JOINT VENTURE AGREEMENT ENTERED INTO BETWEEN E&J BUILDERS SDN BHD, A WHOLLY- OWNED SUBSIDIARY OF M-MODE, AND REXALLENT CONSTRUCTION SDN BHD

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1 1. INTRODUCTION Pursuant to Paragraph 9.03 of Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors of M-MODE wishes to announce that E&J Builders Sdn Bhd ( EJBSB ), a wholly-owned subsidiary of the Company has on 26 May 2017 entered into a Joint Venture Agreement ( the JV Agreement ) with Rexallent Construction Sdn Bhd ( RCSB ) [hereinafter referred to as Party or Parties ] to form an exclusive unincorporated joint-venture ( JV ) business relationship for the sole purpose of undertaking and completing the remaining of construction of a proposed development identified as H2O Cadangan Pembangunan bercampur yang mengandungi 3 blok pangsapuri perkhidmatan 15 tingkat (877 unit), 1 blok soho 15 tingkat (480 unit) dan 1 tingkat rumah kelab di atas 7 tingkat podium yang mengandungi 7 tingkat tempat letak kenderaan berserta 1 tingkat kedai (2 unit), 2 tingkat kedai (5 unit), 6 unit kedai mampu milik dan kemudahan di atas Lot (no. lot lama PT1424), Jalan PJU 1A/3, Ara Damansara, Mukim Damansara, Daerah Petaling, Selangor Darul Ehsan untuk tetuan EPOCH PROPERTY SDN BHD [ the Project ] for a contract sum of RM180,000, only (excluding 6% GST and any additional or variation works) [ the Contract Sum ]. Titijaya PMC Sdn Bhd ( PMC ) has been appointed by Epoch Property Sdn Bhd ( the Developer ) as the Project Management Company of the Project. On 22 May 2015, RCSB was appointed by PMC as its main contractor for the Project for a total sum of RM327,051, only, inclusive of the Contingencies Sum of RM3,000, only and 6% Goods and Services Tax ( GST ) and further subject to the terms and conditions therein. 2. INFORMATION OF REXALLENT CONSTRUCTION SDN BHD ( RCSB ) RCSB was incorporated on 26 March 2013 as a private limited company under the Companies Act, The share capital of RCSB is RM750, and the number of ordinary shares is 750,000. RCSB is principally engaged in carrying the business as construction works of any kind and property development. The directors of RCSB are Chan Peng Kooh, Ang Lin Chu and Fong Tuck Yong. Page 1 of 7

2 The shareholders of RCSB and their respective shareholdings are as follows: Name of shareholders No. of RCSB shares % Chan Peng Kooh 375, Tan Kian Tan Kim 375, Total 750, THE SALIENT TERMS AND/OR FEATURES OF JV AGREEMENT The salient terms and conditions of the JV Agreement are as follows:- 3.1 EJBSB undertakes to be responsible for the overall project management of the Project using all its technical expertise and resources and so as to comply (wherever possible) with the terms and conditions of the Letter of Award from PMC to RCSB dated 20 May 2015 for the Project ( Letter of Award ) and any other document forming the contractual content of the Project commencing from the 1 June, 2017 [ Cut-Off Date ]. The salient terms of Letter of Award are as follows:- (i) The contract sum is RM327,051, (inclusive of the Contingencies Sum of RM3,000, only and 6% GST); (ii) The date of commencement for the works shall be 22 May 2015 ( Commencement Date ); (iii) The works shall be completed based on the construction period of twentyseven (27) months from the Commencement Date and the date of completion shall be 21 August 2017 ( Completion Date ); (iv) A liquidated damage at the rate of RM100,000 per calendar day shall be imposed if fail to complete the works by the stipulated Completion Date or such extended date as provided for under the contract; and (v) Defects liability period shall be twenty-four (24) months commencing from date of Certificate of Completion issued for the Project or until all apparent defects found are made good to the satisfaction and acceptance of the Developer and architect, whichever is later. 3.2 EJBSB shall also be solely responsible to finance the capital and expenses for the construction and completion of the Project, commencing from the Cut-Off Date, including but not limited to the following:- (i) Cost of materials, labour, professional expertise, equipment, machinery and so forth; and Page 2 of 7

3 (ii) The requisite Performance Bond (as defined below) and insurances (if applicable). Additionally, EJBSB shall upon the execution of the JV Agreement shall provide RCSB a performance bond in the form of a bank guarantee or any other form to be agreed by both parties amounting to RM9,000, only as security for the due performance of all the covenants and undertakings and observance of all the terms and conditions of the JV Agreement (hereinafter referred to as the Performance Bond ) which shall be refunded free of interest to EJBSB upon the completion of the Project. 3.3 RCSB shall extend all assistance as may be required by EJBSB to liaise with the PMC, the Developer or any other authority or body that may be connected to the Project to ensure the Project is undertaken and implemented smoothly. 3.4 The Parties hereto acknowledge that the Letter of Award states that the Project works shall commence on the Commencement Date and shall be completed on the Completion Date. The Parties further acknowledge that it would not be possible to complete the Project by the Completion Date. 3.5 As such, RCSB shall ensure that the PMC and/or the Developer grants an extension of time up to 31 December 2018 (or such other period as may be acceptable to EJBSB) for the JV to complete the balance of the outstanding Project works in view of the approaching Completion Date of the Project. In the event no extension of time or an insufficient extension of time is granted by the PMC and/or the Developer to complete the Project, EJBSB shall have the option to terminate the JV Agreement. Further, RCSB shall be wholly responsible and liable for all delay incurred in respect of the Project works prior to the Cut-Off Date until the said works are completed satisfactorily, in particular but not limited to, the liquidated ascertained damages of RM100, only as imposed in the Letter of Award for each day s delay in completing the Project. 3.6 RCSB undertakes to carry out the Project in a timely and workmanlike manner in accordance with the terms of the Letter of Award and the instructions and directions of EJBSB. 3.7 RCSB reserves the rights to propose reliable consultants, subcontractors and suppliers for the Project provided that priority and preference is given to reasonable pricing/cost, quality, reliability and other business related factors. However, EJBSB shall have the absolute right to accept or decline the appointment of the parties proposed by RCSB as well as to appoint suitably qualified parties. Page 3 of 7

4 3.8 The Parties hereby agree that:- (i) all monies invested or advanced by each party to the Joint Venture or in connection with the Project shall remain the sole property and belong beneficially to the said party; Termination (ii) the rights to all the other assets (apart from those stated in Clause 3.8 (i)) needed to undertake the activities of the arrangement commencing from the Cut-Off Date are shared by the Parties equally; (iii) the Parties have several and joint responsibility for all operating and financial obligations for the liabilities relating to the activities of the arrangement equally; and (iv) any and all profit and loss arising from the Project, specifically, all revenue and expenses in connection with the Project, commencing from the Cut-Off Date shall be shared by the Parties equally. 3.9 The JV Agreement shall continue in full force and effect until terminated in accordance with the provisions of the Termination clause Either of the Parties to the JV Agreement shall be entitled to terminate the JV Agreement immediately by notice in writing to the other Party [(but not after ninety (90) days of the event in question first coming to the attention of the Party entitled to give the notice)] if any of the events set out below shall occur: where both Parties mutually agree to terminate the JV Agreement; or if any Party shall commit any material breach of any of its obligations under the JV Agreement and shall fail to remedy such breach (if capable of remedy) within thirty (30) days after being given notice by the other Party to do so; or if any Party (being a company) shall go into liquidation whether compulsory or voluntary (except for the purposes of a bona fide reconstruction or amalgamation with the consent of the other Party, such consent not be unreasonably withheld) or if the said Party shall have an administrator appointed or if a receiver administrator or manager shall be appointed over any of the assets or undertaking of the said party; or Page 4 of 7

5 Where any or both of EJBSB s key directors, namely Ong Chee Koen and Yap Nam Fee cease to be executive directors of EJBSB prior to completion of the Project, or if there shall be any change in the control or Management of EJBSB. 4. THE RATIONALE FOR THE VENTURE M-Mode and its subsidiaries ( the Group ) intends to diversify its income stream and prevent over reliance on a single stream of income i.e. provision of mobile contents and data application services. The Group believes that the Project would contribute positively to the future earnings of M-Mode Group and improve the financial position of M-Mode Group via additional revenue and earnings contribution from the Project. The Board believes that the Group has the capacity, capabilities and resources to diversify into the construction business after taking into consideration the competency and experience of the executive directors of the Company, whom the Board deems to be the main key management personnel and instrumental in the Group s new venture into the construction industry. The executive directors of EJBSB have been involved in the engineering, surveyors, subcontractors and other consultancy works. 5. THE TOTAL CAPITAL AND INVESTMENT OUTLAY IN THE VENTURE The investment outlay required to carry out the Project is approximately RM12,000,000 (inclusive of Performance Bond). 6. SOURCES OF FUNDING M-MODE intends to finance the Project via internally generated funds and/or bank borrowings. The exact breakdown of funds will be determined by the management of M- MODE at a later date. 7. THE FINANCIAL IMPACT OF THE JOINT VENTURE ON THE COMPANY Net assets ( NA ) and gearing The JV Agreement is not expected to have any material effect on the earnings per share, net assets per share and gearing of the Group for the financial period ending 31 May Page 5 of 7

6 Notwithstanding that, the Board envisages that the JV Agreement will potentially improve the NA share of the M-Mode Group for the forthcoming financial years over the duration of the JV Agreement up to 31 December The effect of gearing on M-MODE Group cannot be determined at this juncture as the Group is unable to determine the breakdown of the sources of funding for the Project. Earnings and Earnings per share ( EPS ) The Board envisages that the JV Agreement is expected to contribute positively to the overall earnings as well as the EPS of the M-Mode Group over the duration of the JV Agreement. 8. A DESCRIPTION OF THE PROSPECTS AND RISK FACTORS INVOLVED IN UNDERTAKING THE VENTURE. The risks associated with the JV Agreement are mainly operational risks, inter-alia, inefficiency of operations and competition, as well as subject to challenges and risks arising from the property construction business. Notwithstanding this, the Board is confident that the competency and experiences of the executive director of EJBSB, namely Mr Ong Chee Koen (who is also an Executive Director of M-Mode) and Mr Yap Nam Fee in the property construction industry for more than 30 years, supported by the new team to be appointed equipped with the relevant experiences and expertise in the construction and project management, the associated risks could be minimised. The Project, upon commencement, will be subject to market risk, industry risk and also economy risk which may affect the property construction industry. Nevertheless, M- MODE Group believes that since the Project is in a strategic location, it will be able to mitigate the said risks. 9. THE CURRENT STAGE OF DEVELOPMENT OR OPERATIONS OF THE JOINT VENTURE AND THE EXPECTED DATE OF COMPLETION OF THE PROJECT. The estimated percentage of completion of the Project as of 31 May 2017 is approximately 50.12% and the Project is expected to be completed by 31 December DIRECTORS STATEMENT The Directors of M-MODE are of the opinion that the terms of the JV Agreement are fair and reasonable and that the JV is in the best interest of the Company. Page 6 of 7

7 11. DIRECTORS AND MAJOR SHAREHOLDERS INTEREST None of the Directors and Major Shareholders of M-MODE and/or persons connected with them has any interest, direct or indirect, in the JV. 12. APPROVALS The JV is not subject to the approval of the shareholders of M-MODE and/ or any regulatory authorities. 13. DOCUMENTS FOR INSPECTION The JV Agreement and the Letter of Award are available for inspection at the registered office of M-MODE at Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, Kuala Lumpur during normal office hours from Monday to Friday (except public holidays) for a duration of three (3) months from the date of this announcement. Page 7 of 7

SPRING GALLERY BERHAD ( SGB OR THE COMPANY ) AND ITS SUBSIDIARIES ( SGB GROUP )

SPRING GALLERY BERHAD ( SGB OR THE COMPANY ) AND ITS SUBSIDIARIES ( SGB GROUP ) MANAGING CONTRACTOR AGREEMENT BETWEEN PRINSIP NUSANTARA SDN BHD ( PNSB ) AND PROFIT SUNLAND SDN BHD ( PSSB ), A WHOLLY OWNED