Inspur International : RENEWAL OF CONTINUING CONNECTED TRANSACTIONS WITH INSPUR GROUP

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浪潮國際有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

The Framework Agreement will expire after 31 December 2016. On 12 September 2016, the Company (for itself and on behalf of the other members of the Group) entered into the New Framework Agreement with Inspur Group Limited ("IPG") (for itself and on behalf of the other members of the Inspur Group) relating to the Continuing Connected Transactions for the three financial years ending 31 December 2019. The New Framework Agreement is conditional upon obtaining the approval of the Independent Shareholders for the New Framework Agreement, the transactions contemplated thereunder and the New Caps.

As IPG is a connected person of the Company, the transactions contemplated under the New Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules. Meanwhile, as the aggregate of the annual amounts of the Continuing Connected Transactions under the New Framework Agreement are expected to exceed the thresholds set out in Rule 14A.76(2) of the Listing Rules, the Company will seek the approval of the Independent Shareholders by way of a poll in the EGM of the New Framework Agreement and the proposed New Caps for the three financial years ending 31 December 2019.

A circular containing, among other things, further information about the New Framework Agreement and the relevant cap amounts, the letter from the independent financial adviser to the independent board committee and the Independent Shareholders and the recommendation from the independent board committee together with the notice of the EGM will be despatched to the Shareholders on or before 4 October 2016 in accordance with the Listing Rules.

Reference is made to the Company's announcements dated 29 November 2013 and 29 August 2014 and the Company's circulars dated 9 January 2014 and 15 October 2014 regarding the Continuing Connected Transactions between the Group and the Inspur Group. On 24 January 2014, the Company has obtained the Independent Shareholders' approval for the Continuing Connected Transactions and the annual caps assigned to the transactions contemplated thereunder for the three financial years ending 31 December 2016. In order to fulfil the expected increase in the Transactions, on 3 November 2014 the Company has obtained the Independent Shareholders' approval of the Supplemental Agreement in relation to the revised caps for the Transactions for the three financial years ending 31 December 2016.

As the Framework Agreement will expire after 31 December 2016, on 12 September 2016, the Company (for itself and on behalf of the other members of the Group) entered into the New Framework Agreement with IPG (for itself and on behalf of the other members of the Inspur Group) in respect of the Continuing Connected Transactions for the three financial years ending 31 December 2019. The New Framework Agreement is conditional upon obtaining the approval of the Independent Shareholders for the New Framework Agreement, the transactions contemplated thereunder and the New Caps.

The Continuing Connected Transactions comprises: Supply Transactions, Selling Agency Transactions, Purchase Transactions and Common Services Transactions.

1. Supply Transactions

   Types of products and services

   The Group supply and provide the Inspur Group with various IT products and IT services from time to time including without limitation the following products and services:

2. IT products including without limitation circuit boards of electronic products, sourced software, ERP software and various software developed by the Group; and

3. IT services including but without limitation to the services relating to the development of circuit boards used in personal computers and electronic products, sourced software, ERP software, server products and those software developed by the Group.

   Pricing and other terms

   The Group supply IT products and IT services to the Inspur Group. The actual quantity, specification, delivery date and price of the IT products and the amount of fees and detailed terms and conditions of the IT services to be provided by the Group are subject to individual orders placed by the Inspur Group. The parties have agreed that: If computer components of a specific model number have been sold to a third party customer, and, during the same month of such sale, the computer components of the same model number are to be sold to the Inspur Group, then the selling price of such computer components to the Inspur Group shall be the same as the selling price of such computer components to the aforementioned third party customer; and

4. the supply of products and components by the Group to the Inspur Group shall be on normal commercial terms;

5. the price per unit of the IT products and the service fees of the IT services to be supplied or provided by the Group will be agreed between the parties by reference to, among other factors, the prices of such IT products and IT services supplied by the Group to independent third parties at the relevant time; and

6. the Group shall not be obliged to accept any terms and conditions (including pricing terms) for the supply or provision of the IT products and IT services which are less favourable than those agreed between any member of the Group and its independent third party customers for those IT products and IT services.

Payment terms

The Group gives two-month credit period for the Inspur Group to settle the payment amount of the IT products after delivery and the service fees of the IT services after completion of the performance of the services.

7. Selling Agency Transactions

   The Group appoints the Inspur Group as its selling agent in respect of various IT service products of the Group (such as ERP software, finance software and products of outsourced software). Some of the business may be generated from public tenders made by the Inspur Group. The Group will be involved in participation in negotiation and finalization of the terms of supply of IT products to the ultimate third party customers and ensure that the supply of IT products is on normal commercial terms. The Inspur Group will place orders with the Group for supply of the products from time to time. After acceptance of the orders by the Group, the Group will directly provide the products to the customers. After the delivery of the products to the customers, the Inspur Group will issue sale invoices to the customers and the Group will issue sales invoice to the Inspur Group for settlement of the payment of the products.

   The Group pays selling agency commission of not more than 1% (calculated on the price of the relevant products payable by the customers) to the Inspur Group. The Inspur Group will deduct the related commission from the price received from the customers and pay back the net proceeds to the Group within five days.

8. Purchase Transactions

Types of products

The Group purchases from the Inspur Group various IT products from time to time including without limitation the IT server under the name of "Inspur", storage products and other accessories.