Midland Holdings Limited — Proxy Solicitation & Information Statement 2008

Aug 25, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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MIDLAND HOLDINGS LIMITED 美聯集團有限公司[*] (Incorporated in Bermuda with limited liability)

(Stock Code: 1200)

PROPOSED ADOPTION OF THE 2008 SHARE OPTION SCHEME BY MIDLAND IC&I LIMITED AND NOTICE OF SPECIAL GENERAL MEETING

A letter from the Board of Midland Holdings Limited is set out on pages 5 to 9 of this circular.

A notice convening a special general meeting of Midland Holdings Limited to be held on 18 September 2008, Thursday at Rooms 2505–8, 25th Floor, World-wide House, 19 Des Voeux Road Central, Hong Kong at 2:30 p.m. is set out at the end of this circular.

If you are not able to attend such meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrar and transfer office of Midland Holdings Limited in Hong Kong, Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible and in any event not less than forty-eight (48) hours before the time appointed for the holding of such meeting or any adjournment thereof.

Completion and return of the form of proxy shall not preclude you from attending and voting in person at the meeting or any adjourned meeting should you so desire.

26 August 2008

• For identification purpose only

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
– Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
– Adoption of the 2008 Share Option Scheme
by Midland IC&I Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
– Procedure to demand a poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
– Special general meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
– Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
– Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
– Responsibility of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Appendix I – Summary of the principal terms of
the 2008 Share Option Scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Notice of Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23

DEFINITIONS

In this circular, the following expressions shall have the meanings set out below unless the context requires otherwise:

• “2005 Share Option Scheme”

the share option scheme adopted by Midland IC&I pursuant to a resolution passed by the Midland IC&I Shareholders on 6 June 2005

• “2008 Share Option Scheme”

the proposed share option scheme to be adopted by Midland IC&I at the Midland IC&I EGM

“affiliate”

in relation to Midland IC&I,

• (i) any subsidiary or holding company, controlling shareholder or associated company of Midland IC&I or of Midland IC&I’s holding company or controlling shareholder; or

• (ii) any other company in which any of the companies in (i) above has, directly or indirectly, alone or jointly with any other entity, a controlling interest

• “Articles of Association”

the articles of association of Midland IC&I

• “associate”

has the same meaning ascribed thereto in the Main Board Listing Rules

• “associated company”

in relation to a company, means an enterprise (other than that company’s subsidiary) which is or should be accounted for as an associate or as a joint venture in that company’s consolidated accounts in accordance with the Hong Kong generally accepted accounting principles in force at the relevant time of determination

• “Board”

the board of Directors

• “Bye-laws” the bye-laws of the Company

“Companies Law” the Companies Law, Cap. 22 (Law 3 of 1961, consolidated and revised) of the Cayman Islands

“Company” Midland Holdings Limited, a company incorporated in Bermuda with limited liability and whose shares are listed on Main Board (Stock Code: 1200)

– 1 –

DEFINITIONS

• “connected person(s)” has the meaning given to it by the Main Board Listing Rules

• “controlling shareholder” in relation to Midland IC&I, has the meaning ascribed thereto in the Main Board Listing Rules

• “Convertible Note” the convertible note in the principal amount of HK$540 million issued by Midland IC&I to Tretsfield on 6 June 2007

• “Director(s)” the director(s) of the Company “Eligible Person” any employee (whether full time or part time), senior executive or officer, manager, director (including executive, non-executive and independent nonexecutive director) or consultant of Midland IC&I, any of its affiliates or any Invested Entity, or any of their respective associates, chief executives, or substantial or management shareholders, who, as determined by the Midland IC&I Board, has contributed or will contribute to the growth and development of the Midland IC&I Group or any Invested Entity and “Eligible Persons” shall be construed accordingly

“GEM”	the Growth Enterprises Market of the Stock Exchange
“GEM Listing Rules”	the Rules Governing the Listing of Securities on the
	Growth Enterprises Market of the Stock Exchange
“grantee(s)”	any Eligible Person(s) who accept(s) an offer in
	accordance with the terms of the 2008 Share Option
	Scheme, or (where the context so permits) any
	person(s) who is/are entitled to any Option in
	consequence of the death of the original grantee(s)
	(including but not limited to his/her/their legal
	personal representative(s))
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“Invested Entities”	any entity in which any member of the Midland IC&I
	Group holds an equity interest

– 2 –

DEFINITIONS

“Latest Practicable Date”	21 August 2008, being the latest practicable date prior
	to the printing of this circular for the purpose of
	ascertaining certain information for inclusion in this
	circular
“Main Board”	the securities market operated by the Stock Exchange
	prior to the establishment of GEM (excluding the
	options market) which stock market continues to be
	operated by the Stock Exchange in parallel with GEM.
	For the avoidance of doubt, the Main Board excludes
	GEM
“Main Board Listing	the listing sub-committee of the board of directors of
Committee”	the Stock Exchange responsible for the Main Board
	listing matters
“Main Board Listing Rules”	the Rules Governing the Listing of Securities on the
	Main Board, as amended, supplemented or otherwise
	modified from time to time, and any applicable
	practice notes, supplementary guidance or other
	regulations issued by the Stock Exchange
“Midland IC&I”	Midland IC&I Limited, a company incorporated in the
	Cayman Islands with limited liability, an indirect non-
	wholly owned subsidiary of the Company and whose
	shares are listed on the Main Board (Stock Code: 459)
“Midland IC&I Board”	the board of directors of Midland IC&I
“Midland IC&I EGM”	the extraordinary general meeting of Midland IC&I to
	be held at Room 1801A, 18th Floor, One Grand Tower,
	639 Nathan Road, Mongkok, Kowloon on 19 September
	2008 at 11:00 a.m.
“Midland IC&I Group”	Midland IC&I and its subsidiaries
“Midland IC&I Share(s)”	ordinary share(s) of HK$0.01 each in the share capital
	of Midland IC&I
“Midland IC&I Shareholder(s)”	holder(s) of Midland IC&I Shares
“SGM”	the special general meeting of the Company to be held
	at Rooms 2505–8, 25th Floor, World-wide House, 19
	Des Voeux Road Central, Hong Kong on 18 September
	2008 at 2:30 p.m.
“SGM Notice”	the notice convening the SGM as set out at the end of
	this circular

– 3 –

DEFINITIONS

“Share(s)” ordinary share(s), currently with par value of HK$0.10 each, in the capital of the Company “Shareholder(s)” holder(s) of the Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “subsidiary” in relation to a company, has the meaning ascribed thereto in the Main Board Listing Rules, whether incorporated in Hong Kong or elsewhere “substantial shareholder” in relation to a company listed on the Main Board, has the same meaning ascribed to such term in the Main Board Listing Rules “Transfer of Listing” the transfer of listing of Midland IC&I Shares from GEM to the Main Board according to Chapter 9A of the Main Board Listing Rules “Tretsfield” Tretsfield Investments Limited, which is an indirect wholly-owned subsidiary of the Company “HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent

– 4 –

LETTER FROM THE BOARD

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MIDLAND HOLDINGS LIMITED 美聯集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1200)

Executive Directors:

Mr. Wong Kin Yip, Freddie (Chairman and Managing Director) Ms. Tang Mei Lai, Metty (Deputy Chairman) Mr. Chan Kwan Hing, Vincent (Chief Executive Officer) Ms. Wong Ching Yi, Angela Ms. Lam Fung Fong, Iris Mr. Kwok Ying Lung, Raymond

Independent non-executive Directors: Mr. Koo Fook Sun, Louis Mr. Sun Tak Chiu, Raymond Mr. Wang Ching Miao, Wilson

Registered office:

Clarendon House Church Street Hamilton HM 11 Bermuda

Head office and principal place of business in Hong Kong: Rooms 2505-8, 25th Floor World-wide House 19 Des Voeux Road Central Hong Kong

26 August 2008

To the Shareholders

Dear Sir or Madam,

PROPOSED ADOPTION OF THE 2008 SHARE OPTION SCHEME BY MIDLAND IC&I LIMITED AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

The Stock Exchange informed Access Capital on 8 August 2008 that approval in principal has been granted by the Stock Exchange for the listing of and permission to deal in, on the Main Board (i) the Midland IC&I Shares in issue; (ii) any Midland IC&I Shares which may be issuable upon the exercise of the outstanding options which were granted under the 2005 Share Option Scheme; and (iii) any Midland IC&I Shares to be issued upon conversion of the Convertible Note.

Immediately following the Transfer of Listing becoming effective, the listing of the Midland IC&I Shares on GEM was transferred to the Main Board. Dealings in Midland IC&I Shares on the Main Board commenced at 9:30 a.m. on 18 August 2008.

• For identification purpose only

– 5 –

LETTER FROM THE BOARD

This circular gives you the background to, and details of, the proposed adoption of the 2008 Share Option Scheme by Midland IC&I. It also gives you the notice of SGM.

ADOPTION OF THE 2008 SHARE OPTION SCHEME BY MIDLAND IC&I LIMITED

The Board was informed by the Midland IC&I Board that Midland IC&I would like to adopt the 2008 Share Option Scheme. Accordingly, pursuant to Chapter 17 of the Main Board Listing Rules, the Board would also like to propose to the Shareholders to approve the 2008 Share Option Scheme in the SGM. A summary of the principal terms of the 2008 Share Option Scheme is set out in Appendix I to this circular.

The Board has been advised that the existing 2005 Share Option Scheme was adopted on 6 June 2005 in accordance with the GEM Listing Rules. The provisions in the 2005 Share Option Scheme do not comply with the current requirements of Chapter 17 of the Main Board Listing Rules.

The 2008 Share Option Scheme will enable the Midland IC&I Board to grant options to certain selected participants as incentives or rewards for their contribution to the Midland IC&I Group or any Invested Entity.

Midland IC&I will apply to the Stock Exchange for the listing of, and permission to deal in, on Main Board any Midland IC&I Shares which may be issuable upon the exercise of any options which may be granted under the 2008 Share Option Scheme.

The 2008 Share Option Scheme is conditional on:

• (a) the passing of the ordinary resolution set out in the SGM Notice by the Shareholders at the SGM to approve the 2008 Share Option Scheme;

• (b) the passing of ordinary resolution by the Midland IC&I Shareholders at the Midland IC&I EGM to approve and adopt the 2008 Share Option Scheme;

• (c) the Main Board Listing Committee granting approval for the listing of, and permission to deal in, on the Main Board any Midland IC&I Shares which may be issued pursuant to the exercise of any options which may be granted pursuant to the 2008 Share Options Scheme; and

• (d) approval of the Transfer of Listing by the Main Board Listing Committee.

The condition listed as (d) above has been fulfiled.

The 2005 Share Option Scheme will be terminated by Midland IC&I Board in accordance with its terms after all the conditions of the 2008 Share Option Scheme have been fulfiled.

– 6 –

LETTER FROM THE BOARD

Outstanding options that had been granted pursuant to the 2005 Share Option Scheme as at the Latest Practicable Date would entitle the holder thereof to subscribe for a total of 83,000,000 Midland IC&I Shares. Upon termination of the 2005 Share Option Scheme, no further options may be offered or granted thereunder. Apart from the 2005 Share Option Scheme, there was no other subsisting share option scheme of Midland IC&I as at the Latest Practicable Date. Termination of the 2005 Share Option Scheme will not prejudice the outstanding options granted under such scheme.

As at the Latest Practicable Date, the issued share capital of Midland IC&I comprised 8,300,000,000 Midland IC&I Shares. Assuming that there is no change in the issued share capital of Midland IC&I between the period from the Latest Practicable Date and the date of adoption of the 2008 Share Option Scheme, the number of Midland IC&I Shares issuable pursuant to the 2008 Share Option Scheme under the scheme limited prescribed in Note (1) of Rule 17.03(3) of the Listing Rules will be 830,000,000 Midland IC&I Shares, representing approximately 10% of the total number of Midland IC&I Shares in issue as at the date of approval of the 2008 Share Option Scheme. Midland IC&I will apply to the Stock Exchange for its listing of and permission to deal in 830,000,000 Midland IC&I Shares, that may be issued upon exercise of options granted under the 2008 Share Option Scheme.

PROCEDURE TO DEMAND A POLL

According to the existing Bye-law 66 of the Company’s Bye-laws, a resolution put to the vote of a general meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

• (a) by the chairman of the meeting; or

• (b) by at least three members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or

• (c) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all members having the right to vote at the meeting; or

• (d) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

A demand by a person as proxy for a member or in the case of a member being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a member.

– 7 –

LETTER FROM THE BOARD

In addition, under the Main Board Listing Rules, if the chairman of the meeting and/or the Directors individually or collectively hold(s) proxies in respect of Shares holding 5% or more of the total voting rights of the Company at the SGM, and if the votes casted at the SGM on a show of hands are in the opposite manner to that instructed in those proxies, then the chairman and/or the Directors holding such proxies as aforesaid collectively shall demand a poll. However, if it is apparent from the total proxies held that a vote taken on a poll will not reverse the vote taken on a show of hands, then the chairman and/or the Directors holding such proxies as aforesaid collectively shall not be required to demand a poll.

SPECIAL GENERAL MEETING

The SGM Notice convening the SGM at Rooms 2505–8, 25th Floor, World-wide House, 19 Des Voeux Road Central, Hong Kong on 18 September 2008, Thursday at 2:30 p.m. is set out at the end of this circular.

If you are not able to attend the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrar and transfer office of the Company in Hong Kong, Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible and in any event not less than forty-eight (48) hours before the time appointed for the holding of such meeting or any adjournment thereof.

RECOMMENDATION

The Directors consider that the approval of the 2008 Share Option Scheme at the SGM is in the best interests of the Company and its Shareholders generally. Accordingly, the Directors recommend you to vote in favour of the resolution to be proposed at the SGM.

ADDITIONAL INFORMATION

Copies of the rules of the 2008 Share Option Scheme are available for inspection during normal business hours at the principal offices of the Company at Rooms 2505–8, 25th Floor, World-wide House, 19 Des Voeux Road Central, Hong Kong from the date of this circular up to and including the date of the SGM and at the SGM.

The Company will publish an announcement on the outcome of the SGM in respect of the approval of the 2008 Share Option Scheme on the business day following the date of the SGM.

Your attention is also drawn to Appendix I to this circular respectively.

– 8 –

LETTER FROM THE BOARD

RESPONSIBILITY OF DIRECTORS

This circular includes particulars given in compliance with the Main Board 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.

Yours faithfully, For and on behalf of the Board

Wong Kin Yip, Freddie Chairman and Managing Director

– 9 –

APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

2008 SHARE OPTION SCHEME

The following is a summary of the principal terms of the 2008 Share Option Scheme, which will be put forward to the Shareholders for consideration and adoption at the Midland IC&I EGM.

In this Appendix:

• (i) “Company” means Midland IC&I Limited, a company incorporated in the Cayman Islands with limited liability;

• (ii) “Board” means the board of directors of the Company (as defined in (i) above);

• (iii) “Group” means the Company (as defined in (i) above) and its subsidiaries;

• (iv) “Midland” means Midland Holdings Limited, a company incorporated in Bermuda with limited liability and whose shares are listed on the Main Board and is currently the holding company of the Company (as defined in (i) above);

• (v) “Midland Shareholders” means the shareholders of Midland (as defined in (iv) above);

• (vi) “Shares” means ordinary shares of HK$0.01 each in the capital of the Company (as defined in (i) above) (or of such other nominal amount as shall result from sub-division, consolidation or reduction of the share capital of the Company (as defined in (i) above) from time to time);

• (vii) “eligible person” means any employee (whether full time or part time), senior executive or officer, manager, director (including executive, non-executive and independent non-executive director) or consultant of the Company, any of its affiliates or any Invested Entity, or any of their respective associates, chief executives, or substantial shareholders who, as determined by the Board, has contributed or will contribute to the growth and development of the Group or any Invested Entity; and

• (viii) “Invested Entity” means any entity in which any member of the Group holds an equity interest.

• (a) Who may join

The Board may invite any eligible person as the Board may in its absolute discretion select, having regard to each person’s qualifications, skills, background, experience, service records and/or contribution or potential value to the relevant member(s) of the Group or Invested Entity, to take up options to subscribe for Shares at a price calculated in accordance with paragraph (c) below.

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APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

(b) Purposes of the 2008 Share Option Scheme

The 2008 Share Option Scheme serves the following principal purposes:

• (1) to enable the Group and its Invested Entities to recruit and retain high calibre eligible persons and attract human resources that are valuable to the Group or the Invested Entities;

• (2) to recognise the contributions of the eligible persons to the growth of the Group or Invested Entities by rewarding them with opportunities to obtain ownership interest in the Company; and

• (3) to motivate and give incentives to these eligible persons to continue to contribute to the long term success and prosperity of the Group directly or through Invested Entities.

(c) Subscription price and acceptance period

The subscription price for the Shares under the 2008 Share Option Scheme shall be a price determined by the Board at its absolute discretion and notified to an eligible person. The subscription price shall not be less than the highest of:

• (i) the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet on the offer date;

• (ii) the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets for the five (5) business days immediately preceding the offer date; and

• (iii) the nominal value of a Share

provided that where the Board proposes to grant options under paragraphs (e)(ii) or (f)(ii) below, the date of the meeting of the Board proposing the relevant grant shall be deemed to be the offer date for the purpose of calculating the subscription price.

The eligible person must accept any such offer notified to him or her within ten (10) business days from the offer date, failing which it shall be deemed to have been rejected. Upon acceptance of the offer, the grantee shall pay HK$1.00 to the Company as consideration for the grant.

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APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

(d) Number of Shares subject to the 2008 Share Option Scheme

• (i) Subject to the provisions of paragraph (d)(ii) below and, for so long the Company remains a subsidiary of Midland, necessary approval by the Midland Shareholders being obtained and, where required, Midland having complied with (or obtained waiver from strict compliance with) the relevant requirements under and in the Main Board Listing Rules and other applicable statutory regulations or rules,

• (1) the total number of Shares which may be issued upon exercise of all options to be granted under the 2008 Share Option Scheme and any other share option scheme(s) of the Company must not in aggregate exceed ten (10) per cent (the “Scheme Mandate Limit”) of the Shares in issue at the date on which the 2008 Share Option Scheme is adopted, such ten (10) per cent shall represent 830,000,000 Shares based on 8,300,000,000 Shares in issue unless further approval is obtained from the Shareholders and, for so long the Company remains a subsidiary of Midland, the Midland Shareholders pursuant to paragraphs (d)(i)(2) and/or (3) below;

• (2) the Company and, for so long as the Company remains a subsidiary of Midland, Midland may seek approval of their respective shareholders in their respective general meetings to refresh the Scheme Mandate Limit from time to time such that the total number of Shares which may be issued upon exercise of all options to be granted under the 2008 Share Option Scheme and any other share option scheme(s) of the Company shall not exceed ten (10) per cent of the Shares in issue as at the date of such shareholders’ approval. The Company must send a circular to the Shareholders and, for so long as the Company remains a subsidiary of Midland, Midland must issue a circular to the Midland Shareholders in each case containing the information required under Rule 17.02(2)(d) and the disclaimer required under Rule 17.02(4) of the Main Board Listing Rules; and

• (3) the Company and, for so long as the Company remains a subsidiary of Midland, Midland may seek their respective shareholders’ approval in their respective general meetings to grant options over and above the Scheme Mandate Limit provided that the options in excess of the Scheme Mandate Limit are granted only to the eligible persons specified by the Company before such approval is sought and for whom specific approval is then obtained. The Company and, for so long as the Company remains a subsidiary of Midland, Midland must issue a circular containing the information required under Note 1 to Rule 17.03(3) of the Main Board Listing Rules to the Shareholders and the Midland Shareholders respectively in connection with such grant.

– 12 –

APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

• (ii) The maximum number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the 2008 Share Option Scheme and any other share option scheme(s) of the Company shall not in aggregate exceed thirty (30) per cent of the Shares in issue from time to time. No option may be granted under the 2008 Share Option Scheme and any other share option scheme(s) of the Company if such limit is exceeded.

(e) Maximum entitlement of each grantee

• (i) Unless the approval of Shareholders and, for so long as the Company remains a subsidiary of Midland, of the Midland Shareholders as contemplated under paragraph (e)(ii) below is obtained, the total number of Shares issued and to be issued upon exercise of the options granted to each eligible person under the 2008 Share Option Scheme and any other share option scheme(s) of the Company (including exercised, cancelled and outstanding options) in any 12-month period must not exceed one (1) per cent of the Shares in issue.

• (ii) Where the Board proposes to grant an option to an eligible person under the 2008 Share Option Scheme and/or any other share option scheme(s) of the Company and such further grant would result in such eligible person becoming entitled to subscribe for such number of Shares, when aggregated with the total number of Shares (a) already issued under all the options previously granted to him or her which have been exercised; (b) issuable under all the options previously granted to him or her which are for the time being subsisting and unexercised; and (c) which were subject to options previously granted to him or her but for the time being having been cancelled in the past 12-month period up to and including the date of such further grant, exceeding one (1) per cent of the Shares in issue for the time being, such further grant shall be separately approved by the Shareholders and, for so long as the Company remains a subsidiary of Midland, the Midland Shareholders in their respective general meetings (with such eligible person and his or her associates abstaining from voting). The relevant requirements under the Note to Rule 17.03(4) of the Main Board Listing Rules and other applicable statutory regulations or rules must be complied with.

(f) Maximum entitlement of each grantee who is a connected person

In addition to the approval of the Shareholder and the Midland Shareholders (if required) as set out in paragraphs (d)(i) and (e)(ii) and, for so long as the Company remains a subsidiary of Midland, where required under the Main Board Listing Rules and other applicable statutory regulations or rules, Midland having complied with (or obtained waiver from strict compliance with) the relevant requirements

– 13 –

APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

under and in the Main Board Listing Rules and other applicable statutory regulations or rules,

• (i) each grant of option to an eligible person who is a director, chief executive or substantial shareholder of the Company or, for so long as the Company remains a subsidiary of Midland, of Midland, or any of their respective associates, under the 2008 Share Option Scheme must be approved by the independent non-executive director(s) of the Company (excluding the independent non-executive director who is the grantee of the option) and, for so long as the Company remains a subsidiary of Midland, of Midland; and

• (ii) where the Board proposes to grant any option to an eligible person who is a substantial shareholder or an independent non-executive director of the Company or, for so long as the Company remains a subsidiary of Midland, of Midland, or any of their respective associates, and such option, if exercised in full, would result in the total number of Shares issued and to be issued upon exercise of all options already granted and to be granted to such eligible person (including exercised, cancelled and outstanding options) in the past 12-month period up to and including the date of grant:

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

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

such further grant of options must be approved by the Shareholders and, for so long as the Company remains a subsidiary of Midland, by the Midland Shareholders. The Company must send a circular to the Shareholders and, for so long as the Company remains a subsidiary of Midland, Midland must send a circular to the Midland Shareholders, in each case containing the information required under Rule 17.04 of the Main Board Listing Rules. All connected persons of the Company and, for so long as the Company remains a subsidiary of Midland, of Midland must abstain from voting at their respective general meetings, except that any connected person may vote against the relevant resolution at such general meeting(s) provided that his or her intention to do so has been stated in the circular to be sent to the relevant shareholders. Any vote taken at the meeting to approve the grant of such options must be taken on a poll. Approval by the Shareholders is also required for any change in the terms of options granted to an eligible person who is a director or chief executive or substantial shareholder of the Company or any of their respective associates. Approval by the Midland Shareholders is also required for any change in the terms of options granted to an eligible person who is a director or chief executive or substantial shareholder of Midland or any of their respective associates.

– 14 –

APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

(g) Exercise period and performance target

Subject to paragraphs (i), (j), (k) and (l) and unless otherwise determined by the Board and notified to the grantee on or before the offer date, an option may be exercised in accordance with the terms of the 2008 Share Option Scheme at any time during the option period, subject to any restrictions or conditions on the exercise of the options as the Board may determine.

The option period shall be notified by the Board to each grantee upon grant of each option, provided that it shall commence on a date not earlier than the commencement date (being the date on which the option is granted or deemed to be granted under the 2008 Share Option Scheme) and not be more than ten (10) years from such commencement date.

There is no provision in the 2008 Share Option Scheme to require a grantee to fulfill any performance target or to hold the option for a certain period before exercising the option, but the Board may at its absolute discretion and from time to time provide such requirements in the offer of grant of options. The 2008 Share Option Scheme also specifies the basis for determining the minimum subscription price at which an option may be exercised (see paragraph (c) above). The Directors consider that the aforesaid criteria and rules will serve to preserve the value of the Company and at the same time encourage the eligible persons to work for the benefits of the Group and Invested Entities.

(h) Non-transferability

An option shall be personal to the grantee and shall not be assignable, and no grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest in favour of any third party over or in relation to any option (save that the grantee may nominate a nominee in whose name the Shares issued pursuant to the 2008 Share Option Scheme may be registered). Any breach of the foregoing shall entitle the Company to determine any outstanding option or part thereof granted to such grantee, whereupon the option outstanding or part thereof shall be deemed to have lapsed.

(i) Rights on ceasing to be an eligible person

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

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SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

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

(j) Winding-up

In the event a notice is given by the Company to its shareholders to convene a Shareholders’ meeting for the purpose of considering and, if thought fit, approving a resolution to voluntarily wind-up the Company, the Company shall forthwith give notice thereof to the grantee and the grantee (or his or her legal personal representative(s)) may by notice in writing to the Company accompanied by a remittance for the full amount of the aggregate subscription price for the Shares in respect of which the notice is given (such notice to be received by the Company not later than two (2) business days prior to the proposed Shareholders’ meeting) exercise the option (to the extent not already exercised) either to its full extent or to the extent specified in such notice and the Company shall as soon as possible and in any event no later than the business day immediately prior to the date of the proposed Shareholders’ meeting, allot and issue such number of Shares to the grantee which falls to be issued on such exercise.

(k) General offer

• (i) If a general offer (whether by way of takeover offer, share repurchase offer or otherwise in a like manner) is made to all the Shareholders (or all Shareholders other than the offeror and/or any person controlled by the offeror and/or any person acting in association or concert with the offeror), the Company shall use its reasonable efforts to procure that such offer is extended to all grantees (on the same terms, mutatis mutandis, and assuming that such grantee will become, by exercise of the options granted to them (to the extent not already exercised), Shareholders). If the general offer becomes or is declared unconditional prior to the expiry date of the relevant option, the grantee shall be entitled to exercise the option in full or in part (to the extent not already exercised) at any time within such period as shall be notified by the Company, provided that if, during such period, such person becomes entitled to exercise rights of compulsory acquisition of Shares pursuant to the Companies Law and gives notices in writing to any holders of Shares that he intends to exercise such rights, options (to the extent not already exercised) shall be and remain exercisable until one (1) month from the date of such notice.

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APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

• (ii) If a general offer by way of scheme of arrangement is made to all the Shareholders with the scheme having been approved by the necessary number of Shareholders at the requisite meetings, the grantee (or his or her legal personal representative(s)) may thereafter (but before such time as may be specified by the Company in a notice to the grantee) exercise the option to its full extent or to the extent specified in his or her notice to the Company.

(l) Compromise or arrangement with members or creditors

In the event of a compromise or arrangement between the Company and its members or creditors being proposed in connection with the scheme for the reconstruction or amalgamation of the Company under the Companies Law, the Company shall give notice thereof to all grantees on the same day as it gives notice of the meeting to its members or creditors to consider such a compromise or arrangement and the grantee may by notice in writing to the Company accompanied by the remittance for the full amount of the aggregate subscription price for the Shares in respect of which the notice is given (such notice to be received by the Company not later than two (2) business days prior to the proposed meeting) exercise the option (to the extent not already exercised) either to its full extent or to the extent specified in such notice, and the Company shall as soon as possible and in any event not later than the business day immediately prior to the date of the proposed meeting, allot and issue such number of Shares to the grantee which falls to be issued on such exercise credited as fully paid and register the grantee as holder thereof. With effect from the date of such meeting, the rights of all grantees to exercise their respective options shall forthwith be suspended. Upon such compromise or arrangement becoming effective, all options shall, to the extent that they have not been exercised, lapse and determine. The Board shall endeavour to procure that the Shares issued as a result of the exercise of options under this paragraph shall for the purposes of such compromise or arrangement form part of the issued share capital of the Company on the effective date thereof and that such Shares shall in all respects be subject to such compromise or arrangement. If for any reason such compromise or arrangement is not approved by the court (whether upon the terms presented to the court or upon any other terms as may be approved by such court), the rights of the grantees to exercise their respective options shall with effect from the date of the making of the order by the court be restored in full but only to the extent not already exercised and shall thereupon become exercisable (but subject to the other terms of the 2008 Share Option Scheme) (provided that the option period shall accordingly be extended by the length of the period of suspension) as if such compromise or arrangement had not been proposed by the Company and no claim shall lie against the Company or any of its officers for any loss or damage sustained by any grantee as a result of the aforesaid suspension.

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APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

(m) Adjustment

• (i) In the event of a capitalisation issue, rights issue, sub-division or consolidation of Shares or reduction of capital of the Company while any option remains exercisable, such corresponding alterations (if any) shall be made to:

• (1) the number of Shares subject to the 2008 Share Option Scheme; and/or

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

• (3) the subscription price,

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

• (1) the aggregate subscription price payable by a grantee on the full exercise of any option shall remain as nearly as possible the same (but shall not be greater than) as it was before such event; and

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

and provided further that no such alteration shall be made the effect of which would be to enable a Share to be issued at less than its nominal value and the supplementary guidance issued by the Stock Exchange on 5 September 2005 and other notes or guidance issued by the Stock Exchange from time to time shall be complied with. In respect of any such alterations (save those made on a capitalisation issue), an independent financial adviser or the auditors of the Company must confirm to the directors of the Company in writing and, for so long as the Company remains a subsidiary of Midland, to the directors of Midland in writing that such alterations satisfy the requirements set out in the Note to Rule 17.03(13) of the Main Board Listing Rules.

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

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

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APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

(n) Alteration of rules

• (i) The rules of the 2008 Share Option Scheme relating to definitions, other than eligible person, grantee, option period and the provisions of Clauses 1.2, 12, 13 and 16 thereof may be altered from time to time in any respect by resolution of the Board. Certain specified provisions of the 2008 Share Option Scheme relating to, among other things, the matters set out in Rule 17.03 of the Main Board Listing Rules, the definitions of eligible person, grantee, option period and the provisions of Clauses 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 14 and 15 thereof cannot be altered to the advantage of the grantees or prospective grantees save with the prior approval of the Shareholders and, for so long as the Company remains a subsidiary of Midland, of the Midland Shareholders in their respective general meetings.

• (ii) No alteration of the 2008 Share Option Scheme shall operate to affect adversely the terms of issue of any option granted or agreed to be granted prior to such alteration except with the consent or sanction of such majority of the grantees as would be required of the Shareholders under the Articles of Association for the time being for a variation of the rights attached to the Shares.

• (iii) Any alteration to the terms and conditions of the 2008 Share Option Scheme which is of a material nature or any change to the terms of options granted shall be approved by the Shareholders and, for so long as the Company remains a subsidiary of Midland, by the Midland Shareholders, save where such alteration takes effect automatically under the existing terms of the 2008 Share Option Scheme.

• (iv) Any change to the authority of the Board in relation to any alteration to the terms of the 2008 Share Option Scheme must be approved by the Shareholders and, for so long as the Company remains a subsidiary of Midland, by the Midland Shareholders in general meetings.

• (v) The amended terms of the 2008 Share Option Scheme or the options must still comply with the relevant requirements of Chapter 17 of the Main Board Listing Rules.

(o) Ranking of the Shares

The Shares to be allotted upon exercise of an option will be subject to all the provisions of the Articles of Association of the Company for the time being in force and will rank pari passu with the fully paid Shares in issue on the date of allotment of the Shares upon exercise of the option or, if that date falls on a day when the register of members of the Company is closed, the first day of the re-opening of the register of members, and accordingly will entitle the holders to participate in all

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APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

dividends or other distributions paid or made on or after the date of allotment of the Shares upon exercise of the option or, if that date falls on a day when the register of members of the Company is closed, the first day of the re-opening of the register of members, other than any dividend or other distributions previously declared or recommended or resolved to be paid or made if the record date therefor shall be before the date of allotment of the Shares upon exercise of the option.

(p) Lapse of option

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

• (i) the expiry of the option period;

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

• (iii) subject to the competent court not making an order the effect of which is to prohibit the offeror to acquire the remaining Shares in the offer, the expiry of the period referred to in paragraph (k)(i);

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

• (v) the date on which the grantee ceases to be an eligible person by reason of the termination of his or her employment or engagement or cessation of his or her directorship on the grounds that he or she has been guilty of misconduct, or appears either to be unable to pay or to have no reasonable prospect of being able to pay debts or has become insolvent or has committed an act of bankruptcy or has made any arrangement or composition with his or her creditors generally, or has been convicted of any criminal offence involving his or her integrity or honesty or on any other ground on which an employer would be entitled to terminate his or her employment or engagement at common law or pursuant to any applicable laws or under the grantee’s service or engagement contract with the relevant entity. A resolution of the Board to the effect that the employment or engagement of a grantee has or has not been terminated on one or more of the grounds specified in this paragraph shall be conclusive;

• (vi) the date of occurrence of any event(s), if any, whereby the relevant option will lapse as prescribed under the offer;

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

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APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

(viii) where the grantee commits a breach of paragraph (h), the date which the Board shall designate in the exercise of the Company’s right to determine the option thereunder.

(q) Conditions

The 2008 Share Option Scheme is conditional on (i) the passing of the necessary resolution by the Shareholders in general meeting to approve and adopt the 2008 Share Option Scheme; (ii) the passing of a resolution by the Midland Shareholders at general meeting to approve the 2008 Share Option Scheme; (iii) the Listing Committee granting approval for the listing of, and permission to deal in, on the Main Board any Shares which may be issued pursuant to the exercise of any options which may be granted pursuant to the 2008 Share Option Scheme; and (iv) the commencement of dealing in the Shares on the Main Board. The condition listed as (iv) above has been fulfilled.

(r) Term of the 2008 Share Option Scheme

The 2008 Share Option Scheme will remain in force for a period of ten (10) years commencing from the date on which it is adopted by the Company at the Midland IC&I EGM, after which no further options shall be granted. The options which are granted during the life of the 2008 Share Option Scheme may, however, continue to be exercisable in accordance with their terms of issue, and the provisions of the 2008 Share Option Scheme shall in all other respects remain in full force and effect in respect thereof.

(s) Cancellation of options

Any cancellation of options granted but not exercised shall require approval of the Board. Where the Board cancels options and issues new ones to the same eligible person, the issue of such new options may only be made under the 2008 Share Option Scheme with available unissued options (excluding the cancelled options) within the limit approved by the Shareholders and, for so long as the Company remains a subsidiary of Midland, by the Midland Shareholders as mentioned in paragraph (d).

(t) Early termination

The Company may by ordinary resolution in general meeting or the Board may at any time terminate the operation of the 2008 Share Option Scheme. In such event, no further options will be offered but the options which are granted during the life of the 2008 Share Option Scheme may continue to be exercisable in accordance with their terms of issue and, for such purposes only, the provisions of the 2008 Share Option Scheme will remain in full force and effect.

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APPENDIX I

SUMMARY OF THE PRINCIPAL TERMS OF THE 2008 SHARE OPTION SCHEME

(u) Present status of the 2008 Share Option Scheme

As at the date of this document, no option has been granted or agreed to be granted under the 2008 Share Option Scheme.

Application has been made to the Stock Exchange for the listing of, and permission to deal in, on the Main Board any Shares which may be issuable upon the exercise of any options which may be granted under the 2008 Share Option Scheme.

(v) Values of all options that can be granted under the 2008 Share Option Scheme

The Directors consider that it is not appropriate or helpful to shareholders of the Company to state the value of all options that can be granted pursuant to the 2008 Share Option 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, since the options to be granted shall not be assignable, and no holder of the option shall in any way sell, transfer, charge, mortgage or create any interest (legal or beneficial) in favour of any third party over or in relation to any option.

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 at the Latest Practicable Date based on a great number of speculative assumptions would not be meaningful and would be misleading to the shareholders of the Company.

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NOTICE OF SPECIAL GENERAL MEETING

==> picture [158 x 36] intentionally omitted <==

MIDLAND HOLDINGS LIMITED 美聯集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1200)

NOTICE IS HEREBY GIVEN that a special general meeting of Midland Holdings Limited (the “Company”) will be held on 18 September 2008, Thursday at Rooms 2505–8, 25th Floor, World-wide House, 19 Des Voeux Road Central, Hong Kong at 2:30 p.m. for the purpose of considering and, if thought fit, passing, with or without modification, the following resolution, which will be proposed as an ordinary resolution:

ORDINARY RESOLUTION

“ THAT the new share option scheme (the “2008 Share Option Scheme”, the rules of which are summarized in the circular dated 26 August 2008 of the Company (“Circular”) and contained in the document marked “A” produced to the meeting and for the purposes of identification, signed by the chairman of the meeting) to be adopted by Midland IC&I Limited be and is hereby approved and the directors of the Company be and are hereby authorised to do all such acts and to enter into all such transactions, arrangements and agreements as may be necessary or expedient in order to give full effect to the 2008 Share Option Scheme.”

By Order of the Board Lam Fung Fong, Iris Executive Director and Company Secretary

Hong Kong, 26 August 2008

Head office and principal place of business in Hong Kong: Rooms 2505-8, 25th Floor World-wide House 19 Des Voeux Road Central Hong Kong

Registered office: Clarendon House Church Street Hamilton HM 11 Bermuda

• For identification purpose only

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NOTICE OF SPECIAL GENERAL MEETING

Notes:

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

2. A form of proxy in respect of the meeting is enclosed. If you are not able to attend the meeting in person, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon.

3. In order to be valid, a form of proxy together with a power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority must be deposited with the branch share registrars and transfer office of the Company in Hong Kong, Tricor Abacus Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong, not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

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

5. According to the existing bye-law 66 of the Company’s bye-laws, a resolution put to the vote of a meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

6. (a) by the chairman of the meeting; or

7. (b) by at least three members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or

8. (c) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all members having the right to vote at the meeting; or

9. (d) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

A demand by a person as proxy for a member or in the case of a member being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a member.

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