QL RESOURCES BERHAD PRINCIPAL TERMS AND CONDITIONS PROPOSED SUKUK PROGRAMME OF UP TO RM45.0 MILLION IN NOMINAL VALUE

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1 1. BACKGROUND INFORMATION OF THE ISSUER (i) Name : QL Resources Berhad ( QL or the Issuer ) (ii) Address : Registered Address: No 16A, Jalan Astaka U8/83 Bukit Jelutong Shah Alam Selangor (iii) (iv) Business registration no. Date and place of incorporation : X : 25 April 1997 / Kuala Lumpur (v) Date of listing : 30 March 2000 (vi) Status : Resident controlled company Non-bumiputera controlled company (vii) Principal activities (viii) Board of directors : The principal activities of QL and its group of companies are in marine products manufacturing, integrated livestock farming and palm oil activities. : The board of directors of QL as at 12 August 2011 was as follows: a) Tengku Dato Zainal Rashid bin Tengku Mahmood b) Chia Song Kun c) Chia Seong Pow d) Chia Seong Fatt e) Chia Song Kooi f) Chia Song Swa g) Chia Mak Hooi h) Chieng Ing Huong i) Teh Kim Teh j) Cheah Juw Teck k) Tan Bun Poo Page 1 of 29

2 (ix) Structure of shareholdings and names of shareholders or in the case of a public company, names of all substantial shareholders : As at 12 August 2011 the substantial shareholders of QL based on the register of substantial shareholders were as follows: Name of Substantial Shareholders CBG Holdings Sdn Bhd Farsathy Holdings Sdn Bhd Chia Song Kun Chia Seong Pow Chia Song Kooi Chia Seong Fatt Chia Song Swa Chia Mak Hooi Number of Shares Held Direct Indirect No of Shares % No of Shares % 373,846, ,337, , ,221,998 (1) ,880, ,832,740 (3) , ,453,882 (2) , ,821,540 (4) , ,186,682 (2) , ,270,682 (5) Notes: (1) Deemed interest via his and his spouse's interest in CBG Holdings Sdn. Bhd., and Attractive Features Sdn. Bhd. and via Ruby Technique Sdn. Bhd., his spouse, children and their spouse s shares in QL. (2) Deemed interest via CBG Holdings Sdn. Bhd. and via Ruby Technique Sdn. Bhd., and their spouse s shares in QL. (3) Deemed interest via his and his spouse s shareholding in Farsathy Holdings Sdn. Bhd. and via Ruby Technique Sdn. Bhd., and his spouse s and children s shares in QL. (4) Deemed interest via his and his spouse s shareholding in Farsathy Holdings Sdn. Bhd. and via Ruby Technique Sdn. Bhd., and his children s shares in QL. (5) Deemed interest via his and his father s interest in CBG Holdings Sdn. Bhd. and via Ruby Technique Sdn. Bhd., and his father s and spouse s shares in QL. Page 2 of 29

3 (x) Authorised and paid-up capital : The authorised and paid-up capital of QL as at 12 August 2011 were as follows: Authorised Capital: Paid-up Capital: RM500,000, comprising 2,000,000,000 ordinary shares of RM0.25 each. RM208,000, comprising 832,001,608 ordinary shares of RM0.25 each. 2. (a) Names of parties involved in the proposed transaction, (where applicable) (i) Principal Adviser : Al Rajhi Banking & Investment Corporation (Malaysia) Bhd ( ARBM ) (ii) Lead Arranger : ARBM (iii) Co-arranger : Not applicable (iv) Solicitors : Messrs. Kadir Andri & Partners (legal counsel to ARBM cum transaction solicitor) (v) Financial Adviser : Not applicable (vi) Technical Adviser : Not applicable Messrs. Enolil Loo (legal counsel to the Issuer cum due diligence solicitor) (vii) Trustee : Not applicable. There will only be a single subscriber to the Sukuk at all times. (viii) Guarantor : Not applicable (ix) Valuer : Not applicable (x) Facility Agent : ARBM (xi) Primary Subscriber(s) and amount subscribed (where applicable) : Not applicable. Page 3 of 29

4 (xii) Underwriter(s) and amount underwritten : Not applicable. (xiii) Shariah Adviser : The Shariah Committee of ARBM (xiv) Central Depository : Bank Negara Malaysia ( BNM ) (xv) Paying Agent : BNM (xvi) Reporting Accountant : Not applicable (xvii) Calculation Agent : ARBM (xviii) Others : 1. Wakeel : QL. QL will act as the agent/wakeel of ARBM (as the investor), for the purpose of investment in Shariah compliant Commodities on behalf of ARBM (as the investor). 2. Transaction Administrator 3. Commodity Agent : QL. QL will be responsible for the administrative aspects of the Sukuk Trust (as described in Section 2(b) below). : ARBM. ARBM will be appointed by Al Amin as the commodity agent to purchase Commodities. ARBM will also be appointed by the Issuer as the commodity agent to sell Commodities. Page 4 of 29

5 4. Al Amin : Al Rajhi Nominee (Tempatan) Sdn Bhd ( ARNT ). ARNT will be appointed by the Issuer as the trustee for the Sukuk Trust (as described in Section 2(b) below). Amongst the duties of Al Amin is to undertake investment in Shariah compliant Commodities. 5. Sole Sukuk holder : ARBM (b) Facility description (including the description of Islamic principles used) : An Islamic Commercial Papers ( ICPs or Sukuk ) issuances programme of up to RM45.0 Million in nominal value ( the Proposed Sukuk Programme ). The Sukuk will be issued based on the Islamic principles of al-wakalah (contract of agency), al- Bai (sale of assets), and al-bai Bithaman Ajil (sale of assets with deferred payment). Under the Proposed Sukuk Programme, the following events shall take place:- Firstly, pursuant to al-wakalah principle, QL shall enter into a wakalah agreement with ARBM from time to time pursuant to which QL will be appointed by ARBM (as the investor) to be its agent/wakeel for the purpose of investment in Shariah compliant commodity ( Commodity Investment ) on behalf of ARBM (as the investor). Upon receiving cash from ARBM ( Investment Amount ), QL will immediately thereupon constitute a sukuk trust for the purpose of the Commodity Investment ( Sukuk Trust ) whereupon the Investment Amount shall be received by QL and credited directly into the Sukuk Trust bank account. QL will appoint Al Rajhi Nominee (Tempatan) Sdn Bhd ( ARNT ) as Page 5 of 29

6 the trustee for the Sukuk Trust ( Al Amin ). Amongst the duties of Al Amin is to undertake the Commodity Investment. In respect of each issuance, QL will issue Sukuk to ARBM as the sole Sukuk holder to represent the undivided interest in the Sukuk Trust. QL is appointed as the Transaction Administrator for the administrative aspects of the Sukuk Trust. Al Amin shall utilise the entire Investment Amount as credited into the Sukuk Trust bank account to purchase Shariah compliant Commodities via Bursa Suq Al-Sila or other commodity trading platform as approved by the Shariah Committee of ARBM. Al Amin will appoint a commodity agent ( Commodity Agent ) to purchase Shariah compliant Commodities from identified commodity vendors in the Bursa Suq Al-Sila commodity market for a spot delivery at market value and in cash consideration. Al Amin will issue an authorisation to purchase to the Commodity Agent to conclude the purchase transaction on its behalf. Upon completion of the purchase transaction, the Commodity Agent shall confirm the purchase and ownership of the Commodities to Al Amin. Upon holding ownership of the Commodities by Al Amin, QL will issue to Al Amin a purchase notice wherein QL offers to purchase the Commodities from Al Amin on deferred payment term, in accordance with the Shariah principle of al-bai Bithaman Ajil and subject to the terms and conditions in the Master Commodity Trading Agreement. Upon acceptance by Al Amin of the offer to purchase as contained in the purchase notice, the purchase of the Commodities by QL from Al Amin is concluded and QL becomes the owner of the Commodities. Thereupon, QL shall appoint a Commodity Agent to sell the Commodities to Page 6 of 29

7 commodity buyer(s) in the Bursa Suq Al-Sila commodity market on spot for cash consideration. QL will issue an authorisation to sell to the Commodity Agent to conclude the sale transaction on its behalf. The sale of the Commodities at the Bursa Suq Sila will be through a bidding process and there will be no pre-arrangement to sell back the Commodities to the previous identified commodity vendors. QL shall pay the sale price on deferred payment term to Al Amin for the benefit of ARBM as the sole Sukuk holder on maturity date of each Sukuk. A description of the above transaction structure is further explained in Appendix B. (c) Issue/Programme size (RM) : Up to RM45.0 million in nominal value. The outstanding nominal value of the ICPs issued under the Proposed Sukuk Programme at any point in time shall not exceed RM45.0 million, subject always to the reduction schedule as set out below: Scheduled Reduction Month The Proposed Sukuk Programme reduction in facility amount (RM) The Remaining Proposed Sukuk Programme facility limit (RM) February ,100,000 40,900,000 August ,450,000 35,450,000 February ,450,000 30,000,000 August ,820,000 23,180,000 February ,820,000 16,360,000 August ,180,000 8,180,000 February ,180,000 - The issue size of each issue of ICPs will be determined at the point of issuance. The SC will be notified accordingly pursuant to the Sukuk Guidelines. Page 7 of 29

8 (d) (e) Tenure of the issue/ Sukuk Programme (or facility) Availability period of sukuk programme (or facility) : The aggregate tenure of the Proposed Sukuk Programme is up to three and a half (3.5) years or up to 42 months or up to February 2015, whichever is earlier, from the date of the first issuance of the ICP, subject to the initial issuance to be effected within twenty four (24) months from the date of approval of the SC. The ICPs shall be issued for maturities of one (1), two (2), three (3), six(6), nine (9) or twelve (12) months or such other tenures up to twelve (12) months to be mutually agreed between the Issuer and the Facility Agent, provided the ICPs mature prior to the maturity of the Sukuk Programme. The SC will be notified accordingly pursuant to the Sukuk Guidelines. : Throughout the tenure of the Sukuk Programme, subject to the reduction schedule. (f) Profit/Rental rate : Not applicable as the Sukuk shall be issued at a discount to nominal value. (g) Profit/ Rental payment : Not applicable as the Sukuk shall be issued at a discount to nominal value. (h) Profit/Rental payment basis : The yield/return shall be paid on actual/365 days basis. (i) Security/collateral : The Sukuk shall be unsecured. (j) Details on utilisation of proceeds by Issuer/ Obligor : To early redeem fully or partly the outstanding principal balance in QL s existing Structured Commodity Financing-i facility with ARBM. Once the ICPs have been issued for the purpose set out as above, the Issuer may issue new ICPs to redeem fully or partly the outstanding ICPs subject to the reduction schedule. The Issuer shall ensure that the utilisation of the ICPs under the Proposed Sukuk Programme complies with the Shariah principles at all times. Page 8 of 29

9 (k) Sinking fund and designated accounts (if any) : Not applicable. (l) Rating : The Sukuk shall be unrated, non-transferable and non-tradable. (m) Mode of issue : Via private placement to ARBM in accordance with (1) the Participation and Operation Rules for Payment and Securities Services issued by MyClear ( MyClear Rules ) and (2) MyClear Procedures, or their replacement thereof (collectively the MyClear Rules and Procedures ) applicable from time to time. (n) Selling restriction, including tradability (i.e. tradable or non-tradable) : Any sale of the Sukuk in Malaysia will be subject to the following selling restrictions: (a) At the point of issue The Sukuk may only be offered to a single subscriber falling within Schedule 6 or Section 229(1)(b) and Schedule 7 or Section 230(1)(b) and Schedule 9 or Section 257(3) of the CMSA. (b) Upon issuance thereafter (o) (p) Listing status and types of listing Other regulatory approval required in relation to the issue, offer or invitation and whether or not obtained The Sukuk shall not be transferable and shall not be tradable in the secondary market. : The Sukuk will not be listed on the Bursa Malaysia Securities Berhad or any other exchange. : Not applicable. Page 9 of 29

10 (q) Conditions precedent : To include but not limited to the following (all have to be in form and substance acceptable to ARBM and as may be waived by the ARBM): (a) (b) A Board resolution authorising the application for the Sukuk Programme; The Warranted Agreements (other than the Subscription Agreement) have been executed and endorsed as being exempt from stamp duty. The term Warranted Agreements means: 1. Programme Agreement; 2. Master Wakalah Agreement 3. Subscription Agreement; 4. Trust Deed; 5. Transaction Administration Agreement; 6. Master Commodity Trading Agreement; 7. Master Commodity Purchase Agency Agreement; and 8. Master Commodity Sale Agency Agreement. and any other agreements executed or to be executed by QL in connection with the Proposed Sukuk Programme and includes any amendments, variations and/or supplementals made or entered from time to time; (c) (d) (e) The duly completed Securities Lodgement Form (substantially in the form set out in Appendix 1 of the Central Securities Depository and Paying Agency Rules issued by MyClear) has been delivered to the Facility Agent; Approval of the SC has been obtained for the Proposed Sukuk Programme; The Sukuk structure have received the endorsement or approval of the Shariah Adviser; Page 10 of 29

11 (f) (g) (h) (i) (j) Evidence that all transaction fees, costs and expenses relating to the Proposed Sukuk Programme have been or will be paid in full; Legal opinion from Messrs Kadir, Andri & Partners advising with respect to, among others, the legality, validity and enforceability of the Warranted Agreements and that all the other conditions precedent have been fulfilled; A company search on the Issuer has been conducted at the Companies Commission of Malaysia and ARBM is satisfied that the results of such searches must be satisfactory to ARBM and do not indicate any charges or matters which may affect the Warranted Agreements or any matters contemplated thereunder; A winding up search on the Issuer has been conducted at the Insolvency Department of Malaysia confirming that no winding up order has been made against the Issuer; and The Issuer shall have furnished to ARBM a certificate in a form to be agreed for authorising representatives from the Issuer to sign and deliver the Warranted Agreements (wherever relevant) and all relevant notices, certificates and documents contemplated thereunder. The following documents shall be attached to the certificate: (1) true, complete, correct and up to date copies of the Certificate of Incorporation, and the Memorandum and Articles of Association of the Issuer as certified by the Company Secretary, (2) copies of the latest Forms 8, 24, 44 and 49, and Annual Return filed by the Issuer with the Companies Commission of Malaysia all certified by the Company Secretary; (3) a true, complete, correct and Page 11 of 29

12 up to date copy of the board resolution of the Issuer approving the Proposed Sukuk Programme and the issue of the Sukuk, the execution, delivery and performance of the Sukuk and each Warranted Agreement to which it is a party and authorising a named person or persons to sign each such document and any other document to be delivered by the Issuer pursuant to the Warranted Agreements, certified by the Company Secretary. (k) Others: such other conditions precedent as advised by Messrs Kadir, Andri & Partners to ARBM and mutually agreed between ARBM and the Issuer. (r) Representations and warranties : To include but not limited to the following: (a) Status: the Issuer is a company with limited liability, duly incorporated and validly existing under the laws of Malaysia and has full power to carry on its business; (b) (c) Powers: the Memorandum and Articles of Association of the Issuer incorporate provisions which authorise, and all necessary corporate and other relevant actions have been taken to authorise, and subject to the fulfilment of the conditions precedent, all relevant consents and approvals of any administrative, governmental or other authority or body in Malaysia have been duly obtained and are in full force and effect which are required to authorise the Issuer to execute and deliver and perform the transactions contemplated in the Warranted Agreements in accordance with their terms; Authorisation and Consents: all action, subject to the fulfilment of the conditions precedent, conditions and things required to be taken, fulfilled and done (including Page 12 of 29

13 the obtaining of any necessary consents) in order (a)(i) to enable the Issuer lawfully to enter into, exercise its rights and perform and comply with its obligations under the Warranted Agreements to which it is a party; (ii) to enable the Issuer to issue and perform and comply with its obligations under the Sukuk; and (iii) to ensure that those obligations are legally binding and enforceable and (b) to make the Warranted Agreements to which it is a party and the Sukuk admissible in evidence in the courts of Malaysia, have been taken, fulfilled and done; (d) Non-Violation of Laws: subject to the fulfilment of the conditions precedent, neither the execution and delivery of any of the Warranted Agreements nor the performance of any of the transactions contemplated by the Warranted Agreements did or does as at the date this representation and warranty is made or repeated (i) contravene or constitute a default under any provision contained in any agreement, instrument, law, ordinance, decree, judgment, order, rule, regulation, licence, permit or consent by which the Issuer or any of its assets are bound or which is applicable to the Issuer or any of its assets, (ii) cause any limitation on the Issuer or the powers of its directors, whether imposed by or contained in its Memorandum and Articles of Association or in any agreement, instrument, law, ordinance, decree, order, rule, regulation, judgment or otherwise, to be exceeded, or (iii) cause the creation or imposition of any security interest or restriction of any nature on any of the Issuer s assets or oblige the Issuer to create, any security over those assets; Page 13 of 29

14 (e) Obligations Binding: subject to the fulfilment of the conditions precedent, the Issuer s obligations under each of the Warranted Agreements to which it is a party is or will when executed and/or issued, as the case may be, be in full force and effect and constitutes, or will when executed or issued, as the case may be, constitute, valid and legally binding obligations of the Issuer, enforceable in accordance with its terms and the Issuer s obligations under the Proposed Sukuk Programme, when issued will be valid, binding and enforceable in accordance with their respective terms; (f) (g) (h) (i) Accounts: the Issuer s latest audited financial statements for its last financial year including the income statement and balance sheets were prepared in accordance with approved accounting standards in Malaysia and consistently applied; No Material Adverse Change: there has been no material adverse change in the Issuer s business or condition (financial or otherwise) since the date of its latest audited financial statements which is likely to have a material adverse effect; Litigation: there is no litigation, arbitration or administrative proceedings or claim which might by itself or together with any other such proceedings or claims have a material adverse effect presently in progress or pending against the Issuer or any of its assets, in relation to which the Issuer has not taken any action in good faith to set aside; No Event of Default/Cancellation Event: the Issuer is not aware that an event has occurred which constitutes or which with the giving of notice and/or the lapse of Page 14 of 29

15 time and/or relevant determination would constitute an Event of Default (as defined below) or a Cancellation Event (as defined below) or a contravention or default under any agreement or instrument by which the Issuer or any of its assets are bound or affected being a contravention or default which is likely to have a material adverse effect; (j) No Dissolution: no steps have been taken by the Issuer or each of its shareholders nor have any legal proceedings been started or threatened for the dissolution or for the appointment of a receiver, trustee, judicial manager or similar officer over the Issuer or its assets; (k) Warranted Agreements valid: the Warranted Agreements are at all times valid, binding and enforceable; (l) (m) (n) No Immunity: neither the Issuer nor any of its properties enjoy any immunity on the grounds of sovereignty or otherwise in respect of its obligations under the Warranted Agreements; and Compliance with Applicable Laws: the Issuer is in compliance and will comply with all applicable laws and regulations for the carrying on of its businesses. Others: such other representations and warranties as advised by Messrs Kadir, Andri & Partners to ARBM and mutually agreed between ARBM and the Issuer. (s) Events of default (or enforcement event, where applicable) : To include but not limited to the following events of default ( Events of Default ): (a) Chia Song Kun ceases to be the controlling shareholder either directly or indirectly of the Issuer; or Page 15 of 29

16 (b) (c) (d) (e) if the Issuer fails to pay any amount due from it under any of the Warranted Agreements to which it is a party on the due date or, if so payable, on demand; or the Issuer fails to observe or perform its obligations under any of the Warranted Agreements to which it is a party or the Sukuk or under any undertaking or arrangement entered into in connection therewith other than an obligation of the type referred to in (b) above and such failure has a material adverse effect, and in the case of a failure which in the opinion of ARBM is capable of being remedied, it is not being remedied within a period of fourteen (14) business days after the Issuer became aware or having been notified in writing by ARBM of the failure; or any representation or warranty which is made or given by the Issuer in the Warranted Agreements to which the Issuer is a party or which is contained in any certificate, document or statement furnished at any time pursuant to the terms of the Sukuk and/or any of such Warranted Agreements, which in the reasonable opinion of ARBM is, or is proved to be, incorrect or misleading in a material respect on or as of the date such representation or warranty is made or given or deemed made or given, or if repeated at any time with reference to the facts and circumstances subsisting at such time would have been incorrect; or any indebtedness of the Issuer becomes due or payable or capable of being declared due or payable before its stated maturity and is not discharged within a period of fourteen (14) business days of it so becoming due or being declared due or any guarantee or similar obligation of the Issuer is called upon and such call is Page 16 of 29

17 not discharged within the period stipulated in the relevant document creating or governing such guarantee or similar obligation or the security of such indebtedness becomes enforceable; or (f) (g) (h) it is or will become unlawful by the laws of Malaysia for the Issuer to perform or comply with any of its obligations under the Warranted Agreements to which it is a party; or the Issuer becomes insolvent or takes any corporate action or other steps are taken or legal proceedings are started for the winding-up, dissolution, administration or arrangement and reconstruction under Section 176 of the Companies Act, 1965, of the Issuer or for the appointment of a liquidator or a trustee or administrator or receiver or similar officer is appointed in respect of, all or a substantial part of the business or assets of the Issuer and further in relation to any step or legal proceeding, the Issuer has failed to initiate action to set aside, strike out or defend such step or proceeding within thirty (30) days from the date of the service of such enforcement, possession, appointment or execution; or any execution or distress is levied or enforced upon or against the whole or any substantial part of the property, undertaking or assets of the Issuer and ARBM is of the opinion that the same will have a material adverse effect; or Page 17 of 29

18 (i) (j) all or a substantial portion of the assets, undertakings, rights or revenue of the Issuer are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any governmental body and ARBM is of the opinion that the same will have a material adverse effect; or the Issuer repudiates or threatens to repudiate the Warranted Agreements to which it is a party, (t) Covenants : Positive covenants whereupon the Facility Agent may or shall (if directed to do so by a special resolution of the Sukuk holder) declare that the dissolution amount shall become immediately due and payable. Such declaration by the Facility Agent of an Event of Default shall also be deemed to be a declaration of an event of default under the Warranted Agreements. Thereafter, the Facility Agent may take proceedings against the Issuer as the Facility Agent may deem fit to enforce immediate payment of the dissolution amount. The dissolution amount is determined based on the net profit and amounts due from the investment of the Sukuk proceeds being the commodity trading. Including but not limited to the following: (a) (b) (c) the status of the indebtedness created under the Proposed Sukuk Programme will rank pari passu with all other unsecured indebtedness, present and future; compliance with the financial covenants at QL Group level; the Issuer shall maintain in full force and effect all relevant authorisations, consents, rights, licences, approvals and permits (governmental and otherwise) Page 18 of 29

19 and will promptly make all reasonable efforts to obtain any further authorisations, consents, rights, licences, approvals and permits (governmental and otherwise) which is or may become necessary to enable it to own its assets, to carry on its business or for the Issuer to enter into or perform its obligations under the Warranted Agreements or to ensure the validity, enforceability and admissibility in evidence of the Warranted Agreements; (d) (e) (f) (g) (h) the Issuer shall at the request of ARBM execute all such further documents as it shall require to give further effect to the agreed terms and conditions of the Warranted Agreements; the Issuer shall exercise reasonable diligence in carrying out its business and affairs in a proper and efficient manner and in accordance with sound financial and commercial standards and practices; the Issuer will immediately notify ARBM of claims against it which would have a material adverse effect upon the ability of the Issuer to perform its obligations under the Warranted Agreements to which it is a party; the Issuer shall perform and carry out all its obligations under all the Warranted Agreements and ensure that it shall as soon as it may be practicable notify ARBM in the event that the Issuer is unable to fulfil or comply with any of the provisions of the Warranted Agreements; the Issuer shall ensure that its financial statements are prepared on a basis consistently applied in accordance with approved accounting standards in Malaysia and those financial statements shall give a true and fair view of the Page 19 of 29

20 results of the operations of the Issuer for the period to which the financial statements are made up and shall disclose or provide against all liabilities (actual or contingent) of the Issuer; (i) (j) (k) the Issuer shall promptly comply with all applicable laws for the carrying on of its businesses, and including the provisions of the CMSA and/or the notes, circulars, conditions or guidelines issued by the SC from time to time in respect of the Proposed Sukuk Programme; the Issuer shall give to ARBM such information as it shall reasonably require, to the extent as permitted by law, for the purpose of the discharge of the duties, powers, trusts, authorities, obligations and discretion vested in it hereunder or by the operation of law; the Issuer shall forthwith give notice to ARBM upon becoming aware: (i) (ii) (iii) of any change in its substantial shareholders structure (including changes in the board of directors); of any change in its condition (financial or otherwise) and of any litigation or other proceedings of any nature whatsoever being threatened or initiated against the Issuer before any court or tribunal or administrative agency which may have a material adverse effect; and of the occurrence of any Event of Default or Cancellation Event or any event which, upon the giving of notice and/or lapse of time and/or the issue of a certificate and/or the fulfilment of the relevant requirement as Page 20 of 29

21 contemplated under any of the relevant Warranted Agreements would constitute Events of Default ( Potential Events of Default ) forthwith upon becoming aware thereof, and it shall take all reasonable steps and/or such other steps as may reasonably be requested by ARBM to remedy and/or mitigate the effect of such events; (l) (m) the Issuer shall maintain a Paying Agent with a specified office in Malaysia; the Issuer shall immediately notify ARBM in the event that the Issuer becomes aware: (i) (ii) of any substantial change in the nature of the business of the Issuer; and of any other circumstance or matter whether or not occurred, that may materially and adversely prejudice the interest of the Sukuk holder; (n) (o) the Issuer shall immediately notify ARBM in the event that there is any change in the withholding tax position or taxing jurisdiction of the Issuer; and the Issuer shall keep proper books of account as necessary in compliance with applicable statutory requirements and provide ARBM or any auditor appointed by it access to inspect such books of account at its place of business. Page 21 of 29

22 Negative covenants Including but not limited to the following: (a) the Issuer shall not without prior written consent of ARBM first had and obtained (which consent shall not be unreasonably withheld) create or permit to arise or subject any encumbrance, mortgage, charge, pledge, lien right of retention, right of set-off or any other security interest on the whole or any part of our present or future assets for the obtainment of any working capital facilities from other financial institutions other than: (i) (ii) liens arising in the ordinary course of business or by operation of law; and security interests existing at the date of issuance of the Sukuk provided that the same has been disclosed to ARBM prior to the date of issuance of the Sukuk and subject to the amount outstanding and secured thereby at all times and at any time thereafter not exceeding the amount so disclosed at the date of issuance of the Sukuk; (b) the Issuer shall not without prior written consent of ARBM first had and obtained (which consent shall not be unreasonably withheld) incur or permit to exist any indebtedness for borrowed moneys or assume any liability in respect of or guarantee such indebtedness other than: (i) (ii) the Sukuk; any indebtedness for borrowed moneys existing at the date hereof provided the same has been Page 22 of 29

23 disclosed prior to the date of issuance of Sukuk and subject to the amount outstanding at all times and at any time thereafter not exceeding the amount so disclosed at the date of issuance of the Sukuk; (iii) indebtedness as allowed hereunder; (c) (d) (e) save and except as allowed under paragraph (b)(ii) above, the Issuer shall not without prior written consent of ARBM first had and obtained grant any loans, incur, assume, guarantee any person or permit to exist any further indebtedness, advances or facility except for normal business trade credit or trade guarantee and other unsecured indebtedness incurred in the ordinary course of business; the Issuer shall not without prior written consent of ARBM first had and obtained sell, transfer, lease or otherwise dispose of all or substantial part of its business assets or undertakings and/or the properties and assets of its subsidiaries whether by one transaction or a series of transactions except in the ordinary course of business, on ordinary commercial terms and on arm s length basis; and the Issuer shall not use the proceeds of the issuance of Sukuk other than for the purposes as stated herein. Page 23 of 29

24 Financial Covenants Financial covenants at QL Group level must be adhered at all time throughout the entire Proposed Sukuk Programme tenure:- (a) (b) Gearing not exceeding 1.50x. Debt Service Cover Ratio (DSCR) at minimum 1.8x; and Finance Service Cover Ratio (FSCR) at minimum 3x. (u) Provisions on buy-back and early redemption of sukuk (c) Total annual dividend payout by subsidiary companies to QL shall not be less than 20% of Net Profit (after Tax). : Redemption Unless there is an early redemption of the Sukuk, the Sukuk shall be redeemed on their respective maturity dates by the final payment of the commodity transaction between Al-Amin and the Issuer. Early Redemption The Issuer may redeem the Sukuk (in whole) prior to maturity subject to the mutual agreement between the sole Sukuk holder and Issuer. Pursuant to the early redemption of the Sukuk, the Sukuk shall be cancelled and cannot be reissued. Any rebate (Ibra') due to the Issuer would be determined at the point of early redemption and at the discretion of the sole Sukuk holder. (v) Other principal terms and conditions for the issue (i) Issue of, offer for subscription or purchase of Sukuk : There will only be a single subscriber to the Sukuk at all times. Page 24 of 29

25 (ii) Cancellation events : To include but not limited to the following cancellation events ( Cancellation Events ): (a) (b) where the introduction or variation of any law, order, regulation, or official directive or any change in the interpretation or application thereof by any competent authority makes it unlawful or impractical without breaching such law, order, regulation or official directive for ARBM to give effect to their obligations under the Warranted Agreement; or an Event of Default has occurred and has been declared. Upon occurrence of any of the Cancellation Events, ARBM may, at any time, be entitled to terminate the Proposed Sukuk Programme and, if ARBM terminates the Proposed Sukuk Programme, also declare the ability of the Issuer to issue the Sukuk under the Proposed Sukuk Programme be cancelled by notice in writing delivered to the Issuer. (iii) Suspension event : Any new issuance of Sukuk pursuant to the Proposed Sukuk Programme shall be suspended in the event of suspension or cessation of the listing of, trading in or settlement of trades in, securities generally on RENTAS. (iv) Identified assets : Shariah-compliant Commodities (excluding ribawi items in the category of medium of exchange such as currency, gold and silver). (v) Purchase and selling price/rental : The purchase and selling price of the Identified Assets being Commodities at which any sale and purchase transaction is undertaken will be determined from time to time at the point of each issuance. The purchase price of the Commodities shall fully comply with the requirements in paragraph 8.02 of the Sukuk Guidelines. Page 25 of 29

26 (vi) Compensation ("Ta'widh") : There will be no provision in the documentation relating to the Sukuk for compensation to be paid on any overdue payments of any amounts due under the Sukuk. (vii) Taxation : All payments by the Issuer in respect of the Sukuk 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 the Government of Malaysia, or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law in which event the Issuer shall not make any additional payments on account of such withholdings or deductions. (viii) Governing law : Laws of Malaysia. The courts of Malaysia will have exclusive jurisdiction. For all intents and purposes, the Sukuk are intended to be Shariah compliant in accordance with the relevant Shariah contracts and all Warranted Agreements shall be construed in accordance with the Shariah principles. The Shariah requirements adopted by the Shariah Advisers will be applicable. (ix) Jurisdiction : The Issuer shall unconditionally and irrevocably submit to the exclusive jurisdictions of the courts of Malaysia. Page 26 of 29

27 APPENDIX A DETAILS OF SHARIAH PRINCIPLES USED Al-Wakalah Al-Wakalah is a contract of agency in which one party appoints another party to perform a certain task on behalf of the former based on the agreed terms and conditions whether for a fee or without fee. Al-Bai Al-Bai is a principle in respect of the sale of goods or assets from one party to another for a consideration. Al-Bai Bithaman Ajil The principle of Al-Bai Bithaman Ajil may be applied in a sale contract whereby the payment for the sale of goods or assets is deferred and payable in the future. Notwithstanding, the ownership of the goods or assets would have been transferred at the point of solemnising the contract (i.e., aqad). [the remainder of this page is intentionally left blank] Page 27 of 29

28 APPENDIX B PER SUKUK ISSUED 3 1 ARBM As sole Sukuk holder 9 QL (Wakeel/Issuer/ Transaction Administrator) ARNT (Al Amin) Commodity 8 $ 5 & 6 $ Commodity Commodity Agent Commodity Agent Steps Descriptions 1 Firstly, pursuant to al-wakalah principle, QL shall enter into a wakalah agreement with ARBM from time to time pursuant to which QL will be appointed by ARBM (as the investor) to be its agent/wakeel for the purpose of investment in Shariah compliant commodity ( Commodity Investment ) on behalf of ARBM (as the investor). 2 Upon receiving cash from ARBM ( Investment Amount ), QL will immediately thereupon constitute a sukuk trust for the purpose of the Commodity Investment ( Sukuk Trust ) whereupon the Investment Amount shall be received by QL and credited directly into the Sukuk Trust bank account. QL will appoint Al Rajhi Nominee (Tempatan) Sdn Bhd ( ARNT ) as the trustee for the Sukuk Trust ( Al Amin ). Amongst the duties of Al Amin is to undertake the Commodity Investment. 3 In respect of each issuance, QL will issue Sukuk to ARBM as the sole Sukuk holder to represent the undivided interest in the Sukuk Trust. Page 28 of 29

29 Steps Descriptions 4 QL is appointed as Transaction Administrator for the administrative aspects of the Sukuk Trust. 5 Al Amin shall utilise the entire Investment Amount as credited into the Sukuk Trust bank account to purchase Shariah compliant Commodities via Bursa Suq Al-Sila or other commodity trading platform as approved by the Shariah Committee of ARBM. 6 Al Amin will appoint a commodity agent ( Commodity Agent ) to purchase Shariah compliant Commodities from identified commodity vendors in the Bursa Suq Al-Sila commodity market for a spot delivery at market value and in cash consideration. Al Amin will issue an authorisation to purchase to the Commodity Agent to conclude the purchase transaction on its behalf. Upon completion of the purchase transaction, the Commodity Agent shall confirm the purchase and ownership of the Commodities to Al Amin. 7 Upon holding ownership of the Commodities by Al Amin, QL will issue to Al Amin a purchase notice wherein QL offers to purchase the Commodities from Al Amin on deferred payment term, in accordance with the Shariah principle of al-bai Bithaman Ajil and subject to the terms and conditions in the Master Commodity Trading Agreement. 8 Upon acceptance by Al Amin of the offer to purchase as contained in the purchase notice, the purchase of the Commodities by QL from Al Amin is concluded and QL becomes the owner of the Commodities. Thereupon, QL shall appoint a Commodity Agent to sell the Commodities to commodity buyer(s) in the Bursa Suq Al-Sila commodity market on spot for cash consideration. QL will issue an authorisation to sell to the Commodity Agent to conclude the sale transaction on its behalf. The sale of Commodities at the Bursa Suq Sila will be through a bidding process and there will be no pre-arrangement to sell back the Commodities to the previous identified commodity vendors. 9 QL shall pay the sale price on deferred payment term to Al Amin for the benefit of ARBM as the sole Sukuk holder on maturity date of each Sukuk. Page 29 of 29