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Minutes of a Meeting of the Board of Directors of Tameer Holding

Investments LLC (the “Company”) held at the Tameer Al Sharjah offices in


Concord Tower, 8th Floor, Media City, Dubai, UAE on 10 December 2012 at
11:30 am

Present:

Zubair Daruwala, Chairman


Philippe Akl, Board Member
Federico Tauber, President and Board Member

Invited to attend:

Aasma Khan, Chief Legal Officer


Prashant Prakash, Tameer Analyst

1. Chairman:
Zubair Daruwala was appointed Chairman of the meeting.

2. Secretary:
Aasma Khan was appointed as Secretary of the meeting.

3. Notice and Quorum:


The Chairman reported that due notice of the meeting had been given and that a
quorum was present.

Accordingly, the Chairman declared the meeting open.

4. Business of the Meeting:


The Chairman reported that the business of the meeting was to discuss and
approve:

4.1. Report of Chief Financial Officer

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4.1.1. Cash needs of the Company

DISCUSSION: Tameer still has over AED 460 million outstanding to the banks
and has missed payments to the banks due to cash flow issues. The Company
continues to have a serious cash flow deficit where the 2 most critical issues are
the bank debt of AED 743 million, which is in default from not meeting the
principal and profit payments on time. The second issue is resolving the overall
liability in Tameer Towers in light of the continued delay in construction.

4.1.2. Status of Bank loans

DISCUSSION: The Management reported that the Company is in default with


ADIB and should be paying AED 20 million in principal payments since
September and there is outstanding accrued and unpaid profit. ADIB has agreed
in principle to the restructuring of the loans but is dependent on the shareholder
support to repay the loans. ADIB has already sent a legal notice and ADIB wants
to call the guarantees. It is urgent that we resolve the land / bank repayment
issue since the Bank is trying to collect the full outstanding in one lump sum.
Tameer responded to the legal notice counter-proposing with deferred principal
payments to June 2013 and the profit payments set for January 2012. The
Banks counter-proposed again advising that if the Company: (i) made full
payment of the profit by 15 December 2012 and (ii) thereafter we make the profit
payments quarterly and (iii) make a balloon principal payment coming due in
June of AED 80 million, with a few additional conditions (including manager’s
checks for the balance outstanding and the personal guarantee of Sheikh
Abdullah al Rajhi), it would put Tameer in good standing. Further negotiations
are required. The Board advised that if Tameer could not settle the conditions
without requiring Manager’s checks and Sheikh Abdullah Al Rajhi’s personal
guarantee, then the President has the Board’s permission and authorization to
advise the Shareholders immediately to see if any shareholder support is
forthcoming as all avenues of recourse have been explored and how the
Company must resolve this outstanding issue.

With respect to Tameer’s relationship with Mashreqbank, it is stronger and


Tameer has agreed to wait for confirmation from their CEO on the restructuring
of the loan that has been proposed by the Management. The Board again
advised that if Tameer could not settle with Mashreqbank on the proposed terms
that the Management has the Board’s permission and authorization to advise the
Shareholders immediately to see if any shareholder support is forthcoming to
resolve this issue as all avenues of recourse have been explored and how the
Company must resolve this outstanding issue.

4.1.3. Proposal to seek shareholder support

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DISCUSSION: Even with the restructuring, the Company may not be able to
make payment even with the proposed restructuring. The Company’s
management had offered ADIB to take the mortgaged lands and release the
claim on the loan using the balance of remaining proceeds to repay
Mashreqbank. This would have solved the Company’s outstanding payments to
the banks. It is critical that the Board recommend to shareholders if they or their
brothers may be interested in taking the land deal on the same terms proposed
to the bank and to the Abu Dhabi group represent by Abdullah Ratrout. The
Board confirmed that it would advise the shareholders of the Company’s situation
and see if there is an interest to remove the onerous burden associated with
supporting the loans and the lands tied up with the financing.

4.2. Projects: Report of Chief Commercial Officer

4.2.1. Collections Update

DISCUSSION: The Management reported that the Company is only expecting to


collect from the committed customers. The Management reported the net
remaining that the Company expects to collect (as per page 3-4 of the
presentation). The Management is showing good progress in the handover of
the finished units and the associated collections. The amount still to be collected
from committed customers from all finished projects is AED 171 million out of
which AED 79 million will come from Regal customers, which was finished only 1
month ago. The amount to be collected in finished projects from customers with
legal cases and customers in the process of termination is approximately AED
350 million.

4.2.2. Sales Update

DISCUSSION: We had sold 2 floors of Silver in May as the market was picking
up. The Management increased the prices in Princess and Elite after June as
the market was trending upwards. However, prices stabilized and now we are
above market in pricing. The Management has identified units where it has
recommend reduction in prices and to sell in staged “buckets” of reduced price
inventory that is marked to market prices. The Board approved the
recommendations as per pages 7-8 of the Board presentation.

4.2.3. Shifting – Approval and ratification for shifting Tameer Tower commercial
customers in the Commercial and C&D Towers to Towers A&B at AED 1,400 per
sq/ft

DISCUSSION: In Tameer Towers, the Company has shifted the customers as


set forth on page 9 of the presentation. The Management has closed deals
shifting customers, refunds at 50%, as set forth on page 9. The Board approved
the transactions completed.

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4.2.4. Ratification of Tameer Towers termination and settlement at 50% refund value

DISCUSSION: The Board approved all transaction already signed for 50%
refund as per the directions of the Board in March 2012 and acknowledged that
the Management has stopped the refund program as per the verbal instructions
from the Chairman received in September 2012, which the Board hereby ratifies.

4.2.5 Approval for settlements with non-customers using properties (i.e. UNEC)

DISCUSSION: The Management persuaded UNEC to accept the units in


exchange for services already rendered for Palace Tower. The Board approved
the use of property for refund or payment and will continue to ratify non-customer
deals where contractors / suppliers / vendors accept properties for any
outstanding liability.

4.2.6 Approval of settlement parameters for Al Ameera Village customers to close


liability, ratification of completed settlements, establishments of new parameters,
if required

DISCUSSION: On page 10, the Management has presented the closing of deals
with AAV customers. The Management is trying to close by offering an additional
plot, but trying to avoid offering cash refunds. The Board approved the
Managements efforts to close the liability.

4.2.7 Update of Handovers

DISCUSSION: The Board approved the handovers in progress and urged the
Management to complete the handovers at the fastest rate possible.

4.2.8 Terminations: Impact of returning inventory

DISCUSSION: The returning inventory from terminated customers is being


delayed in return to Tameer’s due to attachments though they already have
buyers in place. The Land Department has taken the position that the terminated
units must return to Tameer’s name and it will not honor the forward sales. The
Management is working to sort out this issue with the Land Department in order
to finalize the terminations.

4.2.9 Settlement of Mada Invoice Agreement

The Board considered the Company’s development projects known as Elite


Residence and Princess Tower both located in Dubai Marina (‘Projects’), and
being constructed by Arabian Construction Company SAL (‘ACC’). Pursuant to
the construction contracts for the Projects, ACC had invoiced the Company for
amounts due totaling one hundred and sixty million dirhams (AED
44,450,630.17) (‘Invoices’) that had already been approved by the Independent

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Engineer. The Company was overdue in making payments. In order to assist
the Company with timely payment of the Invoices and enable ACC to continue to
work on the Projects, Mada Group for Industrial and Commercial Investment LLC
(‘Mada’), one of the Al Rajhi Holding group of companies, entered into a sharia
compliant invoice transfer agreement with the Company on 13 August 2012
whereby it undertook to pay to ACC the amount of the Invoices.

The Company desired to honor its obligation and instructions from ACC to
transfer the paid invoice amounts to Mada and to buy back any residual rights
from Mada by entering into a sharia complaint second invoice transfer agreement
(‘Second Invoice Transfer Agreement’) in order to consolidate back to the
Company all contractual rights it may have against ACC pursuant to the
construction contracts. The Board ratifies the signing of the Mada Invoice
Transfer Agreement.

The Board further ratifies the payment of Mada through Elite and Princess units
under the arrangements signed between the Company and Mada dated 22 May
2012 and authorizes Federico Tauber to make any further adjustments that may
be required in order to meet the debt repayment to Mada and initiate and execute
the related documentation.

4.3. Projects Update: Report of Chief Development Officer

4.3.1. Termination of ARP from Tameer Towers and Imperial: Ratification of termination
and authorization to the management to determine the value of the works
completed on both Tameer Towers and Imperial and settle with ARP accordingly

DISCUSSION: The Management confirmed that the contracts with ARP have
been terminated from both the Tameer Towers project and the Imperial project.
The Board ratified the termination and approved for the Management to achieve
a termination payment for the contracts at the value of the received Works.

4.3.2. Ratification of appointment of Bhatia as the new contractor on Imperial

DISCUSSION: Board approved the new contractor and ratified the appointment
on the basis of the LOA and related documents. The Board commended the
Management on their hard work negotiating the maximum reduction of cost for
the highest speed of building possible.

4.3.3. Status of Conversation of SZR Plot to Freehold, scope of approval to proceed


with development proposals

DISCUSSION: The Management reported to the Board that it will be very difficult
to sell stratified units for this plot on a leasehold basis due to the surrounding
areas having freehold status. The Company has advocated to change the status
of the land to freehold and the Land Department. The Dubai Land Department
has agreed to champion this change in designation directly to the Ruler on behalf
of Tameer. The Land Department has asked Tameer to prepare the submission
and it is anticipated that the submission should be ready on or before 25

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December 2012. Next steps will be determined in consultation with the Land
Department after it has made the submission to the Ruler.

4.3.4. Mothballing Tameer Towers until resumption of building: approval of expense


reduction and determination/ approval of minimally accepted site maintenance

DISCUSSION: The Board has confirmed to put on hold the Tameer Towers
project for another 18 months as alternate financing arrangements are
considered because 70% of customer have defaulted even after Tameer built 14
floors in Tower A, 4 Floors on Tower B and brought Towers C and D level to the
ground. The massive collective customer default of 70% has jeopardized the
financial health of this particular project whereas normal project planning projects
around 10% customer default. This raises the issue of how to settle with
customers who are not patient enough to wait for their units in light of these
defaulting customers being in breach of their booking forms, Sale and Purchase
Agreements and Article 70 breach of the Civil Code. For this issue, the Board
referenced the commercial proposal in Section 4.2.5 above and again affirmed
this strategy for settling with the customers.

The Management reported that the diaphragm walls anchors have expired and
there is a risk the wall may collapse. Additionally, there have been visual reports
of seepage of sea water along the wall that are raising concerns. If the
diaphragm wall were to collapse, the Management reported that there is a major
service corridor of the Shams Island running alongside that wall which would
result in damage to the Shams infrastructure (with undefined costs which could
be in excess of AED 200 million). In addition to civil liability, the Management
reported that criminal liability may attach if there was loss of life attributable to the
Company’s inaction. The Board advised that it is in negotiations directly with
Sorouh to return the plot in an “as is, where is” state.

With respect to the Master Developer, the Board affirmed the Management
strategy to do any or all of the following:

4.3.4.1 Consolidate the commercial plot and remove all penalties.


4.3.4.2 Delay the project up to 18 months, with a further 6 month grace period,
extendable as required until Reem Island prices recover and Sorouh fulfills its
obligations to provide proper infrastructure and facilities, like the main park.
4.3.4.3 Reduce operational costs to the bare minimum, while maintain the safety,
security and municipal obligations.
4.3.4.4 Keep the minimum works operations to maintain the Building Permit.

4.3.5. Approval of parameters for closing the relationship with ACC on Princess and
Elite:

DISCUSSION: The Management presented the final account of the Princess


and Elite projects. Discussions about the extension of time and other variations

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have been ongoing for the last 6 months and the Management is recommending
to close the final accounts of these projects at AED 795 million for Princess and
for AED 77 million for Elite. In the Dubai Municipality inspection of Princess, the
Municipality instructed certain modifications to the podium façade and car
parking ramps. Said modifications designs have now been approved by the
Municipality and have been costed by the Contractor. Although the procurement
is ongoing, the cost has been reduced from AED530k to around AED475k. The
Board approved and ratified the Management’s efforts. The Dubai Municipality
did not find any issues with respect to the Elite Residence.

4.4. Tatweer UAQ - Update

DISCUSSION:

4.4.1. Approve the transfer of Shares from THI to AAR and reverse the loan debt from
Tameer’s books

DISCUSSION: The Board evaluated the joint venture with the Government of
Umm Al Quwain and the Management had recommended that Tameer exit from
this joint venture as it prospects in the near term are exceptionally bleak and
dependent on the Northern Emirates ability to achieve a sustainable sources of
electricity and water. The Board acknowledged that it no longer wanted to carry
the risk of the continued non-development of this project and the possibility that
further cash injections for this company may be required in the future. Further
the acquisition of these shares maintainsdebt on the Company from Eng
Ahmad’s loan to Tameer which has not been repaid to him since he first funded
Tameer’s purchase of shares in 2005. The Board agreed unanimously that it
shall recommend to the Shareholders that Eng Ahmad take back the shares of
Tatweer UAQ, cancel the debt of the Company and arrange between himself and
Tatweer UAQ their final understanding. As per the adjusted accounts, the Board
confirmed that the Eng Ahmed has paid AED 368,261,970 on behalf of Tameer.
.

4.4.2 Debt Repayment to Tatweer UAQ

The Management confirmed to the Board that the Company has an outstanding
debt to Tatweer UAQ in the amount of AED 200 million and that Tatweer UAQ
was demanding settlement of the same with 6% interest. The Management
recommended settling the debt with assets of the Company, particularly the Al
Shahed Building and the unsold EMIA Labor Camp and Warehouses. In such a
manner, the outstanding debt could be resolved at a discount and Tameer would
divest itself of assets with unclean title due to Mr Ayesh’s non-cooperation and
breach of the 2007 Sale and Purchase Agreement between Eng Ahmad Al Rajhi,
Mr Waleed Al Marzooqi and Mr Omar Ayesh dated 11 December 2007.

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4.5. Tameer Jordan

4.5.1. Al Majd City Status of negotiations

DISCUSSION: The Company is expecting that Tameer Jordan shall receive JD


4.5 million, in due course upon settlement with the HUDC. The Board ratified all
the actions, executions and signing of resolutions, settlements, undertakings or
any other document, where the related actions are already taken and / or to be
taken by any and all of Federico Tauber, Mahmood Marfatia, Dr Ibrahim Al Rajhi
and Mr Yazan Masri in this regards.

4.5.2. Approval for settlement from HUDC funds to be used for registering the Tafeh
lands

DISCUSSION: The Board approved to utilize the funds from the settlement with
the HUDC in Section 4.5.1 above and use it to register the lands of Tafeh as
quickly as possible.

4.5.3. Ratifying resolution of Tameer Jordan to sell its office

DISCUSSION: The Board approved that the Tameer Jordan office in the
Shemeisani area of Amman should be sold within a price range of US 1.2 million
dollars and that the sale should be closed as soon as possible. The Board
ratified all the actions, executions and signing of resolutions, settlements, or any
other document where the related actions are already taken and / or to be taken
by any and all of Federico Tauber, Mahmood Marfatia, and Mr Yazan Masri in
this regards.

4.6. Investment in Lands/ Sales of Lands

DISCUSSION: The Management advised to the Board that it has been trying to
sell the lands as directed in previous Board meetings, referencing the Board’s
directives to Management for: (i) the sale of the land from 4 September 2008
Board meeting urging the management to sell the Business Bay plot and the Al
Reem plots; (ii) the sale of land was again advised to the Management on 16
December 2008; (iii) the CEO Ghassan Sakhnini received and offer for the sale
of the Business Bay plots for AED 135 million, which was approved but never
consummated due to buyer non-interest; (iv) the sale of BB.04.002 was also
approved at AED 127,236,000 when raised to the Board when offered, but again
not consummated due to buyer non-interest; (v) on 17 June 2012 Board meeting,
the board directed the management to sell all possible assets to meet the
Company’s outstanding debt obligations the reported around AED 891 million
dirhams; (vi) on 8 August 2012, the Management took Board approval in Board
resolution THI-CR-2012-10 to sell the plot known as the Platinum Plot (Plot. No.

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361) in Business Bay for AED 90 million; (vii) on 31 October 2010, the
Management worked with then Chairman Ibrahim Al Rajhi to arrange the sale of
Al Sofouh 1, known as the SZR / Anara Plot to a buyer in Abu Dhabi which did
not proceed due to buyer non-interest; (vii) on the 27 April 2011 Board Meeting,
the Management reported and informal offer made from a serious investor to
take the Tameer debt and all the related lands – which til date has not
materialized in the form of a written offer. The Management advised that it had
offered a similar deal to ADIB in an attempt to close the outstanding with ADIB by
offering them the land. The Management reported that ADIB refused to accept
the lands in discharge for the loans. Moreover, the Management reported that
the Abu Dhabi group led by Mr Abdallah Ratrout has not responded in spite of
providing: (i) full due diligence; (ii) sale agreements; (iii) and in principle verbal
approval for the deal. The Management has been waiting over 1 year now to
close this deal and it has not happened. The Management advised that the
combined “bank/ land structured swap” has to be discharged from Tameer’s
name. The Board also acknowledged that the Management had pursued all
possible avenues to divest the assets of Tameer to discharge it debts. As set
forth in Section 4.1.3 above, the Board confirmed again that it would seek
shareholder support to see if there was any way to rescue Tameer from this
onerous burden.

Sale of Lands Outlook/ Addressing Bank Mortgage – Management Proposal to


resolve the outstanding debt to the banks

DISCUSSION: As updated in Sections 4.1.2 of the and 4.4 of this Board minutes
set forth above, the Management had tried to do a settlement with ADIB to swap
the loan (and discharge the Mashreqbank loan) for the current valuation of the
lands done by Asteco and Cluttons in 2012. This however, ADIB failed to agree
to and instead counter-proposed through legal notice as set forth in Sections
4.1.2 above.

4.7. Legal Issues:

4.7.1. Status of Claims against the Company

DISCUSSION: The Management updated the situation on the Murad case and
that the banks have objected the attachment and the procedures on the lands
are frozen from proceeding to auction, but still under attachment. The Company
has filed an appeal to overturn the attachments due to the notification procedure
being incorrect. The Company lost the objection before the execution judge and
is now appealing to the Court of Appeals. The Land Department has been
erroneously reporting units that were registered in the name of customers to the
courts in the Al Sayyah execution and in the Bassam Frieha vs Omar Ayesh
execution, in spite of verbally advising to the Management that plots with projects
and their related units should be not be seized by the courts. In the Murad case,

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14 units were captured that did not have Oqood registration. Tameer is preparing
for the customers to sign releases against Tameer and prepare ishkal for
submission in each case. If the situation is not rectified by the filing of an iskhal,
then the customer will need to file a real estate recovery case.

We have had 72 new cases in 2012 out of which 54 are Tameer Towers. We
have 700+ customers in Tameer Towers and expect more cases to be filed due
to the project slow down anticipated in the next 18 months and lack of activity on
site. In total, Tameer has 125 cases in progress including litigation, arbitration,
and non customer cases (contractors, subcontractors, vendors, suppliers, etc).

Tameer’s overall strategy to achieve delay is mostly successful: (i) an average of


10 months is being achieved in the appointment of an arbitrator; (ii) an average
of 2.5 months is being achieved in the notification of Tameer process (although
there are risks of summary judgment in this strategy due to lack of direct
notification); (iii) an average of 10 months of delay is being achieved in the
executions – that is excluding the filing date of the case, which if considered,
then the delays are exceeding several years.

Few settlements have been achieved as the customer demands exceed the
parameters allowed for settlement.

The Management recommend that funds be prepared to settle the cases where
there executions are well progressed and impacting customer units: (i) Real
Estate Channel, (ii) Al Sayyah and (iii) Muhammed Murad.

The Board commended the Legal Department’s performance til date in managing
the cases with such detailed precision. The Board recommend maintaining the
current strategy and only paying the judgments when the attachments needed to
be removed or reached a point of auction. However, the Board also authorized
and approved for the management to try and negotiate less than 100%
settlement offers to customers that are in execution to close their cases. The
Board further authorized the use of free inventory at the sole discretion and
approval of the Manager / President.

4.7.2. Status of Company’s claims

DISCUSSION: The Board approved all the litigations in progress where the
Company’s claims are being prosecuted and confirmed for the lawyers to
continue prosecuting the cases.

4.7.3. Cases to be launched by the Company

DISCUSSION: The Board approved for the Company to launch cases to


terminate unreachable customers.

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4.7.4. Revision of company structure

DISCUSSION: The Board approved for the Management to consider revising the
group structure in light of the majority of the projects being completed and how to
manage to the remaining liabilities of the company. The Board approved for the
Management to reduce all expenses including personnel and others to the
minimum possible The Board also advised the Management to propose
structures to use existing assets to discharge liabilities and the present the
outstanding liabilities remaining on the Company for discharge.

4.8. Ratify previous approvals by Circulation:


No resolutions were presented for further ratification at the Board meeting.

4.9. Any other business

DISCUSSION:

5. Documents produced to the meeting.


The following documents were produced to the meeting: the December 2012
board presentation referenced in the minutes.

6. Filing
The Chairman instructed the secretary to make all necessary and appropriate
entries in the books and registers of the Company.

7. Close
There was no further business and the Chairman declared the meeting closed at
12:30 pm.

..................................................... ..........................................
Zubair Daruwala, Chairman 10 December 2012

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