XN000022-1991-09-02 — Page 3

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MONDAY, SEPTEMBER 2, 1991

(A)

(B)

DURING A PERIOD OF

DUE DILIGENCE, WHICH WILL NOT BE LONGER THAN BIGHT WEEKS, HKCB WILL HAVE EXCLUSIVE RIGHTS TO NEGOTIATE WITH ME FOR THE ACQUISITION OF THE BANKING BUSINESS OF BCCHK, AND

PRECISE DETAILS OF THE CONDITIONAL HEADS OF AGREEMENT ARE CONFIDENTIAL TO THE TWO PARTIES CONCERNED.

"THERE ARE A NUMBER OF PRE-CONDITIONS WHICH WILL HAVE TO BR SATISFIED BEFORE THE SCHEME CAN BE IMPLEMENTED, INCLUDING THE FOLLOWING:

(1) THE COMPLETION OF A BANKING, ACCOUNTING AND LEGAL DUB

DILIGENCE REVIEW SATISFACTORY TO HKCB.

(2) FINALISATION OF THE TERMS AND CONDITIONS OF ALL CONTRACTUAL DOCUMENTATION NECESSARY TO GIVE LEGAL EFFECT TO THE SCHEME AND THEREAFTER FINAL APPROVAL OF THE COURT TO THE SCHEME.

(3)

(4)

(5)

(6)

(7)

HKCB OBTAINING ALL NECESSARY CONSENTS AND THE RELEVANT REGULATORY AUTHORITIES, COMMISSIONER OF BANKING.

APPROVALS FROM INCLUDING THE

DEPOSITORS TO-

HKCB OBTAINING AGREEMENT FROM LARGE DEFERRAL AND/OR CONVERSION OF DEPOSITS ON APPROPRIATE TERMS IN AN AGGREGATE AMOUNT AND FOR A PERIOD SATISFACTORY TO HKCB, THE COMMISSIONER OF BANKING AND MYSELF AS PROVISIONAL LIQUIDATOR.

THE PROVISION TO ME BY THE GOVERNMENT OF ABU DHABI AND/OR A COMMERCIAL BANK OF A GUARANTEE IN RELATION TO ANY UNRECORDED LIABILITIES OF BCCHK AND BCCFI IN A FORM AND IN SUBSTANCE WHICH IS SATISFACTORY TO ME.

THE ENACTMENT OF LEGISLATION TO EFFECT THE TRANSFER OF ASSETS AND LIABILITIES FROM BCCHK AND BCCFI ΤΟ THE NEW BANKING COMPANY.

NO CIRCUMSTANCES OCCURRING WHICH, IN MY OPINION, WOULD RENDER IT BETTER IN THE INTERESTS OF CREDITORS TO PROCEED WITH THE LIQUIDATION OF BCCHK AND/OR BCCFI

GENERALLY MY OBTAINING ALL NECESSARY APPROVALS FROM THE COURT IN RELATION TO THE IMPLEMENTATION OF THE SCHEME.

"IT IS MY BELIEF THAT THIS SCHEME, IF IT CAN BE PUT INTO EFFECT, WILL BE IN THE BEST INTERESTS OF ALL THE CREDITORS, INCLUDING THE DEPOSITORS. IF FOR ANY REASON THE SCHEME CANNOT PROCEED, THE COMPANIES WILL BE PUT INTO LIQUIDATION, AND IN THAT EVENT IT WOULD BK WRONG AT THIS STAGE TO ATTEMPT ANY FORECAST OF WHEN A DIVIDEND OR DIVIDENDS COULD BE PAID. PAST EXPERIENCE HAS SHOWN THAT WITH LITIGATION AND OTHER COMPLICATIONS A WINDING-UP OF A FINANCIAL INSTITUTION OF THE SIZE AND COMPLEXITY LIKE BCCHK IS LIKELY TO TAKE NUMBER OF YEARS."

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