V.S.

INDUSTRY BERHAD (“VSIB” OR “COMPANY”)

PROPOSED SUBSCRIPTION OF 250,000 NEW ORDINARY SHARES (“SHARES”) AND

ACQUISITION OF 200,000 SHARES IN SKREEN FABRIC (M) SDN BHD (“SFSB”),
REPRESENTING 60.0% OF THE ENLARGED ISSUED SHARE CAPITAL OF SFSB FOR A TOTAL
CASH CONSIDERATION OF RM7,500,000 (“PROPOSAL”)

1. INTRODUCTION

The Board of Directors (“Board”) of VSIB wishes to announce that VSIB has, on 15 May 2017 entered
into a conditional subscription and share sale agreement with SFSB, Han Ching Yuen (“HCY”) and
Han Kim Guan (“HKG”) (“Subscription and Sale Agreement”) for the following:

(i) subscription of 250,000 new Shares in SFSB (“Subscription Shares”) for a cash
consideration of RM4,000,000; and

(ii) acquisition of 199,995 Shares in SFSB and 5 Shares in SFSB (collectively, “Sale Shares”)
from HCY and HKG respectively for a total cash consideration of RM3,500,000.

Simultaneous with the execution of the Subscription and Sale Agreement, VSIB has also on even
date entered into the following agreements:

(i) call and put option agreement with HCY to purchase all of the Shares in SFSB held by HCY
during the option period, which is within a period of 5 years commencing from the date of
completion of the Subscription and Sale Agreement (“Option Period”) at the Option Price
(as defined in Appendix I of this Announcement) (“Call-Put Option Agreement”); and

(ii) shareholders’ agreement with SFSB and HCY to govern the rights, duties, liabilities and
obligations of the shareholders vis-à-vis each other in relation to the management and
operation of SFSB and its subsidiary (“SFSB Group”) (“Shareholders’ Agreement”).

(collectively referred to as “Agreements”)

2. DETAILS OF THE PROPOSAL

The Proposal entails the subscription and acquisition by VSIB of the Subscription Shares and Sale
Shares respectively for a total cash consideration of RM7,500,000 (“Total Cash Consideration”).

The Proposal is subject to the terms and conditions of the Subscription and Sale Agreement.

The Subscription Shares shall, upon allotment and issuance, rank equally in all respects with the
then existing Shares in SFSB including voting rights, and will be entitled to all rights, dividends and
distributions that may be declared subsequent to the date of allotment of the Subscription Shares.
The Sale Shares shall be acquired free from all encumbrances and with all attached or accrued
rights.

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Upon completion of the Subscription and Sale Agreement, the issued share capital in SFSB will
increase from 500,000 to 750,000 Shares, whereby HCY and VSIB will hold 300,000 Shares and
450,000 Shares in SFSB respectively. As such, SFSB will become a 60.0%-owned subsidiary of
VSIB. Pursuant to the Call-Put Option Agreement, VSIB may purchase all the Shares in SFSB held
by HCY at the Option Price (as defined in Appendix I of this Announcement) during the Option
Period. Barring any changes in the shareholding structure, SFSB will become a wholly-owned
subsidiary of VSIB in the event the option under the Call-Put Option Agreement is exercised by VSIB
during the Option Period.

Please refer to Appendix I of this Announcement for the salient terms of the Agreements.

2.1 Background information on SFSB

SFSB was incorporated in Malaysia under the Companies Act, 1965 on 16 March 1982 and is
deemed registered under the Companies Act, 2016 (“CA”).

As at the date of this Announcement, the issued share capital of SFSB is RM500,000
comprising 500,000 Shares.

SFSB is principally involved in manufacturing of filter components and other related products.

SFSB has a wholly-owned subsidiary, Skreen Fabric Marketing Sdn Bhd (“SFMSB”), which is
involved in supplying of printing materials and equipment. SFSB does not have any associated
companies.

HCY and HKG are both the existing shareholders and Directors of SFSB and SFMSB.

Their respective shareholdings and VSIB’s shareholding before and after the Proposal and
upon exercise of the option under the Call-Put Option Agreement are as follows:

After exercise of the

option under the Call-
Put Option
As at 12 May 2017 After the Proposal Agreement*
No. of No. of No. of
Shares in Shares in Shares in
Shareholder SFSB % SFSB % SFSB %
HCY 499,995 100.0 300,000 40.0 - -
HKG 5 ^ - - - -
VSIB - - 450,000 60.0 750,000 100.0
500,000 100.0 750,000 100.0 750,000 100.0

Notes:

^ Negligible.

* Assuming HCY holds 300,000 Shares in SFSB when VSIB exercises the option under the Call-
Put Option Agreement during the Option Period.

Based on the audited financial statements of SFSB for the financial year ended (“FYE”) 31
March 2016, the profit after taxation (“PAT”) and net assets (“NA”) of SFSB are RM72,214 and
RM3,760,440 respectively. As for SFMSB, the PAT and NA are RM975,072 and RM1,683,752
respectively for the FYE 30 April 2016 based on the audited financial statements of SFMSB.

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 2.2 Basis and justification for the Total Cash Consideration

The Total Cash Consideration was arrived at on a willing-buyer and willing-seller basis and
after taking into consideration the following:

(i) the Guaranteed NA (as defined in Appendix I of this Announcement);

(ii) the rationale and benefits of the Proposal and prospects of SFSB as set out in Sections
3 and 5 of this Announcement; and

(iii) the implied price-to-earnings multiple of approximately 4.30 times based on the
unaudited consolidated PAT of SFSB Group from 1 April 2016 to 31 March 2017 of
RM1.98 million and the issued share capital of SFSB as at 31 March 2017.

2.3 Source of funding

The Total Cash Consideration is to be funded via internally generated funds and/or borrowings.

2.4 Liabilities to be assumed

Save as disclosed in Paragraph 7.2, Section A of Appendix I of this Announcement, there are no
other liabilities, including contingent liabilities and guarantees, to be assumed by VSIB pursuant to
the Proposal.

3. RATIONALE AND BENEFIT OF THE PROPOSAL

The Proposal is in line with VSIB’s strategy to constantly review production efficacies and efficiencies.
SFSB has been the supplier of filter components to VSIB and its subsidiaries (“VSIB Group”) for
production of orders of a key customer. The Proposal will allow the VSIB Group to potentially increase
the range of value-added services to its existing and prospective customers, and achieve cost saving
following vertical integration, which is expected to be strategic and beneficial to the VSIB Group in
sustaining its growth.

4. RISK FACTORS

4.1 Industry risk

The performance of the SFSB Group is subject to risk inherent in the filter components and
manufacturing industry, which is a risk similarly faced by the VSIB Group including the possible
high competition due to rapid technological changes. However, the SFSB Group is constantly
engaged in research and development to improve its competitiveness and quality in filter
components manufacturing. Notwithstanding the lack of expertise of VSIB Group in filter
components manufacturing, the Executive Director and senior management of SFSB, led by
Datuk Gan Sem Yam will continue to contribute their expertise and experience in charting new
growth for the SFSB Group.

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 4.2 Acquisition risk

Although the Board of VSIB believes that the Proposal is beneficial for the VSIB Group, there
is no assurance that the anticipated contribution from the SFSB Group will be realised or the
SFSB Group will be able to generate sufficient profits to offset the associated cost incurred by
VSIB for the Proposal. However, the Board of VSIB has adopted prudent assessment and
review prior to making its investment decision. Experienced key management and personals
are engaged under the SFSB Group. Hence the Board of VSIB is confident that it is able to
mitigate such risks and is able to limit any potential consequential losses.

4.3 Non-completion of the Proposal

There is a possibility that the Proposal may not be completed due to failure in fulfilling the
conditions set out in the Subscription and Sale Agreement within the timeframe prescribed
therein. Nevertheless, the Board of VSIB will take reasonable steps to ensure that such
conditions are met and fulfilled within the prescribed timeframe in order to complete the
Proposal in a timely manner.

5. INDUSTRY OUTLOOK AND PROSPECTS OF SFSB

5.1 Outlook of the electrical and electronics (“E&E”) industry in Malaysia

The E&E products industry has always been a prime mover in the Malaysian economy over
the past few decades as it has been successful in attracting large amounts of foreign
investment and creating vast numbers of jobs in the process. Its success has been proven by
being the country’s largest export earner in 2016. Exports of E&E products totaled RM287.7
billion and accounted for 44.6% of the total value of manufacturing goods exported in 2016.
Singapore, the United States of America, People’s Republic of China, Hong Kong and Japan
were the top 5 export destinations, with Singapore accounting for the lion’s share or 16.4% of
all Malaysian E&E exports.

(Source: Malaysian Investment Development Authority (“MIDA”), 2016 Malaysia Investment

Performance Report, Investment in the Main Sectors)

5.2 Prospects of SFSB

.
SFSB is an approved vendor to supply filter components to VSIB Group for production of
orders of a key customer. The acquisition of SFSB will enable VSIB to leverage on SFSB’s
technical expertise in the production of filter components. VSIB’s capital injection to SFSB is
intended to support the expansion and modernisation of its manufacturing facility which will
provide better assurance to the existing key customer of the VSIB Group in terms of quality
and capacity.

6. EFFECTS OF THE PROPOSAL

6.1 Share capital and substantial shareholders’ shareholding

The Proposal will not have any effect on the share capital and substantial shareholders’
shareholding in the Company as the Total Cash Consideration is to be wholly satisfied in cash.

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6.2 Earnings and earnings per share (“EPS”)

The Proposal is expected to be earnings accretive and will contribute positively to the future
earnings and EPS of the VSIB Group.

6.3 NA and gearing

Based on the audited consolidated statement of financial position of VSIB as at 31 July 2016
and on the assumption that the Proposal had been effected on that date, the proforma effects
of the Proposal and upon exercise of the option under the Call-Put Option Agreement on the
NA and gearing of the VSIB Group are as follows:

(I) (II) (III)

After (II) and
exercise of the
option under the
Call-Put Option
Agreement during
Audited as at the Option
31 July 2016 After the Proposal Period(1)
(RM’000) (RM’000) (RM’000)

Share capital 235,169 235,169 235,169

Share premium 108,542 108,542 108,542
Shares held under trust (4,396) (4,396) (4,396)
Revaluation reserve 55,420 55,420 55,420
Exchange fluctuation reserve 50,471 50,471 50,471
Capital reserve 12,273 12,273 12,273
Employee share-based reserve 12,692 12,692 12,692
Treasury shares (1,792) (1,792) (1,792)
Retained earnings 411,524 411,524 411,524
NA attributable to equity 879,903 879,903 879,903
holders of the Company
Non-controlling interest 185,980 188,158 (2) 185,980
Total equity 1,065,883 1,068,061 1,065,883

No. of shares in issue (‘000) 1,175,844 1,175,844 1,175,844

(3) (3) (3)
NA per share (RM) 0.75 0.75 0.75
Borrowings 415,043 (4) (4)
421,145 421,145
(5) (5) (5)
Gearing (times) 0.47 0.48 0.48

Notes:

(1) The call option and put option will automatically lapse after the Option Period.

(2) Consolidation of the non-controlling interest of SFSB Group amounting to RM2,177,676.

(3) Computed based on NA attributable to equity holders of the Company against the number of
shares of the Company.

(4) Consolidation of SFSB Group’s borrowings amounting to RM6,102,415.

(5) Computed based on borrowings of the Company against NA attributable to equity holders of the
Company.

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7. APPROVALS REQUIRED

The Proposal is subject to the following being obtained:

(i) approval by Ministry of International Trade and Industry;

(ii) approval by MIDA; and

(ii) other relevant parties/authorities, if required.

The Proposal is not conditional upon any other corporate exercise/scheme of the Company.

8. INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH

THEM

None of the Directors and/or major shareholders of the Company as well as persons connected with
them has any interest, direct or indirect, in the Proposal.

9. DIRECTORS’ STATEMENT

The Board of VSIB, having considered all aspects of the Proposal, including the rationale and
benefits of the Proposal, the salient terms of the Agreements, the basis and justification for the Total
Cash Consideration as well as the effects of the Proposal, is of the opinion that the Proposal is in the
best interest of the Company.

10. ESTIMATED TIMEFRAME FOR SUBMISSION TO THE AUTHORITIES AND COMPLETION

The application to the relevant authorities in relation to the Proposal will be made within 2 months
from the date of this Announcement.

Barring any unforeseen circumstances, the Proposal is expected to be completed by the 3rd quarter
of 2017.

11. PERCENTAGE RATIO

The highest percentage ratio applicable to the Proposal pursuant to Paragraph 10.02(g) of the Main
Market Listing Requirements of Bursa Malaysia Securities Berhad is 0.85% based on the Total Cash
Consideration compared with the audited consolidated NA attributable to equity holders of VSIB as
at 31 July 2016 of RM879.9 million.

12. DOCUMENTS AVAILABLE FOR INSPECTION

The Agreements will be available for inspection at the registered office of VSIB at Suite 7E, Level 7,
Menara Ansar, 65, Jalan Trus, 80000 Johor Bahru, Johor Darul Takzim, during normal business
hours from Mondays to Fridays (except public holidays) for a period of 3 months from the date of this
Announcement.

This Announcement is dated 15 May 2017.

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 APPENDIX I

A. SALIENT TERMS OF THE SUBSCRIPTION AND SALE AGREEMENT

1. Agreement to buy and sell and subscription

On the basis and reliance of the representations and warranties and undertaking given by
SFSB and the retention sum of RM500,000 which forms part of the consideration to be
paid to HCY for the acquisition of 199,995 Sale Shares from HCY by VSIB (“Retention
Sum”), VSIB hereby agrees to buy the Sale Shares and subscribe for the Subscription
Shares in cash and HCY and HKG (“Sellers”) hereby agree to sell the Sale Shares and
SFSB hereby agrees to allot and issue the Subscription Shares to VSIB on the terms and
subject to the conditions of the Subscription and Sale Agreement.

2. Definitive agreements

2.1 Simultaneous with the signing of the Subscription and Sale Agreement:-

(a) HCY, VSIB and SFSB shall execute the Shareholders’ Agreement;

(b) HCY and VSIB shall execute the Call-Put Option Agreement;

(c) HCY and SFSB shall execute the service agreement (“Service Agreement”);

(d) SFSB shall deliver to VSIB a certified true copy of the resolution of the Board
of SFSB, approving its execution of the Subscription and Sale Agreement,
Shareholders’ Agreement and the Service Agreement and the transactions
contemplated thereunder; and

(e) VSIB shall deliver to SFSB and HCY a certified true copy of the resolution of
the Board of VSIB, approving its execution of the Subscription and Sale
Agreement, Shareholders’ Agreement and Call-Put Option Agreement and
the transaction contemplated thereunder.

2.2 VSIB shall not be obliged to complete the purchase of the Sale Shares and the
subscription of the Subscription Shares unless the purchase of all the Sale Shares
and the subscription of the Subscription Shares are completed simultaneously.

2.3 Each of the Shareholders’ Agreement, the Call-Put Option Agreement and the
Service Agreement shall be unconditional and shall take effect upon actual
completion of matters provided for in Paragraphs 4 to 7 below subject to any waiver
under Paragraph 6 below (“Completion”).

3. Matters to be satisfied

The obligation of VSIB to purchase the Sale Shares and to subscribe the Subscription
Shares is conditional on the following being met on or before the date falling 60 days
following the date of the Subscription and Sale Agreement for the parties to satisfy the
conditions as set out in Paragraphs 3.1 to 3.9 below (“Conditions”) or such earlier or later
dates as the parties may from time to time mutually agree in writing:-

3.1 VSIB at its absolute discretion being satisfied in all material respects with the results
of audits, due diligence reviews, any other inquiries and investigations (whether
legal, financial, accounting, tax, business/industry, technical/operational and/or
otherwise whatsoever relating to the SFSB Group;

3.2 all information and materials relating to the SFSB Group’s trade secrets, breakdown
of costings and product pricing (including but not limited to, the quotation analysis
sheet and cost comparison factor formats), intellectual property rights, know-how,
scientific or technical information, design, process, formula, works-in-progress,
inventions and product information shall be provided and disclosed to VSIB and
shall be at the satisfaction of VSIB;

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 APPENDIX I

3.3 VSIB receiving a certified true copy of the following:-

(a) a resolution of the Board of SFSB approving the allotment and issuance of
the Subscription Shares and all other transactions and matters contemplated
by it;

(b) a resolution of the shareholders of SFSB approving the allotment and

issuance of the Subscription Shares to VSIB;

3.4 VSIB receiving a copy of each of the following documents:-

(a) the undated but signed letter of resignation from HKG;

(b) the duly executed and stamped Shareholders’ Agreement, Call-Put Option
Agreement and the Service Agreement;

3.5 the written letter of consent issued by each of the financial institutions subject to the
terms acceptable by VSIB in respect of the following:-

(a) change to the shareholders of SFSB; and

(b) alteration of the Constitution of SFSB;

3.6 VSIB receiving a copy of each of the written letter of notification issued by the SFSB
Group, respectively to each of its financial institutions in respect of the subscription
of Subscription Shares in SFSB by VSIB;

3.7 VSIB receiving copies of the written letters of notification issued by SFSB to
Malaysian Investment Development Authority and Ministry of International Trade
and Industry, respectively in respect of the sale of the Sale Shares in SFSB by the
Sellers pursuant to SFSB’s manufacturing licences;

3.8 the written letter of consent issued by Dyson Manufacturing Sdn Bhd (“Dyson”)
pursuant to the preferred supplier contract dated 10 August 2010 and framework
agreement dated 8 July 2010 both entered into between SFSB and Dyson in respect
of a material change in its ownership or control of SFSB; and

3.9 if applicable, such waivers, consents or other documents (governmental and third
parties) as may be required (i) to give good title to the Sale Shares and to enable
VSIB to become their registered holder having been obtained; and (ii) for the
subscription by VSIB of the Subscription Shares on terms which, in VSIB’s opinion,
are satisfactory and that all conditions imposed by the relevant authorities and/or
persons have been fully complied with.

4. Completion matters

Subject to the Conditions in Paragraph 3 above being met subject to any waiver under Paragraph
6 below, the Completion shall take place at the office of VSIB’s solicitors or such other place as
the parties may agree in relation to the Completion on any day within the period of 30 days after
the Conditions have been satisfied or waived by VSIB (whichever is the later) or such earlier date
(after the Conditions are satisfied) or later date as the parties may from time to time agree in
writing as being the last date for Completion (“Completion Date”) and in such an event, the
following completion matters shall be addressed:-

4.1 the directors shall procure a written undertaking by SFSB to VSIB confirming and/or
undertaking that:-

8
 APPENDIX I

(a) there has been no material adverse change in the prospects, operations or financial
condition of the SFSB Group from the date of the Subscription and Sale Agreement
up to and including the date of such undertaking;

(b) all warranties have been complied with in all material respects, and are true and
accurate as at the Completion Date,

(c) the business of SFSB has been carried out in the ordinary manner and SFSB has
not disposed of any material assets or assumed or incurred any material liabilities
(including contingent liabilities) other than those in connection with its ordinary
course of business;

(d) there being no change of circumstances which makes it unlawful for VSIB to make
the subscription of the Subscription Shares at the subscription price pursuant to the
Subscription and Sale Agreement;

(e) there is no significant change in the financial or trading position or prospects of the
SFSB Group; and

(f) the sale of the Sale Shares and the issue of the Subscription Shares as well as the
obligation of VSIB to purchase the Sale Shares and subscribe for the Subscription
Shares are not being prohibited or impeded by any statute, order, rule, directive or
regulation promulgated by any legislative, executive or regulatory body or authority
of Malaysia on or before the Completion Date;

is provided to VSIB;

4.2 the Sellers shall deliver or caused to be delivered to VSIB and/or procure that control or
possession of the following are provided to VSIB:-

(a) if required by VSIB, appropriate forms to amend the mandates given by SFSB to its
bankers;

(b) written confirmation by each of the Sellers that there are no subsisting guarantees
given by SFSB in their favour and neither the Sellers nor persons related to them
(as defined by Section 7 of CA) will be indebted to SFSB; and

(c) the resignation of the existing auditor of SFSB;

4.3 VSIB shall receive a certified true copy of the resolution of the Board of SFSB:-

(a) approving the transfer of the Sale Shares;

(b) appointing 2 directors nominated by VSIB to the Board of the SFSB Group;

(c) accepting the resignation of HKG from the Board of the SFSB Group; and

(d) approving the resignation of the existing auditor of SFSB and the appointment of the
new auditor of SFSB, being the existing auditors of VSIB;

4.4 a resolution of the shareholders of SFSB approving the adoption of the amended
Constitution of SFSB, to reflect the terms of the Shareholders’ Agreement;

4.5 the Sellers shall deliver the duly completed signed and undated share transfer forms
relating to their respective Sale Shares in favour of VSIB together with the original share
certificates to VSIB;

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 APPENDIX I

4.6 the statutory books (including the minute books), books of account, documents of record,
original licences, contracts, agreements and documents of title of the SFSB Group,
complete and up-to-date;

4.7 VSIB shall complete, sign and deliver to SFSB the subscription application form
accompanied by a banker’s cheque, banker’s draft, telegraphic or wire transfer or such
other mode of payment as may be agreed in writing between VSIB and SFSB in favour of
SFSB in payment of the Subscription Shares;

4.8 SFSB shall allot and issue the Subscription Shares to VSIB and shall issue and deliver to
VSIB appropriate share certificates for the Subscription Shares duly executed by SFSB to
VSIB; and

4.9 deliver the original share certificates of the subsidiary of SFSB and any other original titles,
agreements, deeds and contracts as may be required by VSIB.

5. Non-compliance of completion matters

Without any prejudice to any other remedies available to VSIB, if in any respect Paragraph 4
above is not complied with on the Completion Date, VSIB may:-

5.1 defer the Completion to a date not more than 7 business days after the Completion Date;
or

5.2 proceed to Completion so far as practicable (without prejudice to its rights hereunder); or

5.3 to terminate the Subscription and Sale Agreement by giving a notice in writing to the other
party and neither party shall have any claim against the other in respect of the subject
matter of the Subscription and Sale Agreement save for any antecedent breach and
thereafter the Subscription and Sale Agreement shall be of no further force and effect.

6. Waiver rights

VSIB is entitled to waive any of the requirements in Paragraph 4 above.

7. Post Completion obligations

7.1 SFSB hereby undertakes to VSIB that it shall within 7 business days from the Completion
Date or such other dates as the parties may from time to time agree, deliver to VSIB or
VSIB’s solicitors the certified true copies of the following documents:-

(a) the Notification of Change in the Register of Directors, Managers and Secretaries
under Section 58 of the CA for SFSB as well as its subsidiary indicating the
resignation of HKG and the appointment of VSIB’s nominated directors and a copy
of the receipt showing the filling of the same with the Companies Commission of
Malaysia;

(b) a resolution of the shareholders of SFSB approving the adoption of the amended
Constitution of SFSB, to reflect the terms of the Shareholders’ Agreement; and

(c) to enter the name of VSIB in the register of members of SFSB as registered holder
of the Sale Shares and Subscription Shares.

7.2 VSIB hereby undertakes to HCY and HKG as follows:

(a) to liaise and deal with all financial institutions, leasing companies and/or any other
companies that have granted any form of facilities to SFSB of which HCY and/or
HKG have executed personal guarantees (“Personal Guarantees”) for such facility
and to procure the release of HCY and/or HKG as the guarantor within 6 months
from the Completion Date;

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 APPENDIX I

(b) that to achieve the release of HCY and HKG as the guarantors, VSIB shall offer
itself as the corporate guarantor in place of HCY and/or HKG; and

(c) that prior to release of the Personal Guarantees, VSIB shall at all times indemnify
HCY and/or HKG against any actions, proceedings and claims against HCY and/or
HKG arising from the Personal Guarantees.

8. Undertaking by HCY and Retention Sum

SFSB, HCY and HKG hereby undertake to VSIB to settle and/or procure the settlement or
completion of the related party transactions, including all outstanding loans to and from directors
and/or shareholders of the SFSB Group prior to the Completion Date or such later date as may
be agreed by VSIB such that the NA of SFSB and its subsidiary based on their audited financial
statements for the FYE 31 March 2017 and 30 April 2017, respectively on a combined basis
(“Audited Accounts of the Group”) (collectively referred to as the “NA 2017”) shall not be less
than RM7,000,000.00 (“Guaranteed NA”). In the event:

(a) the actual NA 2017 is less than the Guarantee NA (“Shortfall”), VSIB shall have the right
to deduct the Shortfall from the Retention Sum:

(i) if there is any balance of the Retention Sum after deducting the Shortfall, such
balance with interest shall be returned to HCY. Any Retention Sum deducted by
VSIB shall be paid to SFSB; or

(ii) if the Retention Sum is not sufficient to cover the Shortfall, VSIB shall pay the entire
Retention Sum with interest to SFSB and HCY shall be required to pay to SFSB the
difference between the Shortfall and the Retention Sum with interest;

(b) the actual NA 2017 is the same or more than the Guarantee NA, VSIB shall return the
entire Retention Sum with interest to HCY.

For the avoidance of doubt, the parties shall jointly decide and agree on the Payment Date (as
defined below) and any payment which is required to be made by the party to the other party
pursuant to this clause shall be paid within 30 days from the date of issue of the Audited Accounts
of the Group (“Payment Date”).

9. Covenants on application of subscription sums

9.1 SFSB and HCY covenant with VSIB that the subscription price which SFSB may receive
pursuant to the subscription of the Subscription Shares shall only be utilised for general
working capital of SFSB.

9.2 Such utilisation of working capital shall be in a proper and efficient manner and for SFSB’s
own benefit as decided and authorised by the Board of SFSB from time to time.

10. Termination

VSIB shall be entitled to immediately terminate the Subscription and Sale Agreement prior to
Completion Date in the event if:-

(a) SFSB or any of the existing shareholders commits any breach of any terms and conditions
of the Subscription and Sale Agreement and in the case of a breach capable of remedy
but fails to remedy the same within 30 days after receipt of a written notice from VSIB
giving particulars of the breach and requiring it to be remedied; or

(b) SFSB and/or its subsidiary becomes insolvent; or

(c) SFSB and/or its subsidiary ceases to or threatens to cease to carry on its business; or

11
 APPENDIX I

(d) any warranties under the Subscription and Sale Agreement is false, incorrect or misleading
and HCY and/or SFSB fails to remedy such breach of the warranty(ies) within 30 days
after receipt of a written notice from VSIB; or

(e) an event of force majeure continues for a period in excess of 60 days; or

(f) a fact, matter or event occurs which has or in VSIB’s reasonable opinion, is likely to occur
which will or is likely to affect the business, financial condition, results of operations or
prospects of the SFSB Group,

without prejudice to any right or remedy which have accrued to VSIB terminating the Subscription
and Sale Agreement.

(The rest of this page has been intentionally left blank)

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 APPENDIX I

B. SALIENT TERMS OF THE CALL-PUT OPTION AGREEMENT

1. Grant of call option and the right to exercise

In consideration of the Subscription and Sale Agreement, HCY hereby grants VSIB a call
option to purchase all but not part of all Shares in SFSB held by HCY (“HCY Shares”)
during the Option Period (“Call Option”). Upon exercise of the Call Option by VSIB during
the Option Period, HCY shall sell all but not part of the HCY Shares to VSIB and VSIB
shall buy all but not part of the HCY Shares from HCY at the Option Price (as defined
below).

The Call Option:

(a) shall not be exercisable outside the Option Period;

(b) shall not be exercisable if prohibited or impeded by any statute, order, rule, directive
or regulation promulgated by any legislative, executive or regulatory body or
authority of Malaysia affecting the ability of VSIB to buy or otherwise acquire the
HCY Shares from HCY;

(c) shall be exercised only once within the Option Period;

(d) is personal to VSIB and subject to Paragraph 6 below, VSIB shall not sell, transfer,
assign or charge any of the rights to the Call Option or any of its rights under the
Call-Put Option Agreement during the Option Period, to any third party; and

(e) is exercisable only by notice in writing given by VSIB to HCY during the Option
Period.

For the avoidance of doubt, subject to the representations, warranties and undertakings
by HCY as set out in the Call-Put Option Agreement, the Call Option shall automatically
lapse after the Option Period.

2. Grant of put option and the right to exercise

In consideration of the Subscription and Sale Agreement, VSIB hereby grants HCY a put
option to require VSIB to buy all but not part of the HCY Shares during the Option Period
(“Put Option”). Upon exercise of the Put Option by HCY during the Option Period, HCY
shall sell all but not part of the HCY Shares to VSIB and VSIB shall buy all but not part of
the HCY Shares from HCY at the Option Price (as defined below).

The Put Option:

(a) shall not be exercisable outside the Option Period;

(b) shall not be exercisable if prohibited or impeded by any statute, order, rule, directive
or regulation promulgated by any legislative, executive or regulatory body or
authority of Malaysia affecting the ability of VSIB to buy or otherwise acquire the
HCY Shares from HCY;

(c) shall be exercised only once within the Option Period;

(d) is personal to HCY and subject to Paragraph 6 below, HCY shall not sell, transfer,
assign or charge any of the rights to the Put Option or any of its rights under the
Call-Put Option Agreement during the Option Period, to any third party; and

(e) is exercisable only by notice in writing given by HCY to VSIB during the Option
Period.

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For the avoidance of doubt, subject to the representations, warranties and undertakings
by HCY as set out in the Call-Put Option Agreement, the Put Option shall automatically
lapse after the Option Period.

3. Rights attached

The HCY Shares sold on exercise of the Call Option or Put Option, as the case may be,
shall be free from any encumbrance and together with all rights attached and accrued to
them with effect from the date of completion of the sale and purchase of the HCY Shares
(“Option Completion Date”).

4. Option Price

The price payable by VSIB to HCY for the HCY Shares shall be calculated based on 4.25
times multiple of price-to-earnings ratio based on the latest audited consolidated financial
statement of SFSB (“Option Price”). For purposes of determining the Option Price:

(i) the date of the latest audited consolidated financial statements shall not exceed 6
months from the date of determination and if it so exceeds 6 months, the parties
shall procure that an interim audit be conducted at the costs and expense of SFSB
and that such interim audited financial statements be issued within 2 months in
respect of a financial period which shall not exceed 6 months from the date of
determination; and

(ii) the Option Price shall not in any event be less than RM5,000,000.

5. Option Period

A period of 5 years commencing from the date of Completion upon the terms and
conditions contained in the Subscription and Sale Agreement.

6. Termination

6.1 Termination by VSIB

VSIB shall be entitled (but not obliged to) by written notice to HCY to terminate the
Call-Put Option Agreement including any contract for sale and purchase arising from
exercise of the Call Option if:

(a) HCY breaches all or any of the material provisions of the Call-Put Option
Agreement;

(b) Clause 15 (Compulsory Transfer) of the Shareholders’ Agreement is

triggered; or

(c) the Call Option ceases to be exercisable under Paragraph 1 above;

and on such termination, no claim may be made by HCY against VSIB under or in
relation to the Call-Put Option Agreement and the Call-Put Option Agreement shall
cease to have any further force or effect and neither party shall have any claim
against the other save and except for any antecedent breach.

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6.2 Termination by HCY

HCY shall be entitled (but not obliged to) by written notice to VSIB to terminate the
Call-Put Option Agreement including any contract for sale and purchase arising from
exercise of the Put Option if:

(a) VSIB breaches all or any of the material provisions of the Call-Put Option
Agreement;

(b) Paragraph 5, Section C below (Compulsory Transfer) is triggered; or

(c) the Put Option ceases to be exercisable under Paragraph 2 above;

and on such termination, no claim may be made by VSIB against HCY under or in
relation to the Call-Put Option Agreement and the Call-Put Option Agreement shall
cease to have any further force or effect and neither party shall have any claim
against the other save and except for any antecedent breach.

7. Right of Assignment

VSIB shall have the right to assign all its rights and obligations pursuant to the Call-Put
Option Agreement to its related corporation (as defined in the CA) and such related
corporation shall accept such an assignment on the terms and conditions of the Call-Put
Option Agreement.

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 APPENDIX I

C. SALIENT TERMS OF THE SHAREHOLDERS’ AGREEMENT

1. Shareholding structure

Save and except as otherwise agreed between the shareholders in writing or where any change in
the shareholding ratio is expressly permitted under the Shareholders’ Agreement, the shareholders’
respective shareholdings in SFSB shall at all times during the duration of the Shareholders’
Agreement be as follows:-

Name Shares in SFSB Shareholding Proportion

HCY 300,000 40%

VSIB 450,000 60%
Total 750,000 100%

For the avoidance of doubt, the purchase of Sale Shares and subscription of the Subscription
Shares will occur simultaneously on the Completion.

2. Constitution of Board

Each of the parties agrees that the Board of SFSB shall at all times consist of 3 directors
(excluding alternate directors). VSIB shall be entitled to appoint 2 directors and the remaining
one (1) director shall be appointed by HCY.

3. Dividend

3.1 SFSB shall, and the shareholders shall cause the requisite shareholders’ approval
pursuant to the CA which shall include VSIB to be obtained, to pay cash dividend or
capitalise its retained earnings or its other distributable reserves and distribute them as
cash dividend to the shareholders of SFSB in proportion to their shareholdings. SFSB shall
ensure that the distribution will not result in a breach of any debt covenants, debt equity
ratio, debt servicing credit ratio and any other ratio imposed by any security documents of
SFSB.

3.2 In deciding whether in respect of any accounting period SFSB had profits available for
distribution the parties shall, if required, procure that SFSB’s auditors shall certify whether
such profits are available or not and such amount (if any). In giving such certificate, SFSB’s
auditors shall act as experts and not arbitrators and their determination shall be binding on
the parties.

3.3 Except as may otherwise be mutually agreed in writing by the shareholders, not less than
30% of the profit after taxation of SFSB in the preceding financial year shall be distributed
by way of cash dividends to the shareholders in accordance with their shareholding
proportions and the Board of SFSB shall make such recommendation of cash dividends.
The shareholders acknowledge and agree that they shall procure and cause all the
directors nominated or appointed by them to exercise all voting rights and other powers of
control available to them as directors of SFSB to vote in favour of a declaration of cash
dividends.

4. Financing

4.1 Subject to Paragraph 4.2 below, if and to the extent that SFSB requires funds to meet its
capital requirement within the limits set out in budget approved by the Board of SFSB
(“Funding Requirement”) SFSB shall, subject to mutual agreement by the shareholders,
meet the Funding Requirement by any one or more of the following methods:-

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(a) from SFSB’s internally generated funds;

(b) loans, facilities, borrowings, overdraft or other forms of financing from banks,
financial institutions or third parties;

(c) shareholders’ loans or advances mutually agreed to by the shareholders in writing

which shall be provided by the shareholders in accordance to their respective
shareholding proportions (unless otherwise agreed by the shareholders) and the
shareholders shall procure that SFSB shall not repay any principal on any loans or
advances or redeem any shares by way of set-off or otherwise without making
simultaneous payment of any equal amount to each of the shareholder; and/or

(d) increase in the issued Shares of SFSB and each shareholder shall be responsible
to subscribe new Shares in SFSB in proportion to their shareholding proportions.

4.2 For the avoidance of doubt, in the event the banks and/or financial institutions require a
personal guarantee from the shareholders or directors of SFSB or subsidiary, VSIB’s
appointed directors and HCY shall not be required to provide such personal guarantee to
the banks and/or financial institutions.

5. Compulsory transfer

5.1 If any shareholder (“Defaulting Shareholder”) (where relevant):-

(e) shall commit any material breach of its obligations under the Shareholders’
Agreement (without limitation to the generality of the foregoing, this shall include a
breach of its obligations under Paragraph 4 above) and, if remediable, shall fail to
take all necessary action to remedy such breach within 30 days upon the service of
a notice in writing by the shareholder complaining of such breach; or

(f) for any reason whatsoever suspends its performance of or fails to proceed regularly
and diligently to perform all or any part of its material obligations hereunder and
continues such default for 30 days after service of a notice in writing by the other
shareholder to that effect or shall at any time thereafter repeat such default; or

(g) shall go into voluntary liquidation otherwise than for the purpose of reconstruction
or amalgamation or any order of the court is made for its compulsory liquidation or
shall have a receiver, judicial manager or similar officer appointed in respect of any
material part of its assets; or

(h) shall become insolvent or makes any arrangement or composition with its creditors
or takes or suffers any similar action or occurrence in any jurisdiction or ceases or
threatens to cease to carry on business or any substantial part thereof or is subject
to a distress or execution or other process levied or enforced upon or sued out
against any part of the assets or undertaking of the Defaulting Shareholder or is
subject to a material change in its management or control; or

(i) has all or any part of its business or assets taken possession of by an encumbrancer
or a trustee, receiver or judicial manager;

then any of the non-defaulting shareholders (each a “Non-Defaulting Shareholder”) may

(but is not obliged to) within a period of 14 days after it is aware or ought reasonably to be
aware thereof, serve notice in writing captioned “Default Transfer Notice Activation” upon
the Defaulting Shareholder, whereupon the Non-Defaulting Shareholder shall have the
right to either:-

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(a) serve a ‘Default Purchase Notice’ to the Defaulting Shareholders where the Non-
Defaulting Shareholder shall purchase all the Shares in SFSB owned by the
Defaulting Shareholder at the price of 90% of prescribed price, being the sale price
for the Shares in SFSB calculated based on 4.25 times multiple of price-to-earnings
ratio based on the latest audited consolidated financial statements of SFSB
(“Prescribed Price”). For purposes of determining the Prescribed Price:

(i) the date of the latest audited consolidated financial statements shall not
exceed 6 months from the date of determination and if it so exceeds 6 months,
the parties shall procure that an interim audit be conducted at the costs and
expense of SFSB and that such interim audited financial statements be
issued within 2 months in respect of a financial period which shall not exceed
6 months from the date of determination; and

(ii) the Prescribed Price shall not in any event be less than RM5,000,000;

or

(b) serve a ‘Default Sale Notice’ to the Defaulting Shareholder where the Non-
Defaulting Shareholder shall sell to the Defaulting Shareholder all the Shares in
SFSB owned by the Non-Defaulting Shareholder at the price of 110% of the
Prescribed Price.

5.2 For avoidance of doubt, upon the occurrence of any of the events under Paragraph 5.1
above, the Call-Put Option Agreement shall be terminated.

6. Deadlock

If at any time a deadlock exists or occurs, VSIB or HCY shall be entitled to exercise the call option
or the put option, as the case may be, pursuant to the Call-Put Option Agreement.

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