Bloks Group Limited — Proxy Solicitation & Information Statement 2006

Feb 20, 2006

HONG KONG PHARMACEUTICAL HOLDINGS LIMITED 香港葯業集團有限公司[*]

(PROVISIONAL LIQUIDATORS APPOINTED)

(Incorporated in Bermuda with limited liability)

(Stock code: 182)

NOTICE OF THE SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a SPECIAL GENERAL MEETING of Hong Kong Pharmaceutical Holdings Limited (Provisional Liquidators Appointed) (the “ Company ”) will be held at Room 204, The Duke of Windsor Social Service Building, 15 Hennessy Road, Wan Chai, Hong Kong, on Tuesday, 14 March 2006, at 10:00 a.m. for the purpose of considering and, if thought fit, passing the following resolutions which will be proposed, with or without modification, in the case of resolutions numbered 1, 2, 3, 5 and 12 to 14 as special resolutions, and in the case of resolutions numbered 4 and 6 to 11, as ordinary resolutions:

SPECIAL RESOLUTIONS

CAPITAL REDUCTION OF THE COMPANY

1. THAT, conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) granting its approval to the listing of, and permission to deal in, the new ordinary shares of the Company of HK$0.01 each (the “ New Shares ”) resulting from the reorganisation of the share capital of the Company (the “ Capital Reorganisation ”) to be effected pursuant to the restructuring agreement dated 7 September 2005 entered into by the Company and, among others, Gain Alpha Finance Limited as may be amended from time to time (the“ Restructuring Agreement ”) and in compliance with the Companies Act 1981 of Bermuda as amended (the “ Companies Act ”),

2. (a) the issued share capital of HK$140,379,669.80 of the Company be reduced by HK$138,975,873.11 to HK$1,403,796.69 by cancelling the paid-up capital to the extent of HK$0.099 on each of the 1,403,796,698 issued shares of HK$0.10 each in the share capital of the Company so THAT each of such issued share shall be treated as one fully paid share of HK$0.001 each;

3. (b) the surplus which will arise as a result of the reduction of the issued share capital of the Company to be effected pursuant to paragraph (a) of this resolution above in the amount of HK$138,975,873.11 shall be applied to eliminate the same amount of the Company’s accumulated losses on a dollar for dollar basis and the future directors of the Company appointed pursuant to resolution numbered 9 as set out in the notice of which this resolution forms part (the “ Future Directors ”) be and are hereby authorised to apply such surplus in such manner as may be permitted by the Bye-Laws of the Company; and

4. (c) the provisional liquidators of the Company (the “ Provisional Liquidators ”) and the Future Directors be and are hereby generally and unconditionally authorised to do all things they consider necessary, expedient and appropriate to effect and implement any of the foregoing.

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SHARE CONSOLIDATION

1. THAT, conditional upon approval of resolution numbered 1 set out in the notice of which this resolution forms part:

2. (a) “every 10 issued shares of par value HK$0.001 each in the capital of the Company (the Reduced Shares ”) be consolidated into one New Share (as defined in resolution numbered 1 set out in the notice of which this resolution forms part) (the “ Share Consolidation ”);

3. (b) any fractions of New Shares arising from the Share Consolidation pursuant to paragraph (a) of this resolution shall not be allocated to the holders of the Reduced Shares otherwise entitled thereto but such fractions shall be aggregated and sold for the benefit of the Company;

4. (c) for the purposes of implementing the Share Consolidation, the Provisional Liquidators and the Future Directors (as defined in resolution numbered 1 set out in the notice of which this resolution forms part) be and are hereby generally and unconditionally authorised to appoint some other person to execute transfers or renunciations on behalf of persons otherwise entitled to any such fractions and generally to make all arrangements and execute all documents which they consider necessary, expedient or appropriate for the settlement and disposal of fractional entitlement; and

5. (d) all of the New Shares resulting from the Share Consolidation shall rank pari passu in all respects and have the same rights and privileges and be subject to the restrictions contained in the bye-laws of the Company.

SHARE CANCELLATION

1. THAT, conditional upon approval of resolution numbered 2 set out the notice of which this resolution forms part, the unissued share capital of HK$298,596,203.31 in the authorised share capital of HK$300,000,000 of the Company be cancelled and diminished resulting in an authorised and issued share capital of the Company becoming HK$1,403,796.69.

ORDINARY RESOLUTION

AUTHORISED SHARE CAPITAL INCREASE

1. THAT, conditional upon approval of resolutions numbered 2 and 3 set out the notice of which this resolution forms part,

2. (a) the authorised share capital of the Company be increased from HK$1,403,796.69 to HK$60,000,000 divided into 3,500,000,000 New Shares (as defined in resolution numbered 1 set out in the notice of which this resolution forms part) and 2,500,000,000 preference shares of HK$0.01 each in the capital of the Company (the “ Preference Shares ”) having the rights and being subject to the restrictions set out in the new Bye-Laws of the Company proposed to be adopted pursuant to resolution 5 set out in the notice of which this resolution forms part;

3. (b) all of the New Shares after completion of the Capital Reorganisation (as defined in resolution numbered 1 set out in the notice of which this resolution forms part) shall rank pari passu in all respects with each other (including for the avoidance of doubt the New Shares created following the Share Conversion) and have the same rights and privileges and be subject to the restrictions contained in the new bye-laws of the Company proposed to be adopted in resolution numbered 5 set out in the notice of which this resolution forms part; and

4. (c) the Provisional Liquidators and the Future Directors (as defined in resolution numbered 1 set out in the notice of which this resolution forms part) be and are hereby generally and unconditionally authorised to exercise up to Completion (as defined in the Document referred to in resolution numbered 6 set out in the notice of which this resolution forms part) all the powers of the Company to allot, issue and deal with New Shares (as defined in resolution numbered 1 set out in the notice of which this resolution forms part) and the Preference Shares (as defined in this resolution) and to do all things they consider necessary, expedient and appropriate to effect and implement any of the foregoing.

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SPECIAL RESOLUTION

ADOPTION OF NEW BYE-LAWS OF THE COMPANY

1. THAT the existing bye-laws of the Company be and they are hereby submitted and replaced in their entirety by the new bye-laws of the Company a copy of which has been produced at this meeting marked “A” and, initialled by the chairman of this meeting for the purpose of identification (the “ New Bye-Laws ”). The Provisional Liquidators and the Future Directors (as defined in resolution numbered 1 set out in the notice of which this resolution forms part) be and are generally and unconditionally authorised to do all things necessary, expedient and appropriate to effect and implement the foregoing.

ORDINARY RESOLUTIONS

IMPLEMENTATION OF THE RESTRUCTURING PROPOSAL

1. THAT, conditional upon approval of resolution numbered 8 set out in the notice of which this resolution forms part,

2. (a) the entry by the Company into the Restructuring Agreement (as defined in the resolution numbered 1 as set out in the notice of which this resolution forms part), a copy of which together with a copy of the document sent to the shareholders of the Company dated 20 February 2006 (the “ Document ”) have been produced to the SGM marked “B” and “C” respectively and in each case initialled by the chairman of this meeting of the purpose of identification, the transactions contemplated by the Restructuring Agreement and the performance thereof by the Company, be and are hereby confirmed, ratified and approved; and

3. (b) the Provisional Liquidators and the Future Directors (as defined in resolution numbered 1 set out in the notice of which this resolution forms) part be and are hereby generally and unconditionally authorised to the extent of their authority so to act, to do all such things and take all such actions as they may consider to be necessary or desirable, expedient or appropriate to give effect to the terms of the Restructuring Agreement including, without limiting the foregoing, completion of the transactions contemplated by the Restructuring Agreement.

4. THAT, conditional upon approval of resolution numbered 8 set out in the notice of which this resolution forms part,

5. (a) the entry by the Company into the Subscription Agreement (as defined in the Document referred to in resolution numbered 6 as set out in the notice of which this resolution forms part), a copy of which has been produced to this meeting marked “D” and initialled by the chairman of this meeting for identification purposes, the transactions contemplated by the Subscription Agreement and the performance thereof by the Company, be and are hereby confirmed, ratified and approved;

6. (b) conditional upon the Capital Reorganisation (as defined in resolution numbered 1 of the notice of which this resolution forms part) being effected and the approval from the Bermuda Monetary Authority, the Provisional Liquidators and the Future Directors (as defined in resolution numbered 1 of which this resolution forms part) and are hereby generally and unconditionally authorised to allot and issue the New Shares (as defined in resolution numbered 1 of the notice of which this resolution forms part) and the Preference Shares (as defined in the Document referred to in resolution numbered 6 of which this resolution forms part) pursuant to the terms of the Subscription Agreement and such new Shares upon conversion of the Preference Shares in accordance with the New Bye-Laws (as defined in resolution numbered 5 of which this resolution forms part); and

7. (c) the Future Directors (as defined in resolution numbered 1 set out in the notice of which this resolution forms part) and any directors of the Company appointed from time to time after this meeting be and are hereby generally and unconditionally authorised from time to time to issue New Shares upon conversion of the Preference Shares by the holders thereof subject to the terms of the Preference Shares and to take all such actions as they may consider to be necessary or desirable, expedient or appropriate to give effect to the terms of the Preference Shares.

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WHITEWASH WAIVER

1. THAT the waiver (the “ Whitewash Waiver ”) granted or to be granted by the Executive Director of the Corporate Finance Division of the Securities and Futures Commission of Hong Kong (or any delegate of the Executive Director) pursuant to Note 1 on dispensations from Rule 26 of the Hong Kong Code on Takeovers and Mergers in respect of the obligation on the part of Gain Alpha Finance Limited and any parties acting in concert with it, to make a mandatory general offer to shareholders of the Company for all the issued New Shares (as defined in resolution numbered 1 set out in the notice of which this resolution forms part) of the Company not already owned or agreed to be acquired by them upon Completion (as defined in the Restructuring Agreement referred to in the resolution numbered 4 set out in the notice of which this resolution forms part) be and is hereby approved and the Provisional Liquidators and the Future Directors (as defined in resolution numbered 1 set out in the notice of which this resolution forms part) be and are hereby generally and unconditionally authorised to do all such things and take all such action as they may consider necessary or desirable, expedient or appropriate to give effect to any of the matters relating to, or incidental to, the Whitewash Waiver.

APPOINTMENT OF DIRECTORS

1. THAT, with effect from Completion (as defined in the Document referred to in resolution numbered 6) in the place of Mr. Sun Hiu Lu, Ms. Huang Shuyun, Mr. Chu Kwan, Mr. Zhao Dake, Mr. Zhang Ke, Winston, Mr. Ng Wing Hang, Dr. Melvin Wong and Mr. Chu Yu Lin, David:

2. (a) each of Mr. Ko Chun Shun, Johnson, Mr. Tsoi Tong Hoo, Tony, Mr. Chan Kam Kwan, Jason, Mr. Wong Fan, Frank and Mr. Yeung Heung Yeung or such other nominees to be determined by Gain Alpha Finance Limited upon Completion (as defined in the Document referred to in resolution numbered 6 set out in the notice of which this resolution forms part) be appointed as executive directors of the Company; and

3. (b) such other nominees to be determined by Gain Alpha Finance Limited upon Completion (as defined in the Document referred to in resolution numbered 6 set out in the notice of which this resolution forms part) be appointed as non-executive directors of the Company,

and THAT the future directors appointed pursuant to this resolution be and are hereby generally and unconditionally authorised to appoint such other new executive directors and new nonexecutive directors of the Company during the Relevant Period (such number of new executive and new non-executive to be determined by the future directors of the Company appointed pursuant to this resolution during the Relevant Period).

For the purpose of this resolution, “Relevant Period” means the period from Completion (as defined in the Document referred to in resolution numbered 6 set out in the notice of which this resolution forms part) until whichever is the earliest of:

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

• (ii) the revocation or variation of the authority given under this resolution by ordinary resolution of the shareholders in general meeting; and

• (iii) the expiration of the period within which the next annual general meeting of the Company is required by the New Bye-Laws (as defined in resolution numbered 5 set out in the notice of which this resolution forms part), or any applicable laws, to be held.

ENSURE SETTLEMENT AGREEMENT

1. THAT, the entry by the Company into the Ensure Settlement Agreement (as defined in the Document referred to in resolution numbered 6 as set out in the notice of which this resolution forms part), a copy of which has been produced to this Meeting marked “E” and initialled by the chairman of this meeting for the purpose of identification, the transaction contemplated by the Ensure Settlement Agreement and the performance thereof by the Company, be and are hereby confirmed and ratified and approved.

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HUAXIN AGREEMENT

1. THAT, the entry by the Company into the Huaxin Agreement (as defined in the Document referred to in resolution numbered 6 as set out in the notice of which this resolution forms part), a copy of which has been produced to this meeting marked “F” and initialled by the chairman of this meeting for the purpose of identification, the transaction contemplated by the Huaxin Agreement and the performance thereof by the Company, be and are hereby confirmed and ratified and approved.

SPECIAL RESOLUTION

REMOVAL OF CURRENT DIRECTORS

1. THAT, with effect from Completion (as defined in the Document referred to in resolution numbered 6 set out in the notice of which this resolution forms part), each of Mr. Sun Hiu Lu, Ms. Huang Shuyun, Mr. Chu Kwan, Mr. Zhao Dake, Mr. Zhang Ke, Winston, Mr. Ng Wing Hang, Dr. Melvin Wong and Mr. Chu Yu Lin, David be removed as directors of the Company with effect from Completion (as defined in the Document referred to in resolution numbered 6 set out in the notice of which this resolution forms part).

GENERAL MANDATE TO ALLOT, ISSUE AND DEAL WITH ADDITIONAL NEW SHARES

1. THAT, conditional upon Completion (as defined in the Document referred to in resolution numbered 6 set out in the notice of which this resolution forms part):

2. (a) subject to paragraph (b) below, the Future Directors (as defined in resolution numbered 1 as set out in the notice of which this resolution forms part), be and are hereby generally and unconditionally authorised to exercise during the Relevant Period (as defined below) all the powers of the Company to allot, issue and deal with additional New Shares (as defined in resolution numbered 1 set out in the notice of which this resolution forms part) and to make or grant offers, agreements and options (including warrants, bonds and debentures, notes and any securities which carry rights to subscribe for or are convertible into ordinary shares of the Company) which would or might require the exercise of any of such powers during or after the end of the Relevant Period;

3. (b) the aggregate nominal amount of New Shares allotted, issued or otherwise dealt with or agreed conditionally or unconditionally to be allotted, issued or otherwise dealt with (whether pursuant to an option or otherwise) by the Future Directors pursuant to approval of paragraph (a) above, other than pursuant to (i) a Right Issue (as defined below); or (ii) an issue of ordinary shares of the Company upon the exercise of the rights of subscription or conversion under the terms of any preference shares of the Company; or (iii) an issue of ordinary shares of the Company by way of scrip dividend pursuant to the bye-laws of the Company from time to time; or (iv) the exercise of any option granted under any option scheme or similar arrangement for the time being adopted for the grant or issue to eligible participants of the Company and/or its subsidiaries, of options to subscribe for, or rights to acquire, shares of the Company, shall not in total exceed 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date hereof;

4. (c) for the purpose of this resolution, “Relevant Period” means the period from Completion (as defined in the Document referred to in resolution number 6 set out in the notice of which this resolution forms part) until whichever is the earliest of:

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

   • (ii) the revocation of variation of the authority given under this resolution by ordinary resolution of the shareholders in general meeting; and

   • (iii) the expiration of the period within which the next annual general meeting or the Company, or any applicable laws, to be held.

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“Right Issue” means an offer of shares for subscription open for a fixed period by the Company to holders of shares on the register of members of the Company on a fixed record date in proportion to their holdings of shares (subject to such exclusion or other arrangements as the Future Directors appointed pursuant to resolution number 11 as set out in the notice of which this resolution forms part 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 recognised regulatory body or any stock exchange in, any territory outside Hong Kong).

GENERAL MANDATE TO PURCHASE NEW SHARES

1. THAT, conditional upon Completion (as defined in the Document referred to in resolution numbered 6 set out in the notice of which this resolution forms part),

2. (a) the Future Directors (as defined in resolution numbered 1 as set out in the notice of which this resolution forms part), be and are hereby generally and unconditionally authorised to exercise during the Relevant Period (as defined below) all the powers of the Company to purchase its New Shares (as defined in resolution numbered 1 set out in the notice of which this resolution forms part) in the capital of the Company, subject to and in accordance with applicable laws;

3. (b) the aggregate nominal amount of New Shares which may be purchased pursuant to the approval in paragraph (a) above shall not in total exceed 10% of the aggregate nominal amount of the share capital of the Company as at the date hereof;

4. (c) for the purpose of this resolution, “Relevant Period” means the period from Completion (as defined in the Document referred to in resolution numbered 6 set out in the notice of which this resolution forms part) until whichever is the earliest of:

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

   • (ii) the revocation of variation of the authority given under this resolution by ordinary resolution of the shareholders in general meeting; and

   • (iii) the expiration of the period within which the next annual general meeting or the Company, or any applicable laws, to be held.

As at the date of this notice, the board of directors of the Company comprises five executive directors, namely, Mr. Sun Hiu Lu, Ms. Huang Shuyun, Mr. Chu Kwan, Mr. Zhao Dake and Mr. Zhang Ke, Winston, and three independent non-executive directors, namely, Mr. Ng Wing Hang, Dr. Melvin Wong and Mr. Chu Yu Lin, David. However, the power of the directors of the Company have been exercised by the Provisional Liquidators of the Company since their appointment pursuant to the order of the High Court of Hong Kong dated 13 October 2004.

Yours faithfully, For and on behalf of HONG KONG PHARMACEUTICAL HOLDINGS LIMITED (Provisional Liquidators Appointed) Kelvin Edward Flynn Cosimo Borrelli R. Craig Christensen Provisional Liquidators of the Company without personal liability

20 February 2006, Hong Kong

Please also refer to the published version of this announcement in China Daily.

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