Document:

Exhibit 4.16

 

Execution version

 

 

AMENDED AND RESTATED PLEDGE AGREEMENT

by and between 

 

KENON HOLDINGS LTD., 

 

and

 

NAUTILUS INKIA HOLDINGS LLC

Dated as of February 15, 2018

 

Execution version

 

AMENDED AND RESTATED PLEDGE AGREEMENT

THIS AMENDED AND RESTATED PLEDGE AGREEMENT (this “Pledge Agreement” or this “Agreement”) is made on the 15thday of February, 2018 (“Effective Date”) by and between KENON HOLDINGS LTD. (Company Registration Number: 201406588W), a company incorporated in Singapore and having its registered office at 160 Robinson Road, #17-01, Singapore Business Federation Centre, Singapore 068914 (“Pledgor”); and NAUTILUS INKIA HOLDINGS LLC, a company organized and existing under the laws of Cayman Islands, for itself and on behalf and for the benefit of Nautilus Distribution Holdings LLC (“Buyer” and the “Pledgee”).

Recitals

	
(A)

	
Pursuant to the Share Purchase Agreement (as defined below), the Pledgee and IC Power Asia Development Ltd. (“IC Power”), have entered into a pledge agreement dated 28 December 2017 (the “Original Pledge Agreement”), pursuant to which IC Power granted to the Pledgee a first ranking pledge over, inter alia, the Pledged Shares and certain additional assets as further described in the Original Pledge Agreement;

	
(B)

	
IC Power and the Pledgor have entered into that certain agreement dated December 25, 2017, to transfer, subject to certain conditions, all of its interests in the shares of the Company (as defined below), including the Pledged Shares, to the Pledgor; and

	
(C)

	
In accordance with section 5.6 of the Original Pledge Agreement, as a condition for the transfer of the shares of the Company to the Pledgor, which is occurring on the date hereof, the Pledgee and IC Power agreed that concurrently with the transfer of the shares of the Company to the Pledgor, the Original Pledge Agreement shall be amended and restated and shall be replaced by this Amended and Restated Pledge Agreement, pursuant to which the Pledgor hereby, as security for the Secured Obligations, creates in favour of the Pledgee, a first-ranking fixed pledge over the Pledged Assets, in accordance with the terms of this Pledge Agreement and, upon execution thereof, IC Power shall be released from its obligations as pledgor under and in connection with the Original Pledge Agreement (save for obligations which survive termination of the Original Pledge Agreement as explicitly provided in the Undertaking and Consent (as defined below)).

Now, therefore, it is hereby agreed between the parties as follows:

	
1.

	
Definitions and Interpretation

		
1.1

	
Capitalized terms used and not otherwise defined in this Agreement have the meanings given to them in the Share Purchase Agreement.

		
1.2

	
Capitalized terms referred to in this Agreement will have the following meaning:

 

	
ACRA

	
Accounting and Corporate Regulatory Authority of Singapore.

 

	
 Applicable Account

	
as set forth in clause 5.3 of this Pledge Agreement.

 

	
 Business Day 

	
as defined in the Share Purchase Agreement (which such day shall also be a day in which banks are open for general business in Singapore).

 

	
 Buyer   

	
Nautilus  Inkia  Holdings  LLC  and  its  permitted assignees and transferees under the Share Purchase Agreement.

 

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Execution version

 

	
Company

	
OPC Energy Ltd. (Israeli registration number: 51-440170-2), an Israeli company whose shares are traded on the TASE, having its registered office at 19 Ha’arbaa Street, Tel Aviv, Israel.

 

	
Companies Law

	
Israeli Companies Law, 1999.

 

	
Company Share

	
Ordinary Shares, nominal value NIS 0.01 each, of the Company.

 

	
Dividend Cap

	
fifty percent (50%) of the cumulative net income of the Company (determined as of the date of the most recent regularly prepared income statement of the Company preceding   the  date   the  dividend   is  paid   to  the Applicable Account), on a per Company Share basis with  respect  to  each of  the Pledged Shares for  the period commencing January 1, 2017 through and including the date of that income statement.

 

	
Dividend Reference Period

	
each of (i) the period commencing November 24, 2017 and ending 365 calendar days after that day (the “First Dividend Reference Period”); (ii) the period commencing on the first calendar day following the last day of the First Dividend Reference Period and ending 365 calendar days after that day (the “Second Dividend Reference Period”); and (iii) the period commencing on the first calendar day following the last day of the Second Dividend Reference Period and ending upon the Release Date (the “Third Dividend Reference Period”), in each case, individually or collectively as the context requires.

 

	
Guarantee Law

	
Israeli Guarantee Law, 1967.

 

	
Enforcement Event

	
the exercise by the Pledgee of any of its rights as set forth in clause 12 of this Pledge Agreement.

 

	
Event of Default

	
the occurrence of any event, condition or circumstance that constitutes an “Event of Default” under this Pledge Agreement.

 

	
Excluded Event of Default

	
an Event of Default referred to in any of the following clauses: 11.1, 11.2 (solely for a breach of clause 9.6 in circumstances which the Pledgor has knowledge of on the date hereof), 11.5 (solely with respect to voluntary bankruptcy or dissolution not as part of  a Restructuring) and 11.6.

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Execution version

 

	
Lockup

	
as defined in clause 9.5 of this Pledge Agreement.

 

	
Original Effective Date

	
December 28, 2017.

 

	
Original Pledge Agreement

	
as defined in the preamble.

 

	
Original Pledged Account

	
a bank account opened and maintained in accordance with clause 3.1.4 of the Original Pledge Agreement.

 

	
Original Pledgor

	
the pledgor under the Original Pledge Agreement.

 

	
Pledged Account

	
the bank account to be opened and maintained by the Pledgor in accordance with clause 3.1.4 and pledged under the terms of this Pledge Agreement, details of which to be added in  Schedule 1.

 

	
Pledged Account Bank

	
The bank (including any TASE Member) in which the Pledged Account will be held.

 

	
Pledged Assets

	
as defined in clause 3.1 of the Pledge Agreement.

 

	
Pledged Cash

	
any  cash  pledged pursuant to this Agreement, including any Initially Pledged Cash.

 

	
Pledged Shares

	
32,971,680 Company Shares held for the benefit of the Pledgor by the Trustee in accordance with the Trust Agreement in a segregate Trust Account, constituting as of the Effective Date 25% of the outstanding shares of the Company, such amount of shares to  be (i) reduced by any Company Shares sold (the “Company Shares Sold”) by Pledgor prior to the date of this Agreement, provided that an amount of cash is pledged as Pledged Assets equal to the number of Company Shares Sold multiplied by NIS 14.105 (the “Initially Pledged Cash”) (ii) adjusted to take into account any share split, reverse share split, reclassification or any similar event with respect to the Pledged Shares. The aforementioned amount of Pledged Shares will be reduced following interim release of the Pledged Shares in accordance with clause 4 of this Pledge Agreement and/or following the release of the Pledged Shares pursuant to clause 6 of this Pledge Agreement. Pledged Shares shall include any Company Shares pledged pursuant to Clause 4 or 5.5 of this Agreement.

 

	
Pledges Law

	
Israeli Pledges Law, 1967.

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Execution version

 

	Receiver	
any receiver, receiver and manager, manager, administrator or bailee appointed on the application of the Pledgee by a court of law or any other duly authorised legal or administrative authority, in connection with this Pledge Agreement or the Pledged Assets, including where such appointment is made on a temporary basis.

 

	
Release Date

	
the earlier of: (i) the third (3rd) anniversary date of the Closing of the Share Purchase Agreement, unless upon such date any unresolved indemnity claim(s) under the Share Purchase Agreement is outstanding, whereupon this Pledge Agreement and the pledges created hereunder in favour of the Pledgor will continue to apply but only with respect to the Extended Assets (as defined below) in accordance with the provisions of clause 6 of this Pledge Agreement; (ii) the date all Pledged Shares (including all proceeds received from the sale of Pledged Shares in accordance with clause 5.5 below) have been released from the pledge in accordance with clause 4 of this Pledge Agreement.

 

	
Restructuring

	
as defined in clause 5.6.

 

	
Secured Obligations

	
(i) all indemnification claims by the Pledgee or by any Buyer Indemnitees that are Finally Determined as defined in and in accordance with the Share Purchase Agreement and have not been paid to Buyer less (a) the net proceeds from the realisation of the Pledged Assets that have been set-off by Buyer under clause 10.10 of the Share Purchase Agreement (if permissible thereunder), or (b) amounts actually paid to Buyer as indemnification claims under Article X of the Share Purchase  Agreement);   (ii)  all  obligations  of  the Pledgor under this Pledge Agreement (including any rights to remedies of the Pledgee upon an Event of Default or any breach by the Pledgor of a representation, warranty covenant, agreement or condition contained herein); and (iii) any preservation and foreclosure costs and expenses incurred by the Pledgee (including costs and expenses in connection with an Enforcement Event, lawyers’ fees and costs of any Receiver), in each case of (i)-(iii), unlimited in amount.

 

	
Sellers

	
Inkia Energy Limited and IC Power Distribution Holdings, Pte. Ltd.

	
 

Share Purchase Agreement

	
 

Share Purchase Agreement, dated as of November 24, 2017, by and among, inter alia, Inkia Energy Limited, IC Power Distribution Holdings, Pte. Ltd., and the Pledgee.

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Execution version

 

	
TASE

	
Tel Aviv Stock Exchange.

 

	
Tel Aviv Business Day

	
a day (other than a Saturday) on which banks are open for general business in Israel.

 

	
Term Sheet

	
the  term  sheet  attached  to  the  Share  Purchase Agreement as Exhibit D.

 

	
Trading Day

	
a full day on which trading in the Company Shares is conducted on TASE.

 

	
Trustee

	
Hermetic  Trust  (1975)  Ltd.  (Israeli  Registration Number: 51-070519-7), having its registered office at 113 Ha’yarkon Street, Tel Aviv, Israel, or any assignee thereof in accordance with the Trust Agreement as part of Restructuring, or as otherwise permitted hereunder.

 

	
Trust Account

	
the bank account maintained by the Trustee in which the Pledged Shares are held by the Trustee in accordance with the Trust Agreement and the Trustee Notice and Irrevocable Instructions (as provided under clause 3.2.3 below) until the transfer thereof to the Pledged Account, details of which as set forth in Schedule 2.

 

	
Trust Account Bank

	
Bank Leumi Le’Israel Ltd.

 

	
Trust Agreement

	
the Trust Agreement dated August 2017, by and among the Company and the  Trustee, pursuant to which the Company appointed the Trustee to hold in trust for the benefit of the Pledgor  100,000,021 Company Shares, as amended.

 

	
Undertaking and Consent

	
The Undertaking and Consent of IC Power annexed to this Pledge Agreement.

 

	
VWAP

	
the volume weighed average price, per share, of the Company Shares, for  the Trading  Day  period indicated.

 

	
VWAP Value

	
the fair market value of the Company shares based on the VWAP per Company Share over a 30 Trading Day period prior to such applicable time.

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Execution version

 

	
1.3

	
To the extent that the Pledgor or any other person acting on behalf of the Pledgor makes a payment or payments to the Pledgee on account of the Secured Obligations, or the Pledgee enforces any security given or made as security interest in respect of the Secured Obligations, and such payment or payments or the proceeds of such enforcement or any part thereof are subsequently avoided or set aside, declared to be fraudulent or preferential or required to be repaid or refunded or reduced by virtue of any applicable law relating to bankruptcy, insolvency, administration, receivership, liquidation or similar proceedings, including in case any Restructuring made pursuant to clause 5.6  is declared to be fraudulent or preferential, the Secured Obligations or any part thereof originally intended to be satisfied and this Pledge Agreement and all pledges, rights and remedies hereunder shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or set-off had not occurred.

 

	
1.4

	
Reserved.

	
1.5

	
Unless the context otherwise requires or unless otherwise defined in this Pledge Agreement, words and expressions defined in the Share Purchase Agreement have the same meanings when used in this Pledge Agreement.

	
1.6

	
In this Pledge Agreement, unless the context otherwise requires:

 

		
1.6.1

	
“including” and “includes” means, including, without limiting the generality of any description preceding such terms.

 

		
1.6.2

	
words in the singular include the plural and words in the plural include the singular.

 

		
1.6.3

	
“person” includes any natural person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having separate legal personality) or two or more of the foregoing.

 

		
1.6.4

	
“securities” includes: (a) shares or voting securities or ownership interests in such entity; (b) securities of that entity convertible into or exchangeable for shares or voting securities or ownership interests in such entity; (c) options, warrants, rights or other agreements or commitments to acquire from that entity, or obligations of that entity to issue, any shares or voting securities or other ownership interests in (or securities convertible into or exchangeable for shares or voting securities or other ownership interests in) that entity; (d) obligations of that entity to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to the issuance of any shares, voting securities or other ownership interests in that entity; (e) deposit receipts or certificates representing, directly or indirectly, any of the foregoing; and (f) any other type of security, as such term is defined in the Israeli Securities Law, 1968.

 

		
1.6.5

	
A reference to any agreement or other instrument shall include any amendment of such agreement or instrument from time to time in accordance with the terms hereof and thereof.

 

		
1.6.6

	
A reference to any legislation, to any provision of any legislation or to any regulation issued thereunder shall include any amendment thereto, any modification or re-enactment thereof, any legislative provision or regulation substituted therefor and all regulations and statutory instruments issued thereunder or pursuant thereto.

 

	
1.7

	
The headings in this Pledge Agreement shall not affect the interpretation of this Pledge Agreement.

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Execution version

 

		
1.8

	
Any consent, agreement or approval required from the Pledgee under this Pledge Agreement must be obtained in writing and shall be of no effect if it is not in writing.

	
2.

	
Covenant to Pay and Perform

		
 

	
The Pledgor hereby covenants towards the Pledgee that it will duly and punctually pay and discharge the Secured Obligations as and when and if they become due under the Share Purchase Agreement and/or under this Pledge Agreement.

	
3.

	
Pledge

		
3.1

	
The Pledgor, as a continuing security for the full and punctual payment or performance when and if due of the Secured Obligations, hereby absolutely and unconditionally charges and pledges in favour of the Pledgee, by way of first ranking fixed pledge and assigns to and in favour of the Pledgee, by way of first ranking fixed charge and pledge the following assets (the “Pledged Assets”):

		
3.1.1

	
all right, title and interest of the Pledgor in and to the Pledged Shares, including all distributions (as such term is defined in the Companies Law) and bonus shares distributed and issued in relation thereto, including all dividends, collections, income or otherwise arising from or out of the Pledged Shares, moneys paid or payable in relation thereto (including all liquidation proceeds, redemption proceeds and repaid capital in case of a capital decrease) and all shares, warrants, securities, rights, moneys or property accruing or offered at any time in relation to any or all of the Pledged Shares by way of redemption, substitution, exchange, bonus, pursuant to option rights or otherwise (“Related Rights”), and all rights of the Pledgor as a shareholder of the Company, whether under Law and/or under the organizational documents of the Company which derive from the Pledged Shares or any Related Rights ;

		
3.1.2

	
all rights of the Pledgor as a beneficiary in the Trust Account and rights of the Pledgor as a beneficiary in all securities, moneys, credit balances, securities, documents, instruments and other assets, now or at any time deposited in the Trust Account and any investments part of, credited to or in connection with the Trust Account and all interest, dividends and other income derived thereon or therefrom, certificates and instruments and all assets received, receivable or otherwise distributed in respect of such Trust Account and such investments;

		
3.1.3

	
all rights of the Pledgor as a beneficiary under the Trust Agreement, in respect of and to the extent applicable to the Pledged Shares;

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Execution version

 

		
3.1.4

	
all rights of the Pledgor in and to the Pledged Account and all securities, moneys, credit balances, securities, documents, instruments and other assets, deposited in the Pledged Account at any time, and any investments part of, credited to or in connection with the Pledged Account and all interest, dividends and other income derived thereon or therefrom, certificates and instruments and all assets received, receivable or otherwise distributed in respect of such Pledged Account and such investments. With respect to the Pledged Account, it is hereby agreed as follows:

 

		
3.1.4.1

	
Within no  later than  the date hereof, the Pledgor undertakes to open the Pledged Account and to provide the Pledgee with: (i) a confirmation from the Pledged Account Bank, substantially in the form attached hereto as Exhibit A or in other form reasonably satisfactory to the Pledgee, and (ii) an executed trust agreement with respect to the signatory rights in the Pledged Account (which such agreement shall be counter-signed by the Pledgee), substantially in the form attached hereto as  Exhibit B or in other form reasonably satisfactory to the Pledgee; and

		
3.1.4.2

	
Within no  later than  the date hereof, the Pledgor shall execute and/or deliver to the Pledgee an amendment of, or supplement to, this Pledge Agreement in order to create a first ranking fixed pledge over the Pledged Account and to execute and deliver to the Pledgee all notices of pledge and other documents required to be registered with the Israeli Registrar of Pledges and the ACRA in order to register the pledge created over the Pledged Accountwithin its statutorily prescribed deadlines (if applicable). For the avoidance of doubt, any failure to deliver any additional and/or new pledge or amendment of, or supplement to, this Pledge Agreement or any notices of pledge and other documents required to be filed or registered with the Israeli Registrar of Pledges and the ACRA shall not derogate from any of the rights or pledges created hereunder and the Pledged Account shall be subject to this Pledge Agreement even if no new pledge or amendment of, or supplement to, this Agreement have been executed or no notices of pledge and other documents required to be filed or registered with the Israeli Registrar of Pledges and the ACRA have been filed or registered. The Pledgor hereby irrevocably appoints the Pledgee, to be its attorney acting severally, for purposes of filing and registering or otherwise perfecting the security interest granted over the Pledged Account, in its name and on its behalf, and the Pledgor hereby ratifies, confirms and agrees to ratify and confirm all such acts or things made, done or executed under such authority; and

 

		
3.1.5

	
any Pledged Cash.

		
 

	
and, to the extent not included in the foregoing, any and all proceeds, products and benefits deriving from such pledged assets, including those received upon any collection, exchange, sale or other disposition of such pledged assets and any property into which such pledged assets are converted, whether cash or non-cash.

		
 

	
For the avoidance of doubt, the Pledgor shall be entitled to participate in a rights offering of the Company’s securities, including on account of the Pledged Shares, and in such event the Pledged Assets shall not include any additional securities and rights related thereto purchased by the Pledgor in such rights offering.

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Execution version

 

	
3.2

	
In order to secure the rights of the Pledgee in respect of the Pledged Assets, the Pledgor hereby undertakes and confirms as follows:

 

		
3.2.1

	
it has furnished to the Pledgee certified corporate approvals of the Pledgor approving the execution, delivery and performance of all obligations under this Pledge Agreement;

 

		
3.2.2

	
it has furnished to the Pledgee a legal opinion from a reputable local counsel (in Pledgor’s jurisdiction) in a form reasonably acceptable to the Pledgee;

		
3.2.3

	
it has provided the Trustee, a notice and irrevocable instructions in the form attached hereto as  Exhibit C (“Trustee Notice and Irrevocable Instructions”), and has provided the Pledgee, on the Effective Date, a countersigned acknowledgment thereof by the Trustee, and the Pledgee undertakes to execute and deliver to the Pledgor evidence of executing the confirmation to the Trustee Notice and Irrevocable Instructions promptly upon receipt thereof countersigned by the Trustee. Without derogating from  any of the instructions under the Trustee Notice and Irrevocable Instructions, it is hereby clarified that the Pledgor shall not instruct the Trustee to transfer any Pledged Shares, Related Rights and/or Pledged Cash from the Trust Account (except in case of sale or release of Pledged Shares and/or Pledged Cash which is permitted hereunder), until the Pledgee confirms in writing  to the Trustee  that Pledged Account has been opened and pledged in accordance with this Pledge Agreement;

		
3.2.4

	
it has provided a signed acknowledgement from the Trust Account Bank, substantially in the form attached hereto as Exhibit D or in other form satisfactory to the Pledgee;

		
3.2.5

	
it has duly signed and delivered to the Pledgee all such documents required under applicable law for the purpose of registering the pledges hereby created with the Israeli Registrar of Pledges, including an original form of Notice to the Pledges Registrar (Form #1) and has furnished to the Pledgee evidence of registration of the pledges created hereunder with the Israeli Pledges Registrar; and

		
3.2.6

	
it has duly signed and delivered to the Pledgee all such documents required under Singapore law for the purpose of registering the pledges hereby created with the ACRA and has furnished to the Pledgee evidence of its filing with the ACRA (provided that if it is not possible to file with ACRA on the date hereof due to technical failure related to ACRA, the Pledgor shall furnish to the Pledgee such evidence of filing on the first succeeding day in which it is possible to file with ACRA).

	
3.3

	
Following request of the Pledgee, the Pledgor shall take all action (including any perfection and/or registration actions) as the Pledgee may reasonably require (at the Pledgor’s own cost and expense) so that the pledges created hereunder or pursuant hereto shall be valid, binding and perfected against other creditors (including those claiming to be creditors) of the Pledgor.

	
3.4

	
Upon any share split, reverse share split, reclassification of the Pledged Shares or any other similar event, Pledgor will execute, promptly following such event, a pledge in the same form, mutatis mutandis, as this Pledge Agreement in respect of such additional shares or other securities, as the case may be, and take all action (including any perfection and/or registration actions) as the Pledgee may reasonably require (at the Pledgor’s own cost and expense) so that such new pledges created hereunder or pursuant hereto shall be valid, binding and perfected against other creditors (including those claiming to be creditors) of the Pledgor. Any failure to deliver any additional and/or new pledge or Pledges shall not derogate from any of the rights or pledges granted hereunder. Upon any reverse share split or any other similar event, Pledged Shares shall be released as appropriate such that the portion of the Pledged Shares as a percentage of the total outstanding  shares of the Company is the same as it was prior to such reverse share split or similar event.

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Execution version

 

	
4.

	
Interim Release of the Pledged Shares; Substitution of Collateral

	
 

	
Upon payment of indemnity claims to Pledgee (or the other Buyer Indemnitees) in accordance with the Share Purchase Agreement, the amount of Pledged Shares, Pledged Cash and proceeds received by the Pledgor following the sale of Pledged Shares and deposited in the Applicable Account in accordance with clause 5.5 below (for purposes of this clause, “Proceeds”) shall be reduced and Pledged Shares and Pledged Cash (including Proceeds) shall be released from the pledge created hereunder solely to the extent of such indemnity payments, provided that: (i) first, will be released Pledged Cash (if any); and (ii) second, will be released Pledged Shares, with such amount of Pledged Shares being released to be calculated in accordance with the VWAP Value prior to the release; and necessary documents shall be executed by the parties in connection with such release from the pledge, as soon as reasonably practicable thereafter.

	
 

	
Pledgor may at any time release from this Pledge any cash that is pledged (either held in the Trust Account Bank or in the Pledged Account) by replacing such cash with a pledge of Company Shares equal to amount of cash released divided by the lower of (i) VWAP Value as of the Trading Day prior to the pledge and (ii) NIS 14.105; and necessary documents shall be executed by the parties in connection with such release from the pledge, as soon as reasonably practicable thereafter.  Pledgor will give 3 Business Days’ notice of such a release and pledge.

	
5.

	
Rights of the Pledgor

		
5.1

	
The Pledgor shall retain voting rights with respect to the Pledged Shares, unless an Event of Default shall have occurred and be continuing, and subject to all limitations and restrictions under applicable law.

		
5.2

	
In the event the Company approves distributions (as the term “distributions” is defined in the Companies Law), including distributions of dividends, the proceeds of such distributions with respect to the Pledged Shares will be transferred to the Trust Account (and following transfer of Pledged Shares by the Trustee to the Pledged Account - to the Pledged Account, with respect to the any Pledged Shares so transferred).

		
5.3

	
Unless an Event of Default shall have occurred and be continuing, and subject to applicable law, the Pledgor shall have the right  to draw from the Trust Account (and following transfer of Pledged Shares by the Trustee to the Pledged Account - from the Pledged Account, with respect to the any Pledged Shares so transferred) (the “Applicable Account”) dividends paid in cash (only) on any Pledged Shares in an aggregate amount (in NIS) equal to an amount (in NIS), determined for any Dividend Reference Period, that does not exceed the following amounts:

		
5.3.1

	
In the case of the First Dividend Reference Period, either (i) NIS 0, if VWAP Value preceding the date of the drawing from the Applicable Account does not exceed NIS 14.457726, or if otherwise (ii) an amount, not to  exceed the Dividend Cap, equal to the excess of (1) cumulative cash dividends paid to the Applicable Account since the Original Effective Date, over (2) the cumulative amounts withdrawn from the Applicable Account since the Original Effective Date, excluding in each case amounts referred to in clause 5.4 of this Pledge Agreement.

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Execution version

 

		
5.3.2

	
In the case of the Second Dividend Reference Period, either (i) NIS 0, if VWAP Value preceding the date of the drawing from the Applicable Account does not exceed NIS 14.824459, or if otherwise (ii) an amount, not to  exceed the Dividend Cap, equal to the excess of (1) cumulative cash dividends paid to the Applicable Account since the Original Effective Date, over (2) the cumulative amounts withdrawn from the Applicable Account since the Original Effective Date, excluding in each case amounts referred to in clause 5.4 of this Pledge Agreement.

		
5.3.3

	
In the case of the Third Dividend Reference Period, and thereafter, either (i) NIS 0, if VWAP Value preceding the date of the drawing from the Applicable Account does not exceed NIS 15.177086, or if otherwise (ii) an amount, not to exceed the Dividend Cap, equal to the excess of (1) cumulative cash dividends paid to the Applicable Account since the Original Effective Date, over (2) the cumulative amounts withdrawn from the Applicable Account since the Original Effective Date, excluding in each case amounts referred to in clause 5.4 of this Pledge Agreement.

		
5.4

	
In addition to the right to draw dividends pursuant to clause 5.3 above, provided that the Original Pledgor has not exercised its right to draw dividends under clause 5.4 of the Original Pledge Agreement, on one occasion during the term of this Agreement, and unless an Event of Default shall have occurred and be continuing, the Pledgor shall be entitled to receive and draw from the Applicable Account its pro rata share of dividends of up to the NIS equivalent (determined on the basis of the NIS/USD exchange rate quoted by Central Bank of Israel on the Tel Aviv Business Day immediately preceding the date of payment of the dividend) of USD 25 million paid by the Company in respect of all Pledged Shares. By way of example only, if the Company makes a distribution of US$ 50 million following the Original Effective Date, Pledgor shall be entitled to draw from the Applicable Account on account of such Pledged Shares US$ 6.25 million.

		
5.5

	
Unless an Event of Default shall have occurred and be continuing, the Pledgor may make sales of the Pledged Shares on arms’ length terms in cash at market prices or at customary discounts to market prices for such sales (such discounts not to exceed 5% of market price, based on customary VWAP for such a sale on the TASE), provided that: (a) an amount of cash equal to the number of Pledged Shares sold  multiplied by  NIS 14.105 will be deposited directly into the Applicable Account and invested in bonds of the Israeli government or be deposited in an interest bearing deposit account in the Applicable Account bank; and (b) the Pledgor provides reasonable information regarding the sale to the Pledgee, including the sale documentation to demonstrate compliance with sub clause (a) above, three (3) Business Days prior to such sale.

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Execution version

 

		
5.6

	
Unless (i) an Event of Default under clause 11.6 or 11.5 (solely with respect to voluntary bankruptcy or dissolution not as part of Restructuring) shall have occurred or (ii) following the lapse of 90 days following the Original Effective Date, an Excluded Event of Default shall have occurred and be continuing, Pledgor shall be entitled to transfer the Pledged Assets as part of group restructuring, to an Affiliate of Kenon organized under the laws of Singapore or Israel (“Restructuring”), provided that (a) such transfer is made as part of a transfer of the entire share capital of the Company held by the Pledgor to such Affiliate; (b) the transferee and the Pledgor shall represent to the Pledgee that the transfer is made for adequate consideration; and (c) as a condition for such Restructuring, such transferee will be required to: (i) pledge the Pledged Shares under an amended and restated pledge agreement, with an Affiliate of Kenon organized under the laws of Singapore or Israel as successor pledgor, in substantially the same terms as this Pledge Agreement, subject to applicable changes, including, for the sake of clarity, to reflect requirements under any other applicable laws and customary documentation practices, to the extent applicable (“Amended Pledge Agreement”) and execute and deliver such other documentation as may be required under the laws of Israel or Singapore to register and perfect, as applicable, the security over the Pledged Assets, including registration of the pledge with the Israeli Register of Pledges or Registrar of Companies, and the Parties agree to promptly execute all documents required in connection with such Amended Pledge Agreement and such other documents; (ii) furnish to the Pledgee copies of all regulatory  and third party approvals required by the pledgor (under the Amended Pledge Agreement) to execute and perform the Amended Pledge Agreement (if there are any) or otherwise represent (without any qualifications (other than qualifications explicitly provided hereunder, if any)) that no such regulatory and third party approvals are required and (iii) if the transferee is organized under the laws of Singapore or Israel, at the transferee’s own cost and expense, take all perfection and/or registration action under the laws of Singapore or the laws of Israel as the Pledgee may reasonably require (including any filing with the ACRA) for the purpose of registering the Amended Pledge Agreement and perfection of the pledges thereby created within the required time periods, and the transferee shall furnish to the Pledgee evidence of all such actions and registration. Notwithstanding anything to the contrary herein, in connection with Restructuring, the Pledgor may initiate and promote voluntary winding-up of the Pledgor, provided that such winding-up shall not be completed earlier than 12 months following the execution of a pledge agreement in accordance with sub-clause (c) above. It is agreed, that simultaneously with, or immediately prior to, the execution of the Amended Pledge Agreement and the due filing and registration of all pledges created thereunder, this Pledge Agreement and all instructions provided in accordance to this Pledge Agreement shall terminate (with the exception of clause 6.2 below).

	
6.

	
Release of the Pledge Shares

		
6.1

	
Following the third (3rd) anniversary date of the Closing of the Share Purchase Agreement, the Pledged Assets will be released in full from the pledge created hereby, provided that, to the extent on such date, there are any remaining Pledged Assets which were not released in accordance with clause 4 of this Pledge agreement (which such remaining Pledged Assets shall be defined as the “Remaining Pledged Assets”), and if there are unresolved claims for indemnity made by the Buyer under the Share Purchase Agreement, the pledges created under this Pledge Agreement will continue to apply for Pledged Assets not to exceed the Remaining Pledged Assets sufficient (in the case of Pledged Shares, based on a the VWAP Value per Company Share on the third (3rd) anniversary date of the Closing of the Share Purchase Agreement) (the “Extended Assets”) to cover an amount determined by the Pledgor and the Pledgee together, each acting in good faith (or should the Pledgor and Pledgee be unable to agree, a third party evaluator; and in the absence of agreement on a third party evaluator, PwC shall act as third party evaluator or appoint a third party evaluator) equal to the sum, of (a) a reasonable estimate of the amount ultimately payable on an unresolved claim (including interest and penalties) to be paid under the Share Purchase Agreement, plus (b) a reasonable estimate of the amount of costs and expenses that are expected to be incurred to resolve the claim in accordance with the Share Purchase Agreement, plus (c) 10% of the aggregate of sub clauses (a) and (b) (together, the “Reserve Amount”); provided that (x) to the extent that such unresolved indemnity claims which results in an extension of the pledges created hereunder in a claim amount actually paid exceeding 110% of the Reserve Amount (for the avoidance of doubt being the value of the Extended Assets when the Reserve Amount is initially calculated), the Pledgor shall pay to the Pledgee interest in cash at a rate of 4% per annum on the difference between the amount paid and 110% of the Reserve Amount from the third anniversary date of the Closing of the Share Purchase Agreement until such payment, and (y) to the extent that such unresolved indemnity claims which in an extension of the pledges created hereunder results in a claim amount actually paid is less than 90% of the Reserve Amount (for the avoidance of doubt being the value of the relevant Extended Assets when the Reserve Amount is initially calculated), the Pledgee shall pay to the Pledgor interest in cash at a rate of 4% per annum on the difference between the amount paid and 90% of the Reserve Amount from the third anniversary date of the Closing of the Share Purchase Agreement until the Extended Assets are released from escrow.

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Execution version

 

	
 

	
Any Extended Assets shall be released from the pledge following final settlement of any claims as described above.

		
6.2

	
Upon the Release Date or termination of this Pledge Agreement in accordance with clause 5.6 above, as soon as reasonably practicable thereafter and at the request and cost of the Pledgor, the Pledgee shall execute all such documents and do all such other things which are reasonably required  or otherwise reasonably requested by the Pledgor in order to release or otherwise discharge the pledges, instructions given to any third party, trust agreements, and security rights of the Pledgee created hereunder (other than, for the sake of clarity, Extended Assets, if any), including by means of a written release and discharge, except that (i) any such absolute and unconditional release or discharge shall be subject to clause 1.3 of this Pledge Agreement (Avoidance of Payments), and (ii) in case of any termination of this Pledge Agreement in accordance with clause 5.6 above, in compliance with that clause.

	
7.

	
Continuing Security

		
7.1

	
The pledges created by this Pledge Agreement shall remain in force as continuing security for the payment and discharge of the Secured Obligations and shall remain in force notwithstanding any settlement of account or any other act, event or matter whatsoever, and, subject to clause 1.3 (Avoidance of Payments), shall be released and discharged only in accordance with this Pledge Agreement or upon the Release Date or as otherwise agreed between the parties in writing.

		
7.2

	
The securities created and the powers conferred by this Pledge Agreement are in addition to, and are not in any way prejudiced by the Share Purchase Agreement or any other documents or agreement ancillary thereto.

		
7.3

	
The Pledgee  will not be bound to enforce any of the other liens or collateral before enforcing the pledges created by this Pledge Agreement.

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Execution version

 

	
8.

	
Liability of the Pledgor; Security Interest Absolute

 

		
8.1

	
The Pledgor is a principal debtor and the Pledged Assets are a principal security for the Secured Obligations and, without prejudice to the foregoing, except as provided under clause 12.6, none of the rights of the Pledgee, the Buyer under the Share Purchase Agreement (or any other document or agreement ancillary thereto), or the pledges created hereunder, or the liabilities or obligations of the Pledgor shall be impaired or discharged by (without limitation):

		
8.1.1

	
the Pledgee or the Buyer releasing any of the Pledged Assets (except pursuant to clauses 4 and 6 above or as otherwise agreed between the parties in writing), or granting any time or any indulgence whatsoever or making of any settlement, composition or arrangement with any person;

		
8.1.2

	
the Pledgee or the Buyer asserting or pursuing, failing or neglecting to assert or pursue, or delaying in asserting or pursuing, or waiving, any of their respective rights or remedies (arising under or by virtue of this Pledge Agreement, the Share Purchase Agreement or otherwise) against any person;

		
8.1.3

	
the Pledgee making any variation, amendment or supplement to this Pledge Agreement, the Share Purchase Agreement (or any other document or agreement ancillary thereto) or any other document or instrument from time to time entered into between the Pledgor or any other person and the Pledgee and/or the Buyer (except to the extent specifically provided by such variation, amendment or supplement);

		
8.1.4

	
any change in the time, manner, place of payment or any other term or condition of the Secured Obligations, or any other amendment or waiver of any obligation or warranty under the Share Purchase Agreement (except to the extent specifically provided by such change, amendment or waiver);

		
8.1.5

	
the non-perfection of any security or any release, waiver or amendment from any guaranty for all or part of the Secured Obligations (except to the extent specifically provided by such release, waiver or amendment);

		
8.1.6

	
any lack of validity or enforceability of any or all of the Secured Obligations, any security therefor, the Pledged Assets or any agreement or document relating thereto; or

		
8.1.7

	
to the fullest extent permitted by applicable law, any other circumstance that could otherwise constitute a defence to or discharge of the Pledgor or any third party, other than the payment and performance in full of the Secured Obligations.

		
8.2

	
Notwithstanding anything to the contrary contained in this Pledge Agreement, subject to Clause 12.6, the Pledgor will remain liable to observe and perform all of the conditions and obligations relating to or constituting the Secured Obligations or the Pledged Assets and neither the Pledgee, nor the Buyer nor the Receiver will be under any obligation or liability with respect to the Secured Obligations or the Pledged Assets by reason of or arising out of this Pledge Agreement. Subject to applicable law and the procedures required to make indemnity claims under Article X of the Share Purchase Agreement, neither Pledgee, nor the Buyer nor the Receiver will be required in any manner to perform or fulfil any of the obligations of the Pledgor in respect of the Secured Obligations or the Pledged Assets, or to make any payment, or to make any enquiry as to the nature or sufficiency of any payment received by it, or to present or file any claim or take any action or to collect any amount or enforce any right or remedy hereunder.

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Execution version

 

	
9.

	
Representations and Warranties

	
 

	
The Pledgor makes the following representations and warranties set out in this clause 9 as of the date of this Agreement and acknowledges that the Pledgee has become a party to this Pledge Agreement in reliance on these representations and warranties.

		
9.1

	
The Pledgor is a limited liability company, duly incorporated and validly existing under the laws of Singapore.

		
9.2

	
Pledgor has the requisite power and authority and the legal right to execute, deliver and perform this Agreement, including to create the pledge on the Pledged Assets pursuant to this Agreement, and has taken all necessary action to authorize its execution, delivery and performance of this Agreement.

		
9.3

	
The obligations of Pledgor hereunder are legal, valid and binding obligations and are enforceable in accordance with the terms hereof and, upon completion of proper registration  with  the  Israeli Registrar of Pledges and the proper  registration with  the ACRA, this Pledge Agreement creates the first priority security which it purports to create and such security is valid, effective and enforceable.

		
9.4

	
Neither the execution and delivery of this Pledge Agreement or the other agreements and documents contemplated hereby to be executed and delivered by Pledgor, nor the performance or compliance with any of the provisions hereof or thereof, does or will (i) conflict with or result in a breach of any provisions of the constitutional documents of Pledgor, (ii) constitute or result in any default under any of its contracts, (iii) result in the creation or imposition of a lien upon any property or assets of Pledgor (other than the pledge contemplated by this Pledge Agreement), or (iv) violate any consent, permit, order or law applicable to Pledgor, the Pledged Assets or any of its other material properties, assets or businesses.

		
9.5

	
All authorisations, filings and notices, including regulatory and other third party approvals, consents and notices required by the Pledgor to execute and perform this Pledge Agreement (it being understood that (i) the Pledged Shares (and other Company shares owned by the Pledgor) are subject to an 18 month post-IPO tipping lock up period pursuant to TASE rules and held in trust by the Trustee (“Lockup”); and (ii) the transfer of the Pledged Shares to a buyer(s) as part of foreclosure proceedings of this Agreement may be subject to obtaining the approval of the Israeli Electricity Authority), have been obtained and are in full force and effect, except for the due filing and registration of the pledge with the Israeli Registrar of Pledges and the due filing and registration with the ACRA, which such filing shall occur in accordance with clauses 3.2.5 and 3.2.6 of this Pledge Agreement (respectively).

		
9.6

	
No corporate action, legal proceedings or other procedure or step in relation to: (a) the suspension of payments, a moratorium of any indebtedness, winding-up, judicial management, dissolution, administration, adjudication of bankruptcy, voluntary dissolution (except as part of Restructuring in accordance with clause 5.6 of this Pledge Agreement); (b) a compromise, assignment or arrangement with one or more of its creditors with a view to rescheduling any of its indebtedness on account of inability to repay such indebtedness; (c) the appointment of a liquidator (except as part of Restructuring), judicial manager, receiver, administrative receiver, administrator, compulsory manager or other similar officer; or (d) enforcement of any collateral over any of its assets or any analogous procedure or step has been taken in respect of the Pledgor.

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Execution version

 

		
9.7

	
The Pledged Shares have been duly and validly granted and issued in accordance with Company’s constitutional documents and the Pledgor is the record and beneficial owner of the Pledged Shares, subject to Lockup. The Pledged Shares constitute as of the Effective Date 25% of the outstanding shares of the Company.

		
9.8

	
Except as provided in this Pledge Agreement, and subject to the Pledged Shares being held in trust by the Trustee, the Pledgor is the sole, absolute, legal and beneficial owner of the Pledged Assets.

		
9.9

	
The Pledged Assets are not charged, pledged or attached in favour of any other persons or parties other than the pledge created by this Pledge Agreement and no legal or other proceedings have been taken with respect to the Pledged Assets.

		
9.10

	
Subject to the Lockup: (a) the Pledgor has not assigned, transferred or otherwise disposed of the Pledged Assets (or its right, title and interest to or in the Pledged Assets), either in whole or in part or agreed to do so; and (b) subject to the exceptions provided under clause 9.5 above, no restriction or condition of law or any agreement exists or applies to the ability of the Pledgor to pledge or to transfer the Pledged Assets.

 

		
9.11

	
Subject to certain priorities mandated under applicable law, the pledges created under this Pledge Agreement are not liable to be avoided or otherwise set aside on the liquidation of the Pledgor or otherwise.

		
9.12

	
The Pledgor, both before and after giving effect to the pledge of the Pledge Assets,  is Solvent (as such term is defined in the Share Purchase Agreement).

		
9.13

	
The transfer of the Pledged Shares to the Pledgor from the Original Pledgor was made for adequate consideration.

		
9.14

	
The Pledgor acknowledges and agrees that the representations and warranties set forth in clauses 9.1, 9.3 and 9.8 in this Pledge Agreement shall be deemed to be repeated on each day during the subsistence of this Pledge Agreement by reference to the facts and circumstances then existing.

	
10.

	
Undertakings by the Pledgor

	
 

	
The Pledgor hereby undertakes to the Pledgee as follows:

		
10.1

	
Within a reasonable period of time to use Commercially Reasonable Efforts to supply the Pledgee with such information regarding the Pledged Assets as the Pledgee may reasonably request in writing from time to  time and to use Commercially Reasonable Efforts to provide the Pledgee with reasonable record inspection rights with respect to the accounting books of the Company.

		
10.2

	
To use Commercially Reasonable Efforts to permit at least one visit of a representative of the Pledgee and consultation with the management of the Company each year.

		
10.3

	
Not to create or permit to subsist in any manner, any pledge, charge or other security (of whatsoever nature and howsoever ranking) in respect of or any other right or interest in favour of any third party in relation to all or any part of the Pledged Assets (save for security created hereunder or with respect to the Lockup).

 

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Execution version

 

	
 

 

	
10.4

	
Not to sell, assign, dispose of or otherwise transfer all or any part of the Pledged Assets to any third party, except as permitted under clause 5.5 and/or clause 5.6 of this Pledge Agreement or as set forth in clause 10.5 below.

		
10.5

	
Upon the occurrence of an Event of Default which is continuing, the Pledgor will not permit any sales, pledges or other dispositions of any shares of the Company held by it (or its affiliates) which are not Pledged Shares, unless such sale, at Pledgee’s discretion, is accompanied with  the sale of the Pledged Shares by  the Pledgee on  terms not less favourable than the sale of the non-Pledged Shares (“Co-Sale”), provided that the Pledgor shall be entitled to sell such shares of the Company without Co-Sale if, following Pledgor’s written notice of such contemplated sale (with a reasonable detail of the terms thereof, including the price per share (which the Pledgee acknowledges, may be (i) different from the actual price of such sale in the event of in-market sales or (ii) different from the actual price of such sale in the event of off-market sales (but not more than ten percent (10%) below the price per share indicated in the notice of such contemplated sale)), the Pledgee has not informed the Pledgor whether the Pledgee requires such sale to be accompanied with the sale of Pledged Shares (or has delivered a negative response) within one (1) Business Day (or three (3) Business Days for an off-market sale of shares of one percent (1%) of the outstanding Company Shares or more), provided that in the latter case, the Pledgor may complete the sale at any time prior to the end of such three (3) Business Days, on the condition that if the Pledgee informs the Pledgor within five (5) Business Days following such written notice from the Pledgor, that it has decided that sale of shares should be or should have been performed with Co-Sale, than a respective portion of the proceeds received from such sale of shares shall be deemed to be received from the sale of Pledged Shares (and deposited into the Applicable Account) and a respective amount of Pledged Shares equal to the amount which would have been sold in such sale for such amount of proceeds, shall be, subject to the deposit of said proceeds in the Applicable Account, released from the pledge.

		
10.6

	
To use Commercially Reasonable Efforts not to allow the Company to be delisted from TASE. The Pledgor shall use Commercially Reasonable Efforts to give at least 15 days advance notice of any delisting of the Company’s shares from the TASE or any dual listing of the Company’s shares on another stock exchange (which listing is initiated and pursued by or on behalf of the Company), and in the event that the Pledgee reasonably determines, acting, in good faith, and based on the advice of a reputable external counsel that such delisting or dual listing may impact the ranking, validity or enforceability of the pledges created hereunder, then upon notification of such determination in writing by the Pledgee to the Pledgor, such Pledgor shall not take any action in furtherance of, and shall use Commercially Reasonable Efforts to cause the Company not to effect, such a delisting or dual delisting without the prior consent of the Pledgee, not to be unreasonably withheld, conditioned or delayed.

		
10.7

	
To notify the Pledgee immediately of the imposition of any attachment, or the issue of any execution proceedings or of any application for the appointment of a Receiver, judicial manager, liquidator or similar officer over or with respect to the Pledgor or the Pledged Assets or any part thereof, or any act, proceedings or application similar to any of the foregoing, and to notify immediately the authorities which levied such attachment or issued such execution proceedings or received the application for the appointment of such Receiver, judicial manager, liquidator or similar officer and any third party who initiated or applied for such action, of this Pledge Agreement in favour of the Pledgee and (other than in the case of a Restructuring contemplated by clause 5.6) forthwith to take, at the sole expense of the Pledgor, all steps and measures necessary for the discharge or cancellation of such  attachment, execution proceedings or appointment of Receiver,  liquidator or similar officer or any act, Proceedings or appointment similar to the foregoing, as the case may be.

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Execution version

 

		
10.8

	
To be liable towards the Pledgee for any defect in the Pledgor’s title to the Pledged Assets and to bear the responsibility for the authenticity, regularity and correctness of all the signatures, endorsements and particulars of any Pledged Asset which, under this Pledge Agreement, has been, or may be, until the Release Date, delivered to the Pledgee, or otherwise pursuant to the provisions of this Agreement.

		
10.9

	
To make, from time to time, all such filings, reports and other communications as may be required under applicable law in connection with the Pledged Assets (including, any transaction, omission, act or holding of any interest, by the Pledgor, in the Pledged Assets).

		
10.10

	
Forthwith upon the Pledgee’s first demand, to furnish to it any authorisation or other document which, in the Pledgee’s reasonable opinion, is required or necessary for the purpose of proof of compliance by the Pledgor with its obligations under this Pledge Agreement.

		
10.11

	
Not to withdraw or attempt to withdraw all or any part of the monies standing to the credit of the Trust Account and/or the Pledged Account except as specifically provided under this Pledge Agreement.

		
10.12

	
Once the Pledged Account has been opened,  to  observe and perform,  in  all material respects, all covenants and obligations of the Pledgor in connection with the Pledged Account.

		
10.13

	
To immediately notify the Pledgee in the event that any corporate action, proceedings, petition, application, request or other procedure or step is taken in relation to: (i) the suspension of payments, a moratorium of any financial indebtedness, winding-up, judicial management, dissolution, freeze order, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement, freeze order or otherwise), any other arrangement, proceedings or scheme entered into or applied for in relation to, the Pledgor, except as part of Restructuring in accordance with clause 5.6 of this Pledge Agreement; (ii) a composition, compromise, assignment or arrangement with the creditors or any class or group of creditors of the Pledgor; (iii) the appointment (whether temporary or permanent) of a liquidator, judicial manager, Receiver, or other similar officer in respect of the Pledgor, the Pledged Assets or majority of its assets (iv) enforcement of any lien over the Pledged Assets or a majority of the assets of the Pledgor; or (v) any expropriation, attachment, sequestration, distress or execution which adversely affects the Pledged Assets or a majority of the assets of the Pledgor.

		
10.14

	
To immediately notify the Pledgee of any Event of Default.

		
10.15

	
Not to do, or, to the extent within the Pledgor’s control, permit to be done, anything which could reasonably be expected to prejudice the rights of the Pledgee hereunder (including which would in any way lead to any restriction whatsoever on the ability of the Pledgee to realise its rights under this Agreement).

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Execution version

 

	
11.

	
Events of Default

 

Each of the events set out in this clause 11 shall constitute an Event of Default:

 

		
11.1

	
The Pledgor (or any of the Indemnifying Parties) does not pay on the due date any amount payable by it as indemnification claims that are Finally Determined as defined in, and in the manner required under, the Share Purchase Agreement; unless the non-payment is remedied within three (3) Business Days of the due date.

		
11.2

	
A representation or warranty made by the Pledgor in this Pledge Agreement or the representation made by IC Power under the Undertaking and Consent, is incorrect in any material respect when made, unless the circumstances giving rise to the misrepresentation:

		
11.2.1

	
are reasonably likely to be capable of remedy within the time provided in clause 11.2.2; and

		
11.2.2

	
are remedied within 30 days (or, with respect to clauses 9.1, 9.3 and/or 9.8- within 7 days) of the earlier of the Pledgee giving notice and the Pledgor or IC Power (as relevant) becoming aware of the breach and/or non-compliance.

		
11.3

	
The Pledgor breaches any covenant or undertaking made by it under this Pledge Agreement or does not comply with any term or condition of this Pledge Agreement or IC Power breaches any covenant or undertaking made by it under the Undertaking and Consent or does not comply with any term or condition of the Undertaking and Consent, unless the breach and/or the non-compliance:

		
11.3.1

	
are reasonably likely to be capable of remedy within the time provided in clause 11.2.2; and

		
11.3.2

	
is remedied within 30 days (or, with respect to clauses 10.3, 10.4 and/or 10.11 - within 7 days) of the earlier of the Pledgee giving notice and the Pledgor or IC Power (as relevant) becoming aware of the breach and/or non-compliance.

		
11.4

	
Any of the following occurs in respect of the Pledgor, except as part of Restructuring in accordance with clause 5.6 of this Pledge Agreement:

		
11.4.1

	
a meeting of its shareholders, directors or other officers is convened for the purpose of considering any resolution, to petition for or to file documents with a court or any registrar for its winding-up, judicial management, administration or dissolution or any such resolution is passed;

		
11.4.2

	
its shareholders, directors or other officers request the appointment of, or give notice of their intention to appoint a liquidator, trustee in bankruptcy, judicial manager, compulsory manager, receiver, administrative receiver, administrator or similar officer; or

		
11.4.3

	
it admits its inability to pay its debts as they fall due.

		
11.5

	
Any of the following occurs in respect of the Pledgor, except as part of the Restructuring in accordance with and subject to the terms of, clause 5.6 of this Pledge Agreement:

		
11.5.1

	
any step is taken with a view to a moratorium or a composition, assignment or similar arrangement with any of its creditors;

		
11.5.2

	
any person, other than the Pledgor, presents a petition, or files documents with a court or any registrar for its winding-up, judicial management, administration or dissolution; or

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Execution version

 

		
11.5.3

	
any other analogous step or procedure is taken in any jurisdiction.

		
 

	
This clause 11.5 will not apply to any petition or step taken which is being contested in good faith and with due diligence and is discharged, stayed, dismissed or struck out within 60 days.

 

		
11.6

	
Any of the following occurs in respect of the Pledgor except as part of Restructuring in accordance with clause 5.6 this Pledge Agreement:

		
11.6.1

	
an order for its winding-up, judicial management, administration or dissolution is made;

		
11.6.2

	
any liquidator, trustee in bankruptcy, judicial manager, compulsory manager, receiver, administrative receiver, administrator or similar officer is appointed in respect of all of its assets;

		
11.7

	
Any attachment, sequestration, distress, execution or analogous event affects any of the Pledged Assets and is not discharged within 45 days.

 

		
11.8

	
It is or becomes invalid or unlawful for the Pledgor to perform any of its obligations under this Pledge Agreement or any part of this Pledge Agreement not binding and effective in accordance with its terms or is alleged by any party not to be binding and effective in accordance with its terms for any reason.

		
11.9

	
This Pledge Agreement does not create the security it purports to create.

		
11.10

	
Any provision of this Pledge Agreement is required under or pursuant to any law to be waived, modified or amended and, in the reasonable opinion of the Pledgee this materially adversely affects the rights granted to the Pledgee hereunder.

		
11.11

	
any regulatory authorization required for the creation, performance or perfection of this Pledge Agreement:

 

		
11.11.1

	
is not obtained or effected by the time it is required;

		
11.11.2

	
is varied, revoked or cancelled or otherwise ceases to be in full force and effect; or

		
11.11.3

	
is not renewed or is renewed on revised terms;

		
 

	
and with  respect to any of the circumstances referred to  in  this clause 11.11,  if not remedied within 21 days.

	
12.

	
Realisation

		
12.1

	
Following the occurrence of an Event of Default which is continuing in accordance with clause 11, and subject to the provisions of clause 12.3 below, the Pledgee shall be entitled to enforce its rights under this Pledge Agreement in any manner subject to applicable law (including TASE’s rules), including the realisation and/or sale of the Pledged Assets, in whole or in part, whether by the appointment of a Receiver and/or by the Israeli Execution Office and/or by a court’s order and/or by any other method permitted under applicable law, as the Pledgee shall see fit, and to apply the proceeds thereof on account of the Secured Obligations, all without the Pledgee first being required to realise any other guarantee or pledge or other securities, if such be held by the Pledgee, provided that the Pledgee may only enforce its realization rights of the securities created under this Pledge Agreement in accordance with the waterfall priority set forth in Section 10.10 of the Share Purchase Agreement.

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Execution version

 

		
12.2

	
Any Receiver appointed pursuant to or in connection with clause 12.1 of this Pledge Agreement, shall be empowered, subject to clause 12.3 and any applicable law, including TASE’s rules applicable to the Pledgor, to:

		
(a)

	
take immediate possession of and get in and collect the Pledged Assets or any part thereof;

		
(b)

	
sell or agree to the sale of the Pledged Assets, in whole or in part, or to transfer the same in any other manner upon such terms as he may think fit;

		
(c)

	
make any other arrangement with respect to the Pledged Assets or any part thereof (including the realisation thereof) as he may think fit;

		
(d)

	
exercise any right relating to the Pledged Assets, including the right to vote the Pledged Shares, elect the directors of the Company and receive dividends;

		
(e)

	
take, continue or defend any proceedings and make any arrangement of compromise which he shall see fit; and

		
(f)

	
do all such other acts and things as he may consider incidental or conducive to any of the matters and powers aforesaid.

		
12.3

	
Notwithstanding anything to the contrary in clause 12.1 or clause 12.2 above, unless an Excluded Event of Default has occurred and is continuing, (i) any Receiver that may be appointed for realization proceedings under clause 12.1 shall, to the fullest extent permitted by applicable law, not have authority to, and shall not be instructed to, sell or otherwise transfer any Pledged Assets (such Receiver, a “Special Receiver”), and (ii) the Special Receiver shall only have the authority to exercise the rights under sub-clauses 12.2(a) and 12.2(d) with respect to the Pledged Assets; provided that:

 

		
12.3.1

	
If any Event of Default is cured or waived by the Pledgee (in its sole discretion) or otherwise ceases to be continuing, any Pledged Assets then possessed by the Special Receiver (including any dividends received by the Special Receiver while possessing such Pledged Assets) shall be released from the possession of the Special Receiver and thereafter the provisions of this Pledge Agreement shall continue to apply to all the Pledged Assets.

 

		
12.3.2

	
Without derogating from, in accordance with and subject to clause 4 above, upon payment of indemnity claims to the Pledgee (or the other Buyer Indemnitees) in accordance with the Share Purchase Agreement, an amount of Pledged Shares possessed by such Special Receiver shall be released from the pledge created hereunder to the extent of such indemnity payments and the Pledgee and the Special Receiver shall execute any necessary documents therefor.

 

		
12.3.3

	
For the sake of clarity,  if any Excluded Event of Default occurs and  is continuing at the same time any other Event of Default has occurred and is continuing, the Special Receiver shall have authority to take, and may be instructed to take, any action referred to in clause 12.2, and the limitations set forth on the Special Receiver’s authority in this clause 12.3 shall have no force or effect for so long as any such Excluded Event of Default is continuing.

 

- 22 -

Execution version

 

		
12.4

	
It is hereby clarified that should an Excluded Event of Default occur while the Pledged Assets are possessed by the Special Receiver, neither the Pledgee nor the Special Receiver will be limited to the provisions of clause 12.3 above.

 

		
12.5

	
It is hereby further clarified and agreed that the Pledgee shall not be responsible, and no claim shall be made by the Pledgor against the Pledgee, for any action taken by the Special Receiver in any manner, or for any order or ruling by a competent court, which is inconsistent with clause 12.3 above (for purposes of this clause, an “Inconsistent Action”); provided that the Pledgee (i) has instructed the Special Receiver in writing to act in accordance with clause 12.3 hereof (and, in its first application to the court to appoint the Special Receiver, if any, shall expressly address Section 12.3), (ii) has not requested the court to order an Inconsistent Action, and (iii) if the Special Receiver has been ordered to take an Inconsistent Action, the Pledgee has reasonably objected any such request or application, to  the  extent requested in writing  by  the Pledgor to  so object; provided however that nothing herein is intended to impair the Pledgee’s ability to exercise its rights under this Pledge Agreement (including Section 12.3); it is hereby understood that the foregoing clauses (i), (ii) and (iii) are applicable unless an Excluded Event of Default has occurred immediately prior to such Inconsistent Action and is still continuing at the time.

		
12.6

	
Any amounts actually received by the Pledgor from the realization of the Pledged Assets shall be first allocated to cover any foreclosure costs and expenses incurred by the Pledgee in enforcing its rights hereunder, and thereafter allocated as (and deemed to be) payment of indemnity amounts under Article X of the Share Purchase Agreement (including interest and penalties), with the value of such deemed payment being equal to the proceeds from the realization of the Pledged Assets. For the avoidance of doubt, any payment of proceeds from realization of the Pledged Assets shall not be paid or otherwise transferred to the Pledgee, and the Pledgee shall not accept such transfer or payment, unless in accordance with and solely to the extent the Pledgee is entitled thereto according to Article X of the Share Purchase Agreement for items included in clause (i) of the definition of Secured Obligations,  and/or to  compensate  Pledgee  for items  included  in  clause (iii) of the definition of Secured Obligations. This Clause 12.6 shall not derogate from any other contractual rights the parties may have.

		
12.7

	
Subject to applicable law including TASE’s rules applicable to the Pledgor, the Pledgee shall not be obliged to take any action whatsoever in connection with any Pledged Assets. Neither the Pledgee nor any other person acting on behalf of any of the Pledgee, shall be liable for, and the Pledgor hereby waives, any claim it may have against the Pledgee and/or any other person acting on behalf of the foregoing, which arises from any loss or damage which may be caused as a result of realization of Pledged Assets in accordance with this clause 12, of any of the foregoing, to the extent not in the event of wilful misconduct, intentional misrepresentation or fraud of any of the foregoing.

		
12.8

	
The parties hereby acknowledge and undertake that the exercise of the pledge contemplated hereby will be subject to the applicable TASE’s lockup rules.

 

	
13.

	
Power to Remedy

	
 

	
If the Pledgor fails to comply with any obligation set out in this Pledge Agreement and that failure is not remedied to the satisfaction of the Pledgee within 20 days  (and with respect to any registration requirement - within 7 days) of the Pledgee giving notice to the Pledgor or the Pledgor becoming aware of the failure to comply, it will allow (and irrevocably authorises) the Pledgee or any person which the Trustee nominates to take any action on behalf of the Pledgor which is reasonably necessary to ensure that those obligations are complied with.

- 23 -

Execution version

 

	
14.

	
Indemnity; Costs and Expenses

		
14.1

	
The Pledgor shall indemnify the Pledgee against all losses incurred by the Pledgee as a result of a breach by the Pledgor of its obligations under this Pledge Agreement and in connection with the exercise by the Pledgee’s of its rights contained in clause 12 of this Pledge Agreement, save for any losses arising as a result of the gross negligence or wilful misconduct of the Pledgee. All sums the subject of this indemnity will be payable by the Pledgor to the Pledgee within 10 Business Days of demand.

		
14.2

	
All reasonable costs, fees and expenses arising in relation to the registration and realization of this Pledge Agreement, will be borne by the Pledgor.

	
15.

	
Rights Not Exclusive

	
 

	
The rights, powers and remedies of Pledgee under this Pledge Agreement are cumulative and are not exclusive of, and shall be in addition to, all rights, powers and remedies given to Pledgee by virtue of any law, or any other agreement, all of which rights, powers and remedies shall be cumulative and may  be  exercised  successively  or concurrently  without impairing  Pledgee’s security interest in the Pledged Assets.

	
16.

	
Assignment

	
 

	
Neither the Pledgor nor the Pledgee shall be entitled to transfer or assign this Pledge Agreement or any of their rights and/or obligations arising hereunder to the extent not otherwise permitted in this Pledge Agreement, provided however, that the Pledgee may without having the need for further consent by the Pledgor, transfer and assign this Pledge Agreement together with all of its rights and/or obligations arising hereunder to a collateral agent organized under the laws of the state of (i) Israel or (ii) Singapore, United States or the UK (in which such case, whose identity shall be approved in advance by the Pledgor (which such advance approval shall not be unreasonably withheld or delayed)), appointed to hold the Pledged Assets on behalf or for the benefit of the Buyer, which customarily engages in providing professional trustee services or in acting as a collateral agent.

	
17.

	
Waiver by the Pledgor

	
 

	
Without derogating from any other provisions of this Pledge Agreement which exclude the application of, or constitute a waiver by the Pledgor of, certain defences or rights under the Israeli Guarantee Law 1967  (which defences or rights would, but for such provisions, have been available to the Pledgor), in any event where the pledges created under this Pledge Agreement secure the obligations of the Pledgor, the Pledgor hereby waives all rights and defences of the Guarantee Law, including under Sections 5, 6 or 8 of the Guarantee Law and confirms that such provisions shall not apply to this Pledge Agreement.

	
18.

	
Remedies and Waivers

		
18.1

	
No failure to exercise, nor any delay in exercising, on the part of the Pledgee’s of any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right of remedy prevent any further or other exercise thereof or the exercise of any other right or remedy.

		
18.2

	
Pledgor waives any right to require Pledgee to proceed against any person or to exhaust any other collateral or to pursue any other remedy in such Pledgee’s power.

- 24 -

Execution version

 

	
19.

	
Partial Invalidity

	
 

	
If, at any time, any provision hereof is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

	
20.

	
Counterparts

	
 

	
This Pledge Agreement and any ancillaries thereto may be executed in any number of counterparts (including counterparts transmitted via facsimile or in .pdf or similar format), and this has the same effect as if the signatures on the counterparts were on a single copy of this Pledge Agreement.

	
21.

	
Notices

		
21.1

	
In Writing

		
(a)

	
Any communication in connection with this Pledge Agreement must be in writing and, unless otherwise stated, may be given:

		
(i)

	
in person, by  post, fax, e-mail or any other electronic communication approved by the Pledgor; or

 

		
(ii)

	
For the purpose of this Pledge Agreement, an electronic communication will be treated as being in writing.

		
21.2

	
Contact details

		
(a)

	
The contact details of the Parties hereto are as follows:

In the case of the Pledgee, as set forth in the Share Purchase Agreement, 

 

with a copy to (which shall not constitute notice) to:

 

Goldfarb, Seligman & Co. 

Ampa Tower

98 Igal Alon St. 

Tel Aviv 6789141

Israel

Attention: Ido Zemach, Adv. 

Email: ido.zemach@goldfarb.com 

Attention: Michal Matthews-Maor, Adv. 

Email: michal.matthew@goldfarb.com

 

In the case of the Pledgor, the registered address set forth in the preamble of this Agreement, with a copy to (which shall not constitute notice) to:

Gornitzky & Co.

45 Rothschild Blvd. 

Tel Aviv, Israel

Fax: 972-3-5606555

Elite Elkon, Adv.:

elkon@gornitzky.com

Nurit Traurik, Adv.:

nuritt@gornitzky.com

- 25 -

Execution version

 

		
(b)

	
Any Party may change its contact detail by giving five Business Days’ notice to the other Party.

		
21.3

	
Effectiveness

		
(a)

	
Except as provided below, any communication in connection with this Pledge Agreement will be deemed to be given as follows:

		
(i)

	
if delivered in person, at the time of delivery;

		
(iii)

	
if posted, five days after being deposited in the post, postage prepaid in a correctly addressed envelope;

		
(iv)

	
if by fax, when received in legible form; and

		
(v)

	
if by e-mail or any other electronic communication,  when received in legible form.

		
(b)

	
A communication given under paragraph (a) above but received on a non-Business Day or after business hours in the place of receipt will only be deemed to be given on the next working day in that place.

		
(c)

	
A communication to the Pledgee will only be effective on actual receipt by it.

	
22.

	
Governing Law

	
 

	
This Agreement shall be governed by, and construed in accordance with, the laws of the State of Israel (without regard to the conflict of law principles thereof).

	
23.

	
Jurisdiction

		
23.1

	
The Parties hereby irrevocably agree, that the courts of Tel-Aviv shall have the exclusive jurisdiction to hear and determine any suit, action or proceedings and to settle any disputes, which may arise out of or in connection with this Pledge Agreement (respectively, “Actions” and “Disputes”) and, for such purposes, irrevocably submits to the jurisdiction of such courts.

		
23.2

	
The Pledgor hereby irrevocably waives any objection which it might now or hereafter have to the courts referred to in Clause 23.1 being nominated as the forum to hear and determine any actions and to settle any disputes and agrees not to claim that any such court is not a convenient or appropriate forum.

	
24.

	
Amendment

	
 

	
This Pledge Agreement shall not be amended, modified or altered unless by an agreement in writing executed by Pledgor and Pledgee.

	
25.

	
Stamp Duties

		
To the extent applicable, the Pledgor shall pay, and forthwith on demand indemnify, secure and/or prefund the Pledgee and the Buyer against any liability that the Pledgee and/or the Buyer may incur in respect of any stamp, registration and similar tax which shall become payable in connection with the entry into, registration, recording, perfection, performance, execution or enforcement of this Pledge Agreement or the pledges created hereby.

- 26 -

Execution version

 

	
26.

	
Entire Agreement

	
 

	
This Pledge Agreement contains the entire agreement between the Parties relating to the subject matter hereof and supersede all oral statements and prior writings with respect thereto, including the Term Sheet. Prior drafts of this Pledge Agreement shall not be used for and shall have no affect with respect to the interpretation of this Pledge Agreement.

[The remainder of this page is intentionally left blank.]

 

- 27 -

The undersigned executed this Agreement as of the date first set forth above.

 

	 	PLEDGEE:
	 	 
	
 

	
NAUTILUS INKIA HOLDINGS LLC

	 	 

 

	 	
Name:

	
Thomas Lefebvre

 

	 	
Title:

	
Authorized Signatory

 

 

	 	PLEDGOR:
	 	 
	
 

	
Executed and delivered as a deed by Arunava Sen

	 	 
	 	 on behalf of KENON HOLDINGS LTD.
	 	 
	 	 
	 	
 Director

 

	 	 
	 	 Witness
	 	 Chan Yi Fan

 

 

Undertaking and Consent

 

The undersigned, IC Power Asia Development Ltd., undertakes and confirms as follows:

	
I.

	
The transfer of the Pledged Shares (as such term is defined in the Amended and Restated Pledged Agreement dated the date hereof (the “Pledge Agreement”)) to the Pledgor from the undersigned was made for adequate consideration.

 

	
2.

	
The undertaking of the undersigned not to complete a voluntary winding earlier than 12 months following the execution of the Original Pledge Agreement (as such term is defined in the Pledge Agreement) will survive the termination of the Original Pledge Agreement

	
3.

	
Clause 1.3 of the Original Pledge Agreement (Avoidance of Payments) shall survive the termination of the Original Pledge Agreement including with respect to the transfer of Pledged Shares to Kenon Holdings Ltd.

 

		
IC Power Asia Development Ltd.

	 	 

		
Name:

	
Robert L. Rosen

	 	 	 
	 	Title: 	 Director
	 	 	 
	 	Date:	February 15, 2018Exhibit 4.17

 

Hangzhou Chengmao Investment Co., Ltd.

 

and

 

Wuhu Chery Automobile Investment Company Limited

 

Quantum (2007) LLC

 

Qoros Automobile Company Limited

 

in respect of

 

Qoros Automobile Company Limited

 

Investment Agreement

 

May 2017

	
Investment Agreement

 

TABLE OF CONTENTS

	 	 	 
	
1.

	
Definitions

	
2

	 	 	 
	
2.

	
This Investment

	
5

	 	 	 
	
3.

	
Conditions Precedent

	
11

	 	 	 
	
4.

	
Closing

	
13

	 	 	 
	
5.

	
Arrangements for Transitional Period

	
14

	 	 	 
	
6.

	
Post-investment Covenants

	
16

	 	 	 
	
7.

	
Representations and Warranties

	
17

	 	 	 
	
8.

	
Confidentiality

	
18

	 	 	 
	
9.

	
Notice

	
19

	 	 	 
	
10.

	
Termination of the Agreement

	
20

	 	 	 
	
11.

	
Governing Law and Dispute Resolution

	
22

	 	 	 
	
12.

	
Taxes and Expenses

	
22

	 	 	 
	
13.

	
Severability

	
23

	 	 	 
	
14.

	
Waiver

	
23

	 	 	 
	
15.

	
Formation and Effectiveness

	
23

	 	 	 
	
16.

	
Miscellaneous

	
23

 

1

	
Investment Agreement

 

INVESTMENT AGREEMENT

 

This Qoros Automobile Company Limited Investment Agreement is entered into in the PRC on this May 23, 2017 by and among:

 

(1) Hangzhou Chengmao Investment Co., Ltd., a company organized and validly existing under the laws of China, with its registered address at Room 316, Building 9, 588 Feijiatang Road, Xiacheng District, Hangzhou City, Zhejiang Province, the PRC (hereinafter referred to as the “Investor” or “Party A”);

 

(2) Wuhu Chery Automobile Investment Company Limited, a company organized and validly existing under the laws of China, with its registered address at 8 Changchun Road, Wuhu Economic and Technological Development Zone, Anhui Province, holding 50% equity interest in Qoros Automobile Company Limited as of the date hereof (hereinafter referred to as “Wuhu Chery” or “Party B”);

 

(3) Quantum (2007) LLC, a company organized and validly existing under the laws of State of Delaware, the United States of America, with its registered address at 16192 Coastal Highway Lewes Delaware 19958 USA, holding 50% equity interest in Qoros Automobile Company Limited as of the date hereof (hereinafter referred to as “Quantum” or “Party C”; together with Wuhu Chery, the “Existing Shareholders”);

 

(4) Qoros Automobile Company Limited, a company organized and validly existing under the laws of China, with its registered address at 1 Tongda Road, Changshu Economic & Technological Development Zone, Jiangsu Province (hereinafter referred to as “Party D”, the “Target Company” or “Qoros Automobile”).

 

The parties hereto may be referred to collectively as the “Parties”, and a “Party” means any of them.

 

Whereas:

 

The Parties have agreed upon strategic cooperation on Qoros Automobile. With respect to this Investment, through friendly consultation, the Parties hereby agree as follows:

 

	1.	
Definitions

 

	1.1	
Definitions

 

Unless otherwise specified in this Agreement, the following terms or abbreviations shall have the following meanings:

 

		
1.1.1

	
Agreement means this Qoros Automobile Company Limited Investment Agreement and appendixes hereto.

2

	
Investment Agreement

 

		
1.1.2

	
this Investment means the investment made by the Investor in the Target Company in such a manner as set forth in Article 2 of this Agreement.

 

		
1.1.3

	
Transaction Documents mean any other agreements and documents signed by the Parties for the purpose of completion of this Investment, including but not limited to the AOA, the Loan Agreement, and etc.

 

		
1.1.4

	
AOA means the amended and restated articles of association of the Target Company.

 

		
1.1.5

	
Person means any individual, corporation, partnership, joint venture, enterprise, consortium, company limited by shares, limited liability company, trust, unincorporated body, approval authority or any other entity or organization.

 

		
1.1.6

	
Subordinate Entities means all branches and subsidiaries invested and established by Qoros Automobile.

 

		
1.1.7

	
Existing Shareholders mean Wuhu Chery and Quantum.

 

		
1.1.8

	
Accounts means balance sheet, income statement, cash flow statement, statement of changes in equity and other financial statements together with notes thereto prepared in accordance with the accounting principles generally accepted in China or otherwise set forth herein.

 

		
1.1.9

	
Original Accounts means the audited Accounts of the Target Company as of December 31, 2016 (“Base Date”), prepared in accordance with the accounting principles generally accepted in China.

 

		
1.1.10

	
Investment Price means the total investment price paid by the Investor to the Target Company in accordance with Article 2.6.2 of this Agreement.

 

		
1.1.11

	
Approval Authority means the Ministry of Commerce of the People’s Republic of China and its branches and successors.

 

		
1.1.12

	
NDRC means the National Development and Reform Commission of the People’s Republic of China and its branches and successors.

 

		
1.1.13

	
AIC means the State Administration for Industry and Commerce and its branches and successors.

 

		
1.1.14

	
Closing Date means the date on which this Investment is completed in accordance with Article 4 of this Agreement.

 

		
1.1.15

	
Business Day means a day on which commercial banks are open for normal business other than statutory holidays and public holidays of the People’s Republic of China.

3

	
Investment Agreement

 

		
1.1.16

	
Encumbrance means any mortgage, security, pledge, lien, option, restriction, pre-emptive right, third party’s right or benefit, or encumbrance or security interest in any other form, or any other priority arrangement with a similar effect, including transfer of ownership or collateral arrangement, provided that Encumbrance shall not include any such effect resulting from the AOA.

 

		
1.1.17

	
Material Adverse Effect means (i) with respect to the Target Company, the circumstances under which it has lost or will lose business qualifications or licenses for vehicle production issued by the competent regulatory authorities; (ii) with respect to the Investment contemplated hereunder, this Investment cannot be proceeded lawfully and completely, and/or (iii) the business model of the Target Company has had material adverse changes.

 

		
1.1.18

	
Undisclosed Liabilities means any liabilities accruing on or before March 31, 2017 that are not disclosed in the Accounts of the Target Company, and/or not disclosed by the Target Company and/or the Subordinate Entities to the Investor in writing, including, without limitation, (i) contract or tort obligations or any expenses of the Target Company or the Subordinate Entities as a result of other legal disputes; (ii) any penalty or fines imposed by competent governmental authorities on the Target Company and/or the Subordinate Entities; (iii) unpaid taxes of the Target Company and/or the Subordinate Entities; (iv) wages, bonus, social insurance or welfare, housing fund, economic compensation, damages and other amounts payable to employees.

 

		
1.1.19

	
China or the PRC means the People’s Republic of China, which for the purpose of this Agreement does not include the Hong Kong Special Administrative Region, the Macao Special Administrative Region and Taiwan.

 

		
1.1.20

	
Yuan means yuan of Renminbi, the lawful currency of the PRC.

 

		
1.1.21

	
Cooperator means the investor entering into an agreement with the Existing Shareholders and/or the Target Company on April 6, 2017, as publicly disclosed by the parent company of Quantum.

 

		
1.1.22

	
Qoros Project means a cooperation project contemplated under any binding investment agreement entered into by and between the Existing Shareholders and/or the Target Company and the Cooperator.

4

	
Investment Agreement

 

	
1.2

	
Interpretation

 

		
1.2.1

	
Terms, Appendixes, etc.

 

References to this Agreement shall include references to any appendix hereto; references to terms and appendixes are references to the terms hereof and appendixes hereto.

 

		
1.2.2

	
Headings

 

Headings shall not affect the interpretation of this Agreement.

 

		
1.2.3

	
Dates

 

Unless otherwise specified herein, if the performance date or the last day of the performance period hereunder is a day other than the Business Day, the Business Day immediately following such day shall be the performance date or the last day of the performance period.

 

		
1.2.4

	
Time

 

References to time are references to Beijing Time of the PRC.

 

	2.	
This Investment

 

	2.1	
The Investor shall designate a bank account opened in its name as an escrow account (“Escrow Account”), with which the Investor and each Existing Shareholder shall maintain their respective specimen signature/seal, and all funds under which shall be used and transferred only if agreed upon by the Investor and each Existing Shareholder in accordance with this Agreement. The Investor undertakes that after the opening of the Escrow Account, it will not revoke or change the signatory of Escrow Account at will or change any Party’s specimen signature/seal of the Escrow Account without the written requirements of the designating Party or the Party the specimen signature/seal belongs to. In addition, the Investor shall only activate internet banking to the extent such access provides solely for checking functions (i.e., not transfer or withdrawal functions), and shall provide the necessary access information (i.e., username, password and any required devices) to the Existing Shareholders to allow them regular access to the internet banking portal in order to check the account balance. Within three (3) Business Days after the execution of this Agreement, the Investor shall deposit investment funds of RMB1,000,000,000 (in words: Renminbi one billion yuan) into the Escrow Account.

5

	
Investment Agreement

 

	
2.2

	
(a) The Target Company and/or the Existing Shareholders agree to use their best endeavors to provide signed meeting minutes with the Cooperator or any other written form in respect of the settlement of the Qoros Project which is signed by an attendee who is then duly authorized by the Cooperator (the “Cooperator Meeting Minutes”) within one (1) month after the date of this Agreement. The Investor shall confirm in writing if it accepts the terms set out in the Cooperator Meeting Minutes within three business days upon receipt of such minutes (failure of the Investor to provide the Existing Shareholders with such written confirmation within the prescribed time limit shall be deemed as acceptance by the Investor). The Parties further agree that to the extent the Investor does not accept the Cooperator Meeting Minutes, the Target Company and/or the Existing Shareholders may continue discussions and continue to provide amended Cooperator Meeting Minutes for consideration of approval by the Investor until the time specified in Article 2.2(b) below. For the avoidance of doubt, the Cooperator Meeting Minutes shall provide either for the settlement of the Qoros Project in a manner sufficient to permit the transaction contemplated under this Agreement among the Investor, the Existing Shareholders and the Target Company to proceed or the termination of the Qoros Project. Furthermore, the Parties hereby agree that to the extent the Cooperator Meeting Minutes provide for the unconditional termination of the Qoros Project without any remaining obligations to the Cooperator, there shall be no requirement for confirmation in writing or acceptance by the Investor, and the Parties shall proceed under this Agreement accordingly.

 

(b) Upon expiration of the 3 months following the execution of this Agreement, unless the Target Company and/or the Existing Shareholders in accordance with Article 2.2 (a) above (i) enter into a formal written agreement with the Cooperator in respect of the settlement of the Qoros Project on substantially the same terms as set forth in the Cooperator Meeting Minutes approved or (ii) provide the Investor with a copy of the termination agreement with no additional conditions with the Cooperator, this Agreement shall be terminated automatically, unless otherwise extended in accordance with Article 3.2.1, and no Party shall bear any liabilities to each other Party arising therefrom. For the avoidance of doubt, provided that the key terms of the formal written agreement are substantially consistent with the Cooperator Meeting Minutes previously approved by the Investor, the settlement of the Qoros Project shall be deemed completed and the Investor shall not raise any objection and the condition precedent set forth in Article 3.1.1 shall be deemed to be completed.

 

(c) The Existing Shareholders and the Investor agree that (i) the failure to reach a settlement of the Qoros Project or (ii) the completion of the investment matter with Cooperator by the Existing Shareholders and/or the Target Company, will not be the basis for any claim by any party against the other parties hereto.

6

	
Investment Agreement

 

	
2.3

	
(a) Within 5 Business Days after the execution of this Agreement, the Investor and/or its designated third party (the “Lender”) shall enter into a loan agreement with the Target Company in the form set forth in Appendix III of this Agreement (“Loan Agreement”), under which the Lender will provide the Target Company with a loan of RMB 500,000,000 (in words: Renminbi five hundred million yuan). Upon the approval of the Cooperator Meeting Minutes or unconditional termination with the Cooperator, each in accordance with Article 2.2 of this Agreement, Wuhu Chery and the Lender shall enter into an equity pledge agreement in the form set forth in Appendix IV of this Agreement to secure the performance by the Target Company of 50% of its obligations under the Loan Agreement. Upon the approval of the Cooperator Meeting Minutes or unconditional termination with the Cooperator, each in accordance with Article 2.2 of this Agreement, Quantum shall remove one (1) current director appointed by it to the Target Company and appoint one (1) Person designated by the Investor to the Target Company as the director of the Target Company, and to the extent Quantum has Unencumbered Shares (as defined below), Quantum and the Lender shall enter into an equity pledge agreement in the form set forth in Appendix IVof this Agreement to secure the performance by the Target Company of 50% of its obligations under the Loan Agreement (it being understood that such equity interests shall not include any equity interests in the Target Company already pledged to the Export-Import Bank of China (“Exim Bank”) and other lenders under a syndicated loan agreement (the “Exim Loan Agreement”) or which are required to be pledged pursuant to the Exim Loan Agreement or are already pledged (or are in the process of registration to be pledged) (the “Chery Pledged Shares”) to Wuhu Chery (or to any of its affiliates) under other separate agreements (“Unencumbered Shares”)). The Parties further agree that any such equity pledged by Quantum (the “Quantum Pledged Equity”) is subject to adjustment such that in the event of a change in the calculation by Quantum and Exim Bank of net asset value for calculating the loan-to-value ratio for the equity pledge requirement for the Exim Loan Agreement and the Chery Pledged Shares, then the amount of Quantum Pledged Equity shall be adjusted (and Quantum Pledged Equity released, to the extent applicable) as required pursuant to the Exim Loan Agreement and the agreements for the Chery Pledged Shares. For avoidance of any doubt, the pledged equity as provided by the pledgor according to any provision of this Agreement shall be at all times subject to the Unencumbered Shares held by it. Wuhu Chery acknowledges and agrees that to the extent that at the time that the Lender and Quantum execute the equity pledge agreement, if the Unencumbered Shares are not enough to be pledged to the Lender for securing the performance by the Target Company of 50% of its obligations under the Loan Agreement, the equities held by Quantum in Qoros that could be borrowed by Wuhu Chery but is not borrowed shall be regarded as Unencumbered Shares, and Quantum may pledge such equities the Lender (if applicable). The amount of equity to be pledged pursuant to this Article shall be calculated on a loan-to-value ratio based upon the Pre-Money Valuation (as defined below) and a ratio of 80%.

7

	
Investment Agreement

 

(b) Following the effectiveness of the Loan Agreement but before the granting of the loan by the Investor in accordance with Article 2.4.1, the Investor has the right to nominate one (1) financial staff to the Target Company who shall keep reserved specimen seal/signature, USB key and passwords for the bank account of the Target Company which has or will receive the funds under the Loan Agreement and/or the funds of Investment Advance. Such financial staff shall act in accordance with properly issued instructions by senior management not otherwise in violation of this Agreement.

 

(c) Within three (3) Business Days after the satisfaction of the condition precedent set forth in Article 3.1.1 herein, the Investor agrees to require a bank to issue an irrevocable and unconditional bank guarantee in an amount of RMB 3,400,000,000 (in words: three billion and four hundred million yuan) to the Target Company, or to transfer equivalent RMB to the Escrow Account, at the sole discretion of the Investor, to secure the performance of the Investor’s obligations under this Agreement and the Transaction Documents. The final content and form of the bank guarantee shall be agreed by Parties.

 

	
2.4

	
Subject to the completion of (i) relevant matters under Articles 2.3 (a) and (b); and (ii) either approval of the Cooperator Meeting Minutes by the Investor or unconditional termination with the Cooperator, each in accordance with Article 2.2. above, the Investor agrees at its discretion to itself or to designate a third party to arrange for transfer of the amount of the loan in accordance with the Loan Agreement (or the Investment Advance) pursuant to the Loan Agreement to an account designated by the Target Company in accordance with the following schedule (the Parties agree that the Investor has the right to transfer the funds in the Escrow Account to pay such amounts), which funds shall be used by the Target Company only if agreed upon by the Investor and the Existing Shareholders, provided that the Investor shall not object to such use of funds if for ordinary course of business purposes:

 

		
2.4.1

	
Immediately to transfer RMB 300,000,000 (in words: three hundred million) to an account designated by the Target Company;

 

		
2.4.2

	
Within one (1) month after the completion of all such matters set forth above, to further transfer RMB 200,000,000 (in words: two hundred million) to an account designated by the Target Company; and

 

		
2.4.3

	
To further transfer the remaining funds in the Escrow Account, up to RMB 500,000,000 (in words: Renminbi five hundred million), to the Target Company based on the actual operating requirements of the Target Company, as determined jointly by Party A, Party B and Party C. 

 

		
 

	
Any funds actually transferred by the Investor or its designated third party to the Target Company under this Article are collectively referred to as the investment advance (“Investment Advance”). The use of such funds by the Target Company should be in accordance with the operation and management regulations of the Target Company.

8

	
Investment Agreement

 

	2.5	
Capital Reduction

 

2.5.1 For the purpose of this Investment, the Target Company shall, as required by the applicable laws of the PRC, initiate dealing with the applicable procedures to reduce the registered capital of the Target Company from RMB 10,425,480,000 to RMB 6,500,000,000 (“Capital Reduction”) as soon as possible after the execution of the Cooperator Meeting Minutes, after which Party B and Party C will respectively continue to hold 50% of the equity interest in the Target Company. For the avoidance of doubt, the Existing Shareholders shall not acquire any consideration and/or compensation, in cash or otherwise, from the Target Company due to the Capital Reduction.

 

		
2.5.2

	
The Target Company and the Existing Shareholders shall use their best endeavors to confirm the feasibility of the Capital Reduction under PRC law within two (2) months after the execution of the Cooperator Meeting Minutes. If the Parties consider that the Capital Reduction is impracticable, the Parties shall use their best endeavors to seek an alternative solution having an equivalent economic effect as agreed by the Parties (including but not limited to the Investor first to acquire up to 25.5% equity interest held by each of Wuhu Chery and Quantum in the Target Company and the Existing Shareholders and the Investor to subscribe for the increased registered capital of the Target Company simultaneously in proportion to the equity interest held by them), including the injection into the Target Company of the proceeds from such sales, or to further seek an additional alternative solution with the Investor and the Target Company with same intention, and to further execute applicable agreements to achieve the investment purpose hereunder (i.e., the Investor holding 51% of equity interest in the Target Company based upon the Pre-Money Valuation (as defined below)).

 

	2.6	
Subscription for Capital Increase

 

		
2.6.1

	
The Parties agree and acknowledge that the pre-money valuation of all equity interest in the Target Company prior to the completion of this Investment is RMB 6,500 million Yuan (in words: Renminbi Sixty-five Hundred Million Yuan) (“Pre-Money Valuation”). For the avoidance of doubt, the Target Company has outstanding shareholder loans as of the date of this Agreement, which outstanding shareholder loans, together with any new shareholder loans incurred prior to the Closing Date, shall not be deemed to be equity for any purpose under this Agreement.

9

	
Investment Agreement

 

		2.6.2	
Subject to the completion of the Capital Reduction, the Target Company shall have its registered capital increased by RMB 6,766,000,000 (in words: six billion seven hundred and sixty-six million yuan) (“Increased Registered Capital”), and the Investor agrees to contribute RMB 6,766,000,000 (in words: six billion seven hundred and sixty-six million yuan) in cash to subscribe for the Increased Registered Capital, based on the representations, warranties and undertakings made by the Existing Shareholders and the Target Company to the Investor and subject to the satisfaction (or waiver by relevant party) of all conditions precedent under Article 3.1 of this Agreement.

 

After the completion of this Investment, the Investor shall hold RMB 6,766,000,000 registered capital of the Target Company, representing 51% equity interest in the Target Company, while Wuhu Chery and Quantum shall respectively hold RMB 3,250,000,000 registered capital of the Target Company, representing 24.5% equity interest in the Target Company. From the Closing Date, all shareholders after this Investment shall share profits and bear losses of the Target Company in proportion to their equity interest in the Target Company.

 

2.7 Prior to the Closing Date, Party A, Party B and Party C agree to execute and deliver the AOA in the forms attached as Appendix I. In addition, prior to the Closing Date, each such Party shall cause Directors of the Target Company nominated by such Party to approve this Investment and approve the AOA.

 

2.8 The Existing Shareholders hereby waive any pre-emptive right to subscribe for any newly increased registered capital issued by the Company to the Investor in accordance with this Agreement.

 

2.9 Within five (5) Business Days after completion of all conditions precedent set forth in Article 3.1, other than Article 3.1.10, or waived by the relevant Party, the Investor shall transfer 50% of the Investment Price to the account designated by the Target Company, and within three (3) Business Days after the receipt of such funds, the Target Company shall submit the amendment registration of this Investment with the AIC. The Investor agrees to cooperate fully with such process.

 

2.10 The Investor shall identify and provide all relevant information with respect to any of its nominees to be appointed as Directors pursuant to this Agreement, subject to eligibility requirements.

 

2.11 The Investor shall provide all due diligence information reasonably requested by the Existing Shareholders within three (3) Business Days after the execution date of this Agreement. Such information shall be deemed as the confidential information under Article 8.2, and each Party shall perform the confidentiality obligation provided under Article 8. The Parties acknowledge that the Existing Shareholders will need to complete their due diligence process regarding the Investor to the satisfaction of the Existing Shareholders prior to the completion of Article 3.1.1 and the Existing Shareholder shall notify the Investor upon completion of such process. If the result of such due diligence is not satisfactory to the Existing Shareholders before the fulfillment of the condition precedent set forth in Article 3.1.1, then the Existing Shareholders shall have the right to terminate this Agreement and the Investment, and no Party shall bear liabilities arising therefrom to any other Party.

10

	
Investment Agreement

 

	
3.

	
Conditions Precedent

 

3.1 The closing of this Investment hereunder shall be subject to the satisfaction (or waiver by the relevant party) of each of the following conditions:

 

3.1.1 the Target Company and/or the Existing Shareholders shall either have executed a formal agreement with the Cooperator with respect to the Qoros Project or have entered into an unconditional termination with the Cooperator, each in accordance with Article 2.2. above;

 

3.1.2 no Encumbrance exists on any equity interest in the Target Company which is being newly issued to the Investor or being transferred by the Existing Shareholders to the Investor under this Agreement, except for any Encumbrance resulting from the AOA;

 

3.1.3 As of the Closing Date, neither the Existing Shareholders nor the Target Company shall have materially breached this Agreement;

 

3.1.4 the Parties shall have executed and delivered the AOA of the Target Company in the same form and with the same terms and conditions as Appendix II hereto;

 

3.1.5  the board of directors of the Target Company shall have approved this Investment and shall have approved the AOA of the Target Company;

 

3.1.6 the Capital Reduction shall have been approved by the Approval Authority (if mandatory), and the Target Company shall have completed the AIC business license change with respect to the Capital Reduction;

 

3.1.7 the Target Company shall have notified all lending banks of this Investment in writing and obtained the written consent of or the waiver of the Investment by, the lending banks, to the extent required;

 

3.1.8 the Target Company shall have obtained the approval from the NDRC with respect to this Investment if required, and submitted to the Investor a photocopy of the such approval if any;

 

3.1.9 the Target Company shall have obtained the approval from the Approval Authority in connection with this Investment, if required, and submitted to the Investor a photocopy of such approval, if any;

11

	
Investment Agreement

 

3.1.10 the amendment registration of this Investment with the AIC shall have been completed, and the Target Company shall have obtained the new business license reflecting the shareholding percentage of the shareholders after the completion of this Investment, and the person designated by the Investor shall have been appointed as the director of the Target Company pursuant to the AOA of the Target Company and such appointment shall have been filed with the AIC, provided, however, that the Investor shall transfer 50% of the investment amount to the account designated by the Target Company prior to any such business license change or director appointment and registration, subject to completion of all other conditions precedent in this Article 3.1 (other than Article 3.1.10), and the Target Company shall make such relevant filings within three (3) Business Days of the receipt of such funds;

 

3.1.11 Wuhu Chery shall have completed the filing of an appraisal report with the state owned assets authority (if mandatory).

 

3.2  Satisfaction of Conditions Precedent

         

3.2.1 Within three (3) months after the execution date of this Agreement, the Target Company and the Existing Shareholders shall use their best endeavors to procure the satisfaction of the conditions precedent set forth in Article 3.1.1 hereof, and the Investor agrees to render necessary assistance in this regard. If such condition precedent fails to be satisfied upon expiration of such period, Party A, Party B and Party C shall jointly have the right to determine in writing to extend such period, and the consent to extend such period shall not be unreasonably withheld if reasonably requested by any other Party. Furthermore, upon the expiration of such extended period, in the event such condition precedent continues to be unsatisfied, any of Party A, Party B and Party C shall have the right to terminate this agreement, and no Party shall bear any liabilities to each other Party arising therefrom, or Party A, Party B and Party C shall have the right to jointly further extend such period in accordance with this provision.

 

3.2.2 For the purpose of clarity, the satisfaction by Existing Shareholders and the Target Company of the closing conditions set forth in Articles 3.1.10 is conditioned upon that the Investor shall have paid to the Target Company half of its Investment Price, i.e. RMB 3,383,000,000 (in words: Renminbi three billion three hundred eighty three million yuan).

 

3.2.3 The Parties agree that, with respect to each condition precedent set forth in Article 3.1:

 

		(1)	
The conditions precedent set forth in Articles 3.1.2, 3.1.3, 3.1.5, 3.1.10 (other than the payment condition set forth therein) and 3.1.11, are created for the interest of the Investor, which has the right to determine in its discretion whether to waive such conditions precedent;

12

	
Investment Agreement

 

		(2)	
The payment condition in Article 3.1.10 are created for the interest of the Existing Shareholders, and the Existing Shareholders shall have the right to determine in their discretion whether to waive such conditions precedent;

 

		(3)	
The conditions precedent other than those set forth in Articles 3.2.3(1) and (2) shall be waived only upon mutual agreement by the Parties through consultation.

 

3.2.4 The Parties agree that, to the extent that the conditions precedent set forth in Article 3.1.1 are satisfied, the Target Company and/or the Existing Shareholders and/or the Investor (as the case may be) shall have the obligation to cause all the other conditions precedent under Article 3.1 to be satisfied as soon as possible. Any party hereto shall immediately notify the other Parties of any fact or circumstance it becomes aware of at any time which may render it impossible for a condition precedent in Article 3.1 to be satisfied. If any of the other conditions precedent set forth in Article 3.1 hereof fails to be satisfied or waived by the relevant Party before December 31, 2017, then:

 

		(1)	
The Investor is entitled to set a new Closing Date, subject to the consent of the other Parties hereto; or

 

		(2)	
If the Investor fails to set a new Closing Date, any Party is entitled to terminate this Agreement and this Investment.

 

	
4.

	
Closing

 

4.1 Closing

 

The closing shall be conducted on the fifth (5) Business Day (the “Closing Date”) after the date when all the conditions precedent provided in Article 3.1 are fulfilled (or waived by the relevant Party) at the primary office of the Target Company or other places as agreed by the Parties.

 

4.2 Obligations upon Closing

 

4.2.1 On the Closing Date, the Target Company and the Existing Shareholders shall ensure the following documents have been served on or provided to the Investor:

 

		
(1)

	
applicable certificate documents or the certificate jointly issued by the Target Company and the Existing Shareholders, evidencing all relevant conditions precedents have been satisfied.

13

	
Investment Agreement

 

4.2.2 Payment of Investment Price On the Closing Date:

 

		
(1)

	
The Existing Shareholders and the Investor shall mutually agree to pay all the amounts remaining in the Escrow Account as of the Closing Date to the account designated by the Target Company; and

 

		
(2)

	
The Investor shall further pay the remaining Investment Price to the Target Company, which amount shall be equivalent to the full Investment Price less the amount paid to the Target Company pursuant to Article 4.2.2(1) and the prepaid investment amount. For purposes of this Article 4.2.2, the amount of any Loans made under the Loan Agreement and not repaid shall be considered amounts paid to the Target Company pursuant to Article 4.2.2(1), without double counting.

 

The total investment amount to be paid by the Investor upon the completion of the transaction contemplated hereunder shall be equivalent to RMB 6,766,000,000 (in words: Renminbi six billion seven hundred sixty six million).

 

	
5.

	
Arrangements for Transitional Period

 

5.1 During the period from the execution date of this Agreement to the Closing Date (the “Transitional Period”), the Existing Shareholders and the Target Company shall ensure the Target Company and its Subordinate Entities: (a) carry out their business in the normal course of business consistent with their past practice, and not conduct any other business activity, or terminate or change current business activities, except for business activities that are currently conducted during the normal business operation, and (b) make reasonable endeavors to operate and conduct their business normally in all material respects. The Existing Shareholders shall ensure the Target Company and / or Subordinate Entities to use all the reasonable measures to conserve and protect their assets. Unless as otherwise provided in this Agreement and the Transaction Documents, without prior written notice to the Investor and written permit by the Investor, the Target Company and / or Subordinate Entities shall not:

 

5.1.1 Conduct any asset transfer which exceeds RMB10,000,000 singly or jointly;

 

5.1.2 Create any encumbrance or conduct any transfer of the whole or part of equity interest held by the Target Company, real estates or intellectual properties;

 

5.1.3 Hire or change any Target Company’s general manager/CEO or CFO;

 

5.1.4 Provide guarantee or any loan to third parties;

 

5.1.5 Change the accounting policies or the remuneration polices of the Target Company;

14

	
Investment Agreement

 

5.1.6 Conduct merger, division, equity interest change, capital increase, capital reduction, joint operation with third parties, change of organizations, equity investment, etc. (except as carried out pursuant to this Agreement);

 

5.1.7 Declare, pay any dividend or conduct profit distribution in other forms;

 

5.1.8 Disposal of material assets for nominal consideration or waiver of material debts, of which the amount is or more than RMB1,000,000;

 

5.1.9 Enter into any transaction or a series of transactions of which the transaction value exceeds RMB10,000,000, excluding those within the normal business operation scope;

 

5.1.10 Make a payment or a series of payments, which exceeds RMB10,000,000, other than in the ordinary course of business;

 

5.1.11 Make a capital commitment or a series of capital commitments, which exceeds RMB10,000,000;

 

5.1.12 Conduct connected transactions with a single payment of RMB50,000,000 or more, other than with respect to engine and other automotive parts supply agreements.

 

5.2 After three days upon the completion of the condition precedent provided in Article 3.1.1 and the Investor has issued to the Target Company an irrevocable and unconditional bank guarantee in an amount of RMB 3,400 million (in words: three billion and four hundred million yuan), or to transfer equivalent RMB to the Escrow Account, until the Closing Date or the Termination of this Agreement (whichever is earlier), at the sole discretion of the Investor, in order to have full knowledge of the entire business and management situation of the Target Company, the Investor has the right to further appoint to the Target Company one research and development staff, one manufacturing staff, one procurement staff, one sales staff to observe the research and development, manufacturing, procurement and sales operation of the Target Company, so that the Investor can understand the operation process of the Target Company as soon as possible. The staff appointed by the Investor shall keep the business secrets of the Target Company and the Existing Shareholders confidential, and sign confidentiality agreements with the Target Company, complying with the internal management rules of the Target Company, and shall not interrupt, affect or hinder the operation and management of the Target Company. The Existing Shareholders and the Target Company shall provide necessary supports that are requisite for the staff to understand the operation and management of the Target Company (including, but not limited to granting necessary access to the information to such staff, disclosing the materials as reasonably requested by such staff and/or providing necessary working office and facility). The Target Company and its senior management may decline any unreasonable request raised by the said staff and request the Investor to replace any staff that are not appropriate. The Parties acknowledge that no employer-employee relationship or contractor relationship shall be created between the Target Company and the said staff, such staff shall not obtain any benefits or compensation from the Target Company or the Existing Shareholders for any behavior and the Investor shall be solely responsible for the salaries, welfares, security assurance and indemnifications of such staff. And the Investor shall be jointly and severally liable and indemnify the Target Company or the employees of the Target Company for any damages to the health of such employees or any damages to the property of the Target Company and its employees caused by the appointed staff according to applicable laws and regulations.

15

	
Investment Agreement

 

	
6.

	
Post-investment Covenants

 

6.1 As soon as practicable after the Closing Date, the Parties agree to enter into a specific agreement with respect to the sharing of liabilities in connection with the guarantee and equity pledges provided by the Existing Shareholders for the financing of the Target Company prior to the Closing Date. The Investor agrees to assume part of such guarantee liabilities in proportion to its shareholding percentage in the Target Company after the completion of this Investment, and pledge the equity interest to the bank directly in accordance with the bank’s requirements or provide guarantee in other form. In the event of any change to such shareholding percentage of the Investor, the guarantee liabilities assumed by the Investor shall be adjusted based on such change in its shareholding percentage. In the event that Party A transfers equity interest to a third party, the transferee shall assume part of such guarantee liabilities in proportion to its shareholding percentage in the Target Company and shall be consented by the relevant bank. For avoidance of doubts, such guarantee liabilities shall take Party B and Party C’s current guarantee liabilities undertaking into consideration, and shall not add the guarantee liabilities of Party B and Party C. Parties agree to execute agreements to reflect such arrangement as soon as practicable after the Closing Date.

 

6.2 The Parties agree that the Target Company shall (i) repay 50% of the total amount of shareholder loans outstanding on the date of this Agreement and owing, directly or indirectly, to Wuhu Chery and Quantum and/or affiliates of each within seven (7) Business Days after the Closing Date; and (ii) repay all of the remaining shareholder loans to Wuhu Chery and Quantum and/or affiliates of each within six (6) months starting from the Closing Date. The Parties agree that if required for the operation of the Target Company, either of the Existing Shareholders may extend extra shareholder loan to the Target Company before the Closing Date, and the Investor shall not raise any unreasonable objection on it. To the extent the Investor agrees to any additional shareholder loans from either Existing Shareholder prior to the Closing Date, such shareholder loans shall be repaid in accordance with the schedule above.

16

	
Investment Agreement

 

6.3 If the Target Company and/or Subordinate Entities suffer losses exceeding RMB 50 million within 18 months after the Closing Date from penalties or third party claims as a result of any Undisclosed Liabilities not disclosed to the Investor, the Target Company shall indemnify all losses, liabilities, costs, fees and expenses suffered and incurred by the Investor as a result therefrom.

 

6.4 Unless otherwise agreed, from the Closing Date, the Existing Shareholders and the Investor shall be entitled to and bear the operational profits and risks of the Target Company following the Closing Date in accordance with their respective shareholding percentages. Distribution and administration of the relevant rights and interests of the Target Company shall be executed by the Existing Shareholders and the Investor according to the agreement after the Investor makes the Investment and the AOA.

 

6.5 The Investor hereby undertakes that upon completion of the transaction contemplated hereunder, between 2018 and 2020, each year, it shall provide Qoros Automobile with orders for 100,000 vehicles, to push a further expansion of the domestic market of Qoros Automobile and to make best efforts to realize the initial public offering of Qoros Automobile as early as possible.

 

	
7.

	
Representations and Warranties

 

7.1 The Existing Shareholders make to the Investor the representations and warranties contained in Appendix VI-A and the Target Company make to the Investor the representations and warranties contained in Appendix VI -B. Each of the representations and warranties shall be true, accurate, without material omission and not misleading as of the signing date of this Agreement and the Closing Date. It is acknowledged that the Investor enters into this Agreement and makes this Investment on the basis of such representations and warranties being true and accurate.

 

7.2 The Investor makes the representations and warranties contained in Appendix VI-C to the Target Company and the Existing Shareholders, which shall be true, accurate, without material omissions and not misleading at the execution and closing date of this Agreement, and acknowledges that the Target Company and the Existing Shareholders enter into this Agreement and accept this Investment by the Investor on the basis of such representations and warranties being true and accurate.

17

	
Investment Agreement

 

	
8.

	
Confidentiality

 

8.1 Without prior written consent of other Parties, any Party shall not make any public statements in relation to this Agreement and any other or subsequent documentations executed in connection with matters as contemplated hereunder.

 

8.2 Unless otherwise set forth in Article 8.3, the Parties shall regard any information in relation to the following contents received or obtained as a result of entering into this Agreement or any agreements entered into in accordance with this Agreement as confidential and shall not disclose to third parties or use at its own discretion.

 

8.2.1 terms under this Agreement and any agreements entered into in accordance with this Agreement;

 

8.2.2  all contents of the negotiation conducted for the purpose of this Agreement and such other agreements;

 

8.2.3 business, finance or other matters of any other Party, including further plans and targets.

 

8.3  Article 8.2 shall not prohibit the disclosure to the necessary extent under the following circumstances, provided that such disclosure shall be promptly notified to relevant Parties, but shall notify the other Parties in writing prior to such disclosure and take all possible measures to reduce such disclosure as much as possible together with the other Parties:

 

8.3.1 where it is required to disclose or use any information by laws and regulations of any regulatory authorities or any certified stock exchanges;

 

8.3.2 where it is required to disclose or use any information in accordance with the requirements under this Agreement;

 

8.3.3 where it is required to disclose or use any information for the purpose of any judicial proceedings, or where it is reasonably required to disclose any information regarding taxation matters to tax authorities;

 

8.3.4 to disclose any information to the Parties’ professional counsels, provided that such professional counsels shall comply the requirements of information confidentiality;

 

8.3.5 where the other Party has approved the disclosure or use in writing in advance;

 

8.3.6 For the purpose of this Article 2.2, where it is necessary to make the disclosure by the Existing Shareholders or the Target Company to the Cooperator.

 

8.4 This article is still in forth upon termination of this Agreement and until the date when the relevant confidential information is published.

18

	
Investment Agreement

 

	
9.

	
Notice

 

9.1 All notices shall be written in Chinese and English and delivered to the following address or facsimile number by means of specialized person, registered airmail or facsimile, as applicable:

 

The Investor:

    

	
Address:

	
Room 316, Buliding 9, 588 Feijiatang Road, Xiacheng District, Hangzhou City, Zhejiang Province, P.R. China, 310006

	
Attention to:

	
Zhan Hao

	
Tel:

	
+86 13825223063

	
Fax:

	
 

 

Wuhu Chery:

     

	
Address:

	
8 Changchun Road, Wuhu Economic and Technological Development Area, Anhui Province, PRC, 241009

	
Attention to:

	
Haibo Zhou

	
Tel:

	
+86 553 5922024

	
Fax:

	
 

 

Quantum:

     

	
Address:

	
Temasek Avenue#36-01 

     

Millenia Tower Singapore 039192

	
Attention to:

	
Robert Rosen

	
Tel:

	
(65)6351 1788

	
Fax:

	
(65)6351 1798

19

	
Investment Agreement

 

Target Company:

 

	
Address:

	
1 Tongda Road, Changshu Economic and Technology Development Area, Jiangsu Province, PRC

	
Attention to:

	
Legal Representative

	
Tel:

	
0086 512 5202 2000

	
Fax:

	
0086 512 5202 2040

 

		
9.2

	
To make or serve any notice, letter or documentation:

 

		
 

	
9.2.1 in the circumstance that it is served by specialized person and a written receipt is received, if it is delivered no later than 17:00 on a Business Day of the place of service, it shall be deemed to be delivered on such Business Day; or, if it is delivered later than 17:00 on a Business Day of the place of service or anytime on a non-Business Day of the place of service, it shall be deemed to be delivered on the next Business Day; or

 

		
 

	
9.2.2 if it is served by domestic mail and pre-paid express mail service, it shall be deemed to be delivered on the third (3rd) Business Day after the mail date; or

 

		
 

	
9.2.3 if it is served by facsimile, it shall be deemed to be delivered on the date when the addressee confirms the receipt of the facsimile.

 

		
9.3

	
Within the term of this Agreement, any Party is entitled to change its addressee, address or facsimile number for receiving notice upon notifying other Parties in writing.

 

	
10.

	
Termination of the Agreement

 

		
10.1

	
Unanimous Termination

 

		
 

	
This Agreement may be terminated in writing by unanimous agreement of the Existing Shareholders and the Investor.

 

		
10.2

	
Unilateral Termination

 

		
 

	
10.2.1 This Agreement may be rescinded by any Party in accordance with Article 3.2 hereof;

 

		
 

	
10.2.2 if any Party materially breaches the provisions hereof, any non-breaching Party shall be entitled to terminate this Agreement.

20

	
Investment Agreement

 

		
10.3

	
After the termination of this Agreement in accordance with the provisions above,

 

		(1)	
the Parties will no longer have any right or obligation under this Agreement, except for the rights and obligations accrued prior to the rescission hereof;

 

		(2)	
The Target Company shall immediately when possible and no later than one (1) year after the rescission of this Agreement (and if such rescission is a result of the sole breach by the Investor, the aforesaid period shall be no later than two (2) years after rescission of this Agreement) repay the Investment Advance of the Investor  if any, plus interest calculated at the rate for one-year loan for the same period of time (from the date when such amount is paid to the account of the Target Company), and the Existing Shareholders agree to immediately cancel the escrow arrangement regarding the Escrow Account (for the avoidance of doubt, repayment of the Investment Advance shall take precedence over the repayment of shareholders loans from the Existing Shareholders, and no part of the shareholder loans of the Target Company from the Existing Shareholders then outstanding shall in any way be repaid prior to the full repayment of the Investment Advance).  For the avoidance of doubt, if the rescission of this Agreement is a result of the sole breach by the Investor, the Investor has the obligation to extend to the Target Company a fund  of an aggregate amount of up to RMB 1,000 million (in words: RMB one billion) (such amount shall include all the funds already provided to the Target Company by the Investor or a third party designated by the Investor under this Agreement and the Loan Agreement), provided that for any additional drawdown after the rescission of this Agreement, the Existing Shareholders would have sufficient equity to pledge in accordance with Article 2.3 (a) of this Agreement. If the Target Company cannot promptly repay the above funds to Party A, and the Existing Shareholders do not provide guarantee or a share pledge for such repayment (on a 50/50 basis), the Party that fails to provide such guarantee shall appoint one Investor-designated director to the board of directors of the Target Company until such Investment Advance and interest have been fully paid. For the avoidance of doubt, in the event that party C already appointed one Investor based director following Article 2.3(a) it will not need to appoint an additional director and to the extent it provide the share pledge or guarantee for its 50%,  all previously appointed Investor-board members will be removed;

 

		(3)	
Subject to the provisions of the above paragraph (2), the Existing Shareholders may replace the financial staff appointed by the Investor in accordance with Article 2.3.1 and the research and development, manufacturing, procurement, sales staff and etc. The Investor shall immediately withdraw such staff and shall not appoint any staff to the Target Company in any manner

21

	
Investment Agreement

 

	
11.

	
Governing Law and Dispute Resolution

 

		
11.1

	
Governing Law

 

		
 

	
Matters regarding the entering into, taking effect, performing, interpreting, modifying, terminating of this Agreement and any disputes occurring as a result of the aforesaid matters shall apply the laws and regulations of the People’s Republic of China. For the purpose of this Agreement, laws and regulations of Hong Kong SAR, Macau SAR and Taiwan are not applicable hereunder.

 

		
11.2

	
Dispute Resolution

 

		
 

	
11.2.1 The Parties shall make their efforts to resolve any disputes resulting from or relating to this Agreement through amicable negotiation. If the disputes cannot be resolved through negotiation within thirty (30) days after any Party serves a notice to other Parties, any Party may refer such dispute to arbitration in Beijing before China International Economic and Trade Arbitration Commission in accordance with its arbitration rules then in effect.  The arbitration tribunal shall consist of three (3) arbitrators.  Each of the Investor and the Existing Shareholders shall have the right to appoint one (1) arbitrator.  .  All arbitration proceedings shall be conducted in both English and Chinese languages, provided that if only one language is permitted, the proceedings shall be conducted in English.  Any arbitration award rendered by the arbitration tribunal shall be final and binding upon the Parties.  The arbitration costs, including attorney’s fees, shall be borne by the losing Party, unless otherwise specified in the arbitration award.

 

		
 

	
11.2.2 In the process of resolving the disputes, the Parties shall continue exercising their rights and performing their obligations under this Agreement that are not affected in good faith, except for the disputed matters.

 

	
12.

	
Taxes and Expenses

 

		
 

	
12.1.1 Taxes relevant with this Investment and occurred by executing or performing this Agreement (including stamp duty, etc.) are to be paid by the taxpayer in accordance with the laws; all the verification fees, government fees (including AIC change / recordal registration fees of this Investment) shall be paid by the Target Company.

 

		
 

	
12.1.2 Each of the Parties shall bear all reasonable expenses actually incurred by it for the transactions hereunder, including, without limitation, costs of financial, legal and commercial due diligence, legal service fees, legally required taxes, governmental charges and expenses.

22

	
Investment Agreement

 

	
13.

	
Severability

 

		
 

	
If any provision of this Agreement is adjudicated to be invalid or unenforceable, such provision shall not be implemented to the extent that it is invalid or unenforceable, and shall be deemed as not contained in this Agreement, but shall not invalidate the remaining provisions of this Agreement or make the remaining provisions of this Agreement unenforceable. The Parties shall make all reasonable efforts to replace such provisions by substitute provisions. Substitute provisions shall be as close to the planned effect of such provisions as possible and be enforceable.

 

	
14.

	
Waiver

 

		
 

	
14.1 If any Party fails or delays to exercise any rights or remedies under this Agreement or obtained according to this Agreement and required by law, such circumstances will not constitute damages to such rights or remedies and shall not constitute or regarded as waiver or modification of such rights or remedies, and shall not hinder the exercise of such rights or remedies anytime in the future. The exercise of any such rights or remedies individually or partly shall not hinder any other or further exercise of such rights or remedies or the exercise of any other rights or remedies.

 

		
 

	
14.2 Rights and remedies that the Parties obtained under this Agreement or according to this Agreement are accumulative, and may be exercised where such Party deems appropriate and are supplementary to its rights and remedies under the law.

 

	
15.

	
Formation and Effectiveness

 

		
 

	
15.1 Article 2.1, 2.2, 2.3 and 3, 8, 9, 12, 13, 14, 15, 16 of this Agreement shall take effect upon duly execution by the Parties, and the other provisions shall take effect after the Investor has approved the Cooperator Meeting Minutes or entered into an unconditional termination agreement with the Cooperator in accordance with Article 2.2.

 

	
16.

	
Miscellaneous

 

		
 

	
16.1 This Agreement is executed in four (4) counterparts. Each Party holds one (1) counterpart.  Each counterpart has the equal legal effect.

 

		
 

	
16.2 This Agreement shall be signed in Chinese and English, and both language versions shall have the same legal effect.

 

(no text in the remainder of the page)

23

	
Investment Agreement

 

 

[This page is the signature page of Qoros Automobile Company Limited Investment Agreement with no text contained.]

 

	
Hangzhou Chengmao Investment Co., Ltd. (Seal)

	 

	
Sign by the legal representative or authorized reprensentative:

	 

 

Wuhu Chery Automobile Investment Company (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Quantum(2007) LLC

 

	
Sign by the legal representative or authorized representative:

	 

 

Qoros Automobile Company Limited (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

24

	
Investment Agreement

 

[This page is the signature page of Qoros Automobile Company Limited Investment Agreement with no text contained.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

 

	Wuhu Chery Automobile Investment Company (Seal)	 
	 	 
	
Sign by the legal representative or authorized representative:

	 

 

Qnantum(2007) LLC

 

	
Sign by the legal representative or authorized representative:

	 

 

Qoros Automobile Company Limited (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

24

	
Investment Agreement

 

[This page is the signature page of Qoros Automobile Company Limited Investment Agreement with no text contained.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Wuhu Chery Automobile Investment Company (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Quantum(2007) LLC

 

	
Sign by the legal representative or authorized representative:

	 

 

Qoros Automobile Company Limited (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

24

	
Investment Agreement

 

[This page is the signature page of Qoros Automobile Company Limited Investment Agreement with no text contained.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Wuhu Chery Automobile Investment Company (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Quantum(2007) LLC

 

	
Sign by the legal representative or authorized representative:

	 

Title:

 

Qoros Automobile Company Limited (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

24

	
Investment Agreement

 

Appendices

 

Appendix I [Intentionally left blank]

 

Appendix II Form of AOA

 

Appendix III Form of Loan Agreement

 

Appendix IV Form of Equity Pledge Agreement

 

Appendix V [Intentionally left blank]

 

Appendix VI-A Representations and warranties of the Existing Shareholders

 

Appendix VI-B Representations and warranties of the Target Company

 

Appendix VI-C Representations and warranties of the Investor

 

Appendix VII Disclosure Schedule

25

Memorandum of Understanding Regarding the

 

Second Amendment to the Investment Agreement

 

among

 

Hangzhou Chengmao Investment Co., Ltd.

 

Wuhu Chery Automobile Investment Company Limited

 

Quantum (2007) LLC

 

and

 

Qoros Automotive Co., Ltd.

 

in respect of

 

Qoros Automotive Co., Ltd.

 

August 8, 2017

MEMORANDUM OF UNDERSTANDING REGARDING THE SECOND

 AMENDMENT TO THE INVESTMENT AGREEMENT

 

This binding Memorandum of Understanding Regarding the Second Amendment to the Investment Agreement (this “MOU”) in respect of Qoros Automotive Co., Ltd, is entered into in the PRC on this August 8, 2017 by and among:

 

	(1)	
Hangzhou Chengmao Investment Co., Ltd., a company organized and validly existing under the laws of China, with its registered address at Room 316, Building 9, 588 Feijiatang Road, Xiacheng District, Hangzhou City, Zhejiang Province, the PRC (hereinafter referred to as the “Investor” or “Party A”);

 

	(2)	
Wuhu Chery Automobile Investment Company Limited, a company organized and validly existing under the laws of China, with its registered address at 8 Changchun Road, Wuhu Economic and Technological Development Zone, Anhui Province, holding 50% equity interest in Qoros Automotive Co., Ltd, as of the date hereof (hereinafter referred to as “Wuhu Chery” or “Party B”);

 

	(3)	
Quantum (2007) LLC, a company organized and validly existing under the laws of State of Delaware, the United States of America, with its registered address at 16192 Coastal Highway Lewes Delaware 19958 USA, holding 50% equity interest in Qoros Automotive Co., Ltd. as of the date hereof (hereinafter referred to as “Quantum” or “Party C”; together with Wuhu Chery, the “Existing Shareholders”); and

 

	(4)	
Qoros Automotive Co., Ltd., a company organized and validly existing under the laws of China, with its registered address at 1 Tongda Road, Changshu Economic & Technological Development Zone, Jiangsu Province (hereinafter referred to as “Party D”, the “Target Company” or “Qoros Automotive”).

 

The parties hereto may be referred to collectively as the “Parties”, and a “Party”, individually.

 

Whereas:

 

	(1)	
The Parties entered into that certain Investment Agreement on May 23, 2017, as amended by the Amendment to the Investment Agreement (the “Amendment Agreement”) on July 12, 2017 (as amended, the “Investment Agreement”) in respect of an investment by the Investor into the Target Company in accordance with terms and conditions set forth therein.

 

	(2)	
The Investor and the Target Company entered into that certain Investment Advance Agreement on June 13, 2017 (the “First Investment Advance Agreement”) pursuant to which the Investor has provided investment advances of a total amount of RMB 500 million to the Target Company.

1

	(3)	
The Parties wish to enter into a Second Amendment Agreement (the “Second Amendment Agreement”) to set out their understanding in relation to the alternative solution to certain investment structure under the Investment Agreement and to further amend the Investment Agreement in accordance with the terms and conditions herein.

 

THE PARTIES NOW AGREE as follows:

 

	1.	
Definitions

 

Unless otherwise defined herein, capitalized terms used but not defined herein shall have the same meaning ascribed to them in the Investment Agreement.

 

	2.	
Second Amendment to the Investment Agreement.

 

The Parties agree that, as soon as practicable after the date of this binding MOU, but in no event later than August 14, 2017, the Parties shall enter into the Second Amendment Agreement reflecting the terms herein, together with any corresponding and necessary changes.

 

	3.	
3.3B Escrow Fund

 

		3.1	
On or before August 25, 2017, the Investor agrees to transfer an amount of RMB 3,315,340,000 (Three Billion Three Hundred and Fifteen Million Three Hundred and Forty Thousand) (“3.3B Escrow Fund”) into the Escrow Account (defined below), so as to secure the performance of the Investor’s obligations under the Investment Agreement with respect to the payment of the Equity Transfer Price.

 

		3.2	
The Parties further agree that in addition to the escrow account opened under the name of the Investor, the Investor may also transfer the above-mentioned 3.3B Escrow Fund into one or several escrow accounts (the “Escrow Accounts”) set up under the name of the Investor and/or the affiliate of the Investor which have been agreed by the other Parties hereunder.

 

		3.3	
Such Escrow Accounts shall be set up in accordance with, and any such transfers of the 3.3B Escrow Fund into other escrow accounts shall be subject to, the escrow agreement(s) executed among and by Wuhu Chery, Quantum, the Investor and/or the affiliate of the Investor and each escrow bank providing for the terms of such escrow, including:

2

		(i)	
the release of 3.3B Escrow Fund shall only occur pursuant to the terms hereof and the Investment Agreement; and

 

		(ii)	
direct rights for the Existing Shareholders to require the owner of the Escrow Account (the Investor and/or any such affiliate) to apply full or partial amount of 3.3B Escrow Fund in accordance with relevant terms of the payment of the Equity Transfer Price under the Investment Agreement. Each Existing Shareholders agrees to provide all necessary cooperation with the Investor on the partial or complete release of 3.3B Escrow Fund from the Escrow Account for the purpose of the payment of its respective transfer price.

 

	4.	
Further Investment Funds.

 

		4.1	
Remaining First Investment Advance

 

Pursuant to Article 5(iv) of the Amendment Agreement, the Investor agrees to further transfer RMB 500,000,000 (in words: RMB five hundred million yuan) (the “Remaining First Investment Advance”) from the Escrow Account to the Controlled Account of the Target Company (as defined in the Investment Advance Agreement) under Article 2.4.3 of the Investment Agreement on or before August 18, 2017. Restrictions on the Target Company’s use of the Investment Advance (including but not limited to Article 2.3 and Article 2.4 of the Investment Agreement) shall also apply to the Remaining First Investment Advance, provided that, the Investor shall not object to the reasonable use of funds if for the business needs of the Target Company.

 

		4.2	
Second Investment Advance Agreement

 

Within five (5) Business Days from the date of this MOU, the Investor and the Target Company shall enter into a second investment advance agreement (the “Second Investment Advance Agreement”) pursuant to which:

 

		(i)	
On or before August 15, 2017, the Investor shall ensure there are investment funds of at least RMB 1,200,000,000 (in words: Renminbi one billion, two hundred million yuan) (“1.2B Escrow Fund”) in the Escrow Account owned by the Investor. For the avoidance of doubt, the 1.2B Escrow Fund shall be separate from, and in addition to, the 3.3B Escrow Fund set forth in Article 3 and also shall not include the Remaining First Investment Advance transferred into the account of the Target Company pursuant to the aforesaid Article 4.1;

3

		(ii)	
Based on the review of relevant operational plans and financial budget submitted by the management to the board of the Target Company, and pursuant to the actual operation needs of the Target Company as determined unanimously by all members of the board of the Target Company, the Investor agrees to transfer the 1.2B Escrow Account Fund to the Controlled Account of the Target Company in two (2) installments, with each installment of RMB 600,000,000 (in words: RMB six hundred million yuan). The Parties agree to procure their respectively appointed directors to approve and pass the resolution of the board as mentioned under this item (ii) in the best interests of the Company and shall approve any such funding of the reasonable business needs of the Target Company.

 

		4.3	
Except as otherwise provided herein, in the event of termination of the Investment Agreement, the Target Company shall repay to the Investor the already transferred Remaining First Investment Advance as well as all or part of the 1.2B Escrow Fund pursuant to Article 10 of the Investment Agreement. If the termination of the Investment Agreement results from the sole breach of the Investor after the effective date of this MOU (including performance failure before stated cutoff dates):

 

		(i)	
the Target Company shall first have the right to request to further transfer all the remaining amount of the 1.2B Escrow Fund which has not been transferred, and the Investor shall execute required documents and go through necessary procedures to complete the transfer;

 

		(ii)	
second, at the sole discretion of the Existing Shareholders, (A) all amounts of the Investment Advance already transferred by the Investor to the Target Company in accordance with the Article 2.4 of the Investment Agreement and Article 4.1 of this MOU, and (B) all or part of the 1.2B Escrow Fund transferred by the Investor to the Target Company in accordance with this MOU and Second Investment Advance Agreement, shall be converted into the equity interest of the Target Company held by the Investor.

 

For the avoidance of doubt, the aggregated amount of the Investment Advance and 1.2B Escrow Fund that shall be converted as the Target Company’s equity interests as mentioned in item (A) and (B) above may be up to, hut shall not exceed, RMB2,200,000,000 (in words: RMB two billion two hundred million yuan). To the extent converted, such amount shall be converted as soon as possible based upon the pre-investment valuation currently provided in the Investment Agreement, and the Investor shall have the right to appoint one Director upon such conversion. The Parties agree that all provisions of the AOA requiring unanimous approval by the Directors of the Target Company shall be revised to provide for two-thirds approval, other than as may be required by law.

4

		4.4	
The Parties agree that the restrictions on the Target Company’s use of the Investment Advance (including but not limited to Article 2.3 and Article 2.4 of the Investment Agreement) shall also apply to the 1.2B Escrow Fund, of which the funds shall be used by the Target Company only if agreed upon by the Investor and the Existing Shareholders, provided that, the Investor shall not object to the reasonable use of funds if for the business needs of the Target Company.

 

	5.	
Second Bidding of Chery Equity Transfer

 

		5.1	
The parties agree that with respect to the Chery Equity Transfer (as defined in the Investment Agreement), Wuhu Chery shall apply to the competent SASAC or any competent entity authorized by SASAC for re-approval (if necessary), and shall apply to the Exchange House (as defined in the Investment Agreement) for the second bidding on or before the bid date to be determined in accordance with this Article by the Parties (the “Bid Date”). The Bid Date shall be determined through friendly consultation among the Existing Shareholders and the Investor on or before October 15, 2017, and if no such date is finally agreed until October 15, 2017, the Bid Date shall be a date during the week starting November 13, 2017.

 

		5.2	
The Parties further agree that if Wuhu Chery fails to initiate the process of the listing and bidding of Chery Equity on or before the Bid Date or there is no successful listing or bidding of Chery Equity for whatever reason, the Parties shall switch to the previous investment structure as agreed by the Parties in the Investment Agreement (before as amended by the Amendment Agreement), and the long-stop date set forth in Section 3.3.3 shall be extended accordingly to June 30, 2018 and the deadline of December 31, 2017 for failure to complete the Chery Equity Transfer after the Investor has become the successful bidder set forth in Section 2.5.3(v) shall be extended accordingly to March 31, 2018.

 

	6.	
Purchase of Qoros Vehicles

 

On or before August 21, 2017, the Investor (or a party designated by the Investor and acceptable to the Parties, the “Purchaser”) and the Target Company shall enter into an agreement for the purchase of 15,000 Qoros vehicles (the “Vehicle Purchase Agreement”). Unless otherwise agreed by the Target Company and the Purchaser; the Vehicle Purchase Agreement shall provide for:

5

		6.1	
the purchase by the Investor (or such Designated Purchaser) of 15,000 vehicles from the Target Company to be delivered on or prior to December 31, 2017;

 

		6.2	
the purchase price for such vehicles (the “Vehicle Purchase Price”) will be the wholesale price of which the exact price will be determined in good faith and by mutual consent between the Purchaser and the Target Company;

 

		6.3	
the Purchaser shall pay a deposit of 25% of the total Vehicle Purchase Price within five (5) Business Days of the date of the Vehicle Purchase Agreement. Based upon the manufacturing progress of the vehicles, the Purchaser will further transfer 25% of the total Vehicle Purchase Price (together with the initial 25% deposit, the “50% Deposit”) on or before, but in no event later than, October 31, 2017 and the details of the business terms will be determined by further discussions between the Purchaser and the Target Company. The Parties agree that the funds paid by the Purchaser under this Article 6.3 shall solely be used for relevant production and operation activities conducted by the Target Company in respect of the 15,000 vehicles;

 

		6.4	
the Purchaser shall pay all the remaining amounts of the Vehicle Purchase Price upon the completion of the delivery of any such vehicles pursuant to the Vehicle Purchase Agreement; and

 

		6.5	
such vehicle purchases mentioned under this Article 6 shall be in addition to, and separate from, the undertaking by the Investor set forth in Article 6.5 of the Investment Agreement, provided that the number of vehicles to be ordered in 2018 shall be reduced to 95,000 vehicles.

 

	7.	
Investment Structure Adjustment

 

		7.1	
The Parties agree that the Target Company and Wuhu Chery (or its affiliate) shall further discuss about the matters and arrangements with respect to emission compliance and credit compliance according to the relevant circular on the management on the emission and CAFC credits of enterprise-owned passenger vehicles and the credits of new energy vehicles to be issued by Ministry of Industry and Information Technology. For the aforesaid purpose, the Parties may adjust the investment structure such that after the completion of this Investment and the Registered Capital Increase, the percentage of equity interest held by Wuhu Chery in the Target Company shall be 25% (instead of 24.5% as currently provided under the Investment Agreement).

6

		7.2	
The Parties further agree that the pre-investment valuation, the percentage of the equity interest to be held by the Investor in the Target Company upon completion of this Investment (51%) and the arrangements for Transitional Period currently provided in the Investment Agreement remain unchanged, and the Parties agree to cooperate and provide necessary assistance after the execution of the Second Amendment Agreement so that the Investor will be entitled to further participate in the Target Company’s daily operation and management during the Transitional Period. Any such adjustment to the investment structure, if agreed by the Parties, would not change the essence of this deal and the Parties will adjust relevant transaction documents to reflect the aforesaid changes.

 

	8.	
This MOU shall constitute an integral part of the Investment Agreement, subject to the entering into of the Second Amendment to the Investment Agreement. Save for the express amendments and modifications contained herein, all the provisions of the Investment Agreement shall remain in full force and effect. In the event of any inconsistency between the provisions of this MOU and the Investment Agreement, the provisions of this MOU shall prevail.

 

	9.	
This MOU is executed in Chinese and English languages. Each language version shall be executed in ten (10) counterparts. Each Party holds one (1) counterpart. Each counterpart has the equal legal effect.

 

	10.	
This MOU shall take effect upon due execution by each Party hereto.

7

[Signature Page to the Memorandum of Understanding Regarding the Second Amendment to the Investment Agreement in respect of Qoros Automotive Co., Ltd.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal) 

	 	 
	
Sign by the legal representative or authorized representative:

	

 

Wuhu Chery Automobile Investment Company (Seal)

	 	 
	
Sign by the legal representative or authorized representative:

	 

 

Quantum (2007) LLC

	 	 
	
Sign by the legal representative or authorized representative:

	 

Title:

 

Qoros Automotive Co., Ltd. (Seal)

	 	 
	
Sign by the legal representative or authorized representative:

	 

[Signature Page to the Memorandum of Understanding Regarding the Second Amendment to the Investment Agreement in respect of Qoros Automotive Co., Ltd.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

	 	 
	
Sign by the legal representative or authorized representative:

	 

 

Wuhu Chery Automobile Investment Company (Seal) 

	 	 
	
Sign by the legal representative or authorized representative:

	

 

Quantum (2007) LLC

	 	 
	
Sign by the legal representative or authorized representative:

	 

Title:

 

Qoros Automotive Co., Ltd. (Seal)

	 	 
	
Sign by the legal representative or authorized representative:

	 

[Signature Page to the Memorandum of Understanding Regarding the Second Amendment to the Investment Agreement in respect of Qoros Automotive Co., Ltd.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

	 	 
	
Sign by the legal representative or authorized representative:

	 

 

Wuhu Chery Automobile Investment Company (Seal)

	 	 
	
Sign by the legal representative or authorized representative:

	 

 

Quantum (2007) LLC

	 	 
	
Sign by the legal representative or authorized representative:

	

Title:

 

Qoros Automotive Co., Ltd. (Seal)

	 	 
	
Sign by the legal representative or authorized representative:

	 

[Signature Page to the Memorandum of Understanding Regarding the Second Amendment to the Investment Agreement in respect of Qoros Automotive Co., Ltd.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

	 	 
	
Sign by the legal representative or authorized representative:

	 

 

Wuhu Chery Automobile Investment Company (Seal)

	 	 
	
Sign by the legal representative or authorized representative:

	 

 

Quantum (2007) LLC

	 	 
	
Sign by the legal representative or authorized representative:

	 

Title:

 

Qoros Automotive Co., Ltd. (Seal) 

	 	 
	
Sign by the legal representative or authorized representative:

	

 

Second Amendment to the Investment Agreement

 

among

 

Hangzhou Chengmao Investment Co., Ltd.

 

and

 

Wuhu Chery Automobile Investment Company Limited

 

Quantum (2007) LLC

 

Qoros Automotive Co., Ltd.

 

in respect of

 

Qoros Automotive Co., Ltd.

 

September       , 2017

SECOND AMENDMENT TO THE INVESTMENT AGREEMENT

 

This Second Amendment to the Investment Agreement (this “Second Amendment Agreement”) in respect of Qoros Automotive Co., Ltd. is entered into in the PRC on this September   , 2017 by and among:

 

	
(1)

	
Hangzhou Chengmao Investment Co., Ltd., a company organized and validly existing under the laws of China, with its registered address at Room 316, Building 9, 588 Feijiatang Road, Xiacheng District, Hangzhou City, Zhejiang Province, the PRC (hereinafter referred to as the “Investor” or “Party A”);

 

	
(2)

	
Wuhu Chery Automobile Investment Company Limited, a company organized and validly existing under the laws of China, with its registered address at 8 Changchun Road, Wuhu Economic and Technological Development Zone, Anhui Province, holding 50% equity interest in Qoros Automotive Co., Ltd. as of the date hereof (hereinafter referred to as “Wuhu Chery” or “Party B”);

 

	
(3)

	
Quantum (2007) LLC, a company organized and validly existing under the laws of State of Delaware, the United States of America, with its registered address at 16192 Coastal Highway Lewes Delaware 19958 USA, holding 50% equity interest in Qoros Automotive Co., Ltd. as of the date hereof (hereinafter referred to as “Quantum” or “Party C”; together with Wuhu Chery, the “Existing Shareholders”); and

 

	
(4)

	
Qoros Automotive Co., Ltd., a company organized and validly existing under the laws of China, with its registered address at 1 Tongda Road, Changshu Economic & Technological Development Zone, Jiangsu Province (hereinafter referred to as “Party D”, the “Target Company” or “Qoros Automotive”).

 

The parties hereto may be referred to collectively as the “Parties”, and a “Party”, individually.

 

Whereas:

 

	
(1)

	
The Parties entered into that certain Investment Agreement on May 23, 2017 (the “Investment Agreement”), in respect of an investment by the Investor into the Target Company in accordance with terms and conditions set forth therein.

 

	
(2)

	
The Parties entered into that certain Amendment to the Investment Agreement on July 12, 2017 (the “First Amendment Agreement”), in respect of an amendment to the Investment Agreement in accordance with terms and conditions set forth therein.

1/10

	
(3)

	
The Investor and the Target Company entered into that certain Investment Advance Agreement on June 13, 2017 (the “First Investment Advance Agreement”) pursuant to which the Investor shall provide an investment advance of an amount of RMB 500 million (the “Initial Investment Advance”) to the Target Company upon satisfaction of certain conditions set forth therein.

 

	
(4)

	
The Parties entered into that certain binding Memorandum of Understanding regarding the Second Amendment to the Investment Agreement on August 8, 2017 (the “MOU”).

 

	
(5)

	
On       , 2017, the Investor and the Target Company entered into that certain second investment advance agreement (the “Second Investment Advance Agreement”), pursuant to which the Investor shall provide an investment advance of an amount of at least RMB 1.2 billion to the Target Company upon satisfaction of certain conditions set forth therein.

 

	
(6)

	
The Parties wish to enter into this Second Amendment Agreement to set out their understanding in relation to the alternative solution to certain investment structure under the Investment Agreement and amend the Investment Agreement and the First Amendment Agreement in accordance with the terms and conditions herein.

 

THE PARTIES NOW AGREE as follows:

 

	
1.

	
Definitions

 

1.1 The following new definitions are added to Section 1.1 of the Investment Agreement:

 

“Transaction Documents” means any other agreements and documents signed by the Parties for the purpose of completion of this Investment, including but not limited to the Investment Agreement, the First Investment Agreement, the Second Amendment Agreement, the First Investment Advance Agreement, the Second Investment Advance Agreement, the AOA, the JVC and etc.

 

1.2 Unless otherwise defined herein, capitalized terms used but not defined herein shall have the same meaning ascribed to them in the Investment Agreement and the First Amendment Agreement.

 

	
2.

	
Article 2.3(c) of the Investment Agreement shall be in its entirety be replaced by the following:

 

		
(i)

	
On or before August 29, 2017, the Investor agrees to transfer any additional amount into the Escrow Account (defined below) so that there will be an amount of RMB 3,315,340,000 (Three Billion Three Hundred and Fifteen Million Three Hundred and Forty Thousand) (“3.3B  Escrow Fund”) in the Escrow Accounts, so as to secure the performance of the Investor’s obligations under the Investment Agreement with respect to the payment of the Equity Transfer Price.

2/10

		
(ii)

	
The Parties further agree that in addition to the escrow account opened under the name of the Investor, the Investor may also transfer the above-mentioned 3.3B Escrow Fund into one or several escrow accounts (the “Escrow Accounts”) set up under the name of the Investor and/or the affiliate of the Investor which have been agreed by the other Parties in advance.

 

		
(iii)

	
Such Escrow Accounts shall be set up in accordance with, and any such transfers of 3.3B Escrow Fund into other escrow accounts as well as the termination of escrow arrangement for each Escrow Account, shall be respectively subject to, the escrow agreement(s) executed among and by Wuhu Chery, Quantum, the Investor and/or the affiliate of the Investor and each escrow bank (if applicable) providing for the terms of such escrow, including:

 

		
(a)

	
the release of 3.3B Escrow Fund shall only occur pursuant to the terms of the Investment Agreement, the First Amendment Agreement and the Second Amendment Agreement; and

 

		
(b)

	
direct rights for the Existing Shareholders to require the owner of the Escrow Accounts (the Investor and/or any such affiliate) to apply to the bank for transferring full or partial amount of 3.3B Escrow Fund in accordance with relevant terms of the payment of the Equity Transfer Price under the Investment Agreement. Each Existing Shareholders agrees to provide all necessary cooperation with the Investor on the partial or complete release of 3.3B Escrow Fund from the Escrow Account for the purpose of the payment of its respective transfer price.

 

	
3.

	
Article 2.4 of the Amendment Agreement shall be in its entirety be replaced by the following:

 

		
2.4.1

	
First Investment Advance

 

The Parties hereby acknowledge, confirm and agree that:

 

		
(i)

	
the following conditions as described in Article 2.4 of the Investment Agreement have been satisfied: (A) relevant matters under Articles 2.3 (a) and (b) of the Investment Agreement have been completed; and (B) the Cooperator Meeting Minutes has been approved by the Investor, and the unconditional termination with the Cooperator in the form of Memorandum on Termination of Agreement, entered into by and among the Cooperator, Wuhu Chery Automobile Investment Co., Ltd., Quantum and Qoros Automotive has been completed and the Investor has received a copy of such Memorandum on Termination of Agreement, each in accordance with Article 2.2 of the Investment Agreement;

3/10

		
(ii)

	
the Investor has remitted RMB 500,000,000 (in words: RMB five hundred million yuan) from the Escrow Account to the Controlled Account of the Target Company in accordance with Article 2.4 of the Investment Agreement and Article 4.2(1) and Article 4.2(2) of the First Investment Advance Agreement;

 

		
(iii)

	
The Investor has further transferred RMB 500,000,000 (in words: RMB five hundred million yuan) from the Escrow Account to the Controlled Account of the Target Company on August 18, 2017 (the “Remaining First Investment Advance”); and

 

		
(iv)

	
All the funds transferred by the Investor to the Controlled Account of the Target Company under the items (ii) and (iii) of this Article 2.4.1 are collectively referred to as the first investment advance (the “First Investment Advance”). In addition to the restriction on the Target Company’s use of the First Investment Advance provided in Article 2.3 of the Investment Agreement, the First Investment Advance shall not be used for the purpose of equity investment by the Target Company. The utilization of such funds by the Target Company shall be in compliance with its management and operation requirements and only be allowed with unanimous consent by the Investor and the Existing Shareholders, however, the Investor shall not object to any reasonable use of such funds by the Target Company if for such purposes for its ordinary course of business.

 

		
2.4.2

	
Second Investment Advance

 

		
(i)

	
Pursuant to the Second Investment Advance Agreement, as of the date of this Second Amendment, the Investor ensures that there are investment funds of an amount of RMB 1,200,000,000 (in words: Renminbi one billion, two hundred million yuan) (the “Second Investment Advance”) in the Escrow Account owned by the Investor. For the avoidance of doubt, the Second Investment Advance shall be separate from, and in addition to, the 3.3B Escrow Fund set forth in Article 2.3(c) and also shall not include the Remaining First Investment Advance transferred into the Controlled Account of the Target Company; and

4/10

		
(ii)

	
Based on the review of relevant operational plans and financial budget submitted by the management to the board of the Target Company, and pursuant to the actual operation needs of the Target Company as determined unanimously by all members of the board of the Target Company, the Investor agrees to transfer the Second Investment Advance to the Controlled Account of the Target Company in two (2) installments, with each installment of RMB 600,000,000 (in words: RMB six hundred million yuan). The Parties agree to procure their respectively appointed directors to approve and pass the resolution of the board as mentioned under this item (ii) in the best interests of the Company and shall approve any such funding of the reasonable business needs of the Target Company.

 

		
(iii)

	
Any funds actually transferred by the Investor or its designated third party to the Target Company under this Article 2.4.1 and Article 2.4.2. are collectively referred to as the investment advance (the “Investment Advance”). The Parties agree that the restrictions on the Target Company’s use of the First Investment Advance shall also apply to the Second Investment Advance, of which the funds shall be used by the Target Company only if agreed upon by the Investor and the Existing Shareholders, provided that, the Investor shall not object to the reasonable use of funds if for the business needs of the Target Company.

 

		
2.4.3

	
The Existing Shareholders have completed the due diligence on the Investor and are satisfied with the result of such due diligence.

 

	
4.

	
Section 2.5.3 of the Investment Agreement

 

		
2.5.3

	
Chery Equity Transfer:

 

		
(i)

	
The Existing Shareholders and the Investor agree that with respect to the Chery Equity Transfer, Wuhu Chery shall apply to the competent SASAC or any competent entity authorized by SASAC for re-approval (if necessary), and shall apply to the Exchange House for the second bidding (the “Second Bidding”) on or before the bid date to be determined in accordance with this Article by the Existing Shareholders and the Investor (the “Bid Date”). The Bid Date shall be determined through friendly consultation among the Existing Shareholders and the Investor on or before October 15, 2017, and if no such date is finally agreed until October 15, 2017, the Bid Date shall be a date during the week starting November 13, 2017.

5/10

		
(ii)

	
The Parties acknowledge and agree that Section 2.5.3 (iii) to Section 2.5.3 (v) of the Investment Agreement shall be applicable to the Second Bidding and be incorporated herein by reference in this Second Amendment Agreement except that the deadline of December 31, 2017 for failure to complete the Chery Equity Transfer after the Investor has become the successful bidder set forth in Section 2.5.3(v) of the Investment Agreement shall be extended accordingly to March 31, 2018.

 

	
5.

	
Section 2.5.4 of the Amendment Agreement shall be in its entirety be replaced by the following:

 

Consequence of the Failure of the Investor to be the Final Buyer:

 

If Chery fails to initiate the process of the listing and bidding of Chery Equity on or before the Bid Date or the Second Bidding is not successful for whatever reason (there is no successful bidder for the Second Bidding that becomes the ultimate buyer), the Parties shall switch to the previous investment structure as agreed by the Parties in this Agreement (before as amended by the First Amendment Agreement and this Second Amendment Agreement) whereby (a) the Target Company shall first reduce its registered capital from RMB 10,425,480,000 to RMB 6,500,000,000 (“Capital Reduction”) after which Wuhu Chery and Quantum will respectively continue to hold 50% of the equity interest in the Target Company; and (b) subsequently the Investor shall contribute RMB 6,766,000,000 in cash to subscribe for the increased registered capital of the Target Company, which equals to RMB 6,766,000,000; and the Long Stop Date set forth in Section 3.3.3 shall be extended to June 30, 2018. If the Investor fails to become the final buyer of Chery Equity following the completion of the bidding process at the Exchange House, either Quantum or the Investor may terminate the Quantum Equity Transfer Agreement without bearing any breach liability arising therefrom (and if the failure of the Investor to be the final buyer of Chery Equity is result from the breach by the Investor of the Investment Agreement, the Investor shall not be entitled to terminate the Quantum Equity Transfer Agreement). Upon termination of the Quantum Equity Transfer Agreement, any Party shall have the right to terminate the Investment Agreement, the First Amendment Agreement and this Second Amendment Agreement with a written notice to the other Parties, but such termination shall not affect the accrued rights or liabilities of a Party under Article 10.3 of the Investment Agreement.

 

	
6.

	
Section 3.3.3 of the Investment Agreement:

 

The Parties agree that the Long Stop Date set forth in Section 3.3.3 of the Investment Agreement shall be extended from December 31, 2017 to March 31, 2018.

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7.

	
Article 6.5 of the Investment Agreement shall be in its entirety be replaced by the following:

 

		
6.5.1

	
As of the date of this Second Amendment Agreement, the Investor (or a party designated by the Investor and acceptable to the Parties, the “Purchaser”) and the Target Company shall enter into an agreement for the purchase of 15,000 Qoros vehicles (the “Vehicle Purchase Agreement”). Unless otherwise agreed by the Target Company and the Purchaser, the Vehicle Purchase Agreement shall provide for:

 

		
(i)

	
the Purchaser shall pay a deposit of 25% of the total Vehicle Purchase Price within five (5) Business Days of the date of the Vehicle Purchase Agreement. Based upon the manufacturing progress of the vehicles, the Purchaser will further transfer 25% of the total Vehicle Purchase Price (together with the initial 25% deposit, the “50% Deposit”) on or before, but in no event later than, October 31, 2017 and the details of the business terms will be determined by further discussions between the Purchaser and the Target Company. The Parties agree that the funds paid by the Purchaser under this Article 6.3 shall solely be used for relevant production and operation activities conducted by the Target Company in respect of the 15,000 vehicles;

 

		
(ii)

	
the Purchaser shall pay all the remaining amounts of the Vehicle Purchase Price upon the completion of the delivery of any such vehicles pursuant to the Vehicle Purchase Agreement; and

 

		
(iii)

	
such vehicle purchases mentioned under this Article 6 shall be in addition to, and separate from, the undertaking by the Investor set forth in Article 6.5 of the Investment Agreement, provided that the number of vehicles to be ordered in 2018 shall be reduced to 95,000 vehicles.

 

		
6.5.2

	
The Investor hereby undertakes that upon completion of the transaction contemplated hereunder, between 2018 and 2020, each year, it shall provide Qoros Automobile with orders for 100,000 vehicles, to push a further expansion of the domestic market of Qoros Automobile and to make best efforts to realize the initial public offering of Qoros Automobile as early as possible. Notwithstanding the foregoing provision, subject to the entry of the Vehicle Purchase Agreement, the Parties agree that the number of the vehicles to be ordered in 2018 by the Investor set forth in Article 6.5 of the Investment Agreement shall be reduced to 95,000 vehicles.

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8.

	
Article 10.3 of the Investment Agreement shall be in its entirety be replaced by the following:

 

After the termination of this Agreement in accordance with the provisions above:

 

		
(1)

	
the Parties will no longer have any right or obligation under this Agreement, except for the rights and obligations accrued prior to the rescission hereof;

 

		
(2)

	
The Target Company shall immediately when possible and no later than one (1) year after the rescission of this Agreement repay to the Investor all the First Investment Advance and all or part of the Second Investment Advance which has been actually paid plus interest calculated at the rate for one-year loan for the same period of time (fiom the date when such amount is paid to the account of the Target Company). The Existing Shareholders agree to immediately terminate the escrow arrangements regarding the Escrow Accounts and the Investor agrees to immediately terminate its control on the Controlled Account. For the avoidance of doubt, repayment of the Investment Advance shall take precedence over the repayment of shareholder loans from the Existing Shareholders, and no part of the shareholder loans of the Target Company from the Existing Shareholders then outstanding shall in any way be repaid prior to the full repayment of the Investment Advance. Further, in the event that Quantum has already appointed one director nominated by the Investor following Article 2.3(a) of the Investment Agreement, Quantum shall have the right to remove the director previously nominated by the Investor.

 

If the termination of the Investment Agreement results from the sole breach of the Investor after the effectiveness date of the MOU (including performance failure before stated cutoff dates):

 

		
(i)

	
the Target Company shall first have the right to request to further transfer all the remaining amount of the Second Investment Advance which has not been transferred, and the Investor shall execute required documents and go through necessary procedures to complete the transfer;

 

		
(ii)

	
second, at the sole discretion of the Existing Shareholders, (A) all amounts of the First Investment Advance already transferred by the Investor to the Target Company in accordance with Article 2.4.1 of the Investment Agreement, and (B) all or part of the Second Investment Advance transferred by the Investor to the Target Company, shall be converted into the equity interest of the Target Company held by the Investor.

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For the avoidance of doubt, the aggregated amount of the First Investment Advance and Second Investment Advance that shall be converted as the Target Company’s equity interests as mentioned in item (A) and (B) above may be up to, but shall not exceed, RMB 2,200,000,000 (in words: RMB two billion two hundred million yuan). To the extent converted, such amount shall be converted as soon as possible based upon the Pre-Money Valuation currently provided in the Investment Agreement, and the Investor shall have the right to appoint one Director upon such conversion. The Parties agree that all provisions of the AOA requiring ‘unanimous approval by the Directors of the Target Company shall be revised to provide for two-thirds approval, other than as may be required by law.

 

		
(3)

	
Subject to the provisions of the above sub-section (2), the Existing Shareholders may replace the financial staff appointed by the Investor in accordance with Article 5.2 of the Investment Agreement and the research and development, manufacturing, procurement, sales staff and etc. The Investor shall immediately withdraw such staff and shall not appoint any staff to the Target Company in any manner.

 

	
9.

	
Investment Structure Adjustment

 

		
(1)

	
After the Ministry of Industry and Information Technology has issued the relevant circular on the management on the emission and CAFC credits of enterprise-owned passenger vehicles and the credits of new energy vehicles, the Parties agree that the Target Company and Wuhu Chery (or its affiliate) shall further discuss about the matters and arrangements with respect to emission compliance and credit compliance in connection therewith. For the aforesaid purpose, the Parties may adjust the investment structure provided in the Investment Agreement such that after the completion of this Investment and the Registered Capital Increase, the percentage of equity interest held by Wuhu Chery in the Target Company shall be 25%.

 

		
(2)

	
The Parties further agree that the pre-investment valuation, the percentage of the equity interest to be held by the Investor in the Target Company upon completion of this Investment (51%) and the arrangements for Transitional Period currently provided in the Investment Agreement remain unchanged, and the Parties agree to cooperate and provide necessary assistance after the execution of the Second Amendment Agreement so that the Investor will be entitled to further participate in the Target Company’s daily operation and management during the Transitional Period. Any such adjustment to the investment structure, if agreed by the Parties, would not change the essence of this deal and the Parties will adjust relevant Transaction Documents to reflect the aforesaid changes.

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10.

	
This Second Amendment Agreement shall constitute an integral part of the Investment Agreement. Save for the express amendments and modifications contained herein, all the provisions in the Investment Agreement and the First Amendment Agreement shall remain in full force and effect. In the event of any inconsistency between the provisions of this Second Amendment Agreement and the First Amendment Agreement, or between the provisions of this Second Amendment and the Investment Agreement, the provisions of this Second Amendment Agreement shall prevail.

 

	
11.

	
This Second Amendment Agreement is executed in Chinese and English languages. Each language version shall be executed in ten (10) counterparts. Each Party holds one (1) counterpart. Each counterpart has the equal legal effect.

[Intentionally Left Blank]

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[Signature Page to the Second Amendment to the Investment Agreement in respect of Qoros Automotive Co., Ltd.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Wuhu Chery Automobile Investment Company (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Quantum(2007) LLC

 

	
Sign by the legal representative or authorized representative:

	 

Title:

 

Qoros Automotive Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

[Signature Page to the Second Amendment to the Investment Agreement in respect of Qoros Automotive Co., Ltd.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Wuhu Chery Automobile Investment Company (Seal)

 

	
Sign by the legal representative or authorized representative:

	

 

Quantum(2007) LLC

 

	
Sign by the legal representative or authorized representative:

	 

Title:

 

Qoros Automotive Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

[Signature Page to the Second Amendment to the Investment Agreement in respect of Qoros Automotive Co., Ltd.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Wuhu Chery Automobile Investment Company (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Quantum(2007) LLC

 

	
Sign by the legal representative or authorized representative:

	 
	
Title: MANAGER

	 

 

Qoros Automotive Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative: 

	

[Signature Page to the Second Amendment to the Investment Agreement in respect of Qoros Automotive Co., Ltd.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Wuhu Chery Automobile Investment Company (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Quantum(2007) LLC

 

	
Sign by the legal representative or authorized representative:

	 

Title:

 

Qoros Automotive Co., Ltd. (Seal)   

 

	
Sign by the legal representative or authorized representative:

	

Third Amendment to the Investment Agreement 

 

among

Hangzhou Chengmao Investment Co., Ltd. 

 

and

Wuhu Chery Automobile Investment Company Limited 

 

Quantum (2007) LLC 

 

Qoros Automotive Co., Ltd. 

 

in respect of

Qoros Automotive Co., Ltd.

November 8, 2017

THIRD AMENDMENT TO THE INVESTMENT AGREEMENT

This Third Amendment to the Investment Agreement (this “Third Amendment Agreement”) in respect of Qoros Automotive Co., Ltd. is entered into in the PRC on this November 8, 2017 by and among:

	
(1)

	
Hangzhou Chengmao Investment Co., Ltd., a company organized and validly existing under the laws of China, with its registered address at Room 316, Building 9, 588 Feijiatang Road, Xiacheng District, Hangzhou City, Zhejiang Province, the PRC (hereinafter referred to as the “Investor”);

 

	
(2)

	
Wuhu Chery Automobile Investment Company Limited, a company organized and validly existing under the laws of China, with its registered address at 8 Changchun Road, Wuhu Economic and Technological Development Zone, Anhui Province, holding 50% equity interest in Qoros Automotive Co., Ltd. as of the date hereof (hereinafter referred to as “Wuhu Chery”);

 

	
(3)

	
Quantum (2007) LLC, a company organized and validly existing under the laws of State of Delaware, the United States of America, with its registered address at 16192 Coastal Highway Lewes Delaware 19958 USA, holding 50% equity interest in Qoros Automotive Co., Ltd. as of the date hereof (hereinafter referred to as “Quantum”); and

 

	
(4)

	
Qoros Automotive Co., Ltd., a company organized and validly existing under the laws of China, with its registered address at 1 Tongda Road, Changshu Economic & Technological Development Zone, Jiangsu Province (hereinafter referred to as “Qoros Automotive” or “Target Company”).

 

The parties hereto may be referred to collectively as the “Parties”, and a “Party”, individually.

Whereas:

	
(1)

	
The Parties entered into that certain Investment Agreement on May 23, 2017, as amended by the Amendment to the Investment Agreement on July 12, 2017, the Second Amendment to the Investment Agreement on September 25, 2017, in respect of an investment by the Investor into Qoros Automotive in accordance with terms and conditions set forth therein (the “Initial Investment Agreement”, together with this Third Amendment Agreement, the “Investment Agreement”).

 

	
(2)

	
The Investor and Qoros Automotive entered into that certain Investment Advance Agreement on June 13, 2017 and that certain Second Investment Advance Agreement on August 14, 2017, pursuant to which the Investor (i) has provided an investment advance of a total amount of RMB 1 billion to Qoros Automotive (the “First Investment Advance”) and (ii) shall provide an investment advance of an amount of RMB 1.2 billion (the “Second Investment Advance”) to Qoros Automotive upon satisfaction of certain conditions set forth therein.

1

NOW THREFORE, in consideration of the foregoing recitals, which are incorporated herein, and the mutual intention of the Parties to set forth their understanding in relation to the amendment to the investment structure contemplated under the Initial Investment Agreement, the Parties agree as follows:

	
1.

	
Definitions

 

Unless otherwise defined herein, capitalized terms used but not defined herein shall have the same meaning ascribed to them in the Initial Investment Agreement.

	
2.

	
Section 2.5.2(i) of the Initial Investment Agreement

 

	
 

	
2.5.2   Quantum Equity Transfer

 

The Parties agree that (i) the definition of Quantum Equity in the Initial Investment Agreement shall be amended in such way that the equity interest in Qoros Automotive proposed to be transferred by Quantum is the one representing 26% of the total registered capital of Qoros Automotive; (ii) the Quantum Transfer Price shall be adjusted to RMB 1,690,000,000; and (iii) the Investor and Quantum shall enter into the Quantum Equity Transfer Agreement in the form set forth in Appendix I attached hereto.

	
3.

	
Section 2.5.3(i) of the Initial Investment Agreement

 

		
2.5.3    Chery Equity Transfer

 

With respect to the Chery Equity Transfer, Wuhu Chery shall apply to the competent SASAC or any competent entity authorized by SASAC for re-approval for the Second Bidding before November 17, 2017, and shall apply to the Exchange House for the Second Bidding on November 17, 2017. The Parties agree that (i) the definition of Chery Equity in the Initial Investment Agreement shall be amended in such way that the equity interest in Qoros Automotive proposed to be transferred by Wuhu Chery is the one representing 25% of the total registered capital of Qoros Automotive; and (ii) the base listing price in the public announcement for Chery Equity Transfer proposed by Wuhu Chery at the Exchange House shall be no higher than RMB 1,630,000,000.

2

	
4.

	
Section 2.5.4 of the Initial Investment Agreement shall be in its entirety be replaced by the following:

 

Consequence of the Failure of the Investor to be the Final Buyer.

If Chery fails to initiate the process of the listing and bidding of Chery Equity on or before the Bid Date or the Second Bidding is not successful (the Investor registers and participates in the bidding procedure to bid for Chery Equity in accordance with the applicable regulations and rules, but there is no successful bidder for the Second Bidding that becomes the ultimate buyer), the Parties shall switch to the previous investment structure as agreed by the Parties in this Agreement (before as amended by the First Amendment Agreement and this Second Amendment Agreement) whereby (a) the Target Company shall first reduce its registered capital from RMB 10,425,480,000 to RMB 6,500,000,000 (“Capital Reduction”) after which Wuhu Chery and Quantum will respectively continue to hold 50% of the equity interest in the Target Company; (b) subsequently the Investor shall contribute RMB 6,500,000,000 in cash to subscribe for the increased registered capital of the Target Company, which equals to RMB 6,500,000,000; and (c) simultaneously with (b) the Investor shall acquire from Quantum 1% of the equity interest of the Target Company at the price of RMB 130,000,000; and the Long Stop Date set forth in Section 3.3.3 shall be extended to June 30, 2018. If the Investor fails to become the final buyer of Chery Equity following the completion of the bidding process at the Exchange House, either Quantum or the Investor may terminate the Quantum Equity Transfer Agreement without bearing any breach liability arising therefrom (and if the failure of the Investor to be the final buyer of Chery Equity is result from the breach by the Investor of the Investment Agreement, the Investor shall not be entitled to terminate the Quantum Equity Transfer Agreement). Upon termination of the Quantum Equity Transfer Agreement, any Party shall have the right to terminate the Initial Investment Agreement and this Third Amendment Agreement with a written notice to the other Parties, but such termination shall not affect the accrued rights or liabilities of a Party under Article 10.3 of the Investment Agreement.

 

	
5.

	
Section 2.6.1 of the Initial Investment Agreement shall be in its entirety be replaced by the following:

 

Within three months after the occurrence of the Equity Transfer Closings, the Target Company shall have its registered capital increased by RMB 6,500,000,000 (the “Registered Capital Increase”), and (i) the Investor agrees to contribute RMB 3,315,000,000 (“Investor Capital Increase Price”) to subscribe for 51% of the aforesaid increased registered capital in cash and/or convertible loans (as set forth in Section 2.6.2); (ii) Quantum shall contribute RMB 1,560,000,000 in cash and/or convertible loans (“Quantum Capital Increase Price”) to subscribe for 24% of the aforesaid increased registered capital; and (iii) Wuhu Chery shall contribute RMB 1,625,000,000 in cash and/or convertible loans (as set forth in Section 2.6.2) with the full purchase price for the Chery Equity Transfer to subscribe for 25% of the aforesaid increased registered capital.

3

	
6.

	
Section 2.6.2 of the Initial Investment Agreement shall be in its entirety be replaced by the following:

 

Notwithstanding any terms in this Article 2.6, the Investor and the Existing Shareholders agree that upon the occurrence of the Equity Transfer Closings, the Parties shall respectively provide, simultaneously and in proportion to their then shareholding percentages to be contemplated upon the Equity Transfer Closings, Quantum Capital Increase Price, the Chery Transfer Price and Investor Capital Increase Price, each in the form of a shareholder loan free of interests and free from Encumbrances, to the Target Company, provided that each of such loans shall be convertible into equity interest in the Target Company as agreed by the Investor and the Existing Shareholders. For the avoidance of doubt, the Parties agree that any remaining amounts in respect of the Quantum Transfer Price after the provision of such shareholder loan by Quantum shall not be subject to any further limitation or restriction under the Investment Agreement. For the avoidance of doubt, the First Investment Advance which has been transferred to the Target Company by the Investor and any or all of the Second Investment Advance actually transferred to the Target Company by the Investor on or before the Equity Transfer Closings shall be considered as part of the Investor Capital Increase Price, without double counting.

	
7.

	
Section 2.6.4 of the Initial Investment Agreement shall be in its entirety be replaced by the following:

 

Upon the completion of the Registered Capital Increase, the total registered capital of the Target Company shall be RMB 16,925,480,000, the Investor shall hold RMB 8,631,994,800 registered capital of the Target Company, representing 51% equity interest in the Target Company, Wuhu Chery shall hold RMB 4,231,370,000 registered capital of the Target Company, representing 25% equity interest in the Target Company, and Quantum shall hold RMB 4,062,115,200 registered capital of the Target Company, each representing 24% equity interest in the Target Company. All the shareholders shall share profits and bear losses of the Target Company in proportion to their equity interests in the Target Company.

 

	
8.

	
Section 4.1.1 of the Initial Investment Agreement shall be in its entirety be replaced by the following:

 

Shareholding Percentage at Equity  Transfer Closing Date. Upon the occurrence of the Equity Transfer Closing, the Investor shall hold RMB 5,316,994,800 registered capital of the Target Company, representing 51% equity interest in the Target Company, Quantum shall hold RMB 2,502,115,200 registered capital of the Target Company, representing 24% equity interest in the Target Company, and Wuhu Chery shall hold RMB 2,606,370,000 registered capital of the Target Company, representing 25% equity interest in the Target Company. After the Equity Transfer Closing Date, the Investor shall share profits and bear losses of the Target Company in proportion to its equity interests in the Target Company.

 

	
9.

	
Amended AOA of Qoros Automotive

 

The Parties acknowledge and agree that based on the foregoing provisions of this Third Amendment Agreement and the recent discussion among the Investor and the Existing Shareholders, the amended AOA of Qoros Automotive shall be adjusted accordingly, the form of which is set forth in Appendix II attached hereto. On or prior to the date of the Equity Transfer Closings, the Parties agree to execute and deliver the amended AOA which shall reflect the respective registered capital subscribed by and the shareholding structure of the relevant Party upon the Equity Transfer Closings.

4

	
10.

	
Limitation of Liabilities of Legal Representative and Indemnity

    

	
10.1

	
The Investor, Wuhu Chery, Quantum and Qoros Automotive acknowledge that pursuant to the letter of designation and revocation, dated as of October 18, 2017, the designation of An’ning Chen as the chairman of the board of Qoros Automotive has been revoked by Wuhu Chery while An’ning Chen remains as the legal representative of Qoros Automotive on record with the relevant corporate registration authorities. The Investor and its nominated person who acts as the chairman of the board of Qoros Automotive shall diligently perform its obligations thereof according to the laws, regulations and article of association of Qoros Automotive.

 

	
10.2

	
The Parties agree to waive any claims against Chen An’ning and/or Wuhu Chery and release each of them from any and all liability that results from or relates to any action or decision taken by Chen An’ning as the legal representative of Qoros Automotive during the period from the effective date of the foregoing letter of designation and revocation through the date when the registration with the competent corporate registration authorities of the removal of Chen An’ning as the legal representative of Qoros Automotive is completed (the “Chairmanship Transition Period”). For the avoidance of doubt, Chen An’ning and/or Wuhu Chery shall not be liable to any of the Parties, nor any of their respective employees, managers, directors, or shareholders in any respect for any damages or losses that any of them may incur or suffer as a result of or in connection with any action or decision taken by Chen An’ning as the legal representative of Qoros Automotive during the Chairmanship Transition Period.

 

	
10.3

	
The Parties agree that Chen An’ning will not take any action or decision as legal representative of Qoros Automotive during the Chairmanship Transition Period upon the direction of the Investor or its representatives, unless at such time the Investor or Qoros Automotive agrees to defend and hold harmless Chen An’ning from and against any and all losses, damages, claims, liabilities, penalties, judgments, costs and expenses (including, without limitation, the fees and expenses of attorneys and experts) arising out of or in connection with any such action or decision.

5

	
11.

	Transfer of CAFC Credits

 

Wuhu Chery agree that within three (3) years as from the Closing Date, Qoros Automotive is entitled to internally trade corporate average fuel consumption and new energy vehicle dual credits (“CAFC Credits”) with Wuhu Chery and its Affiliates under the Administrative Measures on Corporate Average Fuel Consumption and New Energy Vehicle Dual-credit Scheme for Passenger Vehicle Enterprises or any other PRC laws and regulations with respect to the trade of CAFC Credits, provided Wuhu Chery and its Affiliates have extra credits after adequately satisfying Wuhu Chery and its Affiliates’ own credits requirement. Wuhu Chery shall, and shall procure its Affiliates to, offer price of the credits available to Qoros Automotive no higher than market price, and no higher than the one Chery Jaguar Land Rover Automotive Co., Ltd. can obtain from Wuhu Chery and its Affiliates, with respect to the said trade of the CAFC credits.

 

	
12.

	
This Third Amendment Agreement shall constitute an integral part of the Initial Investment Agreement. Save for the express amendments and modifications contained herein, all the other provisions in the Initial Investment Agreement shall remain in full force and effect. In the event of any inconsistency between the provisions of this Third Amendment Agreement and the Initial Investment Agreement, the provisions of this Third Amendment Agreement shall prevail.

 

	
13.

	
This Third Amendment Agreement is executed in the Chinese and English languages. Each language version shall be executed in ten (10) copies with each Party holding one (1) copy. Each copy has the equal legal effect.

 

[Intentionally Left Blank]

6

[Signature Page to the Third Amendment to the Investment Agreement in respect of Qoros Automotive Co., Ltd.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	

 

Wuhu Chery Automobile Investment Company (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Quantum(2007) LLC

 

	
Sign by the legal representative or authorized representative:

	 

Title:

 

Qoros Automotive Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

[Signature Page to the Third Amendment to the Investment Agreement in respect of Qoros Automotive Co., Ltd.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Wuhu Chery Automobile Investment Company (Seal)

 

	
Sign by the legal representative or authorized representative:

	

 

Quantum(2007) LLC

 

	
Sign by the legal representative or authorized representative:

	 

Title:

 

Qoros Automotive Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

[Signature Page to the Third Amendment to the Investment Agreement in respect of Qoros Automotive Co., Ltd.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Wuhu Chery Automobile Investment Company (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Quantum(2007) LLC

 

	
Sign by the legal representative or authorized representative:

	

Title: Manager

 

Qoros Automotive Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

[Signature Page to the Third Amendment to the Investment Agreement in respect of Qoros Automotive Co., Ltd.]

 

Hangzhou Chengmao Investment Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Wuhu Chery Automobile Investment Company (Seal)

 

	
Sign by the legal representative or authorized representative:

	 

 

Quantum(2007) LLC

 

	
Sign by the legal representative or authorized representative:

	 

Title:

 

Qoros Automotive Co., Ltd. (Seal)

 

	
Sign by the legal representative or authorized representative:

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