Medlive Technology Co., Ltd. — Capital/Financing Update 2008

May 8, 2008

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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HISENSE KELON ELECTRICAL HOLDINGS COMPANY LIMITED 海信科龍電器股份有限公司

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 00921)

MAJOR TRANSACTION

ESTABLISHMENT OF JOINT VENTURE

The Board announces that on 27 April 2008, the Company entered into the JV Agreement with Whirlpool (Hong Kong) to establish the JV Company for the purposes of developing, manufacturing and selling washing machines, refrigerators and other electrical appliances and provision of after-sale and consultation services in relation thereto.

Pursuant to the JV Agreement, each of the Company and Whirlpool (Hong Kong) agreed to invest the sum of RMB225,000,000 as capital contribution to the JV Company. The total registered share capital of the JV Company will be in the sum of RMB450,000,000. The JV Company will be owned as to 50% by the Company and 50% by Whirlpool (Hong Kong).

As the consideration ratio (as defined in Rule 14.07 of the Listing Rules) of the transaction under the JV Agreement is more than 25% but less than 100% and each of the other relevant percentage ratios (as defined in Rule 14.07 of the Listing Rules) is less than 25%, the transaction under the JV Agreement constitutes a major transaction under Chapter 14 of the Listing Rules and is subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

A circular containing, among other things, the details of the JV Agreement, together with a notice of the EGM, in accordance with the relevant requirements under Chapter 14 will be dispatched by the Company to its Shareholders as soon as practicable.

The Board announces that on 27 April 2008, the Company entered into the JV Agreement with Whirlpool (Hong Kong) to establish the JV Company for the purposes of developing, manufacturing and selling washing machines, refrigerators and other electrical appliances and provision of after-sale and consultation services in relation thereto.

JV AGREEMENT

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Date

27 April 2008

Parties to the JV Agreement

• 1) The Company; and

• 2) Whirlpool (Hong Kong).

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiry, Whirlpool (Hong Kong) and its ultimate beneficial owner are third parties independent of the Company and its connected persons.

Scope of Business of the JV Company

The JV Company will be incorporated under the laws of the PRC with limited liability and located in Zhejiang Province, the PRC.

The scope of business of the JV Company includes developing, manufacturing, selling washing machines and refrigerators and its components parts and other electrical appliances; and provision of after-sale and consultation services in relation thereto.

Effective Date

The JV Agreement will become effective on the date of which (i) the JV Agreement and the articles and memorandum of association of the JV Company were approved by the Approval Authorities; and (ii) the relevant approval procedures in relation to the establishment of the JV Company in accordance with the relevant laws and regulations were completed and the relevant approvals were obtained.

Term of the JV Company

The term of the JV Company is 50 years from the date of the incorporation of the JV Company and such term can be revised with the agreement between the parties and the approval from the Approval Authorities of the PRC.

Total Investment and Capital Contribution

1) The total investment amount for the JV Company will be RMB900,000,000 and the total registered share capital of the JV Company will be RMB450,000,000. Pursuant to the JV Agreement, each of the Company and Whirlpool (Hong Kong) agreed to invest RMB225,000,000 as capital contribution to JV Company. The JV Company will be owned as to 50% by the Company and 50% by Whirlpool (Hong Kong).

The above-mentioned total investment amount for the JV Company was determined after arm’s length negotiations between the parties taking into account the estimated investment required for carrying out the anticipated production and sales of the JV Company. The Company and Whirlpool (Hong Kong)’s contributions are in proportion to their respective shareholding interest in the JV

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Company.

Pursuant to the JV Agreement, the total committed amount of the Company for the formation of JV Company is RMB225 million (including the Company’s total capital commitment and any possible guarantee or indemnity that maybe provided in connection with the formation of the JV Company).

2) The Company agreed to make capital contribution to the registered share capital of the JV Company in the following manners:-

• (i) RMB33,750,000 by way of cash generated from internal funding of the Company;

• (ii) RMB120,000,000 by way of transfer of the land use rights of a piece of Land ( the value of the Land is estimated at RMB25,560,000, i.e. area of the Land being 166 mu at the price of RMB160,000 per mu) and the ownership of a factory to be constructed by the Company thereon (Note);

• Note: The above-mentioned value of RMB120,000,000 is only an estimated figure which is arrived at after arm’s length negotiations between the parties taking into account (i) the estimated investment to be made to the JV Company considering the anticipated scale of production of the JV Company; (ii) the estimated construction costs of the factory considering the anticipated scale of production of the JV Company; and (iii) the guideline issued by the local government for the compensated use of industrial land in the economic development zone that the price of the Land should not be less than RMB150,000 per mu. The value of the Site is still subject to valuation to be carried out by independent valuer.

In the event that the assessed value of the Site after valuation is lower than its current estimated value, the Company shall make further contribution to the JV Company by way of cash which amount is equivalent to such differences in values. In the event that the assessed value of the Site after valuation is higher than its current estimated value, the JV Company shall make cash refund to the Company which amount is equivalent to such differences in values.

The transfer of Site constitutes a transaction under Chapter 14 of the Listing Rules. The Company will comply with the requirements of the Listing Rules including the disclosure requirements in accordance with the requirements of the Listing Rules when the terms for the transfer of the Site are finalized and the exact location of the Land is identified.

• (iii) RMB37,500,000 by way of injection of machinery and equipment in accordance with the Hisense Assets Transfer Agreement; and

• (iv) RMB33,750,000 by way of injection of moulds in accordance with the Hisense Assets Transfer Agreement.

3) Whirlpool (Hong Kong) agreed to make its capital contribution, i.e. the sum of

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RMB225,000,000, to the JV Company by way of cash.

4) Subject to the fulfillment of the conditions set out below, each of the parties shall make contribution equivalent to 15% of the registered share capital of the JV Company (i.e., each of the parties shall contribute the respective sum of RMB33,750,000) by way of cash within 3 months from the date of the issue of the business certificate of the JV Company. The parties agreed to make remaining capital contribution to the JV Company according to the timetable approved by the board of directors of the JV Company, however in any event, such remaining capital contribution shall be made within 2 years from the date of the issue of the business certificate of the JV Company.

• (i) The anti-trust report (if required by the PRC laws and regulations) submitted by both parties in relation to the transaction under the JV Agreement has been accepted and approved by Ministry of Commerce and the State Administration for Industry and Commerce without any dissent;

• (ii) The JV Agreement, the articles of association of the JV Company and the ancillary agreements thereto (if required by the PRC laws and regulations) have been approved by the Approval Authorities, and the competent authority for industrial and commercial registration has issued the business license to the JV Company;

• (iii) Hisense Group and Whirlpool Corp. have entered into the relevant agreements in relation to non-competition, preferential purchase and OEM arrangement in agreed forms and contents to acknowledge that they have undertaken to and are obliged to procure all of their subsidiaries and associate entities to observe the relevant terms of the JV Agreement;

• (iv) Hisense Group has issued a letter of undertaking, pursuant to which Hisense Group undertakes that it shall procure the Company to perform its obligations under the JV Agreement and the ancillary agreements in relation thereto;

• (v) Whirlpool Corp. has issued a letter of undertaking, pursuant to which Whirlpool Corp. undertakes that it shall procure Whirlpool (Hong Kong) to perform its obligations under the JV Agreement and the ancillary agreements in relation thereto;

• (vi) The specified technology licensing agreement under the JV Agreement has been registered with the relevant PRC government authorities;

• (vii) All ancillary agreements to the JV Agreement in the form and content as agreed by both parties prior to the execution of the JV Agreement have been signed by the parties to the relevant contract and approved by the board of directors of the JV Company (if require) ;

• (viii) The Company has obtained the written acknowledgement from the relevant third party that the JV Company is to be regarded as “Hisense Kelon Plant (海信科龍工廠)”. The JV Company shall be entitled to use

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the technologies of the refrigerators with certain production model numbers as specified in the JV Agreement and their derived products;

• (ix) The first annual budget plan and business proposal in the form and content as agreed by both parties prior to the execution of the JV Agreement have been approved by the board of directors of the JV Company; and

• (x) The Company has received the site assessment report of the Site. The value of the land use right of the Land set out in the site assessment report shall be in consistency with or shall not exceed more than 110% the estimated value of the land use right of the Land as set out in the JV Agreement.

• 5) If any conditions set out in clause (4) above fails to be satisfied within 120 days after the signing of the JV Agreement and both parties do not waive any of such conditions nor postpone the deadline for the performance of such conditions within 30 days upon expiration of such 120 days, either party shall have the right to terminate the JV Agreement.

Under such circumstances, neither party shall have the right to (i) request the other party to pay for any capital contribution to the registered share capital; or (ii) request the other party to indemnify against the losses it suffered.

In addition, if during the course of examination and review of the relevant joint venture documents, the Approval Authorities or the relevant registration authorities in the PRC have requested to make any amendments to any terms and conditions of the JV Agreement, the articles of association or any other documents which are agreed and submitted to the Approval Authorities by both parties, the party who receives the relevant notice of suggested amendments shall notify the other party on a timely basis. Within fifteen (15) days upon such notification, each party shall confirm whether such amendments are acceptable after discussion and negotiation. If either party considers that such amendments are not acceptable, it shall notify the other party promptly in writing. Thereafter, neither party shall have the obligation on the incorporation of the JV Company (in case the business license has been issued, neither party shall be obliged to pay for its capital contribution thereafter) and both parties shall have the right to terminate the JV Agreement in accordance with the provisions therein.

• 6) The parties agree that the JV Company shall be responsible for funding the differences between the total investment amount and the registered share capital with the assistance of both parties. The parties shall have no obligation in providing any additional capital nor loans to the JV Company unless in accordance with the JV Agreement or other agreements between the parties.

It is anticipated that the JV Company will be set up upon (i) obtaining the approval by the relevant government authorities and by the shareholders of the Company at the general meeting; and (ii) the respective parties have made their respective capital contributions equivalent to 15% of the registered share capital of the JV Company (i.e., each of the parties shall contribute the respective sum of RMB33,750,000) by way of cash within 3 months from the date of the issue of the business certificate of the JV Company.

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Profit Distribution

The profits of the JV Company will be shared among the Company and Whirlpool (Hong Kong) in accordance with their respective holdings of registered share capital in the JV Company.

Board of Directors and Management

The board of directors of the JV Company shall be composed of 6 directors. Each of the Company and Whirlpool (Hong Kong) is entitled to appoint 3 directors to the board of directors. The term of such directors shall be 3 years from the date of their appointment and is subject to re-election.

Whirlpool (Hong Kong) is entitled to appoint one director as the chairman and the Company is entitled to appoint one director as the vice-chairman.

There will be one general manager in the JV Company whom will be responsible for the dayto-day operational management of the JV Company and is to be nominated by the Company.

The above-mentioned arrangement is arrived at after arm’s length negotiations between the parties with the aim of making the best of the competitive edge and management experience of the parties.

Roles and Obligations

• 1) Save for the obligation of making capital contribution, the Company shall, at the request of the JV Company, perform the following obligations, in particular during the course of initial operation of the JV Company:

• (i) to assist the JV Company in obtaining the all necessary approvals, permits and licenses in relation to the incorporation and operation of the JV Company and the establishment of factories on the designated sites for the JV Company;

• (ii) to assist the JV Company in organizing and installing the facilities required for its business and putting such facilities into operation;

• (iii) to assist the JV Company in purchasing the China-made equipment and ensuring that the quantity and quality of such equipment meet the requirements of the business operation of the JV Company;

• (iv) to assist the JV Company in purchasing the foreign-made equipment and ensuring that the quantity and quality of such equipment meet the requirements of the business operation of the JV Company;

• (v) to assist the JV Company in applying for and enjoying the most preferential taxation treatments and other investment benefits available under the relevant PRC laws and regulations;

• (vi) to assist the JV Company in liaising with the relevant authorities and departments so as to obtain the water supply, fuel supply, power supply,

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transportation service, communication service and other services required for the operation of production facilities of the JV Company;

• (vii) to assist the JV Company in arranging for the transportation of imported equipment and materials between the PRC ports and the place where the JV Company is situated;

• (viii) to assist the JV Company in completing all application procedures for, and obtaining, all permits required for importing specific volume of machinery and equipment, materials and resources;

• (ix) to assist the foreign employees of the JV Company, the foreign employees of the party who enters into a contract with the JV Company and the foreign members of the board of directors in obtaining all necessary visas and working permits;

• (x) to assist the JV Company in opening up the Reminbi and foreign currency bank accounts;

• (xi) to assist the JV Company in handling all necessary importing and customs declaration procedures in relation to the machinery and equipment, materials and resources imported by the JV Company;

• (xii) to assist the JV Company in purchasing raw materials, parts and components and other resources in the PRC;

• (xiii) to assist the JV Company in obtaining the recognition as an advanced technology enterprise and the relevant certificates;

• (xiv) to assist the JV Company, Whirlpool (Hong Kong) and/or its affiliated companies in handling the profit appropriation under the JV Agreement or settling the issues on the PRC taxation and foreign currency in relation to any amounts paid or to be paid to Whirlpool (Hong Kong) and/or its affiliated companies in accordance with any contracts entered into between the JV Company and Whirlpool (Hong Kong) or its affiliated companies;

• (xv) to assist the JV Company in recruiting the personnel who meets with the requirements of the JV Company; and

(xvi) to complete other matters as maybe agreed by both parties.

• 2) Save for the obligation of making capital contribution, Whirlpool (Hong Kong) shall, at the request of the JV Company, perform the following obligations,:-

• (i) to assist the JV Company in purchasing materials in the PRC;

• (ii) to assist the JV Company in recruiting the personnel who meets with the requirements of the JV Company;

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• (iii) to assist the JV Company in applying for and enjoying the most preferential taxation treatments and other investment benefits available under the relevant PRC laws and regulations;

• (iv) to assist the JV Company in completing all application procedures for, and obtaining, all permits required for importing specific volume of machinery and equipment, materials and resources;

• (v) to assist the JV Company in purchasing the China-made equipment and ensuring that the quantity and quality of such equipment meeting the requirements of the business operation of the JV Company;

• (vi) to assist the JV Company in purchasing the foreign-made equipment and ensuring that the quantity and quality of such equipment meeting the requirements of the business operation of the JV Company; and

(vii) to complete other matters as maybe agreed by both parties.

FUTURE PLAN OF THE JV COMPANY

The JV Company will fully make use of the advanced technology and management experience of Whirlpool (Hong Kong) to develop and manufacture washing machines and refrigerators.

REASONS FOR AND BENEFITS FOR ENTERING INTO THE JV AGREEMENT

The Company is principally engaged in the manufacturing and sale of air-conditioners and refrigerators. Whirlpool (Hong Kong) is principally engaged in the production of washing machines and other electrical appliances.

The Company considers that the establishment of the JV Company will diversify the products of the Company, improve its products’ structure and enhance its anti-risk ability and profitability. Through cooperation with Whirlpool (Hong Kong), both parties can complement each other. The introduction of advanced technologies and management method can also further strengthen the presence of the Company in the domestic electric appliance industry.

In light of the above, the Directors (including the independent non-executive Directors) consider that the terms of the JV Agreement are fair and reasonable and in the interest of the Company and the shareholders as a whole.

ACCOUNTING TREATMENT OF THE JV COMPANY

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In accordance with PRC accounting standards, the accounts of the JV Company will not be consolidated to the accounts of the Company and the JV Company will not be regarded as a subsidiary of the Company.

In accordance with International Financial Reporting Standards, the JV Company and its revenues (if applicable) will be classified as an interest in an associate in the balance sheet and share of results of an associate in the financial statements of the Company, respectively.

INFORMATION RELATING TO THE COMPANY

The Company is principally engaged in the manufacture and sales of refrigerators and airconditioners.

INFORMATION RELATING TO WHIRLPOOL (HONG KONG)

Whirlpool (Hong Kong) is principally engaged in the production of washing machines and other electrical appliances.

LISTING RULES IMPLICATIONS

As the consideration ratio (as defined in Rule 14.07 of the Listing Rules) of the transaction under the JV Agreement is more than 25% but less than 100% and each of the other relevant percentage ratios (as defined in Rule 14.07 of the Listing Rules) is less than 25%, the transaction under the JV Agreement constitutes a major transaction under Chapter 14 of the Listing Rules and is subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules. To the best knowledge of the Company, no shareholder of the Company has any material interest in the transaction under the JV Agreement and required to abstain from voting in approving such transaction in the general meeting.

A circular containing, among other things, the details of the JV Agreement, together with a notice of the EGM, in accordance with the relevant requirements under Chapter 14 will be dispatched by the Company to its Shareholders as soon as practicable.

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context otherwise requires:

“A Shares”	domestic ordinary shares of the Company with a nominal value
	of RMB1.00 each and are listed on the Shenzhen Stock
	Exchange
“Approval Authorities”	The Ministry of Commerce of the PRC and such other
	authorities as appointed by the Ministry of Commerce to
	approve the JV Agreement and the articles of association of the
	JV Company
“Board”	the board of Directors

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• “Company” Hisense Kelon Electrical Holdings Company Limited, a joint stock limited company incorporated in the PRC with limited liability and the H Shares and A Shares of which are listed on the main board of the Stock Exchange and Shenzhen Stock Exchange, respectively

• “Director(s)” the current director(s) of the Company

• “EGM” The extraordinary general meeting of the Company to be held to consider and approve, among other things, the JV Agreement

• “Group” the Company and subsidiaries of the Company “H Shares” overseas listed foreign shares of the Company with a nominal value of RMB1.00 each and are listed on the Stock Exchange

• “Hisense Assets Transfer the assets transfer agreement dated 27 April 2008 entered into Agreement” by the Company and the JV Company in relation to the transfer of machinery, equipment and moulds pursuant to the JV Agreement

• “Hisense Group” Hisense Group Company, a limited company incorporated in the PRC and is a State-owned enterprise.

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

• “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong “JV Agreement” the agreement dated 27 April 2008 entered into between the Company, Hisense Export, Hisense Electrical and Natural Person(s) to establish the JV Company

• “JV Company” 海信 惠而浦 ( 浙江 ) 電器有限公司 (Hisense – Whirlpool (Zhejiang) Electric Appliances Co., Ltd), a joint venture company to be established under the laws of the PRC

• “Land” A piece of land with an area of 166 mu and is located at the Changxing economic development zone of Zhejiang Province, the PRC

• “Listing Rules” Rules Governing the Listing of Securities on the Stock Exchange

• “OEM” original equipment manufacturing, a type of manufacturing under which products are manufactured, in whole or in part, in accordance with specifications of the customer and are marketed and sold under the brand name of customer

“PRC” the People’s Republic of China

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“RMB”	Renminbi yuan, the lawful currency of the PRC
“Share(s)”	share(s) of RMB1.00 each in the capital of the Company,
	comprising the A Shares and the H Shares
“Shareholder(s)”	holders of the Shares
“Site”	the Land and the factory to be constructed by the Company
	thereon
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Whirlpool Corp.”	Whirlpool Corporation, a limited company incorporated in the
	United States
“Whirlpool (Hong Kong)”	Whirlpool (Hong Kong) Limited, a limited company
	incorporated in Hong Kong
“%”	per cent

Suspension of Trading in the H Shares of the Company

At the request of the Company, trading in the H Shares of the Company was suspended from 28 April 2005 to 10 May 2005, and has remained suspended since 10:00 a.m. on 16 June 2005, initially following various press releases regarding the investigation by the China Securities and Regulatory Commission on Greencool Technology Holdings Limited in connection with the possible misappropriation of funds of the Company. Greencool Technology Holdings Limited was then an indirect shareholder of the Company controlled by Mr. Gu Chu Jun, who was the then executive director and chairman of the Company and the controlling shareholder of Guangdong Greencool Enterprise Development Company Limited, the then single largest shareholder of the Company.

The Company is currently reviewing the relevant documents in relation to the suspension of H Shares, the events leading to such suspension and the actions taken by the Company and has submitted a resumption proposal to the Stock Exchange for review.

By order of the Board of Hisense Kelon Electrical Holdings Company Limited Tang Ye Guo Chairman

As at the date of this announcement, the Company’s directors are Mr. Tang Ye Guo, Mr. Wang Shi Lei, Ms. Yu Shu Min, Mr. Lin Lan, Ms. Liu Chun Xin and Mr. Zhang Ming; and the Company’s independent non-executive directors are Mr. Zhang Sheng Ping, Mr. Lu Qing and Mr. Cheung Yui Kai, Warren.

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Foshan City, Guangdong, the PRC, 8 May 2008

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