REDSEA

EGYPT– SAUDIARABIA

Strictly Confidential

JANUARY 2014

PRESENTATION BY

Contents

1. / Objective
2. / InformationaboutEgypt– Red / Sea / Map
3. / Environment-Competition
4. / ManagementCompany
5. / OfficesFacilities
6. / SalesManagement
7. / SalesNetwork
8. / Agents’Commissions
9. / DataITSystems
10. / FinancialServices
11. / OperationsDepartment
12. / PortAgent
13. / Routingfor2014
14. / Liquidity– MarketConditions

1. Objective: Theincorporation ofa

Maritime Company in the Rea Sea

The Company’s incorporation will be for the purpose of hiring/Purchasing a vessel orvesselsintherouteof Egypt – Saudi Arabia.

TheManagementCompanywillbeeitherEgyptian or Saudi Arabian.

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2. Information about Egypt

According to the IMF Egypt’s populationin 2012wasabout78 million(prediction for 2015: 86 million) fromwhich63%covers ages between 15 –64 years old.

90% of the population is Muslim.

Inflationfor2012wasreportedat

11,8% (prediction for 2016:

6,5%)

Theroadinfrastructureisrecently built,thus is in a very good condition. Concerning the port facilities, the port services and the telecommunication services are really satisfactory.

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  • TherouteEgypt–SaudiArabia,apartfromthetouristdemand, serves the religious tourismofMuslims,whomustvisitthecityof Mecca at leastonceintheirlifetime:thereishighdemandforthe journey.
  • Beforetheaccidentin2005,whichoccurredbecauseofthepoor conditionofthevessel,annualsalesforthisroundtripreached almost 5 million tickets, while operating with those poorly conditioned vessels of the past.
  • Nowadaysdemandwiththeconventionalvessels,isclosetothe amount of 10 million round trip tickets.
  • The Egyptian and Saudi Arabian governments support this venture.
  • Furthermore,forsomeonetotravelfromEgypttoSaudiArabia,a visamustbeissued,whichcanonly beissuedonlyafterproofof purchase of the ticket for the round trip has been submitted.

Thus, it is possible to control and satisfy the demand.

Forthetimebeingthereisnocompetition,becauseduetothe vessels’ oldage,(before1985)theportauthorities,baringinmind the safety conditions, do not give sailing permission.

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Includes:

Administration /OperationsDepartment/PortAgent/Sales& Marketing Department / Financial Services / Information Technology Department/Organization Chart

Vessels:

1-2 conventional vessels

Offices:

HeadOfficesin Cairo and/or Saudi Arabia

Management officein theport of Safaga

It isalsosuggested,thatanemployeebeassignedtomonitorthe localagent’soperationduringthe periodofoperation,withthe goal of creating supporting offices, in order to control and supervise local/generalagent’sactionsandoperationconcerning theCompany’s vessels

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The officeshouldberentedandestablishedinCairo and/or SaudiArabia,whichwillconstitutetheHead Office of the Company.

Itisrecommendedthatthemanagementofficeinthe Port ofSafagaholdalltheOperationDepartment, Port Agent and Sales Department services.

6. Sales Management

We will appoint an Egyptian and Saudi Arabian counterparty to take over the Sales Management under the GSA format (ticket commission, itineraries and commercial policy, contracts and contracts).

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  • TheSalesNetworkshouldbedesignedandbasedon

specifictravelagents,dependingontheircredibility and experience in the maritime sector.

  • Ourtargetingwillincludetravelagentswhocontrol significant sales networks.
  • Basedonsales,co-operationandcredibility,wewill expand the network further with more agents.
  • Alltheco-operationagreementsmustbeconfirmed with contracts.
  • Ahighpercentageonexpectedsaleswillhavetobe prepaid by the network agents.

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The commissions will depend on the agent’s involvement.

Eachcounterpartywillberesponsibleforthetotal sales (GSA) and will be responsible for co-operation agreements with all of the other subagent contracts.

Each counterparty will take over all the sales network and all the relevant procedures in connections with: the port agent, contacts with the authorities, operations department, the design of routes and the commercial policy, establish collaborations with carrier companies.

All the co-operation will be based on signed contracts, including an 18% commission on the sales grand total from Egypt.

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  • ThemaintouristfoundationsinEgyptareusingacomputerized systemforticketissuance(airticketsmainly)andasaresult they haveknowledgeofusinganelectronicsystemofticket issuance.
  • ApartfromthesalespointsoftheCompany,theremustbe selectedofficesofpartnership(whichwillconstitutethesales

«mainbody»).

  • There must be a coordination between the IT engineers, concerningthe controlandthe installationoftheData andIT programs inthecomputersoftheselectedagentsorinthe sales pointsandateam(peopleknowingtheArabiclanguage quitewell)whowilltakeoverthepersonneltraining.
  • Weshouldtakeunderconsideration,thatsalesaretargeted toward peoplewithaloweducationallevel,whopossiblyare unfamiliar withtheEnglish language.
  • Asfarastheelectronicissuanceofticketsareconcerned,we mustinclude theArabic languagerequiring Data& Itsupport.

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  • The accounting control mustbecomputerized.
  • Theabilitytoissueaccountingstatementsonamonthlybasis (every twoweeks isoptimal),inordertomonitortheagents regularly will beessential.
  • The distribution of invoices must be direct concerning the financialservices (anemphasisisgiventothispointbecauseof thedifficulties of thelong distancesand transportation).
  • Theaccountantsmustbelocalswithexcellentknowledgeofthe English language, becausemostoftheinvoiceswillbewrittenin thelocallanguage.
  • Also,thereisalwaystheoptionthattheaccountingservicesbe assignedtoaninternationalauditorby “posting”ourCompany’s personnelthere(after theyhavebeenfamiliarizedwiththeIT, Dataand Accounting Systemsof thecompany).

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  • The OperationsDepartmentmustbeclosetotheportsof operation.
  • Theadministrativeteamwillhaveitsheadofficeinthe port, supporting all the departures and will beresponsible for the ISM codeimplementation andhave a DPA/Port Captain–it ispreferabletohave2separatepersons,who willtakeoverthecontacts andprocedureswiththeport authorities.
  • It is preferable for the port agents to have Egyptian assistants, whowill also serveastranslatorsbutwillalso serve as replacements for the main marine team.

The Operations Department has to be made up of persons, who in addition to the monitoring will be responsible also for the management, contacts, the vessels’ operations and any other emergency situation.

  • This team will also supervise the port agent operations.

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  • ThePortAgentdealswithalltheoperationinthe port as he is the only one(togetherwithhisteam) who is allowed to move inside the port.
  • The Egyptian government provides port agent licensesstrictlyto“pure” Egyptiancompaniesandthe procedure of issuance lasts 3 months.
  • Another option is to “rent”alicense from port agents who do not have any interest in using this license.
  • We suggest that the monitoring of the port agent be assigned totheCompany,becauseinourexperience the cost and the further profit that comes from the customer inside the port are extremely high.

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13. Routingfor 2013

Safaga – Jeddah: 420 miles

Type of vessel(s): Conventional Vessels

This specific route serves the tourism, religious tourism (pilgrims) and working people.

Also,thisistheroutewiththemostsignificant demand of transportation, concerning vehiclesand cargo.

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14. Liquidity -Market Conditions

Liquidity

Asalreadymentioned, foravisatobeissued,aticket must have been bought quite earlier and as a result, the Company’s liquidity will be significantly enhanced.

Market Conditions

ThetimingisidealastheCompanycanproceedwith theresearchneededtogetpreparedandtakeallthe necessaryactions,soastobereadyatthebeginning

ofseason(springof2015)andensurethesuccessof

this venture.

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