PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL. : Boustead Holdings Berhad ( BHB )

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1 PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL 1. BACKGROUND INFORMATION (a) Issuer Name Address (iii) Business Registration No. (iv) Date/Place of Incorporation (v) Date of listing (in case of a public listed company) (vi) Status of Residence (vii) Principal Activities : Boustead Holdings Berhad ( BHB ) : Registered Address: 28 th Floor, Menara Boustead 69 Jalan Raja Chulan Kuala Lumpur : 3871-H : 25 July 1960 / Malaysia : 17 March 1961 : Resident controlled company : The principal activities of BHB are investment holding, provision of management services to subsidiaries and property investment. The principal activities of its subsidiaries include the cultivation and management of oil palm plantations, property development, property investment, hotels, ship building and ship repair, manufacturing of pharmaceutical products, marketing of petroleum products, distribution of building materials, travel agency, education, manufacturing of fibre cement products, manufacturing of paints, manufacturing of glazed ceramic tiles and the provision of air transportation and support services as well as maintenance, repair and overhaul of aircraft. The principal activities of its associates are operating a commercial bank, an Islamic bank, an investment bank, and engaging in general and life insurance, manufacturing of confectionery and marketing of toiletries, and property investment. (viii) Board of Directors : The Board of Directors of BHB as at 30 August 2013 is as follows: Gen. Tan Sri Dato Mohd Ghazali Hj. Che Mat (R) Tan Sri Dato Seri Lodin Wok Kamaruddin 1

2 (iii) Dato (Dr.) Megat Abdul Rahman Megat Ahmad (iv) Datuk Azzat Kamaludin (v) Dato Ghazali Mohd Ali (vi) Datuk Francis Tan Leh Kiah (ix) Structure of shareholdings and name of shareholders or, in the case of a public company, names of all substantial shareholders (x) Authorised, issued and paid up capital : The substantial shareholder of BHB as at 30 August 2013 is as follows: Name of Shareholder Lembaga Tabung Angkatan Tentera Direct Interest No. of % Shares 619,998, : The share capital of BHB as at 30 August 2013 is as follows: Share Capital No. of Shares RM Authorised Ordinary shares of RM0.50 each 2,000,000,000 1,000,000,000 Issued and fully paid-up Ordinary shares of RM0.50 each 1,034,178, ,089, (xi) Disclosure of the following : a) 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 Nil. b) 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. Nil. 2

3 2. PRINCIPAL TERMS AND CONDITIONS (a) Names of parties involved in the proposed transaction (where applicable) : Principal Adviser Affin Investment Bank Berhad ( Affin Investment ) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) : Lead Arranger ( LA ) Affin Investment : Co-Arranger Not Applicable : Solicitor Messrs. Zul Rafique & partners : Financial Adviser Not Applicable : Technical Adviser Not Applicable : Sukuk Trustee Pacific Trustees Berhad : Shariah Adviser Dr Aznan Hasan : Guarantor Not Applicable : Valuer Not Applicable : Facility Agent Affin Investment : Primary Subscriber (under a bought-deal arrangement) and Amount Subscribed Not applicable : Underwriter and amount underwritten Not applicable : Central Depository Bank Negara Malaysia ( BNM ) : Paying Agent BNM : Reporting Accountant Not applicable 3

4 (xvii) : Calculation Agent Not applicable (xviii) : Others (please specify) i) Lead Managers Affin Investment and other financial institution(s) (if any) which shall be identified closer to the point of each issuance ii) Identified Investors/placees To be identified. (b) : Islamic Principles Used The issuance of the Islamic medium term notes is under the Shariah principle of Musharakah. The Shariah principle of Musawamah will be employed: to effect any deferral of Periodic Distribution Amount (as described in item 2(c)) and/or any deferral of any Additional Distribution Amount (as described in item 2(y)(iii)) via Musawamah Transaction I (as described in item 2(c)); and to effect the payment of any Additional Distribution Amount via Musawamah Transaction II (as described in item 2(c)). (c) Facility Description Issuance of Islamic medium term notes under the Shariah principle of Musharakah ( Junior Sukuk Musharakah ) pursuant to the junior Islamic medium term note programme of up to RM1.2 billion in nominal value ( Junior Sukuk Programme ). Musharakah Transaction The Shariah compliant businesses or part thereof of the Issuer and its subsidiaries will be identified and used as the underlying asset for that particular Musharakah transaction. Business comprises BHB and its subsidiaries Shariah compliant businesses. In circumstances whereby the Shariah compliant businesses are held by the subsidiaries, there shall be a hibah to be executed by the subsidiaries in favour of BHB prior to the contribution of BHB to the Musharakah Venture (as defined hereafter). In respect of the issuance of the Junior Sukuk Musharakah, the investors of each tranche of the Junior Sukuk Musharakah ( Sukukholders ), shall from time to time, via the Sukuk Trustee, enter into Musharakah agreement with BHB (each a Musharakah Agreement ) as partners (each a Partner and collectively the Partners ) to invest directly into the Business identified for the relevant tranche ( Musharakah Venture ). The Sukukholders shall subscribe to the Junior 4

5 Sukuk Musharakah issued by BHB whereby each Junior Sukuk Musharakah shall represent the respective Sukukholders undivided proportionate interest in the relevant Musharakah Venture. The contribution of the Sukukholders to the Musharakah Venture is the proceeds raised from each tranche of the Junior Sukuk Musharakah ( Musharakah Capital ) while BHB will contribute a percentage of the Business as capital contribution in-kind into the relevant Musharakah Venture. For the avoidance of doubt, the Business provided under each Musharakah Venture will not overlap with other Musharakah Ventures under another issuance. Simultaneously, BHB shall make a declaration that it holds on trust a percentage of the interest in the Business for the benefit of the Sukukholders and itself pursuant to the Musharakah Venture. Income from the Musharakah Venture shall be distributed to each Partner based on profit sharing ratios which will be determined prior to the issuance of the Junior Sukuk Musharakah. Any losses incurred in the Musharakah Venture shall be borne by each Partner in proportion to each Partner s respective capital contribution in the Musharakah Venture. The Sukukholders shall appoint BHB as the manager to manage the Musharakah Venture ( Managing Partner ). The Sukukholders agree that any excess income from the relevant Musharakah Venture above the Periodic Distribution Amount (as defined hereafter) shall be retained by the Managing Partner as an incentive fee. Periodic Distribution Amount The income from the relevant Musharakah Venture calculated at the applicable Periodic Distribution Rate (as defined in item 2) on the nominal value of the Junior Sukuk Musharakah on the basis of the actual number of days over actual days in the relevant Distribution Period (as defined hereafter) ( Periodic Distribution Amount ) shall be distributed semi-annually to the Sukukholders of that particular tranche of Junior Sukuk Musharakah on each Periodic Distribution Date (as defined hereafter). Distribution Period means such period commencing from the issue date of the relevant Junior Sukuk Musharakah and ending on the date falling six (6) months thereafter, and each successive period thereafter commencing from a Periodic Distribution Date (inclusive) and ending on the next succeeding Periodic Distribution Date (excluding). 5

6 Periodic Distribution Date means the date falling six (6) months after the relevant issue date and every six (6) months thereafter. Distribution on each Periodic Distribution Date (a) (b) If the profits generated from the Musharakah Venture ( Profits ) are in excess of the Periodic Distribution Amount for the applicable Distribution Period, Profits up to the Periodic Distribution Amount due and payable will be distributed to the Sukukholders and any excess will be paid to the Managing Partner as an incentive fee. If the Profits are insufficient to pay the Periodic Distribution Amount for the applicable Distribution Period ( Profit Shortfall ), the Musharakah Venture may be dissolved through the exercise of the Musharakah Purchase Undertaking I (as defined below) by the Sukukholders pursuant to which a sale agreement ( Sale Agreement ) shall be executed to effect the sale of Musharakah interest by the Sukukholders to BHB. The issuer will decide whether the initial capital contributed from the existing Musharakah Venture will be utilised as Musharakah capital contribution for the new Musharakah Venture, provided that prior to FORD (as defined in item 2), the Issuer has to enter into the new Musharakah Venture. The business contributed by BHB as capital contribution in-kind in the new Musharakah Venture shall not be the same business contributed in the Musharakah Venture that has been dissolved. The accounting entries associated with the dissolution of the Musharakah Venture and investment into a new Musharakah Venture shall be made in the books of the Managing Partner. In the event the Issuer elects to defer payment of the Periodic Distribution Amount, the Issuer shall initiate Musawamah Transaction I in the manner as described in item 2(c) below. Musharakah Sale Undertaking Pursuant to the sale undertaking ( Musharakah Sale Undertaking ) declared and issued by the Sukuk Trustee (for and on behalf of the Sukukholders) to BHB, the Sukuk Trustee (for and on behalf of the Sukukholders) undertakes to sell the Sukukholders interest in the Musharakah Venture to BHB at the relevant Exercise Price (as described in items 2(y)(xii), 2(y)(xiv), 2(y)(xvi), 2(y)(xviii), 2(y)(xx) and 2(y)(xxii)) upon redemption of the Junior Sukuk Musharakah in accordance with the terms of the Optional Redemption (as described in item 2(y)(xii)) or Change in Control Redemption (as 6

7 described in item 2(y)(xiv)) or Leverage Event Redemption (as described in item 2(y)(xvi)) or Privatisation Event Redemption (as described in item 2(y)(xviii)) or Accounting Event Redemption (as described in item 2(y)(xx)) or Tax Event Redemption (as described in item 2(y)(xxii)), as the case may be. Musharakah Purchase Undertaking I BHB shall issue a purchase undertaking ( Musharakah Purchase Undertaking I ) to the Sukuk Trustee (for and on behalf of the Sukukholders) whereby BHB undertakes to purchase the Sukukholders interest in the Musharakah Venture from the Sukuk Trustee (for and on behalf of the Sukukholders) in the event of a Profit Shortfall in accordance with the terms set out herein at the exercise price which shall be determined in the following manner: (a) (b) (c) the Musharakah Capital; plus aggregate Periodic Distribution Amount and any Additional Distribution Amount; less distributable income generated from the respective Musharakah Venture paid out in the form of Periodic Distribution Amount. On the exercise of the Musharakah Purchase Undertaking I by the Sukuk Trustee (for and on behalf of the Sukukholders), the aggregate of any outstanding Musawamah Sale Price I and any outstanding Musawamah Sale Price II, under any Musawamah Transaction I and any Musawamah Transaction II, shall become due and payable by the Issuer, unless the Issuer elects to defer such Musawamah Sale Price I and such Musawamah Sale Price II, in accordance with the terms herein. The Sukuk Trustee will execute a power of attorney in favour of BHB pursuant to which BHB is granted the authority to execute the Sale Agreement for the sale of the Sukukholders interest in the Musharakah Venture to BHB; and, to invest the initial capital contributed by the Sukukholders into a new Musharakah Venture, following the exercise of the Musharakah Purchase Undertaking I. Musharakah Purchase Undertaking II BHB shall issue a purchase undertaking ( Musharakah Purchase Undertaking II ) to the Sukuk Trustee (for and on behalf of the Sukukholders) whereby BHB undertakes to purchase the Sukukholders interest in the Musharakah Venture from the Sukuk Trustee (for and on behalf of the 7

8 Sukukholders) upon the Winding Up (as described in item 2(y)(xxiii)) of BHB in accordance with the terms set out herein at the exercise price which shall be determined in the following manner: (a) (b) (c) the Musharakah Capital; plus aggregate Periodic Distribution Amount and any Additional Distribution Amount up to the liquidation date; less distributable income generated from the respective Musharakah Venture paid out in the form of Periodic Distribution Amount. On the exercise of the Musharakah Purchase Undertaking II by the Sukuk Trustee (for and on behalf of the Sukukholders), the aggregate of any outstanding Musawamah Sale Price I under any Musawamah Transaction I and any outstanding Musawamah Sale Price II under any Musawamah Transaction II, shall become due and payable by the Issuer. A diagrammatical illustration of the Musharakah transaction is set out in Annexure 1. Musawamah Transactions - Musawamah Transaction I and Musawamah Transaction II Musawamah Transaction I Periodic Distribution Amount and/or any Musawamah Sale Price II channelled to purchase Commodities via Musawamah Transaction I The Issuer may give, not less than five (5) business days before the relevant Periodic Distribution Date, a notice in writing ( Musawamah Investment Notice ) to the Facility Agent and the Sukuk Trustee that part or all of any Periodic Distribution Amount on such Periodic Distribution Date and/ or part or all of any Musawamah Sale Price II on such Periodic Distribution Date for which the Issuer opts to defer ( Musawamah Investment Amount ), will be invested in Commodities (defined hereinafter) via Musawamah Transaction I (defined hereafter). Musawamah Undertaking I The Sukuk Trustee, for and on behalf of the Sukukholders, shall issue an undertaking to BHB, whereby BHB shall have the right to require the Sukukholders to sell certain Shariah compliant commodities which would exclude ribawi items in 8

9 the category of medium of exchange such as currency, gold and silver ( Commodities ) to BHB at a certain selling price based on the Shariah principle of Musawamah ( Musawamah Undertaking I ). Under the Musawamah Undertaking I, the Sukuk Trustee, for and on behalf of the Sukukholders, agrees that, on each Periodic Distribution Date, BHB may, at its sole discretion, request the Sukukholders to enter into a Commodity Musawamah transaction ( Musawamah Transaction I ) whereby the Sukukholders shall sell the Commodities to the Issuer at a certain selling price ( Musawamah Sale Price I ). The payment of the Musawamah Sale Price I, which is equivalent to the Musawamah Investment Amount, shall be deferred to the next Periodic Distribution Date. The Sukukholders shall also give the Issuer the right to further defer the payment of the Musawamah Sale Price I should the Issuer request for such a deferment. For avoidance of doubt, Musawamah Sale Price I that is deferred shall be payable on the following Periodic Distribution Date unless further deferment is requested by BHB. Such Musawamah Sale Price I outstanding shall neither accrue any additional profits nor be compounded and any further deferment of its payment does not constitute a Dissolution Event or an Enforcement Event. Musawamah Transaction I When the Musawamah Investment Notice is issued from time to time, BHB will invoke the Musawamah Undertaking I, to initiate the Musawamah Transaction I. BHB, in the capacity as an agent on behalf of the Sukukholders ( Agent ), shall appoint Affin Investment as the sub agent ( Sub Agent ) to purchase Commodities from the commodity vendor(s) via Bursa Suq Al-Sila (via Commodity Trading Participant ( CTP )) or As-Sidq Tawarruq Trading System on a spot basis on behalf of the Sukukholders. BHB in the capacity as a trustee for the Sukukholders in respect of the Commodities ( Commodity Trustee ) will declare a trust in favour of the Sukukholders over the Commodities. The Commodity Trustee shall sell the Commodities to BHB as a purchaser at the Musawamah Sale Price I, which will be payable on the next Periodic Distribution Date. The Musawamah Sale Price I may be further deferred for another Distribution Period at the request of BHB. For avoidance of doubt, Musawamah Sale Price I that is deferred shall be payable on the following Periodic Distribution Date unless further deferment is requested by BHB. 9

10 BHB shall then appoint Affin Investment as its agent to sell the Commodities to the commodity purchaser via Bursa Suq Al- Sila (via CTP) or As-Sidq Tawarruq Trading System, on a spot basis, for a cash consideration. A diagrammatical illustration of the Musawamah Transaction I is set out in Annexure II. Musawamah Transaction II Additional Distribution Amount channelled to purchase Commodities via Musawamah Transaction II After the occurrence of Change in Control, Leverage Event or Privatisation Event (as described in items 2(y)(xiii), 2(y)(xv) and 2(y)(xvii), and the Issuer decides not to redeem the Junior Sukuk Musharakah, the Issuer shall give to the Sukuk Trustee a notice in writing that it has decided not to redeem the Junior Sukuk Musharakah ( Non Redemption Notice ). Upon receipt of the Non Redemption Notice from the Issuer, the Sukuk Trustee, for and on behalf of the Sukukholders, shall on the relevant Periodic Distribution Date or relevant redemption date or date of Winding Up of the Issuer (as the case may be), after the occurrence of Change in Control, Leverage Event or Privatisation Event (as described in items 2(y)(xiii), 2(y)(xv) and 2(y)(xvii)), serve a notice in writing ( Musawamah Transaction Notice ) to the Facility Agent and the Issuer, requesting the Issuer to purchase Commodities from the Sukuk Trustee, for and on behalf of the Sukukholders, via Musawamah Transaction II (defined hereafter), of an amount equivalent to the Additional Distribution Amount payable. Musawamah Undertaking II BHB shall issue an undertaking to the Sukuk Trustee, for and on behalf of the Sukukholders, that upon receipt of the Non Redemption Notice by the Sukuk Trustee, the Sukukholders shall have the right to require BHB to purchase the Commodities from the Sukukholders, at a certain selling price based on the Shariah principle of Musawamah ( Musawamah Undertaking II ). Under the Musawamah Undertaking II, BHB agrees that, on the relevant Periodic Distribution Date or relevant redemption date or date of Winding Up of the Issuer (as the case may be), after the occurrence of Change in Control, Leverage Event or Privatisation Event (as described in items 2(y)(xiii), 2(y)(xv) and 2(y)(xvii)) and upon the receipt of the Non Redemption Notice by the Sukuk Trustee, the Sukuk Trustee, for and on behalf of the Sukukholders will request BHB to enter into Commodity Musawamah transaction 10

11 ( Musawamah Transaction II ) whereby BHB shall purchase Commodities from the Sukuk Trustee, for and on behalf of the Sukukholders, at a certain selling price ( Musawamah Sale Price II ). The Musawamah Sale Price II is equivalent to the Additional Distribution Amount payable Musawamah Transaction II Upon receipt of the Non Redemption Notice by the Sukuk Trustee, acting for and on behalf of the Sukukholders, the Sukuk Trustee shall issue the Musawamah Transaction Notice and invoke the Musawamah Undertaking II to initiate the Musawamah Transaction II. BHB, in the capacity as an agent on behalf of the Sukukholders ( Agent ) shall appoint Affin Investment as the sub-agent ( Sub-Agent ) to purchase Commodities from the commodity vendor(s) via Bursa Suq Al-Sila (via CTP) or As- Sidq Tawarruq Trading System on a spot basis on behalf of the Sukukholders. BHB in the capacity as a trustee for the Sukukholders in respect of the Commodities ( Commodity Trustee ) will declare a trust in favour of the Sukukholders over the Commodities. The Commodity Trustee shall sell the Commodities to BHB as a purchaser at the Musawamah Sale Price II, which shall be immediately payable. BHB shall then appoint Affin Investment as its Agent to sell the Commodities to the commodity purchaser via Bursa Suq Al-Sila (via CTP) or As-Sidq Tawarruq Trading System, on a spot basis for a cash consideration. A diagrammatical illustration of the Musawamah Transaction II is set out in Annexure III. (d) : Identified Assets Shariah principle of Musharakah The Shariah compliant businesses or part thereof of the Issuer and its subsidiaries will be identified and used as the underlying asset for that particular Musharakah transaction. Shariah principle of Musawamah In the event that Musawamah Transaction I or Musawamah Transaction II is initiated under the Shariah principle of Musawamah, the identified assets shall be the Commodities as defined in 2(c) above. (e) (f) : Purchase and selling price/rental Not applicable. : Issue/sukuk programme size Up to RM 1.2 billion in nominal value. 11

12 (g) (h) : Tenure of issue/sukuk programme Perpetual. : Availability period of sukuk programme Period commencing on the date of fulfilment of the Conditions Precedent, provided that the first issuance of the Junior Sukuk Musharakah shall not be later than two (2) years from the date of the Securities Commission Malaysia ( SC ) s approval, and ending on the date that the programme agreement of the Junior Sukuk Programme is terminated. : Profit/coupon/rental rate The expected profit rate for each relevant tranche of the Junior Sukuk Musharakah will be determined prior to issuance of the relevant tranche ( Initial Profit Rate ), which will be benchmarked to the first optional redemption date of the relevant tranche, namely on the Periodic Distribution Date falling on the fifth (5 th ) anniversary date from the issue date of such tranche ( FORD ). Thereafter, the expected profit rate shall be adjusted as follows: (a) For the period commencing after FORD up to the sixth (6 th ) anniversary date from the relevant issue date, 1.5% per annum above the Initial Profit Rate; (b) For the period commencing after the sixth (6 th ) anniversary date from the relevant issue date and for every subsequent year thereafter, an additional 1% per annum above the prevailing profit rate, subject to a maximum rate of 15% per annum. The Initial Profit Rate and the adjustments to expected profit rate as reflected in (a) and (b) above are referred to as the Periodic Distribution Rate. In addition, if any of the following events occurs at any time during the tenure of the Junior Sukuk Musharakah, the following additional distribution rate ( Additional Distribution Rate ) shall apply: (a) (b) (c) If a Change in Control occurs, so long as the Issuer has not redeemed the Junior Sukuk Musharakah in accordance with item 2(y)(xiv), the Issuer shall pay an additional distribution rate of 2% per annum of the nominal value thereof; If a Leverage Event occurs, so long as the Issuer has not redeemed the Junior Sukuk Musharakah in accordance with item 2(y)(xvi), the Issuer shall pay an additional distribution rate of 1% per annum of the nominal value thereof; If a Privatisation Event occurs, so long as the Issuer has not redeemed the Junior Sukuk Musharakah in accordance with item 2(y)(xviii), the Issuer shall pay an additional distribution rate of 1% per annum of the nominal value thereof, 12

13 with effect from the date the Change in Control, Leverage Event and/or Privatisation Event occurs, as the case may be. For the avoidance of doubt, the maximum rate of 15% is inclusive of any Additional Distribution Rate. (j) : Profit/coupon/rental payment frequency Periodic Distribution Amount The frequency of payment of the Periodic Distribution Amount for each tranche of the Junior Sukuk Musharakah shall be on a semiannual basis in arrears, with the first payment to be made on the date falling six (6) months from the relevant issue date of the Junior Sukuk Musharakah and each successive period thereafter, calculated on actual/actual day count basis. Additional Distribution Amount The frequency of payment of any Additional Distribution Amount shall be on a semi-annual basis in arrears, with the first payment to be made on the Periodic Distribution Date after the occurrence of Change in Control (as described in item 2(y)(xiii)) or Leverage Event (as decribed in item 2(y)(xv)) or Privatisation Event Redemption (as described in item 2(y)(xvii)), and each successive period thereafter, calculated on actual/actual day count basis. (k) (l) (m) : Profit/coupon/rental payment basis Actual days/actual days. : Security/Collateral Unsecured. : Details on Utilisation of Proceeds The proceeds raised from issuance of the Junior Sukuk Musharakah shall be utilised for the following Shariah compliant purposes:- No. Purpose Amount Up To (RM 'million) To finance capital expenditure***, working capital requirements, corporate exercises, repayment of intercompany borrowings and general investments of the Issuer and/or any of its subsidiaries**. Refinancing of existing borrowings of the Issuer and/or any of its subsidiaries** * Total 1,

14 Notes: * Any undrawn amount in respect of item may be utilised for item above. ** In circumstances whereby the proceeds are to be channelled to or for the account of the subsidiaries, these shall be done via a Shariah compliant financing arrangement between BHB and the respective subsidiaries. *** Includes purchase of plant, machinery and equipment (n) (o) (p) : Sinking Fund and Designated Accounts Not applicable. : Rating The Junior Sukuk Musharakah shall be unrated. : Mode of Issue The Junior Sukuk Musharakah will be issued at par and by way of private placement on a best effort basis. The issuance of the Junior Sukuk Musharakah shall be in accordance with the (1) Operational Procedures for Securities Services issued by Malaysian Electronic Clearing Corporation Sdn. Bhd. ( MyClear ) dated 6 May 2011 ( MyClear Procedures ); and (2) Participation and Operation Rules for Payment and Securities Services issued by MyClear dated 6 May 2011 ( MyClear Rules ) (collectively referred to as the MyClear Procedures and Rules ), subject to such exemptions (if any) granted from time to time. (q) : Selling Restrictions, including tradability (i.e. tradable or nontradable) Selling Restrictions at Issuance The Junior Sukuk Musharakah shall not be offered, sold or delivered, directly or indirectly, nor may any document or other material in connection therewith be distributed in Malaysia, other than to persons falling within any of the categories of persons or in the circumstances specified under: Schedule 6 (or Section 229(1)(b)); or Schedule 7 (or Section 230(1)(b)), read together with Schedule 9 (or Section 257(3)) of the Capital Market and Services Act 2007 ( CMSA ), as amended from time to time. Selling Restrictions at Thereafter The Junior Sukuk Musharakah shall not be tradable and shall not be transferable. 14

15 (r) (s) (t) : Listing Status and types of listing The Junior Sukuk Musharakah will not be listed on Bursa Malaysia Securities Berhad or any other stock exchange. : Other Regulatory Approvals Required in Relation to the Issue, Offer or Invitation to Subscribe or Purchase Sukuk, and whether or not obtained None. : Conditions Precedent Usual and customary conditions precedent for an issue of this nature, which shall include but not limited to the following:- Conditions Precedent for First Issuance Main Documentation All Transaction Documents (as described in item 2(y)(xxx)) have been duly executed, and where applicable, stamped (unless otherwise exempted) and presented for registration. All relevant notices and acknowledgements where applicable, have been made or received as the case may be. The Issuer Receipt from the Issuer of: (iii) (iv) (v) (vi) A list of its authorised signatories and specimen signatures; Certified true copies of the Certificate of Incorporation and the Memorandum and Articles of Association of the Issuer; Certified true copies of the latest Forms 24, 44 and 49 of the Issuer; Certified true copies of the board resolution of the Issuer authorising, among others, the issuance of the Junior Sukuk Musharakah and the execution of all Transaction Documents (as described in item 2(y)(xxx)); A satisfactory report of the relevant search of the Issuer conducted at the Companies Commission of Malaysia; and A satisfactory report of the relevant winding up search conducted on the Issuer or pending the same a statutory declaration by the director of the Issuer. General Satisfactory documentary evidence that the approvals from the relevant authorities, including but not limited to the SC in 15

16 respect of the Junior Sukuk Musharakah has been obtained; (iii) (iv) (v) Confirmation from the Shariah Adviser that the structure and mechanism of the Junior Sukuk Musharakah and the Transaction Documents (as described in item 2(y)(xxx)) are in compliance with Shariah principles; Receipt of satisfactory legal opinion from the Solicitors with regards to the legality, validity and enforceability of all Transaction Documents (as described in item 2(y)(xxx)), and a confirmation that all conditions precedent for the Junior Sukuk Musharakah have been fulfilled; Receipt of a satisfactory opinion from the auditor of the Issuer on the accounting treatment of the Junior Sukuk Musharakah that the Junior Sukuk Musharakah will be recorded as equity in the financial statements of the Issuer; and Such other conditions precedent to be advised by the Solicitors and mutually agreed between the LA and the Issuer. Conditions Precedent for Subsequent Issuance (iii) Confirmation from the Issuer that the representations and warranties still remain true and correct in all respect; Confirmation from the Issuer that no Enforcement Event has occurred and is continuing or shall occur if the relevant issuance is made; and Such other conditions precedent as may be advised by the Solicitors and agreed by the Issuer. (u) : Representations and warranties The representations and warranties typical and customary for an issue of this nature or as may be advised by the Solicitors for the purpose of the Transaction Documents (as described in item 2(y)(xxx)) and shall include but not limited to the following: The Issuer is a company duly established and validly existing under the laws of Malaysia and it has the power and authority to enter into the business in which it is engaged in and has the power to enter into, exercise its rights under and perform its obligations under the Transaction Documents (as described in item 2(y)(xxx)); All necessary actions, authorisations and consents required under the Transaction Documents (as described in item 2(y)(xxx)) have been taken, fulfilled and obtained and remain in full force and effect and no further approvals, or other third party consents are required other than those already obtained; 16

17 (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) The Issuer s entry into, exercise of its rights under and performance of its obligations under the respective Transaction Documents (as described in item 2(y)(xxx)) to which it is a party does not and will not violate any existing law or any agreements to which it is a party which may have a Material Adverse Effect (as defined in item 2(y)(xxviii)); The Transaction Documents (as described in item 2(y)(xxx)) are in full force and effect and constitute valid, binding and enforceable obligations of the Issuer; No registration and no payment of any duty or tax or other action is necessary to ensure the validity, enforceability or admissibility in evidence in Malaysia of the Transaction Documents (as described in item 2(y)(xxx)); To the Issuer s knowledge, there are no change of law or other governmental action has occurred which shall make it improbable for the Issuer to perform covenants and obligations on its part to be performed under the Transaction Documents (as described in item 2(y)(xxx)); The Issuer s financial statements have been prepared in accordance with generally approved accounting principles and standards in Malaysia; There has been no event or occurrence which constitutes a violation of the law or contravention of or default under any agreement, by the Issuer which may have a Material Adverse Effect (as defined in item 2(y)(xxviii)); There is no change in its business, condition (financial or otherwise), performance or results of the operations of the Issuer which may have a Material Adverse Effect; There are no legal proceedings or arbitrations pending or to the Issuer s knowledge, threatened against the Issuer, which if adversely determined would have a Material Adverse Effect; and Such other representations and warranties as may be advised by the Solicitor of the LA and to be mutually agreed between the LA and the Issuer. (v) : Events of default, dissolution event and enforcement event, where applicable Dissolution Events The Musharakah Venture may be dissolved upon occurrence of the following: Optional Redemption (as described in item 2(y)(xii)) pursuant 17

18 to the Musharakah Sale Undertaking; or (iii) (iv) (v) (vi) (vii) Change in Control Redemption (as described in item 2(y)(xiv)) pursuant to the Musharakah Sale Undertaking; or Leverage Event Redemption (as described in item 2(y)(xvi)) pursuant to the Musharakah Sale Undertaking; or Privatisation Event Redemption (as described in item 2(y)(xviii)) pursuant to the Musharakah Sale Undertaking; or Accounting Event Redemption (as described in item 2(y)(xx)) pursuant to the Musharakah Sale Undertaking; or Tax Event Redemption (as described in item 2(y)(xxii)) pursuant to the Musharakah Sale Undertaking; or Winding Up of the Issuer (as described in item 2(y)(xxiii)) pursuant to the Musharakah Purchase Undertaking II (where the occurrence of the Winding Up of the Issuer is also an Enforcement Event; refer to the Enforcement Events and Enforcement Remedy, as described hereinafter). For the avoidance of doubt, other than item (vii) above, there are no Dissolution Events where the Junior Sukuk Musharakah can be declared to be immediately due and payable. Enforcement Events The Enforcement Events are as follows: (iii) The Issuer has not made payment of any Periodic Distribution Amount or any Musawamah Sale Price I or any Musawamah Sale Price II in respect of the Junior Sukuk Musharakah, within seven (7) business days from due date (for this purpose, such payment will not be due if the Issuer has elected to defer payment of any Periodic Distribution Amount or any Musawamah Sale Price I or any Musawamah Sale Price II); or The failure of the Issuer to observe any of its obligations under the Dividend & Capital Stopper (as described in item 2(y)(ix)) and Dividend Pusher (as described in item 2(y)(x)) provisions under the Transaction Documents (as described in item 2(y)(xxx)); or Winding Up of the Issuer as described in item 2(y)(xxiii). Enforcement Remedy Upon the occurrence of any Enforcement Event, the Sukuk Trustee may declare that an Enforcement Event has occurred and the Sukuk Trustee (for and on behalf of the Sukukholders) may institute such 18

19 proceedings as they may think fit to enforce the obligations of the Issuer, including to institute proceedings for the Winding Up of the Issuer and/or prove in the Winding Up of the Issuer and/or claim in the liquidation of the Issuer for such payment. Upon the Winding Up of the Issuer, the Sukuk Trustee shall exercise the Musharakah Purchase Undertaking II where the Issuer is required to purchase the Sukukholders interest in the Musharakah Venture from the Sukuk Trustee and the Musharakah Venture shall thereafter be dissolved. (w) : Covenants Such covenants required in order to comply with the Trust Deeds Guidelines issued by the SC including but not limited to the following: (iii) (iv) (v) (vi) Issuer shall comply at all times with the provisions of the Transaction Documents (as described in item 2(y)(xxx)) and the terms and conditions of the Junior Sukuk Musharakah; Issuer shall exercise reasonable diligence in carrying out its business in a proper and efficient manner in accordance with the financial and commercial standards and practices including, among others, that all necessary approvals or relevant licences are obtained and maintained; Issuer shall keep proper books and accounts at all times and to provide the Sukuk Trustee access to such books and accounts to the extent permitted by law; Issuer shall provide the Sukuk Trustee copies of its latest annual audited accounts, as soon as they become available, or any or accounts, report, notice, statement or circular issued to shareholders; Issuer shall maintain a paying agent, or its equivalent, who is based in Malaysia; Issuer shall immediately notify the Sukuk Trustee as soon as it becomes aware of any circumstance that has occurred that would materially prejudice the Issuer and/or the interest of the Sukukholders, including but not limited to: (a) (b) (c) any Enforcement Event; the happening of any event that has caused or could cause, among others, any right or remedy under the terms and conditions of the Junior Sukuk Musharakah or the Transaction Documents (as described in item 2(y)(xxx)) to become immediately enforceable; any substantial change in the nature of the business of the Issuer; 19

20 (vii) (viii) Issuer shall not amend its Memorandum and Articles of Association in any manner which would be materially prejudicial to the interest of the Sukukholders except for mandatory amendments as may be required by law from time to time; and Issuer shall not change the utilisation of proceeds from the Junior Sukuk Musharakah for any purposes other than the purposes set out in item 2(m) herein. (x) : Provisions on Buy-back and Early Redemption of Sukuk Buy-Back The Junior Sukuk Musharakah shall not be transferable and tradable in the secondary market, as such, the Issuer or any its subsidiaries or agent(s) of the Issuer may not purchase the Junior Sukuk Musharakah in the open market or by way of private treaty. Early Redemption The Junior Sukuk Musharakah is perpetual in tenure with no fixed maturity date and, therefore, early redemption is not applicable. The Issuer, however, has the option to redeem the Junior Sukuk Musharakah under Optional Redemption (as described in item 2(y)(xii)) or Change in Control Redemption (as described in item 2(y)(xiv)) or Leverage Event Redemption (as decribed in item 2(y)(xvi)) or Privatisation Event Redemption (as described in item 2(y)(xviii)) or Accounting Event Redemption (as described in item 2(y)(xx)) or Tax Event Redemption (as described in item 2(y)(xxii)), as the case may be. All Junior Sukuk Musharakah so redeemed by the Issuer, any of its subsidiaries or any agents acting on their behalf in relation to such redemption shall be cancelled and may not be reissued or resold. (y) : Other Principal Terms and Conditions Status The Junior Sukuk Musharakah shall constitute trust obligations of the Issuer in relation to, and represent undivided beneficial interest in the relevant Business. The Junior Sukuk Musharakah, pursuant to the relevant Transaction Documents (as described in item 2(y)(xxx)), shall constitute direct, unsecured and subordinated obligations of the Issuer ranking pari passu among themselves. Upon the Winding Up of the Issuer (other than pursuant to a Permitted Reorganisation as defined in item 2(y)(xxiii)), the Junior Sukuk Musharakah shall rank: junior to all other creditors of the Issuer; 20

21 (iii) pari passu with all Parity Obligations (as described in item 2(y)(ix)); and senior to the holders of the Issuer s ordinary shares and any other securities or obligations of the Issuer that are subordinated to the Junior Sukuk Musharakah. (iii) No Further Rights to Participate in Profits and Assets The Junior Sukuk Musharakah shall not confer any right or claim with regards to participation in the profits and assets of the Issuer. Additional Distribution Amount If a Change in Control, Leverage Event or Privatisation Event (as described in items 2(y)(xiii), 2(y)(xv) and 2(y)(xvii)) occurs, at any time during the tenure of the Junior Sukuk Musharakah, and the Issuer decides not to redeem the Junior Sukuk Musharakah, the Issuer shall pay additional distribution amount to the Sukukholders via Musawamah Transaction II distributable in Ringgit Malaysia at the relevant Additional Distribution Rate (as defined in item 2) of the nominal value thereof ( Additional Distribution Amount ) calculated on the basis of the actual number of days in the relevant period which shall be distributed on each Periodic Distribution Date after occurrence of any of the above mentioned event. The Additional Distribution Amount shall be calculated from the date of occurrence of the above mentioned events. (iv) Optional Deferral of Distribution The Issuer may give, not less than five (5) business days before the relevant Periodic Distribution Date, the Musawamah Investment Notice to the Facility Agent and the Sukuk Trustee, that part or all of any Periodic Distribution Amount on such Periodic Distribution Date or part or all of any Musawamah Sale Price II on such Periodic Distribution Date for which the Issuer opts to defer, will be invested in Commodities via Musawamah Transaction I, upon the Issuer exercising the Musawamah Undertaking I, provided that within the period of six (6) months prior to the relevant Periodic Distribution Date, the Issuer had not declared, paid or made any: dividends, payments or other distributions in respect of, or (if permitted) repurchased or redeemed, its ordinary shares or any other security or obligation of the Issuer ranking junior to the Junior Sukuk Musharakah; and payments or distributions in respect of, or (if permitted) repurchased or redeemed, any Parity Obligations (as described in item 2(y)(ix)) (or contribute any monies to 21

22 a sinking fund for the redemption of any such obligations). For the avoidance of doubt, part or all of any Periodic Distribution Amount with respect to any Distribution Period or part or all of any Musawamah Sale Price II with respect to any Distribution Period invested via Musawamah Transaction I, shall not give rise to any Dissolution Event or Enforcement Event. (v) (vi) (vii) (viii) Payment of Musawamah Sale Price I The Musawamah Sale Price I is payable to the Sukukholders at a Periodic Distribution Date immediately following the Musawamah Transaction I. However, the Sukukholders give the Issuer the right to further defer the payment of the Musawamah Sale Price I should it request for such a deferment. Such Musawamah Sale Price I outstanding shall not accrue any additional profits nor be compounded and do not constitute a Dissolution Event or an Enforcement Event. Musawamah Transaction Notice Upon receipt of the Non Redemption Notice from the Issuer, the Sukuk Trustee, for and on behalf of the Sukukholders, shall on the relevant Periodic Distribution Date or relevant redemption date or date of Winding Up of the Issuer (as the case may be), after the occurrence of Change in Control, Leverage Event or Privatisation Event (as described in items 2(y)(xiii), 2(y)(xv) or 2(y)(xvii)), serve the Musawamah Transaction Notice to the Facility Agent and the Issuer, requesting the Issuer to purchase Commodities from the Sukuk Trustee, for and on behalf of the Sukukholders, via Musawamah Transaction II, of an amount equivalent to the Additional Distribution Amount payable. Payment of Musawamah Sale Price II The Musawamah Sale Price II is payable to the Sukukholders at a Periodic Distribution Date immediately following the Musawamah Transaction II. However, the Sukukholders give the Issuer the right to further defer payment of Musawamah Sale Price II should the Issuer request for such a deferment through Musawamah Transaction I. Such Musawamah Sale Price I outstanding shall not accrue any additional profits nor be compounded and do not constitute a Dissolution Event or an Enforcement Event. Proportionate Distribution Payment If on the relevant Periodic Distribution Date, part of any Periodic Distribution Amount or part of any Musawamah Sale Price II is invested in Commodities via Musawamah Transaction I, the investment will be on a proportionate basis for each Sukukholder based on the nominal value of the Junior Sukuk Musharakah held. Each Sukukholder will 22

23 therefore receive the remaining proportionate share of the Periodic Distribution Amount or the Musawamah Sale Price II that is not invested in Commodities on such Periodic Distribution Date. Each Sukukholder shall be entitled to receive its proportionate share of Musawamah Sale Price I at the next Periodic Distribution Date, subject to any further deferment at the option of the Issuer. (ix) Dividend & Capital Stopper In the event that there is any Musawamah Sale Price I outstanding for any reason on any Periodic Distribution Date, the Issuer shall not: declare or pay any dividends, payments or other distributions in respect of, or (if permitted) repurchase or redeem, its ordinary shares or any other securities of the Issuer ranking junior to the Junior Sukuk Musharakah (or contribute any monies to a sinking fund for the redemption of any such shares or securities); or declare or pay any payments or other distributions in respect of, or (if permitted) repurchase or redeem, any Parity Obligations (as defined below) (or contribute any monies to a sinking fund for the redemption of any such obligations), in each case until it has paid any Periodic Distribution Amount or any Musawamah Sale Price I or any Musawamah Sale Price II in full. In the event the Issuer breaches its obligation under items and/or above, the payment of all outstanding Musawamah Sale Price I will immediately become due and payable. Parity Obligations means any subordinated debt, preferred securities or other similar obligations of the Issuer or any subsidiary of the Issuer that constitutes obligations of the Issuer ranking pari passu with the Junior Sukuk Musharakah. (x) Dividend Pusher Payment of any Periodic Distribution Amount or any Musawamah Sale Price I or any Musawamah Sale Price II accrued and outstanding will be mandatory, if at any time within a period of six (6) months prior to any date, the Issuer had declared, paid or made any: dividends, payments or other distributions in respect of, or (if permitted) repurchased or redeemed, its ordinary shares or any other security or obligation of the Issuer ranking junior to the Junior Sukuk Musharakah; or 23

24 payments or distributions in respect of, or (if permitted) repurchased or redeemed, any Parity Obligations (or contribute any monies to a sinking fund for the redemption of any such obligations). (xi) Musharakah Sale Undertaking The Sukuk Trustee (for and on behalf of the Sukukholders) shall issue a Musharakah Sale Undertaking to the Issuer allowing the Issuer to acquire the Sukukholders interest in the Musharakah Venture at the relevant Exercise Price upon Optional Redemption or Change in Control Redemption or Leverage Event Redemption or Privatisation Event Redemption or Accounting Event Redemption or Tax Event Redemption, as described in items 2(y)(xii), 2(y)(xiv), 2(y)(xvi) 2(xviii), 2(xx) or 2(xxii), as the case may be. Any of these events shall also be deemed as the redemption of the Junior Sukuk Musharakah. The Issuer may exercise the Musharakah Sale Undertaking in accordance with the Optional Redemption, Change in Control Redemption, Leverage Event Redemption, Privatisation Event Redemption, Accounting Event Redemption or Tax Event Redemption conditions described hereafter, as the case may be, by giving notice in writing to the Facility Agent and the Sukuk Trustee. Upon the Issuer acquiring all the Sukukholders interest in the Musharakah Venture, the Musharakah Venture shall then be dissolved. All Junior Sukuk Musharakah so redeemed by the Issuer, any of its subsidiaries or any agents acting on their behalf in relation to such redemption shall be cancelled and may not be reissued or resold. (xii) Optional Redemption The Issuer may, at its option, by exercising the Musharakah Sale Undertaking, redeem in whole, but not in part, of the relevant tranche of the Junior Sukuk Musharakah for the time being issued and outstanding: on FORD; or on each Periodic Distribution Date after FORD. The exercise price payable to the Sukukholders of the relevant tranche of the Junior Sukuk Musharakah arising from an Optional Redemption pursuant to the Musharakah Sale Undertaking shall be: the Musharakah Capital; plus 24

25 (iii) aggregate Periodic Distribution Amount payable and any Additional Distribution Amount up to the Optional Redemption date; less distributable income generated from the respective Musharakah Venture paid out in the form of Periodic Distribution Amount. Upon the exercise of the Musharakah Sale Undertaking, the aggregate of any outstanding Musawamah Sale Price I under any Musawamah Transaction I and any outstanding Musawamah Sale Price II under any Musawamah Transaction II, shall also become due and payable by the Issuer. (xiii) (xiv) Change in Control The change in the shareholding of the Issuer on any date which resulted in Lembaga Tabung Angkatan Tentera and persons acting in concert with it ceasing to have in aggregate direct or deemed interest of at least 33 percent (or such other percentage as may be prescribed in the Malaysian Code on Take Overs and Mergers 2010, including any amendments that may be made from time to time, as being the level for triggering a mandatory general offer) of the voting shares for the time being of the Issuer. Change in Control Redemption If at any time a Change in Control occurs, then the whole, but not in part, of all the tranches of the Junior Sukuk Musharakah may be redeemed at the option of the Issuer by exercising the Musharakah Sale Undertaking. The exercise price payable to the Sukukholders arising from a Change in Control Redemption pursuant to the Musharakah Sale Undertaking shall be: the Musharakah Capital; plus aggregate Periodic Distribution Amount and any Additional Distribution Amount payable up to the Change in Control Redemption date; less (iii) distributable income generated from the respective Musharakah Venture paid out in the form of Periodic Distribution Amount. Upon the exercise of the Musharakah Sale Undertaking, the aggregate of any outstanding Musawamah Sale Price I under any Musawamah Transaction I and any outstanding Musawamah Sale Price II under any Musawamah Transaction II, shall also become due and payable by the Issuer. 25

26 (xv) Leverage Event If at any time the Finance to Equity Ratio (as defined below) of the Issuer (on a consolidated basis) exceeds 3.0 times which shall be tested on an annual basis based on the audited consolidated financial statements of the Issuer, a Leverage Event shall have occurred. The calculation of the Finance to Equity Ratio shall be duly confirmed by the Issuer's external auditors on an annual basis. The Issuer shall arrange for the auditor's confirmation to be forwarded to the Sukuk Trustee. Finance to Equity Ratio is the ratio of Indebtedness to Equity. Indebtedness means the consolidated borrowings of the Issuer as reported in the audited financial statements of the Issuer under the Borrowings section. Equity means the aggregate amount of the issued and fully paid-up share capital, retained earnings, all non-distributable reserves, minority interests and any hybrid capital classified as equity (including but not limited to the Junior Sukuk Musharakah issued), as reported in the audited financial statements of the Issuer. (xvi) Leverage Event Redemption If at any time a Leverage Event occurs, then the whole, but not in part, of all the tranches of the Junior Sukuk Musharakah may be redeemed at the option of the Issuer by exercising the Musharakah Sale Undertaking and attaching to the relevant notice of redemption: a certificate signed by a director of the Issuer stating that the Issuer is entitled to effect such redemption; and an opinion of the auditor to the Issuer to the effect that a Leverage Event has occurred. The delivery of such opinion shall constitute conclusive evidence of the occurrence of a Leverage Event. The exercise price payable to the Sukukholders arising from the Leverage Event Redemption pursuant to the Musharakah Sale Undertaking shall be: the Musharakah Capital; plus aggregate Periodic Distribution Amount and any Additional Distribution Amount payable up to the Leverage Event Redemption date; less (iii) distributable income generated from the respective Musharakah Venture paid out in the form of Periodic 26

27 Distribution Amount. Upon the exercise of the Musharakah Sale Undertaking, the aggregate of any outstanding Musawamah Sale Price I under any Musawamah Transaction I and any outstanding Musawamah Sale Price II under any Musawamah Transaction II, shall also become due and payable by the Issuer. (xvii) Privatisation Event If at any time any of the shareholders of the Issuer acting on its own or acting in concert with any other parties, undertake an exercise to take the Issuer private and that the ordinary shares of BHB are no longer listed on Bursa Malaysia Securities Berhad, a Privatisation Event has occurred. (xviii) Privatisation Event Redemption If at any time a Privatisation Event occurs, then the whole, but not in part, of all the tranches of the Junior Sukuk Musharakah may be redeemed at the option of the Issuer by exercising the Musharakah Sale Undertaking. The exercise price payable to the Sukukholders arising from the Privatisation Event Redemption pursuant to the Musharakah Sale Undertaking shall be: the Musharakah Capital; plus aggregate Periodic Distribution Amount and any Additional Distribution Amount payable up to the Privatisation Redemption date; less (iii) distributable income generated from the respective Musharakah Venture paid out in the form of Periodic Distribution Amount. Upon the exercise of the Musharakah Sale Undertaking, the aggregate of any outstanding Musawamah Sale Price I under any Musawamah Transaction I and any outstanding Musawamah Sale Price II under any Musawamah Transaction II, shall also become due and payable by the Issuer. (xix) Accounting Event As a result of any changes or amendments to the Financial Reporting Standards ( FRS ) in Malaysia or any other accounting standards that may replace FRS for the purposes of the Issuer s consolidated financial statements (the Relevant Accounting Standard ), the Junior Sukuk Musharakah must not or must no longer be recorded as equity pursuant to the Relevant Accounting Standard. 27

28 (xx) Accounting Event Redemption If at any time an Accounting Event occurs, then the whole, but not in part, of all the tranches of the Junior Sukuk Musharakah may be redeemed at the option of the Issuer by exercising the Musharakah Sale Undertaking and attaching to the relevant notice of redemption: a certificate signed by a director of the Issuer stating that the Issuer is entitled to effect such redemption; and an opinion of the auditors to the Issuer to the effect that an Accounting Event has occurred. The delivery of such opinion shall constitute conclusive evidence of the occurrence of an Accounting Event. The exercise price payable to the Sukukholders arising from an Accounting Event Redemption pursuant to the Musharakah Sale Undertaking shall be: (iii) (iv) the Musharakah Capital; plus 1.0% of the Musharakah Capital; plus aggregate Periodic Distribution Amount and any Additional Distribution Amount payable up to the Accounting Event Redemption date; less distributable income generated from the respective Musharakah Venture paid out in the form of Periodic Distribution Amount. Upon the exercise of the Musharakah Sale Undertaking, the aggregate of any outstanding Musawamah Sale Price I under any Musawamah Transaction I and any outstanding Musawamah Sale Price II under any Musawamah Transaction II, shall also become due and payable by the Issuer. (xxi) Tax Event If at any time the Issuer has or will become obliged to pay additional amounts as result of any change in, or amendment to, the laws or regulations of Malaysia, or any change in the application or official interpretation of such laws ( Tax Event ), the tax agent to the Issuer must deliver an opinion to the effect that a Tax Event has occurred. (xxii) Tax Event Redemption If at any time a Tax Event occurs and the tax agent of the Issuer has delivered an opinion that a Tax Event has occurred, then the whole, but not in part, of all the tranches of the Junior Sukuk Musharakah may be redeemed at the option of the Issuer by exercising the Musharakah Sale Undertaking 28

29 and attaching to the relevant notice of redemption: a certificate signed by a director of the Issuer stating that the Issuer is entitled to effect such redemption; and an opinion of the tax agent to the Issuer to the effect that a Tax Event has occurred. The delivery of such opinion shall constitute conclusive evidence of the occurrence of a Tax Event. The exercise price payable to the Sukukholders arising from the Tax Event Redemption pursuant to the Musharakah Sale Undertaking shall be: the Musharakah Capital; plus aggregate Periodic Distribution Amount and any Additional Distribution Amount payable up to the Tax Event Redemption date; less (iii) distributable income generated from the respective Musharakah Venture paid out in the form of Periodic Distribution Amount. Upon the exercise of the Musharakah Sale Undertaking, the aggregate of any outstanding Musawamah Sale Price I under any Musawamah Transaction I and any outstanding Musawamah Sale Price II under any Musawamah Transaction II, shall also become due and payable by the Issuer. (xxiii) Winding Up / Musharakah Purchase Undertaking II Winding Up means a final and effective order or resolution by a competent authority for the bankruptcy, winding up, liquidation, receivership or similar proceedings in respect of the Issuer. Upon the Winding Up of the Issuer (other than pursuant to a Permitted Reorganisation, as defined below) the Junior Sukuk Musharakah shall rank: (iii) junior to all other creditors of the Issuer; pari passu with all Parity Obligations; and senior to the holders of the Issuer s ordinary shares and any other securities or obligations of the Issuer that are subordinated to the Junior Sukuk Musharakah. Permitted Reorganisation means a solvent reconstruction, amalgamation, reorganisation, merger or consolidation whereby all or substantially all the business, undertaking and 29

30 assets of the Issuer are transferred to a successor entity which assumes all the obligations of the Issuer under the Junior Sukuk Musharakah. Pursuant to the Musharakah Purchase Undertaking II, upon such Winding Up of the Issuer, each Junior Sukuk Musharakah shall be entitled to receive in Ringgit Malaysia an amount equal to the Liquidation Distribution (as defined hereinafter) payable upon the date of Winding Up of the Issuer ( Liquidation Date ). Liquidation Distribution means, upon Winding Up of the Issuer, the exercise price pursuant to the Musharakah Purchase Undertaking II shall be : (iii) the Musharakah Capital; plus aggregate Periodic Distribution Amount and any Additional Distribution Amount payable up to Liquidation Date; less distributable income generated from the Musharakah Venture paid out in the form of Periodic Distribution Amount. Upon the exercise of the Musharakah Purchase Undertaking II, the aggregate of any outstanding Musawamah Sale Price I under any Musawamah Transaction I and any outstanding Musawamah Sale Price II under any Musawamah Transaction II, shall also become due and payable by the Issuer. (xxiv) Proportionate Liquidation Distribution If, upon Winding Up, the amounts available for payment are insufficient to cover the Liquidation Distribution and any liquidation distributions of any Parity Obligation, but there are funds available for payment so as to allow payment of part of the Liquidation Distribution, then each Sukukholder shall be entitled to receive its proportionate share of the Relevant Proportion of the Liquidation Distribution. Relevant Proportion means, in relation to any partial payment of any Liquidation Distribution, the total amount available for any such payment and for making any liquidation distribution on any Parity Obligation divided by the sum of: the full Liquidation Distribution before any reduction or abatement hereunder; and the amount (before any reduction or abatement hereunder) of the full liquidation distribution on any Parity Obligations, 30

31 converted where necessary into the same currency in which liquidation payments are made to creditors of the Issuer. (xxv) Voting Rights The Sukukholders shall have no voting rights in the Issuer. (xxvi) Form and Denomination The Junior Sukuk Musharakah shall be issued in accordance with MyClear Rules and Procedures as applicable from time to time. The Junior Sukuk Musharakah shall be represented by a global certificate to be deposited with BNM and may be exchanged for definitive bearer form only in certain limited circumstances. The denomination of the Junior Sukuk Musharakah shall be Ringgit Malaysia One Million (RM1,000,000.00) or in multiples of Ringgit Malaysia One Million (RM1,000,000.00) thereof or such other denominations as may be allowed by MyClear/ BNM at the time of issuance. (xxvii) Taxation All payments shall be made free and clear of all present and future taxes, duties, withholdings or other deductions whatsoever imposed by the Government of Malaysia or any political sub-division or tax authority thereof. In the event that any such taxes are in future imposed, the Issuer will be required to make such additional payments as are necessary to cause the participating institution(s) under the Junior Sukuk Musharakah to receive the net amount that they would otherwise have received. (xxviii) Material Adverse Effect Means in relation to any event or circumstances, the occurrence or effect of which is or will be likely to have a material adverse effect on:- (iii) the financial condition, business or operations of the Issuer, or the Issuer s ability to perform its obligations under any provision of the Transaction Documents (as described in item 2(y)(xxx)); or the rights or remedies of the Sukuk Trustee or the Sukukholders under the Transaction Documents (as described in item 2(y)(xxx)), and references herein to an event or circumstances which has or would have a Material Adverse Effect shall be construed accordingly. 31

32 (xxix) Compensation on Late and Default Payment (Ta widh) In the event of overdue payments of any amount due and payable to Sukukholders pursuant to the exercise of Musharakah Purchase Undertaking I, Musharakah Purchase Undertaking II or Musharakah Sale Undertaking, as the case may be, or from the default payments of the realised profit, the Issuer shall pay the compensation on such overdue amount at the rate and manner prescribed by the SC s Shariah Advisory Council from time to time in accordance with Shariah. (xxx) Transaction Documents The Transaction Documents shall include but not limited to the following: the Trust Deed; the Musharakah Purchase Undertaking I and II; (iii) the Musharakah Sale Undertaking; (iv) the Management Agreement; (v) the Musharakah Agreement; (vi) the Musawamah Undertaking I and II; (vii) Securities Lodgement Form for Central Securities Depository and Paying Agency; (viii) the Programme Agreement; (ix) (x) each Subscription Agreement(s); any other documents relating to the Junior Sukuk Musharakah as shall be determined by the Issuer, the Principal Adviser/LA, the Facility Agent and the Trustee. (xxxi) Governing Law & Jurisdiction Laws of Malaysia and the exclusive jurisdiction of the Courts of Malaysia. 32

33 Annexure 1: Musharakah Transaction Step 1(a) Description The Shariah compliant businesses or part thereof of the Issuer and its subsidiaries will be identified and used as the underlying asset for that particular Musharakah transaction. Business comprises BHB and its subsidiaries Shariah compliant businesses. In circumstances whereby the Shariah compliant businesses are held by the subsidiaries, there shall be a hibah to be executed by the subsidiaries in favour of BHB prior to the contribution of BHB to the Musharakah Venture (as defined hereafter). 1 (b), (c), (d) In respect of the issuance of the Junior Sukuk Musharakah, the investors of each tranche of the Junior Sukuk Musharakah ( Sukukholders ), shall from time to time, via the Sukuk Trustee, enter into Musharakah agreement with BHB (each a Musharakah Agreement ) as partners (each a Partner and collectively the Partners ) to invest directly into the Business identified for the relevant tranche ( Musharakah Venture ). The Sukukholders shall subscribe to the Junior Sukuk Musharakah issued by BHB whereby each Junior Sukuk Musharakah shall represent the respective Sukukholders undivided proportionate interest in the relevant Musharakah Venture. 33

34 The contribution of the Sukukholders to the Musharakah Venture is the proceeds raised from each tranche of the Junior Sukuk Musharakah ( Musharakah Capital ) while BHB will contribute a percentage of the Business as capital contribution in-kind into the relevant Musharakah Venture.For the avoidance of doubt, the Business provided under each Musharakah Venture will not overlap with other Musharakah Ventures under another issuance. Simultaneously, BHB shall make a declaration that it holds on trust a percentage of the interest in the Business for the benefit of the Sukukholders and itself pursuant to the Musharakah Venture. Income from the Musharakah Venture shall be distributed to each Partner based on profit sharing ratios which will be determined prior to the issuance of the Junior Sukuk Musharakah. Any losses incurred in the Musharakah Venture shall be borne by each Partner in proportion to each Partner s respective capital contribution in the Musharakah Venture. 2 The Sukukholders shall appoint BHB as the manager to manage the Musharakah Venture ( Managing Partner ). The Sukukholders agree that any excess income from the relevant Musharakah Venture above the Periodic Distribution Amount (as defined hereafter) shall be retained by the Managing Partner as an incentive fee. 3 The income from the relevant Musharakah Venture calculated at the applicable Periodic Distribution Rate (as defined in item 2) on the nominal value of the Junior Sukuk Musharakah on the basis of the actual number of days over actual days in the relevant Distribution Period (as defined hereafter) ( Periodic Distribution Amount ) shall be distributed semi-annually to the Sukukholders of that particular tranche of Junior Sukuk Musharakah on each Periodic Distribution Date (as defined hereafter). Distribution Period means such period commencing from the issue date of the relevant Junior Sukuk Musharakah and ending on the date falling six (6) months thereafter, and each successive period thereafter commencing from a Periodic Distribution Date (inclusive) and ending on the next succeeding Periodic Distribution Date (excluding). Periodic Distribution Date means the date falling six (6) months after the relevant issue date and every six (6) months thereafter. Distribution on each Periodic Distribution Date (a) (b) If the profits generated from the Musharakah Venture ( Profits ) are in excess of the Periodic Distribution Amount for the applicable Distribution Period, Profits up to the Periodic Distribution Amount due and payable will be distributed to the Sukukholders and any excess will be paid to the Managing Partner as an incentive fee. If the Profits are insufficient to pay the Periodic Distribution Amount for the applicable Distribution Period ( Profit Shortfall ), the Musharakah Venture may be dissolved through the exercise of the 34

35 Musharakah Purchase Undertaking I (defined below) by the Sukukholders pursuant to which a sale agreement ( Sale Agreement ) shall be executed to effect the sale of Musharakah interest by the Sukukholders to BHB. The issuer will decide whether the initial capital contributed from the existing Musharakah Venture will be utilised as Musharakah capital contribution for the new Musharakah Venture, provided that prior to FORD (as defined in item 2), the Issuer has to enter into the new Musharakah Venture. The business contributed by BHB as capital contribution in-kind in the new Musharakah Venture shall not be the same business contributed in the Musharakah Venture that has been dissolved. The accounting entries associated with the dissolution of the Musharakah Venture and investment into a new Musharakah Venture shall be made in the books of the Managing Partner. In the event the Issuer elects to defer payment of the Periodic Distribution Amount, the Issuer shall initiate Musawamah Transaction I. 4 Musharakah Sale Undertaking Pursuant to the sale undertaking ( Musharakah Sale Undertaking ) declared and issued by the Sukuk Trustee (for and on behalf of the Sukukholders) to BHB, the Sukuk Trustee (for and on behalf of the Sukukholders) undertakes to sell the Sukukholders interest in the Musharakah Venture to BHB at the relevant Exercise Price (as described in items 2(y)(xii), 2(y)(xiv), 2(y)(xvi), 2(y)(xviii), 2(y)(xx) and 2(y)(xxii)) upon redemption of the Junior Sukuk Musharakah in accordance with the terms of the Optional Redemption (as described in item 2(y)(xii)) or Change in Control Redemption (as described in item 2(y)(xiv)) or Leverage Event Redemption (as described in item 2(y)(xvi)) or Privatisation Event Redemption (as described in item 2(y)(xviii)) or Accounting Event Redemption (as described in item 2(y)(xx)) or Tax Event Redemption (as described in item 2(y)(xxii)), as the case may be. Musharakah Purchase Undertaking I BHB shall issue a purchase undertaking ( Musharakah Purchase Undertaking I ) to the Sukuk Trustee (for and on behalf of the Sukukholders) whereby BHB undertakes to purchase the Sukukholders interest in the Musharakah Venture from the Sukuk Trustee (for and on behalf of the Sukukholders) in the event of a Profit Shortfall in accordance with the terms set out herein at the exercise price which shall be determined in the following manner: (a) the Musharakah Capital; plus (b) aggregate Periodic Distribution Amount and any Additional Distribution Amount; less (c) distributable income generated from the respective Musharakah Venture paid out in the form of Periodic Distribution Amount. 35

36 On the exercise of the Musharakah Purchase Undertaking I by the Sukuk Trustee (for and on behalf of the Sukukholders), the aggregate of any outstanding Musawamah Sale Price I and any outstanding Musawamah Sale Price II, under any Musawamah Transaction I and any Musawamah Transaction II, shall become due and payable by the Issuer, unless the Issuer elects to defer such Musawamah Sale Price I and such Musawamah Sale Price II, in accordance with the terms herein. The Sukuk Trustee will execute a power of attorney in favour of BHB pursuant to which BHB is granted the authority to execute the Sale Agreement for the sale of the Sukukholders interest in the Musharakah Venture to BHB; and, to invest the initial capital contributed by the Sukukholders into a new Musharakah Venture, following the exercise of the Musharakah Purchase Undertaking I. Musharakah Purchase Undertaking II BHB shall issue a purchase undertaking ( Musharakah Purchase Undertaking II ) to the Sukuk Trustee (for and on behalf of the Sukukholders) whereby BHB undertakes to purchase the Sukukholders interest in the Musharakah Venture from the Sukuk Trustee (for and on behalf of the Sukukholders) upon the Winding Up (as described in item 2(y)(xxiii)) of BHB in accordance with the terms set out herein at the exercise price which shall be determined in the following manner: (a) the Musharakah Capital; plus (b) aggregate Periodic Distribution Amount and any Additional Distribution Amount up to the liquidation date; less (c) distributable income generated from the respective Musharakah Venture paid out in the form of Periodic Distribution Amount. On the exercise of the Musharakah Purchase Undertaking II by the Sukuk Trustee (for and on behalf of the Sukukholders), the aggregate of any outstanding Musawamah Sale Price I under any Musawamah Transaction I and any outstanding Musawamah Sale Price II under any Musawamah Transaction II, shall become due and payable by the Issuer. 36

37 Annexure II: Musawamah Transaction I Step Description 1 When the Musawamah Investment Notice is issued from time to time, BHB will invoke the Musawamah Undertaking I, to initiate the Musawamah Transaction I. 2 BHB, in the capacity as an agent on behalf of the Sukukholders ( Agent ), shall appoint Affin Investment as the sub agent ( Sub Agent ) to purchase Commodities from the commodity vendor(s) via Bursa Suq Al-Sila (via Commodity Trading Participant ( CTP ) or As- Sidq Tawarruq Trading System on a spot basis on behalf of the Sukukholders. BHB in the capacity as a trustee for the Sukukholders in respect of the Commodities ( Commodity Trustee ) will declare a trust in favour of the Sukukholders over the Commodities. 3 & 5 The Commodity Trustee shall sell the Commodities to BHB as a purchaser at the Musawamah Sale Price I, which will be payable on the next Periodic Distribution Date. The Musawamah Sale Price I may be further deferred for another Distribution Period at the request of BHB. For avoidance of doubt, Musawamah Sale Price I that is deferred shall be payable on the following Periodic Distribution Date unless further deferment is requested by BHB. 4 BHB shall then appoint Affin Investment as its agent to sell the Commodities to the commodity purchaser via Bursa Suq Al-Sila (via CTP) or As-Sidq Tawarruq Trading System, on a spot basis, for a cash consideration. 37

38 Annexure III: Musawamah Transaction II Step Description 1 Upon receipt of the Non Redemption Notice by the Sukuk Trustee, acting for and on behalf of the Sukukholders, the Sukuk Trustee shall issue the Musawamah Transaction Notice and invoke the Musawamah Undertaking II to initiate the Musawamah Transaction II. 2 BHB, in the capacity as an agent on behalf of the Sukukholders ( Agent ) shall appoint Affin Investment as the sub-agent ( Sub- Agent ) to purchase Commodities from the commodity vendor(s) via Bursa Suq Al-Sila (via CTP) or As-Sidq Tawarruq Trading System on a spot basis on behalf of the Sukukholders. BHB in the capacity as a trustee for the Sukukholders in respect of the Commodities ( Commodity Trustee ) will declare a trust in favour of the Sukukholders over the Commodities. 3 & 5 The Commodity Trustee shall sell the Commodities to BHB as a purchaser at the Musawamah Sale Price II, which shall be immediately payable. 4 BHB shall then appoint Affin Investment as its Agent to sell the Commodities to the commodity purchaser via Bursa Suq Al-Sila (via CTP) or As-Sidq Tawarruq Trading System, on a spot basis for a cash consideration. 38