1. Issuer : Sutera Harbour Holdings Sdn Bhd (formerly known as Etika Raya Sdn Bhd) (Company No. : T) ( SHHoldings )

Transcription

1 PRINCIPAL TERMS AND CONDITIONS RM MILLION NOMINAL VALUE REDEEMABLE CONVERTIBLE SECURED LOAN STOCKS ( RCSLS ) & REDEEMABLE SECURED LOAN STOCKS ( RSLS ) This summary is provided for ease of reference only and is subject in all respects to the terms and conditions of formal documentation to be entered into in connection with the Redeemable Convertible Secured Loan Stocks ( RCSLS ) and Redeemable Secured Loan Stocks ( RSLS ) and the approvals from the relevant authorities. 1. Issuer : Sutera Harbour Holdings Sdn Bhd (formerly known as Etika Raya Sdn Bhd) (Company No. : T) ( SHHoldings ) 2. Issue : Redeemable Convertible Secured Loan Stocks (A) ( RCSLS(A) ); Redeemable Convertible Secured Loan Stocks (B) Tier 1 ( RCSLS(B) Tier 1 ); (iii) Redeemable Convertible Secured Loan Stocks (B) Tier 2 ( RCSLS(B) Tier 2 ) (RCSLS(A), RCSLS(B) Tier 1 and RCSLS(B) Tier 2 shall collectively be referred to as RCSLS ); (iv) Redeemable Secured Loan Stocks (A) - Tier 1 ( RSLS(A) - Tier 1 ); (v) Redeemable Secured Loan Stocks (B) - Tier1 ( RSLS(B) - Tier 1); (vi) Redeemable Secured Loan Stocks (B) Tier 2 ( RSLS(B) Tier 2 ); (RSLS(A) - Tier 1, RSLS(B) Tier 1 and RSLS (B) - Tier 2 shall collectively be referred to as RSLS(A) and (B) ); and (vii) Redeemable Secured Loan Stocks - Tier 3 ( RSLS - Tier 3 ) (RSLS(A) and (B) and RSLS Tier 3 shall collectively be referred to as RSLS ) 3. Total Nominal Amount to be Issued : Up to RM845,787,000 of RCSLS and RSLS comprising of the following:- RCSLS (A) of up to RM351,731,000 RCSLS (B) Tier 1of up to RM49,185,000 RCSLS (B) Tier 2 of up to RM 27,993,000 RSLS (A) - Tier 1 of up to RM189,395,000 RSLS (B) - Tier 1 of up to RM49,185,000 RSLS (B) Tier 2 of up to RM 27,993,000 RSLS - Tier 3 of up to RM150,305, Issue Price : 100% of the nominal value of the RCSLS and RSLS respectively. 5. Nominal Value : RM1.00 per RCSLS and RM1.00 per RSLS. 6. Tenure : 8 years from the date of issue. 7. Coupon : 2.0% per annum for year 1 and year 2; and 4% per annum for year 3 onwards until maturity 1

2 Coupons for year 1 shall be paid within 3 business days from the date of issue of the RM180.0 Million Nominal Value Redeemable Secured Bonds ( the Bonds ) to be issued by Sutera Harbour Resort Sdn Bhd ( SHRSB ) from proceeds of the Bonds, while coupons for year 2 up to year 5 (both years inclusive) may be cumulative and payable in year 6. Coupons for year 6 thereafter until maturity shall be payable in the respective years. The coupons will be paid annually in arrears and will be calculated based on 365 days on the amount of RCSLS and RSLS outstanding on such book closure date. 8. Redemption : Redeemable at anytime during the Tenure at the option of SHHoldings but no later than the date of maturity. The redemption price shall be calculated as follows:- Redemption during Redemption for RM1.00 RCSLS/ RSLS Net Yield First year % Second year % Third year % Fourth year % Fifth year % Sixth year % Seven year % Eight year % Provided always in the event of early redemption, any unpaid interest accumulated on the RCSLS and RSLS up to each early redemption date shall be paid by SHHoldings on each early redemption date. The redemption will be made in accordance with the following priority:- RCSLS(A) and RCSLS(B) Tier 1; RCSLS(B) Tier 2 (iii) RSLS(A) Tier 1 and RSLS(B) - Tier 1 (iv) RSLS(B) - Tier 2; and (v) RSLS Tier 3 Subject to the priority set out above and paragraph 15 below, the RCSLS and RSLS shall be redeemed on a pro rata basis among the outstanding RCSLS and RSLS. The redemption amount will be such amount that will cause the RCSLS and RSLS holders, taking into account the Issue Price and the aggregate coupon paid up to the redemption date, to benefit from a net yield as set out in the table above, commencing from the date of the issue of the RCSLS and RSLS to the redemption date. 9. Form and Denomination : The RCSLS and the RSLS shall be issued in accordance with (1) the Code of Conduct and Market Practices for the Malaysian Corporate Bond Market issued by the Institut Peniaga Bon Malaysia and approved by BNM, and (2) the Code of Conduct and Market Practices for Malaysian Scripless Securities Market under the Real Time Electronic Transfer of Funds and Securities ( RENTAS ) System issued by BNM, and (3) the rules on the Fully Automated System for 2

3 Tendering ( FAST ) issued by BNM or their replacement thereof (collectively the Code of Conduct ) applicable from time to time. Each of the RCSLS (A), RCSLS (B) Tier 1, RCSLS (B) Tier 2, RSLS (A) - Tier 1, RSLS (B) Tier 2, RSLS (B) - Tier 1 and RSLS - Tier 3 shall be represented by a Global Certificate to be deposited with BNM and is exchangeable for definitive bearer form only in certain limited circumstances. The RCSLS and RSLS will be in registered form and in denomination of RM1, each. 10. Central Depository : Bank Negara Malaysia ( BNM ) 11. Strategic Investor : In the event a Strategic Investor shall be desirous of acquiring equity interest in SHHoldings, the shareholders of SHHoldings shall cause the Strategic Investor to make an offer to the holders of the RCSLS to acquire the RCSLS (on a proportionate basis) based on the pricing outlined in the Redemption Table under paragraph 8 provided that the approval of the Securities Commission or such other authority having jurisdiction over SHHoldings shall have been obtained. 12. Conversion : The RCSLS is convertible into ordinary shares of SHHoldings upon the occurrence of any of the following events:- the listing of SHHoldings ( IPO Exercise ); or the Strategic Investor has purchased the RCSLS and agreed with the shareholders of SHHoldings as to the Conversion Price. 13 Conversion Price : In the event that the IPO Exercise is to be carried out, the RCSLS holders shall be required to exercise their conversion rights once all the relevant approvals and conditions precedent required to be fulfilled for the carrying out of the IPO Exercise have been obtained at the conversion price which is fixed at a 15% discount from the proposed initial public offering price to be determined at that point in time. Provided That in the event the conversion thereof would trigger a mandatory general offer for any RCSLS holder (other than the Strategic Investor) in accordance with the Malaysian Code on Takeovers and Mergers 1998, that RCSLS holder shall seek a waiver from the Securities Commission to undertake a mandatory general offer, failing which SHHoldings shall redeem such amount of the RCSLS from that RCSLS holder so that the RCSLS holder would not trigger the mandatory general offer pursuant to the conversion. The conversion amount into ordinary shares of SHHoldings will be based on the Conversion Price Provided That in the event that the Strategic Investor is to be the holder of the RCSLS, the Conversion Price shall be based on the agreed price between the Strategic Investor and the shareholders of SHHoldings. 14 Status of New Shares : The new shares to be issued upon the conversion of the RCSLS shall rank pari passu in all respect with the then existing ordinary shares of SHHoldings except that they will not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which precedes the relevant conversion date of the RCSLS. 3

4 15 Security : RCSLS (A), RCSLS (B) Tier 1, RCSLS (B) Tier 2, RSLS (A) - Tier 1, RSLS (B) - Tier 1, RSLS (B) Tier 2 and RSLS Tier 3 shall each be secured against the following securities :- Loan Stocks & Security RCSLS (A) Legal charge over ASPB Property and ESSB Property (b) RSLS (A) - Tier 1 Legal charge over APSB Property and ESSB Property (c) RCSLS (B) Tier 1 Legal charge over SHGCC Property (which shall rank in priority to the legal charges referred to in paragraphs 15(e), (f) and (g) below and the SHGCC Third Charge) (d) RSLS (B)-Tier 1 Legal charge over SHGCC Property (which shall rank in priority to the legal charges referred to in paragraphs 15(e), (f) and (g) below and the SHGCC Third Charge) (e) RCSLS (B) Tier 2 Legal charge over SHGCC Property (which shall rank after the legal charges referred to in paragraphs 15(c) and (d) above but in priority to the SHGCC Third Charge and the legal charge referred to in paragraph 15(g) below to be created over the SHGCC Property) (f) RSLS (B)-Tier 2 Legal charge over SHGCC Property (which shall rank after the legal charges referred to in paragraphs 15(c) and (d) above but in priority to the SHGCC Third Charge and the legal charge referred to in paragraph 15(g) below to be created over the SHGCC Property) (g) RSLS - Tier 3 Legal charges over APSB Property and ESSB Property (which shall rank after the legal charges referred to in paragraphs 15 and (b) and ranking pari passu with the legal charges over the APSB Property and ESSB Property to be created as security for the Bonds) and legal charge SHGCC Property (which shall rank after the legal charges referred to in paragraphs 15(c), (d), (e) and (f) above and the SHGCC Third Charge and ranking pari passu with the legal charge over the SHGCC Property to be created as security for the Bonds) (h) RCSLS (A), RCSLS (B) Tier 1, RCSLS (B) Tier 2, RSLS (A) - Tier 1, 4

5 RSLS (B)-Tier 1, RSLS (B)-Tier 2, and RSLS - Tier 3 Assignment of Debt Service Reserve Account II for the purpose set out in paragraph 16 below MBB undertakes not to exercise its rights under the SHGCC Third Charge created pursuant to the MBB PHSB Loan, at any time prior to the redemption of the Bonds unless an Event of Default is declared pursuant to the trust deed for the Bonds. A letter of disclaimer shall be issued by the respective trustees of the RCSLS and RSLS and the Bonds in favour of Profound Heritage Sdn Bhd ( PHSB ) whereby the trustees agree to disclaim their rights, interests and benefit over the piece of land measuring approximately acres together with the generation plant erected on the SHGCC Property ( Excluded Area ) and agree that in the event of any action taken by any of the aforesaid trustees to obtain an order for sale pursuant to the charge in its favour, it would apply for the sale of the SHGCC Property to be made subject to the PHSB's interests in the Excluded Area and it would to ensure that PHSB's interests in the Excluded Area would be fully disclosed in such foreclosure proceedings, upon terms and conditions acceptable to the parties thereto. 16 Covenant to deposit monies into DSRA II : To deposit Excess Cashflow (i.e. after full repayment of the bridging loans or such other loans or financing obtained by SGSB, ISB or LPSB, as the case may be, for financing the development of the Sutera Heritage, Sutera Vista and Sutera Point respectively, the net cashflow accumulated in excess of other liabilities incurred in relation to or in connection with the development, promotion, marketing and/or management of Sutera Heritage, Sutera Vista or Sutera Point development respectively as are set out in the balance sheet of such companies) into the DSRA II within ten (10) Business Days after the adoption by their respective members in general meetings of the audited accounts of SGSB, ISB or LPSB, as the case may be; (b) Upon the full redemption of the Bonds or the balance in the debt service reserve account for the Bonds being sufficient to redeem the Bonds and service all interest payable thereon up to maturity, whichever shall first occur, SHHoldings shall, as soon as practicable after all relevant approvals have been obtained (where necessary), cause SHRSB to deposit into the Debt Service Reserve Account II the following:- any monies standing to the credit in the debt service reserve account for the Bonds after full redemption of the Bonds; and 26% of the revenues (net of 10% service charge and 5% Government tax or such other service charge or Government tax applicable from time to time) from APSB, ESSB and SHGCC; Revenues from APSB, ESSB and SHGCC (sales/operating revenues and club membership revenues) are credited to their respective revenue 5

6 accounts, and shall be remitted to the Debt Service Reserve Account II based on the above proportion, on a daily basis. The Debt Service Reserve Account II shall be operated solely by the trustee or such other person appointed by the trustee. Withdrawal from the Debt Service Reserve Account II may only be made towards payment of any moneys due and owing under the Financing Agreements and for purposes of Permitted Investments. Placement of such funds shall be in accordance with paragraph Right to make Permitted Investments : SHRSB shall be permitted from time to time to utilize funds held in the Debt Service Reserve Account II to make Permitted Investments, provided that such funds utilized for Permitted Investments shall be remitted to the Debt Service Reserve Account II in a timely manner to meet any payment obligations of SHRSB when due and payable and provided further that at least 50% of such funds shall be invested in the Permitted Investment as set out in sub-paragraph 17 herein. The trustee or such other person appointed by the trustee shall invest in accordance with the written instructions of SHRSB prior to the occurrence of any Event of Default. Upon maturity, the proceeds (i.e. principal and income) shall be remitted to the Debt Service Reserve Account II. Permitted Investments shall mean : (b) (c) deposits in income bearing accounts and negotiable certificates of deposits issued by licensed commercial banks and/or merchant banks having a minimum rating of AA3/P1 (as defined in the Banking and Financial Institutions Act 1989); or bonds, treasury bills or financial instruments issued by the Government; or other finance or capital market instruments of private entities having: a maturity date no later than the maturity of RCSLS and RSLS. After the redemption of RCSLS and RSLS, the maturity date of the instruments invested shall not be later than the maturity date of RCSLS and RSLS and all investments are denominated in Ringgit Malaysia; and in the case only of investments of the type referred to in paragraph (c), a minimum rating of AA3(bg)/P1(bg) (or its equivalent) as determined by Rating Agency Malaysia Berhad ( RAM ) or Malaysian Rating Corporation Berhad ( MARC ) or a recognised rating agency and the amount of investment allowed from the Debt Service Reserve Account II shall be limited to a maximum of 15% of the Debt Service Reserve Account II balance. In the event that such investment is downgraded to below 6

7 AA3(bg)/P1(bg), such investment shall be disposed within thirty (30) days upon the rating downgrade announcement. 18 Undertaking by Dato Ong Han Nam ( OHN ) : OHN shall undertake and covenant with the Trustee:- if any coupon payments in respect of any of the RCSLS and RSLS is due and owing and remains outstanding for year 2 or thereafter and notwithstanding that non-payment of the coupons referred to above is not an Event of Default under the trust deed for the RCSLS and/or RSLS, the trustee for the RCSLS and RSLS may (after having given OHN seven (7) days written notice of its intention to exercise its right of disposal) dispose up to forty nine percent (49%) of the issued and paid up share capital of SHHoldings ( SHHoldings Shares ) or its successor in title, held by FTHL and OHN to a strategic investor upon the terms and conditions as are set out in a memorandum of deposit of the SHHoldings Shares to be executed between FTHL and OHN and the said trustee, at a price determined to be within the market value by a firm of independent valuers to be appointed by the trustee for the RCSLS and RSLS at the instruction of the majority in number of the holders of each of the RCSLS and RSLS which together have more than 50% of the value of each of the RCSLS and RSLS outstanding ( Majority Loan Stock Holders ) Provided Always That the aggregate disposal of the SHHoldings Shares shall not result in OHN s shareholding, direct and/or indirect, in SHHoldings to be less than 51% of the total issued and paid up share capital of SHHoldings at any point of time. All the proceeds arising from such sale or disposal shall be deemed to be an advance by OHN to SHHoldings as a subordinated shareholder s advance by OHN to SHHoldings, ranking after the RCLS and RSLS, to be utilised by SHHoldings to pay the amount due under the coupons. (b) unless all of the RCSLS and RSLS have been redeemed, cancelled or converted into new ordinary shares of SHHoldings, as the case may be, and that no monies is owing to the holders of the RCSLS and RSLS, he will not, without the prior approval of the Majority Loan Stock Holders, sell or dispose of any of his shareholding in FTHL and SHHoldings. In the event that such approval is granted by the Majority Loan Stock Holders, all proceeds arising from such sale or disposal shall be advanced to SHHoldings, as a subordinated shareholder s advance by OHN to SHHoldings, ranking after the RCSLS and RSLS, to be utilised by SHHoldings to repay any monies owing to the holders of the RCSLS and RSLS; 19 Subscribers : Existing lenders comprising Maybank International (L) Ltd, Aseambankers Malaysia Berhad, Danaharta Managers (L) Ltd, RHB Bank Berhad, Oversea-Chinese Banking Corporation Limited, Malayan Banking Berhad, Mayban Finance Berhad and Sabah Development Bank Berhad. 20. Listing : The RCSLS and the RSLS will not be listed. 21 Transferability : The RCSLS and the RSLS are not transferable. 7

8 22 Conditions Precedent : To include but not limited to the following: A B (iii) (iv) (v) C (iii) (iv) Main Documentation Execution of the trust deeds, the security documents, the agency agreements and the depository and paying agency agreements in respect of the RCSLS and RSLS and the presentation of the relevant charge documents at the relevant registries. SHHoldings Certified true copies of the Certificate of Incorporation, and the Memorandum and Articles of Association, of SHHoldings. Certified true copies of the Forms 24 and 49 of SHHoldings. A certified true copy of a board resolution and shareholders approval, if required, of SHHoldings authorising, among others, the execution of the trust deed, the agency agreement, the depository and paying agency agreement and the issuance of the RCSLS (A), RCSLS (B) Tier 1, RCSLS (B) Tier 2, RSLS (A)-Tier 1, RSLS (B)-Tier 1, RSLS (B) Tier 2 and RSLS-Tier 3. A list of SHHoldings s authorised signatories and their respective specimen signatures. A report of the relevant company search, winding up search, land searches on the properties referred to on paragraph 15 above. Security Providers Certified true copies of the Certificate of Incorporation, and the Memorandum and Articles of Association, of the Security Providers (which includes APSB, ESSB, SHRSB and SHGCC). Certified true copies of the Forms 24 and 49 of the Security Providers. A certified true copy of a board resolution and shareholders approval, if required, of the Security Providers authorising, among others, the execution of the relevant security documents. A report of the relevant company and winding up searches and searches on the securities to be provided by the Security Providers D General Approvals from Bank Negara Malaysia, Labuan Offshore Financial Securities Authority, Foreign Investment Committee and Securities Commission. 8

9 23 Information Covenants : Including but not limited to the following : Annual audited financial statements within 180 days of the financial year-end; (b) (c) Management financial statements within 90 days of each halfyear period; Receipt of quarterly reports on the status of the operations of the respective subsidiaries (in which a charge has been created for the benefit of the holders thereof) incorporating the following information : Ageing analysis of revenue payments/collections, together with an explanation of any material bad debts; and Quarterly cash flow budgets detailing the actual versus budgeted cash flow estimates, together with an explanation of any material variations. (e) (f) (g) (h) Details of any claims of an amount exceeding RM1.0 million in any single case made by SHHoldings and/or any Security Provider under any insurance policies; Details of any litigation against SHHoldings and/or any Security Provider of an amount exceeding RM1.0 million in any single case at any point in time or which would have a Material Adverse Effect (i.e., in the reasonable opinion of the Majority Loan Stock Holders, a material adverse effect upon the financial condition of SHHoldings or any Security Provider, as the case may be, which would have a material impact on the ability of such party to perform their respective obligations under the Trust Deed or any of the security documents) on SHHoldings or any Security Provider; Details of any event which would result in a Material Adverse Effect on SHHoldings or any Security Provider; and Receipt of quarterly reports on the status of units of bungalow lots and service apartments sold and percentage of billings to date under the Sutera Heritage Project, Sutera Vista Project and Sutera Point Project. 24 Positive Covenants : Including but not limited to following : SHHoldings shall and shall procure that the Security Providers perform all their respective material obligations under and shall comply with the Trust Deeds and the security documents, as the case may be. (b) SHHoldings shall and shall procure that the Security Providers preserve and keep in force and effect all material consents, licences and rights necessary for the conduct of their respective businesses; (c) The Trustee shall be notified of claims in excess of RM1.0 million in any single case against SHHoldings and/or the Security Providers and which would have a Material Adverse Effect upon 9

10 SHHoldings and/or any Security Provider and SHHoldings shall and shall procure that the Security Providers defend themselves against such claims and shall not settle such claims except with the prior consent of the Majority Loan Stock Holders, such consent shall not be unreasonably withheld or delayed; (d) (e) (f) SHHoldings shall procure that there will be no new borrowings taken by APSB, ESSB and/or SHGCC, save and except in the ordinary course of business as permitted under Clause 25(c) and no new encumbrances on APSB, ESSB and SHGCC or their respective assets save and except as permitted under Clause 25(b); SHHoldings shall cause the appointment of a monitoring accountant to review the accounts of SHRSB, APSB, ESSB, SHGCC, SGSB, LPSB and ISB on a historical basis for each six (6) monthly period commencing 31 December 2001 to ensure that revenues of the said companies are applied in accordance with the terms of the RCSLS and RSLS issue and the Bonds issue or for expenses utilised in the ordinary course of business of the said companies; and SHHoldings shall cause Investasia Sdn Bhd to forward to the Trustee a copy of the turnkey contract to be executed with the turnkey contractor for the construction of the Sutera Vista Project prior to the execution thereof; (g) SHHoldings shall maintain an accounting system and keep adequate records in compliance with applicable statutory requirements and in accordance with generally accepted accounting principles in Malaysia; (h) After full redemption of the Bonds, deliver together with its annual audited financial statements, a certificate signed by two directors, stating that to the best of their knowledge and belief, there has not occurred any Event of Default; and Take such reasonable steps as may have been notified by the Trustee following the occurrence of an Event of Default to remedy or mitigate the effect of the Event of Default or any other step as the Trustee may reasonably request. 25 Negative Covenants : Including but not limited to the following: (b) (c) SHHoldings and its material subsidiaries shall not carry out any business or activities other than those related to the operation of a leisure and hospitality and property development; Save for the security to be created for the Bonds, the Restructured Term Loan or the financing to be obtained by LPSB and/or ISB, and any security interest arising in the normal course of business or by operations of law, SHHoldings and its subsidiaries shall not charge, pledge or encumber any of its present or future assets; SHHoldings and/or the Security Providers shall not incur, assume or permit to exist any indebtedness, save and except for: the RCSLS and the RSLS; the Bonds issue; 10

11 (iii) indebtedness disclosed in the Debt Restructuring Agreement; (iv) (v) indebtedness not exceeding in aggregate at any point in time RM560.0 million incurred by LPSB and/or ISB for the development on the ISB Property ( Sutera Vista Project ) and/or LPSB Property ( Sutera Point Project ) and indebtedness not exceeding in aggregate at any point in time RM25.0 million incurred by SGSB to finance the construction of bungalows pursuant to executed sale and purchase agreements in respect of the development of the SGSB Property ( Sutera Heritage Project ); the Restructured Term Loan by SGSB; (d) (vi) (vii) leasing and/or hire purchase facilities ( HP facilities ) for the hotels and golf club operations, as may be permitted by the Majority Loan Stock Holders; and trade credits or suppliers credit incurred or obtained in the ordinary course of business provided that this shall not permit SHHoldings to incur or obtain trade credits or suppliers credit. SHHoldings will not give any guarantee of any indebtedness to any person or entity and the Security Providers will not give any guarantee of any indebtedness to any person or entity save and except for trade credits or suppliers credits incurred or obtained in the ordinary course of business; (e) SHHoldings and the Security Providers shall not amend their respective Memorandum and Articles of Association; (f) SHHoldings and the Security Providers shall not reduce their respective authorised and paid-up share capital or vary such rights; (g) SHHoldings and the Security Providers will not dissolve their respective affairs and SHHoldings and the Security Providers shall not do anything which would cause any Security Providers not to remain a subsidiary of SHHoldings and shall not register any material change to their respective shareholders and shareholding save and except for the inclusion of the Strategic Investor; (h) SHHoldings and the Security Providers shall not dispose any of their respective assets save and except in the ordinary course of business of SHHoldings or the Security Providers, as the case may be; and SHHoldings shall not declare and pay any dividend or bonus issue or make any capital distribution to its shareholders so long as any RCSLS and RSLS remains unredeemed or any coupon payments remained unpaid thereon. 26. Representations and Warranties : Including but not limited to : SHHoldings and the Security Providers are duly established and existing under Malaysian law and have the power and authority to enter into the business in which they propose to be engaged; 11

12 (b) (c) (d) (e) (f) (g) SHHoldings and the Security Providers have the power to enter into, exercise their respective rights under and perform their respective obligations under the Trust Deed and the security documents; SHHoldings and the Security Providers have taken all necessary actions, authorisations and consents required by such date under the Trust Deeds and the security documents and such action, authorization and consent taken or obtained shall remain in full force and effect; SHHoldings s and the Security Providers entry into, exercise of their rights under and performance of the Trust Deeds and the respective security documents to which they are parties do not and shall not violate any existing law or agreements to which they are respectively a party; The Trust Deeds and security documents create valid and binding obligations which are enforceable on and against SHHoldings and the Security Providers respectively; SHHoldings s audited accounts are prepared in accordance with generally accepted accounting principles and standards, and the audited accounts fairly represent SHHoldings s financial position; The assets of SHHoldings and the Security Providers are free of all security interest save as disclosed and the security interest created in respect of the RCSLS, RSLS, the Restructured Term Loan and the Bonds; (h) Save as disclosed to the Trustee, no litigation or arbitration proceeding is presently in progress or pending against SHHoldings or any Security Providers or, to SHHoldings s knowledge is threatened, which if adversely determined would have a Material Adverse Effect on SHHoldings or any Security Provider; and To the best knowledge of SHHoldings no winding up proceeding is currently in progress or pending against SHHoldings or any Security Provider and no resolutions have been passed to wind-up of any of the said parties. 27. Events of Default : Before the full redemption of the Bonds no Event of Default can be declared by the trustee of the RCSLS and RSLS otherwise than due to the declaration of an event of default under the Trust Deed for the Bonds ; After full redemption of the Bonds, the events of default shall include but not limited to the following: failure to perform or breach of any material obligations under any Trust Deeds or the security documents resulting from a default of SHHoldings and/or its subsidiaries and/or the Security Providers thereunder which would have a Material Adverse Effect on SHHoldings or the relevant Security Provider s ability to perform their respective obligations under the Trust Deeds and/or the security documents and which, if capable of remedy, has not been remedied within 30 days notice thereof; 12

13 (b) (c) (d) (e) (f) (g) the making of a representation or warranty which is incorrect in any material respect when made or repeated and which would have a Material Adverse Effect on SHHoldings s or the relevant Security Provider s ability to perform their respective obligations under the Trust Deed and/or the security documents and which, if capable of remedy, is not remedied within 30 days notice thereof; any material indebtedness of SHHoldings or the Security Providers which is not paid when due or any indebtedness of SHHoldings or the Security Providers becomes due and payable prior to the date when it would otherwise have become due and such event is certified in writing to SHHoldings by the Trustee to be, in its reasonable opinion, materially prejudicial to the interest of the holders of RCSLS and RSLS provided that is shall not be an event of default if such party has within forty five (45) days from the date on which the matter described in this paragraph has occurred, remedied such failure or default to the satisfaction of the Trustee (save and except for indebtedness arising from borrowed moneys wherein such indebtedness shall be an event of default if such party fails to remedy such failure or default to the satisfaction of the Trustee within fourteen (14) days from the date on which such indebtedness is due); a distress or execution is levied or enforced upon or judgement is obtained against a substantial part of the properties of SHHoldings or any Security Provider and appropriate proceedings not having been commenced by SHHoldings or that Security Provider, as the case may be, to have such distress or execution stayed or discharged within thirty (30) days notice thereof to SHHoldings or the Security Provider, as the case maybe, and such distress or execution being certified in writing to SHHoldings by the Trustee to be, in its reasonable opinion, materially prejudicial to the interests of the holders of RCSLS and RSLS; SHHoldings or any Security Provider enters into any arrangement with its creditors and such event is certified in writing to SHHoldings by the Trustee to be, in its reasonable opinion, materially prejudicial to the interests of the holders RCSLS and RSLS; insolvency administration of a winding up of SHHoldings or any Security Provider and such event is certified in writing to SHHoldings by the Trustee to be, in its reasonable opinion, materially prejudicial to the interests of the holders of the RCSLS and RSLS; cessation or suspension of a substantial part of SHHoldings s or any Security Provider s present business operations and such event is certified in writing to SHHoldings by the Trustee to be, in its reasonable opinion, materially prejudicial to the interests of the holders of the RCSLS and RSLS; (h) failure to satisfy any judgement passed against SHHoldings or any Security Provider by any court of 13

14 competent jurisdiction and no appeal against the judgement has been taken to any appropriate appellate court within the time prescribed by law; (j) (k) (l) any consent, authorization, license or approval of or registration with or declaration to governmental or public bodies or authorities or courts (if any) required by SHHoldings, or any Security Provider to carry on their respective business and operations or to authorize, or required by SHHoldings, any Security Provider in connection with, the execution, issue, sale, delivery, validity, enforceability or admissibility in evidence of the Trust Deeds or the RCSLS or the RSLS or the security documents, as the case may be, or the performance by SHHoldings or, any Security Provider of its obligations under the Trust Deeds or the RCSLS or the RSLS or the security documents, as the case may be, is modified to such degree as would be materially prejudicial to the interest of the holders of the RCSLS and RSLS, as the case may be, or is not granted or is revoked or terminated or expired and is not renewed or otherwise ceases to be in full force and effect; it becomes unlawful at any time for SHHoldings or any Security Provider to perform all or any of its obligations under the Trust Deeds or the RCSLS or the RSLS or any of the Issue Documents, as a case maybe, or due to the fault or omission of SHHoldings or any Security Provider, the RCSLS or the RSLS or the Trust Deeds or any security documents, as the case may be, become unenforceable against SHHoldings or any Security Provider, as the case may be; commencement of legal proceedings against OHN, FTHL, SHGCC or any Security Provider which will have a material adverse effect on the affected party and such proceeding have not been set aside within sixty (60) days from the date of such party being notified of such proceedings or such further period permitted by the Majority Loan Stock Holders; and the occurrence of any other event which has a Material Adverse Effect on SHHoldings or any Security Provider provided that it shall not be an event of default if such party has, within sixty (60) days from the date on which SHHoldings receives a notice in writing setting out in reasonable detail particulars of the event which would have a Material Adverse Effect on such party, remedied to the reasonable satisfaction of the trustee. 28. Default Interest : 1.0% per annum above the base lending rate of Malayan Banking Berhad on the amount unpaid (including unpaid interest) from the relevant due date up to the date of actual payment, calculated based on the actual number days elapsed and a year of 365 days PROVIDED THAT in the case of cumulative interest from Years 2 to 5, the same shall be deemed overdue only if such interest is not paid in Year 6. 14

15 29. Method of Offering : Private placement without prospectus to the creditors of the existing facilities. 30. Financing Agreements : The RCSLS and RSLS shall be evidenced by, amongst others, the following documents:- (b) (c) (d) Trust Deeds; Depository and Paying Agency Agreements; Security Sharing Agreement; and Other relevant documentation which may be advised by the solicitors for the holders of the RCSLS and RSLS. 31. Taxation : All payments by SHHoldings shall be made without withholding or deductions for or on account of any present or future tax, duty or charge of whatsoever nature imposed or levied by or on behalf of Malaysia or any other applicable jurisdictions, or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law (in which event the payer shall be required to make such additional amount so that the payee would receive the full amount which the payee would have received if no such withholding or deductions are made). 32. Selling restrictions : There are selling restrictions to the persons who may hold the RCSLS and RSLS. The RCSLS and RSLS may only be offered or sold or delivered to a person falling within any of the relevant categories of persons specified under Section 4(6) of the Companies Act 1965, as amended from time to time. 33. Legal, Stamp Duty and Other Out of Pocket Expenses : For the account of SHHoldings. 34. Trustee : Malaysian Trustees Berhad. 35. Governing Law : Laws of Malaysia. 36. Jurisdiction : SHHoldings shall unconditionally and irrevocably submit to the nonexclusive jurisdictions of the courts of Malaysia. 37. Rating : The RCSLS and RSLS will not be rated. 38. Facility Agent : Amanah Short Deposits Berhad. [THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 15