Chaowei Power : Announcements and Notices - Inside Information Equity Joint Venture Contract and Technology Transfer and License Agreement

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Chaowei Power Holdings Limited

超 威 動 力 控 股 有 限 公 司

(incorporated in the Cayman Islands with limited liability)

(Stock code: 951)

INSIDE INFORMATION EQUITY JOINT VENTURE CONTRACT

AND

TECHNOLOGY TRANSFER AND LICENSE AGREEMENT

INTRODUCTION

This announcement is made by the Company pursuant to Rule 13.09(2) of Listing Rules and the Inside Information Provisions under Part XIVA of the SFO.

The Board is pleased to announce that on 30 December 2016, Chaowei Lvna, an indirect wholly-owned subsidiary of the Company, entered into the Equity Joint Venture Contract with GE Technology Development in relation to the establishment of the JV Company. Pursuant to the Equity Joint Venture Contract, Chaowei Lvna will contribute in cash the RMB equivalent of USD30,000,000 to the registered capital of the JV Company and GE Technology Development will contribute in cash USD5,000,000 to the registered capital of the JV Company. After completion of the transactions contemplated in the Equity Joint Venture Contract, Chaowei Lvna will own 85.71% of the equity interest of the JV Company and GE Technology Development will own 14.29% of the equity interest of the JV Company.

On the same date, Chaowei Lvna, GE Technology Development and the JV Company (signed by Chaowei Lvna and GE Technology Development for and on behalf of the JV Company) entered into the Technology Transfer and License Agreement in connection with the Equity Joint Venture Contract, pursuant to which the JV Company will, amongst others, pay GE Technology Development a lump sum payment of USD14,000,000, as consideration for the Technology Transfer and the licenses granted by GE Technology Development to the JV Company.

LISTING RULES IMPLICATIONS

Based on the information available to the Board, all of the relevant percentage ratios in respect of the proposed establishment of the JV Company under the Equity Joint Venture Contract are less than 5% and such transaction does not involve issue of any securities by the Company. Accordingly, it is expected that the proposed establishment of the JV Company under the Equity Joint Venture Contract will not constitute notifiable transactions under Chapter 14 of the Listing Rules.

After the establishment of the JV Company, GE Technology Development will become a connected person of the Company according to Rule 14A.07(1) of the Listing Rules, Accordingly any further transactions between the JV Company and GE Technology Development shall be subject to Chapter 14A of the Listing Rules. The Company will publish announcement(s) in this regard when and as appropriate.

The Company hereby reminds Shareholders and potential investors that this announcement is made according to the requirements of the Listing Rules. As at the date of this announcement, the establishment of the JV Company is subject to the satisfaction of the relevant conditions precedent as set out in the Equity Joint Venture Contract, including approval from relevant regulatory authorities. Therefore the establishment of the JV Company and thus the transactions under the Technology Transfer and License Agreement may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company.

INTRODUCTION

This announcement is made by the Company pursuant to Rule 13.09(2) of Listing Rules and the Inside Information Provisions under Part XIVA of the SFO.

The Board is pleased to announce that on 30 December 2016, Chaowei Lvna, an indirect wholly-owned subsidiary of the Company, entered into the Equity Joint Venture Contract with GE Technology Development in relation to the establishment of the JV Company. Pursuant to the Equity Joint Venture Contract, Chaowei Lvna will contribute in cash the RMB equivalent of USD30,000,000 to the registered capital of the JV Company and GE Technology Development will contribute in cash USD5,000,000 to the registered capital of the JV Company. After completion of the transactions contemplated in the Equity Joint Venture Contract, Chaowei Lvna will own 85.71% of the equity interest of the JV Company and GE Technology Development will own 14.29% of the equity interest of the JV Company.

On the same date, Chaowei Lvna, GE Technology Development and the JV Company (signed by Chaowei Lvna and GE Technology Development for and on behalf of the JV Company) entered into the Technology Transfer and License Agreement in connection with the Equity Joint Venture Contract, pursuant to which the JV Company will, amongst others, pay GE Technology Development a lump sum payment of USD14,000,000, in consideration for the Technology Transfer and the licenses granted by GE Technology Development to the JV Company.

EQUITY JOINT VENTURE CONTRACT

The principal terms of the Equity Joint Venture Contract are set out below:

Date: 30 December 2016

Parties: (1) Chaowei Lvna; and

(2) GE Technology Development

Registered Capital of the JV Company:

Pursuant to the Equity Joint Venture Contract, the registered capital of the JV Company will be USD35,000,000, with reference to the expected funding requirement for the initial operation of the JV Company.

Capital Contributions:

Chaowei Lvna will contribute in cash the RMB equivalent of USD30,000,000 to the registered capital of the JV Company as soon as is reasonably practicable following the date on which the business license of the JV Company is issued (the ''Establishment Date''), but in no event later than six months following the Establishment Date, and GE Technology Development will contribute in cash USD5,000,000 to the registered capital of the JV Company within six months after the Establishment Date. After completion of the transactions contemplated in the Equity Joint Venture Contract, Chaowei Lvna will own 85.71% of the equity interest of the JV Company and GE Technology Development will own 14.29% of the equity interest of the JV Company.

Business Scope of the JV Company:

The scope of business of the JV Company shall include, among other things, production, research and development and sales of an energy storage product using proprietary technology and know-how (the ''JV Products'').

Board Composition of the JV Company:

The board of the JV Company (the ''JV Board'') will be composed of five directors. Chaowei Lvna shall have the right to appoint four directors and GE Technology Development shall have the right to appoint one director. The chairman of the JV Board shall be a director designated by Chaowei Lvna and the vice chairman of the JV Board shall be a director designated by GE Technology Development. The director appointed by GE Technology Development shall have veto rights in terms of material resolutions, including amendments to the articles of association of the JV Company, increase or decrease in the registered capital of the JV Company, merger, acquisition, consolidation or reorganization of the JV Company. If GE Technology Development waives its right to appoint a director, it will have a right to have an observer at the JV Board meetings.

Profit Distribution:

The JV Company shall determine the amount of its after-tax distributable profit on an annual basis. Chaowei Lvna and GE Technology Development shall share the profits in proportion to their respective contributed capital and bear the risks and losses of the JV Company in proportion to their respective equity interests in the registered capital of the JV Company.

Other Rights of GE Technology Development:

GE Technology Development shall have the right (''Purchase Option'') to increase its equity interest in the JV Company to up to 30% of the registered capital of the JV Company. The price of such purchased equity interest, subject to statutory requirements, shall be determined on the basis of the valuation of the JV Company underlying the JV Company's most recent increase in registered capital (a ''Qualifying Prior Capital Increase''), as supplemented by the amount of such increase, provided that such capital increase shall have been completed no earlier than six months prior to the date on which the exercise notice in respect of such Purchase Option was delivered. If there is no Qualifying Prior Capital Increase, the exercise price for the Purchase Option shall be calculated on the basis of an independent valuation of the JV Company conducted by a qualified appraisal firm that is selected by GE Technology Development and is reasonably acceptable to Chaowei Lvna. The valuation of the JV Company used to calculate the exercise price for the Purchase Option shall not be lower than the valuation of the JV Company underlying the prior capital increase.

In addition, GE Technology Development is also entitled to customary shareholders' rights under the Equity Joint Venture Contract, including first-refusal right, pre-emptive right, tag- along right and put option.

Termination:

Chaowei Lvna and GE Technology Development may mutually agree to terminate the Equity Joint Venture Contract in writing at any time. In addition, either party (so long as it is not a breaching party) may give a written notice of termination to the other party at any time upon the occurrence of certain events.

TECHNOLOGY TRANSFER AND LICENSE AGREEMENT

The principal terms of the Technology Transfer and License Agreement are set out below:

Date: 30 December 2016

Parties:	(1)	Chaowei Lvna;
(2)	GE Technology Development, as the licensor; and
(3)	JV Company, as the licensee (signed by Chaowei Lvna and
GE Technology Development for and on behalf of the JV Company, in their capacity as the proposed shareholders of the
JV Company in view that the JV Company has not yet been established as at the date hereof.)