Yuexiu Transport Infrastructure Limited — Proxy Solicitation & Information Statement 2002

Jun 18, 2002

IMPORTANT

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

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

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

GZI Transport Limited

(incorporated in Bermuda with limited liability)

PROPOSED REDUCTION OF SHARE PREMIUM ACCOUNT, TERMINATION OF EXISTING SHARE OPTION SCHEME AND ADOPTION OF NEW SHARE OPTION SCHEME

A letter from the board of directors of GZI Transport Limited is set out on pages 5 to 9 of this circular.

A notice convening the special general meeting of GZI Transport Limited, a copy of which has been published in the newspapers on 30th May, 2002, to be held on 25th June, 2002 at 1st Floor, South China Hotel, 67-75 Java Road, North Point, Hong Kong at 9:45 a.m. (or so soon thereafter as the annual general meeting of the Company convened at the same place and on the same day shall have been concluded or adjourned), is set out on pages 18 and 19 of this circular. A notice convening the special general meeting of GZI Transport Limited to be held on 25th June, 2002 at 1st Floor, South China Hotel, 67-75 Java Road, North Point, Hong Kong at 9:55 a.m. (or so soon thereafter as the special general meeting of the Company convened at the same place and on the same day shall have been concluded or adjourned), is set out on pages 20 and 21 of this circular. Whether or not you are able to attend such meetings, you are requested to complete the accompanying forms of proxy in accordance with the instructions printed thereon and return the same to the Hong Kong branch share registrar of GZI Transport Limited, Abacus Share Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong as soon as possible and in any event not later than forty-eight (48) hours before the time appointed for holding such meetings or any adjournment thereof. Completion and return of the forms of proxy shall not preclude you from attending and voting at the relevant meetings or any adjourned meetings should you so desire.

5th June, 2002

GZI Transport Limited

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix — Summary of Principal Terms of the New Scheme . . . . . . . . . . . . . . . . . .	10
Notice of the Share Premium Reduction Special General Meeting . . . . . . . . . . . . . . . . . . .	18
Notice of the Share Option Scheme Special General Meeting . . . . . . . . . . . . . . . . . . . . . . .	20

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GZI Transport Limited

DEFINITIONS

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

“Adoption Date”	25th June, 2002 (the date on which the New Scheme is
	conditionally adopted by resolution of the Shareholders in the
	Share Option Scheme Special General Meeting)
“Annual General Meeting”	the annual general meeting of the Company to be held at 1st
	Floor, South China Hotel, 67-75 Java Road, North Point,
	Hong Kong on Tuesday, 25th June, 2002 at 9:30 a.m.
“associate(s)”	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
“Bye-Laws”	the bye-laws of the Company
“Companies Act”	the Companies Act 1981 of Bermuda, as amended from time
	to time
“Companies Ordinance”	the Companies Ordinance (Cap. 32 of the Laws of Hong
	Kong), as amended from time to time
“Company”	GZI Transport Limited, an exempted company incorporated in
	Bermuda with limited liability, the shares 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
“Effective Date”	the date on which the Share Premium Reduction shall become
	effective, being the date of the Share Premium Reduction
	Special General Meeting at which the relevant resolution
	approving the Share Premium Reduction will be considered
	by the Shareholders and subject to the passing of such
	resolution
“Existing Scheme”	the existing share option scheme of the Company adopted on
	3rd January, 1997 and expiring on the business day preceding
	3rd January, 2007
“Grant Date”	the date (which shall be a Business Day) on which the grant
	of an Option is made to (and subject to acceptance by) a
	Participant

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GZI Transport Limited

DEFINITIONS

“Grantee”	any Participant who accepts the grant of any Option in
	accordance with the terms of the New Scheme or (where the
	context so permits) a person entitled under the New Scheme
	to exercise any such Option in consequence of the death of the
	original Grantee
“Group”	the Company and its subsidiaries
“Holding Company”	a company which is for the time being and from time to time
	a holding company (within the meaning of Section 2 of the
	Companies Ordinance or Section 86 of the Companies Act) of
	the Company whether incorporated in Hong Kong, Bermuda
	or elsewhere, and as at the Adoption Date, the Holding
	Company shall be Guangzhou Investment Company Limited,
	a company incorporated under the laws of Hong Kong with
	limited liability and whose shares are listed on the main board
	of the Stock Exchange
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“HK$”	Hong Kong dollars
“Latest Practicable Date”	4th June, 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 of Hong Kong Limited as amended from time to
	time
“New Scheme”	the share option scheme proposed to be adopted at the Share
	Option Scheme Special General Meeting, the principal terms
	of which are summarised in the Appendix to this circular
“Option”	an option to subscribe for Shares granted to (and subject to
	acceptance by) a Participant of the New Scheme
“Option Period”	a period to be notified by the Board to the Grantee at the time
	of the grant of an Option, such period to commence on the
	Grant Date or such later date as the Board may decide and
	expire on the last day of the period, which in any event shall
	not exceed ten (10) years from the Grant Date, subject to
	certain provisions of the New Scheme as summarised in
	paragraphs (h), (i), (j) and (l) of the Appendix to this circular

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GZI Transport Limited

DEFINITIONS

“Participant”	any person being an employee, officer, agent, consultant or
	representative of the Holding Company, Yue Xiu, the
	Company or any Subsidiary, including any executive or
	non-executive director of the Holding Company, Yue Xiu, the
	Company or any Subsidiary, who satisfies the selection
	criteria summarised in paragraph (b) of the Appendix to this
	circular
“Retained Earnings Account”	the retained earnings account of the Company
“Scheme Period”	the period of ten years commencing on the Adoption Date
“Shareholders”	the shareholders of the Company
“Share Option Scheme Special	the special general meeting of the Company to be held at 1st
General Meeting”	Floor, South China Hotel, 67-75 Java Road, North Point,
	Hong Kong on 25th June, 2002 at 9:55 a.m. (or so soon
	thereafter as the Share Premium Reduction Special General
	Meeting of the Company convened at the same place and on
	the same day shall have been concluded or adjourned), notice
	of which is set out on pages 20 and 21 of this circular, to
	consider and, if thought fit, to approve the resolution relating
	to the termination of the Existing Scheme and the adoption of
	the New Scheme
“Share Premium Account”	the share premium account of the Company
“Share Premium Reduction”	the proposed reduction of share premium account of the
	Company described in the section headed “Proposed
	reduction of share premium account” in the Letter from the
	Board in this circular
“Share Premium Reduction	the special general meeting of the Company to be held at 1st
Special General Meeting”	Floor, South China Hotel, 67-75 Java Road, North Point,
	Hong Kong on 25th June, 2002 at 9:45 a.m. (or so soon
	thereafter as the Annual General Meeting of the Company
	convened at the same place and on the same day shall have
	been concluded or adjourned), notice of which is set out on
	pages 18 and 19 of this circular, to consider and, if thought
	fit, to approve the resolution relating to the Share Premium
	Reduction
“Shares”	ordinary shares of HK$0.10 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
“SSAP”	Statement of Standard Accounting Practice as issued by the
	Hong Kong Society of Accountants

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GZI Transport Limited

DEFINITIONS

“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subsidiary”	a company which is for the time being and from	time to time
	a subsidiary (within the meaning of Section 2 of the
	Companies Ordinance or Section 86 of the Companies Act) of
	the Holding Company, Yue Xiu or the Company, as the case
	may be, whether incorporated in Hong Kong,	Bermuda or
	elsewhere;
“Substantial Shareholder(s)”	has the meaning ascribed thereto in the Listing	Rules
“Yue Xiu”	Yue Xiu Enterprises (Holding) Limited,	a company
	incorporated under the laws of Hong Kong,	which is a
	substantial shareholder of the Company

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GZI Transport Limited

LETTER FROM THE BOARD

GZI Transport Limited

(incorporated in Bermuda with limited liability)

Executive Directors: Liu Jinxiang (Chairman) Yin Hui Xie Shuwen Li Xinmin Chen Guangsong Chen Jiahong Liang Ningguang Xiao Boyan Cai Hanxiang Du Liangying Du Xinrang Zhong Ming He Zili Zhang Siyuan

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

Principal Place of Business: 23rd Floor Yue Hing Building 103 Hennessy Road Wanchai, Hong Kong

Non-Executive Directors: Fung Ka Pun Lau Hon Chuen Ambrose Poon Jing Cheung Doi Shu*

• Independent Non-Executive Directors

5th June, 2002

To the Shareholders

Dear Sir or Madam,

PROPOSED REDUCTION OF SHARE PREMIUM ACCOUNT, TERMINATION OF EXISTING SHARE OPTION SCHEME AND ADOPTION OF NEW SHARE OPTION SCHEME

INTRODUCTION

It was announced on 29th May, 2002 that the Board intended to put forward a proposal to the Shareholders to partially reduce the Share Premium Account. The Board also proposes to seek approval of the Shareholders for the termination of the Existing Scheme and the adoption of the New Scheme. The purpose of this circular is to provide you with further information in relation to the above proposals and to convene the Share Premium Reduction Special General Meeting to be held on 25th June, 2002 to consider and, if thought fit, approve the Share Premium Reduction, and the Share Option Scheme Special General Meeting to be held on the same day to consider and, if thought fit, approve the termination of the Existing Scheme and the adoption of the New Scheme.

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GZI Transport Limited

LETTER FROM THE BOARD

PROPOSED REDUCTION OF SHARE PREMIUM ACCOUNT

The Board intends to put forward a proposal to the Shareholders to partially reduce the Share Premium Account . The amount standing to the credit of the Share Premium Account as at 31st December, 2001 was HK$853,017,796. It is proposed that, subject to the conditions set out below, the Share Premium Account as at the Effective Date be partially reduced by an amount of HK$330,370,376 pursuant to Section 46 of the Companies Act and Bye-law 59(B) of the Bye-laws and that the amount so reduced be transferred to the Retained Earnings Account for eliminating the Loss (as defined below) in full.

Reasons for the Share Premium Reduction

As at 31st December, 2001, the Company recorded an audited accumulated loss of HK$330,370,376 (the “Loss”) standing to the debit of the Retained Earnings Account as a result of provisions for impairment of investments in certain subsidiaries and associated companies. The provisions are attributable to the impairment of goodwill made in accordance with the transitional provisions of SSAP30 “Business combinations”, details of which are set out in the notes to the audited accounts of the Company for the year ended 31st December, 2001.

The Share Premium Reduction will enable the Company to eliminate the Loss in full and, as a result, enable the Company to make payment of dividends from the Retained Earnings Account in future. The Board considers that it is in the best interest of the Company and the Shareholders as a whole to implement the Share Premium Reduction.

Effect of the Share Premium Reduction

Implementation of the Share Premium Reduction will not, of itself, affect the underlying assets, liabilities, business operations, management or financial position of the Company, or the proportionate interest of the Shareholders, other than related expenses incurred which are immaterial. The Board considers that the Share Premium Reduction will not have a material adverse effect on the financial position of the Group.

Conditions of the Share Premium Reduction

The Share Premium Reduction is conditional upon, inter alia, the following being fulfilled:

• (i) the passing by the Shareholders of a special resolution to approve the Share Premium Reduction at the Share Premium Reduction Special General Meeting; and

• (ii) compliance with Section 46 of the Companies Act, including publication of a notice of the Share Premium Reduction in an appointed newspaper in Bermuda and, within 30 days from the Effective Date, the filing of a memorandum of reduction of share premium with the Registrar of Companies in Bermuda.

Assuming the above conditions are fulfilled, it is expected that the Share Premium Reduction will become effective on the date of passing the relevant resolution to approve the Share Premium Reduction.

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GZI Transport Limited

LETTER FROM THE BOARD

SHARE OPTION SCHEME

The New Scheme

The Existing Scheme is not in full compliance with the amended Chapter 17 of the Listing Rules. Therefore, in order to comply with the amended Chapter 17 of the Listing Rules, the Board proposes that the Existing Scheme be terminated and the New Scheme be adopted. A summary of the principal terms of the New Scheme is set out in the Appendix to this circular. Upon termination of the Existing Scheme, no further share options will be granted thereunder but all the outstanding Options granted prior to such termination shall continue to be valid and exercisable in accordance therewith, and only those provisions of the Existing Scheme which are required to give effect to the outstanding Option shall continue to remain in force for such purpose.

The Existing Scheme

As at the Latest Practicable Date, the Company had granted share options in respect of 120,960,000 Shares pursuant to the Existing Scheme, of which 19,200,000 have lapsed, 8,556,000 have been exercised and the balance of 93,204,000 remained outstanding. No Options have been granted under the Existing Scheme since the amendment of Chapter 17 of the Listing Rules becoming effective. Except for the Existing Scheme, the Company has not adopted any other share option schemes.

Reasons for adopting the New Scheme

The purpose of the New Scheme is to provide incentives to Participants to contribute to the Group and to enable the Group to recruit, retain and motivate high-calibre employees and attract human 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 1,046,059,530 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 Share Option Scheme Special General Meeting, the Company may initially grant Options representing 104,605,953 Shares under the New Scheme (i.e. 10 per cent. of the Shares of the Company in issue as at the date of the Share Option Scheme Special 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, with the exception set out in paragraph (f) in the Appendix to this circular, the Board believes that the ability for the Board to prescribe at its discretion a minimum period for which the 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 to this circular) as well as the selection criteria prescribed by the rules (which are summarised in paragraph (b) in the Appendix to this circular) of the New Scheme will serve to protect the value of the Shares as well as to achieve the purpose of the New Scheme. No trustees will be appointed under the New Scheme.

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GZI Transport Limited

LETTER FROM THE BOARD

Valuation of Share Options

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.

Listing Rules

An application has been made to the Listing Committee of the Stock Exchange for the 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 Share Option Scheme Special General Meeting in respect of the resolution relating to the adoption of the New Scheme on the business day following the date of the Share Option Scheme Special 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 rules of the New Scheme will be available for inspection at the principal place of business of the Company at 23rd Floor, Yue Hing Building, 103 Hennessy Road, Wanchai, Hong Kong during normal business hours from the date of this circular up to and including the date of the Share Option Scheme Special General Meeting. A copy of the rules of the New Scheme will also be available for inspection at the Share Option Scheme Special General Meeting.

DETAILS OF THE SPECIAL GENERAL MEETINGS

Share Premium Reduction Special General Meeting

Notice of the Share Premium Reduction Special General Meeting, a copy of which has been published in the newspapers on 30th May, 2002, is set out on pages 18 and 19 of this circular and a proxy form for use at the Share Premium Reduction Special General Meeting is enclosed for your attention. If you are not able to attend the Share Premium Reduction Special General Meeting, you are requested to complete and return the form of proxy to the Company’s Hong Kong branch share registrar, Abacus Share Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong as soon as possible and in any event not later than forty-eight (48) hours before the time of the Share Premium Reduction Special General Meeting, or any adjournment thereof.

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GZI Transport Limited

LETTER FROM THE BOARD

Share Option Scheme Special General Meeting

Notice of the Share Option Scheme Special General Meeting is set out on pages 20 and 21 of this circular and a proxy form for use at the Share Option Scheme Special General Meeting is enclosed for your attention. If you are not able to attend the Share Option Scheme Special General Meeting, you are requested to complete and return the form of proxy to the Company’s Hong Kong branch share registrar, Abacus Share Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong as soon as possible and in any event not later than forty-eight (48) hours before the time of the Share Option Scheme Special General Meeting, or any adjournment thereof.

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 Share Premium Reduction, the termination of the Existing Scheme and the adoption of the New Scheme are each in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that the Shareholders vote in favour of the special resolution to be proposed at the Share Premium Reduction Special General Meeting and the ordinary resolution to be proposed at the Share Option Scheme Special General Meeting.

Yours faithfully For and on behalf of the Board Liu Jinxiang Chairman

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GZI Transport Limited

SUMMARY OF PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX

The following is a summary of the principal terms of the New Scheme proposed to be approved and adopted at the Share Option Scheme Special 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, retain and motivate high-calibre employees and attract human 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 based on his performance and/or years of service, or is regarded as valuable human resources of the Group based on his work experience, knowledge in the industry and other relevant factors.

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 the Directors of any applicable securities laws and regulations or in any filing or other requirements arising.

(c) Payment on acceptance of Option offer

HK$10.00 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 on the Grant Date (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 Grant Date, 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 Grant Date; 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 Holding Company, the Company and/or its subsidiaries must not exceed 30 per cent. of the number of Shares in issue from time to time. No Options may be granted if such grant would result in the 30-per cent. limit being exceeded.

In addition, subject to the aforementioned 30-per cent. limit, 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 Holding Company, the Company and/or the Subsidiary must not in aggregate exceed 10 per cent. of the number of Shares in issue as at the date of approval

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GZI Transport Limited

APPENDIX SUMMARY OF PRINCIPAL TERMS OF THE NEW SCHEME

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 Holding Company, the Company and/or the 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 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 Holding Company, the Company and/or the Subsidiary under the limit as refreshed must not exceed 10 per cent. of the number of Shares in issue as at the date of approval of the mandate with respect to the refresher (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 Holding Company, 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, and (if required under the Listing Rules) from the shareholders of the Holding Company in general meeting in accordance with the relevant procedural requirements of the Listing Rules, 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 would, 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 Holding Company, the Company and/or its subsidiary within the 12-month period immediately preceding the proposed date of grant of such Options, exceed 1 per cent. 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

Subject as mentioned below, 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 Grant Date .

A Grantee who is an employee of the Holding Company, Yue Xiu, the Company or any Subsidiary must have been employed by the Holding Company, Yue Xiu, the Company or any Subsidiary, as the case may be, for a continuous period of at least one year as a permanent member of their staff, before such a Grantee is entitled to exercise the Options granted to him and, for the purposes of the New Scheme and a grant of Option to an employee of the Holding Company, Yue Xiu, the Company or any Subsidiary, the Option Period in respect of such Options shall commence from the Grant Date.

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GZI Transport Limited

APPENDIX

SUMMARY OF PRINCIPAL TERMS OF THE NEW SCHEME

During the Option Period, save for certain exceptional situations (such as those mentioned in paragraphs (i) and (j) below), the exercise of the Options by a Grantee who is not an employee of the Holding Company, Yue Xiu, the Company or any Subsidiary, as the case may be, shall be limited such that during the period (i) up to the first anniversary; and (ii) up to the second anniversary, of the commencement date of the Option Period, such Grantee shall only be permitted to exercise up to (i) 30 per cent.; and (ii) 60 per cent. (inclusive of any Options exercised under (i)), respectively, of the Options granted under the relevant grant. After the second anniversary of the commencement date of the Option Period the restrictions will cease and the Grantee will be entitled to exercise up to 100 per cent. of the Options granted under the relevant grant. Where the Option Period under the relevant grant is one year or less, the above restrictions will not apply, and where the Option Period under the relevant grant is more than one year but two years or less, only the 30-per cent. restriction for the first year of the Option Period will apply and the 60-per cent. restriction for the second year of the Option Period will not apply.

In respect of a Grantee who is an employee of the Holding Company, Yue Xiu, the Company or any Subsidiary, the same limits on the exercise of the Options as described in the immediately preceding paragraph above shall also apply, except that the periods referred to in (i) and (ii) above shall commence from the later of: (a) the date of completion by such Grantee of one year of continuous employment as a permanent member of the staff of the Holding Company, Yue Xiu, the Company or any Subsidiary, as the case may be; and (b) the commencement date of the Option Period, and the date when the restrictions cease shall be modified accordingly.

The right to exercise an Option is not subject to or conditional upon the achievement of 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 (save that the Grantee may have the Shares to be issued on the exercise of any Option registered in the name of a nominee holding such Shares solely in trust for him or her subject to the provision of evidence in support of such trust arrangement between the Grantee and the nominee to the satisfaction of the Board upon request, failing which the Board may refuse to register the Shares on the exercise of any Option in the name of a nominee). 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 death, ill health, injury, disability, insanity, redundancy or retirement

If the Grantee ceases to be an employee (including any executive director), officer (including any non-executive director), agent, consultant or representative of the Holding Company, Yue Xiu, the Company or any Subsidiary, as the case may be, by reason of death, ill health, disability, injury, insanity, redundancy or retirement, 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 summarised in sub-paragraph (v) of paragraph (l) below) arises, the Grantee or his legal personal representative(s) shall be entitled after commencement of the Option Period until whichever is the earlier of the date of expiry of the Option Period or the last day of the period of 6 months (or such longer period as the Board may determine) from the date of cessation, which date shall be the last actual day of employment,

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GZI Transport Limited

APPENDIX SUMMARY OF PRINCIPAL TERMS OF THE NEW SCHEME

office, agency consultancy or representation with the Holding Company, Yue Xiu, the Company or the relevant Subsidiary whether payment in lieu of notice is made or not (if applicable), to exercise the Option (to the extent not already exercised and up to his or her entitlement) in full or to the extent specified in the notice to exercise such Option.

(i) Rights on takeover

If a general offer (other than a general offer required pursuant to paragraphs 26.1(c) or 26.1(d) of the Hong Kong Code on Takeovers and Mergers, or any equivalent successor provision) to acquire Shares (whether by takeover offer, merger, privatisation proposal by scheme of arrangement between the Company and the Shareholders 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 so long as the Option Period has commenced, be entitled to exercise all the Option granted (to the extent not already exercised) irrespective of the limits on the exercise of the Option described in paragraph (f) above, 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 14 days after the date on which the offer becomes or is declared unconditional, after which the Option shall lapse. With respect to Grantees who are employees of the Holding Company, Yue Xiu, the Company or any Subsidiary, this paragraph shall apply only if, at the relevant time, such employees have been permanent members of the staff of the Holding Company, Yue Xiu, the Company or any Subsidiary, as the case may be, for a continuous period of at least one year.

(j) Rights on winding up

If a notice is given by the Company to the Shareholders 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 Shareholder give notice thereof to all Grantees and thereupon, each Grantee (or his legal personal representative(s)) shall so long as the Option Period has commenced, be entitled to exercise all or any of the Options granted (to the extent not already exercised), irrespective of the limits on the exercise of the Option described in paragraph (f), at any time not later than 5 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 payment 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. With respect to Grantees who are employees of the Holding Company, Yue Xiu, the Company or any Subsidiary, this paragraph shall apply only if, at the relevant time, such employees have been permanent members of the staff of the Holding Company, Yue Xiu, the Company or any Subsidiary, as the case may be, for a continuous period of at least one year.

(k) 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, sub-division 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 Option exercise price and/or the number of Shares

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GZI Transport Limited

APPENDIX SUMMARY OF PRINCIPAL TERMS OF THE NEW SCHEME

subject to outstanding Options and to the New Scheme, 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.

(l) Lapse of Options

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

• (i) the expiry of the Option Period;

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

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

• (iv) save as otherwise provided in paragraph (i), 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 the Shareholders 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 is served a notice of termination of his employment, office, agency, consultancy or representation by the Holding Company, Yue Xiu, the Company or any Subsidiary, as the case may be, for any reason, other than the circumstances described in paragraph (h) above, but including any one of the 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 Grantee’s service contract, terms of office, or agency, consultancy, or representation agreement or arrangement with the Holding Company, Yue Xiu, the Company or the relevant Subsidiary;

• (vi) the date on which the Grantee serves a notice of termination of his employment, office, agency, consultancy or representation to the Holding Company, Yue Xiu, the Company or the relevant Subsidiary, as the case may be, for any reason other than the circumstances described in paragraph (h) above;

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GZI Transport Limited

APPENDIX SUMMARY OF PRINCIPAL TERMS OF THE NEW SCHEME

• (vii) 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 Holding Company, Yue Xiu, the Company or any Subsidiary for any reason other than the circumstances described in paragraph (h) above, if the Grantee is not yet entitled to exercise the Option by reason of the restrictions described in paragraph (f) above, and the date of cessation shall be the last actual day of employment, office, agency, consultancy or representation with the Holding Company, Yue Xiu, the Company or the relevant Subsidiary, as the case may be, whether payment in lieu of notice is made or not (if applicable); or

• (viii)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 summarised in paragraph (g) above.

(m) 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.

(n) 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.

(o) Alteration to the New Scheme

The terms of the New Scheme may be altered in any respect by resolution of the Board if such an alteration is not of a material nature, and 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 and (if required by the Listing Rules) by the shareholders of the Holding Company in general meeting, except where the alterations take effect automatically under the existing terms of the New Scheme.

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GZI Transport Limited

APPENDIX SUMMARY OF PRINCIPAL 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 and (if required by the Listing Rules) by the shareholders of the Holding Company in general meeting.

(p) Termination of the New Scheme

The Company by resolution passed at a general meeting of the Shareholders may at any time terminate the operation of the New Scheme. Upon termination of the New Scheme, no further Options will be granted thereunder but all the outstanding Options granted prior to such termination shall continue to be valid and exercisable in accordance therewith, and only those provisions of the New Scheme which are required to give effect to the outstanding Options shall continue to remain in force for such purpose.

(q) Period of the New Scheme

The New Scheme shall be valid and effective for a period of ten years commencing on the Adoption Date after which period no further Options will be granted, accepted or exercised. Only those provisions of the New Scheme which are required to give effect to all the outstanding Options granted and accepted prior to such termination and not then exercised shall continue to be valid and exercisable in accordance with the New Scheme.

(r) Conditions

The adoption of the New Scheme is conditional upon:

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

• (ii) the passing by the Shareholders of the Holding Company in general meeting of an ordinary resolution to approve the adoption of the New Scheme;

• (iii) 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; and

• (iv) the Bermuda Monetary Authority granting consent in respect of Options, and/or the Shares which may fall to be issued pursuant to the exercise of Options under the New Scheme (if required).

(s) Restrictions on the time of grant of Option

Grant of Options may not be made to any Participant: (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

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GZI Transport Limited

APPENDIX SUMMARY OF PRINCIPAL TERMS OF THE NEW SCHEME

month immediately preceding the earlier of: (i) the date of the Board meeting for the approval of the Company’s interim or annual results for any financial period; and (ii) the deadline for the Company to publish its interim or annual results announcement for any financial period under the Listing Agreement, and ending on the date of the results announcement.

(t) Grant of Options to connected persons

Where any grant of Options is proposed to be made to a Participant who is:

• (i) a director, chief executive or Substantial Shareholder of the Company, or any of their respective associates, such grant must first be approved by all the independent non-executive directors of the Company; or

• (ii) a director, chief executive or Substantial Shareholder of the Holding Company, or any of their respective associates (if required by the Listing Rules) such grant must first be approved by all the independent non-executive directors of the Holding Company,

in each case, excluding any independent non-executive director who is the proposed Grantee of such Options.

If the grant of Options is to be made to a Substantial Shareholder or an independent non-executive 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 Holding Company, the Company and/or any of its subsidiaries 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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GZI Transport Limited

NOTICE OF THE SHARE PREMIUM REDUCTION SPECIAL GENERAL MEETING

GZI Transport Limited

(incorporated in Bermuda with limited liability)

NOTICE OF SPECIAL GENERAL MEETING

(a copy of which has been published in the newspapers on 30th May, 2002)

NOTICE IS HEREBY GIVEN that a special general meeting of GZI Transport Limited (the “Company”) will be held at 1st Floor, South China Hotel, 67-75 Java Road, North Point, Hong Kong on 25th June, 2002 at 9:45 a.m. (or so soon thereafter as the annual general meeting of the Company convened at the same place and on the same day shall have been concluded or adjourned), for the purpose of considering and, if thought fit, passing the resolution set out below as a special resolution:

SPECIAL RESOLUTION

“THAT, conditional upon (i) the publication of a notice of the reduction of share premium account in an appointed newspaper in Bermuda; and (ii) within 30 days from the date on which the reduction of share premium account shall become effective, being the date of the passing of this special resolution, the filing of a memorandum of reduction of share premium with the Registrar of Companies in Bermuda:

• (A) the share premium account of the Company, as it shall stand at the close of business on the day immediately prior to the date of this special general meeting of the Company at which this special resolution is considered, be reduced by the amount of HK$330,370,376 and that such amount be credited and applied in full to the retained earnings account of the Company for eliminating in full the accumulated loss in the amount of HK$330,370,376 recorded in the said retained earnings account as at 31st December, 2001 as shown in the audited accounts of the Company for the year ended 31st December, 2001; and

• (B) any one of the directors of the Company be and is hereby authorised generally to do or procure to be done on behalf of the Company all such things he may in his discretion consider appropriate or desirable to effect and implement the reduction of the share premium account of the Company.”

By Order of the Board Liu Jinxiang Chairman

Hong Kong, 29th May, 2002

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GZI Transport Limited

NOTICE OF THE SHARE PREMIUM REDUCTION SPECIAL GENERAL MEETING

Notes:

• (1) A shareholder of the Company entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one proxy to attend and vote on his behalf. A shareholder of the Company who is the holder of two or more shares may appoint more than one proxy to attend on the same occasion. A proxy need not be a shareholder of the Company.

• (2) To be valid, the form of proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power of attorney, must be deposited with the Company’s Hong Kong branch share registrar, Abacus Share Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong, not less than 48 hours before the time appointed for holding the meeting or any adjourned meeting thereof.

• (3) In the case of joint holders of any share, any one of such persons may vote at the meeting either personally or by proxy in respect of such share but if more than one of such joint holders are present at the meeting personally or by proxy, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holder(s), and for this purpose seniority will be determined by the order in which the names stand in the register of members in respect of the joint holding.

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GZI Transport Limited

NOTICE OF THE SHARE OPTION SCHEME SPECIAL GENERAL MEETING

GZI Transport Limited

(incorporated in Bermuda with limited liability)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting of GZI Transport Limited (the “Company”) will be held at 1st Floor, South China Hotel, 67-75 Java Road, North Point, Hong Kong on 25th June, 2002 at 9:55 a.m. (or so soon thereafter as the special general meeting of the Company, for the purpose of considering and, if thought fit, passing the resolution in relation to the reduction of the share premium account of the Company, convened at the same place and on the same day shall have been concluded or adjourned), for the purpose of considering and, if thought fit, passing the resolution as set out below as an ordinary resolution:-

ORDINARY RESOLUTION

“THAT subject to and conditional upon:

• (a) the passing by the shareholders of Guangzhou Investment Company Limited, being the holding company of the Company, in a general meeting of an ordinary resolution to approve the adoption of the new share option scheme of the Company (the “New Scheme”) in the form submitted to this meeting and for the purpose of identification initialed by the Chairman of this meeting and marked “A”;

• (b) the Listing Committee of The Stock Exchange of Hong Kong Limited granting the approval of the listing of, and permission to deal in, any shares of the Company which may fall to be issued pursuant to the exercise of any options under the New Scheme; and

• (c) the Bermuda Monetary Authority granting consent in respect of the issue of options under the New Scheme, and/or the shares of the Company which may fall to be issued pursuant to the exercise of any options under the New Scheme (if required),

• (1) the operation of the existing share option scheme adopted by the Company by ordinary resolution of the shareholders of the Company on 3rd January, 1997 (the “Existing Scheme”) in the form submitted to this meeting and for the purpose of identification initialed by the Chairman of this meeting and marked “B”, be terminated and that no further options will be granted under the Existing Scheme but all the outstanding options granted prior to such termination shall continue to be valid and exercisable in accordance therewith, and only those provisions of the Existing Scheme which are required to give effect to the outstanding options shall continue to remain in force for such purpose; and

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GZI Transport Limited

NOTICE OF THE SHARE OPTION SCHEME SPECIAL GENERAL MEETING

• (2) the rules of the New Scheme be and are hereby approved and adopted and that the directors of the Company be and they are hereby authorised to:

• (i) administer the New Scheme under which the options under the New Scheme will be granted to eligible participants under the New Scheme to subscribe for shares of the Company;

• (ii) modify and/or amend the rules of the New Scheme from time to time subject to the provisions of such rules;

• (iii) issue and allot from time to time such number of shares of the Company as may be required to be issued pursuant to the exercise of the options under the New Scheme; and

• (iv) to make application at the appropriate time to The Stock Exchange of Hong Kong Limited, and any other stock exchange upon which the shares of the Company may for the time being be listed, for the listing of, and permission to deal in, the shares of the Company which may thereafter from time to time be issued and allotted pursuant to the exercise of the options under the New Scheme.”

By Order of the Board Liu Jinxiang Chairman

Hong Kong, 5th June, 2002

Notes:

• (1) A shareholder of the Company entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one proxy to attend and vote on his behalf. A shareholder of the Company who is the holder of two or more shares may appoint more than one proxy to attend on the same occasion. A proxy need not be a shareholder of the Company.

• (2) To be valid, the form of proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power of attorney, must be deposited with the Company’s Hong Kong branch share registrar, Abacus Share Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong, not less than 48 hours before the time appointed for holding the meeting or any adjourned meeting thereof.

• (3) In the case of joint holders of any share, any one of such persons may vote at the meeting either personally or by proxy in respect of such share but if more than one of such joint holders are present at the meeting personally or by proxy, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holder(s), and for this purpose seniority will be determined by the order in which the names stand in the register of members in respect of the joint holding.

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GZI Transport Limited