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LEGAL DUE

DILIGENCEREPORT

[*]

([*year])

BUDIARTO Law Partnership


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i

Table of Contents

LEGAL DUE DILIGENCE REPORT ...................................................................................................... i

1. Purpose of Report ............................................................................................................... i

2.

Scope of Report .................................................................................................................. i

3. Assumptions ....................................................................................................................... i4. QUALIFICATIONS ............................................................................................................. ii5. RELIANCE .........................................................................................................................iii

EXECUTIVE SUMMARY ...................................................................................................................... 1

1. DEFINITIONS .............................................................................................................................. 3

2. CORPORATE STRUCTURE ....................................................................................................... 5

2.1 Legal Background .............................................................................................................. 5(1) Company Formation........................................................................................................... 5(2) Replacement or Appointment of Board Members; Share Transfers; and Amendment of

Articles................................................................................................................................ 5(3) Company Officers .............................................................................................................. 6

(4)

Articles of Association ........................................................................................................ 72.2 PT Mesra Coalindo ............................................................................................................ 8

(1) Articles of Association, MOLHR Approval and State Gazette ........................................... 7(2) Letter of Domicile, NPWP and Taxable Entrepreneur Number ......................................... 8(3) Certificate of Company Registration .................................................................................. 9(4) Register of Shareholders ................................................................................................... 9(5) Special Register ............................................................................................................... 10

3. GOVERNMENT LICENCES AND FILINGS .............................................................................. 10

3.1 Regulatory Regime for Special Terminal Companies ..................................................... 10(1) Ministry of Law and Human Rights .................................................................................. 10(2) Department of Trade ........................................................................................................ 11(3) Ministry of Transport ........................................................................................................ 113.2 Business Licenses ........................................................................................................... 11

(1)

Forms of Company........................................................................................................... 11(2) Companys Business Licenses ........................................................................................ 12

3.3 Licenses and Approvals Issued by Transportation Authorities ....................................... 12(1) Legal Background ............................................................................................................ 12(2) Stipulation of Special Local Port Area (Penetapan Lokasi Pelabuhan Khusus Lokal) .... 13(3) Special Port Construction Permit (Izin Pembangunan Pelabuhan Khusus orIPPK) .... 13(4) Special Port Operation Permit (Izin Operasi Terminal Khususor IOPK)...................... 14(5) Other Documents Relating to the Port Activities ............................................................. 163.4 Agreement Regarding Port Activities............................................................................... 173.5 Environment Licenses ..................................................................................................... 17

4. ASSETS, LIABILITIES AND LABORS ....................................................................................... 17

4.1 Assets .............................................................................................................................. 174.2 Liabilities .......................................................................................................................... 17

4.3

LABORS .......................................................................................................................... 18

5. TAXATION ................................................................................................................................. 18

6. LITIGATION ............................................................................................................................... 18

Attachment 1: List of Documents Received ........................................................................................ 20

CONCLUSIONS AND RECOMMENDATIONS .................................................................................. 21


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CONFIDENTIAL

Ref. No. [*]

[*], 2012

[*]1Attn. Directors[*].

Dear Sirs,

LEGAL DUE DILIGENCE REPORT

1. Purpose of Report

This legal due diligence report ("Report")has been prepared at the request of [*buyers ID] inrelation to the proposed acquisition (the Project) of the issued shares in [*] (theCompany).

We understand that Buyers intend to acquire [*] of the issued shares in the share capital ofthe Company.

The Company is a limited company established under the laws of the Republic of Indonesia,

and having its registered office in [*].

2. Scope of Report

2.1 Budiarto Law Partnership (BLP) has been instructed by the Buyers to conduct the followinglegal due diligence investigations:

(1) Corporate, to confirm the due incorporation of the Company, their currentshareholdings and the current membership of management;

(2) Licensing, to confirm that the Company holds all required material licenses from thegovernment and those licenses are valid;

(3) Assets, Liabilities and Labors, to confirm the nature and validity of the Assets,Labors and Liabilities owned by the Company; and

(4) Litigation, to confirm whether any of the Company is a party to any litigation orarbitration proceedings.

2.2 This Report is based on information obtained prior to[*].

3. Assumptions

1Insert intended PT to whom this LDD addressed


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In our examination of the legal due diligence materials referred to in Attachment 1: List of DocumentsReceived of this Report, we have assumed that:

3.1 all the signatures on the documents are genuine and authentic;

3.2 all documents provided to BLP are authentic, true and correct in all material respect and

complete and without omission in any material respect;

3.3 all documents submitted as copies conform truly and accurately to the original documents andare without omission in any material aspect;

3.4 all documents submitted to us as English language version documents that were executed inthe Bahasa Indonesia language are accurate translations of the Bahasa Indonesia languageversion;

3.5 all documents submitted to us as execution version conform to the executed originals;

3.6 all documents have been duly authorized, executed and delivered by each party thereto, andthat all the documents have been validly authorized and the entry into and performance

thereof are within the capacity and powers of, each such party thereto;

3.7 resolutions of shareholders and directors that were reviewed by us have been properlypassed and all constitutional, statutory and other formalities were duly observed;

3.8 documents sought by us that were not supplied or were incomplete by the date of this Reportdo not contain information which is material to the Project;

3.9 all documents, contracts, leases and other agreements have been duly and validlyauthorized, executed, delivered and stamped (where necessary) in accordance withapplicable law by and are binding on each party thereto, and that the entry into andperformance thereof are within the capacity and powers of each such party thereto; and

3.10 no legal or insolvency proceedings have been or are contemplated or instituted and noinjunction has been granted against any party to any document, contract, lease or otheragreement reviewed by us that would restrain or prevent it from performing any of itsobligations thereunder.

Furthermore, in conducting our due diligence investigations and in preparing this Report, we haveconsidered such laws, regulations and practices as we have deemed necessary. In the examinationof such laws, regulations and practices, our opinions herein are based on the following assumptions:

3.11 The practices of Indonesian authorities are consistent with applicable law and will not changesignificantly, provided that as of the date of this Report, nothing has come to our attention toindicate that such assumptions are not accurate; and

3.12 In our examination of such laws, regulations and practices, that there are no provisions in thelaws of any jurisdiction outside Indonesia which would be contravened by Buyersexecutionof and entry into the Projects, documents or agreements referred to herein, and that nothingexpressed herein will be affected by the laws (including public policy) of any jurisdictionoutside Indonesia.

4. QUALIFICATIONS

This Report is subject to, and modified by, the following facts, actions, laws, or interpretation of laws

to the extent that such are partially or wholly true:

4.1 This Report is based upon the laws of Republic of Indonesia which are available to the public

as of the date hereof; provided that nothing has come to our attention despite our best effortsindicating that any unpublished laws, decrees, regulations, governmental policies or


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governmental interpretation or notifications exist which would affect any of the statements

made herein.

4.2 The opinions and decisions of the courts of Indonesia are usually not published or available to

the public, and the judicial interpretation of the Indonesian law is therefore uncertain; provided

that nothing has come to our attention despite our best efforts indicating that any unpublished

opinions or decisions of the Indonesia courts would affect any of the statements made herein.

4.3 While companies established in Indonesia are required to be registered with the relevant

licensing authorities, it is not possible to rely on corporate information (such as the

Memorandum & Articles of Association (or equivalent) or names of shareholders or directors)

obtained from the licensing authorities as being conclusively up-to-date. Also, the information

available does not include information relating to encumbrances, charges, pledges or

assignments over corporate assets, or whether encumbrances, charges, pledges or

assignments over such assets exist.

4.4 We do not purport to be experts and do not purport to be generally familiar with or qualified to

make statements based on any law other than the Indonesia laws and accordingly make nostatement herein upon any other laws than the Indonesian laws.

4.5 Although documents involving a foreign element may be executed in the English language,

current judicial practice indicates that the courts of Indonesia may rely solely on an Indonesia

translation of such documents.

A certificate, determination, notification or opinion as to any matter provided for in a document might

be held by the courts of Indonesia not to be conclusive, if it could be shown to have an unreasonable

or arbitrary basis, or in the event of manifest error.

5. RELIANCE

This Repot

5.1 is addressed only to the addressee named at the beginning of this Report and is for its sole

benefit and may not be duplicated or disclosed to any other person, or relied upon by any

other person or for any other purpose, without our prior written consent;

5.2 is valid as at the date hereof and should not be relied upon by any party after the date of

issue hereof. The opinions expressed in this Report will not be updated to take account of

subsequent changes to the legislation or to the practices of regulatory authorities unless we

are specifically instructed to do so. It is your responsibility to seek updated opinions if you are

to rely on opinions expressed in this Report at a later date;

5.3 may not be filed with any governmental agency or authority or quoted in any public document

without, in any such case, our prior written consent;

5.4 addresses only those issues that we have identified in the course of our review of the due

diligence materials and any inquiries we may have made with any Indonesian court,

governmental agency or authority and which appear to us to be material in the context of the

Project. A legal issue is considered material if it imposes onerous obligations on any of the

Company, results from conduct undertaken by any of the Company other than in the ordinary

course of business or relates to the ownership or ability to operate their registered lines of

business;


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5.5 provides a purely legal analysis and investigation and does not assess the business

implications of any of the matters addressed in the Report. Without prejudice to the generality

of the foregoing, this Report makes no representation on commercial, financial, accounting or

actuarial matters, the adequacy of any insurance arrangements or the value or fitness for

purpose of any asset, interest, facility or service;

5.6 is in no way to be interpreted as providing a tax due diligence and extends only to basic tax

compliance matters to assess whether the required annual and monthly tax filings have been

submitted to the relevant tax authorities (if relevant). This Report does not concern itself with

nor assess the accuracy of the tax filings, adequacy of the payments made, or whether such

tax filings were made in a timely manner, nor does this Report assess the existence of any

tax liabilities, fines, etc.; and

5.7 is limited to the matters stated herein and does not extend, and is not to be read as extending

by implication, to any other matter.

Sincerely yours,BUDIARTOLAWPARTNERSHIP

WIDJOJOBUDIARTONIA92.10155


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EXECUTIVE SUMMARY

This Report, which summarizes the results of our legal due diligence review in relation to theProject, should be read in full. However, we believe that the matters set out in this ExecutiveSummary may be of particular concern or interest to the addressee.

NO ISSUE ANALYSIS/RECOMMENDATION

CORPORATE

1. The Company was establishedpursuant to the Deed No. [*], made on[*], before [*], S.H., then a Notary in [*](Deed of Establishment).

The Deed of Establishment has beenapproved by the Decree No. [*] dated [*]concerning MOLHRs Approval andregistration with the Company Registrar No.[*] dated [*].We were [not] provided with theannouncement of the Deed of Establishmentin the State Gazette.

2. [insert other details on AoA] [*]

3. Taxable Entrepreneur Number(Pengusaha Kena Pajak)

We were not provided with a TaxableEntrepreneur Number (Pengusaha KenaPajak) of the Company.

4. Certificate of Company Registration(Tanda Daftar Perusahaan).

The Companys Certificate of CompanyRegistration will expire on March 10, 2013.

LICENSING

1. Business License (Surat ljin UsahaPerdagangan).

Companys Business License No [*], dated

[*], expires on [*].

2. [ insert principal licenses]

3. Environment Licenses We were provided with technical documentsof Environmental Management Attempt(Upaya Pengelolaan Lingkungan or UKL)and Environmental Supervision Attempt(Upaya Pemantauan Lingkungan or UPL).We have yet to receive the approval of theUKL and UPL.

AGREEMENT

Insert detai ls on agreemen ts target engaged

in]

ASSETS

[*]

LIABILITIES

[*]

LABORS

[*]


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LITIGATION

Impending Litigation [*]


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1. DEFINITIONS

Unless otherwise defined, all and any words or terms used in this Report shall have thefollowing meanings:

APL Area Penggunaan Lain, as defined in page 162

BLP Budiarto Law Partnership.

Company [*].

Company Law Law No. 40/2007 concerning limited liability companies.

DT Department of Trade Republic of Republic of Indonesia.

Deed of Establishmentmeans Deed No. [*] made on [*].

GMOS General Meeting of Shareholders.

IOPK Special Port Operation Permit (Izin Operasi Pelabuhan Khusus).

IPPK Special Port Construction Permit (Izin Pembangunan PelabuhanKhusus).

KM 55/2002 Decree of Minister of Transport No. KM 55 year 2002 concerning theManagement of Special Sea Port.

KM 55/2007 Decree of Minister of Transport No. KM 55 year 2007 concerning theAmendment of KM 55/2002.

KPP Tax Service Office (Kantor Pelayanan Pajak).

Law No.13/2003 means Law No. 13 year 2003 regarding Employment.

Law No. 17/2008 means Law No. 17 year 2008 regarding Shipping.

MOLHR Ministry / Minister of Law and Human Rights Republic of Indonesiawhich shall refer also to the predecessors of the ministry of law andHuman Rights.

NPWP Tax File Number (Nomor Pokok Wajib Pajak) as defined in page 8.

PM 51/2011 Minister of Transport Regulation No. PM 51 year 2011 concerningSpecial Terminal and Private Interest Terminal.

Report means this legal due diligence report, as defined in page i.

RKAB Work and Cost Budget Plan (Rencana Kerja dan Anggaran Biaya).

SIUP Business License (Surat ljin Usaha Perdagangan).

SKDP Letter of Domicile (Surat Keterangan Domisili Perusahaan) asdefined in page 8.

SSP Special Sea Port.

2Please update field


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2. CORPORATE STRUCTURE

The Company is an Indonesian limited company and all of the shares in its share capital areheld and owned by Indonesian individuals.

2.1 Legal Background

(1) Company Formation

The following is a summary of steps required under Company Law and by theMOLHR for the incorporation of a company in Indonesia. It is noteworthy that theactions were also common under the predecessors of the Company Law.

A company obtained its status as legal person under the Company Law once its deedof incorporation is approved by the MOLHR.

All actions done by its founders on behalf of a company prior to its establishmentshall bind the Company upon the Company obtaining its legal person status if suchactions are accepted or taken over by the first General Meeting of Shareholders (theGMOS). The GMOS must be convened within 60 days after the company obtainingits legal person status, attended by all shareholders of the Company. The resolutionpassed in this GMOS has to be voted for by all shareholders of the Company. Failingthis, the founders who entered into the contract shall be personally, jointly andseverally liable for the performed actions and all their consequences.

All actions done by all members of board of directors, board of commissioners andfounders of a company on behalf of the company after the company is establishedbut prior to the company obtaining its legal status shall automatically bind thecompany upon the company obtaining its legal person status.

(2) Replacement or Appointment of Board Members; Share Transfers; andAmendment of Articles

In general, appointment or removal of director or commissioner, share transfer,amendment to the articles of association (including the issue of new shares / increaseof paid up and subscribed capital and increase of authorized capital) requires aresolution passed by the GMOS or all shareholders of the company and theresolution has to be restated in a Notarial deed. In addition, the following actions have

also to be completed:

Summary of Action Required

Execute Deed of Incorporation containing Articles of Association of the company

before a Notary.

Submit Deed of Incorporation to MOLHR for approval, attaching Letter of Domicile,Tax File Number and evidence of payment of paid up capital.

Register the company at Company Register maintained by Company Registrar andobtain Certificate of Company Registration (Tanda Daftar Perusahaan).

Announce the Deed of Establishment of the company in the Supplement to theState Gazette (Tambahan Berita Negara).


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(i) in the case of a share transfer or share issue, a report must be submitted toMOLHR;

(ii) in the case of an increase in authorized capital, the increase must beapproved by MOLHR;

(iii) in the case of an increase in subscribed and paid up capital within theauthorized capital threshold, a report must be submitted to MOLHR;

(iv) the share transfer, share issue or increase in capital must be reported toDepartment of Trade (DT); and

(v) in the case of amendment to the articles of association, the amendment mustbe published in the State Gazette.

In the case of share transfers, the transferor and transferee will sign Deeds ofTransfer (Akta Pemindahan Hak) either under hand or before a Notary.

(3) Company Officers

The Company Law, following the Dutch Civil Law tradition, adopts a two-tiermanagement structure, comprising:

(i) a Board of Directors (Direksi); and

(ii) a Board of Commissioners (Komisaris).

Under the two-tier management structure, the basic function of directors is to manageand represent the company. The role of commissioners is to supervise and advise thedirectors. A limited analogy may be made between the roles of:

(i) Direksiand common law executive directors; and

(ii) Komisarisand common law non-executive directors.

A company must have at least one director and one commissioner. In the event thereis more than one director, one of the directors may be appointed as PresidentDirector, who generally has the authority to bind a company under agreements withthird parties. In the event there is more than one commissioner, one of thecommissioners can be appointed as President Commissioner.

Each time there is a change to the members of the Board of Directors or the Board ofCommissioners, the following must take place:

(i) the shareholders approve the change to the members of the Board ofDirectors and/or Board of Commissioners, with such shareholders' resolutionbeing restated in notarial deed form;

(ii) the change to the members of the Board of Directors and/or the Board ofCommissioners is reported to MOLHR; and

(iii) the change to the members of the Board of Directors and/or the Board ofCommissioners is reported to DT. Indonesian companies are not required tomaintain a Register of Directors or Register of Commissioners. Rather,evidence of the current composition of the Board of Directors and Board ofCommissioners is in the form of Shareholders' Resolutions appointing thedirectors and commissioners of the company, which follow steps (i) to (iii)

above.


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Indonesia has no reliable registry of corporate information which is available to thepublic. Accordingly, we are unable to independently verify the information containedin this Section One by conducting a company search, which would be standard inother jurisdictions.

(4) Articles of Association

Under the Company Law, all Indonesian companies were required to amend theirArticles of Association by mid-August 2008, so as to comply with standard-formArticles of Association which have been issued by the Ministry of Law and HumanRights. Failure to amend Articles of Association could ultimately result in an"interested party" to apply for the relevant company to be wound-up. The Companywas established in [*] pursuant to the Company Law No. 40 Tahun 2007.

2.2 [*target name]

(1) Articles of Association, MOLHR Approval and State Gazette

(a) Background

(i) The Deed of Establishment of the Company (Deed ofEstablishment) which includes the Articles of Association of theCompany is contained in Deed No. [*], made on [*], before [*], then aNotary in [*].

The Deed of Establishment was approved by the MOLHR on [*]pursuant to Decree No. [*] and registered with the CompanyRegistrar No. [*] on [*].

Note:

We were not provided with the announcement of the Deed ofEstablishment in the State Gazette.

(ii) up to the date of this Report, the Articles of Association in the Deedof Establishment have been amended pursuant to [*].

(b) Corporate Structure

The main features of the Company as set out in the documents referred to insection (1)(a) above may be summarized as follows.

(i) Status of Incorporation

The Company became a separate legal entity on receipt of MOLHRapproval on [*].

(ii) Authorized and Issued Capital

Pursuant to the Deed of Establishment, its authorized capital is [*]divided into [*] shares, and the issued capital of Company is [*]divided into [*] shares, each with a nominal value of [*].

All companies incorporated in lndonesia must denominate theirshares in Indonesian Rupiah (IDR) in the Articles of Association.

(iii) Shareholders


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a) Pursuant to the Deed of Establishment, the shareholdingstructure of the Company was as follows:

Shareholders Shares Amount (Rp) %

(iv) Company Officers

a) Pursuant to the Deed of Establishment, the composition ofthe Board of Directors and the Board of Commissioners wereas follows:

(2) Letter of Domicile, NPWP and Taxable Entrepreneur Number

(a) Requirement for Domicile Confirmation

In Indonesia, government departments will frequently require a company toprovide a current Letter of Domicile (Surat Keterangan Domisili) whenapplying for new licenses or extensions to existing licenses.

The details of the Companys Domicile are as follows:

Date of issue :Number :Issuing authority :

Address :

This Letter of Domicile is valid until [*].

(b) Taxpayer Registration, Tax File Numbers and Taxable Entrepreneur Number

All companies in Indonesia must have Taxpayer Registration (SuratKeterangan Terdaftar) and must have a Tax File Number (Nomor PokokWajib Pajak) and the details of the Companys Taxpayer Registration andTax File Number are as follows:

(i) Taxpayer Registration:

Type :

Position Name AppointmentEffective Date


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(c) Shares Certificate

The Company has issued Share Certificates. The details os the SharesCertificates are as follow:

Collective Share Certificate No. 1

Shares No. :Total Shares :Authorized Capital :Name on the Certificate :Issuance Date :

Note:

These Collective Shares Certificates have been signed by [*] as thePresident Director and [*] as the President Commissioner.

(5) Special Register

The Company Law requires the Board of Directors to maintain a Special Register"(Daftar Khusus) containing information on the shareholdings of the members of theBoard of Directors and Board of Commissioners and their families in both thecompany and any other companies (this disclosure requirement is aimed atpreventing conflict of interest).

Note:

We were not provided with any document relating to this matter.

3. GOVERNMENT LICENCES AND FILINGS

3.1 Regulatory Regime for Special Terminal Companies

The key government authorities in relation to Indonesian companies engaged in thebusiness of sea port below.

(1) Ministry of Law and Human Rights

Shareholders Date of

AcquiringShares

Number

of

Shares

Amount ofShares

NominalAmount

(Rp)

Remarks


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MOLHR has authority in relation to matters concerning the establishment ofcompanies and other corporate issues, including amendments to the Articlesof Association. Please refer to Section One above.

(2) Department of Trade

The Department has authority for registration of all companies and tradingmatters of general Indonesian companies. Please refer to Section Oneabove.

(3) Ministry of Transport

The Ministry has several governmental authorities in the area of seaport/terminal business and in particular, to issue the licenses for seaport/terminal activities.

3.2 Business Licenses

(1) Forms of Company

Indonesian law recognizes:

(a) General Indonesian Companies (Perseroan Terbatas Biasa), whichare:

(i) 100% Indonesian-owned;

(ii) not able to take advantage of any taxation facilit ies offered byBKPM;

(b) Domestic Capital Investment Companies (Penanaman Modal DalamNegerior "PMDN"), which are:

(i) 100% Indonesian-owned;

(ii) able to take advantage of taxation facilit ies offered by BKPM;and

(iii) subject to the MOLHR and BKPM company regulatoryregimes; and

(c) Foreign Capital Investment Companies (Penanaman Modal AsingPMA), which:

(i) have a percentage of or total foreign share ownership;

(ii) are able to take advantage of taxation facilities; and

(iii) are subject to the MOLHR and BKPM company regulatoryregimes.

All forms of companies are:

(a) subject to the MOLHR company regulatory regime; and

(b) required to obtain a Business License (Surat ljin Usaha Perdaganganor "SIUP) from DT;


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Under these regulations, competent authorities require license of principalbusiness to issue licenses of special port (construction and operation) sincespecial port may only be utilized as support to principal business and grantedin certain conditions as set out in article 111 GR 61/2009 jo. Article 3 PM51/2011.

Special port may also be used to support subsidiarys business which has tobe akin to the principal business of holding company and/or support thesupplies of raw materials and equipments of such subsidiary (article 3 (2) PM51/2011).

(2) Stipulation of Special Local Port Area (Penetapan Lokasi PelabuhanKhusus Loka l)

The Company holds the following Stipulation of Special Local Port Area:

Decree of Regent of Paser No. [*] dated [*] which granted an area for SpecialLocal Port to the Company with provisions:

(a) [*]

Note:

Pursuant to KM 55/2002 jo. PM 51/2011, the stipulation of specialport/terminal area is under the authority of Minister of Transport. Theapplication has to be filed to the Minister of Transport through DirectorGeneral of Sea Transportation and the stipulation shall be issued by theMinister. This particular Stipulation was issued by Regent of Paser whichcontravened the regulations. On the other hand, we also note that there arestill local or regional regulations (Peraturan Daerah) regulate that theauthorized officer to stipulate special port/terminal area is Regent (for speciallocal port) or Governor (for special regional port). These regulations are

supported by Government Regulation No. 38 of 2007 concerningGovernment Affairs Division amongst the Government, ProvincialGovernment and Local Government (Pembagian Urusan Pemerintahanantara Pemerintah, Pemerintah Daerah Provinsi, dan Pemerintah DaerahKabupaten/Kota) and Circular of Minister of Transportation (Surat EdaranMenteri Perhubungan) No. 07 of 2000 concerning Details of Authorities ofRegency/Municipality in the Transportation Sector with respect to the LocalAutonomy (Rincian Kewenangan Kabupaten/Kota di Sektor PerhubunganDalam Rangka Otonomi Daerah), both which in fact still draw multiinterpretation in the implementation. This conflict of substance amongregulations in local/regional and national level may cause legal uncertainties.In legal point of view, the Company shall proceed in accordance with higherregulations.

(3) Special Port Construction Permit (Izin Pembangunan PelabuhanKhusus orIPPK)

The Company holds the following Special Port Construction Permit:

Decree of Regent of Paser No 552.3/030/DISHUBKOMINFO/III/2011 datedMarch 3, 2011 which granted Special Port Construction Permit (IPPK) withthe following details:

Company Name : PT MESRA COALINDO

President Director : Yusi Ananda


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Address : Jl. Pahlawan No. 1 RT. 26, Samarinda

Location of Construction

Location : Adang RiverDistrict : Long Ikis

Regency : PaserProvince : East Borneo

Area Coordinate : 01038 18,5 LS 116014 50,7 BT

(a) This IPPK was granted for private interest purpose of the Companyin supporting loading/unloading product and equipments for coalmining.

(b) In constructing the special port, the Company has obligations to:

i) obey the prevailing laws and regulations in port affairs, watertransportation, navigation safety, environment management

and other regulations with respect to its principal business;

ii) be responsible for the impacts arising from and during theconstruction;

iii) provide shipping navigational infrastructures, shipping laneand other facilities required to ensure navigation safety andfluency of ships and goods traffic in accordance with theIPPK.

(c) IPPK can be revoked if the holder:

i) has not performed the construction within 1 (one) year

following the issuance of IPPK;

ii) cannot complete the construction within 3 (three) yearsfollowing the issuance of IPPK;

iii) violates its obligations or covenants as set out in the IPPKand the prevailing regulations.

(d) Transport, Communication and Informatics Service Office of Regencyof Paser enforces supervision and technical control in theimplementation of IPPK.

(e) The Decree of the Regent is valid from the date of its enactment.

Amendments will be made if there are mistakes in the enactment.

(4) Special Port Operation Permit (Izin Operasi Term inal Khusu sorIOPK)

The Company holds the following Special Port Operation Permit:

Decree of Regent of Paser No 552.3/03/DISHUBKOMINFO/III/2011 datedMarch 30, 2011 which granted Special Port Operation Permit (IOPK) withthe following details:

Company Name : PT MESRA COALINDO

Principal Business : Coal Mining


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Address : Jl. Pahlawan No. 1 RT. 26, Samarinda

Tax File Number : 02.756.796.5-722-00

(a) the abovementioned is licensed to operate a special local portlocated in Nipah Ulo River, Village of Kerayan Makmur, District of

Long Ikis, Regency of Paser, Province of East Borneo withspecification:

i) Dock:

Type : Warf/JettySize : 8m x 12 mConstruction : woodFender : .24.00 mBolder : 18.00 mDepth : 5,316,20 m

ii) Coordinate : 01038 18,5 LS 116014 50,7 BT

As barge facility for private interest in supporting loading/unloading ofproducts and equipments for coal mining business.

(b) The holder has the obligations as follows:

i) comply with the prevailing laws and regulations concerningport, water transportation and traffic, safety, environmentsustainability, and regulations from other authoritiesregarding principal business;

ii) maintain shipping navigational infrastructures, shipping lane,and other facilities required to ensure navigation safety and

fluency of ships, goods traffic and the convenience ofgovernmental duties in special port/terminal;

iii) provide storage for waste or other substances of ships whichcan be contaminant;

iv) take full responsibility of the operation of the special localport;

v) report monthly operational activities to Regent of Paserthrough Transport, Communication and Informatics ServiceOffice of Regency of Paser.

(c) IOPK for the Company is valid as long as the Company still performsits principal business;

(d) IOPK can be revoked/declared no longer valid if:

i) the holder is in breach of its obligations or covenants;

ii) the location is no longer in accordance with Spatial LayoutPlan of Regency of Paser;

iii) the holder utilizes the special port for commercial or publicuse, unless with permission issued by Transport,Communication and Informatics Service Office of Regency of

Paser on behalf of Regent of Paser;


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(e) Transport, Communication and Informatics Service Office of Regencyof Paser enforces supervision and technical control in theimplementation of IOPK.

(f) The Decree of the Regent is valid from the date of its enactment.

Amendments will be made if there are mistakes in the enactment.

Note:

The Company had obtained IPPK and IOPK in 2011 prior to the enactment ofPM 51/2011, therefore, the issuance of IPPK and IOPK should be bound byKM 55/2002 jo. KM 55/2007.

We have yet to receive monthly report of the Companys operationalactivities.

(5) Other Documents Relating to the Port Activities

(a) Letter No. S.23/BPKH IV-3/2011 concerning Clarification ofCoordinates dated January 7, 2011, issued by Head of Board ofStabilization of Forest Area Region IV, Directorate General ofForestry Planology, Ministry of Forestry, addressed to the Director ofPT Jasa Tambang Nusantara. This Letter describes the results ofstudy of status/function of forest area designed for construction ofspecial port of PT Mesra Coalindo in District of Long Ikis, Regency ofPaser, East Borneo Province. The studied area is not encumberedby onAreal Penggunaan Lain(APL). APL is defined in RegulationNo. P.50/Menhut-II/2009 issued by Minister of Forestry as areaswhich are not forest area.

(b) Minutes of Inventory and Identification of Issues of Forest Area in

Reserve Forest of Teluk Adang in relation to the Construction Plan ofSpecial Port and Stock Pile of PT Mesra Coalindo, dated April 16,2011, signed by Examiners Team, the Companys Head of MiningTechnical, and acknowledged by Regional Technical Service Unit ofForestry Planology Balikpapan. This minute records that from GlobalPositioning System (GPS) observation, the coordinates of theplanned area is outside of Reserve Forest of Teluk Adang, and onAPL area. The examiners recommend that the Company, inconstructing the special port and stock pile, attends to the boundariessigns and the Company is obliged to create signs or announcementboards or prohibitions of encroachment of forest area along the portareas adjacent to the Reserve Forest of Teluk Adang.

Note:

These permits regarding special port activities imply that the permits were granted assupports only to the principal business of the Company which in IPPK mentioned ascoal mining. The special port may only be used by the Company for its own privateinterest to support the transportation of coal mining products. Therefore, theCompany may not transfer the aforementioned functions of the special port to othercompanies as it would be a violation to article 124 GR No. 61/2009 jis. Article 19 and21 PM 51/2011.

We note that the Company applied for the licenses of special port using PT JasaTambang Nusantarasmap of mining area and coordinates list as stated in Letter No.

S.23/BPKH IV-3/2011 concerning Clarification of Coordinates dated January 7, 2011.


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However, JTN was not a subsidiary of the Company, although they might beaffiliated, hence the issuance of the licenses was potentially incompliant with theregulations which accentuated that special port may only be constructed and used insupport of the principal business. Moreover, we were provided with UKL and UPLdocuments of the special port, which state that the special port would be used tosupport coal mining business of the Company (point 1.1 jo. point 2.3.2 of the UKL and

UPL document), but we were not provided with the licenses of the principal business(coal mining business) inter alia Mining License (Izin Usaha Pertambangan) of theCompany.

3.4 Agreement Regarding Port Activities


3.5 Environment Licenses

We were provided with technical documents of Environmental Management Attempt(Upaya Pengelolaan Lingkungan or UKL ) and Environmental Supervision Attempt(Upaya Pemantauan Lingkungan or UPL ). We have yet to receive the approval of

the UKL and UPL.

4. ASSETS, LIABILITIES AND LABORS

4.1 Assets

Pursuant to Financial Statement of PT Mesra Coalindo as per December 31, 2011,the Company had the following assets:

(1) Fix Assets

(a) Acquisition Cost Rp580.000.000,-

Note:

We have not received legal documents relating with this matter.

(2) Other Assets

(a) Deferred Licensing Cost Rp620.000.000,-

(b) Deferred Operating Expenses Rp612.000.000,-

(c) Related Parties Receivables Rp2.585.000.000,-

Note:

We were not provided with legal documents evidencing Companysassets.

4.2 Liabilities

Pursuant to Financial Statement of PT Mesra Coalindo as per December 31, 2011,the Company had no liabilities.

Note:

We were not provided with legal documents evidencing Companys liability.


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4.3 LABORS

Legal Background

Law No 13 year 2003 concerning Employment (Law No.13/2003) defines 2 (two)kinds of Employment contract which are:

(a) Employment contract for specified time.

An employment contract for a specified time shall be made in writing andmust be written in the Indonesian language with Latin alphabets. Employmentcontract for a specified time, if not made in writing, shall be regarded as anemployment contract for an unspecified time. Employment contract for aspecified time cannot be made for jobs that are permanent by nature.

Employment contract for a specified time may be made for a period of nolonger than 2 (two) years and can only be extended one time that is no longerthan 1 (one) year.

(b) Employment contract for unspecified time.

An employment contract for an unspecified time may require a probationperiod for no longer than 3 (three) months. During the probation period theentrepreneur is prohibited from paying wages less than the applicableminimum wage.

Note:


5. TAXATION


6. LITIGATION

This Section is based upon inquiries made to: the District Court of Samarinda, District Courtof Sangatta, the Administrative Court of Samarinda, the National Arbitration Council ofIndonesia, the Industrial Relation Court in the District Court of Samarinda, the CommercialCourt of Surabaya and the Tax Court, which are the courts with jurisdiction over JDG.

Search Result for the Company

Attachment 2: contains the Letter of Statement which we have received as at the date of thisReport which indicates that the Company has never been registered as a party to:

A. any civil or criminal proceedings in the District Court of Samarinda pursuant toStatement Letter No. W18-I1/84/HK.02.1/IV/2012 issued by the Deputy Registrar ofDistrict Court of Samarinda on June 1, 2012;

B. any civil or criminal proceedings in the District Court of Sangatta since Januari 2009up to June 6, 2012, pursuant to Statement Letter No. W18-U7/21/KH.01.06/V/2012issued by the Deputy Registrar of District Court of Sangatta on June 6, 2012;

C. any administrat ive proceedings in the Administrative Court of Samarinda up to June4, 2012 pursuant to Statement Letter No. W2-TUN2.5/446/HK.06/VI/2012 issued by

the Registrar of Administrative Court of Samarinda on June 4, 2012;


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D. any arbitration proceedings in the National Arbitration Council of Indonesia pursuantto Statement Letter No.12.797/SKB/VI/BANI/WD issued on June 5, 2012;

E. any industrial dispute proceedings in the Industrial Relations Court in District Court ofSamarinda, pursuant to Statement Letter No. W18.U1/143/PHI.02.1/VI/2012 issuedby the Deputy Registrar of Industrial Relations Court in the District Court of

Samarinda on June 1, 2012;

F. process of bankruptcy, suspension of indebtedness in the Commercial Court/DistrictCourt of Surabaya since January 1, 2010 up to June 5, 2012, pursuant to StatementLetter No. W.14.U1.Pdt.SK.Niaga/247/VI/2012/03 issued by the Registrar of theDistrict Court of Surabaya on June 5, 2012; and

G. any tax proceedings in the Tax Court up to June 8, 2012, pursuant to StatementLetter No. KET-747/SP.5/2012, issued by Secretary General of Tax Court on June 8,2012


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Attachment 1: List of Documents ReceivedList of documents of PT MESRA COALINDO

NO. Name of Documents

1. Deed No. 81, dated January 29, 2008

2. Decree No. AHU-19158.AH.01.01 Tahun 20083. Decree No. AHU-48360.AH.01.01Tahun 2011

4.Statement Letter No. 503/09/Permb-DM/02/2012, dated February 22, 2012, issued byHead of sub-district of Dadi Mulya

5. Taxation Registration No. PEM-507/WPJ.14/KP.0203/2008, dated February 27, 2008

6. Companys Tax File Number No. 02.756.796.5-722.000, dated February 27, 2008

7. Certificate of Company Registration No. 17.01.1.71.03372, dated March 10, 2008

8.Business License (Surat ljin Usaha Perdagangan) No. 4368/17-01/PK/III/2008, datedMarch 6, 2008

9.Decree of Regent of Paser No. 552.3/029/DISHUBKOMINFO/I/2011 dated January 12,2011

10.Decree of Regent of Paser No 552.3/030/DISHUBKOMINFO/III/2011 dated March 3,2011

11.Decree of Regent of Paser No 552.3/03/DISHUBKOMINFO/III/2011 dated March 30,2011

12.

Letter No. S.23/BPKH IV-3/2011 concerning Clarification of Coordinates dated January 7,2011, issued by Head of Board of Stabilization of Forest Area Region IV, DirectorateGeneral of Forestry Planology, Ministry of Forestry, addressed to the Director of PT JasaTambang Nusantara

13.Maps of Examined Area of Special Port PT Mesra Coalindo as attachment to Letter No.S.23/BPKH IV-3/2011 concerning Clarification of Coordinates dated January 7, 2011.

14.Minutes of Inventory and Identification of Issues of Forest Area in Reserve Forest of TelukAdang in relation to the Construction Plan of Special Port and Stock Pile of PT MesraCoalindo, dated April 16, 2011

15.Environmental Management Attempt (Upaya Pengelolaan Lingkunganor UKL) and

Environmental Supervision Attempt (Upaya Pemantauan Lingkunganor UPL)16. In House Financial Statement PT Mesra Coalindo per December 31, 2011

17. Identity Card No. 64.7203.030765.0005 (Yusi Ananda)

18. Identity Card No. 3172061607641001 (Tjoetjoe Sandjaja Hernanto)


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CONCLUSIONS AND RECOMMENDATIONS

If you are to complete the Project, we would recommend you;

A. to clarify:

1. Decree of Regent of Paser No. 552.3/029/DISHUBKOMINFO/I/2011 dated January

12, 2011 (Stipulation of Special Local Port Area or Penetapan Lokasi Pelabuhan

Khusus Lokal);

2. Decree of Regent of Paser No 552.3/030/DISHUBKOMINFO/III/2011 dated March 3,

2011 granted Special Port Construction Permit or Izin Pembangunan Pelabuhan

Khusus (IPPK);

3. Decree of Regent of Paser No 552.3/03/DISHUBKOMINFO/III/2011 dated March 30,

2011 granted Special Port Operation Permit or Izin Operasi Terminal Khusus

(IOPK).

B. to require the Company to obtain the Approval of UKL-UPL.