Grand Pharmaceutical Group Limited — Proxy Solicitation & Information Statement 2004

Aug 6, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a 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 of MAXX Bioscience Holdings Limited , you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or to the bank or stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

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

MAXX BIOSCIENCE HOLDINGS LIMITED （曼盛生物科技集團有限公司[] ）*

(Incorporated in Bermuda with limited liability)

(stock code: 512)

PROPOSED GENERAL MANDATE TO ISSUE NEW SHARES, REFRESHMENT OF THE 10 PER CENT LIMIT ON THE GRANT OF OPTIONS UNDER THE SHARE OPTION SCHEME AND NOTICE OF SPECIAL GENERAL MEETING

A notice convening the special general meeting (“SGM”) of shareholders of MAXX Bioscience Holdings Limited (the “Company”) to be held at Rooms 1910 – 1913, Hutchison House, 10 Harcourt Road, Central, Hong Kong on Tuesday, 24 August 2004 at 10:00 a.m. is set out on pages 6 to 8 of this circular. If you are unable to attend the SGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon as soon as possible to the Company Secretary, Mr. Lee Pak Chung at the Company’s principal office in Hong Kong at Room 3802, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not later than 48 hours before the time appointed for the holding of the SGM. Completion and delivery of the proxy form will not preclude you from attending and voting in person at the SGM should you so wish.

This circular, for which the directors of the Company collectively and individually accept full responsibility, includes particulars given in compliance with The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Company. The directors of the Company, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (i) the information contained in this circular is accurate and complete in all material respects and not misleading; (ii) there are no other matters the omission of which would make any statement in this circular misleading; and (iii) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

* For identification only

6 August 2004

DEFINITIONS

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

• “Adoption Date”

• 17 May 2002, being the date on which the Share Option Scheme was adopted by the Company

• “Capital Reorganisation”

• the capital reorganisation of the Company which became effective on 27 April 2004, details of which are set out in the circular of the Company dated 31 March 2004

• “Director(s)” the director(s) of the Company

• “General Issue Mandate”

• the proposed general mandate granted to the Directors to exercise all the powers of the Company to allot, issue and otherwise deal with new Shares not exceeding 20% of the issued share capital of the Company as at the date of passing the resolution approving the said mandate

• “Latest Practicable Date”

• 3 August 2004, being 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, as amended from time to time

• “Open Offer”

• the issue of the 207,214,500 new Shares on the basis of three new Shares for every Share at HK$0.08 per Share, details of which are set out in the circular of the Company dated 8 May 2004 and prospectus of the Company dated 28 May 2004

• “Option(s)”

• the right granted under the Share Option Scheme to subscribe for Shares in accordance with the Share Option Scheme

• “Proposed Refreshment” the proposed refreshment of the Scheme Mandate Limit under the Share Option Scheme

• “Scheme Mandate Limit”

• the maximum number of Shares which may be allotted and issued upon the exercise of all options to be granted under the Share Option Scheme and other such schemes of the Company which initially shall not in aggregate exceed 10 per cent of the Shares in issue as at the Adoption Date and thereafter, if refreshed shall not exceed 10 per cent of the Shares in issue as at the date of approval of the refreshed limit by the Shareholders

• “Share(s)”

• ordinary share(s) of HK$0.01 each in the share capital of the Company

• “Share Option Scheme”

• the share option scheme adopted by the Company on 17 May 2002

• “Shareholder(s)”

registered holder(s) of Share(s)

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

– 1 –

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)

(stock code: 512)

Executive Directors: Ms. LO Yuk Yee (Chairman) Ms. HE Jin Hong Prof. ZANG Jing Wu Dr. CAO Wu Mr. SIU Siu Ling, Robert

Independent Non-executive Directors: Mr. WONG Wai Kin Mr. MA Shiu Kin

Registered Office: Clarendon House Church Street Hamilton HM11 Bermuda

Principal Place of Business in Hong Kong: Room 3802 Wu Chung House 213 Queen’s Road East Wanchai Hong Kong

6 August 2004

To the Shareholders

Dear Sir or Madam,

PROPOSED GENERAL MANDATE TO ISSUE NEW SHARES, REFRESHMENT OF THE 10 PER CENT LIMIT ON THE GRANT OF OPTIONS UNDER THE SHARE OPTION SCHEME AND NOTICE OF SPECIAL GENERAL MEETING

A notice convening a special general meeting (“SGM”) of shareholders of MAXX Bioscience Holdings Limited (the “Company”) to be held at Rooms 1910 – 1913, Hutchison House, 10 Harcourt Road, Central, Hong Kong on Tuesday, 24 August 2004 at 10:00 a.m. is set out on pages 6 to 8 of this circular for proposing, inter alia, the granting of the General Issue Mandate and the Proposed Refreshment.

GENERAL ISSUE MANDATE

At the annual general meeting of the Company held on 25 May 2004 (the “AGM”), the Directors were granted a general mandate (the “Previous General Mandate”) to allot, issue and deal with new Shares up to 20% of the aggregate issued share capital of the Company as at the date of such meeting. As at the date of AGM, 69,071,500 Shares were in issue.

After completion of the Open Offer, the number of issued shares of the Company has increased from 69,071,500 Shares to 276,286,000 Shares. However, based on the Previous General Mandate, only 13,814,300 Shares can be issued, representing 5% of the issued share capital of the Company upon completion of the Open Offer and as at the Latest Practicable Date.

* For identification only

– 2 –

LETTER FROM THE BOARD

From the date of the Previous General Mandate to the Latest Practicable Date, none of the Previous General Mandate has been utilised and no Shares have been issued under the Previous General Mandate and thus the Company proposes to refresh the Previous General Mandate such that the amount in percentage terms of the unused part of the Previous General Mandate upon refreshment is the same as that before the Open Offer, i.e. 20 per cent of the issued share capital of the Company as at the date of grant of the Previous General Mandate.

In order to top up the number of Shares to be issued pursuant to the Previous General Mandate as a result of the Open Offer and to ensure flexibility and discretion to the Directors to issue new Shares in the future, the Directors propose to the Shareholders a resolution to grant the General Issue Mandate.

REFRESHMENT OF THE SHARE OPTION SCHEME

Proposed Refreshment

On the Adoption Date, 815,100,000 shares of the Company were in issue and the maximum number of shares of the Company which may be issued upon exercise of all Options under the Share Option Scheme and other schemes of the Company was therefore 81,510,000 shares, being 10 percent of the shares in issue at that time. As a result of the implementation of the Capital Reorganisation on 27 April 2004, the said 815,100,000 shares have been adjusted to 40,755,000 Shares. Hence, pursuant to the terms of the Share Option Scheme and in compliance with Chapter 17 of the Listing Rules, the maximum number of Shares which may be issued upon exercise of all Options to be granted under the Share Option Scheme and all other share option scheme(s) of the Company should be adjusted to 4,075,500 Shares.

According to the Share Option Scheme, the number of Options granted under the Share Option Scheme shall be duly adjusted taking into account of the effect of Capital Reorganisation and the Open Offer. The adjustments on the number of Shares and the exercise price per Share after the Capital Reorganisation and the Open Offer have been duly certified by the Company’s auditors (as set out below) that the adjustments satisfy the requirements set out in the Share Option Scheme and Chapter 17 of the Listing Rules. Up to and as at the Latest Practicable Date, particulars of Options granted under the Share Option Scheme and adjustment made thereon, in respect of the number of Shares and the exercise price per Share upon exercise of the subscription rights attached to the Option, after Capital Reorganisation and Open Offer are as follows:

Number of shares of the Company Number of Shares subject to subject to outstanding Options outstanding Options Exercised since the Period Before Capital After Capital After the grant of Exercise Reorganisation Reorganisation Open Offer the Options 28.6.2002 – 25,150,000 1,257,500 5,030,000 Nil 27.7.2004 21.1.2003 – 22,540,000 1,127,000 4,508,000 Nil 20.1.2005 18.2.2003 – 18,510,000 925,500 3,702,000 Nil 17.2.2005 66,200,000 3,310,000 13,240,000 Nil	Lapsed/ Cancelled Nil (1,000,000 ) (2,076,000 ) (3,076,000 )	Exercise price per Share After the Outstanding Open Offer as at and as at the Latest Before After the Latest Practicable Capital Capital Practicable Date Reorganisation Reorganisation Date (HK$) (HK$) (HK$) 5,030,000 0.315 6.300 1.575 3,508,000 0.158 3.160 0.790 1,626,000 0.140 2.800 0.700 10,164,000

– 3 –

LETTER FROM THE BOARD

To avoid diluting the shareholding of the holders of Options in the Company after the Open Offer and pursuant to the Share Option Scheme and in compliance with Chapter 17 of the Listing Rules, it is certified by the auditors of the Company that the number of Shares subject to outstanding Options has been adjusted from 3,310,000 Shares to 13,240,000 Shares immediately after the Open Offer, which is below 10 per cent of the Shares in issue as at the Adoption Date taking into account of the adjustments after the Open Offer which has been certified by the auditors of the Company. On 1 June 2004, a total number of 3,076,000 Options had been surrendered to the Company leaving a total number of 10,164,000 Options remain outstanding.

As at the Latest Practicable Date, a total of 10,164,000 Options remain outstanding and 10,164,000 Shares will be allotted and issued upon the exercise of such Options, representing 3.64% of the issued share capital of the Company as at the Latest Practicable Date. In view of the fact that the issued share capital of the Company has been enlarged as a result of the Open Offer, the Company purposes to refresh the Scheme Mandate Limit based on the enlarged issued share capital of the Company.

Unless the Scheme Mandate Limit is refreshed, the Company cannot grant further Options under the Share Option Scheme.

If the Scheme Mandate Limit is refreshed, on the basis of 276,286,000 Shares in issue after the Open Offer and as at the Latest Practicable Date and assuming no Shares are issued or repurchased by the Company prior to the SGM, the Scheme Mandate Limit will be re-set to 27,628,600 Shares and the Company will be allowed to grant further options under the Share Option Scheme and other share option schemes carrying rights to subscribe for a maximum of 27,628,600 Shares (inclusive of the 10,164,000 Shares duly adjusted after the Open Offer).

The Directors consider that it is in the interests of the Company to refresh the Scheme Mandate Limit to permit the grant of further Options under the Share Option Scheme so as to provide incentives to, and recognise the contributions of, the Group’s employees and other selected grantees.

It is proposed that subject to the approval of the Shareholders at the SGM and such other requirements prescribed under the Listing Rules, the Scheme Mandate Limit will be refreshed so that the total number of securities which may be issued upon exercise of all Options to be granted under the Share Option Scheme and all other share option schemes of the Company under the Scheme Mandate Limit as refreshed, shall not exceed 10 per cent of the Shares in issue as at the date of approval of the Proposed Refreshment by the Shareholders at the SGM and, Options previously granted under the Share Option Scheme and/or any other share option scheme(s) of the Company (including without limitation those outstanding, cancelled, lapsed or exercised in accordance with the Share Option Scheme or such other scheme(s) of the Company) will not be counted for the purpose of calculating the Scheme Mandate Limit as refreshed.

Pursuant to the Listing Rules, the Shares which may be issued upon exercise of all outstanding Options granted and yet to be exercised under the Share Option Scheme and any other share option scheme(s) of the Company at any time will not exceed 30 per cent of the Shares in issue from time to time. No options shall be granted under any scheme(s) of the Company or any of its subsidiaries if this will result in the 30 per cent limit being exceeded.

Conditions

As required by the Share Option Scheme and the Listing Rules, an ordinary resolution will be proposed at the SGM to approve the Proposed Refreshment.

– 4 –

LETTER FROM THE BOARD

The adoption of the refreshed Scheme Mandate Limit is conditional upon:

• (a) the Shareholders passing an ordinary resolution to approve the Proposed Refreshment at the SGM; and

• (b) the Stock Exchange granting the approval of the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of any options that may be granted under the Share Option Scheme under the refreshed Scheme Mandate Limit not exceeding 10% of the number of Shares in issue as at the date of approval by the Shareholders.

Application for Listing

An application will be made to the Stock Exchange in respect of the approval above.

PROCEDURE FOR DEMANDING A POLL

Pursuant to the bye-law 66 of the bye-laws of the Company, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

• (a) by the chairman of such meeting; or

• (b) at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy for the time being entitled to vote at the meeting; or

• (c) a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or

• (d) a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy and holding Shares conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the Shares conferring that right.

A demand by a person as proxy for a Shareholder or in case of a Shareholder being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a Shareholder.

RECOMMENDATION

The Directors consider that the proposals for General Issue Mandate and the Proposed Refreshment are in the best interests of the Company and the Shareholders. Accordingly, the Directors recommend that all the Shareholders should vote in favour of all the resolutions to be proposed at the SGM.

Yours faithfully, By Order of the Board

MAXX Bioscience Holdings Limited

Lo Yuk Yee Chairman

– 5 –

NOTICE OF SGM

APPENDIX

MAXX BIOSCIENCE HOLDINGS LIMITED （曼盛生物科技集團有限公司[] ）*

(Incorporated in Bermuda with limited liability)

(stock code: 512)

NOTICE IS HEREBY GIVEN that a special general meeting of MAXX Bioscience Holdings Limited (the “Company”) will be held at Rooms 1910 – 1913, Hutchison House, 10 Harcourt Road, Hong Kong on Tuesday, 24 August 2004 at 10:00 a.m. for the purpose of considering and, if thought fit, passing the following resolutions as ordinary resolutions (with or without modification), as indicated below:

ORDINARY RESOLUTIONS

1. “ THAT

2. (i) subject to the extent that such authority has not been exercised, the general mandate granted to the directors of the Company (the “Directors”) to exercise the powers of the Company to issue, allot and otherwise deal with Shares of HK$0.01 each in the capital of the Company as approved by the shareholders of the Company in the annual general meeting of the Company held on 25 May 2004 be and is hereby revoked (without prejudice to any valid exercise of such general mandate prior to the passing of this resolution);

3. (ii) subject to sub-paragraph (iv) of this resolution, the exercise by the Directors during the Relevant Period (as defined below) of all powers of the Company to issue, allot and otherwise deal with additional shares in the capital of the Company and to make or grant offers, agreements and options which would or might require the exercise of such powers be and is hereby generally and unconditionally approved;

4. (iii) the approval in (ii) above shall authorize the Directors during the Relevant Period to make or grant offers, agreements and options which would or might require the exercise of such power after the end of the Relevant Period;

5. (iv) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors pursuant to the approval contained in sub-paragraph (i) of this resolution, otherwise than pursuant to (a) a Rights Issue (as defined below); (b) an issue of shares as scrip dividends pursuant to the bye-laws of the Company from time to time; or (c) an issue of shares under any share option scheme or similar arrangement for the time being adopted for the grant or issue to employees of the Company and/or any of its subsidiaries, shall not exceed twenty per cent. of the nominal amount of the issued share capital of the Company on the date of this resolution and this approval shall be limited accordingly; and

* For identification only

– 6 –

NOTICE OF SGM

APPENDIX

• (v) for the purposes of this resolution:

“Relevant Period” means the period from the date of the passing of this resolution until the earliest of:

• (a) the conclusion of the next annual general meeting of the Company;

• (b) the expiration of the period within which the next annual general meeting of the Company is required, by the bye-laws of the Company or any applicable laws, to be held; and

• (c) the revocation or variation of the authority given under this resolution by an ordinary resolution of the shareholders of the Company in general meeting.

“Rights Issue” means an offer of share open for a period fixed by the directors to holders of shares on the register on a fixed record date in proportion to their then holdings of such shares (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of, any recognized regulatory body or any stock exchange in any territory outside Hong Kong).”

1. “ THAT subject to and conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting approval of the listing of, and permission to deal in, any ordinary shares in the capital of the Company with a nominal value of HK$0.01 each (the “Shares”) in the share capital of the Company to be issued pursuant to the exercise of options which may be granted under the Refreshed Scheme Mandate Limit (as defined below), the refreshment of the limit in respect of the granting of share options under the share option scheme adopted by the Company on 17 May 2002 (the “Scheme”), up to a new 10 per cent limit (the “Refreshed Scheme Mandate Limit”) be approved provided that (i) the total number of Shares which may be issued upon exercise of options to be granted under the Scheme on or after the date of the passing of this resolution (the “Refreshed Date”), together with all options to be granted under any other share option scheme(s) of the Company on or after the Refreshed Date, must not exceed 10 per cent of the number of Shares in issue as at the Refreshed Date; and (ii) options granted prior to the Refreshed Date under the Scheme or any other share option scheme(s) of the Company (including without limitation those outstanding, cancelled, lapsed or exercised in accordance with the Scheme or such other scheme(s) of the Company) shall not be counted for the purpose of calculating the Refreshed Scheme Mandate Limit and any Director be and is hereby authorized to do such act and execute such document to effect the Refreshed Scheme Mandate Limit.”

By Order of the Board Lo Yuk Yee Chairman

Hong Kong, 6 August 2004

– 7 –

NOTICE OF SGM

APPENDIX

Registered Office: Principal Place of Business in Hong Kong: Clarendon House Room 3802 Wu Chung House Church Street 213 Queen’s Road East Hamilton HM11 Wanchai Bermuda Hong Kong

Notes:

• (i) A member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint a proxy in respect of the whole or any part of his holding of shares to attend and vote in his stead. A proxy need not be a member of the Company.

• (ii) In order to be valid, the form of proxy, together with any power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of attorney or other authority, must be deposited at the principal place of business of the Company located at Room 3802 Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours prior to the meeting.

– 8 –

MAXX BIOSCIENCE HOLDINGS LIMITED （曼盛生物科技集團有限公司[] ）*

(Incorporated in Bermuda with limited liability)

(stock code: 512)

FORM OF PROXY

Form of proxy for use at the special general meeting of the shareholders (“SGM”) of MAXX Bioscience Holdings Limited (the “Company”) to be held at 10:00 a.m. on Tuesday, 24 August 2004 at Rooms 1910 - 1913, Hutchison House, 10 Harcourt Road, Central, Hong Kong.

I/We of (Note 1) being the registered holder(s) of [(Note 2)] shares of HK$0.01 each (the “Shares”) in the share capital of the Company, HEREBY APPOINT of [(Note 3) ] to

act for me/us as my/our proxy at the SGM (or at any adjourned meetings thereof) to be held at 10:00 a.m. on Tuesday, 24 August 2004 at Rooms 1910 - 1913, Hutchison House, 10 Harcourt Road, Central, Hong Kong for the purpose of considering and, if thought fit, passing the resolutions as set out in the notice (the “Notice”) convening the SGM and at such meeting (or any adjourned meeting thereof) to vote for me/us and on my/our behalf in respect of the said resolutions as hereunder indicated or, if no such indication is given, as my/our proxy think fit.

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RESOLUTION FOR [ (Note 4)] AGAINST [(Note 4)]
1. Ordinary resolution no. 1: New Share Issue Mandate
2. Ordinary resolution no. 2: Refresh Share Option Scheme Limit
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Date: Signature:

[(Note 5)]

Notes:

1. Full name(s) and address(es) to be inserted in BLOCK CAPITALS .

2. Please insert the number of Shares registered in your name(s). If no number is inserted, this form of proxy will be deemed to relate to all the Shares registered in your name(s).

3. Please insert the name and address of the proxy desired. IF NO NAME IS INSERTED, THE CHAIRMAN OF THE MEETING WILL ACT AS YOUR PROXY. ANY ALTERATION MADE IN THIS FORM OF PROXY MUST BE INITIALLED BY THE PERSON WHO SIGNS IT.

4. IMPORTANT: IF YOU WISH TO VOTE FOR A RESOLUTION, PLACE A “ ” IN THE BOX MARKED “FOR” BESIDE THE RESOLUTION. IF YOU WISH TO VOTE AGAINST A RESOLUTION, PLACE A “ ” IN THE BOX MARKED “AGAINST” BESIDE THE RESOLUTION. Failure to complete the boxes will entitle your proxy to cast his/her vote at his/her discretion on any resolution which has been properly put to the SGM other than those referred to in the Notice.

5. This form of proxy must be signed by you or your attorney duly authorized in writing or, in the case of a corporation, must be under its common seal or the hand of an officer duly authorized on its behalf.

6. In case of joint registered holders of any Share, any one of such persons may vote at the SGM, either personally or by proxy, in respect of such Share as if he/she was solely entitled thereto, but if more than one of such joint holders are present at the SGM in person or by proxy, that one of the said persons so present whose names stands first on the register of members of the Company in respect of such Share shall alone be entitled to vote in respect thereof.

7. To be valid, this form of proxy, together with any power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof, must be returned, by a shareholder whose name appears on the register of members at Computershare Hong Kong Investor Services Limited on 20 August 2004, to the Company Secretary, Mr. Lee Pak Chung, 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 SGM or adjourned meeting thereof (as the case may be).

8. A proxy need not be a member of the Company but must attend the SGM in person to represent you.

9. Completion and delivery of this form of proxy will not preclude you from attending and voting at the SGM if you so wish.

* For identification only