China Automation : (021) Scheme Consortium Agreement

DATED 14 June 2019

ASCENDENT AUTOMATION (CAYMAN) LIMITED

ARACO INVESTMENT LIMITED

BRIGHTEX ENTERPRISES LIMITED

and

XUAN RUI GUO (宣瑞国)

SCHEME CONSORTIUM AGREEMENT

in connection with the proposal for the privatization of China Automation Group Limited by

Brightex Enterprises Limited and Ascendent Automation (Cayman) Limited by way of a scheme of

arrangement (under Section 86 of the Companies Law)

hk-204895 v6B

	CONTENTS
1	INTERPRETATION.............................................................................................................................	2
2	IMPLEMENTATION OF THE SCHEME...........................................................................................	8
3	RESTRICTED TRANSACTIONS .....................................................................................................	11
4	INDEMNITIES...................................................................................................................................	12
5	INSIDE INFORMATION...................................................................................................................	12
6	GUARANTEE ....................................................................................................................................	12
7	TERMINATION.................................................................................................................................	13
8	NOTICES............................................................................................................................................	13
9	COSTS AND EXPENSES..................................................................................................................	14
10	GENERAL PROVISIONS .................................................................................................................	14
11	ANNOUNCEMENTS.........................................................................................................................	16
12	CONFIDENTIALITY.........................................................................................................................	16
13	LANGUAGE ......................................................................................................................................	17
14	COUNTERPARTS .............................................................................................................................	17
15	GOVERNING LAW AND ARBITRATION .....................................................................................	17
	SCHEDULE 1 FORM OF ANNOUNCEMENT...............................................................................	19

hk-204895 v6B

THIS AGREEMENT14 June

is made on _______________ 2019

BETWEEN:

1. Ascendent Automation (Cayman) Limited, an exempted company incorporated with limited liability in the Cayman Islands, whose registered office is at c/o Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1- 9008, Cayman Islands ("AACL");
2. Brightex Enterprises Limited, a BVI business company incorporated in the British Virgin Islands, whose registered office is at Morgan & Morgan Building, P.O. Box 958, Pasea Estate, Road Town, Tortola, British Virgin Islands with BVI Company Number 1904314 ("Brightex Enterprises, together with AACL, the "Joint Offerors");
3. Araco Investment Limited, a BVI business company incorporated in the British Virgin Islands, whose registered office is at Morgan & Morgan Building, Pasea Estate, Road Town, Tortola, British Virgin Islands with BVI Company Number:1907170 ("Araco"); and
4. Xuan Rui Guo (宣瑞国), an individual holding a passport of the People's Republic of China (No. E05163617), whose address is 20A Building 1, Fenglin Lvzhou, Datun Road, Chaoyang District, Beijing, the PRC ( "Mr. Xuan").

each a "Party" and together the "Parties".

WHEREAS:

1. China Automation Group Limited ("CAG"), is an exempted company incorporated in the Cayman Islands with its registered office at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands, and its issued CAG Shares are listed on the Main Board of the Stock Exchange (Stock Code: 569). As at the date of this Agreement, CAG has an authorised share capital of HK$30,000,000 divided into 3,000,000,000 ordinary shares of a par value of HK$0.01 per share, of which 1,026,263,729 CAG Shares are in issue and are fully paid or credited as fully paid.
2. As of the date of this Agreement: (i) Araco holds 515,696,164 CAG Shares, representing approximately 50.25% of the issued share capital of CAG; (ii) AACL holds 248,235,132 CAG Shares, representing approximately 24.19% of the issued share capital of CAG; and (iii) Mr. Xuan holds 1,000,000 CAG Shares, representing approximately 0.1% of the issued share capital of CAG.
3. Pursuant to and subject to the terms and conditions of the Scheme Facility Agreement, AACL shall advance a loan in the principal amount of US$51,000,000 (or its equivalent in HK$) (the "Loan") to Brightex Enterprises to finance the funds required for the Scheme. As further consideration for AACL making available the Loan to Brightex Enterprises, Araco, AACL, Mr. Xuan and Brightex Enterprises have entered into the Amendment Agreement to the 2018 Facility Agreement and the Sale and Purchase Agreement at the same time as entry of the Scheme Facility Agreement.
4. The Joint Offerors shall co-operate with CAG to implement, by way of a scheme of arrangement under Section 86 of the Companies Law the privatisation of CAG involving the cancellation of the Scheme Shares and, in consideration thereof, the payment by Brightex Enterprises to the Scheme Shareholders of the Cancellation Price in cash for each Scheme Share, and the withdrawal of the listing of the CAG Shares on the Stock Exchange.

1

hk-204895 v6B

1. If the Proposal is approved and implemented, under the Scheme, the share capital of CAG will, on the Effective Date of the Scheme, be reduced by cancelling and extinguishing the Scheme Shares. Upon such reduction, the share capital of CAG will be increased to its former amount by the issuance at par to Brightex Enterprises (or AACL in the case of Clause 2.5), credited as fully paid, of the aggregate number of CAG Shares as is equal to the number of Scheme Shares cancelled. The reserve created in CAG's books of account as a result of the capital reduction will be applied in paying up in full at par the new CAG Shares so issued, credited as fully paid.
2. The Parties have agreed to enter into this Agreement to regulate their relationship in respect of the Scheme. Each of Araco and Mr. Xuan have agreed to jointly and severally guarantee the due and punctual performance and observance by Brightex Enterprises of all the obligations of Brightex Enterprises under this Agreement.

IT IS AGREED as follows:

1 INTERPRETATION In this Agreement:

"2018 Facility Agreement" means the facility agreement entered into between Araco, AACL Mr. Xuan and Brightex Enterprises on 17 December 2018;

"acting in concert" has the meaning given to it in the Takeovers Code, and "persons acting in concert" and "concert parties" shall be construed accordingly;

"Affiliate" means:

1. in relation to an individual, that individual's relatives (whether close or distant, including any spouse, child (including adopted child and step-child), parent or sibling of that individual), any person which is Controlled by that individual and/or that individual's relatives (whether close or distant and whether acting singly or together) ("Controlled Entity") and any Affiliate of a Controlled Entity; and
2. in relation to any other person, any other person that (directly or indirectly) Controls, is Controlled by or is under common Control with such person;

"Amendment Agreement to the 2018 Facility Agreement" means the amendment agreement amending the 2018 Facility Agreement entered into between Araco, AACL, Mr. Xuan and Brightex Enterprises at the same time as the entry of the Scheme Facility Agreement on or about 14 June 2019;

"Announcement" means the announcement relating to the Scheme to be issued under Rule

3.5 of the Takeovers Code, in substantially the form set out in Schedule 1 to this Agreement, with such amendments thereto as may be approved by the Executive and/or the Stock Exchange and agreed between the Parties;

"Authorisation" means any license, permit, consent, authorisation, permission, clearance, warrant, confirmation, certificate, order, exemption or approval of any Authority or any other person;

"Authority" means any competent governmental, administrative, supervisory, regulatory, judicial, determinative, disciplinary, enforcement or tax raising body, authority, agency, board, department, court or tribunal of any jurisdiction (including any relevant securities exchange)

2

hk-204895 v6B

and whether supranational, national, regional or local;

"Business Day" means a day on which banks are generally open for business in Hong Kong (other than a Saturday, Sunday or a public holiday or a day on which a tropical cyclone warning No. 8 or above or a "black rainstorm warning signal" is hoisted or remains hoisted in Hong Kong at any time between 9:00 am and 5:00 pm);

"CAG Group" means CAG and its subsidiaries from time to time, and "member of the CAG Group" shall be construed accordingly;

"CAG Share(s)" means ordinary shares of HK$0.01 each in the capital of CAG or shares of any class or classes resulting from any subdivision, consolidation or re-classification of those shares;

"CAG Shareholder" means a holder of CAG Shares;

"Cancellation Price" the cancellation price being offered to the Scheme Shareholders under the Scheme as set out in the Announcement;

"Companies Law" means the Companies Law (as amended) of the Cayman Islands;

"Companies Ordinance" means the Companies Ordinance (Chapter 622 of the Laws of Hong Kong);

"Concert Party" means, in relation to any person, a person who is, or who is deemed to be, acting in concert with that person, as this term is defined in the Takeovers Code;

"Confidential Information" has the meaning given to it in Clause 12.1; "Control" means:

1. in relation to a corporate person: (i) direct or indirect ownership or control of more than 50% of the outstanding voting securities of such corporate person; (ii) the ability to appoint or remove more than one-half of the directors of the board (or equivalent governing body) of such person; (iii) the right to control the votes at a meeting of the board of directors (or equivalent governing body) of such person; or (iv) the ability to direct or cause the direction of the management and policies of such person (whether by contract or howsoever arising); and
2. in relation to a non-corporate person: (i) direct or indirect ownership or right to exercise a majority of the voting rights or otherwise; (ii) the ability to direct or cause the direction of the management and policies of such person (whether by contract or howsoever arising); or (iii) the operational or practical control of such person,

and the terms "Controls", "Controlling" and "Controlled" shall be construed accordingly;

"Dealing Party" has the meaning given to it in Clause 3.3;

"Effective Date" means the date on which the Scheme becomes effective in accordance with the Companies Law;

"Executive" means the Executive Director of the Corporate Finance Division of the SFC;

"Financing Documents" means the Scheme Facility Agreement, loan agreements, 3

hk-204895 v6B