Final Main Body Investment Agreement

Final Draft 25 August 2014
INVESTMENT AGREEMENT
IN RESPECT OF THE PROPOSED DEVELOPMENT OF AN
AUTOMOTIVE MANUFACTURING PLANT IN THE STATE OF
NUEVO LEON
entered into by
KIA MOTORS CORPORATION;
THE GOVERNMENT OF THE STATE OF NUEVO LEON;

and
THE MUNICIPALITY OF PESQUERIA, NUEVO LEON
This Investment Agreement (the "Agreement") is hereby entered into as of August 27, 2014
by and among:
(1) KIA MOTORS CORPORATION, a company established under the laws of the Republic of
Korea, with its head office at 12 Heolleung-ro, Seocho-gu, Seoul, 137-938, Republic of Korea
("KMC");
(2) THE GOVERNMENT OF THE STATE OF NUEVO LEON through the SECRETARY OF
ECONOMIC DEVELOPMENT OF THE STATE OF NUEVO LEON (the "State
Government"); and
(3) THE MUNICIPALITY OF PESQUERIA, NUEVO LEON (the "Municipality").
(The above referenced entities may from time to time be referred to individually as a
"Party" and collectively as the "Parties", and the State Government and the Municipality
may from time to time be referred to collectively as the "Mexican Parties").
WHEREAS
(A) KMC, subject to the terms and conditions of this Agreement, intends, through any entities
appointed or designated by KMC, to develop and construct an automobile manufacturing
plant in the State of Nuevo Leon.
(B) The State Government has proposed a site located in the municipality of Pesqueria in the
State, as generally described in Schedule 1, for the development and implementation of the
Project.
(C) The implementation of the Project will make a major positive contribution to the economic
development of the Pesqueria region, the State, and Mexico as a whole.
(D) The State Government and the Municipality wish to support the implementation of the
Project by offering attractive terms and conditions under which KMC (and/or its designee(s))
may undertake the Project in the State, including significant investment incentives and other
state and municipal aid granted in accordance with Applicable Law.
NOW, THEREFORE, upon and in consideration for the mutual promises and covenants contained
herein and for other valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
1.
1.1
INTERPRETATIONS
Definitions
The following words and expressions shall, unless the context otherwise requires, have
the following meanings:
"AASHTO" means the American Association of State Highway and Transportation
Officials.
"Advisers", in relation to any Person, means professional advisers advising it in relation
to this Project, including (unless the context otherwise requires) partners in, and
directors and employees of, such advisers.
"Adjacent Property" means certain parcels of land (with a surface area of

approximately 132 hectares) adjacent to the Project Site, as generally illustrated in
Schedule 1, which is reserved for donation to KMC by the State Government in the event
that KMC expands or develops an additional car manufacturing plant near the Project Site
in the future, pursuant to clause 7.3.
"Affiliate" means any Person that directly or indirectly controls, or is under the control
of, KMC, or, any Person which KMC owns not less than 50% of the voting shares in the
share capital of the controlled entity.
"Applicable Law" means all legal acts, including laws, regulations, rules, decrees,
orders and instructions at the federal, state, and municipal levels of the Mexican
government, including any amendments which may be adopted (whether prior to or
subsequent to the Effective Date).
"Approval of State Congress" means either (i) the issuance of a decree by the State
Congress pursuant to which an exemption to payroll Tax for the Project is to be granted,
or (ii) an amendment to the State Promotion of Investment and Employment Act,
authorising the Executive branch, through the Board for Promotion of Investment, to
grant an exemption to payroll Tax, pursuant to clause 6.3 of this Agreement.
"ASTM" means the American Society for Testing and Materials.
"AWWA" means the American Water Works Association.
"Conditions" means the conditions subsequent set out in clause 5.1.
"Confidential Information" means all information, whether in writing, verbal or in
electronic form, relating to the Project or this Agreement, the Parties to it or any of their
respective Affiliates and businesses (including copies of any documents in relation to the
Project made available to the Parties to this Agreement or their Representatives or
Advisers and any other information, or data otherwise made available to the Parties in
relation to the Project or their Representatives or Advisers), whether before or after this
Agreement is entered into, for the purpose of, and in connection with, the Project (and
any information or analysis derived from such information), but shall not include
information or data which:
(a)
is publicly available or becomes generally available to the public (other than as a

result of disclosure by a Party or its Representatives or Advisers contrary to their
respective obligations of confidentiality); or
(b)
becomes available (as can be demonstrated by its written records or by other

reasonable evidence) to a Party to this Agreement from a source other than one of
the other Parties, or any of their respective Representatives; or
(c)
was already in the Partys possession prior to its receipt from any other Party free
of any restrictions as to its use or disclosure.
"Cure Period" means a period of time to remedy a breach of one or more obligations,
representations and warranties, covenants and Conditions, without terminating this
Agreement pursuant to clause 5.2. The cure period shall be seven (7) calendar days, and
shall be counted from the day in which one Party notifies the other Party or Parties in
writing of the breach.
"Donation Agreement" has the meaning given to such term in clause 7.1(a).
"Effective Date" means August 27, 2014.
3
"Environmental Impact Assessment" means an environmental assessment conducted

by the State Government and/or KMC (and/or its designee(s)), as appropriate, in order to
identify any impact which the Project may have on the environment, including the
measures that should be implemented to avoid, mitigate or compensate any such impact.
This term includes the Phase I Environmental Impact Assessment and the Phase II
Environmental Impact Assessment.
"Environmental Laws" means any federal, state, municipal and foreign statute, law,
ordinance, rule, regulation, order, judgment, injunction or decree and other provision
having the full force or effect of law, any judicial and administrative order and
determination, any contractual obligation and any law concerning public health and
safety, worker health and safety, and pollution or protection of the environment,
including, without limitation, any laws or regulations regarding the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened release, control,
or clean up of any Hazardous Substances or Wastes, each as amended and as now or
hereafter in effect, including, without limitation, the General Law of Ecological Balance
and Environmental Protection, the General Law for the Prevention and Comprehensive
Management of Wastes, the National Waters Law, the Federal Law on Environmental
Liability, the General Law on Sustainable Forest Development, the General Law on
Climate Change, the General Law on Wildlife and their Regulations, the Mexican Official
Standards (Normas Oficiales Mexicanas), and comparable state laws, and all
amendments and supplements to any of the foregoing, and all rules, regulations and
publications promulgated or issued pursuant thereto, and/or any other governmental
rules which govern Hazardous Substances or Wastes, and regulations adopted pursuant
to all such laws, each as amended and as now or hereinafter in effect.
"Firm Deadline" means each and any of the firm deadlines for completion of particular
stages for development of the Project, as set forth in the Project Schedule.
"Force Majeure" means any acts of God, including floods, earthquakes, wars, or acts of
terrorism; provided, however, that no event or circumstance shall constitute a Force
Majeure to the extent that it could have been prevented, overcome or remedied, in whole
or in part, by the Party invoking Force Majeure, through the exercise of reasonable
diligence and due care.
"General Investment Conditions" means the general investment climate in Mexico,
including, in particular, the following key general investment and business conditions:
payroll Tax, value added Tax, property Tax, Tax over value added to the real estate,
corporate and personal income Tax, and any other substantial Tax rates are not
more than the rates in effect at the date of this Agreement;
no increase of withholding Taxes on dividend payments;
losses incurred by corporate entities shall be permitted to be carried forward and

applied against income in future years for a period of not less than 10 years;
no extension in current time periods for recovery of excess input VAT;
stability of labor laws and other factors, changes of which increase the overall
burden of labor costs by more than twenty percent (20%);
no substantive change in the social security regime;
Tax law provisions relating to new passenger cars shall not be worsened (such as
depreciation, deductions, deductibility of lease payments, recoverability of VAT);
4
no excise Tax increase on cars; and
no material adverse changes in the political and economic systems in Mexico,

including, but not limited to, changes in the general regulatory or political
conditions, including any acts of war or terrorist activities, and any material
changes to Applicable Law affecting the Project.
"Hazardous Substances or Wastes" means any and all pollutants, contaminants, toxic
or hazardous wastes or any other substances that might pose a hazard to health or
safety, of which the removal may be required, or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage or filtration of which is, or shall be,
regulated, restricted, prohibited or penalised by any Environmental Laws, including,
without limitation, substances defined as "Hazardous Substances or Wastes" under the
General Ecological Balance and Environmental Protection Law and the General Law for the
Prevention and Comprehensive Management of Wastes.
"High Risk Substances" means all the substances set forth in the first and second list
of high risk activities published in the Federal Official Gazette on March 28, 1990, and
May 4, 1992, as well as its amendments.
"Historic Properties" means any prehistoric or historic district, site, building, structure,
object, artefact, record or remains, including properties of traditional, religious and
cultural significance.
"ICSID" means the International Centre for Settlement of Investment Disputes.
"Intellectual Property" means all of the following: (i) all inventions (whether
patentable or unpatentable, and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, together with all
reissues, continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof; (ii) all trademarks, service marks, trade dress, logos, slogans, trade names,
corporate names and internet domain names, together with all combinations thereof and
including all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith; (iii) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection therewith; (iv) all mask works and
all applications, registrations, and renewals in connection therewith; (v) all trade secrets
and confidential business information (including ideas, research and development, knowhow, formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists, pricing and
cost information, and business and marketing plans and proposals); (vi) all computer
software (including source code, executable code, data, databases and related
documentation); (vii) all advertising and promotional materials; (viii) all other proprietary
rights; and (ix) all copies and tangible embodiments thereof (in whatever form or
medium).
"Implementation Agreements" means such additional agreements, as may be
reasonably necessary for implementation of the terms of this Agreement, including, but
not limited to, the Donation Agreement.
"Incentive(s)" means each and every incentive, aid, support, commitment, assistance
and benefit provided by the State, Municipality and/or the federal government under this
Agreement.
"Indemnified Parties" has the meaning given to such term in clause 7.5.
"KCSM" means Kansas City Southern de Mexico.
5
"Key Officers" means the five (5) key officers of KMC (and/or its designee(s)) as
designated by KMC (and/or its designee(s)) for the purpose of clause 6.1(i).
"KMC Representative" means an individual or entity retained by KMC (and/or its
designee(s)) to advise and consult with KMC (and/or its designee(s)) on Site Preparation
and Site Construction matters at the Project Site.
"KMC Site" means certain parcels of land of approximately 335 hectares in surface area
located within the Municipality, to be granted to KMC (and/or its designee(s)) to construct
car manufacturing facilities, as generally illustrated in Schedule 1.
"Liability" means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due), including, but not limited
to, any liability for Taxes.
"Loss" means any loss of any nature whatsoever, including, but not limited to, any
liability, loss, deficiency, damage, claim, judgment, interest, award, cost, fine, fee,
penalty, injury, or expense of any nature whatsoever, known or unknown, including, but
not limited to, (i) those resulting from any actions, suits, proceedings, demands,
assessments or judgments, together with costs and expenses including attorneys fees
and other legal costs and expenses relating thereto, and any loss of benefit which the
Party suffering a loss would have acquired had the breaching Party complied with its
obligations under this Agreement and (ii) lost profit.
"Market Value" has the meaning set forth in clause 4.
"Municipality" means the Municipality of Pesqueria, Nuevo Leon.
"Obstacles" means any and all physical obstructions on the Project Site or the Adjacent
Property whose existence makes the implementation of the Project impossible or
inexpedient as agreed upon by the Parties.
"Permit" means any permit, licence, order, approval or authorisation issued under any
law.
"Person" means any individual, corporation, company, partnership (limited or general),
limited liability company, joint venture, association, trust, join stock company,
unincorporated organisation or other entity.
"Phase I Environmental Impact Assessment" means an environmental assessment
conducted by the State Government, at its own cost, for the purpose of obtaining the
Phase I Environmental Impact Authorisation, pursuant to clause 2.10(b). The assessment
shall include all the activities that are required to be evaluated by SEMARNAT and/or
SEDESU with respect to the environmental impact under Article 5 of the Regulations to
the General Ecological Balance and Environmental Protection Law in respect of the
Environmental Impact Assessment and Article 6 of the Regulations of the Environmental
Law for the State of Nuevo Leon, respectively, including, but not limited to, the
modification of land use of forest zones, development of the necessary infrastructure to
provide the industrial zone with Utilities, the construction of the industrial facilities that
KMC (and/or its designee(s)) will occupy and the construction of railroads, roads and
other necessary infrastructure.
This term includes Phase I Environmental Impact
Assessment A, Phase I Environmental Impact Assessment B, and Phase I Environmental
Impact Assessment C, as defined below:
"Phase I Environmental Impact Assessment A" means an environmental

impact assessment conducted by the State Government, at its own cost, for the
6
purpose of obtaining the Phase I Environmental Impact Authorisation A, pursuant

to clause 2.10(b).
Phase I Environmental Impact Assessment B means an environmental

purpose of obtaining the Phase I Environmental Impact Authorisation B.
Phase I Environmental Impact Assessment C means the environmental

purpose of obtaining the Phase I Environmental Impact Authorisation C.
"Phase I Environmental Impact Authorisation" means the authorisation issued by

SEMARNAT and/or SEDESU, as appropriate, which is necessary to undertake the Site
Preparation work and/or infrastructure and Utilities work, on, under and/or outside the
Project Site, and the construction of the facilities that KMC (and/or its designee(s)) will
occupy. This term includes Phase I Environmental Impact Authorisation A, Phase I
Environmental Impact Authorisation B, and Phase I Environmental Impact Authorisation
C, as defined below:
"Phase I Environmental Impact Authorisation A" means the authorisation

issued by SEMARNAT which is necessary to undertake the Site Preparation work
on the Project Site.
Phase I Environmental Impact Authorisation B means the authorisation

issued by SEDESU which is necessary to undertake the infrastructure and Utilities
works on or under the Project Site, and the construction of the industrial facilities
that KMC (and/or its designee(s)) will occupy.
Phase I Environmental Impact Authorization C means the authorisation

issued by SEMARNAT which is necessary to develop the necessary infrastructure
to provide the Project Site with Utilities, the construction of railroads and
infrastructure outside the Project Site.
"Phase II Environmental Impact Assessment" means the environmental impact

assessment conducted by KMC (and/or its designee(s)), at its own cost, for the purpose
of obtaining the Phase II Environmental Impact Authorisation.
"Phase II Environmental Impact Authorisation" means the authorisation issued by
SEDESU, which is necessary to operate the car manufacturing plant on the Project Site.
"Project" means the development and construction by KMC (and/or its designee(s)) of a
fully operational state-of-the-art facility for, initially, the manufacture and assembly of
certain automobiles currently under the development by KMC together with all related
facilities to be located on the Project Site or appurtenant thereto.
"Project Manager(s)" means Ms. Celina Villarreal Cardenas, Mr. Anselmo Corts, Mr.
Eduardo Snchez, or any other person appointed by the State Government subject to the
approval of KMC (and/or its designee(s)), which shall not be unreasonably denied,
pursuant to clause 2.5.
"Project Schedule" means each and any of the deadlines for completion of particular
stages of the Project, as set forth in Schedule 3.
"Project Site" means certain parcels of land constituting approximately 500 hectares
located within the Municipality, which comprise the KMC Site and the Suppliers Site, as
generally illustrated in Schedule 1.
"Protected Species" means all vegetation or wildlife species defined in the Mexican
Official Standard NOM-059-SEMARNAT-2010 Environmental protection Native species of
Mexicos forest flora and fauna Categories of risk and specifications for their inclusion,
exclusion or change List of species at risk; and any other applicable standards.
"Representatives", in relation to any Person, means the directors, officers, employees
and consultants of, and individuals seconded to work for it.
"Rules" has the meaning given to such term in clause 16.2.
"SCT" means the Secretariat of Communications and Transportation.
"SEDESU" means the Ministry of Sustainable Development of the State.
"Selected Industries" means business enterprises engaged in cement manufacturing,
glass manufacturing and glass recycling, coal burning plants, carbon black processors,
stone processors or fiberglass processors, tire and rubber production, and any businesses
or industries that make significant use of silicone in any of their operations.
"SEMARNAT" means the Federal Ministry of Environment and Natural Resources of
Mexico.
"Site Construction" means the development, design, engineering, construction,
equipping, start-up and completion of the Project and the Training Centre.
"Site Preparation" means, with respect to the Project Site, without limitation, all
activities to be performed in accordance with the Site Preparation Specifications and the
Site Preparation Schedule set forth in Schedule 2.
"Site Preparation Schedule" has the meaning set forth in Schedule 2.
"Site Preparation Specifications" has the meaning set forth in Schedule 2.
"SOP" means the start of production by KMC (and/or its designee(s)) or the respective
Suppliers, as appropriate.
"State" means the State of Nuevo Leon.
"Suppliers" has the meaning given to such term in clause 2.12.
"Suppliers Site" means certain parcels of land of approximately 165 hectares in surface
area in the Project Site, to be granted to KMC's Suppliers, as generally illustrated in
Schedule 1.
"Tax" means all taxes, assessments, charges, duties, fees, levies or other governmental
charges including all federal, state, local, foreign and other income, franchise, profits,
gross receipts, capital gains, capital stock, transfer, sales, use, value added, occupation,
property, excise, severance, stamp, licence, payroll, social security, withholding and other
taxes, including any payments due under any social security laws, including those related
to the Mexican Social Security Institute (Instituto Mexicano del Seguro Social), the
National Institute for Workers Housing (Instituto del Fondo Nacional de la Vivienda para
los Trabajadores) and the Retirement Savings System (Sistema de Ahorro para el Retiro),
as well as any assessments, charges, duties, fees, levies or other governmental charges
of any kind whatsoever (whether payable directly or by withholding, and whether or not
requiring the filing of a return), all estimated taxes, deficiency assessments, additions to
tax, penalties, updates (actualizaciones) and interests and shall include any Liabilities for
such amounts as a result of (i) being a transferee or successor or member of a combined,
consolidated, unitary or affiliated group, or (ii) a contractual obligation to indemnify any
Person.
8
"Tie-in Point(s)" has the meaning given to such term in Schedule 2.

"Training Centre" means the training centre located in the Project Site, as described in
clause 9.1.
"Training Centre Specifications" has the meaning set forth in Schedule 5.
"Trust Fund" has the meaning given to such term in clause 10.2.
"Urban Development Act" means the Urban Development Act of the State of Nuevo
Leon.
"Utilities" has the meaning given to such term in Schedule 2.
2.
2.1
INVESTMENT AGREEMENT
Purpose
The purpose of this Agreement is to set out the mutual commitments and undertakings of
the Parties, based upon which KMC (and/or its designee(s)) shall develop the Project, and
the Mexican Parties will provide KMC (and/or its designee(s)) with the aid and support
necessary or desirable to implement the Project as set out in this Agreement, all subject
to the terms and conditions of the Agreement (including, but not limited to, the fulfilment
of all the Conditions set forth herein to the reasonable satisfaction of KMC).
2.2
KMCs (and/or its designee(s)) Potential Investment

The potential investment by KMC may amount to approximately USD 1,000,000,000
(one billion United States Dollars) from the Effective Date until the expiry of 9 years from
the SOP; provided, however, that such potential investment shall be conditional upon the
Mexican Parties' fulfilment of all the terms, Conditions and obligations under this
Agreement (including, without limitation, the representations and warranties under this
Agreement), and such potential investment amount shall be subject to change at KMCs
sole discretion due to commercial reasons.
The State Government acknowledges and agrees that KMC (and/or its designee(s)) is in
no way obligated with respect to the Suppliers investment, and the State Government
acknowledges that it has to negotiate separately with the Suppliers as to the Suppliers
investment amount. It is anticipated that the indirect economic spillover for this Project
will result in a benefit for the State of approximately USD 1,500,000,000 (one point five
billion United States Dollars) from the Effective Date until the expiry of 9 years from the
SOP.
2.3
Obligations of Mexican Parties; General Terms

By entering into this Agreement, each of the Mexican Parties agrees to do all required
actions, assist, cooperate, and support, to the greatest extent possible, the
implementation, completion and ongoing successful operation of the Project, including,
but not limited to, by promptly giving effect to its specific undertakings and obligations in
this Agreement, in a manner and within the time periods set forth in the Project
Schedule. The State Government shall designate a procurement agent (a one-stop shop)
to offer comprehensive support in the formalities regarding the establishment of KMC's
(and/or its designee(s)) business.
2.4
Assistance, Cooperation and Support of Mexican Parties

In order to ensure the timely and efficient implementation of the Project, each of the
Mexican Parties shall procure, to the greatest extent possible, the assistance, cooperation
and support by all appropriate ministries, administrative authorities, municipal and
9
regional authorities, and enterprises which it owns or controls, and their respective
directors, employees, legal, financial, technical and other Advisers and contractors, for so
long as KMC (and/or its designee(s)) or any of its Affiliates owns or operates the Project.
Such assistance, cooperation and support shall, without limitation, be provided in a
manner and to the extent that is in compliance with Applicable Law so that KMC (and/or
its designee(s)) can obtain all executed documents and agreements reasonably necessary
for the implementation of the Project, including the Implementation Agreements,
issuance of all necessary approvals, consents, decisions, Permits, Tax rulings, or licences
and all other acts of public administration reasonably necessary for the efficient and
timely implementation of the Project.
2.5
Designation of Project Manager(s)

The Parties agree that it is in the best interests of the Parties for the development,
design, engineering, construction, equipping and start-up of the Project to proceed on an
expeditious timetable, and that time is of the essence to achieve the timetable set forth
in the Project Schedule. Accordingly, in order for the Project to commence as soon as
possible and to proceed in an orderly and on-schedule manner to meet such Project
Schedule, the Mexican Parties agree, commencing on the Effective Date, to appoint,
without cost or charge to KMC (and/or its designee(s)), the Project Manager(s) from
among their employees, to assist KMC (and/or its designee(s)) in implementing the terms
and conditions of the Agreement, through whom all contact, correspondence, and
communications between the Parties in respect of the Project and the subject matter of
this Agreement shall be channelled. Upon KMC's reasonable request, the Mexican Parties
shall appoint additional qualified coordinators to work in conjunction and cooperation with
the Project Managers in the following areas, including, without limitation, Site
Preparation, Permits, Tax, training, rail, road, Supplier location, employee assistance,
Utilities, and fire protection.
The appointment of the Project Manager(s) shall be subject to the prior approval of KMC
(and/or its designee(s)) which shall not be unreasonably denied, and any request by KMC
(and/or its designee(s)) to change the Project Manager(s) and/or coordinators shall not
be unreasonably denied by the Mexican Parties.
2.6
Implementation Agreements
The Parties shall sign such documents and take such steps as necessary or useful for
KMC (and/or its designee(s)) to implement the Project, including entering into the
Implementation Agreements for the purpose of detailing and implementing the terms of
this Agreement.
2.7
Representations and Warranties

Each of the Mexican Parties hereby makes to KMC, and KMC hereby makes to the State
Government, the representations and warranties set out in Schedule 4. Each Party has
made due inquiry with respect to each representation and warranty contained in
Schedule 4, so that none of the representations and warranties contains any untrue
statement of any fact or omits to state a fact necessary to make the statements
contained therein not misleading.
2.8
(a)
Assistance with Permits
The Mexican Parties, in conjunction with the Project Manager(s) in clause 2.5 above
shall, on and from the Effective Date and on an ongoing basis, do all things and take all actions
necessary to assist KMC (and/or its designee(s)) in its timely filing of all applications for, obtaining,
and timely renewal of, all applicable Permits, provided, that such applications are fully and
accurately completed in accordance with Applicable Law and timely filed by KMC (and/or its
10
designee(s)) with the federal government, the State Government, the Municipality and/or all
applicable agencies thereof. Such assistance shall include, without limitation, timely provision by
the Mexican Parties of necessary information to enable KMC (and/or its designee(s)) to prepare
and file applications and documents on a timely basis, and timely issuance by the Mexican Parties
of all necessary Permits (or procuring thereof by causing all Permits decisions to be made as soon
as possible) required in connection with the Project, including, without limitation, site plan
approvals, construction Permits, land use Permits, the official boundary and street number
certificate, Environmental Impact Authorisations, the environmental risk study and the accident
prevention plan in respect of High Risk Substances, water construction and supply Permits,
wastewater discharge Permits, wetlands Permits, storm-water discharge Permits, and the land
disturbing activity Permits, notice of completion of works and occupancy Permit, all to be issued on
an expedited basis in order to permit KMC (and/or its designee(s)) to proceed with Site
Construction and operation of the plant on the Project Site and the Adjacent Property in
accordance with the Project Schedule.
(b)
(c)
The State Government shall conduct the Phase I Environmental Impact

Assessments at its own cost and obtain the Phase I Environmental Impact
Authorisations from SEMARNAT and SEDESU, and any other Permits necessary for
undertaking Site Preparation work and infrastructure and Utilities work on, under,
and outside, the Project Site, as well as the construction of the industrial facilities
that KMC (and/or its designee(s)) will occupy, and shall assume responsibility for
complying with any orders or conditions imposed thereon (if any).
The Mexican Parties shall, to the extent permitted by Applicable Law, waive all
administrative, licensing and permitting fees or charges otherwise payable by KMC (and/or its
designee(s)) in connection with compliance with all applicable State and Municipal laws, rules,
regulations, and orders, until the SOP of the facilities on the Project Site.
2.9
State Contractors and Suppliers
(a)
The State Government represents and agrees that (i) all contractors to be retained
by the State Government in connection with Site Preparation work and infrastructure and Utilities
work as set forth in Schedule 2 and any other necessary auxiliary work in accordance with the
terms of this Agreement shall have a recognized professional, technical, and financial reputation
and the attributes required to perform said works pursuant to the terms, conditions, and
guidelines agreed in this Agreement; and (ii) the selection of said contractors and the performance
of any work by such contractors shall be subject to the State Governments compliance with
Applicable Law.
(b)
Contractors to be retained by the State Government in connection with the

construction of the Training Centre shall be subject to the prior written approval of KMC (and/or its
designee(s)), which approval shall not be unreasonably denied. Such contractors shall have a
recognized professional, technical, and financial reputation and the attributes required to perform
said works pursuant to the terms, conditions, and guidelines agreed in this Agreement, it being
understood that the selection of said contractors and the performance of any works by such
contractors shall be subject to the State Governments compliance with Applicable Law. The
Parties agree that if the State Government wishes to retain a new contractor for the construction
of the Training Centre, it shall submit a written approval request to KMC (and/or its designee(s)),
accompanying a detailed description of the proposed contractor, including its past relevant
experience, which shall not include experience or previous work with competitors of KMC (or its
designee(s)). KMC shall respond to such request within 15 calendar days after receiving the
request. In the event that KMC (and/or its designee(s)) fails to respond within such timeframe,
the contractor proposed by the State Government shall be deemed to have been approved. If KMC
(and/or its designee(s)) notifies the State Government of its objection in its reasonable discretion,
the State Government shall propose another contractor within 10 calendar days of delivery of
objection by KMC (and/or its designee(s)) to the State Government. In the event KMC (and/or its
11
designee(s)) performs or undertakes the designing and/or construction of the Training Centre, KMC
(and/or its designee(s)) shall be entitled to retain any contractors or suppliers of its choice in its
sole discretion, without consultation with the State Government.
2.10
Preparatory Real Estate Due Diligence
(a)
Geotechnical, Soil, Water and Air Quality Analysis

The State Government shall cause, at its own cost, the preparation of reports or
analyses regarding geotechnical, soil, water (including a soil and water
contamination study), and air quality, a copy of which has been provided to KMC.
Each such report (i) shall name KMC (and/or its designee(s)) as a third party
beneficiary; (ii) will be prepared for the benefit of KMC (and/or its designee(s));
and (iii) contains or will contain an acknowledgement from the consultant which
prepared the reports that KMC (and/or its designee(s)) and any and all lenders
with respect to the Project shall be entitled to rely upon the results and conclusions
of support report(s). To the extent permitted by law, all such reports shall be held
confidential.
(b)
Phase I Environmental Impact Assessment

The State Government shall cause, at its own cost, the preparation of, and
submission to SEMARNAT and SEDESU, of reports or analyses regarding any impact
on the environment (the "Phase I Environmental Impact Assessment"), a
copy of which has been provided to KMC. Each such report (i) shall name KMC
(and/or its designee(s)) as a third party beneficiary; (ii) will be prepared for the
benefit of KMC (and/or its designee(s)); and (iii) contains or will contain an
acknowledgement from the consultant which prepared the reports that KMC
(and/or its designee(s)) and any and all lenders with respect to the Project shall be
entitled to rely upon the results and conclusions of such report(s). To the extent
permitted by law, all such reports shall be held confidential.
In addition, the State Government shall cause the issuance by the Effective Date of
(i) a guarantee letter by SEMARNAT and SEDESU certifying that there are no
Protected Species or protected areas on the Project Site; and (ii) a letter from the
Municipality certifying that the Project Site and the Adjacent Property are classified
as an heavy industrial land use zone.
(c)
Aerial Photograph; Topographic Survey; Land Survey

The State Government shall cause, at its own cost, the following to be prepared
and provided to KMC (and/or its designee(s)) by the Effective Date: (i) an aerial
photograph of the Project Site; (ii) a topographic survey of the Project Site; and
(iii) a land survey of the Project Site to be prepared by a licenced surveyor, each in
form and substance satisfactory to KMC.
(d)
Wetland Delineation
The State Government shall prepare, at its own cost, and deliver to KMC (and/or its
designee(s)) by the Effective Date, the wetland delineation for the Project Site.
2.11
Additional Inducements and Incentives for Expansions

The investment made by KMC (and/or its designee(s)) pursuant to this Agreement has no
effect on, and shall not restrict or limit, any inducements and incentives to which KMC
(and/or its designee(s)) may be entitled in respect of any additional significant
12
investment, expansion or hiring of employees beyond that contemplated by this

Agreement as of the Effective Date. The Mexican Parties agree to provide to KMC
(and/or its designee(s)) such additional inducements and incentives equivalent in scope
and form to the Incentives provided to KMC (and/or its designee(s)) under the
Agreement at such time as KMC (and/or its designee(s)) commits to make such
additional investment, expansion or new hires.
2.12
KMC's Suppliers
The Mexican Parties recognise and acknowledge that (i) KMC (and/or its designee(s)) and
certain of its Affiliates may enter into agreements with suppliers, contractors and vendors
(collectively, the "Suppliers", and for the avoidance of doubt, such Suppliers shall
include any Affiliate of KMC), to provide certain products and services to KMC (and/or its
designee(s)) and/or its Affiliates, and (ii) certain of such Suppliers may construct facilities
upon parcels of land on or in reasonable proximity to the Project Site for the purpose of
providing such products and services to KMC (and/or its designee(s)) and/or its Affiliates.
KMC will provide a preliminary list of Suppliers who have expressed an interest in
investing in the State, which investment is subject to negotiations and execution with the
Mexican Parties with respect to their relevant investment agreements, by the Effective
Date.
The Mexican Parties and the applicable local government agencies agree that, subject to
the total amount to be invested in the State by all the Suppliers, as a whole, being no
less than USD 500,000,000 (five hundred million United States Dollars) in accordance
with Applicable Law, the Suppliers locating in the State shall be granted inducements and
incentives equivalent in scope and form to the Incentives as provided to KMC (and/or its
designee(s)) under the Agreement, including, but not limited to, the following: (i) Tax
Incentives including a 20-year exemption of payroll Tax and other state and municipal Tax
incentives; (ii) provision of infrastructure and/or Utilities in accordance with Suppliers'
requirements, including connections of infrastructure and Utilities to Tie-in Points dictated
by KMC's Suppliers and guarantee of sufficient capacity and supply of Utilities; (iii) the
provision of temporary office space during the construction period; (iv) assistance with
obtaining and timely issuance of necessary Permits; and (v) other supports such as
undertaking the Phase I Environmental Impact Assessment.
It is expressly understood and agreed by each of the Mexican Parties that (i) the benefits
to the Suppliers as set forth herein are separate and distinct from the inducements
otherwise made available to KMC (and/or its designee(s)) in accordance with this
Agreement and (ii) no such benefits granted to or made available to any such Suppliers
shall in any manner preclude, diminish or adversely impact in any manner upon the
inducements and the value thereof made available to KMC (and/or its designee(s))
pursuant to this Agreement or otherwise available to KMC (and/or its designee(s)).
2.13
Assistance with Arranging Financing Commitments

The State Government agrees, at the request of KMC (and/or its designee(s)), to assist
KMC (and/or its designee(s)) to receive from, or arrange provision of, financing facilities
by onshore commercial banks, at preferential interest rates sufficient to permit KMC
(and/or its designee(s)) to finance in connection with the design, construction, equipping
and start-up of the Project, including the construction costs of the KMC Site.
3.
3.1
PROJECT SCHEDULE
The Mexican Parties acknowledge and agree that a delay in the completion of the Project
will impose substantial costs and result in substantial lost profits to KMC (and/or its
designee(s)), and as a result KMC (and/or its designee(s)) may not pursue the
development of the Project. Therefore, time is of the essence as to all the terms and
conditions of this Agreement, and the other agreements referred to herein. Accordingly,
13
the Mexican Parties agree to do all things and take all actions necessary or useful in
order for the Project to commence as soon as possible and to ensure that each of the
steps which is required to be taken or procured by them shall occur within the time
periods set forth in the Project Schedule.
3.2
4.
Notwithstanding the foregoing, the Parties acknowledge and agree that the provisions of
this clause is subject to the excuse by any Party claiming a Force Majeure, and the
Project Schedule may change from time to time in accordance with business needs and
requirements. In all cases, the Party claiming a Force Majeure shall take all necessary
measures to minimise the impact of Force Majeure on the performance of its obligations
and to ensure, the resumption of normal performance of the obligations affected by the
Force Majeure as soon as possible.
Accordingly, in the case of unforeseen
circumstances, after mutual agreement, the Parties may modify the timetable so as to
most effectively implement the Project, provided, that none of the Firm Deadlines set
forth in Schedule 3 may be changed without the express consent of KMC (and/or its
designee(s)), failing which the Mexican Parties agree that, without prejudice to any other
rights or remedies, KMC (and/or its designee(s)) may have under the terms of this
Agreement, KMC (and/or its designee(s)) shall be entitled not to proceed with the
Project and/or terminate this Agreement in accordance with clause 11.1. Amendment of
the timetable in accordance with the terms of this clause shall not limit the obligations to
carry out the purpose of this Agreement to the fullest extent of their abilities in order to
successfully implement the Project. KMC (and/or its designee(s)) reserves the right at
all times to delay the Project or any segment thereof for such reasonable periods of time
as may be required for its business purposes.
Any such delay shall neither be
considered a determination not to proceed with the Project for purposes of this clause
nor a breach or default by KMC (and/or its designee(s)) to comply with any
commitments made in this Agreement.
MARKET VALUE OF LAND
The State Government shall, at its own cost, commission an independent appraisal of the
Project Site and the Adjacent Property by an independent land appraisal expert that is
recognised and reputable in the State, a copy of which shall be provided to KMC (and/or
its designee(s)) by the Effective Date. Such appraisal shall specify the current market
value per square meter of the Project Site and the Adjacent Property (the "Market
Value").
5.
5.1
CONDITIONS SUBSEQUENT
Each of the Mexican Parties agrees to fulfil each of the following Conditions, each to the
reasonable satisfaction of KMC (and/or its designee(s)), unless waived by KMC (and/or
its designee(s)):
(a)
the State Government provides or procures the granting of each and every
Incentive set forth in this Agreement;
(b)
the Approval of the State Congress in respect of (i) a 100% exemption of payroll
Tax for employees of KMC (and/or its designee(s)) and its Suppliers for a period of twenty (20)
years from the relevant calculation date(s) pursuant to clause 6.3, and (ii) a 100% exemption of
any potential Tax over value added to real estate (including, but not limited to, Impuesto Sobre
Aumento de Valor y Mejora Especfica de la Propiedad) in respect of the Project Site pursuant to
clause 6.6 has been obtained in form and substance reasonably satisfactory to KMC (and/or its
designee(s)) and by no later than 15 November 2014;
(c)
legal due diligence on the title of the Project Site and the Adjacent Property has
been completed to the satisfaction of KMC;
14
(d)
the federal government provides all federal incentives in scope and substance
satisfactory to KMC (and/or its designee(s)); and
(e)
subject to the total amount to be invested in the State by all the Suppliers as a
whole being no less than USD 500,000,000 (five hundred million United States Dollars), the
Mexican Parties provide all the Suppliers with inducements and Incentives equivalent in scope and
form to the Incentives as provided to KMC (and/or its designee(s)) under the Agreement,
including, but not limited to, the following: (i) Tax Incentives, including a 20-year exemption of
payroll Tax and other state and municipal Tax incentives; (ii) provision of infrastructure and
Utilities in accordance with Suppliers' requirements, including connections of infrastructure and
Utilities to the Tie-in Points dictated by the Suppliers and guarantee of a sufficient supply and
capacity for the Utilities; (iii) provision of temporary office space during the construction period;
(iv) assistance with obtaining, and timely issuance of, necessary Permits; and (v) other support,
such as undertaking the Phase I Environmental Impact Assessment.
5.2
6.
6.1
Non-Fulfilment of Conditions Subsequent
(a)
If any of the Conditions has not been fulfilled within the respective stipulated time
periods, KMC (and/or its designee(s)) may at its sole discretion, after the
occurrence of a Cure Period, terminate this Agreement, without incurring any
Liability whatsoever to the Mexican Parties, by giving at least seven (7) days'
notice in writing to the State Government; provided, however, that the termination
by KMC (and/or its designee(s)) pursuant to clause 5.2 shall not affect any accrued
rights of KMC (and/or its designee(s)) in respect of the breach or non-performance
by the Mexican Parties of any obligations under this Agreement falling due for
performance prior to such termination.
(b)
If the Agreement terminates in accordance with clause 5.2(a), then, KMC (and/or
its designee(s)) shall have no obligation to refund, pay for, or reimburse the costs
of any Incentives or any other support already received in connection with the
Project, including, but not limited to, the costs of the Site Preparation, and the
State Government shall have no obligation to provide KMC (and/or its designee(s))
with any further Incentives. In addition, the State Government shall indemnify KMC
(and/or its designee(s)) on demand from and against each Loss, Liability, cost,
claim, expense, proceeding or demand (including without limitation legal fees and
disbursements) that KMC (and/or its designee(s) may suffer or incur as a result of
non-fulfilment of the Conditions, unless the non-fulfilment is attributable to the
fault of KMC (and/or its designee(s)).
TAX INCENTIVES
The State Government and the Municipality, as applicable, shall provide a 100%
exemption for KMC (and/or its designee(s)) in respect of each of the following Taxes,
Permits, and associated fees and expenses to be incurred therewith:
(a)
Real Estate Acquisition Tax;
(b)
Real Estate Ownership Tax for a period of five (5) years;
(c)
Land-Use Permit;
(d)
Construction Permit;
(e)
Real Estate Registration fees;

15
(f)
(g)
Property Transfer Tax and its associated fees and expenses;

Tax over Value Added to Real Estate (including, but not limited to, Impuesto Sobre
Aumento de Valor y Mejora Especfica de la Propiedad) (if any);
(h)
Availability of Drinking Water and Sewage Services Certificate;
(i)
Tax for Possession and Use of Vehicles, exclusively for Key Officers of KMC (and/or
its designee(s)) for a period of one (1) year, provided that the one (1) year period shall start on
the date designated by KMC (and/or its designee(s)) after the Investment Agreement is entered
into;
(j)
Phase I Environmental Impact Authorisation (including implementation costs, if

any);
(k)
Payroll Tax exemption for a period of 20 years, as set forth in clause 6.3 below;
and
(l)
Any other similar Taxes as to the aforementioned Taxes that may be in force on the
Effective Date or in the future.
provided that the relevant Tax exemption period, where applicable, shall commence from
the date on which KMC (and/or its designee(s)) acquires title to parcels of land
constituting the KMC Site.
6.2
6.3
Subject to the total amount to be invested in the State by all the Suppliers as a whole
being no less than USD 500,000,000 (five hundred million United States Dollars), the
State Government and the Municipality, as applicable, shall provide a 100% exemption
for all the Suppliers in respect of each of the Taxes (save for clause 6.1(i)) and Permits
set forth in clause 6.1 above and associated fees and expenses to be incurred therewith;
provided that the relevant Tax exemption period, where applicable, shall commence from
the date on which the Suppliers acquire title to parcels of land constituting the Suppliers
Site.
Payroll Tax Exemption
(a)
The State Government shall provide a 100% exemption of payroll Tax (the
applicable rate of which as of the Effective Date being three (3) percent) in respect of all of the
employees to be hired by KMC (and/or its designee(s)) in connection with the Project (as may be
expanded in accordance with clause 2.11) for a period of 20 years; provided that the said 20-year
exemption period for employees to be hired by KMC (and/or its designee(s)) shall commence on
the applicable calculation date(s) as determined by KMC (and/or its designee(s)).
(b)
Subject to the total amount to be invested by all the Suppliers as a whole in the
State being no less than USD 500 million (five hundred million United States Dollars), the State
Government shall provide a 100% exemption of payroll Tax (the applicable rate of which as of the
Effective Date being three (3) percent) in respect of all of the employees to be hired by the
Suppliers in connection with the Project (as may be expanded in the future) for a period of 20
years; provided that the said 20-year exemption period for employees to be hired by the Suppliers
shall commence on the applicable calculation dates as determined by the Suppliers according to
specific stages and dates set forth in their applicable investment agreements to be executed with
the Mexican Parties.
(c)
For the avoidance of doubt, if so requested by KMC (and/or its designee(s)) and/or
its Suppliers, the State shall implement such payroll Tax exemption for the said 20
16
years, in phases, depending on recruitment and business needs of each such entity
in its sole discretion, as generally described in Schedule 7. For the avoidance of
doubt, the calculation dates indicated in Schedule 7 are for reference purposes
only, and may be changed by KMC (and/or its designee(s)) at any time, in its sole
discretion. The State Government shall continue to make available to KMC (and/or
its designee(s)) and its Suppliers the said payroll Tax exemption for the 20 year
period despite the replacement of the employees for each job position.
6.4
Exemption of Land Donation or Payment under the Urban Development Act
(a)
The Municipality shall exempt KMC (and/or its designee(s)) from donating certain
areas of land equivalent to seven (7) percent of the KMC Site, or in lieu of such
land donation, paying an amount equivalent to seven (7) percent of the market
value thereof for the purposes of the Urban Development Act. For the purposes of
the Urban Development Act, reservation by KMC (and/or its designee(s)) of certain
areas within the KMC Site as parks or recreational spaces, shall be considered
requisite land having been donated or payment made.
(b)
The Municipality shall exempt the Suppliers from donating certain areas of land
equivalent to seven percent (7%) of the Suppliers Site, or in lieu of such land
donation, paying an amount equivalent to seven percent (7%) of the market value
thereof for the purposes of the Urban Development Act. For the purposes of the
Urban Development Act, reservation by KMC (and/or its designee(s)) of certain
areas within the Project Site as parks or recreational spaces, shall be considered
requisite land having been donated or payment made.
6.5
The State Government shall reimburse KMC (and/or its designee(s)) and its Suppliers for
any fines and/or any costs associated with such fines paid by KMC (and/or its
designee(s)) and its Suppliers to relevant authorities, in the event that the Tax Incentives
provided by the State constitute KMC (and/or its designee(s)) or its Suppliers committing
a Tax offense, Tax evasion, illegal act or any other fiscal crime under the fiscal regulations
in Mexico.
6.6
Exemption on Tax over Value Added to Real Estate (including, but not limited to,
Impuesto Sobre Aumento de Valor y Mejora Especfica de la Propiedad)
In the event the value of land composing the Project Site increases for whatever reason,
including, but not limited to, public infrastructure works and the issuance by the State
legislature of an official decree authorising the collection of Tax over Value Added to Real
Estate (including, but not limited to, Impuesto Sobre Aumento de Valor y Mejora
Especfica de la Propiedad), or any other similar Tax, the State Government and the
Municipal Government shall immediately take all necessary actions in full compliance with
Applicable Law, in order to provide KMC (and/or its designee(s)) and its Suppliers a
100% exemption of such Tax over Value Added to Real Estate for a period of twenty (20)
years following the date on which such Tax comes into force.
6.7
7.
7.1
The State Government shall assist KMC (and/or its designee(s)), on an ongoing basis, in
maximizing the availability to, and use by, KMC (and/or its designee(s)) of statutory and
negotiated Tax incentives, which may reduce or eliminate KMCs (and/or its designee(s))
State, municipal and/or federal Taxes that would otherwise become due and payable by
KMC (and/or its designee(s)).
ACQUISITION OF PROJECT SITE
KMC Site
17
7.2
(a)
The State Government shall, through the Trust Fund, and at no cost to KMC
(and/or its designee(s)), transfer to KMC (and/or its designee(s)), good,
marketable and insurable title, in fee simple, to each parcel of land constituting the
KMC Site, free and clear of all liens, encumbrances, easements and servitudes,
pursuant to a separate land donation agreement ("Donation Agreement") to be
executed between the State Government (directly or through the Trust Fund) and
KMC (and/or its designee(s)), by no later than 10 September 2014.
Upon
assuming the title to the KMC Site, KMC (and/or its designee(s)) shall have
absolute right to occupy, use, improve, all or part of the KMC Site according to its
needs at its discretion. For the avoidance of doubt, it shall be entitled to lease or
grant licence in respect of all or part of the KMC Site to any third party in
connection with the Project.
(b)
If KMC (and/or any of its designee(s)) is required to pay Tax on any Incentives
provided to it, the State Government shall pay such amount to KMC (and/or its
designee(s)), by no later than three (3) business days prior to the date on which
such Tax payment (and/or fine, if any) falls due.
(c)
The Parties agree that the Donation Agreement shall contain provisions prohibiting
the transfer by KMC (and/or its designee(s)) of the KMC Site, or part thereof,
without the prior consent of the State Government, in accordance with Applicable
Law, save for the transfer or assignment thereof to its Affiliates, subsidiaries,
designee(s), or any Supplier on the Project Site.
Suppliers Site
The State Government shall transfer to KMC's Suppliers, through the Trust Fund, at no
cost to KMC's Supplier(s), good, marketable and insurable title, in fee simple, to certain
parcels of land constituting the Suppliers Site, or part thereof, free and clear of all liens,
encumbrances, easements and servitudes, pursuant to a separate land donation
agreement to be executed between the Mexican Parties and each Supplier.
7.3
Option to Acquire Adjacent Property

The State Government shall grant an irrevocable option under which KMC (and/or its
designee(s)) shall be entitled to acquire, at no cost to it, the Adjacent Property during the
ten (10) year period from the SOP of KMC (and/or its designee(s)); provided that upon
expiry of the 10-year option period, the State Government shall have the right to dispose
of the same to a third party other than to any competitor of KMC (and/or its designee(s)
and/or its Affiliates), the exclusive Tier 1 suppliers of such competitors in the Tier 1 light
vehicle automotive industry, or any company carrying out business in the Selected
Industries, all in compliance with the provisions of this Agreement and the
Implementation Agreements, as appropriate.
7.4
Right of First Refusal as to Suppliers Site

The State Government shall grant to KMC (and/or its designee(s)) a right of first refusal
to purchase at Market Value (referred to in clause 4) plus an increase resulting from
applying to said Market Value a percentage equal to the accumulated inflation pursuant
to the Mexican National Consumers Price Index (Indice Nacional de Precios al
Consumidor that is determined by Mexicos Central Bank) between the date of execution
of the Donation Agreement and the moment when KMC exercises the right of first refusal
granted by this clause, any portion of the remaining land constituting the Suppliers Site
in respect of which the Supplier(s) have failed to enter into an investment agreement
with the Mexican Parties by the expiry of three (3) years from the Effective Date. The
State Government agrees that KMC (and/or its designee(s)) shall be entitled to exercise
the right of first refusal for a period of one (1) year from the expiry of such three (3) year
18
period, failing which the State Government shall have the right to dispose of the land to a
third party other than any competitor to KMC (and/or its designee(s)), the suppliers of
such competitors, or any company carrying out business in the Selected Industries, all in
compliance with the provisions of this Agreement and the Implementation Agreements,
as appropriate.
7.5
The State Government acknowledges and agrees that it is the sole responsible party for
any and all Liabilities, claims, indebtedness and responsibility of any nature related to, or
derived from, the real estate constituting the Project Site and the Adjacent Property that
arise prior to acquisition by KMC (and/or its designee(s)) of title to the KMC Site and the
Adjacent Property, including, but not limited to, the payment of the real estate Taxes,
until title over the property is fully transferred to KMC (and/or its designee(s)).
The State Government shall indemnify and keep KMC (and/or its designee(s)) and its
Affiliates, subsidiaries, employees, officers, Representatives or agents (each an
"Indemnified Party" and collectively, the "Indemnified Parties"), safe and harmless
against any and all Liabilities, Losses, damages, claims, costs and expenses incurred, or
suffered by, them, in relation to, arising out of, resulting from, or attributable to, actions
or events prior to KMC's acquisition of such title to the land constituting the KMC Site and
the Adjacent Property, including, but not limited to, things arising from, or related to, the
environmental, health, safety or any other condition of the Project Site and the Adjacent
Property, or the presence or suspected presence of Hazardous Substances and Wastes,
regardless of whether such environmental, health or safety condition, or such presence of
Hazardous Substances and Wastes is known or unknown by the State Government at any
time.
7.6
7.7
As of the Effective Date, the State Government shall grant KMC (including its
designee(s) and its agents, Representatives, contractors, consultants, successors and
assignees) a revocable licence for the purposes of pedestrian, passenger and construction
vehicular access, ingress and egress over, across and through the Project Site, and such
other rights and privileges necessary or appropriate in connection with KMCs intended
development and use of the Project Site. KMCs said revocable licence shall remain in full
force and effect, and shall not be revoked by the State Government, until KMC (and/or its
designee(s)) and Suppliers, as appropriate, acquire unencumbered title to those parcels
of real estate constituting the Project Site.
Zoning
(a)
The State Government agrees that it will cause the Project Site and surrounding
areas to be zoned to a classification approved by KMC (and/or its designee(s)),
which includes heavy industrial land use and the prohibition of the operation of
restaurants, bars, waste disposal sites, incinerators in accordance with Schedule 6,
and which will at all times permit the intended use of the Project Site by KM C
(and/or its designee(s)) and its Suppliers.
(b)
The Mexican Parties shall, to the maximum extent possible, in compliance with
Applicable Law oppose the location of any unpleasant facilities in the vicinity of the
Project Site, as set forth in Schedule 6, which may adversely affect the quality of
the working environment in the Project Site, including, but not limited to, a
junkyard, a waste disposal site and an incinerator, and contest the granting of
Permits by appropriate State Government and local agencies to any such facility.
(c)
The State Government shall make or cause the necessary amendments to the
Urban Development Plan for the Municipality and any other applicable
municipalities, and/or to the State Development Plan 2010 2015, in order to
prohibit the installation or the construction of Selected Industries and the facilities
19
and/or businesses described in Schedule 6, within the proximity of the Project Site,
as set forth in Schedule 6, by no later than 31 December 2014.
7.8
(a)
Environmental Matters
Pursuant to clause 2.10(a), KMC (and/or its designee(s)) shall be made a third
party beneficiary of certain reports enumerated therein.
(i) The State Government represents and warrants that there are no (i) Hazardous
Substances and Wastes in, on or under the Project Site, (ii) Protected Species or
Historic Properties in, on or under the Project Site, (iii) non-compliance or
violations of or Liabilities under any Environmental Law with respect to owning,
leasing, or operating the Project Site, or carrying out the intended operations at the
Project Site, and (iv) other conditions on the Project Site that may create or
impose Liability on KMC (and/or its designee(s)), under any Environmental Law or
materially delay completion or operation of the Project. As of the Effective Date,
the State Government represents and warrants that there are no Hazardous
Substances and Wastes that have migrated or emanated or will migrate or emanate
onto, into, under or above the Project Site from any off Project Site source.
(ii) The State Government recognises that emissions of the Selected Industries
within the vicinity of the Project Site could cause damage to the manufacturing
process (which includes paint processing) or equipment utilised by KMC (and/or its
designee(s)), and could adversely affect the ability of KMC (and/or its designee(s))
to obtain Permits for emissions from the Project based on reasonable Permit terms
and conditions. The State Government agrees that it will procure the Municipality
and other applicable municipalities (specified in Schedule 6) to, and the
Municipality agrees to, complete the required rezoning amendments and not
provide any non-statutory inducements to any Selected Industry, if KMC (and/or its
designee(s)) can establish that the operation of such Selected Industry is
reasonably expected to cause pollutants to enter the air which will cause significant
and continuing damage to KMCs (and/or its designee(s)) products, equipment or
manufacturing process or may impact in any way KMCs (and/or its designee(s))
ability to obtain Permits for emissions from the Project.
(iii) The State Government represents and warrants that no Selected Industry or
other facility is, or shall be located within the proximity of the Project Site as set
forth in Schedule 6. The Mexican Parties shall, to the maximum extent possible,
contest the granting of Permits by appropriate agencies at the State and/or
municipality levels to any Selected Industry and to exercise police and other
powers in compliance with Applicable Law to avoid and oppose the location of any
facility in or near the Project Site that would cause damage to KMCs (and/or its
designee) products, equipment or manufacturing process and that would cause any
pollutant to enter the air that would violate any Environmental Law relating to air
pollution.
(b)
Environmental Permits; Phase I Environmental Impact Authorisation

(i) The State Government shall obtain all environmental Permits that are required
for the Site Preparation work, infrastructure work, and Utilities work necessary for
the operation of the Project, as well as for the construction of the facilities that
KMC (and/or its designee(s)) will occupy, including, without limitation, the Phase I
Environmental Impact Authorisations in accordance with this clause 7.8(b) and the
Availability of Drinking Water and Sewage Service Certificate, within the time frame
specified herein.
20
(ii) The State Government covenants that improvements shall be made to and
around the Project Site, at no cost to KMC (and/or its designee(s)), in compliance
with, and to bring the Project Site into compliance with, any Environmental Law
and to protect against any damages to natural resources, other than those physical
alterations that have been expressly authorised by Permit, including, without
limitation, (A) the implementation of any terms and conditions required by any
Permit issued by SEMARNAT, and (B) the implementation of any conservation
measures or reasonable and prudent measures determined to be necessary to
address any potential impact on the Protected Species (including, without
limitation, cavity tree and activity updates, biological assessments, mitigation
planning and consultation and actual mitigation).
(iii) The State Government shall provide KMC with geotechnical analyses of the
Project Site, including, without limitation, preliminary (performance of groundwater
studies and additional borings) and final (Project Site plan boring) analyses, the
results of which shall not prevent the Project Site from being developed and the
Project from being constructed thereon for the purposes contemplated hereunder,
and would, in fact, support the construction of the Project on the Project Site.
(iv) The State Government represents and warranties that that all Historic
Properties identified by any cultural resource surveys prepared in connection with
the Project have been identified, assessed, documented and mitigated, all such
that the development of the Project Site and the construction and operation of the
Project thereon would be permissible and would not violate any Applicable Law.
(v) If any of the events described in this clause 7.8(b) occurs after the Effective
Date, the effect of which would be to halt or delay the completion of Site
Preparation and/or Site Construction in accordance with the Project Schedule, KMC
(and/or its designee(s)) shall be entitled to terminate this Agreement in accordance
with clause 11.1, without incurring any Liability whatsoever to the Mexican Parties.
7.9
Site Preparation of Land for the Project Site
(a)
The State Government shall, at no cost or expense to KMC (and/or its

designee(s)), (i) do all things necessary to conduct or cause the completion of Site Preparation
pursuant to KMC's requirements and instructions, all as set forth in the Site Preparation
Specifications and the Site Preparation Schedule section of Schedule 2, and (ii) contract with, or
cause to be contracted with, all contractors to implement the programs and requirements of
Schedule 2.
(b)
Pursuant to clause 2.9, the State Government shall select the design professionals
and contractors to perform the Site Preparation work, and cause the work to commence as soon as
practicable thereafter, in accordance with the Site Preparation Schedule; it being understood that
KMC (and/or its designee(s)) shall be an express third party beneficiary of any contract or
contracts entered into by and between the State Government and any design professionals and
contractors providing Site Preparation services.
(c)
KMC shall have the right to engage, at its expense, a KMC Representative to review
all aspects of the Site Preparation work, including work plans and site specifications. The State
Government shall cooperate and cause its contractors to cooperate with the KMC Representative,
and promptly make information related to Site Preparation available to the KMC Representative
upon request. The KMC Representative shall have the right to review the performance of any
construction manager or contractor engaged in connection with Site Preparation and, where
appropriate, require adherence to the Site Preparation Specifications and the Site Preparation
Schedule section of Schedule 2.
21
(d)
The State Government shall during the continuance of Site Preparation work under
this Agreement cause its contractors to maintain the insurance coverage set forth in the State
Government's standard construction contracts, a copy of which has been provided to KMC, and
KMC (and/or its designee(s)) shall be named as an additional insured on each such policy. The
State Government shall not make any change or cancellation in the foregoing insurance coverage
without KMC's prior written approval thereof, which approval shall not be unreasonably withheld.
Each policy shall provide that it shall not be cancellable without reasonable notice to KMC (and/or
its designee(s)).
(e)
The State Government and KMC expressly acknowledge and agree that the amount
of costs, damages, Losses and Liabilities that KMC (and/or its designee(s)) would incur as a result
of the State Government's failure to complete the Site Preparation work in accordance with the
Site Preparation Schedule set forth in Schedule 2 are difficult or impossible to accurately estimate.
Therefore, all contracts which the State Government enters into with third parties for Site
Preparation work shall contain a provision for liquidated damages, and KMC (and/or its
designee(s)) shall be named as a third party beneficiary to all said Site Preparation contracts. The
Parties agree that the State Government shall not be responsible for any delay in the Site
Preparation caused by Force Majeure. In the event of a delay for these reasons, the Parties agree
that the State Government shall exercise its best efforts to resume the Site Preparation as soon as
practicable.
(f)
The State Government shall, once every two weeks during the Site Preparation and
Site Construction, provide helicopter assistance to KMC (and/or its designee(s)), at no cost or
expense to KMC (and/or its designee(s)), which enables the KMC's Representative to take aerial
photographs over the Project Site.
(g)
The State Government shall indemnify and keep the Indemnified Parties safe and
harmless against any and all Liabilities, Losses, damages, claims, costs and expenses suffered by
them, in relation to, arising out of, resulting from, or attributable to, the Site Preparation work,
including but not limited to, any accidents caused by the Site Preparation work being conducted
concurrently with the relocation of the gas pipeline underneath the Project Site.
7.10
No manufacturing facilities for cars

With a view to ensuring a sufficient supply of labour for the Project, the State
Government shall not provide any non-statutory inducements and/or incentives and/or
infrastructure support to any new automotive OEM manufacturing projects, except
existing automobile manufacturers set forth in Schedule 6, locating within a distance of a
forty (40) miles radius of the Project Site.
8.
8.1
INFRASTRUCTURES AND UTILITIES

General
The State Government agrees to construct and make improvements to infrastructure and
Utilities necessary or desirable for the successful implementation of the Project, all
without cost or charges to KMC (and/or its designee(s)) and its Suppliers, and in
accordance with KMCs specifications as set forth in this clause and Schedule 2. The
State Government shall acquire those parcels of land that are necessary for construction
and operation of the Project as set forth in this Agreement, including, but not limited to,
the right-of-way for the infrastructure and Utilities related work.
8.2
(a)
Roads
The State Government shall provide, or procure SCT to undertake, without cost or
charge to KMC (and/or its designee(s)) and its Suppliers, certain road construction and
improvements related thereto in respect of the Project Site, as described in the Roadway
22
Commitment section of Schedule 2. The State Government shall landscape such access roads,
adjacent highways and interchange ramps with low growing plants, shrubs and wild flowers in
accordance with the Urban Development Plan for the Municipality and any other applicable
municipalities, and/or to the State Development Plan 2010 2015, as appropriate, and in
accordance with KMCs reasonable specifications, in light of a mega-project of this size and
nature. The State Government shall landscape such access roads, adjacent highways and
interchange ramps with low growing plants, shrubs and wild flowers in accordance with KMCs
(and/or its designee(s)) reasonable specifications.
Attached in Schedule 2 are the design
specifications for, and a summary description of, each of the roadway projects, and the road
infrastructure plan indicating the location of such improvements, in each case as agreed between
KMC and the State Government. The State Government agrees to pay all costs in respect of such
roadway construction and improvements. All contracts which the State Government enters into
with third parties for construction of the roadway projects shall contain a provision for liquidated
damages.
(b)
The State Government represents and warrants that all roadway construction and
improvements shall be performed in accordance with the applicable Mexican standards, or as
otherwise agreed with KMC (and/or its designee(s)) in Schedule 2. The State Government
represents and warrants that the applicable Mexican standards are equivalent to the US standards,
such as the AASHTO and the ASTM. Work on the design of the roadway construction and
improvements shall be coordinated with KMC (and/or its designee(s)), and commence promptly
after the Effective Date. Actual construction and implementation of all improvements shall
commence as soon as practicable after the roadway construction and improvements designs are
mutually agreed to by KMC (and/or its designee(s)), the SCT and the State Government and after
the federal funds are received by the State Government, subject, however, to the relevant Firm
Deadlines. The State Government represents and warrants that (i) all design and construction
work shall be promptly performed by or on behalf of the State Government; and (ii) the State
Government will proceed to complete the work called for it to be performed hereunder in
accordance with the Project Schedule. On and from the Effective Date, each of the Mexican Parties
agrees to maintain and repair, or procure the SCT to maintain and repair, at no cost to KMC
(and/or its designee(s)) and its Suppliers, all public roads in each of their respective road systems
identified on the Road Infrastructure Plan as set forth in Exhibit X-2a attached to Schedule 2 ), so
as to keep such roads in compliance at all times with the applicable Mexican standards, which the
State Government represents and warrants are equivalent to the then-prevailing US standards,
such as the AASHTO and the ASTM.
8.3
Railway
(a)
The State Government shall provide, or procure KCSM and/or the SCT (as
appropriate) to undertake, without cost or charge to KMC (and/or its designee(s)) and its
Suppliers, certain railway construction, extension and improvements related thereto in respect of
the Project Site, as described in the Railway Commitment section of Schedule 2. KMC (and/or its
designee(s)) shall be made a third party beneficiary of any direct contract or contracts entered into
by and between the State Government and any contractor engaged to construct, or assist in the
construction of the railway projects. All contracts which the State Government enters into with
third parties for construction of the railway projects shall contain a provision for liquidated
damages.
(b)
The State Government represents and warrants that all rail construction and
improvements shall be performed in accordance with the applicable Mexican standards, or as
otherwise mutually agreed with KMC (and/or its designee(s)) in Schedule 2.
The State
Government represents and warrants that the applicable Mexican standards are equivalent to the
best international standards. Work on the design of such improvements shall be coordinated with
KMC (and/or its designee(s)) and commence promptly after the Effective Date.
Actual
construction and implementation of the railway projects shall commence as soon as practicable
after KMC approves the designs and after federal funds are received by the State Government,
subject, however, to the relevant Firm Deadlines. All design and construction work to be
23
performed by the State Government shall be accorded the highest priority, and the State
Government will proceed to complete the work called for it to be performed hereunder in
accordance with the Project Schedule.
(c)
The State Government shall assist KMC (and/or its designee(s)) in obtaining from
KCSM the terms and conditions for the rail services which are as favourable to KMC (and/or its
designee(s)) as those offered to other comparable industrial customers. The Mexican Parties shall
ensure that improvement costs shall not be recouped from increased charges for the railway
services provided to KMC (and/or its designee(s)) and its Suppliers.
8.4
Water and Wastewater
(a)
The State Government agrees to cause water and wastewater and other related
necessary improvements to be provided to the Tie-in Point(s) of water and wastewater at the
Project Site as dictated by KMC (and/or its designee(s)) and/or its Suppliers, without cost or
charge to KMC (and/or its designee(s)) and its Suppliers, in accordance with the Water and
Wastewater Commitment section of Schedule 2, and on a timely basis in accordance with the
Project Schedule. The State Government guarantees that it will (i) provide sufficient water
recovery; (ii) provide a looped water supply system; (iii) construct water storage tanks in
accordance with Exhibit X-4a-4 at the locations dictated by KMC (and/or its designee(s)), at no
cost to KMC (and/or its designee(s)), by 15 December 2015, and such elevated water storage tank
shall bear the Kia mark as dictated by KMC (and/or its designee(s)); (iv) maintain KMC's required
minimum flow and residual pressure; and (v) construct water/wastewater filtration facilities as
required by KMC (and/or its designee(s)).
The State Government shall obtain a written
commitment letter from at least one (1) water and wastewater provider that KMCs (and/or its
designee(s)) water and wastewater requirements can be met.
(b)
The State Government covenants that each extension and/or improvements shall
be constructed, installed, maintained and repaired by the State Government in accordance with
the applicable Mexican standards, or as otherwise agreed to in the Water and Wastewater
Commitment section of Schedule 2, including, but not limited to, line size and pressure, in order to
service adequately the needs of the Project Site and other potential independent users along each
extension and/or improvement. The State Government represents and warrants that the applicable
Mexican standards are equivalent to the best international standards. The State Government
represents and warrants to KMC (and/or its designee(s)) that it has secured or will secure all
necessary Permits and easements and other rights and privileges to construct all water and sewer
lines and improvements incidental to the Project Site. The State Government shall begin the
construction and installation of the water and sewer extensions as soon as reasonably practicable,
after the Effective Date, and in accordance with the Project Schedule. On and from the Effective
Date, the State Government covenants to perform, on an ongoing basis, and bear all costs
associated with all maintenance and repairs to those water and sewer lines as depicted in Exhibit
X-4a attached to Schedule 2, so as to keep such water/sewer lines in compliance at all times with
the then-prevailing Mexican standards, which the State Government represents and warrants are
equivalent to the best international standards, such as the AWWA, or as otherwise agreed to in the
Water and Wastewater Commitment section of Schedule 2.
(c)
If requested by KMC (and/or its designee(s)), the State Government shall assist, to
the greatest extent possible, KMC (and/or its designee(s)) in acquiring the necessary concession
titles to extract underground water at a preferential rate.
(d)
The State Government guarantees that at all times during which water (whether
industrial or potable) and wastewater services are provided to KMC (and/or its designee(s)) and its
Suppliers, the rates made available to KMC (and/or its designee(s)) and its Suppliers for such
services shall be the lowest contractually negotiated or published rates as those industrial
customers with services and infrastructure requirements similar to those of KMC (and/or its
designee(s)) and its Suppliers, and that improvement costs shall not be recouped from increased
24
charges for water and sewer services provided to KMC (and/or its designee(s)) and its Suppliers.
The State Government shall refrain from discriminating against KMC (and/or its designee(s)) and
its Suppliers with respect to water and sewer fees or charges or rates or surcharges based upon
the water expansions required by the Project. KMC (and/or its designee(s)) shall be made a third
party beneficiary of any direct contract or contracts entered into by and between the State
Government and any contractor engaged to construct, or assist in the construction of, the
water/wastewater projects. All contracts which the State Government enters into with third
parties for construction of the water/wastewater project shall contain a provision for liquidated
damages.
8.5
Electricity
(a)
The State Government shall cause a third party provider to provide electric
transmission distribution lines to the Tie-in Point(s) of electric service on the Project Site as
dictated by KMC (and/or its designee(s)) and/or its Suppliers, without cost or charge to KMC and
its Suppliers, in accordance with the Electricity Commitment section of Schedule 2. In addition,
the State Government shall construct, at its own cost, such additional infrastructure (including the
construction of an electric substation with a capacity of at least 70 MVA at the location dictated by
KMC (and/or its designee(s)) and/or its Suppliers) as necessary to meet the requirements of KMC
The State Government shall obtain a written
commitment from at least one (1) electric power provider that KMC (and/or its designee(s))'s
electric power requirements specified in the Electricity Commitment section of Schedule 2 can be
met.
(b)
The State Government shall ensure that the rates to be charged to KMC (and/or its
designee(s)) and its Suppliers shall be as favourable as those rates charged to other comparable
industrial customers, and that the improvement costs shall not be recouped from increased
charges for electricity provided to KMC (and/or its designee(s)) and its Suppliers.
8.6
Gas
(a)
The State Government shall cause a third party gas service provider to redirect the
existing gas pipeline to outside the Project Site, remove the existing gas pipeline, and install and
connect a new pipeline to the Tie-in Point(s) on the Project Site as dictated by KMC (and/or its
designee(s) and/or its Suppliers, all without cost to KMC (and/or its designee(s)) and its Suppliers.
In addition, the State Government shall construct, at its own cost, such additional infrastructure
and make improvements as necessary to meet the requirements of KMC (and/or its designee(s))
and its Suppliers in accordance with KMCs specifications.
(b)
The State Government shall obtain a written commitment letter from at least one
(1) gas provider that KMC's (and/or its designee(s)) gas requirements specified in the Gas
Commitment section of Schedule 2 can be met.
(c)
The State Government shall assist KMC (and/or its designee(s)) and its Suppliers in
obtaining preferential rates from the gas service provider, and ensure that the rates to be charged
to KMC (and/or its designee(s)) and its Suppliers shall be as favourable as those rates charged to
other comparable industrial customers, and that the improvement costs shall not be recouped from
increased charges for gas services provided to KMC (and/or its designee(s)) and its Suppliers.
8.7
Alternative Sources of Energy

obtaining viable alternative sources of energy and conduct negotiations to obtain
preferential rates and packages for KMC (and/or its designee(s)) and its Suppliers.
8.8
Telecommunications
25
(a)
The State Government shall obtain a written commitment letter from at least one
(1) telecommunications provider that KMCs (and/or its designee(s)) fiber optic line requirements
as specified in the Telecommunications Commitment section of Schedule 2 can be met.
(b)
obtaining preferential rates from the telecommunications service provider and ensure that the
rates to be charged to KMC (and/or its designee(s)) and its Suppliers shall be as favourable as
those rates charged to other comparable industrial customers, and that the improvement costs
shall not be recouped from increased charges for telecommunications services provided to KMC
8.9
Law Enforcement and Fire Station
(a)
The State Government represents and warrants that (i) at all times the Project Site
shall receive such law enforcement services as may be necessary, adequate and
sufficient to service KMC (and/or its designee(s)) and its Suppliers, without any
cost, assessment or charge to KMC (and/or its designee(s)) and its Suppliers, and
(ii) the existing facilities and equipment of the Mexican Parties near the Project Site
including the four (4) security force bases, the newly opened military base, the
municipal police headquarters, and the State and federal police, are adequate for
such purposes. The Parties agree that the law enforcement services shall not
include any private security services.
(b)
The State Government shall (i) construct a fire station to be located approximately
1.5 kilometres from the Project Site by 1 October 2015 which includes a hazardous materials unit,
with a maximum response time of two (2) minutes, (ii) procure and maintain sufficient fire fighting
equipment to provide adequate fire protection services for all structures and facilities located on
the Project Site; and (iii) facilitate the provision of necessary and adequate fire department
services to the Project Site through coordination and cooperation with the area fire departments of
the Municipality in supplementing equipment availability to such local fire station.
(c)
The State Government represents and warrants that (i) it will fund all operational
and other aspects of the fire station annex so long as the Project is operated on the Project Site,
and (ii) fire and police protection shall satisfy KMC (and/or its designee(s)'s fire insurance
requirements and meet KMC (and/or its designee(s)'s specifications. As the fire protection needs of
KMC (and/or its designee(s) increase due to renovations, expansions and the like, the State
Government agrees that it will secure such fire fighting equipment and services as shall be needed
to maintain the adequacy of fire protection services for all of the structures and facilities located on
the Project Site. Any maintenance for fire fighting equipment and services, including the salaries
of the personnel required for the operation of the fire station shall be assumed by the Municipality.
8.10
Local Medical Facility

The State Government represents and warrants that the existing hospital facility adjacent
to the International Airport Mariano Escobedo which is located within 15 kilometres from
the Project Site is adequate to provide KMC (and/or its designee(s)) and its employees
twenty-four (24) hour emergency medical response and emergency room services.
9.
9.1
(a)
TRAINING CENTRE; OTHER TRAINING GRANTS

Training Centre
The State Government shall (i) do all things necessary to cause the construction,
equipping, and completion of the Training Centre to be located on the Project Site in accordance
with KMCs requirements, as set forth in Schedule 5 ("Training Centre Specifications") and (ii)
retain and hire, pursuant to clause 2.9(b), all design professionals and contractors, subject to the
26
prior approval of KMC (and/or its designee(s)), to complete the Training Centre on the Project Site.
The costs to be incurred in connection with the designing, construction, equipping and start-up of
the Training Centre shall be entirely borne by the State Government; provided, however, that the
maximum amount of such financial support to be provided by the State Government on behalf of
or for the benefit of KMC (and/or its designee(s)) under this clause shall not exceed
USD15,000,000 (fifteen million United States Dollars); provided, further, that in the event the
actual cost of designing, construction and equipping of the Training Centre exceeds such amount,
KMC (and/or its designee(s)) shall bear such additional costs.
(b)
Promptly after the Effective Date, the State Government shall (i) hire designing
professionals for architectural design and contractors for the construction of the Training Centre,
subject to the prior written approval of KMC (and/or its designee(s)), pursuant to clause 2.9(b),
and (ii) cause work on the Training Centre to commence as soon as practical thereafter. The State
Government acknowledges and agrees that time is of the essence for the construction of the
Training Centre, and the construction of the Training Centre shall be completed by no later than 31
March 2016; provided, however, that the State Government will exercise its best efforts to
complete the design, construction and equipping of the Training Centre by 30 June 2015, failing
which, the State Government shall arrange for other comparable state-of-the-art training facilities
owned or operated by the State Government or state universities, to be available to KMC (and/or
its designee(s)) and its Suppliers, all at no cost or expense to KMC (and/or its designee(s)) and/or
its Suppliers, until such time as the design, construction and equipping of the Training Centre is
completed.
(c)
The State Government acknowledges and agrees that the Training Centre shall be
owned, operated, managed and maintained by KMC (and/or its designee(s)). KMC shall be made a
third party beneficiary of any direct contract or contracts entered into by and between the State
Government and any contractor engaged to design, construct, or assist in the construction of, the
Training Centre. All contracts which the State Government enters into with third parties for the
design, construction and equipping of the Training Centre shall contain a provision for liquidated
damages.
(d)
KMC (and/or its designee(s)) shall have the right to engage, at its own expense,
the KMC Representative to review all aspects of the Training Centre design and construction
including work plans and specifications related thereto, and the costs related thereto. The State
Government shall cooperate and cause its contractors to cooperate with the KMC Representative
and promptly make information related to the design, construction, and costs of the Training
Centre available to the KMC Representative upon request. The KMC Representative shall have the
right to review the performance of any design professional, construction manager or contractor in
connection with the Training Centre and the costs related thereto, where appropriate, to work with
the State Government to reach a mutual agreement regarding any modifications in respect of the
Training Centre and the costs related thereto.
(e)
The State Government shall, during the design and construction of the Training
Centre, cause its contractors to maintain, the insurance coverage set forth in the State
Government's construction contracts, a copy of which will be provided to KMC (and/or its
designee(s)), and KMC (and/or its designee(s)) shall be named as an additional insured on each
policy.
9.2
Training Support
(a)
The State Government shall plan and execute, at its own cost, at least three (3)
different training and recruitment support programmes specifically for each of KMC
(and/or its designee(s)) and its Suppliers, in accordance with KMC's requirements
and specifications. Such programmes shall include: (i) job fairs or events of a
similar nature, which shall be organized in conjunction with vocational and/or
technical schools and may commence prior to the completion of the construction of
27
the Project, without limitation on the frequency; (ii) prioritised referral to and/or
selection from specialised labour pools; and (iii) tailor-made training programmes
targeted at a workforce aged 16 to 29, which include the State Government's
responsibility to pre-screen eligible workers, develop and execute suitable training
courses, and provide wage subsidies equivalent to twice the amount of the
minimum wage of the State, for ninety (90) days, to each participant of the
training programmes.
(b)
9.3
The State Government agrees that KMC (and/or its designee(s)) shall not have any
obligation to hire participants in the training and recruitment support programmes.
The training and recruitment support programmes shall be provided at KMCs
(and/or its designee(s)) request, without limitation to the frequency and the
number of executed and developed programmes.
Academia's Support
The State Government shall plan, coordinate, and execute, at its own cost, coordination
services with universities and vocational and technical schools for KMC (and/or its
designee(s)) and its Suppliers, in relation to KMC (and/or its designee(s)) and its
Suppliers' recruitment processes, in accordance with their respective requirements and
specifications.
9.4
(a)
The main universities involved are Monterrey Tech ("ITESM"), the State University
("UANL"), University of Monterrey ("UDEM") and Universidad Regiomontana ("UR").
(b)
The vocational schools involved will be Instituto de Capacitacion, Evaluacion y

Certificacion En Competencias Para El Trabajo (ICECCT), Alvaro Obregon
Technical School ("AOTS") and the technical school of the Engineering Faculty of
UANL ("FIME"). The State Government shall provide, at its own cost, necessary
space at AOTS for KMC (and/or its designee(s)) and its Suppliers to conduct job
interviews and/or other recruitment procedures.
Tailor-Made Programmes
The State Government shall develop, at its own cost, tailor-made training programmes
for KMC (and/or its designee(s)) and its Suppliers in conjunction with any or all of the
participating academic institutions referred to in clause 9.3. In addition, the State
Government shall provide, at its own cost, the necessary instructors, space, equipment
and machinery necessary or desirable to train prospective or actual employees of KMC
(and/or its designee(s)) and/or its Suppliers.
9.5
Internship Programmes
The State Government shall provide access to internship programmes to KMC (and/or its
designee(s)) and its Suppliers in conjunction with the participating academic institutions
referred to in clause 9.3.
9.6
Language Scholarships
The State Government shall provide scholarships to fund 80% of costs in relation to
language courses to, initially, 250 employees of KMC (and/or its designee(s)) and its
Suppliers.
9.7
Research and Development
28
obtaining from the federal government the maximum amount of funds for the following
Research and Development ("R&D"):
(a)
R&D grants and scholarships offered by the Innovation and Technology Transfer
Institute;
(b)
PROINNOVA incentives which aim to boost collaboration between large companies,

R&D centres and/or education institutions and which provide 50%-70% support of project costs;
(c)
INNOVATEC incentives which provide 30%-75% support of project costs;
(d)
the FONLIN fund which provides up to USD 190,000 support per project; and/or
(e)
the FOMIX fund.

9.8
Supplier Development
(a)
Supplier Hub Program

The State Government shall, at its own cost, locate, classify and link qualified local
companies with KMC (and/or its designee(s)) and its Suppliers, at KMC's request,
through the Supplier Hub Program and the Automotive Industry Development
Manager as certified by the Japan International Cooperation Agency, without
limitation to the frequency and number of requests made by KMC (and/or its
designee(s)) or its Suppliers.
(b)
Suppliers Day
The State Government, upon two (2) month prior notice from KMC (and/or its
designee(s)) or its Suppliers, shall plan and execute, at its own cost and in
accordance with the requirements and specifications of KMC (and/or its
designee(s)) and/or its Suppliers, a supplier day or events of a similar nature which
enables KMC (and/or its designee(s)) and/or its Suppliers to meet a large number
of prospective suppliers.
9.9
Other Support
One-Stop Shop
The State Government guarantees proper application to and issuance, in an
expeditious manner, of any Permits or approvals, which KMC (and/or its
designee(s)) and/or its Suppliers are required to obtain in implementing the
Project.
Expatriates
(i) General Support
The State Government shall provide, sponsor, or coordinate, at no cost or charge to
expatriates and other employees of KMC (and/or its designee(s)), various services
including without limitation: (A) translation services; (B) school searches, (C)
housing searches; (D) referral to and/or providing information on medical clinics
(including dental clinics) or hospitals; (E) hotel accommodations at preferential
rates; (F) assistance with job searches for spouses of expatriates or other
employees of KMC (and/or its designee(s)); (F) assistance with applying for and
29
obtaining required visas including work permits; and (G) organising and/or
sponsoring community welcome activities including arranging a city tour and other
activities.
(ii) Housing
The State Government shall aid and procure the establishment of exclusive housing
areas for the expatriates of KMC (and/or its designee(s)) and its Suppliers.
The State Government shall provide assistance and support including negotiating
with developers and Tax authorities, on behalf of KMC (and/or its designee(s)) and
its Suppliers, to obtain preferential rates in regard to housing projects (including
construction costs, leasing conditions, purchase options, leisure areas and day-care
facilities).
Logistics Support
obtaining preferential rates for storage fees and loading/unloading fees at the
following ports:
(i) the Manzanillo Port,
(ii) the Altamira Port, and
(iii) the Interpuerto Monterrey (including but not limited to an inland customs
office, Strategic Tax Precinct, the Air Cargo Terminal of the Mariano Escobedo
International Airport, and the Colombia International Bridge).
The State
Government shall ensure that the inland port will meet the capacity required by
KMC, including, but not limited to, an unloading space of 1,800 TEU.
Ground-breaking Event
The State Government shall organise, at no cost to KMC, a ground breaking
ceremony to be the held at the Project Site and relevant public announcements, in
accordance with KMC's requirements.
Federal Incentives
The State Government shall assist KMC (and/or its designee(s)), to the greatest
extent possible, in obtaining from the federal government federal incentives,
including, but not limited to, customs duty and VAT exemptions, reductions, and/or
deferral programs, as applicable, CONACYT incentives including INNOVATEC,
PROINOVA and human resources incentives, and the Ministry of Economy
incentives such as PRODIAT, as well as financing programs by BANCOMEXT.
The State Government shall organise, at no cost to KMC, special hiring fairs for construction
related companies for the benefit of KMC (and/or its designee(s)) and its Suppliers, in
accordance with KMC's needs and specifications.
The State Government shall assist KMC (and/or its designee(s)), to the greatest extent
possible, in structuring an adequate labour structure pertaining to the labour force to be used in
connection with the Project pursuant to an external counsel's opinion, including entering into a
collective bargaining agreement with a labour union favourable to KMC by no later than two
weeks after the Effective Date, and maintaining a favourable labour union environment for the
implementation of the Project and operation of the plant.
The State Government shall provide information and documents guaranteeing that all of the
necessary infrastructure and Utilities at the Project Site will be provided, including roadway,
railroads, water, wastewater treatment, gas, and electricity supply, and any other necessary
30
services as required.
10.
OTHERS
1.2
The State Government and the Municipality shall carry out all necessary actions pursuant
to Applicable Law for granting and formalising the Incentives, including, but not limited to,
obtaining the Approval of State Congress and approval and/or support from any
municipal, federal, and any other State agencies.
10.1
Trust Fund
(a) By no later than 30 calendar days from the Effective Date, the State Government
shall execute a trust fund (the "Trust Fund") in favour of KMC (and/or its
designee(s)) and its Suppliers, into which the sum of money corresponding to the
Incentives shall be deposited, through one or more installments, and used in
accordance with the terms of such Trust Fund and for the purposes established in this
Agreement. The State Government shall take any and all necessary actions to
guarantee the immediate availability of all of the amounts corresponding to the
Incentives deposited into such Trust Fund for the sole benefit of KMC (and/or its
designee(s)) and its Suppliers.
(b) The State Government shall transfer the funds corresponding to Site Preparation to
the Trust Fund to the satisfaction of KMC (and/or its designee(s)) at the latest by 1
January 2015; provided, however, that this obligation shall be considered to have
been fulfilled, so long as the State Government fully complies with its obligations
pursuant to this Agreement in accordance with the respective due dates provided
herein.
10.2
Tax Gross-Up
To the extent that any Incentives or other amount provided by the State Government and
the Municipality to KMC (and/or its designee(s)) and/or its Suppliers lead to any Tax
Liability (including, but without limitation, corporate income Tax or real estate transfer
Tax) in Mexico for KMC (and/or its designee(s)) and/or its Suppliers, including, but
without limitation, as an increase of their taxable income or a reduction of Tax costs or a
reduction of Tax depreciation on assets acquired in whole or in part financed from the
State or a reduction of Tax loss carry forward, either at the time of receipt or
subsequently, the State Government shall reimburse such amount of Tax liability to the
entity incurring it. Such reimbursement will be further increased to the extent it is
subject to Tax (gross-up basis). The Mexican Parties may propose to KMC (and/or its
designee(s)), and KMC (and/or its designee(s)) may consider at its sole discretion,
mechanisms (which mechanisms shall not incur, or result in, any cost to KMC (and/or its
designee(s)), consistent with Applicable Law, for the purpose of mitigating the obligations
foreseen by this clause 10.3.
10.3
Change of Law
In the event of a change in law after the Effective Date, the result of which would be to
lessen or remove from KMC (and/or its designee(s)) or its Suppliers the economic benefit
of any Incentives, abatements or exemptions that would have been available under the
law in effect on the Effective Date, the Mexican Parties shall provide KMC (and/or its
designee(s)) and its Suppliers with an exemption from the law as so changed or another
incentive having equivalent economic effect to the statutory benefit so lessened or
removed (gross-up basis).
11.
11.1
TERMINATION, INDEMNIFICATION AND GUARANTEES

Termination
31
In the event of a breach by any of the Mexican Parties of its obligations (including, but
not limited to, a breach of the representations and warranties, and covenants, set forth
herein) arising from, or in connection with, this Agreement or the Implementation
Agreements, unless it is proven that such breach was due to the intentional fault or gross
negligence of KMC (and/or its designee(s)), KMC (and/or its designee(s)) shall have the
right to terminate this Agreement and the Project. If the Agreement or the Project
terminates in accordance with this clause 11.1, then, KMC (and/or its designee(s)) shall
have no obligation to refund, pay for, or reimburse costs of any Incentives or any other
support already received in connection with the Project, including, but not limited to, the
costs of the Site Preparation.
2
General Provision on Indemnification

Each of the Mexican Parties undertakes that, in the event of a breach of its obligations
arising from, or in connection with, this Agreement or the Implementation Agreements
and/or the termination of this Agreement or the Implementation Agreements, it shall be
jointly and severally liable to indemnify KMC (and/or its designee(s)) from and against
each Loss, Liability, cost, claim, expense, proceeding or demand (including, without
limitation, legal fees and disbursements) that KMC (and/or its designee(s)) may suffer as
a result of breach of this Agreement (including, but not limited to, a breach of the
representations and warranties, and the covenants, set forth herein), and/or the
Implementation Agreements, and/or the termination of this Agreement or the
Implementation Agreements, unless it is proven that such breach was due to the
intentional fault or gross negligence of KMC (and/or its designee(s)).
To the extent that any amount(s) so payable by the State Government and the
Municipality as compensation or indemnification is subject to deduction, withholding or
taxation in Mexico or elsewhere, the amount of such compensation or indemnification
shall be increased to the extent necessary that the amount received by KMC (and/or its
designee(s)) net of any such taxation, deduction or withholding is equal to the amount of
its Losses.
12.
NOTICES AND CONTACT PERSONS

All notices to be given to a Party pursuant to this Agreement shall be in writing in English,
and (i) by delivery in person, (ii) by an internationally recognised courier service, (iii) by
first class registered or certified mail, postage prepaid, or (iv) by email, to the address of
such Party as set forth below or to such address as the addressee shall have provided to
the addressor, and shall be deemed to have been given one business day after delivery:
In the case of State Government to:
The State of Nuevo Leon
Torre Administrativa Piso 13, Washington 2000, Colonia Obrera, Monterrey, Nuevo
Leon, 64010, Mexico
Email: Celina.villarreal@nuevoleon.gob.mx
Attn: Celina Villarreal / Under Secretary of Foreign Investment and International
Commerce
In the case of the Municipality to:
The Municipality of Pesqueria
Mariano Escobedo S/N, Centro, Pesqueria, Nuevo Leon, 66650, Mexico
Email:
oscarg_ayuntamiento@hotmail.com
Attn: Oscar Gonzlez / Secretary of Staff

32
With a copy to (which shall not constitute notice):

Santos Elizondo
Avenida Pedro Ramrez Vzquez 200-1 Cuarto Piso
Colonia Valle Oriente
San Pedro Garza Garcia, NL CP 66269
Fax: (5281) 4777-1249
Email: mza@santoselizondo.com
Attention: Luis Mendoza Garza/Mario Zambrano Abrego
In the case of KMC to:

KIA Motors Corporation
12 Heolleung-ro, Seocho-gu, Seoul, 137-938, Republic of Korea
Email: albertolee@kia.co.kr
Attention: Jong Kun Lee / Vice President
With copy to (which shall not constitute notice):
Ashurst Hong Kong
11/F Jardine House, Connaught Place, Central, Hong Kong
Fax: (852) 2868 0898
Email: john.kim@ashurst.com
Attention: John J.K. Kim
Basham, Ringe Y Correa, S.C.
Paseo de los Tamarindos 400-A, 9th Floor,
Bosques de las Lomas, Mexico City, Mexico, 05120
Fax: (52 55) 52610496
Email: serra@basham.com.mx
Attention: Juan Carlos Serra
13.
EFFECTIVENESS
This Agreement shall become effective as of the Effective Date on which it has been
signed by the Parties.
14.
EXCLUSIVITY
From the date hereof and until the date this Agreement is terminated, the State
Government and the Municipality shall not discuss or negotiate, directly or indirectly, with
any Person, or entertain or consider any inquiries or proposals relating to the Project.
15.
SURVIVAL
The commitments, undertakings, obligations, representations and warranties of the
Parties pursuant to this Agreement shall remain in full force and effect throughout the
development of the Project and thereafter, provided, however, that if a Party withdraws
from this Agreement or it is otherwise terminated, the matters set out in clauses 11.2
(General Provision on Indemnification), 16.1 (Governing Law), 16.2 (Dispute Resolution),
16.3 (Waiver of Sovereign Immunity), 17.2 (Intellectual Property), 17.3 (Joint and
Several Liability), 17.15 (Construction) shall survive such withdrawal or termination of
this Agreement indefinitely.
33
The covenants and representations made by each of the Parties hereto and contained
herein shall survive the performance of any obligations to which such covenants and
representations relate.
16.
16.1
GOVERNING LAW AND DISPUTE RESOLUTION

Governing Law
This Agreement and other documents and agreements related hereto shall be governed
by and construed in accordance with the laws of Mexico, except to the extent otherwise
required by mandatory provisions of applicable law or as otherwise expressly provided in
such documents or agreements.
16.2
Dispute Resolution
(a)
The Mexican Parties and KMC (and/or its designee(s)) hereby irrevocably consent
to submit exclusively to the International Centre for Settlement of Investment
Disputes (hereinafter the "ICSID"), any and all disputes, controversy, or claims,
arising out of, in connection with, or relating to, this Agreement, or any agreement
in connection with, this Agreement, including, but not limited to, any question
regarding its existence, validity, invalidity, breach or termination thereof, to be
finally resolved, with binding effect, by arbitration in accordance with the ICSID
Convention, Regulations, and Rules (the "Rules") in force on the date on which
the request of arbitration is submitted in writing in accordance with these Rules.
For the avoidance of doubt, ICSID, in accordance with the terms of this Agreement,
shall have sole and complete jurisdiction for resolving any and all disputes,
controversy or claims aforementioned.
(b)
Each Party to this Agreement hereby irrevocably waives (i) any immunity from
jurisdiction, investigation or enforcement that it may enjoy, whether pursuant to
international agreements or the domestic law of any such Party, (ii) any objection
which it might at any time have to arbitral proceedings being brought in
accordance with the terms of this Agreement, and (iii) the right to bring, initiate or
process any suit, action or proceeding based on any matter whatsoever, arising out
of, in connection with, or relating to, this Agreement, whether in contract, tort or
otherwise, in any judicial court of any jurisdiction.
(c)
The arbitration shall be conducted in English with the assistance of interpreters .

The tribunal shall consist of three arbitrators, one arbitrator each appointed by the
Mexican Parties and by KMC (and/or its designee(s)), respectively, and the third
who shall be the President of the tribunal, shall be chosen by the arbitrators
appointed by the Parties. If the tribunal is not constituted, or the President of the
tribunal is not chosen, within 90 days after the notice of the registration of the
request for arbitration has been dispatched by the Secretary-General (as defined in
the Rules), the arbitrators not yet appointed, or the President of the tribunal, will
be designated according to the Rules. The President shall not be of the same
nationality as any Party. The decision of a majority of the three arbitrators shall be
final and binding upon the Parties and shall be enforceable.
(d)
According to the Rules, the arbitration shall be held in any state party to the 1958
UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards, as
determined by the arbitral tribunal after consultation with the parties and the
Secretariat (as defined in the Rules). For this purpose, the Parties hereby agree to
designate Washington, D.C. as the venue of arbitration.
34
16.3
Waiver of Sovereign Immunity

To the extent the State Government, the Municipality or any of their respective assets
have or hereafter may acquire any right to immunity from legal proceedings, set-off,
attachment prior to judgment, other attachment or execution of an arbitral award or
court judgment on the grounds of sovereignty or otherwise, then to the extent permitted
by law of the forum concerned, each of the State Government and the Municipality
hereby irrevocably waives such rights to immunity in respect of its obligations arising
under or relating to this Agreement; provided that such waiver shall not extend to
property which is used solely or mainly for official purposes (including ambassadorial or
consular-held property, diplomatic buildings and the contents thereof).
17.
17.1
GENERAL
Opinions
Each of the Mexican Parties shall deliver to KMC (and/or its designee(s)) on the Effective
Date the opinion letters of their respective legal counsels, in form and substance
reasonably acceptable to KMC (and/or its designee(s)), to the effect that each such Party
with respect to which the opinion is given (a) has the legal power and authority to enter
into this Agreement, (b) is duly authorised to make and carry out the respective
commitments made in this Agreement in accordance with Applicable Law, and (c) that
this Agreement is a legal, valid and binding obligation of the relevant Party, enforceable
in accordance with its terms.
17.2
Intellectual Property
All rights in Intellectual Property conceived of or created in relation to the Project shall be
the property of KMC (and/or its designee(s)).
Upon request of KMC (and/or its
designee(s)), made to any of the Mexican Parties, identifying the Intellectual Property
conceived or created, the Mexican Parties shall cause a disclosure document to be
executed and delivered to KMC (and/or its designee(s)) reporting such Intellectual
Property. All Intellectual Property conceived of or created in relation to the Project shall
be works made for hire for KMC (and/or its designee(s)).
17.3
Joint and Several Liability

In order to guarantee the compliance of each and every obligation assumed herein by the
Municipality pursuant to article 1987 of the Civil Code for the Federal District and its
correlatives of the Federal Civil Code, the State Government hereby constitutes itself as
joint obligor of each and all obligations and responsibilities of the Municipality; for such
purposes, the State Government expressly waives all benefits of order, excussion,
division, that may apply pursuant to articles 2813, 2814, 2815, 2816, 2817, 2818, 2819,
2820, 2821, 2822, 2823, 2824, 2826, 2827, 2830, 2835, 2836, 2837, 2838, 2839, 2840,
2842, 2844, 2845, 2846, 2847, 2848, and 2849 of the Civil Code for the Federal District
and its correlatives of the Federal Civil Code.
17.4
Incorporation of Schedules, Exhibits and Annexes

The schedules, exhibits and annexes identified in this Agreement are incorporated herein
by reference and made a part hereof.
17.5
Entire Agreement
The terms and conditions contained in this Agreement (including the schedules and the
exhibits herein) supersede all prior oral or written understandings, agreements, or
representations by or among the Parties and constitute the entire agreement between
them concerning the subjects matter hereof.
35
17.6
Amendments and Waivers

No amendment of any provision of this Agreement shall be valid unless the same shall be
in writing and duly signed by an authorised Representative of each of the Parties hereto.
No waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation, or breach of warranty or covenant hereunder,
or affect in any way, any rights arising by virtue of any prior or subsequent breach.
17.7
Costs
Except as otherwise provided in this Agreement, each of the Parties shall bear its own
costs incurred in connection with the preparation, negotiation, execution and
implementation of this Agreement and the matters contemplated herein.
17.8
Confidentiality
This Agreement contains information that is highly confidential and commercially
sensitive for KMC (and/or its designee(s)). The contents of this Agreement shall be
regarded as a trade secret of KMC (and/or its designee(s)). To the fullest extent
permitted by law, the Parties shall at all times keep confidential this Agreement and all
Confidential Information and not disclose it to anyone other than those individuals who
are both (i) Representatives of the respective Party and (ii) who need to know such
information or data for the purposes of the Project and who are aware of the obligations
of confidentiality and agree to keep this Agreement and such Confidential Information
confidential. In the event that any of the Mexican Parties is required to disclose any
Confidential Information pursuant to Applicable Law, such Mexican Party will provide KMC
(and/or its designee(s)) with prompt notice, so that KMC (and/or its designee(s)) may
seek a protective order or other appropriate remedy to protect this information.
17.9
Announcements
No announcements or circular in connection with the details of this Agreement and/or the
Project shall be made or issued by or on behalf of any of the Parties without the prior
written approval of the other Parties. This shall not affect any announcement or circular
required by law or any regulatory body or the rules of any recognised stock exchange,
but the Party with an obligation to make an announcement or issue a circular shall agree
with the other Parties as to the content of the announcement or circular, insofar as is
reasonably practicable in compliance with such an obligation.
17.10
Assignment and Benefit of Agreement

This Agreement is entered into for the benefit of the Parties and their respective
Affiliates. KMC may, without the consent of the State Government or the Municipality,
assign any of its rights, interests and obligations in and to the Project under this
Agreement, in whole or in part, whether by operation of the law or otherwise to, or cause
any of its obligations under this Agreement to be performed by, any of its designee(s) or
Affiliates. At the request of KMC, the State Government shall take such measures to
ensure that the benefit of this Agreement is extended in full to any Affiliate of KMC or its
designee(s) that KMC deems appropriate for the effective implementation of the Project.
17.11
Third Party Rights

This Agreement does not create any right, which is enforceable by any Person who is not
a Party to it; provided, however, that KMC's designee(s) shall be able to enforce the
rights conferred upon it by this Agreement without intervention of KMC.
17.12
Unenforceability
36
If any provision of this Agreement is or becomes invalid or unenforceable, such invalidity

or unenforceability shall not invalidate the remaining provisions of this Agreement, except
where the provisions cannot be severed from the rest of this Agreement due to the
nature of this Agreement, its subject matter or the circumstances in which this
Agreement was concluded. The Parties agree to do all things necessary to achieve the
same result as was intended by any such invalid or unenforceable provisions.
17.13
Binding Effect
All of the terms and provisions of the Agreement shall be binding upon and shall inure to
the benefit of the Parties and their respective successors and permitted assignees. In
addition, the Mexican Parties agree (a) to take all actions which are necessary and
appropriate at any time to assure the binding effect, legality and enforceability of their
respective obligations hereunder, and (b) not to take any action which would affect
adversely in any way whatsoever the binding effect, legality and enforceability of their
respective obligations hereunder.
17.14
Counterparts
The Agreement may be executed simultaneously in one or more counterparts, each of
which shall be deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
17.15
Construction
In this Agreement, unless the context indicates otherwise, words denoting the singular
shall include the plural and vice versa; references to statutes, articles or regulations are
to be construed as including all statutory or regulatory provisions consolidating,
amending, replacing, succeeding or supplementing the statutes, articles or regulations
referred to; references to the words "including", "includes" and "include" shall be deemed
to be followed by the words "without limitation" or "but not limited to" or words of similar
import; references to clauses, sections (or subdivisions of sections), exhibits, appendices,
annexes or schedules are to those of this Agreement unless otherwise indicated;
references to agreements and other contractual instruments shall be deemed to include
all exhibits, schedules and appendices attached thereto; and references to days shall
mean calendar days unless otherwise specified.
The titles and headings are for
convenience only and do not define, modify or limit any of the terms and provisions
hereof.
37

Final Main Body Investment Agreement

Загружено:

Сведения о документе

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Final Main Body Investment Agreement

Загружено:

Авторское право:

Доступные форматы

Final Draft 25 August 2014

KIA MOTORS CORPORATION;

THE GOVERNMENT OF THE STATE OF NUEVO LEON;

THE MUNICIPALITY OF PESQUERIA, NUEVO LEON

Final Draft 25 August 2014

Final Draft 25 August 2014

"Adjacent Property" means certain parcels of land (with a surface area of

is publicly available or becomes generally available to the public (other than as a

becomes available (as can be demonstrated by its written records or by other

Final Draft 25 August 2014

"Environmental Impact Assessment" means an environmental assessment conducted

no increase of withholding Taxes on dividend payments;

losses incurred by corporate entities shall be permitted to be carried forward and

no extension in current time periods for recovery of excess input VAT;

no substantive change in the social security regime;

Final Draft 25 August 2014

no excise Tax increase on cars; and

no material adverse changes in the political and economic systems in Mexico,

Final Draft 25 August 2014

"Phase I Environmental Impact Assessment A" means an environmental

Final Draft 25 August 2014

purpose of obtaining the Phase I Environmental Impact Authorisation A, pursuant

Phase I Environmental Impact Assessment B means an environmental

Phase I Environmental Impact Assessment C means the environmental

"Phase I Environmental Impact Authorisation" means the authorisation issued by

"Phase I Environmental Impact Authorisation A" means the authorisation

Phase I Environmental Impact Authorisation B means the authorisation

Phase I Environmental Impact Authorization C means the authorisation

"Phase II Environmental Impact Assessment" means the environmental impact

Final Draft 25 August 2014

Final Draft 25 August 2014

"Tie-in Point(s)" has the meaning given to such term in Schedule 2.

KMCs (and/or its designee(s)) Potential Investment

Obligations of Mexican Parties; General Terms

Assistance, Cooperation and Support of Mexican Parties

Final Draft 25 August 2014

Designation of Project Manager(s)

Representations and Warranties

Assistance with Permits

Final Draft 25 August 2014

The State Government shall conduct the Phase I Environmental Impact

State Contractors and Suppliers

Contractors to be retained by the State Government in connection with the

Final Draft 25 August 2014

Preparatory Real Estate Due Diligence

Geotechnical, Soil, Water and Air Quality Analysis

Phase I Environmental Impact Assessment

Aerial Photograph; Topographic Survey; Land Survey

Additional Inducements and Incentives for Expansions

Final Draft 25 August 2014

investment, expansion or hiring of employees beyond that contemplated by this

Assistance with Arranging Financing Commitments

Final Draft 25 August 2014

Final Draft 25 August 2014

Non-Fulfilment of Conditions Subsequent

Real Estate Acquisition Tax;

Real Estate Ownership Tax for a period of five (5) years;

Real Estate Registration fees;

Final Draft 25 August 2014

Property Transfer Tax and its associated fees and expenses;

Availability of Drinking Water and Sewage Services Certificate;

Phase I Environmental Impact Authorisation (including implementation costs, if

Final Draft 25 August 2014

Exemption of Land Donation or Payment under the Urban Development Act