TNAG-1765-FCO40-2519-Hong-Kong-stock-market-and-exchange-rate-1989 — Page 57

CONFIDENTIAL ##

Terms of the Lifeboat

Annex I

Under the Lifeboat, the Government facility is treated on a "Last-In-First-Out" (LIFO) basis. Drawings from the Lifeboat carry interest

at the prime rate and

repayments to the lenders are ranked according to the following priority -

2.

(a) interest on the Government facility and the

broker-lenders/shareholder-lenders facility pari

(b)

(c)

passu;

principal amount drawn under the Government facility; and

principal amount drawn under the broker-lenders/ shareholders facility.

Funds for the repayment are provided from the following sources

(a)

(b)

a contract fee of $30 per contract in respect of trading done in the HSI futures market;

a special levy of 0.03% payable on transactions in the Stock Exchange of Hong Kong; and

(c) net

amounts received in recovery from members of the HKFE who have defaulted in respect of their obligations to the HKFGC.

G.F. 326

CONFIDENTIAL #