Jiangling Motors Corporation, Ltd. and its Board members undertake that the information disclosed herein is truthful, accurate and complete and contains no false statement, misrepresentation or major omission.
I. Informing of the Meeting
The Board of Directors of Jiangling Motors Corporation, Ltd. (hereinafter referred to as “JMC”) sent out a written meeting notice to directors, supervisors, the members of the Executive Committee and relevant persons on March 10, 2014.
II. Time, Place & Form of Holding the Meeting
The twelfth session of the seventh Board of Directors was held in the conference centre on the second floor of the Administration Building of JMC on March 21, 2014. The procedure of convening and holding the meeting complied with the stipulation of the relevant laws, regulations and the Articles of Association of JMC.
III. Status of the Directors Attending the Meeting
Nine Directors shall attend this Board meeting and seven directors were present. Independent Director Shi Jiansan did not attend this meeting, and he authorized Independent Director Vincent Pun Fong KWAN to represent him at this meeting. Independent Director Wang Xu did not attend this meeting, and she authorized Independent Director Vincent Pun Fong KWAN to represent her at this meeting.
IV. Resolutions
The directors present at the meeting approved the following resolutions based on their discussion:
- Credit Line Increase Approval
The Board of Directors approved to convert the dealer temporary credit line of RMB 450 million to permanent line, and to increase export credit line to RMB 185 million. Total credit line is RMB 1,575 million, an increase of RMB 55 million compared with present Board approved (include temporary line of 450 million).
There were 9 votes in favor of the proposal, 0 vote against, and 0 abstention.
2. J09 Automatic Transmission Program Long Lead Funding Approval
The Board of Directors approved the J09 Automatic Transmission program long lead funding of RMB 187 million.
There were 9 votes in favor of the proposal, 0 vote against, and 0 abstention.
J09 is a new generation Transit product to be introduced by JMC from Ford Motor Company (hereinafter referred to as “Ford”). It is currently planned with manual transmission only. The purpose of the program is to improve passenger comfort and support J09 “premium” positioning by adding an optional automatic transmission. The long lead funding of the program will be spent mostly in relevant engineering development.
3. J09 Overseas ED&T Agreement Approval
The Board of Directors approved the J09 Overseas ED&T Agreement between Ford and the Company, and authorized Ms. Xiong Chunying, the Executive Vice President of the Company, to sign the Agreement on behalf of the Company. According to the aforesaid Agreement, JMC shall pay no more than US $17 million (include US$0.9 million provision) to Ford for overseas supplier ED&T cost
Whereas Ford, representing 32% of the outstanding shares of the Company, is the second largest shareholder of the Company, the transaction herein constitutes a related party transaction. When voting on the proposal, Director John Lawler, Director Manto Wong and Director Yuan-Ching Chen withdrew from the voting and all the other directors agreed with this proposal.
Please refer to the Public Announcement on the Related Party Transaction of JMC in China Securities, Securities Times and Hong Kong Commercial Daily on March 25, 2014 for details.
4. Related Memorandum of Understanding on Application of Automatic Transmission for J09 Program
The Board of Directors approved the related Memorandum of Understanding on Application of Automatic Transmission for J09 Program between Ford and the Company, and authorized Ms. Xiong Chunying, the Executive Vice President of the Company, to sign the Memorandum on behalf of the Company. According to the aforesaid related Memorandum, JMC shall pay engineering services fee of US$ 14.9 million to Ford for the Ford support in the initial stage of the J09 Automatic Transmission program.
Whereas Ford, representing 32% of the outstanding shares of the Company, is the second largest shareholder of the Company, the transaction herein constitutes a related party transaction. When voting on the proposal, Director John Lawler, Director Manto Wong and Director Yuan-Ching Chen withdrew from the voting and all the other directors agreed with this proposal.
Please refer to the Public Announcement on the Related Party Transaction of JMC in China Securities, Securities Times and Hong Kong Commercial Daily on March 25, 2014 for details.
5. Technology Licensing Contract for Sales of 6-Speed Automatic Transmission and All Wheel Drive System (For JMC Branded Vehicles) Approval
The Board of Directors approved the Technology License Contract for Sales of 6-Speed Automatic Transmission and All Wheel Drive System (For JMC Branded Vehicles) between Ford and the Company, and authorized Ms. Xiong Chunying, the Executive Vice President of the Company, to sign the Contract on behalf of the Company.
Whereas Ford, representing 32% of the outstanding shares of the Company, is the second largest shareholder of the Company, the transaction herein constitutes a related party transaction. When voting on the proposal, Director John Lawler, Director Manto Wong and Director Yuan-Ching Chen withdrew from the voting and all the other directors agreed with this proposal.
Please refer to the Public Announcement on the Related Party Transaction of JMC in China Securities, Securities Times and Hong Kong Commercial Daily on March 25, 2014 for details.
6. Engineering Service Agreement Concerning 6-Speed Automatic Transmission and All Wheel Drive System (For JMC Branded Vehicles) Approval
The Board of Directors approved the Engineering Service Agreement Concerning 6-Speed Automatic Transmission and All Wheel Drive System (For JMC Branded Vehicles) between Ford and the Company, and authorized Ms. Xiong Chunying, the Executive Vice President of the Company, to sign the Agreement on behalf of the Company.
Whereas Ford, representing 32% of the outstanding shares of the Company, is the second largest shareholder of the Company, the transaction herein constitutes a related party transaction. When voting on the proposal, Director John Lawler, Director Manto Wong and Director Yuan-Ching Chen withdrew from the voting and all the other directors agreed with this proposal.
Please refer to the Public Announcement on the Related Party Transaction of JMC in China Securities, Securities Times and Hong Kong Commercial Daily on March 25, 2014 for details.
7. J19 Program Long Lead Funding Approval
The Board of Directors approved the J19 Program Long Lead Funding of RMB 510 million.
There were 9 votes in favor of the proposal, 0 vote against, and 0 abstention.
J19 is a newly developed heavy duty truck of JMC. The long lead funding of the program will be spent mostly in relevant engineering development and fixtures & tooling.
8. Incremental Funding of JMCH Engine Capacity Phase One Program Approval
The Board of Directors approved the incremental funding of RMB 33.5 million for JMC Heavy Duty Vehicle Co., LTd. (“JMCH”) engine capacity phase one program, and the total investment increases from RMB 304 million to RMB 337.5 million.
There were 9 votes in favor of the proposal, 0 vote against, and 0 abstention.
Due to adjustment on JMCH engine manufacturing strategy, it is planned to do the rough machining in cylinder block and head of JMCH engine, to save cost and support trial production of new product. Job#1 of the program will be in the second half of 2015. The incremental investment for the program will be spent mostly in facilities & tooling.
9. Powertrain NVH (refer to “Noise, Vibration and Harshness”) Test Lab Program Approval
The Board of Directors approved the Powertrain NVH Test Lab program with a total investment of RMB 38.6 million.
There were 9 votes in favor of the proposal, 0 vote against, and 0 abstention.
The NVH performance become a main factor of the customer’s vehicle purchase decision, however, presently JMC’s engine NVH testing is conducted in external labs, which creates issues including higher testing expenses, inefficiently, and also the risk of new product confidentiality. Therefore, the Company decides to build a NVH lab in -house, which can save the cost and improve engine NVH development competency and efficiency in NVH trouble shooting. The investment for the program will be spent mostly in facilities and related building construction.
10. Xiaolan New Canteen Construction Proposal
The Board of Directors approved Xiaolan New Canteen Construction proposal with a total investment of RMB 26 million.
There were 9 votes in favor of the proposal, 0 vote against, and 0 abstention.
The existing Xiaolan canteen was put in use in June of 2013. The number of Xiaolan employees is expected to grow in next few years. As a result, the serving capacity of present canteen is insufficient starting in the second half of 2015, so it is necessary to build a new canteen in Xiaolan Site. The investment of the program will be spent mostly in related building construction and decoration.
V. Opinions from Independent Directors
Please refer to the Public Announcement on Related Party Transactions of JMC for the opinions from Independent Directors on the aforesaid related party transactions in China Securities, Securities Times and Hong Kong Commercial Daily on March 25, 2014.
