Grand Pharmaceutical Group Limited — Proxy Solicitation & Information Statement 2003

Jan 23, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in MAXX Bioscience Holdings Limited , you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this document, 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 document.

MAXX BIOSCIENCE HOLDINGS LIMITED 曼盛生物科技集團有限公司

(Incorporated in Bermuda with limited liability)

SETTLEMENT OF THE BALANCE CONSIDERATION UNDER THE SALE AND PURCHASE AGREEMENT IN RELATION TO JOY ROUTE DEVELOPMENT LIMITED BY WAY OF NEW ISSUE OF CONSIDERATION SHARES

A notice convening an EGM of the shareholders of MAXX Bioscience Holdings Limited to be held at 11 a.m. on Monday, 10 February 2003 at Room 3802, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong are set out on page 10 of this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible to the Company Secretary, Mr. Rico Chow, at Room 3802, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong no later than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof.

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

This circular is provided for the information of the shareholders of MAXX Bioscience Holdings Limited only.

23 January 2003

CONTENTS

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
EXPECTED	TIMETABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		4
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
2.	The Agreement Dated 30 September 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
3.	Specific mandate to Issue Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
APPENDIX — GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		8
1.	Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
2.	Disclosure of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
3.	Service contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
4.	Substantial Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
5.	Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
6.	Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
NOTICE OF	EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10

Proxy Form for Extraordinary General Meeting

— i —

DEFINITIONS

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

“21/10 Circular”	The circular dispatched to the Shareholders on 21 October 2002
	relating to, amongst others, the Acquisition
“Acquisition”	The acquisition of the entire issued share capital of Joy Route by
	Biometrics on the terms and conditions of the Agreement
“Agreement”	A sale and purchase agreement in respect of the Acquisition dated 30
	September 2002 entered into between Biometrics and the Vendor
“Balance Consideration”	The sum of HK$10,000,000 to be settled by Biometrics to the Vendor
	on or before 180 days after the Completion Date constituting part of
	the Consideration
“Best Express”	Best Express Worldwide Limited, a company incorporated in the
	British Virgin Islands, 70 per cent. of its share capital are legally and
	beneficially held by Joy Route and the remaining 30 per cent. are
	legally and beneficially held by Regal Town Trading Limited
“Biometrics”	Biometrics Technology Limited, a company incorporated in the British
	Virgin Islands, a wholly-owned subsidiary of the Company and the
	purchaser to the Agreement
“Board”	The board of Directors
“Business Day”	Any day (other than Saturday or Sunday) on which banks are open
	for business in Hong Kong throughout its normal business hours
“Cash Consideration”	The sum of HK$30,000,000 to be paid by Biometrics to the Vendor
	in cash on or before 90 days after the Completion Date constituting
	part of the Consideration
“Company”	MAXX Bioscience Holdings Limited, a company incorporated in
	Bermuda with limited liability and the shares of which are listed on
	the main board of the Stock Exchange (stock code: 512)
“Completion Date”	3 October 2002
“Consideration”	The consideration of HK$40,000,000 to be paid by the Company to
	the Vendor pursuant to the Agreement
“Consideration Shares”	Such number of new Shares with an aggregate value equivalent to
	the Balance Consideration when calculated based on the Conversion
	Price, to be issued and allotted to the Vendor upon Biometrics electing
	to settle the Balance Consideration by way of procuring the issuance
	of new Shares which constitutes part of the Consideration
“Conversion Price”	The price representing a 10 per cent. discount of the average of the
	closing prices of the Shares as stated in the Stock Exchange’s daily
	quotation sheets for the 5 Business Days immediately preceding the
	date on which the Balance Consideration is settled by way of issuance
	of the Consideration Shares by the Company
“Directors”	The director(s) of the Company
“EGM”	An extraordinary general meeting of the Company to be convened
	for approving the issue of the Consideration Shares
“Group”	The Company and its subsidiaries
“HK$”	The Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	The Hong Kong Special Administrative Region of People’s Republic
	of China

— 1 —

DEFINITIONS

“Joy Route”	Joy Route Development Limited, a company incorporated in the
	British Virgin Islands, whose entire share capital is beneficially owned
	by the Vendor
“Joy Route Group”	Joy Route and Best Express
“Latest Practicable Date”	21 January 2003, being the latest practicable date for ascertaining
	information referred to in this circular prior to the printing of this
	circular
“Listing Committee”	The Listing Committee of the Stock Exchange
“Listing Rules”	The Rules Governing the Listing of Securities on The Stock Exchange
	of Hong Kong Limited
“Placing”	Placing of 60,000,000 new Shares at the price of HK$0.125 each
	pursuant to a conditional agreement entered into between the Company
	and Sino-Pac Securities (Asia) Limited dated 8 January 2003, under
	which SinoPac Securities (Asia) Limited shall, on a best effort basis,
	procure subscribers to subscribe for the new 60,000,000 Shares
“PRC”	The People’s Republic of China
“Prime Rate”	The rate announced or applied by The Hongkong and Shanghai
	Banking Corporation from time to time as its prime rate of interest in
	Hong Kong for lending of HK$ to its prime corporate customers
“Sale Shares”	The 100 ordinary shares of US$1.00 each in the issued share capital
	of Joy Route
“SDI Ordinance”	The Securities (Disclosure of Interests) Ordinance, Chapter 396 of
	the laws of Hong Kong
“Share(s)”	Ordinary share(s) of nominal value of HK$0.10 each in the share
	capital of the Company
“Shareholders”	The shareholders of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“US$”	The lawful currency of the United States of America
“Vendor”	Monaco International Group Limited, a company incorporated with
	limited liability under the laws of the British Virgin Islands, an
	independent third party of the Company

For the purpose of this circular, conversion of US dollars into Hong Kong dollars is calculated at the approximate exchange rate of HK$7.80 to US$1.00. This exchange rate is for the purposes of illustration only and no representation is made that any amounts in US$ or HK$ could have been or could be converted at such rate or at any other rate at all.

— 2 —

EXPECTED TIMETABLE

Latest time for lodging forms of Proxy for the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 a.m., 8 February 2003 EGM to be held on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 a.m., 10 February 2003

— 3 —

LETTER FROM THE BOARD

MAXX BIOSCIENCE HOLDINGS LIMITED 曼盛生物科技集團有限公司

(Incorporated in Bermuda with limited liability)

Executive Directors: LO Yuk Yee (Chairperson) ZANG Jing Wu CAO Wu HE Jin Hong Independent Non-Executive Directors: HO Kwok Wah, George YUEN Kin

Registered Office: Clarendon House Church Street Hamilton HM 11 Bermuda Principal Place of Business: Room 3802, Wu Chung House 213 Queen’s Road East Wanchai Hong Kong 23 January 2003

To the shareholders of MAXX Bioscience Holdings Limited

Dear Sir or Madam,

SETTLEMENT OF THE BALANCE CONSIDERATION UNDER THE SALE AND PURCHASE AGREEMENT IN RELATION TO JOY ROUTE DEVELOPMENT LIMITED BY WAY OF NEW ISSUE OF CONSIDERATION SHARES

1. INTRODUCTION

Reference is made to the announcement of the Company dated 2 October 2002 where the Directors announced that the Company has entered into a sale and purchase agreement on 30 September 2002, under which the Company has acquired the entire issued share capital of Joy Route from the Vendor for an aggregate consideration of HK$40,000,000 which shall be settled by way of two installments. The Company has settled HK$30,000,000, being the Cash Consideration, on 15 October 2002 in accordance with the Agreement. The Company is entitled under the Agreement to settle the Balance Consideration either by way of procuring the Company to issue the Consideration Shares or repaying the same in cash with interest to the Vendor on or before 1 April 2003.

The transaction constituted a discloseable transaction of the Company. A circular in relation to, amongst others, the Acquisition was despatched to the Shareholders on 21 October 2002. As disclosed in the 21/10 Circular, Biometrics had irrevocably elected to settle the Balance Consideration by way of cash.

However, as disclosed in the announcement of the Company dated 13 January 2003, for reasons explained below, Biometrics has elected to settle the Balance Consideration by way of procuring the Company to issue and allot the Consideration Shares to the Vendor. Biometrics is entitled to so settle the Balance Consideration under the Agreement and no adverse legal implication is attached to this decision.

The issue of the Consideration Shares is subject to the specific mandate to be granted by the Shareholders, if thought fit, at the EGM and the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Consideration Shares.

The purpose of this circular is to provide you with further information relating to the Acquisition, the settlement of the Balance Consideration by way of issuance of the Consideration Shares and the proposal to seek a specific mandate with respect to the issue of the Consideration Shares. This circular also contains a notice to convene the EGM and other information in compliance with the Listing Rules.

2. THE AGREEMENT DATED 30 SEPTEMBER 2002

(Please note most of the following information under this section was disclosed in the 21/10 Circular.)

Purchaser

Biometrics, a wholly-owned subsidiary of the Company.

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LETTER FROM THE BOARD

Vendor

Monaco International Group Limited whose entire issued share capital is held by Mr. Alex Chow, an independent third party not connected with any Directors, chief executive or substantial shareholders of the Company, its subsidiaries or their respective associates pursuant to the Listing Rules. As at the date of the Agreement, the Vendor is the legal and beneficial owner of all of the Sale Shares.

The Asset Acquired

The asset being acquired under the Agreement is the entire issued share capital of Joy Route whose sole asset is the legal and beneficial interest in 70 ordinary shares of US$1.00 each, representing 70 per cent. of the entire issued share capital of Best Express.

The primary assets owned by Best Express are the intellectual property rights relating to the technology on new chemical entities used as drugs for cardiovascular and cerebrovascular diseases, and the patent in respect thereof registered in the World Intellectual Property Organization, United States Patent and Trademark Office, Canadian Intellectual Property Office and European Patent Office.

Based on the consolidated unaudited balance sheet of the Joy Route Group as at 31 August 2002, Joy Route Group has a net asset value of US$1,372,503 (equivalent to HK$10,705,523.40) and based on the consolidated unaudited income statement of Joy Route Group for the period from 8 February 2002 to 31 August 2002, it has an accumulated loss of US$1,806 (equivalent to HK$14,806.80).

Completion

Completion of the Acquisition took place on 3 October 2002.

Consideration and Payment Terms

The total consideration for the Acquisition amounting to HK$40,000,000 was negotiated and reached by the parties on an arms’ length basis after taking into account the future business development potential of the Joy Route Group and is with reference to a valuation conducted by LCH (Asia Pacific) Surveyors Limited, an independent valuer, on the value of the intellectual property owned by Best Express as at 31 August 2002 which amounts to approximately US$8,500,000 (equivalent to HK$66,300,000). The Directors considered that the terms of the Agreement are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

Pursuant to the Agreement, the Consideration shall be satisfied by Biometrics by two installments. The Cash Consideration was settled by the Company on 15 October 2002 in accordance with the Agreement.

Pursuant to the Agreement, Biometrics shall settle the Balance Consideration on or before 1 April 2003 (i.e. 180 days after the Completion Date) either (i) by way of procuring that the Consideration Shares be issued and allotted by the Company, credited as fully paid to the Vendor; or (ii) by way of repaying the Balance Consideration with interest calculated based on the Prime Rate prevailing from day to day to the Vendor. Biometrics has absolute discretion to choose the settlement method of the Balance Consideration under the Agreement.

As stated in the 21/10 Circular, upon completion of the Acquisition, Biometrics has irrevocably elected to settle the Balance Consideration by way of cash repayment.

Reasons for the change in payment method

As stated in the announcement made by the Company on 13 January 2003, Biometrics received a request from the Vendor to settle the Balance Consideration by way of procuring the issuance of the Consideration Shares by the Company on 24 December 2002. Despite Biometrics has no obligation under the Agreement to agree to the request, the Directors having further considered:

• the current and projected cash flow position of the Group and the general prospect and opportunities of the Group;

• the difficulties the Company has experienced in raising sufficient additional funding by way of placement due to the general market conditions; and

• the negative impact on the gearing ratio of the Group if the Company elects to issue further debt securities;

concluded that it would be in the best interest of the Company for Biometrics to agree to the Vendor’s request to procure the Company to issue the Consideration Shares. The Directors consider that, under the above circumstances, it would be in the best interest of the Company to preserve its internal financial resources and its ability to generate external financial resources for future working capital purposes, and to expand its capital base when the option to issue the Consideration Shares is readily available and preferred by the Vendor.

— 5 —

3. SPECIFIC MANDATE TO ISSUE SHARES

LETTER FROM THE BOARD

Biometrics is entitled to so settle the Balance Consideration under the Agreement and no adverse legal implication is attached to this decision.

The issue of the Consideration Shares is subject to the specific mandate to be granted by the Shareholders, if thought fit, at the EGM and the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Consideration Shares. The Directors recommend that the Shareholders should vote in favor of the resolution for the approval of the grant of the specific mandate.

Information on Joy Route Group

The principal business of Joy Route is investment holding. Joy Route was incorporated on 8 February 2002 with a total issued paid-up capital of US$1,000,000. Joy Route has acquired a 70 per cent. equity interest in Best Express on 18 March 2002. The remaining 30 per cent. of Best Express is legally and beneficially held by Regal Town Trading Limited, an independent third party of the Company not connected with the Directors, chief executive or substantial shareholders of the Company, its subsidiaries or their respective associates pursuant to the Listing Rules.

Best Express was incorporated on 19 December 2001 with a total issued paid-up capital of US$1,250,000. It is principally engaged in research, development and production of potential drug candidates targeting at cardiovascular and cerebrovascular diseases.

The Joy Route Group is not connected with the Directors, chief executive or substantial shareholders of the Company, its subsidiaries or their respective associates pursuant to the Listing Rules.

Reasons for the Acquisition

The Company is principally engaged in the development and production of health products. Its subsidiaries are principally engaged in the business of development, manufacture and sale of tonic and health drink products, pharmaceutical products and pyruvate calcium series products in the PRC, and the research and development of embryonic technology and related technical know-how in the PRC and in North America. The principal business activities of the Joy Route Group are research, development and production of potential drug candidates targeting at cardiovascular and cerebrovascular diseases.

The Directors consider that the Acquisition is in line with the Group’s principal activities and believe the Acquisition will increase the Group’s competitiveness in the pharmaceutical market as many large pharmaceutical companies are eager to develop their own pipeline products. The Directors were given to understand that many pharmaceutical companies are keen to obtain licences to commercialize good drug candidates for treatment of cardiovascular and cerebrovascular diseases. The Directors believe that the Acquisition will not only give the Group a good opportunity to strengthen its drug development business, but also will increase the pipeline products of the Group.

Source of funds for the Acquisition

As indicated in the announcement made by the Company on 10 October 2002, most of the funds required for the payment of the Cash Consideration was raised from the issue of the unsecured convertible debentures to Health Capital Investment Limited.

As stated in the 21/10 Circular the Directors intended to source the funds for the payment of the Balance Consideration from internal financial resources of the Group. However, for reasons stated above, the Directors intend to source the funds for settlement of the Balance Consideration by way of issuance of the Consideration Shares.

At the EGM, the Shareholders will be asked to consider and, if thought fit, to approve an ordinary resolution for the granting to the Directors of a specific mandate to issue the new Consideration Shares.

Share Capital

The authorized share capital and the total issued share capital of the Company as at the Latest Practicable Date were, and upon completion of the Placing and the issuance of the Consideration Shares will be:

Authorized Capital		HK$
1,600,000,000	Shares	160,00,000
Issued Share Capital
978,100,000	Shares	97,810,000
Shares to be issued
60,000,000	Placing Shares to be issued	6,000,000
72,463,768	Consideration Shares to be issued assuming	7,246,377
	the Conversion Price would be HK$0.138
	(please see further explanation below)
1,110,563,768	Shares	111,056,377

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LETTER FROM THE BOARD

Assuming the Consideration Shares were issued as at and the Placing was completed on the Latest Practicable Date and all 60,000,000 new Shares were issued under the Placing, the Conversion Price would be HK$0.138 and a total of approximately 72,463,768 Shares, representing approximately 6.98 per cent. of the issued share capital of the Company as at the Latest Practicable Date and approximately 6.52 per cent. of the enlarged issued share capital of the Company after issue of the Consideration Shares. The entire enlarged issued share capital of the Company amounting to approximately HK$111,056,377 represents the new paidup capital of the Company upon completion of the Placing and issuance of the Consideration Shares. The Consideration Shares will rank pari passu in all respects will all other Shares in issue.

Shareholding Structure (Note 1)

Shareholding Structure(Note	1)	1)	1)
	After Completion of the Placing			After the Completion of the
	and prior to the issue of			Placing and the issuance of the
	the Consideration Shares			Consideration Shares(Note 2)
Name of	Number of			Number of
Shareholders	issued Shares		%	issued Shares	%
Ms Lo Yuk Yee	415,230,000		40.0	415,230,000	37.39
(chairperson of the Board
and chief executive officer)
Mr. Lok Fai	185,000,000	17.82		185,000,000	16.66
(resigned as director on
21/6/2002)
The Vendor	—		—	72,463,768	6.52
Public	437,870,000	42.18		437,870,000	39.43
Total	1,038,100,000		100	1,110,563,768	100

Note:

1. Assuming the Placing was completed on the Latest Practicable Date and all the 60,000,000 Shares were subscribed for and issued under the Placing.

2. Assuming 72,463,768 Shares were issued and allotted as Consideration Shares on the Latest Practicable Date and the Conversation Price was HK$0.138.

EGM

The EGM will be held at 11 a.m. on Monday, 10 February 2003 at Room 3802, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong. A notice of the EGM is set out on page 10 of this circular.

A form of proxy for use at the EGM is enclosed. You are requested to complete the enclosed form of proxy and return the same to the Company Secretary, Mr. Rico Chow, at Room 3802, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time of the EGM (or any adjournment thereof) whether or not you intend to be present at the meeting. Completion and the return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment meeting should you so desire.

General

The Company has made an application to the Listing Committee of the Stock Exchange for the listing and permission to deal in the Consideration Shares.

The English text of this circular and the accompanying proxy form shall prevail over the Chinese text of the same in case of inconsistency.

On behalf of the Board MAXX Bioscience Holdings Limited Lo Yuk Yee Chairperson

— 7 —

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purposes of giving information with regard to the Group. All other Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

• (a) As at the Latest Practicable Date, the interests of the Directors in the equity or debt securities of the Company or any of its associated corporations (within the meaning of the SDI Ordinance) which required notification to the Company pursuant to Section 28 of the SDI Ordinance (including interest which any such Director was deemed or taken to have under Section 31 or Part I of the Schedule to the SDI Ordinance) or which were required to be entered in the register maintained by the Company pursuant to Section 29 of the SDI Ordinance, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, were as follows:

Directors’ interests in the share capital of the Company

	Personal	Corporate	Total number
Name of Director	Interests	Interests	of Shares
Ms. Lo Yuk Yee	—	415,230,000	415,230,000
		(Note)

Note: Such interests are held by Ms. Lo through her wholly-owned company, Vision Ocean Investments Limited.

Directors’ right to acquire Shares or debentures of the Company

As at the Latest Practicable Date, the interests of the Directors in options to subscribe for Shares were as follows:

were as follows:
Name of		Exercise price	Exercisable	Number of
Director	Date of Grant	per Share	Period	Share Option
		HK$
Lo Yuk Yee	28 June 2002	HK$0.315	28 June 2002 to	8,150,000
			27 July 2004
	21 January 2003	HK$0.158	21 January 2003 to	1,630,000
			20 January 2005
Cao Wu	21 January 2003	HK$0.158	21 January 2003 to	9,780,000
			20 January 2005
Zang Jing Wu	28 June 2002	HK$0.315	28 June 2002 to	3,000,000
			27 July 2004

All of the above share options were granted pursuant to the share option scheme adopted by the Company on 17 May 2002. No option had been exercised as at the Latest Practicable Date.

• (b) None of the Directors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date which is significant to the business of the Group taken as a whole.

— 8 —

GENERAL INFORMATION

APPENDIX

3. SERVICE CONTRACTS

Ms. Lo Yuk Yee and Dr. Zang Jing Wu have service contracts with the Company which are terminable by either party giving not less than three months’ notice in writing. Except the foregoing, none of the Directors has an unexpired service contract with the Company which is not terminable by the Company within one year without payment of compensation (other than statutory compensation).

4. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, the following substantial shareholders were directly or indirectly interested in 10 per cent. or more of the share capital of the Company as recorded in the register required to be kept under Section 16(1) of the SDI Ordinance.

		Percentage of
Name of Shareholder	Number of Shares	existing issued capital
Lok Yuk Yee	415,230,000	40.0 per cent.
Vision Ocean Investments Limited	415,230,000	40.0 per cent.
(see Note a & b)
Lok Fai	185,000,000	17.82 per cent.
Sunny Fortune Limited	185,000,000	17.82 per cent.
(see Note c)

Notes:

• (a) On 22 March 2002, Vision Ocean Investments Limited (a company wholly-owned by Ms. Lo Yuk Yee) has granted a mortgage of 415,000,000 Shares to Lafe Components Limited as security for a loan from Lafe Components Limited. Lafe Components Limited holds the 415,000,000 Shares on trust for Vision Ocean Investments Limited until such financing is fully repaid, when the 415,000,000 Shares will be transferred back to Vision Ocean Investments Limited subject to the terms of the share mortgage.

• (b) Mr. Ho Wing On, Christopher has 100 per cent. deemed beneficial interests in The Grande International Holdings Limited, which holds 73.7 per cent. of the entire issued share capital of The Grande Holdings Limited, through its wholly-owned subsidiary, Barrican Investments Corporation. The Grande Holdings Limited holds the entire issued share capital of The Grande (Nominees) Limited, which holds the entire issued share capital of Sheer Profit Corporation as bare trustee on behalf of The Grande Holdings Limited, Sheer Profit Corporation holds 61.9 per cent. of the entire issued share capital of Lafe Technology Limited, which holds the entire issued share capital of Lafe Components Limited.

Therefore, all of these shares are entirely duplicated.

• (c) Sunny Fortune Limited is a company wholly and beneficially owned by Mr. Lok Fai.

5. LITIGATION

As at the Latest Practicable Date, the Company was not engaged in any litigation or arbitration of material importance and there is no litigation or claim material importance known to the Directors to be pending or threatened by or against the Company.

6. MISCELLANEOUS

• (a) The branch share registrars and transfer office of the Company in Hong Kong is Central Registration Hong Kong Limited, Rooms 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (b) The secretary of the Company is Mr. Chow Wing Chau, Rico who is an associate member of the Hong Kong Society of Accountants. Mr. Chow holds a Bachelor of Economics Degree in Business Finance from Macquarie University in Australia. He is a qualified accountant of CPA Australia and a senior associate member of the Australasian Institute of Banking and Finance. Before joining the Group, he had over 10 years’ experience in accounting, financial management and corporate finance, and held a management position as the Project Administration Manager in a listed company in Hong Kong.

— 9 —

NOTICE OF EGM

MAXX BIOSCIENCE HOLDINGS LIMITED 曼盛生物科技集團有限公司

(Incorporated in Bermuda with limited liability)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of the shareholders of MAXX Bioscience Holdings Limited (the “ Company ”) will be held at 11 a.m. on Monday, 10 February 2003 at Room 3802, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong for the purpose of considering and, if thought fit, passing the following resolution as an ordinary resolution:

ORDINARY RESOLUTION

“ THAT

• (a) subject to and conditional upon the Listing Committee of the Stock Exchange of Hong Kong Limited granting the approval for the listing of and permission to deal in the Consideration Shares to be issued by the Company as a result of the Agreement, the directors of the Company be authorized to issue, allot the Consideration Shares to Monaco International Group Limited or its nominee for the purpose of enabling Biometrics Technology Limited, a wholly owned subsidiary of the Company, to settle the Balance Consideration pursuant to the Agreement;

• (b) the directors of the Company be authorized to do all acts and things as may be necessary and expedient in connection with the allotment and issue of the Consideration Shares; and

• (c) for the purpose of this resolution:

• “Agreement” means a sale and purchase agreement in respect of the acquisition of Joy Route Development Limited dated 30 September 2002 entered into between Biometrics Technology Limited and Monaco International Group Limited;

• “Balance means the sum of HK$10,000,000 to be settled by Biometrics Technology Limited to Consideration” Monaco International Group Limited constituting part of the consideration under the Agreement;

• “Consideration means such number of new ordinary shares of HK$0.10 each of the Company with an Shares” aggregate value equivalent to the Balance Consideration when calculated based on the Conversion Price, to be issued and allotted to Monaco International Group Limited; and

• “Conversion means the price representing a 10 per cent. discount of the average of the closing prices Price” of the Shares as stated in the daily quotation sheets of the Stock Exchange of Hong Kong Limited for the 5 business days immediately preceding the date on which the Balance Consideration is settled by way of issuance of the Consideration Shares by the Company.”

On behalf of the Board MAXX Bioscience Holdings Limited Lo Yuk Yee Chairperson

Hong Kong, 23 January 2003

Notes:

(1) Any member of the Company entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not be a member of the Company.

• (2) Where there are joint registered holders of any share, any one of such persons may vote at the EGM, either personally or by proxy, in respect of such share as if he was solely entitled thereto, but if more than one of such joint holders be present at the EGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members in respect of such share shall alone be entitled to vote in respect thereof.

• (3) A form of proxy is enclosed herewith.

• (4) The instrument appointing a proxy must be in writing under hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same.

• (5) To be valid, a form of proxy, together with the power of attorney or other authority, if any, under which it is signed or a certified copy of that power of attorney, must be sent to the Company Secretary, Mr. Rico Chow at Room 3802, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time appointed for holding the EGM or adjourned meeting. Completion and return of the form of proxy will not preclude shareholders from attending the EGM and voting in person.

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