totaling Baht 16,178.32 million to CID. Right and Obligations -CPN shall have the right to allow other tenants to of the Sub-Lessee under rent/lease the area in the Sub-Leased Assets in the New Sub-Lease accordance with the specified terms and conditions Agreement under the New Sub-Lease Agreement. -CPN shall be obligated to renovate, maintain, improve or repair the Sub-Leased Assets and other supporting/utilities systems in the Sub-Leased Assets to ensure their good conditions at its own expenses. -CPN shall arrange for required insurance policies on an annual basis and implement safety measures throughout the term of the New Sub-Lease Agreement. Ownership in the Sub- Upon completion of renovation, improvement, Leased Assets construction, addition, repairing or maintenance of the Sub-Leased Assets, the SRT shall be granted ownership in such renovated, improved, constructed, added, repaired or maintained assets with no compensation from either CID or the SRT. Expiration of the New If any of the following events occurs,the New Sub-Lease Agreement Sub- Lease Agreement shall be immediately expired: -Failure of CPN to make annual leasehold payment to CID in accordance with the annual leasehold payment schedule; -The expiration of the New Sub-Lease Agreement; -Confiscation or freeze of leasehold right granted under the New Sub-Lease Agreement; -CPN being adjudicated bankrupt under any insolvency law; -CPN entering into business rehabilitation process under the bankruptcy law except in case CPN is still able to make annual leasehold payment and fulfill its obligations under the New Sub-Lease Agreement without transferring its right,obligation or duty under the New Sub-Lease Agreement to another party; -Dissolution of CPN In addition to the events as showed above, CID shall also reserve the right to terminate the New Sub-Lease Agreement in case CPN breaches any of the material terms, conditions or obligations under the agreement, and CPN fails to cure such breach within 20 days from the date CID provides written notice informing CPN's breach of such material terms, conditions or obligations under the agreement. 4.2 Opinion of the Independent Financial Advisor 4.2.1 Rationales and Necessity for Entering into the Transaction with the Connected Person The terms and conditions under the original Agreement to Sub-Lease the Assets of the Central Plaza Lardprao Shopping Complex (the "Original Sub-Lease Agreement") that was effective from April 2, 1984 to December 18, 2008 were developed in reference to those under the original Agreement Granting the Right to Utilize the Shopping Center Located in the Area of Paholyothin Delta (the "Original Main Lease Agreement") dated December 19, 1978.Such Original Main Lease Agreement, entered into between CID as the lessee and the SRT as the lessor, was expired on December 18, 2008 as well. In accordance with the Agreement to Sub-Lease the Assets of the Central Plaza Ladprao Shopping Complex (the "New Sub-Lease Agreement") to be entered into between CPN as the sub-lessee and CID as the sub-lessor, the assets CPN will sub-lease from CID shall consist of land and buildings with details as follows: Table 2 The Assets of the Central Plaza Ladprao Project that CPN Will Sub- Lease from CID (the "Assets that CPN Will Sub-Lease from CID" or the "Sub-Leased Assets") 1) Land Some plots of land belonging to the Central Plaza Ladprao Project with the approximate area of 28 rais. The Sub-Leased Assets that are buildings are located on such plots of land. 2) Buildings Building Gross Leasable Area Net Leasable Area (Occupancy Rate) (%) (SQ.M.) (SQ.M.) As of December 31, 2008 1) Shopping Complex and Plaza 95,000 55,531* 97 % 2) Office Building 23,000 17,719 97 % 3) Car Parking 90,000 - - * Note: The net leasable area of the Shopping Complex and Plaza includes the net leasable areas of both the theaters totaling 7,500 SQ.M. and the convention hall totaling 9,000 SQ.M. Source: Central Pattana Public Company Limited The New Sub-Lease Agreement shall be effective from December 19, 2008 to December 18, 2028. Note that rather than directly entering to a long-term lease agreement with the SRT, CPN will enter into a New Sub-Lease Agreement with CID.This is because in accordance with the Original Main Lease Agreement CID entered into with the SRT, CID holds the first right to negotiate with the SRT in extending the land lease agreement. In case CID does not exercise such first right, the SRT will open a new round of bidding to look for a new property developer to develop and operate the existing CentralPlaza Ladprao Project. CID already entered into the new 20-year Agreement Granting the Right to Utilize the Shopping Center Located in the Area of Paholyothin Delta (the "New Main Lease Agreement") with the SRT in December 2008. The New Main Lease Agreement shall be effective from December 19, 2008 to December 18, 2028. In accordance with the New Main Lease Agreement within 120 days from the date CID and the SRT signed the New Main Lease Agreement or within April 8, 2009, CID shall submit the certified copy of the New Sub-Lease Agreement between CID and each sub- lessee (including CPN, Central Plaza Hotel Plc. ("CENTEL") and Harng Central Department Store Limited ("HCDS")) to the SRT. Nevertheless, as entering into the New Sub-Lease Agreement with CID is regarded as CPN's connected transaction in relation to assets and services, this requires CPN to obtain an approval resolution from the shareholders' meeting prior to doing so. Due to such time constraint, CPN could not complete extension of the New Sub-Lease Agreement by the time the Original Sub-Lease Agreement was expired on December 18, 2008. Thus, in December 2008, CPN had entered into a memorandum of understanding ("MOU") with CID to confirm and preserve its right for the New Sub-Lease Agreement. In doing so, CID required CPN to make a payment of THB 300 million to it as a guarantee for the right to sub-lease land and buildings of the Central Plaza Lardprao Shopping Complex on the date that CID entered into the New Main Lease Agreement with the SRT. The conditions of such guarantee are as follows: 1. In case that the meeting of CPN shareholders does not approve the entering into the New Sub-Lease Agreement with CID or CPN and CID cannot finalize the terms and conditions of the New Sub-Lease Agreement, CID will repay all of the guarantee with interest at the Minimum Lending Rate (MLR) to CPN. 2. In case that the meeting of CPN shareholders approves the entering into the New Sub-Lease Agreement with CID,the guarantee will be returned to CPN. Subsequently, CPN shall make scheduled annual leasehold payment to CID in accordance with the New Sub-Lease Agreement. During the period in which the Original Sub-Lease Agreement was expired and the New Sub-Lease Agreement has yet to be entered into, CID had agreed to allow CPN to utilize the land and buildings of the Central Plaza Lardprao Shopping Complex further until all required process is completed, subject to the following conditions 1. In case that CPN and CID enter into the New Sub-Lease Agreement, CPN shall be entitled to income from operations generated by the Sub-Leased Assets as showed in Table 2 2. In case that CPN and CID do not enter into the New Sub-Lease Agreement, any income less relevant operating expenses obtained by CPN after December 18, 2008 and until the date of the conclusion of the negotiation shall be returned to CID or treated in other manners to be agreed upon between CPN and CID. CPN had already informed and disclosed the transactions of entering into the MOU with CID to confirm and preserve its right for entering into the New Sub-Lease Agreement and of making a payment of THB 300 million to CID as a guarantee for the right to sub-lease land and buildings of the Central Plaza Lardprao Shopping Complex to the Stock Exchange of Thailand on December 9, 2008. 4.2.2 Reasonableness and Benefits of the Transaction Entering into the New Sub-Lease Agreement with CID, thus allowing CPN to utilize land and buildings of the Central Plaza Ladprao Shopping Complex, provides benefits for the Company and other involved parties as follows: 4.2.2.1 Maintaining CPN's Major Source of Revenue Over the years, the Central Plaza Ladprao Shopping Complex that is one of the largest shopping complexes in Bangkok and one of the existing flagship shopping complexes currently run by CPN has generated substantial amount of rental and services revenues for CPN each year. Revenue from the Central Plaza Ladprao Shopping Complex (including rental & services revenues and others) accounted for approximately 21 % on average of CPN's consolidated revenues excluding share of profits from investments accounted for using the equity method for the Years 2006, 2007 and 2008. This is because the Central Plaza Ladprao Shopping Complex is located in one of the prime areas of Bangkok, with its existing location close to three main roads of Bangkok (i.e.Wipawadee Rangsit Road, Ladprao Road and Paholyothin Road). With its existing location in the area that is regarded as one of the main business, education and living areas of Bangkok, the Central Plaza Ladprao Shopping Complex is able to attract millions of its target customers such as working people, students and residents of the surrounding communities each year, thus increasing customer traffic in the shopping complex. This will help to attract variety of businesses such as restaurants, fashion, IT, entertainment & recreation, banking & financial services and etc to lease/rent areas in the shopping complex for their operations. With its good location that will be able to attract millions of visiting customers each year, the occupancy rate in the Central Plaza Ladprao Shopping Complex has been higher than 90% over the last few years. 4.2.2.2 A Less Risky Investment than Investing in A New Shopping Complex Entering into the New Sub-Lease Agreement with CID, thus allowing CPN to utilize the assets of the Central Plaza Ladprao Shopping Complex for its operation until December 2028, is a less risky investment than investing in a new shopping complex. Although development and operation of a new shopping complex will allow CPN to expand its market and get access to new target customers, investment in a new shopping complex is also a risky investment thanks to high amount of capital requirement and many uncertainties associated with the project. On the contrary, investment in the existing shopping complex with good location, strong past track record as evidenced by its past high occupancy rate and strong growth potential like the Central Plaza Ladprao Shopping Complex is a less risky investment compared to investing in a new shopping complex project with no past track record. 4.2.2.3 Maintaining CPN's High Market Share and Leading Position in the Thai Retail Property Business Over the years, CPN has been regarded as one of the market leaders in Thailand's retail property business. It has operated many fully integrated shopping complexes in Bangkok and in other provinces in Thailand such as the Central Plaza Ladprao Shopping Complex, the Central Plaza Ramindra Shopping Complex, the Central City Bangna Shopping Complex, the Central Plaza Pinklao Shopping Complex, the Central World Shopping Complex and etc. Its leading position as well as its high market share in the Thai retail property business has helped to create competitive advantages for CPN as follows: 1. Create CPN's good image as one of the market leaders in Thailand's retail property business in the eyes of domestic and foreign investors, thus facilitating the Company in fund-raising activities; 2. Help to enhance CPN's bargaining and negotiation power in the matters regarding bidding and negotiation with relevant authorities for the purpose of developing and operating the retail property project; 3. Help to enhance CPN's strong growth potential, with support from strong expertise and experience of its human resources and optimal level of operating and financing costs. 4.2.2.4 Ability to Utilize and Create Value-Added for the Central Plaza Ladprao Shopping Complex Prior to entering into the New Sub-Lease Agreement, CPN has operated the Central Plaza Ladprao Shopping Complex for more than 20 years. Over the period in which CPN has operated the Central Plaza Ladprao Shopping Complex, the Company continued to renovate, maintain, improve and develop such shopping complex.The Central Plaza Ladprao Shopping Complex has been successful and generated substantial amount of rental and services revenues for CPN each year. The Central Plaza Ladprao Shopping Complex has also continually brought about developments and created jobs for the surrounding communities. With its experience in running the Central Plaza Ladprao Shopping Complex as well as that gained from running other shopping complexes such as the Central City Bangna Shopping Complex, the Central Plaza Pinklao Shopping Complex, the Central Plaza Rama 2 Shopping Complex, the Central Plaza Rama 3 Shopping Complex, the Central World Shopping Complex and etc, CPN should be able to apply them in creating value for the Central Plaza Ladprao Shopping Complex.This will allow such shopping complex to increase its customer traffic, create and maintain stable source of income for CPN and create economy of scale from its business operation. 4.2.3 Disadvantages from Failure to Enter into the Transaction Failure to enter into the New Sub-Lease Agreement may result in some disadvantages as follows: 4.2.3.1 Loss of Major Source of Revenue and Business Advantages Should CPN fail to enter into the New Sub-Lease Agreement and thus not be allowed to operate the Central Plaza Ladprao Shopping Complex, it will lose its major source of revenue in the form of rental and services revenues. Although CPN continues to initiate and develop some new shopping complexes in Bangkok and in other provinces, it may take years to develop and construct such projects and it is still uncertain whether revenues from such new projects can compensate for revenue loss caused by CPN's failure to enter into the New Sub-Lease Agreement. In case CPN fails to enter into the New Sub-Lease Agreement for the purpose of running the Central Plaza Ladprao Shopping Complex, it is likely that the Company will lose its market share and leading status in the Thai retail property business. CPN's may lose benefit in the form of economy of scale from operation, as it cannot allocate some fixed costs (i.e. SG&A and financing costs) to the Central Plaza Ladprao Shopping Complex. Thus,its profit margin will be adversely affected. 4.2.3.2 Incurrence of Costs and Expenses as a result of Failure to Extend the New Sub-Lease Agreement Should CPN be unable to enter into the New Sub-Lease Agreement for the purpose of running the Central Plaza Ladprao Shopping Complex, apart from loss in rental and services revenues, CPN may have to bear some costs and expenses to be incurred as a result of its failure to continue running the Central Plaza Ladprao ShoppingComplex. They include: 1.Lease deposits that CPN, as the operator of the Central Plaza Ladprao Shopping Complex, is required to return to all tenants when the rental/lease contracts are terminated; 2.In case that CPN and CID do not enter into the New Sub-Lease Agreement, any income less relevant operating expenses obtained by CPN after December 18, 2008 and until the date of the conclusion of the negotiation shall be returned to CID or treated in other manners to be agreed upon between CPN and CID.Such condition was disclosed to the Stock Exchange of Thailand on December 9, 2008. 4.2.4 Potential Risk that CPN May Face as a result of Entering into the New Sub-Lease Agreement Although entering into the New Sub-Lease Agreement with CID will provide benefits to CPN, CPN may be exposed to some potential risks that management and shareholders should take into account. They are as follows: 4.2.4.1 Risk that Actual Rental and Services Revenues May Be Lower than Projected Entering into the New Sub-Lease Agreement with CID, CPN is obligated to make scheduled annual leasehold payment to CID throughout the new sub-lease term, fulfill its obligations under the New Sub-Lease Agreement and bear scheduled renovation and maintenance expenses in relation to the Sub-Leased Assets. Main source of cash flows to be used for making scheduled annual leasehold payment and paying renovation and maintenance expenses are from CPN's operating cash flows to be generated by rental and services revenues from operating the Central Plaza Ladprao Shopping Complex. Thus, CPN is exposed to the risk that actual operating revenue it will earn from running the Central Plaza Ladprao Shopping Complex may be lower than projected due to uncontrollable factors such as intensifying competition in the retail property business, economic slowdown and change in customer lifestyle, thus making actual rental and services revenues it will earn from the Central Plaza Ladprao Shopping Complex lower than projected. In case actual rental and services revenues from the Central Plaza Ladprao Shopping Complex are lower than projected whereas annual leasehold payment to be made to CID is already determined and fixed, CPN's ability to make annual leasehold payment and pay for required renovation and maintenance expenses may be adversely affected. Investment return from the Central Plaza Ladprao Shopping Complex may also be lower than projected. To counter this risk, CPN will implement many strategies and measures aimed to deal with intensifying competition in the retail property business and economic slowdown. They are as follows: 1. Diversification of Tenant Base: CPN will diversify tenant base of the Central Plaza Ladprao Shopping Complex in terms of both business type and tenant. This would help to reduce the risk that CPN will rely on particular types of businesses and tenants as well as prevent potential competition among operators of the same type of business. 2. Arrangement for Anchor Tenants: Having anchor tenants such as department store, theatre, bowling lawn will help to increase attractiveness of the Central Plaza Ladprao Shopping Complex, thus increasing customer traffic and being able to maintain other tenants. 3. Advertising & PR Campaigns: Continuous launch of advertising & PR campaigns will help to increase attractiveness of the Central Plaza Ladprao Shopping Complex, thus increasing customer traffic 4. Maintaining Existing Tenants and Looking for New Ones: This will help to reduce unoccupied areas and cost of leasing commission. Over the years, CPN has succeeded in implementing those strategies as evidenced by high occupancy rate in the Central Plaza Ladprao Shopping Complex. 4.2.4.2 Risk that the New Main Lease Agreement May Be Terminated by the SRT due to Fault or Negligence of CID or Other Sub-Lessees In entering into the New Sub-Lease Agreement with CID, CPN may be exposed to the risk that CID may breach conditions or requirements under the New Main Lease Agreement and/or other sub-lessees may breach conditions or requirements under the New Sub-Lease Agreement, both of which may result in termination of the New Main Lease Agreement by the SRT. Termination of the New Main Lease Agreement by the SRT results in the termination of the New Sub-Lease Agreement CID will enter into with each sub-lessee as well. In case the New Main Lease Agreement is terminated without fault or negligence of CPN, CPN shall not bear any costs or damages incurred. In case the New Main Lease Agreement is terminated due to fault or negligence of CID,CPN is allowed to sue and ask for compensation from CID. In case the New Main Lease Agreement is terminated due to breach of conditions/requirements under the New Sub-Lease Agreement by another sub-lessee, CPN is allowed to sue and ask for compensation from the sub-lessee in breach of the New Sub-Lease Agreement. 4.3 Fairness on Price and Conditions of the Transaction 4.3.1 Some Key Financial Figures to Be Used in Evaluating Fairness of Stream of Annual Leasehold Payment In providing the opinion regarding fairness of scheduled annual leasehold payment to be made by CPN as the sub-lessee to CID as the sub-lessor throughout the term of the New Sub-Lease Agreement, the Independent Financial Advisor will show some key financial figures that investors/shareholders should understand about their meanings,interpretations and calculations so that they can understand and comprehend the opinion of the Financial Advisor regarding fairness of the scheduled annual leasehold payment. They are showed in Table 3 below: Table 3 Some Key Financial Figures to Be Used as Reference in Providing (more)