Islamic Finance 101 Key Elements of Shari’ah Compliant Investments

1. Islamic Finance 101Key Elements of Shari’ah Compliant Investments [Date] 2 April 2008

2. Shari’ah General Principles • Islam • Monotheistic religion founded in 7th century by Prophet Mohammed • Builds on validity of Old Testament and New Testament (Abraham, Jesus, Mary) • Five Pillars – Belief in One God; Prayer; Charity; Pilgrimage; Fasting • A strong sense of social responsibility • Shari’ah and Islamic Finance Concepts • Shari’ah: The “way” or the “path.” • A body of Islamic law that defines the day-to-day activities of Muslims • Governs all aspects of the life of Muslims, including their business activities

3. Shari’ah General Principles • As applied to business • calls for fair dealing with business partners and customers • social responsibility in business dealings • Investment restrictions • Under Shari'ah, can make a equity investment in any business as long as it does not involve gambling, alcohol, pornography, dealing in pork products, or non-Shari’ah compliant financial services (e.g., banks, insurance companies) • In addition, the financing should be structured in a Shari’ah compliant manner • Cannot make money on money – instead should profit from a productive asset • Shari’ah disfavors uncertainty and gambling

4. Shari’ah Standards • Shari’ah Supervisory Board – Committee of scholars who review and certify Shari’ah compliance. Many major global institutions have Shari’ah boards (e.g., Dow Jones, HSBC, etc.) • No set of universally accepted standards • Middle East vs Malaysia • Different rules for majority vs minority investments

5. Generally used for acquisition financing SPV, owned by a 3rd party corporate services provider, obtains conventional acquisition financing from Lender SPV uses the loan amount to acquire the assets of Target through an asset purchase agreement The funds raised by Target, together with the Arcapita equity are used to pay the sellers. SPV then leases the assets back to Target via a lease agreement in exchange for a predetermined rental payment stream which matches SPV’s payment schedule under the credit agreement Lease incorporates all the customary covenants included in the credit agreement SPV and Target also enter into a call option agreement, a put option agreement, a supplemental agreement and a tax matters agreement All activities of Target must be Shari’ah compliant Arcapita/Investors Target Borrower SPV Lender Service Provider Shari’ah Structures Ijara STRUCTURE OVERVIEW 100% Lease Agreement Loan Rent Debt service payments Mortgage andRelated Collateral

6. Used for acquisition financing and for working capital facilities Bank enters into a conventional revolver or short-term loan with the SPV The SPV enters into a spot commodity purchase transaction with a commodity broker The SPV sells the commodities to the Target, with immediate delivery but deferred payment Target then resells the commodities to a commodity broker for immediate delivery and payment, which effectively provides Target with liquidity Target then pays the SPV on the date the deferred payment is due, which corresponds to the payment date under the working capital line All activities of Target must be Shari’ah compliant Bank SPV Service Provider Commodity Brokers Target Shari’ah Structures Murabaha/Tuwarruq STRUCTURE OVERVIEW (1) Spot Payment Revolving Credit Agreement (2) Spot Delivery (4) Spot Delivery (5) Spot Payment (3) Spot Delivery (6) Deferred Payment Tuwarruq Agreement

7. Usually used for development transactions SPV, owned by a 3rd party corporate services provider, enters into a joint venture with JV Partner JVco will acquire the Property from its current owners. Holdings will enter into an Istisna agreement with SPV, whereby it hires SPV to develop its share of the Property, paying SPV an upfront payment (which equals Arcapita’s equity investment) Under the Istisna agreement, SPV will agree to deliver its share of the completed property or completed portions thereof to Holdings or to its order. SPV or JVco can be appointed to handle the sale of the Property on behalf of Holdings and to distribute the proceeds to Holdings. JVco will enter into a development agreement with Developer, an affiliate of JV Partner, for consideration commercially agreed to develop the Property Service Provider Property SPV JVco JV Partner Arcapita/ Investors Holdings Developer Shari’ah Structures Istisna STRUCTURE OVERVIEW Call option Istisna Agreement Development Agreement

8. About Arcapita • Arcapita Bank B.S.C.(c) (“Arcapita”) is a global investment group with offices in Atlanta, London, Bahrain and Singapore • Founded in 1997 in Bahrain to bridge investors in the Gulf Region with international investment opportunities • Provide diversification by asset class and geography • Offer shari’ah-compliant investments • Total financial assets in the region estimated at $1.3 trillion, of which $250-$300 billion are shari’ah compliant • Arcapita’s main lines of business include: • Corporate investment (private equity and venture capital), • Real estate investment; and • Infrastructure and Asset-based investment. • Completed 64 platform transactions valued in excess of $21 billion across the U.S., Europe and Asia with over $6.2 billion in equity invested

9. Contact Arcapita Arcapita Bank B.S.C.(c) Arcapita Inc. P.O. Box 1406ManamaKingdom of Bahrain Tel: +973 1721 8333Fax: +973 1721 7555 75 Fourteenth Street, 24th FloorAtlanta, GA 30309United States of America Tel: +1 404 920 9000Fax: +1 404 920 9001 Arcapita Limited Arcapita Pte. Limited 15 Sloane Square, 2nd FloorLondon SW1W 8ERUnited Kingdom Tel: +44 207 824 5600 Fax: +44 207 824 5601 North Tower, Level 25One Raffles QuaySingapore 048583 Tel: +65 6622 5390Fax: +65 6622 5391 www.arcapita.com