Laws, Cap 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands

• “Director(s)”

• director(s) of the Company

• “Existing Scheme”

the existing share option scheme of the Company adopted pursuant to a resolution passed by the then shareholders of the Company on 8 April 2001

• “Extraordinary General Meeting”

• the extraordinary general meeting of the Company convened to be held immediately after the conclusion of the Annual General Meeting or on Monday, 18 November 2002 at 3:15 p.m., whichever is later, at Level 7, Conrad Hong Kong, 88 Queensway, Hong Kong

• “Extraordinary General Meeting Notice”

• the notice for convening the Extraordinary General Meeting set out on pages 19 to 27 in this circular

• “Group”

the Company and its subsidiaries

• “Hong Kong”

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

– 2 –

DEFINITIONS

• “Latest Practicable Date”

21 October 2002, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “New Scheme”

• the new share option scheme proposed to be adopted by the Company at the Extraordinary General Meeting for the benefit of the employees and directors of the Company and its subsidiaries and other eligible participants

• “Proposal” means the termination of the Existing Scheme, the adoption of the New Scheme and the grant of a general authorisation to the Directors to grant options under the New Scheme of up to 10 per cent. of the issued share capital of the Company as at the date of the Extraordinary General Meeting

• “Share(s)” ordinary share(s) of HK$0.01 in the capital of the Company

• “Shareholder(s)” holder(s) of the Shares

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “%” per cent.

– 3 –

LETTER FROM THE BOARD

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(incorporated in the Cayman Islands with limited liability)

Executive Directors: Wang Dan Hui (Chairman) Wang Hailou Wu Chieho, Joseph

Independent non-executive Directors: Feng Jianming Ma Wing Yun, Bryan Meng Fanxi

Registered office: Century Yard Cricket Square Hutchins Drive P.O. Box 2681 GT George Town Grand Cayman British Virgin Islands

Principal place of business in Hong Kong: Unit 2303, 23rd Floor Far East Finance Centre 16 Harcourt Road Admiralty Hong Kong

24 October 2002

To the Shareholders

Dear Sir or Madam

PROPOSED CHANGE OF COMPANY NAME, PROPOSED ALTERATIONS TO THE ARTICLES OF ASSOCIATION, PROPOSED TERMINATION OF THE EXISTING SHARE OPTION SCHEME AND ADOPTION OF A NEW SHARE OPTION SCHEME

INTRODUCTION

On 18 October 2002, the Directors announced that they would propose to change the name of the Company from “Sunlord Chemical Group Limited（東君化工集團有限公司[*] ）” to “Daqing Petroleum and Chemical Group Limited 大慶石油化工集團有限公司 ”.

* for identification purpose only

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LETTER FROM THE BOARD

Pursuant to an ordinary resolution passed on 8 April 2001 by the then shareholders of the Company, the Company has adopted the Existing Scheme pursuant to which the Directors were authorised to grant options to employees of the Company or its subsidiaries, including executive directors of such company, to subscribe for Shares. Consequential upon the amendments to Chapter 17 of the Listing Rules which came into effect on 1 September 2001, no option may be granted under the Existing Scheme unless such grant is made in compliance with the amended rules.

The Board proposes to seek the approval of the Shareholders for the change of name of the Company, the alterations to the Articles regarding distribution of corporate communications to Shareholders using electronic means, the termination of the Existing Scheme and the adoption of the New Scheme at the Extraordinary General Meeting.

The purpose of this circular is to provide you with further information regarding the proposed change of company name, the proposed alterations to the Articles regarding distribution of corporate communications to Shareholders using electronic means and the Proposal.

CHANGE OF COMPANY NAME

Reasons and conditions for change of name

With reference to the Company’s announcement made on 30 January 2002 relating to the letter of intent (the “ Letter of Intent ”) signed between the Company and 大慶市經濟貿 易委員會 (Daqing City Economics and Trade Committee) on 29 January 2002, the Company is now acting as an agent for the Government of Daqing City, the People’s Republic of China (the “ PRC ”) in Hong Kong and Macau and assisting the enterprises in Daqing City, the PRC to seek for business opportunities and fund raising in Hong Kong, Macau and other overseas countries.

Following the said announcement and to implement the terms of the Letter of Intent in an expedient manner, the Directors propose to change the name of the Company from Sunlord Chemical Group Limited（東君化工集團有限公司[*] ）to “Daqing Petroleum and Chemical Group Limited 大慶石油化工集團有限公司 ”. The proposed change of company name is subject to:

• (i) the approval of the Registrar of Companies in the Cayman Islands and a certified resolution by the Shareholders of the change of name being filed with the Registrar of Companies in the Cayman Islands; and

• (ii) the passing of a special resolution by the Shareholders at the Extraordinary General Meeting.

* for identification purpose only

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LETTER FROM THE BOARD

Further announcement will be made by the Company when the proposed change of name becomes effective. Thereafter, the Company will carry out necessary filing procedures with the Registrar of Companies in Hong Kong.

Free exchange of the existing share certificate

Subject to the change of company name becoming effective, the Shareholders may submit their existing share certificates for the Shares to the Company’s branch share registrar in Hong Kong, Tengis Limited at 4th Floor, Hutchsion House, 10 Harcourt Road, Central, Hong Kong, in exchange for new share certificates at the expense of the Company from 10 December 2002 until 4:00 p.m. on 9 January 2003. The new share certificates will be available to the Shareholders for collection within ten days from the date of submission for the exchange. Any submission after 4:00 p.m. on 9 January 2003 will only be accepted for the exchange at a fee of HK$2.50 (or such higher amount as may from time to time be allowed by the Stock Exchange) per new share certificate.

Status of the existing share certificates

The change of company name will not affect any rights of the Shareholders. All existing share certificates for the Shares in issue bearing the present name of the Company will after the new company name becoming effective continue to be evidence of titles to the Shares and will be valid for trading, settlement, registration and delivery for the same number of Shares in the new company name.

A further announcement will be made about the trading arrangement of the Shares and the exchange of the new share certificates when the change of company name has been effective.

ALTERATIONS TO THE ARTICLES

Certain amendments have been made to the Listing Rules as a result of which listed issuers are permitted, to the extent permitted under the applicable laws and regulations and their own constitutional documents and where the listed issuers have made adequate arrangements to ascertain the wish of their shareholders, to send or make available corporate communications (including the distribution of a summary of its financial reports) to their shareholders using electronics means and in either the English or the Chinese language.

To align the Articles with the latest changes of the Listing Rules, the Company proposes that the Articles be altered to permit the distribution of corporate communications (including the distribution of a summary of its financial reports) to the Shareholders using electronic means and in either the English or the Chinese language.

– 6 –

LETTER FROM THE BOARD

THE PROPOSAL

Termination of the Existing Scheme and adoption of the New Scheme

As at the Latest Practicable Date, there were 873,000,000 Shares in issue. The particulars of the options granted as at the Latest Practicable Date under the Existing Scheme are set out below:

				Outstanding
				as at the
				Latest
	Originally		Cancelled	Practicable
	granted	Exercised	or lapsed	Date
Number of Shares being
subject of the options
issued under the
Existing Scheme	80,000,000	13,000,000	25,000,000	42,000,000

The Directors confirm that they will not further exercise their authorities in granting options under the Existing Scheme and no further option will be granted under the Existing Scheme prior to its termination and the adoption of the New Scheme at the Extraordinary General Meeting.

Upon the termination of the Existing Scheme, no further options would be offered pursuant to the Existing Scheme but the Existing Scheme would in all other respects remain in force to the extent necessary to give effect to the exercise of the outstanding options (the “ Existing Options ”) prior to the termination of the Existing Scheme. The Existing Options will continue to be valid and exercisable in accordance with the provisions of the Existing Scheme.

Reasons for the proposal

Major amendments have been introduced to Chapter 17 of the Listing Rules. These amendments came into effect on 1 September 2001.

Chapter 17 of the Listing Rules deals with the share option schemes of the listed companies. The amendments expanded the classes of potential grantees of share options, relaxed certain requirements relating to the maximum number of shares comprised in share options that can be granted under the share option schemes of listed companies and, at the same time, imposed new disclosure and approval requirements on listed companies.

– 7 –

LETTER FROM THE BOARD

Options may no longer be granted under the Existing Scheme by the Company unless such grants have been made in compliance with the amended rules. In this connection, the Board intends to propose to the Shareholders that the Company should terminate its Existing Scheme and adopt the New Scheme, the terms of which comply with the amended Chapter 17 of the Listing Rules. The Directors consider that the adoption of the New Scheme is in the interests of the Company and Shareholders as a whole because it enables the Company to reward and provide incentives to, and strengthen the Group’s business relationship with, the prescribed classes of participants who may contribute to the growth and development of the Group. Under the New Scheme, the Directors may impose minimum period required for the holding of an option and performance target on the option granted before it can be exercised. The minimum period (if any) for holding of an option, the performance target (if any) and the subscription price set in accordance with the New Scheme will secure the long term service of eligible participants to the Group and act as incentive to the eligible participants to contribute more efforts for the benefits of the Group.

The New Scheme

Set out in the Appendix to this circular are the principal terms of the New Scheme, under which the maximum number of Shares which might be allotted and issued upon exercise of all outstanding options granted and yet to be exercised under the New Scheme and any other schemes could represent up to 10%. of the issued share capital of the Company on the date of approval of the New Scheme by the Shareholders at the Extraordinary General Meeting, which maximum number may however be refreshed as detailed in paragraph (iii) of the Appendix to this circular.

Conditions of the adoption of the New Scheme

The adoption of the New Scheme is conditional upon, among other matters, (i) the termination of the Existing Scheme by an ordinary resolution at the Extraordinary General Meeting; (ii) the approval of the New Scheme by an ordinary resolution at the Extraordinary General Meeting and the allotment and issue of the Shares which fall to be allotted and issued upon the exercise of the option granted under the New Scheme; and (iii) the Stock Exchange granting the listing of, and permission to deal in, the Shares which fall to be allotted and issued upon the exercise of the option granted under the New Scheme.

Application will be made to the Stock Exchange for the approval of the listing of, and permission to deal in, the Shares which may fall to be allotted and issued upon the exercise of the options granted under the New Scheme.

Values of all options that can be granted under the New Scheme

The Directors consider that it is not appropriate or helpful to the Shareholders to state the value of all options that can be granted pursuant to the New Scheme as if they had been granted at the Latest Practicable Date. The Directors believe that any statement regarding the value of the options as at the Latest Practicable Date will not be meaningful to the Shareholders.

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LETTER FROM THE BOARD

In addition, the calculation of the value of the options is based on a number of variables such as the exercise price, the exercise period, interest rate, expected volatility and other relevant variables. The Directors believe that any calculation of the value of the options as if they had been granted at the Latest Practicable Date based on a great number of speculative assumptions would not be meaningful and would be misleading to the Shareholders.

General mandate to Directors to grant options

Subject to the approval of the New Scheme by the Shareholders, a resolution will be proposed at the Extraordinary General Meeting for the grant of general authority to the Directors to grant options under the New Scheme for the subscription of not more than 10% of the entire issued capital of the Company as at the date of the passing of the relevant resolution.

EXTRAORDINARY GENERAL MEETING

At the Extraordinary General Meeting, special and ordinary resolutions will be proposed to approve, among other matters, the following:

• (a) the change of company name;

• (b) the alterations to the Articles;

• (c) the termination of the Existing Scheme; and

• (d) the adoption of the New Scheme.

Whether or not you are able to attend the Extraordinary General Meeting in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon as soon as possible and, in any event not later than 48 hours before the time for the Extraordinary General Meeting or any adjournment thereof to the Company’s branch share registrar, Tengis Limited at 4th Floor, Hutchsion House, 10 Harcourt Road, Central, Hong Kong. Completion and return of the form of proxy will not preclude you from attending and voting at the Extraordinary General Meeting or any adjournment thereof should you so wish.

RECOMMENDATION

The Directors believes that the proposed change of company name, proposed alterations to the Articles and the Proposal are beneficial to the Company and the Shareholders as a whole. In particular, the performance targets (if any) and the subscription price set in accordance with the New Scheme will act as incentive to the eligible participants of the New Scheme to contribute more efforts for the benefits of the Company.

– 9 –

LETTER FROM THE BOARD

Accordingly, the Directors recommend that Shareholders should vote in favour of all resolutions set out in the Extraordinary General Meeting Notice.

RESULTS OF THE EXTRAORDINARY GENERAL MEETING

An announcement of the outcome of the Extraordinary General Meeting will be made by the Company on the business day immediately after the date of the Extraordinary General Meeting.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s head office and principal place of business in Hong Kong at Unit 2303, 23rd Floor, Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong during normal business hours on any business day up to and including 7 November 2002 and at the Extraordinary General Meeting:

• (i) the prevailing Articles;

• (ii) the rules of the Existing Scheme; and

• (ii) the draft rules of the New Scheme.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in Appendix to this circular.

Yours faithfully, For and on behalf of the Board

Sunlord Chemical Group Limited Wang Dan Hui

Chairman and Executive Director

– 10 –

PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

Set out below is a summary of the principal terms and conditions of the New Scheme to provide sufficient information to the Shareholders for their consideration of the New Scheme proposed to be adopted at the Extraordinary General Meeting.

(i) PURPOSE OF THE SCHEME

The purpose of the New Scheme is to enable the Group to grant options to selected participants as incentives or rewards for their contribution to the Group.

(ii) WHO MAY JOIN

The Directors may at their absolute discretion, invite any person belonging to any of the following classes of participants (the “ Eligible Participants ”) to take up options to subscribe for Shares:

• (a) any employee (whether full time or part time including any executive director but excluding any non-executive director) of the Company, any of its subsidiaries (the “ Subsidiary ”) or any entity (the “ Invested Entity ”) in which the Group holds any equity interest (the “ Eligible Employee ”);

• (b) any non-executive directors (including independent non-executive directors) of the Company, any Subsidiary or any Invested Entity;

• (c) any supplier of goods or services to any member of the Group or any Invested Entity;

• (d) any customer of the Group or any Invested Entity;

• (e) any person or entity that provides research, development or other technological support to the Group or any Invested Entity;

• (f) any shareholder of any member of the Group or any Invested Entity or any holder of any securities issued or proposed to be issued by any member of the Group or any Invested Entity;

• (g) any adviser (professional or otherwise) or consultant to the Group relating to business development of the Group or any member of the Group or any Invested Entity; and

• (h) any joint venture partner or counterparty to business transactions of the Group ,

and, for the purposes of the New Scheme, the options may be granted to any company wholly owned by one or more persons belonging to any of the above classes of participants. For the avoidance of doubt, the grant of any options by the Company for the subscription of Shares or

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PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

other securities of the Group to any person who fall within any of the above classes of participants shall not, by itself, unless the Directors otherwise determine, be construed as a grant of option under the New Scheme.

The basis of eligibility of any of the above class of participants to the grant of any options shall be determined by the Directors from time to time on the basis of their contribution to the development and growth of the Group.

(iii) MAXIMUM NUMBER OF SHARES

• (a) The maximum 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 share option scheme of the Group must not in aggregate exceed 30% of the issued share capital of the Company from time to time.

• (b) The total number of Shares which may be issued upon exercise of all options (excluding, for this purpose, options which have lapsed in accordance with the terms of the New Scheme and any other share option scheme of the Group) to be granted under the New Scheme and any other share option scheme of the Group must not in aggregate exceed 10% of the Shares in issue as at the date of passing the relevant resolution adopting the New Scheme (the “ General Scheme Limit ”). As at the Latest Practicable Date, there were 873,000,000 Shares in issue. On the assumption that no further Shares will be allotted and issued by the Company prior to the Extraordinary General Meeting, the General Scheme Limit will represent 87,300,000 Shares.

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

• (d) Subject to (a) above and without prejudice to (c) above, the Company may issue a circular to the Shareholders and seek separate Shareholders’ approval at general meeting to grant options beyond the General Scheme Limit or, if applicable, the refreshed limit referred to in (c) above to participants specifically identified by the Company before such approval is sought. The Company must send a circular to the Shareholders containing a generic description of such specified participants who may be granted options, the number and the terms of the options to be granted and other information required under the Listing Rules.

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PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

(iv) MAXIMUM ENTITLEMENT OF EACH PARTICIPANT

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

(v) GRANT OF OPTIONS TO CONNECTED PERSONS

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

• (b) Where any grant of options to a substantial shareholder or an independent nonexecutive Director, or any of their respective associates, would result in the Shares issued and to be issued upon exercise of all options already granted and to be granted (including options exercised, cancelled and outstanding) to such person in the 12-month period up to and including the date of such grant:

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

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

such further grant of options must be approved by the Shareholders at general meeting. The Company must send a circular to the Shareholders. All connected persons of the Company must abstain from voting at such general meeting, except that any connected person may vote against the relevant resolution at the general meeting provided that his intention to do so has been stated in the circular. Any vote taken at the meeting to approve the grant of such options must be taken on a poll. Any change in the terms of options granted to a substantial shareholder or an independent non-executive Director, or any of their respective associates must be approved by the Shareholders at general meeting.

(vi) TIME OF ACCEPTANCE AND EXERCISE OF OPTION

An option may be accepted by a participant within 21 days from the date of the offer of grant of the option.

– 13 –

PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

An option may be exercised in accordance with the terms of the New Scheme at any time during a period to be determined and notified by the Directors to each grantee, which period may commence on a day after the date upon which the offer for the grant of options is made but shall end in any event not later than 10 years from the date of grant of the option subject to the provisions for early termination thereof. Unless otherwise determined by the Directors and stated in the offer of the grant of options to a grantee, there is no minimum period required under the New Scheme for the holding of an option before it can be exercised.

(vii) PERFORMANCE TARGETS

Unless the Directors otherwise determined and stated in the offer of the grant of options to a grantee, a grantee is not required to achieve any performance targets before any options granted under the New Scheme can be exercised.

(viii) SUBSCRIPTION PRICE FOR SHARES

The subscription price for Shares under the New Scheme shall be a price determined by the Directors, but shall not be less than the highest of (i) the closing price of Shares as stated in the Stock Exchange’s daily quotations sheet on the date of the offer of grant, which must be a business day; (ii) the average closing price of Shares as stated in the Stock Exchange’s daily quotations sheet for the five business days immediately preceding the date of the offer of grant; and (iii) the nominal value of the Shares. A nominal consideration of HK$1 is payable on acceptance of the grant of an option.

(ix) RANKING OF SHARES

• (a) Shares allotted upon the exercise of an option will be subject to all the provisions of the Articles and will rank pari passu in all respects with the fully paid Shares in issue on the date on which the option is duly exercised (the “ Exercise Date ”) and accordingly will entitle the holders thereof to participate in all dividends or other distributions paid or made on or after the Exercise Date other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefor shall be before the Exercise Date. A Share allotted and issued upon the exercise of an option shall not carry voting rights until completion of the registration of the grantee as the holder thereof.

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

– 14 –

PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

(x) RESTRICTIONS ON THE TIME OF GRANT OF OPTIONS

• (a) No offer for the grant of options shall be made after a price sensitive event has occurred or a price sensitive matter has been the subject of a decision until such price sensitive information has been published in accordance with the manner prescribed by the Listing Rules from time to time. In particular, during the period commencing one month immediately preceding the earlier of (aa) the date of the meeting of the Directors for the approval of the Company’s interim or annual results, and (bb) the last date on which the Company must publish its interim or annual results announcement under the Listing Rules and ending on the date of the announcement of the results, no option may be granted.

• (b) The Directors may not grant any option to a participant who is a Director during the periods or times in which the Directors are prohibited from dealing in Shares pursuant such circumstances as prescribed by the Listing Rules or any corresponding code or securities dealing restrictions adopted by the Company.

(xi) PERIOD OF THE NEW SCHEME

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

(xii) RIGHTS ON CEASING EMPLOYMENT

If the grantee of an option is an Eligible Employee and ceases to be an Eligible Employee for any reason other than his death, ill-health or retirement in accordance with his contract of employment or for serious misconduct or other grounds referred to in sub-paragraph (xiv) below before exercising his option in full, the option (to the extent not already exercised) will lapse on the date of cessation and will not be exercisable unless the Directors otherwise determine in which event the grantee may exercise the option (to the extent not already exercised) in whole or in part within such period as the Directors may determine following the date of such cessation, which will be taken to be the last day on which the grantee was at work with the Group or the Invested Entity whether salary is paid in lieu of notice or not.

Eligible Employee means any employee (whether full time or part time employee, including any executive director but excluding any non-executive director) of the Company, any Subsidiary or any Invested Entity.

(xiii) RIGHTS ON DEATH, ILL-HEALTH OR RETIREMENT

If the grantee of an option is an Eligible Employee and ceases to be an Eligible Employee by reason of his death, ill-health or retirement in accordance with his contract of employment before exercising the option in full, his personal representative(s), or, as appropriate, the grantee may exercise the option (to the extent not already exercised) in whole or in part a

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PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

period of 12 months following the date of cessation which date shall be the last day on which the grantee was at work with the Group or the Invested Entity whether salary is paid in lieu of notice or not or such longer period as the Directors may determine.

(xiv) RIGHTS ON DISMISSAL

If the grantee of an option is an Eligible Employee and ceases to be an Eligible Employee by reason that he has been guilty of serious misconduct or has committed any act of bankruptcy or has become insolvent or has made any arrangements or composition with his creditors generally, or has been convicted of any criminal offence (other than an offence which in the opinion of the Directors does not bring the grantee or the Group or the Invested Entity into disrepute), his option will lapse automatically and will not in any event be exercisable on or after the date of cessation to be an Eligible Employee.

(xv) RIGHTS ON BREACH OF CONTRACT

If the Directors shall at their absolute discretion determine that (a) the grantee of any option (other than an Eligible Employee) or his associate has committed any breach of any contract entered into between the grantee or his associate on the one part and the Group or any Invested Entity on the other part or that the grantee has committed any act of bankruptcy or has become insolvent or is subject to any winding-up, liquidation or analogous proceedings or has made any arrangement or composition with his creditors generally; and (b) the option granted to the grantee under the New Scheme shall lapse, his option will lapse automatically and will not in any event be exercisable on or after the date on which the Directors have so determined.

(xvi) RIGHTS ON A GENERAL OFFER, A COMPROMISE OR ARRANGEMENT

If a general or partial offer, whether by way of take-over offer, share re-purchase offer or scheme of arrangement or otherwise in like manner is made to all the holders of Shares, or all such holders other than the offeror and/or any person controlled by the offeror and/or any person acting in association or concert with the offeror, the Company shall use all reasonable endeavours to procure that such offer is extended to all the grantees on the same terms, mutatis mutandis; and assuming that they will become, by the exercise in full of the options granted to them, Shareholders. If such offer becomes or is declared unconditional, a grantee shall be entitled to exercise his option (to the extent not already exercised) to its full extent or to the extent specified in the grantee’s notice to the Company in exercise of his option at any time before the close of such offer (or any revised offer) or the record date for entitlements under such scheme of arrangement, as the case may be. Subject to the above, an option will lapse automatically (to the extent not already exercised) on the date on which such offer (or, as the case may be, revised offer) closes.

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PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

(xvii) RIGHTS ON WINDING UP

In the event of an effective resolution being proposed for the voluntary winding-up of the Company during the option period, the grantee may, subject to the provisions of all applicable laws, by notice in writing to the Company at any time prior to the date on which such resolution is passed, exercise his option (to the extent not already exercised) either to its full extent or to the extent specified in such notice in accordance with the provisions of the New Scheme and shall accordingly be entitled, in respect of the Shares falling to be allotted and issued upon the exercise of his option, to participate in the distribution of the assets of the Company available in liquidation pari passu with the Shares in issue on the day prior to the date of such resolution.

(xviii) ADJUSTMENTS TO THE SUBSCRIPTION PRICE

In the event of a capitalisation issue, rights issue, subdivision or consolidation of Shares or reduction of capital of the Company whilst an option remains exercisable, such corresponding alterations (if any) certified by the auditors for the time being of or an independent financial adviser to the Company as fair and reasonable will be made to the number or nominal amount of Shares, the subject matter of the New Scheme and the option so far as unexercised and/or the option price, provided that (a) any adjustments shall give a grantee the same proportion of the issued share capital to which he was entitled prior to such alteration; (b) the issue of Shares or other securities of the Group as consideration in a transaction may not be regarded as a circumstance requiring adjustment; and (c) no alternation shall be made the effect of which would be to enable a Share to be issued at less than its nominal value. In addition, in respect of any such adjustments, other than any adjustment made on a capitalisation issue, such auditors or independent financial adviser must confirm to the Directors in writing that the adjustments satisfy the requirements of the relevant provision of the Listing Rules.

(xix) CANCELLATION OF OPTIONS

Any cancellation of options granted but not exercised must be subject to the consent of the relevant Grantee and approved by the Directors.

(xx) TERMINATION OF THE NEW SCHEME

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

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PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

(xxi) RIGHTS ARE PERSONAL TO THE GRANTEE

An option is personal to the grantee and shall not be transferable or assignable.

(xxii) LAPSE OF OPTION

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

of:

• (a) the expiry of the period referred to in paragraph (vi); and

• (b) the expiry of the periods or dates referred to in paragraph (xii), (xiii), (xiv), (xv), (xvi) and (xvii).

(xxiii) MISCELLANEOUS

• (a) The New Scheme is conditional on the Stock Exchange granting approval of the listing of, and permission to deal in, the Shares to be allotted and issued pursuant to the exercise of any options which may be granted under the New Scheme.

• (b) The terms and conditions of the New Scheme relating to the matters set out in Chapter 17 of the Listing Rules shall not be altered to the advantage of grantees of the options except with the approval of the Shareholders at general meeting.

• (c) 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 be approved by the Shareholders at general meeting, except where the alterations take effect automatically under the existing terms of the New Scheme.

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

• (e) Any change to the authority of the Directors or the scheme administrators in relation to any alteration to the terms of the New Scheme shall be approved by the Shareholders at general meeting.

(xxiv) PRESENT STATUS OF THE NEW SCHEME

Application will be made to the Stock Exchange for the granting of the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of any options which may be granted under the New Scheme.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

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(incorporated in the Cayman Islands with limited liability)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Sunlord Chemical Group Limited (the “Company”) will be held immediately after the conclusion of the annual general meeting of the Company to be held on Monday, 18 November 2002 at 3:00 p.m. or at 3:15 p.m., whichever is later, at Level 7, Conrad Hong Kong, 88 Queensway, Hong Kong to consider and, if thought fit, passing the resolutions as special and/or ordinary resolutions respectively:

SPECIAL RESOLUTIONS

1. “ THAT subject to the approval of the Registrar of Companies in the Cayman Islands being obtained, the name of the Company be changed from “Sunlord Chemical Group Limited （東君化工集團有限公司[*] ） to “Daqing Petroleum and Chemical Group Limited 大慶石油化工集團有限公司 ” and the directors of the Company (the “Directors”) be and are hereby authorised generally to do such acts and things and execute all documents or make such arrangements as they may consider necessary or expedient to effect the change of name.”

2. “ THAT the articles of association of the Company be and they are altered in the following manner:

3. (a) Article 1(A) be amended by:

   • a. deletion of the number “21” and insertion in its place of the number “18” in paragraph (i) of definition of “associates”;

   • b. insertion of the following definition immediately before the definition of “debenture” and “debenture holder”:

“ “Company’s website” the website of the Company to which any shareholder may have access, the address or domain name of which has been notified to the shareholders at the time the Company seeks the relevant shareholder’s consent for the purposes of Article 180(B) or, as subsequently amended by notice given to the shareholders in accordance with Article 180;”

* for identification purpose only

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• c. insertion of the following words immediate after the word “form” in the definition of “writing” or “printing”:

“and including where the representation takes the form of electronic display, provided that the same is available for download onto a user’s computer or for printing through conventional small office equipment or is placed on the Company’s website and, in each case, the shareholder concerned (where the relevant provision of these Articles require the delivery or service of any document or notice on him in his capacity as shareholder) has elected for the receipt of the relevant download or notice through electronic means and both the mode of service of the relevant document or notice and the shareholder’s election comply with all applicable laws and regulations and the requirements of the stock exchange of the Relevant Territory.”

• (b) Article 47 be amended by insertion of the words “or by any electronic means in such manner as may be accepted by the stock exchange in the Relevant Territory”, after the word “Newspapers” on the second line of that paragraph;

• (c) Article 175 be amended by:

• a. insertion of the words “affect the operation of paragraph (C) of this Article, or” immediate after the words “provided that this Article shall not” on the eleventh line in paragraph (B); and

• b. insertion of the following paragraph as new Article 175(C):

  • “(C) Subject to due compliance with the Statutes and the rules of the stock exchange in the Relevant Territory, and to obtaining all necessary consents, if any, required thereunder and such consents being in full force and effect, the requirements of Article 175(B) shall be deemed satisfied in relation to any person by sending to the person in any manner not prohibited by the Statutes and instead of such copies, a summary financial statement derived from the Company’s annual financial statements and the directors’ report thereon, which shall be in the form and containing the information required by applicable laws and regulation, provided that any person who is otherwise entitled to the annual financial statements of the Company and the directors’ report thereon may, if he so requires by notice in writing served on the Company, demands that the Company sends to him, in addition to a summary financial statement, a complete printed copy of the Company’s annual financial statement and the directors’ report thereon.”;

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• (d) Article 180 be deleted in its entirety and replaced with the following:

• “180. (A) Subject to Article 180(B), any notice or document to be given or issued under these Articles shall be in writing, and may be served by the Company on any shareholder either personally or by sending it through the post in a prepaid envelope or wrapper addressed to such shareholder at his registered address as appearing in the register or by delivering or leaving it at such registered address as aforesaid or (in the case of a notice) by advertisement in the Newspapers or displaying the relevant notice conspicuously at the Registered Office and the Head Office. In the case of joint holders of a share, all notices shall be given to that one of the joint holders whose name stands first in the register and notice so given shall be sufficient notice to all the joint holders. Any notice or document may be given to a shareholder in the English language or the Chinese language, subject to due compliance with all applicable statutes, rules and regulations.

  • (B) Subject to due compliance with the rules of the stock exchange in the Relevant Territory, and to obtaining all necessary consents, if any, required and such consents being in full force and effect, any notice or document (including any document or notice issued or to be issued by the Company for the information and/or action of holders of any of its securities and whether or not given or issued under these Articles) may also be served by the Company on any shareholder or holder of other securities of the Company by electronic means:

    • (i) at his electronic address or website as appearing in the Register (if any); or

    • (ii) at any other electronic address or website supplied by him to the Company for the purpose of such transmission; or

    • (iii) by placing it on the Company’s website provided that where the relevant documents are the Company’s directors’ report, annual financial statements, auditors’ report and, where Article 175(C) applies, a summary financial statement, any service of such documents by placing on the Company’s website shall also be accompanied by a notice of the publication (“ notice of publication ”) of such documents on the Company’s

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NOTICE OF EXTRAORDINARY GENERAL MEETING

website given to the shareholder concerned in the manner referred to in Article 180(A) or in any other manner agreed between the shareholder concerned and the Company;

provided that (aa) in the case of joint holders of share, any consent required from the shareholder concerned for the purposes of this Article 180(B) shall be given by that one of the joint holders who is entitled to receive notice pursuant to Article 180(A); and (bb) the Company may, for the purposes of this Article 180(B), propose to its shareholders any one or more or all of the above means of electronic communication.”;

• (e) Article 181 be deleted in its entirety and replaced with the following:

• “181. (A) Any shareholder whose registered address is outside the Relevant Territory may notify the Company in writing of an address in the Relevant Territory which for the purpose of service of notice shall be deemed to be his registered address. Where the registered address of the shareholder is outside the Relevant Territory, notice, if given through the post, shall be sent by prepaid airmail letter where available.

  • (B) Any shareholder who fails (and, where a share is held by joint holders, where the first joint holder named on the register fails) to supply his registered address or electronic address (in the event that the shareholder concerned has elected for service of any notice or document at his electronic address or website pursuant to Article 180(B)) or a correct registered address or electronic address (in the event that the shareholder concerned has elected for service of any notice or document at his electronic address or website pursuant to Article 180(B)) to the Company for service of notices and documents on him shall not (and where a share is held by joint holders, none of the other joint holders whether or not they have supplied a registered address or electronic address (in the event that the shareholder concerned has elected for service of any notice or document at his electronic address or website pursuant to Article 180(B)) shall be entitled to service of any notice or documents by the Company and any notice or document which is otherwise required to be served on him may, if the Directors in their absolute discretion so elect (and subject to them re-electing otherwise from time to time), be served, in the case of notices,

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NOTICE OF EXTRAORDINARY GENERAL MEETING

by displaying a copy of such notice conspicuously at the Registered Office and the Head Office or, if the Directors see fit, by advertisement in the Newspapers, and, in the case of documents, by posting up a notice conspicuously at the Registered Office and the Head Office addressed to such shareholder which notice shall state the address within the Relevant Territory at which he may obtain a copy of the relevant document, or by displaying or otherwise making available the relevant notice or document on the Company’s website and stating the address within the Relevant Territory at which he may obtain a copy of the notice or document. Any notice or document served in the manner so described shall be sufficient service as regards shareholders with no registered or electronic address (in the event that the shareholder concerned has elected for service of any notice or document at his electronic address or website pursuant to Article 180(B)) or incorrect addresses, provided that nothing in this paragraph (B) shall be construed as requiring the Company to serve any notice or document on any shareholder with no or an incorrect registered address or electronic address (in the event that the shareholder concerned has elected for service of any notice or document at his electronic address or website pursuant to Article 180(B)) for the service of notice or document on him or on any shareholder other than the first named on the Register.

• (C) If on three consecutive occasions notices or other documents have been sent through the post to any shareholder (or, in the case of joint holders of shares, the first holder named on the register) at his registered address or by electronic means to his electronic address or website (in the event that the shareholder concerned has elected for service of any notice or document at this electronic address or website pursuant to Article 180(B)) but have been returned undelivered, such shareholder (and, in the case of joint holders of a share, all other joint holders of the share) shall not thereafter be entitled to receive or be served (save as the Directors may elect otherwise pursuant to paragraph (B) of this Article) and shall be deemed to have waived the service of notices and other documents from the Company until he shall have communicated with the Company and supplied in writing a new registered address or electronic address (in the event that the shareholder concerned has elected for service of any notice or document at his electronic address or website pursuant to Article 180(B)) for the service of notices on him.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

  - (D) Notwithstanding any election by a member, if the Company is advised that the sending of any notice or other document to any electronic address supplied by a shareholder may or might infringe the law of any relevant jurisdiction, or if the Company cannot verify the location of the server at which the electronic address of the member located, the Company may in lieu of the sending of any notice or other document to the electronic address supplied by the shareholder concerned, place the same on the Company’s website, and any such placement shall be deemed effective service on the shareholder, and the relevant notice and document shall be deemed to be served on the shareholder on which the same is first placed on the Company’s website.

  - (E) Notwithstanding any election by a member from time to time to receive any notice or document through electronic means, such member may, at any time require the Company to send to him, in addition to an electronic copy thereof a printed copy of any notice or document which he, in his capacity as shareholder, is entitled to receive.”;

• (f) Article 182 be deleted in its entirety and replaced with the following:

• “182. (A) Any notice or document sent by post shall be deemed to have been served on the day following that on which the envelope or wrapper containing the same is put into a post office situated within the Relevant Territory and in proving such service it shall be sufficient to prove that the envelope or wrapper containing notice or document was properly prepaid (and in the case of an address outside the Relevant Territory where airmail service is available, airmail postage prepaid), addressed and put into such post office and a certificate in writing signed by the Secretary or other person appointed by the Directors that the envelope or wrapper containing the notice or document was so addressed and put into such post office shall be conclusive evidence thereof.

  • (B) A notice served by advertisement in the Newspapers shall be deemed to have been served on the day on which the notice is first published.

  • (C) Any notice or document sent by electronic transmission shall be deemed to have been served on the day on which the notice is sent.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• (D) Any notice or document placed on the Company’s website is deemed given by the Company to a shareholder on the day the notice or document is placed on the Company’s website except where the document is the Company’s directors’ report, annual financial statements or auditors’ report and, where applicable, summary financial statement, then such document shall be deemed to be served on the day following that on which a notice of publication is deemed served on the shareholder.

• (E) A notice served by display of the same at the Registered Office and Head Office shall be deemed to have been served 24 hours after the notice was first so displayed.

• (F) Any notice or document served pursuant to Article 181(B) shall be deemed duly served 24 hours after the relevant notice was first displayed.”;

• (g) Article 183 be amended by insertion of the words “(including electronic address)” after the words “at the address” on the sixth line of that paragraph;

• (h) Article 185 be amended by insertion of the words “or electronic means” after the words “sent by post” on the first line of that paragraph.”

(a copy of the revised articles of association of the Company, with mark-up indicating the above proposed amendments having been produced to the meeting marked “A” and signed by the chairman of the meeting for the purposes of identification).”

ORDINARY RESOLUTIONS

1. “ THAT , with effect from the close of business of the day on which this resolution is passed, the existing share option scheme (the “ Existing Scheme ”) adopted by the Company pursuant to an ordinary resolution passed by all shareholders of the Company on 8 April 2001 (a copy of the Existing Scheme having been produced to the meeting marked “ B ” and signed by the chairman of the meeting for the purposes of identification), be and it is hereby terminated and cease to have any further effect save and except that the Existing Scheme will remain in force to the extent necessary to give effect to the exercise of the options granted thereunder prior to the termination thereof”.

2. “ THAT , subject to the passing of resolution numbered 3 and with effect from the close of business of the day on which this resolution is passed, the rules of the share option scheme (the “ New Scheme ”, the principal terms of which are

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NOTICE OF EXTRAORDINARY GENERAL MEETING

particularly described in the circular (the “ Circular ”) to the shareholders of the Company dated 24 October 2002) (a copy of the New Scheme and the Circular having been produced to the meeting marked “ C ” and “ D ”, respectively, and signed by the chairman of the meeting for the purposes of identification), be approved and adopted and the Directors be and they are hereby authorised to approve any amendments to the rules of the New Scheme as may be acceptable or not objected to by The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”), and at their absolute discretion to grant options to subscribe for Shares thereunder and to allot, issue and deal with shares of HK$0.01 each in the Company pursuant to the exercise of options granted under the New Scheme and to take all such steps as may be necessary, desirable or expedient to carry into effect the New Scheme with effect from the close of business of the day on which this resolution is passed”.

1. “ THAT

2. (A) subject to the passing of resolution numbered 4 and paragraph (B) below, pursuant to the Rules Governing the Listing of Securities on the Stock Exchange and the terms of the New Scheme, the Directors are hereby authorised to grant options under the New Scheme and to allot, issue and otherwise deal with shares (the “ Shares ”) of HK$0.01 each in the capital of the Company pursuant to the exercise of option granted under the New Scheme;

3. (B) the aggregate nominal amount of share capital to be allotted and issued pursuant to paragraph (A) above, together with any issue of Shares upon the exercise of any options (excluding the exercise of those options granted under the Existing Scheme) granted under any other share option scheme of the Company as may from time to time adopted by the Company, shall not exceed the aggregate of 10 per cent. of the Shares in issue as at the date of the passing of this resolution.”

By order of the Board of Sunlord Chemical Group Limited Wang Dan Hui Chairman and Executive Director

Hong Kong, 24 October, 2002

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NOTICE OF EXTRAORDINARY GENERAL MEETING

Head office and principal place

of business in Hong Kong: Unit 2303, 23rd Floor Far East Finance Centre 16 Harcourt Road Admiralty Hong Kong

Notes:

1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy need not be a member of the Company. A form of proxy for use at the meeting is enclosed herewith. In case of a joint holding, the form of proxy may be signed by any joint holder, but if more than one joint holder is present at the meeting, whether in person or by proxy, that one of the joint holders whose name stands first on the register of members in respect of the relevant joint holding shall alone be entitled to vote in respect thereof.

2. To be valid, the form of proxy together with any power of attorney or other authority under which it is signed or a notarially certified copy of that power of attorney or authority must be deposited with the Hong Kong branch share registrar of the Company, Tengis Limited at 4th Floor, Hutchsion House, 10 Harcourt Road, Central, Hong Kong not later than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

3. Completion and return of the accompanying form of proxy will not preclude members of the Company from attending and voting in person at the meeting or any adjournment thereof should they so wish.

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