Other terms and conditions (i) Trust Assets : In respect of each Tranche under an Issue, the Issuer shall declare a trust for the benefit of the Sukukholders of that Tranche under an Issue over the following Trust Assets: (i) (ii) (iii) (iv) Beneficial ownership to the Lease Assets of that Tranche; Rights under the Ijarah Agreement(s) of that Tranche and to the Rental(s) thereof; Purchase Undertaking by the REIT Trustee in respect of that Issue; and Any additional items as advised by the LA, Solicitors and/or Shariah Adviser. (ii) Lease Assets : For Issue 1, the Lease Assets identified are as follows: No Lease Assets Market Value (RM) 1. Mydin Gong Badak 158,000,000 1 2. Premises No. 31, Lorong IKS Juru 3, Taman IKS Juru, 1,400,000 2 Simpang Ampat, Seberang Perai Selatan, Pulau Pinang held under the issue document of title GRN 149808, Lot 3499, Mukim 13, Daerah Seberang Perai Tengah, Pulau Pinang 3. Premises No. 5, Bangunan Joota Brothers, Jalan Sungai Korok, Jitra, Kedah held under the issue document of title H.S.(D) 17607, PT 740, Bandar Jitra, Daerah Kubang Pasu, Kedah 4. PT No. 2281, Jalan Kuala Ketil, Bandar Puteri Jaya, Sungai Petani, Kedah held under the issue document of title H.S.(D) 125211, PT 2281, Bandar Sungai Petani, Daerah Kuala Muda, Kedah 5. Premises Nos. 1 & 1-1, Jalan Niaga, Pusat Perdagangan Jalan Mawai, Kota Tinggi, Johor held under the issue document of title PN 74196, Lot 20473, Bandar Kota Tinggi, Daerah Kota Tinggi, Johor 6. Premises Nos. 3, 3A & 3B, Jalan Resam 13, Taman Bukit Tiram, Ulu Tiram, Johor held under the issue document of title GRN 343903, Lot 107789, Mukim Tebrau, Daerah Johor Bahru, Johor 1 520,000 2 5,200,000 2 820,000 2 860,000 2
7. Premises No. 1, Jalan Bandar Baru 1, Pusat Bandar Baru Ayer Hitam, Ayer Hitam, Johor held under the issue document of title PN 69846, Lot 41096, Mukim Sri Gading, Daerah Batu Pahat, Johor 8. PTD 153154, Jalan Tampoi, Taman Damansara Aliff, Johor Bahru, Johor held under the issue document of title H.S.(D) 491589, PTD 153154, Mukim Tebrau, Daerah Johor Bahru, Johor 9. PTD 103231, Taman Impian Senai, Senai, Johor held under the issue document of title H.S.(D) 58402, PTD 103231, Mukim Senai, Daerah Kulai, Johor 10. PT No. 217643, Lot 383044, Jalan Kuala Kangsar, Taman Tasek Mutiara, Ipoh, Perak held under the issue document of title GRN 140646, Lot 383044, Mukim Hulu Kinta, Daerah Kinta, Perak 11. Premises Nos. 18 & 20, Jalan Sulaiman, Kajang, Selangor held under the following issue documents of title:- (a) GRN 45688, Lot 62, Seksyen 7, Bandar Kajang, Daerah Ulu Langat, Selangor; and (b) GRN 45689, Lot 63, Seksyen 7, Bandar Kajang, Daerah Ulu Langat, Selangor 12. Premises Nos. 60 & 62, Jalan PJS 11/28A, Bandar Sunway, 46150 Petaling Jaya, Selangor held under the following issue documents of title:- (a) H.S.(M) 9319, PT 17192, Mukim Damansara, Daerah Petaling, Selangor; (b) PN 72424, Lot 46465, Bandar Sunway, Daerah Petaling, Selangor; (c) H.S.(M) 9320, PT 17193, Mukim Damansara, Daerah Petaling, Selangor; (d) PN 72423, Lot 46464, 2 2,000,000 2 12,000,000 2 8,400,000 2 8,600,000 2 9,700,000 2 9,300,000 2
Bandar Sunway, Daerah Petaling, Selangor 13. Premises No. 3, Lorong 47,000,000 2 Gerudi 1, Off Jalan Pelabuhan Utara, Pelabuhan Klang, Selangor held under the issue document of title PN 11243, Lot 9, Seksyen 21, Bandar Port Swettenham, Klang, Selangor 14. Premises No. 6, Jalan Gerudi, Off Jalan Pelabuhan Utara, 27,000,000 2 Pelabuhan Klang, Selangor held under the issue document of title PN 8616, Lot 59560, Seksyen 21, Bandar Port Swettenham, Klang, Selangor 15. PT No. 6878, Jalan 8/27A, Pusat Bandar Wangsa Maju, Kuala Lumpur held under the issue document of title H.S.(D) 26,000,000 2 99750, PT 6878, Mukim Setapak, Daerah Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur 16. Premises No. 9, Persiaran 470,000 2 Putra Timur 1, Kuala Perlis, Perlis held under the issue document of title PM 1181, Lot 2105, Mukim Kuala Perlis, Daerah Perlis, Perlis 17. PT No. 19503, Lebuh Ayer 8,300,000 2 Keroh, Hang Tuah Jaya, Melaka held under the issue document of title PM 4878, Lot 19838, Mukim Bukit Katil, Daerah Melaka Tengah, Melaka TOTAL 325,570,000 Note: 1: The market value of the Lease Asset as at 24 August 2017. 2. The market value of the Lease Assets as at 31 December 2017. (iii) Purchase Undertaking : For each Issue under the Sukuk Ijarah Programme, the REIT Trustee (as Obligor on behalf of Al- Salãm REIT) shall grant a Purchase Undertaking to the Sukuk Trustee pursuant to which the Obligor shall undertake to purchase the Identified Assets for that Issue (on collective basis) from the Issuer on the Expected Maturity Date or upon an occurrence of a Trigger Event under that Issue or upon the declaration of an Event of Default under that Issue, at the relevant Exercise Price (as defined below) for that Issue. The Purchase Undertaking shall be held by the Sukuk Trustee upon execution. 3
(iv) Exercise Price : In respect of each Issue, upon the exercise by the Sukuk Trustee (for Sukukholders) of its rights under the Purchase Undertaking granted by the REIT Trustee, the Exercise Price in respect of that Issue for the purchase of the Identified Assets in respect of that Issue is as follows: At the Expected Maturity Date Equivalent to the Scheduled Periodic Distributions Amount (as defined below) for the Sukuk Ijarah belonging to that Issue plus the Ownership Expenses (as defined below). Scheduled Periodic Distributions Amount means the aggregate of the following: (a) (b) the nominal value of the outstanding Sukuk Ijarah belonging to that Issue; and the accrued but unpaid Rental(s) (if any), accrued to the Expected Maturity Date of the Sukuk Ijarah belonging to that Issue and shall be calculated in accordance with PayNet Rules and Procedures. Upon occurrence of a Trigger Event or declaration of an Event of Default Equivalent to the Dissolution Payment Amount (as defined below) for the Sukuk Ijarah belonging to that Issue plus the Ownership Expenses (as defined below). Dissolution Payment Amount means:- (i) in the case where Dissolution Payment Amount is to be computed for the purpose of determining the Exercise Price payable following the exercise by the Sukuk Trustee of its rights under the Purchase Undertaking following the occurrence of a Trigger Event (but in the absence of a declaration of an Event of Default in respect of the Sukuk Ijarah belonging to that Issue), the aggregate of the following: (a) (b) (c) the nominal value of the outstanding Sukuk Ijarah belonging to that Issue; the accrued but unpaid Rental(s) (if any), accrued up to the date of the occurrence of a Trigger Event in respect of the Sukuk Ijarah belonging to that Issue; and the remaining Rental(s) (if any), calculated from the date of the occurrence of a Trigger Event up to the Legal Maturity Date of the Sukuk Ijarah belonging to that Issue subject to Ibra (as defined below) (if any). Ibra means an act of releasing absolutely or conditionally the Sukukholders rights and claims on any obligation against the Obligor which would result in the latter being discharged of its obligation or liabilities towards such Sukukholders. The release may be either partially or in full. In the event the Obligor pays the 4
Exercise Price prior to the Legal Maturity Date of the Sukuk Ijarah belonging to an Issue following the exercise by the Sukuk Trustee of its rights under the Purchase Undertaking following the occurrence of a Trigger Event (but in the absence of a declaration of an Event of Default in respect of the Sukuk Ijarah belonging to that Issue), the Sukukholders shall consent to grant an Ibra for the remaining Rental(s) calculated from the date of the payment in full of the Exercise Price by the Obligor up to the Legal Maturity Date of the Sukuk Ijarah belonging to that Issue. (ii) in the case where Dissolution Payment Amount is to be computed for the purpose of determining the Exercise Price payable following the exercise by the Sukuk Trustee of its rights under the Purchase Undertaking following the declaration of an Event of Default in respect of the Sukuk Ijarah belonging to that Issue, the aggregate of the following:- (a) (b) the nominal value of the outstanding Sukuk Ijarah belonging to that Issue; and the accrued but unpaid Rentals(s) (if any), accrued up to the date of the declaration of an Event of Default in respect of the Sukuk Ijarah belonging to that Issue. For the avoidance of doubt, the Dissolution Payment Amount shall be calculated in accordance with PayNet Rules and Procedures. The Exercise Price payable by the Obligor to the Sukuk Trustee (on behalf of the Sukukholders) shall be set off against reimbursement of the Ownership Expenses. For the avoidance of doubt, upon the occurrence of a Trigger Event due to the total loss or destruction of or damage to one or more (but not all) of the Identified Assets in relation to such Issue or any event or occurrence that renders one or more (but not all) of such Identified Assets permanently unfit for any economic use and the repair or remedial work in respect thereof is wholly uneconomical, which in the opinion of the Sukuk Trustee would significantly impair the ability of the Issuer to continue to collect and/or earn the Rental under such Issue from the Lessee in order to meet its obligations under such Issue ( Loss Assets ) and the Purchase Undertaking is exercised by the Sukuk Trustee, the Exercise Price shall exclude the Loss Assets. For any Takaful/insurance claims made on the Loss Assets, such proceeds when received shall be utilised towards the settlement of the Dissolution Payment Amount. The Servicing Agent shall irrevocably and unconditionally undertake to immediately make the requisite payment to the Issuer (for the benefit of the Sukukholders) if sufficient proceeds of Takaful/insurance have not been received within the agreed timeframe after the occurrence of such Trigger Event, for the full settlement of the Dissolution Payment 5
Amount. (v) Ordinary maintenance and repair : The REIT Trustee (as Lessee) shall be responsible for all costs and expenses associated with the use and operation of the Lease Assets including, without limitation, general upkeep and maintenance of the Lease Assets. (vi) Ownership Expenses : Ownership expenses shall mean in respect of an Issue, all expenses associated with the land premium, ownership maintenance and takaful/insurance of the Identified Assets (in the case where all Tranches in respect of that Issue have been issued) or all Lease Assets falling within the Identified Assets (in the case where not all Tranches in respect of that Issue have been issued) under all Ijarah Agreement(s) in respect of that Issue, other than the ordinary maintenance and repair. The REIT Trustee as Servicing Agent under the Servicing Agency Agreement in respect of an Issue will take full responsibility for Ownership Expenses of the Identified Assets (in the case where all Tranches in respect of that Issue have been issued) or all Lease Assets falling within the Identified Assets (in the case where not all Tranches in respect of that Issue have been issued) under all Ijarah Agreement(s) in respect of that Issue, and may only submit its claims for such expenses paid upon the expiry of the Ijarah Agreement(s) in respect of that Issue or upon termination of the Ijarah Agreement(s) in respect of that Issue provided that the Issuer has fully discharged its obligations under the Sukuk Ijarah belonging to that Issue. For the avoidance of doubt, the Ownership Expenses shall be subordinated under the Sukuk Ijarah belonging to that Issue. (vii) Limited recourse : The Sukuk Ijarah are limited recourse in nature in that payment obligations of the Issuer under each Issue of the Sukuk Ijarah and the payment obligations of the REIT Trustee under the respective security documents are limited to the extent of the Issue Security for that Issue. If the net proceeds from the realisation of the Issue Security for that Issue is not sufficient to make all payments due to the relevant Sukukholders of that Issue, such Sukukholder will have no further claim against the Issuer nor shall the respective security party in respect of such shortfall and any unsatisfied claims be extinguished. For avoidance of doubt, in a Total Loss Event, payment due to the relevant Sukukholders will be paid out of the claim proceeds of the takaful/insurance in relation to the Identified Assets. (viii) Tenure of the Sukuk Ijarah Programme/ Tenure of the Sukuk Ijarah Tenure of Sukuk Ijarah Programme The Sukuk Ijarah Programme has an expected tenure of up to thirteen (13) years ( Expected Tenure ) and a legal tenure of up to fifteen (15) years ( Legal Tenure ) commencing from the date of first issuance under the Sukuk Ijarah Programme. 6
Tenure of the Sukuk Ijarah The Sukuk Ijarah shall be issued for tenures of more than one (1) year and up to an expected maturity period of thirteen (13) years ( Expected Maturity Period ) (the last day on which the Expected Maturity Period expires is referred to as Expected Maturity Date ) with a legal maturity period falling two (2) years ( Legal Maturity Period ) (or such other period as may be agreed by the Issuer and the JLMs and where necessary, in consultation with the Rating Agency based on the Rating Agency s assessment (in the case of rated Sukuk Ijarah) or the JLMs (in case of an unrated Sukuk Ijarah)) from the Expected Maturity Date (the last day on which the Legal Maturity Period expires is referred to as Legal Maturity Date ), provided always that: (1) the Expected Maturity Date of the Sukuk Ijarah shall not fall after the Expected Tenure; (2) the Legal Maturity Date of the Sukuk Ijarah shall not fall after the Legal Tenure; and (3) the Expected Maturity Date and Legal Maturity Date elected by the Issuer for the Sukuk Ijarah shall be mutually agreed by the Issuer and the JLMs and where necessary, in consultation with the Rating Agency based on the Rating Agency's assessment (in the case of a rated Sukuk Ijarah) or the JLMs (in the case of an unrated Sukuk Ijarah) prior to each Issue. The Expected Maturity Date and Legal Maturity Date of Sukuk Ijarah issued under the Tranche(s) of an Issue issued subsequent to the first Tranche issued under that same Issue shall co-terminus with the Expected Maturity Date and Legal Maturity Date of the Sukuk Ijarah issued under the first Tranche of the same Issue. Tenure of the Sukuk Ijarah under Issue 1 In respect of Sukuk Ijarah to be issued under Issue 1, the Expected Maturity Period of the Sukuk Ijarah is up to 2 years and the Legal Maturity Period of the Sukuk Ijarah is up to 4 years. (ix) Taxes : All payments in respect of the Sukuk Ijarah and/or any of the Transaction Documents by the Issuer and/or the REIT Trustee will be made by the Issuer and/or the REIT Trustee 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 GOM or any authority thereof or therein having power to tax and which are required by law to be deducted or withheld. The Issuer and/or the REIT Trustee shall not be required to 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 taxes and duties. 7
(x) Expenses : All expenses including but not limited to legal fees, stamp duty, out-of-pocket expenses and other costs, which are reasonably incurred in arranging this financing whether on an abortive basis or otherwise, shall be for the account of the Issuer/REIT Trustee and on a full indemnity basis. (xi) (xii) (xiii) (xiv) Profit/coupon/rental rate Profit coupon/rental payment frequency Profit/coupon/rental payment basis Details on utilisation of proceeds by Issuer : The periodic distribution rate ( Periodic Distribution Rate ) for each Sukuk Ijarah shall be based either on fixed or floating rate basis and will be determined prior to each issuance of the Sukuk Ijarah. In respect of the Sukuk Ijarah with Periodic Distributions based on floating rate, the expected Periodic Distributions amount shall be based on a floating rate based on a benchmark or formula to be agreed prior to the issuance of the Sukuk Ijarah and as set out in the Transaction Documents multiplied with the nominal value of the relevant outstanding Sukuk Ijarah ( Benchmark Rate ). : For rated Sukuk Ijarah: The Issuer shall pay the periodic distribution payment ( Periodic Distribution Payment ) on semi-annual basis, with the first payment to be made six (6) months from the date of issuance of the Sukuk Ijarah. For unrated Sukuk Ijarah: The Issuer shall pay the Periodic Distribution Payment either on quarterly basis or on semi-annual basis to be determined prior to each issuance of the unrated Sukuk Ijarah, with the first payment to be made three (3) or six (6) months from the date of issuance of the Sukuk Ijarah, as the case may be. For the avoidance of doubt, the payment frequency of such Periodic Distribution Payment that has been determined prior to issuance of such unrated Sukuk Ijarah, shall apply until the Legal Maturity Date of such unrated Sukuk Ijarah. : The Periodic Distribution Payment shall be calculated on actual/365 days basis. : Issue 1 Issuer The proceeds from the issuance of Sukuk Ijarah to be issued under Issue 1 shall be utilised by the Issuer for the following Shariah-compliant purposes:- 1. To finance the acquisition of the beneficial interest of the Identified Assets under Issue 1 from the REIT Trustee; 2. To fund the FSRA; and/or 3. To defray expenses incurred in relation to the establishment of the Sukuk Ijarah Programme and the issuance of Sukuk Ijarah under Issue 1. 8
REIT Trustee The REIT Trustee (acting on behalf of Al- Salãm REIT) shall utilise the proceeds received from the Issuer for the following Shariah-compliant purposes:- 1. To settle the purchase consideration for the purchase of Mydin Gong Badak; 2. Repayment of the outstanding amounts under the revolving credit facility of RM10.0 million granted by RHB Islamic to the REIT Trustee (in its capacity as trustee of Al- Salãm REIT); and/or 3. Working capital requirements of Al- Salãm REIT. In each case, in accordance with the REIT Trust Deed and the REIT Guidelines, as amended from time to time. Note: The remaining/excess balance of the Sukuk proceeds of Issue 1 after the above utilisation ( Excess Balance from Issue 1 Sukuk Proceeds ) if any, shall be credited into the MCA. Subsequent Issues Issuer The proceeds from the issuance of Sukuk Ijarah under each Subsequent Issue shall be utilised by the Issuer for the following Shariah-compliant purposes: 1. To finance the acquisition of the beneficial interest of the Lease Assets for each Tranche under such Subsequent Issue from the REIT Trustee; 2. To refinance maturing Sukuk Ijarah on their respective maturity dates subsequent to first issuance; 3. To fund the relevant designated accounts in respect of that Subsequent Issue (where applicable); and/or 4. To defray expenses incurred in relation to such Subsequent Issue. REIT Trustee The REIT Trustee (acting on behalf of Al- Salãm REIT) shall utilise the proceeds received from the Issuer for the following Shariah-compliant purposes:- 1. Financing the investment activities (including regular capital expenditure, and acquisitions and financing expenses) of Al- Salãm REIT; and/or 2. Refinancing of existing and/or future borrowings/financings undertaken by Al- Salãm REIT for its investment activities (including capital expenditure and the related acquisition and financing expenses); and/or 3. Working capital requirements of Al- Salãm REIT. In each case, in accordance with the REIT Trust Deed and the REIT Guidelines, as amended from time to time. 9
(xv) Listing status and types of listing, where applicable : The Sukuk Ijarah will not be listed on Bursa Malaysia Securities Berhad or any other stock exchanges. (xvi) Status : Each Issue of Sukuk Ijarah when issued constitute direct, unconditional, unsubordinated and secured obligations of the Issuer in accordance with the Transaction Documents governing such Issue and all Sukuk Ijarah belonging to the same Class within that Issue (regardless of which Tranche they belong to in that Issue) will rank pari passu in all respects without discrimination, preference or priority among themselves and will rank at least pari passu, with all other present and future unsecured and unsubordinated obligations (both actual and contingent) of the Issuer except for liabilities which are preferred by the laws of Malaysia and not by reason of any security interest, and shall among themselves have the following ranking:- (xvii) Form and Denomination : Form (1) Class A Sukuk Ijarah shall rank ahead in terms of priority of payment and security of all other Classes of Sukuk Ijarah and shall rank pari passu amongst themselves in terms of priority of payment and security; (2) Class B Sukuk Ijarah, if any, shall rank below the Class A Sukuk Ijarah but ahead in terms of priority of payment and security of all other Classes of Sukuk Ijarah and shall rank pari passu amongst themselves in terms of priority of payment and security; (3) The subsequent Classes, if any shall rank below the Class A Sukuk Ijarah and Class B Sukuk Ijarah in terms of priority of payment and security but ahead of all other Classes of Sukuk Ijarah alphabetically in descending order of seniority, i.e. Class C will rank ahead of Class D, Class D will rank ahead of Class E etc., in terms of priority of payment and security and each Class shall rank pari passu amongst themselves in terms of priority of payment and security respectively; and (4) the Unrated Class Sukuk Ijarah, if any, shall rank the lowest in terms of ranking and shall rank pari passu amongst themselves in terms of priority of payment and security. For the avoidance of doubt, each Issue will not rank pari passu with each other given that each Issue is secured by different Issue Security.. In respect of Issue 1, the Sukuk Ijarah belonging to Issue 1 shall comprise only one (1) Tranche comprising one (1) Unrated Class Sukuk Ijarah which shall rank pari passu without any preference or priority among themselves. The Sukuk Ijarah will be issued in bearer form and represented at all times by global certificates to be deposited with the Central Securities Depository (exchangeable for 10
definitive certificates only in limited circumstances as provided in the Trust Deed) and shall be issued in accordance with PayNet Rules and Procedures. Denomination The Sukuk Ijarah shall be issued in the denomination of RM1,000.00 each and in multiples of RM1,000.00 thereof or such other denomination as may be mutually agreed by the Issuer and the LA/JLMs as may be allowed under the PayNet Rules and Procedures. (xviii) Issue Price : The Sukuk Ijarah may be issued at a discount, at par or at premium to the nominal value, and the issue price shall be determined prior to the date of issuance of such Sukuk Ijarah. (xx) Issue Tenure : Each Sukuk Ijarah shall have a tenure of more than one (1) year and up to fifteen (15) years, provided that the Sukuk Ijarah shall mature prior to the expiry of the Sukuk Ijarah Programme. (xxi) Trigger Event : In respect of an Issue, the occurrence of any of the following events will constitute a Trigger Event for such Issue:- (i) (ii) (iii) (iv) (v) (vi) In respect of Issue 1, the Issuer fails to meet the Minimum Required Amount to be maintained in the FSRA. In respect of each Subsequent Issue, the Issuer fails to meet the applicable minimum required amount required to be maintained in the relevant designated accounts under that Subsequent Issue (where relevant); The Issuer fails to redeem any of the applicable Sukuk Ijarah in relation to such Issue on their Expected Maturity Date; The Issuer and/or Al-Salām REIT fail to maintain the minimum FSCR applicable to such Issue; The Lessee of the Ijarah Agreement(s) fails to pay the Rentals on the rental payment date under such Ijarah Agreement(s) in relation to such Issue; The occurence of the total loss or destruction of, or damage to one or more (but not all) of the Identified Assets in relation to such Issue or any event or occurrence that renders one or more (but not all) of such Identified Assets permanently unfit for any economic use and the repair or remedial work in respect thereof is wholly uneconomical, which in the opinion of the Sukuk Trustee would significantly impair the ability of the Issuer to continue to collect and/or earn the Rental under such Issue from the Lessee in order to meet its obligations under such Issue; A distress, execution, attachment or other legal process is levied, enforced or sued out against any of the Identified Assets in relation to such Issue, and is 11
not discharged or stayed within thirty (30) days which in the opinion of the Sukuk Trustee would significantly impair the ability of the Issuer to continue to collect and/or earn the Rental under such Issue from the Lessee in order to meet its obligations under such Issue; or (vii) (viii) Termination of lease agreement(s) of the Identified Assets in relation to such Issue between any of the relevant Operators and the REIT Trustee, which in the opinion of the Sukuk Trustee would significantly impair the ability of the Lessee to pay the Rentals under the Ijarah Agreement(s) under such Issue; or Default on the lease agreement(s) of the Identified Assets in relation to such Issue by any of the relevant Operators, which in the opinion of the Sukuk Trustee would significantly impair the ability of the Lessee to pay the Rentals under the Ijarah Agreement(s) under such Issue. Upon the occurrence of a Trigger Event under an Issue, the Sukuk Trustee shall immediately without the need to seek any instruction from the Sukukholders of that Issue serve a written notice ( Trigger Event Notice ) to the Issuer, the REIT Trustee, the Security Trustee and the Facility Agent, whereupon the Sukuk Trustee shall exercise the Purchase Undertaking of that Issue granted by the REIT Trustee as the Obligor, requiring the Obligor to purchase (a) the Identified Assets in whole (in the case where all Tranches in respect of such Issue have been issued), or (b) all Lease Assets (but not part thereof) falling within the Identified Assets (in the case where not all Tranches in respect of such Issue have been issued) of that Issue by entering into a Sale Agreement and pay the relevant Exercise Price for that Issue within thirty (30) days from the date of the Trigger Event Notice. In the event the Obligor fails to pay the Exercise Price for that Issue within thirty (30) days from the date of the Trigger Event Notice, the Security Trustee shall, pursuant to the Power of Attorney granted by the REIT Trustee in favour of the Security Trustee in respect of that Issue, proceed with the disposal of the Secured Properties in respect of that Issue. The disposal process of the Secured Properties in respect of that Issue shall be managed by the Security Trustee pursuant to the provisions of the Power of Attorney granted by the REIT Trustee in favour of the Security Trustee for that Issue. The disposal price shall be determined in accordance with a pre-agreed mechanism between the Issuer and the LA (i.e. with reference to a valuation by a valuer acceptable to the Security Trustee) subject always to the REIT Guidelines. The sale proceeds from the Secured Properties in respect of such Issue shall be deposited into the FSA (in respect of Issue 1) or such designated account for such other Subsequent Issue and shall be utilised for the redemption of outstanding Sukuk Ijarah of that Issue in order of its ranking and thereafter any residual amount shall be returned to the REIT Trustee to 12
be deposited into the MCA (in respect of Issue 1) or such designated account for such other Subsequent Issue. All costs relating to the disposal shall be borne by Al-Salām REIT. All outstanding Sukuk Ijarah belonging to an Issue so redeemed pursuant to the provision of this paragraph shall forthwith be cancelled or treated as cancelled and accordingly shall not be resold. In the event the sale proceeds from the disposal of the Secured Properties in respect of an Issue are insufficient to redeem all the outstanding Sukuk Ijarah belonging to that Issue, the Security Trustee shall have no further claim against the Issuer, the REIT Trustee in respect of such shortfall and thereafter any unsatisfied claims shall be extinguished. For avoidance of doubt, the occurrence of a Trigger Event will not constitute an Event of Default under the Transaction Documents. (xxii) Transaction Documents : The documents for the establishment of the Sukuk Ijarah Programme are:- (i) (ii) (iii) (iv) (v) Programme Agreement; Trust Deed; The Security Trustee Agreement; The securities lodgement form; and any other documentation as may be advised by the Solicitors and/or the LA/JLMs. For each Issue, the following agreements will also be entered into: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) the Issue Term Sheet; the Security Documents constituting Issue Security; in respect to any applicable Issue, the deed of covenants; the Purchase Undertaking; Service Agency Agreement; Sale Agreement; Security Sharing Agreement, if required; and any such agreement(s) as may be advised by the Solicitors and/or the LA/JLMs. For each Tranche, the following agreements will also be entered into: (i) Subscription Agreement; (ii) Asset Purchase Agreement; (iii) Ijarah Agreement; (iv) Declaration of Trust; and (v) any such agreement(s) as may be advised by the Solicitors and/or the LA/JLMs. The Transaction Documents will contain those provisions noted herein this PTC and other provisions customarily found in documentation for similar financing and satisfactory to the LA, Shariah Adviser and the Solicitors. 13
(xxiii) (xxiv) Sukuk Trustees Reimbursement Account for Sukukholders Actions ( TRA ) Details of designated account(s) : The Sukuk Trustee (on behalf of the Issuer) shall open and maintain a Shariah-compliant TRA with an Islamic bank to be appointed by the Issuer which is acceptable to the Sukuk Trustee with a sum of RM30,000.00. The TRA shall be operated by the Sukuk Trustee and the monies shall only be used strictly by the Sukuk Trustee in carrying out its duties in relation to the occurrence of an Event of Default or enforcement events in the manner as provided in the Trust Deed. This sum of money shall be maintained in the TRA at all times throughout the tenure of the Sukuk Ijarah Programme. The monies in the TRA may be invested in Islamic based account, Shariah-compliant instruments or Shariah-compliant securities in the manner prescribed in the Trust Deed, with any income from such investment to be accrued to the Issuer. These monies shall be returned to the Issuer upon full redemption of the Sukuk Ijarah if no Event of Default or enforcement takes place under the Sukuk Ijarah Programme. : Each Issue of the Sukuk Ijarah shall have its own designated accounts, which shall be Shariah-compliant ( Designated Accounts ) and opened by the Issuer/REIT Trustee with financial institutions that carry a minimum rating of A3/A- or P1/MARC-1 (or its equivalent). In respect of each Subsequent Issue, the Designated Accounts and amounts to be remitted and withdrawn from such Designated Accounts shall be determined and agreed by the Issuer, REIT Trustee and the JLMs prior to issuance of Sukuk Ijarah under each Subsequent Issue. Upon the occurrence of a Trigger Event or a declaration of an Event of Default under the relevant Issue, whichever is earlier, all Designated Accounts shall be solely operated by the Security Trustee. Prior to such events occurring, the Designated Accounts shall be operated by the relevant parties as set out below or in the applicable Issue Term Sheet for each Subsequent Issue, as the case may be. In respect of Issue 1, the Designated Accounts shall comprise the following accounts:- 14
Name of Account Opened/to be Opened by Maintain/operate or to be maintained by/operated by Signatories to the account Sources of funds Master Collection Account ( MCA ) The MCA will be opened by the REIT Trustee. The MCA will be maintained and operated solely by: (i) prior to the occurrence of a Trigger Event or a declaration of an Event of Default, the REIT Trustee; and (ii) upon the occurrence of a Trigger Event or a declaration of an Event of Default, the Security Trustee. The signatory to the MCA is: (i) prior to the occurrence of a Trigger Event or a declaration of an Event of Default, the REIT Trustee; and (ii) upon the occurrence of a Trigger Event or a declaration of an Event of Default, the Security Trustee. The following shall be deposited into the MCA: (a) Excess Balance from Issue 1 Sukuk Proceeds, if any; (b) cash inflow to Al-Salãm REIT in relation to the Issue 1 Secured Properties including but not limited to rental cashflows; (c) all proceeds from the Permitted Investments in respect of Issue 1; (d) if any, other income in respect of Issue 1 Secured Properties; and (e) all proceeds of the takaful/ insurance claims in relation to the Issue 1 Secured Properties. Any excess monies after meeting the payments/obligations listed below (Utilisation of funds) will be kept in the MCA. 15
Utilisation of funds Monies in the MCA shall be applied to meet the following permitted expenditure in the following order of priority if no Trigger Event or Event of Default has occurred: (a) Any statutory payments of Al- Salãm REIT (i.e. assessment fee, quit rent, tax, etc.) which are due and payable; (b) Deposit into the FSRA to meet the Minimum Required Balance; (c) Payment of the Rental under the Ijarah Agreement for Issue 1 to the Issuer. The payments are to be deposited into the FSA; (d) Takaful/ insurance contribution for the Issue 1 Secured Properties which is due and payable; (e) Payment for Al-Salãm REIT s operating expenses; (f) Distribution to unitholders to the extent that it is permitted under the Transaction Documents; and (g) Permitted Investments. With regard to meeting the Rental obligations under Issue 1, the REIT Trustee shall build-up an amount equivalent to the then immediate Rental payable under Issue 1, by crediting such amount from the MCA into the FSA in the following instalments:- (i) (ii) if the Issuer elects a periodic distribution period of 3 months, by two (2) equal monthly instalments, with each instalment in an amount equivalent to 1/2 of such Rental payable under Issue 1 with the first instalment to commence on the date falling one (1) month from the Issue Date of Issue 1 and the last instalment on the date falling one (1) month thereafter; if the Issuer elects a periodic distribution period of 6 months, five (5) equal monthly instalments, with each instalment in an amount equivalent to 1/5 of such Rental payable under Issue 1 with the first instalment to commence on 16
17 the date falling one (1) month from the Issue Date of Issue 1 and subsequent instalment on the date falling one (1) month thereafter, in each case so that the whole amount of the immediate Rental due and payable under Issue 1 shall be credited into the FSA on the date falling one (1) month prior to the relevant due date of the Rental payable under Issue 1. Notwithstanding the above, upon occurrence of a Trigger Event but prior to the disposal of Issue 1 Secured Properties by the Security Trustee pursuant to the Power of Attorney, the payments out of the MCA shall be in the following order of priority: (a) Any statutory payments of Al- Salãm REIT (i.e. assessment fee, quit rent, tax, etc.) which are due and payable; (b) Deposit into the FSRA to meet the Minimum Required Balance; (c) Deposit into the FSA to meet payment obligations due and payable for the outstanding Sukuk Ijarah under the Issue 1 based on its order of priority in terms of ranking and priority of payment determined under the FSA; and (d) Payment of Al- Salãm REIT s operating expenses. For the avoidance of doubt, upon occurrence of a Trigger Event or an Event of Default under Issue 1, the REIT Trustee is not permitted to utilise the monies in the MCA to make payments of distribution to Al- Salãm REIT s unitholders. Additionally, following the occurrence of a Trigger Event or a declaration of an Event of Default and after the disposal of Issue 1 Secured Properties by the Security Trustee pursuant to the Power of Attorney, the funds in the MCA shall be applied to meet the following permitted expenditure in the following order of priority:
(a) Any statutory payments of Al- Salãm REIT (i.e. assessment fee, quit rent, tax, etc.) which are due and payable; (b) Deposit into the FSA to meet payment obligations due and payable for the outstanding Sukuk Ijarah under Issue 1 based on its order of priority in terms of ranking and priority of payment determined under the FSA; and (c) Payment of Al- Salãm REIT s operating expenses; For the avoidance of doubt, following the occurrence of a Trigger Event or declaration of an Event of Default and after the disposal of the Issue 1 Secured Properties and redemption of the outstanding Sukuk Ijarah under Issue 1, any residual amounts in the MCA will be transferred to the relevant trust account which is controlled by the REIT Trustee. 18
Name of Account Finance Service Account ( FSA ) Opened/to be The FSA will be opened by the Issuer. Opened by Maintain/operate or The FSA will be maintained by the to be maintained Issuer and operated solely by the by/operated by Security Trustee. Signatories to the Security Trustee. account Sources of funds (a) Monies from the MCA for payments of the Rental to the Issuer pursuant to the Ijarah Agreement for Issue 1; (b) Monies from the FSRA to top-up any deficit amount to meet the Rental(s) due under Issue 1; (c) Proceeds received following the exercise of the Purchase Undertaking for Issue 1 (i) upon the Expected Maturity Date of the Sukuk Ijarah under Issue 1 or (ii) upon the occurrence of a Trigger Event, when the Purchase Undertaking of Issue 1 is exercised by the Sukuk Trustee and the Obligor pays the Exercise Price for Issue 1 within thirty (30) days from the date of the Trigger Event Notice; (d) Proceeds due to the Sukukholders from the disposal of the Issue 1 Secured Properties following the Security Trustee exercising its rights under the Power of Attorney (a) upon the occurrence of a Trigger Event, when the Purchase Undertaking of Issue 1 is exercised by the Sukuk Trustee and the Obligor is unable to pay the Exercise Price for Issue 1 within thirty (30) days from the date of the Trigger Event Notice; or (b) upon the declaration of an Event of Default; and (e) Rental cash flows generated from the lessees/tenants of the Issue 1 Secured Properties following the occurrence of a Trigger Event. Utilisation of funds Under normal circumstances (i.e. no occurrence of a Trigger Event or declaration of an Event of Default), monies in the FSA shall be utilised in the following order of priority: 19 (a) Any statutory payments of the Issuer and the Issue 1 Secured Properties (i.e. assessment fee, quit rent, tax, etc.) which are due
20 and payable; (b) Payment of expenses, charges and fees in relation to the Sukuk Ijarah Programme (prorated amount among the outstanding Issues under the Sukuk Ijarah Programme); (c) Periodic Distributions for the Sukuk Ijarah under Issue 1 falling due and payable; (d) Principal of the Sukuk Ijarah under Issue 1 on the Expected Maturity Date of such Sukuk Ijarah under Issue 1; and (e) Thereafter, any excess funds in the FSA are to be deposited into the MCA. Following the occurrence of a Trigger Event and pre-/post-disposal of the Issue 1 Secured Properties by the Security Trustee pursuant to the Power of Attorney, the Security Trustee shall apply monies in the FSA in the following order of priority: (a) Any statutory payments of the Issuer and Issue 1 Secured Properties (i.e. assessment fee, quit rent, tax, etc.) which are due and payable; (b) Payment of expenses, charges and fees in relation to the Sukuk Ijarah Programme (prorated amount among the outstanding Issues under the Sukuk Ijarah Programme); (c) Periodic Distributions when due for the Sukuk Ijarah under Issue 1; (d) Principal payment until full redemption of the Sukuk Ijarah under Issue 1; and (e) Thereafter, any excess funds in the FSA shall be deposited to the MCA. Following the declaration of an Event of Default, the Security Trustee shall apply monies in the FSA in the following order of priority: (a) Any statutory payments of the Issuer and Issue 1 Secured Properties (i.e. assessment fee, quit rent, tax, etc.) which are due and payable; (b) Payment of expenses, charges
and fees in relation to the Sukuk Ijarah Programme (prorated amount among the outstanding Issues under the Sukuk Ijarah Programme); (c) Principal outstanding, Periodic Distributions accrued and unpaid and any compensation for the Sukuk Ijarah of Issue 1; and (d) Thereafter, any excess funds in the FSA shall be deposited into the MCA. Funds in the FSA may be invested in the Permitted Investments. 21
Name of Account Opened/to be Opened by Maintain/operate or to be maintained by/operated by Signatories to the account Sources of funds Finance Service Reserve Account ( FSRA ) The FSRA will be opened by the Issuer. The FSRA will be maintained by the Issuer and operated solely by the Security Trustee. Security Trustee. Monies from the MCA to build up the Minimum Required Amount to be maintained in the FSRA. Minimum Required Amount shall mean at any time, the amount equivalent to any of the following (whichever is applicable):- 22 (A) Upon issuance of Issue 1 (B) Upon the occurrence of a Trigger Event:- Three (3) or six (6) months (as the case may be, based on the periodic distribution period as selected by the Issuer) equivalent of Periodic Distributions payable under Issue 1. As soon as practicable, an additional amount equivalent to the next immediate six (6) months (if the Issuer selects a periodic distribution period for Issue 1 of six (6) months) or nine (9) months (if the Issuer selects a periodic distribution period for Issue 1 of three (3) months) Periodic Distribution Payment payable under Issue 1 in
addition to the amounts stipulated in (A) above. For the avoidance of doubt, where a Trigger Event under Issue 1 has occurred, the Minimum Required Amount in the FSA shall be an amount equivalent to the next twelve (12) months Periodic Distribution Payment payable. Utilisation of funds The Issuer shall maintain the Minimum Required Amount at all times. Monies in the FSRA shall be used to top-up any deficit amount in the FSA. Any amount withdrawn from the FSRA shall be replenished within thirty (30) days after the withdrawal date as notified in writing by the Security Trustee to the Issuer so that the Minimum Required Amount is maintained. In the event the Issuer fails to maintain the Minimum Required Amount on the expiry of the aforesaid thirty (30) days period, such failure shall be a Trigger Event but not an Event of Default. In the event monies standing in the FSRA are more than the Minimum Requirement Amount, the excess monies shall be deposited into the MCA. Funds in the FSRA may be invested under the Permitted Investments. (xxv) No Payment of Interest : For the avoidance of doubt and notwithstanding any other provision to the contrary herein contained, it is agreed and declared that nothing in this principal terms and conditions and the Transaction Documents shall oblige or entitle any party nor shall any party pay or receive or recover interest on any amount due or payable to another party pursuant to the principal terms and conditions or the Transaction Documents and the parties hereby expressly waive and reject any entitlement to recover such interest. 23
(xxvi) Redemption : Unless previously redeemed, purchased and cancelled, all Sukuk Ijarah then outstanding will be redeemed by the Issuer at 100% of their nominal value on their respective maturity date(s). (xxvii) Jurisdiction : The Issuer shall unconditionally and irrevocably submit to the exclusive jurisdiction of the courts of Malaysia. (xxviii) No Vote for Sukuk Ijarah held by Issuer and Interested Person : The Issuer, agents and/or any interested person of the Issuer (which includes directors or major shareholders or chief executive of the Issuer) may at any time purchase the Sukuk Ijarah at any price in the open market or by private treaty and such Sukuk Ijarah so purchased shall be cancelled and cannot be reissued. For the purpose of this paragraph, interested person shall not apply to the following major shareholders who hold the shares whether directly or indirectly for the benefit of the public: (a) (b) (c) (d) a statutory institution who is managing funds belonging to the general public; a closed end fund, unit trust or investment fund (but excluding an investment holding company); a licensed bank or a licensed investment bank as defined under the Financial Services Act 2013 or the Islamic Financial Services Act 2013 and a development financial institution as defined under the Development Financial Institutions Act 2002 of Malaysia; and an insurance corporation whose activities are regulated by any written law relating to insurance and are subject to supervision by BNM and the said insurance corporation is managing its insurance funds/ takaful funds (together with its own shareholders funds or otherwise). For the purposes of this paragraph, the term insurance funds has the meaning given to it in the Financial Services Act 2013 and the term takaful fund has the meaning given to it in the Islamic Financial Services Act 2013. For the avoidance of doubt, all Sukuk Ijarah purchased and cancelled shall not be reissued. (xxix) Other Conditions : The Sukuk Ijarah shall at all times be governed by the guidelines issued and to be issued from time to time by the SC, and/or BNM having jurisdiction over matters pertaining to the Sukuk Ijarah. 24