National Electronics Holdings Limited — Proxy Solicitation & Information Statement 2001

Mar 1, 2001

CHINESE ESTATES HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

NOTICE OF THE SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting of Chinese Estates Holdings Limited (the "Company") will be held at the Concord Room 2, 8th Floor, Renaissance Harbour View Hotel Hong Kong, 1 Harbour Road, Wanchai, Hong Kong on Monday, 19th March, 2001 at 10:00 a.m. for the purpose of considering and, if thought fit, passing (with or without modification) the following resolutions: -

ORDINARY RESOLUTIONS

RESOLUTION NO. 1

1. "THAT the Acquisition referred to below and the conditional agreement dated 7th February, 2001 (the "Agreement") entered into between Overseas Crown Limited and Nutmeg Point Ventures Inc. as vendors (the "Vendors"), Paul Y. Holdings Company Limited, a wholly-owned subsidiary of the Company, as purchaser (the "Purchaser") and the Company as the Purchaser's guarantor (a copy of which has been produced to this meeting and marked "A" and signed by the chairman of this meeting for the purpose of identification) relating to the Purchaser's acquisition of the entire issued share capital in and all the shareholders' loans due to the Vendors by Gold Horse Limited (the "Acquisition") be and are hereby approved, AND THAT the execution and delivery of the Agreement and the performance of the terms of the Agreement by the directors of the Purchaser and the Company respectively be and are hereby confirmed, ratified and approved AND THAT any one Director of the Company be and is hereby authorised to do, for and on behalf of the Company, all such acts and things as may be considered necessary, desirable or expedient by him in his sole and absolute opinion for the purposes of, or in connection with, the performance of the Acquisition pursuant to the Agreement and all transactions contemplated thereunder."

RESOLUTION NO. 2

2A. "THAT subject to the passing of resolution numbered 1 as set out in the notice convening the meeting of which this resolution forms part, the instrument (the "Instrument") to be executed by the Company in relation to the issue and constitution of the convertible bonds of the Company in the principal amount of HK$200,000,000 (the "Convertible Bonds") (a copy of which has been produced to the meeting and marked "B" and signed by the chairman of the meeting for the purpose of identification) be and is hereby approved in the form and substance as tabled in all respects and the transactions contemplated therein be and are hereby approved; AND THAT subject to completion of the Acquisition, the issue of the Convertible Bonds by the Company be and is hereby approved; and the Directors of the Company be and are hereby authorised to execute under seal the Instrument for and on behalf of the Company."

2B. "THAT the Board of Directors of the Company be and is hereby authorised to allot and issue new shares ("Conversion Shares") in the capital of the Company, credited as fully paid up and ranking pari passu in all respects with the ordinary shares of the Company in issue on the date of issue of the Conversion Shares upon exercise of the conversion rights under the Convertible Bonds in accordance with the terms and conditions of the Instrument."

2C. "THAT any two Directors of the Company be and are hereby appointed to form a committee of the board of the Company to do and execute all such acts and things or such other documents by hand or under seal and to review, approve and implement any amendments to the Instrument and all and any other matters in connection with and incidental to the implementation of the Instrument and matters relating thereto, including the issue of the Convertible Bonds and the Conversion Shares, as may be considered by such committee in its sole and absolute discretion as necessary, desirable or expedient for and on behalf of the Company."

RESOLUTION NO. 3

3A. "THAT:

(a) subject to the extent that such authority has not been exercised, the authority granted to the Directors of the Company pursuant to resolution numbered 4A in the notice of the annual general meeting of the Company held on 23rd June, 2000 be and is hereby revoked;

(b) subject to paragraph (d) below, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase shares of HK$0.10 each in the capital of the Company ("Shares") subject to and in accordance with all applicable laws and requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as amended from time to time be and is hereby generally and unconditionally approved;

(c) the approval in paragraph (b) above shall be in addition to any other authorisation given to the Directors of the Company and shall authorise the Directors on behalf of the Company during the Relevant Period to procure the Company to repurchase its Shares at a price determined by the Directors of the Company;

(d) the aggregate nominal amount of the Shares which are authorised to be repurchased by the Directors of the Company pursuant to the approval in paragraph (b) above during the Relevant Period shall not exceed 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of this resolution, and the said approval shall be limited accordingly; and

(e) for the purposes of this resolution, "Relevant Period" means the period from the date of the passing of this resolution until whichever is the earliest of:

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

(ii) the expiration of the period within which the next annual general meeting of the Company is required by law, the Company's Bye-laws or the Companies Act 1981 of Bermuda to be held; or

(iii) the date upon which the authority set out in this resolution is revoked or varied by way of ordinary resolution of the Company in general meeting."

3B. "THAT:

(a) subject to the extent that such authority has not been exercised, the authority granted to the Directors of the Company pursuant to resolution numbered 4B in the notice of the annual general meeting of the Company held on 23rd June, 2000 be and is hereby revoked;

(b) subject to paragraph (d) below, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company ("Shares") and to make or grant offers, agreements, options and rights of exchange or conversion which might require the exercise of such powers be and is hereby generally and unconditionally approved;

(c) the approval in paragraph (b) above shall be in addition to any other authorisation given to the Directors of the Company and shall authorise the Directors of Company during the Relevant Period to make or grant offers, agreements, options and rights of exchange or conversion which might require the exercise of such powers after the end of the Relevant Period;

(d) the aggregate nominal amount of the share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors of the Company pursuant to the approval granted in paragraph (b) above, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined), or (ii) an issue of Shares upon the exercise of the subscription rights attaching to any warrants of the Company, or (iii) an issue of Shares upon an exercise of the subscription rights under the share option scheme of the Company approved by The Stock Exchange of Hong Kong Limited, or (iv) any scrip dividend or similar arrangement providing for the allotment of Shares in lieu of the whole or part of the dividend on Shares of the Company in accordance with the Bye-laws of the Company, shall not exceed 20 per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of this resolution, and the said approval shall be limited accordingly; and

(e) for the purpose of this resolution:-

"Relevant Period" shall have the same meaning as ascribed to it under the resolution numbered 3A (e) of the notice convening this meeting; and;

"Rights Issue" means an offer of shares in the Company open for a period fixed by the Directors of the Company to holders of shares in the Company or any class thereof whose names appear on the register of members of the Company on a fixed record date in proportion to their then holdings of such Shares (or class thereof) (subject to such exclusions or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of any relevant jurisdiction, or the requirements or any recognised regulatory body or any stock exchange in any territory applicable to the Company)."

3C."THAT:

(a) subject to the extent that such authority has not been exercised, the authority granted to the Directors of the Company pursuant to resolution numbered 4C in the notice of the annual general meeting of the Company held on 23rd June, 2000 be and is hereby revoked; and

(b) conditional upon the passing of the resolutions numbered 3A and 3B as set out in the notice convening this meeting, the general mandate granted to the Directors of the Company to exercise the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements, options and rights of exchange or conversion which might require the exercise of such powers pursuant to the resolution numbered 3B as set out in the notice convening this meeting be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of share capital of the Company repurchased by the Company under the authority granted pursuant to the resolution numbered 3A as set out in the notice convening this meeting, provided that such amount shall not exceed 10 per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of this resolution."

By the Order of the Board

Lam, Kwong-wai

Company Secretary

Hong Kong, 28th February, 2001.

Notes:

1. Any shareholder entitled to attend and vote at the meeting is entitled to appoint one or more separate proxies to attend and, on a poll, to vote instead of him. A proxy need not be a shareholder of the Company.

2. To be valid, a form of proxy in the prescribed form together with the power of attorney or other authority (if any) under which it is signed (or a notarially certified copy thereof) must be deposited at the Company's principal office in Hong Kong at 26th Floor, MassMutual Tower, 38 Gloucester Road, Wanchai, Hong Kong not less than 48 hours before the time fixed for holding the meeting.

3. With respect to the matter set out in paragraph 3A of the notice, approval is being sought from shareholders for a general mandate to be given to the Directors of the Company to repurchase shares of the Company.

4. With respect to the matter set out in paragraph 3B of the notice, approval is being sought from shareholders for a general mandate to be given to the Directors of the Company to issue shares of the Company in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

5. In view of the interests of Mr. Joseph Lau, Luen-hung and Mr. Thomas Lau, Luen-hung in the transaction contemplated in resolutions nos. 1 and 2, the shares held by any of them and their respective associates will not be voted in the resolutions nos. 1 and 2 at the meeting.

Please also refer to the published version of this announcement in the South China Morning Post.