Maxtral PTC

MAXTRAL INDUSTRY BERHAD
PROPOSED RM100.0 MILLION ISLAMIC SECURITIES FACILITIES
PRINCIPAL TERMS AND CONDITIONS
1.0 BACKGROUND INFORMATION
(a) Issuer
i. Name Maxtral Industry Berhad (“Maxtral” or the “Issuer”)
ii. Address TB 324, 2nd Floor

Lot 21, Block 38
Fajar Complex
91000 Tawau, Sabah
iii. Business 584501-H

Registration No.
iv. Date/Place of 27 June 2002 /Malaysia

Incorporation
v. Date of Listing (in 21 August 2003

case of a public
listed company)
vi. Status :
Resident / non- Resident controlled company
resident
controlled
company
Bumiputra / Non-Bumiputera controlled company
non-bumiputra
company
vii. Principal Provision of management services and investment holding.

Activities Maxtral’s subsidiaries are involved in the manufacturing and sale
of veneer, plywood, moulding products and logs trading.
viii. Board of Directors The Board of Directors for Maxtral as at 19 October 2005 are as
follows:
1. Chen Shou-Ren (Executive Chairman)
2. Lau Mei Yong @ Lau Mii Yong (Managing Director)
3. Chen Rong-Chuan (Non-independent Non-Executive
Director)
4. Ku Hien Liong (Independent Non-Executive Director)
5. Yap Kai Weng (Independent Non-Executive Director)
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ix. Structure of Substantial shareholder(s) and their respective percentage of

shareholdings and shareholdings held as at 19 October 2005 is as follows:-
names of
shareholders or, Name of Direct Interest Indirect Interest
in the case of a Substantial
public company, Shareholders No. of % No. of %
ordinary ordinary
names of all
shares held shares held
substantial
shareholders Platinum Digital 112,154,900 53.38 - -
(M) Sdn Bhd
Chen Shou-Ren - - 124,111,200 59.07
*
Lau Mei Yong @ 11,956,300 5.69 112,154,900 53.38
Lau Mii Yong
**
Chen Rong-Chuan - - 112,154,900 53.38
***
* Deemed interested by virtue of his spouse, Lau Mei Yong @ Lau

Mii Yong’s shareholding in Maxtral and his spouse and his
substantial shareholding in Platinum Digital (M) Sdn Bhd.
** Deemed interested by virtue of her spouse, Chen Shou-Ren and

her substantial shareholding in Platinum Digital (M) Sdn Bhd.
*** Deemed interested by virtue of his substantial shareholdings in

Platinum Digital (M) Sdn Bhd.
x. Authorized and Authorized capital as at 19 October 2005

paid-up capital RM450,000,000 comprising of 900,000,000 ordinary shares of
RM0.50 each.
RM50,000,000 comprising of 500,000,000 irredeemable

convertible preference shares of RM0.10 each.
Paid-up capital as at 19 October 2005

RM105,049,734.50 comprising of 210,099,469 ordinary shares
of RM0.50 each.
RM8,441,541.90 comprising of 84,415,419 irredeemable

convertible preference shares (“ICPS”) of RM0.10 each.
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2.0 PRINCIPAL TERMS AND CONDITIONS
(a) Names of parties involved in the proposed transaction (where applicable)
i. Principal OSK Securities Berhad (“OSK”) (14152-V)

Adviser(s)/Lead
Arranger(s)
ii. Arranger(s) Not applicable
iii. Valuers Not applicable
iv. Solicitors Messrs Raslan Loong
v. Financial Adviser Not applicable
vi. Technical Not applicable

Adviser
vii. Guarantor Not applicable
viii. Trustee OSK Trustees Berhad
ix. Facility Agent OSK
x. Primary Al Bai Bithaman Ajil Islamic Debt Securities (“BaIDS”)

Subscriber(s) and Facility
Amount
OSK will subscribe the entire issue of the BaIDS.
subscribed
Murabahah Underwritten Notes Issuance Facility (“MUNIF”)
/ Murabahah Medium Term Notes (“MMTN”) Issuance
Facility (collectively known as the “MUNIF / MMTN Facility”)
Not applicable.
xi. Underwriter(s) BaIDS Facility

and amount Not applicable.
underwritten
MUNIF / MMTN Facility
MUNIF
OSK shall underwrite the MUNIF for the amount of RM20.0
million and may sell down its underwriting commitment to other
financial institutions during the tenure of the MUNIF / MMTN
Facility. The underwriter(s) shall not be committed to or obliged
to underwrite the subscription of the MUNIF where the rating of
the MUNIF is MARC-3ID or equivalent or lower and the
underwriter(s) shall have the option whether to underwrite in
whole or in part or not at all in proportion to their underwriting
commitment. Otherwise the MUNIF shall be issued on a non
underwritten basis.
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MMTN
Not applicable.
xii. Syariah Adviser Dr Mohd Daud Bakar
xiii. Central BaIDS Facility

Depository Bank Negara Malaysia (“BNM”)

OSK
xiv. Paying Agent BaIDS Facility

BNM

OSK
xv. Reporting Messrs Moores Rowland

Accountant
xvi. Others
Security OSK Trustees Berhad

Trustee
Tender Panel BaIDS Facility

Members Not applicable.
(“TPM”)

Eligible investors approved by Bank Negara Malaysia (“BNM”)
and/or such other relevant authority comprising discount
houses, merchant banks, commercial banks and/or other
financial institutions shall be invited to bid competitively for the
Notes. The composition of the TPM may be changed from time
to time at the discretion of the Facility Agent in consultation with
the Issuer.
(b) Islamic Principles BaIDS Facility

Used Deferred-Payment Sale (Al Bai’ Bithaman Ajil)
MUNIF/MMTN Facility
Cost-Plus Sale (Murabahah).
(c) Facility The Islamic Securities Facilities comprising the BaIDS Facility
Description and MUNIF/MMTN Facility are stand-alone financing
programmes collectively referred to as the “ISF”.
BaIDS Facility
Al Bai Bithaman Ajil Islamic Debt Securities (“BaIDS”) Facility.
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The BaIDS applies the underlying Syariah principles of Al Bai’

Bithaman Ajil which is an agreement that refers to the sale and
purchase transaction for the financing of an asset on a deferred
payment basis with a pre-agreed payment period. The selling
price will include a profit margin. The primary subscriber(s) shall
first purchase the Identified Assets (“Assets”) as described in
item (2) (t) from the Issuer at the Purchase Price. The primary
subscriber(s) shall immediately thereafter sell the Assets to the
Issuer at a Selling Price comprising the original Purchase Price
and a profit margin at a profit rate agreed between the Issuer
and the primary subscriber(s) on a deferred payment basis.
The obligation of the Issuer to pay the Selling Price shall be

evidenced through the issuance of the negotiable and non-
interest bearing primary notes and secondary notes under the
BaIDS which the Issuer shall redeem on the respective maturity
dates.

Murabahah Underwritten Notes Issuance Facility (“MUNIF”) /
Murabahah Medium Term Notes (“MMTN”) Issuance Facility
(collectively known as the “MUNIF / MMTN Facility”).
The MUNIF and MMTN to be issued under the MUNIF/MMTN

Facility are short and medium term notes and shall hereinafter
refer to as “MUNIF Note” and “MMTN” respectively. The MUNIF
/ MMTN Facility apply the underlying Syariah principles of
Murabahah which is an agreement that refers to the sale and
purchase transaction for the financing of an asset on a deferred
payment basis with a pre-agreed payment basis. The selling
price will include a profit margin. The Underwriters/TPM shall
first purchase the identified assets (“Assets”) from the Issuer at
the Purchase Price. The Underwriters/TPM shall immediately
thereafter sell the Assets to the Issuer at a Selling Price
comprising the original Purchase Price and a profit margin at a
profit rate agreed between the Issuer and the Underwriters/TPM
on a deferred payment basis.

evidenced through the issuance of the negotiable and non-
interest bearing MUNIF / MMTN which the Issuer shall redeem
on the respective maturity dates.
The MUNIF / MMTN shall share the similar Assets with the
BaIDS. Depending on the value of the Assets and to comply with
the Syariah principles, the BaIDS and MUNIF/MMTN
transactions may not happen simultaneously. In any event, the
BaIDS will be issued first.
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(d) Issue Size (RM) BaIDS Facility

RM80.0 million (Ringgit Malaysia Eighty Million) which will be
issued as follows:
Series Amount
(RM)
1 20,000,000
2 20,000,000
3 20,000,000
4 20,000,000
Total 80,000,000
MUNIF/MMTN Facility
Up to RM20.0 million (Ringgit Malaysia Twenty Million).
(e) Issue Price (RM) BaIDS Facility

The issue price for the BaIDS is as follows subject to there is no
change in the YTM as indicated in item 2 (i):
Series Issue Price

(RM)
1 20,000,000
2 20,000,000
3 20,000,000
4 20,000,000
Total 80,000,000
MUNIF
The MUNIF Notes will be issued at a discount to face value. The
Issue Price shall be based on bids submitted by the TPMs or in
the case where underwriters are to subscribe for the MUNIF, the
underwritten rate. The Issue Price shall be computed in
accordance with the following formula, as specified in the Rules
on Fully Automated System for Issuing / Tendering (“FAST
Rules”) issued by BNM from time to time:-
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IP = FV x 1 – (rxt)
36500
where :
IP = Proceeds / Issue Price
FV = Face value
r = The applicable yield / rate of return at which
the offer was accepted (expressed to three
decimal places)
t = The number of days in the tenure of the
papers (which shall include the Issue Date
but shall exclude the Maturity Date)
MMTN
The MMTN shall be issued at par, premium or at a discount to
the face amount.
The amount conclusively determined by the Facility Agent (“FA”)

to be equal to:
⎧ Discounted Value ⎫ ⎧ Discounted Value ⎫

⎪ ⎪ ⎪ ⎪
FV = ⎨ of Redemption ⎬ + ⎨ of Stream of ⎬
⎪ Value At Maturity ⎪ ⎪ Interest Payments ⎪
⎩ ⎭ ⎩ ⎭
⎧ ⎫ ⎧ ⎫
⎪ ⎪ ⎪ ⎪
⎪ RV ⎪ ⎪N C/2 ⎪
= ⎨ N − 1 + T/E ⎬+⎨∑ K − 1 + T/E ⎬
⎪ ⎛1 + r ⎞ ⎪ ⎪ ⎛1 + r ⎞
K =1
⎪
⎪⎩ ⎜⎝ ⎟
200 ⎠ ⎪⎭ ⎪⎩ ⎜⎝ 200 ⎠
⎟ ⎪⎭
where,
FV = Face value
RV = Redemption value (=FV, if redemption is at
par)
C = Profit rate
r = Market yield for a similar maturity period
N = Number of semi-annual profit payments
between the value date and maturity date
T = Number of days from the Issue Date and the
next Profit Payment Date
E = Number of days in a Profit Period in which
settlement takes place
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(f) Tenure of the BaIDS Facility

facility / issue All series under the BaIDS Facility shall be issued
simultaneously on its initial issuance and issued for maturities of
the following tenures:
Series Tenure (years)
1 3
2 4
3 5
4 6
Seven (7) years from the initial issue of the MUNIF Notes and /
or MMTN.
MUNIF
The MUNIF Notes may be issued at the Issuer’s option for
maturities of one (1), two (2), three (3), six (6) months, nine (9)
months or twelve (12) months or any other maturities of more
than one (1) month and up to twelve (12) months and subject to
the tenure of the MUNIF / MMTN Facility.
MMTN
The MMTN may be issued at the Issuer’s option for maturities of
one (1) year and up to seven (7) years subject to the tenure of
the MUNIF / MMTN Facility.
(g) Coupon/Profit or BaIDS Facility

equivalent rate (%)
(please specify) Series Indicative Profit
Rate (%) p.a.
1 7.25
2 7.50
3 7.75
4 8.00
8
MUNIF
The profit rate or its equivalent rate will be determined on the
proposed issuance day at which the tender/private placement is
accepted or in the case where underwriters are to subscribe for
the MUNIF, the underwritten rate, dependent on the maturities of
one (1), two (2), three (3), six (6) months, nine (9) months or
twelve (12) months or any other maturities of more than one (1)
month and up to twelve (12) months.
MMTN
The profit rate or its equivalent rate will be determined on the
proposed issuance day at which the tender/private placement is
accepted.
(h) Coupon/Profit BaIDS Facility

payment The frequency of the profit payment is semi-annually.
frequency and
basis The profit will be calculated on the actual/actual days basis.
MUNIF/MMTN Facility
MUNIF
The frequency of profit payment is dependent on the frequency
of Issuance of MUNIF Notes for maturities of one (1), two (2),
three (3), six (6), nine (9) or twelve (12) months or any other
maturities of more than one (1) and up to twelve (12) months in
arrears upon the respective maturity dates of the MUNIF Notes.
The MUNIF Notes shall be issued on a discounted basis, the

calculation of which is as per the formula stated in item 2 (e)
above.
MMTN
The frequency of the profit payment is semi-annually.
The profit will be calculated on the actual/actual days basis.
(i) Yield to Maturity BaIDS Facility

(%)
Series Amount Tenor Indicative Yield
(RM) (years) to Maturity (%)
1 20,000,000 3 7.25
2 20,000,000 4 7.50
3 20,000,000 5 7.75
4 20,000,000 6 8.00
Total 80,000,000
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The above Yield To Maturity (“YTMs”) as agreed with the

Primary Subscriber(s) are indicative based on a rating of AID and
the prevailing market conditions. In any case, the Primary
Subscriber(s) reserves the rights to vary the YTMs if any change
in the prevailing market conditions and / or Change in
Circumstances or Adverse Market conditions are to exist prior to
the issuance of the BaIDS as described in item (2) (z)(xiv).

The Yield to Maturity of the MUNIF / MMTN will only be known
on the proposed issue day / tender day when Issuer confirms
the acceptance of the allocated tender / private placement bids.
(j) Security / The holders of the BaIDS, MUNIF and MMTN shall share the
Collateral following securities:
(i) First Legal Charge over the factory lands and buildings held
under titles CL105381833, CL105381842 and CL105381851
of Brantian, Merotai Rd, Tawau, Sabah (“Land Charge”),
belonging to Maxtral’s subsidiary, Kin Yip Wood Industries
Sdn Bhd (“KYWI”);
(ii) Debenture creating fixed and floating charges over the
assets of Maxtral and KYWI, both present and future. For
avoidance of doubts, assets purchased/financed under
Additional Financing as described in item 2 (z) (vi) shall be
excluded from this debenture;
(iii) Legal Charge over the Designated Accounts including all
monies standing to the credit of Maxtral; and
(iv) Legal Deed of Assignment of KYWI’s rights and interest over
the Log Sale and Purchase Agreement (“Log SPA”) dated 16
December 2003 and Supplemental Log Sale and Purchase
Agreement dated 25 March 2004 executed between KYWI
and Rakyat Berjaya Sdn Bhd in relation to the purchase of all
commercial timber from the designated timber area stated
therein.
(The above are collectively referred to as “Security

Arrangement”).
The security arrangement in respect of item (i) above, item (ii)

above (in respect of KYWI only) and item (iv) above (collectively
referred to as “Affected Security”) will only be perfected upon the
redemption of the existing bank borrowings as indicated in item 2
(k) below and its discharge by the existing financiers.
10
(k) Details on BaIDS Facility

utilisation of
proceeds: Proceeds from the BaIDS shall be utilized as follows:
RM
(1) Refinance and / or repay existing bank Up to 60,000,000

borrowings of Maxtral and / or KYWI
(“Issuer Group”).
(2) Deposit into Finance Service Reserve 3,050,000
Account (“FSRA”) an amount equivalent
to one (1) profit payment of each series
of the BaIDS.
(3) To reimburse and / or finance the Issuer 10,000,000
Group for the purchase of boilers,
turbines and other capital expenditures
which have earlier been paid and / or to
be paid by the Issuer Group.
(4) To finance all relevant fees and 1,731,700
expenses incurred due to the issuance
of the ISF
(5) Balance for working capital Balance
requirements of the Issuer Group
Total 80,000,000
Notes:
(A) Details of outstanding balance of the Issuer Group’s existing bank

borrowings as at 19 October 2005 to be refinanced and / or
repaid:-
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Financial Facility Amount Security

Institution outstanding
HSBC 1. Import & Export Line 0 Securities for Facility (1)

Bank Letter of Credit to (2)
Malaysia Trust Receipts a) Irrevocable standby
Berhad Banker Acceptances Letter of Credits for
Pre-Shipment ECR USD800,000
b) Joint & Several
2. Foreign Exchange Line 0 Guarantee from Lau
Mei Yong, Chen
3. Business Premises 330,516 Shou-Ren for
Financing RM9,124,000
c) Letter of undertaking
to top up standby
------------ credit if the exchange
330,516 rate of RM to USD
======= falls below 3.80 or
USD pegging no
longer exist and/or
alternatively a
proportionate
reduction of overdraft
limit
d) General Security
Agreement Relating
to Goods dated 29-
Aug-1995
Securities for Facility (3)

a) Loan Agreement cum
Deed of Assignment
for RM382,500 on
nd rd
TB324, 2 and 3
floor, Block 38, Fajar
Complex, Tawau
b) Joint and Several
Guarantee for
RM382,500 from Lau
Mei Yong and Chen
Shou-Ren
c) Shop Ownership
Insurance Policy or
Business Insurance
Policy
Bank 1. Term Loan 13,707,291 a) First legal charge for

Pertanian RM35,000,000 on
Malaysia factory land and
building
2. Revolving Credit 7,065,468 (CL105381833,
CL105381842 and
--------------- CL105381851); office
20,772,759 lot (TL107516807)
========= and staff quarters
(CL105433734)
b) Fixed and Floating
Debenture for
RM35,000,000
c) Joint & Several
Guarantee for
RM35,000,000 from
Lau Mei Yong; Chen
Shou-Ren and Chen
Rong-Chuan
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RHB 1. Term Loan 20,200,000 a) Assignment of all

Sakura rights and benefits
Merchant under Log SPA dated
Bankers 16/12/2003 with
Berhad Rakyat Berjaya Sdn
(“RHB 2. Revolving Credit and/or 4,000,000 Bhd
Sakura”) Acceptance Credit b) Pledge of 92,665,419
ordinary shares in
Maxtral Industry
--------------- Berhad held by
24,200,000 Platinum Digital (M)
========= Sdn Bhd
c) Pledge of 26,905,419
ICPS in Maxtral
Industry Berhad held
by Platinum Digital
(M) Sdn Bhd
d) First fixed charge
over a third party
landed property
e) Charge over Proceed
Account maintained
with RHB Bank
Berhad (Jointly
operated with RHB
Sakura)
f) Charge over Sinking
Fund Account
maintained with RHB
Bank Berhad (Solely
operated by RHB
Sakura)
g) Corporate guarantee
by Maxtral Industry
Berhad
f) Joint and Several
Guarantee of Lau Mei
Yong, Chen Shou-
Ren and Chen Rong-
Chuan
Export- 1. Revolving Pre- 7,684,000 a) If required, Bankers

Import Shipment & Post- ======== Letter(s) of Credit
Bank of Shipment Supplier Policy (MECIB) or
Malaysia Credit Facility any other insurance
Berhad policy as determined
(“Exim by Exim Bank
Bank”) b) Corporate Guarantee
by Maxtral Industry
Berhad.
RHB Delta 1. Hire Purchase facility 1,878,399

Finance for various motor ========
Berhad vehicles and machinery
Total 54,865,674
(B) The actual outstanding amount to be refinanced and / or repaid will

only be determined on the dates of redemption and/ or repayment.
13
(C) Any balance after utilization of item 2 (k) (1) to (4) will be allocated
for usage under 2 (k) (5) for meeting working capital requirements
of the Issuer Group. The usage of working capital under the ISF
shall be Syariah-compliant.
Proceeds from the MUNIF / MMTN of up to RM20.0 million shall

be utilised as follows:
RM
(1) To deposit into the FSRA an Amount to be based
amount equivalent to one (1) profit on the agreed profit
payment of each series of MMTN rates at the point of
issued (if any). each MMTN
issuance
(2) To finance the purchases of Up to 14,000,000
relevant raw materials for
production of timber and timber
related products.
(3) To finance any capital expenditure Up to 6,000,000
of the Issuer Group, including
purchases of plant, equipment and
machineries and upgrading
factories.
(4) To finance working capital Balance
requirements of the Issuer Group.
(5) To redeem previously issued To be determined on
MUNIF / MMTN for the purpose of each rollover date
rollover.
Total 20,000,000
Note : The above amounts are allocated on indicative basis only as the
actual amount to be utilized are still subject to actual profit rates,
production level, raw material prices, capital expenditure requirements
and working capital requirements. Any amount allocated for item (1),
(2) and (3) not utilized will be utilized under item (4). The usage of
working capital under the ISF shall be Syariah-compliant.
(l) Sinking Fund (if The Sinking Fund shall be represented by the Designated
any) Accounts which shall be Syariah compliant.
Designated Accounts:-
1. Proceeds Account;
2. Master Revenue Account;
3. Commodity Reserve Account;
4. Sinking Fund Account; and
5. Finance Service Reserve Account.
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1) Proceeds Account (“PA”)

Proceeds from the issuance of BaIDS and MUNIF / MMTN shall
be remitted into the PA. The account is to be operated by the
Security Trustee. The funds in this account shall be utilized in
accordance with the abovementioned purposes.
2) Master Revenue Account (“MRA”)

The Issuer shall open and maintain a MRA for the purpose of
capturing, amongst others, all cash proceeds received by it from,
but not limited to the following:
(i) Dividend payments from its subsidiaries;
(ii) All relevant insurance claims;
(iii) All other income generated by the Issuer; and
(iv) Repayment of inter-company advances where the
advances were disbursed by the Issuer to its subsidiaries
from the BaIDS and / or MUNIF / MMTN.
The MRA shall be operated by the Issuer and the Issuer shall
grant a power of attorney to the Security Trustee to take charge
of the account as and when the Security Trustee deems fit. The
Trustee shall be furnished with the monthly statements of the
MRA.
3) Commodity Reserve Account (“CRA”)

During the tenure of the ISF, in the event that Maxtral’s audited
consolidated net cash flows from operation exceeds that of its
original projections, a sum equivalent to 50% of the excess
amount shall be transferred into the CRA as additional liquidity
buffer to cover market risks associated with the wood products
industry. This liquidity buffer shall be built up until the cumulative
balance in the CRA amounts to RM20.0 million.
The funds in this account can be utilized in the following order of

priority:
(i) Towards meeting requirements in the SFAs in relation to the
principal redemption of the ISF;
(ii) Towards cover any shortfalls in the FSRA; and
(iii) For Permitted Investment.
The CRA shall be operated solely by the Security Trustee or

such other person appointed by the Security Trustee.
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4) Sinking Fund Account (“SFA”)

The Issuer shall open and maintain SFA 1 and SFA 2 whereby:
(i) SFA 1 – for the purpose of redeeming the principal and
profit amount of the BaIDS; and
(ii) SFA 2 – for the purpose of redeeming the principal and
profit amount of the MUNIF / MMTN.
Minimum Cumulative Balance
The Issuer shall ensure that the minimum balance required

under the Principal Payment Reserve and the Profit Payment
Reserve (collectively the “Minimum Cumulative Balance”) is
maintained and accumulated in SFAs, in the following manner:
i) Principal Payment Reserve

The Issuer shall ensure that the SFA 1 has a credit balance
of:
(a) at least 50% of the nominal value of any maturing
BaIDS three (3) months prior to the maturity of any
BaIDS; and
(b) at least 100% of the nominal value of any maturing
BaIDS one (1) month prior to the maturity date.
In relation to SFA 2 for the MUNIF / MMTN, the Issuer must

ensure that a credit balance of at least 50% of the nominal
value of any maturing MMTN three (3) months before the
expiry of the MUNIF / MMTN Facility and 100% of the
nominal value of any maturing MUNIF and / or MMTN one
(1) month prior to the expiry of the MUNIF / MMTN Facility.
In the event there is a shortfall in meeting the above

requirements, the Issuer is required to remedy the shortfall
within a thirty (30) days period. Failure to remedy the
shortfall shall constitute an Event of Default.
ii) Profit Payment Reserve

The Issuer shall also ensure that the SFA 1 and SFA 2 have
a credit balance equivalent to at least one (1) Profit
Payment in respect of the BaIDS and MMTN respectively
issued one (1) month prior to the Profit Payment date.
Where at any time funds for the BaIDS and / or MMTN Profit
Payment Reserve in the SFA 1 and SFA 2 respectively is
less than the required credit balance of the Minimum
Cumulative Balance for Profit Payment of the BaIDS and
MMTN, the Issuer may withdraw funds for such shortfalls
from the FSRA in accordance with the provisions set out
herein.
16
The SFAs shall be operated solely by the Security Trustee

or such other person appointed by the Security Trustee.
5) Finance Service Reserve Account (“FSRA”)

The Issuer shall open and maintain one (1) FSRA for the
purpose of depositing and maintaining at all times, a minimum
credit balance equivalent to the nominal value of one (1) Profit
Payment of each outstanding series of BaIDS and MMTN.
The monies in the FSRA shall be utilized for the following

purpose:
(i) Only in the event that there is a shortfall in the Profit
Payment Reserve in the SFAs in relation to profit
payments due for any BaIDS and / or MMTN issued. Any
amount withdrawn from the FSRA shall be replenished
within one (1) month of such withdrawal; and
(ii) For Permitted Investments.
The FSRA shall be operated solely by the Security Trustee or

such other person appointed by the Security Trustee.
(m) Rating BaIDS Facility

Credit rating Indicative rating of AID from MARC.
assigned
Name of MUNIF / MMTN Facility

rating
agency MUNIF
Indicative rating of MARC-2ID from MARC.
MMTN
Indicative rating of AID from MARC.
(n) Form and The BaIDS, MMTN and MUNIF Notes shall be represented by
Denomination Global Certificates in bearer form and issued in denominations
of RM1,000,000. The Global Certificates shall be deposited with
the respective Central Depository and are exchangeable for
Definitive Certificates only in certain limited circumstances. No
physical delivery of the Global Certificates will be made.
(o) Mode of Issue BaIDS Facility

Issued through and traded scripless under the Real Time
Electronic Transfer of Funds and Securities (“RENTAS”) System
by BNM and in accordance with the Rules on Fully Automated
System for Issuing/Tendering (“FAST”) issued by BNM, and/or
under any regulations to be implemented by BNM from time to
time, with OSK acting as Primary Subscriber via bought-deal.
17
MUNIF
By way of Tender to TPM and/or private placements without
prospectus to eligible investors administered electronically
through and governed by the Rules on FAST issued by BNM,
and / or under any regulations to be implemented by BNM from
time to time.
MMTN
By way of Tender to TPM and / or private placements without
prospectus to eligible investors in accordance with the Rules on
FAST issued by BNM, and / or under any regulations to be
implemented by BNM from time to time.
(p) Selling Restriction The ISF may not be issued or offered or sold directly or
indirectly, nor may any document or other material in connection
therewith be distributed in Malaysia other than to persons whose
ordinary business is to subscribe or buy or sell shares and
debentures, whether as principal or agent falling within any of
the categories of persons specified under Schedules 2, 3 and 5
of the SCA (as amended from time to time).
(q) Listing Status The ISF will not be listed on the Bursa Malaysia or on any other
stock exchange.
(r) Minimum Level of BaIDS Facility

Subscription (RM The BaIDS of RM80.0 million shall be fully subscribed.
or %)
MUNIF
The MUNIF is fully underwritten.
In the event the MUNIF rating is MARC-3ID or equivalent or

lower and the Underwriter (s) are not committed to or obliged to
underwrite the subscription of the MUNIF, the minimum level of
subscription shall be 100% for the issue. The Issue will be
aborted should the actual level of subscription be less than the
Minimum Level of Subscription.
MMTN
The Minimum Level of Subscription of MMTN shall not be less
than 100%. The Issue will be aborted should the actual level of
subscription be less than the Minimum Level of Subscription.
In every issue of MUNIF and /or MMTN, the aggregate amount

of each MUNIF or MMTN shall not be less than RM5.0 million
and must be in multiple of RM5.0 million.
18
(s) Other regulatory Not required.

approvals
required in
relation to the
issue, offer or
invitation and
whether or not
obtained
(t) Identified Assets BaIDS Facility

(“Assets”) The Assets held by the Issuer are as follow:
Identified No. of Ascribed Total

Assets Shares# Value Ascribed
(“Assets”) Per Value*
Share (RM)
(RM)
Ordinary shares 39,260,000 1.58** 62,061,148

of Kin Yip Wood
Industries Sdn
Bhd (“KYWI”)
#
Direct shareholdings held by Maxtral as at 19 October 2005.
*Based on KYWI’s audited accounts net book value as at 31 December
2004.
**Rounded up to 2 decimal places.
The pricing for the Identified Assets shall be in compliance with

SC’s Syariah Advisory Council Pricing Guidelines dated 30 April
2004 (as amended from time to time) throughout the tenure of
the ISF.
There will not be any overlapping in the use of the Identified

Assets as the underlying assets for the BaIDS and
MUNIF/MMTN Facility since the BaIDS transaction is to be
completed first before any subsequent MUNIF/MMTN
transaction.
The Identified Assets are Syariah-compliant as endorsed by

Syariah Adviser pursuant to his endorsement letter dated 25
November 2005 and shall continue to be Syariah-compliant
throughout the tenor of the ISF.
19
Subject to the approval of the Syariah Adviser and the Lead

Arranger, these Assets may be substituted with such other
assets which shall then form the Assets to be made available for
the purposes of the BaIDS Facility and MUNIF / MMTN Facility.
The Total Ascribed Value represents fair value for the Identified
Assets which is based on the audited net book value of the
Identified Assets as at 31 December 2004.
MUNIF/MMTN Facility
Identified No. of Ascribed Total

Assets Shares# Value Ascribed
(“Assets”) Per Value*
Share (RM)
(RM)
Ordinary shares 39,260,000 1.58** 62,061,148

of KYWI
#
Direct shareholdings held by Maxtral as at 19 October 2005.
*Based on KYWI’s audited accounts net book value as at 31 December
2004.
**Rounded up to 2 decimal places.
The pricing for the Identified Assets shall be in compliance with

SC’s Syariah Advisory Council Pricing Guidelines dated 30 April
2004 (as amended from time to time) throughout the tenure of
the ISF.
There will not be any overlapping in the use of the Identified

Assets as the underlying assets for the BaIDS and
MUNIF/MMTN Facility since the BaIDS transaction is to be
completed first before any subsequent MUNIF/MMTN
transaction.
The Identified Assets are Syariah-compliant as endorsed by

Syariah Adviser pursuant to his endorsement letter dated 25
November 2005 and shall continue to be Syariah-compliant
throughout the tenor of the ISF.
Subject to the approval of the Syariah Adviser and the Lead

Arranger, these Assets may be substituted with such other
assets which shall then form the Assets to be made available for
the purposes of the BaIDS Facility and MUNIF / MMTN Facility.
The Total Ascribed Value represents fair value for the Identified
Assets which is based on the audited net book value of the
Identified Assets as at 31 December 2004.
20
(u) Purchase and Under the BaIDS Facility and MUNIF / MMTN Facility, the
Selling Primary Subscriber (s) / Investors shall first purchase the Assets
Price/Rental as determined under item 2 (t) above belonging to the Issuer at
(where applicable) an agreed Purchase Price. The same Assets shall then
thereafter be sold to the Issuer at a Selling Price, comprising the
original Purchase Price and profit margin agreed between the
Issuer and the Primary Subscriber (s) / Investors on a deferred
payment basis.

evidenced through the issuance of the Primary Notes and the
non-detachable Secondary Notes (where applicable) under the
BaIDS Facility and MUNIF / MMTN Facility which the Issuer
shall redeem on the respective dates.
Purchase Price
BaIDS Facility
The Purchase Price for the BaIDS is as follows subject to there

is no change in the YTM as indicated in item 2 (i):-
Series Purchase Price

(RM)
1 20,000,000
2 20,000,000
3 20,000,000
4 20,000,000
Total 80,000,000
The Purchase Price of the MUNIF and MMTN will only be

determined on issuance date / tender date as per the formula in
item 2 (e) when the Issuer confirms the acceptance of the
allocated tender bids / private placement or underwriter rates (as
the case may be).
Selling Price
BaIDS Facility
The Selling Price for the BaIDS shall be evidenced by the
issuance of Primary Notes and the non-detachable Secondary
Notes which represents the profit portion of the Selling Price.
Based on the Indicative Profit Rate in item 2 (g), the Selling

Price for the BaIDS are as follows:
21
Series Selling Price (RM)
1 24,350,000
2 26,000,000
3 27,750,000
4 29,600,000
Total 107,700,000
MUNIF
The Selling Price for the MUNIF will be determined on the
issuance date and shall be evidenced by the issuance of
Primary Notes which is payable in full by the Issuer on the
maturity dates.
MMTN
The Selling Price for the MMTN shall be evidenced by the
issuance of Primary Notes and the non-detachable Secondary
Notes (if applicable), which represents the profit portion of the
Selling Price.
The Selling Price for the MMTN will be determined on the

issuance date.
(v) (i) Conditions Conditions precedent to the ISF shall be subject but not limited
Precedent to to the following:
Initial Issuance:
i) approval of the SC and/or other relevant authorities, if
applicable. Copies of the approvals are to be made
available to the Lead Arranger;
ii) all necessary corporate and other relevant approvals,

authorization and consents shall have been secured and
obtained with respect to the issuance of the BaIDS and
MUNIF / MMTN;
iii) the Lead Arranger shall have received a certified true copy
of the resolution of the Board of Directors of Maxtral
authorizing the acceptance of the ISF and the appointment
of the signatories to accept and operate the ISF and to
execute the relevant documents relating to the ISF;
iv) the Issuer shall have furnished the Lead Arranger with a
certified true copy of its Memorandum and Articles of
Association together with Forms 24 and 49;
22
v) receipt of solicitors’ confirmation that the necessary legal

documents including the Security Documents pertaining to
the ISF have been executed, stamped (or endorsed as
exempt from stamp duty) and presented for registration
(where applicable) (save and except for the Affected
Security which will only be perfected after initial issuance
which is the issue of BaIDS);
vi) receipt of endorsement /approval from the Syariah Adviser

in respect of the ISF;
vii) receipt of redemption letters and undertakings, given by the

existing lenders to discharge the existing charges created in
their favor after the redemption of their respective loans;
viii) all documents evidencing the establishment of the

Designated Accounts have been delivered to the Facility
Agent;
ix) receipt of satisfactory legal opinion from the solicitors as to

the validity and enforceability of the Financing Documents
(save and except for the Affected Security which will only be
perfected after the initial issuance, which is the issuance of
BaIDS);
x) receipt of all consents, acknowledgements or endorsements

in relation to the security interests granted over the
Designated Accounts or any other agreements entered into
or to be entered into by Maxtral, where relevant;
xi) no event of default has occurred or will occur as a result of

the issuance of the BaIDS and MUNIF / MMTN;
xii) a minimum of AID rating for the BaIDS and MMTN and
MARC-2ID rating for the MUNIF from MARC or any other
equivalent rating(s) from any other rating agency acceptable
to the Lead Arranger;
xiii) all due diligence deemed necessary having been

conducted to the satisfaction of the Lead Arranger;
xiv) The Lead Arranger has received confirmation from the

solicitors that all conditions precedent have been complied
with or waived (where applicable); and
xv) any other conditions as may be advised by the Lead

Arranger’s solicitors and Security Trustee.
23
(v)(ii) Conditions i) no event of default has occurred or will occur as a result of

Precedent to the issuance of the BaIDS and / or MUNIF / MMTN;
Subsequent
Issuances: ii) confirmation from the Issuer that the relevant finance to
equity ratio if recalculate immediately after the issuance of
such BaIDs and / or MUNIF / MMTN shall not exceed 1.50
times; and
iii) any other conditions as may be advised by the Lead

Arranger’s solicitors and the respective Trustees.
(w) Representations As long as any of the BaIDS and MUNIF / MMTN remain
and Warranties outstanding the Issuer shall represent and warrant to the
respective Trustees and the subscribers, inter alia, that:
i) Status: The Issuer and its subsidiaries are duly established

and existing under Malaysian law and it has the power and
authority to enter into the business in which it is or proposes
to be engaged;
ii) Powers: The Issuer has the power to enter into, exercise its
rights under and perform its obligations under the respective
documents relating to the BaIDS and MUNIF / MMTN (as the
case may be);
iii) Authorizations: All necessary actions, authorizations and

consents required by that date under the respective
documents relating to the BaIDS and MUNIF / MMTN (as the
case may be) have been taken, fulfilled and obtained and
remain in full force and effect;
iv) Non-violation: The Issuer’s entry into, exercise of its rights

under, and performance of the respective documents relating
to the BaIDS and MUNIF / MMTN (as the case may be) do
not and will not violate any existing law or documents to
which it is a party;
v) Binding Obligation: The respective documents relating to

the BaIDS and MUNIF / MMTN (as the case may be) create
valid and binding obligations which are enforceable on and
against the Issuer and the relevant security parties;
vi) Security: The Issuer Group’s assets are free of all

encumbrances except as disclosed herein and in the
Financing Documents / Agreements;
vii) Accounts: The Issuer’s audited accounts are prepared in

accordance with generally accepted accounting principles
and standards;
24
viii) Litigation: No litigation or arbitration is current or threatened

to the Issuer’s knowledge, which if adversely determined
would have a material adverse effect on the ability of the
Issuer to comply and perform its obligations under the
respective documents relating to the BaIDS and MUNIF /
MMTN (as the case may be); and
ix) Status of ISF: The liabilities of the Issuer under the BaIDS
and MUNIF / MMTN (as the case may be) are direct
unconditional and secured obligations ranking pari passu
among themselves and at least pari passu with all the
unsecured indebtedness of the Issuer.
The above representations and warranties are not exhaustive

and include any other customary representations and warranties
as advised by the Lead Arranger’s solicitors.
(x) Events of Default Standard events of default for financing facilities of this nature
which shall include but not limited to:
i) Covenants: Failure to meet any covenants,

representations and warranties under the Financing
Documents after the prescribed remedy periods; or
ii) Amounts due: Failure to pay any amounts due from it

under the ISF on the due date or on demand, if so payable;
or
iii) Balance in SFAs & FSRA: Failure to meet its obligation to

maintain the provisions of the Minimum Cumulative
Balance in the SFAs and required credit balance in the
FSRA after the prescribed remedy periods; or
iv) Financial covenants: Failure to meet its obligations to

maintain or achieve the Finance : Equity Ratio and the
Finance Service Cover Ratio for two (2) consecutive
financial periods; or
v) Misrepresentation: any representation, warranty or

statement which is made by the Issuer in the Financing
Documents proves to be incorrect or misleading in any
respect; or
vi) Invalidity: it is or will become unlawful by the laws of

Malaysia or by the laws of any applicable jurisdiction for the
Issuer to perform or comply with any one or more of its
material obligations under the Financing Documents; or
25
vii) Cessation of business: the Issuer and its subsidiaries

changes the nature or scope of its business, suspends or
ceases a substantial part of the present business
operations; or
viii) Appointment of receiver, legal process: an

encumbrance takes possession of, or a trustee, liquidator,
receiver or similar officer is appointed in respect of, all or
any part of the business or assets of the Issuer and its
subsidiaries and is not paid out, withdrawn, discharged or
stayed within thirty (30) days of such appointment; or
ix) Insolvency: the Issuer and its subsidiaries are deemed

unable to pay its debts within the meaning of Section
218(2) of the Companies Act 1965; or
x) Composition of winding up: the Issuer convenes a

meeting of its creditors or proposes or makes any
arrangement or composition with, or any assignment for the
benefit of, its creditors or a petition is presented for the
winding up of the Issuer and its subsidiaries; or
xi) Judgement passed: the Issuer and its subsidiaries fail to

satisfy any judgement passed against it by any court of
competent jurisdiction which would have a material adverse
effect on the Issuer’s obligations under the ISF and no
appeal against such judgment has been made to any
appropriate appellate court within the time prescribed by
law; or
xii) Cross default: where any other indebtedness of the

Issuer and / or its subsidiaries becomes due and payable
prior to its stated maturity or where the security created for
any other indebtedness becomes enforceable that will have
a material adverse effect on the Issuer’s obligations under
the ISF; or
xiii) Section 176: any step or legal proceedings or

applications or creditors’ scheme of arrangement are
started or threatened under Section 176 of the Companies
Act 1965 against the Issuer and its subsidiaries; or
xiv) Assets: all or a material part of the property or assets of

the Issuer and its subsidiaries shall be condemned, seized
or otherwise appropriated or nationalized by any person
acting under the authority of the Government of Malaysia
that will have a material adverse effect on the Issuer’s
obligations under the ISF; or
26
xv) Licences: Any license, permits, authorisation, approval,

consent, order, exemption, registration, filing or notarization
is revoked or withheld or modified or is otherwise not
granted or fails to remain in full force and effect which has
or will impair or prejudice the Issuer’s ability to comply with
the provisions of the BaIDS and MUNIF / MMTN or any of
the financing documents.
The above events of default are not exhaustive and include any
other customary events of default as advised by the Lead
Arranger’s solicitors.
Should an Event of Default occurs, the BaIDS, MUNIF and

MMTN holders shall have recourse to the Security/Collateral as
set out in item 2 (j) and under the Financing Documents.
(y) Principal terms Not applicable.

and conditions for
warrants (where
applicable)
(z) Other principal terms and conditions for the issue
i) Underwritten The Underwriter(s)’ Purchase Price for the MUNIF Notes shall
Rate for be based on the aggregate of (i) the margin stipulated herein
Computation below; and (ii) the Cost of Funds (“COF”) of the respective
of Underwriter(s) (as defined below).
Underwriter(s)’
Purchase Price The margins herein below mentioned shall be based on the
credit ratings assigned by MARC, as follows :-
Underwritten Rate
Margin Rating
0.50 % p.a. + COF MARC-1ID
0.75 % p.a. + COF MARC-2ID
COF is hereby defined as the cost of borrowings of the

respective Underwriter(s) for the relevant period of maturity in
addition to which the cost of maintaining statutory reserves and
liquid assets (if applicable) and/or other costs as may be
required in complying with any other requirements as may from
time to time be imposed by Bank Negara Malaysia (“BNM”) or
any other regulatory authorities.
27
In the event the MUNIF rating is MARC-3ID or lower, the

Underwriter(s) are not committed to or obliged to underwrite the
subscription of the MUNIF.
ii) Underwriting The Underwriting Fee under the MUNIF payable to each of the
Fee for MUNIF Underwriter on their Underwriting commitment shall be as
follows: -
Underwriting Fee Rating
0.50% p.a. MARC-1ID
0.75% p.a. MARC-2ID
The Underwriting Fee shall be payable yearly in advance to the

Underwriter(s) and on each Anniversary date, first commencing
on the initial issue of the MUNIF Notes and / or MMTN.
iii) Underwriting The Underwriter(s) shall commit to purchase the MUNIF Notes
Commitment not taken up by the TPM at the Underwritten Rate, pro-rated to
for MUNIF their underwriting commitment.
In the event the MUNIF rating is MARC-3ID or lower, the

Underwriter(s) are not committed to or obliged to underwrite the
subscription of the MUNIF Notes.
All MUNIF Notes subscribed by an Underwriter in its capacity as

a member of the Tender Panel will reduce its underwriting
commitment to the extent of each respective issue.
The underwriting obligation will not apply to MUNIF Notes in

respect to which the Issuer has rejected a bid from a TPM which
is lower than the Underwritten Rate.
iv) Redemption BaIDS Facility

and/or The BaIDS will be redeemed according to the corresponding
cancellation maturity date.
The Issuer may also at any time purchase the BaIDS in the
open market at any price by private treaty for redemption
purposes. BaIDS redeemed or purchased in this manner will be
cancelled and may not be reissued.
MUNIF
The MUNIF Notes shall be redeemed in accordance with and in
full at the end of the facility tenure as per the tenure of the
MUNIF / IMTN Facility.
28
The Issuer may also at any time purchase the MUNIF Notes in
the open market at any price by private treaty for redemption
purpose. MUNIF Notes redeemed or purchased in such manner
will be cancelled and may not be reissued.
MMTN
The MMTN will be redeemed according to the corresponding
maturity date as per the tenure of the MUNIF / IMTN Facility.
The Issuer may also at any time purchase the MMTN in the
open market at any price by private treaty for redemption
purposes. MMTN redeemed or purchased in this manner will be
cancelled and may not be reissued.
v) Availability Upon completion of documentation and compliance of all

Period relevant conditions to the satisfaction of the Lead Arranger, the
first issue of the BaIDS shall be issued within six (6) months
from the date of the SC’s approval while the initial issue of
MUNIF and / or MMTN shall be made within twenty four (24)
months from the date of the SC’s approval.
The Issuer shall inform the Lead Arranger (in writing) forty five
(45) business days before the expiry of the availability period of
the BaIDS and MUNIF / MMTN in the event that the Issuer is
desirous to extend the availability period.
If the Issuer fails to notify the Lead Arranger forty five (45)
business days before the expiry of the availability period, the
Lead Arranger shall have the sole discretion to apply to the SC
for the extension of time.
vi) Additional The Issuer Group is permitted to seek additional financing in hire
Financing purchase and leasing for purchase of equipment and
machineries as well as working capital and trade-related
transactions in relation to its ordinary course of business
(“Additional Financing”).
The cumulative outstanding amount of Additional Financing shall

not exceed RM20.0 million during the tenor of the ISF and
subject to meeting the Financial Covenants as described in item
2 (z) (x).
29
vii) Permitted The Issuer shall be permitted from time to time to utilize funds
Investments held in the SFAs, CRA and the FSRA to make Permitted
Investments, provided that such funds utilized for Permitted
Investments shall be remitted to the corresponding Designated
Account in a timely manner to meet any payment obligations of
the Issuer when due and payable. The Permitted Investments
shall have a maturity date to match the utilisation of the monies,
denominated in Ringgit Malaysia and comply with the relevant
Syariah principles. Upon maturity which shall be at least 5 days
before such funds are required to repay or redeem the Notes,
the proceeds (i.e. principal plus profit) shall be remitted to the
corresponding Designated Account.
Permitted Investments shall mean :-

(i) deposits in profit bearing accounts and negotiable
certificates of deposits issued by licensed banking and
financial institutions; or
(ii) bonds, treasury bills or financial instruments issued by the
Government; or
(iii) other finance or capital market instruments or private
entities having:
(a) a maturity date no later than the maturity of the BaIDS
and MUNIF, as the case may be; and
(b) in the case of only investments of the type referred to in
paragraph (iii), a minimum rating of AA- / MARC-1 or
AA3 / P1 as determined by MARC or Rating Agency
Malaysia Berhad (“RAM”) respectively or a recognized
rating agency or such other higher rating as is capable
of being issued by the said rating agencies from time to
time.
In the event that such investment is downgraded to below AA- /

MARC-1 or AA3 / P1, whichever is applicable, such investment
shall be disposed of within thirty (30) days upon the rating
downgrade announcement.
The types of investment must be from the list of investments

allowed by the Syariah Advisory Council of the SC and/or other
recognised authorities which are issued from time to time.
viii) Positive The Issuer covenants and undertakes inter-alia, with the
Covenants respective Trustee and the holders of the BaIDS, MUNIF Notes
and MMTN that until all its liabilities and obligations under the
ISF has been discharged, the Issuer will, amongst others :
i) Compliance: Comply with all provisions of the Financing

Documents;
30
ii) Insurance: Acquire and maintain insurance policies (during

the periods in which such policies are relevant) required by
law to the satisfaction of the Trustee and notify Trustee of
any event which will or may give rise to any claim or right of
action under the insurances;
iii) License: Undertake to preserve and keep in force and effect

all licenses, permits, approvals and rights necessary for the
conduct of its business;
iv) Remedy event of default: Take such steps as may have

been notified by the Trustee following the occurrence of an
Event of Default or Potential Event of Default and to remedy
or mitigate the effect of that Event of Default or Potential of
Default or any other steps as the Trustee may reasonably
request;
v) Designated Accounts: Open and maintain the Designated

Accounts and pay all amounts into such accounts, and make
all payments from such accounts only as permitted under the
Financing Documents;
vi) Notification: Promptly notify the Trustee of any default or

Event of Default under or in relation to any of the Financing
Documents or any other contractual obligation of the Issuer
or any litigation, investigation, arbitration or proceeding
before any court or government regulatory agency affecting
the Issuer, which if determined, could have material adverse
effect or materially impair the business, operations, property
or financial condition of the Issuer or its ability to carry on its
normal course of business;
vii) Monies due: Use all reasonable endeavors to collect all

monies becoming due to the Issuer;
viii) Accounts: Maintain an accounting system and keep

adequate records in compliance with applicable statutory
requirements and in accordance with generally accepted
accounting principles of Malaysia;
ix) Information: Deliver to the Trustee within ninety (90) days of

the end of each financial year, and within sixty (60) days of
each half year period of its financial statements period which
shall also contain detailed calculation of the required
financial ratios, together with a certificate by two of its
directors that such financial statements present a true and
fair view;
x) Quarterly report: Deliver to MARC on a quarterly basis, a

report which details the operating performance (including
details of revenue and operating expenses), FSCR
calculations, Designated Account balances;
31
xi) Payment: Punctually pay all of its financial obligations within

its specified grace period;
xii) Conduct: Carry on and conduct its affairs and business with
due diligence and efficiency and in accordance with sound
financial and commercial standards and practices.
The above positive covenants are not exhaustive and include

any other customary covenants as advised by the Lead
Arranger’s solicitors.
ix) Negative The Issuer covenants and undertakes inter-alia, with the
Covenants respective Trustee and the holders of the BaIDS, MUNIF Notes
and MMTN that, from the signing of the Financing Documents of
the ISF until all its liabilities and obligations hereunder and under
the ISF have been discharged, the Issuer will not without prior
written consent of the Trustee:
i) Negative Pledge: save as otherwise expressly

contemplated in the Financing Agreements, create or permit
to subsist any other Security Interest or permit to arise or
affect, all or any part of its rights, undertaking, business or
assets, other than Security Interest arising from the BaIDS
and MUNIF / MMTN and Additional Financing as described
under item 2 (z) (vi);
ii) Authorized and Issued Paid-Up Capital; reduce its

authorized and issued paid-up share capital save for as
permitted/disclosed under the Financing Documents /
Agreements;
iii) Financing Agreements: save as otherwise expressly

contemplated in the Financing Documents, not amend, vary
or replace any of or other relevant agreements relating to the
ISF;
iv) Render void: do or suffer to be done any act, matter or thing

whereby any insurance may be rendered void, voidable or
incapable of being effected, maintained or renewed, nor
permit any other act to be done whereby any insurance or
any provision thereof may be suspended, impaired or
defeated;
v) Surrender Rights: surrender, transfer, assign, relinquish or

otherwise dispose any of its rights and interest under the
Financing Documents (except as permitted or required under
the financing documents);
32
vi) Loans and advances: make, assume or permit to exist any

loans or grant advances to others or provide or extend any
credit or accommodation or provide any guarantee,
indemnity or assurance against loss to or for the benefit of
any person, enterprise or company or act as surety or
otherwise voluntarily assume any liability, whether actual or
contingent except as permitted under the Financing
Documents:
vii) Memorandum or Articles of Association: amend any

provisions of its Memorandum and/or Articles of Association,
which may have a material adverse effect on the Issuer’s
ability to meet its obligations under the ISF;
viii) Business Nature: carry on any business other than its

authorized business in accordance with its obligations under
the Financing Documents;
ix) Capital Expenditure: make or incur any capital expenditure

except as contemplated under the Financing Documents or
arising from its ordinary course of business with amount not
exceeding ten percent (10%) of Maxtral’s revenue per
annum;
x) Dissolution: dissolve its affairs or consolidate with or merge

with other person;
xi) Indebtedness: create, incur, assume, guarantee or permit to

exist any indebtedness except for fully subordinated loans
and existing banking facilities as disclosed in the Financing
Agreement or:
a. Any indebtedness arising from the ISF and Additional
Financing; and
b. Arising in the ordinary course of business.
For avoidance of doubt, the above exception shall always be
subject to the maximum Finance to Equity ratio of 1.50
times; and
xii) Declare/Payout of Dividends: declare or pay out any

dividend on ordinary share capital and/or interest on
subordinated advances/loan stocks to shareholders or bonus
issue or interest on its subordinated advances and loan
stock or make any other distribution on or in respect of any
of its share capital under any circumstances if:
(a) the FSCR (on a consolidated basis) is less than 1.75
Times before and after the payment of dividends;
(b) An Event of Default has occurred and is still subsisting or
if following such payment or distribution, an Event of
Default will occur; and
33
(c) Payment to the FSRA is still outstanding.
The above negative covenants are not exhaustive and include

any other customary covenants imposed by the authorities and /
or as advised by the Lead Arranger’s solicitors.
x) Financial Finance to Equity: the Finance to Equity Ratio shall not

Covenants exceed 1.50 times throughout the tenure of the ISF.
Finance Service Cover Ratio: maintain at all times a minimum

Finance Service Cover Ratio (“FSCR”) at 1.50 times
commencing from the initial issuance of the ISF.
The above financial covenants shall be calculated at the end of

each financial year and each half year period of its financial
statements for that period.
xi) Compensation In the event of overdue payment of any sums covenanted to be

For Late & paid, the Issuer shall pay compensation on such overdue
Default amounts at the rate and in the manner prescribed by SC’s
Payment(s) Syariah Advisory Council (or such other Syariah Advisory
Council approved by SC) and duly endorsed by SC.
xii) Incidental All legal and professional fees including such cost relating to the
Expenses & due diligence exercise, stamp duties, taxes, SC Submission Fees
Legal Fees and any other out-of-pocket expenses, incurred pursuant to the
Issuer’s acceptance of the ISF and for purposes of
preparation/submission of any information memorandum and the
preparation of security documentation (notwithstanding non-
utilisation of the BaIDS Facility and MUNIF / MMTN Facility (as
the case maybe) by the Issuer) shall be borne by the Issuer.
All costs and expenses incurred by the Lead Arranger / Trustee /

Security Trustee for and on behalf of the Issuer including legal
costs on solicitor/client basis in enforcing any term or condition or
in obtaining payment of any sum due and payable or any cost
and expenses in relation to quit rent, assessments and
insurances, etc. shall be for the account of the Issuer.
xiii) Taxation All payments under the ISF shall be made free and clear of all
present and future Malaysian taxes.
xiv) Adverse Should there occur a material adverse change in the opinion of
Market the Lead Arranger / Underwriter(s) in the business condition
(financial or otherwise) of the Issuer and / or the economic,
social and political situation in Malaysia including but not limited
to the adversities in the domestic or international financial
market prior to the launch, offering and/or distribution of the
BaIDS / MUNIF / MMTN, the Lead Arranger / Underwriter(s)
reserves the right to withdraw, cancel, terminate and / or
restructure the arrangement of the BaIDS / MUNIF / MMTN.
34
xv) Clear Market From the date of the appointment of the Lead Arranger to the
date falling thirty (30) days after the issue date, the Issuer will
ensure that no other borrowings or debt instruments or
securities issued or guaranteed by the Issuer or any of their
subsidiaries or affiliates are either placed or syndicated, directly
or on its behalf, in any manner which might, in the sole opinion
of the Lead Arranger, have a detrimental effect on the
successful placement of the BaIDS / MUNIF / MMTN.
xvi) Change in If as a result of any change in applicable law, regulation or

Circumstances regulatory requirement or in the interpretation or application
thereof or if compliance by the Lead Arranger / Underwriter(s)
for the BaIDS / MUNIF / MMTN with any applicable direction,
request or requirement (whether or not having the force of law)
will imposed on the Lead Arranger / Underwriter(s) any material
condition burden or obligation then the commitment of the Lead
Arranger / Underwriter(s) to the BaIDS / MUNIF / MMTN will end
upon notice to the Issuer of the happening of such events after
becoming aware thereof.
xvii) Financing Standard documentation for a facility of this nature, which would
Documents/ include, inter-alia :-
Agreements
(i) BaIDS Facility
(a) BaIDS Facility Agreement;
(b) BaIDS Assets Sale Agreement;
(c) BaIDS Assets Purchase Agreement;
(d) Depository and Paying Agency Agreement; and
(e) BaIDS Trust Deed.
(ii) MUNIF / MMTN Facility

(a) MUNIF / MMTN Facility Agreement;
(b) MUNIF / MMTN Assets Sale Agreement;
(c) MUNIF / MMTN Assets Purchase Agreement;
(d) Depository and Paying Agency Agreement;
(e) MUNIF / MMTN Trust Deed; and
(f) Tender Panel Agreement.
(iii) Security Documents
(iv) Any other legal documentation as advised by the Lead

Arranger’s solicitors to the documentation.
xviii) Governing The Laws of Malaysia.

Law
35

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MAXTRAL INDUSTRY BERHAD

PROPOSED RM100.0 MILLION ISLAMIC SECURITIES FACILITIES

PRINCIPAL TERMS AND CONDITIONS

1.0 BACKGROUND INFORMATION

i. Name Maxtral Industry Berhad (“Maxtral” or the “Issuer”)

ii. Address TB 324, 2nd Floor

iii. Business 584501-H

iv. Date/Place of 27 June 2002 /Malaysia

v. Date of Listing (in 21 August 2003

vii. Principal Provision of management services and investment holding.

PROPOSED RM100.0 MILLION ISLAMIC SECURITIES FACILITIES

ix. Structure of Substantial shareholder(s) and their respective percentage of

* Deemed interested by virtue of his spouse, Lau Mei Yong @ Lau

** Deemed interested by virtue of her spouse, Chen Shou-Ren and

*** Deemed interested by virtue of his substantial shareholdings in

x. Authorized and Authorized capital as at 19 October 2005

RM50,000,000 comprising of 500,000,000 irredeemable

Paid-up capital as at 19 October 2005

RM8,441,541.90 comprising of 84,415,419 irredeemable

PROPOSED RM100.0 MILLION ISLAMIC SECURITIES FACILITIES

2.0 PRINCIPAL TERMS AND CONDITIONS

(a) Names of parties involved in the proposed transaction (where applicable)

i. Principal OSK Securities Berhad (“OSK”) (14152-V)

ii. Arranger(s) Not applicable

iii. Valuers Not applicable

iv. Solicitors Messrs Raslan Loong

v. Financial Adviser Not applicable

vi. Technical Not applicable

vii. Guarantor Not applicable

viii. Trustee OSK Trustees Berhad

ix. Facility Agent OSK

x. Primary Al Bai Bithaman Ajil Islamic Debt Securities (“BaIDS”)

xi. Underwriter(s) BaIDS Facility

PROPOSED RM100.0 MILLION ISLAMIC SECURITIES FACILITIES

xii. Syariah Adviser Dr Mohd Daud Bakar

xiii. Central BaIDS Facility

MUNIF / MMTN Facility

xiv. Paying Agent BaIDS Facility

MUNIF / MMTN Facility

xv. Reporting Messrs Moores Rowland

 Security OSK Trustees Berhad

 Tender Panel BaIDS Facility

MUNIF / MMTN Facility

(b) Islamic Principles BaIDS Facility

PROPOSED RM100.0 MILLION ISLAMIC SECURITIES FACILITIES

The BaIDS applies the underlying Syariah principles of Al Bai’

The obligation of the Issuer to pay the Selling Price shall be

MUNIF / MMTN Facility

The MUNIF and MMTN to be issued under the MUNIF/MMTN

The obligation of the Issuer to pay the Selling Price shall be

PROPOSED RM100.0 MILLION ISLAMIC SECURITIES FACILITIES

(d) Issue Size (RM) BaIDS Facility

(e) Issue Price (RM) BaIDS Facility

Series Issue Price

MUNIF / MMTN Facility

PROPOSED RM100.0 MILLION ISLAMIC SECURITIES FACILITIES

The amount conclusively determined by the Facility Agent (“FA”)

⎧ Discounted Value ⎫ ⎧ Discounted Value ⎫

PROPOSED RM100.0 MILLION ISLAMIC SECURITIES FACILITIES

(f) Tenure of the BaIDS Facility

Series Tenure (years)

MUNIF / MMTN Facility

(g) Coupon/Profit or BaIDS Facility

PROPOSED RM100.0 MILLION ISLAMIC SECURITIES FACILITIES

Security OSK Trustees Berhad

Tender Panel BaIDS Facility

Name of MUNIF / MMTN Facility