Tongguan Gold Group Limited — Proxy Solicitation & Information Statement 2002

Jun 7, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular, 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 the Company, you should at once hand this circular and the proxy form for use at the Special General Meeting to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee.

The Stock Exchange takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

(Incorporated in Bermuda with limited liability)

ADOPTION OF NEW SHARE OPTION SCHEME

AND

TERMINATION OF EXISTING SHARE OPTION SCHEME

A notice convening the Special General Meeting for the purpose of considering the adoption of the New Share Option Scheme and termination of the Existing Share Option Scheme to be held at Rooms 901-905, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong on Wednesday, 26th June 2002 at 11:00 a.m. is set out on pages 18 to 19 of this circular. Whether or not you intend to attend the meeting, you are advised to read the notice and complete and return the form of proxy for use at the Special General Meeting to the Company’s Share Registrar, Central Registration Hong Kong Limited of Rooms 1901-5, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible and in any event not later than 48 hours before the time appointed for holding 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 thereof should you so wish.

The English text of this circular shall prevail over the Chinese text.

* For identification purpose only

7th June 2002

INNOMAXX BIOTECHNOLOGY GROUP LIMITED

RESPONSIBILITY STATEMENT

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

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Proposed adoption of New Share Option Scheme and
termination of Existing Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Action to be taken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix — Summary of the main terms of the New Share Option Scheme . . . . . . . . .	8

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

DEFINITIONS

In this circular, except where the context otherwise requires, the following expressions shall have the following meanings:

“associates”	has the same meaning ascribed to such term in the Listing
	Rules
“Auditors”	the auditors of the Company
“Board”	the board of Directors
“Companies Ordinance”	Companies Ordinance, Chapter 32 of the Laws of Hong Kong,
	as amended from time to time
“Company”	INNOMAXX Biotechnology Group Limited
“connected person”	has the same meaning ascribed to such term in the Listing
	Rules
“Directors”	the directors of the Company
“Eligible Participants”	the persons or parties who or which are eligible to participle
	as grantee in and receive options under the New Share Option
	Scheme, as set out in paragraph 2 of the Appendix
“Existing Share Option Scheme”	the existing share option scheme adopted by the Company on
	11th March 1997
“Group”	the Company and the Subsidiaries
“Invested Entity”	any entity in which any member of the Group holds any
	interest from time to time
“Latest Practicable Date”	4th June 2002, the latest practicable date prior to the printing
	of this circular for ascertaining certain information contained
	herein
“Listing Rules”	The Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited
“New Share Option Scheme”	the new share option scheme proposed to be adopted by the
	Company at the Special General Meeting, a summary of the
	main terms of which is set out in the Appendix to this Circular
“Proposal”	the proposed adoption of the New Share Option Scheme and
	termination of the Existing Share Option Scheme
“Shareholders”	holders of Shares
“Shares”	ordinary shares of HK$0.10 each in the capital of the
	Company

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

DEFINITIONS

“Special General Meeting”	the special general meeting of the Company to be held on 26th
	June 2002
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subsidiary”	a corporation which is for the time being and from time to
	time a subsidiary of the Company (within the meaning of
	section 2 of the Companies Ordinance) or section 86 of the
	Companies Act 1981 of Bermuda (as amended), whether
	incorporated in Hong Kong, Bermuda or elsewhere and
	“Subsidiaries” means all of them
“substantial shareholder”	has the same meaning ascribed to such term in the Listing
	Rules
“%”	per cent.

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

LETTER FROM THE BOARD

(Incorporated in Bermuda with limited liability)

Executive Directors: Tong Nai Kan (Chairman and Managing Director) Chen Qiao (Deputy Managing Director) Leung Wai Kwan Cheung Ming Man Cheung Hiu Wai

Independent non-executive Directors:

Tang Tin Sek Ko Ming Tung, Edward

Registered office: Clarendon House Church Street Hamilton HM11 Bermuda

Head office and principal place of business: Room 901, Harcourt House 39 Gloucester Road Wanchai Hong Kong

7th June 2002

To the shareholders

Dear Sir or Madam,

ADOPTION OF NEW SHARE OPTION SCHEME AND TERMINATION OF EXISTING SHARE OPTION SCHEME

INTRODUCTION

This circular contains a summary of the main terms of the New Share Option Scheme proposed to be adopted by the Company and all the information reasonably necessary to enable the Shareholders to make an informed decision on whether to vote in favour of or against the ordinary resolutions to approve the adoption of the New Share Option Scheme and the termination of the Existing Share Option Scheme.

• For identification purpose only

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

LETTER FROM THE BOARD

PROPOSED ADOPTON OF NEW SHARE OPTION SCHEME AND TERMINATION OF EXISTING SHARE OPTION SCHEME

Introduction

The Board proposes to seek the approval of the Shareholders for the termination of the Existing Share Option Scheme adopted by the Company on 11th March 1997 (which will expire on 11th March 2007) and the adoption of the New Share Option Scheme, a summary of the main terms of which are set out in the Appendix to this circular.

Proposed termination of the Existing Share Option Scheme and adoption of the New Share Option Scheme

1. Current Status of the Existing Share Option Scheme

As at the Latest Practicable Date, there were 996,728,853 Shares in issue. The particulars of the options subject to/granted under the Existing Share Option Scheme as at the Latest Practicable Date are set out below:

Number of Shares subject to options granted	88,900,000 Shares
Number of Shares issued pursuant to options exercised	0 Share
Number of Shares subject to options lapsed	44,000,000 Shares
Number of Shares issuable pursuant to exercise	44,900,000 Shares
of outstanding options	(Note)
Percentage of Shares issuable pursuant to exercise
of outstanding options in the issued share capital
of the Company	approximately 4.5%
Exercise price	HK$0.145 per Share
Exercise period	1st March 2002 to 28th February 2005

Note: These Shares together with other Shares which may be issued upon exercise of all outstanding options granted but not yet exercised under the New Share Option Scheme and any other share option scheme of the Company are subject to the 30% limit as set out in paragraph 3(b) of the Appendix.

Upon termination of the Existing Share Option Scheme, no further options can be granted thereunder but in all other respects, the provisions of the Existing Share Option Scheme shall remain in force and all options granted prior to such termination shall continue to be valid and exercisable in accordance therewith.

Assuming the New Share Option Scheme is adopted at the Special General Meeting and on the basis that the issued Shares remain to be 996,728,853 on the date of adoption of the New Share Option Scheme, the Shares that are issuable pursuant to the New Share Option Scheme on the date of its adoption will be 99,672,885 Shares.

The Company will comply with the requirements of the Listing Rules in granting options and issuing Shares pursuant to the New Share Option Scheme.

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

LETTER FROM THE BOARD

2. Reasons for the proposal

On 23rd August 2001, the Stock Exchange announced amendments to Chapter 17 of the Listing Rules, which came into effect on 1st September 2001. In compliance with the amendments to the Listing Rules and the announcement of the Stock Exchange and for reasons set out in this letter, the Board considers that it is in the interest of the Company to terminate the Existing Share Option Scheme and adopt the New Share Option Scheme.

Chapter 17 of the Listing Rules deals with the share option schemes of companies listed on the Stock Exchange. The amendments introduced expand the classes of potential grantees of share options, relax certain requirements relating to the maximum number of shares comprised in share options that can be granted under the share option schemes of listed companies and at the same time, impose new disclosure and approval requirements on listed companies. In general, these amendments are designed to facilitate the giving of incentives and rewards to employees and other stakeholders of listed companies through the grant of share options while improving transparency and accountability over the grant of share options by these listed companies.

Options may no longer be granted under the Existing Share Option Scheme by the Company unless such grants have been made in compliance with the amended Listing Rules. In this connection, the Board wishes to propose to the Shareholders that the Company terminates the Existing Share Option Scheme and adopts the New Share Option Scheme, the terms of which comply with the amended Chapter 17 of the Listing Rules. The Board considers that the adoption of the New Share Option Scheme is in the interests of the Company and the Shareholders as a whole because it enables the Company to reward and provide incentives to its employees and other stakeholders for their contributions to the Group.

3. Conditions

The New Share Option Scheme is conditional upon:

• (i) the passing of an ordinary resolution at the Special General Meeting resolving the termination of the Existing Share Option Scheme;

• (ii) the passing of an ordinary resolution at the Special General Meeting resolving the adoption of the New Share Option Scheme; and

• (iii) the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in the Shares which may fall to be issued upon the exercise of the subscription rights attaching to the options to be granted under the New Share Option Scheme.

Application will be made to the Listing Committee of the Stock Exchange for approval of the listing of, and permission to deal in, the Shares which may be issued pursuant to the exercise of subscription rights attaching to the options to be granted under the New Share Option Scheme.

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

LETTER FROM THE BOARD

4. Valuation of share options

The Directors consider that it is not appropriate to state the value of all options that can be granted pursuant to the New Share Option Scheme as if they had been granted on the Latest Practicable Date prior to the approval of the New Share Option Scheme, given that the variables which are crucial for the calculation of the value of such option cannot be determined. The variables which are critical for the determination of the value of such options include the subscription price for the Shares upon the exercise of the subscription rights attaching to the options, whether or not options will be granted under the New Share Option Scheme and the timing of the grant of such options, the period during which the subscription rights may be exercised and any other conditions that the Board may impose on the options and whether or not such options if granted will be exercised by the grantees. The subscription price depends on the price of the Shares as quoted on the Stock Exchange, which in turn depends on when the Board will grant options under the New Share Option Scheme. With a scheme life of 10 years, the Board is of the view that it is too premature to state whether or not options will be granted under the New Share Option Scheme, and if so, the number of options that may be granted. It is also difficult to ascertain with accuracy the subscription price given the volatility the price of the Shares may be subject to during the 10-year life span of the New Share Option Scheme. On these premises, the Directors are of the view that the value of the options depends on a number of variables which are either difficult to ascertain or can only be ascertained subject to a number of theoretical basis and speculative assumptions. Accordingly, the Directors believe that any calculation of the value of the options will not be meaningful and may be misleading to Shareholders in the circumstances.

5. Interest of Directors

None of the Directors is a trustee of the New Share Option Scheme nor does any of them have a direct or indirect interest in such a trustee.

SPECIAL GENERAL MEETING

The notice convening the Special General Meeting is set out on pages 18 to 19 of this circular and the form of proxy for use at the Special General Meeting is enclosed in this circular. Ordinary resolutions relating to the following matters will be proposed at such meeting:

1. adoption of the New Share Option Scheme with effect from the conclusion of the Special General Meeting; and

2. termination of the Existing Share Option Scheme with effect from the conclusion of the Special General Meeting.

The Company will publish in the newspapers an announcement on the outcome of the Special General Meeting on 27th June 2002.

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

LETTER FROM THE BOARD

ACTION TO BE TAKEN

Whether or not you intend to attend the Special General Meeting, you are requested to complete the form of proxy and return it to the the Company’s Share Registrar, Central Registration Hong Kong Limited of Rooms 1901-5, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible and in any event not later than 48 hours before the time appointed for holding the Special General Meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude Shareholders from attending and voting in person at the Special General Meeting if they so wish.

RECOMMENDATION

The Directors consider that the proposals of adoption of the New Share Option Scheme and the termination of the Existing Share Option Scheme are in the best interests of the Company and the Shareholders and accordingly recommend that all Shareholders vote in favour of the resolutions set out in the notice convening the Special General Meeting. A copy of the proposed New Share Option Scheme will be available for inspection during normal business hours at the head office and principal place of business of the Company in Hong Kong at Room 901, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong during the 14 day period immediately preceding the Special General Meeting and at the Special General Meeting itself.

On behalf of the Board INNOMAXX Biotechnology Group Limited Tong Nai Kan

Chairman and Managing Director

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

SUMMARY OF THE MAIN TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

The following is a summary of the main terms of the New Share Option Scheme.

1. PURPOSE OF THE NEW SHARE OPTION SCHEME

• (a) The New Share Option Scheme is a share incentive scheme and is established to recognize and acknowledge the contributions which the Eligible Participants have made or may make to the Group.

• (b) The New Share Option Scheme will provide the Eligible Participants an opportunity to have a personal stake in the Company with a view to achieving the following objectives:

  • (i) motivate the Eligible Participants to utilise their performance and efficiency for the benefit of the Group; and

  • (ii) attract and retain or otherwise maintain on-going relationship with the Eligible Participants whose contributions are or will be beneficial to the long term growth of the Group.

2. WHO MAY JOIN

• (a) The Board may at its discretion invite anyone belonging to any of the following classes of persons to take up options to subscribe for Shares, subject to such conditions as the Board may think fit:

  • (i) any director (whether executive or non-executive or independent non-executive), employee (whether full time or part time), officer, consultant, customer, supplier, agent, partner or advisers of or contractor to the Group or any Invested Entity; and

  • (ii) any discretionary trust who discretionary objects include any director (whether executive or non-executive or independent non-executive), employee (whether full time or part time), officer, consultant, customer, supplier, agent, partner or adviser of or contractor to the Group or any Invested Entity;

and for the purpose of the New Share Option Scheme, the option may be granted to any corporation wholly-owned by any person mentioned in sub-paragraph (i) of this paragraph (a).

• (b) The eligibility of any of the above persons to the grant of any option shall be determined by the Board from time to time on the basis of his contribution to the development and growth of the Group. The Company shall be entitled to cancel any option granted to a grantee but not exercised if such grantee fails to meet the eligibility criteria determined by the Board.

• (c) Any person being an Eligible Participant must remain eligible during the period when any option granted to him remains outstanding. If he ceases to be eligible by reason of any of the events set out in paragraph 13, then the provisions of such paragraph shall apply in respect of the exercise of any option granted to him which remains outstanding.

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

SUMMARY OF THE MAIN TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

3. MAXIMUM NUMBER OF SHARES AVAILABLE FOR SUBSCRIPTION UNDER THE NEW SHARE OPTION SCHEME

(a) 10% limit

Subject to the following paragraphs, the total number of Shares which may be issued upon exercise of all options to be granted under the New Share Option Scheme and any other share option schemes of the Company must not in aggregate exceed 10% of the Shares in issue as at the date of approval of the New Share Option Scheme (excluding any options which have lapsed) (the “Scheme Mandate Limit”).

The Company may, from time to time, refresh the Scheme Mandate Limit by obtaining the approval of the Shareholders in general meeting. A circular containing the information required by the Listing Rules will be issued to the Shareholders in connection with seeking Shareholders’ approval for refreshing the Scheme Mandate Limit. Once refreshed, the total number of Shares which may be issued upon exercise of all options to be granted under the New Share Option Scheme and all other share option schemes of the Company under the limit, as refreshed, must not exceed 10% of the Shares in issue as at the date of approval of the refreshed limit. Options previously granted under the New Share Option Scheme and any other share option schemes, including without limitation any options which are outstanding, cancelled, lapsed or exercised, will not be counted for the purpose of calculating the refreshed 10% limit.

The Company may seek separate approval of the Shareholders in general meeting for granting options beyond the Scheme Mandate Limit or the refreshed limit provided the options in excess of such limit are granted only to participants specifically identified by the Company before such approval is sought. A circular containing a generic description of the specified participants who may be granted such options, the number and terms of the options to be granted, the purpose of granting options to the specified participants with an explanation as to how the terms of the options serve such purpose and other information required under the Listing Rules must be sent to the Shareholders.

(b) 30% limit

The overall limit on the number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Share Option Scheme and any other share option schemes of the Company must not exceed 30% of the Shares in issue from time to time.

4. MAXIMUM ENTITLEMENT OF EACH PARTICIPANT

Unless approved by the Shareholders, the total number of Shares issued and to be issued upon exercise of the options granted to each grantee (including both exercised and outstanding options) in any 12 month period must not exceed 1% of the Shares in issue. Where any further grant of options to a grantee would result in the Shares issued and to be issued upon exercise of all options granted and to be granted to such person (including exercised, cancelled and outstanding options) in the 12

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

SUMMARY OF THE MAIN TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

month period up to and including the date of such further grant representing in aggregate over 1% of the Shares in issue, such further grant must be separately approved by the Shareholders in general meeting with such grantee and his associates abstaining from voting. A circular containing the information required by the Listing Rules will be issued to the Shareholders in connection with seeking Shareholders’ approval for such further grant.

5. PERFORMANCE TARGET

The Board may at its discretion when offering the grant of any option impose any performance targets which must be met before the option shall vest and become exercisable.

6. MINIMUM PERIOD FOR WHICH AN OPTION MUST BE HELD

The Board may at its discretion when offering the grant of any option impose any minimum period for which an option must be held.

7. PRICE OF SHARES

The exercise price shall be determined by the Board but shall be at least the highest of: (a) the closing price of a Share as stated in the daily quotations sheet of the Stock Exchange on the date of grant which must be a business day, and (b) the average closing price of the Shares as shown on the daily quotations sheets of the Stock Exchange for the five business days immediately preceding the date of grant; and (c) the nominal value of a Share.

8. AMOUNT PAYABLE UPON ACCEPTANCE OF OPTION

HK$1.00 is payable by each Eligible Participant to the Company on acceptance of an offer of an option, which shall be paid within 30 days from the date of the offer.

9. TERM OF THE NEW SHARE OPTION SCHEME

The New Share Option Scheme shall commence on the day it becomes unconditional and shall continue in force until the tenth anniversary of such date.

10. RIGHTS PERSONAL TO THE OPTION HOLDER

An option shall be personal to the option holder and shall not be assignable and no option holder shall in any way sell, transfer, charge, mortgage, encumber or create any interest in favour of any third party over in relation to any option.

11. TIME OF EXERCISE OF OPTION

An option shall be exercisable at any time during such period(s) to be notified by the Board to each grantee, provided that no option shall be exercisable later than 10 years after its date of grant.

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

SUMMARY OF THE MAIN TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

12. GRANT OF OPTION TO DIRECTOR, CHIEF EXECUTIVE OR SUBSTANTIAL SHAREHOLDER

• (a) Any grant of options to a Director, chief executive or substantial shareholder of the Company or any of their respective associates under the New Share Option Scheme must be approved by independent non-executive Directors (excluding any independent nonexecutive Director who is a grantee of such option).

• (b) Where an option is proposed to be granted to a substantial shareholder of the Company or an independent non-executive Director, or any of their respective associates, and where the Shares issued and to be issued upon exercise of all options granted and to be granted to such person under the New Share Option Scheme (including options exercised, cancelled and outstanding) in the 12-month period up to and including the date of such grant:

• (i) representing in aggregate over 0.1% of the Shares in issue as at such date of grant, and

• (ii) at such date of grant have an aggregate value in excess of HK$5,000,000, based on the closing price of the Shares at such date of grant,

then the proposed grant must be subject to the approval by the Shareholders at a general meeting taken on a poll. The connected persons involved and all other connected persons of the Company must abstain from voting in such general meeting (except where any connected person intends to vote against the proposed grant and that his intention to do so has been stated in the circular mentioned in this paragraph). The Company shall issue a circular to the Shareholders explaining the proposed grant, disclosing the number and terms (including the subscription price) of the options to be granted to each grantee and containing a recommendation from the independent non-executive Directors (excluding any independent non-executive Director who is a grantee) on whether or not to vote in favour of the proposed grant and including all the information required under the Listing Rules.

13. RIGHTS ON CEASING TO BE AN ELIGIBLE PARTICIPANT

• (a) in the event of the grantee (being an individual) ceasing to be an Eligible Participant by reason of his death before exercising his option in full, such option period shall be deemed to expire 6 months after the date of such grantee’s death and, if none of the events under paragraphs 14 to 16 existed with respect to such grantee at the time of his death, his personal representative(s) may exercise such option (to the extent not already exercised) in whole or in part within such period of 6 months, provided that where any of the events set out in paragraphs 14 to 16 occurs prior to his death or within such period of 6 months following his death, then his personal representative(s) may so exercise the option within such of the various periods respectively set out in such paragraphs, and any option not so exercised shall lapse and determine at the expiry of such 6 months or any applicable shorter period set out in paragraphs 14 to 16;

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

SUMMARY OF THE MAIN TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

• (b) in the event of the grantee ceasing to be an Eligible Participant for any reason other than as described in sub-paragraph (a), then all his options shall lapse and determine on the date he so ceases (to the extent not already exercised), unless the Board gives notice in writing to the grantee within one month of the grantee ceasing to be an Eligible Participant that his option (to the extent not exercised) may be exercised at any time within such period set out in the notice from the Board.

14. EFFECT ON TAKEOVER

If in consequence of any general offer made to all the Shareholders (or all such Shareholders other than the offeror, any person controlled by the offeror and any person acting in association or concert with the offeror) (including an offer made in the first instance on a condition such that, if it is satisfied, the offeror will have control of the Company) or otherwise, and such offer becomes or is declared unconditional, then the Directors shall as soon as practicable thereafter notify every grantee accordingly and each grantee shall be entitled at any time within the period of 21 days of the notice given by the offeror, to exercise all of his outstanding option, and such option shall, to the extent not having been exercised, lapse and determine upon the expiry of such period.

15. EFFECT OF WINDING UP

In the event a notice is given by the Company to the Shareholders to convene a Shareholders’ meeting for the purpose of considering and, if thought fit, approving a resolution for the voluntary winding up of the Company, the Company shall forthwith give notice thereof to every grantee and the grantee shall be entitled by notice in writing to the Company (such notice to be received by the Company not later than 4 business days prior to the proposed Shareholders’ meeting) exercise his option (to the extent not already exercised) either to its full extent or to the extent specified in such notice and the Company shall as soon as possible and in any event not later than the day immediately prior to the date of the proposed Shareholders’ meeting, allot and issue such number of Shares to the grantee which falls to be issued on such exercise and all options shall, to the extent not having been exercised, lapse and determine.

16. EFFECT ON RECONSTRUCTION

If a compromise or arrangement between the Company and the Shareholders or its creditors is proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies, the Company shall give notice thereof to every grantee on the same day as it despatches to each Shareholder or creditor of the Company a notice summoning the meeting to consider such a compromise or arrangement, and thereupon each grantee shall be entitled by notice in writing to the Company accompanied by the remittance for the subscription price in respect of his option (such notice to be received by the Company not later than 2 business days prior to the proposed meeting) exercise his option (to the grantees to exercise their respective options shall forthwith be suspended. Upon such compromise or arrangement becoming effective, all options shall, to the extent not having been exercised, thereupon lapse and determine. The Directors shall endeavour to procure that the Shares issued as a result of the exercise of options under this paragraph 16 shall for the purposes of such compromise or arrangement form part of the

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

SUMMARY OF THE MAIN TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

issued share capital of the Company on the effective date thereof and that such Shares shall in all respects be subject to such compromise or arrangement. If for any reason such compromise or arrangement is not approved by the relevant court having jurisdiction (the “Court”) (whether upon the terms presented to the Court or upon any other terms as may be approved by such Court), the rights of the grantees to exercise their respective options shall with effect from the date of the making of the order by the Court be restored in full and shall thereupon become exercisable (but subject to the other terms of the scheme) as if such compromise or arrangement had not been proposed by the Company and no claim shall lie against the Company or any of its officers for any loss or damage sustained by any grantee as a result of the aforesaid suspension.

17. RANKING OF SHARES

Shares to be allotted upon the exercise of an option will be subject to all the provisions of the Bye-laws of the Company for the time being in force and will rank pari passu in all respects with the existing fully paid Shares in issue on the date on which the option is duly exercised or, if that date falls on a day when the register of members of the Company is closed, the first day of the re-opening of the register of members) (the “Exercise Date”) and accordingly will entitle the holders thereof to participate in all dividends or other distributions (including distributions made upon the liquidation of the Company) paid or made on or after the Exercise Date, other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefor shall be before the Exercise Date. A Share allotted and issued upon the exercise of an option shall not carry voting rights until the name of the grantee has been duly entered onto the register of members of the Company as the holder thereof.

18. EFFECT OF ALTERATION TO CAPITAL

• (a) In the event of any alteration in the capital structure of the Company whilst any option remains exercisable or the New Share Option Scheme remains in effect, and such event arises from a capitalisation of profits or reserves, rights issues, consolidation, sub-division of Shares or reduction of share capital of the Company, then, in any such case (other than in the case of capitalisation of profits or reserves), the Board shall instruct the auditors of the Company (the “Auditors”) or an independent financial adviser to certify in writing:

• (i) the adjustment, if any, that ought in their opinion fairly and reasonably to be made either generally or as regards any particular grantee, to:

  • (1) the number or nominal amount of Shares to which the New Share Option Scheme or any option(s) relates (insofar as it is/they are unexercised); and/or

  • (2) the subscription price; and/or

  • (3) the maximum number of Shares referred to in paragraph 3 above,

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

SUMMARY OF THE MAIN TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

and an adjustment as so certified by the Auditors or the independent financial adviser shall be made, provided that:

  - (aa) any such adjustment shall be made on the basis that the proportion of the issued share capital of the Company for which any grantee would have been entitled had he exercised all the options held by him immediately prior to such adjustment shall equal to the proportion of the issued share capital of the Company for which he would have been entitled had he exercised all the options held by him immediately after such adjustment;

  - (bb) any such adjustment shall be made on the basis that the aggregate subscription price payable by a grantee on the full exercise of any option shall remain as nearly as possible the same (but shall not be greater than) as it was before such event;

  - (cc) no such adjustment shall be made the effect of which would be to enable a Share to be issued at less than its nominal value; and

  - (dd) the issue of Shares as consideration in a transaction shall not be regarded as a circumstance requiring any such adjustment; and

• (ii) the adjustment (other than an adjustment made in the event of a capitalisation issue) so made satisfy the requirements set out in sub-paragraphs (aa) to (dd) of paragraph 18(a)(i) above.

• (b) If there has been any alteration in the capital structure of the Company as a result of the circumstances set out in sub-paragraph (a) of this paragraph 18, the Company shall upon receipt of a notice from a grantee as mentioned above inform the grantee of such alteration and shall either inform the grantee of the adjustment to be made in accordance with the certificate of the Auditors or the independent financial adviser obtained by the Company for such purpose or, if no such certificate has yet been obtained, inform the grantee of such fact and instruct the Auditors or the independent financial adviser as soon as practicable thereafter to issue a certificate in that regard.

• (c) In giving any certificate under this paragraph 18, the Auditors and the independent financial adviser shall be deemed to be acting as experts and not as arbitrators and their certificate shall, in the absence of manifest error, be final, conclusive and binding on the Company and all persons who may be affected thereby.

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

SUMMARY OF THE MAIN TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

19. LAPSE OF OPTION

An option shall lapse automatically and not be exercisable (to the extent not already exercised) on the earliest of:

• (a) subject to sub-paragraph (b) of this paragraph 19, the expiry of the option period in respect of such option;

• (b) the expiry of any of the periods referred to in paragraphs 13 to 16;

• (c) the date of commencement of the winding up of the Company;

• (d) the date on which the grantee sells, transfers, charges, mortgages, encumbrances or creates any interest in favour of any other party, over or in relation to any option in breach of the rules of the New Share Option Scheme;

• (e) the date on which any of the following events, unless otherwise waived by the Board, happens:

• (i) any liquidator, provisional liquidator, receiver or any person carrying out any similar function has been appointed anywhere in the world in respect of the whole or any part of the assets or undertaking of the grantee (being a corporation) of such option;

• (ii) the grantee (being a corporation) of such option has ceased or suspended payment of its debts, become unable to pay its debts or otherwise become insolvent;

• (iii) there is unsatisfied judgment, order or award outstanding against the grantee of such option;

• (iv) there are circumstances which entitle any person to take any action, appoint any person, commence proceedings or obtain any order of the type mentioned in sub-paragraphs (i), (ii) and (iii) above in respect of the grantee of such option;

• (v) a bankruptcy order has been made against any director of the grantee (being a corporation) of such option in any jurisdiction; or

• (vi) a petition for bankruptcy has been presented against any director of the grantee (being a corporation) of such option in any jurisdiction;

• (f) the date on which the grantee commits a breach of any condition, restriction or limitation attached to the grant of any option, if the Board shall exercise the Company’s right to cancel such option; or

• (g) the date on which the Board considers that the grantee fails to meet any eligibility criteria set out by the Board, if the Board shall exercise the Company’s right to cancel the option.

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

SUMMARY OF THE MAIN TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

20. RESTRICTION ON THE TIME OF GRANT OF OPTION

No offer of any option shall be made by the Board in the following circumstances:

• (a) after a price sensitive event of the Company has occurred or a price sensitive matter has been the subject of a decision until such price sensitive information has been announced by the Company pursuant to the requirements of the Listing Rules; and

• (b) during the period of one month immediately preceding the earlier of:

• (i) the date of the Board meeting for the approval of the Company’s interim or annual result; and

• (ii) the deadline for the Company to publish its interim or annual results announcement under the Listing Rules;

and ending on the date of the results announcement.

21. ALTERATION OF THE NEW SHARE OPTION SCHEME

The New Share Option Scheme may be altered in any respect by resolution of the Board, save

that:

• (a) the provisions of the New Share Option Scheme relating to matters set out in Rule 17.03 of the Listing Rules shall not be altered to the advantage of any grantees or prospective grantees except with the prior sanction of an ordinary resolution of the Company in general meeting;

• (b) any alteration to the terms and conditions of the New Share Option Scheme which are of a material nature or any change to the terms of the options granted prior to such alteration shall be approved by the Shareholders, except where the alterations take effect automatically under the existing terms of the New Share Option Scheme;

• (c) the amended terms of the New Share Option Scheme or the amended options shall continue to comply with the relevant requirements of the Listing Rules;

• (d) any change to the authority of the Board in relation to any alteration to the terms of the New Share Option Scheme must be approved by the Shareholders in a general meeting; and

• (e) where there is any proposed change to the terms of any option granted to an Eligible Participant who is a substantial shareholder of the Company or an independent nonexecutive Director, or any of their respective associates, then the proposed change must be subject to the approval of the Shareholders taken on a poll at a general meeting and to any other requirements of the Listing Rules. The connected person involved in such proposed change and all other connected persons of the Company must abstain from voting at such

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

SUMMARY OF THE MAIN TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

general meeting (except where any connected person intends to vote against the proposed change, provided that his intention to do so has been stated in the circular mentioned in this paragraph). The Company shall issue a circular to the Shareholders explaining the proposed change and disclosing the original terms of the option to be granted and containing a recommendation from the independent non-executive Directors (excluding any independent non-executive Director who is the holder of any option whose terms are to be changed) on whether or not to vote in favour of the proposed change and containing such information as is required under the Listing Rules to be set out in the circular.

22. TERMINATION

• (a) The Company may, by an ordinary resolution at a general meeting or of a resolution of the Board, at any time terminate the operation of the New Share Option Scheme and in such event no further option will be offered but in all other respects the provisions of the New Share Option Scheme shall remain in force to the extent necessary to give effect to the exercise of any option granted prior thereto or otherwise as may be required in accordance with the provisions of the New Share Option Scheme, and any option granted but not yet exercised prior to such termination shall continue to be valid and exercisable in accordance with the New Share Option Scheme.

• (b) The Board or the Shareholders (by an ordinary resolution) shall have the right, at any time and from time to time, by notice to a grantee forthwith to cancel, whether conditionally or unconditionally, any option granted to the grantee but not exercised. Cancelled options may be re-issued after such cancellation has been approved, provided that re-issued options shall only be granted in compliance with the terms of the New Share Option Scheme. For the avoidance of doubt, new options may be issued to an option holder in place of his cancelled options only if there are available unissued options (excluding cancelled options) within the limit approved by the Shareholders as mentioned in paragraph 3 above. The Board may also in its absolute discretion determine that against cancellation of all or any part of the outstanding options held by a grantee, a sum shall be paid to the grantee which sum shall be equal to the excess (if any) of the price of the Shares comprised in the outstanding options or the relevant part thereof calculated at the average of the closing prices of the Shares on the Stock Exchange according to the daily quotations published by the Stock Exchange during the 5 business days immediately preceding the date of the cancellation notice over the aggregate subscription price comprised in the outstanding options or the relevant part thereof.

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

NOTICE OF SPECIAL GENERAL MEETING

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a Special General Meeting of INNOMAXX Biotechnology Limited (the “Company”) will be held at Rooms 901-905, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong on Wednesday, 26th June 2002 at 11:00 a.m. for the purpose of considering and, if thought fit passing, the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

1. “ THAT the existing share option scheme (the “Existing Share Option Scheme”) of the Company adopted pursuant to a resolution of the Company passed on 11th March 1997 be and is hereby terminated provided that any option granted under the Existing Share Option Scheme prior to the passing of this resolution shall not, in any way, be affected or prejudiced and all such options shall continue to be valid and exercisable in accordance with the Existing Share Option Scheme.”

2. “ THAT conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting approval of the listing of, and permission to deal in, the shares of HK$0.10 each in the capital of the Company (“Shares”) which may fall to be issued upon the exercise of the subscription rights attaching to the options to be granted under the new share option scheme to be adopted by the Company, a copy of which is marked “A” and produced to the Meeting and for the purpose of identification signed by the Chairman of the Meeting (the “New Share Option Scheme”), the New Share Option Scheme be and is hereby approved and adopted to be the share option scheme of the Company and that the Board of Directors of the Company be and is hereby authorized to grant options to subscribe for Shares under the New Share Option Scheme and to do all such acts and to enter into all such transactions and arrangements as may be necessary or expedient in order to give effect to the New Share Option Scheme.”

By Order of the Board INNOMAXX Biotechnology Group Limited Sherman K C Lee

Company Secretary

• For identification purpose only

Hong Kong, 7th June 2002

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED

NOTICE OF SPECIAL GENERAL MEETING

Head office and principal place of business in Hong Kong: Room 901, Harcourt House 39 Gloucester Road

Wanchai

Hong Kong

Notes:

• (i) The Register of Members of the Company will be closed from Monday, 24th June 2002 to Wednesday, 26th June 2002, both days inclusive, during which period no transfer of shares will be registered. In order to qualify for attending the forthcoming Special General Meeting, all completed transfer forms accompanied by the relevant share certificates must be lodged with the Company’s share registrars, Central Registration Hong Kong Limited, Room 1901-5, 19 Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong no later than 4:00 p.m. on Friday, 21st June 2002.

• (ii) A shareholder entitled to attend and vote at the meeting convened by the above notice is entitled to appoint another person as his proxy to attend and, on a poll, vote instead of him. A proxy need not be a shareholder of the Company.

• (iii) In order to be valid, the form of proxy together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power or authority, must be deposited at the Company’s Share Registrar, Central Registration Hong Kong Limited of Rooms 1901-5, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for the meeting or any adjourned meeting.

• (iv) Delivery of an instrument appointing a proxy should not preclude a shareholder from attending and voting in person at the meeting and in such event, the instrument appointing a proxy shall be deemed to be revoked.

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INNOMAXX BIOTECHNOLOGY GROUP LIMITED