PEET LIMITED — AGM Information 2008

Oct 16, 2008

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PEET LIMITED

A.B.N 56 008 665 834

NOTICE OF ANNUAL GENERAL MEETING

AND

EXPLANATORY MEMORANDUM TO SHAREHOLDERS

A PROXY FORM IS ENCLOSED

Please read the Notice and Explanatory Memorandum carefully.

If you are unable to attend the meeting please complete and return the enclosed proxy form in accordance with the specified instructions.

PEET LIMITED

A.B.N 56 008 665 834

NOTICE OF ANNUAL GENERAL MEETING

Notice is given that the Annual General Meeting of Peet Limited (“the Company”) will be held at the Parmelia Hilton Perth Hotel, 14 Mill Street, Perth, Western Australia on Wednesday 19 November 2008 at 10.00am (WDST).

Agenda items

1 Financial report

To receive and consider the financial report of the Company and the reports of the directors and auditors for the year ended 30 June 2008.

2 Re-election of directors

To consider and, if thought fit, to pass the following resolutions as ordinary resolutions:

• a) “That Stephen Francis Higgs, being a director of the Company who retires by rotation under rule 8.1(d) of the Company’s constitution, and being eligible, is re-elected as a director of the Company.

• b) That Anthony Wayne Lennon, being a director of the Company who retires by rotation under rule 8.1(d) of the Company’s constitution, and being eligible, is re-elected as a director of the Company.”

3 Adoption of Remuneration Report

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

“That the Company’s Remuneration Report for the year ended 30 June 2008 be adopted.”

Note: The vote on this item is advisory only and does not bind the directors or the Company

4 Approval for the issue of securities under the Peet Limited Performance Rights Plan

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“For the purposes of section 208 of the Corporations Act 2001 (Cth), and exception 9 under ASX Listing Rule 7.2 as an exception to ASX Listing Rule 7.1, approval is given to issue securities under the Peet Limited Performance Rights Plan, as described in the Explanatory Memorandum accompanying the Notice of this meeting.”

5 Approval for grant of Performance Rights under the Peet Limited Performance Rights Plan to Brendan Gore

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“For the purposes of section 208 of the Corporations Act 2001 (Cth), and ASX Listing Rule 10.14, approval is given to grant 120,000 Performance Rights to Brendan Gore (a Director of the Company) under the Peet Limited Performance Rights Plan, on the terms and conditions set out in the Explanatory Memorandum accompanying the Notice of this meeting.”

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6 Approval for the grant of Performance Rights under the Peet Limited Performance Rights Plan to Anthony James Lennon

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“For the purposes of section 208 of the Corporations Act 2001 (Cth), and ASX Listing Rule 10.14, approval is given to grant 35,000 Performance Rights to Anthony James Lennon (a Director of the Company) under the Peet Limited Performance Rights Plan, on the terms and conditions set out in the Explanatory Memorandum accompanying the Notice of this meeting.”

7 Approval for grant of Options under the Peet Limited Employee Share Option Plan to Brendan Gore

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

"For the purposes of section 208 of the Corporations Act 2001 (Cth) and ASX Listing Rule 10.14, the Company approves and authorises the issue of 1,300,000 Options exercisable any time after the 4-year anniversary of the granting of the Options but not later than the 6-year anniversary of the granting of the Options to Brendan Gore, (a Director of the Company) under the Company’s Employee Share Option Plan or otherwise, on the terms and conditions set out in the Explanatory Memorandum accompanying the Notice of this meeting."

8 Approval for grant of Options under the Peet Limited Employee Share Option Plan to Anthony James Lennon

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

"For the purposes of section 208 of the Corporations Act 2001 (Cth) and ASX Listing Rule 10.14, the Company approves and authorises the issue of 400,000 Options exercisable any time after the 4-year anniversary of the granting of the Options but not later than the 6-year anniversary of the granting of the Options to Anthony James Lennon, (a Director of the Company) under the Company’s Employee Share Option Plan or otherwise, on the terms and conditions set out in the Explanatory Memorandum accompanying the Notice of this meeting."

9 Other Business

To transact any other business which may be brought before the meeting in conformity with the Corporations Act, 2001 and the Company’s constitution.

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Explanatory Memorandum

Shareholders are referred to the Explanatory Memorandum accompanying and forming part of this notice of meeting.

Entitlement to vote

It has been determined that under the Corporations Regulations 7.11.37, for the purposes of the Annual General Meeting, shares will be taken to be held by the persons who are the registered holders at 10.00am (WDST), 17 November 2008. Accordingly, share transfers registered after that time will be disregarded in determining entitlements to attend and vote at the meeting.

Voting exclusion

In accordance with the ASX Listing Rules, the Company will disregard any votes cast on Resolutions 4 to 8 (inclusive) by Brendan Gore and Anthony James Lennon, and any of their associates. However, the Company need not disregard a vote if:

• it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• it is cast by the person chairing the meeting, as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Proxies

A shareholder entitled to attend and vote has a right to appoint a proxy. The proxy does not need to be a member of the Company. A shareholder that is entitled to cast 2 or more votes may appoint up to 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If no proportion or number is specified, each proxy may exercise half of the shareholder’s votes.

A Proxy Form (with signing instructions) accompanies this Notice and to be effective must be received at the Company’s share registry, Computershare Investor Services,

• In Person: to Level 2, 45 St Georges Terrace, Perth WA

• By Mail: to GPO BOX 242, Melbourne, Vic 3001, or

• By Facsimile: 1800 783 447

By no later than 10.00am (WDST), 17 November 2008

By Order of the Board

Dated: 9 October 2008

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Dom Scafetta Company Secretary

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PEET LIMITED

A.B.N 56 008 665 834

EXPLANATORY MEMORANDUM TO SHAREHOLDERS

This Explanatory Memorandum has been prepared to assist shareholders to understand the business to be put to shareholders at the forthcoming Annual General Meeting.

1 Financial report

The Corporations Act requires:

• The reports of the directors and auditors; and

• The annual financial report, including the financial statements of the Company for the year ended 30 June 2008,

to be laid before the Annual General Meeting. The Corporations Act does not require a vote of shareholders on the reports or statements. However, shareholders will be given ample opportunity to raise questions or comments on the reports and statements at the meeting.

The financial report for consideration at the meeting will be the full financial report.

2 Re-election of directors

ASX Listing Rule 14.4 provides that a director (other than the Managing Director) must not hold office (without re-election) past the third Annual General Meeting following his or her appointment or 3 years, whichever is longer.

Further, rule 8.1(d) of the Company’s constitution provides that, if after excluding the Managing Director and directors appointed since the last Annual General Meeting, the number of directors is 5 or less, then 2 of the remaining directors must retire from office or, if the number is more than 5, one third of those directors (to the nearest whole number) must retire from office.

Stephen Francis Higgs and Anthony Wayne (Tony) Lennon retire by rotation and offer themselves for re-election.

The experience, qualifications and other information about the candidates are shown below and on the next page.

STEPHEN FRANCIS HIGGS, BEc (Syd) (Age 61), is a Non-executive Director of Peet.

With more than 30 years corporate finance experience behind him, Stephen Higgs joined the board of Peet as a Director in June 2004.

Mr Higgs has held a series of board roles with high-profile Australian companies, including UBS Investment Bank, with which he worked for 20 years to cement a leadership position in the private equity market.

In addition to his role on Peet’s Board, Mr Higgs is currently a Non-executive Director of Primary Healthcare Limited.

He is also Chairman of the Juvenile Diabetes Research Foundation Australia, a role he has undertaken since 2002.

Mr Higgs’ commitment to the community has extended to include positions working as a Councillor at St Andrew’s College at Sydney University and Trustee of the Malcolm Sargent Cancer Fund for Children.

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ANTHONY WAYNE (TONY) LENNON, FAICD (Age 67), is the Non-executive Chairman of Peet.

Tony Lennon brings more than 40 years' property experience to the position of Chairman of the Board. He has been a director of Peet for more than 20 years and was Executive Chairman before the company was listed on the Australian Securities Exchange in 2004.

A qualified valuer, Mr Lennon acquired a controlling interest in, and took up the position of, Managing Director of Peet Limited in 1985. Today, he continues to maintain a significant and active interest in the company.

Mr Lennon is a Fellow of the Australian Institute of Company Directors and an Associate of the Australian Property Institute. Formerly President of the Real Estate Institute of Western Australia, he has also served as the Institute’s Senior Arbitrator (Ethics and Practice) and as a Councillor of the national body, the Real Estate Institute of Australia.

His industry service has included State Government appointed roles as Chairman of both the Perth Inner City Living Taskforce and the Residential Densities Review Taskforce. He is also a Member of the Commercial Tenancies Tribunal.

Mr Lennon is a former President of Western Australia’s Shire of Peppermint Grove and Deputy Chairman of the National Board of the Australia Day Council. He is also a former Chairman of the Curtin Aged Persons Foundation and a founding Director of the Wearne and the Riversea Hostels for the Aged, both of which are locally initiated and managed community facilities.

3 Adoption of Remuneration Report

Section 250R(2) of the Corporations Act requires a resolution adopting the Remuneration Report must be put to the vote. The Remuneration Report is set out on pages 40 to 52 of the Annual Report.

Shareholders are advised that the vote on this item is advisory only and does not bind the directors or the Company.

4 Approval for the grant of Performance Rights under the Peet Limited Performance Rights Plan

Broadly, ASX Listing Rule 7.1 provides that a company must obtain shareholder approval if it wishes to issue more than 15% of its equity securities within a rolling 12 month period. ASX Listing Rule 7.2 exception 9 (paragraph (b)) provides an exception to ASX Listing Rule 7.1 for an issue of securities under an “employee incentive scheme” if, within 3 years before the date of issue, shareholders approved the issue.

Resolution 4 seeks shareholder approval for the purposes of exception 9 of ASX Listing Rule 7.2 and all other purposes for the issue of securities (i.e. Performance Rights and fully paid ordinary shares in the Company following the vesting of the Performance Rights) under the Peet Limited Performance Rights Plan ( PRP ). This means that the issue of these Performance Rights and shares under the PRP, if approved, will not be counted within the 15% cap on the Company’s capacity to issue additional equity securities under ASX Listing Rule 7.1. This will give the Company the flexibility to issue further securities up to the 15% limit if the need or opportunity arises in the future.

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For the purposes of ASX Listing Rule 7.2, exception 9, paragraph (b), the following information is provided:

(a) Summary of the terms of the PRP

The PRP operates as part of the Company’s long term incentive scheme for Executive Directors and employees of the Company and “Group Companies” (which includes Peet Limited, its subsidiaries and any other entity declared by the Board to be a member of the group for the purposes of the PRP from time to time) (the Eligible Executives ). The Board may also, from time to time, declare other persons to be eligible to receive grants of Performance Rights under the PRP. Participation of Directors in the PRP is subject to shareholder approval under the ASX Listing Rules (see Resolution 5 and Resolution 6).

The Company implemented the PRP on 1 October 2008.

Under the PRP rules, Eligible Executives may be granted Performance Rights on terms and conditions as determined by the Board. A Performance Right is an entitlement to a fully paid ordinary share in the Company, subject to satisfaction of certain performance criteria as determined by the Board ( Performance Rights ). A Performance Right confers no right to vote, attend meetings, participate in a distribution of profit or a return of capital or any other participating rights or entitlements on the Participant unless and until the Performance Right vests.

On satisfaction of the Performance Conditions the Performance Rights vest and the Company must issue the relevant shares to the participant or purchase the shares on market. No payment is required from the participant for the issue or transfer of the relevant shares.

A share issued pursuant to a Performance Right ranks equally and has the same rights as the ordinary shares of the Company. The Company will apply for any shares issued to a participant to be listed on the ASX.

If the relevant Performance Conditions (as determined by the Board and notified to the participant) are not satisfied within the time frame provided, the Performance Right will lapse. In addition, the PRP rules provide that:

• ( transferability ) a Performance Right is not transferable other than with the consent of the Board or by force of law (upon death to the participant’s legal personal representative or upon bankruptcy to the participant’s trustee in bankruptcy). Where a participant purports to transfer a Performance Right other than in these circumstances, the Performance Right immediately lapses;

• ( cessation of employment ) where a participant ceases to be employed by the Company or a Group Company because of death or disability, bona fide redundancy or other reason approved by the Board, any unvested Performance Rights may vest at the Board’s discretion, having regard to the relevant performance conditions and in accordance with the PRP rules;

• ( fraud, dishonesty or breach of obligations ) if a participant is found to have acted fraudulently or dishonestly or is in breach of their obligations to any Group Company, the Board may determine that any unvested Performance Rights held by the participant immediately lapse, that any shares (which have been allocated pursuant to the vesting of Performance Rights) held by the participant be forfeited and that, if a participant has sold such shares, the proceeds of sale are payable to the Company;

• ( restrictions on shares ) the Board has a discretion to impose restrictions (except to the extent prohibited by law or the ASX Listing Rules) on shares issued or transferred to a participant on vesting of a Performance Right, and the Company may implement appropriate procedures to restrict a participant from so dealing in the shares;

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• ( reorganisation of capital ) in the event of a reorganisation of capital, a participant’s Performance Rights may be adjusted, as set out in the PRP rules;

• ( lapse of Performance Rights ) each Performance Right which does not vest as at the 6-year anniversary of the granting of the Performance Right will lapse immediately;

• ( Board’s power to amend the PRP ) the Board has the power to amend the provisions of the PRP, or the terms or conditions of any Performance Right granted under the PRP subject to the following:

• the ASX Listing Rules; and

• the Board cannot make any amendment to the terms of a granted Performance Right which reduces the participant’s rights in respect of that Performance Right, unless the participant has consented or the purpose of the amendment is to comply with the law, to correct a manifest error or mistake, or to take into consideration possible adverse tax implications in respect of the PRP;

• ( early vesting in certain events ) the Board may determine that any unvested Performance Rights vest, having regard to the extent to which the participant has satisfied the relevant Performance Conditions, if the following events occur:

• a takeover bid is made for the Company’s shares, the Board recommends a takeover bid, or a takeover bid becomes unconditional;

• a court-ordered meeting in relation to a scheme for reconstruction or amalgamation of the Company;

• a scheme of arrangement is approved;

• compulsory acquisition following a takeover bid; or

• voluntary or compulsory winding up of the Company.

• ( receiving shares in an acquiring company if that company gains control of the Company ) if another company obtains control of the Company as a result of a takeover bid or a scheme of arrangement, a participant may be provided (on vesting of Performance Rights) with shares in the acquiring company in lieu of shares in the Company, if the Company, the acquiring company and the participant agree.

(b) The number of securities issued under the PRP since the date of the last approval

The PRP has not previously been approved by shareholders. No securities have been issued under the PRP to a director of the company as at the date of this meeting.

(c) Directors’ Recommendations

All of the Directors, except Brendan Gore and Anthony James Lennon unanimously recommend that shareholders vote in favour of Resolution 4. Brendan Gore and Anthony James Lennon decline to make a recommendation in respect of Resolution 4 as they have a material personal interest in the outcome of the Resolution.

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5 Resolution 5 - Approval for the grant of Performance Rights to Brendan Gore under the Peet Limited Performance Rights Plan

Resolution 6 - Approval for the grant of Performance Rights to Anthony James Lennon under the Peet Limited Performance Rights Plan

Details of the PRP are provided above in the Explanatory Memorandum for Resolution 4.

Shareholder approval is sought for the purposes of section 208 of the Corporations Act 2001 (Cth) ( Corporations Act ) and ASX Listing Rule 10.14, and all other purposes for the grant of Performance Rights under the PRP, in the case of:

• Resolution 5 - to Brendan Gore (Managing Director and Chief Executive Officer of the Company); and

• Resolution 6 - to Anthony James Lennon (Executive Director of the Company).

Resolution 5 and Resolution 6 are separate resolutions and are not dependant on the success of one or the other. Information relevant to voting on the Resolutions is explained together where possible to reduce repetition. Any differences between the Resolutions are clearly outlined.

A summary of the terms of the Performance Rights proposed to be granted to Brendan Gore and Anthony James Lennon is shown below:

Director	Vesting	Expiry Term	Exercise Price	Performance
	Term			Conditions 1
Brendan Gore	4 years	6 years	$0.00	EPS Growth
				(refer below)
Anthony James Lennon	4 years	6 years	$0.00	EPS Growth
				(refer below)

1 Refer to discussion below on Performance Conditions.

(a) ASX Listing Rule 10.14 approval

Broadly, ASX Listing Rule 10.14 provides that a company must obtain shareholder approval if it wishes to grant Performance Rights under an “employee incentive scheme” to a Director of the Company.

For the purposes of ASX Listing Rule 10.14, the PRP is an “employee incentive scheme”. Accordingly, the grant of Performance Rights (i.e. Performance Rights and shares issued following the vesting of Performance Rights under the PRP) to Brendan Gore and to Anthony James Lennon requires separate shareholder approval for the purposes of ASX Listing Rule 10.14.

For the purposes of ASX Listing Rule 10.15, the following information is provided:

(i) If the person to whom the securities will be issued is not a director, a statement of the relationship between the person and the director

• Brendan Gore is the Managing Director and Chief Executive Officer of the Company.

• Anthony James Lennon is an Executive Director of the Company.

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(ii) The maximum number of securities that may be acquired by all persons for whom approval is required

The maximum number of securities that may be issued to:

• Brendan Gore is 120,000;

• Anthony James Lennon is 35,000.

The Performance Conditions will be measured as at the Vesting Date, being the 4-year anniversary of the granting of the Performance Rights. The Performance Conditions require Peet to achieve an average EPS growth rate of 5% per annum or more over the vesting period before any of the Performance Rights are eligible to vest. The base EPS from which EPS growth will be measured is the EPS for the year ended 30 June 2008.

The proportion of Performance Rights that will vest will depend on Peet’s average EPS Growth over the vesting period according to the following table:

Performance Level	Performance Level	Average 4-year EPS Growth	Proportion of Performance
			Rights that may be eligible to
			vest
Less than the Threshold		Peet’s Average 4-year EPS	0%
		Growth is less than 5%p.a.
Threshold		Peet’s Average 4-year EPS	50%
		Growth is 5%p.a.
Threshold - Maximum		Peet’s Average 4-year EPS	Pro rata between 50% and 100%
		Growth is between 5%p.a. -	(i.e., for each 1% increase above
		8%p.a.	5% EPS Growth, an additional
			16.667% of the maximum
			Performance Rights will vest)
Maximum		Peet’s Average 4-year EPS	100%
		Growth is above 8%p.a.

(iii) The price, or the formula for calculating the price, for each security to be acquired under the PRP

No payment is required for the grant of a Performance Right.

No payment is required from the participant for the issue of the relevant shares upon vesting of Performance Rights.

• (iv) The names of all persons referred to in ASX Listing Rule 10.14 who received securities under the PRP, the number of the securities received, and acquisition price for each security

No persons referred to in ASX Listing Rule 10.14 have received securities under the PRP.

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(v) The names of all persons referred to in ASX Listing Rule 10.14 entitled to participate in the PRP

The following directors are the only persons referred to in ASX Listing Rule 10.14 currently entitled to participate in the PRP:

• Brendan Gore

• Anthony James Lennon

(vi) The date by which Peet will issue the securities

The Performance Rights will be issued within one month of shareholder approval obtained for the purposes of ASX Listing Rule 10.14 under Resolution 5 and Resolution 6.

(b) Chapter 2E Corporations Act 2001 (Cth) approval

Section 208 of Chapter 2E of the Corporations Act 2001 (Cth) prohibits a public company from giving a financial benefit to a “related party” of the public company unless either:

• the giving of the financial benefit falls within one of the nominated exceptions; or

• prior shareholder approval is obtained to the giving of the financial benefit.

For the purposes of Chapter 2E, a Director is considered to be a “related party” of the Company. Accordingly, the issue of Performance Rights to Brendan Gore and to Anthony James Lennon requires separate shareholder approval for the purposes of Chapter 2E.

For the purposes of Chapter 2E of the Corporations Act 2001 (Cth), the following information is provided to shareholders.

(i) The nature of the financial benefits

The nature of the financial benefit to be given to Brendan Gore is the grant of a total of 120,000 Performance Rights, being the right to be issued a total of 120,000 ordinary shares in the Company, subject to satisfaction of certain Performance Conditions. The maximum number of shares that may be issued to Brendan Gore is 120,000.

The nature of the financial benefit to be given to Anthony James Lennon is the grant of a total of 35,000 Performance Rights, being the right to be issued a total of 35,000 ordinary shares in the Company, subject to satisfaction of certain Performance Conditions. The maximum number of shares that may be issued to Anthony James Lennon is 35,000.

(ii) Directors’ recommendation about the proposed Resolutions and interest in the outcome of the proposed Resolutions

Brendan Gore has a material personal interest in the outcome of Resolution 5 and, accordingly, declines to make a recommendation in respect of Resolution 5.

Anthony James Lennon has a material personal interest in the outcome of Resolution 6 and, accordingly, declines to make a recommendation in respect of Resolution 6.

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All of the other Directors recommend that shareholders vote in favour of Resolution 5 and Resolution 6. This recommendation is made on the basis that several benefits will flow to the Company by issuing Performance Rights to Brendan Gore and to Anthony James Lennon under the PRP, including the following:

• PRP’s are a common and effective means of motivating and improving the performance of senior executives.

• It will ensure that the interests of executives, such as Brendan Gore and Anthony James Lennon, are aligned with the interests of shareholders of the Company.

• The PRP is designed to provide an incentive for future performance with restrictions on securities vesting under the PRP Rules encouraging executives, such as Brendan Gore and Anthony James Lennon to remain with the Peet Group.

(iii) Other information that is reasonably required by members to make a decision and that is known to the Company or any of its Directors

The table below sets out:

• The existing interests of Brendan Gore and Anthony James Lennon (in Performance Rights and shares);

• the maximum number of securities (i.e. Performance Rights and shares issued following the vesting of Performance Rights) that may be issued to Brendan Gore and to Anthony James Lennon under the PRP; and

• The interests of Brendan Gore and Anthony James Lennon after the Performance Rights have been issued (assuming Brendan Gore and Anthony James Lennon have been issued the maximum number of Performance Rights and shares under the PRP).

	Existing interests	Existing interests	Existing interests		PRP	PRP	Interests after the	Interests after the	PRP
	No. of	No. of	% of		Maximum	Maximum	No. of	Maximum	Maximum
	Perf.	shares 1	shares 2		No. of	No. of	Perf.	No. of	% of
	Rights				Perf.	shares	Rights	shares 1	shares 2
					Rights
Brendan	0	0	N/A		120,000	120,000	120,000	120,000	0.05%
Gore
Anthony
James
Lennon	0	203,597	0.09%		35,000	35,000	35,000	238,597	0.11%

1 Held directly and indirectly. Brendan Gore also holds 1,370,000 unlisted options. Anthony James Lennon also holds 600,000 unlisted options.

2 Based on 222,238,454 shares on issue at the date of this notice (disclosed in the Appendix 3B lodged 18/09/08).

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Related parties’ existing interests

The Directors’ existing interests in the Company are set out in the table above.

Dilution effect of transaction on existing shareholders' interests

If Resolution 5 is approved by shareholders and all of the 120,000 shares are issued to Brendan Gore upon satisfaction of the Performance Conditions attaching to the Performance Rights, it will result in a dilution of all other shareholders’ holdings in the Company. Brendan Gore’s interest in the Company’s shares will rise from 0% to 0.05% as set out in the table above (based on the current number of shares on issue in the Company of 222,238,454 and the assumption that Anthony James Lennon has been issued with 35,000 shares).

If Resolution 6 is approved by shareholders and all of the 35,000 shares are issued to Anthony James Lennon upon satisfaction of the Performance Conditions attaching to the Performance Rights, it will result in a dilution of all other shareholders’ holdings in the Company. Anthony James Lennon’s interest in the Company’s shares will rise from 0.09% to 0.11% as set out in the table above (based on the current number of shares on issue in the Company of 222,238,454 and the assumption that Brendan Gore has been issued with 120,000 shares).

Valuation

The Company commissioned an independent expert to provide an indicative value of the Performance Rights the subject of Resolution 5 and Resolution 6.

The independent expert applied the Binomial option valuation methodology to value the Performance Rights. The acceptance of this model is due to its derivation being grounded in economic theory.

The independent expert has provided an indicative valuation of the Performance Rights, as at 24 September 2008, of $1.70 per Performance Right.

A summary of the inputs and assumptions adopted by the independent expert for the indicative valuation is contained in the following table:

Performance	Expected	Underlying	Exercise	Dividend	Risk	Volatility
Rights	Exercise	Share	Price	Yield	Free
Expiry Date	Date	Price			Rate
24/09/14	24/09/12	$2.35	$0.00	8.07%	5.51%	29.83%

Trading history

In the 12 month period before the date of this Notice of Meeting, the highest price of Peet shares was $4.25 on 10 December 2007 and the lowest price was $2.00 on 30 June 2008 and 8 October 2008. The volume weighted average price on the ASX over the 10 trading days prior to the date of this Notice of Meeting was $2.24. The closing price on the trading day prior to the date of this Notice of Meeting was $2.00.

Other information

Shareholders are referred to information disclosed for the purposes of ASX Listing Rule 10.15 above in relation to Resolution 5 and Resolution 6 and the information regarding the PRP disclosed for the purposes of ASX Listing Rule 7.2, exception 9 above in relation to Resolution 4.

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6 Resolution 7 – Approval for the issue of Options to Brendan Gore under the Peet Limited Employee Share Option Plan

Resolution 8 – Approval for the issue of Options to Anthony James Lennon under the Peet Limited Employee Share Option Plan

Shareholders are asked to approve the issue of:

• 1,300,000 Options to Brendan Gore (Managing Director and Chief Executive Officer of the Company) under Resolution 7; and

• 400,000 Options to Anthony James Lennon (Executive Director of the Company) under Resolution 8.

The Options will be issued in accordance with the Company’s Employee Share Option Plan ( ESOP ).

Shareholder approval for the grant of the Options to Brendan Gore and to Anthony James Lennon is required for the purposes of Listing Rule 10.14 and section 208 of the Corporations Act.

Resolution 7 and Resolution 8 are separate resolutions and are not dependant on the success of one or the other. Information relevant to voting on the Resolutions are explained together where possible to reduce repetition. Any differences between the Resolutions are clearly outlined.

A summary of the terms of the Options proposed to be granted to Brendan Gore and Anthony James Lennon are as follows:

Director Vesting Term Expiry Term	Exercise Price Performance Conditions 1
Brendan Gore 4 years 6 years Anthony James Lennon 4 years 6 years	$2.50 EPS Growth (refer below) $2.50 EPS Growth (refer below)

1 Refer to discussion below on Performance Conditions.

(a) ASX Listing Rule 10.14

ASX Listing Rule 10.14 provides that a company must not permit Directors or their associates to acquire securities under an employment incentive scheme (such as the ESOP) without the approval of shareholders. Approval under ASX Listing Rule 10.14 is an exception to the prohibition on a company issuing securities to related parties under ASX Listing Rule 10.11.

In compliance with the information requirements of ASX Listing Rule 10.15 the following information is provided with respect to those Options, if any, issued to Brendan Gore and Anthony James Lennon under the ESOP:

(i) The price, or the formula for calculating the price, for each security to be acquired under the ESOP

No payment is required for the grant of an Option.

Payment is required from the participant on issue of the shares upon exercise of the Options. The exercise price of the Options the subject of Resolution 7 and Resolution 8 is $2.50.

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• (ii) The names of all persons referred to in ASX Listing Rule 10.14 who received securities under the ESOP since the last approval, the number of the securities received, and acquisition price for each security

Grant	Issued to	Quantity	Exercise	Status
Date			Price
18/06/04	Anthony James Lennon	600,000	$1.20	Vested – not exercised
18/06/04	Warwick Hemsley	600,000	$1.20	Vested – not exercised
17/08/05	Brendan Gore	20,000	$1.71	Vested – not exercised
01/09/05	Brendan Gore	50,000	$2.04	Vested – not exercised
08/02/06	Brendan Gore	100,000	$2.81	Not yet vested
30/11/07	Brendan Gore	1,200,000	$4.10	Not yet vested

The options referred to in the above table do not form part of the Options the subject of Resolution 7 and Resolution 8 of this Notice

(iii) The names of all persons referred to in ASX Listing Rule 10.14 entitled to participate in the ESOP

The following directors are the only persons referred to in ASX Listing Rule 10.14 currently entitled to participate in the ESOP:

• Brendan Gore

• Anthony James Lennon

(iv) The date by which Peet will issue the securities

The Options will be issued within one month of shareholder approval obtained for the purposes of ASX Listing Rule 10.14 under Resolution 7 and Resolution 8.

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(b) Section 208 of the Corporations Act

Subject to certain exceptions, Chapter 2E of the Corporations Act (which contains section 208) provides that a public company must not give a financial benefit to a related party of that company.

• Brendan Gore is a director of the Company and therefore a related party. The grant of Options to Brendan Gore constitutes the giving of a financial benefit by the Company.

• Anthony James Lennon is a director of the Company and therefore a related party. The grant of Options to Anthony James Lennon constitutes the giving of a financial benefit by the Company.

For the purposes of Chapter 2E, the following information is provided where it is not provided above:

(i) The nature of the financial benefit

The proposed financial benefit is the grant to:

• Brendan Gore of 1,300,000 Options, for no consideration.

• Anthony James Lennon of 400,000 Options, for no consideration.

(ii) Directors’ recommendation about the proposed Resolutions and interest in the outcome of the proposed Resolutions

Brendan Gore has a material personal interest in the outcome of Resolution 7 and, accordingly, declines to make a recommendation in respect of Resolution 7.

Anthony James Lennon has a material personal interest in the outcome of Resolution 8 and, accordingly, declines to make a recommendation in respect of Resolution 8.

All of the other Directors recommend that shareholders vote in favour of Resolution 7 and Resolution 8. This recommendation is made on the basis that several benefits will flow to the Company by issuing Options to Brendan Gore and to Anthony James Lennon under the ESOP, including:

• ESOP’s are a common and effective means of motivating and improving the performance of senior executives and aligning their interests with security holder value.

• It will ensure that the interests of executives, such as Brendan Gore and Anthony James Lennon, are aligned with the interests of shareholders of the Company.

• The ESOP is designed to provide an incentive for future performance with restrictions on securities vesting under the ESOP Rules encouraging executives, such as Brendan Gore and Anthony James Lennon to remain with the Peet Group.

(iii) Any other information that is reasonably required by Shareholders to make a decision and that is known to the Company or any of its officers

The Company’s accounting advisers have suggested that an appropriate valuation of the Options sought to be issued may be made using the Binomial option valuation methodology outlined below.

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Valuation of the Options and other information

The Options to be granted to Brendan Gore and to Anthony James Lennon after approval by Shareholders are not traded on the ASX and as such have no market value. Each Option grants the holder the right to obtain one Share in the Company upon exercise of the Option and payment of the exercise price of the Option. Accordingly, the Options may have a present value at the date of their grant. The Options may acquire future value depending upon the extent to which the Share prices exceed the exercise price during the term of the Options.

Various factors will affect the value of the Options including:

• the period outstanding before the expiry date of the Options;

• the exercise price of the Options relative to the underlying price or value of the Shares into which they may be converted;

• the proportion of the issued capital as expanded upon exercise of the Options;

• the value of the Shares into which the Options may be converted; and

• whether or not the Options are listed (and therefore capable of being sold).

The Company commissioned an independent expert to provide an indicative value of the Options the subject of Resolution 7 and Resolution 8.

As previously noted, the independent expert applied the Binomial option valuation methodology to value the Options. The acceptance of this model is due to its derivation being grounded in economic theory.

The independent expert has provided an indicative valuation of the Options, as at 24 September 2008, of $0.30 per Option.

A summary of the inputs and assumptions adopted by the independent expert for the indicative valuation is contained in the following table:

Options	Expected	Underlying	Exercise	Dividend	Risk	Volatility
Expiry	Exercise	Share Price	Price	Yield	Free
Date	Date				Rate
24/09/14	24/09/12	$2.35	$2.50	8.07%	5.51%	29.83%

Remuneration

Details of Brendan Gore’s and Anthony James Lennon’s total current remuneration is shown in the Company’s 2008 Remuneration Report forming part of the 2008 Annual Report. Details of their existing options are shown above and also in the 2008 Remuneration Report. For those shareholders that have elected not to receive the 2008 Annual Report, an electronic copy can be found on the Company’s website at www.peet.com.au.

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Effect on shareholdings of existing Shareholders

If the Options the subject of Resolution 7 and Resolution 8 granted to Brendan Gore and/or to Anthony James Lennon are exercised, the effect would be to dilute the shareholdings of the existing Shareholders.

As at the date of this Notice, the total issued capital of the Company comprised 222,238,454 shares and 2,904,000 unexercised options.

On a fully diluted basis assuming all Options the subject of Resolution 7 and Resolution 8, but no other options or performance rights, are exercised, the grant of:

• 1,300,000 Options to Brendan Gore will represent approximately 0.58% of the Company’s total issued capital.

• 400,000 Options to Anthony James Lennon will represent approximately 0.18% of the Company’s total issued capital.

Interests in securities of the Company

The details of options, performance rights and shares already held by Brendan Gore and Anthony James Lennon are shown elsewhere in this Explanatory Memorandum. Additionally, the Remuneration Report forming part of the 2008 Annual Report also contains information on their remuneration and security holdings in the Company. For those shareholders that have elected not to receive the 2008 Annual Report, an electronic copy can be found on the Company’s website at www.peet.com.au.

Market Price of Shares

The market price of the Shares during the term of the Options will normally determine whether or not the option holder exercises the Options. At the time any Options are exercised and shares issued pursuant to the exercise of the Options, shares may be trading on the ASX at a price which is higher than the exercise price of the Options.

In the 12 month period before the date of this Notice of Meeting, the highest price of Peet shares was $4.25 on 10 December 2007 and the lowest price was $2.00 on 30 June 2008 and 8 October 2008. The volume weighted average price on the ASX over the 10 trading days prior to the date of this Notice of Meeting was $2.24. The closing price on the trading day prior to the date of this Notice of Meeting was $2.00.

The Options are capable of being converted to shares by payment of the exercise price of $2.50 and subject to the Performance Conditions detailed below.

Directors’ considerations

Under the Company’s current circumstances, the Directors consider that the incentive to Brendan Gore and to Anthony James Lennon which would be represented by the grant of the Options would be a cost-effective and efficient incentive for the Company to provide, as opposed to alternative forms of incentives.

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Performance Conditions

The Performance Conditions will be measured as at the Vesting Date, being the 4-year anniversary of the granting of the Options. The Performance Conditions require Peet to achieve an average EPS growth rate of 5% per annum or more over the vesting period before any of the Options are eligible to vest. The base EPS from which EPS growth will be measured is the EPS for the year ended 30 June 2008.

The proportion of Options that will be eligible to vest will depend on Peet’s average EPS Growth over the vesting period according to the following table:

Performance Level	Performance Level	Average 4-year EPS Growth	Proportion of Options that
			may be eligible to
			exercise
Less than the Threshold		Peet’s Average 4-year EPS	0%
		Growth is less than 5%p.a.
Threshold		Peet’s Average 4-year EPS	50%
		Growth is 5%p.a.
Threshold - Maximum		Peet’s Average 4-year EPS	Pro rata between 50%
		Growth is between 5%p.a. -	and 100%
		8%p.a.	(i.e., for each 1%
			increase above 5% EPS
			Growth, an additional
			16.667% of Performance
			Rights will vest)
Maximum		Peet’s Average 4-year EPS	100%
		Growth is above 8%p.a.

In this way the benefit will only be provided in circumstances where shareholders benefit from an increase in EPS Growth. Not only will this promote performance by key senior management to drive outcomes that will improve EPS to the benefit of shareholders, but this benefit will only be provided where this performance is achieved.

Neither the Directors nor the Company are aware of any other information that would be reasonably required by Shareholders to make a decision in relation to the financial benefits contemplated by Resolution 7 or by Resolution 8.

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Lodge your vote:

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By Mail:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia

000001 000 PPC MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

Alternatively you can fax your form to (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555

For all enquiries call:

(within Australia) 1300 850 505 (outside Australia) +61 3 9415 4000

Proxy Form

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For your vote to be effective it must be received by 10.00am (WDST) Monday 17 November 2008

How to Vote on Items of Business

Signing Instructions

All your securities will be voted in accordance with your directions.

Individual: Where the holding is in one name, the securityholder must sign.

Appointment of Proxy

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate ''Certificate of Appointment of Corporate Representative'' prior to admission. A form of the certificate may be obtained from Computershare or online at www.computershare.com.

A proxy need not be a securityholder of the Company.

Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.

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Turn over to complete the form

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View the annual report or update your securityholding, 24 hours a day, 7 days a week:

www.investorcentre.com.au

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Review your securityholding

Your secure access information is:

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Update your securityholding

SRN/HIN: I9999999999

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Access the annual report

www.peet.com.au

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PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

999999_SAMPLE_0_0_PROXY/000001/000001/i

MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

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I9999999999
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Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a I9999999999 broker (reference number commences with ' X ') should advise your broker of any changes. I 9999999999 I ND

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Proxy Form

Please mark to indicate your directions

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Appoint a Proxy to Vote on Your Behalf

XX

I/We being a member/s of Peet Limited hereby appoint

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PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s).

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the Chairman of the Meeting[OR]

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of Peet Limited to be held at Parmelia Hilton Perth Hotel, 14 Mill Street, Perth, Western Australa on Wednesday, 19 November 2008 at 10.00am (WDST) and at any adjournment of that meeting.

Important for Items 4 to 8: If the Chairman of the Meeting is your proxy and you have not directed him/her how to vote on Items 4 to 8 below, please mark the box in this section. If you do not mark this box and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on Items 4 to 8 and your votes will not be counted in computing the required majority if a poll is called on these Items. The Chairman of the Meeting intends to vote undirected proxies in favour of items 4 to 8 of business.

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I/We acknowledge that the Chairman of the Meeting may exercise my proxy even if he/she has an interest in the outcome of that Item and that votes cast by him/her, other than as proxy holder, would be disregarded because of that interest.

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PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.

Items of Business

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Item	2a	Re-election of Director - Stephen Francis Higgs
Item	2b	Re-election of Director - Anthony Wayne Lennon.
Item	3	Adoption of Remuneration Report for the year ended 30 June 2008.
Item	4	Approval for the issue of secuities under the Peet Limited Performance Rights Plan.
Item	5	Approval for grant of Performance Rights under the Peet Limited Performance Rights Plan to Brendon Gore
Item	6	Approval for grant of Performance Rights under the Peet Limited Performance Rights Plan to Anthony James
		Lennon.
Item	7	Approval for grant of Options under the Peet Limited Employee Share Option Plan to Brendan Gore
Item	8	Approval for grant of Options under the Peet Limited Employee Share Option Plan to Anthony James Lennon

The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.

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Signature of Securityholder(s) This section must be completed.

Individual or Securityholder 1 Securityholder 2 Securityholder 3 Sole Director and Sole Company Secretary Director Director/Company Secretary Contact Contact Daytime Name Telephone Date / /

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P P C

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