National Electronics Holdings Limited — Proxy Solicitation & Information Statement 2008

Dec 22, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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 licensed securities dealer or other registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

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

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.

(Incorporated in Bermuda with limited liability)

(Stock Code: 127)

PROPOSED ADOPTION OF SHARE AWARD SCHEME

A notice convening the SGM to be held at Concord Room II-III, 8th Floor, Renaissance Harbour View Hotel Hong Kong, No. 1 Harbour Road, Wanchai, Hong Kong on Wednesday, 14th January, 2009 at 10:00 a.m. is set out on pages 16 and 17 of this circular. A form of proxy is also enclosed. Whether or not you are able to attend and/or vote at the SGM in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1806-07, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time for holding the SGM or any adjournment thereof (as the case may be). The completion and delivery of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof (as the case may be) should you so wish.

23rd December, 2008

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
The Share Award Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Right to demand a poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
APPENDIX – PRINCIPAL TERMS OF THE SHARE AWARD SCHEME. . . . . . . . . . .	6
NOTICE OF SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16

– i –

DEFINITIONS

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

“Adoption Date” the date on which the Share Award Scheme is adopted by the Shareholders in general meeting; “Announcement” the announcement issued by the Company dated 2nd December, 2008; “Award(s)” award(s) of Shares by the Board pursuant to the Share Award Scheme; “Award Notice” a written notice from the Company to the Selected Employee(s) after the selection of the Selected Employee(s) and the determination of the number of Awarded Shares requiring the Selected Employee(s) to undertake to hold the Award on the terms on which it is to be granted and to be bound by the rules of the Share Award Scheme;

“Awarded Share(s)”	in respect of a Selected Employee, such number of Share(s)
	determined by the Board and to be issued and allotted by
	the Company to a Selected Employee;
“Board”	the board of Directors;
“Company”	Chinese Estates Holdings Limited, an exempted company
	incorporated in Bermuda with limited liability, the shares
	of which are listed on the main board of Stock Exchange
	(stock code: 127);
“Date of Qualification”	the date of fulfilment of all the qualifying conditions set out
	in the Award Notice;
“Directors”	the directors of the Company from time to time;
“Employee(s)”	any employee (including without limitation an employee
	who is also a director) of any member of the Group;
“Group”	the Company and its subsidiaries;

– ii –

	DEFINITIONS
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China;
“Latest Practicable Date”	17th December, 2008, being the latest practicable date
	prior to the printing of this circular for ascertaining certain
	information included in this circular;
“Listing Committee”	the listing sub-committee of the board of the Stock
	Exchange;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange in force for the time being;
“Selected Employee(s)”	Employee(s) selected by the Board pursuant to the terms
	of the Share Award Scheme for participation in the Share
	Award Scheme;
“SGM”	the special general meeting of the Company to be convened
	atConcord Room II-III, 8th Floor, Renaissance Harbour View
	Hotel Hong Kong, No. 1 Harbour Road, Wanchai, Hong
	Kong onWednesday, 14th January, 2009at10:00 a.m.or any
	adjournment thereof (as the case may be), notice of which
	is set out on pages 16 and 17 of this circular;
“Share(s)”	the ordinary share(s) of HK$0.1 each in the share capital of
	the Company;
“Share Award Scheme”	the share award scheme proposed to be adopted by the
	Company;
“Shareholder(s)”	the shareholder(s) of the Company;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong; and
“%”	per cent.

– iii –

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 127)

Executive Director: Registered Office: Joseph Lau, Luen-hung Canon’s Court (Chairman and Chief Executive Officer) 22 Victoria Street Hamilton HM 12 Non-executive Directors: Bermuda Lau, Ming-wai Amy Lau, Yuk-wai Principal Office in Hong Kong: 26th Floor Independent Non-executive Directors: MassMutual Tower Chan, Kwok-wai 38 Gloucester Road Phillis Loh, Lai-ping Wanchai Ma, Tsz-chun Hong Kong 23rd December, 2008

To the Shareholders

Dear Sir or Madam,

PROPOSED ADOPTION OF SHARE AWARD SCHEME

INTRODUCTION

Reference is made to the Announcement with respect to the proposed adoption of the Share Award Scheme. The purpose of this circular is to provide you with further information on the Share Award Scheme and a notice of the SGM.

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LETTER FROM THE BOARD

THE SHARE AWARD SCHEME

The Share Award Scheme is a long-term incentive arrangement for the Selected Employees. The purpose of the Share Award Scheme is to recognize and reward certain Employees for their contributions to the Group and to give long-term incentives for retaining them for the continued operations and development of the Group. The Share Award Scheme intends to provide longterm compensation and incentives such that current Employees are incentivized to remain in the Group, and suitable professional recruits are attracted to join the Group, to assist in the further development of the Group. The Company has not adopted any share option scheme as at the Latest Practicable Date.

Subject to any early termination pursuant to the Share Award Scheme, the Share Award Scheme will be valid and effective for a period of ten years commencing from the Adoption Date. No Awarded Shares shall be issued after the tenth anniversary of the date of Award Notice to which it relates.

Awards

The Board may from time to time, at its absolute discretion and subject to such terms and conditions as it may think fit (including the basis of eligibility of each Employee determined by the Board from time to time), after having taken into account recommendations made by member(s) of the Group and assessment of individual performance pursuant to internal appraisal system, select an Employee for participation in the Share Award Scheme as a Selected Employee and determine the number of Awarded Shares which may be awarded to such Selected Employee pursuant to the terms of the Share Award Scheme. A Selected Employee shall become qualified to be issued and allotted the Awarded Shares after all the qualifying conditions have been fulfilled, unless otherwise determined by the Board at its discretion.

The Awarded Shares to be issued under the Share Award Scheme shall rank pari passu in all respects with the then existing issued Shares and will entitle the holders to participate in all dividends and other distributions paid or made after the date of issue of such Awarded Shares other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefor shall be on or before the date of issue of such Awarded Shares.

The issue price for each Awarded Share shall, subject to the terms of the Share Award Scheme, be an amount equal to its nominal value and shall be paid or satisfied in cash by the relevant member of the Group engaging the Selected Employee or, if payment by the relevant member of the Group engaging the Selected Employee is not permitted under applicable law, any member of the Group, upon the issue and allotment of the Awarded Shares.

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LETTER FROM THE BOARD

THE SHARE AWARD SCHEME (CONTINUED)

Limit on Awarded Shares

The total number of Shares which may be awarded upon vesting of all Awards to be granted under the Share Award Scheme and which may be issued upon the exercise of all options to be granted under all other incentive or option schemes of the Company (if any) must not in aggregate exceed 10% of the Shares in issue on the Adoption Date. As at the Latest Practicable Date, there was 2,082,526,079 Shares in issue. Assuming no Shares will be issued or repurchased from the Latest Practicable Date to the date of the SGM on which the Share Award Scheme is expected to be adopted by the Shareholders, subject to the Share Award Scheme becoming effective, the Company may grant Awards under the Share Award Scheme and any other incentive or option schemes of the Company in respect of which up to 208,252,607 Shares, representing 10% of the Shares in issue, may be issued.

The 10% limit may be refreshed by approval of the Shareholders in general meeting. However, the total number of Shares which may be issued in response to Awards and the exercise of all options to be granted under any other incentive and option schemes of the Company under the limit as so refreshed shall not exceed 10% of the Shares in issue as at the date of approval of the limit. Awards or options previously granted under the Share Award Scheme or under any other incentive and option schemes of the Company (including those vested, outstanding, cancelled and lapsed) will not be counted for the purpose of calculating the limit as refreshed. The Board shall not grant any Award which would result in the total number of Awarded Shares which are subject of Awards granted but not yet vested together with Shares which may be issued upon exercise of all outstanding options granted but yet to be exercised under any other incentive or option schemes of the Company representing in aggregate over 30% of the Shares in issue as at the date of such grant.

No Award will be granted to any Selected Employee which would result in the maximum number of Awarded Shares which are the subject of the Awards granted to such Selected Employee (including any which have vested, lapsed or have been forfeited) under the Share Award Scheme in the 12-month period up to and including the date of such grant representing in aggregate over 1% of the Shares in issue as at the date of such grant. The Company may seek separate approval from the Shareholders in general meeting for granting Awards beyond the 10% limit or 1% limit set out above provided the Awards in excess of the limit are granted only to Selected Employees specifically identified by the Company before such approval is sought.

Where any Award is proposed to be granted to a connected person of the Company, such Award must first be approved by the independent non-executive Directors and the Company shall comply with the applicable requirements of Chapter 14A of the Listing Rules (including, if necessary, the obtaining of approval of the independent Shareholders).

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LETTER FROM THE BOARD

THE SHARE AWARD SCHEME (CONTINUED)

Conditions of the Share Award Scheme

The Share Award Scheme is conditional upon (a) the passing of the ordinary resolution of the Shareholders in the SGM to approve and adopt the Share Award Scheme and to authorize the Board to implement the Share Award Scheme; and (b) the Listing Committee having granted approval of the listing of, and permission to deal in, the Shares to be issued by the Company pursuant to the Award which may be granted under the Share Award Scheme.

SGM

The notice of the SGM is set out on pages 16 and 17 of this circular. At the SGM, a resolution will be proposed to approve the adoption of the Share Award Scheme.

A form of proxy for the SGM is enclosed together with this circular for dispatch to Shareholders. Whether or not you intend to attend and vote at the SGM in person, you are requested to complete the form of proxy and return it to the Company’s branch registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1806-07, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, in accordance with the instructions printed thereon as soon as practicable but in any event no later than 48 hours before the time for holding the SGM or any adjournment thereof (as the case may be). Completion and return of a form of proxy will not preclude you from attending and voting at the SGM in person should you so wish.

RIGHT TO DEMAND A POLL

Pursuant to Bye-law 75 of the Bye-laws of the Company, a resolution put to the vote at the SGM shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by:–

• (a) the chairman of the meeting; or

• (b) at least three members present in person or by proxy for the time being entitled to vote at the meeting; or

• (c) any member or members present in person or by proxy and presenting not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

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LETTER FROM THE BOARD

RIGHT TO DEMAND A POLL (CONTINUED)

• (d) a member or members present in person or by proxy and holding Shares 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 the Shares conferring that right.

The Company will procure the chairman of the SGM to demand for voting on poll and Computershare Hong Kong Investor Services Limited, the branch registrar and transfer office of the Company in Hong Kong, will serve as the scrutineer for the vote-taking.

RECOMMENDATION

The Directors consider that the terms of the Share Award Scheme are fair and reasonable and in the interests of the Shareholders as a whole. Accordingly, the Board (including the independent non-executive Directors) recommends the Shareholders to vote in favour of the resolution as set out in the notice of the SGM.

GENERAL

A copy of the rules of the Share Award Scheme will be available for inspection at 26th Floor, MassMutual Tower, 38 Gloucester Road, Wanchai, Hong Kong during normal business hours on any business day up to and including the date of the SGM.

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. 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 contained herein misleading.

Your attention is drawn to the information contained in the appendix of this circular.

The English text of this circular shall prevail over its Chinese text in case of any discrepancy.

Yours faithfully, Joseph Lau, Luen-hung Chairman

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PRINCIPAL TERMS OF THE SHARE AWARD SCHEME

APPENDIX

THE SHARE AWARD SCHEME

The following is a summary of the principal terms of the Share Award Scheme proposed to be approved at the SGM:–

(a) Purpose

The purpose of the Share Award Scheme is to recognize and reward certain Employees for their contributions to the Group and to give long-term incentives for retaining them for the continued operations and development of the Group. The Share Award Scheme intends to provide long-term compensation and incentives such that current Employees are incentivized to remain in the Group, and suitable professional recruits are attracted to join the Group, to assist in the further development of the Group.

(b) Who may join

The Board may from time to time, at its absolute discretion and subject to such terms and conditions as it may think fit (including the basis of eligibility of each Employee determined by the Board from time to time), after having taken into account recommendations made by member(s) of the Group and assessment of individual performance pursuant to internal appraisal system, select an Employee for participation in the Share Award Scheme as a Selected Employee and determine the number of Awarded Shares which may be awarded to such Selected Employee pursuant to the terms of the Share Award Scheme. However, unless so selected, no Employee shall be entitled to participate in the Share Award Scheme. Subject to the provisions of the Share Award Scheme, the Board may impose any qualifying or performing conditions, restrictions or limitations or waive any such conditions, restrictions or limitations from time to time in relation to the Award as it may at its absolute discretion think fit.

(c) Duration and administration

Subject to any early termination pursuant to the terms of the Share Award Scheme, the Share Award Scheme shall be valid and effective for a period of ten years commencing from the Adoption Date.

The Share Award Scheme shall be subject to the administration of the Board whose decision as to all matters arising in relation to the Share Award Scheme or its interpretation or effect shall be final, conclusive and binding on all parties.

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PRINCIPAL TERMS OF THE SHARE AWARD SCHEME

APPENDIX

(c) Duration and administration (continued)

No Award shall be made to any Selected Employees:

• (i) after a price sensitive event in relation to the securities of the Company has occurred or a price sensitive matter in relation to the securities of the Company has been the subject of a decision, until such price sensitive information has been published in accordance with the Listing Rules;

• (ii) within the period commencing one month immediately preceding the earlier of: (aa) the date of a meeting of the Board (as such date is first notified to the Stock Exchange in accordance with the Listing Rules) for the approval of the Company’s results for any year, half-year, quarterly or other interim period (whether or not required under the Listing Rules); and (bb) the deadline for the Company to publish an announcement of its results for any such period and ending on the date of such announcement; or

• (iii) in any other circumstances which are prohibited under the Listing Rules.

(d) Issue of Awarded Shares

A Selected Employee shall become qualified (“ Qualified Selected Employee(s) ”) to be issued and allotted the Awarded Shares after all the qualifying conditions have been fulfilled, unless otherwise determined by the Board at its discretion.

The issue price for each Awarded Share shall, subject to the terms of the Share Award Scheme, be an amount equal to its nominal value and shall be paid or satisfied in cash by the relevant member of the Group engaging the Selected Employee or, if payment by the relevant member of the Group engaging the Selected Employee is not permitted under applicable law, any member of the Group, upon the issue and allotment of the Awarded Shares.

No Awarded Shares shall be issued and allotted after the tenth anniversary of the date of Award Notice of the Award to which it relates.

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PRINCIPAL TERMS OF THE SHARE AWARD SCHEME

APPENDIX

(e) Rights attaching to Awarded Shares

The Awarded Shares to be issued under the Share Award Scheme shall rank pari passu in all respects with the then existing issued Shares and will entitle the holders to participate in all dividends and other distributions paid or made after the date of issue of such Awarded Shares other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefor shall be on or before the date of issue of such Awarded Shares. The Awarded Shares will be subject to all the provisions of the constitutional documents of the Company and the Companies Act 1981 of Bermuda (as amended) for the time being in force.

(f) Rights on death or physical or mental disabilities or retirement or mutual agreement

If a Qualified Selected Employee leaves the service of the Group by reason of death or physical or mental disabilities or retirement at normal age or by mutual agreement between him and the relevant member of the Group employing him after the Date of Qualification, the Award shall be deemed to vest to the extent the qualifying conditions in respect of the Award set out in the Award Notice have been met on the day the Qualified Selected Employee’s death or last day of employment or such later date (no later than 12 months after the relevant Qualified Selected Employee’s death or last day of employment) as the Board shall decide and extend. The Award shall vest with the legal personal representative of the Qualified Selected Employee in the event the Qualified Selected Employee has died or become physically or mentally disabled.

(g) Termination for misconduct etc.

If the Selected Employee and Qualified Selected Employee of an Award leaves the service of the Group because he has been guilty of serious misconduct or has been convicted of a criminal offence involving his integrity or honesty (or has otherwise been dismissed for cause) or because he has committed an act of bankruptcy, become insolvent or made any arrangement or composition with his creditors generally, the Award made to him/her shall lapse automatically forthwith.

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PRINCIPAL TERMS OF THE SHARE AWARD SCHEME

APPENDIX

(h) Rights on voluntary winding-up of the Company

In the event a notice is given by the Company to its members to convene a general meeting for the purposes of considering, and if thought fit, approving a resolution to voluntarily wind-up the Company, the Company shall on the same date as or soon after it dispatches such notice to members of the Company give notice thereof to all Selected Employees and thereupon, the Award shall be deemed to have vested to the extent the qualifying conditions in respect of the Award set out in the Award Notice has been met as the Board decides on the day (referred to in this paragraph as the “ Cut-Off Date ”) immediately before the date of such notice to the members of the Company and the Company shall issue and allot the Awarded Shares which are the subject of the vested Award to the Qualified Selected Employee not later than the day of the general meeting. To the extent that an Award or any part thereof has not yet been vested by the Cut-Off Date, the right of the Selected Employees to be issued and allotted the Awarded Shares under any Award shall be suspended for the time being notwithstanding that such Award may have become vested after the CutOff Date. If for any reason the voluntary winding-up is not approved by members of the Company, the rights of the Selected Employees to be issued and allotted Shares under the Awards shall with effect from the date of the meeting of the members of the Company which do not approve the voluntary winding-up be restored in full as if such resolution had not been proposed by the Company and no claim shall lie against any member of the Group or any of its officers for any loss or damage sustained by any Selected Employee as a result of the aforesaid suspension. However, if the voluntary winding-up has been approved by members of the Company, all Awards shall, to the extent that they have not been so vested by the Cut-Off Date, lapse and determine automatically on the date of the general meeting of the Company which approves the voluntary winding-up.

(i) Rights on scheme of arrangement

If a scheme of arrangement between the Company and its members under section 99 of the Companies Act 1981 of Bermuda (as amended) is proposed, the Company shall give notice to the Selected Employees on the same date as or soon after it dispatches such notice to each member of the Company summoning the meeting to consider such scheme and thereupon the Award shall vest to the extent the qualifying conditions in respect of the Award set out in the Award Notice have been met as the Board decides on the day (referred to in this Paragraph as the “ Cut-Off Date ”) immediately before the date of such notice to the members of the Company and the Company shall issue and allot the Awarded Shares which are subject of the vested Award to the Qualified Selected Employee not later than the day of the meeting. The Company may require the Qualified Selected Employee to transfer or otherwise deal with the Shares issued as a result of the vesting of the Award in these circumstances so as to place the Qualified Selected Employee in the same position, as nearly as possible, as would

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PRINCIPAL TERMS OF THE SHARE AWARD SCHEME

APPENDIX

(i) Rights on scheme of arrangement (continued)

have been the case had such Shares been subject to such compromise or arrangement. To the extent that an Award or any part thereof has not yet been vested by the Cut-Off Date, the right of the Selected Employees to be issued and allotted the Awarded Shares shall be suspended for the time being notwithstanding that such Award may have become vested after the Cut-Off Date. If for any reason such scheme is not approved by members of the Company or if so approved but 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 Selected Employees to be issued and allotted Shares under the Awards shall with effect from the date of the meeting of the members of the Company which do not approve the scheme or the date of the making of the order by the court (as the case may be) be restored in full as if such scheme had not been proposed by the Company and no claim shall lie against any member of the Group or any of its officers for any loss or damage sustained by any Selected Employee as a result of the aforesaid suspension. However, if such scheme has become effective, all Awards shall, to the extent that they have not been so vested by the Cut-Off Date, lapse and determine automatically upon such scheme becoming effective.

(j) Rights on general offer

If a general offer by way of takeover is made to all the holders of Shares (or all such holders other than the offeror and/or any person controlled by the offeror and/or any person acting in association or concert with the offeror), and the offer becomes or is declared unconditional in all respects, the Award shall be deemed to have vested to the extent the qualifying conditions in respect of the Award set out in the Award Notice have been met as the Board decides on the day such offer becomes or is declared unconditional in all respects and the Company shall issue and allot the Awarded Shares which are the subject of the vested Awards to the Qualified Selected Employees within ten business days after the offer becomes unconditional in all respects. To the extent that the Award has not been so vested on the date the offer becomes or is declared unconditional in all respects, the Award shall lapse automatically when such offer becomes or is declared unconditional in all respects.

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PRINCIPAL TERMS OF THE SHARE AWARD SCHEME

APPENDIX

(k) Reorganisation of capital

Adjustments to the issue price and/or the number of Awarded Shares subject to Awards already granted under the Share Award Scheme may be made in the event of a capitalisation issue, rights issue, sub-division or consolidation of Shares or reduction of capital. Any such adjustments shall give a Selected Employee or Qualified Selected Employee the same proportion of the equity capital of the Company as that to which he was previously entitled, but no such adjustments shall be made to the extent that a Share would be issued at less than its nominal value. No issue of Shares or other securities as consideration or part consideration in transaction or for the acquisition of any other securities, assets or business shall be regarded as a circumstance requiring such adjustments. In respect of any such adjustments, other than any made on a capitalisation issue, an independent financial advisor or the auditors for the time being of the Company shall confirm to the Board in writing that, in their opinion, the adjustments are fair and reasonable and satisfy the aforementioned requirements.

(l) Scheme limit

(i) Overriding limit

The Board shall not grant any Award which would result in the total number of Awarded Shares which are subject of Awards granted but not yet vested together with Shares which may be issued upon exercise of all outstanding options granted but yet to be exercised under any other incentive or option schemes of the Company representing in aggregate over 30% of the Shares in issue as at the date of such grant.

(ii) Mandate limit

Subject to paragraph (l)(i) above, the total number of Shares which may be awarded upon vesting of all Awards to be granted under the Share Award Scheme and which may be issued upon the exercise of all options to be granted under all other incentive or option schemes of the Company (if any) must not in aggregate exceed 10% of the Shares in issue on the Adoption Date (the “ Initial Mandate Limit ”). Awards and options granted and lapsed in accordance with the terms of the Share Award Scheme or any other incentive or option schemes of the Company will not be counted for the purpose of calculating the 10% limit.

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PRINCIPAL TERMS OF THE SHARE AWARD SCHEME

APPENDIX

(l) Scheme limit (continued)

(iii) Refreshment of mandate limit

Subject to paragraph (l)(i) above, the limit under paragraph (l)(ii) above may be refreshed by approval of Shareholders in general meeting and, for this purpose, the Company shall send a circular to Shareholders. However, the total number of Shares which may be issued in response to Awards and the exercise of all options to be granted under any other incentive and option schemes of the Company under the limit as so refreshed shall not exceed 10% of the Shares in issue as at the date of approval of the limit. Awards or options previously granted under the Share Award Scheme or under any other incentive and option schemes of the Company (including those vested, outstanding, cancelled and lapsed) will not be counted for the purpose of calculating the limit as refreshed.

(iv) Limit for each Selected Employee

Subject to paragraph (l)(i) above, no Award shall be granted to any Selected Employee which would result in the maximum number of Awarded Shares which are the subject of the Awards granted to such Selected Employee (including any which have vested, lapsed or have been forfeited) under the Share Award Scheme in the 12-month period up to and including the date of such grant representing in aggregate over 1% of the Shares in issue as at the date of such grant.

Subject to paragraph (l)(i) above, the Company may seek separate approval from Shareholders in general meeting for granting Awards beyond the 10% limit set out in paragraph (l)(ii) or (1)(iii) or 1% limit set out in paragraph (l)(iv) provided the Awards in excess of the limit are granted only to Selected Employees specifically identified by the Company before such approval is sought and, for this purpose, the Company shall send a circular to Shareholders containing details and information of the Awards to be granted, and such specified Selected Employees and their associates (as defined in the Listing Rules) shall abstain from voting at such general meeting.

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PRINCIPAL TERMS OF THE SHARE AWARD SCHEME

APPENDIX

(m) Grant to connected person of the Company

Where any Award is proposed to be granted to a connected person (as defined in the Listing Rules) of the Company, such Award must first be approved by the independent nonexecutive Directors and the Company shall comply with the applicable requirements of Chapter 14A of the Listing Rules (including, if necessary, the obtaining of approval of the independent Shareholders).

(n) Rights are personal to the Selected Employee

Any Award made under the Share Award Scheme shall be personal to the Selected Employee to whom it is made or such person who is entitled to any such Award in consequence of the death or physical or mental disabilities of such Selected Employee and shall not be assignable or transferable and no Selected Employee shall in any way sell, transfer, assign, charge, mortgage, encumber or create any interests (legal or beneficial) in favour of any other third party over or in relation to the Award or attempt to do so.

(o) Lapse of Award

An Award shall lapse or be cancelled automatically on the earliest of:–

• (i) the date on which the Board determines that the condition imposed on the Award cannot be met or the restrictions or limitations imposed on the Award has not been complied with by the Selected Employee;

• (ii) the date on which a Selected Employee ceases to be an Employee before he becomes qualified to receive the Awarded Shares;

• (iii) the date on which a Qualified Selected Employee ceases to be an Employee after the Date of Qualification but before the Awarded Shares are vested in him (other than: termination of employment resulted from his death or his physical or mental disabilities or retirement at normal age or by mutual agreement between him and the relevant member of the Group employing him);

• (iv) the date on which the company by which a Selected Employee or a Qualified Selected Employee is employed ceases to be a member of the Group;

• (v) the date on which an order for the winding-up of the Company is made;

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PRINCIPAL TERMS OF THE SHARE AWARD SCHEME

APPENDIX

(o) Lapse of Award (continued)

• (vi) the date of such other event as may be determined by the Board from time to time;

• (vii) the expiry of any of the periods or dates referred to in paragraphs (f), (g), (h), (i) and (j) above (as the case may be) to the extent where any part of the Award has not been so vested before the expiry of such periods or dates; and

• (viii) the date on which the Board certifies that for the reason of a breach of paragraph (n) above, the Award shall be cancelled.

(p) Alteration of the Share Award Scheme

The Share Award Scheme may be altered in any respect by a resolution of the Board without the approval of the Shareholders in general meeting except that:–

• (i) the terms of the Share Award Scheme shall not be altered to the advantage of Selected Employees or Qualified Selected Employees without the prior approval of the Shareholders in general meeting; and

• (ii) any change to the authority of the Board in relation to any alteration to the terms of the Share Award Scheme must be approved by the Shareholders in general meeting.

No alteration shall operate to affect adversely in any material respect any subsisting rights of any Selected Employee under the Share Award Scheme except with the prior consent of the relevant Selected Employee or the consent or sanction of such majority of the Selected Employees as would be required of Shareholders under the Bye-laws of the Company for the time being for a variation of the rights attached to the Shares. Written notice of any amendment to the Share Award Scheme shall be given to all Selected Employees with subsisting Awards.

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PRINCIPAL TERMS OF THE SHARE AWARD SCHEME

APPENDIX

(q) Termination

The Share Award Scheme shall terminate on the earliest of:

• (i) the date when an order for the winding up of the Company is made or a resolution is passed for the voluntary winding-up of the Company (otherwise than for the purposes of an amalgamation, reconstruction or scheme of arrangement); and

• (ii) such date of early termination as determined by the Board.

After such termination, no new Award shall be granted but in all other respects, the provisions of the Share Award Scheme shall remain in full force and effect to the extent necessary to give effect to the Award made prior thereto or otherwise as may be required in accordance with the provisions of the Share Award Scheme.

(r) Conditions of the Share Award Scheme

The Share Award Scheme shall take effect subject to:–

• (i) the passing of the ordinary resolution of the Shareholders in a general meeting to approve and adopt the Share Award Scheme and to authorize the Board to implement the Share Award Scheme; and

• (ii) the Listing Committee having granted approval of the listing of, and permission to deal in, the Shares to be issued by the Company pursuant to the Award which may be granted under the Share Award Scheme.

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NOTICE OF SGM

==> picture [38 x 32] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

(Stock Code: 127)

NOTICE IS HEREBY GIVEN that a special general meeting of the shareholders of Chinese Estates Holdings Limited (the “ Company ”) will be held at Concord Room II-III, 8th Floor, Renaissance Harbour View Hotel Hong Kong, No. 1 Harbour Road, Wanchai, Hong Kong on Wednesday, 14th January, 2009 at 10:00 a.m. or any adjournment thereof (as the case may be), for the purpose of considering and, if thought fit, passing with or without amendments, the following resolution as an ordinary resolution of the Company:–

ORDINARY RESOLUTION

“ THAT conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of and permission to deal in the shares in the capital of the Company (the “ Shares ”) to be issued pursuant to the vesting of the award granted under the share award scheme (a copy of which is produced to the meeting marked “A” and signed by the Chairman of this meeting for the purpose of identification) (the “ Share Award Scheme ”), the Share Award Scheme be approved and adopted to be the share award scheme of the Company and that the directors of the Company be and are hereby authorised to grant awards and issue, allot and deal with the Shares pursuant to the Share Award Scheme and take such steps and do such acts and to enter into such transactions, arrangements and agreements as may be necessary or desirable to implement and give full effect to the Share Award Scheme.”

By Order of the Board Lam, Kwong-wai Company Secretary

Hong Kong, 23rd December, 2008

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NOTICE OF SGM

Notes:

1. The register of members will be closed from 12th January, 2009 to 14th January, 2009, both days inclusive. For the purpose of ascertaining the members’ entitlement to the attendance of the meeting, all Share transfers documents accompanied by the relevant share certificates must be lodged with the Company’s branch registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on 9th January, 2009.

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

3. To be valid, a form of proxy in the prescribed form together with power of attorney or other authority (if any) under which it is signed (or notarially certified copy thereof) must be deposited at the Company’s branch registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1806-07, 18th Floor, Hopewell Centre, 183 Queens’s Road East, Wanchai, Hong Kong not less than 48 hours before the time fixed for holding the meeting or at any adjournment thereof.

4. A circular containing the information with respect to the resolution and this notice will be sent to the shareholders.

5. As at the date thereof, the Board comprised Mr. Joseph Lau, Luen-hung as Executive Director, Mr. Lau, Ming-wai and Ms. Amy Lau, Yuk-wai as Non-executive Directors and Mr. Chan, Kwok-wai, Ms. Phillis Loh, Lai-ping and Mr. Ma, Tsz-chun as Independent Non-executive Directors.

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