PRINCIPAL TERMS AND CONDITIONS FOR THE PROPOSED MURABAHAH MEDIUM TERM NOTES OF UP TO RM630 MILLION IN NOMINAL VALUE

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1 PRINCIPAL TERMS AND CONDITIONS FOR THE PROPOSED MURABAHAH MEDIUM TERM NOTES OF UP TO RM630 MILLION IN NOMINAL VALUE BACKGROUND INFORMATION 1. ISSUER (i) Name (ii) Address : KMCOB Capital Berhad ( KCB or Issuer ) : Registered Office: Suite 5.03, 5 th Floor, Wisma Chase Perdana, Off Jalan Semantan, Damansara Heights, Kuala Lumpur. (iii) Business Registration No. : M (iv) Date/Place of incorporation (v) Date of Listing (vi) Status (vii) Principal activities (viii) Board of Directors : 7 September 2006, Place of incorporation: Malaysia : Not applicable : Non-Resident Controlled Company Bumiputra-controlled company : The Issuer is a single-purpose company established to undertake the issuance of murabahah medium term notes in such classes, series, form or denomination and to secure the redemption thereof and the utilisation of proceeds from such issuance. : 1. Shah Shahzanim bin Zain 2. Loong Chun Nee (ix) Structure of shareholdings and names of shareholders or, in the case of public company, names of all substantial shareholders : Shareholder Direct Interest KMC Oiltools Bermuda Limited 2 ordinary shares of RM1.00 each 100% (x) Authorised and paid-up share capital Authorised: Ordinary shares of RM1.00 each Issued and fully paidup: Ordinary shares of RM1.00 each RM100, RM2.00

2 2. Names of parties involved in the proposed transaction (where applicable) i. Joint Principal Advisers/ Joint Lead Arrangers/ Joint Lead Managers : United Overseas Bank (Malaysia) Bhd ( UOBM ); and CIMB Investment Bank Berhad ( CIMB ) (herein referred to as Joint Lead Arrangers/Joint Lead Managers or JLA/JLM ) ii. Arranger : Not applicable. iii. Valuers : Not applicable. iv. Solicitors : Albar & Partners ( Legal Counsel ) v. Financial Adviser : Not applicable vi. Technical Adviser : Not applicable vii. Guarantor : KMCOB and in the case where a new company ( Listed Company ) is incorporated to undertake the listing of KMCOB, the Listed Company and, subject to terms set out herein, Principal Subsidiaries (as defined in item 27 (xiii) viii. Trustee : OSK Trustees Berhad ix. Facility Agent/Security Agent : UOBM x. Primary Subscriber(s) and Amount subscribed : If applicable, UOBM and CIMB and/or its affiliates. The amount subscribed will be determined prior to issuance xi. Underwriter(s) and amount underwritten : Not applicable xii. Syariah Adviser : CIMB Shariah Committee xiii. Central Depository : Bank Negara Malaysia xiv. Paying Agent : Bank Negara Malaysia xv. xvi. Reporting Accountant Others : PricewaterhouseCoopers

3 (a) Security Agent : UOBM (b) Joint Bookrunners : if applicable, UOBM and CIMB 3. Islamic Principle Used : Murabahah 4. Facility Description : Up to RM630 million nominal value murabahah medium term notes ( Murabahah Notes ). Underlying Transaction Under the Murabahah structure*, the relevant asset owner(s) and the Trustee (acting on behalf of the investors) shall execute an Asset Purchase Agreement ( APA ) under which the relevant owner(s) will sell the relevant assets ( Murabahah Assets ) to be identified to the Trustee. The purchase price ( Purchase Price ) will be the amount to be disbursed. Pursuant to the Murabahah arrangement, the Trustee will then sell the Murabahah Assets to the Issuer via an Asset Sale Agreement ( ASA ) on a deferred payment basis. The sale price ( Sale Price ) would represent the profit and Purchase Price under the relevant Murabahah Notes. The Issuer will then sell the Murabahah Assets back to the asset owner(s) at the Purchase Price. The obligation of the Issuer to pay the Sale Price is evidenced by the face value of the primary notes (representing the principal) and the aggregate face value of the secondary notes (representing the profits). The primary notes will be settled in one lump sum at the end of the issue period whilst the secondary notes shall be redeemed by the Issuer on a semi-annual basis. *Please refer to Attachment I for a diagrammatic illustration of the structure. 5. Issue size (RM) : The outstanding nominal value of the Murabahah Notes at any point in time shall not exceed RM630 million. 6. Issue price (RM) : The Murabahah Notes will be issued at a discount to the nominal value and the issue price is calculated in accordance with the FAST Rules. 7. Tenor of the The Murabahah Notes shall be issued in series

4 facility/issue with the following maturities: Series Tenor (from respective Issue Date) Maturity Date Nominal Value (RM) Series A 7.0 years 13 December 2013 Series B 8.0 years 12 December 2014 Series C 9.0 years 14 December 2015 Series D 10.0 years 14 December , , ,000, ,000, The Murabahah Notes shall be mandatorily redeemed by the Issuer based on the following predetermined mandatory partial principal redemption feature: 1 st Mandatory Partial Principal Redemption Series Series A Series B Series C Series D Partial Redemption Date 14 December December December December 2010 Redemption Amount (RM) 18,000, ,000, ,000, ,000, nd Mandatory Partial Principal Redemption Series Series A Series B Series C Series D Partial Redemption Date 14 December December December December 2013 Redemption Amount (RM) 75,000, ,000, ,000, ,000, Profit rate (%) : The profit rates for the respective Murabahah Notes shall be determined closer to issuance. The Securities Commission ( SC ) will be notified

5 accordingly prior to issuance. 9. Profit Payment frequency and basis : Semi-annually in arrears and calculated on Actual / Actual day count basis 10. Yield to Maturity ( YTM ) (%) : The Yield to Maturity will only be determined at the point of issuance of the respective Murabahah Notes. 11. Security/Collateral : The Murabahah Notes shall be secured, inter-alia by the following: 1. Corporate guarantees from KMCOB, the existing and future Principal Subsidiaries (as defined in item 27(xiii)) and in the case where a new company ( Listed Company ) is incorporated to undertake the listing of KMCOB, from such Listed Company (collectively, the Guarantors ); 2. Charge over the issued and paid up share capital of the existing and future Principal Subsidiaries held by KMCOB or its subsidiaries or the Listed Company (if applicable); 3. Debenture over the present and future assets of the Issuer; 4. Assignment over the FSRA (as defined hereinafter) or such other account as maybe required by the rating agency to be opened and maintained by the Issuer; and 5. Any other security as may be required by the rating agency to achieve the requisite rating. The requirement for a guarantee or security in respect of any Principal Subsidiary shall be waived in the event that, in the opinion of the Trustee, the relevant legal system affecting the Principal Subsidiary makes it impossible or impracticable for it to be provided. Note: The Issuer is also desirous to procure an arrangement to swap its Ringgit Malaysia liabilities of up to RM630 million arising from the Murabahah Notes to US Dollars via a proposed USD/MYR Cross Currency Interest Rate Swap ( CCIRS Swap Arrangement ). The CCIRS Swap Arrangement (if entered into) is expected to be secured against the Security, ranking pari-

6 passu in terms of priority with the Murabahah Notes. 12. Details on utilisation of proceeds : The issuance of Murabahah Notes are for the following purposes: a) RM250 million will be used to settle intercompany advances between KMCOB Group and Scomi Group Bhd ( SGB ) by way of RM250 million nominal value Murabahah Notes being placed directly with the holders of SGB s RM500 million nominal value of Medium Term Notes ; and b) To raise up to RM380 million for the following purposes: i) up to RM195 million to be advanced to KMCOB, Kota Minerals & Chemicals Sdn Bhd and KMC Oiltools Overseas (M) Limited to enable each of the company to repay its borrowings; ii) up to RM50 million for settling of intercompany advances within the SGB Group; and iii) the remaining amount for working capital requirements and future capital expenditure requirement of the KMCOB Group. 13. Sinking fund : Not applicable. 14. Rating : Malaysian Rating Corporation Berhad ( MARC ) has accorded the Murabahah Notes an indicative rating of AA- ID (CG). 15. Form and Denomination : Each series of the Murabahah Notes shall be represented by a Global Certificate to be deposited with BNM and shall be in bearer form and will be prescribed under the Real Time Electronic Transfer of Funds and Securities ( RENTAS ) system maintained by BNM and be reported on the Fully Automated System for Issuing/Tendering ( FAST ) and comply with all rules and requirements of FAST / RENTAS. Each Murabahah Notes certificate will be in the denomination of RM1,000 or such other denominations as shall be agreed upon between the JLA/JLM and the Issuer.

7 16. Mode of Issue : The Murabahah Notes may be issued via book building or direct placement on best effort basis or on a bought deal basis. The Murabahah Notes will be issued in accordance with the FAST rules or the rules of Real Time Electronic Transfer of Funds and Securities ( RENTAS ), whichever is applicable. 17. Selling Restriction : Selling Restrictions at issuance The Murabahah Notes may only be offered, sold, transferred or otherwise disposed directly or indirectly to a person to whom an offer or invitation to subscribe the Murabahah Notes and to whom the Murabahah Notes are issued would fall within Schedule 6 or Section 229(1)(b) and Schedule 7 or Section 230(1)(b) of the Capital Markets & Services Act 2007 ( CMSA ) and would fall within Schedule 9 or Section 257(3) of the CMSA. Selling Restrictions thereafter The Murabahah Notes may only be offered, sold, transferred or otherwise disposed directly or indirectly to a person to whom an offer or invitation to purchase the Murabahah Notes would fall within Schedule 6 or Section 229(1)(b) and Schedule 9 or Section 257(3) of the CMSA. 18. Listing Status : The Murabahah Notes will not be listed. 19. Minimum Level of Subscription (RM or %) 20. Other Regulatory Approvals Required in relation to the Issue, Offer or Invitation and whether or not obtained : 100% : Not applicable 21. Identified Assets : Identified Assets 96,283,784 ordinary shares in Scomi Engineering Berhad held by SGB, which are free from encumbrances. Ascribed Value RM137,685, The Ascribed Value for the shares is based on

8 the market price of the shares of RM1.43 each as at 22 September The Ascribed Value may change based on the market price of the shares prior to issuance. The assets identified for each sale and purchase transaction will have to comply with the Syariah requirements as well as the Syariah Advisory Council Pricing Guidelines dated 31 December 2003 and 30 April Purchase and selling price / rental (where applicable) : Purchase Price The Purchase Price of the Identified Assets will equal to the proceeds from the issuance. The Purchase Price can only be determined at the point of issuance upon the determination of the profit rate and yield to maturity of the Murabahah Notes (see Items 8 and 10). The Purchase Price will comply with the Syariah Advisory Council Pricing Guidelines dated 31 December 2003 and 30 April Selling Price The Selling Price of the Identified Assets shall equal to the face value of all the primary notes and secondary notes. The Selling Price can only be determined at the point of issuance upon the determination of the profit rate of the Murabahah Notes (see Item 8) Conditions Precedent : Conditions precedent relevant for issuance of this nature as advised by the Legal Counsel, including but not limited to the following: 1. Board Resolution from the Issuer authorising the acceptance and issuance of the Notes by the Issuer and for the Issuer to enter into and execute all the relevant agreements ( the Transaction Documents ) in relation to the issuance of the Murabahah Notes; 2. All approvals required in relation to the Murabahah Notes, including but not limited to that from the SC; 3. The Murabahah Notes are accorded a long term rating of at least AA- or such equivalent rating from a rating agency acceptable to the SC; 4. In respect of the facilities which are to be refinanced by the Murabahah Notes whereby the assets currently charged under such facilities are to be charged to secure the

9 Murabahah Notes, the relevant redemption statements and the lenders' undertaking to release any security and refund the redemption sum in the event that the release of such security is not completed; 5. The approval of the holders of the medium term notes issued by Scomi Group Bhd; 6. Documentary evidence acceptable to the JLA/JLM confirming that all conditions precedent (other than such conditions precedent relating to the issuance of the Murabahah Notes) relating to the reorganisation exercise of the KMCOB Group have been fulfilled; 7. Endorsement from the Syariah Advisor that the Transaction Documents are syariah compliant; 8. Favourable legal opinion from the Legal Counsel addressed to the JLA/JLM and the Trustee advising with respect to, among others, the legality, validity and enforceability of the Transaction Documents; 9. Documentary evidence acceptable to the JLA/JLM confirming the existence of the intercompany advances which will be refinanced from the proceeds of the Murabahah Notes; and 10. Legal opinion from the Legal Counsel that all conditions precedent to the Murabahah Notes have been duly complied with by the Issuer. 24. Representations and Warranties Representations and warranties normal for a facility of this nature as advised by the Legal Counsel including but not limited to the following: 1. the Issuer is a company with limited liability duly incorporated and validly existing under the laws of Malaysia, has full power to carry on its business and to own its property and assets; 2. 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 all relevant consents and approvals of any 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

10 transactions contemplated in the Transaction Documents; 3. neither the execution and delivery of any of the Transaction Documents nor the performance of any of the transactions contemplated by the Transaction Documents (a) contravene or constitute a default under any provision contained in any agreement, law, judgment, order, rule, regulation, licence, permit or consent by which the Issuer or any of its assets is bound or which is applicable to the Issuer or any of its assets, (b) 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; and 4. each of the Transaction Documents 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. 25. Events of Default : Events of Default normal for a facility of this nature as advised by the Legal Counsel including but not limited to the following: 1. the Issuer fails to pay any sum due under the Transaction Documents on the due date thereof or, if so payable, on demand; 2. the Issuer defaults on any other provision of the Transaction Documents (other than any covenant to pay) which is not capable of remedy or which, being capable of remedy, is not remedied within fourteen (14) working days after notice to the Issuer from the Trustee requesting action to remedy the same; 3. any representation, warranty or statement which is made (or acknowledged to have been made) by the Issuer in the Transaction Documents or which is contained in any certificate, statement, legal opinion or notice provided or caused to be provided hereunder or in connection with the Transaction

11 Documents proves to be incorrect, inaccurate or misleading in any material respect or, if repeated at any time with reference to the facts and circumstances then existing, would not be accurate in all material respects; 4. any consent referred to in the Transaction Documents is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect; 5. any indebtedness for borrowed moneys of the Issuer or any of the Guarantors becomes due or payable or capable of being declared due or payable prior to its stated maturity or any guarantee or similar obligations of the Issuer or any of the Guarantors is not discharged at maturity or when called or any security created to secure such indebtedness becomes enforceable; 6. the Issuer or any of the Guarantors enters into or proposes to enter into, or there is declared by any competent court or authority, a moratorium on the payment of indebtedness or other suspensions of payments generally; 7. any provision of the Transaction Documents is or becomes (or is bona fide claimed by the Issuer or any other person to be or to have become) unenforceable for any reason whatsoever; 8. any step or action is taken for the winding up, dissolution or liquidation of the Issuer or any of the Guarantors (including, without limitation, the presentation of a petition for the winding up against the Issuer or the making of any order or the passing of any resolution for the winding up, dissolution or liquidation of the Issuer or any of the Guarantors, as the case may be); 9. a distress, execution, attachment or other legal process is levied, enforced or sued out against any of the assets of the Issuer or any of the Guarantors or any part thereof, and is not discharged or stayed within fourteen (14) days, provided that such distress, execution, attachment or other legal process would have a material and adverse effect on the obligations of the Issuer or any of the Guarantors, as the case may be, in relation to the Murabahah Notes; 10. a receiver, manager, liquidator, trustee,

12 administrator, bailiff or similar officer (other than any officer appointed by Bank Negara Malaysia) is appointed in respect of the Issuer or any of the Guarantors or in respect of all or any part of the respective assets, properties or undertaking of the Issuer or any of the Guarantors; 11. the Issuer or any of the Guarantors ceases or threatens to cease to carry on all or a substantial part of its business where it would have a material and adverse effect on the obligations of the Issuer or any of the Guarantors, as the case may be, in relation to the Murabahah Notes; 12. the Issuer or any of the Guarantors becomes insolvent or commits an act of insolvency or is unable to pay its debts as they fall due or any judgement or judgements is or are obtained against the Issuer and that judgment would have a material and adverse effect on the obligations of the Issuer or any of the Guarantors, as the case may be, in relation to the Murabahah Notes; 13. the Issuer or any of the Guarantors stops, suspends or threatens to stop or suspend payment of all or any part of its debts, begins negotiations or takes any proceeding or other step with a view of readjustment, rescheduling or deferral of all of its indebtedness (or of any part of its indebtedness which it will or might otherwise be unable to pay when due) or proposes or makes a general assignment or any arrangement or composition with or for the benefit of its creditors; 14. any encumbrance over any of the assets of the Issuer or any of the Guarantors is or becomes enforceable; and, 15. any other event or series of events whether related or not (including, without limitation, any material adverse change in the business assets or financial condition of the Issuer) has or have occurred which in the reasonable opinion of the Trustee (which opinion shall be final and binding upon the Issuer) will materially affect or prejudice the ability or willingness of the Issuer or any of the Guarantors to comply with or perform all or any of its obligations in relation to the Murabahah Notes.

13 26. Principal terms and conditions for warrants : Not applicable 27. Other principal terms and conditions for the issue (i) Instrument : Negotiable and non-interest bearing promissory notes (i.e. primary notes (principal portion) together with non-detachable secondary notes (profit portion)) in bearer form evidencing a promise by the Issuer to pay stated Ringgit Malaysia sums on specified dates based on the relevant Selling Price. (ii) Redemption : Unless purchased and cancelled or the maturity of the Murabahah Notes are accelerated by virtue of the declaration of an Event of Default, the Murabahah Notes shall be redeemed by the Issuer at par on the respective Maturity Date or Partial Redemption Dates of each series, as the case may be. (iii) Repurchase and cancellation : The Issuer may at any time purchase the Murabahah Notes at any price in the open market or by private treaty, but these repurchased Murabahah Notes shall be cancelled and cannot be reissued. (iv) Status : The Murabahah Notes will constitute direct, secured and unconditional obligations of the Issuer ranking pari-passu without any preference or priority among themselves and at least paripassu with all present and future unsecured and unsubordinated obligations of the Issuer, subject to those preferred by law. (v) Finance Service Reserves Account ( FSRA ) : The Issuer shall open and maintain a Finance Service Reserves Account ( FSRA ) with a bank acceptable to the JLA/JLM. The Security Agent shall solely operate the FSRA. The Issuer shall maintain an amount, which is sufficient for it to meet its most immediate six (6) months payment obligations in respect of the profits and principal (if applicable) under the Murabahah Notes and pursuant to the terms and conditions of the CCIRS Swap Arrangement (if any) ( Minimum Balance ). However, the initial amount of the FSRA shall be

14 built up progressively from the first issuance of the Murabahah Notes on a monthly basis (i.e. 1/6 every month), for the first six (6) months and thereafter, Issuer shall maintain the Minimum Balance at all times. The Minimum Balance in the FSRA may only withdrawn for the purpose of meeting the Issuer s payment obligations in respect of the profits and/or principal of the Murabahah Notes and pursuant to the terms and conditions of the CCIRS Swap Arrangement (if any) in the event that payment is not possible from internally generated fund. In the event that the balance held in the FSRA is less than/exceeds the most immediate six (6) months obligation of the Issuer pursuant to the terms of the Murabahah Notes and CCIRS Swap Arrangement, the shortfall/excess shall be topped up by/released to Issuer, as the case may be. (vi) Information Covenants : To include but not limited to the following: 1. the Issuer shall provide to the Trustee at least on an annual basis, a certificate confirming that it has complied with all its obligations under the Transaction Documents and the terms and conditions of the Murabahah Notes and that there does not exist or had not existed, from the date the Murabahah Notes were issued, any Event of Default, and if such is not the case, to specify the same; 2. the Issuer shall deliver to the Trustee the following: (a) as soon as they become available (and in any event within one hundred and eighty (180) days after the end of each of its financial year) copies of the financial statements for that year which shall contain the income statements and balance sheets of the Issuer and KMCOB and which are audited and certified without qualification by a firm of independent chartered accountants acceptable to

15 the Trustee; (b) as soon as they become available (and in any event within ninety (90) days after the end of the first half of its financial year) copies of the unaudited half yearly consolidated management financial statements for that period which shall contain the income statements and balance sheets of the Issuer and KMCOB which are duly certified by any one of its directors; (c) promptly, such additional financial or other information relating to the Issuer s and/or the Guarantors business and their operations as the Trustee may from time to time reasonably request; and (d) promptly, all notices or other documents received by the Issuer and/or KMCOB from any of their shareholders or creditors which contents may materially and adversely affect the interests of the Murabahah Notes holders, and a copy of all documents dispatched by the Issuer and/or KMCOB to their shareholders (or any class of them) in their capacity as shareholders or their creditors generally at the same time as these documents are dispatched to these shareholders or creditors, 3. the Issuer shall promptly notify the Trustee of any change (a) in the Board of Directors of the Issuer and/or KMCOB or (b) in the shareholders of KMCOB unless KMCOB pursues a listing exercise; 4. the Issuer shall promptly notify the Trustee 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 materially and adversely affect the ability of the Issuer to perform any of

16 its obligations under any of the Transaction Documents; the Issuer shall promptly give notice to the Trustee of the occurrence of any Event of Default 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 contemplated under the relevant Transaction Document would constitute an Event of Default ( Potential Event 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 the Trustee to remedy and/or mitigate the effect of the Event of Default or the Potential Event of Default; (vii) Positive Covenants Positive covenants normal for facility of this nature as advised by the Legal Counsel including but not limited to the following: 1. the Issuer shall maintain in full force and effect all relevant authorisations, consents, rights, licences, approvals and permits (governmental and otherwise) and will promptly 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 Transaction Documents or to ensure the validity, enforceability, admissibility in evidence of the obligations of the Issuer or the priority or rights of the financiers under the Transaction Documents and the Issuer shall comply with the same; 2. the Issuer shall at all times on demand execute all such further documents and do all such further acts reasonably necessary at any time or times to give further effect to the terms and conditions of the Transaction Documents; 3. 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;

17 4. the Issuer shall promptly perform and carry out all its obligations under all the Transaction Documents; 5. the Issuer shall prepare its financial statements 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 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; and 6. maintain a minimum rating of BBB or such other equivalent rating from an acceptable rating agency, including providing any necessary credit enhancement satisfactory to the relevant rating agency to maintain such a rating. (viii) Negative Covenants Negative covenants normal for facility of this nature as advised by the Legal Counsel and/or as required by the rating agency, that the Issuer, will not, without the prior written consent of the Murabahah Notes holders including but not limited to the following: 1. Grant guarantees, indemnities or similar assurances against financial loss in respect of any indebtedness of any party; 2. Incur any additional indebtedness, which would result in the then prevailing KMCOB Group Net Debt to Equity ratio not being complied with; 3. Other than those created for the benefit of the holders of the Murabahah Notes and the CCIRS Swap Arrangement, it will not charge, pledge, assign or otherwise create or permit to exist any security interest over the Issuer s assets and revenues present or future; 4. Amend its Memorandum and Articles of Association to be inconsistent with the Transaction Documents;

18 5. Assign its rights or transfer its obligations under the Transaction Documents; 6. Sell, transfer or otherwise dispose its assets if such sale, transfer or disposal would in the opinion of the Trustee materially and adversely affect the Issuer s ability to perform its obligations under the Transaction Documents; 7. Enter into any amalgamation, demerger, reconstruction or winding up of itself; 8. Declare any dividends; and 9. Grant any advances or loans to any third party save and except for advances or loans to companies within the KMCOB Group arising out of the proceeds from the issuance of the Murabahah Notes. For avoidance of doubt such company within the KMCOB Group that receives advances or loans from the Issuer shall not subordinate the obligation to repay such advances or loans to the payment obligation owing to any other third party. (ix) KMCOB s and the Listed Company s (if applicable) Positive Undertakings : To include but not limited to the following: 1. KMCOB and the Listed Company (if applicable) shall maintain in full force and effect all relevant authorisations, consents, rights, licences, approvals and permits (governmental and otherwise) and will promptly 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 KMCOB and the Listed Company (if applicable) to enter into or perform its obligations under the Transaction Documents or to ensure the validity, enforceability, admissibility in evidence of the obligations of KMCOB and the Listed Company (if applicable) or the priority or rights of the financiers under the Transaction Documents and KMCOB and the Listed Company (if applicable) shall comply with the same;

19 2. KMCOB and the Listed Company (if applicable) 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; and 3. KMCOB and the Listed Company (if applicable) shall prepare its financial statements on a basis consistently applied in accordance with approved accounting standards in the jurisdiction in which it is incorporated and those financial statements shall give a true and fair view of the results of the operations of the KMCOB and the Listed Company (if applicable) for the period to which the financial statements are made up and shall disclose or provide against all liabilities (actual or contingent) of KMCOB and the Listed Company (if applicable); (x) KMCOB s and the Listed Company s (if applicable) Negative Undertakings : KMCOB and the Listed Company (if applicable) shall undertake that it shall not: 1. grant or permit its subsidiaries to grant guarantees, indemnities or similar assurances against financial loss in respect of any indebtedness of any affiliate or third party other than (i) corporate guarantees and performance bonds granted in the ordinary course of KMCOB s and/or the Listed Company s (if applicable) business and (ii) corporate guarantees granted by KMCOB and/or the subsidiaries which benefit from the Stand By Letter of Credit ( SBLC ) facilities of KMCOB Group for up to USD25 million and for trade facilities of KMCOB Group for up to USD20 million; 2. incur any additional indebtedness or permit its subsidiaries to incur any additional indebtedness which would result in the then prevailing KMCOB Group Net Debt to Equity ratio or the Listed Company Group Net Debt to Equity Ratio (if applicable) not being complied with; 3. other than those created for the benefit of the holders of the Murabahah Notes and

20 the CCIRS Swap Arrangement and as disclosed to the JLA/JLM, charge, pledge, assign or otherwise create or permit to exist, or permit its subsidiaries to charge, pledge, assign or otherwise create or permit to exist, any security interest over their respective assets and revenues present or future, save and except those given in connection with their respective working capital lines, hire purchase or leasing arrangements entered into in the ordinary course of business, or those arising from any Additional Indebtedness as permitted in item 27(xiii); 4. sell, transfer or otherwise dispose its assets if such sale transfer and disposal would in the opinion of the Trustee materially and adversely affect its ability to perform its obligations in relation to the Murabahah Notes; 5. enter into any amalgamation, demerger, reconstruction or winding up of itself or any of its subsidiaries which may materially affect its ability to perform its obligations; 6. declare any dividends if: (i) an event of default has occurred, is continuing and has not been waived; or (ii) the ADSCR is not met or the then prevailing group Net Debt to Equity ratio not complied with, if calculated immediately following such payment/distribution; 7. grant any advances or loans to any third party save and except for advances or loans made to (i) companies within the KMCOB Group or the Listed Company Group (if applicable) in the ordinary course of business or in connection with the Murabahah Notes; or (ii) its wholly owned subsidiary specially incorporated to enable the wholly owned subsidiary to finance or part finance the proposed acquisition of another corporation and the funding of such advances or loans is via equity injection and borrowings which are

21 non-recourse to KMCOB or the Listed Company (if applicable) (refer to item 27(xiii)); or (iii) companies within KMCOB Group or the Listed Company Group (if applicable) to finance or part finance the proposed acquisition of another corporation provided that if such corporation falls within the definition of Principal Subsidiaries and security interest is created over such corporation in favour of the holders of the Murabahah Notes. (xi) KMCOB s/list ed Company Financial Covenants : To include but not limited to the following financial ratios to be maintained at all times but measured: Without listing of KMCOB 1. KMCOB Group Net Debt to Equity Ratio shall not exceed 2.00 times from FYE 31st Dec 2007, not more than 1.5 times from FYE 31 st Dec Thereafter from FYE 31 st Dec 2009 to maintain the Group Net Debt to Equity Ratio of not more than 1.25 times; 2. The ADSCR is not less than 1.50 times. Post listing of KMCOB/Listed Company 1. Listed Company Group Net Debt to Equity Ratio shall not exceed 1.75 times from FYE 31 st Dec Thereafter from FYE 31 st Dec 2009 to maintain the Group Net Debt to Equity Ratio of not more than 1.25 times. 2. The ADSCR is not less than 1.50 times. Definition of terms used in the ratios above: Equity is defined as the aggregate of paid-up capital (equity and preference), subordinated shareholders loans and advances (if any), irredeemable convertible loan stocks (if any), retained earnings and other reserves. ADSCR is defined as the ratio of (A) available consolidated cash and cash equivalents at the closing of the financial year plus the Consolidated Total Debt Service Obligations (principal and interest and other charges) for the said financial year ( Consolidated Total Debt Service Obligations ), to (B) Consolidated Total Debt Service Obligations. Consolidated Total Debt Service Obligations is

22 defined as the aggregate of: 1. the nominal value paid and profit paid under the Murabahah Notes; and 2. monies paid or repaid under the borrowings of the KMCOB Group or the Listed Company Group (if applicable) but exclude principal repayment to be made via draw down of new financing facilities and Additional Indebtedness as permitted under item 27(xiii) which have no recourse to KMCOB or the Listed Company (if applicable) and the Principal Subsidiaries. (xii) Group Net Debt : Group Net Debt is defined as: (a) the principal amount (together with any fixed or minimum premium payable on final repayment) for the time being owing by any member of the KMCOB Group or the Listed Company Group (if applicable), as the case may be in respect of any loan, debenture, debenture stock, credit facilities, borrowing or any other instrument creating or evidencing that member s borrowing but so that in the case of a debenture, debenture stock, bond, or other instruments created or evidencing collateral security for that member s borrowing, the amount to be taken into account shall be the principal amount thereof or the amount for the time being outstanding of the borrowing or indebtedness collaterally secured whichever is the lesser but shall exclude all loans and/or advances from its shareholders which are subordinated to the Notes; (b) in the case of a counter indemnity with respect to any guarantee facility to any member of the KMCOB Group or the Listed Company Group (if applicable), as the case may be in relation to advances made by that member, the amount to be taken into account shall be the principal amount of those advances granted to that member and not repaid; (c) the principal amount payable in respect of any overdraft or other similar indebtedness of any member of the KMCOB Group or the Listed Company Group (if applicable), as the case may be;

23 (d) the amounts raised by any member of the KMCOB Group or the Listed Company Group (if applicable), as the case may be by acceptance under any acceptance credit opened and the principal amount recoverable in respect of bills or receivables discounted; (e) amounts raised by any member of the KMCOB Group or the Listed Company Group (if applicable), as the case may be by factoring its hire-purchase receivables with recourse and financial leases; and (f) the principal amount payable by any member of the KMCOB Group or the Listed Company Group (if applicable), as the case may be pursuant to or in connection with debt instruments (including but not limited to bonds, promissory notes and loan stocks) issued by that member; (g) all other indebtedness for borrowed monies (be it actual or contingent) by any member of the KMCOB Group or the Listed Company Group (if applicable), as the case may be; Less:- (a) the consolidated cash balances of KMCOB Group or the Listed Company Group (if applicable), as the case may be and such balances includes accrued interest retained by or on behalf of KMCOB Group at the end of such period; and (b) the monetary value of all consolidated cash equivalent instruments which are readily convertible to cash; and (c) Additional Indebtedness as permitted under item 27(xiii), which have no recourse to KMCOB or the Listed Company (if applicable) and the Principal Subsidiaries. but excludes the double counting of any liability which might otherwise be included as a result of this definition; (xiii) Principal Subsidiaries : Principal Subsidiaries means collectively Kota Minerals & Chemicals Sdn Bhd, KMC Oiltools

24 (Europe) Limited, KMC Oiltools Inc, KMC Oiltools (Cayman) Ltd, KMC Oiltools de Venezuela SA, Shetlands Oiltools Limited, Oiltools (Africa) Ltd and Oiltools South America Ltd so long as each of them is a subsidiary of KMCOB or the Listed Company (if applicable) and any other subsidiary of KMCOB or the Listed Company (if applicable): (a) (b) (c) whose revenues (in the case of a subsidiary which itself has subsidiaries) consolidated revenues, as shown by its management accounts for the cumulative period corresponding to the latest published consolidated income statement of KMCOB or the Listed Company (if applicable), are at least 5% of the consolidated revenue as shown by the latest published consolidated income statement of KMCOB or the Listed Company (if applicable); or whose profits or losses after tax or (in case of a subsidiary which itself has subsidiaries) consolidated losses or profits after tax, as shown by its management accounts for the cumulative period corresponding to the latest published consolidated income statement of KMCOB or the Listed Company (if applicable), are at least 5% of the consolidated profits or losses (as the case may be) after tax as shown by the latest published consolidated income statement of KMCOB or the Listed Company (if applicable) including for the avoidance of doubt, KMCOB s or the Listed Company s (if applicable) share of profits or losses (as the case may be) of subsidiaries not consolidated and of associated companies and after adjustment for minority interest; or whose net assets or (in the case of a subsidiary which itself has subsidiaries) total consolidated net assets, as shown by its latest management accounts, are at least 5% of the consolidated total net assets of KMCOB or the Listed Company (if applicable) as shown by the latest published consolidated balance sheet of KMCOB or the Listed Company (if

25 applicable) including, for the avoidance of doubt, the investment of KMCOB or the Listed Company (if applicable) in each subsidiary whose accounts are not consolidated with the published consolidated accounts of KMCOB or the Listed Company (if applicable) and after adjustment for minority interests; or (d) to which is transferred the whole or substantially the whole of the assets of a subsidiary which immediately prior to such transfer was a Principal Subsidiary, provided that the Principal Subsidiary which so transfers its assets shall forthwith upon completion of such transfer cease to be Principal Subsidiary and the Subsidiary to which the assets are so transferred shall become a Principal Subsidiary forthwith upon completion of the transfer, unless such subsidiary would continue to be a Principal Subsidiary by virtue of paragraph (a), (b) or (c) above; BUT shall exclude such company within the KMCOB Group or the Listed Company Group (if applicable) that is a subsidiary of KMCOB or the Listed Company (if applicable) by virtue of an acquisition undertaken after the date of the Transaction Documents where the following conditions are satisfied: (1) the acquisition is undertaken by a special purpose vehicle ( SPV ) wholly owned by KMCOB or the Listed Company (if applicable), acting as the acquirer; (2) the acquisition is financed via equity injection into KMCOB or the Listed Company (if applicable) (with no repayment obligation) which is thereafter injected into the SPV as equity or as advances to the SPV; and (3) if the SPV also incurs additional indebtedness ( Additional Indebtedness ) to finance the acquisition, the Additional Indebtedness is incurred on a nonrecourse basis to KMCOB or the Listed Company (if applicable) and/or any of the then existing Principal Subsidiaries and

26 the cash flow to support such Additional Indebtedness is not through the cash flow of KMCOB or the Listed Company (if applicable) and/or any of the then existing Principal Subsidiaries. For the avoidance of doubt, both the SPV and the subsidiary acquired by the SPV would be excluded from the definition of Principal Subsidiaries. Reference to Principal Subsidiary means any one of the Principal Subsidiaries. Reference to Principal Subsidiary shall exclude Oiltools Africa Limited (Company No. RC837048). (xiv) Put Option The Noteholders have a right, on every Maturity Date from the year 2014 onwards, to sell the Murabahah Notes to the Issuer ( Put Option ) subject to the following conditions being met:- (i) (ii) the Put Option is exercisable in respect of any Murabahah Notes maturing on the year 2015 and/or 2016, either in whole or in part, and at par value; the date of the Put Option occurs on a Maturity Date; (iii) the annual debt service cover ratio of Scomi Oilfield Limited (Company No.39717), upon redemption of the relevant Murabahah Notes, shall be at least two (2) times; and (iv) prior to the exercise of the Put Option, the Issuer shall have received a written confirmation from the Rating Agency confirming that the exercise of the Put Option will not adversely impact the AArating of the Murabahah Notes. (xv) Compensatio n for Late Payment(s) ( Ta widh ) : Compensation on late payment In the event that the Issuer fails to make timely payment on the Murabahah Notes, the Issuer shall pay compensation on such overdue amounts at the rate and manner prescribed by the Syariah Advisory Council at the SC.

27 (xvi) Taxes : All payments of principal and interest in respect of the Notes will be made by the Issuer after deducting or withholding any amount for or on account of any present or future taxes or duties of whatsoever nature imposed or levied by the Government of Malaysia or any authority thereof or therein having power to tax and which are required by law to be deducted or withheld. The Issuer will not pay any additional amount in respect of any such deduction or withholding or payment of principal or interest for or on account of any such taxed and duties. (xvii) Governing Laws : Laws of Malaysia and in the case of the securities to be created, the laws of the appropriate jurisdiction, as the case may be.

28 Attachment I Murabahah Structure