Luoyang Glass : INSIDE INFORMATION IN RELATION TO THE ENTERING INTO OF COOPERATION FRAMEWORK AGREEMENT AND THE ENTRUSTED OPERATIONS AND MANAGEMENT AGREEMENT

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INSIDE INFORMATION

IN RELATION TO THE ENTERING INTO OF COOPERATION FRAMEWORK AGREEMENT AND THE ENTRUSTED OPERATIONS AND MANAGEMENT AGREEMENT

Luoyang Glass Company Limited* (the "Company") and all members of the board (the "Board") of directors (the "Directors") of the Company warrant the truthfulness, accuracy and completeness of the contents of this announcement, and accept several and joint responsibilities for any false information, misleading statements or material omissions in this announcement.

This announcement is made by the Company pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).

The Board is pleased to announce that the Company entered into a cooperation framework agreement (the "Cooperation Framework Agreement") with Zigong Jinma Industrial Investment Co., Ltd* ( І্̹ږ৵ପุҳ༟Ϟࠢʮ̡ ) (the "Jinma Investment") on 18 March 2021. On the same day, the Company entered into an entrusted operation and management agreement (the "Entrusted Operation and Management Agreement") with Jinma Investment and Kaisheng (Zigong) New Energy Co., Ltd.* ( ௱ସ€І্อঐ๕Ϟࠢʮ̡ ) (the "Zigong New Energy"),reaching consensus and arrangement on relevant cooperation and entrusted operation matters. Pursuant to the Cooperation Framework Agreement, the Company intended to increase the capital and share of Zigong New Energy to achieve the target of holding 60% of equity interests of Zigong New Energy, subject to the capital increase agreement to be signed by both parties in the future. Pursuant to Entrusted Operation and Management Agreement, Jinma Investment entrusted the Company to operate and manage Zigong New Energy.

COOPERATION FRAMEWORK AGREEMENT

Set out below is a summary of the principal terms of the Cooperation Framework Agreement:

Date:

18 March 2021

Parties:

• (1) Jinma Investment; and

• (2) the Company

(collectively, the "Parties to Cooperation Framework Agreement")

Major cooperation contents

Jinma Investment contributed in the establishment of Zigong New Energy, which is principally engaged in R&D, production and sales of solar photovoltaic glass and processed glass. The Parties to Cooperation Framework Agreement intend to integrate their own resources and advantages to achieve mutual benefit and win-win cooperation in the field of new energy glass.

(1) Capital increase of Zigong New Energy

The Company intended to increase the capital and share of Zigong New Energy to achieve the target of holding 60% of equity interests of Zigong New Energy, subject to the capital increase agreement to be signed by the Parties to Cooperation Framework Agreement in the future.

The method, time, amount and other specific matters of the Company's investment will be determined separately in accordance with the investment and construction of Zigong New Energy completed by Jinma Investment and the approval arrangement of the Company as a listed company.

(2) Project arrangement

After the Cooperation Framework Agreement is signed by the Parties to Cooperation Framework Agreement and takes effect, the Company (by itself or by engaging an intermediary institution) will carry out due diligence on the financial situation, legal affairs and company condition of Zigong New Energy. Jinma Investment and Zigong New Energy shall cooperate with the Company's investigation. Jinma Investment and Zigong New Energy shall provide the information and documents required by the Company and the intermediary institution in full and detailed.

If Zigong New Energy fails to meet the requirements of listed companies (including but not limited to land, real estate, environmental protection, project approval, accounting treatment, etc.), Jinma Investment will use its best endeavours to procure Zigong New Energy to improve and standardize relevant matters in accordance with the law, and the Company will provide guidance and assistance.

After the Company completes the due diligence, if the Company has no objection, the Parties to Cooperation Framework Agreement shall negotiate on the specific details of the capital increase. In accordance with the principle of compliance, on the basis of reaching an agreement by Parties to Cooperation Framework Agreement on the capital increase, Parties to Cooperation Framework Agreement shall sign a capital increase agreement.

Exclusivity and conditions for agreement to come into effect

From the date of signing the Cooperation Framework Agreement to 31 December 2021, the Company has the exclusive right to negotiate with Jinma Investment and Zigong New Energy on the capital increase under the Cooperation Framework Agreement. Unless the Company notifies Jinma Investment to terminate the capital increase or the capital increase is not approved or the Company is not satisfied with the due diligence of Zigong New Energy, Jinma Investment shall not communicate and negotiate with any investors other than the Company in respect of matters which are the same or similar to the Cooperation Framework Agreement.

The Cooperation Framework Agreement shall come into effect upon the complete satisfaction of following conditions:

• (i) The Cooperation Framework Agreement has been signed by the respective legal representatives or authorized representatives of Jinma Investment and the Company, and sealed with their respective official seals;

• (ii) the matters regarding the cooperation referred to in the Cooperation Framework Agreement have been approved by the competent authority of Jinma Investment;

(iii) the matters regarding the cooperation referred to in the Cooperation Framework

Agreement have been approved by the competent authority of the Company.

ENTRUSTED OPERATIONS AND MANAGEMENT AGREEMENT

Set out below is a summary of the principal terms of the Entrusted Operation and Management Agreement:

Date:

18 March 2021

Parties:

• (1) Jinma Investment;

• (2) the Company; and

• (3) Zigong New Energy

(collectively, the "Parties to Agreement")

Entrusted Period

The entrusted period of Zigong New Energy under the Entrusted Operation and Management Agreement shall begin from the date when the Company takes over Zigong New Energy as a whole and end on 31 December 2021. If the Company becomes a shareholder of Zigong New Energy during the entrusted period, the Entrusted Operation and Management Agreement shall be terminated automatically from the date when the Company becomes a shareholder of Zigong New Energy.

Two months before the expiry of the term of entrusted operation, the Parties to Agreement shall negotiate whether to continue to implement the entrusted operation after the expiration of the term of entrusted operation. If consensus is reached through negotiation, the Parties to Agreement shall sign a separate entrusted operation agreement. If consensus is not reached, the Entrusted Operation and Management Agreement shall terminate and the entrusted operation shall end after the expiry of the term of entrusted operation. After the termination of the Entrusted Operation and Management Agreement, the Parties to Agreement shall continue to perform the payment, handover and other related obligations under the Entrusted Operation and Management Agreement.

Entrustment matters

(1) During the entrusted period of the Entrusted Operation and Management

Agreement, the Company is fully responsible for the production, operation and management of Zigong New Energy, including:

(i) to preside over the production, operation and management of Zigong New Energy;

• (ii) the Company proposes to set up the internal management organization of Zigong New Energy; the internal management organization shall be adjusted according to the needs of production and operation;

• (iii) the Company proposes to set up the basic management system and financial system of Zigong New Energy;

• (iv) the Company shall determine the post, staffing and salary standard of Zigong New Energy in accordance with the business development, and carry out labor and personnel management in accordance with law to ensure the stability of staff team of Zigong New Energy;

• (v) to formulate, organize and implement the construction, commissioning and operation of "solar material project phase I" of Zigong New Energy (hereinafter referred to as the "Project");

• (vi) the Parties to Agreement shall negotiate and determine the working capital plan, raw and auxiliary material procurement plan and human resource allocation plan required for the production of Project of Zigong New Energy, and the Parties to Agreement shall jointly provide necessary cooperation and assistance;

• (vii) the Company shall dispatch production, technology, procurement, sales, finance and other management personnel to Zigong New Energy to be responsible for the daily operation and management of Zigong New Energy such as production, technology, procurement, sales and finance;

(viii) according to the principle of economic benefit, the procurement and sales of Zigong New Energy shall be gradually incorporated into the procurement platform and sales platform of the Company and its affiliated enterprises to implement centralized procurement or sales; the Company undertakes not to purchase materials at prices that are significantly higher than the fair market price, and not to sell products and materials at prices that are significantly lower than the fair market price;

(ix) other functions and powers granted to the Company by Jinma Investment and Zigong New Energy.

(2) Ownership of assets and shareholders' equity

During the entrusted operation, the ownership of Zigong New Energy remains unchanged, the assets of Zigong New Energy and the corresponding shareholders' equity are legally owned by Zigong New Energy and Jinma Investment.

• (3) Cost commitments

  During the entrusted operation, the remuneration of the staff assigned by the Company to Zigong New Energy is borne by Zigong New Energy. The expenditures for project construction, trial production, production, operation, management, etc. of Zigong New Energy during the entrusted operation are borne by Zigong New Energy.

• (4) During the entrusted operation, if the scope of entrusted business needs to be adjusted or other matters that cannot be agreed upon by the Entrusted Operation and Management Agreements resulting in the need to change the entrusted business, the Parties to the Agreement shall negotiate and resolve, and sign a supplemental agreement to determine.

Entrustment fees and payments

The entrustment fee is charged at RMB100,000 per month. If less than one full month, it is calculated by the actual number of calendar days. The entrustment fee is payable annually and is payable within 15 days after the end of the entrusted period. The entrustment fee is payable by Zigong New Energy to the Company using spot exchange rate.

Debt and debt treatment

Except as otherwise provided in the Entrusted Operation and Management Agreement, the creditor claims and debts of Zigong New Energy are enjoyed and borne by Zigong New Energy and are not related to the Company.

During the entrusted period, Zigong New Energy has the right to claim compensation from the Company due to the intentional or material fault of the Company after Zigong New Energy has actually assumed the settlement of liability of debts of Zigong New Energy.

During the entrusted period, Jinma Investment or Zigong New Energy shall be responsible to resolve disputes due to the debts of Zigong New Energy or other contingent disputes that result in the seizure, freezing, suspending production for rectification, etc. of the assets and accounts of Zigong New Energy by the court, which affects the entrusted operation of the Company, such matters shall not affect the payment of entrustment fees by Zigong New Energy to our Company.

Handover of entrustment matters

Within 15 days after the Entrusted Operation and Management Agreement becomes effective, Zigong New Energy is responsible for drafting the transfer list, and transferring the information as prescribed in the agreement to the Company.

Within 3 days after the completion of the handover, the Company and Zigong New Energy shall jointly confirm the transfer list with their signatures and seals, the Company shall practically take over the operation of Zigong New Energy.

Jinma Investment and Zigong New Energy shall not transfer or reduce the working capital for the regular operation of Zigong New Energy prior to the handover (a joint verification will be conducted by the Parties to the Agreement before the handover).

Variation, release and termination of agreement

• (1) After the Entrusted Operation and Management Agreement becomes effective, it shall not be altered or released in advance by the Parties to the Agreement.

• (2) The Parties to the Agreement may, by consensus, amend or supplement the Entrusted Operation and Management Agreement, provided that the written supplemental agreement is signed. The supplemental agreement is an important part of the Entrusted Operation and Management Agreement and has the same legal effect as the Entrusted Operation and Management Agreement.

• (3) Jinma Investment has the right to unilaterally release the Entrusted Operation and Management Agreement in any of the following circumstances:

  • (i) unauthorized disposal of the assets of Zigong New Energy by the Company;

  • (ii) where part or all of the entrustment matters are entrusted to others by the Company for implementation;

  • (iii) the Company has breached the obligations stipulated in the Entrusted Operation and Management Agreement and caused significant losses to Jinma Investment or Zigong New Energy.

• (4) The Company has the right to unilaterally release the Entrusted Operation and Management Agreement in any of the following circumstances:

  (i) Jinma Investment and Zigong New Energy failed to deliver Zigong New Energy to the Company for entrusted operation for more than 30 days;

(ii) the seizure, freezing, suspending production for rectification, etc. of the assets and accounts of Zigong New Energy by the court, caused by disputes due to the debts of Zigong New Energy or other contingent disputes, or Zigong New Energy being penalized, shut down, etc. by government authorities due to compliance issues in respect of warrants, qualifications and licensing procedures, affecting the entrusted operation of the Company;

(iii) circumstances under which Jinma Investment and Zigong New Energy disposes of the assets of Zigong New Energy without authorization or the assets of Zigong New Energy are restricted, resulting in the failure of the entrusted operation to be implemented during the entrusted period.

Conditions for Entrusted Operation and Management Agreement

The Entrusted Operation and Management Agreement shall become effective from the date when the legal representative or the authorized representatives of the Parties to the Agreement sign and affix the company seal.

INFORMATION ABOUT THE COMPANY, JINMA INVESTMENT AND ZIGONG NEW ENERGY

The principal activities of the Company are production and sales of information display glass and new energy glass. The scope of business includes development, production, manufacture and installation of information display glass, new energy glass, photoelectric material for functional-glass category and its highly-processed products and components, relevant materials, mechanical whole-set equipment and its electric appliances and accessories, relevant technical consultancy and technical services, as well as sales and after-sales services of self-produced products.

Jinma Investment is a company incorporated in the PRC with limited liability, which is principally engaged in investment and asset management; investment advisory services, real estate development (level 3); biotechnology development and promotion services, wholesale and retail: mechanical and electrical products, metallic materials, hardware and electrical appliances, automobile accessories, flowers, building materials, labor insurance products, office supplies, agricultural by-products, fertilisers, feeds and their additives, wine, beverages, food, oil equipment and accessories, machinery equipment and accessories: oil and machinery technology development; sweeping and cleaning services for the public health environment; landscaping, property management, parking services, warehousing services, loading and unloading, property tenancy. As of the date of this announcement, Jinma Investment is an independent third party of the Company.

Zigong New Energy is a company incorporated in the PRC with limited liability, which is principally engaged in manufacturing, sales and services of new energy equipment and related products; research and development, production and sales of solar photovoltaic glass and highly-processed glass; consultation services for enterprises relating to the new energy industry. As of the date of this announcement, Zigong New Energy is an independent third party of the Company.

EFFECT OF THE ENTERING INTO OF THE COOPERATION FRAMEWORK AGREEMENT AND THE ENTRUSTED OPERATION AND MANAGEMENT AGREEMENT ON THE COMPANY

The entering into of the Cooperation Framework Agreement and the Entrusted Operation and Management Agreement is conducive to capturing the opportunity of vigorous development of the photovoltaic industry based on the resources and advantages of the parties thereof, laying a foundation for the subsequent engagement in in-depth cooperation, obtaining the control over Zigong New Energy by the Company, further expanding the scale of photovoltaic glass business of the Company and improving its discourse power and market competitiveness in terms of the photovoltaic glass business.

The entering into of the abovementioned agreements will not result in a change in the scope of the consolidated financial statements of the Company and are not expected to have a significant impact on the current results of the Company.

GENERAL INFORMATION AND RISK WARNING

The Cooperation Framework Agreement and the Entrusted Operation and Management Agreement entered into between the Company and related parties are the consensus reached by them on the matters regarding the cooperation to be carried out and serve as the basis for the relevant parties to commence the work for such matters. The financial, legal and business due diligence related to Zigong New Energy under the Cooperation Framework Agreement will be carried out subsequently; based on the results of the due diligence and the project construction of Zigong New Energy during the entrusted operation, the Company will separately sign the capital increase agreement on the basis of consensus among all parties on the specific capital increase matters. At present, there is still uncertainty as to the capital increase matters.

The Company shall perform its information disclosure obligations in a timely manner based on the implementation of the aforementioned agreements and the progress of subsequent cooperation. Investors are kindly advised to pay attention to the investment risks.

Since the entering into of the Cooperation Framework Agreement may or may not result in the entering into of a formal agreement, the specific matters on the transactions contemplated thereunder are subject to further negotiation and the entering into of a formal agreement. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

By order of the Board

Luoyang Glass Company Limited*

Zhang Chong

Chairman

Luoyang, China

18 March 2021

As at the date of this announcement, the Board comprises five executive Directors: Mr. Zhang Chong, Mr. Xie Jun, Mr. Ma Yan, Mr. Wang Guoqiang and Mr. Zhang Rong; two non-executive Directors: Mr. Ren Hongcan and Mr. Chen Yong; and four independent non-executive Directors: Mr. Jin Zhanping, Mr. Ye Shuhua, Mr. He Baofeng and Ms. Zhang Yajuan.

* For identification purposes only