Medlive Technology Co., Ltd. - Capital/Financing Update 2010

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim 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)

ANNOUNCEMENT

Proposed Adoption of First Share Option Incentive Scheme and Proposed Grant thereunder Resumption of Trading

This announcement is hereby made by the Company pursuant to Rule 13.09(1) of the Hong Kong Listing Rules.

The Company hereby announces that on 2 December 2010, the Board passed a resolution in respect of the proposed adoption of the Scheme and the grant thereunder by the Company, and proposed the draft of the Scheme and the draft proposal in respect of the grant thereunder. The Scheme shall become effective upon review and approval by the SASAC of Qingdao, filing with the SASAC of the State Council, no-objection filing with the CSRC and review and approval at the general meeting of the Company. Before a general meeting is held for approval of the Scheme, the Company may make certain amendments to the draft of the Scheme and the draft proposal in respect of the grant thereunder upon requests of the PRC and/or Hong Kong regulatory authorities.

At the request of the Company, trading of its A shares and H shares on the Shenzhen Stock Exchange and Hong Kong Stock Exchange was suspended with effect from 9:30 a.m. and 10:22 a.m. on 30 November 2010 respectively, pending the announcement of the proposed adoption of the Scheme and the proposed grant thereunder. Application has been made to the Shenzhen Stock Exchange and Hong Kong Stock Exchange to resume trading of its A shares and H shares with effect from 9:30 a.m. on 3 December 2010.

The Company hereby announces the major contents of the proposed Scheme and the proposed grant thereunder, details of which are set out below:

I. PROPOSED ADOPTION OF THE SCHEME

1. Purposes of the Scheme

The Scheme is formulated to further refine the management structure of the Company, provide long-term rewards and retention incentives for the senior and mid-level management, key technical, sales and management personnel of the Company, fully motivate their pro-activeness and creativity, closely correlate their interests with the long term development of the Company, and allow sustainable development of the Company.

2. Basis for Determining the Participants and the Scope of Participants

(1) Basic for Determining the Participants

The Participants shall be determined in accordance with relevant laws, administrative regulations, rules and regulatory documents of government authorities, the value of the Participants’ positions in the Company and their contribution to the Company’s performance.

(2) Scope of Participants

The Participants include the directors of the Company (exclusive of the independent directors and external directors who are not officers of the Hisense Group), senior management (including president, vice president, financial controller, secretary to the Board, company secretary and other officers which are regarded as senior management under the Articles of Association) of the Company, mid-level management staff of the Company and its subsidiaries, and such key technical, sales and management personnel of the Company and its subsidiaries as determined by the Board, but no Participants shall participate in the share option schemes of two (or more) listed companies during the same period.

On the Grant Date, substantial shareholders or de facto controllers which hold shares representing 5% voting rights of the Company or above and their associates or the associates of any independent directors cannot participate in this Scheme without the approval at the general meeting.

In addition, persons listed above cannot be Participants under the Scheme if they:

(i) have been publicly censured or declared as ineligible candidates by the Shenzhen Stock Exchange within the previous three years;
(ii) have been imposed with administrative penalties by CSRC within the previous three years due to material non-compliance of laws and regulations;
(iii) are prohibited from acting as directors and senior management of a company under the Company Law of PRC;
(iv) cannot reach a pass grade or above in the performance appraisal according to the “Measures for Performance Appraisal for the Share Option Incentive Scheme of Hisense Kelon Electrical Holdings Company Limited” (《海信科龍電器股份有限公司股票期權激勵計劃考核辦法》).
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3. Incentive Method of the Scheme

Share Options will be granted under the Scheme as incentives. The underlying shares are ordinary A shares of the Company. Within the Validity Period of the Share Options and the Exercisable Period, and subject to the fulfillment of the exercise conditions of the Scheme and exercise arrangement, each Share Option entitles the holder to acquire one A share of the Company at a pre-determined price.

4. Source and Number of Shares under the Scheme

(1) Source of shares under the Scheme

The source of the underlying shares under the Scheme shall be ordinary A shares of the Company to be issued to the Participants.

(2) Total Number of Share Options in Relation to the Scheme and Its Limit

The total number of the underlying shares in relation to all effective share option incentive schemes of the Company shall not exceed 10% of the Company’s total share capital of the same class. The number of underlying shares of the Share Options which are proposed to be granted to the Participants under this Scheme shall not exceed 22,900,000 shares, representing approximately 1.691% of the total issued share capital of the Company and approximately 2.56% of the share capital of the same class.

Unless approved by the general meeting, the aggregate number of underlying shares which may be acquired by any Participant through the Scheme or other effective share option incentive schemes of the Company (if any) at any time shall not exceed 1% of the Company’s total share capital of the same class, and the maximum entitlement which may be granted to a Participant (including exercised, cancelled and outstanding share options) within any 12-month period shall not exceed 1% of the Company’s total share capital of the same class.

5. Validity Period of the Share Options, Exercise Arrangement, Exercisable Period, Grant Date and Lock-up Provisions

(1) Validity Period of the Share Options

The Validity Period of the Share Options under the Grant shall be a term of 5 years commencing from the Grant Date.

(2) Exercise Arrangement

The exercise of the Share Options under the Grant is subject to a restriction period of 2 years, during which period the rights are not exercisable.

Subject to the fulfillment of the exercise conditions, the Share Options under the Grant can be exercised in batches after the expiry of the 2-year period from the Grant Date according to the following exercise arrangement:

i. 33% of the Share Options granted to each Participant shall become exercisable on the trading day immediately after the second anniversary of the Grant Date until the trading day falling on the fifth anniversary of the Grant Date;
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ii. Another 33% of the Share Options granted to each Participant shall become exercisable on the trading day immediately after the third anniversary of the Grant Date until the trading day falling on the fifth anniversary of the Grant Date; and
iii. The remaining 34% of the Share Options granted to each Participant shall become exercisable on the trading day immediately after the fourth anniversary of the Grant Date until the trading day falling on the fifth anniversary of the Grant Date.

Where the Participant is a director or member of the senior management, Share Options of not less than 20% of the total Share Options granted to such Participant can only be exercised after the Participant has reached a pass grade or above in the performance appraisal for his/ her employment (or office).

(3) Exercisable Period

The Exercisable Period of the Share Options commences from the effective date (that is, the Exercisable Date) up to the date when the Share Options lapse. The Participants may exercise the Share Options 2 years after the Grant Date during the Exercisable Period, but shall not exercise any Share Options during the following periods:

i. The period commencing from 30 days prior to the publication of periodic reports of the Company and ending on the second trading day after such reports are published. Should the publication of the periodic reports be postponed due to special reasons, the period shall commence from 30 days prior to the originally scheduled publication date of such reports;
ii. The period commencing from 10 days prior to the publication of the Company’s announcement of estimated results and preliminary results and ending on the second trading day after such announcements are published;
iii. Anytime during the decision making process of a material transaction or significant event until 2 trading days after such transaction or event is announced;
iv. Where the Participant is a director or member of the senior management, the period from 60 days immediately preceding the publication date of the annual results up to the publication date of the results; and the period from 30 days immediately preceding the publication date of the half-year results and quarterly results up to the publication date of the results.

(4) The Grant Date of Share Options

Please see the section “Grant Date of the Grant” below for further information of the Grant Date of the Grant.

(5) Lock-up Provisions on the Underlying Shares

The A shares acquired by the Participants pursuant to the exercise of the Share Options under the Scheme are subject to the following lock-up provisions:

i. Where the Participant is a director or member of the senior management, the number of shares which may be transferred by the Participant per year during his/her tenure of office shall not exceed 25% of the total number of the shares held by him/her, and the Participant shall not transfer the shares held by him/her within 6 months after his/her resignation.
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ii. Where the Participant is a director or member of senior management, all gains from the sale of shares within 6 months of acquisition or from the acquisition of shares within 6 months of sale by the Participant shall be accounted to the Company and the Board will collect all such gains.
iii. If there is a change in relevant regulations in relation to share transfer by directors and senior management of a company, then the transfer of shares by such Participants shall comply with the stipulations of the Company Law of PRC and Articles of Associations as amended.

6. Exercise Price of Share Options and Its Determination Method

Please see the section “Exercise Price of the Grant” below for details of the Exercise Price for the Share Options proposed to be granted and its determination method.

7. Conditions of Grant and Conditions of the Exercise of the Share Options

(1) Conditions of Grant of Share Options

The following conditions must be fulfilled before Participants are granted Share Options:

i. The results of the Company have reached the following conditions:-

When comparing the years ended 2009 and 2010, the net profit growth rate (after deduction of any extraordinary gain or loss) shall not be lower than 20% (including 20%) and shall not be lower than the average growth rate of the industry, and the return on net assets (after deduction of any extraordinary gain or loss) shall not be lower than 12% (including 12%) and shall not be lower than the average of the industry.

ii. None of the following circumstances has occurred in relation to the Company:
(i) Issue of the Company’s financial and accounting report for the most recent financial year in which a certified public accountant gives a qualified opinion or indicates the inability to give an opinion;
(ii) The imposition of administrative penalties by the CSRC during the past one year due to material non-compliance of laws and regulations by the Company;

(iii) Other circumstances determined by the CSRC.

iii. The Participant must reach a pass grade or above in the performance appraisal in the preceding year according to the “Measures for Performance Appraisal for the Share Option Incentive Scheme of Hisense Kelon Electrical Holdings Company Limited” (《海信科龍電器股份有限公司股票期權激勵計劃考核辦法》).
iv. None of the following circumstances has occurred in relation to the Participant:
(i) Public censure or declaration as ineligible candidate by the Shenzhen Stock Exchange in
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the previous three years;

(ii) The imposition of administrative penalties by the CSRC during the previous three years due to material non-compliance of laws and regulations;
(iii) Occurrence of circumstances under which the Participant is prohibited from acting as a director and member of the senior management of a company, as stipulated in the Company Law of the PRC.

(2) Exercise Conditions of Share Options

Share Options may only be exercised by the Participants upon fulfillment of the following conditions:

i. The results of the Company have reached the following conditions:-

During the Validity Period of the Share Options, the average net profit growth rate (after deduction of any extraordinary gain or loss) of the Company for each year shall not be lower than 20% (including 20%) and shall not be lower than the average growth rate of the industry, and the average return on net assets (after deduction of any extraordinary gain or loss) of the Company for each year shall not be lower than 15% (including 15%) and shall not be lower than the average of the industry. Details on the conditions in relation to the Company’s results of each Exercisable Period are as follows:-

(i) First Exercisable Period

For the years of 2011 and 2012, the average net profit growth rate (after deduction of any extraordinary gain or loss) for each year shall not be lower than 20% (including 20%) and the average return on net assets (after deduction of any extraordinary gain or loss) for each year shall not be lower than 15% (including 15%), both of which shall also not be lower than the average of the industry.

(ii) Second Exercisable Period

For the years of 2011 to 2013, the average net profit growth rate (after deduction of any extraordinary gain or loss) for each year shall not be lower than 20% (including 20%) and the average return on net assets (after deduction of any extraordinary gain or loss) for each year shall not be lower than 15% (including 15%), both of which shall also not be lower than the average of the industry.

(iii) Third Exercisable Period

For the years of 2011 to 2014, the average net profit growth rate (after deduction of any extraordinary gain or loss) for each year shall not be lower than 20% (including 20%) and the average return on net assets (after deduction of any extraordinary gain or loss) for each year shall not be lower than 15% (including 15%), both of which shall also not be lower than the average of the industry.

ii. None of the following circumstances has occurred in relation to the Company:
(i) Issue of the Company’s financial and accounting report for the most recent financial
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year in which a certified public accountant gives a qualified opinion or indicates the inability to give an opinion;

(ii) The imposition of administrative penalties by the CSRC during the past one year due to material non-compliance of laws and regulations by the Company;
(iii) Other circumstances determined by the CSRC.
iii. the performance appraisal of the Participant in the preceding year must reach the pass grade or above under the appraisal methods of the Company according to the “Measures for Performance Appraisal for the Share Option Incentive Scheme of Hisense Kelon Electrical Holdings Company Limited” (《海信科龍電器股份有限公司股票期權激勵計劃考核辦法》).
iv. None of the following circumstances has occurred in relation to a Participant:
(i) Public censure or declaration as ineligible candidate by the Shenzhen Stock Exchange in the previous three years;
(ii) The imposition of administrative penalties by the CSRC during the previous three years due to material non-compliance of laws and regulations;
(iii) Occurrence of circumstances under which the Participant is prohibited from acting as a director and member of the senior management of a company, as stipulated in the Company Law of PRC.

If the above conditions cannot be fulfilled, the number of Share Options granted to the Participants which corresponds to the relevant Exercisable Period shall be cancelled by the Company.

8. Methods and Procedures for Adjustment of the Scheme

( 1) Method of Adjusting the Number of Share Options

In case of any capitalisation issue, bonus issue, sub-division or consolidation of shares, rights issue (allotment of shares to existing shareholders) or reduction of share capital in relation to the A shares of the Company before the exercise of the Share Options, an adjustment to the number of Share Options shall be made accordingly. Such adjustments shall comply with the relevant provisions, guidance or interpretation of the Hong Kong Listing Rules and no adjustments shall be made to the effect that the A shares would be issued at less than the nominal value. The method of adjustment in principle is set out below:

i. Capitalisation issue, bonus issue and sub-division of shares

Q = Q0×(1+n)

Where: Q0 represents the number of Share Options before the adjustment; n represents the ratio of increase per share resulting from the capitalisation issue, bonus issue and sub-division of shares (i.e. the number of increased shares per share upon capitalisation issue, bonus issue or subdivision of shares); Q represents the adjusted number of Share Options.

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ii. Consolidation of Shares and Reduction of Share Capital

Q = Q0 × n

Where: Q0 represents the number of Share Options before the adjustment; n represents the ratio of consolidation of shares (i.e. one share shall be consolidated into n shares) or ratio of reduction of share capital; Q represents the adjusted number of Share Options.

iii. Rights Issue (allotment of shares to existing shareholders)

Q=Q0×P1×（1+n）/（P1+P2×n）

Where: Q0 represents the number of Share Options before the adjustment; P1 represents the closing price as at the record date; P2 represents the subscription price of the rights issue; n represents the basis of the rights issue (i.e. the number of shares to be issued under the rights issue in proportion to the total share capital of the Company before the rights issue); Q represents the adjusted amount of Share Options.

(2) Methods of Adjusting the Exercise Price

In case of any capitalisation issue, bonus issue, sub-division or consolidation of shares, rights issue (allotment of shares to existing shareholders) or reduction of share capital in relation to the A shares of the Company before the exercise of the Share Options, an adjustment to the Exercise Price shall be made accordingly. Such adjustments shall comply with the relevant provisions, guidance or interpretation of the Hong Kong Listing Rules and no adjustments shall be made to the effect that the A shares would be issued at less than the nominal value. The method of adjustment in principle is set out below:

i. Capitalisation issue, bonus issue and sub-division of Shares

P = P0÷ (1+n)

Where: P0 represents the Exercise Price before the adjustment; n represents the ratio of increase per share resulting from the capitalisation issue, bonus issue and sub-division of shares; P represents the adjusted Exercise Price.

ii. Consolidation of Shares or Reduction of Share Capital

P = P0÷n

Where: P0 represents the Exercise Price before the adjustment; n represents the ratio of consolidation of shares (i.e. one share shall be consolidated into n shares) or ratio of reduction of share capital; P represents the adjusted Exercise Price.

iii. Rights issue (allotment of shares to existing shareholders)

P= P0× (P1+ P2×n) / (P1×(1+n))

Where: P0 represents the Exercise Price before the adjustment; P1 represents the closing price as at the record date; P2 represents the subscription price of the rights issue; n represents the

basis of the rights issue (i.e. the number of shares to be issued under the rights issue in proportion to the total share capital of the Company before the rights issue); P represents the adjusted Exercise Price.

(3) Procedures for Adjusting the Amount of Share Options and the Exercise Price

i. The Board will be authorized by the general meeting to adjust the number of Share Options and the Exercise Price according to the reasons prescribed above. The Board shall issue an announcement and inform the Participants in a timely manner after adjustment of the Exercise Price or the number of Share Options pursuant to the above provisions.
ii. If the amount of Share Options, the Exercise Price or other term(s) needs to be adjusted for other reasons, such adjustment shall be subject to the approval of the Board and the filing with CSRC and SASAC with no objection and approvals at the general meeting.
iii. Lawyers shall issue professional advice to the Board as to whether the above adjustments conform to relevant regulations promulgated by the CSRC and SASAC, the Articles of Association and the provisions of the Scheme.
iv. Auditors of the Company or independent financial advisor shall issue written opinion to the Company to confirm that the above adjustments comply with the relevant provisions, guidance or interpretation of the Hong Kong Listing Rules.

9. Handling Methods for Special Cases

(1) When there is a change of position, dismissal, resignation, incapacitation or death of the Participant, the arrangements will be as follows:

(a) Change of Position

When the position of the Participant is changed within the Company (or the Company’s subsidiaries) under normal circumstances, the Share Options already granted shall not be affected and the Participant can exercise the Share Options in accordance the provisions of the Scheme.

When the Participant leaves the Company (or the Company’s subsidiaries) due to job changes, the Share Options which are exercisable but yet to be exercised can be exercised by the Participant within 6 months from the date of termination of employment and Share Options which are not yet exercisable shall lapse forthwith.

When the position of the Participant in the Company (or the Company’s subsidiaries) is changed due to his/her failure in passing the performance appraisal, his/her incompetence in performing his/her duties or commission of acts that are prejudicial to the Company’s interests or acts that amounts to a breach of laws or regulations, all Share Options which are exercisable but not yet exercised shall cease to be exercisable forthwith and Share Options which are not yet exercisable shall lapse forthwith.

(b) Dismissal

When the Participant is dismissed due to his/her failure in passing the performance appraisal, his/her incompetence in performing his/her duties or commission of acts that are prejudicial to the Company’s interests or acts that amounts to a breach of laws or

regulations, all Share Options which are exercisable but not yet exercised shall cease to be exercisable forthwith and Share Options which are not yet exercisable shall lapse forthwith.

(c) Resignation

When the Participant resigns from his/her position in the Company (or the Company’s subsidiaries), all Share Options which are exercisable but not yet exercised shall cease to be exercisable forthwith and Share Options which are not yet exercisable shall lapse forthwith.

(d) Incapacitation

When the Participant loses his/her capacity to work due to work related injuries, the Share Options which are exercisable but not yet exercised can be exercised by the Participant within 6 months from the date of termination of employment and Share Options which are not yet exercisable shall lapse forthwith.

(e) Retirement

When the Participant retires as he/she attains the retirement age stipulated by the State or the Company, the Share Options which are exercisable but not yet exercised can be exercised by the Participant within 6 months from the date of retirement and Share Options which are not yet exercisable shall lapse forthwith.

(f) Death

Upon the death of the Participant, the Share Options which are exercisable but not yet exercised can be exercised by the lawful heir of the Participant within 6 months from the date of death and Share Options which are not yet exercisable shall lapse forthwith.

The Company shall cancel the Share Options which cease to be exercisable or lapse due to any of the aforesaid reasons after the same has been considered and approved by the Board.

(2) During the implementation of the Scheme, should any of the following occur in relation to a Participant, all Share Options which are exercisable but not yet exercised shall cease to be exercisable and be cancelled and Share Options which are not yet exercisable shall lapse forthwith:
i. public censure or declaration of the Participant as ineligible candidate by the Shenzhen Stock Exchange in the previous 3 years;
ii. imposition of administrative penalties by the CSRC against the Participant during the previous 3 years due to material non-compliance of laws and regulations by the Participant;
iii. circumstances under which the Participant is prohibited from acting as a director and a member of the senior management of a company as stipulated in the Company Law of the PRC;
iv. during the term of office, the Participant is involved in solicitation or acceptance of any bribes, corruption, theft, unauthorized disclosure of operational and technical secrets of the Company, conducting connected transactions, commission of other serious violation of laws and regulations which are significantly detrimental to the
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Company’s interests, reputation and image and bring losses to the Company;

v. breach of the relevant laws and regulations of the State and the provisions of the Articles of Association.
(3) Share Options having been granted shall remain unchanged in case of amalgamation, spin-off or change in control of the Company for any reason.
(4) If any of the following has occurred in relation to the Company, the Company shall terminate the implementation of the Scheme, and no new Share Options shall be granted to the Participants under the Scheme. Share Options which are exercisable but not yet exercised by the Participants shall cease to be exercisable and be cancelled and Share Options which are not yet exercisable by the Participants shall lapse forthwith:
i. Issue of the Company’s financial and accounting report for the most recent accounting year in which a certified public accountant gives a qualified opinion or indicates the inability to give an opinion;
ii. The imposition of administrative penalties by the CSRC due to material non-compliance of laws and regulations by the Company;
iii. Operational loss of the Company leading to indefinite suspension of trading of the shares of the Company, delisting, winding-up or dissolution of the Company;
iv. The delisting of the Company as a result of its failure to meet the listing requirements due to repurchase and cancellation of the shares of the Company;
v. Other circumstances determined by the CSRC.

10. Amendments to the Scheme

Amendment to the Scheme shall be approved at the general meeting if (i) the amendment is required by the relevant documents issued by the CSRC or the SASAC (including any amendments thereto from time to time and any other laws, regulations or regulatory documents in replacement) to be approved at the general meeting; (ii) the amendment relates to matters provided in Rule 17.03(2) of the Hong Kong Listing Rules and is beneficial to the Participants; (iii) the amendment substantially revises the provisions of the Scheme or the terms of the Share Options granted; or (iv) the amendment relates to the power of the Board in amending the provisions of the Scheme. Any other amendments to the Scheme shall be determined by the Board.

When there are changes in the share capital of the Company due to issue of new shares, capital conversion, amalgamation, de-merger and repurchase and other reasons so that amendments to the major contents of the Scheme (such as the scope of the Participants and the amount of Share Options to be granted, etc.) shall be necessary, such amendments shall be considered by the Board and reported to the SASAC and CSRC thereafter and be implemented after the approval of the general meeting.

11. Supplementary Provisions

(1) The Scheme shall be effective upon satisfaction of the following conditions: the examination and approval of the Scheme by the SASAC of Qingdao, filing of the Scheme to the SASAC
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of the State Council for its record, the no-objection filing of the Scheme with the CSRC and approval of the Scheme at the general meeting of the Company.

(2) The Company shall not provide any loans or any other forms of financial assistance (including providing guarantee for the loan extended to the Participants) to the Participants for exercising the Share Options.
(3) From the date of announcement of the summary of the Scheme to 30 days after the date of the approval of the Scheme at the general meeting, the Company shall not conduct any material transactions, such as issue of new shares, injection of assets into the Company or issue of convertible notes.
(4) In case of any conflicts between relevant terms of the Scheme and relevant laws, regulations, administrative rules or regulatory documents of the State, the relevant laws, regulations and administrative rules and systems shall prevail. Any issues not specified in the Scheme shall be implemented in accordance with the relevant national laws, regulations, administrative rules and regulatory documents.
(5) The right of interpretation of the Scheme belongs to the Board.
(6) The issue of shares pursuant to the exercise of the Share Options granted under the Scheme shall be in accordance with provisions of the Articles of Association as at the date of issue of shares (the “Issue Date”), and shall rank pari passu in all respects with all paid-up A shares in issue as at the Issue Date, entitling the Participants to qualify for all dividends and other distributions declared paid or made after the Issue Date (except dividends and other distributions declared paid or made before the Issue Date if resolutions for approving each distribution or payment are passed before the Issue Date). Participants are bound by the lock-up provisions of the Scheme (if applicable).
(7) Share Options granted to the Participants under the Scheme is personal and the Participants shall not sell, assign, charge or mortgage or create any encumbrances in respect of any Share Options or to make third party being the beneficial owners of the Share Options or intend to do any such acts. If the Participant is in breach of any of the aforesaid provisions, the Company shall be entitled to cancel Share Options granted to such Participants (but yet to be exercised).
(8) The Share Options cancelled shall not be re-granted according to the Scheme.
(9) The Scheme shall become effective for a term of 5 years upon the approval at the general meeting and no Share Options will be granted under the Scheme thereafter, but the provisions of the Scheme will be in full force in all aspects for the Share Options granted during the effective period of the Scheme.

II. PROPOSED GRANT

Major terms of the proposal in respect of the Grant are set out in details in this paragraph. Relevant contents of the proposal of the Grant shall also comply with the restrictive provisions under the Scheme. Other contents not provided in the proposal in respect of the Grant shall be determined by reference to relevant terms under the Scheme.

1. Number of underlying shares subject to the Share Options under the Grant

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The number of underlying shares subject to the Share Options under the proposed Grant will be 22,900,000 shares, representing approximately 1.691% of the total share capital (1,354,054,750 shares) of the Company and approximately 2.56% of the share capital of the same class (894,464,942 A shares).

2. Allocation of the Share Options under the Grant

The Share Options will be granted to 237 persons. In particular, Share Options of a total number of 6,880,000 shares will be granted to 7 directors and senior management members, representing approximately 30.04% of the total number of Share Options under the Grant. Details of the allocation are as follows:

							As a
							percentage
No.		Name	Position	Number of Share Options granted	As a percentage of the Grant	As a percentage of the total share capital	of share capital of the same class (A shares)
				(’0000	%	%	%
				shares)
	1	Tang Ye Guo	Chairman	140	6.11	0.103	0.157
	2	Xiao Jian Lin	Director	92	4.02	0.068	0.103
	3	Jia Shao Qian	Vice-President	92	4.02	0.068	0.103
	4	Liu Chun Xin	Director,	100	4.37	0.074	0.112
			Vice-President,
			Head of Finance
			Department
	5	Ren Li Ren	Vice-President	80	3.49	0.059	0.089
	6	Zhang Yu Qing	Vice-President	92	4.02	0.068	0.103
	7	Wang Yun Li	Vice-President	92	4.02	0.068	0.103
	8	Mid level		1602	69.96	1.183	1.791
		management staff
		and key personnel
		(230 individuals)
		Total		2290	100.00	1.691	2.560

Note: Mr. Xiao Jian Lin has been nominated by the Board as a candidate as director of the seventh session of the Board. The grant of Share Options to Mr. Xiao is conditional upon the approval of the appointment of Mr. Xiao as the director of the Company at the extraordinary general meeting of the

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Company. If Mr. Xiao Jian Lin is not appointed as a director of the Company at the general meeting, he shall not qualify as a Participant under the Scheme, and the corresponding number of the Share Options to be granted to him shall become invalid.

The above allocation in relation to the mid-level management staff and key personnel of the Company and its subsidiaries is proposed by the general manager, determined by the Board and reviewed by the Supervisory Committee. Particulars of the name list and the Scheme will be disclosed on the website of CNINF (www.cninfo.com.cn) on the same date.

3. Grant date of the Grant

Within 30 days from the date of approval of the Scheme at general meeting, the Company shall convene a board meeting to grant Share Options to the Participants and complete the relevant registration and announcement procedures in accordance with relevant regulations. The Grant Date shall be determined by the Board pursuant to relevant regulations, and in principle, shall be the date of the relevant Board meeting. The Grant Date shall be a trading day, and cannot be any of the following periods:

i. 30 days prior to the earlier of the publication of periodic reports and the date of the Board meeting for the purpose of approving such periodic report. The aforesaid period will end on the date of the publication of the Company’s periodic report;
ii. Any time during the decision making process of a material transaction or significant event until 2 trading days after such transaction or event is announced;
iii. Any other period commencing from the date on which a significant event that is of price sensitive nature occurs until 2 trading days after such significant event is announced;
iv. Where the Participant is a director of the Company, the period from 60 days immediately preceding the publication date of the annual results up to the publication date of the results; and the period from 30 days immediately preceding the publication date of the half-year results and quarterly results up to the publication date of the results.

If the procedures of the Grant cannot be completed within 30 days of the approval of the Scheme at the general meeting as a result of the above circumstances, the Grant Date may be postponed accordingly.

4. Exercise Price of the Grant

(1) Exercise Price

The Exercise Price of the Share Options proposed to be granted under the Scheme shall be RMB7.65 per share. Upon fulfillment of exercise conditions, each of the Share Option granted to the Participants entitles the Participant to acquire one A share of the Company at RMB7.65 per share.

(2) Determination Method of Exercise Price

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The Exercise Price of the Grant is the higher of the following two prices:

(i) The closing price of the A shares on the last trading day immediately preceding the date of the announcement of the summary of the Scheme (that is, 29 November 2010), which was RMB7.65 per share; and
(ii) The average closing price of the A shares during the last 30 trading days immediately preceding the date of announcement of the summary of the Scheme, which was RMB7.37 per share.

The Company has written to the Hong Kong Stock Exchange for confirmation as to whether the above determination method of the Exercise Price complies with the requirements under the Hong Kong Listing Rules and for application for waiver from strict compliance with the relevant requirements (if applicable).

5. Conditions of Grant and Exercisable Conditions for the Grant

The grant of Share Options and its effectiveness are also subject to the satisfaction of the conditions stipulated under the Scheme (the major terms of which have been set out above).

III. RESUMPTION OF TRADING

At the request of the Company, trading of its A shares and H shares on the Shenzhen Stock Exchange and Hong Kong Stock Exchange was suspended with effect from 9:30 a.m. and 10:22 a.m. on 30 November 2010 respectively, pending the announcement of the proposed adoption of the Scheme and the proposed grant thereunder. An application has been made to the Shenzhen Stock Exchange and Hong Kong Stock Exchange to resume trading of its A shares and H shares with effect from 9:30 a.m. on 3 December 2010.

IV. DEFINITIONS

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

“Articles of Association” Articles of Association of the Company “associate(s)” natural person, corporations or trustees referred to in the definition of “associates” in Rule 19A.04 of the Hong Kong Listing Rules

“Board” the board of directors of the Company “Company” Hisense Kelon Electrical Holdings Company Limited（海信科龍電器股份有限公司）, a company incorporated in the PRC with limited liability, the H shares and A shares of which are listed on the Hong Kong Stock Exchange and

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the Shenzhen Stock Exchange respectively

“CSRC” China Securities Regulatory Commission (中華人民共和國證券監督管理委員會 )
“Exercisable Date” the date on which the Participants is entitled to exercise the Share Options, which must be a trading day
“Exercisable Period”
the period commencing from the Exercisable Date and ending on the date when the Share Options lapse
“exercise of the Share Options” the acts by Participants to purchase the shares of the Company at the pre-determined price and on the exercise conditions according to the Scheme during the Exercisable Period
“Exercise Price”
the price at which Participants are able to purchase shares of the Company and determined when the Share Options are granted to such Participants by the Company.
“Grant”
the proposed grant of 22,900,000 Share Options to the Participants pursuant to the Scheme
“Grant Date”
the date on which Share Options are granted to Participants by the Company. The Grant Date must be a trading day
“Hisense Group”
Hisense Company Limited ( 海信集團有限公司 ), a company incorporated in the PRC with limited liability, and its subsidiaries (excluding the Company and its subsidiaries)
“Hong Kong”
Hong Kong Special Administrative Region of the PRC
“Hong Kong Listing Rules” Rules Governing the Listing of Securities on the Hong Kong Stock Exchange
“Hong Kong Stock Exchange”

The Stock Exchange of Hong Kong Limited

“Participant(s)” directors, senior management and other staff of the Company eligible to receive certain amount of Share Options as provided under the Scheme
“PRC” or “State” the People’s Republic of China (for the purpose of this announcement, excluding Hong Kong, Macau Special Administrative Region and Taiwan)
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“SASAC of Qingdao” the State-owned Assets Supervision and Administration Commission of the Qingdao Municipal Government “SASAC of the State Council” the State-owned Assets Supervision and Administration Commission of the State Council of the PRC

“Scheme” or the first A share share option incentive scheme of the Company

“First Share Option Incentive Scheme”

“Share Option(s)” the right granted to the Participants to acquire certain amount of A shares of the Company at a pre-determined price and upon certain conditions during a certain period of time in the future in accordance with the Scheme

“Supervisory Committee” the supervisory committee of the Company

“Validity Period of the Share Options” the period commencing from the Grant Date to the date when the Share Options lapse

“RMB” Renminbi, the lawful currency of the PRC

By order of the Board

Hisense Kelon Electrical Holdings Company Limited Tang Ye Guo Chairman

Foshan City, Guangdong, the PRC, 2 December 2010

As at the date of this announcement, the executive directors are Mr. Tang Ye Guo, Mr. Zhou Xiao Tian, Ms. Yu Shu Min, Mr. Lin Lan, Ms. Liu Chun Xin ; and the independent non-executive directors are Mr. Zhang Sheng Ping, Mr. Cheung Yui Kai, Warren.

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