Proposed Acquisition and Shareholder Circular

For immediate release

14 May 2010

Alternative Energy Limited

("Alternative Energy", "AEL" or the "Company")

Shareholder Circular

Notice of Extraordinary General Meeting Proposed Acquisition of Technology Proposed Issue and Allotment of the Consideration Shares to the Vendor Proposed Convertible Loan Facility Proposed Issue and Allotment of the Convertible Loan Shares to Christopher NightingaleAdmission of Enlarged Ordinary Share Capital to trading on AIMProposed Whitewash Resolution (under the Singaporean Takeover Code)

The Company announces that today the Shareholder circular, in respect of the above Proposals, is being posted to Shareholders. Details on the Proposals as extracted from the Document are set out below.

INTRODUCTION

The Board has today, subject to Shareholder approval, reached agreement for the proposed acquisition of certain patented technology and other intellectual property (the "Technology") concerning the eRoof, from Dragon Energy Pte Ltd, a company controlled by Mr. Christopher Nightingale, a Director of the Company.

The consideration for the Acquisition, which is part payable in stages upon the grant of the relevant patents, comprises a total maximum of 666,666,666 Consideration Shares. In addition, the Company has raised a total of US$3 million, by way of a combination of placings with investors and US$2 million being provided by Christopher Nightingale in the form of a Convertible Loan, in order to provide the working capital for the commercial exploitation of the Technology.

The Acquisition will constitute a "reverse take-over" under the AIM Rules and is therefore subject to the approval of Shareholders at the Extraordinary General Meeting, details of which are set out below. Given Mr. Nightingale's interest in the Vendor of the Technology, the transaction is also a Related Party Transaction under the AIM Rules. Further, since the Company is subject to the Singapore Code on Takeovers and Mergers (the "Takeover Code"), the Vendor and its concert parties (being Mr. Nightingale, Dragon Energy (and its nominees, as listed in paragraph 5.4 of Part 9 of the Document) and Perfection Group Limited, a controlling shareholder of the Company which is 100 per cent. owned by Mr. Nightingale) will require a whitewash waiver from Shareholders or will otherwise be obliged be make an offer to all shareholders to buy their shares.

Application will be made for the Enlarged Ordinary Share Capital to be admitted to trading on AIM, subject to the Resolutions set out in the Notice of Extraordinary General Meeting being passed by Shareholders at the Extraordinary General Meeting. It is expected that Admission will become effective and that trading in the Enlarged Ordinary Share Capital on AIM will commence on 2 June 2010.

BACKGROUND TO THE TRANSACTION  

The Company was established for the purpose of making investments and/or acquisitions in the alternative energy technologies market and for research into and development of energy technologies, businesses and companies which offer alternative conventional fossil fuel and nuclear methods of generating household and industrial energy. To support this strategy the Company raised approximately US$7.8 million and was admitted to trading on AIM with effect from 12 October 2007.

In 2007, AEL acquired Renewable Power Pte Ltd, a Singapore based research and development company.

Renewable Power Pte Ltd brought with it an in-house research team led by Dr. Eric Goh to enable the Company quickly to analyse the technical viability of investment proposals and also to enable the Company to develop its own technical competence.

Since the acquisition by AEL, Dr. Eric Goh, Dr. Tay Boon Hou and their team have been evaluating a number of different technologies for potential acquisition by the Company, primarily in the field of solar and wind generated energy, and have themselves developed, in the course of their research, further technologies in respect of which the Company has patents and trademarks (a list of patents and trademarks is set out in Part 5 of the Document).

AEL has developed a new approach to energy generation and, through its research and development team, has now proven the efficacy and viability of the eRoof system of energy generation. AEL has also been developing its own range of energy saving products, including LED light bulbs, street lights and housing, which will be complemented by the energy generating technology of the eRoof. These have been developed by the Company itself which intends to sell these both as a method of revenue generation to fund the development, marketing and roll out of the eRoof and as a point of entry into the alternative energy distributors internationally.

AEL is now proposing to purchase the patents surrounding the eRoof technology and to commence the production and marketing of its eRoof technology. The eRoof is a fully integrated method of micro energy generation designed to use the sun, wind and water to generate power. The Company will initially focus on the eSolar product which is a roofing system designed to generate electricity through photovoltaic cells incorporated into eSlates.At the same time, AEL is intending to change its status on AIM from an investing company to that of an operating company.

Information on the Business

In Parts 4 and 5 of the Document there is an independent report on the Technology and the Business by PA Strategy Partners and an intellectual property report on the patents incorporated in the Technology by Infinitus Law.

A report by PA Strategy Partners, as set out in the Document, contains the following extracts from the executive summary:

"Alternative Energy's product portfolio is based on the concept of the "eRoof". The eRoof concept is based on a portfolio of products which are intended to produce energy and other benefits from sunlight ("eSolar"), wind ("eWind") and rain ("eHydro"). Two ancillary products are in development to maximise the benefits of the energy generated: "eStorage", to enable the safe and efficient storage and reuse of the energy generated, and eControl to integrate the energy generated by the systems and control whether it is used in the premises or fed back onto the grid.

PA has reviewed the portfolio and assessed the stage of development of each component. We have done this by carefully assessing the design documentation provided to us by Alternative Energy, interviewing technical staff and visiting the R&D facility to inspect the systems in operation under test conditions.

PA's view is that each product in the portfolio is in a different stage of development, with the eSolar being the most mature, with tested laboratory prototypes having been developed, eHydro being at the concept stage and eWind at the prototyping stage. For that reason, we have concentrated on assessing the contribution of eSolar, together with eControl and eStorage, to the valuation of the company and the patent portfolio. The upside potential for the valuation from eWind and eHydro has therefore been addressed qualitatively in this version of the report. Notwithstanding the focus of our detailed analysis on eSolar and the different stages of product development, our assessment is that the concept of the "eRoof", i.e. a combination of three micro-power generation technologies (eSolar, eWind and eHydro) with a storage and a control device in an integrated solution - is a novelty.

Overall PA believes that the "eRoof" as a modular, hybrid, building-integrated micro generation system has the potential to be the foundation of a successful business. This is based on the commercial assessment and valuation of the eSolar subsystem, the eStorage device and the eControl application only. At this early stage, it is difficult to quantify the potential for the eWind and the eHydro subsystems and of potential synergies in their parallel operation with eSolar; for that reason the upside potential of eWind and eHydro has been addressed qualitatively in this version of the report.

The upside potential also comes from the idea of combining three micro-power generation units (eSolar, eWind and eHydro) with an eStorage and an eControl device in a single solution, which - to our knowledge - is novel.

The main value drivers in our analysis are cost advantages in the off-grid case (mainly due to eStorage) and the ability to attract customers who value the aesthetic appearance of the eRoof, compared to, for example, a standard slate roof with solar panels installed on top. These aesthetic advantages mainly result from eSolar and its components.

The main result of our assessment of the eSolar, eControl and eStorage subsystem is as follows:

·; On the assumption that by the end of 2010 the eRoof subcomponents eSolar, eStorage and eControl will reach a stage of development such that it is functional, safe, reliable and ready for mass production we estimate the value of Alternative Energy as a venture being approximately US$200 mio in our base case. The major uncertainty is whether AEL can bring the product up to the status for mass production in the short period envisaged.

·; We further estimate the value of the patents involved in the eRoof product is in the order of US$ 31.5 mio in our base case. The major uncertainty behind this value is whether some or all of the patents will be granted by passing the key tests of novelty, containing an "inventive step" and demonstrating of utility."

PASP have not analysed the energy saving products being developed by the Company but further details of these products are included in Part 2 of the Document to provide further background of the benefits to the company of acquiring the eRoof technology.

FINANCIAL INFORMATION

Set out in Part 6 of the Document are the audited financial statements of the Company for the year ended 31 August 2009 and the audited results for the year ended 31 August 2008 incorporating as comparatives the audited results for the period from incorporation to 31 August 2007. These have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations that have been adopted for use in the EU and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

Unaudited Pro Forma Statement of Net Assets for the Enlarged Group

Set out in Part 7 of the Document is an unaudited pro forma statement of net assets for the Enlarged Group showing the effects of the Acquisition and the recent placings and Convertible Loan on the Enlarged Group. This shows net assets following implementation of the Proposals of US$ 23,864,689.

Working Capital

On Admission, the Company will have net cash balances of approximately US$2.5 million.

The Directors are of the opinion that, having made due and careful enquiry, the working capital available to the Enlarged Group will be sufficient for its present requirements, that is for at least twelve months from the date of Admission.

REASONS FOR THE ACQUISITION

The Directors believe that the Technology reviewed by the Company's research team, further details of which are set out in Parts 2 and 5 of the Document, demonstrates a new approach to energy generation. This has been the subject of extensive testing and research by the Company's own research engineers.

The review carried out by PA Strategy Partners, which supported and supplemented the Company's own research, examined the technical substance and viability, as well as the market and value of the Technology. Both internal and external reports indicate that the Company has the opportunity to acquire and develop technology of significant value which offers it the potential to become a participant in the growing alternative energy market in accordance with the Company's business philosophies and strategies, which are set out in further detail in Part 2 of the Document.

The Company is paying for the Acquisition in Consideration Shares and the Company's cash reserves will therefore be conserved for the exploitation of the Technology.

As referred to above, subject to the acquisition of the Technology, the base case valuation of the business of the Company given by PA Strategy Partners is US$200 million. To achieve this valuation, the Company is making the acquisition for US$20 million in shares, which represents a significant discount to the base case valuation for the Technology (including four other related patents applied for by AEL already) of US$31.5 million given by PA Strategy Partners, as described further in Part 5 of the Document. In addition, the Consideration Shares are to be issued in tranches, conditional on the granting of certain patents, and hence the Company is only purchasing the remaining patents as and when they are granted. The Technology being acquired also includes technologies which were not valued by PA Strategy Partners but which the Directors' believe could have a material value, such as eWind and technologies, for which patents are in process, such as eCladding and eCapping. The Deferred Consideration Shares will in any event be issued as patents are granted, with three patents being granted to date.

The Board has also noted that recent global financial turmoil has meant that the market and opportunities for investment companies has changed significantly, whereas it appears to have remained attractive for businesses in the alternative energy sector and therefore the Board believes this is a good time to become an operating company within the alternative energy sector.

In the circumstances, the Independent Directors are unanimous in considering that the Acquisition and the change of the status of the Company from an investment company to a company active in the Technology, Hardware and Equipment sector is in line with the Company's founding principles and offers the most attractive way for the company to achieve growth for the benefit of its shareholders.

THE ACQUISITION

Summary of the Acquisition Agreement

The Acquisition is conditional upon approval by shareholders of the Whitewash Resolution and the admission of the Initial Consideration Shares to trading on AIM by 30 June 2010. If the conditions precedent are not fulfilled by 30 June 2010, then either the Company or the Vendor may at any time thereafter rescind the Acquisition Agreement.

In consideration for the Acquisition, the Company will issue and allot to the Vendor or its nominees the Consideration Shares at an issue price of US$0.03 per share with an aggregate value of US$20 million. Subject to the conditions precedent having been fulfilled by 30 June 2010 to the reasonable satisfaction of the Company, the Acquisition will complete on the date falling seven (7) days after the conditions precedent are fulfilled. The Consideration Shares will be issued to the Vendor or its nominees (a) on completion of the Acquisition Agreement, as to 199,999,999 consideration shares in consideration for the patents already granted, and (b) the balance of the Consideration Shares shall be allotted in tranches of 66,666,666 forthwith upon the first grant of each and any further patents relating to any of the remaining patent applications within twelve months from the completion date of the Acquisition Agreement. The parties will review the position in twelve months time following which the Company can elect, in the event that less than seven patents relating to the patent applications have been granted in that time, either to complete the Acquisition and allot the balance of the Consideration Shares or to cancel the Acquisition insofar as it relates to technology for which patents have not been granted and for which Consideration Shares have not been issued.

The Vendor has given certain warranties in respect of, inter alia, the intellectual property rights relating to the Technology, specifically that the Technology is the legal and beneficial property of the Vendor free and clear of any restrictions or encumbrances and not subject to any claim or opposition from any person as to title, validity, enforceability, or otherwise. The Vendor has warranted that it has not received any written notice of any claims or proceedings of intellectual property infringement in Singapore or elsewhere from any third party in respect of the Vendor's use of the intellectual property rights relating to the Technology, and the Vendor has not infringed or wrongfully used, nor has the Vendor been alleged to infringe or wrongfully use any of the intellectual property rights relating to the Technology, nor has any claim of such infringement or wrongful use been made against the Vendor.

CONVERTIBLE LOAN FACILITY

On 14 May 2010, Christopher Nightingale agreed to provide the Company with a Convertible Loan Facility for up to US$2 million, conditional on Shareholder approval, at the General Meeting, for general working capital. The Convertible Loan Facility is interest free, unsecured and repayable through the issue of Ordinary Shares at US$0.03 per Ordinary Share or in cash on or before 1 May 2012.

WHITEWASH WAIVER

Set out in Part 8 of the Document are further details on the application of the Takeover Code in relation to the Acquisition and a proposed convertible loan agreement to be entered into with Mr. Nightingale and the effect of the said transactions on the Company.

CURRENT TRADING AND FUTURE PROSPECTS

The Directors believe that the Enlarged Group will be well placed to participate in the growing market and demand for alternative energy systems.

The market research contained in Part 2 of the Document, as well as the research carried out by PASP and incorporated in their report contained in Part 4 of the Document, confirms the significant expected growth in the alternative energy sector which is expected over the next decade.

The Directors believe that the Technology which the Company is proposing to acquire offers advantages and features which differentiate it from currently available technology and the Company has already received expressions of interest from third parties interested in the potential of that Technology. The Company therefore anticipates being able to develop a successful and sustainable business by bringing the "eRoof" technology into production and marketing it worldwide.

Since the admission to AIM in 2007, AEL has continued to analyse the technical viability of investment proposals and also to develop its own technical competence. Since the acquisition by AEL of Renewable Power, Dr. Eric Goh, Dr. Tay Boon Hou and their team have been evaluating a number of different technologies for potential acquisition by the Company, primarily in the field of solar and wind generated energy, and have themselves developed, in the course of their research, further technologies which may lead to the Company obtaining its own proprietary technology. Indeed, the Company currently has been granted patents in respect of three inventions that complement the eRoof. In the year ended 31 August 2009 AEL spent US$290,884 developing this technology whilst it made a loss of US$2,578,044. Cash as at 31 August 2009 was US$1,798,732.

As described above, as a method of revenue generation, the Company is intending to market its own range of energy saving products, industry LED light bulbs and street lights. Revenues are yet to be generated but a number of distribution relationships have been established. On 26 February 2010, the Company announced that, further to the repurchase into Treasury of 40,042,966 Ordinary Shares by the Company in September 2008, the Company issued and allotted 19,370,000 of these Ordinary Shares at US$0.03 per share thereby raising a total of US$581,100. The monies have been used for general working capital purposes. In addition, the Company also issued and allotted 15,580,000 new Ordinary Shares at US$0.03 per share in February 2010 thereby raising a total of US$467,400.

On 14 May 2010, Christopher Nightingale agreed to provide the Company with a Convertible Loan Facility for up to $2 million. This is conditional on approval by Shareholders of the Acquisition at the General Meeting.

LOCK-IN ARRANGEMENTS

The Directors and related parties (each as defined in the AIM Rules) whose interests in the Company will amount in aggregate to 689,100,304 Ordinary Shares representing 50.01 per cent. of the issued Ordinary Shares on Admission and 755,766,970 Ordinary Shares representing 52.31 per cent. assuming full conversion of the Convertible Loan Facility, have undertaken not to dispose of any interest in their Ordinary Shares except in the limited circumstances allowed by the AIM Rules, for such periods (the "Lock In Period") as described in further detail in paragraph 5.3 of Part 9 of the Document. Additionally, they have each agreed, following the expiry of the Lock In Period, to not dispose for a further 12 month period of any of their interests in the Ordinary Shares held by them other than through the Company's broker and in consultation with the Company's nominated adviser subject to being offered terms as to price and rates of commission at least as favourable as those being offered by any other broker at that time provided that such orderly market arrangement shall only be applicable to the Directors and their related parties (as defined in the AIM Rules) for so long as each Director remains a director of the Company during that relevant period.

THE SHARE-BASED INCENTIVE SCHEMES

The Company, at the time of the Original Admission, implemented share-based incentive schemes in order to:

(a) foster an ownership culture within the Company to build a stronger identification by the employee with the long-term prosperity of the Company and create value for the Shareholders of the Company;

(b) motivate participants to achieve performance targets and a high level of contribution to the Company;

(c) attract and retain talented key executives and directors of the Company whose contributions are essential to the long-term growth and profitability of the Company;

(d) attract potential employees with the relevant skills to contribute to the Company; and

(e) give recognition to the contribution made or to be made by the Executive Directors to the success of the Company.

To achieve the above objectives, the Company has at the time of the Original Admission, implemented the following schemes:

(a) the AEL ESOS; and

(b) the AEL Share Performance Plan collectively, the "Schemes".

The ESOS Committee has on 5 May 2010 resolved to grant Incentive Options to the following individuals under the existing AEL ESOS scheme exercisable at US$0.03 per Ordinary Share*:

*Subject to the discount limit contained in the ESOS Scheme of no more than 20 per cent. discount to the average of the last dealt prices for the Shares on AIM over the five (5) market days immediately preceding the offering date of the option.

ADMISSION TO AIM AND DEALINGS

The Acquisition will constitute a "reverse take-over" under the AIM Rules and is therefore dependant upon the approval of Shareholders being given at the Extraordinary General Meeting, details of which are set out below.

Application will be made for the Ordinary Shares and the Consideration Shares to be admitted to trading on AIM and it is anticipated that Admission will become effective and that trading in the Enlarged Ordinary Share Capital on AIM will commence on 2 June 2010.

RELATED PARTY TRANSACTIONS

Mr. Christopher Nightingale wholly owns the Vendor and he is both a Director and a 42.44 per cent. shareholder in the Company as the beneficial owner of 500,000,000 Ordinary Shares and as a recipient of Consideration Shares. The Acquisition is, therefore, a Related Party Transaction under the AIM Rules. Accordingly, the Independent Directors, having consulted the Nominated Adviser, consider that the terms of the Acquisition are fair and reasonable insofar as shareholders are concerned.

In addition, for the reasons above and as Christopher Nightingale is also providing the proposed Convertible Loan Facility, this is a Related Party Transaction under the AIM Rules. Accordingly, the Independent Directors, having consulted the Nominated Adviser, consider that the terms of the Convertible Loan Facility are fair and reasonable in so far as shareholders are concerned.

Abstention from Voting

Christopher Nightingale and Perfection Group Limited, are interested parties in the Acquisition and the Convertible Loan. They will therefore abstain from voting on the Whitewash Resolution and the Acquisition Resolution (Resolutions 6 and 1) during the EGM.

Service Contracts

There are no intended amendments to the current Director's service contracts as a result of the Transaction.

EXTRAORDINARY GENERAL MEETING

At the end of the Document, there is set out a Notice convening an Extraordinary General Meeting of the Company to be held at 2.30 p.m. (or as soon thereafter following the conclusion or adjournment of the AGM of the Company to be held at 2.00 p.m. on the same day and at the same place), on 31 May 2010 at Hibiscus Room, Mezzanine Level, Shangri-La Hotel, Singapore Orange Grove Road, Singapore 258350 at which resolutions will be put to Shareholders, as summarised as follows:

(i) Resolution 1, to approve the proposed Acquisition of the Technology for an aggregate consideration of US$20 million;

(ii) Resolution 2, to approve the issuance and allotment of Consideration Shares to the Vendor;

(iii) Resolution 3, to approve the proposed Convertible Loan Facility to be entered into with Mr. Nightingale;

(iv) Resolution 4, to approve the issue of the Convertible Loan Shares to Christopher Nightingale;

(v) Resolution 5, to approve the admission of the Enlarged Ordinary Share Capital of the Company to AIM; and

(vi) Resolution 6, to approve the Whitewash Resolution for waiver of the requirement for the Concert Parties to make a mandatory offer for all the shares in the Company.

RECOMMENDATION

Resolutions

The Independent Directors, who have been advised by Beaumont Cornish, consider that the Proposals described in this Document, including the Acquisition, to be in the best interests of the Company and the Shareholders as a whole. In providing its advice, Beaumont Cornish has taken into account the commercial assessment of the Directors.

Whitewash Resolution

The Independent Directors, taking into account the opinion of Beaumont Cornish as set out in its letter set out in paragraph 8.3 of Part 8 of the Document, are of the opinion that the Whitewash Resolution is in the best interests of the Company. The Independent Directors recommend that Shareholders vote in favour of Resolution 6, being the Whitewash Resolution.

The Independent Directors wish to highlight the fact that the approval for the Whitewash Resolution is a condition precedent for the completion of the Acquisition as envisaged in the Acquisition Agreement and the Convertible Loan under the Convertible Loan Agreement. Accordingly, in the event Resolution 6 is not approved, Dragon Energy and/or Christopher Nightingale will have no obligation to complete its respective obligations as so envisaged.

Shareholders are to note that by voting for Resolution 6 (the Whitewash Resolution), they are waiving their rights to a mandatory offer from the Concert Parties at the highest price paid by the Concert Parties in the six (6) months preceding the commencement of the issue of the relevant shares under either the Acquisition Agreement or the Convertible Loan Agreement, which the Concert Parties would otherwise have been obliged to make for the Shares.

The issue of Consideration Shares and the Convertible Loan Shares to the Concert Party Shareholders will result in the Concert Party Shareholders holding shares carrying over 49 per cent. of the voting rights of the Company based on its enlarged issued share capital, and the Concert Party Shareholders will be free to acquire further shares without incurring any obligation under Rule 14 to make a Mandatory Offer.

Shareholders are to note that by voting for Resolution 6 (the Whitewash Resolution), they could be foregoing the opportunity to receive a general offer from another person who may be discouraged from making a general offer in view of the potential dilution effect of the proposed transactions.

Summary

In summary, the Independent Directors recommend Shareholders to vote in favour of all the Resolutions as they intend to do so in respect of their own beneficial holdings in respect of 82,058,823 Ordinary Shares representing 6.97 per cent. of the Existing Ordinary Share Capital (excluding treasury shares). Mr. Christopher Nightingale will abstain from voting in respect of his holding of 2 Ordinary Shares and will procure that Perfection Group Limited will abstain from voting in respect of 499,999,998 Ordinary Shares, collectively representing 42.44 per cent. of the Existing Ordinary Share Capital (excluding treasury shares) of the Company.

ANNUAL GENERAL MEETING

The Company has also posted its notice of Annual General Meeting which will be held at 2.00 p.m. on 31 May 2010 at Hibiscus Room, Mezzanine Level, Shangri-La Hotel, Singapore Orange Grove Road, Singapore 258350. The Notice of Annual General Meeting can be found at the Company's website www.alternativeenergy.com.sg.

A copy of the Circular and Notice of EGM can be found at the Company's website, www.alternativeenergy.com.sg.

ENDS

For further information, please contact:

Alternative Energy Limited

Christopher Nightingale

Tel: 0065 900 82702

Richard Lascelles, Director

Tel: 020 7408 1067

Beaumont Cornish Limited

Roland Cornish

Tel: 020 7628 3396

DEFINITIONS

In this Document, where the context permits, the expressions set out below shall bear the following meanings:

"Acquisition" the proposed acquisition by the Company of the Technology

as described in the Document

"Acquisition Agreement" the conditional agreement dated 14 May 2010 between (1)

the Vendor and (2) the Company relating to the Acquisition, a summary of the principal terms of which is set out in paragraph 5.4 of Part 8 of the Document

"Act" The Companies Act (Cap. 50) of Singapore, as amended

from time to time

"Admission" the re-admission of the Existing Ordinary Shares and the

admission of the New Ordinary Shares to trading on AIM following completion of the Acquisition and such admission becoming effective in accordance with Rule 6 of the AIM Rules

"AEL ESOS" the share option scheme adopted by the Company on 2 July

2007 described in paragraph 6 of Part 8 of the Document

"AEL Share Performance Plan" the share performance plan adopted by the Company on

2 July 2007 described in paragraph 5 of Part 8 of the Document

"AIM" AIM, a market operated by the London Stock Exchange

"AIM Rules" the rules of the London Stock Exchange governing admission

to, and operation of, AIM and comprising the AIM Rules for Companies and the AIM Rules for Nominated Advisers

"Annual General Meeting" or the Annual General Meeting of the Company to be held on 31

"AGM" May 2010

"Articles of Association" or the articles of association of the Company as at the date of

"Articles" this Document

"Beaumont Cornish" or "BCL" Beaumont Cornish Limited, the Company's Nominated

Adviser, authorised and regulated by the FSA

"Board" or "Directors" the board of directors of the Company whose names are set

out on page 9 of the Document

"Business" the ongoing business of the Company following the

Admission and the Acquisition

"City Code" the City Code on Takeovers and Mergers

"Combined Code" the Principles of Good Governance and Code of Best

Practice published in July 2003 by the Financial Reporting Council

"Company" Alternative Energy Limited

"Completion" the completion of the Proposals

"Concert Parties" Dragon Energy, Christopher Nightingale, Perfection Group

Limited and other parties acting in concert with them as defined in the Takeover Code

"Consideration Shares" the aggregate of the Initial Consideration Shares and

Deferred Consideration Shares, being 666,666,666 new Ordinary Shares to be issued to the Vendor pursuant to the Acquisition

"Convertible Loan Facility the agreement setting out the terms of the Convertible Loan

Agreement" Facility, as summarized in paragraph 5.5 of Part 9 of the

Document

"Convertible Loan Facility" the interest-free US$2 million revolving convertible loan

facility, convertible into Shares in the Company at US$0.03each proposed to be provided by Mr. Nightingale, furtherdetails are set out in paragraph 6 of Part 1 of the Document

"Convertible Loan Shares" the 66,666,666 Ordinary Shares which may be issued by the

Company pursuant to a conversion of amounts owing under the Convertible Loan into Shares.

"CREST" the computerised settlement system for trading securities in

uncertificated form operated by Euroclear UK & Ireland Limited

"CREST Regulations" the Uncertificated Securities Regulations 2001 (SI2001/3755)

as amended and any applicable rules made under those Regulations

"Custodian" the Depositary's nominated custodian

"Deferred Consideration up to a maximum of 466,666,667 Ordinary Shares to be

Shares" issued in the next 12 months and conditional on the granting

of 7 Patents

"Depositary" Computershare Investor Services Plc

"Depositary Interests" dematerialised depositary interests representing underlying

Ordinary Shares in the ratio of 1:1

"Document" the admission document issued by the Company and dated 14 May 2010

"Dragon Nominees" those parties nominated by Dragon Energy to receive

Consideration Shares

"DTR" the Disclosure Rules and Transparency Rules issued by the

FSA

"eRoof" the system being developed by the Company utilising the

Technology

"Enlarged Group" the Company and any of its Subsidiaries on Admission

"Existing Ordinary Shares" the Ordinary Shares in issue as at the date of the Document

"Extraordinary General the extraordinary general meeting of the Company to be held

Meeting" or "EGM" at 2.30 p.m. on 31 May 2010 or any adjournment thereof,

notice of which is set out at the end of the Document

"Financial Services and the Financial Services and Markets Act 2000

Markets Act" or "FSMA"

"Form of Proxy" the form of proxy for use by Shareholders in connection with

the EGM

"FSA" the Financial Services Authority, the single statutory regulator

under FSMA

"Fully Enlarged Share Capital" the fully enlarged share capital in the Company comprising

the Existing Ordinary Share Capital, the Consideration Shares and the Convertible Loan Shares

"Independent Directors" the Directors other than Mr. Christopher Nightingale who is

connected to the Vendor

"Independent Shareholders" the Shareholders other than Mr. Christopher Nightingale who

is connected to the Vendor

"Initial Consideration Shares" the 199,999,999 Ordinary Shares to be issued on Completion

"ISIN" International Securities Identification Number

"Latest Practicable Date" the latest practicable date prior to the printing of this

Document for the purpose of ascertaining certain information contained in the Document

"Lock-In Agreements" the lock-in agreements as set out in paragraph 5.3 of Part 9

of the Document

"Lock-In Parties" the Vendor, the Directors and key management of the

Company on Admission

"London Stock Exchange" London Stock Exchange plc

"Member Account ID" the identification code or number attached to any member

account in CREST

"New Ordinary Shares" the Consideration Shares

"Official List" the official list of the UK Listing Authority

"Ordinary Shares" ordinary shares in the share capital of the Company

"Original Admission" the original admission to trading on AIM of the Company's

Ordinary Shares in October 2007

"PASP" or "PA Strategy PA Strategy Partners Ltd

Partners" or "PA"

"Panel" the Panel on Takeovers and Mergers

"Participant ID" the identification code or membership number used in

CREST to identify a particular CREST member or other CREST participant

"Pound" or "£" Pound Sterling, the lawful currency of the United Kingdom

"Proposals" the Acquisition, the Admission and the Resolutions

"Resolutions" the resolutions to be proposed at the EGM as set out in the

Notice of EGM at the end of the Document and "Resolution" shall mean any one of them as appropriate

"Shareholders" holders of Existing Ordinary Shares

"Subsidiaries" Renewable Power Pte Limited, Alternative Energy

Technology Pte Limited, Alternative Energy Limited (BVI) and Alternative Energy (Middle East) Limited

"Takeover Code" The Singapore Code on Takeovers and Mergers

"Technology" the patented and other intellectual property being acquired

from Dragon Energy Pte Limited, a company controlled by Mr. Christopher Nightingale, a Director of the Company

"UK" or "United Kingdom" United Kingdom of Great Britain and Northern Ireland

"UK Listing Authority" the Financial Services Authority acting in its capacity as the

competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000

"Uncertificated" or "in an Ordinary Share recorded in the Company's register as

uncertificated form" being held in uncertificated form in CREST and title to which

by virtue of the CREST Regulations may be transferred by means of CREST

"United States" or "US" the United States of America, its territories and possessions

and any state of the United States and the District of Columbia

"US$" United States dollars, the lawful currency of the United States

of America

"Vendor" or "DEPL" or Dragon Energy Pte. Ltd., a company controlled by

"Dragon Energy" Mr. Christopher Nightingale

"Whitewash Resolution" the resolution to approve Whitewash as set out in the Notice

of General Meeting

"Whitewash Waiver" The waiver granted by the SIC of the requirement for the

Concert Parties to make the mandatory offer. This waiver is subject to the satisfaction of certain conditions, details of which are set out in Part 8 of the Document

For the purposes of the AEL ESOS and the AEL Share Performance Plan (collectively, the "Schemes"):

(a) in relation to a Shareholder (including, where the context requires, the Company), "control" means the capacity to dominate decision-marking, directly or indirectly, in relation to the financial and operating policies of that company;

(b) unless rebutted, a person who holds directly or indirectly, a shareholding of 15 per cent. or more of the Company's issued share capital shall be presumed to be a Controlling Shareholder; and

(c) in relation to a Controlling Shareholder, his "associate" shall have the meaning ascribed to it by the Act.