China Display Optoelectronics Technology : DISCLOSEABLE TRANSACTION CONSTRUCTION AGREEMENT

Date:

8 April 2021

Parties:

(i)

CDOT Huizhou; and

(ii)

the Contractor.

Subject Matter:

The Contractor is appointed as the contractor responsible for the

construction and engineering works of factory plant, dormitories

and ancillary facilities located at the Construction Area.

Construction Period:

The construction period is expected to be 418 days, scheduled to

commence on 8 April 2021 and end on 31 May 2022.

Consideration:

The Consideration payable to the Contractor pursuant to

the Agreement shall be RMB211,366,388.68 (equivalent to

approximately HK$251,357,341.75), subject to adjustments

("Adjustments") based on the actual work to be undertaken and

certain customary price adjustment mechanism with reference

to, among others, market price of raw materials necessary for

the construction, as set out below, provided that in any event

the Consideration (inclusive of the Adjustments, if any) shall

not exceed RMB220,000,000.00 (equivalent to approximately

HK$261,624,450.00).

The Consideration will be financed by the Group's internal

resources, bank facilities or a combination of both.

Adjustments to

The Consideration may be subject to the following Adjustments:

Consideration:

(i) Fluctuation of material fees

According to the terms of the Agreement, in the event that

the fluctuation of the price of steel reinforcement, concrete

and/or copper cable exceeds 5%, the Consideration will be

adjusted in accordance with the corresponding mechanism

under the Agreement.

(ii) Change of construction plan

The adjustment of pricing for a change of plan shall be made

in the following manners:

(1) In the event that the Agreement contains an applicable

item identical or similar to the proposed change of

plan, the applicable item will be used as the basis to

determine the pricing of the change of plan;

Huizhou and the Contractor.

(iii) Change in relevant PRC laws and regulations

In the event that there is any change in PRC laws and

regulations which would affect the Consideration, the

Consideration shall be adjusted accordingly with reference

to the actual impact of such change in laws and regulations.

Basis of determination of

The Consideration was determined based on the bidding price

Consideration:

offered by the Contractor, and CDOT Huizhou awarded the

Agreement to the Contractor after an open tendering process.

CDOT Huizhou evaluated the experience and capability of the

Contractor, the expected scope and complexity of the construction

to be performed, the expected cost of the project and the

prevailing market price for carrying out a construction of similar

scale and complexity.

Payment Terms:

The Consideration, subject to the Adjustments (if any), shall be

settled by CDOT Huizhou in cash via 7-day promissory notes in

the following manner:

(i) CDOT Huizhou shall pay a deposit to the Contractor, being

10% of the Consideration (after deducting the Estimated

Sum), within 30 days after entering into the Agreement and

upon receipt of the Guarantee Letter (as defined below), and

such deposit will be applied to offset the monthly payments

in (ii) below;

(ii)

in the course of construction, CDOT Huizhou shall make

monthly payments to the Contractor which amount shall

be calculated based on 80% of the assessed value of

construction work completed in that month. Up to 80%

of the Consideration (including the 10% deposit above)

will be paid through the monthly payment for completed

construction work;

(iii)

upon the completion of all construction works and CDOT

Huizhou having inspected the construction works and

accepted the same, up to 90% of the Consideration shall be

paid;

(iv)

after completion of the settlement procedure, up to 97% of

the Consideration shall be paid; and

(v)

the remaining 3% of the Consideration, which will be

withheld by CDOT Huizhou as quality assurance fee

("Quality Assurance Fee") under the Agreement, shall

be paid 2 years after the inspection and acceptance of the

completed construction works by CDOT Huizhou pursuant

to the Agreement (after deduction of expenses incurred

by CDOT Huizhou in the relevant maintenance works in

relation to quality issues of the construction works under the

Agreement during the warranty period, as more specifically

detailed below).

Sub-contracting:

Unless prior written approval is obtained from CDOT Huizhou,

the Contractor shall not sub-contract any works under the

Agreement.

As such, before approving any sub-contracting work, the

Company will ensure that all applicable requirements under the

Listing Rules will be complied with.

Warranty period:

During the warranty period, the Contractor shall be responsible for

providing routine maintenance works and handling and fixing any

quality issues of the constructions works under the Agreement in a

timely manner:

(1) Unless otherwise specified, the warranty period is 2 years

from the date of the inspection and acceptance of the

completed construction works by CDOT Huizhou pursuant

to the Agreement.

(2) The warranty period for waterproof and leak-proof works for

lavatories, rooms and external walls is 5 years. The warranty

period for decoration and renovation works, electric wires

and pipelines, water pipes and installation of machineries

is 2 years. The warranty period for the main structural

construction is the reasonable useful life as stipulated under

the relevant design document. The warranty period for

heating and cooling systems is 2 heating periods and cooling

periods respectively.

(3) During the warranty period, the Contractor shall carry out

maintenance works within 7 days after receiving notice

of quality issues of the construction works under the

Agreement, failing which CDOT Huizhou shall have the

right to carry out maintenance works and deduct the relevant

expenses from the Quality Assurance Fee.

Guarantee:

The Contractor shall give a guarantee in favor of CDOT Huizhou

in respect of the performance of its obligations under the

Agreement, in an amount equivalent to 10% of the Consideration

for the period from the date of commencing the construction

works until the end of the 3rd month after the inspection and

acceptance of the completed construction works by CDOT

Huizhou pursuant to the Agreement, by way of providing CDOT

Huizhou a guarantee letter ("Guarantee Letter") to be issued by a

bank.