APPENDIX I (B) PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL (in relation to the issue of Islamic Medium Term Notes)

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1 APPENDIX I (B) PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL (in relation to the issue of Islamic Medium Term Notes) 1

2 Principal Terms and Conditions of the Proposal 1. BACKGROUND INFORMATION ON THE ISSUER (i) Name : LYC Mall Sdn Bhd ( LYCM or Issuer ) (ii) Address : Registered address 468-6B & C (1 st Floor) 3 rd Mile, Jalan Ipoh Kuala Lumpur (iii) (iv) (v) (vi) Business registration no. Date and place of incorporation Date of listing, where applicable Status on residence, ie whether it is a resident controlled company or a nonresident controlled company : T : 10 May 2013 : Not applicable. : Resident controlled company. (vii) Principal activities : Property investment, property management and operation & management of car parking business (viii) Board of directors : The board of directors of the Issuer as at 15 July 2013 are as follows: (i) (ii) Low Gee Gene Low; and Low Gee Teong. (ix) Structure of shareholdings and names of shareholders or, in the case of a public company, names of all substantial shareholders : The shareholders and the shareholdings structure of the Issuer as at 15 July 2013 are as follows: Name of Ordinary Shareholder Low Yat And Sons Realty Sdn Bhd ( LYSR ) No. of Ordinary Shares held (%) 2 100% Total 2 100% 2

3 (x) Authorised, issued and paid-up capital : Authorised share capital of the Issuer as at 15 July 2013 RM400, comprising 400,000 ordinary shares of RM1.00 each Issued and paid-up share capital of the Issuer as at 15 July 2013 RM2.00 comprising 2 ordinary shares of RM1.00 each (xi) Disclosure of the following: : If the issuer or its board members have been convicted or charged with any offence under the securities laws, corporation laws or other laws involving fraud or dishonesty in a court of law, for the past five years prior to the date of application; and (a) The Issuer and its board members have not been convicted or charged with any offence under the securities laws, corporations laws or other laws involving fraud or dishonesty in a court of law, for the past five (5) years prior to the date of application; and If the issuer has been subjected to any action by the stock exchange for any breach of the listing requirements or rules issued by the stock exchange, for the past five years prior to the date of application. (b) The Issuer has not been subjected to any action by the stock exchange for any breach of the listing requirements or rules issued by the stock exchange, for the past five (5) years prior to the date of application. 3

4 2. PRINCIPAL TERMS AND CONDITIONS (a) Names of parties involved in the transaction (where applicable) (i) Principal adviser : RHB Investment Bank Berhad ("RHB Investment Bank"). (ii) Lead arranger : RHB Investment Bank. (iii) Co-arranger : Not applicable. (iv) Solicitor : Zul Rafique & partners. (v) Financial adviser : Not applicable. (vi) Technical adviser : Not applicable. (vii) Sukuk trustee : Pacific Trustees Berhad ( Trustee ). (viii) Shariah adviser : RHB Islamic Bank Berhad. (ix) Guarantor : Low Yat And Sons Realty Sdn Bhd ( LYSR ). (x) r : Khong & Jaafar Sdn Bhd or such other valuers as may be appointed from time to time for valuation of properties for purposes of security. (xi) Facility agent : RHB Investment Bank. (xii) (xiii) (xiv) Primary subscriber (under a bought-deal arrangement) and amount subscribed Underwriter and amount underwritten Central depository : Not applicable. : The Islamic Medium Term Notes ( Sukuk Murabahah ) will not be underwritten. : Bank Negara Malaysia ("BNM"). (xv) Paying agent : BNM. (xvi) Reporting accountant : Not applicable. (xvii) Calculation agent : Not applicable. 4

5 (xviii) Others (please specify) : Lead Manager RHB Investment Bank. Placee(s) To be determined prior to each issuance. Security Trustee Pacific Trustees Berhad. (b) Islamic principles used : Murabahah (Cost-Plus Sale). A contract that refers to the sale and purchase transaction for the financing of an asset whereby the cost and profit margin (mark-up) are made known and agreed by all parties involved. (c) Facility description : A Medium Term Note Programme ( Notes Programme ) for the issue of conventional medium term notes ( Conventional MTNs ) and Sukuk Murabahah (the Conventional MTNs and the Sukuk Murabahah shall hereinafter be collectively referred to as the Notes ). The principal terms and conditions of the Conventional MTNs are the subject of a separate term sheet which is annexed as Appendix 1 (A). The Sukuk Murabahah will be issued based on the Shariah principle of Murabahah (via tawarruq arrangement) based on Commodity Murabahah structure in the following form: Commodity Murabahah The Issuer will be appointed, as agent/wakeel ( Wakeel ) for the investor(s) (the Murabahah Investor(s) or Sukukholder(s) ) to buy Shariahcompliant commodities, which shall mean Shariahcompliant commodities would exclude ribawi items in the category of medium of exchange such as currency, gold and silver (the Commodities ). The Wakeel will then appoint the Facility Agent, as its sub-purchase agent to purchase the Commodities. The Issuer will issue a purchase order (the Purchase Order ) to the Wakeel and the Facility Agent from time to time wherein the Issuer will irrevocably undertake to purchase the Commodities from the Murabahah Investor(s)at a price equivalent to the Purchase Price (as defined below in this item 2(c)) and a mark-up (profit) payable on a deferred payment basis by way of installments or in one lump sum (the Deferred Sale Price ). 5

6 The Facility Agent will purchase the Commodities from commodity vendor(s) in the Bursa Suq Al-Sila commodity market (through a Commodity Trading Participant ( CTP )) at a purchase price (the Purchase Price ) on a spot basis, which shall be equivalent to the Sukuk Murabahah proceeds. The Purchase Price will be in compliance with the asset pricing requirements as set out in the Securities Commission Malaysia s ( SC ) Guidelines on Sukuk (revised and effective on 28 December 2012) as may be replaced, substituted or revised from time to time ( Sukuk Guidelines ). Subsequently, the Issuer shall issue the Sukuk Murabahah to the Murabahah Investor(s) whereupon the Sukuk Murabahah shall evidence the Murabahah Investor(s) ownership of the Commodities and all such rights thereto (including all rights against the Issuer under the Purchase Order as well as the rights to the Deferred Sale Price once the Commodities are sold to the Issuer). Proceeds received from the issuances of the Sukuk Murabahah shall be used or deemed to have been used by the Facility Agent to pay the Purchase Price of the Commodities. Thereafter, the Facility Agent as instructed by the Sukukholder(s) shall sell the Commodities to the Issuer at the Deferred Sale Price. Upon completion of such purchase, the Issuer shall appoint the Facility Agent to sell the Commodities to Bursa Suq Al-Sila (through a CTP) for a cash consideration equal to the Purchase Price on a spot basis. During the tenure of the Sukuk Murabahah, the Issuer shall make periodic payments or a lump sum payment, whichever is applicable, to the Trustee (acting for the Sukukholder(s)) as its obligation to pay the Deferred Sale Price to the Sukukholder(s). Each such payment shall pro tanto reduce the obligation of the Issuer on the Deferred Sale Price payable for the Commodities. On the date of maturity of the Sukuk Murabahah, all amounts then outstanding on the Deferred Sale Price shall be paid by the Issuer to the Trustee whereupon the Sukuk Murabahah shall be cancelled. The Issuer s payment obligations under the Sukuk Murabahah are secured by the collateral as described in item 2(l) below. The transaction structure is set out in the Appendix 1. 6

7 (d) Identified assets (e) Purchase and selling price/rental (where applicable) : Shariah-compliant commodities would exclude ribawi items in the category of medium of exchange such as currency, gold and silver. To be determined prior to each Sukuk Murabahah issuance under the Notes Programme and as specified in the applicable pricing supplement. (f) Issue/ sukuk programme size : The aggregate outstanding amount of the face value of the Notes to be issued under the Notes Programme at any point in time shall not exceed RM500.0 million. (g) Tenure of issue/ sukuk programme : Notes Programme Up to ten (10) years from the date of first issue of the Notes. Maturity of the Sukuk Murabahah The Sukuk Murabahah may be issued with maturities of more than one (1) year and up to ten (10) years, provided always that the final maturities of any of the Sukuk Murabahah shall not exceed the tenure of the Notes Programme. (h) Availability period of sukuk programme : The Sukuk Murabahah may be issued from time to time during the respective tenure of the Notes Programme, as the case may be, upon completion of the Transaction Documents (as defined under item 2(y)(vii)) and compliance with all conditions precedent and other applicable conditions to the satisfaction of the Lead Arranger provided always that the final maturity of any of the Sukuk Murabahah shall not exceed the tenure of the Notes Programme. (i) Profit / coupon / rental rate : The Sukuk Murabahah will be issued at par with a profit rate or at a discount with or without a profit rate. The profit rate (if applicable, and which may be fixed or floating) will be determined by the Issuer and the Lead Manager prior to each issuance of Sukuk Murabahah. In relation to Sukuk Murabahah where the floating profit rate is applicable, the Deferred Sale Price shall be calculated on an agreed contracted profit rate ( Contracted Profit Rate ). Notwithstanding the Contracted Profit Rate, the Issuer shall pay profit calculated at the profit rate determined for each period for which such profit is to be paid ( Effective Profit Rate ). Not applicable for Sukuk Murabahah that are issued with no profit rate. 7

8 (j) Profit / coupon / rental payment frequency : In respect of Sukuk Murabahah which are issued with a fixed profit rate or a floating profit rate, the profit is payable on a semi-annual basis or such other periodic basis as determined by the Issuer and Lead Manager prior to the issuance of such Sukuk Murabahah, in arrears, subject to the rules issued by Malaysian Electronic Clearing Corporation Sdn Bhd as amended and/or substituted from time to time ( MyClear ) or its successors in title in such capacity, from the date of issue of the Sukuk Murabahah with the last date profit payment to be made on the maturity date. Not applicable for Sukuk Murabahah that are issued without periodic distribution. (k) Profit / coupon/ rental payment basis : In respect of Sukuk Murabahah which are issued with a fixed profit rate or floating profit rate, the profit will be calculated on the basis of actual number of days in a relevant period divided by 365 days, or in any event, in accordance with the rules of MyClear. (l) Security/ collateral, where applicable Not applicable for Sukuk Murabahah that are issued without periodic distribution. The Notes will be secured (in favour of the Security Trustee for the benefit of the holders of the Notes ( Noteholders )) by the following ( Securities ):- a. Assignment(s) over the Designated Accounts (as defined under item 2(n)); b. First legal charge over land held under issue document of title Geran 53624, Lot 1257, Section 67, Bandar Kuala Lumpur, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan together with all buildings and fixtures erected or to be erected thereon (the Acquired Property ) and/or any other investment properties and/or land owned by the Issuer and/or owned by third party related to the Issuer ( Other Security Party ) and/or LYSR (together with the Acquired Property, collectively referred to as the Pledged Properties ) acceptable to the Lead Manager and subject to the Security Cover (as defined at the end of this item 2(l)) of not less than 1.50 times; c. Assignment(s) of rental, lease, other income proceeds and monies collected or arising from the Pledged Properties; 8

9 d. Assignment(s) over the rights, interests and benefits of all present and future insurance policies and proceeds thereof of the Pledged Properties; e. Debenture creating fixed and floating charges over all present and future assets of the Issuer; f. Specific Debenture by LYSR creating a specific fixed charge over the Acquired Property; g. Such other security to be agreed between the Lead Arranger and the Issuer. Security Cover shall be defined as the open market value (supported by valuation report(s) prepared by panel valuer(s) of the Placee(s)) of the Pledged Properties under item 2(l)(b) against the outstanding principal amount of the Notes issued under the Notes Programme at any point in time. (m) Details on utilisation of proceeds by issuer : The proceeds of the issuance of the Notes of up to RM380 million will be used to: (i) partly pay the purchase consideration for the acquisition of the Acquired Property from LYSR; and (ii) meet the Minimum Balance (as defined in item 2(n) in the FSRA (as defined in item 2(n)). The remaining proceeds raised from the issues of the Notes under the Notes Programme shall be utilised for the following purposes: (i) to refinance any Notes; (ii) to finance working capital requirements, future investments and other general purposes in the ordinary course of business; and/or (iii) to meet the Minimum Balance (as defined in item 2(n)) in the FSRA (as defined in item 2(n)). For avoidance of doubt, the utilisation of the proceeds of the Sukuk Murabahah shall at all times be for Shariah compliant purposes. 9

10 (n) Sinking fund and designated accounts, where applicable : Sinking fund None. Designated accounts The Issuer and/or LYSR and/or any Other Security Party shall open and maintain the following designated accounts with RHB Islamic Bank which shall be Shariah-compliant: Finance Service Reserve Account ( FSRA ): The Issuer is required to maintain a profit bearing FSRA with RHB Islamic Bank for the purpose of setting aside on each issue date an amount that is sufficient to pay at least three (3) months coupon / profit for all the outstanding Notes ( Minimum Balance ). Such Minimum Balance shall be maintained by the Issuer at all times. The Minimum Balance or any part thereof in the FSRA shall only be utilised for the payment of the coupon / profit on the Notes. Withdrawals of the Minimum Balance or any part thereof from the FSRA shall only be allowed if the Issuer has insufficient funds to make such payments from its internally generated funds. Any withdrawal of the Minimum Balance or any part thereof from the FSRA and/or shortfall in the Minimum Balance shall be replenished within a period of not exceeding seven (7) business days from the date of withdrawal and/or shortfall. Any funds in the FSRA exceeding the Minimum Balance may be transferred to the OA (as defined hereinafter in this item 2(n)). FSRA is to be operated solely by the Security Trustee. Funds held in the FSRA may be utilised for investments in Permitted Investments (as defined hereinafter in item 2(y)(v)). 10

11 Operating Account ( OA ): The OA will capture, amongst others: (i) (ii) all assigned proceeds from the rental, lease and other incomes of the Pledged Properties; all proceeds of disposal(s) and other proceeds and monies collected or arising from the Pledged Properties (if any). The credit balance of OA will be first applied to meet all payment obligations under the Notes Programme as well as meeting the Minimum Balance required for FSRA. At the Issuer s or LYSR s or the Other Security Party s request, as the case may be, any balance thereafter can be transferred to Issuer s or LYSR s or the Other Security Party s other operating current account(s), as the case may be, provided that no Event of Default (as defined in item 2(v)) has occurred and is continuing and following such transfer, an Event of Default would not occur. The OA shall be operated solely by the Issuer, LYSR or the Other Security Party, as the case may be and upon the occurrence of an Event of Default, shall be operated solely by the Security Trustee. Each of the Issuer s future operating account(s) which the Issuer may open from time to time other than the FSRA shall be designated as OA and the same shall be maintained by the Issuer for the purpose of capturing all assigned proceeds from the rental, lease and other incomes, proceeds and monies collected or arising from the Pledged Properties. In respect of each Pledged Property, the Issuer, and/or LYSR and/or the Other Security Party, as the case may be, shall open operating account(s) which shall be designated as OA and the same shall be maintained by the Issuer and/or LYSR and/or the Other Security Party, for the purpose of capturing all assigned proceeds from the rental, lease and other incomes, proceeds and monies collected or arising from the Pledged Properties. 11

12 (o) Rating Credit ratings assigned and whether the rating is final or indicative Name of rating agency : Unrated. Not applicable. (p) Mode of issue : Private placement via direct placement or book running on a best effort basis, as the Issuer may elect without a prospectus or an information memorandum. Issuance of the Sukuk Murabahah under the Notes Programme shall be in accordance with (1) the rules of MyClear and (2) any other procedures/guidelines/rules issued by the relevant authorities from time to time (as the same may be amended and/or substituted from time to time). (q) Selling restriction, including tradability, i.e. tradable or non-tradable : The Sukuk Murabahah may not be offered, sold or delivered, directly or indirectly, nor may any document or other material in connection therewith be distributed in Malaysia or anywhere else, other than to persons falling within any of the following categories of persons:- (r) Listing status and types of listing, where applicable Selling Restrictions at Issuance (i) Section 4 (6) of the Companies Act 1965 as amended from time to time; and (ii) Schedule 6 (or Section 229(1)(b)) and Schedule 7 (or Section 230(1)(b)) read together with Schedule 9 (or Section 257(3)) of the Capital Markets and Services Act, 2007 ( CMSA ) as amended from time to time. Selling Restrictions thereafter Not applicable as the Sukuk Murabahah are nontransferable and non-tradable. Tradability The Sukuk Murabahah are non-transferable and non-tradable. : The Notes will not be listed on Bursa Malaysia Securities Berhad or any other stock exchange. 12

13 (s) Other regulatory approvals required in relation to the issue, offer or invitation to subscribe or purchase sukuk, and whether or not obtained : None. (t) Conditions precedent : The issuance of the Sukuk Murabahah shall be subject to the following conditions including but not limited to: - For the establishment of the Notes Programme (i) Receipt of the following by the Solicitors and the Lead Arranger: a) Certified true copies of the Certificate of Incorporation and the Memorandum and Articles of Association of the Issuer and LYSR; b) Certified true copies of the latest Forms 24, 44 and 49 of the Issuer and LYSR; c) Certified true copies of the board resolution of the Issuer authorizing, among others, the establishment of the Notes Programme, the issuance of the Notes, the execution of all the Transaction Documents including the security documents ( Security Documents ) necessary for and in relation to the establishment of the Notes Programme and the issuance of the Notes, list of the Issuer s authorized signatories (and their respective specimen signatures) to approve including but not limited to any variation to the terms and conditions of the Notes and to sign all notices, documents and legal documents in connection with the Notes Programme; d) Certified true copies of the board resolution of LYSR authorizing, among others, the execution of the Security Documents to which it is a party and all other documents necessary or in relation to the Notes Programme, list of LYSR s authorized signatories (and their respective specimen signatures) to sign all notices, documents and legal documents in connection with the Notes Programme; 13

14 e) Satisfactory company search results on the Issuer, LYSR and any Other Security Party; and f) Satisfactory winding up search results on the Issuer, LYSR and any Other Security Party. (ii) All necessary approvals and consents required (including but not limited to the shareholders of the Issuer, LYSR and any Other Security Party and the existing lenders/financiers of the Issuer, LYSR and/or the relevant Other Security Party) for the implementation of the Notes Programme (if required) and the execution of the Transaction Documents have been obtained and compliance with all conditions of such approvals and consents; (iii) Authorisation of the SC shall have been obtained; (iv) Evidence of confirmation from the Shariah Adviser that the structure and mechanism together with the Transaction Documents of the Sukuk Murabahah is in compliance with Shariah principles; (v) Satisfactory legal due diligence for the Notes Programme shall have been completed by the Solicitors and the results thereof being acceptable to the Lead Arranger; (vi) Completion and execution of Transaction Documents (where applicable) and where relevant, stamped or endorsed as exempted from stamp duty under the relevant legislation and (where applicable) presented for registration (save for the relevant Security Documents not required to be executed prior to the first issuance of the Notes or which can only be presented for registration or perfected within a stipulated period of time after the discharge and/ or reassignment); (vii) Receipt of satisfactory legal opinion from the Solicitors to the Lead Arranger as to the legality, validity and enforceability of the Transaction Documents; (viii) Written confirmation from the Solicitors to the Lead Arranger that all Conditions Precedent in relation to the Notes Programme have 14

15 been duly complied with; (ix) Evidence that the Designated Accounts have been opened and maintained with financial institutions acceptable to the Lead Arranger; (x) A list of the Issuer s authorized signatories and their respective specimen signatures for the operation of the OA; (xi) Documentary evidence satisfactory that arrangements have been made for payment of all transaction fees, costs expenses payable by the Issuer to the Lead Arranger and the relevant parties; (xii) All relevant notices and acknowledgement (where applicable) shall have been made or received, as the case may be; (xiii) Receipt of the redemption statement and letter of undertaking from the existing financier(s) and lender(s) of the Ijarah Term Financing Facility and the Term Loan Financing Facility made available to LYSR to discharge the security created over the Acquired Property and all other securities created in relation to the Ijarah Term Financing Facility and the Term Loan Financing Facility within a stipulated period of time; (xiv) Documentary evidence that the Trustees Reimbursement Account (as defined in item 2(y)(viii) below) has been established and the deposit of RM30,000 has been made; (xv) Board resolution of any Other Security Party(ies)for the execution of the relevant security documents; (xvi) Letters of Undertaking from LYSR to cover any cashflow shortfall which include principal repayment, coupon payment and any other charges in relation to the Notes programme herein; and (xvii) Such other Conditions Precedent as may be advised by the Solicitors and to be mutually agreed between the Issuer and the Lead Arranger. For Each Issuance (i) Issuer s certification and confirmation that it 15

16 is in compliance with all Representations and Warranties (as set out in item 2(u)) and Covenants (as set out in item 2(w)) under the Transaction Documents; (ii) Issuer s written confirmation set out in the issue request, on the specific purpose of the utilisation of the Notes proceeds which is satisfactory to the potential Placee(s) and Lead Arranger; (iii) Receipt of satisfactory supporting report, document, opinion and information evidencing the purpose of the utilisation of the Notes proceeds and/or relevant in the context of the issue of the Notes as may be requested by the potential Placee(s) or the Lead Arranger or the Solicitors; (iv) No Event of Default has occurred and continues to subsist; (v) Receipt of an updated valuation report conducted by panel of valuers acceptable to the Lead Arranger / the Lead Manager confirming the value of the Pledged Properties is at least equivalent to the minimum value required to meet the Security Cover of not less than 1.50 times; and (vi) Such other conditions precedent to be reasonably requested by the Lead Arranger and/or advised by the Solicitors and to be mutually agreed between the Issuer and the Lead Arranger. (u) Representations and warranties : Representations and warranties typical and customary for a facility of this nature as advised by the Solicitors including but not limited to the following: - (i) (ii) The Issuer and LYSR each is a company duly established and existing under Malaysian law and has the power and authority to enter into the businesses in which each of it is engaged; The Issuer has not opened any other account(s) save for the Designated Accounts and the Trustees Reimbursement Account prior to the first issuance; 16

17 (iii) (iv) (v) (vi) The Transaction Documents create valid, legal and binding obligations which are enforceable on or against the Issuer and LYSR; Under the Issuer s and LYSR s respective Memorandum and Articles of Association, the Issuer and LYSR respectively has the power to enter into, exercise its rights under and perform its obligations under the Transaction Documents to which it is a party; Upon taking all necessary actions and obtaining the consents and approvals under items 2(t)(ii), (iii) and (xii) above, all necessary actions, authorisations and consents required under the Transaction Documents and the Notes Programme have been taken, fulfilled and obtained and remain in full force and effect; Upon taking all necessary actions and obtaining the consents and approvals under item 2(t)(ii), (iii) and (xii) above, the Issuer s and LYSR s respective entry into, exercise of its rights under and performance of the Transaction Documents to which it is a party do not and will not violate any existing law or any agreements to which it is a party; (vii) The Issuer and LYSR each is in compliance with and will comply with all applicable laws and regulations; (viii) The audited accounts of the Issuer and LYSR each are prepared in accordance with generally accepted accounting principles and standards and they fairly represent its financial position; (ix) (x) No litigation or arbitration is current or, to the Issuer s and LYSR s knowledge is threatened, which if adversely determined would have a Material Adverse Effect (as defined in item 2(y)(iii)); and Such other representations and warranties in relation to the Issuer and/or the relevant Other Security Party, as advised by the Solicitors. (v) Events of default, dissolution event and enforcement event, where applicable : Events of Default typical and customary for a facility of this nature as advised by the Solicitors, including but not limited to the following: - 17

18 (i) (ii) (iii) (iv) (v) (vi) (vii) The Issuer fails to pay any sum due under the Notes and/or the Transaction Documents on the due date; The Issuer fails to maintain the Minimum Balance in the FSRA; Any representation or warranty made or implied under any provision of the Transaction Documents or any information, notice, opinion or certificate or other document delivered pursuant to the terms of the Transaction Documents proves to have been incorrect or misleading in any particular respect which is deemed to be material by the Trustee as of the date on which the representation or warranty was made or was deemed made; The Issuer, LYSR or any Other Security Party, where applicable, fails to observe or perform or commits a breach of any of its obligations under any of the Transaction Documents to which it is a party or under any undertaking or arrangement entered into in connection therewith (other than the payment obligations referred to in subparagraph (i) and the obligation under subparagraph (ii) above) which is not capable of remedy or if capable of remedy, the failure is not remedied within fourteen (14) business days thereof or such other period as may be agreed by the Noteholder; Any consent or license or authorisation or approval is revoked or withheld or invalidated or modified that impairs or prejudices the Issuer s and/or the Other Security Party s ability to perform their respective obligations under the Transaction Documents or is otherwise not granted or fails to remain in full force and effect; The Issuer, LYSR or any of the Other Security Parties where applicable, enters into or proposes to enter into, or there is declared by any competent court or authority, a moratorium on the payment of indebtedness or other suspensions of payments generally; Any provision of the Transaction Documents is or becomes illegal, void, voidable or unenforceable which may have a Material Adverse Effect or any of the Transaction 18

19 Documents is or becomes illegal, void, voidable or unenforceable; (viii) (ix) (x) (xi) (xii) (xiii) A winding up order has been made against the Issuer, LYSR or any of the Other Security Parties; A resolution to wind up the Issuer, LYSR or any of the Other Security Parties; A scheme of arrangement under section 176 of the Companies Act 1965 has been instituted against LYSR or any of the Other Security Parties, where applicable in respect of or affecting its or their respective indebtedness, which may have a Material Adverse Effect, or a scheme of arrangement under section 176 of the Companies Act 1965 has been instituted against the Issuer in respect of or affecting its indebtedness, save where such scheme of arrangement is for the reconstruction of the Issuer which has been approved in writing by the Trustee, which approval is not to be unreasonably withheld, unless during or following such reconstruction, the Issuer becomes or is declared to be insolvent or such reconstruction may have a Material Adverse Effect; A receiver has been appointed over the whole or a substantial part of the assets of the Issuer, LYSR or any of the Other Security Parties which may have a Material Adverse Effect, where applicable; (a) The Issuer, LYSR or any of the Other Security Parties cease or threaten to cease to carry on all or a substantial part of its business that it now conducts directly or indirectly; or (b) any of its material subsidiaries cease or threaten to cease to carry on all or a substantial part of its business that it now conducts directly or indirectly which may have a Material Adverse Effect; (a) The Issuer, LYSR or any of the Other Security Parties becomes insolvent or commits an act of insolvency or is unable to pay its debts as they fall due which may have Material Adverse Effect; or (b) any final judgment or judgments is or are obtained against the Issuer, LYSR or any of the Other Security Parties which may have 19

20 a Material Adverse Effect, where applicable provided that no Event of Default shall occur under this sub-item (xiii) if an application is made to stay such judgment within the time prescribed by law and such judgment is discharged or stayed within thirty (30) days (or such extended period as may be consented by the Trustee which consent is not to be unreasonably withheld) of the application to stay; (xiv) (xv) (xvi) The Issuer, LYSR or any of the Other Security Parties, where applicable, stops, suspends or threatens to stop or suspend payment of all or a substantial part of its debts, begins negotiations or takes any proceedings or other steps with a view of readjustment, rescheduling or deferral of all of its indebtedness (or of any substantial part of its indebtedness which it will or might otherwise be unable to pay when due) or proposes or makes a general assignment or any arrangement or composition with or for the benefit of its creditors. For purposes of this sub-item (xiv), references to substantial shall mean, in respect of the indebtedness, at any point in time, an agreed aggregate amount; If any other debentures of or monies borrowed by the Issuer, LYSR or the any of Other Security Parties, where applicable, becomes repayable by reason of default or any amount owing thereunder or in respect thereof is not repaid on its due date (or is not remedied within seven (7) business days thereof or such other period as may be agreed by the Noteholders) or becomes due and payable prior to its stated maturity if any guarantee or indemnity given by the Issuer, LYSR or any of the Other Security Parties where applicable, is not honoured when due and called upon or if any security for any such obligations, debentures, monies borrowed, guarantee or indemnity becomes enforceable; and Such other events of default as advised by the Solicitors. Upon the occurrence of the foregoing, the Trustee may or shall (if directed to do so by the Noteholders for the Sukuk Murabahah and the Conventional MTNs collectively) in a special resolution declare that an Event of Default has 20

21 occurred and whereupon:- (a) the Deferred Sale Price less any profit already paid (if any) of the Identified Assets under the Sukuk Murabahah shall become immediately due and payable; and (b) the Trustee may take such proceedings or cause the Security Trustee to take such proceedings against the Issuer and/or any Other Security Party as it may think fit to enforce its rights under the Transaction Documents including the enforcement of the Securities. (w) Covenants (i) Positive covenants : Positive Covenants Positive covenants typical and customary for facility of this nature as advised by the Solicitors including but not limited to the following and those required to comply with the Trust Deeds Guidelines (revised on 12 July 2011 and effective on 12 August 2011) issued by the SC as may be replaced, substituted or revised from time to time (the Trust Deeds Guidelines ): - (i) (ii) (iii) (iv) (v) (vi) Submission to Facility Agent and Security Trustee a quarterly report on the performance of the Pledged Properties; The Issuer shall obtain the written consent of the Trustee of any change in the shareholding of the Issuer; Advances and/or any amount owing to related companies of the Issuer shall be subordinated during the tenure of the Notes Programme, save and except for the proceeds of the issue of the Notes of up to RM380 million, which will be used to partly settle the amount owing to LYSR for the purchase of the Acquired Property; The Issuer and LYSR will preserve and keep in full force and effect all consents, authorizations, licenses and rights necessary for the conduct of its business; The Issuer shall remain wholly owned by LYSR; The Issuer shall immediately notify the Trustee upon occurrence of any of the abovesaid Events of Default and provide the Trustee with all relevant details of any steps 21

22 which the Issuer is taking or is considering taking, in order to remedy or mitigate the effect of such breach or Event of Default or otherwise in connection with it, and the Issuer shall take such reasonable steps to remedy or mitigate the effect of such breach or Events of Default; (vii) The Issuer shall ensure compliance of the Minimum Balance in relation to the FSRA and should there be any withdrawal of the Minimum Balance from the FSRA and/or shortfall in the Minimum Balance, the Issuer undertakes to replenish the foregoing within seven (7) business days from the date of such withdrawal and/or shortfall; (viii) The Issuer, LYSR and the Other Security Party(ies), will comply with all provisions and perform their respective obligations under the Transaction Documents to which it is a party; (ix) (x) (xi) The Issuer, LYSR and the Other Security Party(ies) shall maintain and/or cause to be maintained such insurances with licensed insurance company or companies in respect of its assets and businesses against all risks which a prudent company carrying on a business similar to that of the Issuer LYSR or any of the Other Security Parties, as the case may be, would normally insure; The Issuer shall promptly notify the Trustee and Security Trustee of any new operating account(s) that it opens/maintains in its name; The Issuer shall promptly comply with all applicable laws including the provisions of the CMSA and/or notes, circular, conditions or guidelines issued by the SC from time to time; (xii) The Issuer shall deliver to the Trustee such information as requested by the Trustee, including but not limited to the following: (a) 22 as soon as they become available (and in any event within one hundred and eighty (180) calendar days after the end of each financial year) copies of its financial statements for that financial year which shall contain the income statement, balance sheet and

23 cash flow statement of the Issuer and which are audited and certified without qualification by independent accountants permitted under applicable laws; (b) (c) (d) as soon as they become available (and in any event within ninety (90) calendar days after the end of each half financial year) copies of its semi annual unaudited financial statements for that half financial year; at least on an annual basis, a certificate confirming that it has complied with all its obligations under the Transaction Documents and the terms and conditions of the Notes Programme, and that there did not exist or had not existed, from the date the Notes were first issued or 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; to the extent permitted by law, such information relating to the Issuer s affairs which the Trustee may require in order to discharge its duties and obligations as trustee under the Transaction Documents; (xiii) The Issuer shall immediately notify the Trustee in the event that the Issuer becomes aware of the following:- (a) any Event of Default or any other event that has caused or could cause any other right or remedy under the terms, provisions or covenants of the Notes or the Transaction Documents to become immediately enforceable; (b) any circumstance that has occurred that would materially prejudice the Issuer or LYSR or any Other Security Party or any security included in or created by the Notes or the Transaction Documents (where applicable); (c) any change in withholding tax position or taxing jurisdiction of the Issuer; 23

24 (d) any change in the Issuer s Board of Directors; and (e) any other matter that may materially prejudice the interest of the Noteholders; (xiv) The Issuer will at all times maintain a paying agent for the Notes in Malaysia, and the Issuer shall cause and procure such paying agent to notify the Trustee (through a facility agent) in the event the paying agent does not receive payment from the Issuer on the due dates as required under the Transaction Documents and the terms and conditions of the Notes; (xv) The Issuer will keep proper books and accounts at all times and to provide the Trustee and any person appointed by it to have access to such books and accounts to the extent permitted by law; (xvi) The Issuer shall cause and ensure that the Security Cover is met at all times throughout the Notes Programme; and (xvii) Such other reasonable positive covenants as advised by the Solicitors. (ii) Negative covenants : Negative Covenants Negative covenants typical and customary for facility of this nature as advised by the Solicitors including but not limited to the following and those required to comply with the Trust Deeds Guidelines, without the prior written consent of the Trustee (acting on instructions of the Noteholders for the Sukuk Murabahah and the Conventional MTNs):- (i) (ii) The Issuer, LYSR and the Other Security Parties will not surrender, transfer, assign, relinquish or otherwise dispose of any of their respective rights and interest under any of the Transaction Documents to which it is a party; The Issuer, LYSR and the Other Security Parties will not enter into any amalgamation, demerger or reconstruction which may materially affect their respective abilities to perform their respective obligations unless the Issuer, LYSR or the Other Security Parties, as the case may be, 24

25 is and will be the surviving legal entity and such amalgamation, demerger or reconstruction is not reasonably expected to have a Material Adverse Effect; (iii) The Issuer, LYSR and the Other Security Parties shall not carry out any acts which would have a Material Adverse Effect on the business, assets or the valuation of the Issuer, LYSR or the Other Security Parties, as the case may be, as a whole or adversely affect their respective abilities to observe or perform their respective obligations under the Transaction Documents to which it is a party; (iv) The Issuer shall not make further drawing/issuance of the Notes under the Notes Programme during the occurrence of an Event of Default; (v) (vi) (vii) (viii) (ix) The Issuer shall not create or permit to exist any encumbrance, mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment by way of security, trust arrangement for the purpose of providing security or other security interest of any kind including, without limitation, title transfer and/or retention arrangements having a similar effect or any agreement to create any of the foregoing, save and except for any liens arising in the ordinary course of business by operation of law and not by way of contract and such other exceptions to be determined in the Trust Deed; The Issuer will not add to, delete, vary or amend its Memorandum and Articles of Association in a manner inconsistent with the provisions of the Transaction Documents or which may be materially prejudicial to the interests of the Noteholders; All existing and future loans and advances extended to the Issuer by its shareholders, directors and/or related parties, shall be subordinated to the Notes; Issuer will not extend any loans or advances to its shareholders, directors or related companies; and Any other reasonable negative covenants 25

26 as advised by the Solicitors. (iii) Financial covenants : Financial covenants 1) Dividend covenants The Issuer shall not declare or pay dividend or such other forms of distributions to shareholders (if applicable) if: (i) (ii) (iii) (iv) The FSCR (as defined in this item 2(w)(iii)(1)) is below 1.25 times after such payment; or The Total Debt (as defined in this item 2(w)(iii)(2)) to Shareholders Funds (as defined in this item 2(w)(iii)(2)) ratio is breached or if following such payment, the ratio will be breached; or An Event of Default has occurred, or if following such payments, an Event Default would occur; or The Minimum Balance has not been met. FSCR is defined as the ratio of the Issuer s net operating cashflow plus opening cash balances (including Permitted Investments) less any capital expenditure and dividend payments, to the aggregate of: the total principal repayment and coupon/interest/profit repayments due and paid under the Issuer s borrowings and financings and all finance charges paid during the relevant financial year. This excludes repayment of Notes, which are refinanced or replaced via a rollover or new issuance from the Notes Programme, of which the rollover or new issuance must occur within the same financial year. For avoidance of doubt, any repayment of the borrowings and financing via a refinancing will be treated as a net repayment and the amount will be included in the calculation of the FSCR for that financial year. 2) Total Debt to Shareholders Funds The Issuer shall maintain at all times a Total Debts (as defined in this item 2(w)(iii)(2)) to Shareholders Funds (as defined in this item 2(w)(iii)(2)) ratio of not more than 2.5 times. Total Debts shall mean: 26

27 (a) all principal amounts outstanding under the Notes Programme; and (b) all other indebtedness for borrowed moneys (be it actual or contingent), hire purchase obligations, finance lease obligations, net exposure determined on a marked to market basis under any derivative instrument (but excluding forward contracts entered into in the ordinary course of business which are trade in nature) and obligations/ contingent liabilities under guarantees/call or put options of the Issuer. For the avoidance of doubt, any double counting of any sum which might otherwise be included as a result of this definition, shall be disregarded. Shareholders Funds shall mean the aggregate of:- (a) (b) nominal ordinary and preference share capital for the time being issued and paidup; and the amount standing to the credit of capital revenue reserve (share premium accounts, capital redemption reserve fund, profit and loss account). The computation of FSCR and Total Debts to Shareholders Funds Ratio shall be based on the Issuer s latest audited accounts and confirmed by the auditors, whereupon a director of the Issuer shall provide a written confirmation to the Trustee confirming that the FSCR and Total Debts to Shareholders Funds Ratio have been complied with. (x) Provisions on buy-back and early redemption of Sukuk : Buyback Any Notes redeemed or purchased by the Issuer, its subsidiaries or agents of the Issuer acting for the redemption or purchase, shall be cancelled by the Issuer and not be resold. The Notes held by the Issuer or any interested person of the Issuer shall not be counted for purposes of voting at any meeting of the Noteholders. The interested person shall include directors, major shareholders and chief executive as defined under the Trust Deeds Guidelines but will not include the categories of major shareholders as provided under the exception in paragraph of the Trust Deeds Guidelines. 27

28 Early redemption The Issuer may, at its option, redeem in whole or in part (on a pro-rata basis), of a particular series of the Notes before their respective maturity dates at the terms to be agreed between the Issuer and the relevant Noteholders. Redemption at maturity Unless previously redeemed and cancelled, the Notes shall be redeemed by the Issuer at its nominal value on the respective maturity dates. Ibra (Rebate) A rebate may be granted at the absolute discretion of the Sukukholder(s). The Sukukholder(s) in subscribing or purchasing the Sukuk Murabahah, consent to grant a rebate, if the Sukuk Murabahah is redeemed before the maturity date, i.e upon the declaration of an Event of Default or upon such early redemption. In case of declaration of an Event of Default, the Ibra (Rebate) shall be the unearned profit due to the Sukukholder(s) from the date of redemption of the Sukuk Murabahah upon the declaration of an Event of Default up to the maturity date of the Sukuk Murabahah. In case of an early redemption, the Ibra (Rebate) (if any) shall be the difference between the outstanding Deferred Sale Price and the aggregate of nominal value plus accrued profit payments to be calculated from and including the preceding profit payment dates until and excluding the date of such early redemption. In case of Sukuk Murabahah where a floating profit rate is applicable, the Ibra (Rebate) (if any) shall be the difference between the Effective Profit Rate and Contracted Profit Rate. (y) Other principal terms and conditions for the proposal: (i) Form and denomination : Form Each series of the Sukuk Murabahah shall be represented by a global certificate to be deposited with BNM and shall be in bearer form. No physical delivery of the Sukuk Murabahah is permitted. 28

29 The Sukuk Murabahah shall be prescribed and be reported under the rules of MyClear and shall comply with all rules and requirements set out by MyClear. Denomination Each Sukuk Murabahah shall be issued in denomination and multiples of RM1,000,000 if issued through the rules of MyClear or such other denominations as shall be agreed upon between the Lead Arranger and the Issuer. (ii) (iii) Compensation for late payment ("Ta'widh") Material Adverse Effect : In the event of any overdue payments of the Deferred Sale Price due under the Sukuk Murabahah, the Issuer shall pay to the Trustee for the benefit of the Sukukholder(s), compensation ("Ta'widh") on such overdue amounts at an amount and manner prescribed by the SC's Shariah Advisory Council from time to time in accordance with the Shariah principles. : In relation to an event or circumstance, the occurrence or effect of which (in the opinion of the Trustee) may have a material adverse effect on: - a) the business or condition (financial or otherwise) or prospects of the Issuer, LYSR and/or their respective material subsidiaries taken as a whole, or b) the ability of the Issuer, LYSR and/or the Other Security Party to perform any of their respective obligations under any provision of the Transaction Documents, or c) the legality, validity, binding effect or enforceability of the Notes or the Transaction Documents; or d) the rights of or remedies available to the Trustee, Security Trustee and/or the Noteholders under any provision of the Transaction Documents. (iv) Status : The Sukuk Murabahah shall constitute direct, unconditional, unsubordinated and secured obligations of the Issuer and will at all times rank pari-passu without preference or priority among themselves and will rank at least paripassu to all other present and future unsecured and unsubordinated obligations of the Issuer from time to time (subject to those preferred by law). 29

30 (v) Permitted investments : Permitted Investments are collectively, the investment products approved by the SC s Shariah Advisory Council, BNM s Shariah Advisory Council and/or other recognized Shariah authorities, as follows; (i) (ii) Deposits with licensed Islamic financial institutions in Malaysia (as defined in the Financial Services Act, 2013 ( FSA ) and/or the Islamic Financial Services Act, 2013 ( IFSA ) with short term rating of P1 and a minimum long term rating of A3 or their equivalent; or Islamic bankers acceptance, Islamic bills and other Islamic money market instruments by licensed financial institutions (as defined in FSA and/or IFSA) with a short term rating of P1 and a minimum long term rating of A3 or their equivalent; or (iii) (iv) (v) Islamic treasury bills, Islamic money market instruments, and other Islamic securities or sukuk issued by BNM or the Government; or Sukuk issued by quasi government or government related corporations with a short term rating of P1 and a minimum long term rating of AA3 or their equivalent or Islamic securities or sukuk guaranteed by the Government; or Sukuk issued by corporations with a short term rating of P1 and a minimum long term rating of AA3 or their equivalent; or (vi) Sukuk issued by licensed financial institutions and/or Islamic banks with short term rating of P1 and a minimum long term rating of A3 or their equivalent. (vi) Taxation : All payments in respect of the Notes will be made by the Issuer after deducting or withholding any amount for or on account of any present or future taxes or duties of whatsoever nature imposed or levied by the Government of Malaysia or any authority thereof or therein having power to tax and which are required by law to be deducted or withheld. The Issuer shall be required to pay any additional amount in respect of any such deduction or 30