Malaysia Rail Link IMTN Sukuk RM9.75 Billion - Principal Terms and Conditions

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1. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential AN ISLAMIC MEDIUM TERM NOTES ISSUANCE PROGRAMME OF UP TO RM9.75 BILLION IN NOMINAL VALUE IRREVOCABLY AND UNCONDITIONALLY GUARANTEED BY THE GOVERNMENT OF MALAYSIA (“SUKUK MURABAHAH PROGRAMME”) PRINCIPAL TERMS AND CONDITIONS OF THE SUKUK MURABAHAH PROGRAMME (a) Names of parties involved in the proposed transaction (i) Issuer : Malaysia Rail Link Sdn Bhd (“MRL” or “Issuer”). (ii) Guarantor : Government of “Guarantor”). (iii) Joint Lead Arrangers (“JLAs”) : CIMB Investment Bank Berhad (“CIMB”), Kenanga Investment Bank Berhad (“Kenanga”), Maybank Investment Bank Berhad (“Maybank IB”) and RHB Investment Bank Berhad ("RHB"). (iv) Joint Lead Managers/Joint Bookrunners (“JLMs”) : For the first issuance under the Sukuk Murabahah Programme, all of the following financial institutions in their capacity as the joint lead managers: (i) Affin Hwang Investment Bank Berhad (“Affin Hwang”); (ii) CIMB; (iii) Kenanga; (iv) Maybank IB; and (v) RHB Islamic Bank Berhad (“RHB Islamic”). Malaysia (“Government” or For subsequent issuances under the Sukuk Murabahah Programme, any one or more of the following financial institutions to be appointed by the Issuer from time to time prior to each subsequent issuance under the Sukuk Murabahah Programme: (i) Affin Hwang; and/or (ii) CIMB; and/or (iii) Kenanga; and/or (iv) Maybank IB; and/or (v) RHB Islamic. (v) Facility Agent : Maybank IB. (vi) Agent (representing Sukukholders (as defined below) and the Financiers (as defined below)) : Maybank IB (vi) Joint Shariah Advisers (“JSAs”) : (i) (ii) (vii) Solicitors : Acting for the JLAs/JLMs Messrs. Shook Lin & Bok CIMB Islamic Bank Berhad; and RHB Islamic.
2. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential Acting for the Issuer Messrs. Zul Rafique & partners (b) (viii) Primary Subscriber(s) and Amount Subscribed : The primary subscribers (if any) will be determined prior to the issuance of the relevant Sukuk Murabahah (as defined below) under the Sukuk Murabahah Programme (as defined below), in the case where the Sukuk Murabahah are issued via bought deal or direct placement on a best effort basis. (ix) Central Depository & Paying Agent : (i) Central Depository Bank Negara Malaysia (“BNM”). (ii) Paying Agent BNM. Facility Description : An Islamic medium term notes (“Sukuk Murabahah”) programme (“Sukuk Murabahah Programme”) based on the Shariah principle of Murabahah (via a Tawarruq arrangement), which together with a syndicated Islamic short term revolving credit-i facility of up to the principal amount of RM3.0 billion or such other increased limit as may be approved by the Financiers (as defined below) subject always to a maximum limit of RM3.6 billion (“STRC-i Facility”), have an aggregate combined limit of up to RM9.75 billion in nominal value. The Sukuk Murabahah Programme and the STRC-i Facility shall be irrevocably and unconditionally guaranteed by the Government (“Guarantee”). For the purpose of these principal terms and conditions (“Principal Terms and Conditions”), the Sukuk Murabahah Programme and the STRC-i Facility shall be collectively referred to as the “Facilities”. For the avoidance of doubt, the Sukukholders (as defined below) shall be deemed to have consented to any increased limit under the STRC-i Facility and no consent will be required from the Sukukholders, the Facility Agent and any other party under the Sukuk Murabahah Programme for the said increased limit under the STRC-i Facility, provided that: (a) such increased limit does not exceed RM3.6 billion; and (b) the JLMs shall have received satisfactory confirmation from the Facility Agent and the Issuer that the combined aggregate of (i) the outstanding nominal value of Sukuk Murabahah issued under the Sukuk Murabahah Programme; (ii) the outstanding principal amount under the STRC-i Facility; (iii) the nominal value of the Sukuk Murabahah to be issued as notified by the Issuer to the Facility Page 2
3. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential Agent prior to such increase; and (iv) the principal amount to be disbursed under the STRC-i Facility as notified by the Issuer to the Facility Agent prior to such increase, does not exceed the Guarantee Limit (as defined below) or the Reduced Guarantee Limit (as defined below), as the case may be (and such aggregate shall, for the avoidance of doubt, exclude the nominal value of any proposed Sukuk Murabahah to be issued to refinance or redeem the STRC-i Facility and/or any Sukuk Murabahah on the same day as the issue date of such proposed Sukuk Murabahah). The issuance of Sukuk Murabahah under the Sukuk Murabahah Programme shall be effected as follows: 1. The Agent, on behalf of the investors of the Sukuk Murabahah (“Sukukholders”), and MRL shall enter into an agency agreement (“Purchase Agency Agreement”), pursuant to which MRL is appointed as the agent of the Sukukholders (in such capacity, “Purchase Agent”) for the purchase and sale of Shariahcompliant Commodities (as defined below) under the Sukuk Murabahah Programme.The Purchase Agent will then enter into a subpurchase agency agreement (“Sub-Purchase Agency Agreement”) to appoint the Facility Agent as a sub-agent of the Sukukholders (in such capacity, “Sub-Purchase Agent”) for the purchase and sale of the Commodities under the Sukuk Murabahah Programme. 2. Pursuant to a commodity Murabahah master agreement (“Commodity Murabahah Master Agreement”) to be entered into between MRL (in such capacity, “Purchaser”), the Purchase Agent and the Sub-Purchase Agent, prior to the date on which the relevant Series (as defined below) of the Sukuk Murabahah is issued, MRL (acting as Purchaser) shall issue a purchase order (“Purchase Order”) to the Purchase Agent and the Sub-Purchase Agent. In the Purchase Order, MRL (acting as Purchaser) will request the Purchase Agent and subsequently the Purchase Agent will request the Sub-Purchase Agent to purchase the Commodities at the Purchase Price (as defined below). The Purchaser will irrevocably undertake to the Sub-Purchase Agent that it shall subsequently purchase the Commodities from the Sukukholders via the Sub-Purchase Agent at the Deferred Sale Price (as defined below), payable on a deferred payment basis. Page 3
4. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential 3. Based on the Purchase Order, the SubPurchase Agent (pursuant to a commodity trading participant purchase agreement (“CTP Purchase Agreement”) to be entered into between the Sub-Purchase Agent and the commodity trading participant (“CTP”)) prior to the date on which the relevant Series of the Sukuk Murabahah is issued, will appoint the CTP to purchase the Commodities from commodity vendor(s) in the Bursa Suq Al-Sila’ commodity trading platform and/or such other independent commodity trading platforms acceptable to the JSAs (“Commodity Vendor(s)”) which shall be identified prior to each issuance of the Sukuk Murabahah, on a spot basis at a purchase price which shall be an amount equivalent to the Sukuk Murabahah proceeds (“Purchase Price”). The Purchase Price of the Commodities shall comply with the asset pricing requirement stipulated under the Securities Commission Malaysia (“SC”)’s Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework (issued on 9 March 2015, effective on 15 June 2015 and revised on 26 November 2019), as may be replaced, substituted, amended or revised from time to time. 4. MRL (acting as the Issuer) shall issue the Sukuk Murabahah to the Sukukholders, whereby the proceeds from such issuance shall be used to pay for the Purchase Price of the Commodities. The Sukuk Murabahah shall evidence, amongst others, the Sukukholders’ ownership of the Commodities and subsequently, once the Commodities are sold to MRL (acting as Purchaser), the Sukukholders’ entitlement to receive the Deferred Sale Price. 5. Thereafter, pursuant to the undertaking under the Purchase Order, the Sub-Purchase Agent (acting as agent of the Purchase Agent who in turn acts as agent of the Sukukholders) shall sell the Commodities to MRL (acting as Purchaser) based on the Shariah principle of Murabahah at the Deferred Sale Price under a sale and purchase agreement (“Sale and Purchase Agreement”) to be entered into between the Sub-Purchase Agent and the Purchaser. 6. Upon completion of such sale to the Purchaser, the Purchaser (pursuant to a commodity trading participant sale agreement (“CTP Sale Agreement”) to be entered into between MRL Page 4
5. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential (acting as Purchaser) and the CTP) shall appoint the CTP to sell the Commodities to the commodity buyer(s) in the Bursa Suq Al-Sila’ commodity trading platform and/or such other independent commodity trading platforms acceptable to the JSAs (“Commodity Buyer”) which shall be identified prior to each issuance of the Sukuk Murabahah, on a spot basis, for an amount equal to the Purchase Price. The CTP Sale Agreement will provide for the CTP (on behalf of the Purchaser) to directly sell the Commodities to the Commodity Buyer upon notice by the Purchaser that the Sale and Purchase Agreement has been completed and executed. 7. The Sukuk Murabahah may be issued with or without periodic profit payments (“Periodic Payments”). During the tenure of Sukuk Murabahah with Periodic Payments, MRL (acting as Purchaser), as part of its obligation to pay the Deferred Sale Price, shall make Periodic Payments (which form part of the Deferred Sale Price) to the Sukukholders on the Periodic Payment Dates (as defined below) and on the maturity date (“Maturity Date”) of such Sukuk Murabahah. For Sukuk Murabahah without Periodic Payments, MRL (acting as Purchaser) shall make a one-off lump sum payment which is equivalent to the Deferred Sale Price on the Maturity Date of such Sukuk Murabahah to the Sukukholders. The Purchaser shall: (i) (ii) on the respective Maturity Dates of the Sukuk Murabahah; or upon the declaration of an Event of Default (as defined below), whichever is earlier, pay all amounts then outstanding in respect of the Deferred Sale Price as a final settlement (subject to Ibra’ (as defined below), if any) upon which the relevant Sukuk Murabahah will be cancelled. A diagrammatical illustration of the Sukuk Murabahah (via Tawarruq arrangement) is set out in Annexure 1. “Series” means, in relation to any Sukuk Murabahah, such Sukuk Murabahah with the same issue date and Maturity Date. “Deferred Sale Price” means the aggregate of (i) an amount equivalent to the Purchase Price; and (ii) the applicable Profit Margin (as defined below.) calculated Page 5
6. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential at the issue date of each relevant Sukuk Murabahah. “Profit Margin” means: (a) in the case of Sukuk Murabahah issued with Periodic Payments and issued at a discount, the aggregate of the Periodic Payments and the Discounted Amount (as defined below); (b) in the case of Sukuk Murabahah issued without Periodic Payments and issued at a discount, the Discounted Amount; (c) in the case of Sukuk Murabahah issued with Periodic Payments and issued at par, the aggregate Periodic Payments; and (d) in the case of Sukuk Murabahah issued with Periodic Payments and issued at a premium, the aggregate Periodic Payments less the Premium Amount (as defined below). “Discounted Amount” means the difference between the nominal value of the Sukuk Murabahah and the Purchase Price in the case of Sukuk Murabahah issued at a discount. “Premium Amount” means the difference between the Purchase Price and the nominal value of the Sukuk Murabahah in the case of Sukuk Murabahah issued at a premium. (c) Programme Size : Subject to paragraph (w)(xii) below, the aggregate nominal value of the Sukuk Murabahah outstanding under the Sukuk Murabahah Programme, together with the principal amount outstanding under the STRCi Facility, at any point in time shall not exceed RM9.75 billion in nominal value. (d) Issue Price : The Sukuk Murabahah may be issued at par, at a premium or at a discount and the issue price for each Sukuk Murabahah issuance shall be calculated in accordance with the Operational Procedures for Securities Services issued by Payments Network Malaysia Sdn Bhd (formerly known as Malaysian Electronic Clearing Corporation Sdn Bhd) (“PayNet”), as amended or substituted from time to time (“PayNet Procedures”). The issue price of the relevant Sukuk Murabahah shall be determined prior to each issuance. (e) Tenure : Tenure of the Sukuk Murabahah Programme Fifty (50) years from the date of the first issuance of Sukuk Murabahah under the Sukuk Murabahah Page 6
7. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential Programme. Tenure of the Sukuk Murabahah Each Sukuk Murabahah shall have a tenure of more than one (1) year and up to fifty (50) years as the Issuer may select, provided that the Maturity Date of the Sukuk Murabahah shall not extend beyond the tenure of the Sukuk Murabahah Programme. (f) Availability Period : Upon completion of documentation and, unless waived by the JLAs, compliance of all conditions precedent and ending at 5.00 p.m. in Kuala Lumpur on the final day of the tenure of the Sukuk Murabahah Programme. (g) Periodic Payment Rate (%) : For Sukuk Murabahah with Periodic Payments, the periodic payment rate (“Periodic Payment Rate”), which shall be fixed, shall be determined prior to each issuance of the Sukuk Murabahah. The Periodic Payments shall be calculated at the Periodic Payment Rate on the nominal value of the Sukuk Murabahah based on the Periodic Payment Basis (as defined below). Not applicable for Sukuk Murabahah without Periodic Payments. (h) Periodic Payment Frequency and Periodic Payment Basis : For Sukuk Murabahah with Periodic Payments, the Periodic Payments shall be payable in arrears on each Periodic Payment Date on a semi-annual basis or such other payment frequency to be agreed between MRL and the applicable JLMs (“Periodic Payment Period”) prior to each issuance and shall be calculated on an actual/365 days basis (“Periodic Payment Basis”). Not applicable for Sukuk Murabahah without Periodic Payments. “Periodic Payment Date” is the date falling on the last day of a particular Periodic Payment Period. (i) Yield-to-Maturity (%) : To be determined prior to each issuance of the Sukuk Murabahah. (j) Guarantee : An irrevocable and unconditional guarantee (“Guarantee”) by the Government in favour of the Agent (acting on behalf of the Sukukholders and the Financiers (as defined below)) whereby the Government guarantees the proper and punctual payment by MRL of the Guaranteed Amount (as defined below) and irrevocably and unconditionally undertakes, as a continuing obligation to the Agent (acting on behalf of the Sukukholders and the Financiers), that if for any reason and at any time and Page 7
8. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential from time to time MRL fails to make payment of the Guaranteed Amount when due, to pay the amounts not so paid within thirty (30) Business Days from the date of receipt by the Government of the written demand issued by the Agent (“Payment Period”). “Guaranteed Amount” means all monies and liabilities which are now or shall at any time hereafter become due, owing or payable or expressed to be due, owing or payable by MRL: 1. in relation to the Sukuk Murabahah Programme: i. the nominal value of the Sukuk Murabahah (or in the case of Sukuk Murabahah without Periodic Payments, the accreted value of the Sukuk Murabahah); and ii. in the case of Sukuk Murabahah with Periodic Payments, any accrued but unpaid Periodic Payments thereon. 2. in relation to the STRC-i Facility, the Financiers’ Sale Price (as defined below) which shall at any time become due and payable by MRL under the STRC-i Facility. Provided that: a) the combined aggregate outstanding nominal value of the Sukuk Murabahah and the outstanding principal amount under the STRC-i Facility guaranteed by the Guarantor shall not exceed the Guarantee Limit (as defined below) at any one time; b) any double-counting shall be disregarded; and c) the Guarantee Limit may, at the option of the Guarantor, be reduced (“Reduced Guarantee Limit”) accordingly subject to the Facility Agent’s confirmation that, the combined aggregate of: (i) the outstanding nominal value of the Sukuk Murabahah issued under the Sukuk Murabahah Programme; (ii) the outstanding principal amount under the STRC-i Facility; (iii) the nominal value of the Sukuk Murabahah to be issued as notified by the Issuer to the Facility Agent prior to the exercise of the option; and (iv) the principal amount under the STRC-i Facility to be disbursed as notified by the Issuer to the Facility Agent prior to the exercise of the option, does not exceed the Reduced Guarantee Limit (and such aggregate shall, for the avoidance of doubt, exclude the nominal value of any proposed Sukuk Murabahah to be issued to refinance or redeem the STRC-i Facility and/or any Sukuk Murabahah on the same day as the issue date of such proposed Sukuk Murabahah). When such option is so exercised by Page 8
9. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential the Guarantor and the Facility Agent has provided the required confirmation as stated above, the Issuer, the Sukukholders and the Financiers shall be deemed to have consented to the Reduced Guarantee Limit. No consent will be required from the Issuer, the Sukukholders, the Facility Agent, the Financiers and any other party under the Sukuk Murabahah Programme or the STRC-i Facility for the Reduced Guarantee Limit. “Financiers” means the financiers of the STRC-i Facility, which are CIMB Islamic Bank Berhad, Maybank Islamic Berhad and RHB Islamic Bank Berhad, including the assigns and the transferees of the Financiers. “Financiers’ Sale Price” means the aggregate of the principal portion and the profit portion of the STRC-i Facility. “Guarantee Limit” means the total sum of Ringgit Malaysia Nine Billion Seven Hundred And Fifty Million (RM9,750,000,000.00) under the Guarantee or the reduced amount as referred to in paragraph (j)(c) above, as the case may be. For the avoidance of doubt, the Guaranteed Amount shall not include Compensation (Ta’widh) (as referred to below). (k) Details of Utilisation of Proceeds : The proceeds from the Sukuk Murabahah issued under the Sukuk Murabahah Programme shall be utilised by the Issuer for the following Shariahcompliant purposes: (i) To part finance the commercial contract dated 1 November 2016 (“Commercial Contract”) entered into between China Communications Construction Company Ltd, China Communications Construction Company (M) Sdn Bhd and the Issuer in relation to the East Coast Rail Link project (“Project”), including but not limited to construction cost and progressive payments to Engineering, Procurement, Construction and Commissioning Contractor(s) under the Commercial Contract, project management consultancy services, operating and transactional costs and expenses, working capital requirements, land acquisition costs and other Project related cost; (ii) To refinance the financings/borrowings; (iii) To finance profit payment obligations due and payable under the STRC-i Facility and the Sukuk Murabahah Programme; Issuer’s existing Page 9
10. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential (iv) To refinance any maturing Sukuk Murabahah issued under the Sukuk Murabahah Programme and/or the STRC-i Facility undertaken by the Issuer; and (v) To defray all other costs and expenses including but not limited to financing, refinancing and administrative costs, fees and expenses in connection with the Sukuk Murabahah Programme including, if any, advisory fees and solicitors’ fees. (l) Rating : The Sukuk Murabahah Programme and the Sukuk Murabahah issued under the Sukuk Murabahah Programme will not be rated. (m) Form and Denomination : The Sukuk Murabahah shall be issued in accordance with (1) the Participation Rules for Payment and Securities Services issued by PayNet (“PayNet Rules”), (2) the Paynet Procedures, or their replacement thereof (collectively “PayNet Rules and Procedures”) and/or (3) such other rules and procedures issued by other relevant regulatory authorities as may be applicable from time to time. Each Series of the Sukuk Murabahah shall be represented by a global certificate in bearer form to be deposited with BNM, and is exchangeable for definitive bearer form only in certain limited circumstances. The denomination of the Sukuk Murabahah shall be RM1,000,000.00 and the Sukuk Murabahah shall be issued in multiples of RM1,000,000.00 at the time of issuance or such other denominations in accordance with the PayNet Rules and Procedures and/or any other procedures and guidelines issued by the relevant authorities as may be applicable from time to time. (n) Status of the Sukuk Murabahah (o) Status of the Guarantee (p) Mode of Issue : The Sukuk Murabahah shall constitute direct, unconditional, unsecured and unsubordinated obligations of MRL and shall at all times rank pari passu, without discrimination, preference or priority amongst themselves and at least pari passu with all other present and future unsecured and unsubordinated obligations of MRL, subject to those preferred by law and the Transaction Documents (as described in paragraph (w)(iv) below). The liabilities of the Guarantor under the Guarantee shall rank at least equally and rateably pari passu with all its other unsecured liabilities, both actual and contingent (except liabilities which are subject to liens or rights of set-off wherein the aggregate amount of which is not material). : The Sukuk Murabahah may be issued through any of the following modes: Page 10
11. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme (i) (ii) (iii) (q) Listing Status (r) Commodities (s) Conditions Precedent : Private and Confidential via book running on a best efforts basis. via direct placement on a best efforts basis; or via bought deal basis. The Sukuk Murabahah may be listed on Bursa Malaysia Securities Berhad under an Exempt Regime. Shariah-compliant commodities available at Bursa Suq Al-Sila’ commodity market and/or such other independent commodity trading platforms acceptable to the JSAs (excluding ribawi items in the category of medium of exchange such as currency, gold and silver) (“Commodities”). : The conditions precedent for the establishment of the Sukuk Murabahah Programme include but are not limited to the following, in form and substance acceptable to the JLAs: A. Main Documentation 1. All relevant Transaction Documents (including the Guarantee) with respect to the establishment of the Sukuk Murabahah Programme have been duly executed by the parties thereto and the relevant stamp duty remission/exemption has been endorsed thereon and, where applicable, presented for filing/registration with the relevant registries and/or authorities. B. Issuer 2. The delivery of the certified true copy of the following documents of the Issuer: (a) Resolution(s) from the Board of Directors (and, if applicable, shareholders’ resolution(s)) of the Issuer approving, amongst others, the establishment of the Sukuk Murabahah Programme, the issuance of the Sukuk Murabahah, the execution of and carrying out of all obligations the Transaction Documents and the appointment of authorised signatories to execute such Transaction Documents; (b) Certified true copies of the Certificate of Incorporation, the latest Constitution, the latest Return for Allotment of Shares, the latest Notification of Change in the Registered Address, the latest Notification of Change in the Register of Directors, Managers and Secretaries and the latest Annual Return of a Company having a Share Capital issued pursuant to the Companies Act, 2016 (“Companies Act”), of the Issuer; Page 11
12. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential (c) List of authorised signatories of the Issuer and their specimen signatures, duly certified by the company secretary or any of its directors; 3. A report of the relevant company search of the Issuer; 4. A report of the relevant winding-up search of the Issuer, confirming that the Issuer has not been wound up; and 5. Reports of the bankruptcy searches of the Issuer's directors and company secretary, confirming that none of them is a bankrupt. C. General 6. The relevant approvals and orders required from the Government and/or Minister of Finance (including under the Loans Guarantee (Bodies Corporate) Act, 1965 (“LGBCA”)), where applicable, and any other regulatory authorities as advised by the Solicitors as required for purposes of the Sukuk Murabahah and/or the Sukuk Murabahah Programme have been obtained: (a) The Minister of Finance has granted or has gazetted the relevant tax and stamp duty exemption and/or remission for purposes of the Sukuk Murabahah and/or the Sukuk Murabahah Programme; and (b) Receipt of the relevant approval and/or consent from the Minister of Finance pursuant to Section 5(1) and, if applicable, Section 6 of the LGBCA; 7. Evidence of confirmation from the JSAs that the structure and mechanism of the Sukuk Murabahah Programme and the Transaction Documents are in compliance with Shariah principles; 8. Evidence that all transaction fees, costs and expenses relating to the Sukuk Murabahah Programme have been paid in full or that arrangements have been made for the full payment of the same; 9. The JLAs have received from their Solicitors a legal opinion addressed to them and the Agent advising with respect to, among others, the legality, validity and enforceability of the Transaction Documents and a confirmation addressed to the JLAs that all the conditions precedent have been fulfilled, or otherwise waived; Page 12
13. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential 10. The relevant consents required from the existing financiers (if any) of the Issuer have been obtained; and 11. Receipt of a certificate from the Issuer to confirm, among others, that the representations and warranties are true and accurate in all material respects and no Events of Default has occurred and is continuing as at the date of the certificate or will occur with the establishment of the Sukuk Murabahah Programme; Such other conditions precedent as may be deemed necessary by the JLAs and/or as advised by the Solicitors and agreed to by the Issuer. Additional conditions for each issuance of Sukuk Murabahah under the Sukuk Murabahah Programme shall include but not limited to the following in form and substance acceptable to the JLMs: 1. The relevant Transaction Documents for each issuance of Sukuk Murabahah under the Sukuk Murabahah Programme have been duly executed by the parties thereto and the relevant stamp duty remission/exemption has been endorsed thereon and, where applicable, presented for filing/registration with the relevant registries and/or authorities; 2. The JLMs shall have received satisfactory confirmation from the Facility Agent and the Issuer that the combined aggregate of (i) the outstanding nominal value of Sukuk Murabahah issued under the Sukuk Murabahah Programme; (ii) the nominal value of the Sukuk Murabahah to be issued ; (iii) the outstanding principal amount under the STRC-i Facility; and (iv) the principal amount to be disbursed under the STRC-i Facility on the proposed date of issuance of the Sukuk Murabahah and/or the proposed date of disbursement under the STRC-i Facility (where applicable), will not exceed the Guarantee Limit or the Reduced Guarantee Limit (as the case may be) (and such aggregate shall, for the avoidance of doubt, exclude the nominal value of any proposed Sukuk Murabahah to be issued to refinance or redeem the STRC-i Facility and/or any Sukuk Murabahah on the same day as the issue date of such proposed Sukuk Murabahah); 3. Any proposed issuance of Sukuk Murabahah to reimburse the payments made by the Issuer for the purposes set out in paragraph (k) above is Page 13
14. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential allowed subject to documentary evidence (in form and substance reasonably acceptable to the Agent). 4. (t) Representations and Warranties of the Issuer : Such other conditions precedent as may be deemed necessary by the JLMs and/or as advised by the Solicitors and agreed to by the Issuer.. The representations and warranties of the Issuer include but not are not limited to the following: 1. It is a body corporate under the LGBCA and a company duly established and existing under Malaysian laws and has full power and authority to carry on its business as it is being conducted and to own its property and assets, and has full legal and beneficial ownership of all its assets and has complied with all legal requirements relative to its business; 2. It has the power to enter into, exercise its rights and perform its obligations under the Transaction Documents to which it is a party, its Constitution incorporate provisions which authorise, and all necessary corporate and other relevant actions have been taken to authorise it to exercise its rights and to perform its obligations under the Transaction Documents to which it is a party; 3. All necessary authorisations, licences, and consents required for its performance under the Transaction Documents to which it is a party have been obtained, renewed, fulfilled and remain in full force and effect to ensure the legality, validity or enforceability of the Transaction Documents to which it is a party in accordance with their respective terms in Malaysia; 4. No registration and no payment of any duty or tax (subject to the relevant tax and stamp duty exemption and/or remission being obtained) or other action whatsoever is necessary to ensure the legality, validity, enforceability or admissibility as evidence of the Transaction Documents to which it is a party in Malaysia; 5. Its entry into and the exercise of its rights, and performance of its obligations under the Transaction Documents to which it is a party to, do not and will not violate any law or any provision contained in any agreement to which it is a party; 6. No litigation or arbitration is current or, to its knowledge, is threatened, which if adversely determined will have a Material Adverse Effect (as defined below); Page 14
15. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential For the purposes of these Principal Terms and Conditions, “Material Adverse Effect” means an event or effect which will or is reasonably likely to have a material adverse effect on (a) the financial condition of the Issuer; or (b) the ability of the Issuer to perform any of its material obligations under any of the Transaction Documents to which it is a party. 7. It is subject to civil and commercial laws with respect to its obligations under the Transaction Documents to which it is a party to, the transactions contemplated hereby and thereby constitute private and commercial acts done for private and commercial purposes and it is not entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which may include, without limitation, suits, attachment prior to judgment, execution or other enforcement in Malaysia); 8. Each of the Transaction Documents to which it is a party to is or will when executed and/or issued, be in full force and effect and constitutes, or will when executed or issued, constitutes its valid and legally binding obligations enforceable in accordance with its terms; 9. The Sukuk Murabahah constitute direct, unconditional, unsecured and unsubordinated obligations of the Issuer and shall at all times rank pari passu without discrimination, preference or priority among themselves and at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, subject to the provisions of the Transaction Documents and those preferred by law; 10. Its audited financial statements have been or will be prepared in accordance with approved accounting standards, principles and practices generally accepted in Malaysia and together with the notes thereto present a true and fair view of the results of its operations for that financial year and the state of its affairs at that date and have been prepared, examined, reported on and approved in accordance with all procedures required by its Constitution and the laws of Malaysia and audited and certified by qualified auditors; 11. No step or action is or has been taken for the winding-up, liquidation or dissolution of the Issuer (including, without limitation, the presentation of a petition for the bankruptcy of or winding-up against the Issuer or the making of any order or the Page 15
16. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential passing of any resolution for the winding-up, liquidation or dissolution of the Issuer); 12. The information furnished by the Issuer or on its behalf and with the knowledge of the Issuer, in connection with the Sukuk Murabahah Programme and the Transaction Documents does not contain any false or misleading statement or any material omission and any opinions contained therein were honestly made on reasonable grounds after its due and careful enquiry; 13. No Event of Default continuing; and has occurred and is 14. Such other representations and warranties of the Issuer as may be deemed necessary by the JLAs and/or as advised by the Solicitors and agreed to by the Issuer (u) Events of Default : The Events of Default include but are not limited to the following: 1. The Issuer fails to pay any amount in respect of the Sukuk Murabahah and/or the Transaction Documents as and when it falls due for payment or when demanded (upon occurrence of an Event of Default) if so payable, under any of the Transaction Documents PROVIDED THAT it shall not be an Event of Default if there is a non-payment by the Issuer on the relevant due date as a result of administrative or technical error by the Issuer and such failure is remedied within three (3) Business Days from the date such amount is due or demanded; 2. The indebtedness of the Issuer under the STRC-i Facility, becomes capable, in accordance with the relevant terms thereof, of being declared due prematurely by reason of a default by the Issuer in its obligations in respect of the same, or the Issuer fails to make any payment in respect thereof on the due date for such payment or if due on demand when demanded and such declaration of indebtedness being due or payable or demanded is not discharged or disputed in good faith by the Issuer in a court of competent jurisdiction within thirty (30) days from the date of such declaration or demand; 3. Any representation or warranty made or given by the Issuer in any of the Transaction Documents to which it is a party to or which is contained in any certificate, document or statement furnished by the Issuer at any time pursuant to the terms of the Sukuk Murabahah and/or any of the Transaction Page 16
17. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential Documents to which it is a party, proves to have been incorrect or misleading in any material respect on or as of the date made or given or deemed made or deemed given; 4. Any representation or warranty made or given by the Guarantor under the Guarantee proves to have been incorrect or misleading in any material respect on or as of the date made or given or deemed made or deemed given; 5. The Issuer fails to observe or perform any of its obligations under any of the Transaction Documents to which it is party or the Sukuk Murabahah or under any undertaking or arrangement entered into by it in connection therewith (other than an obligation of the type referred to in paragraph 1 above) and such failure shall continue for a period of thirty (30) days or more from the date the Issuer receives written notification from the Agent of the failure; 6. Any step or action is taken for the winding-up, dissolution or liquidation of the Issuer (including without limitation, the presentation of a petition for the bankruptcy of or 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), and no action is taken to strike out, withdraw, set aside or stay the order or petition within sixty (60) days from the date of service of the petition or order on the Issuer or the date of passing of the resolution (as the case may be); 7. Any consent, authorisation, licence or approval or declaration to governmental or public bodies or authorities required by the Issuer to authorise or required by the Issuer in connection with the execution, issue, delivery, validity, legality, enforceability or admissibility in evidence of any of the Transaction Documents or the performance by the Issuer of its obligations under any of the Transaction Documents as the case may be, is not approved or is revoked or expired or is not renewed or otherwise ceases to be in full force and effect, and such non-approval, revocation, expiration, non-renewal or cessation continues for thirty (30) days or more from the date the Issuer has been notified of the same in writing by the Agent, unless in respect of the foregoing, such non-approval, revocation, expiration, non-renewal or cessation will not have a Material Adverse Effect; 8. At any time any provision of any of the Transaction Page 17
18. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential Documents relating to the payment obligations of the Issuer and/or the Guarantor is or becomes, invalid, illegal, void, voidable or unenforceable; 9. The Issuer enters into any composition or arrangement with or for the benefit of its creditors (including pursuant to Section 366 of the Companies Act) or a moratorium is agreed or declared in respect of or affecting all or a substantial part of any of its financings (whether conventional or based on Shariah principles); 10. The Issuer or the Guarantor repudiates any of the Transaction Documents or the Commercial Contract or the Letter of Award (if any) granted by the Guarantor to the Issuer to which it is a party or the Issuer or the Guarantor does or causes to be done any act or thing to repudiate any of the Transaction Documents to which it is a party; 11. The Guarantee is revoked or terminated for any reason whatsoever; 12. The occurrence of any event or circumstance with a Material Adverse Effect and the Issuer and the Agent (acting on the instructions of the Sukukholders by a special resolution) are unable to any mutually acceptable agreement or solution, within thirty (30) days from the date of the Agent’s written notice to the Issuer of the occurrence of such event or circumstance, to nullify or counteract or avoid the effect of such event or circumstance. 13. Such other Events of Default as may be deemed necessary by the JLAs and/or as advised by the Solicitors and agreed to by the Issuer Upon the occurrence of any of the above events, the Agent may, at its discretion, and shall, if directed to do so by a special resolution of the Sukukholders, declare that an Event of Default has occurred whereupon, the Agent shall exercise its rights under the Sale and Purchase Agreement for the benefit of the Sukukholders, all amounts then outstanding on the Deferred Sale Price (subject to Ibra’ if any) shall become immediately due and payable by the Purchaser to the Sukukholders and the Agent shall have recourse to all remedies made available under the Transaction Documents. Pursuant to the above, the Agent, on behalf of the Sukukholders, will enforce its rights under the Guarantee in accordance with the terms as set out therein. (v) Covenants : The covenants of the Issuer include but are not limited Page 18
19. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential to the following : 1. The Issuer shall deliver to the Agent as soon as they become available (in any case, no later than one hundred and eighty (180) days after the end of its financial year) copies of its financial statements for that year or if applicable, its consolidated financial statements for that year, which shall contain the income statements and balance sheets of the Issuer and which are audited and certified by a firm of independent certified public accountants; 2. The Issuer shall prepare its financial statements on a basis consistently applied in accordance with approved accounting standards, principles and practices generally accepted 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; 3. The Issuer shall immediately notify the Agent and the Government as soon as it becomes aware of: (a) the occurrence of any Event of Default; (b) the occurrence of any event or circumstance having a Material Adverse Effect on the Issuer; (c) any other matters that may materially prejudice the interests of the Sukukholders or any of them. 4. So far as required by law, the Issuer shall execute all such further documents and do all such further acts and things as the Agent (acting on behalf of the Sukukholders) may reasonably consider to be necessary or expedient at any time or times to give further effect to the terms and conditions of the Transaction Documents to which it is a party; 5. The Issuer shall carry out its business and affairs in a proper and efficient manner; 6. The Issuer shall promptly perform and carry out all its obligations under the Transaction Documents to which it is a party and the terms and conditions of the Sukuk Murabahah (including but not limited to redeeming the Sukuk Murabahah on the relevant Maturity Date(s) or any other date on which the Sukuk Murabahah are due and payable) and ensure that it shall immediately notify the Agent in the event that the Issuer is unable to fulfil or comply with any of the provisions of the Transaction Documents; Page 19
20. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential 7. The Issuer shall promptly comply with all applicable laws, regulations and guidelines relating to the entry into and performance by the Issuer of its obligations under the Transaction Documents to which it is a party; 8. To the extent permitted under the law the Issuer will promptly give to the Agent such information as the Agent may reasonably require relating to its affairs in connection with the performance of its duties and the exercise of its powers under the Transaction Documents to which it is a party; 9. To the extent permitted under the law, the Issuer will authorise and instruct its auditors to disclose to the Agent such information as the Agent may reasonably require in connection with any calculation or matter arising under the Transaction Documents or as the Agent may reasonably require for the purpose of performing its duties and exercising its powers as Agent; 10. The Issuer shall comply with its obligations under the Central Securities Depository and Paying Agency Rules issued by PayNet, as modified or revised or substituted from time to time by PayNet and, without prejudice to the generality of the foregoing, maintain at all times a paying agent with a specified office in Malaysia in respect of payments in relation to the Sukuk Murabahah in accordance with the relevant laws and regulations; 11. The Issuer shall obtain and promptly renew from time to time, and to the extent permitted by law, promptly deliver or procure the delivery to the Agent upon demand certified true copies of any and all licences, authorisations, approvals, consents and exemptions as may be necessary or desirable to ensure the validity, enforceability or priority of its liabilities and obligations or the rights of the Sukukholders (or any of them) under the Transaction Documents, and shall comply with the terms of the same; 12. The Issuer shall utilise the proceeds from the Sukuk Murabahah Programme in accordance with the purposes as set out herein which are for Shariah-compliant purposes only; 13. The Issuer shall ensure that (A) the aggregate of (i) the outstanding principal amount under the STRC-i Facility; and (ii) the principal amount under the STRC-i Facility to be disbursed on the proposed date of disbursement under the STRC-i Facility does not exceed RM3.0 billion (or RM3.6 billion if Page 20
21. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential so increased subject to the approval of the Financiers); and (B) the aggregate of (i) the outstanding nominal value of Sukuk Murabahah issued under the Sukuk Murabahah Programme; (ii) the outstanding principal amount under the STRC-i Facility, (iii) the nominal value of the Sukuk Murabahah to be issued and (iv) the principal amount under the STRC-i Facility to be disbursed on the proposed date of issuance of the Sukuk Murabahah and/or the proposed date of disbursement under the STRC-i Facility (where applicable), does not exceed the Guarantee Limit or the Reduced Guarantee Limit at any time; 14. The Issuer shall not (without the prior written consent of the Agent who is acting on behalf of the Sukukholders), reduce or in any way whatsoever alter (except increase), its paid-up capital whether by varying the amount, structure or value thereof or the rights attached thereto or convert any of its share capital into stock, or by consolidating, dividing or sub-dividing all or any of its shares or add to, delete or amend its Constitution in a manner inconsistent with the Transaction Documents; 15. The Issuer shall not take steps to wind-up, liquidate or dissolve itself; 16. The Issuer shall not declare or pay any dividends or make any distribution whether income or capital in nature if: (a) an Event of Default has occurred, is continuing and has not been remedied or waived; or (b) any payments under the arrangements pertaining to the Sukuk Murabahah Programme is overdue and has not been paid or if any of the payments under the arrangements pertaining to the Sukuk Murabahah Programme which has become payable has not been paid as a consequence of default by the Issuer; and 17. Such other covenants of the Issuer as may be deemed necessary by the JLAs and/or as advised by the Solicitors and agreed to by the Issuer (w) Other terms and conditions of the Sukuk Murabahah Programme (i) Transferability : The Sukuk Murabahah are tradable and transferable. (ii) Redemption : Unless previously redeemed, purchased or cancelled, Page 21
22. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential all outstanding Sukuk Murabahah will be redeemed by the Issuer at 100% of their nominal value on their respective Maturity Dates. (iii) Purchase and Cancellation : The Issuer or its subsidiaries or agents of the Issuer may at any time purchase the Sukuk Murabahah at any price in the open market or by private treaty, but these purchased Sukuk Murabahah shall be cancelled and cannot be resold. (iv) Transaction Documents : (a) Programme Agreement; (b) Guarantee; (c) Securities Lodgement Form; (d) Agency Agreement (e) Purchase Agency Agreement; (f) Sub-Purchase Agency Agreement; (g) Commodity Murabahah Master Agreement; (h) CTP Purchase Agreement; (i) Sale and Purchase Agreement; (j) CTP Sale Agreement; (k) Subscription Agreement; (l) Purchase Order; (m) Sukuk Murabahah, and other relevant agreements agreed between the parties that may be required to complete the Sukuk Murabahah Programme and/or the Murabahah arrangement as advised by the Solicitors and agreed by the JLAs and the Issuer. (v) Taxation : All payments by the Issuer shall be made without withholding or deductions for or on account of any present or future tax, duty or charge of whatsoever nature imposed or levied by or on behalf of Malaysia or any other applicable jurisdictions, or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law (in which event the Issuer shall be required to make such additional amount so that the payee would receive the full amount which the payee would have received if no such withholding or deductions are made). Provided That no such additional amount shall be payable in respect of the Sukuk Murabahah presented for payment:(1) by or on behalf of a payee who is liable to such taxes, duties, assessments or governmental charges in respect of such Sukuk Murabahah by reason of it being a non-resident of Malaysia for tax purposes; or Page 22
23. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential (2) by or on behalf of a payee who would not be liable or subject to such withholding or deduction by making declaration of residence in Malaysia or other similar claim for exemption to the relevant tax authority; or (3) more than thirty (30) days after the Relevant Date, unless the payee is entitled to such additional amount upon such presentation for payment on the last day of such period of thirty (30) days. For the avoidance of doubt, paragraph (3) would not apply to such payee falling under paragraphs (1) or (2) above. For the purpose of this Principal Terms and Conditions, “Relevant Date” shall mean the date on which the payment first become due but, if the full amount of the money payable has not been received by the Agent on or before the due date, it shall mean the date on which, the full payment of money having been so received. (vi) Compensation (Ta’widh) In the event of any delay in payment of the Deferred Sale Price to the Sukukholders, the Issuer shall pay the compensation (Ta’widh) on such overdue amounts at the rate and manner prescribed by the SC’s Shariah Advisory Council from time to time. (vii) Ibra’ An Ibra’, where applicable, shall be granted by the Sukukholders. The Sukukholders in subscribing to the Sukuk Murabahah hereby consent to grant such Ibra’ if the Sukuk Murabahah are redeemed before maturity, or upon the declaration of an Event of Default. The “Ibra’” shall be calculated as follows: (i) in the case of Sukuk Murabahah with Periodic Payments and issued at a discount, the aggregate of unearned Periodic Payments; (ii) in the case of Sukuk Murabahah without Periodic Payments and issued at a discount, the unearned Discounted Amount; (iii) in the case of Sukuk Murabahah with Periodic Payments and issued at par, the aggregate of unearned Periodic Payments; and (iv) in the case of Sukuk Murabahah with Periodic Payments and issued at a premium, the aggregate of unearned Periodic Payments. Page 23
24. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential The Ibra’ in relation to (i), (ii), (iii) and (iv) above shall be calculated from the date of the declaration of an Event of Default up to the Maturity Date of such Sukuk Murabahah. (viii) Governing Laws : Laws of Malaysia. (ix) Jurisdiction : MRL shall unconditionally and irrevocably submit to the exclusive jurisdiction of the courts of Malaysia. (x) Special Condition : The Issuer shall ensure and/or procure that the Minister of Finance (Incorporated) holds directly and/or indirectly at least fifty one per centum (51%) of the ordinary paid-up share capital of the Issuer at all times. (xi) Increase in : Programme Size The Issuer shall have the option to upsize the limit of the Sukuk Murabahah Programme and the aggregate combined limit of the Facilities at any time and from time to time (“Upsizing”) and when such option is so exercised by the Issuer, the Sukukholders and the Financiers shall be deemed to have consented to the Upsizing and no consent will be required from the Sukukholders, the Financiers, the Facility Agent, the Agent and any other party under the Sukuk Murabahah Programme or the STRC-i Facility for the Upsizing, provided that any Sukuk Murabahah issued pursuant to the Upsizing shall be irrevocably and unconditionally guaranteed by the Government. (xii) Selling Restrictions : Selling Restrictions At Issuance The Sukuk Murabahah may only be offered, sold, transferred or otherwise disposed of, directly or indirectly, to a person to whom an offer or invitation to subscribe for the Sukuk Murabahah and to whom the Sukuk Murabahah are issued would fall within Section 2(6) of the Companies Act; and Part I of Schedule 6 (or Section 229(1)(b)), Part I of Schedule 7 (or ISection 230(1)(b)) and Schedule 8 (or Section 257(1)) of the CMSA, read together with Schedule 9 (or Section 257(3)) of the CMSA. Selling Restrictions Thereafter The Sukuk Murabahah may only be offered, sold, transferred or otherwise disposed of, directly or indirectly, to a person to whom an offer or invitation to purchase the Sukuk Murabahah would fall within Section 2(6) of the Companies Act; and Part I of Schedule 6 (or Section 229(1)(b)) and Schedule 8 (or Section 257(1)) of the CMSA, read together with Schedule 9 (or Section 257(3)) of the CMSA. Page 24
25. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential Annexure 1 Agent (acting on behalf of Sukukholders) 7 Periodic Payments/ One-off Payment 1 Purchase Agency Agreement MRL (Purchase Agent) Sukuk Murabahah Proceeds 4 Issue Sukuk Murabahah 2 Purchase Order MRL (Issuer / Purchaser) 5 6 Sell Commodities at Deferred Sale Price Sub-Purchase Agency Agreement 1 Facility Agent (Sub-Purchase Agent) 3 CTP Sale Agreement CTP Purchase Agreement CTP 6 Sell Commodities on spot Commodity Buyer 3 Purchase Commodities on spot Commodity Vendor(s) Page 25
26. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Step 1 Step 2 Step 3 Step 4 Private and Confidential The Agent, on behalf of the investors of the Sukuk Murabahah (“Sukukholders”), and MRL shall enter into an agency agreement (“Purchase Agency Agreement”), pursuant to which MRL is appointed as the agent of the Sukukholders (in such capacity, “Purchase Agent”) for the purchase and sale of Shariah-compliant Commodities (as defined below) under the Sukuk Murabahah Programme.The Purchase Agent will then enter into a sub-purchase agency agreement (“SubPurchase Agency Agreement”) to appoint the Facility Agent as a subagent of the Sukukholders (in such capacity, “Sub-Purchase Agent”) for the purchase and sale of the Commodities under the Sukuk Murabahah Programme. Pursuant to a commodity Murabahah master agreement (“Commodity Murabahah Master Agreement”) to be entered into between MRL (in such capacity, “Purchaser”), the Purchase Agent and the SubPurchase Agent, prior to the date on which the relevant Series (as defined below) of the Sukuk Murabahah is issued, MRL (acting as Purchaser) shall issue a purchase order (“Purchase Order”) to the Purchase Agent and the Sub-Purchase Agent. In the Purchase Order, MRL (acting as Purchaser) will request the Purchase Agent and subsequently the Purchase Agent will request the Sub-Purchase Agent to purchase the Commodities at the Purchase Price (as defined below). The Purchaser will irrevocably undertake to the Sub-Purchase Agent that it shall subsequently purchase the Commodities from the Sukukholders via the Sub-Purchase Agent at the Deferred Sale Price (as defined below), payable on a deferred payment basis. Based on the Purchase Order, the Sub-Purchase Agent (pursuant to a commodity trading participant purchase agreement (“CTP Purchase Agreement”) to be entered into between the Sub-Purchase Agent and the commodity trading participant (“CTP”)) prior to the date on which the relevant Series of the Sukuk Murabahah is issued, will appoint the CTP to purchase the Commodities from commodity vendor(s) in the Bursa Suq Al-Sila’ commodity trading platform and/or such other independent commodity trading platforms acceptable to the JSAs (“Commodity Vendor(s)”) which shall be identified prior to each issuance of the Sukuk Murabahah, on a spot basis at a purchase price which shall be an amount equivalent to the Sukuk Murabahah proceeds (“Purchase Price”). The Purchase Price of the Commodities shall comply with the asset pricing requirement stipulated under the Securities Commission Malaysia (“SC”)’s Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework (issued on 9 March 2015, effective on 15 June 2015 and revised on 26 November 2019), as may be replaced, substituted, amended or revised from time to time. MRL (acting as the Issuer) shall issue the Sukuk Murabahah to the Sukukholders, whereby the proceeds from such issuance shall be used to pay for the Purchase Price of the Commodities. The Sukuk Murabahah shall evidence, amongst others, the Sukukholders’ ownership of the Commodities and subsequently, once the Commodities are sold to MRL (acting as Purchaser), the Sukukholders’ entitlement to receive the Deferred Sale Price. Page 26
27. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Step 5 Step 6 Step 7 Private and Confidential Thereafter, pursuant to the undertaking under the Purchase Order, the Sub-Purchase Agent (acting as agent of the Purchase Agent who in turn acts as agent of the Sukukholders) shall sell the Commodities to MRL (acting as Purchaser) based on the Shariah principle of Murabahah at the Deferred Sale Price under a sale and purchase agreement (“Sale and Purchase Agreement”) to be entered into between the Sub-Purchase Agent and the Purchaser. Upon completion of such sale to the Purchaser, the Purchaser (pursuant to a commodity trading participant sale agreement (“CTP Sale Agreement”) to be entered into between MRL (acting as Purchaser) and the CTP) shall appoint the CTP to sell the Commodities to the commodity buyer(s) in the Bursa Suq Al-Sila’ commodity trading platform and/or such other independent commodity trading platforms acceptable to the JSAs (“Commodity Buyer”) which shall be identified prior to each issuance of the Sukuk Murabahah, on a spot basis, for an amount equal to the Purchase Price. The CTP Sale Agreement will provide for the CTP (on behalf of the Purchaser) to directly sell the Commodities to the Commodity Buyer upon notice by the Purchaser that the Sale and Purchase Agreement has been completed and executed. The Sukuk Murabahah may be issued with or without periodic profit payments (“Periodic Payments”). During the tenure of Sukuk Murabahah with Periodic Payments, MRL (acting as Purchaser), as part of its obligation to pay the Deferred Sale Price, shall make Periodic Payments (which form part of the Deferred Sale Price) to the Sukukholders on the Periodic Payment Dates (as defined below) and on the maturity date (“Maturity Date”) of such Sukuk Murabahah. For Sukuk Murabahah without Periodic Payments, MRL (acting as Purchaser) shall make a one-off lump sum payment which is equivalent to the Deferred Sale Price on the Maturity Date of such Sukuk Murabahah to the Sukukholders. “Commodities” means Shariah-compliant commodities available at Bursa Suq Al-Sila’ commodity market and/or such other independent commodity trading platforms acceptable to the JSAs (excluding ribawi items in the category of medium of exchange such as currency, gold and silver). “Series” means, in relation to any Sukuk Murabahah, such Sukuk Murabahah with the same issue date and Maturity Date, stock code and identical terms and conditions. Definitions “Deferred Sale Price” means in relation to each Series of the Sukuk Murabahah, the aggregate of (i) an amount equivalent to the Purchase Price; and (ii) the applicable Profit Margin (as defined below.) calculated at the issue date of each relevant Sukuk Murabahah. “Profit Margin” means: (a) in the case of Sukuk Murabahah issued with Periodic Payments and issued at a discount, the aggregate of the Periodic Payments and the Discounted Amount (as defined below); Page 27
28. Malaysia Rail Link Sdn Bhd Principal Terms and Conditions – Sukuk Murabahah Programme Private and Confidential (b) in the case of Sukuk Murabahah issued without Periodic Payments and issued at a discount, the Discounted Amount; (c) in the case of Sukuk Murabahah issued with Periodic Payments and issued at par, the aggregate Periodic Payments; and (d) in the case of Sukuk Murabahah issued with Periodic Payments and issued at a premium, the aggregate Periodic Payments less the Premium Amount (as defined below). “Discounted Amount” means the difference between the nominal value of the Relevant Sukuk Murabahah and the Purchase Price of the Relevant Sukuk Murabahah in the case of Sukuk Murabahah issued at a discount. “Premium Amount” means the difference between the Purchase Price of the Relevant Sukuk Murabahah and the nominal value of the Relevant Sukuk Murabahah in the case of Sukuk Murabahah issued at a premium. Page 28