SCHEME OF ARRANGEMENT

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to the action that you should take, you should consult your legal or professional adviser without delay. In an endeavour to ensure that investment advisers are in a position to advise their clients, all advisers known to have placed business with CSA Absolute Return Fund Limited have been sent details of how to obtain a copy of this document. SCHEME OF ARRANGEMENT PURSUANT TO SECTION 166 OF THE COMPANIES ORDINANCE (CAP. 32) OF THE LAWS OF HONG KONG AND IN CONJUNCTION WITH A COMPANY CREDITORS ARRANGEMENT UNDER PART II OF DIVISION 2 OF THE INSOLVENCY ACT (2003) IN THE BRITISH VIRGIN ISLANDS BETWEEN CSA ABSOLUTE RETURN FUND LIMITED (IN LIQUIDATION) (INCORPORATED IN BRITISH VIRGIN ISLANDS) BVI COMPANY NO. 41-4011 AND THE RESPECTIVE SCHEME CLAIMANTS (AS DEFINED IN THE SCHEME) The meetings of Scheme Claimants and CCA Creditors to consider the Scheme of Arrangement and CCA will be held at 26 Floor Edinburgh Tower, The Landmark, 15 Queen s Road Central, Hong Kong on 8 September 2005 at 10:00am (registration from 9:00am). Notices of the meetings are set out in Appendix 1 on page 61. The action required to be taken by you is set out on pages 2 and 13. Whether or not Scheme Claimants and CCA Creditors intend to be present at the meetings, they are requested to complete and return the relevant Proxy and Voting Form sent to them as soon as possible, and by no later than 5:00pm on 5 September 2005.

CONTACT DETAILS HONG KONG BRITISH VIRGIN ISLANDS The Liquidators Legal Advisers The Liquidators Legal Advisers Jan G W Blaauw John J Toohey Jan G W Blaauw John J Toohey Meade Malone* PricewaterhouseCoopers Dibb Lupton Alsop Meade Malone & Co* Walkers (BVI) 22/F Prince s Building 41/F Bank of China Tower Geneva Place The Mill Mall 10 Chater Road 1 Garden Road P.O. Box 3339 P.O. Box 92 Hong Kong Hong Kong Road Town, Tortola Road Town, Tortola British Virgin Islands British Virgin Islands Tel: (852) 2289 5088 (852) 2103 0808 (1 284) 494 4388 (1 284) 494 2204 Fax:(852) 2890 8345 (852) 2810 1345 (1 284) 494 3088 (1 284) 494 5535 Website: www.pwchk.com/csa

CONTENTS The terms used in this document are fully defined on pages 17 to 22 and on page 49. Documents contained within this Document Page Key Dates, Timetable and Meeting Checklist 2 Important Notice to Scheme Claimants 3 PART 1 EXPLANATORY STATEMENT Introduction 5 Summary of Key Proposals and Structure of the Scheme 9 Financial Position as at 21 June 2004 14 PART 2 SCHEME OF ARRANGEMENT Definitions and Interpretation 17 The Scheme General 22 Treatment of the Company s Property under the Scheme 25 Determination of Admitted Liabilities and Payment of Dividends 26 The Scheme Administrators 33 The Scheme Adjudicator and Dispute Resolution Procedure 36 The Creditors Committee 38 Meetings of Scheme Claimants 42 Duration and Termination of the Scheme 44 Miscellaneous Provisions 45 PART 3 COMPANY CREDITORS ARRANGEMENT The CCA General 50 Treatment of the Company s Property under the CCA 53 Determination of CCA Creditor Claims and Payment of Dividends The Supervisors, Dispute Resolution Procedure and Creditors Committee 54 Meetings of CCA Creditors 58 Duration and Termination of the CCA Miscellaneous Provisions 59 PART 4 APPENDICES 1 Notices of Meetings of Scheme Claimants and CCA Creditors 61 2 Notes on completion of Proxy and Voting Forms (and Specimen Forms) 63 3 Notes to the Scheme Liability Form (and Specimen Form) 71 4 Notes to the Valuation Statement (and Specimen Statement) 73 5 Company Information, History and Operations 75 6 Explanation of Possible Scheme Claims 79 7 Financial Modelling 83 8 Receipts and Payments Account 86 9 Curricula Vitae of the Scheme Administrators 87 10 Consents to Act 89 11 Letter of Support from the Committees of Inspection 91 12 List of Documents Available for Inspection 92 13 Summary of Main Scheme Provisions 93 14 Statutory Provisions 98 1

PROPOSED SCHEME OF ARRANGEMENT AND CCA Introduction KEY SCHEME MILESTONES Ascertainment Date 21 June 2004 Distribution of Scheme Documents and Scheme Liability Forms* 11 August 2005 Return Proxy Forms for Meeting 5 September 2005 Scheme and CCA Meetings 8 September 2005 Hearing to Sanction the Scheme 21 September 2005 Anticipated dates Effective Date: The later of the Scheme and the CCA coming into effect 30 September 2005 Scheme Liability Form becomes Binding if not objected to prior to this date* 12 October 2005 Distribution of Valuation Statements 14 October 2005 General Scheme Claimants first and final dividend 100% 11 November 2005 Investor Scheme Claimants first interim dividend 15% 2 December 2005 subsequent dividends 45%** **6-monthly review Final Claims Submission Date: the second anniversary of the Effective Date ***30 September 2007 The dates given above are indicative only. * Scheme Claimants are requested to notify any amendments to the Scheme Liability Form as soon as possible and in any event within 7 Business Days of the Effective Date. ** Subject to receipt of distributable amounts *** Please note that all Claims received after the Final Claims Submission Date will be Rejected. MEETING CHECKLIST Before 5 September 2005: check the information on the Scheme Liability Form to confirm that you agree with: the Agreed Claim amount(s); and the allocation to Class(es). check the amounts and classes on the Voting Form to confirm that they are the same as the data that appears on the Scheme Liability Form; notify the Liquidators of any data that you do not agree with. By no later than 5:00pm on 5 September 2005 Appointing a proxy check the data on the Proxy Form to confirm that it is the same as the Voting and Scheme Liability Forms; complete and lodge the original or fax copy of your Proxy Form and other required documents with the Liquidators in accordance with the notes and the General Guidelines in Appendix 2; if you have faxed your Proxy Form, the original must be received prior to the start of the meetings; give your blank voting form to your proxy, corporate representative or the Chairman to bring to the meetings for completion. At 10:00am on 8 September 2005 - Attending the meetings bring the Voting Form to the meetings for completion; if you have sent your Proxy Form by fax, bring the original documents, and the relevant authorities; attend at 26/F Edinburgh Tower, The Landmark, 15 Queen s Road Central, Hong Kong. IF YOU HAVE ANY QUERIES ON THE DATA APPEARING ON ANY FORMS, OR THE COMPLETION OF THE VOTING PACK PLEASE CONTACT THE HOTLINE ON (852) 2289 5088. 2

IMPORTANT NOTICE TO SCHEME CLAIMANTS Exclusion of Liability This document has been prepared in connection with CSA Absolute Return Fund Limited (in liquidation) (the Company ) and a proposed Scheme of Arrangement (Scheme) in Hong Kong and a Company Creditors Arrangement (CCA) in the British Virgin Islands (BVI) pursuant to section 166 of the Hong Kong Companies Ordinance and Part II Division 2 of the Insolvency Act 2003 in the BVI between the Company and its Scheme Claimants (as defined in the Scheme). Introduction The information contained in this document has been prepared from information obtained from the Company s records and third parties who maintained records on behalf of or in connection with the Company and its affairs. In reviewing the Company s affairs the Joint Liquidators have not performed an audit of the financial position and, accordingly, do not express an audit opinion. Although the Joint Liquidators have no reason to doubt the accuracy of that information there may be certain matters of which they have not been advised or are not aware, accordingly they make no representation or warranty that it, or any information prepared by a third party, is accurate nor in respect of the quantum and timing of any dividends. Estimates provided in this document are indicative only, there are many factors (including the effect of legal rights on insolvency) that are beyond the control of the Joint Liquidators and subsequently appointed Scheme Administrators and Supervisors that can affect these estimates. Events or circumstances could occur that may give rise to either an improvement or deterioration of these estimates and they should therefore be treated with caution in arriving at any decisions or actions based upon them. Unless otherwise indicated, the statements contained in this document are made as at 30 July 2005 and reflect the circumstances existing and the information which the Joint Liquidators were aware of at that time. Nothing in this Document is to be taken as an admission of liability by the Company or its Joint Liquidators. Any statement of a fact, matter or thing contained in this Document is made without prejudice to all rights of the Company against Scheme Claimants and others, which remain expressly reserved. Receipt of this document does not operate as any acknowledgement of a Scheme Claim or mean that if the Scheme is implemented, you will be able to participate in it. If the Scheme and CCA are approved and become binding and you make or have made a Scheme Claim in accordance therewith, then it will be processed in accordance with the terms of the Scheme. Admission of your claim for voting purposes by the Chairman of the relevant Scheme meetings is without prejudice to the Scheme Administrators right to reject the Scheme Claim in whole or in part for the purpose of calculating dividend payments under the Scheme. The Joint Liquidators have not authorised any person to make any representations concerning the Scheme and CCA which are inconsistent with the statements contained herein and if made, they may not be relied upon as having been so authorised. Scheme Claimants should not construe the contents of this document as legal, tax, financial or other professional advice. Each Scheme Claimant should take its own advice from professional advisers before taking any action in connection with the Scheme. None of the Joint Liquidators, their advisers or any of their representatives, partners, staff or agents shall incur any personal liability under, or in connection with the Scheme and CCA. No member of the committee of inspection referred to at Clause S30 of the Scheme is responsible for any statement of opinion or fact contained in this document. This document is important and requires your immediate attention. It contains extensive and detailed information and should be read in its entirety. If you are in any doubt as to the action you should take you should consult your legal or other professional adviser without delay. 3

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PART 1 Explanatory Statement SCHEME OF ARRANGEMENT PURSUANT TO SECTION 166 OF THE COMPANIES ORDINANCE (CAP. 32) OF THE LAWS OF HONG KONG AND IN CONJUNCTION WITH A COMPANY CREDITORS ARRANGEMENT UNDER PART II DIVISION 2 OF THE INSOLVENCY ACT, 2003 OF THE BRITISH VIRGIN ISLANDS BETWEEN CSA ABSOLUTE RETURN FUND LIMITED (IN LIQUIDATION) (INCORPORATED IN BRITISH VIRGIN ISLANDS) BVI COMPANY NO. 41-4011 AND THE RESPECTIVE SCHEME CLAIMANTS (AS DEFINED IN THE SCHEME) Explanatory Statement 1 BACKGROUND AND OVERVIEW OF THE PROPOSAL FOR A SCHEME OF ARRANGEMENT 1.1 CSA Absolute Return Fund Limited CSA Absolute Return Fund Limited (the Company) was incorporated in the BVI on 26 October 2000 to operate a fund of funds hedge fund (the Fund) and ceased trading on or around 15 June 2004 when a restriction notice was issued by the Securities and Futures Commission of Hong Kong on Charles Schmitt and Associates Limited. The background to the Company, its history and operations are set out in Appendix 5. 1.2 The winding up petitions in Hong Kong and the British Virgin Islands ( BVI ) On 21 and 22 June 2004, winding up petitions were filed and provisional liquidators appointed in Hong Kong and the BVI respectively. The principal purpose of the provisional liquidation was to preserve and protect the assets and investigate the affairs of the Company pending the determination of the petitions. The winding up commenced on 13 December 2004 in the BVI, when liquidators were appointed. On 10 January 2005, a winding up order was made in Hong Kong and liquidators were appointed together with a committee of inspection on 1 March 2005. The liquidators in both jurisdictions are referred to as the Joint Liquidators. 5

Having considered how to resolve the issues arising in the liquidation of the Company, the Joint Liquidators are of the opinion that the implementation of a scheme of arrangement (Scheme) in Hong Kong and a company creditor arrangement (CCA) in the BVI between the Company and its respective creditors and members will be in their best interests by simplifying matters, removing inherent legal uncertainties, allowing more efficient agreement of claims, earlier distribution of funds to creditors and Investors and earlier closure of the administration, resulting in cost savings. 1.3 What is a Scheme and CCA? The legal requirements of a Scheme and a CCA are set out in paragraph 3 below. Essentially, each procedure is a compromise or arrangement between a company and some or all of its creditors and/or members (as the case may be) and they are designed to operate through the Scheme in Hong Kong (references to the Scheme also include the CCA). If implemented, they will become final and binding as between the Company and its creditors and members. Each arrangement is tailored to the individual circumstances of the company in order to maximise the benefits it may produce. Pages 5 to 16 contain an explanation of the Scheme. The full Scheme and CCA begin at pages 17 and 49 respectively. Explanatory Statement 1.4 Why has the Scheme been proposed? The Company has been placed in liquidation in Hong Kong and the BVI. Liquidations of companies in two jurisdictions are complex, especially where the insolvency and other local laws in each place are different or inconsistent with each other. Additionally, in this case, the Company faces actual and potential claims which if dealt with in the ordinary course could take many years to resolve and would substantially delay any distribution to creditors and members. The proposed Scheme is a cost-effective and timely way of bringing finality to the claims against the Company, enabling distributions to be made in a shorter period of time than would be achievable on winding up. The general principle of payment in a winding up is for the creditors of a company to be paid before the shareholders. In the usual case, the shareholders are only entitled to receive a share of a company s assets after the expenses of the winding up have been met and the creditors have received payment in full. The position in relation to the Company is more complicated than the usual case, because the Company has two main types of creditor. The first type of creditor includes both those who applied for shares in the Company and did not receive them and other general trade creditors. These creditors are collectively defined in the Scheme as General Scheme Claimants. The second type of creditor includes those who applied for and were allotted shares in the Company. These creditors are defined in the Scheme as Investors. All Investors of the Company are shareholders in the Company. However, it is possible that, in addition to the right to receive an ultimate distribution as shareholders in the Company, Investors may also have a right to claim damages. These claims might potentially arise as a result of possible misrepresentations made by or on behalf of the Company about the Fund to Investors. These claims are defined in the Scheme as Investor Scheme Claims and are summarised in Appendix 6. The Joint Liquidators have identified that such possible claims for damages the Investors may have 6

broadly fall into two categories: i) Claims by Investors who may be eligible to assert various claims including possible common law claims for damages under section 40B of the Hong Kong Companies Ordinance ( section 40B Investor Scheme Claims ) and possible statutory claims for damages under section 16 of the Mutual Fund Act (1996) in the BVI ( MFA ), as limited by section 17 MFA ( section 16 Claims ). As a result, this class of Investor claims only includes those Investor claims relating to shares subscribed for by Investors on or after 12 December 2003; and ii) Investors claims relating to shares subscribed for before 12 December 2003. These Investors do not appear to be eligible to assert section 16 Claims. These Investors are limited to any other potential claims that such Investors may have (including section 40B Investor Scheme Claims). It is possible that all Investors may have claims that fall into one and/or other of the 2 categories set out above. As a result all Investors are potentially in a position to assert that they have claims for damages in the Hong Kong and/or BVI liquidations as if they were creditors, in addition to the claims of Investors as members of the Company. As is set out in Appendix 6, the legal nature of the claims potentially available to Investors is complex. It is difficult to predict what the outcome of any litigation to resolve these issues might be. If Investors pursued the individual claims that may be available to them, the following factors would delay and reduce the assets available for distribution by the Company: Such claims would almost certainly involve litigation in the courts of Hong Kong and the BVI and are likely to take time, somewhere between 2 and 7 years, before such claims could be resolved. Explanatory Statement Litigation would be expensive and would reduce the assets available for distribution from the Company s estate. The Joint Liquidators would be unable to distribute any dividend to creditors and members in the liquidations of the Company until the legal rights, quantum and relative priorities of the Investors had been established. If some Investors successfully made claims and it became clear that the legal position was that all, or a significant number of other Investors had similar rights to damages, the Liquidators might have to seek Court directions on whether to pay, or reserve for, similar claims to those which had been litigated. The likely consequences of a significant number of Investors being able to make such claims successfully would be to render the Company insolvent. A Scheme has been proposed as an alternative to liquidation in order to avoid the delays and costs that could result from the claims referred to above, by establishing a mechanism for settling the classes and priorities of creditors to assets without the need to test the claims in the courts at the Investors own cost, and enabling a distribution of the assets to be made as quickly as possible. It is important that Scheme Claimants give careful consideration to this section of the Explanatory Statement and Appendix 6 and take independent legal advice on its contents in order that they can properly assess whether or not to support the Scheme. 1.5 What is the effect of the Scheme and CCA proposals? 7

In the absence of the Scheme and CCA, the Company s assets would be administered by the Joint Liquidators by way of the liquidations in accordance with the laws of both BVI and Hong Kong jurisdictions. These laws are fundamentally based upon United Kingdom legislation and the underlying principles are similar, though a series of amendments to the BVI legislation in 2003 means that a number of previously similar mechanisms are now different. The proposals set out in this document are for parallel and interlocking arrangements for the Company in the BVI and Hong Kong, the effect of which is to introduce a structure to simplify the liquidation of the Company. The main features of the Scheme include: A mechanism for the assessment and payment of claims which is, so far as practicable, consistent with the principles and rules of winding-up in both the BVI and Hong Kong; Paying General Scheme Creditors in full, apart from claims for interest which are excluded; Explanatory Statement Barring all contingent claims by Investors, including but not limited to those under section 16 of the MFA, and excluding any claims for interest, in place of which Investors Scheme Claims will be valued at the original subscription amount; Facility for the early, interim payment of Agreed Claims in order to return assets to Scheme Claimants as expeditiously as possible. The distribution of available assets would be in the following order of priority: Expenses and any preferential claims, in full; then General Scheme Claims, in full; then Investor Scheme Claims, pari passu; and then Shareholders, if at the end of the Scheme, a surplus remains after all Scheme Claimants have been paid in full and the Scheme has terminated in accordance with its terms, the surplus will be transferred to the BVI Liquidators to be distributed to members in accordance with BVI law. The Joint Liquidators make no representation or warranty in respect of the quantum and timing of any dividends. The estimated dividends shown below to each class of Scheme Claimant are based on the parallel schemes being accepted as they are currently proposed and are provided for illustrative purposes only. A comparison of the projected outcomes for the Scheme and on liquidation is set out in the Financial Modelling in Appendix 7. General Scheme Claimants 100% Investor Scheme Claimants 60-72% It is proposed that the Scheme will be administered by the Hong Kong Liquidators as the Scheme Administrators whose investigatory and recovery powers will not be affected. The Joint Liquidators consider that the implementation of the Scheme between the Company and its respective creditors and members will be in the best interests of the Scheme Claimants of the Company. 1.6 Why you have received this document 8

In proposing the Scheme and the CCA, the Joint Liquidators have sought to identify and notify all known and potential creditors and members of the Company that will be bound by the arrangements, should they proceed. Please refer to paragraph 3 below in respect of the Scheme Meetings and Voting procedures. You have received this document either as: a General Scheme Claimant; or an Investor Scheme Claimant. The receipt of this Document does not mean that you are currently owed, or that you will ever be owed, any money by the Company. Nothing in this Document is to be taken as an admission of liability by the Company or its Joint Liquidators. If the Scheme is implemented and you make or have made a Scheme Claim it will be processed in accordance with the terms of the Scheme. Admission of your claim for voting purposes by the Chairman of the relevant Scheme meetings is without prejudice to the Scheme Administrators right to reject the Scheme Claim in whole or in part for the purpose of calculating a dividend payment under the Scheme. 2 THE SCHEME S KEY PROPOSALS 2.1 Key proposal early payment of Scheme Claims without litigation The core proposal of the Scheme is to pay Scheme Claimants as quickly as possible, by avoiding litigating the potential future claims of various groups of Scheme Claimants with differing interests. The Scheme seeks to resolve the general and legislative complexities resulting from the Company being wound up in two different jurisdictions, each of which has a different statutory right to recover damages for misrepresentation. The Scheme does so by providing a consistent set of rules for dealing with claims which will operate in both jurisdictions. Explanatory Statement The Scheme recognises the rights of Scheme Claimants in a manner which: preserves the relative creditor/shareholder priorities; treats all Investors in the same way; values Investor Scheme Claims at the subscription amount paid; equalises the difference between Class A and Class B shareholders so that no commissions or charges are levied; and avoids the substantial costs and delays of litigation, with a view to early distribution to creditors and shareholders. 2.2 Compromises consequent upon the Scheme The specific adjustments that each class of claimant will be compromising if the Scheme becomes effective are as follows: General Scheme Claimants will forego all claims to interest. It is estimated that if the claims for damages were successful, then they would render the Company insolvent and accordingly interest would not be payable in any event. Investor Scheme Claimants with possible claims relating to the period after 12 December 2003 9

(the possible section 16 Claims) will receive a dividend which recognises part of the benefit they would be entitled to without incurring the cost of establishing that claim. Investor Scheme Claimants with claims relating to the period before 12 December 2003 (the claims which do not include possible section 16 Claims) will receive the same return on their invested amount. Those who have prospective section 16 Claims invested later than those Investors whose claims would be based on other grounds. By valuing all Investors claims at the amount that each group paid for their shares, whenever purchased, is intended to give a fairer return to Investors, more accurately reflecting their loss. If each type of Investor claim were litigated it is hard to predict the possible outcome and therefore it is not possible to make an accurate comparison between the Scheme and the relative position of Investors claims in a liquidation. Overall, all classes will receive an improved return as a result of avoiding the costs and delays of litigation. 2.3 Advantages of a Scheme Explanatory Statement Accelerated payments to Scheme Claimants The statutory framework in liquidation permits creditors to file, revise or submit new information in support of their claims at any time prior to the final distribution of assets. In the case of the Company there are significant legal uncertainties for Investors to assert claims. There are also questions as to the relative priorities of such claims, even if successful as referred to in Appendix 6. As a result of these complex issues, it would be impossible to make any distributions to creditors or Investors until all claims and priorities were determined with the required degree of legal certainty through expensive Court applications in order to declare a final dividend. By contrast, the Scheme will permit the valuation of Scheme Claims followed by a distribution to Scheme Claimants earlier than would be the case in liquidation. Barring Scheme Claims The Scheme will enable the legal uncertainties inherent in the liquidation to be resolved in the absence of litigation, by barring all Proceedings. No Scheme Claimant will be able to commence Proceedings in respect of their Scheme Claim during the period of the Scheme or after the Scheme has terminated. Certainty in Valuation of Investor Scheme Claims Investor Scheme Claims will be valued at the amount paid to the Company. This mechanism provides certainty in determining Investor Scheme Claimants rights, quantum and relative priorities. In liquidation, assessing the value of each Investor s potential damages claim would be an enormous and difficult task and would take significant time. If a Scheme Claimant objects to the valuation of his Scheme Claim, the right to relief from the Court is replaced by an appeal to a Scheme Adjudicator who is an independent barrister of more than 10 years calling and whose decision in a dispute will be final and binding. This procedure will reduce the time that would be spent in a liquidation in finally adjudicating Scheme Claims. Cost Savings The Joint Liquidators consider that significant, substantial cost savings are likely by avoiding time delays: of Court applications to resolve the legal rights of creditors and Investors; by adopting the mechanism for adjudicating Scheme Claims; and through substitution of a dispute resolution procedure by a Scheme Adjudicator in place of an 10

appeal to a court streamlining the claims adjudication process. Consequences of these advantages The Scheme Administrators duties can be focused on collection of assets, pursuit of third party claims and making additional distributions on a timely basis, as opposed to becoming embroiled in highly technical litigation. To proceed with the liquidation of the Company for an extended period would not, in the view of the Joint Liquidators, be in the best interests of Scheme Claimants as a whole and would lead to the erosion of the assets through an escalation in costs generated by complex multi-jurisdictional litigation. 2.4 Disadvantages of the Scheme The Joint Liquidators consider that the possible disadvantages in implementing the Scheme, compared to liquidation of the Company are that: General Scheme Claimants will forego their right to claim interest on their claims in return for a more expedient distribution; Scheme Claimants will lose the right to commence Proceedings and to appeal to the court in respect of the adjudication of their Scheme Claims. Although this might be seen as a significant disadvantage, the Joint Liquidators consider that this will result in time and cost savings which will benefit all Scheme Claimants; and Scheme Claimants will not be entitled to make or amend their Scheme Claims after the relevant cut-off dates (subject to any extension of that date under the terms of the Scheme). Explanatory Statement 3 STRUCTURE OF SCHEME AND WHAT YOU SHOULD DO 3.1 Schemes of Arrangement in Hong Kong In Hong Kong, a scheme of arrangement becomes binding on all those creditors and members affected by it when: a) a majority in number, representing at least 75% in value of each class of those creditors (or members) entitled to do so, vote in person or by proxy in favour of the scheme at a specially convened meeting ( Scheme meetings ); b) the Hong Kong Court subsequently makes an order approving the scheme; and c) an office copy of that order is delivered to the Registrar of Companies in Hong Kong for registration. Scheme Claimants should appreciate that if the majorities prescribed above are obtained and the Scheme is sanctioned by the Court, it will become binding on ALL creditors and members of the Company, whether or not they received notice of or voted in favour of the Scheme. 3.2 Company Creditors Arrangements in the BVI 11

A CCA is a compromise or arrangement between a company and its creditors (not members), governed by Part II Division 2 of the BVI Insolvency Act. A CCA becomes binding on all creditors with notice and members of the Company if a majority in excess of 75% in value of the creditors present, in person or by proxy, at a specially convened meeting, resolve to adopt the CCA Proposal and appoint supervisors to administer the CCA. Scheme Claimants should appreciate that if the majority prescribed above for the CCA Proposal is obtained, it will bind all Scheme Claimants who received notice of the CCA. 3.3 Entry into force of the Scheme and conditions precedent Explanatory Statement As the timing and procedures for the Scheme and the CCA to become effective are different, they will only come into force if and when they are both approved. The Scheme will not become effective unless the CCA becomes binding and vice versa. The Scheme Meetings will be held concurrently on 8 September 2005, but the Effective Date is likely to be the filing date of the order approving the Scheme with the Hong Kong Companies Registry. A summary of the terms of the Scheme are at Appendix 13. 3.4 Classes of Scheme Claimants Meetings of creditors and/or members or classes of them, affected by the proposals are required, in order to decide whether to adopt the Scheme. Whether a Scheme Claimant belongs to a particular class depends on the similarity or dissimilarity of their rights. The Hong Kong Liquidators view is that there are 3 classes of Scheme Claimants and accordingly meetings of each of these classes, and one of shareholders, are required. On 21 July 2005 the Hong Kong Court approved that the Scheme meetings be convened concurrently with the meeting of creditors required in the CCA. The 4 classes of Scheme Claimants which are proposed are as follows: i) General Creditors: those who subscribed for, but did not receive shares in the Company and any other creditors other than in respect of a claim falling within sub-paragraphs (ii) and (iii) below; ii) Investors who became registered shareholders of the Company on or after 12 December 2003; iii) iv) Investors who became registered shareholders of the Company before 12 December 2003; and Shareholders (as shareholders). If the requisite majorities are obtained at each of the Scheme meetings, and (1) it is sanctioned by the Hong Kong Court and that order is filed, and (2) the CCA becomes effective, the Scheme will bind all Scheme Claimants. Under the CCA, there are no class voting requirements and members are automatically bound. Therefore there will only be one Meeting of CCA Creditors. If the requisite majority of CCA Creditors with notice vote in favour of the proposal, the CCA will become effective subject to its terms. 12

3.5 Scheme Liability Forms which have been sent with details of Scheme Claims Many Scheme Claimants have previously submitted their claims when requested to complete proofs of debt forms or contributory verification forms for the purposes of the first meetings of creditors and members of the Company or, subsequently, for the claims adjudication process in the liquidation. Other Scheme Claimants will not have made any claims to date but may do so in the future. Information already received by the Joint Liquidators about Scheme Claims has been set out on a Scheme Liability Form enclosed with this Document. If you have received this Form the information on it represents the amount which will be accepted as your Agreed Claim. The contents of the Scheme Liability Form will become binding upon you and the Company 7 Business Days after the Effective Date unless you amend or add to the form and return it so that it is received by the Joint Liquidators prior to the Effective Date, or within 7 Business Days after the Effective Date. Blank Scheme Liability Forms Scheme Claimants receiving this Document without a Scheme Liability Form and who have Scheme Claims should complete a copy of the blank Scheme Liability Form at Appendix 3, and send it to PricewaterhouseCoopers, 22nd Floor, Prince s Building, 10 Chater Road, Central, Hong Kong (Ref: JGWB/JOJT/JAAK). Additional copies of Scheme Liability Forms can be requested from PwC at the same address or by telephone (852) 2289 5088 or downloaded from www.pwchk.com/csa (the website). The final deadline for Scheme Claims to be submitted is the second anniversary of the Effective Date defined in the Scheme as the Final Claims Submission Date. Provisions for estimated claims will be reserved until this date and thereafter distributed in accordance with the Scheme. 3.6 Voting Explanatory Statement All Scheme Claimants are entitled to vote on the Scheme, either in person or by proxy, at the relevant Scheme and CCA meetings to be held on 8 September 2005. Attached at Appendix 1 is a copy of the notice convening the Scheme meetings, approved by the Hong Kong Court. Enclosed with this Document, for the meetings, are: a Scheme Liability Form (referred to in paragraph 3.5 above); a Voting Form; a Proxy Form; and a Corporate Representative Form. At Appendix 2 is an explanation of how your claim against the Company is to be valued for voting purposes and guidance notes and instructions for the completion of the forms. If you intend to attend and vote at the Scheme meetings please bring the Voting form and complete and return it at the meetings. If someone is attending on your behalf, you must complete a proxy and/or a corporate representative form. Before completing the appropriate proxy form you should carefully read the guidance notes and instructions for their completion. Failure to validly complete the forms may affect your right to vote. 13

Please return these forms as soon as possible to the Joint Liquidators, CSA Absolute Return Fund Limited (in liquidation) at 22nd Floor, Prince s Building, 10 Chater Road, Central, Hong Kong, and at the latest by 5:00pm (Hong Kong time) on 5 September 2005. Forms not so returned may be handed in on the day of the Scheme meetings provided that a faxed copy is received prior to the aforesaid time. Faxed forms may be sent to Fax No: (852) 2890 8345, but you should ensure that the originals are dispatched by post to allow enough time to ensure that they are received prior to the Scheme meetings. Scheme Claims for the subscription of shares will be admitted for voting purposes at the amount paid to the Company in respect of the subscription. Scheme Claims that do not arise out of the subscription for shares must be supported by appropriate evidence and will be given an estimated amount for voting purposes by the Chairman. Explanatory Statement The Chairman will have discretion to reject a Scheme Claim in whole or in part if he considers that it has been made for an amount that is not fair and reasonable. The Chairman s decision will be notified to the creditor concerned who may ask the Court to review the decision at the hearing to sanction the Scheme. Scheme Claims admitted for voting purposes will not constitute an admission of the existence and amount of a Scheme Claim for the purposes of calculating a dividend payment under the Scheme. 3.7 The Chairman of the meetings At the direction of the Hong Kong and BVI Courts Jan G W Blaauw, or failing him, John J Toohey of PwC, being one of the Joint Liquidators, will act as Chairman of the Scheme and CCA Creditors Meetings. 3.8 Appointment of Scheme Administrators Upon the Scheme and CCA becoming effective, the Hong Kong Liquidators will be appointed as Scheme Administrators and, together with Mr Malone, will be appointed as the Supervisors of the CCA. The Scheme Administrators will then take control of all the assets of the Company in the capacity of co-trustees and oversee the operation of the Scheme in accordance with its terms. They will adjudicate all Scheme Claims and make the first dividend distributions as soon as practicable, thereafter. 3.9 How your interests will be protected The Scheme provides for a Creditors Committee to fulfil a role comparable to that carried out by the committee of inspection and will initially comprise the same members. The Creditors Committee will have powers to monitor the progress of the Scheme and supervise certain activities of the Scheme Administrators. 4 SUMMARY OF THE COMPANY S FINANCIAL POSITION 4.1 Financial position The directors of the Company were requested to prepare a Statement of Affairs for the Company but have not done so. The most recent audited financial statements of the Company prior to the appointment of Provisional Liquidators were as at 31 December 2003. 14

The reason for the liquidation of the Company was that it was being operated in a manner prejudicial to investors interests and not that it was insolvent. However, if the legal uncertainties were resolved in favour of one class of Investor, then this could render the Company insolvent. 4.2 Financial position as at 21 June 2004 Note: The amounts shown in the Joint Liquidators Estimated Financial Position set out below are estimates of total assets and total liabilities. The estimated book values at 21 June 2004 are provided for comparative purposes. Please refer to the Receipts and Payments Account in Appendix 8 for a summary of the realisations and administrative expenses to date. CSA Absolute Return Fund Limited (in liquidation) Estimated Joint Liquidators Book Value Estimated Financial as at Position Summary Financial Position 21 June 2004 21 June 2004 US$m US$m Assets Investments and other assets 122.6 78.2 Cash and deposits 75.6 76.0 Total Assets 198.2 154.2 Liabilities Creditors (Unallotted Subscribers) 24.5 24.5 Other liabilities 168.3 Explanatory Statement Total Liabilities 24.5 192.8 Share capital and share premium 168.3 Net Surplus (Deficiency) 5.4 (38.6) The Joint Liquidators have not performed an audit of the financial position and, accordingly, do not express an audit opinion. All information has been reviewed for reasonableness, however there are many factors (including the effect of legal rights on insolvency) that are beyond the control of the Joint Liquidators and subsequently appointed Scheme Administrators that can affect these estimates. Estimates provided in this document are indicative only. Events or circumstances could occur that may give rise to either an improvement or deterioration of these estimates and they should therefore be treated with caution in arriving at any decisions or actions based upon them. 5 SCHEME ADMINISTRATORS, SUPERVISOR AND JOINT LIQUIDATORS Once the Scheme and the CCA become effective, the role of the Scheme Administrators and the Supervisors is to collect in and distribute the Company s assets to its creditors and Investors in accordance with the terms of the Scheme and CCA. The Joint Liquidators in Hong Kong and the BVI will remain in place. None of the Scheme Administrators, the Supervisors, the Joint Liquidators and their advisers, nor any of their representatives, advisers, partners, staff or agents shall incur any personal liability under or in relation to the Scheme or otherwise. 15

6 TAXATION Scheme Claimants, whether in Hong Kong or in other jurisdictions, are recommended to consult their professional advisers if they are in any doubt as to the taxation implications of any amounts claimed or received under the Scheme. It is emphasised that the taxation implications of the Scheme are personal matters for Scheme Claimants themselves. 7 DOCUMENTS AVAILABLE FOR INSPECTION The documents listed in Appendix 12 are available for inspection between the hours of 10:00am and 4:00pm on any Business Day until 7 September 2005 at PricewaterhouseCoopers, 22nd Floor, Prince s Building, 10 Chater Road, Central, Hong Kong (ref: JGWB/JOJT/JAAK). 8 CONCLUSION Explanatory Statement If the proposed Scheme and CCA are not approved, the Company will continue in liquidation with the result that Scheme Claimants lose the prospect of an early resolution of the affairs of the Company. The Committees of Inspection have reviewed the information contained in this document. On the basis of this information and having considered the advantages of the Scheme for Scheme Claimants, each member of the Committees of Inspection has confirmed to the Joint Liquidators that it is in favour of the Scheme and CCA. The Liquidators are satisfied that the Scheme and CCA are in the best interests of the Scheme Claimants and accordingly recommend that Scheme Claimants vote in favour of the Scheme. Date: 30 July 2005 16

PART 2 The Scheme SCHEME OF ARRANGEMENT PURSUANT TO SECTION 166 OF THE COMPANIES ORDINANCE (CAP. 32) OF THE LAWS OF HONG KONG BETWEEN CSA ABSOLUTE RETURN FUND LIMITED (IN LIQUIDATION) (INCORPORATED IN BRITISH VIRGIN ISLANDS) BVI COMPANY NO. 41-4011 AND PRELIMINARY S1. Definitions THE RESPECTIVE SCHEME CLAIMANTS (AS DEFINED IN THE SCHEME) 1.1 In this Scheme, unless inconsistent with the subject or context, the following words shall have the following meanings: Admitted Claim Agreed Claim Ascertainment Date the sum, if any, due from the Company to a Scheme Claimant following the application of set-off to that Scheme Claimant s Agreed Claim(s) in accordance with Clause S15; the amount of a Debt established as being due in relation to a Scheme Claim in accordance with Clause S13; 21 June 2004, being the date on which the winding up petition was presented in respect of the Company in Hong Kong; Available Distributable Amount the amount determined in accordance with Clause S16; Binding Data any information relating to one or more Scheme Claims which is inserted into a Scheme Liability Form by the Hong Kong Liquidators to a Scheme Claimant; The Scheme Business Day BVI BVI Court any day (other than Saturday, Sunday and days on which a tropical cyclone warning No. 8 or above, or a black rainstorm warning signal is hoisted in Hong Kong at any time between 9:00am and 5:00pm) on which banks are open in Hong Kong for general banking business; the British Virgin Islands; the Eastern Caribbean Supreme Court in the BVI; 17

BVI Liquidators BVI Members Committee CCA Jan G W Blaauw and John J Toohey of PwC and Meade Malone of Meade Malone & Co; the Members Committee established pursuant to the order of the BVI Court made on 20 April 2005; the Company Creditors Arrangement proposed between the Company and the Scheme Claimants in the BVI; CCA Expenses the expenses referred to in Clause C7; Claimants Resolution Committee Member Companies Ordinance a resolution passed in accordance with Clause S36 read with Clause S37; a duly appointed member of the Creditors Committee; the Companies Ordinance (Cap 32) Laws of Hong Kong as amended and in force at the Ascertainment Date; Company CSA Absolute Return Fund Limited, BVI Company Number 41-4011; Creditors Committee the Creditors Committee established pursuant to Clause S30; Custodian Debt Bermuda Trust (Far East) Limited, a company incorporated in Hong Kong; any of the following: (a) (b) any debt or liability to which the Company is subject at the Ascertainment Date; any debt or liability to which the Company may become subject after the Ascertainment Date by reason of any obligation incurred before that Date. The Scheme In relation to both (a) and (b) above: (i) it is immaterial whether the debt or liability is present or future, whether it is certain or contingent, or whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion; (ii) liability means (subject to (i) above) a liability to pay money or money s worth, including without limitation any liability under any enactment, any liability for breach of trust, any liability in contract, tort or bailment, and any liability arising out of an obligation to make restitution; 18

(iii) (iv) (v) in determining whether any liability in tort is a Debt, the Company is deemed to become subject to that liability by reason of an obligation incurred at the time when the cause of action accrued; debt or liability does not include a debt or liability which would be statute barred at the Ascertainment Date; for the avoidance of doubt Debt does not include a Scheme Expense; Dispute Resolution Procedure the procedure for the resolution of disputes set out in Clause S29; Disputed Scheme Claim Effective Date a Scheme Claim in respect of which there is a dispute between the Company or the Scheme Administrators and a Scheme Claimant; the later of: (i) (ii) the date on which an office copy of the order of the Hong Kong Court sanctioning the Scheme shall be delivered for registration to the Hong Kong Registrar of Companies and the resolution to approve the proposal set out in the Scheme as a CCA by a majority in excess of three quarters in value of the Scheme Claimants present in person or by proxy and voting on the resolution to approve it, is passed; Explanatory Statement Final Claims Submission Date the explanatory statement forming part of the Scheme Document and provided in accordance with section 166A of the Companies Ordinance in relation to this Scheme; mid-day in Hong Kong on the second anniversary of the Effective Date; General Scheme Claim General Scheme Claim Amount any claim whatsoever without limitation for a Debt (including but not limited to claims based on fraud or dishonesty) against the Company which is not an Investor Scheme Claim in respect of which the Agreed Claim has not yet been established; the amount which the Scheme Administrators determine from time to time is their prudent estimate of the maximum possible aggregate value of Admitted Claims arising out of General Scheme Claims, including any amount which the Scheme Administrators determine, in their absolute discretion, is necessary to take into account claims not yet notified to them; The Scheme General Scheme Claim Dividend Rate Hong Kong the rate determined pursuant to Clause S18.2 payable in respect of Agreed Claims arising in respect of General Scheme Claims; the Hong Kong Special Administrative Region of the People s Republic of China; 19

Hong Kong Court Hong Kong Liquidators Insolvency Rules Investor Investor Claim Amount Investor Dividend Rate Investor Scheme Claim Joint Liquidators Net Debt the High Court of Hong Kong; Jan G W Blaauw and John J Toohey of PwC or any others appointed additionally or in their stead from time to time as liquidators of the Company in Hong Kong; the BVI Insolvency Rules under the Insolvency Act 2003 of the BVI and in the absence of such relevant rules, the United Kingdom Insolvency Rules 1986; a natural or legal person who has purchased and been registered as a holder of shares in the Company; the amount which the Scheme Administrators determine from time to time is their prudent estimate of the maximum possible aggregate value of Agreed Claims arising out of Investor Scheme Claims, including any amount which the Scheme Administrators determine, in their absolute discretion, is necessary to take into account claims not yet notified to them; the rate determined pursuant to Clause S18.3 payable in respect of Agreed Claims arising in respect of Investor Scheme Claims; any claim whatsoever without limitation for a Debt (including but not limited to claims based on fraud or dishonesty) against the Company made by an Investor in his capacity as an Investor in respect of which the Agreed Claim has not yet been established; the Hong Kong Liquidators and the BVI Liquidators in their capacity as liquidators of the Company in the BVI and Hong Kong or if different, such others as are liquidators of the Company; any amount found pursuant to the terms of the Scheme to be due to the Company from a Scheme Claimant in respect of a Debt following the application of set-off in accordance with Clause S6; The Scheme Net Debtor Nominated Representative any person liable to pay a Net Debt pursuant to Clause S6.3; any individual nominated by a Committee Member to act as its representative on the Creditors Committee; Post Preferential Debt Proceedings first class post or air mail or a generally recognised commercial courier service; any Debt which is preferential under section 265 of the Companies Ordinance or section 215 of the Insolvency Act 2003 of the BVI; any form of proceedings in any jurisdiction or forum including without limitation any demand, legal proceedings, arbitration, alternative dispute resolution, adjudication, mediation, seizure, distraint, forfeiture, re-entry, execution or enforcement of judgment or any step taken for the purpose of creating or enforcing a lien; 20

Property Provisional Liquidators PwC Scheme Scheme Accounts Scheme Adjudicator Scheme Administrators Scheme Claim all forms of property including money, shares, investments, goods, things in action, land and every description of property wherever situated and also obligations and every description of interest, whether present or future or vested or contingent, arising out of, or incidental to, property; the Hong Kong Liquidators in relation to the provisional liquidation of the Company in Hong Kong and the BVI Liquidators together with Nadeem Sweiss, but excluding Meade Malone, both of Meade Malone & Co., in relation to the provisional liquidation of the Company in the BVI; PricewaterhouseCoopers, 22nd Floor, Prince s Building, 10 Chater Road, Central Hong Kong, facsimile (852) 2890 8345; the scheme of arrangement in the form herein contained together with any modification thereof or addition thereto approved or imposed by the Court; any bank accounts opened pursuant to Clause S26.1(g); any person appointed as such pursuant to Clause S27 and any person appointed in substitution for him, or as an alternate; the persons referred to as such in Clause S22.2 and where there is only one scheme administrator in office, that person, and all references to Scheme Administrators herein shall be deemed to refer also to such Scheme Administrator; a General Scheme Claim or an Investor Scheme Claim; Scheme Claimant Scheme Document a person, including any person treated as a principal pursuant to Clause S26.1(i), who has a Scheme Claim or claims to be a creditor of the Company in respect of a Scheme Claim excluding for the avoidance of doubt any person in respect of whom it has been established to the satisfaction of the Scheme Administrators that no Debt is owed, or that the Debt owed has been or will be extinguished whether by the operation of set-off pursuant to Clause S6, or otherwise, and any Net Debtor; the document containing the terms of the Scheme and the Explanatory Statement together with the appendices thereto; The Scheme Scheme Expenses Scheme Liability Form Scheme Period the expenses referred to in Clauses S8 and S34.2; the document entitled Scheme Liability Form, an example of which is set out at Appendix 3; the period from the Effective Date to the Termination Date; 21

Scheme Rate Supervisors Termination Date US Dollar and US$ Valuation Statement the rate of exchange for the relevant currency, at the mid-market rate quoted by the Hong Kong Association of Banks on the Ascertainment Date; the Supervisors for the time being appointed as supervisors under the CCA, initially being the BVI Liquidators; the date on which the Scheme ceases to have effect in accordance with Clause S40; the Dollar in the currency of the United States of America; the statement to be sent out in accordance with Clause S15.3 and any amended statement dispatched in accordance with Clause S15.5 or Clause S15.7. 1.2 In the Scheme references: a) to Clauses are references to Clauses of the Scheme (if prefixed with the letter S ) and to the CCA (if prefixed with the letter C ) and references to Pages and Appendices are references to Pages and Appendices of the Scheme Document; b) to a person include a company, unincorporated association or partnership; c) to the date of a document, form, notice or report mean the date shown on such document, form, notice or report as the date thereof; d) in the Scheme to PwC shall be deemed to refer also to any successor firm or business entity or such other firm or business entity from which a duly appointed Scheme Administrator for the time being holding office practises; e) to the singular includes the plural and vice versa, and masculine includes feminine; f) to headings are for ease of reference only and shall not affect the interpretation of the Scheme; and The Scheme g) in the event of a conflict or inconsistency between the terms of the CCA and the Scheme, the terms and definitions of the Scheme shall prevail. THE SCHEME GENERAL S2. Effective Date The Scheme shall come into operation on the Effective Date, provided that the CCA has also come into operation. S3. Application of the Scheme The Scheme shall apply to all Debts of the Company. 22

S4. Enforcement of Scheme Claims 4.1 Each Scheme Claimant is deemed to acknowledge that the terms herein including without limitation the process of establishing Admitted Claims in accordance with Clauses S12 to S15, and of calculating and paying dividends in accordance with Clauses S18 and S19, is fair and that all Scheme Claimants shall be bound thereby. 4.2 Save as expressly provided for in the Scheme and without prejudice to Clause S4.5, no Scheme Claimant shall be entitled to take or continue any step or do or continue any act against or in respect of the Company or its Property or the Scheme Administrators (including by way of any Proceedings) in any jurisdiction whatsoever after the Effective Date for the purpose of obtaining payment or establishing the quantum of any Debt. 4.3 If any Scheme Claimant takes any action which is prohibited by Clause S4.2 after the Effective Date he shall be deemed to have received on account of any dividend(s) to which he would otherwise be entitled pursuant to the Scheme an advance payment under the Scheme equal to the amount or gross value of any money, property or advantage obtained by him at the expense of the Company as a result of such action, and the extent, if any, to which he is entitled to a payment from the Company shall be determined accordingly. In the event that the amount of any deemed receipt(s) on account of dividends attributable to a Scheme Claimant exceeds the total of all sums by way of dividend which that Scheme Claimant would otherwise receive pursuant to the Scheme he shall be treated as a debtor of the Company in respect of such excess. 4.4 For the purpose of Clause S4.3 the value of any property, benefit or advantage obtained as aforesaid shall be conclusively determined by the Scheme Administrators and (without prejudice to the generality of the foregoing) may include such amount as the Scheme Administrators may in their absolute discretion consider to be appropriate in respect of interest, and of any costs, charges and expenses incurred by the Company or the Scheme Administrators as a consequence of the action prohibited by Clause S4.2. 4.5 Each Scheme Claimant is deemed to acknowledge that if he takes Proceedings against the Company in breach of Clause S4.2 the Scheme Administrators shall be entitled to obtain an order staying those Proceedings and providing for payment by the Scheme Claimant concerned of interest and of any costs, charges and expenses incurred by the Company or the Scheme Administrators as a result of those Proceedings. S5. Interest All Scheme Claimants shall waive any entitlement to interest on their Scheme Claims. S6. Set-off The Scheme 6.1 Where before the Effective Date there have been mutual credits, mutual debts or other mutual dealings between the Company and any Scheme Claimant, an account shall be taken of what is due from the Company to the Scheme Claimant pursuant to the terms of the Scheme and what is due from the Scheme Claimant to the Company at the Ascertainment Date in respect of the mutual credits, mutual debts or other mutual dealings subject, where relevant, to Clause S6.4, the sums due from one party shall be set off against the sums due from the other. 6.2 Contingent and prospective claims against the Company a value for which has been agreed or established for the purposes of the Scheme in accordance with Clause S13 shall be included in the account taken pursuant to Clause S6.1. 23

6.3 The account referred to in Clause S6.1 shall be taken after all of the Agreed Claims in relation to a Scheme Claimant s Scheme Claims have been established pursuant to Clause S13, and only the balance, if any, due from the Company, shall thereafter constitute that Scheme Claimant s Admitted Claim. Any balance due to the Company shall constitute a Net Debt. Scheme Claimants and Net Debtors shall be notified of the amount of their Admitted Claim and Net Debt respectively by means of a Valuation Statement dispatched to them in accordance with the provisions of Clause S15.3. Any Net Debt shall be paid by the Net Debtor to the Scheme Administrators forthwith upon the sending of the Valuation Statement. 6.4 Sums due from the Company to a Scheme Claimant shall not be included in the account taken under Clause S6.1 where the sums have become due to the Scheme Claimant by reason of any transfer, assignment, sale or novation of a debt or of a right to receive payment, or by reason of any reorganisation or reconstruction of companies on a date after the Ascertainment Date. S7. Foreign Currency Conversion Where a Debt or any sum owed to the Company which is the subject of a claim to set-off under Clause S6 has been incurred in, or is payable in, a currency other than US Dollars (including any case where the relevant contract allows the Scheme Claimant to elect to make a claim or claims in a currency other than US Dollars and they so elect), for the purposes of the Scheme the amount thereof shall be converted into US Dollars at the Scheme Rate. S8. Scheme Expenses 8.1 All remuneration, costs, charges and expenses of and incidental to the Scheme and the performance by the Joint Liquidators and the Scheme Administrators of their functions which are payable after the Effective Date shall be Scheme Expenses, including, without prejudice to the generality of the foregoing: The Scheme a) any remuneration of the Hong Kong Liquidators (calculated by reference to the time spent by them and employees of PwC under their control on the affairs of the Company) relating to the work done by them as liquidators pursuant to the order appointing them to the Company, together with all costs, charges and expenses incurred by them including the fees, expenses, costs and disbursements of any third party service providers, outstanding at the Effective Date or incurred after the Effective Date in making any application to the Court in relation to the Company s winding-up in any jurisdiction or the termination of their appointment. The hourly rates of remuneration charged by PwC shall be the rates agreed by the Court and approved at the meetings of creditors and members of the Company on 17 February 2005, or any increased rates subsequently approved by the Creditors Committee; b) any remuneration of the Scheme Administrators (calculated by reference to the time spent by them and employees of PwC under their control on the affairs of the Company). The rates of remuneration charged by the Scheme Administrators shall be the same as the rates that are approved from time to time in relation to the Hong Kong Liquidators; c) any remuneration and expenses of the BVI Liquidators approved by the BVI Members Committee or otherwise in accordance with the Insolvency Rules in force from time to time; d) any remuneration of the Provisional Liquidators approved by the Hong Kong Court, BVI Court or the Creditors Committee as the case may be; 24

e) all costs, charges and expenses incurred by the Company in connection with the negotiation, preparation and implementation of the Scheme (including, but not limited to, all legal and accounting fees, postage, advertising expenses, Court and filing fees and stamp or other duty or tax and other costs); f) the costs of summoning and holding meetings of Scheme Claimants and any meetings of creditors or members convened to consider the Scheme and the costs of obtaining Court sanction and registration of the Scheme at the Companies Registry in Hong Kong; g) all liabilities, expenses, costs and disbursements, taxes, duties, administrative, licence, filing, registration and other fees, incurred by the Company, the Joint Liquidators and the Scheme Administrators in the course of exercising or performing their respective powers, duties and functions under, or for the purpose of implementing, or in connection with the Scheme as set out in Clauses S8.1(a), (b) and (c) above and approved by the Creditors Committee; h) the costs incurred in employing agents, professional advisers or other third party service providers to advise or assist the Scheme Administrators and Supervisors and their staff in connection with the exercise and performance of their powers, duties and functions as Scheme Administrators and Supervisors; i) the fees of and the costs, charges and expenses incurred by the Scheme Adjudicator (as approved by the Scheme Administrators and the Creditors Committee pursuant to Clause S29.1(d) and subject to Clauses S29.1(d)(i) and S29.1(d)(ii)) in connection with the exercise and performance of their powers, duties and functions under the Scheme; j) the costs of summoning meetings of Scheme Claimants and the Creditors Committee in accordance with the Scheme and any costs of preparing advertising and sending out notices and reports to be given by or to the Creditors Committee or the Scheme Claimants under the Scheme; k) any legal and other advisers costs which the Company is liable to pay pursuant to the indemnity in Clause S43.1; S9. Payment of Scheme Expenses The Company shall pay all Scheme Expenses and CCA Expenses in full. COMPANY S PROPERTY TRUST AND INVESTMENT S10. Property of the Company 10.1 The Company acting by the Joint Liquidators shall forthwith upon the Effective Date place under the control of the Scheme Administrators all Property of the Company (including, for the avoidance of doubt, all funds held on its behalf or under its control) and they shall have the power to get in any Property not placed under their control. The Scheme Administrators shall realise the Property at such times and in such manner as they deem appropriate having regard to the requirements of the Scheme. The Scheme 10.2 With effect from the Effective Date and thereafter subject to the terms of the Scheme the Company shall hold all of its Property, including, for the avoidance of doubt, all sums standing to the credit of any bank accounts opened by the Scheme Administrators pursuant to Clause S26.1(g) and the Company s entitlement to all sums held on trust for it, whether pursuant to Clause S11 or otherwise, upon trust for the Scheme Claimants to apply the same in accordance with the terms of the Scheme. The Scheme 25

Administrators shall notify the bank or banks at which any such bank accounts are opened and kept accordingly. The Scheme Administrators shall have the power to execute any deed or document in the name and on behalf of the Company or in their own names necessary or desirable to establish or give effect to the said trust. 10.3 Forthwith upon the Effective Date the Company shall appoint the Scheme Administrators and, to the extent that they are different from the Scheme Administrators, the Supervisors as its co-trustees of the trust established pursuant to Clause S10.2. The appointment of a Scheme Administrator as co-trustee of such trust shall terminate automatically upon that Scheme Administrator ceasing to hold office as such pursuant to Clause S24. The Company and any remaining trustee(s) shall forthwith appoint any person appointed in accordance with the provisions of the Scheme as Scheme Administrator as co-trustee of such trust. Subject to Clause S10.4, such trustees may act jointly or severally. 10.4 Any step to be taken or decision to be made by the trustees, or any of them, in their capacity as trustee may only be taken or made with the concurrence of the majority of such trustees. In the event that and for so long as the number of trustees falls below three, the trustees shall be unable to act. 10.5 The trust referred to in Clause S10.2 shall terminate upon the earliest to occur of the events referred to in Clause S40.1. S11. Investment The Scheme Administrators as trustees shall have the power during the Scheme Period to place all or any of the monies for the time being held by the Company upon trust pursuant to Clause S10.2 on deposit at any clearing bank in Hong Kong whether through bank, money market deposit or otherwise. DETERMINATION OF ADMITTED CLAIMS AND PAYMENT OF DIVIDENDS S12. Valuation of Debts 12.1 Each Investor Scheme Claim shall be valued at the amount paid by the relevant Scheme Claimant to the Company or to the Custodian in respect of the shares in the Company allotted to that Scheme Claimant. The Scheme 12.2 Any General Scheme Claim arising from a payment for the subscription of shares in the Company shall be valued at the amount paid by the relevant Scheme Claimant to the Company or the Custodian in respect of such subscription. 12.3 Any other General Scheme Claim shall be valued as hereinafter provided, subject to the terms of the Scheme. All Scheme Claims shall be valued as at the Ascertainment Date. S13. Investors Scheme Claims and General Scheme Claims: Establishing the Agreed Claim Where at the Effective Date any Scheme Claimant has not already received a Scheme Liability Form containing Binding Data, that Scheme Claimant may use a copy of the blank Scheme Liability Form at Appendix 3 or send to the Scheme Administrators by Post or by facsimile a written request for a Scheme Liability Form at any time prior to the Final Claims Submission Date. On receipt of such a request the Scheme Administrators shall forthwith dispatch a Scheme Liability Form to the relevant Scheme Claimant and Clauses S13.1 to S13.7 shall apply to such Scheme Liability Form. 26

13.1 In relation to a copy blank Scheme Liability Form or one sent to him which contains no Binding Data, each Scheme Claimant shall: a) fill in the Scheme Liability Form by inserting details of its Scheme Claims; and b) sign and return the Scheme Liability Form by Post or by facsimile to the Scheme Administrators at PwC, to be received by them no later than the Final Claims Submission Date. 13.2 In relation to a Scheme Liability Form sent to it prior to the Effective Date which contains Binding Data, each Scheme Claimant shall be entitled to: a) accept the content of the Scheme Liability Form as it is in accordance with Clause S13.5; or b) amend the Scheme Liability Form by: where relevant, adding to the Scheme Liability Form by inserting details of any Scheme Claims not included on the Scheme Liability Form; or amending any of the Binding Data appearing on the Scheme Liability Form. 13.3 If a Scheme Claimant has made alterations or additions to the Scheme Liability Form in accordance with Clauses S13.1(a) or S13.2(b), then the Scheme Claimant must in each case comply with the relevant instructions attached to the Scheme Liability Form in relation to those additions or amendments, and enclose any relevant supporting documentation relating to such additions or amendments when returning it to the Scheme Administrators. Any such additions and amendments and supporting documentation which are not in English may be disregarded by the Scheme Administrators. 13.4 If the Scheme Claimant elects to amend or add to the Scheme Liability Form in accordance with Clause S13.2(b), then the Scheme Claimant must sign and return the amended Scheme Liability Form by Post or by facsimile to the Scheme Administrators at PwC, to be received by them no later than 5:00pm in Hong Kong on the date which is 7 Business Days after the Effective Date. 13.5 Each Scheme Claimant shall be deemed to have accepted and confirmed as accurate the Binding Data set out in any Scheme Liability Form sent to it by the Hong Kong Liquidators, and that Scheme Liability Form shall thereafter be binding on the Scheme Claimant as to the matters referred to therein, unless the Scheme Liability Form is amended, signed and returned by Post or by facsimile in accordance with Clause S13.3, and received by the Scheme Administrators prior to 5:00pm in Hong Kong on the date which is 7 Business Days after the Effective Date. Where the Scheme Liability Form is so amended and returned, it shall only be binding as to any unamended data set out in it. 13.6 Following receipt of a Scheme Liability Form amended or added to and returned by a Scheme Claimant in accordance with the provisions of Clauses S13.1(a) or S13.2: The Scheme a) no further additions or alterations to that Scheme Liability Form and no further Scheme Claims may be made by that Scheme Claimant; and b) the Scheme Administrators shall thereupon endeavour to agree any additional or amended data with the relevant Scheme Claimant within 21 days of receipt. Once agreement has been reached in relation to any such data, the data in its agreed form will become binding on the Scheme Claimant, the Company and the Scheme Administrators. 27

13.7 If agreement has not been reached within 21 days of receipt the disputed matters shall be referred to adjudication by a Scheme Adjudicator under the Dispute Resolution Procedure set out in Clause S29. The decision of a Scheme Adjudicator shall so far as the law permits be final and binding on the Company, the Scheme Administrators, the relevant Scheme Claimant and all Scheme Claimants. 13.8 The amount established as being due in respect of a Scheme Claim following completion of the steps set out in Clauses S13.1 to S13.7, or such of them as are applicable, shall so far as the law permits be binding on the Company, the Scheme Administrators, the Scheme Claimant and all Scheme Claimants as the Agreed Claim in respect of that Scheme Claim. 13.9 All costs incurred by a Scheme Claimant in complying with the terms of Clause S13 shall be met by the Scheme Claimant. S14. Final Claims Submission Date 14.1 Notification of the Effective Date and the Final Claims Submission Date will be advertised by the Scheme Administrators as soon as practicable following the Effective Date, and as far as possible in the same publications as were used to advertise the meeting of Scheme Claimants to vote on the Scheme and in such other publications as they shall deem appropriate. 14.2 On two separate occasions following the publication of the advertisement referred to in Clause S14.1, the Scheme Administrators shall cause a further advertisement of the Final Claims Submission Date to be placed in the publications referred to in Clause S14.1, requesting the Scheme Claimants to submit their Scheme Claims (by amending and returning their Scheme Liability Forms where applicable) by that date, the second such advertisement to be published no later than 14 days before the Final Claims Submission Date. 14.3 No Scheme Claimant shall be entitled to claim in, or receive any dividend under, the Scheme in respect of a Scheme Claim where, details and the amount of that Scheme Claim were not either: a) Binding Data included in the Scheme Liability Form dispatched to that Scheme Claimant which has become binding by virtue of Clause S13.5; or The Scheme b) notified to the Scheme Administrators by that Scheme Claimant amending or adding to the Scheme Liability Form and signing and returning it in accordance with Clauses S13.1 or S13.2, such Scheme Liability Form being received by the Scheme Administrators no later than the date and time required pursuant to Clause S13; and in either case, notwithstanding the fact that such Scheme Claimant was not aware of the existence of the Scheme and, where relevant, received no notification of it from any of the Joint Liquidators or the Scheme Administrators. S15. The Admitted Claim and Valuation Statements 15.1 Following the identification of the Agreed Claim in relation to all of a Scheme Claimant s Scheme Claims the Scheme Administrators shall determine the amount which, following the application of any set-off in accordance with Clause S6, constitutes the Admitted Claim or Net Debt in respect of the relevant Scheme Claimant or Net Debtor. 28

15.2 Following the completion of the steps set out in Clause S15.1 in relation to a Scheme Claimant, the Scheme Administrators shall calculate that Scheme Claimant s aggregate Agreed Claim in respect of each of General Scheme Claims and Investor Scheme Claims and shall then divide each Scheme Claimant s Admitted Claim into an Admitted Claim for General Scheme Claims and Investor Scheme Claims. 15.3 Following completion of the steps set out in Clause S15.1 and, where relevant, Clause S15.2 in relation to a Scheme Claimant, the Scheme Administrators shall send by Post to that Scheme Claimant or Net Debtor a statement setting out: a) the amount of the aggregate Agreed Claims in respect of its Scheme Claims; b) the amount of any debt due from it to the Company which has been applied by way of set-off in accordance with Clause S6; c) the resultant amount of its Admitted Claim or, as the case may be, its Net Debt; and d) if applicable, a breakdown of its aggregate Agreed Claim and its Admitted Claim, attributable to each of General Scheme Claims and Investor Scheme Claims. 15.4 Scheme Claimants and Net Debtors may, by notice in writing to be received by the Scheme Administrators within 28 days of the date of the Valuation Statement, object to the amount of an Admitted Claim or Net Debt as shown in the Valuation Statement on the grounds of arithmetical or other manifest error on the face of the Valuation Statement only. For the avoidance of doubt, no Scheme Claimant may challenge an Admitted Claim or Net Debt as shown in the Valuation Statement on any other grounds. In the absence of any such objection, the amount shown as an Admitted Claim or Net Debt in the Valuation Statement shall be binding on the Company, the Scheme Administrators and the relevant Scheme Claimant or Net Debtor as that Scheme Claimant or Net Debtor s Admitted Claim or Net Debt. 15.5 In the event that the Scheme Administrators agree with the objections of a Scheme Claimant or Net Debtor raised in accordance with Clause S15.4, they shall dispatch an amended Valuation Statement by Post to the Scheme Claimant concerned as soon as may be practicable and the provisions of Clause S15.4, this Clause S15.5 and Clauses S15.6 to S15.9 shall apply, mutatis mutandis to such Valuation Statement. 15.6 In the event that the Scheme Administrators do not agree that an objection notified to them in accordance with Clause S15.4 is valid, they shall notify the Scheme Claimant or Net Debtor of this by Post as soon as possible and, in any event, within 56 days of the date of the relevant Valuation Statement. If the Scheme Claimant or Net Debtor informs the Scheme Administrators that he does not accept the accuracy of the Valuation Statement by notice in writing within 14 days of the date of such notification, the disputed matter shall be referred by the Scheme Administrators to a Scheme Adjudicator who shall adjudicate on the matter within 7 days of receipt of such reference. The Scheme 15.7 The amount determined as the Admitted Claim or Net Debt following the adjudication of the Scheme Adjudicator shall, so far as the law permits, be binding on the Company, the Scheme Administrators and the relevant Scheme Claimant or Net Debtor and shall be that Scheme Claimant s Admitted Claim or Net Debtor s Net Debt. If applicable, the Scheme Administrators shall dispatch an amended Valuation Statement to the relevant Scheme Claimant or Net Debtor. 29

15.8 The amount of the Admitted Claim or Net Debt shown as such in an amended Valuation Statement sent pursuant to Clause S15.5 or Clause S15.7, shall, so far as the law permits, be binding on the relevant Scheme Claimant or Net Debtor, the Company, the Scheme Administrators and all Scheme Claimants as that Scheme Claimant s Admitted Claim or Net Debt. 15.9 All Scheme Claimants are deemed to acknowledge that in the event that they become Net Debtors a Net Debt, which has become binding pursuant to this Clause S15 and any sum owed by them pursuant to Clause S29.1(e)(ii), shall be an undisputed debt due as at the date at which the relevant Valuation Statement was prepared. S16. Determination of the Available Distributable Amount 16.1 As soon as practicable after the Effective Date, but not before they are due for payment, the Scheme Administrators shall: a) pay the taxed costs of the petitioning creditor ordered to be paid by the Hong Kong Court and the BVI Court in the winding up proceedings against the Company pursuant to the priority contained in Rule 179 of the Companies (Winding Up) Rules of Hong Kong and Rule 4.218 of the Insolvency Rules in force at the Ascertainment Date; b) pay any Preferential Debts and Scheme Expenses which are then due for payment; c) provide for any petitioning creditor s costs, Preferential Debts and Scheme Expenses which are not then due for payment. 16.2 The Scheme Administrators shall, as soon as practicable after the steps set out in Clause S16.1 have been carried out and thereafter from time to time at their discretion, but in any event so as to comply with their obligations under Clause S16.4 review the assets and liabilities of the Company and determine the Available Distributable Amount. The Scheme 16.3 The Available Distributable Amount shall be the amount, if any, which in the opinion of the Scheme Administrators, having consulted the Creditors Committee, is prudently available at the relevant time for distribution pursuant to Clause S18 to Scheme Claimants in respect of Admitted Claims other than those Admitted Claims or parts of Admitted Claims which constitute Preferential Debts, proper provision having been made for Scheme Expenses to be incurred in the future and any other liabilities of the Company which, in the Scheme Administrators view, should be provided for. An Available Distributable Amount shall include all payments previously made pursuant to Clause S18 below. 16.4 The Scheme Administrators shall by a date six months after the first payment pursuant to Clause S18 and from time to time thereafter, but in any event by each subsequent twelve month anniversary of the first payment pursuant to Clause S18 during the Scheme Period, review the assets and liabilities of the Company in accordance with the provisions of Clauses S16.2 and S16.3 and determine the Available Distributable Amount at the date of each such review. The provisions of Clause S18.1 shall apply following each determination of the Available Distributable Amount. S17. Determination of the General Scheme Claim Amount and Investor Claim Amount As soon as reasonably practicable after each occasion when the Available Distributable Amount has been determined pursuant to Clause S16, the Scheme Administrators shall determine the General Scheme Claim Amount and the Investor Claim Amount. 30

S18. Payment of Dividends 18.1 As soon as reasonably practicable following each completion of the steps referred to in Clauses S16 and S17, the Scheme Administrators shall cause payments to be made as follows in the following order of priority: a) first, to make payment in full of Admitted Claims arising out of General Scheme Claims, or, if the General Scheme Claim Amount is greater than the Available Distributable Amount, the General Scheme Claim Dividend Rate will be paid on Admitted Claims arising out of General Scheme Claims; and b) secondly, if the Available Distributable Amount exceeds the General Scheme Claim Amount, dividends shall be paid in respect of Admitted Claims arising out of Investor Scheme Claims at the Investor Dividend Rate. 18.2 Where the Available Distributable Amount is less than the General Scheme Claim Amount, the General Scheme Claim Dividend Rate shall be a fraction in which: the numerator is the Available Distributable Amount; and the denominator is the General Scheme Claim Amount; Provided that the General Scheme Claim Dividend Rate shall not exceed 100%. 18.3 The Investor Dividend Rate shall be a fraction in which: the numerator is the Available Distributable Amount less the General Scheme Claim Amount; and the denominator is the Investor Claim Amount. Provided that the Investor Dividend Rate shall not be less than 0% or more than 100%. 18.4 In the event that all Scheme Claims are paid in full, any surplus funds available for distribution pursuant to the Scheme shall be transferred to the BVI Liquidators on the Termination Date, to be dealt with in accordance with BVI Law. 18.5 For the avoidance of doubt: a) where the General Scheme Claim Amount and the Investor Claim Amount are determined on the second and subsequent occasions, payments previously made pursuant to Clause S18.1 shall be disregarded in determining the General Scheme Claim Amount and the Investor Claim Amount; and The Scheme b) in determining the amount of any payment to a Scheme Claimant pursuant to Clause S18.1, the Scheme Administrators shall take into account any payments previously made to the Scheme Claimant in respect of the relevant Admitted Claim pursuant to Clause S18.1. 31

18.6 The Scheme Administrators may, at their absolute discretion, withhold payment of a dividend due to a Scheme Claimant pursuant to Clause S18 if the Company has or they believe that the Company may have claims against that Scheme Claimant which have not yet been quantified provided that: a) the amount so withheld does not exceed the Scheme Administrators estimate of the maximum amount that could become due from that Scheme Claimant to the Company; b) the Scheme Administrators send notice of the amount being withheld by Post to the relevant Scheme Claimant at the time when it would otherwise be paid pursuant to the Scheme; and c) if the sum due or which might become due from the Scheme Claimant is not quantified such that it is final and binding on the Company and the Scheme Claimant within 183 days of an amount being withheld in respect of it, the Scheme Administrators will seek directions from the Hong Kong Court (or, if the Hong Kong Court will not give such directions to them, the Hong Kong Liquidators shall seek them) as to the continued withholding of any such amount. 18.7 When the Scheme Administrators determine in relation to a dividend payment that it will be the final dividend they shall: inform the Creditors Committee; send a notice to that effect by Post to the relevant Scheme Claimants at the same time as payment of the dividend is made; and cause advertisements of the fact to be placed in such publications as they in their absolute discretion decide are appropriate. S19. Method of Payment 19.1 Payment of dividends shall be in US Dollars. The Scheme 19.2 All payments by the Company to Scheme Claimants shall be made either by telegraphic transfer (if requested in writing by a Scheme Claimant) to a designated bank account at the sole risk and cost of the relevant Scheme Claimant, or by cheque in favour of the Scheme Claimant, or of such other person as he may direct by notice in writing and shall be sent by Post, at the risk of the Scheme Claimant (who shall bear the costs of clearing each such cheque), to the last known address of the Scheme Claimant or to any other address of which the Scheme Administrators may receive notification in writing from the Scheme Claimant. 19.3 Subject to Clause S19.2, the sending by Post of such cheque, or the execution of telegraphic transfer instructions received pursuant to Clause S19.2 shall be good discharge to the relevant Scheme Claimant of the dividend in respect of which the cheque is drawn or the telegraphic transfer made and shall constitute conclusive evidence that the relevant Scheme Claimant has received such cheque or telegraphically transferred payment, as the case may be. S20. Unclaimed Dividends Any balance remaining in the Scheme Accounts at the Termination Date representing cheques or other means of payment in respect of which the Scheme Accounts have not been debited and any accumulated interest thereon shall be transferred to the BVI Liquidators on the Termination Date, to be dealt with in accordance with BVI Law. 32

S21. Full and Final Settlement of Claims Subject to any rights they may have to the amounts referred to in Clause S20, each Scheme Claimant shall be deemed to agree that following the payment of a final dividend, the payment of dividends, whether received or not, in accordance with Clause S19 shall be made and accepted in full and final settlement of all present and future liabilities of the Company to that Scheme Claimant other than pursuant to Clause S18.4 but including, for the avoidance of doubt, any liabilities in respect of any and all matters arising or events occurring after the Ascertainment Date. THE SCHEME ADMINISTRATORS S22. The Scheme Administrators 22.1 There shall be two Scheme Administrators having the powers, duties and functions conferred upon them by the Scheme. In exercising their powers and carrying out their duties and functions under the Scheme, the Scheme Administrators shall act in good faith and with due care and diligence in the interests of the general body of Scheme Claimants and shall exercise their powers under the Scheme for the purpose of ensuring that the Scheme is operated in accordance with its terms. 22.2 Subject to Clause S24.4 the Scheme Administrators shall be the Hong Kong Liquidators. 22.3 Other than in their capacity as trustees pursuant to Clause S10.3, the Scheme Administrators shall (so far as the law permits) act as agents of the Company in exercising their powers and in carrying out their duties and functions under the Scheme. 22.4 Nothing in this Scheme shall render the Scheme Administrators or the Joint Liquidators liable for any Debts or obligations of the Company. S23. Scheme Administrators Exercise of Powers Any act required or authorised under the Scheme to be done by the Scheme Administrators may be done by both or either of the persons for the time being holding the office of Scheme Administrator. S24. Resignation and Removal of the Scheme Administrators 24.1 The Scheme Administrators or either of them may resign their appointment at any time by giving not less than six months notice in writing to the Company and to the Creditors Committee, or such shorter period of notice as the Scheme Administrators and the Creditors Committee may agree in writing. 24.2 The Office of a Scheme Administrator shall be vacated if he: The Scheme a) dies, or becomes bankrupt or mentally disordered; b) is convicted of an indictable offence; c) resigns his office by notice in accordance with Clause S24.1; d) is no longer a person qualified to act in accordance with Clause S22.2; or e) ceases to be a Hong Kong Liquidator. 33

24.3 If one of the Scheme Administrators vacates office in accordance with Clauses S24.1 or S24.2, the other may appoint a replacement Scheme Administrator. Any such replacement shall be a partner in PwC who is not ineligible by reason of any of the matters referred to in Clause S24.2 and who consents so to act. For the avoidance of doubt, during such time as there may be a single Scheme Administrator, he shall be entitled to exercise all of the powers and carry out all of the duties and functions of the Scheme Administrators. 24.4 If the office of both Scheme Administrators is vacated in accordance with Clauses S24.1 or S24.2 and no other person is the Hong Kong Liquidator, the Creditors Committee shall be entitled to appoint replacement Scheme Administrators provided that: a) such replacements are duly qualified partners in a firm of accountants entitled to practise in Hong Kong and the BVI who are not ineligible by reason of any of the matters referred to in Clause S24.2 and consent so to act; and b) the appointment of such persons shall be subject to ratification by a Claimants Resolution at a meeting called within 56 days by the Creditors Committee for the purpose in accordance with Clause S34. 24.5 Notwithstanding the provisions of Clause S24.4(b), the persons appointed by the Creditors Committee as replacement Scheme Administrators shall, subject to Clause S24.6, be entitled to act as Scheme Administrators throughout the period from the date of their appointment by the Creditors Committee to the date of the ratification by a Claimants Resolution. In the event that the appointment of such Scheme Administrators is not ratified at the said meeting, that meeting shall elect replacement Scheme Administrators by a Claimants Resolution. Such replacement Scheme Administrators shall be duly qualified partners in a firm of accountants entitled to practise in Hong Kong and the BVI who are not ineligible by reason of any of the matters referred to in Clause S24.2 and who consent so to act. If no such Claimant s Resolution is passed, the appointment made by the Creditors Committee shall, notwithstanding the provisions of Clause S24.4(b), stand until the next meeting of Scheme Claimants, which shall take place within 56 days. Failing actual ratification of the appointment made by the Creditors Committee, or election by a Creditors Resolution of replacement Scheme Administrators or a Scheme Administrator at that meeting, the appointment made by the Creditors Committee shall be deemed to be ratified. The Scheme 24.6 Scheme Administrators appointed pursuant to Clauses S24.4 and S24.5 shall vacate that office upon the appointment of Hong Kong Liquidators. S25. General Powers of the Scheme Administrators The Scheme Administrators shall to the fullest extent permitted by law have the power to manage and control the business, affairs and Property of the Company for the purposes of implementing the Scheme subject to the provisions thereof, together with the powers specifically conferred on them thereby. S26. Specific Powers and Obligations of the Scheme Administrators 26.1 In carrying out their duties and functions under the Scheme, the Scheme Administrators shall (without prejudice to the full terms of the Scheme) be empowered: a) to have full access to all such information as they may from time to time require in relation to the affairs of the Company or the operation of the Scheme and to all books, papers, documents and other information contained or represented in any format whatsoever in the possession or under the control of the Company. Such information, books, papers and documents may be disclosed by 34

the Scheme Administrators to the Creditors Committee and to the Scheme Claimants if they consider such disclosure to be for the benefit of the Scheme; b) subject to Clause S31.3(a) to employ and remunerate as a Scheme Expense accountants, lawyers and other professional advisers or agents in connection with the Scheme; c) to delegate in writing to any person qualified and not ineligible by reason of any of the matters referred to in Clause S24.2 all or any of the powers and discretion conferred upon the Scheme Administrators under the Scheme, and from time to time to revoke any such delegation, provided that the Scheme Administrators shall both be personally responsible for any act or omission of any such delegatee to the same extent as if they had expressly authorised it; d) subject to Clause S31.3(b) to petition the courts of any jurisdiction to obtain recognition or enforcement of the Scheme or to bring, commence or defend any Proceedings in the name and, insofar as is permitted by law, on behalf of the Company in any matter affecting the Company in any jurisdiction, or to prevent the continuation or commencement of any Proceedings against the Company or its Property and/or to seek such other relief as they deem appropriate or which the relevant court may grant; e) to apply to the Hong Kong Court for directions in relation to any particular matter arising under, or in the course of the operation of, the Scheme; f) subject to Clause S31.3(c) on behalf of the Company to negotiate, compromise, waive or settle claims by and against the Company and to treat the sum agreed as being due from the Company in respect of any Debt forming the subject of any such compromise or settlement as an Agreed Claim and, in circumstances where a full and final settlement of all liabilities owed between the relevant Scheme Claimant and the Company has been agreed, to treat any sum agreed to be paid by or to the Company pursuant to such compromise or settlement as an Admitted Claim or Net Debt (as the case may be) for the purposes of the Scheme; g) to open, maintain and operate such bank accounts as they may think fit and to close such accounts; h) to convene and attend meetings of the Creditors Committee for the purposes of consulting with or providing information to them. The Scheme Administrators shall inform each Committee Member in advance of such meetings; i) to treat those acting or believed to be acting on behalf of principals who invested in or applied to invest in the Company as if they were a principal creditor or debtor in place of their principal, until such time as the Scheme Administrators receive notice in writing from any such investor or investment-applicant principal that the relevant party has no authority to act on their behalf, or that the relevant party s authority to act on their behalf has come to an end; The Scheme j) to appoint additional Committee Members in the event that the number of Committee Members shall fall to three or below three and the Creditors Committee do not exercise their power of appointment under Clause S30.5, but so that the number of Committee Members shall not exceed seven; k) to exercise in the name of the Company in accordance with the provisions set out therein, the powers conferred by Clause S31.3; 35

l) to do all acts and to execute in the name and, insofar as permitted by law, on behalf of the Company any deed, transfer, instrument, cheque, bill of exchange, receipt or other document which may be necessary for or incidental to the full and proper implementation of the Scheme; m) to do all such things as may be necessary for the preservation, getting in and realisation of the Property of the Company; n) to make any payment which is necessary or incidental to the performance of their functions; o) in the name and on behalf of the Company to rank and claim in the bankruptcy, insolvency, sequestration, liquidation or other similar or analogous proceedings of any person indebted to the Company in any jurisdiction and to receive dividends and to accede to trust deeds, compromises and arrangements in relation to the creditors of any such person; p) to exercise any other powers necessary for or incidental to the full and proper implementation of the Scheme; q) to use the Company s seal; and r) to do all other things incidental to the exercise of the foregoing powers. THE SCHEME ADJUDICATOR AND DISPUTE RESOLUTION PROCEDURE S27. The Scheme Adjudicator 27.1 In the event of a claim being referred to adjudication pursuant to the Scheme the Scheme Administrators will in consultation with the Creditors Committee appoint a person who is a barrister of not less than 10 years calling in Hong Kong or BVI, to act as Scheme Adjudicator. The Scheme Administrators may, in consultation with the Creditors Committee remove a Scheme Adjudicator and appoint another, in their absolute discretion. The Scheme 27.2 Any such Scheme Adjudicator shall have the powers, duties and functions, and the rights, conferred upon him by the Scheme. In exercising his powers and carrying out his duties and functions under the Scheme, a Scheme Adjudicator shall act in good faith and with due care and diligence in the interests of the Scheme Claimants as a whole, and shall exercise his powers under the Scheme for the purpose of ensuring that the Scheme is operated in accordance with its terms. S28. Specific Powers, Duties and Functions of the Scheme Adjudicator A Scheme Adjudicator shall act as an expert not an arbitrator and shall adjudicate on all matters submitted to him pursuant to the Scheme in accordance with the Dispute Resolution Procedure. S29. Dispute Resolution Procedure 29.1 In relation to any matter which is referred to a Scheme Adjudicator: a) The Scheme Administrators shall refer the disputed matter by notice in writing sent by Post to a Scheme Adjudicator, (and copied, with enclosures, by Post to the relevant Scheme Claimant) setting out details of the matter to be resolved and enclosing evidence in support thereof, including copies of such of the Company s records as shall appear relevant, the relevant Scheme Liability Forms and enclosures, if any, together with any supporting documents including those provided by the relevant Scheme Claimant. 36

b) A Scheme Adjudicator shall consider the papers and documents before him and shall as soon as possible and in any event within 21 days of receipt of the notice referred to in Clause S29.1(a) (except in the case of a dispute referred to him pursuant to Clause S15.6, in which case the time limit shall be reduced to 7 days) either: (i) (ii) achieve the agreement of the Scheme Administrators and the relevant Scheme Claimant on the disputed matters by reference to the evidence submitted to him in accordance with Clause S29.1(a) or in the absence of such agreement, certify in writing by Post to the Scheme Administrators and the relevant Scheme Claimant his determination in relation to the disputed matters; provided that a Scheme Adjudicator may, with the consent of the Scheme Administrators (such consent not to be unreasonably withheld), extend the said 21 or 7 day period by such amount of time as he and the Scheme Administrators shall agree. c) A Scheme Adjudicator shall be entitled as he may deem appropriate in any jurisdiction or jurisdictions to consult with such advisers, including legal advisers and experts, and shall be entitled to be remunerated and to be reimbursed his reasonable costs and expenses in carrying out his duties under the Scheme. d) The basis of remuneration of a Scheme Adjudicator shall be subject to the prior approval of both the Scheme Administrators and the Creditors Committee and, subject thereto, a Scheme Adjudicator shall be entitled, in respect of such remuneration and reasonable costs and expenses incurred by him, to order the parties to deposit such sum as he shall deem appropriate in respect of such remuneration, costs and expenses and, in addition, to: (i) direct that any or all of his remuneration, costs, and expenses shall be paid by the Company, in which case the Scheme Administrators shall cause the same to be paid forthwith from the Property of the Company as a Scheme Expense; or (ii) direct that any or all of his remuneration, costs and expenses shall be paid by the Scheme Claimant in which case, the same shall be paid by the Scheme Claimant forthwith and, in any event, no later than 14 days from the date of such direction, failing which the Scheme Administrators shall cause the same to be paid from the Property of the Company as a Scheme Expense. e) In the event that the amount of a Scheme Adjudicator s remuneration, costs and expenses is paid as a Scheme Expense in accordance with Clause S29.1(d)(ii) only, the Scheme Administrators shall, following such payment, either: The Scheme (i) (ii) deduct the same from any amount which may be or may become due to the Scheme Claimant by way of dividend, such Scheme Claimant being treated for these purposes as having received, on account of any such dividend, an advance under the Scheme equal to the amount which he has been directed to pay; or where the Scheme Claimant is not entitled to receive a dividend pursuant to the Scheme, or is subsequently found to be a Net Debtor, or the amount of such remuneration, costs and expenses exceeds his entitlement, treat such amount or such excess as a debt owed by the Scheme Claimant or Net Debtor to the Company. 37

f) Insofar as the law permits, the decision of a Scheme Adjudicator on any dispute referred to him in accordance with this Scheme shall be final and binding and, for the avoidance of doubt, there shall be no right to appeal therefrom, or to make any claim against the Scheme Adjudicator in respect thereof. 29.2 In the event that a Scheme Adjudicator shall become aware that he has a conflict of interest in relation to any matter referred to him under the Dispute Resolution Procedure, he shall inform the Scheme Administrators of such conflict forthwith. THE CREDITORS COMMITTEE S30. Constitution of the Creditors Committee 30.1 There shall be a Creditors Committee initially comprising the same members as the committee of inspection in respect of the liquidation of the Company for the purposes mentioned in the Scheme, which shall comprise not less than three and not more than seven Scheme Claimants or Nominated Representatives of Scheme Claimants. The first Committee Members appointed shall be: Randolph Shane Menton; Cheung Man Fai, German; the Nominated Representative of Frank Chen; the Nominated Representative of Royal Skandia Life Assurance Limited; the Nominated Representative of IPP Financial Advisers Pte Limited; the Nominated Representative of The Fieldstone Foundation; and the Nominated Representative of Lloyds (BVI) Nominees Limited. 30.2 No one shall be elected or nominated or appointed as a Committee Member who is ineligible by reason of any of the matters referred to in Clause S30.4, or who was not at the Ascertainment Date, and is not at the date of such election or nomination, a Scheme Claimant. The Scheme 30.3 The Committee Members and Nominated Representatives, when acting for the purposes of the Scheme, shall act in good faith at all times in the interests of the general body of Scheme Claimants. 30.4 The office of Committee Member shall be vacated if that member: a) in the case of Committee Members who are individuals only: dies or becomes mentally disordered; or is convicted of an indictable offence in respect of which he receives a custodial sentence; b) in the case of all Committee Members: resigns office by notice sent by Post to the Scheme Administrators; 38

ceases to be or represent a Scheme Claimant, whether as a result of the application of setoff pursuant to Clause S6 or otherwise; knowingly contravenes the provisions of the Scheme and the remaining members of the Creditors Committee resolve that he should cease to be a Committee Member; or fails to attend five consecutive meetings of the Creditors Committee, and the remaining members of the Creditors Committee resolve that he should cease to be a Committee Member. 30.5 The Creditors Committee shall have power subject to Clause S30.2 at any time to appoint any Scheme Claimant who would not be ineligible by reason of any of the matters referred to in Clause S30.4 to be a Committee Member, whether to fill a casual vacancy or, subject to Clause S30.1, as an addition to the existing Committee Members. S31. Functions of the Creditors Committee 31.1 The Creditors Committee shall be responsible for assisting the Scheme Administrators in the implementation of the Scheme including, without limiting the generality of the foregoing, providing their views on any matter pertaining to the Scheme to the Scheme Administrators. 31.2 The Creditors Committee shall ensure that there is at least one Scheme Administrator in office at all times throughout the Scheme Period. 31.3 The Company acting by the Scheme Administrators shall not, except with the prior approval of the Creditors Committee: a) employ and remunerate accountants, lawyers and other professional advisers or agents, pursuant to Clause S26.1(b); b) commence or bring Proceedings pursuant to Clause S26.1(d); c) agree to the settlement, waiver or compromise of a Scheme Claim pursuant to Clause S26.1(f); or d) extend the deadlines laid down by the Scheme pursuant to Clause S47.1 provided that in the event that the Scheme Administrators give notice in writing by Post to the Committee Members that they wish to enter into any transaction or take any step mentioned in this Clause S31.3, and the Creditors Committee has not within the time specified in such notice passed a resolution to the effect that it does not approve the same, the Scheme Administrators may enter into the transaction or take the step notwithstanding that the Creditors Committee has not given its approval, which shall be deemed to have been received. The Scheme 31.4 The Creditors Committee shall have the other functions specifically referred to in the Scheme. S32. Information to be given to the Creditors Committee 32.1 The Creditors Committee may, from time to time, resolve to seek such information as it may reasonably think necessary or desirable from the Scheme Administrators concerning the affairs of the Company, the operation of the Scheme, the determination of any dividend and such other matters concerning the affairs of the Company as the Creditors Committee may reasonably require and the Scheme Administrators shall (subject always to Clause S32.3) provide the same unless the Court shall otherwise direct or the Scheme Administrators are for any reason unable to do so. 39

32.2 The Scheme Administrators shall either attend, or appoint a delegate to attend, each meeting of the Creditors Committee, including any meeting at which information provided under Clause S32.1 is submitted or considered, for the purpose of giving such explanations and information as the Creditors Committee may require. 32.3 Nothing in the Scheme, including for the avoidance of doubt Clause S32.1, shall require the Scheme Administrators to provide to the Creditors Committee information the release of which: is subject to restrictions by virtue of confidentiality, legal privilege, law, contract, rule or regulation; or the Scheme Administrators determine would be detrimental to the interests of the Scheme Claimants as a whole. 32.4 If the Scheme Administrators refuse to provide information under Clause S32.3, they must inform the Creditors Committee of their reasons for such refusal. S33. Proceedings of the Creditors Committee 33.1 Committee Members other than individuals shall, and Committee Members who are individuals may, appoint a Nominated Representative to attend and vote at meetings of the Creditors Committee on their behalf and to fulfil their functions as Committee Member. The appointment of a Nominated Representative shall terminate automatically in the event that the appointing Committee Member ceases to hold office. 33.2 Subject to the provisions of the Scheme, the Creditors Committee may meet together for the dispatch of business, adjourn and otherwise regulate its meetings as it sees fit. Any Committee Member may at any time summon a meeting of the Creditors Committee to be held during normal business hours on a Business Day, unless all the other Committee Members and the Scheme Administrators agree otherwise. Written notice of any such meeting of the Creditors Committee (including the time, date, location and purpose for which the meeting is called) must be sent by Post to the other members and the Scheme Administrators at their office not less than 21 days before the day on which the meeting is to be held or such lesser period of notice as the Scheme Administrators and the Creditors Committee may agree. The Scheme 33.3 The chairman of any meeting of the Creditors Committee shall be one of the Scheme Administrators or a person nominated by them or either of them so to act. 33.4 Meetings of the Creditors Committee may be validly held where the Committee Members or their Nominated Representatives are present physically, or through the medium of a conference call, video conference or such other electronic means of communication as shall allow them to communicate contemporaneously, and the words present in person shall be deemed, for the purposes of Clause S33.5, to include being present by such means. 33.5 Subject to Clause S33.6, the quorum necessary for the transaction of business shall be three Committee Members or their Nominated Representative present in person. 33.6 The Creditors Committee may act notwithstanding any vacancy in its body, but if and so long as the number of Committee Members does not exceed two, the continuing Committee Members or their Nominated Representatives may act for the purpose of convening a meeting of Scheme Claimants or filling the vacancy or vacancies in the membership of the Creditors Committee but for no other purpose. 40

33.7 Matters arising for decision at any meeting of the Creditors Committee shall be decided by a majority of votes of the Committee Members and Nominated Representatives present. In the case of an equality of votes, the chairman of the meeting shall have a casting vote, except where the chairman has a conflict of interest in relation to the matter the subject of the vote, in which case: the chairman must disclose the conflict of interest to the Committee Members prior to the vote; and the chairman will not be entitled to a casting vote in relation to the matter the subject of the conflict. 33.8 A resolution in writing, including for the avoidance of doubt, a facsimile copy of such resolution, whether on one or separate pieces of paper, signed by or on behalf of all or a majority of Committee Members for the time being, shall be as valid and effective as if passed at a meeting of the Creditors Committee duly convened and held. 33.9 Each Committee Member and Nominated Representative shall preserve the confidentiality of all information received in his capacity as a Committee Member or Nominated Representative, which is not information that is a matter of public record, concerning the Company and the operation of the Scheme, and shall not use such information for pecuniary advantage or for any purpose other than the performance of his functions under the Scheme, unless he has obtained the prior written approval of the Scheme Administrators. 33.10 No Committee Member or Nominated Representative shall, save as provided in this Clause, act as a Committee Member or Nominated Representative in relation to any matter in respect of which he has a conflict of interest in performing his functions under the Scheme. Where any Committee Member or Nominated Representative has such a conflict of interest he shall at any meeting of the Creditors Committee declare in advance any interest that he has, or might have, (and, in the case of a Nominated Representative, that he is aware that the Committee Member for whom he acts has, or might have) in any information provided, or matters to be considered, at that meeting, or in any deliberation of the Creditors Committee, and subject as hereinafter provided, shall absent himself from the meeting. Neither a Committee Member nor a Nominated Representative shall be entitled to vote at any meeting of the Creditors Committee in respect of any matter in relation to which such a conflict of interest arises, unless at that meeting the other Committee Members and Nominated Representatives present resolve (with the agreement of the Scheme Administrators) that the relevant Committee Member or Nominated Representative should be entitled either to vote or to participate in the meeting or both. 33.11 Unless the Creditors Committee shall (with the agreement of the Scheme Administrators) resolve otherwise, all meetings of the Creditors Committee shall be held in Hong Kong at such venue as may be specified in any notice convening such meetings. The Scheme 33.12 The Scheme Administrators shall cause proper minutes to be kept of all proceedings of the Creditors Committee and shall send a copy of such minutes to each Committee Member, except that where such minutes detail proceedings relating to any matter in respect of which a Committee Member or Nominated Representative has a conflict of interest, the relevant section of the minutes shall be deleted from the copy sent to such Committee Member, unless a resolution was passed pursuant to Clause S33.10 that such Committee Member or Nominated Representative should be entitled to participate in such proceedings. 41

MEETINGS OF SCHEME CLAIMANTS S34. Meetings 34.1 For the avoidance of doubt, the provisions of Clauses S34 to S39 inclusive, save for Clause S34.5, shall have no application to the convening and conduct of the meeting of Scheme Claimants held for the purpose of considering, and if thought fit, approving the Scheme. 34.2 The Scheme Administrators and/or the Creditors Committee may convene a meeting of Scheme Claimants for the purposes referred to in Clauses S24.4(b) and S40.1(a). The costs of convening such a meeting shall be a Scheme Expense. 34.3 In addition to the circumstances set out in Clause S34.2, the Scheme Administrators shall forthwith summon a meeting of Scheme Claimants whenever they shall be required to do so by notice in writing sent by Post to the Scheme Administrators, and signed by or on behalf of twenty or more Scheme Claimants having Scheme Claims or Agreed Claims amounting to not less than one fifth in value of the aggregate of all Scheme Claims and Agreed Claims, subject to any applicable set-off. The notice requiring the Scheme Administrators to summon the meeting must specify the purpose for which the meeting is required and any resolutions to be proposed at the meeting, and if such notice is duly served in accordance with this Clause S34.3, it shall be the duty of the Scheme Administrators to give notice of the meeting in accordance with Clause S35. The purpose of such a meeting shall be to request and receive information from the Scheme Administrators of the kind referred to in Clause S32.1, and subject to the restrictions referred to in Clause S32.1 as if all references in those Clauses to Creditors Committee were to Scheme Claimants, the Scheme Administrators shall provide such information at the meeting of Scheme Claimants called for the purpose of receiving it. If by reason of such restrictions none of the information required can be provided, no such meeting of Scheme Claimants shall be summoned and the Scheme Administrators shall inform those who requested the meeting of the reasons for their refusal to provide the information. 34.4 In calculating the value of Scheme Claims or, where applicable, Agreed Claims for the purposes of Clause S34.3: The Scheme Scheme Claims or Agreed Claims or the right to receive dividends in respect of them, acquired by transfer, assignment, sale or novation of a debt or of a right to receive payment or by reason of any reorganisation or reconstruction of companies after the Effective Date shall not be counted; and the Scheme Administrators shall place a value on any Disputed Scheme Claim of any Scheme Claimant serving notice pursuant to Clause S34.3 provided that, if such Scheme Claimant disagrees with such value, he shall be entitled to refer the matter to the Scheme Adjudicator whose decision as to the value to be placed on such Disputed Scheme Claim for the purposes of Clause S34.3 shall be made as soon as practicable and shall be final and binding. 34.5 For the avoidance of doubt, the amount in respect of which any Scheme Claimant votes at any meeting of Scheme Claimants (including a meeting to approve the Scheme) and any adjudication of, or decision on, discrepancies between the information in the Company s records and that provided by Scheme Claimants prior to the holding of the meeting of Scheme Claimants to approve the Scheme, for the purpose of voting at the said meeting of Scheme Claimants, shall not be binding on the Company, the Scheme Claimants or the Scheme Administrators, save in respect of such vote. 42

S35. Notice of Meetings of Scheme Claimants 35.1 Notice in writing of every meeting of Scheme Claimants specifying the time and place of the meeting and the general nature of the business to be transacted at the meeting, and setting out any resolutions to be proposed at the meeting, shall be sent to each Scheme Claimant at his last known address (if any) or such other address as he may have given to the Company (or the Scheme Administrators) for the service of such notice upon him. Every such notice shall be sent by Post and the accidental omission to send any such notice to, or the non-receipt of a notice by, any Scheme Claimant entitled to receive the same shall not invalidate the proceedings in any meeting. The Scheme Administrators, or where the meeting is convened by it pursuant to Clause S34.2, the Creditors Committee shall, in so far as they are able, cause to be published an advertisement of each meeting in the same newspaper(s) and publication(s) in which the notice of the meeting of Scheme Claimants to consider and if thought fit approve the Scheme was advertised. The Scheme Administrators, or where relevant, the Creditors Committee, may also cause to be published in such other place or places as they deem fit notices or advertisements of any proposed meeting of Scheme Claimants. 35.2 It shall be sufficient to give not less than 28 days notice of a meeting of Scheme Claimants. 35.3 No resolution may be proposed or passed at a meeting of Scheme Claimants unless such resolution was set out in the notice of such meeting. S36. Voting at Meetings 36.1 Every Scheme Claimant present in person or by proxy, shall have one vote for every US Dollar of his Agreed Claims as valued in accordance with Clause S13 or, if a Valuation Statement has been sent in respect of a Scheme Claimant, the amount, if any of his Admitted Claim or, in the case of Disputed Scheme Claims or other Scheme Claims in respect of which the Agreed Claim has yet to be established, for every US Dollar of such Disputed Scheme Claims or Scheme Claims as valued by the chairman, in either case, subject to any applicable set-off and the deduction of any amounts received by way of dividend(s). 36.2 For voting purposes Scheme Claims, Disputed Scheme Claims and Agreed Claims, where necessary, will be converted into US Dollars at the Scheme Rate. 36.3 The chairman of the Scheme Claimants meeting may, at his absolute discretion, reject or admit votes in respect of Disputed Scheme Claims and other Scheme Claims in respect of which the Agreed Claim has yet to be established, in such amount as he, in his absolute discretion, may deem appropriate. 36.4 The decision of the chairman of the meeting as to the admission and value of votes at a meeting shall be final for the purposes of, and in relation to the proceedings at, that meeting. The Scheme 36.5 Every Scheme Claimant entitled to vote shall have the right to appoint any person as his proxy to attend and vote in his place. The instrument appointing a proxy may be in any form which the chairman of the meeting may approve, and must be lodged at the place specified in the notice of meeting for the lodging of proxies not less than two clear Business Days before the meeting at which it is to be used. Proxies may be lodged by facsimile, in which case they shall be sent to the facsimile number specified for that purpose in the notice of meeting. 36.6 Subject to Clause S39.2, Claimants Resolutions at meetings of Scheme Claimants shall be passed if a simple majority in number of those Scheme Claimants voting and entitled to vote in person or by proxy vote in favour thereof. 43

S37. Quorum Required for Meetings No business shall be transacted at any meeting of Scheme Claimants unless a quorum is present when the meeting proceeds to business. Twenty Scheme Claimants present in person or by proxy and having the right to vote at the meeting shall constitute a quorum. S38. Chairman of Meetings One of the Scheme Administrators shall be the chairman of any meeting of Scheme Claimants. If there is a vacancy in the office of chairman, or if the chairman is not present within 15 minutes after the time appointed for opening the meeting or is unwilling to preside, the Scheme Claimants present in person or by proxy shall choose a Committee Member or, if no such member is present or if all such members present decline to preside, one of themselves, to be chairman of the meeting. S39. Powers of the Scheme Claimants in General Meeting 39.1 Without prejudice to the terms of this Scheme, a meeting of Scheme Claimants duly convened and held shall have power by a Claimants Resolution to appoint a Scheme Administrator in accordance with Clause S24.4 subject to the provisions of Clause S24.6. 39.2 A meeting of Scheme Claimants convened in accordance with Clause S34.3 shall have the power to vote upon a resolution to remove the current members of the Creditors Committee and, subject to Clause S30, nominate such replacement members as they see fit, provided that a majority in number representing at least 75% by value of Scheme Claimants voting and entitled to do so, vote in person or by proxy at such meeting in favour of such resolution. DURATION AND TERMINATION OF THE SCHEME S40. Termination of the Scheme 40.1 Save as provided for in Clause S41, the Scheme shall forthwith terminate and cease to have effect upon the happening of the first to occur of the following events: a) the Scheme Claimants passing a Claimants Resolution (with the prior agreement of the Scheme Administrators or the Hong Kong Court) that the Scheme be terminated; The Scheme b) the expiry of 183 days from payment of a final dividend to Scheme Claimants; c) the expiry of 80 years from the Effective Date; or d) the termination of the CCA according to its terms. 40.2 The Scheme shall not terminate in any circumstances other than those set out in Clause S40.1. S41. Effect of Termination Upon termination in accordance with Clause S40, the trust established pursuant to Clause S10.2 shall determine and, save as provided for in this Clause S41, the provisions of the Scheme shall forthwith cease to have effect. 44

Notwithstanding the termination of the Scheme in accordance with Clause S40 the provisions of this Clause S41 and of Clauses S4.1, S18.4, S20, S21, S42, S43 and S48.1 shall continue in full force and effect. INDEMNITY AND SCHEME CLAIMANTS CO-OPERATION S42. Validity of Acts of and Responsibility of the Scheme Administrators and the Creditors Committee 42.1 Subject to any applicable provision of the Companies Ordinance any amendment, modification or reenactment thereof: No Scheme Claimant shall be entitled to challenge the validity of any act done or omitted to be done in good faith by the Provisional Liquidators, the Joint Liquidators, the Scheme Administrators, or any of them, or by the Scheme Adjudicator, in pursuance of their or his functions or duties under the Scheme, or the exercise or non-exercise by the Provisional Liquidators, the Joint Liquidators, the Scheme Administrators or any of them, or by the Scheme Adjudicator, in good faith of any power or discretion conferred upon them or him for the purposes of the Scheme, and neither the Provisional Liquidators nor the Joint Liquidators nor the Scheme Administrators or any of them nor the Scheme Adjudicator shall be liable for any loss whatsoever and howsoever arising out of any such act or omission, exercise or non-exercise of any power or discretion, unless such loss is attributable to their or either of their or his own negligence, breach of duty or trust, fraud or dishonesty or (in the case of the Scheme Administrators) to the negligence, breach of duty or trust, fraud or dishonesty of any delegatee appointed by them or either of them under Clause S26.1(c). References in this Clause to the Scheme Administrators shall be deemed to refer to the Scheme Administrators acting both in their capacity as such and in their capacity as trustees of the trust established pursuant to Clause S10. No Scheme Claimant shall be entitled to challenge the validity of any act done or omitted to be done in good faith by any Committee Member or Nominated Representative in pursuance of his functions or duties under the Scheme, and no such Committee Member or Nominated Representative shall be liable for any loss arising out of any such act or omission, unless such loss is attributable to his own negligence, breach of duty or trust, fraud or dishonesty. S43. Indemnities and Validation 43.1 The Company shall indemnify the Provisional Liquidators, the Joint Liquidators and the Scheme Administrators, both in their capacity as Scheme Administrators and as trustees of the trust established pursuant to Clause S10, the Scheme Adjudicator, Committee Members and Nominated Representatives, against any liability by way of legal and other advisers costs incurred by them in defending any proceedings in relation to the preparation, negotiation and implementation of the Scheme, whether civil or criminal, in which judgment is given in their favour, or which is discontinued before judgment is given, or in which they are acquitted, or in connection with any application in which relief is granted to them by the court from liability for negligence, default, breach of duty or breach of trust. The Scheme 43.2 Notwithstanding a subsequent discovery that there was some defect in the procedure for calling or voting at any meetings, or the passing of resolutions, or the appointment of a Committee Member or the Scheme Administrators, or of a trustee or trustees pursuant to Clause S10.3, or that any of them was not eligible for appointment pursuant to the provisions of the Scheme, all acts done by the Creditors Committee, a Committee Member or Nominated Representative, the Scheme Administrators, the trustee(s), or any of them, shall be valid as if every such procedure had been correctly adhered to and every such person had been duly appointed and was so eligible, provided that, in the case of any meeting in respect of which such a defect is discovered, that meeting was quorate. 45

S44. Functions of the Joint Liquidators The Joint Liquidators shall continue to have and fulfil all obligations imposed upon them by statute, subject to the powers given to the Scheme Administrators under this Scheme. S45. Scheme Claimants to Co-operate The Scheme Claimants shall co-operate with and render such assistance to the Scheme Administrators as they may reasonably require, including, but not limited to the provision of prompt notice of any change of address and other details which may be used by the Scheme Administrators, the provision of information and documents in connection with their Scheme Claims and the operation of the Scheme, and shall provide such assistance as the Scheme Administrators may reasonably require in connection with the recovery of any Property or the enforcement of obligations owed to the Company. Scheme Claimants are deemed to acknowledge that their obligations under this Clause S45 shall continue in the event that they become Net Debtors. OTHER PROVISIONS S46. Dispatch of Notices and Other Written Communications and Documents 46.1 All notices and other written communications and documents required to be sent pursuant to the provisions of the Scheme shall be sent by Post, unless otherwise specifically provided in this Scheme. 46.2 Notices and other written communications and documents to be sent to the Scheme Administrators and/ or the Company shall be sent, clearly marked for the attention of the Scheme Administrators of CSA Absolute Return Fund Limited, to PwC or such other address as may be notified to Scheme Claimants from time to time. Where the Scheme provides for notices or other written communications or documents to be sent to the Scheme Administrators by facsimile, the appropriate facsimile number shall be the facsimile number of PwC or such other facsimile number as may be notified to Scheme Claimants by the Scheme Administrators from time to time. The Scheme 46.3 Notices and other written communications and documents to be sent to Scheme Claimants, may be sent to such address as they notify to the Scheme Administrators following the Effective Date and, failing such notification, to such address as may be shown in the Company s records, or any other address, being the last known address of the Scheme Claimant, which the Scheme Administrators may reasonably believe is appropriate. 46.4 Notices and any other written communications or documents sent by Post to Scheme Claimants pursuant to the Scheme shall be deemed, in the absence of evidence to the contrary, to have been received by the relevant Scheme Claimant on the second Business Day after dispatch, where the Scheme Claimant s address is in Hong Kong, and on the seventh Business Day after dispatch in all other cases, and references to the receipt by a Scheme Claimant of any such notice, communication or document shall be construed accordingly. References to a Scheme Claimant s address in this Clause S46.4 are to that Scheme Claimant s address as established in accordance with Clause S46.3. Notice periods laid down by the Scheme are to be calculated by reference to days excluding the date on which the notice concerned was sent by Post. 46.5 A sworn statement by the Scheme Administrators or a member of their staff that an envelope containing a notice was sent by Post shall be conclusive evidence that the notice was given. 46

S47. Extension and Calculation of Deadlines 47.1 All or any of the deadlines laid down by the Scheme for the taking of any step by the Scheme Administrators, or by any Scheme Claimant, or by the Scheme Adjudicator, including the Final Claims Submission Date, may be extended by such period as may with the consent of the Creditors Committee be determined by the Scheme Administrators, whether in relation to one or more Scheme Claims only, or in relation to all Scheme Claims. 47.2 Save where the context otherwise requires deadlines laid down by the Scheme shall be calculated by reference to elapsed days and not Business Days, but in the event that such a deadline expires on a day which is not a Business Day, such deadline shall be deemed not to expire until close of business on the Business Day next following. S48. Governing Law 48.1 The Scheme shall be governed by, and construed in accordance with, the laws of Hong Kong and the Scheme Claimants hereby agree that the Hong Kong Court shall (save as provided in Clauses S29.1(f) and S48.2) have exclusive jurisdiction to hear and determine any dispute or proceedings arising out of the Explanatory Statement, or the Scheme, or the operation of the Scheme, and the Scheme Claimants hereby submit to the exclusive jurisdiction of the Hong Kong Court for such purposes. 48.2 Notwithstanding the provisions of Clause S48.1, the Scheme Administrators retain the right to bring Proceedings, in the name of the Company or otherwise, in the courts of any other country having jurisdiction under its own laws to hear such Proceedings. Date: 30 July 2005 The Scheme 47

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PART 3 The Proposals for A COMPANY CREDITORS ARRANGEMENT UNDER PART II DIVISION 2 OF THE INSOLVENCY ACT, 2003 OF THE BRITISH VIRGIN ISLANDS BETWEEN CSA ABSOLUTE RETURN FUND LIMITED (IN LIQUIDATION) (INCORPORATED IN BRITISH VIRGIN ISLANDS) BVI COMPANY NO. 41-4011 AND THE CCA CREDITORS (AS DEFINED HEREIN) PRELIMINARY C1. Definitions 1.1 In this CCA, all definitions used shall bear the meanings contained in the Scheme. In addition, unless inconsistent with the subject or context, the following words shall have the following meanings: CCA Creditor CCA Creditor Claim has the same meaning as Scheme Claimant ; any claim whatsoever without limitation (including but not limited to claims based on fraud or dishonesty) against the Company for a Debt by any Scheme Claimant in respect of which the Agreed Claim has not yet been established; CCA Creditors Resolution a resolution passed in accordance with Clause C23; CCA Creditors Meeting CCA Period Insolvency Act Interim Supervisors Proposals Termination Date the meeting of CCA Creditors convened in accordance with the Notice contained at Appendix 1; the period from the Effective Date to the Termination Date; the Insolvency Act 2003 of the BVI; the Interim Supervisors for the time being, appointed as such by the BVI Liquidators, initially being the BVI Liquidators; the proposals of the BVI Liquidators for the CCA Creditors as detailed herein; the date on which the CCA ceases to have effect in accordance with Clause C24; 49 CCA

1.2 In this CCA: a) Unless stated otherwise, references to Clauses are references to Clauses of the Scheme (if prefixed with the letter S ) and to the CCA (if prefixed with the letter C ) and references to Pages and Appendices are references to Pages and Appendices of the Scheme Document; b) references to a person include a company, unincorporated association or partnership; c) references to the date of a document, form, notice or report mean the date shown on such document, form, notice or report as the date thereof; d) references in the CCA to PwC shall be deemed to refer also to any successor firm or business entity or such other firm or business entity from which a duly appointed Scheme Administrator or Supervisor for the time being holding office practises; e) the singular includes the plural and vice versa, and masculine includes feminine; f) headings are for ease of reference only and shall not affect the interpretation of the CCA; and g) in the event of a conflict or inconsistency between the terms of the CCA and the Scheme, the terms and definitions of the Scheme shall prevail. THE CCA GENERAL C2. Application and Approval of the CCA 2.1 If the CCA is approved in accordance with this Clause C2 and the Hong Kong Court sanctions the Scheme in accordance with its terms, then as from the Effective Date, the CCA shall bind the Company and all CCA Creditors with notice of the CCA Creditors Meeting, whether or not such CCA Creditors were present, in person or by proxy, and voted at the CCA Creditors Meeting. CCA Creditors who did not have notice of the CCA Creditors Meeting may elect to be bound by the CCA by confirming this in writing to the Supervisors. 2.2 The CCA is approved at the CCA Creditors Meeting if a majority in excess of three quarters in value of the CCA Creditors present in person or by proxy vote in favour of the CCA Creditors Resolution to be proposed at the CCA Creditors Meeting. 2.3 The CCA shall be valid and binding according to the terms contained herein, except to the extent modified at any meeting of CCA Creditors convened by the Supervisors for such purpose. C3. Entitlement of CCA Creditors CCA Creditors make the same compromise, have the same entitlements and are subject to the same obligations as CCA Creditors under the CCA, as they do in their capacity as Scheme Claimants under the Scheme. C4. Dealing with CCA Creditor Claims As set out at Clauses C11 to C21 below, the Supervisors will delegate the process of dealing with CCA Creditor Claims to the Scheme Administrators. Where a Scheme Claimant s Scheme Claim is dealt with in any way in the Scheme including, without limitation, determined, valued, admitted and discharged through payment of dividend(s), this shall be deemed to be binding on the Company, the Supervisors and the Scheme Claimant as CCA Creditor, for the purposes of the CCA. CCA 50

C5. Enforcement of CCA Creditor Claims 5.1 Each CCA Creditor is deemed to acknowledge that the CCA is fair and that each CCA Creditor is bound thereby. 5.2 Save as expressly provided for in the CCA and without prejudice to Clause C5.5, no CCA Creditor shall be entitled to take or continue any step or do or continue any act against or in respect of the Company or its Property or the Supervisors (including by way of any Proceedings) in any jurisdiction whatsoever after the Effective Date for the purpose of obtaining payment, or establishing the quantum, of any CCA Creditor Claim. 5.3 If any CCA Creditor takes any action which is prohibited by Clause C5.2 after the Effective Date he shall be deemed to have received on account of any dividend(s) to which he would otherwise be entitled pursuant to the CCA an advance payment under the CCA equal to the amount or gross value of any money, property or advantage obtained by him at the expense of the Company as a result of such action, and the extent, if any, to which he is entitled to a payment from the Company shall be determined accordingly. In the event that the amount of any deemed receipt(s) on account of dividends attributable to a Scheme Claimant as CCA Creditor exceed the total of all sums by way of dividend which that CCA Creditor would otherwise receive pursuant to the CCA he shall be treated as a debtor of the Company in respect of such excess. 5.4 For the purpose of Clause C5.3 the value of any property, benefit or advantage obtained as aforesaid shall be conclusively determined by the Supervisors with the assistance of the Scheme Administrators where necessary, and (without prejudice to the generality of the foregoing) may include such amount as the Supervisors may in their absolute discretion consider to be appropriate in respect of interest, and of any costs, charges and expenses incurred by the Company or the Supervisors as a consequence of the action prohibited by Clause C5.2. 5.5 Each CCA Creditor is deemed to acknowledge that if he takes Proceedings against the Company in breach of Clause C5.2 the Supervisors shall be entitled to obtain an order staying those Proceedings and providing for payment by the CCA Creditor concerned of interest and of any costs, charges and expenses incurred by the Company or the Supervisors as a result of those Proceedings. C6. Interest All CCA Creditors shall waive any entitlement to interest on CCA Creditor Claims. C7. CCA Expenses 7.1 All remuneration, costs, charges and expenses of and incidental to the CCA and the performance by the Joint Liquidators, the Interim Supervisors and the Supervisors of their functions which are payable after the Effective Date shall, to the extent such expenses are not Scheme Expenses be CCA Expenses, including, without prejudice to the generality of the foregoing: a) any remuneration of the BVI Liquidators (calculated by reference to the time spent by them and employees of Meade Malone & Co and PwC under their control on the affairs of the Company) relating to the work done by the BVI Liquidators pursuant to the order appointing them to the Company, (including, for the avoidance of doubt, any remuneration and expenses incurred as Interim Supervisors and as Supervisors under the Insolvency Act) together with all costs, charges and expenses incurred by them including the fees, expenses, costs and disbursements of any third party service providers, outstanding at the Effective Date or incurred after the Effective Date in making any application to the Court in relation to the Company s winding-up in any jurisdiction 51 CCA

or the termination of their appointment. The hourly rates of remuneration charged by Meade Malone & Co and PwC shall be the rates agreed by the Hong Kong Court and approved at the meetings of creditors and members on 17 February 2005, or any increased rates subsequently approved by the Creditors Committee or otherwise in accordance with the Insolvency Act and Insolvency Rules; b) any remuneration of the Supervisors (calculated by reference to time spent by them and employees of Meade Malone & Co and PwC under their control on the affairs of the Company). The rates of remuneration charged by the Supervisors shall be the same as the rates that are approved from time to time in relation to the BVI Liquidators. c) any remuneration of the Provisional Liquidators approved by the Hong Kong Court, BVI Court or the Creditors Committee as the case may be; d) all costs, charges and expenses incurred by the Company in connection with the negotiation, preparation and implementation of the CCA (including, but not limited to, all legal, accounting, postage, advertising expenses, Court and filing fees and stamp or other duty or tax and other costs); e) the costs of summoning and holding the CCA Creditors Meetings (including, for the avoidance of doubt, meetings of CCA Creditors convened pursuant to Clause C23) and any meetings of creditors or members convened to consider the CCA and the costs of seeking directions or attending any other application at the BVI Court; f) all liabilities, expenses, costs and disbursements, taxes, duties, administrative, licence, filing, registration and other fees incurred by the Company, the Joint Liquidators, the Interim Supervisors and the Supervisors in the course of exercising or performing their respective powers, duties and functions under, or for the purpose of implementing, or in connection with the CCA as set out in Clauses C7.1(a), (b), (c) and (d) above and approved by the Creditors Committee; g) the costs incurred in employing agents, professional advisers or other third party service providers to advise or assist the Interim Supervisors and Supervisors and their staff in connection with the exercise and performance of their powers, duties and functions as Interim Supervisors and Supervisors; h) the fees of and the costs, charges and expenses incurred by the Scheme Adjudicator (as approved by the Scheme Administrators and the Creditors Committee pursuant to Clause S29.1(d) and subject to Clauses S29.1(d)(i) and S29.1(d)(ii)) in connection with the exercise and performance of their powers, duties and functions under the Scheme; i) the costs of summoning meetings of CCA Creditors and meetings of the Creditors Committee in accordance with the CCA and any costs of preparing advertising and sending out notices and reports to be given by or to the Creditors Committee or the CCA Creditors under the CCA; j) any legal and other advisers costs which the Company is liable to pay pursuant to the indemnity in Clause C27. C8. Payment of CCA Expenses The Company shall pay all CCA Expenses in full. CCA 52

COMPANY S PROPERTY TRUST AND INVESTMENT C9. Property of the Company 9.1 The Company acting by the Joint Liquidators shall forthwith upon the Effective Date place under the control of the Scheme Administrators all Property of the Company (including, for the avoidance of doubt, all funds held on its behalf or under its control) and they shall have the power to get in any Property not placed under their control. The Scheme Administrators shall realise the Property at such times and in such manner as they deem appropriate having regard to the requirements of the Scheme. 9.2 With effect from the Effective Date and thereafter subject to the terms of the CCA the Company shall hold all of its Property, including, for the avoidance of doubt, all sums standing to the credit of any bank accounts opened by the Scheme Administrators pursuant to Clause C20.1(g), and the Company s entitlement to all sums held on trust for it, whether pursuant to this Clause C9.2 or otherwise, upon trust for the CCA Creditors to apply the same in accordance with the terms of the CCA. The Scheme Administrators shall notify the bank or banks at which any such bank accounts are opened and kept accordingly. The Scheme Administrators shall have the power to execute any deed or document in the name and on behalf of the Company or in their own names necessary or desirable to establish or give effect to the said trust. 9.3 Forthwith upon the Effective Date the Company shall appoint the Supervisors as its co-trustees of the trust established pursuant to Clause C9.2. The appointment of a Supervisor as co-trustee of such trust shall terminate automatically upon that Supervisor ceasing to hold office as such pursuant to Clauses C18.1 or C18.2. The Company and any remaining trustee(s) shall forthwith appoint as co-trustee of such trust any person appointed in accordance with the provisions of the CCA as Supervisor. Subject to Clause C9.4, such trustees may act jointly or severally. 9.4 Any step to be taken or decision to be made by the trustees, or any of them, in their capacity as trustee may only be taken or made with the concurrence of the majority of such trustees. In the event that and for so long as the number of trustees falls below three, the trustees shall be unable to act. 9.5 The trust referred to in Clause C9.2 shall terminate upon the earliest to occur of the events referred to in Clause C24.1. C10. Investment The Supervisors as trustees shall have the power during the CCA Period to place all or any of the monies for the time being held by the Company upon trust pursuant to Clause C9.2 on deposit at any clearing bank in Hong Kong whether through bank, money market deposit or otherwise. DETERMINATION OF CCA CREDITOR CLAIMS AND PAYMENT OF DIVIDENDS C11. Valuation, determination and agreement of CCA Creditor Claims The process carried out by the Scheme Administrators of valuation, determination and agreement of a Scheme Claim for a Scheme Claimant, within Clauses S12 to S15 shall bind the Scheme Claimant as CCA Creditor and be deemed to constitute valuation, determination and agreement of that person s CCA Creditor Claim for the purposes of the CCA. 53 CCA

C12. Available Distributable Amount Any determination of the Available Distributable Amount under Clause S16 shall be deemed to be binding on the Supervisors and the Scheme Claimant as CCA Creditor for the purposes of the CCA. C13. Payment of Dividends 13.1 All payments paid by the Scheme Administrators under Clause S18 shall discharge, to the same extent, CCA Creditor Claims for the purposes of the CCA. 13.2 The sending by Post of a cheque under Clause S19 in discharge of the dividend to a Scheme Claimant or executed telegraphic transfer instructions from an account in the name of the Company opened in accordance with Clause S26.1(g) shall constitute conclusive evidence that the relevant Scheme Claimant has received such a cheque or telegraphic transfer in discharge of that person s CCA Creditor Claim or, in the case of an Investor without a CCA Creditor Claim, that claim. C14. Unclaimed Dividends Any balance remaining on the Scheme Accounts at the Termination Date representing cheques or other means of payment in respect of which the Scheme Accounts have not been debited and any accumulated interest thereon shall be transferred to the BVI Liquidators on the Termination Date, to be dealt with in accordance with BVI Law. C15. Full and Final Settlement of Claims Subject to any rights they may have to the amounts referred to in Clause C14, the deemed agreement of a Scheme Claimant following payment of a final dividend under the Scheme, whether received or not in accordance with Clause S19 shall be made and accepted by the Scheme Claimant in full and final settlement of all present and future liabilities of the Company under the CCA, including, for the avoidance of doubt, any liabilities in respect of any and all matters arising or events occurring after the Ascertainment Date. THE SUPERVISORS C16. The Supervisors 16.1 There shall be three Supervisors, having the powers, duties and functions conferred upon them by the CCA. In exercising their powers and carrying out their duties and functions under the CCA the Supervisors shall act in good faith and with due care and diligence in the interests of the general body of CCA Creditors and shall exercise their powers under the CCA for the purpose of ensuring that the CCA is operated in accordance with its terms. 16.2 Subject to Clause C18.2, the Supervisors shall be the BVI Liquidators. 16.3 Other than in their capacity as trustees pursuant to Clause C9.3, the Supervisors shall (so far as the law permits) act as agents of the Company in exercising their powers and in carrying out their duties and functions under the CCA. 16.4 Nothing in this CCA shall render the Interim Supervisors, Supervisors or the Joint Liquidators liable for any Debts or obligations of the Company. CCA 54

C17. Supervisors Exercise of Powers Any act required or authorised under the CCA to be done by the Supervisors may be done by any one of the persons for the time being holding the office of Supervisor. C18. Resignation and Removal of the Supervisors 18.1 Any of the Supervisors may resign their appointment at any time by giving not less than six months notice in writing to the Company and to the Creditors Committee, or such shorter period of notice as the Supervisors and the Creditors Committee may agree in writing. 18.2 The Office of a Supervisor shall be vacated if he: a) dies, or becomes bankrupt or mentally disordered; b) is convicted of an indictable offence; c) resigns his office by notice in accordance with Clause C18.1; d) is no longer a person qualified to act in accordance with Clause C16.2; or e) ceases to be a BVI Liquidator of the Company. 18.3 If one of the Supervisors vacates office in accordance with Clauses C18.1 or C18.2, the others may appoint a replacement Supervisor, subject to there always being one Supervisor who is an insolvency practitioner licensed in the BVI. Any such replacement shall be a person duly qualified in accordance with Clause C16.2 who is not ineligible by reason of any of the matters referred to in Clause C18.2 and who consents so to act. For the avoidance of doubt, during such time as there may be less than three Supervisors, the remaining Supervisor(s) shall be entitled to exercise all of the powers and carry out all of the duties and functions of the Supervisors. 18.4 If the office of the Supervisors is vacated in accordance with Clauses C18.1 or C18.2, and no other person is the BVI Liquidator, the Creditors Committee shall be entitled to appoint replacement Supervisors provided that: a) such replacements are duly qualified partners in a firm of accountants entitled to practice in Hong Kong and/or BVI and to act in accordance with Clause C16.2, at least one of whom is an insolvency practitioner licensed in the BVI, and not ineligible by reason of any of the matters referred to in Clause C18.2 and consent so to act; and b) the appointment of such persons shall be subject to ratification by a CCA Creditors Resolution at a meeting called within 56 days by the Creditors Committee for the purpose in accordance with Clause C23. 18.5 Notwithstanding the provisions of Clause C18.4(b), the persons appointed by the Creditors Committee as replacement Supervisors shall be entitled to act as Supervisors throughout the period from the date of their appointment by the Creditors Committee to the date of the said meeting of CCA Creditors. In the event that the appointment of such Supervisors is not ratified at the said meeting, the CCA Creditors shall, at that meeting, elect replacement Supervisors. Such replacement Supervisors shall be duly qualified partners in a firm of accountants entitled to practice in Hong Kong and/or BVI who are not ineligible by reason of any of the matters referred to in Clause C18.2, shall consent so to act and at least one of the Supervisors shall be an insolvency practitioner licensed in BVI. The appointment of 55 CCA

such persons shall be terminated upon the appointment of BVI Liquidators. If no such CCA Creditors Resolution is passed, the appointment made by the Creditors Committee shall, notwithstanding the provisions of Clause C18.4(b), stand until the next meeting of CCA Creditors, which shall take place within 56 days. Failing actual ratification of the appointment made by the Creditors Committee, or election by the CCA Creditors of replacement Supervisors at that meeting, the appointment made by the Creditors Committee shall be deemed to be ratified. 18.6 Supervisors appointed pursuant to Clauses C18.4 and C18.5 shall vacate that office upon the appointment of new BVI Liquidators. C19. General Powers of the Supervisors The Supervisors shall to the fullest extent permitted by law have the power to manage and control the business, affairs and Property of the Company for the purposes of implementing the CCA subject to the provisions thereof, together with the powers specifically conferred on them thereby. C20. Specific Powers and Obligations of the Supervisors 20.1 In carrying out their duties and functions under the CCA, the Supervisors shall (without prejudice to the full terms of the CCA) be empowered: a) to have full access to all such information as they may from time to time require in relation to the affairs of the Company or the operation of the CCA and to all books, papers, documents and other information contained or represented in any format whatsoever in the possession or under the control of the Company and/or the Scheme Administrators. Such information, books, papers and documents may be disclosed by the Supervisors to the Creditors Committee and to the CCA Creditors if they consider such disclosure to be for the benefit of the CCA; b) subject to obtaining the prior approval of the Creditors Committee, to employ and remunerate as a CCA Expense accountants, lawyers and other professional advisers or agents in connection with the CCA; c) to delegate in writing to any person qualified and not ineligible by reason of any of the matters referred to in Clause C18.2 all or any of the powers and discretion conferred upon the Supervisors under the CCA, and from time to time to revoke any such delegation, provided that the Supervisors shall be personally responsible for any act or omission of any such delegatee to the same extent as if they had expressly authorised it; d) subject to obtaining the prior approval of the Creditors Committee, to petition the courts of any jurisdiction to obtain recognition or enforcement of the CCA or to bring, commence or defend any Proceedings in the name and, insofar as is permitted by law, on behalf of the Company in any matter affecting the Company in any jurisdiction, or to prevent the continuation or commencement of any Proceedings against the Company or its Property and/or to seek such other relief as they deem appropriate or which the relevant court may grant; e) to apply to the BVI Court for directions in relation to any particular matter arising under, or in the course of the operation of, the CCA; f) subject to obtaining the prior approval of the Creditors Committee where a CCA Claim is being settled, waived or compromised, on behalf of the Company to delegate to the Scheme Administrators the task of negotiating, compromising, waiving or settling claims by and against the Company and dealing with the treatment of the sum agreed as being due from the Company CCA 56

in respect of any Debt forming the subject of any such compromise or settlement as an Agreed Claim and, in circumstances where a full and final settlement of all liabilities owed between the relevant CCA Creditor as Scheme Claimant and the Company has been agreed, to treat any sum agreed to be paid by or to the Company pursuant to such compromise or settlement as an Admitted Claim or Net Debt (as the case may be) for the purposes of the CCA; g) to open, maintain and operate such bank accounts as they may think fit and to close such accounts; h) to convene and attend meetings of the Creditors Committee for the purposes of consulting with or providing information to them. The Supervisors shall inform each Committee Member in advance of such meetings; i) to treat those acting or believed to be acting on behalf of principals who invested in or applied to invest in the Company, as if they were a principal creditor or debtor in place of their principal, until such time as the Supervisors receive notice in writing from any such investor or investmentapplicant principal that the relevant party has no authority to act on their behalf, or that the relevant party s authority to act on their behalf has come to an end; j) to appoint additional members to the Creditors Committee in the event that the number of Committee Members shall fall to three or below three and the Creditors Committee do not exercise their power of appointment under Clause S30.5, but so that the number of Committee Members shall not exceed seven; k) to exercise in the name of the Company in accordance with the provisions set out therein, the powers conferred by Clause S31.3, substituting where necessary Supervisors for Scheme Administrators, CCA Period for Scheme Period, CCA for Scheme and CCA Creditor Claim for Scheme Claim ; l) to do all acts and to execute in the name and, insofar as permitted by law, on behalf of the Company any deed, transfer, instrument, cheque, bill of exchange, receipt or other document which may be necessary for or incidental to the full and proper implementation of the CCA; m) to do all such things as may be necessary for the preservation, getting in and realisation of the Property of the Company; n) to make any payment which is necessary or incidental to the performance of their functions; o) in the name and on behalf of the Company to rank and claim in the bankruptcy, insolvency, sequestration, liquidation or other similar or analogous proceedings of any person indebted to the Company in any jurisdiction and to receive dividends and to accede to trust deeds, compromises and arrangements in relation to the creditors of any such person; p) to exercise any other powers necessary for or incidental to the full and proper implementation of the CCA; q) to use the Company s seal; and r) to do all other things incidental to the exercise of the foregoing powers. 57 CCA

ADJUDICATION OF CCA CREDITOR CLAIMS AND DISPUTE RESOLUTION PROCEDURE C21. If a Scheme Claim is referred to adjudication by the Scheme Administrators under the terms of Clauses S27 to S29, such adjudication shall be binding on the Company, the Supervisors and the Scheme Claimant as CCA Creditor and any decision of the Scheme Administrators shall be binding on the Supervisors, the Company and the Scheme Claimant as CCA Creditor in the same way it is binding on the Scheme Claimant under Clauses S27 to S29. THE CREDITORS COMMITTEE C22. The Creditors Committee 22.1 The Creditors Committee established pursuant to Clauses S30 to S33 shall constitute the creditors committee for the purposes of the CCA. 22.2 All provisions of Clauses S30 to S33 inclusive shall apply to the CCA substituting where necessary the words CCA Creditors for Scheme Claimants and Supervisors for Scheme Administrators. MEETINGS OF CCA CREDITORS C23. The provisions of Clauses S34 to S39 in relation to meetings of Scheme Claimants shall apply to meetings of CCA Creditors, substituting where necessary the words CCA Creditors for Scheme Claimants, CCA for Scheme, Supervisors for Scheme Administrators, and CCA Creditor Claims for Scheme Claims. DURATION AND TERMINATION OF THE CCA C24. Termination of the CCA 24.1 Save as provided for in Clause C25, the CCA shall forthwith cease to have effect upon the happening of the first to occur of the following events: a) the CCA Creditors passing a CCA Creditors Resolution (with the prior agreement of the Supervisors or the BVI Court) that the CCA be terminated; or b) the expiry of 183 days from payment of a final dividend under the Scheme; c) the expiry of 80 years from the Effective Date;. d) the termination of the Scheme according to its terms 24.2 The CCA shall not terminate in any circumstances other than those set out in Clause C24.1. C25. Effect of Termination 25.1 Upon termination in accordance with Clause C24.1, the trust established pursuant to Clause C9.2 shall determine and, save as provided for in this Clause C25, the provisions of the CCA shall forthwith cease to have effect. 25.2 Notwithstanding the termination of the CCA in accordance with Clause C24.1 the provisions of Clauses C5.1, C14, C15, C25, C26, C27 and C31.1 shall continue in full force and effect. CCA 58

INDEMNITY AND CCA CREDITORS CO-OPERATION C26. Validity of Acts of and Responsibility of the Supervisors and the Creditors Committee 26.1 Subject to any applicable provision of the Insolvency Act or, any amendment, modification or reenactment thereof: a) No CCA Creditor shall be entitled to challenge the validity of any act done or omitted to be done in good faith by the Joint Liquidators, the Provisional Liquidators, the Interim Supervisors, the Supervisors, the Scheme Administrators or by the Scheme Adjudicator, in pursuance of their or his functions or duties under the CCA or the Scheme, or the exercise or non-exercise by the Joint Liquidators, the Provisional Liquidators, the Scheme Administrators, the Interim Supervisors or Supervisors or any of them, or by the Scheme Adjudicator, in good faith of any power or discretion conferred upon them or him for the purposes of the CCA or the Scheme and neither the Joint Liquidators nor the Provisional Liquidators nor the Scheme Administrators nor the Interim Supervisors nor the Supervisors or any of them nor the Scheme Adjudicator shall be liable for any loss whatsoever and howsoever arising out of any such act or omission, exercise or non-exercise of any power or discretion, unless such loss is attributable to their or his own negligence, breach of duty or trust, fraud or dishonesty or (in the case of the Supervisors) to the negligence, breach of duty or trust, fraud or dishonesty of any delegatee appointed by them under Clause C20.1(c). References in this Clause to the Supervisors shall be deemed to refer to the Supervisors acting both in their capacity as such and in their capacity as trustees of the trust established pursuant to Clause C9.2. b) No CCA Creditor shall be entitled to challenge the validity of any act done or omitted to be done in good faith by any Committee Member or Nominated Representative in pursuance of his functions or duties under the CCA, and no such member of the Creditors Committee or Nominated Representative shall be liable for any loss arising out of any such act or omission, unless such loss is attributable to his own negligence, breach of duty or trust, fraud or dishonesty. C27. Indemnities and Validation 27.1 The Company shall indemnify the Joint Liquidators, the Provisional Liquidators, the Interim Supervisors and the Supervisors, both in their capacity as Joint Liquidators, Provisional Liquidators, Interim Supervisors and Supervisors, and as trustees of the trust established pursuant to Clause C9.2, the Scheme Adjudicator, Committee Members and Nominated Representatives, against any liability by way of legal and other advisers costs incurred by them in defending any proceedings in relation to the preparation, negotiation and implementation of the CCA, whether civil or criminal, in which judgment is given in their favour, or which is discontinued before judgment is given, or in which they are acquitted, or in connection with any application in which relief is granted to them by the court from liability for negligence, default, breach of duty or breach of trust. 27.2 Notwithstanding a subsequent discovery that there was some defect in the procedure for calling or voting at any meetings, or the passing of resolutions, or the appointment of a Committee Member or the Interim Supervisors or Supervisors, or of a trustee or trustees pursuant to Clauses C9.3 or C9.4, or that any of them was not eligible for appointment pursuant to the provisions of the CCA, all acts done by the Creditors Committee, a Committee Member or Nominated Representative, the Interim Supervisors or Supervisors, the trustee(s), or any of them, shall be valid as if every such procedure had been correctly adhered to and every such person had been duly appointed and was so eligible, provided that, in the case of any meeting in respect of which such a defect is discovered, that meeting was quorate. 59 CCA

C28. Functions of the Joint Liquidators The Joint Liquidators shall continue to have and fulfil all obligations imposed upon them by statute, subject to the powers given to the Supervisors under this CCA. C29. CCA Creditors to Co-operate The CCA Creditors shall co-operate with and render such assistance to the Supervisors as they may reasonably require, including, but not limited to the provision of prompt notice of any change of address and other details which may be used by the Supervisors, the provision of information and documents in connection with their CCA Creditors Claims and the operation of the CCA, and shall provide such assistance as the Supervisors may reasonably require in connection with the recovery of any Property or the enforcement of obligations owed to the Company. CCA Creditors are deemed to acknowledge that their obligations under this Clause C29 shall continue in the event that they become Net Debtors. OTHER PROVISIONS C30. Dispatch of Notices and Other Written Communications and Documents The provisions of Clause S46 shall apply to this CCA, with the following substitutions where necessary CCA for Scheme, Supervisors for Scheme Administrators, and CCA Creditors for Scheme Claimants. C31. Governing Law 31.1 The CCA shall be governed by, and construed in accordance with British Virgin Islands law and the CCA Creditors hereby agree that the BVI Court shall (save as provided in Clauses C11 and C21 have exclusive jurisdiction to hear and determine any dispute or proceedings arising out of the interpretation and effect of the Explanatory Statement or the CCA, or the operation of the CCA, and the CCA Creditors hereby submit to the exclusive jurisdiction of the BVI Court for such purposes. 31.2 Notwithstanding the provisions of Clause C31.1, the Supervisors retain the right to bring Proceedings, in the name of the Company or otherwise, in the courts of any other country having jurisdiction under its own laws to hear such Proceedings. Date: 30 July 2005 CCA 60

APPENDIX 1 IN THE HIGH COURT OF HONG KONG HCMP NO: 1240/2005 IN THE MATTER of CSA Absolute Return Fund Limited (In Liquidation) AND IN THE MATTER of the Companies Ordinance (Cap. 32 of Hong Kong) Appendix 1 NOTICE OF SCHEME CLAIMANTS MEETINGS NOTICE IS HEREBY GIVEN that, by an order dated 21 July 2005, the High Court of Hong Kong (the Court ) directed that meetings of certain classes of creditors and shareholders of CSA Absolute Return Fund Limited (in liquidation) (the Scheme Claimants ) be convened for the purpose of considering and, if thought fit, approving (with or without modification) a scheme of arrangement pursuant to section 166 of the Companies Ordinance (the Meetings ) proposed between the Company and its Scheme Claimants. Notice is further given that the Meetings will be held at 26/F Edinburgh Tower, The Landmark, 15 Queen s Road Central, Hong Kong at 10:00am on 8 September 2005, (Registration from 9:00am). By the same order, the Court appointed Jan G W Blaauw or, failing him, John J Toohey, each being one of the joint and several liquidators of the Company, to act as Chairman of the Meetings and directed the Chairman to report the results thereof to the Court. Separate Meetings for each of the following classes of Scheme Claimants will be held concurrently at the aforesaid time: 1. Persons who subscribed for, but did not receive shares in the Company and any other creditor other than a creditor in respect of a claim falling within either sub-paragraph 2 or 3 hereof; 2. Persons who became registered shareholders of the Company on or after 12 December 2003; 3. Persons who became registered shareholders of the Company before 12 December 2003; 4. Shareholders (as shareholders) All Scheme Claimants may vote in person or may appoint another person as their proxy to vote in their place at the Meetings. If any Scheme Claimant wishes to vote by proxy, a Proxy Form (together with all supporting documentation specified in the notes to the Proxy Form as being necessary to demonstrate that the proxy has been properly executed) must be submitted to the Company. Please note that the Proxy Forms must be lodged with the Company before 5:00pm (Hong Kong time) on 5 September 2005 (being three Business Days before the date of the Meetings) at 22/F Prince s Building, 10 Chater Road, Central, Hong Kong for the attention of the Liquidators of CSA Absolute Return Fund Limited (in liquidation) (Ref: JGWB/JOJT/JAAK). Proxy Forms not returned by that date may be handed in to the Chairman on the day of the Meeting and will be accepted at his discretion, provided that a copy of the Proxy Form has been sent to the Liquidators prior to 5:00pm on 5 September 2005 by fax or by hand. Faxed copies may be sent to Fax No: (852) 2890 8345. Completing and returning the Proxy Form does not prevent a Scheme Claimant from attending the Meetings in person to vote. All documents required under section 166A of the Companies Ordinance including the Scheme document, the Explanatory Statement, the Liquidators Proposal for a Company Creditors Arrangement in the British Virgin Islands, the Voting Form and the Proxy Form can be downloaded from www.pwchk.com/ csa or obtained free of charge by Scheme Claimants from the offices of the Liquidators at 22/F Prince s Building, 10 Chater Road, Central, Hong Kong or their solicitors, Messrs Dibb Lupton Alsop at 41/F Bank of China Tower, 1 Garden Road, Central, Hong Kong (Ref: PJM/CJDC) from 10:00am to 4:00pm, Monday to Friday, until the Business Day prior to the date scheduled for the Meetings. The Scheme will be subject to the subsequent approval of the Court. Dated: the 11 day of August, 2005 Jan G W Blaauw Joint and Several Liquidator CSA Absolute Return Fund Limited (In Liquidation) 61

IN THE EASTERN CARIBBEAN SUPREME COURT IN THE BRITISH VIRGIN ISLANDS CLAIM NO: BVI HCV 2004/88 Appendix 1 IN THE MATTER of CSA Absolute Return Fund Limited (In Liquidation) AND IN THE MATTER of the International Business Companies Act (Cap. 291) AND IN THE MATTER of the Insolvency Act (Part II Division 2) NOTICE OF CCA CREDITORS MEETING NOTICE IS HEREBY GIVEN that a meeting has been convened of CCA Creditors (as defined in the Liquidators Proposals for a Company Creditors Arrangement) of CSA Absolute Return Fund Limited (In Liquidation) (the Company ) for the purpose of considering, and if thought fit, approving (with or without modification) a Company Creditors Arrangement pursuant to Part II Division 2 of the Insolvency Act 2003 between the Company and its CCA Creditors (the CCA Creditors Meeting ). Notice is further given that the meeting will be held at 26/F Edinburgh Tower, The Landmark, 15 Queen s Road Central, Hong Kong at 10:00am on 8 September 2005, (registration from 9:00am) at which time and place all CCA Creditors are requested to attend, in person or by proxy. By order of the BVI Court dated 25 July 2005, Jan G W Blaauw or, failing him, John J Toohey each being one of the joint and several liquidators of the Company, was appointed to act as Chairman of the Meeting. All relevant documents including the Voting Form, the Proxy Form, the Company Creditors Arrangement Proposals, the Interim Supervisors Report on the Proposals and the Statement of Affairs (being the Explanatory Statement) and the Scheme of Arrangement can be downloaded from www.pwchk.com/csa or obtained free of charge by CCA Creditors from the offices of the Liquidators at 22/F Prince s Building, 10 Chater Road, Central, Hong Kong (Ref: JGWB/JOJT/JAAK) or their solicitors, Messrs Dibb Lupton Alsop at 41/F Bank of China Tower, 1 Garden Road, Central, Hong Kong (Ref: PJM/CJDC) from 10:00am to 4:00pm, Monday to Friday, until the Business Day prior to the date scheduled for the CCA Creditors Meeting. CCA Creditors may vote in person or may appoint another person as their proxy to vote in their place at the CCA Creditors Meeting. If any CCA Creditor wishes to vote by proxy, a Proxy Form (together with all supporting documentation specified in the notes to the Proxy Form as being necessary to demonstrate that the proxy has been properly executed) must be submitted to the Company before 5:00pm (Hong Kong time) on 5 September 2005 (being three Business Days before the date of the CCA Creditors Meeting) at the offices of the Liquidators as noted above. The same Proxy Form will be used for the CCA Creditors Meeting and the Meetings of Scheme Claimants. Proxy Forms not returned by that date may be handed in to the Chairman on the day of the Meeting and will be accepted at his discretion, provided that a copy of the Proxy Form has been sent to the Liquidators prior to 5:00pm on 5 September 2005 by fax or hand. Faxed copies may be sent to Fax No: (852) 2890 8345. Completing and returning the Proxy Form does not prevent a CCA Creditor from attending the Meeting in person to vote. Dated: the 11 day of August, 2005 Jan G W Blaauw Interim Supervisor CSA Absolute Return Fund Limited (In Liquidation) 62

APPENDIX 2 GENERAL GUIDELINES TO COMPLETION OF THE VOTING PACK Please find attached to these General Guidelines a Scheme Liability Form, Voting Form, Proxy Form and Notice of Appointment of Corporate Representative, together forming the Voting Pack. The Voting Pack can be obtained free of charge from the offices of the Liquidators at 22/F Prince s Building, 10 Chater Road, Central, Hong Kong (Ref: JGWB/JOJT/JAAK) or can be downloaded from the website www.pwchk.com/csa. For details about completing each form, please refer to the instructions stated on the individual forms, or contact the Hotline (852) 2289 5088. Fax No: (852) 2890 8345. GENERAL GUIDELINES TO COMPLETION OF VOTING PACK Checking the Forms 1. Scheme Liability Form (Appendix 3) This is an important document. It contains the amount of your Agreed Claim and the allocation to the relevant Classes for voting purposes at the Scheme and CCA Meetings (the Meetings ), as currently calculated by the Liquidators. It will operate as: a) the amount for which you will be permitted to vote in the various Class(es) at the Meetings; and b) an acknowledgement and acceptance by you of the Company s liability to you, if the Scheme and CCA become binding, except in limited circumstances. Therefore if you: object to the amount of the Agreed Claim or classification, as stated in the Scheme Liability Form, you must: amend the amounts stated; sign the Scheme Liability Form; and together with all supporting documentation; return the Scheme Liability Form to the Liquidators either by post, fax or hand, as soon as possible, so that any corrections that may be necessary for voting purposes may be made prior to 8 September 2005 (the date of the Meetings) and in any event, not later than 5:00pm on 7 Business Days after the Effective Date (as defined in the Scheme); or do not object to the amount of the Agreed Claim or classification as stated in the Scheme Liability Form then, please RETAIN the form. Once the Scheme and CCA are approved it will become Binding Data and form the basis of your Agreed Claim and Admitted Claim for the purposes of calculating dividend payments. Please refer to the Scheme Liability Form in Appendix 3 as well as Clauses S13 of the Scheme and C11 of the CCA for information and instructions about the data contained in the Scheme Liability Form. 2. One Voting Form (and one Proxy Form, if applicable) is to be used for ALL Classes of Scheme Claims at the Meetings. Parts of the Forms have been completed in advance based on the information provided by you and agreed to the Company s records, which should correspond with the data on the Scheme Liability Form, in respect of the Agreed Claim amounts and Class(es). Please ensure that you agree with the data contained in the Scheme Liability Form and that the information in the Voting Form (and the Proxy Form, if applicable) for each Class(es) in which you are entitled to vote is accurately reflected. 3. If you do not agree with any of the information in the Scheme Liability Form, the Voting Form and/ or the Proxy Form please, inform the Liquidators as soon as possible so that any corrections that may be necessary for voting purposes may be made and revised Forms issued in advance of the Meetings. 4. If you have any queries or require further information about the Class(es) to which your Scheme Claim has been assigned or in which you are entitled to vote, please refer to the accompanying Explanatory Statement and Scheme Document. If you have any queries in completing any forms in the Voting Pack, please contact the Hotline Number on (852) 2289 5088. Attending the Meetings In person (individual): 5. If you wish to attend and vote at the Meetings in person and you are an individual, you must bring your Voting Form with you. You will be entitled to vote in all Class(es) except those where VOID is printed in the Signature box. You should complete the Voting Form in respect of EACH Class you are entitled to vote in and return it at the Meeting. Appendix 2 63

In person (corporate) 6. If you are a corporate Scheme Claimant you may appoint either an individual or proxy (see note 10 below) to attend and vote at the Meetings on behalf of the corporation. If you appoint an individual, the Corporate Representative must be duly authorised to act. A suggested form of Notice of Appointment of Corporate Representative is enclosed for your convenience. The execution of this Notice should be authorised by a board resolution and made under the company s seal, or must be certified to be a true copy by the secretary or a director of the corporation. The notice of appointment, together with a copy of the board resolution must be lodged by 5:00pm 5 September 2005. The individual attending the Meetings should bring the Voting Form and either originals or (if they have already been provided) copies of the authorising documents. By proxy (individual) 7. If you do not wish to attend the Meetings in person but wish to vote, you must appoint another person to attend on your behalf and complete and lodge a Proxy Form not later than 5:00pm on 5 September 2005. One Proxy Form is to be used for ALL Classes of Scheme Claim in which you are entitled to vote. (If you wish to appoint a different proxy for different classes, separate Proxy Forms will be required for each person and/or class). 8. Your Proxy Form must be signed by you or your attorney duly authorised in writing and may be either: A special proxy, in which case you must indicate on the Proxy Form whether you vote FOR or AGAINST the Scheme and CCA for EACH Class in which you are entitled to vote; or A general proxy, in which case you must indicate on the Proxy Form that your vote is at the PROXYHOLDER S DISCRETION. 9. In order to vote your proxy must attend and should bring the Voting Form to the Meetings. Appendix 2 By proxy (corporate) 10. If a corporate Scheme Claimant does not wish to nominate a Corporate Representative as set out in Note 6 above, it may appoint a proxy to attend and vote at the Meetings on its behalf. A Proxy Form, being either a special or a general proxy, as noted for individuals, must be executed under the common seal of the corporation or under the hand of an officer or attorney duly authorised by the corporation. A copy of the supporting documentation, (e.g. a certified copy of the board resolution authorising the appointment of the proxy, or the officer to sign the Proxy Form on behalf of the corporation) must be lodged together with the Proxy Form not later than 5:00pm on 5 September 2005. Proxies 11. If you appoint a proxy, the Voting Form must be: left blank; given to your proxy to bring to the Meetings; and completed and returned by your proxy at the Meetings. 12. If you wish to appoint the Chairman as your proxy, then you must do so by special proxy only, i.e. one in which you specifically instruct how to vote, as he has no authority to vote at his discretion. In this case the Voting Form should be sent to the Chairman together with the completed Proxy Form. 13. Please return the completed Proxy Form, Notice of Appointment of Corporate Representative (if applicable) and Voting Form (if you wish to appoint the Chairman as your proxy), together with all supporting documentation not later than 5:00pm (Hong Kong time) on 5 September 2005, to the Liquidators of CSA Absolute Return Fund Limited (In Liquidation) c/o PricewaterhouseCoopers, 22/F Prince s Building, 10 Chater Road, Central, Hong Kong (Ref: JGWB/JOJT/JAAK). 14. Proxy Forms not returned by 5:00pm on 5 September 2005 may be handed to the Chairman on the day of the Meetings and will be accepted at his discretion, provided a faxed copy has been received prior to that time. Faxed copies may be sent to Fax no: (852) 2890 8345. IMPORTANT: The receipt by you of a Voting Pack is not to be taken as an admission of liability by the Company or any of its Liquidators. Any statement of fact, matter or thing contained in the Voting Pack is made without prejudice to all rights of the Company against Scheme Claimants, which remain expressly reserved. Receipt of the Voting Pack does not operate as any acknowledgement of an Agreed Claim by the Company or its Liquidators, nor mean that if the Scheme and CCA are successful, you will be able to participate in it. If the Scheme and CCA are successful, your claims will be adjudicated upon by the Scheme Administrators in accordance with the terms of the Scheme and CCA. Admission of your claim for voting purposes by the Chairman of the Meetings is made subject to the same conditions as those governing your receipt of the Voting Pack, including the Scheme Administrators right to reject the Agreed Claim in whole or in part for the purpose of calculating dividend payments under a successful Scheme and CCA. 64

IN THE HIGH COURT OF HONG KONG HCMP NO: 1240 OF 2005 AND IN THE EASTERN CARIBBEAN SUPREME COURT IN THE BRITISH VIRGIN ISLANDS CLAIM NO: BVI HCV 2004/88 IN THE MATTER OF CSA ABSOLUTE RETURN FUND LIMITED (In Liquidation) AND IN THE MATTER OF Section 166 of the Companies Ordinance (Cap. 32) AND The International Business Companies Act (Cap. 291) AND Part II Division 2 of the BVI Insolvency Act 2003 VOTING FORM To be used at the meetings of creditors and shareholders of CSA Absolute Return Fund Limited (in liquidation) to consider the proposed Scheme and CCA between the Company and its Scheme Claimants and CCA Creditors, to be held concurrently at 26/F Edinburgh Tower, The Landmark, 15 Queen s Road Central, Hong Kong at 10:00am on 8 September 2005. NAME OF SCHEME CLAIMANT(S) REFERENCE CODE (Note 1) I/We............................................................................................. (Name of the Scheme Claimant(s), including all former names) of................................................................................................ (Address of the Scheme Claimant(s)) HEREBY VOTE as indicated in the voting boxes below (Please see Notes 2 to 4 on how to complete this section) : (1) Table 1 the Scheme Meetings Appendix 2 CLASSES FOR AGAINST the Scheme the Scheme (with or without modification) CLASS 1 GENERAL SCHEME CLAIMS US$... Signature... Signature... CLASS 2 INVESTOR SCHEME CLAIMS (shareholders registered on or after 12 December 2003) US$... Signature... Signature... CLASS 3 INVESTOR SCHEME CLAIMS (shareholders registered before 12 December 2003) US$... Signature... Signature... CLASS 4 SHAREHOLDER Number of shares:... Signature... Signature... (2) Table 2 the CCA Meeting FOR the CCA (with or without modification) AGAINST the CCA CCA CREDITORS CLAIMS US$... Signature... Signature... PLEASE TURN OVER FOR COMPLETION AND NOTES ON THIS FORM 65

Name of Scheme Claimant(s)/Proxyholder/ Corporate Representative (Note 5)............................................................................... Reference Code............................................................................................ Signature of the person voting................................................................................ Capacity (only if you are voting as a Proxy or Corporate Representative)............................................ Telephone.......................................... Date............................................... VOTING FORM This Voting Form is to be completed by either a Scheme Claimant voting in person, or a duly authorised proxyholder or Corporate Representative. If you are voting as either a proxyholder or Corporate Representative evidence of your authority to sign on behalf of the creditor or shareholder you represent must be provided in accordance with the General Guidelines and Notes to the Proxy Form or Notice of Appointment of Corporate Representative (if you have not already done so). Failure to provide the necessary documents of authority to vote may affect your right to vote. You should read the notes carefully. Please check that the information on this form is correct, following the General Guidance Notes and Note 3 below. Please note that if the amounts on this form are different from those provided to you in your Scheme Liability Form, or if you disagree with the Agreed Claim amount on your Scheme Liability Form, please notify the Liquidators as soon as possible so any corrections that may be necessary for voting purposes may be made prior to the Meetings. If you wish to rely on your own calculation of your claim, then you must provide sufficient supporting evidence of how you arrive at your figure, in order for the Chairman of the Meetings to decide whether it is a fair and reasonable amount for the purposes of voting. Appendix 2 Notes for completing the Voting Form Note 1 Please ensure that the Name, Address and Reference Code of the Scheme Claimant(s) have been accurately stated on the Voting Form. Note 2 You have been provided with a Scheme Liability Form showing the Agreed Claims owed to you by the Company as at 21 June 2004. For Classes 1, 2 and 3: The amount in US$ shown under Classes 1, 2 and 3 in the first column of Table 1 should correspond with the amount shown as the Agreed Claim under Classes 1, 2 and 3 in your Scheme Liability Form. For Class 4: For Class 4 the number of shares shown in the first column of Table 1 is the number of shares allotted to you by the Company as at 21 June 2004. Please ensure that this figure is accurate and corresponds with the data in the Scheme Liability Form. For CCA Creditors Claims: For CCA Creditors Claims the amount in US$ shown in Table 2 should correspond with the Total Agreed Claims in your Scheme Liability Form. If you disagree with the data in your Voting Form and/or the Scheme Liability Form, you should notify the Liquidators as soon as possible so any corrections that may be necessary for voting purposes may be made prior to the Meetings, and in accordance with the instructions on the Scheme Liability Form as well as Clauses S13 of the Scheme and C11 of the CCA. If you wish to rely on your own calculation of your claim, you must provide sufficient supporting evidence of how you arrive at your figure. All Scheme Claims are to be denoted in US$. Note 3 You are entitled to vote in EACH of the Classes where an amount appears in Table 1 and 2. To vote, please bring this Voting Form to the Meetings and sign in each of the appropriate adjacent boxes marked either FOR or AGAINST (unless you wish to abstain). If you wish to vote for the Scheme and/or the CCA (with or without modification), sign in the appropriate box marked FOR. If you wish to vote against the Scheme and/or the CCA, sign in the appropriate box marked AGAINST. Thereafter return the Voting Form to the Liquidators at the Meetings. Note 4 If you have appointed a proxy (or a Corporate Representative, as appropriate), this Voting Form should be left blank and given to your proxy or Corporate Representative, who should bring it and sign it at the Meetings. If you have appointed the Chairman as your special proxy, the Voting Form should be left blank and sent together with the Proxy Form to the Chairman before 5:00pm on 5 September 2005. Note 5 Please complete and sign as indicated. If you are: attending and voting in person, please enter your own name. a proxyholder attending and voting on behalf of a Scheme Claimant, please enter your name and complete your capacity as proxy for (name of the Scheme Claimant). a Corporate Representative attending and voting on behalf of a Scheme Claimant, please enter your name and complete your capacity as Corporate Representative for (name of the Scheme Claimant). IMPORTANT: The admission of an amount for which a Scheme Claimant, his proxy or Corporate Representative can vote at the Meetings does not constitute an admission by the Liquidators, the Scheme Administrators or the Company of the amount owing by the Company to a Scheme Claimant for any purpose, including for the purposes of the Scheme or the CCA, if they become binding. CAPITALISED TERMS in this form have the same meaning as in the Scheme and/or the CCA, unless the context otherwise requires. 66

IN THE HIGH COURT OF HONG KONG HCMP NO: 1240 OF 2005 AND IN THE EASTERN CARIBBEAN SUPREME COURT IN THE BRITISH VIRGIN ISLANDS CLAIM NO: BVI HCV 2004/88 IN THE MATTER OF CSA ABSOLUTE RETURN FUND LIMITED (In Liquidation) AND IN THE MATTER OF Section 166 of the Companies Ordinance (Cap. 32) AND The International Business Companies Act (Cap. 291) AND Part II Division 2 of the BVI Insolvency Act 2003 PROXY FORM To be used at the meetings of creditors and shareholders of CSA Absolute Return Fund Limited (in liquidation) to consider the proposed Scheme and CCA between the Company and its Scheme Claimants and CCA Creditors, to be held concurrently at 26/F Edinburgh Tower, The Landmark, 15 Queen s Road Central, Hong Kong at 10:00am on 8 September 2005 (or any adjournment thereof). PART A I/We (Note 1)... (name of the Scheme Claimant(s), including former names) of... (address of the Scheme Claimant(s)) Reference Code (Note 2)... being a Scheme Claimant(s) in the sum(s) indicated in the Voting Form attached and as indicated in Part B below HEREBY APPOINT (Note 3) the Chairman of the Meetings / or... as my proxy to act for me at the Meetings for the purpose of considering and, if thought fit, approving (with or without modification) the Scheme and the CCA referred to in the Notices convening the Meetings, and at such Meetings or any adjournment thereof, to vote for me and in my name as indicated in Part B, below (either with or without modification) or, if Proxyholder s Discretion is marked then, as my proxy shall think fit. Appendix 2 PART B (See Note 4 for instructions on how to complete Part B) (1) Table 1 For Scheme Meetings CLASSES FOR AGAINST PROXYHOLDER S the Scheme the Scheme DISCRETION (with or without modification) (GENERAL PROXY) CLASS 1 GENERAL SCHEME CLAIMS US$... Signature... Signature... Signature... CLASS 2 INVESTOR SCHEME CLAIMS (shareholders registered on or after 12 December 2003) US$... Signature... Signature... Signature... CLASS 3 INVESTOR SCHEME CLAIMS (shareholders registered before 12 December 2003) US$... Signature... Signature... Signature... CLASS 4 SHAREHOLDER Number of shares:... Signature... Signature... Signature... (2) Table 2 For CCA Meeting CCA CREDITORS CLAIMS FOR AGAINST PROXYHOLDER S the CCA the CCA DISCRETION (with or without modification) US$... Signature... Signature... Signature... IMPORTANT: The receipt by you of a Proxy Form is not to be taken as an admission of liability by the Company or any of its Liquidators. Any statement of fact, matter or thing contained in the Proxy Form is made without prejudice to all rights of the Company against creditors and shareholders, which remain expressly reserved. Receipt of the Proxy Form does not operate as any acknowledgement of an Agreed Claim by the Company or its Liquidators, nor mean that if the Scheme and CCA are successful, you will be able to participate in it. If the Scheme and CCA are successful, your claims will be adjudicated upon by the Scheme Administrators in accordance with the terms of the Scheme and CCA. Admission of your claim for voting purposes by the Chairman of the relevant Meetings is made subject to the same conditions as those governing your receipt of the Proxy Form, including the Scheme Administrators right to reject the Agreed Claim in whole or in part for the purpose of calculating dividend payments under a binding Scheme and CCA. PLEASE TURN OVER FOR COMPLETION AND NOTES ON THIS FORM 67

(Note 5 for instructions on how to sign) FOR AN INDIVIDUAL EXECUTING THIS PROXY FORM FOR A CORPORATION EXECUTING THIS PROXY FORM Dated : 2005 Dated: 2005 Signed:... For a company incorporated in Hong Kong: Name of Scheme Claimant: (1) Sealed with the Common Seal of... ) Seal [Name of Scheme Claimant] Address: and signed by... )... [Name of duly authorised officer] ) Director in the presence of:- )... )... [Name of Witness]: ) Signature of witness OR Capacity: (2)... For and on behalf of [Scheme Claimant] Occupation: Duly authorised officer [Name and position] OR For a foreign corporation: (3) Common seal of [Scheme Claimant] affixed [in accordance with ) the laws of place of incorporation of Scheme Claimant] ) Appendix 2 Notes for completing the Proxy Form If you are entitled to vote in more than one Class and wish to appoint the same person as proxy to attend and vote at the Meetings on your behalf, you need only fill in ONE Proxy Form. If you wish to nominate a different proxy for different classes, you should fill in a separate Proxy Form for each Class. Copies of the Proxy Forms can be obtained free of charge from the offices of the Liquidators at 22/F Prince s Building, 10 Chater Road, Central, Hong Kong (Ref: JGWB/JOJT/JAAK) or their solicitors, Messrs Dibb Lupton Alsop at 41/F Bank of China Tower, 1 Garden Road, Central, Hong Kong (Ref: PJM/CJDC) from 10:00am to 4:00pm, Monday to Friday, until 5 September 2005, three Business Days prior to the date of the Meetings and can also be downloaded from the website www.pwchk.com/csa. Note 1 Please ensure that the name and address of the Scheme Claimant is accurately stated. For a corporate Scheme Claimant wishing to appoint a proxy, the Proxy Form must be executed in accordance with Note 5 below. Note 2 Please ensure that the Reference Code corresponds to that appearing on your Scheme Liability Form. Note 3 You may appoint the Chairman of the Meetings or some other person as your Proxy. If you wish to appoint a person other than the Chairman as your Proxy, delete the words the Chairman of the Meetings and insert the name and address of the person to be appointed in BLOCK CAPITALS and initial the alteration. Note 4 Please ensure that the amount appearing for EACH CLASS in which you are entitled to vote, in the first column of Table 1 corresponds to the data on your Scheme Liability Form. The amount shown in the first column of Table 2 should correspond with the Total Agreed Claims figure on your Scheme Liability Form. If you do not agree with the data in your Scheme Liability Form and/or your Proxy Form, please notify the Liquidators as soon as possible so that any corrections that may be necessary for voting purposes may be made and revised Forms issued in advance of the Meetings, and in accordance with the procedures on the Scheme Liability Form and Clauses S13 of the Scheme and C11 of the CCA. You MUST complete Part B of the form by signing in either the boxes under the columns marked FOR or AGAINST or signing in the boxes under the column marked PROXYHOLDER S DISCRETION adjacent to EACH CLASS in which you are entitled to vote. Otherwise, this form will not operate as a valid appointment of your proxy for the relevant Meetings. You may appoint either a special proxy or a general proxy for EACH CLASS IN WHICH YOU ARE ENTITLED TO VOTE, BOTH IN THE SCHEME AND THE CCA. If you appoint: i. a person other than the Chairman of the Meetings as your Proxy, you may either: instruct your proxy specifically on how to vote (a special proxy) by signing in each of the appropriate boxes marked FOR or AGAINST the Scheme and/or the CCA in Part B of the Proxy Form. If you wish to vote for the Scheme and/or the CCA (with or without modification), sign in the appropriate boxes marked FOR. If you wish to vote against the Scheme and/or the CCA, sign in the appropriate boxes under the columns marked AGAINST ; or give your proxy discretion to vote (a general proxy) for or against (or abstain) at the Meetings by signing in the appropriate boxes under the columns marked PROXYHOLDER S DISCRETION ; or ii. the Chairman of the Meetings as your Proxy, in which case you MUST appoint a special proxy by signing in the appropriate boxes marked FOR or AGAINST to enable him to vote on your behalf. If you wish to vote for the Scheme and/or the CCA (with or without modification), sign in the appropriate boxes marked FOR. If you wish to vote against the Scheme and/or the CCA, sign in the appropriate boxes marked AGAINST. Please note the Chairman, the Liquidators or their advisers, or any person who is in a position, whether directly or indirectly, to receive any remuneration from the Company may NOT vote at his discretion, as your Proxy. Your proxy must attend the Meetings in person. If your proxy fails to attend the Meetings, the Proxy Form will NOT operate as a valid appointment of a proxy at the Meetings and your vote will not be counted. You should ONLY sign the appropriate boxes marked PROXYHOLDER S DISCRETION on the Proxy Form if you appoint a person other than the Chairman to be your General Proxy. Note 5 This Proxy Form must be signed by a Scheme Claimant or its attorney duly authorised in writing or, in the case of a corporate Scheme Claimant must be either under its common seal or under the hand of an officer or attorney stating he is duly authorised to sign it or, if a foreign corporation, in accordance with the laws of the foreign place of incorporation. If you are signing the form as the duly authorised representative of a partnership or other unincorporated body of persons, or the duly authorised agent and/or attorney of an individual Scheme Claimant, state the capacity in which you have signed the Proxy Form (e.g. partner, manager, clerk or solicitor employed by the Scheme Claimant) and provide a copy of the evidence of your authority to sign. Note 6 When completed, please return the Proxy Form together with any power of attorney or other authority under which it is signed or a certified copy thereof to the Liquidators at 22/F Prince s Building, 10 Chater Road, Central, Hong Kong (Ref: JGWB/JOJT/JAAK) not later than 5:00pm (Hong Kong time) on 5 September 2005. Facsimile copies will be accepted (fax number: (852) 2890 8345) if received at the above time and place and the originals are received prior to the commencement of the Meetings. If you have appointed the Chairman of the Meetings as your special proxy to vote on your behalf, please also ensure that the blank Voting Form is returned together with the Proxy Form and relevant authorities. Note 7 Any alterations to the Proxy Form should be initialled by the person who signs it. Note 8 Completion and return of this Proxy Form will not preclude you from attending and voting in person at the Meetings, but in such event this Proxy Form will be deemed to have been revoked. Note 9 Capitalised terms in this proxy form have the same meaning as in the Scheme and/or the CCA unless the context otherwise requires. 68

IN THE HIGH COURT OF HONG KONG HCMP NO: 1240 OF 2005 AND IN THE EASTERN CARIBBEAN SUPREME COURT IN THE BRITISH VIRGIN ISLANDS CLAIM NO: BVI HCV 2004/88 IN THE MATTER OF CSA ABSOLUTE RETURN FUND LIMITED (In Liquidation) AND IN THE MATTER OF Section 166 of the Companies Ordinance (Cap. 32) AND The International Business Companies Act (Cap. 291) AND Part II Division 2 of the BVI Insolvency Act 2003 NOTICE OF APPOINTMENT OF CORPORATE REPRESENTATIVE (Note 1) We... (Name of corporate Scheme Claimant) of... (Registered office address) by a resolution of our board of directors at a duly convened meeting appoint... (Name of Corporate Representative) of... (Address) Appendix 2 or failing him,... (Name and address of alternate) or the Chairman of the Meeting as our Corporate Representative to attend and vote on our behalf at the meetings of creditors and shareholders of CSA Absolute Return Fund Limited (in liquidation) to consider the proposed Scheme and CCA between the Company and its Scheme Claimants and CCA Creditors, to be held concurrently at 26/F Edinburgh Tower, The Landmark, 15 Queen s Road Central, Hong Kong at 10:00am on 8 September 2005 and any adjournment thereof. Dated: this day of 2005 Sealed with the Company Seal of (Note 2) )... ) (Name of corporate Scheme Claimant) ) ) and signed by... ) (Name of Director) ) ) in the presence of:- ) ) Witness: Address: Occupation: PLEASE TURN OVER FOR NOTES ON THE FORM 69

Notes for completing the Notice of Appointment of Corporate Representative Note 1 This Notice may be used to enable an individual, as Corporate Representative, to attend the Meetings and vote on behalf of a corporate Scheme Claimant. Please also include a copy of the board resolution of the corporate Scheme Claimant authorising such appointment. The board resolution should be under the seal of the corporation or certified to be a true copy by the secretary or a director of the corporation. The signed Notice of Appointment of Corporate Representative and board resolution will be adequate documentation to authorise the named representative to attend and vote on behalf of the corporation at the Meetings. Note 2 This document should be sealed with the Company Seal and signed by a director of the corporate Scheme Claimant in the presence of a witness who should also sign it, or otherwise in accordance with the Articles of Association of the corporate Scheme Claimant. Note 3 The original of this document should be sent to the offices of the Liquidators at 22/F Prince s Building, 10 Chater Road, Central, Hong Kong (Ref: JGWB/JOJT/JAAK) by no later than 5:00pm on 5 September 2005 together with either the board resolution executed under the company s seal, or a copy of the board resolution certified to be a true copy by the secretary or a director of the corporation. Note 4 The Voting Form should be left blank and given to Corporate Representative to bring to the Meetings for completion on 8 September 2005. Appendix 2 70

APPENDIX 3 CSA ABSOLUTE RETURN FUND LIMITED (in Liquidation) SCHEME LIABILITY FORM c/o PricewaterhouseCoopers 22/F Prince s Building 10 Chater Road Central, Hong Kong Tel: (852) 2289 5088 Fax: (852) 2890 8345 Ref: JGWB/JOJT/JAAK Reference Code: Total Scheme Claims by Class (Breakdown as per schedule) Date: [ ].[ ].2005 SUMMARY OF SCHEME CLAIMS NO. OF AGREED CLAIM UNITS US$ Class 1 - General Scheme Claims Class 2 - Investor Scheme Claims (shareholders registered on or after 12 December 2003) Class 3 - Investor Scheme Claims (shareholders registered before 12 December 2003) Class 4 - Shareholder TOTAL AGREED CLAIMS The details of Agreed Claims contained in this form are based on existing records of the Company. If you: 1. object to the Agreed Claim amount, you may amend or add to any data contained in this form. The amended form MUST be signed and returned, as soon as possible, together with all supporting documentation, by post, fax or hand to the Liquidators at the above address, so that any corrections that may be necessary for voting purposes may be made prior to 8 September 2005 (the date of the Scheme Meetings). Please note that if no amendments to the data are notified by 5:00pm at the latest 7 Business Days after the Effective Date (defined in the Scheme) it shall become binding on you. Any amended data notified will be considered by the Scheme Administrators and, if agreed by them, shall become binding. If the Scheme Administrators cannot agree to the amended data within 21 days, the matter shall be referred to the Scheme Adjudicator, whose decision shall be binding. Detailed information on the above procedure can be found in Clauses S13 of the Scheme and C11 of the CCA; or 2. do not object to the Agreed Claim amount as stated in this form, the data will become binding on you and the Company after 7 Business Days from the Effective Date (defined in the Scheme) and operate as an acknowledgement and acceptance by you of the total amount owed to you by the Company, should the Scheme and CCA become binding. Please RETAIN this form. PLEASE COMPLETE THIS SECTION AND RETURN THIS FORM IF YOU OBJECT TO ANY OF THE INFORMATION CONTAINED HEREIN. I do not accept the data in this form as correct and I hereby amend the data. Documentation in support of this amended Scheme Claim is attached. My total Scheme Claim is [STATE TOTAL SCHEME CLAIM AMOUNT] US$... Signed: Position: (if signing on behalf of a corporation) Appendix 3 IMPORTANT: Nothing in this form is to be taken as an admission of liability by the Company or any of its Liquidators or that you will be admitted to vote at the Scheme and CCA Meetings in the amount shown on this form or to participate in the Scheme or CCA, if successful. Estimates of the Agreed Claim will be used for voting purposes only and will not constitute an admission of the existence and amount of a Scheme or CCA Creditor Claim for the purposes of calculating dividend payments under the Scheme or CCA. The estimates that are admitted by the Chairman for voting purposes at the Scheme and CCA Meetings are admitted without prejudice to the Scheme Administrators right to reject the claim in whole or in part for the purposes of calculating dividend payments under the Scheme and CCA. Any statement of fact, matter or thing contained in this form is made without prejudice to all rights of the Company against Scheme Claimants and CCA Creditors, which remain expressly reserved. Receipt of this form does not operate as any acknowledgement of a Scheme or CCA Creditor Claim, nor mean that if the Scheme and CCA are successful, you will be able to participate in it. If the Scheme and CCA are successful, your claims will be processed and adjudicated upon by the Scheme Administrators in accordance with the terms of the Scheme and CCA. 71

CLASS 1, GENERAL SCHEME CLAIMS SCHEME LIABILITY FORM SCHEDULE DATE debt was PARTICULARS of debt AGREED CLAIM incurred US$ TOTAL CLASS 2, INVESTOR SCHEME CLAIMS (for shareholders registered on or after 12 December 2003) TRANSACTION CONSIDERATION AGREED CLAIM NO. DATE CLASS UNITS UNIT PRICE CHARGES US$ TOTAL CLASS 3, INVESTOR SCHEME CLAIMS (for shareholders registered before 12 December 2003) TRANSACTION CONSIDERATION AGREED CLAIM NO. DATE CLASS UNITS UNIT PRICE CHARGES US$ TOTAL NOTE: Information contained in this form shall become binding unless you object to it in accordance with the procedures outlined above and in Clauses S13 of the Scheme and C11 of the CCA. A Valuation Statement will be sent to you 7 Business Days after the Effective Date confirming the details in this form. The Valuation Statement is a binding document. Objections to the Valuation Statement can only be made on the grounds of arithmetical or other manifest error on the face of the Valuation Statement and not on any other grounds. Appendix 3 72

APPENDIX 4 CSA ABSOLUTE RETURN FUND LIMITED (in Liquidation) SCHEME VALUATION STATEMENT c/o PricewaterhouseCoopers 22/F Prince s Building 10 Chater Road Central, Hong Kong Tel: (852) 2289 5088 Fax: (852) 2890 8345 Ref: JGWB/JOJT/JAAK Reference Code: Date: [ ].[ ].2005 This Valuation Statement acts as a confirmation of your Admitted Claim. The data contained in the Scheme Liability Form is binding unless any objection has been made to it in accordance with the procedures outlined in that form and Clauses S13 of the Scheme and C11 of the CCA. This Valuation Statement is a BINDING DOCUMENT. Any objection to this Valuation Statement can ONLY be made on grounds of arithmetical or other manifest error on the face of the Valuation Statement and not on any other grounds. Class 1 - General Scheme Claims ADMITTED CLAIM US$ Admitted General Scheme Claim Class 2 - Investor Scheme Claims (shareholders registered on or after 12 December 2003) Class 3 - Investor Scheme Claims (shareholders registered before 12 December 2003) ADMITTED CLAIM US$ Admitted Investor Scheme Claim IMPORTANT: The dispatch of this Valuation Statement to you is made without prejudice to all rights of the Company against you which remain expressly reserved. You will have 28 days from the date of this Valuation Statement within which to object to the information contained it. If you do not object within that time, the information contained in this Valuation Statement will become binding on you in accordance with Clauses S15 of the Scheme and C11 of the CCA. The Admitted Claim will be used for the purposes of calculating dividend payments under the Scheme. The estimates admitted by the Chairman for voting purposes at the Scheme Meetings are admitted without prejudice to the Scheme Administrators right to reject the claim in whole or in part for the purposes of calculating dividend payments under the Scheme. PLEASE TURN OVER FOR NOTES ON THIS STATEMENT. 73 Appendix 4

Notes on the Valuation Statement Note 1 Note 2 This Valuation Statement acts as a confirmation of the Admitted Claim as determined under the Scheme Liability Form. The data contained in the Scheme Liability Form is binding unless any objections have been raised in accordance with the procedures outlined in the Scheme Liability Form and Clauses S13 of the Scheme and C11 of the CCA. The Valuation Statement is therefore also a binding document unless objections are made in accordance with the following paragraph. Objections to the Admitted Claim: i. Scheme Claimants who wish to object to the Admitted Claim should do so by notice in writing to the Scheme Administrators within 28 days from the date of this Valuation Statement. Objections can only be made on grounds of arithmetical or other manifest error on the face of the Valuation Statement and not on any other grounds. ii. Where the Scheme Administrators agree with such objections, an amended Valuation Statement shall be dispatched. iii. Where the Scheme Administrators disagree with the objection, they shall notify the Scheme Claimant (or Net Debtor) within 56 days of this Valuation Statement. iv. The Scheme Claimant (or Net Debtor) then has 14 days from the date of the notification to inform the Scheme Administrators by notice in writing that he does not accept the accuracy of the Valuation Statement v. The disputed matter shall then be referred to a Scheme Adjudicator to be adjudicated within 7 days. The amount determined by the Scheme Adjudicator shall be binding on the Company, the Scheme Administrators and Scheme Claimant (or Net Debtor) and shall constitute that Scheme Claimant s Admitted Claim. Note 3 The Admitted Claim contained in a Valuation Statement will become binding on a Scheme Claimant (or Net Debtor) if: i. it is agreed between the Scheme Claimant (or Net Debtor) and the Scheme Administrators and no objection is raised within 28 days of the date of the Valuation Statement; or ii. a notice of objection is sent by the Scheme Claimant (or Net Debtor) to the Scheme Administrators, who agree with the objections and dispatch an amended Valuation Statement; or iii. the Scheme Administrators do not agree with the objection and the matter is referred to a Scheme Adjudicator for adjudication, whose decision will be binding. Note 4 Note 5 Note 6 Please confirm your address is correct, as this will be used for the purposes of dividend payments. If you move address please inform the Scheme Administrators promptly. Your rights in respect of this Valuation Statement are more fully set out in Clauses S15 of the Scheme and C11 of the CCA. Capitalised terms in this Valuation Statement have the same meaning as in the Scheme and/or the CCA unless the context otherwise requires. Appendix 4 74

APPENDIX 5 COMPANY INFORMATION, HISTORY AND OPERATIONS 1. Incorporation CSA Absolute Return Fund Limited (the Company ) was incorporated in BVI on 26 October 2000 under the International Business Companies Act as an open-ended investment company and subsequently registered under the Mutual Funds Act as a Public Mutual Fund. The former name of the Company on incorporation was Regency Absolute Return Fund Limited, the name was changed on 17 July 2001. On 11 June 2003, the Company was registered as Public Mutual Fund under the Mutual Funds Act in BVI. Appendix 5 The registered office of the Company was situated at Commence Chambers, P.O. Box 2208, Road Town, Tortola, British Virgin Islands. The Company operated from premises at 803A World Wide House, 19 Des Voeux Road, Central, Hong Kong. 2. Events leading to appointment The applications for the appointment of provisional liquidators were made by Randolph Shane Menton, (a shareholder of the Company) as petitioner for the just and equitable winding up of the Company. The petitions followed a restriction notice issued on 15 June 2004, on the investment adviser, Charles Schmitt & Associates Ltd (CSAL) by the Securities and Futures Commission in Hong Kong (SFC) pursuant to sections 204 and 205 of the Securities and Futures Ordinance. CSAL was the investment adviser to the investment manager of the Fund and was registered with the SFC. The restriction notice prohibited CSAL from carrying on any regulated activity including disposing of or dealing with any assets held or controlled by it, without the prior written consent of the SFC on the grounds that the operations were being conducted in a manner prejudicial to the interests of investors. 3. Background to the appointments Hong Kong On 21 June 2004, a winding up petition was filed by Mr. Menton, together with an application for the appointment of joint and several Provisional Liquidators of the Company in Hong Kong being Messrs Jan G W Blaauw and John J Toohey of PricewaterhouseCoopers (PwC), and confirmed on 24 June 2004. On 10 January 2005 a winding-up order was made and on 17 February 2005 at the first meetings of creditors and members Messrs Blaauw and Toohey were appointed as joint and several Liquidators together with a committee of inspection comprising seven creditors or shareholders or their duly authorised representatives. The appointments were confirmed by the Hong Kong Court on 1 March 2005. BVI On 22 June 2004, a winding up petition was filed in the Eastern Caribbean Supreme Court of the British Virgin Islands together with an application for the appointment of Messrs Blaauw and Toohey (of PwC) and Nadeem Sweiss (of Meade Malone & Co) as joint and several Provisional Liquidators of the Company in BVI. On 13 December 2004 Messrs Blaauw, Toohey (of PwC), Sweiss and Meade Malone (of Meade Malone & Co) were appointed joint and several Liquidators of the Company. On 20 April 2005 the committee of inspection comprising the same members as in Hong Kong was appointed by the BVI Court and Nadeem Sweiss resigned as liquidator of the Company. 75

Role of the Provisional Liquidators The Orders for the appointments of provisional liquidators were granted: to preserve and protect the assets of the Company, and to investigate the affairs of the Company. Appendix 5 The issue of verifying the complete flow of subscription and redemption monies and transfers of funds, since the inception of the Company and validating the authenticity of the underlying transactions has been the subject of the investigations carried out since the appointment. 4. Business of the Company The Company operated what it described as a fund-of-funds hedge fund (the Fund) with the objective of achieving medium-range absolute rates of return. The directors of the Company were Mr. Charles L. Schmitt and Mr. William I. S. Oei. The Company Secretary was Commence Secretaries Ltd and the auditors were Ernst & Young, Hong Kong. The operations were carried out through a number of offshore and local entities associated with Mr. Schmitt, comprising principally: CSA Management Limited a company incorporated in the BVI the Investment Manger of the Fund; Charles Schmitt and Associates Limited (now in liquidation) (CSAL) a company incorporated in Hong Kong and registered with the SFC the Investment Adviser to the Investment Manager. The Company appointed the Investment Manager to provide all investment management services to the Company, who in turn appointed CSAL to provide investment advice. Bank of Bermuda (Cayman) Limited was appointed as the administrator of the Fund and was responsible for keeping the register of shareholders and performing certain other administrative functions including: processing the issue and redemption of shares, determining the value of the shares, preparing the financial statements of the Fund, general administration of the Fund Bermuda Trust (Far East) Limited (BTFE) was appointed as the Custodian of the Fund and was responsible for safekeeping certain assets of the Fund which were held directly or to the order of the Custodian. The Custodian maintained a bank account on behalf of the Company. The information memorandum of the Fund sets out a general description of the funds to be invested in and the procedures for investors to subscribe in the Fund. In the course of our investigations to date it would appear that as at 21 June 2004: approximately 1,700 investors participated in the Fund; approximately US$200 million was received in the form of subscription monies for investment; the unverified reported net asset of the Company was US$198 million; including approximately US$75 million held in a bank account by BTFE. 76

5. Share Capital The authorised share capital of the Company was US$50,000 divided into 5,000,000 redeemable shares having a par value of US$0.01 per share issuable by the directors of the Company as Class A Shares or Class B Shares and in different series and as voting or non-voting shares. The issued share capital comprised: Dec 03 June 04 Class A shares of US$0.01 each 22,569 79,266 Class B shares of US$0.01 each 30,807 60,342 Total 53,376 139,608 Appendix 5 The difference between Class A and B shares was the different level of performance fees and charges payable by shareholders of each class as follows: Class A Class B Initial charge 5% on the issue price NIL Management fee 1.5% per annum 1.5% per annum Performance fee NIL 10% of the increase in the net asset value of the relevant series of shares in each calendar quarter Redemption charge NIL 5% of the redemption proceeds on or before the 1st anniversary, reducing by one percent each year so that redemptions on or before the 2nd, 3rd, 4th and 5th years were subject to charges of 4%, 3%, 2% and 1% respectively. The issue prices of shares during the operation of the Fund were as follows: 2002 2003 2004 Class A B A B A B January 1,069.49 1,068.07 1,224.04 1,212.42 February 1,085.25 1,083.42 1,254.85 1,239.88 March 1,000.00 N/A 1,092.86 1,090.82 1,266.36 1,250.12 April 1,016.79 1,016.79 1,099.26 1,097.05 1,259.94 1,244.42 May 1,020.10 1,020.02 1,114.83 1,112.20 1,257.98 1,242.48 June 1,029.38 1,028.99 1,132.46 1,129.35 July 1,037.25 1,036.66 1,146.87 1,143.36 August 1,034.63 1,034.04 1,146.16 1,142.65 September 1,044.03 1,043.26 1.159.22 1,154.44 October 1,047.18 1,046.33 1,177.19 1,170.55 November 1,053.64 1,052.63 1,195.42 1,186.86 December 1,064.41 1,063.12 1,206.46 1,196.73 77

Issue prices of shares during the operation of the Company Class A Class B 1,300 1,250 Appendix 5 USD Per share 1,200 1,150 1,100 1,050 1,000 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Period 6. Rights of creditors and shareholders Subscriptions received after the cut-off date for allotment of shares on 3 May 2004 were deposited into the Company s bank account at BTFE. Those subscribers were not however allotted shares in the Company due to the intervening circumstances of the appointment of provisional liquidators. Those subscribers who have not been allotted shares in the Company are entitled to a refund of their subscription monies as ordinary unsecured creditors of the Company. Further, it appears that the Company may not have invested in the permitted investments and the valuation method the Company used for issuing shares may be questionable. As set out in Appendix 6 a number of possible legal claims could be alleged and it is possible that in reality all shareholders may be creditors, and if so, a number of additional issues may arise in order to determine the proper value of claims against the Company. 78

APPENDIX 6 EXPLANATION OF POSSIBLE SCHEME CLAIMS IMPORTANT NOTICE: THE CONTENTS OF THIS ANNEXURE ARE INTENDED TO PROVIDE SCHEME CLAIMANTS WITH INFORMATION WHICH WILL HELP THEM UNDERSTAND THE REASONS WHY THE JOINT LIQUIDATORS HAVE PROPOSED THE SCHEME. IT IS ALSO INTENDED TO ASSIST THEM IN OBTAINING INDEPENDENT LEGAL ADVICE ON THEIR INDIVIDUAL POSITIONS. IT IS NOT INTENDED TO BE ADVICE TO SCHEME CLAIMANTS ON THEIR INDIVIDUAL RIGHTS AND SHOULD NOT BE RELIED ON AS SUCH. IT IS INTENDED TO BE A SUMMARY OF RELEVANT AND COMPLEX LEGAL ISSUES IN A FORM WHICH NON-LAWYERS WILL UNDERSTAND. IT IS NOT AN EXHAUSTIVE ANALYSIS OF THOSE ISSUES. THE JOINT LIQUIDATORS AND THE LEGAL ADVISERS IN VARIOUS JURISDICTIONS WHO HAVE CONTRIBUTED TO THIS ANNEXURE TAKE NO RESPONSIBILITY FOR ANY INACCURACY OR MISTAKE IN THE CONTENTS OF THIS ANNEXURE OR ANY LOSS THAT MIGHT BE SUFFERED BY A SCHEME CLAIMANT AS A RESULT OF HIM OR HER RELYING ON ITS CONTENTS. SCHEME CLAIMANTS ARE STRONGLY ADVISED TO TAKE THEIR OWN INDEPENDENT LEGAL ADVICE ON THEIR INDIVIDUAL POSITIONS AND POSSIBLE LEGAL RIGHTS AGAINST THE COMPANY. 1 The Joint Liquidators are proposing the Scheme to Scheme Claimants in order to avoid the delay and costs which would be likely to result from a resolution of the issues summarized below through Court rulings. 2 The Scheme Claimants consist of General Scheme Creditors and Investors. Investors are potential creditors as well as shareholders in the Company. Appendix 6 3 General Scheme Creditors consist of: trade creditors who, for example, provided services to the Company; persons who paid money to the Company in the period leading up to 21 June 2004 (the date on which the petition to wind up the Company was presented in Hong Kong) in the expectation of being allotted shares in the Company, but were not in fact allotted shares. These persons have claims for the return of the money that they paid to the Company. 4 In addition, and for the reasons explained in the following paragraphs, some Investors may also have common law and/or statutory claims as creditors of the Company. This potentially gives rise to different interests of General Scheme Creditors and Investors, and possibly different interests between the Investors themselves. If these issues were litigated, their resolution would be time consuming, expensive and would probably result in delayed and reduced distributions to Scheme Claimants. It is with a view to avoiding this that the Joint Liquidators have proposed the Scheme. THE POSITION UNDER HONG KONG LAW 5 Generally, if a company is wound up, after payment of the liquidation expenses, its creditors are entitled to be paid in full prior the company s shareholders (in this case the Investors) receiving any payment in respect of their investment in a company. However, an exception may arise where a shareholder subscribes for shares in a company as a consequence of fraudulent misrepresentations. As will be readily appreciated, this may be relevant in the present circumstances. There are potential grounds for most, if not all, Investors to argue that they were induced to subscribe for shares in the Company because of misrepresentations made by the Company or its agents. 79

6 The highest English Court, the House of Lords, decided in Houldsworth v City of Glasgow Bank (1880) 5 App. Cas. 317 that a shareholder can sue for damages resulting from fraudulent misrepresentations inducing him or her to subscribe for shares provided that the shareholder rescinds its subscription agreement. As liquidation of the Company has occurred it is doubtful whether Investors could rescind their subscription agreements after 21 June 2004. In practice the shareholder s measure of damages is likely to be the amount that was paid for the shares. Section 40B of the Hong Kong Companies Ordinance (the Ordinance ) contains provisions which allow a shareholder to claim damages for fraudulent misrepresentation inducing him to subscribe for shares without rescinding the subscription agreement. This section was introduced to reverse the effect of Houldsworth s case. Appendix 6 7 A shareholder who succeeds in such a claim will be entitled to recover damages, which he will claim as a creditor from the company in question. If the company is in insolvent liquidation, it is probable that he will not be paid until such time as creditors whose claims do not arise in connection with a subscription for shares have been paid in full. This is a consequence of the operation of section 170(1)(g) of the Ordinance, which provides a sum due to a member of a company, in his character of a member, by way of dividends, profits or otherwise, shall not be deemed to be a debt of the company, payable to that member in a case of competition between himself and any other creditor not a member. (The section and section 197 of the BVI Insolvency Act which is in similar terms to the Hong Kong section are extracted in Appendix 14). The language in this sub-section seems to be intended to subordinate any claim for damages for fraudulent misrepresentation to the claims of other creditors. In other words an Investor who has a claim for damages for fraudulent misrepresentation would only be paid after all General Scheme Claimants have been paid in full. However, the position is not entirely clear because of the operation of another section of the Ordinance which is considered in the next paragraph. 8 It is arguable that section 40B of the Ordinance has the effect of taking a claim for damages for fraudulent misrepresentation outside the operation of section 170(1)(g) of the Ordinance. Similar, but not identical, issues have been considered by the English courts in a number of cases; in particular the House of Lords in Soden v British & Commonwealth Holdings Plc [1998] AC 298, In Addlestone Linoleum Co. (1887) 37 Ch D 191 and Webb Distributors (Aust.) Pty. ltd. v State of Victoria (1993) 11 ACSR 731. The analysis of similar issues in these cases tend to suggest that a Hong Kong court would find that sub-section 170(1)(g) of the Ordinance does subordinate an Investor s claims for damages for fraudulent misrepresentation to the claims of other creditors. This is, however, an issue of complexity and uncertainty. An Investor whose position was materially affected by the operation of section 170(1)(g) might seek a ruling from the court as to whether or not his claims were subordinated to those of General Scheme Claimants. This would be time-consuming and costly litigation. THE POSITION UNDER BVI LAW 9 For reasons explained in paragraph 12 it is unlikely that any Investors will be able to make claims of the type described above in the BVI. However, certain Investors may have an express statutory right to claim damages under section 16 the Mutual Fund Act (1996) in the BVI ( MFA ), as limited by section 17 of the MFA ( section 16 Claims ). Extracts of the relevant provisions of the MFA are contained in Appendix 14. 10 Section 16 MFA gives Investors a possible claim for damages for fraudulent misrepresentation. Section 17 of the MFA provides time limits within which such claims must be made and a limit on the amount recoverable. 80

11 If an Investor is able to make a claim in the BVI under section 16 of the MFA, he or she will still face the issues referred to in paragraphs 7 and 8 above. Section 197 of the BVI Insolvency Act contains similar provisions to section 170(1)(g) of the Ordinance concerning the subordination to general creditor claims of a claim for damages brought by a shareholder against a company. DOES HONG KONG LAW OR BVI LAW APPLY TO THE LIQUIDATION OF THE COMPANY? 12 An additional consideration is whether BVI or Hong Kong Law should apply to determine the rights (if any) of Investors to recover damages from the Company and the priority that they should be given in the process of distribution of assets. The assets which the Joint Liquidators have secured or are attempting to recover are located both offshore and in Hong Kong. The Company appears to have no material assets in the BVI. The Company is, however, incorporated in the BVI. Generally, a Hong Kong court will take the view that the winding up in the country of a company s incorporation is the principal winding up and the winding up of the assets of the company located in Hong Kong is ancillary to it. The Hong Kong Liquidators would have to seek directions from the Hong Kong court as to whether or not BVI law should govern the availability of claims of the sort described above. It is important in this context that Investors may have no general right to claim common law damages for fraudulent misrepresentation in the BVI as there is no equivalent of section 40B of the Ordinance, in the BVI. 13 If the Hong Kong court concluded that the provisions of the MFA do operate the Joint Liquidators would need to transfer sums sufficient to settle prospective claims to the BVI. If this were to occur, it is possible that those Investors who were able successfully to make a section 16 Claim in the BVI would recover more than those who were not able to do so. INVESTORS WHO CANNOT MAKE A CLAIM FOR DAMAGES Appendix 6 14 If a substantial number of Investors were to claim damages successfully under either section 16 of the MFA in the BVI or for common law damages for fraudulent misrepresentation in Hong Kong, this may result in Investors who are not able to claim damages recovering nothing from the Company in respect of the investments that they have made. If some Investors find themselves in this position they might argue (probably before the Hong Kong courts) the following in an attempt to avoid the consequences described above: The Company and various other companies controlled by Charles Schmitt were purely vehicles for a fraud perpetrated by him on all Investors; and In these circumstances the correct approach for the court to take would be to treat the Company and Charles Schmitt s other companies associated with the fraud as nullities and their assets as the assets of Mr. Schmitt to be available to satisfy claims by all Investors against him personally for fraud. The likely result of this argument being accepted is that all Scheme Claimants would recover an amount proportionate to the sums they paid to the Company regardless of when and in what circumstances they paid money to the Company. 81

DELAY IN PAYING DIVIDENDS 15 The Joint Liquidators would be unable to distribute any dividend to creditors and shareholders in the liquidation of the Company until the issues identified above have been resolved. Unless there is a Scheme which compromises the Scheme Claimants legal rights and replaces them with rights under the Scheme, it is likely that litigation would result in which the courts in Hong Kong and the BVI would be asked to determine these issues. Such litigation would involve the Scheme Claimants and the Company. It would be likely to take a considerable period to resolve, particularly if unsuccessful parties chose to appeal decisions. It is unlikely that this process would be completed within 2 years and could take considerably longer, possibly 5 to 7 years. Until such time as it has been completed the Joint Liquidators would be unable to make any distributions to Scheme Claimants. In addition such litigation would be likely to be very expensive and reduce the sums available for ultimate distribution to Scheme Claimants. 16 It is with a view to avoiding these delays and costs that the Joint Liquidators are proposing the Scheme to Scheme Claimants. Appendix 6 82

APPENDIX 7 FINANCIAL MODELLING 1 Introduction The Joint Liquidators believe that the Scheme will be in the best interests of Scheme Claimants by simplifying matters, removing inherent legal uncertainties, facilitating more efficient agreement of claims, leading to earlier distribution of funds and earlier closure of the administration, resulting in cost savings. An accurate comparison between the Scheme and the liquidation is not possible in view of the uncertainty connected with litigation and the range of outcomes if each type of Investor claim were litigated together with the issues in respect of priorities, as set out in Appendix 6. Depending on the outcome of such litigation the range of returns could vary so that one Class of Investor could receive significantly less than the other Class. The Scheme seeks to resolve these issues in a manner which: preserves the relative creditor/shareholder priorities; treats all Investors in the same way; values Investor Scheme Claims at the subscription amount paid; equalises the difference between Class A and Class B shareholders so that no commissions or charges are levied; and avoids the substantial costs and delays of litigation, with a view to early distribution to creditors and shareholders. The estimates by the Joint Liquidators in respect of the liquidation assume that the inherent legal uncertainties are resolved through litigation with associated cost and delay. The estimated costs of litigation are in the order of US$5-8 million, and the time delays could be in the order of at least 2 years and possibly as long as 7 years, if decisions are appealed. Consequently the estimated returns are similar in the Scheme compared to the original Liquidation estimates as follows: Original Scheme Liquidation US$m Estimate Estimate Appendix 7 Creditors 24.5 100% 100% Shareholders registered on or after 12 December 2003 112.7 60 to 72% Shareholders registered before 12 December 2003 55.6 60 to 72% Shareholders 168.3 56 to 67% 83

2 Scheme Compromises The adjustments that each class of claimant will be compromising in the Scheme are: a) Creditors will forego all claims to interest. It is estimated that if the claims for damages were successful, then they would render the Company insolvent and accordingly interest would not be payable in any event (refer to paragraph 3 below). b) Investor Scheme Claimants with possible claims relating to the period on or after 12 December 2003 will receive a dividend which recognises part of the benefit they would be entitled to without incurring the cost of establishing that claim. Investor Scheme Claimants with claims relating to the period before 12 December 2003 will receive the same return on their invested amount. c) Generally those who invested later paid more for their shares. By valuing all Investors claims at the amount that each group paid for their shares, whenever purchased, is intended to give a fairer return to Investors, more accurately reflecting their loss. A distribution based on the number of shares held, while it would be at the same liquidation dividend rate, would represent a lower return on the invested amount for some shareholders than for others. Furthermore it would avoid further possible argument on the correct calculation of the net asset values and share prices at each share issue date. A simple example, for illustrative purposes only, is provided at paragraph 4 below. Note that the actual situation will differ for each investor. d) If each type of Investor claim were litigated it is hard to predict which group might receive a higher dividend in a liquidation and therefore it is not possible to make an accurate comparison between the Scheme and the relative position of Investors claims in a liquidation. e) Overall all classes would receive an improvement through avoiding the costs and delays of litigation. 3 Claims for Interest Appendix 7 Generally in liquidations, claims for interest after the commencement of winding up are barred, except in circumstances where a surplus remains after all claims by creditors are paid in full. The bases of calculating claims for interest are set out in section 264A of the Hong Kong Companies Ordinance and section 215 of the BVI Insolvency Act. It is noted that claims for interest may not be applicable if the claims set out in Appendix 6 were successful as they would likely render the Company insolvent. In Hong Kong the basis of calculation of interest is as follows: The period of interest is from, the date of the winding up order, 10 January 2005, until the date of payment of the principal amount. The applicable interest rate is the greater of the Court rate on judgment debts and the rate applicable on the debt apart from winding up. For practical purposes in this case the Court judgment rate would be applicable as no debts of the Company provided for interest. The applicable Court rate since January 2005 was approximately 8%. In BVI the basis of calculation of interest is as follows: The period of interest is from date of appointment of liquidators, 13 December 2004, until the date of payment of the principal amount. 84

The applicable interest rate is the greater of the Court rate and the rate applicable on the debt apart from winding up. For practical purposes in this case the Court rate would be applicable as no debts of the Company provided for interest. The applicable Court rate since December 2004 was 5%. Accordingly there would be a conflict between the jurisdictions as to the correct calculation of interest, which would require Court directions in order to resolve. 4 Illustration of Compromise by Investors Assumptions The share prices for those investors who bought their shares during the period on or after 12 December 2003, ranged from US$1,212.42 to US$1,266.36. The share prices for those investors who bought their shares prior to 12 December 2003, ranged from US$1,000.00 to US$1,206.46. Accordingly for the same subscription amount those who bought later received fewer shares than those who bought shares earlier. On distribution in liquidation the shareholders would receive the same dividend per share, which for the purposes of this illustration is taken as US$635 per share. Therefore for the purposes of this illustration the compromises for the equivalent investment amount of say US$100,000 the position would be as follows: Illustration of Compromise by Investors Pre Post Dec 03 Dec 03 US$ US$ Subscription amount invested 100,000 100,000 Share price 1,050 1,250 Number of shares allotted # shares 95 80 Illustrative liquidation return per share 635 635 Return on shares 60,325 50,800 Percentage return on subscription amount 60.3% 50.8% Total amount of pools 55.6m 112.7m Total adjustment between pools (2.9)m 2.9m Appendix 7 5 Conclusion The Joint Liquidators consider that a better return to Scheme Claimants (in terms of timing and value) can be achieved through the Scheme than would be the case through liquidation and are of the opinion that the implementation of the Scheme will be in the best interests of the creditors and members, as Scheme Claimants. 85

RECEIPTS AND PAYMENTS ACCOUNT APPENDIX 8 CSA Absolute Return Fund Limited (In Liquidation) Receipts and Payments from 21 June 2004 to 30 July 2005 US$ Receipts Cash Deposits 75,381,163 Interest 1,525,035 76,906,198 Payments Liquidators fees 650,332 Legal and professional fees 250,825 Official Receiver s fees 6,154 Meeting charges 5,256 Taxing fees 5,006 Bank charges 4,933 Statutory advertising 3,563 Search fees 3,414 Exchange difference and others 321 929,804 Balance at 30 July 2005 75,976,394 Appendix 8 86

APPENDIX 9 CURRICULA VITAE OF THE SCHEME ADMINISTRATORS Jan G W Blaauw Jan is an Advisory partner of PricewaterhouseCoopers with over 30 years experience specialising in Business Recovery Services and insolvency. He has been appointed by the High Court in Hong Kong as liquidator, receiver or scheme administrator in diverse industries including financial services, insurance, property, manufacturing and retail including some of the largest, most complex, cross-border liquidations and restructurings in Hong Kong over the last 10 years. His financial sector appointments include CSA Absolute Return Fund Limited, HIH Insurance Group in Hong Kong, CA Pacific Securities and CA Pacific Finance Ltd, and a number of brokerage firms following the stock market crash in 1987. Appendix 9 Jan is a member of the Institute of Chartered Accountants of Scotland and a practicing member and Fellow of the Hong Kong Institute of Certified Public Accountants, where he serves on the Insolvency Practitioners Committee. He is a Panel A member of the Official Receivers Administrative Panel of Insolvency Practitioners for Court Winding Up. Jan has also provided expert insolvency advice to government agencies on regulatory matters and in respect of reforms arising out of his cases including: Hong Kong Monetary Authority deposit insurance scheme, Securities and Futures Commission margin financing rules and investor compensation schemes, Insurance Authority policyholder protection schemes, Labour Department, Official Receiver s Office, Employees Compensation Assistance Fund Board and regularly comments on legislative amendments on insolvency. John J Toohey John is a partner in the Business Recovery Services Group of PricewaterhouseCoopers in Hong Kong with over 20 years of experience having practiced full time in the insolvency and corporate reorganisation field. John is a member of the Official Receivers Administrative Panel of Insolvency Practitioners for Court Winding Up in Hong Kong. He is a former member of the Expert Panel of Insolvency Practitioners and the Insolvency Education Steering Committee of the Hong Kong Institute of Certified Public Accountants. John was registered as a Liquidator by the Australian Securities Commission in 1992 and is a member of the Insolvency Practitioners Association of Australia. He is an affiliate of the Institute of Chartered Accountants in Australia. John s areas of specialisation include: directing and coordinating liquidation and receivership assignments; developing and implementing corporate reorganisations and restructurings; developing and monitoring turnaround proposals for financially distressed companies; advising lenders on collection strategies, realising security and recovering claims in restructurings and liquidations; and acting as expert witness in cases involving money laundering and commercial disputes. 87

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APPENDIX 10 CONSENT TO ACT 30 July 2005 To Whom It May Concern CSA Absolute Return Fund Limited (in Liquidation) (BVI Company No.41-4011) (the Company ) We are being proposed as Scheme Administrators for the purpose of, and in accordance with the terms of the Scheme of Arrangement (Scheme) which is proposed between the Company and its Scheme Claimants. Appendix 10 We confirm that, we consent to act as Scheme Administrators in accordance with the terms of the Scheme, if the Scheme is approved by the requisite majority of the Scheme Claimants and sanctioned by the High Court of the Hong Kong Special Administrative Region. In addition we are being proposed as the Supervisors, together with Meade Malone of Meade Malone & Co., in the British Virgin Islands (the BVI), for the purpose of, and in accordance with the terms of the Company Creditors Arrangement (CCA) in the BVI, which is proposed between the Company and its CCA Creditors. We confirm that, we consent to act as Supervisors in accordance with the terms of the CCA, if it is approved by the requisite majority of the CCA Creditors. Yours faithfully Jan G W Blaauw John J Toohey 89

CONSENT TO ACT 30 July 2005 To Whom It May Concern Appendix 10 CSA Absolute Return Fund Limited (In Liquidation) (BVI Company No. 41-4011) (the Company ) I am being proposed as one of the Supervisors, together with Messrs Jan G W Blaauw and John J Toohey of PricewaterhouseCoopers Hong Kong, for the purpose of, and in accordance with the terms and conditions of the Company Creditors Arrangement (the CCA ) which is proposed between the Company and its Scheme Claimants/CCA Creditors. I confirm that, I consent to act as Supervisor in accordance with the terms and conditions of the CCA, if the CCA is approved by the requisite majority of the Scheme Claimants/CCA Creditors. Yours faithfully, Meade W. Malone Meade Malone & Co. is a member of MWM Global Holdings Limited, a limited liability company incorporated in the British Virgin Islands. 90

APPENDIX 11 PRIVATE & CONFIDENTIAL LETTER OF SUPPORT FROM THE COMMITTEES OF INSPECTION 30 July 2005 To the Joint Liquidators of CSA Absolute Return Fund Limited CSA Absolute Return Fund Limited (in Liquidation) We, the Committee of Inspection of CSA Absolute Return Fund Limited (in Liquidation) have reviewed the proposed Scheme of Arrangement (the Scheme ), Explanatory Statement and Company Creditors Arrangement Proposals (CCA) prepared by the Joint Liquidators. We confirm that the Scheme and CCA have been developed in consultation with us as members of the committees of inspection in both Hong Kong and the British Virgin Islands. The members of the committees of inspection are representatives of both creditors and investors of CSA Absolute Return Fund Limited. However, none of the members of the Committee of Inspection shall incur any liability in connection with the Scheme and CCA as a result of such consultation. In our opinion, the Scheme and CCA provides creditors and investors with benefits over liquidation and we recommend creditors and investors vote in favour of the Scheme. Yours faithfully Randolph S Menton Cheung Man Fai, German Jenny Wen Chun Liu Nominated Representative Mark Christal representing Royal Skandia Life Assurance Limited Appendix 11 Kevin Wilkinson representing IPP Financial Advisers Pte Limited Jason Toms representing The Fieldstone Foundation Clifford Forster representing Lloyds (BVI) Nominees Limited 91

APPENDIX 12 LIST OF DOCUMENTS AVAILABLE FOR INSPECTION 1. Memoranda and Articles of Association and Certificates of Incorporation of CSA Absolute Return Fund Limited. 2. Orders of the Court appointing the Liquidators and Committees of Inspection in Hong Kong and the British Virgin Islands. 3. Order of the Court granting leave to convene the Scheme Meetings. 4. Notices of Scheme Claimants and CCA Creditors Meetings. 5. The Explanatory Memorandum. 6. The Scheme Document. 7. The CCA Proposal. 8. Consents from the Joint Liquidators to Act as Scheme Administrators and Supervisors. 9. Letter of support from the Committees of Inspection. Appendix 12 92

SUMMARY OF MAIN SCHEME PROVISIONS 1 Enforcement of scheme claims Clause S4 APPENDIX 13 One of the main advantages of the Scheme is that all Scheme Claimants, whether or not they have notice of the proposals, will be bound by the Scheme and by the adjudication of claims according to principles in the Scheme. The Scheme provides that Scheme Claimants are deemed to accept the process of establishing Admitted Claims in accordance with the Scheme and will be bound by its results. Appendix 13 In order to preserve the Company s assets for an equitable distribution among Scheme Claimants, the Scheme prohibits Scheme Claimants from taking any steps or Proceedings for the purpose of obtaining payment. If a Scheme Claimant was to take such steps or Proceedings, any advantage obtained by him, together with any costs incurred by the Company or the Scheme Administrators in relation to such steps or Proceedings, may be set-off against the amount of that Scheme Claimant s dividend entitlement. If those costs exceed the dividend entitlement, they become a debt due and payable to the Company. The Scheme also provides that Scheme Claimants are deemed to acknowledge that if Proceedings are commenced by them, notwithstanding the prohibition on doing so, that the Scheme Administrators shall be entitled to obtain an order staying these Proceedings and providing that the Scheme Claimant pay the costs and expenses incurred by the Scheme Administrators and the Company in relation to these Proceedings. 2 Interest Clause S5 All Scheme Claimants forego their right (if any) to receive interest on their Scheme Claim(s). 3 Set-off Clause S6 The provisions of the Scheme relating to set-off broadly reflect those contained in s.264 Companies Ordinance importing s.35 of the Bankruptcy Ordinance in Hong Kong and section 150 of the BVI Insolvency Act, which apply to liquidations in both jurisdictions. Sums due from the Company will be set-off against sums due to the Company (if any) where they arise out of mutual dealings between the same parties before the Effective Date. Contingent and prospective debts and claims will also be taken into account for set-off. Sums which become due to a Scheme Claimant after the Ascertainment Date, as a result of assignment of Debts or contracts, will not be taken into account for set-off purposes. This date was chosen because it was the earliest date on which a winding up petition in Hong Kong was presented against the Company. 4 Foreign currency conversion Clause S7 Where a sum of money owed by or to the Company is the subject of a claim to set-off and has been incurred in, or is payable in a currency other than US Dollars, for the purposes of the Scheme that amount shall be converted into US Dollars at the Scheme Rate (being the mid-market rate of exchange quoted for the relevant currency by the Hong Kong Association of Banks on the Ascertainment Date). 93

5 Scheme Expenses Clause S8 Appendix 13 Certain expenses will be paid in full under the Scheme out of the Company s funds. A non-exhaustive list of such expenses is given in Clause S8 of the Scheme. They include the costs incurred in the preparation of the Scheme, any remuneration and expenses of the Joint Liquidators and the Scheme Adjudicators, the cost of holding meetings of Scheme Claimants and the administrative costs of running the Scheme. 6 Property of the Company Clause S10 In addition to barring Scheme Claimants from enforcing Scheme Claims by way of Proceedings, the Scheme further protects the Company s assets by providing that the Company will hold them on trust for the benefit of Scheme Claimants, to be applied in accordance with the terms of the Scheme. Any Property remaining after the payment or provision for the payment in full of Scheme Claimants in accordance with the terms of the Scheme is to be transferred to the BVI Liquidators to be dealt with in accordance with BVI law. The trust will terminate automatically on the termination of the Scheme in accordance with the Scheme provisions. 7 Valuation of debts Clause S12 Each Investor Scheme Claim will be valued at the amount paid by the Scheme Claimant to the Company (or Custodian, as the case may be) for the Company s shares allotted to that Scheme Claimant. Any General Scheme Claim arising from a payment for the subscription of shares in the Company will be valued at the amount paid by the relevant Scheme Claimant in respect of their subscription. All Scheme Claims will be valued as at the Ascertainment Date. 8 Scheme claims: establishing the Agreed Claim Clause S13 Scheme Claimants must submit their claims on a Scheme Liability Form. Most Scheme Claimants will have been sent a Scheme Liability Form containing Binding Data (i.e. information in the Company s possession relating to Scheme Claims which a Scheme Claimant may have together with details of any amount which the Scheme Administrators believe is due to the Company from the Scheme Claimant concerned and which will be applied by way of set-off). Otherwise, Scheme Claimants should use the blank Scheme Liability Form at Appendix 3. A Scheme Liability Form which is blank or which otherwise contains no Binding Data is to be completed by the Scheme Claimant by inserting into the form details of its Scheme Claims. The Scheme Liability Form is to be signed and returned to the Scheme Administrators no later than the Final Claims Submission Date. A Scheme Claimant may either accept or amend a Scheme Liability Form sent to him which contains Binding Data. Each Scheme Claimant will be deemed to have accepted and confirmed as accurate the Binding Data set out in any Scheme Liability Form unless it is amended or added to, signed and returned to the Scheme Administrators on or before 5:00pm on the date which is 7 Business Days after the Effective Date. Any alterations or additions to a Scheme Liability Form must comply with the accompanying instructions. Any relevant supporting documentation relating to those alterations or additions must also be enclosed. Alterations and additions to the Scheme Liability Form must be in English. 94

Following the receipt of a Scheme Liability Form amended or added to and returned by a Scheme Claimant, no further modifications may be made to that Scheme Liability Form and no further Scheme Claims may be asserted by that Scheme Claimant. Within 21 days of receipt of a Scheme Liability Form which has been amended or added to, the Scheme Administrators will endeavour to agree any addition or amendment with the Scheme Claimant. Once agreement has been reached in relation to that data, the data will become binding on the Scheme Claimant, the Company and the Scheme Administrators. If agreement is not reached within 21 days of receipt, the disputed matters shall be referred to the Scheme Adjudicator for adjudication, whose decision will be final and binding upon the parties. Appendix 13 9 Final Claims Submission Date Clause S14 Scheme Claims received after the relevant cut-off date specified in Clause S13 WILL BE REJECTED by the Scheme Administrators unless the Creditors Committee has consented to an extension in respect of that particular Scheme Claim. Scheme Claims included on the Scheme Liability Form in the form of Binding Data will become binding on the relevant Scheme Claimant in the amount indicated on the form unless the claim details are amended and the form is returned and received by the Scheme Administrators no later than 7 Business Days after the Effective Date. Recipients of a blank Scheme Liability Form must notify the Scheme Administrators of any Scheme Claims which they may have (by completing, signing, returning and complying with the instructions contained in the Scheme Liability Form) no later than the Final Claims Submission Date, which is midday in Hong Kong on the second anniversary of the Effective Date. Scheme Claimants will be notified of the exact date as soon as practicable after the Scheme comes into effect. Advertisements will also be placed on three separate occasions between the Effective Date and the Final Claims Submission Date advising Scheme Claimants of the Final Claims Submission Date and requesting them to submit their Scheme Claims. The last advertisement will be placed no later than 14 Business Days before the Final Claims Submission Date. The Final Claims Submission Date can be extended by the Scheme Administrators, but only with the consent of the Creditors Committee (Clause S47). The Scheme Administrators will have no discretion to admit Scheme Claims (or amended Scheme Claims) of which they receive notice after the passing of the Final Claims Submission Date, even if such claims are submitted in the format required by the Scheme. Whilst the Final Claims Submission Date itself can be extended with the consent of the Creditors Committee, there is no guarantee that the Creditors Committee will consent to the extension. The Scheme Administrators do not envisage extending the Final Claims Submission Date. Extending it would defeat the Scheme s objectives of resolving Scheme Claims more quickly and cost effectively than would be possible in a conventional liquidation of the Company. 10 The Admitted Claim and Valuation Statement Clause S15 Once the Scheme Administrators have determined Agreed Claims, they will calculate each Scheme Claimant s Admitted Claim or Net Debt by applying any set-off in accordance with Clause S6. The balance, if any, due from the Company will be the Scheme Claimant s Admitted Claim on which his dividend entitlement will be calculated. Any Admitted Claim will, where relevant, be divided into Admitted Claims for General Scheme Claims and/or Investor Scheme Claims. Following this calculation the Scheme Administrators will send to a Scheme Claimant a Valuation Statement setting out the particulars of their Admitted Claim or Net Debt. 95

Within 28 days of receiving their Valuation Statement, Scheme Claimants may by notice in writing object to the amount of the Admitted Claim or Net Debt as shown in the Valuation Statement only on the ground of arithmetical or other manifest error on the face of the Valuation Statement. Any disputed objection will be referred to the Scheme Adjudicator following certain notice periods specified in Clause S15. Appendix 13 11 Determination of the Available Distributable Amount Clause S16 This is the amount available for distribution to Scheme Claimants with Admitted Claims, after the payment (or provision for payment) by the Scheme Administrators, of: The petitioning creditor s taxed costs in the winding up proceedings against the Company in Hong Kong and the BVI; Preferential Debts and Scheme Expenses which are then due for payment; and petitioning creditor costs, Preferential Debts and Scheme Expenses which are not then due for payment. As soon as practicable after such payment or provision the Scheme Administrators are obliged to review the assets and liabilities of the Company to determine the Available Distributable Amount. This is the amount which in the opinion of the Scheme Administrators is prudently available for distribution to Scheme Claimants under Clause S18. 12 Payment of dividends Clause S18 As soon as reasonably practicable after the Scheme Administrators have determined the Available Distributable Amount and determined the General Scheme Claim Amount and Investor Scheme Claim Amount in accordance with Clause S17, the Scheme Administrators will pay Scheme Claimants in the following order of priority: i) firstly, to satisfy in full all Admitted Claims arising out of General Scheme Claims, or, if the General Scheme Claim Amount is greater than the Available Distributable Amount, the General Scheme Claim Dividend Rate will be paid on Admitted Claims arising out of General Scheme Claims; and ii) secondly, if the Available Distributable Amount exceeds the General Scheme Claim Amount, dividends shall be paid to satisfy Admitted Claims arising out of Investor Scheme Claims at the Investor Dividend Rate. In the event that all Scheme Claims are paid in full, any surplus funds will be transferred to the BVI Liquidators on the Termination Date, to be dealt with in accordance with BVI law. 13 Method of payment of dividends Clause S19 Dividends will be paid in US Dollars by cheque or telegraphic transfer. Cheques will be posted to the last known address of each Scheme Claimant. 96

14 Unclaimed dividends Clause S20 Any balance remaining in the Scheme Accounts at the Termination Date representing cheques or other means of payment which have not been debited and any accumulated interest thereon, will be transferred to the BVI Liquidators to be dealt with in accordance with BVI law. 15 Full and Final Settlement of claims Clause S21 Subject to any rights Scheme Claimants may have to the amounts referred to in Clause S20 (i.e. those residual amounts transferred to the BVI Liquidators to be dealt with in accordance with BVI law), each Scheme Claimant is deemed to agree that following the payment of a final dividend, the payment of dividends, whether received or not, shall be made and accepted in full and final settlement of all present and future liabilities of the Company to that Scheme Claimant. Appendix 13 16 Administrative provisions Clauses S22 to S33 deal with the appointment, removal, functions, powers, duties, obligations, responsibilities and qualifications of the Scheme Administrators, Scheme Adjudicator and Creditors Committee. Clauses S34 to S48 deal with Meetings of Scheme Claimants; the duration of the trust created by the Scheme; indemnities and co-operation of Scheme Claimants; and other general provisions dealing with service of notices, discretion to extend deadlines, and the governing law of the Scheme. 97

APPENDIX 14 STATUTORY PROVISIONS BVI Mutual Funds Act Sections 14, 16 and 17 Section 14. Duty to publish and file a prospectus (1) No registered public fund shall in or outside the Territory make an invitation to the public or any section thereof to purchase its shares unless prior to such invitation it publishes in writing a prospectus signed by or on behalf of the board of directors (by whatever name called) or, in the case of a partnership, unit trust or other similar body, the equivalent governing body of the fund which approved the contents of the prospectus or authorised its publishing, and files a copy thereof with the Commission. (2) Every prospectus shall: (a) (b) provide full and accurate disclosure of all such information as investors would reasonably require and expect to find for the purpose of making an informed investment decision; contain a summary statement of investors rights as provided in section 16; and Appendix 14 (c) (3) Repealed. be accompanied by or contain reference to the availability of the financial statements for the last financial year of the fund and the auditor s report thereon if the fund has completed a financial year in operation. (4) If all or any part of the prospectus is not in the English language, the Commission may require that an English translation of the prospectus or that part of the prospectus, verified in a manner satisfactory to the Commission, be filed along with the prospectus. (5) Where in a prospectus any of the disclosures required under subsection (2)(a) ceases to be accurate in a material particular, the registered public fund shall, within fourteen days of the change occurring, publish an amendment thereto giving accurate disclosures and provide a copy thereof to each of its investors and to the Commission. Section 16. Investors rights (1) If a registered public fund publishes a prospectus or any amendment thereto that contains misrepresentation relating to any of the disclosures required under section 14(2)(a), a person who purchased any shares pursuant to such prospectus or amendment thereto is deemed to have relied upon the misrepresentation and shall have the rights provided in subsection (2). (2) A person referred to in subsection (1) may elect to exercise a right of action: (a) (b) for the rescission of the purchase, or for damages, 98

jointly and severally against the fund, and every member of the board of directors (by whatever name called) or, in the case of a partnership, unit trust or other similar body, every member or the equivalent governing body who, while aware of the misrepresentation, or would have been aware of the misrepresentation had he made reasonable investigations consistent with his duties, authorised the signing of or approved the prospectus or amendment thereto and consented to its publication and filing or caused it to be signed or published and filed. (3) For the purposes of this section, misrepresentation means: (a) (b) an untrue or misleading statement of any of the disclosures required under section l4(2)(a); or an omission to disclose any of such disclosures. (4) No person is liable under this section if he proves that the purchaser purchased the shares offered by the prospectus or amendment thereto with knowledge of the misrepresentation. (5) The right of action for rescission or for damages conferred by subsection (2) is in addition to and without derogation from any other right the plaintiff may have at law. Section 17. Limitation of action and amount recoverable (1) Notwithstanding any provision of law to the contrary, any action pursuant to section 16(2) may not be commenced after: (a) one hundred and eighty days from the day that the plaintiff first had knowledge of the misrepresentation, or Appendix 14 (b) one year from the date of the purchase transaction that gave rise to the cause of action, whichever is earlier. (2) In any action under section 16(2), the amount recoverable shall not exceed the amount at which the shares were purchased or subscribed, including any fees or other charges paid by the plaintiff. BVI Insolvency Act, 2003 (as amended) Section 2. Interpretation (1) In this Act, unless the context otherwise requires, preferential claim means a claim of a type prescribed by the Rules 1 as a preferential claim; preferential creditor means a creditor having a preferential claim; 1 The Rules referred to in the Insolvency Act, 2003 have not yet come into force. It is anticipated that the Rules will be gazetted by 31 July 2005. In the absence of Insolvency Rules in the British Virgin Islands reference may be made to the UK Insolvency Rules, to the extent that the UK legislation is consistent with the legislation in effect in the British Virgin Islands. However, the UK Insolvency Rules are not binding in the British Virgin Islands and therefore it is unclear as to the extent to which the UK Insolvency Rules will be applied in the British Virgin Islands. 99

prescribed priority means: (a) (b) in a liquidation, the priority for the payment of the costs and expenses of a liquidation prescribed in the Rules, and in a bankruptcy, the priority for the payment of the costs and expenses of a bankruptcy prescribed in the Rules. Implementation of Arrangement Section 15. Arrangements (1) An arrangement is a compromise between a debtor and its or his creditors, the implementation of which is supervised by a supervisor acting as a trustee or otherwise. (2) Without limiting subsection (1), an arrangement may: (a) (b) cancel all or any part of, or vary, a liability of the debtor; vary the rights of the debtor s creditors or the terms of a debt; and Appendix 14 (c) include any other provision that may be prescribed. (3) Varying a liability or the terms of a debt under paragraphs (a) or (b) of subsection (2) may include: (a) varying, adding or canceling rights to interest; and (b) varying the dates upon which a liability, or part of a liability, becomes due for payment. (4) An arrangement shall not, except with the written agreement of the secured creditor or the preferential creditor concerned: (a) (b) affect the right of a secured creditor of the debtor to enforce his security interest or vary the liability secured by the security interest; or result in a preferential creditor receiving less than he would receive in a liquidation or bankruptcy of the debtor had it commenced at the time of approval of the arrangement. (5) An arrangement does not effect a release of any surety or co-debtor of the debtor unless the terms of the arrangement expressly provide otherwise. Section 22. Appointment of interim supervisor, company in administration or liquidation (1) Where a company is in administration or liquidation, the administrator or liquidator may make a proposal and appoint another eligible insolvency practitioner as the interim supervisor. (2) Where the administrator or liquidator intends to appoint another eligible insolvency practitioner as interim supervisor, he shall provide him with: (a) (b) a notice of intention to appoint him as interim supervisor; and a written proposal containing the information prescribed. 100

(3) The nominated insolvency practitioner may accept appointment as interim supervisor by delivering the notice referred to in subsection (2)(a), endorsed in accordance with the Rules, to the administrator or liquidator. (4) The appointment of an interim supervisor under this section takes effect from the time when the endorsed notice of intention to appoint is received by the administrator or liquidator. Section 23. Administrator or liquidator acting as interim supervisor (1) An administrator or liquidator who intends to make a proposal may, instead of appointing another eligible insolvency practitioner as interim supervisor, act as the interim supervisor himself. (2) Where the administrator or liquidator intends to act as the interim supervisor himself he shall: (a) (b) prepare a written proposal containing the information prescribed; and sign a notice of intention to act as interim supervisor. (3) The appointment of the administrator or liquidator as interim supervisor under this section takes effect on the date of the notice of intention to act as interim supervisor. Meeting of Creditors Section 27. Calling creditors meeting (1) The interim supervisor shall: Appendix 14 (a) (b) (c) (d) (e) (f) prepare a written report on the proposal complying with the Rules; call a meeting of creditors for a date no later than 28 days after the commencement of the proposal period for the purposes of considering whether to approve the proposal; send to each creditor, together with the notice of the meeting, a copy of the proposal, his report on the proposal and a copy of the company s statement of affairs; cause the creditors meeting to be advertised; send a copy of the notice of the creditors meeting, together with copies of the documents sent to creditors, to every member of the company; and send to every director of the company a copy of the notice of the meeting, together with copies of the documents sent to creditors. (2) Where a proposal is amended under section 26(1)(b), this section and section 28 applies to the amended proposal as if it were the original proposal. (3) An interim supervisor who contravenes subsection (1) commits an offence. Section 35. Supervisor to be given possession of assets included in arrangement (1) After the approval of an arrangement the board or, where appropriate the administrator or liquidator, shall forthwith take all necessary steps to put the supervisor into possession of the assets included in the arrangement. 101

(2) The supervisor shall, on taking possession of the assets included in the arrangement: (a) where, at the time of approval, the company is in administration or liquidation: (i) (ii) promptly discharge any sums due to the administrator or liquidator under the Act or the Rules; or provide the administrator or liquidator with a written undertaking to discharge any such sums out of the assets as soon as practicable; and (b) where, at the time of approval, the company is in liquidation, promptly discharge any sums due to the preferential creditors. (3) The supervisor shall, out of the assets included in the arrangement: (a) (b) discharge all guarantees properly given, or obligations properly entered into, by the administrator or liquidator for the benefit of the company or in the course of his duties; pay the administrator s or the liquidator s outstanding remuneration; and Appendix 14 (c) if as part of the arrangement, the administration order is to be discharged and the administrator released or the liquidation terminated by order of the Court under section 233, pay the costs of such discharge, release or termination. (4) The following have equally ranking charges on the assets included in the arrangement, subject to the deduction of the proper costs and expenses of realization: (a) notwithstanding his release or discharge, the administrator or liquidator of a company in respect of any monies payable under subsections (2) and (3); and (b) each preferential creditor in respect of any monies payable to him under subsection (2). (5) In this section, liquidator and administrator includes, where appropriate, a former liquidator or administrator. Part VI Liquidation Section 175. Effect of liquidation (1) Subject to subsection (2), with effect from the commencement of the liquidation of a company: (a) (b) (c) the liquidator has custody and control of the assets of the company; the directors and other officers of the company remain in office, but they cease to have any powers, functions or duties other than those required or permitted under this Part or authorised by the liquidator; unless the Court otherwise orders, no person may: (i) commence or proceed with any action or proceeding against the company or in relation to its assets, or 102

(ii) exercise or enforce, or continue to exercise or enforce any right or remedy over or against assets of the company; (d) (e) (f) (g) unless the Court otherwise orders, no share in the company may be transferred; no alteration may be made in the status of or to the rights or liabilities of a member, whether by an amendment of the memorandum or articles or otherwise; no member may exercise any power under the memorandum or articles, or otherwise, except for the purposes of this Act; and no amendment may be made to the memorandum or articles of the company. (2) Subsection (1) does not affect the right of a secured creditor to take possession of and realise or otherwise deal with assets of the company over which that creditor has a security interest. (3) Any thing or matter done or purported to be done in contravention of subsection (1) is void and of no effect. Section 195. Liability of members limited (1) Unless the memorandum of a company provides that the liability of a member is unlimited, the liability of a member to contribute to the assets of a company in liquidation for the payment of its liabilities, for the expenses of the liquidation and for the adjustment of the rights of the members between themselves is limited to: Appendix 14 (a) (b) any amount unpaid on a share held by the member, including any liability for calls; and any liability expressly provided for in the memorandum or articles, including such contribution as the member of a company limited by guarantee, or by shares and guarantee, may have undertaken to make in the event of the company being wound up. (2) Subsection (1) does not affect: (a) (b) any liability of the member to pay or repay monies to the company imposed by a provision of this Act, the Companies Act or the International Business Companies Act; or any liability of a member to the company under a contract, including a contract for the issue of shares, or for any tort, breach of fiduciary duty or other actionable wrong committed by the member. Section 196. Liability of past members (1) For the purposes of this section, a past member of a company is a person who ceased to be a member of the company at any time during the period of one year before the commencement of the liquidation of the company. (2) Unless the Court is satisfied that the members of a company are able to discharge the liabilities set out in 195(1), a past member of a company in liquidation is liable to contribute to the assets of the company for the purposes specified in that subsection to the same extent as a member. 103

(3) Notwithstanding subsection (2), a past member is not liable to contribute to the assets of the company in respect of any liability of the company contracted after he ceased to be a member. Section 197. Dividends payable to a member A member, and a past member, of a company may not claim in the liquidation of the company for a sum due to him in his character as a member, whether by way of dividend, profits, redemption proceeds or otherwise, but such sum is to be taken into account for the purposes of the final adjustment of the rights of members and, if appropriate, past members between themselves. Claims Section 207. Distribution of assets of company (1) Unless and to the extent that this Act or any other enactment provides otherwise, the assets of a company in liquidation shall be applied: (a) in paying, in priority to all other claims, the costs and expenses properly incurred in the liquidation in accordance with the prescribed priority; Appendix 14 (b) (c) after payment of the costs and expenses of the liquidation, in paying the preferential claims admitted by the liquidator in accordance with the provisions for the payment of preferential claims prescribed; after payment of the preferential claims, in paying all other claims admitted by the liquidator; and (d) after paying all admitted claims, in paying any interest payable under section 215. (2) Subject to section 151, the claims referred to in subsection (1)(c) rank equally between themselves if the assets of the company are insufficient to meet the claims in full, they shall be paid rateably. (3) Any surplus assets remaining after payment of the costs, expenses and claims referred to in subsection (1) shall be distributed to the members in accordance with their rights and interests in the company. (4) For the purposes of this Act, assets held by a company in liquidation on trust for another person are not assets of the company. Section 208. Claims having priority over floating charges (1) So far as the assets of a company in liquidation available for payment of the claims of unsecured creditors are insufficient to pay: (a) (b) the costs and expenses of the liquidation in accordance with the prescribed priority; and the preferential creditors; those costs, expenses and claims have priority over the claims of chargees in respect of assets that are subject to a floating charge created by the company and shall be paid accordingly out of those assets. 104

Hong Kong Companies Ordinance Section 166 and 166A Section 166. Power to compromise with creditors and members Arrangements and Reconstructions (1) Where a compromise or arrangement is proposed between a company and its creditors or any class of them, or between the company and its members or any class of them, the court may, on the application in a summary way of the company or of any creditor or member of the company, or, in the case of a company being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members of the company or class of members, as the case may be, to be summoned in such manner as the court directs. (2) If a majority in number representing three-fourths in value of the creditors or class of creditors, or members or class of members, as the case may be, present and voting either in person or by proxy at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the court, be binding on all the creditors or the class of creditors, or on the members or class of members, as the case may be, and also on the company or, in the case of a company in the course of being wound up, on the liquidator and contributories of the company. (3) An order made under subsection (2) shall have no effect until an office copy of the order has been delivered to the Registrar for registration, and a copy of every such order shall be annexed to every copy of the memorandum of the company issued after the order has been made, or, in the case of a company not having a memorandum, of every copy so issued of the instrument constituting or defining the constitution of the company. Appendix 14 (4) If a company makes default in complying with subsection (3), the company and every officer of the company who is in default shall be liable to a fine for each copy in respect of which default is made. (5) In this section and in section 166A, the expression company means any company liable to be wound up under this Ordinance, and the expression arrangement includes a re-organisation of the share capital of the company by the consolidation of shares of different classes or by the division of shares into shares of different classes or by both those methods. Section 166A. Information as to compromises with creditors and members (1) Where a meeting of creditors or any class of creditors or of members or any class of members is summoned under section 166 there shall: (a) (b) with every notice summoning the meeting which is sent to a creditor or member, be sent also a statement explaining the effect of the compromise or arrangement and in particular stating any material interests of the directors of the company, whether as directors or as members or as creditors of the company or otherwise, and the effect thereon of the compromise or arrangement, in so far as it is different from the effect on the like interests of other persons; and in every notice summoning the meeting which is given by advertisement, be included either such a statement as aforesaid or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain copies of such a statement as aforesaid. (2) Where the compromise or arrangement affects the rights of debenture holders of the company, the said statement shall give the like explanation as respects the trustees of any deed for securing the issue of the debentures as it is required to give as respects the company s directors. 105

(3) Where a notice given by advertisement includes a notification that copies of a statement explaining the effect of the compromise or arrangement proposed can be obtained by creditors or members entitled to attend the meeting, every such creditor or member shall, on making application in the manner indicated by the notice, be furnished by the company free of charge with a copy of the statement. (4) Where a company makes default in complying with any requirement of this section, the company and every officer of the company who is in default shall be liable to a fine, and for the purpose of this subsection any liquidator of the company and any trustee of a deed for securing the issue of debentures of the company shall be deemed to be an officer of the company: Provided that a person shall not be liable under this subsection if that person shows that the default was due to the refusal of any other person, being a director or trustee for debenture holders, to supply the necessary particulars as to his interests. (5) It shall be the duty of any director of the company and of any trustee for debenture holders of the company to give notice to the company of such matters relating to himself as may be necessary for the purposes of this section, and any person who makes default in complying with this subsection shall be liable to a fine. Hong Kong Companies Ordinance Sections 40B and 170 Appendix 14 Section 40B. Right to damages and compensation not affected A person is not debarred from obtaining damages or other compensation from a company by reason only of: (a) his holding or having held shares in the company; or (b) his having any right: (i) (ii) to apply or subscribe for shares; or to be included in the register of the company in respect of shares. Section 170. Liability as contributories of present and past members Contributories (1) In the event of a company being wound up, every present and past member shall be liable to contribute to the assets of the company to an amount sufficient for payment of its debts and liabilities, and the costs, charges, and expenses of the winding up, and for the adjustment of the rights of the contributories among themselves, subject to the provisions of subsection (2) and the following qualifications: (a) (b) (c) a past member shall not be liable to contribute if he has ceased to be a member for 1 year or upwards before the commencement of the winding up; a past member shall not be liable to contribute in respect of any debt or liability of the company contracted after he ceased to be a member; a past member shall not be liable to contribute unless it appears to the court that the existing members are unable to satisfy the contribution required to be made by them in pursuance of this Ordinance; 106

(d) (e) (f) (g) in the case of a company limited by shares no contribution shall be required from any member exceeding the amount, if any, unpaid on the shares in respect of which he is liable as a present or past member; in the case of a company limited by guarantee, no contribution shall, subject to the provisions of subsection (3), be required from any member exceeding the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up; nothing in this Ordinance shall invalidate any provision contained in any policy of insurance or other contract whereby the liability of individual members on the policy or contract is restricted, or whereby the funds of the company are alone made liable in respect of the policy or contract; a sum due to any member of a company, in his character of a member, by way of dividends, profits or otherwise, shall not be deemed to be a debt of the company, payable to that member in a case of competition between himself and any other creditor not a member of the company, but any such sum may be taken into account for the purpose of the final adjustment of the rights of the contributories among themselves. (2) In the winding up of a limited company, any director, whether past or present, whose liability is, under the provisions of this Ordinance, unlimited, shall, in addition to his liability (if any) to contribute as an ordinary member, be liable to make a further contribution as if he were at the commencement of the winding up a member of an unlimited company: Provided that: (a) a past director shall not be liable to make such further contribution if he has ceased to hold office for a year or upwards before the commencement of the winding up; Appendix 14 (b) (c) a past director shall not be liable to make such further contribution in respect of any debt or liability of the company contracted after he ceased to hold office; subject to the articles of the company, a director shall not be liable to make such further contribution unless the court deems it necessary to require that contribution in order to satisfy the debts and liabilities of the company, and the costs, charges, and expenses of the winding up. (3) In the winding up of a company limited by guarantee which has a share capital, every member of the company shall be liable, in addition to the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up, to contribute to the extent of any sums unpaid on any shares held by him. 107