2-1, Jalan Vivekananda Brickfields, Kuala Lumpur. Business Address (Head Office):

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1 3.01 BACKGROUND INFORMATION a) Issuer i. Name Malaysian International Tuna Port Sdn Bhd ( MITP ) ii. Address Registered Office: iii. Company No X 2-1, Jalan Vivekananda Brickfields, Kuala Lumpur Business Address (Head Office): Suite 3B-7-3, Level 7, Block 3B Plaza Sentral, Jalan Stesen Sentral 5 Kuala Lumpur Sentral, Kuala Lumpur Business Address (Port Office): MITP Fisheries Port, Batu Maung Batu Maung Pulau Pinang iv. Date/ Place of Incorporation 12 April 2004/ Malaysia v. Date of Listing (in case of a public listed company) vi. Status : resident/nonresident controlled company bumiputra/ non-bumiputra company Not listed Resident controlled company Bumiputra controlled company vii. Principal Activities The Issuer s principal activities as at 31 October 2006 are to develop, operate and maintain a port. 1

2 viii. ix. Board of Directors Structure of shareholdings and names of shareholders or, in the case of a public company, names of all substantial shareholders The Board of Directors for the Issuer as at 31 October 2006 are as follows: 1) Gen (R) Tan Sri Dato Mohd Ghazali Bin Dato Mohd Seth 2) Annuar Zaini Bin Binyamin 3) Dato Abu Zahar Bin Dato Nika Ujang 4) Bukhari Bin Hassan 5) Tuan Haji Mohd Mokhtar Bin Ismail 6) Ahamad Sabki Bin Mahmood 7) Tuan Haji Mustafa Bin Haji Ahmad 8) Ab.llah Bin Rashid 9) Tuan Haji Sa dom Bin Abd. Wahab 10) Mohamad Shaupi Bin Derahman 11) Foong Peng Yew 12) Low Siak Wei 13) Chua Hui Yen The shareholder of the Issuer and the structure of shareholdings as at 31 October 2006 are as follows: Shareholders Bindforce Sdn Bhd (1) Direct No. of Shares Percentage (%) 16,200, LKIM (2) 10,800, Total 27,000,

3 Note: (1) As at 31 October 2006, the list of shareholders of Bindforce Sdn Bhd ( Bindforce ) is as follows:- Shareholders Direct No. of Shares Percentage (%) Annuar Zaini Bin Binyamin 3,850, Visage Engineering Sdn Bhd 775, Wingspan Project Management Sdn Bhd YB Dato Zahidi Zainal Abidin 250, , Total 5,000, (2) Pursuant to the provisions of the Concession Agreement, LKIM shall within one year from the date of execution of the Concession Agreement, divest its forty percent (40%) equity to a company to be approved by the Federal Government through the Economic Planning Unit ( EPU ) of the Prime Minister's Department, Malaysia or such other governmental body or authority or Ministry which has taken over EPU s responsibilities (administratively or otherwise) upon EPU s cessation. As at 31 October 2006, the Issuer has confirmed that application for the said divestment has been made by LKIM to the EPU, Ministry of Agriculture and Agro-based industry ( MOA ) and Ministry of Finance ( MOF ) for approval to transfer LKIM s stake in the Issuer to a wholly-owned subsidiary of LKIM registered under the name of Melia Evolusi Sdn Bhd which was established on 15 September While EPU and MOA have approved the application, approval from MOF is still pending. x. Authorized and paid-up capital Authorized capital as at 31 October 2006 RM 50,000,000 ordinary shares of RM1.00 each 50,000,000 Paid-up capital as at 31 October 2006 RM 27,000,000 ordinary shares of RM1.00 each 27,000,000 3

4 3.02 PRINCIPAL TERMS AND CONDITIONS (a) Names of parties involved in the proposed transaction (where applicable) i. Principal Adviser(s)/Lead Arranger(s) OSK Securities Berhad ( OSK ) (14152-V); and RHB Investment Bank Berhad (formerly known as RHB Sakura Merchant Bankers Berhad) ( RHB InvestBank ) (19663-P) (Collectively known as the Joint Lead Arrangers ) ii. Arranger(s) iii. Valuers iv. Solicitors v. Financial Adviser vi. Technical Adviser vii. Guarantor viii. Trustee ix. Facility Agent x. Primary Subscribers and Amount subscribed (where applicable) Not applicable Not applicable Kadir, Andri & Partners Not applicable Not applicable Bindforce Sdn Bhd ( M) OSK Trustees Berhad ( U) OSK OSK and RHB InvestBank as the Primary Subscribers will fully subscribe the BAIS on a Bought-Deal basis and their respective subscription amount are as follows:- Financial Institution Amount Subscribed (up to RM million) OSK RHB InvestBank Total Should there be any changes, the final list of Primary Subscribers together with the respective amount to be subscribed shall be provided to the Securities Commission ( SC ) prior to the issuance of the BAIS. 4

5 xi. Underwriter(s) and amount underwritten xii. Syariah Adviser (where applicable) xiii. Central Depository xiv. Paying Agent xv. Reporting Accountant xvi. Others (please specify) (b) Islamic Principle Used (c) Facility Description Not Applicable Dr Mohd Daud Bakar Bank Negara Malaysia ( BNM ) BNM Horwath (AF 1018) Not Applicable Bai Bithaman Ajil Bai Bithaman Ajil Islamic Securities ( BAIS ) Facility of up to RM240.0 million nominal value. The BAIS applies the underlying Syariah principles of Bai Bithaman Ajil which is a contract that refers to the sale and purchase transaction for the financing of an asset on a deferred and an instalment basis with a pre-agreed payment period. The sale price will include a profit margin. Under the BAIS structure, the Primary Subscribers shall first purchase the Identified Assets (as defined under Paragraph (t) herein) from the Issuer pursuant to the asset purchase agreement at the purchase price (the Asset Purchase Price ). The Primary Subscribers shall immediately thereafter sell the Identified Assets to the Issuer pursuant to the asset sale agreement at the sale price (the Asset Sale Price ) comprising the original Asset Purchase Price and a profit margin at a profit rate agreed between the Issuer and the Primary Subscribers on a deferred and an instalment payment basis. The obligation of the Issuer to pay the Asset Sale Price under the asset sale agreement shall be evidenced by the issuance of the negotiable and non-interest bearing primary notes and secondary notes under the BAIS which the Issuer shall redeem on the respective maturity dates. 5

6 The BAIS may be traded in the secondary market under the Syariah principles of Bai Dayn. (d) Issue Size (RM) Up to RM240.0 million in nominal value comprising of six (6) series as follows: Series Nominal Value (RM million) TOTAL (e) Issue Price The BAIS will be either issued at par, discount or premium to the nominal value. The issue price for the BAIS shall be calculated in accordance with the formula as set out in the Rules on Fully Automated System for Issuing/Tendering ( FAST ). (f) Tenure of the Facility/ Issue Ten (10) years from the issuance date. The date of the issuance of the BAIS is subject to the completion of documentation and compliance of all relevant conditions to the reasonable satisfaction of the Joint Lead Arrangers, but in any case, the date of first issuance of the BAIS is to be no later than six (6) months from the date of the Securities Commission s ( SC ) approval or such other period approved by the SC from time to time. The BAIS amount shall be redeemed in the following manner: Series Amount Tenure (RM million) (years) TOTAL The actual issue date, maturity date and tenure for the BAIS will be determined prior to the proposed issue date of the BAIS. The SC will be notified accordingly. 6

7 (g) Profit or equivalent rate (%) (please specify) (h) Profit payment frequency and basis The profit rate will only be known prior to the proposed issue date and upon the agreement between the Issuer and the Primary Subscribers. The SC will be notified accordingly. The frequency of profit payment is semi-annually in arrears. The profit will be calculated on the basis of actual number of days in a year and the actual number of days elapsed. (i) Yield to Maturity (%) The Yield-To-Maturity will only be known prior to the proposed issue date and upon the agreement between the Issuer and the Primary Subscribers. The SC will be notified accordingly. (j) Security / Collateral i) First legal charge over the Designated Accounts; ii) Assignment of the rights, title and interest over the Fees received by the Issuer in respect of the Services provided and proceeds from any insurance policies as described in the Concession Agreement; iii) iv) Assignment of all revenues and receivables not covered under item (ii) above which shall include but not limited to management fees, dividends and all other revenues received by the Issuer excluding all revenues and receivables belonging to the Malaysian Government; Assignment of all revenues received by the Issuer s subsidiaries, as and when they are created for the purpose of commercial benefit to MITP (hereinafter referred to as Commercial Subsidiaries ); v) Debenture incorporating a fixed and floating charge over all assets of Bindforce Sdn Bhd ( Bindforce ), both present and future; and vi) Corporate Guarantee by Bindforce. 7

8 (k) Details on utilisation of proceeds Proceeds raised from the BAIS shall be utilized as follows: Purpose Amount of Proceeds (up to RM) i) Firstly, for the payment of fees and expenses relating to the issuance of the BAIS and the bridging loan facility of up to RM40.0 million granted to MITP by RHB InvestBank ( Bridging Loan ); a 3,200,000 ii) Secondly, to pre-fund the Finance Service Reserve Account 1 with two (2) profit payments; b 22,000,000 iii) Thirdly, to pre-fund the Finance Service Reserve Account 2 with all profit payments due and payable during the construction period of the remaining Additional Facilities; c 33,000,000 iv) Fourthly, for repayment/refinancing of 40,000,000 the Bridging Loan; d v) Fifthly, for financing the construction cost (including related fees and expenses) of the remaining Additional Facilities; e 135,000,000 vi) Sixthly, for purchase of Ancillary Facilities; and f 6,000,000 vii) Lastly, for working capital requirements of the Issuer. g Balance Total 240,000,000 Notes: (a) Payment of fees and expenses relating to the issuance of the BAIS and the Bridging Loan shall be determined based on invoices or such other documentary evidence received from the relevant parties relating to the said expenses. 8

9 (b) The amount allocated for the pre-funding of two (2) profit payments into the Finance Service Reserve Account 1 shall be based on the agreed profit rates at the point of the BAIS issuance. (c) The amount allocated for the pre-funding of all profit payments during the construction period of the remaining Additional Facilities into the Finance Service Reserve Account 2 shall be based on the agreed profit rates at the point of the BAIS issuance. (d) Details of the Bridging Loan is as follows: Facility Type Purpose of Facility Amount of Proceeds (up to RM) Bridging Loan i) Up to RM10.0 million to bridge finance the refinancing of the Loan Facility of up to RM10.0 million granted to Bindforce Sdn Bhd incurred to finance the construction of the Upgraded Works pending issuance of the BAIS; and ii) Up to RM30.0 million to bridge MITP s funding requirements to part finance the remaining Additional Facilities and Ancillary Facilities, pending issuance of the BAIS. 40,000,000 Total 40,000,000 Note: In the event the amount allocated hereunder is not fully utilized, the unutilized amount shall be allocated for the purpose of item (v) above. (e) Payments to the contractor(s) appointed by the Issuer via the proceeds raised from the BAIS shall be evidenced against invoices/certificates or other similar forms of documentary evidences (collectively known as Certificates ) certified by architect/engineer based on amount of works done. 9

10 The proceeds to be disbursed to the contractor(s) shall be the amount stated in the Certificates and subject to a minimum drawdown of RM2.0 million or such other amount as may be agreed between the Issuer and the Facility Agent from time to time. The Certificates shall have been supported by all the relevant documents evidencing the amount of works done by the contractor(s) and that the amount is due and payable and duly certified by the architect/engineer. The amount shall be disbursed within seven (7) business days from the date of receipt by the Trustee of the Certificates. The architect/engineer in this regard refer to suitably qualified firm of consulting architects, consulting engineers, quantity surveyor or other professional consultants duly registered with their respective professional bodies in Malaysia and the Ministry of Finance, appointed from time to time by the Issuer which shall be responsible for the relevant performance and supervision of the remaining Additional Facilities. (f) The amount allocated for purchase of Ancillary Facilities shall be based on invoices or other supporting documentary evidences. (g) Balance of funds after paying (i) to (vi) above can be used for working capital requirements of the Issuer only after construction of the remaining Additional Facilities has been completed and the Certificate of Practical Completion (as defined in the Concession Agreement) has been obtained from the Issuer. In any case, all utilization of funds under the BAIS Facility for purpose (i) to (vii) above shall be Syariah compliant. 10

11 (l) Sinking Fund Sinking Fund Account ( SFA ) The Trustee shall remit funds from the Collection Account ( CA ) into the SFA for: 1. Profit servicing of the BAIS; and 2. Redemption of the BAIS. In relation to profit servicing of the BAIS, the Issuer shall build up the minimum credit balance in the SFA equivalent to at least one (1) profit payment one (1) month prior to the profit payment date. In relation to redemption of the BAIS, the Issuer shall build up the minimum credit balance in the SFA equivalent to: 1. at least 20% of the nominal value of any maturing BAIS five (5) months prior to the maturity of the maturing BAIS; 2. at least 40% of the nominal value of any maturing BAIS four (4) months prior to the maturity of the maturing BAIS; 3. at least 60% of the nominal value of any maturing BAIS three (3) months prior to the maturity of the maturing BAIS; 4. at least 80% of the nominal value of any maturing BAIS two (2) months prior to the maturity of the maturing BAIS; and 5. at least 100% of the nominal value of any maturing BAIS one (1) month prior to the maturity of the maturing BAIS; Should there be any shortfall of funds for principal repayment of the BAIS, the Issuer must top up additional funds required at least two (2) working days prior to the maturing BAIS. Any excess of the minimum credit balance in the SFA in relation to profit servicing of the BAIS and redemption of the BAIS shall be transferred into the CA. The SFA shall be solely operated by the Trustee. (m) Rating Credit Rating Assigned : Indicative rating of A+ ID. Name of Rating Agency : Malaysian Rating Corporation Berhad ( MARC ). (n) Form and Denomination The BAIS will be in bearer form in denomination of RM5.0 million each (or such other denominations as may be agreed between the Issuer and the Facility Agent). The BAIS will be represented by global certificates which are exchangeable for the definitive certificates on the occurrence for certain events. The global certificate for the BAIS will be deposited with BNM, as the Central Depository. 11

12 (o) Mode of Issue (p) Selling Restriction The BAIS shall be fully issued to the Primary Subscribers via Bought-Deal basis and shall be traded scripless under the Rules on Scripless Securities under the Real Time Electronic Transfer of Funds and Securities ( RENTAS ) System in accordance with the Rules on FAST issued by BNM and/or under any new regulations to be implemented by BNM from time to time. The BAIS may not be offered, sold or delivered, directly or indirectly, nor may any document or other material in connection therewith be distributed in Malaysia, other than to persons falling under Section 4(6) of the Companies Act, 1965 of Malaysia, as amended from time to time, and subject to any law, order, regulation, or official directive of either the SC, BNM or any other regulatory authority from time to time. (q) Listing Status The BAIS will not be listed on the Bursa Malaysia Securities Berhad or on any other stock exchange. (r) Minimum Level of Subscription (RM or %) (s) Other regulatory approvals required in relation to the issue, offer or invitation and whether or not obtained [please specify] The minimum level of subscription for the BAIS issuance is one hundred percent (100%). In respect of the BAIS issuance, the issue will be aborted should the minimum level of subscription is not met. The Issuer shall return all considerations received to the Primary Subscribers. Not applicable (t) Identified Assets The Identified Asset is the rights, title, benefit and interest of the Issuer under the Concession Agreement to design, construct, manage, operate and maintain the Upgraded Works and Additional Facilities. The value of the Identified Asset is based on the value of the construction cost of the Upgraded Works and Additional Facilities amounting to RM237,374,328 as stated in the Concession Agreement. The Identified Asset is Syariah compliant as endorsed by the Syariah Adviser pursuant to his endorsement letter dated 27 November

13 (u) Purchase and Selling Price/Rental (where applicable) The Asset Purchase Price for the BAIS shall be equal to the issue price of the BAIS as per Paragraph (e) above. The Asset Purchase Price shall at all times during the tenure of the BAIS Facility be in compliance with the SAC Pricing Guidelines on the Identified Assets. The issue price of the BAIS shall be determined at the point of issuance by way of private placements without prospectus to eligible Investor(s). The BAIS will be traded scripless under the Rules on Scripless Securities under the RENTAS System in accordance with the Rules on FAST issued by BNM and/or under any new regulations to be implemented by BNM from time to time. The Asset Sale Price for the BAIS shall be equal to the aggregate sum of the nominal value and all profit payment of the BAIS Facility. The Asset Sale Price shall be determined at the point of issuance. (v) Conditions Precedent to the BAIS Issuance: Conditions precedent to the issuance of the BAIS shall be subject but not limited to the following: i) completion of the due diligence exercise on the Issuer to the satisfaction of the Joint Lead Arrangers and the Solicitors; ii) all necessary approvals and consents including the SC, the Syariah Adviser and/or other relevant authorities (if applicable) have been secured and obtained; iii) receipt by the Joint Lead Arrangers of certified true copy of the resolution of the Board of Directors of the Issuer authorizing the acceptance of the BAIS Facility and the appointment of the signatories to accept and operate the BAIS Facility and to execute the relevant documents relating to the BAIS Facility; iv) receipt by the Joint Lead Arrangers of the Solicitor s confirmation that the necessary legal documents pertaining to the BAIS Facility have been executed, stamped (or endorsed as exempt from stamp duty) and presented for registration (where applicable); v) no event of default has occurred or is continuing or will occur as a result of the issuance of the BAIS; vi) evidence that the Designated Accounts have been opened with a licensed bank (or banks) in Malaysia; 13

14 vii) receipt by the Trustee, Rating Agency and Joint Lead Arrangers a written confirmation from the external auditor of the Issuer stating that the Issuer have a minimum paid-up capital of RM25.0 million; viii) receipt by the Trustee, Rating Agency and Joint Lead Arrangers a letter of support from the Ministry of Agriculture and Agro Based Industry, Malaysia ( MOA ) stating that the Malaysian Government through LKIM ensures that the Issuer is in the position to meet (and do meet on a full and timely basis) its liabilities in respect of all amounts borrowed for so long as the amount in respect of the borrowings remain outstanding; and provide all necessary support to the Issuer and also ensure that the Issuer shall not take any detrimental action which may cause the Issuer not being able to perform its obligations in respect of its borrowings; ix) receipt by the Trustee, Rating Agency and Joint Lead Arrangers a letter from LKIM addressed to the Issuer, affirming that LKIM shall exercise its rights under Clause , and of the Concession Agreement and terminate the Concession Agreement in the event the Issuer defaults under the provision of Clause 24 of the Concession Agreement; x) receipt by the Trustee, Rating Agency and Joint Lead Arrangers the Issuer s letter addressed to and duly acknowledged by LKIM stating that in the event of termination of the Concession Agreement followed by the Consequences of Termination as stipulated under Clauses , and , all monies due and payable to the Issuer pursuant to Clause (c)(ii)(bb) of the Concession Agreement shall be paid directly into the CA; xi) LKIM s approval on the material terms of the Issue Documents with regards to the BAIS Facility; xii) the Issuer shall have awarded/executed lump sum contracts with contractors acceptable to the Joint Lead Arrangers evidencing that the lump sum contract for financing the construction of the remaining Additional Facilities shall not exceed RM179.0 million; xiii) a minimum final rating of A+ ID for the BAIS Facility from MARC or any other equivalent rating(s) from any other rating agency acceptable to Joint Lead Arrangers; and 14

15 xiv) receipt by the Joint Lead Arrangers the confirmation from the Solicitor (in writing) that all conditions precedents have been complied with or waived (where applicable). (w) Representations and Warranties The representations and warranties by the Issuer to the respective Trustee and the Investor(s) shall include but not limited to the following: i) it is a company duly incorporated and validly existing under the laws of Malaysia and has the power and authority to own its assets and to conduct the business which it conducts and/or proposes to conduct; ii) (a) its memorandum and articles of association incorporate provisions which authorise, (b) all necessary corporate action has been taken to authorise, and (c) all authorisations of any government or other authority have been duly and unconditionally obtained and are in full force and effect which are required to authorise, it to own its assets, carry on its business as it is being conducted, and sign and deliver, and perform the transactions contemplated in the Issue Documents, and for the Issuer to issue the BAIS and to perform its obligations specified therein and under the BAIS in accordance with its terms; iii) the Issuer s audited accounts are prepared in accordance with generally accepted accounting principles and standards and fairly reflects the Issuer s financial position; iv) except as disclosed in the information memorandum, the Issuer has no knowledge of any litigation or arbitrations which will have a material adverse affect on the Issuer s ability to comply with the Issue Documents; and v) it has the power to enter into, exercise its rights and perform and comply with its obligations under the trust deed and for it to issue and perform and comply with its obligations under the BAIS Facility and repayments in accordance with the trust deed. 15

16 (x) Events of Default Events of Default will comprise those as required under the Guidelines on the Minimum Contents Requirements for Trust Deeds issued by the SC dated 1 July 2000 and such events of default as may be deemed standard for a facility of this nature or as may be advised by the Solicitors. These shall include but not limited to: i) where the Issuer fails to pay any amount of any principal or profit due from it under any of the Issue Documents on the due date or on demand, if so payable; or ii) where any of the Financial Covenants are breached and are not being remedied within a sixty (60) day remedy period; or iii) where a winding-up order has been made against the Issuer or a resolution to wind up the Issuer has been passed; or iv) where the Issuer convenes a meeting of its creditors or proposes or makes any arrangement or composition with, or any assignment for the benefit of, its creditors under section 176 of the Companies Act, 1965; or v) where an encumbrance takes possession of, or a trustee, liquidator, receiver or similar officer is appointed in respect of, all or any part of the business or assets of the Issuer and is not paid out, withdrawn or discharged within thirty (30) days of such appointment; or vi) where the Issuer fails to observe or perform any of its obligations, terms and conditions or provisions under the Issue Documents or any other related documents or under any undertaking arrangement entered into in connection herewith; or vii) where any of the indebtedness of the Issuer becomes due and payable or capable of being declared due or payable before its stated maturity or if any security created to secure any such indebtedness becomes enforceable that will have a material adverse effect on the Issuer s obligation under the BAIS Facility; or viii) where there is a revocation, withholding or modification of a licence, authorisation or approval that impairs or prejudices the Issuer's ability to comply with the terms and conditions or the provisions of the Issue Documents or any other related documents. 16

17 Should an Event of Default occur(s), the Trustee on behalf of the BAIS holders shall have recourse to the Security/Collateral as set out in Paragraph (j) of this Principal Terms and Conditions and also under the Issue Documents. (y) Principal terms and conditions for warrants (where applicable) Not applicable. 17

18 (z) OTHER PRINCIPAL TERMS AND CONDITIONS FOR THE ISSUE i) Designated Accounts The Issuer and its Commercial Subsidiaries (as and when they are created) are required to open and maintain the Designated Accounts with a licensed bank (or banks as required) in Malaysia to be appointed by the Trustee. The Designated Accounts must be Syariah compliant. Designated Accounts To be opened and maintained by the Issuer: 1. Disbursement Account ( DA ); 2. CA; 3. Operating Account ( OA ); 4. SFA; 5. Finance Service Reserve Account 1 ( FSRA-1 ); and 6. Finance Service Reserve Account 2 ( FSRA-2 ). To be opened and maintained by each of the Commercial Subsidiaries: 1. Commercial Subsidiaries Collection Account ( CSCA ); and 2. Commercial Subsidiaries Operating Account ( CSOA ). i) DA The purpose of the DA is to capture all proceeds raised from the issuance of the BAIS and funds from this account shall be utilized in the manner as set out in Paragraph (k) above. Any balances remaining after full utilization of the BAIS in the manner as set out in Paragraph (k) above shall be transferred into the CA. Utilization of funds from the DA for the purpose as set out in Paragraph (k) above is subject to the following: 1. Finance to Equity Ratio ( FER ) not exceeding 4.25 times; 2. Receipt by the Trustee a written confirmation from the external auditor of the Issuer stating that the FER will not be breached upon such utilization; and 3. No Event of Default (as described in Paragraph (x)(ii) above) has occurred, is continuing and has not been waived or will occur as a result of such utilization. The DA shall be operated solely by the Trustee. 18

19 ii) CA The purpose of the CA is to capture all income and proceeds received by the Issuer from, but not limited to the following: 1. Dividend payment and/or management fees from all its Commercial Subsidiaries; 2. Dividend payment and/or management fees from all its associate companies which are created for the purpose of commercial benefit to MITP (hereinafter referred to as Commercial Associate Companies ); 3. All other revenue, advances and proceeds received and/or generated by the Issuer; 4. All profits earned from the cash deposits in the DA, SFA, FSRA-1 and FSRA-2; 5. All relevant insurance claims; 6. All monies due and payable by LKIM to the Issuer in the event of termination of the Concession Agreement; and 7. Collection by the Issuer on behalf of the Malaysian Government Authorities the tax/charges/fees imposed by the Malaysian Government ( Malaysian Government Revenue ). The above income and proceeds shall exclude the grants/soft loans received from the Malaysian Government for research and/or port facilities enhancements. All income and proceeds received by the Issuer in relation to item (1) to (6) above shall be paid in the following order of priority: 1. BAIS annual fees and expenses; 2. Profit servicing of the BAIS (SFA, FSRA-1 & FSRA-2); 3. Redemption of the BAIS (SFA); 4. Payment of operating expenses of the Issuer (OA); and 5. Declaration of dividends to the Issuer s holding company and payment of the Issuer s additional capital expenditure. For payment of annual BAIS fees and expenses, it shall be against invoices or such other documentary evidence received from the relevant parties relating to the said expenses. For declaration of dividends to the Issuer s holding company and payment of the Issuer s additional capital expenditure, it shall be based on the terms and conditions as described under Paragraph (z)(v)(viii) below. 19

20 As for income and proceeds received by the Issuer in relation to item (7) above, the amount to be remitted into the OA for payment of Malaysian Government Revenue to the Malaysian Government shall be against documentary evidence in form and substance acceptable to the Facility Agent/Trustee. The CA shall be operated solely by the Trustee. iii) OA The Trustee shall remit (as and when required) amounts from the CA into the OA for payment of the Issuer s operating expenses and for payment of Malaysian Government Revenue. In relation to payment of the Issuer s annual operating expenses, the said funds will be transferred from the CA into the OA on a monthly or quarterly basis based on an annual budget and subject to availability of funds in the CA. Payments from the OA shall be made as and when the expenses become due and payable. The annual budget is to be prepared by the Issuer and approved by the Trustee in consultation with the Facility Agent before the end of each financial year of the Issuer. In the event there are additional expenses arising during the budgeted year that was not provided for in the annual budget, the Issuer shall be entitled to submit to the Facility Agent for approval a supplementary budget to provide for such additional expenses of the Issuer. The additional expenses shall amount to no greater than twenty percent (20%) of the annual budget. Any shortfall in funds for payment of the Issuer s operating expenses shall be topped up by the Issuer. In relation to payment of Malaysian Government Revenue to the Malaysian Government, payments shall be made from the OA as and when the Malaysian Government Revenue becomes due and payable to the Malaysian Government. The OA shall be operated solely by the Issuer. iv) SFA Please refer to Sinking Fund Account in Clause 3.02 (l) above. 20

21 v) FSRA-1 The Issuer shall open FSRA-1 for the purpose of depositing and maintaining the minimum credit balance in the FSRA-1 equivalent to at least two (2) profit payments in respect of the BAIS issuance. The FSRA-1 shall be pre-funded from the issue proceeds of the BAIS issuance. The Issuer shall be required to top up the FSRA-1 to meet the minimum credit balance in the FSRA-1 if insufficient for whatsoever reason and any excess of the minimum credit balance in the FSRA-1 shall be transferred into the CA. The funds in the FSRA-1 shall be utilized only in the event that there is a shortfall of funds to be remitted into the SFA from the CA in relation to profit payment that is due and payable. Any amount withdrawn from the FSRA-1 shall be replenished within one (1) month of such withdrawal to meet the minimum credit balance. The FSRA-1 shall be operated solely by the Trustee. vi) FSRA-2 The Issuer shall open a FSRA-2 for the purpose of depositing and maintaining the minimum credit balance in the FSRA-2 equivalent to all profit payment due and payable during the construction period. The FSRA-2 shall be pre-funded with the total amount of profit payment during the construction period from the issue proceeds of the BAIS issuance. The Issuer shall be required to top up the FSRA-2 to meet the minimum credit balance in the FSRA-2 if insufficient for whatsoever reason and any excess of the minimum credit balance in the FSRA-2 shall be transferred into the CA. The funds in the FSRA-2 shall be utilized only for profit payments during the construction period and shall be remitted to the SFA as and when the amount is due and payable. Any shortfall of funds in the FSRA-2 shall be topped up by the Issuer within one (1) month prior to the profit payment due date. The FSRA-2 shall be operated solely by the Trustee. 21

22 vii) CSCA The purpose of the CSCA is to capture all income and proceeds received by the respective Commercial Subsidiaries including collection on behalf of the Malaysian Government, the Malaysian Government Revenue (if any). However, the above income and proceeds shall exclude the grants/soft loans received from the Malaysian Government for research and/or port facilities enhancements. Application of the funds in each CSCA shall be in the following order of priority: 1. Payment of the respective Commercial Subsidiaries operating expenses and the Malaysian Government Revenue which shall be remitted into the respective CSOA; and 2. Payment of management fees and/or dividends to the Commercial Subsidiaries shareholders. In the event the Commercial Subsidiary is not a wholly-owned subsidiary of the Issuer, payment of management fees and/or dividends to the Issuer and the Commercial Subsidiary s other shareholders shall be in accordance to the agreed profit sharing ratio and/or shareholding of the shareholders of the said Commercial Subsidiary. For item (1) above, payment of the Malaysian Government Revenue into the CSOA shall be against the documentary evidence in form and substance acceptable to the Facility Agent/Trustee. For item (2) above, in relation to payment of management fees and/or dividends to the Issuer, the amount payable shall be remitted into the CA. In relation to payment of management fees and/or dividends to the Commercial Subsidiaries other shareholders (if the Commercial Subsidiary is not a wholly-owned subsidiary of the Issuer), the amount payable shall be remitted into an account as the respective Commercial Subsidiaries other shareholders may instruct ( Payment Instructions ) and payment shall be effected within seven (7) business days from the date of receipt by the Trustee all supporting documentary evidence by the management of the Commercial Subsidiaries including the Payment Instructions, in the form and substance acceptable to the Trustee. The CSCA shall be operated by the Trustee. 22

23 viii) CSOA The Trustee shall remit (as and when required) amounts from the CSCA into the CSOA for payment of the Commercial Subsidiaries operating expenses and for payment of Malaysian Government Revenue. In relation to payment of the Commercial Subsidiaries annual operating expenses, the said funds will be transferred from the CSCA into the CSOA on a monthly or quarterly basis based on an annual budget and subject to availability of funds in the CSCA. Payments from the CSOA shall be made as and when the expenses become due and payable. The annual budget is to be prepared by the respective Commercial Subsidiaries and approved by the Trustee in consultation with the Facility Agent before the end of each financial year of the Commercial Subsidiaries. In the event there are additional expenses arising during the budgeted year that was not provided for in the annual budget, the Commercial Subsidiaries shall be entitled to submit to the Facility Agent for approval a supplementary budget to provide for such additional expenses of the Commercial Subsidiaries. The additional expenses shall amount to no greater than twenty percent (20%) of the annual budget. Any shortfall in funds for payment of the Commercial Subsidiaries operating expenses shall be topped up by the respective Commercial Subsidiaries. In relation to payment of Malaysian Government Revenue to the Malaysian Government, payments shall be made from the CSOA as and when the Malaysian Government Revenue becomes due and payable to the Malaysian Government. The CSOA shall be operated solely by the respective Commercial Subsidiaries. ii) Redemption Unless previously redeemed, purchased or cancelled, the BAIS will be redeemed at nominal value on the respective maturity dates. The Issuer may at any time purchase the BAIS in the open market at any price by private treaty for redemption purposes. 23

24 iii) Permitted Investments The Issuer and/or the Commercial Subsidiaries shall be permitted from time to time to utilize funds held in their respective Designated Accounts to make Permitted Investments, provided that such funds utilized for Permitted Investments shall be remitted to the corresponding Designated Account in a timely manner to meet any payment obligations of the Issuer when due and payable. The Permitted Investments shall have a maturity date to match the utilization of the proceeds, denominated in Ringgit Malaysia and must be Syariah compliant. Upon maturity, the proceeds (i.e. principal plus profit) shall be remitted to the corresponding Designated Accounts. Permitted Investments shall mean: i) deposits in profit bearing accounts and negotiable certificates of deposits issued by licensed banking and financial institutions; and ii) bonds, treasury bills or financial instruments issued by the Government. iv) Positive Covenants The Positive Covenants will comprise those as required under the Guidelines on the Minimum Contents Requirements for Trust Deeds issued by the SC dated 1 July 2000 and the SCA and such covenants as may be deemed standard for a facility of this nature or as may be advised by the Solicitors. The Issuer covenants and undertakes inter alia, with the Trustee and the Primary Subscribers that until all its liabilities and obligations under the BAIS Facility has been discharged, the Issuer will, amongst others: i) use its reasonable diligence to carry on and conduct its affairs in a proper and efficient manner which should ensure, amongst others, that all necessary approvals or relevant licenses are obtained and/or being obtained; ii) make available to the Facility Agent, Trustee and/or an auditor appointed by the Trustee for their respective inspection the whole of the accounting or other records of the Issuer and give them such information as they may reasonably require with respect to all matters relating to the accounting records of the Issuer; 24

25 iii) it shall provide to the Trustee annually at the end of its financial year, a certificate that the Issuer has complied with its obligations under the trust deed and the terms and conditions of the BAIS Facility and that there did not exist or had existed, from the date of the first issuance of the BAIS or the date of the previous certificate as the case may be, any Event of Default and if such is not the case, to specify the same; iv) obtain, preserve and keep in full force and effect all necessary licenses and approvals; v) maintain or cause to be maintained such insurance in respect of its assets and its business against all risk in accordance with industry practice; vi) cause all advances made or to be made hereafter by its shareholders and directors to be subordinated to its liabilities to the BAIS Facility; vii) notify the Facility Agent/Trustee on the creation of all subsidiaries, whether the said subsidiaries are Commercial Subsidiaries or are created for other purposes; viii) cause all its Commercial Subsidiaries, as and when they are created, to execute management contracts wherein all the said Commercial Subsidiaries shall pay management fees and/or dividends (at least once a year when possible) directly into the CA; ix) notify the Facility Agent/Trustee on the creation of all associate companies, whether the said associate companies are Commercial Associate Companies or are created for other purposes; x) ensure that there will be a dividend policy implemented by all its Commercial Associate Companies, as and when they are created wherein all the said Commercial Associate Companies shall declare dividends (at least semi-annually when possible) amounting to not less than fifty-percent (50%) of profit after tax; xi) ensure that the management fees and/or dividends to be collected from all its Commercial Subsidiaries and Commercial Associate Companies along with its own income collectively are sufficient to meet its financial obligations in relation to the BAIS Facility; and 25

26 xii) ensure that the Joint Lead Arrangers shall at all times during the tenure of the BAIS Facility have the first right of refusal for the Issuer to undertake any Initial Public Offering exercise or such other corporate/fund raising exercise to refinance the existing BAIS Facility. v) Negative Covenants The Negative Covenants will comprise those as required under the Guidelines on the Minimum Contents Requirements for Trust Deeds issued by the SC dated 1 July 2000 and the SCA and such covenants as may be deemed standard for a facility of this nature or as may be advised by the Solicitors. The Issuer covenants and undertakes inter-alia, with the Trustee and the Primary Subscribers that, from the signing of the Issue Documents of the BAIS until all its liabilities and obligations hereunder and under the BAIS have been discharged, the Issuer will not without prior written consent of the Trustee and instruction of the BAIS holders pursuant to an extraordinary resolution: i) amend its Memorandum and Articles of Association in a manner that is inconsistent with the provision of the Issue Documents, save and except to comply with the rules, regulations or guidelines of the relevant authorities and where such amendments that are, in the opinion of the Trustee, not prejudicial to the interests of the Primary Subscribers; ii) iii) substantially change the nature of its present business; reduce the nominal value and the total amount of its authorised, issued and paid-up share capital; iv) dispose of major assets that contribute substantially to its revenue unless in the ordinary course of business and on arms length basis or which are either obsolete or worn out; v) make any advances or loans to any persons or provide guarantees to secure advances or loans for the benefit of any shareholders, affiliates or related corporation of the Issuer (other than normal trade credits or temporary loans to staff, customers, contractors or suppliers in the ordinary course of business and other than those provided for the benefit of its subsidiaries); 26

27 vi) create, incur, assume, suffer or permit to exist over all or any part of the Issuer s business or assets, both present or future, any security interest save and except: a) statutory lien and/or any security interest arising in the ordinary course of business or by operation of law; or b) any existing security interest which the Issuer has disclosed in writing pursuant to a disclosure letter addressed and delivered to the Trustee prior to or on the date of the execution of the Issue Documents; or c) any security interest which has been permitted with the consents of all persons to whom the Issuer has now or hereafter or from time to time provided a Negative Pledge. vii) create, incur, assume, guarantee or permit to exist any indebtedness except for existing banking facilities or: a) any indebtedness arising from the BAIS Facility; and b) any indebtedness arising in the ordinary course of business provided that the FER will not exceed 4.25 times. viii) declare any dividend on share capital or make or incur any additional capital expenditure if: a) the FSCR will be less than 2.00 times after such dividends are declared or additional capital expenditure incurred; b) the Financial Covenants are breached, or after such dividends are declared or additional capital expenditure incurred, they would be breached; and c) an event of default has occurred, is continuing and has not been waived, or after such dividends are declared or additional capital expenditure incurred, an event of default would occur. vi) Financial Covenants i) maintain a Finance Service Cover Ratio ( FSCR ) of not less than 1.75 times at all times throughout the tenure of the BAIS Facility commencing from the date of issuance of the BAIS; ii) maintain a Finance to Equity Ratio ( FER ) of not more than 4.25 times at all times throughout the tenure of the BAIS Facility commencing from the date of issuance of the BAIS; 27

28 The following financial covenants below shall be calculated at the end of each financial year of its financial statements: i) Finance Service Cover Ratio ( FSCR ): Defined as the ratio of the Issuer s cash and bank balances at the beginning of the financial year and the Issuer s net cash flow at the end of the financial year (excluding the total finance service obligations) for the relevant financial year to the Issuer s total finance service obligations in the corresponding financial year. The total finance service obligations refer to the aggregate of: a) all principal and profit paid by the Issuer under the BAIS Facility; and b) net repayment of short term banking facilities (for working capital purposes), both conventional and Islamic banking facilities, including but not limited to trade related bills, revolving credits and overdrafts; and c) all other principal and interest or profit paid for external borrowings and redeemable loan stocks excluding principal and interest or profit paid for trade finance facilities incurred in the ordinary course of business and grants/soft loans from the Malaysian Government for research and/or port facilities enhancements (if any). (For avoidance of doubt, the external borrowings to be categorized under item (c) shall cover both conventional and Islamic arrangements, secured and unsecured, but excluding those falling within item (a) and (b) above). Notwithstanding the above, the principal repayment under item (a) and (c) that is being repaid/refinanced by the BAIS and/or external borrowings shall be excluded from the computation of the total finance service obligations. 28

29 ii) Finance to Equity Ratio ( FER ): Defined as the ratio of indebtedness of the Issuer represented by: a) all amounts outstanding under the BAIS Facility (less balances standing to the credit of the Designated Accounts excluding (i) the OA, (ii) the CSCA, (iii) the CSOA and (iv) the Malaysian Government Revenue in the CA); and b) all other outstanding external borrowings, both conventional and Islamic financing, secured and unsecured excluding trade finance facilities incurred in the ordinary course of business and grants/soft loans from the Malaysian Government for research and/or port facilities enhancements (if any); and c) all outstanding redeemable loan stocks, secured and unsecured. to the aggregate of the Issuer s shareholders funds plus loan stocks (that are irredeemable and convertible) plus loans/advances from shareholders/directors that is subordinated to the BAIS Facility. vii) Compensation For Late & Default Payment(s) ( Ta widh ) viii) Incidental Expenses & Legal Fees In the event of any overdue payment(s) or defaulted payment(s) on any amounts due under the Issue Documents, the Issuer shall pay to the BAIS holders the compensation on such overdue amount or defaulted payment(s) at a rate and manner as prescribed by the SC s SAC or such other relevant Syariah authority from time to time. All legal and professional fees including such cost relating to the due diligence exercise, stamp duties, taxes, SC Submission Fees and any other out-of-pocket expenses incurred pursuant to the Issuer s acceptance of the BAIS Facility and for purposes of preparation/submission of any information memorandum and the preparation of security documentation (notwithstanding nonutilization of the BAIS Facility by the Issuer) shall be borne by the Issuer. All costs and expenses incurred by the Joint Lead Arrangers/Trustee/ Security Trustee for and on behalf of the Issuer including legal costs on Solicitor/client basis in enforcing any term or condition or in obtaining payment of any sum due and payable or any cost and expenses in relation to quit rent, assessments and insurances, etc. shall be for the account of the Issuer. 29

30 ix) Taxation All payments under the BAIS Facility shall be made free and clear of all present and future withholdings or other deductions other than those imposed by the Malaysian Government or tax authority thereon. Unless such withholdings or deductions is required by law, the Issuer shall be required to gross up in connection with such withholdings and deductions save and except that the Issuer will not be liable to gross up for any withholding and/or additional tax payable by any BAIS holder (A) who is a non-resident (other than financial institutions and other institutions which come within the jurisdiction of the Labuan Offshore Financial Services Advisory) or (B) where such payment is on the BAIS holder s overall net income and in any of such instance, any withholding and/or additional tax payable shall be borne by the BAIS holder. x) Adverse Market Should there occur a material adverse change in the opinion of the Joint Lead Arrangers in the business condition (financial or otherwise) of the Issuer and/or the economic, social and political situation in Malaysia including but not limited to the adversities in the domestic or international financial market prior to the launch, offering and/or distribution of the BAIS, the Joint Lead Arrangers reserves the right to withdraw, cancel, terminate and/or restructure the arrangement of the BAIS. xi) Clear Market xii) Change in Circumstances xiii) Currency From the date of the appointment of the Joint Lead Arrangers to the date falling thirty (30) days after the issuance of the BAIS, the Issuer will ensure that no other borrowings or securities issued or guaranteed by the Issuer or any of their subsidiaries or affiliates are either placed or syndicated, directly or on its behalf, in any manner which might, in the sole opinion of the Joint Lead Arrangers, have a detrimental effect on the successful placement of the BAIS. If as a result of any change in applicable law, regulation or regulatory requirement or in the interpretation or application thereof or if compliance by the Joint Lead Arrangers for the BAIS with any applicable direction, request or requirement (whether or not having the force of law) will impose on the Joint Lead Arrangers any material condition burden or obligation then the commitment of the Joint Lead Arrangers to the BAIS will end upon notice to the Issuer of the happening of such events after becoming aware thereof. Ringgit Malaysia. 30