Chapter I General Provisions
Article 1 These management measures are formulated to regulate the implementation of the third employee stock ownership plan (hereinafter referred to as the "Plan") of Hangzhou Zhongheng Electric Co., Ltd. (hereinafter referred to as the "Company"), in accordance with the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Guiding Opinions on the Implementation of Employee Stock Ownership Plans by Listed Companies, the Guidelines for Self-Regulation of Listed Companies on the Shenzhen Stock Exchange No. 1—Standardized Operation of Main Board Listed Companies, and other relevant laws, administrative regulations, and the Articles of Association of Hangzhou Zhongheng Electric Co., Ltd.
Article 2 These measures shall become legally binding upon the date of effectiveness, governing the organizational procedures, rights, and obligations of all participants in the Plan.
Chapter II Formulation of the Employee Stock Ownership Plan
Article 3 Basic Principles
(I) Principle of Legality and Compliance
The Company shall implement the Plan in strict accordance with laws and administrative regulations, ensuring truthful, accurate, complete, and timely information disclosure. No person shall use the Plan to engage in insider trading, market manipulation, or other securities fraud.
(II) Principle of Voluntary Participation
The Company follows the principle of autonomous decision-making and voluntary employee participation, prohibiting any form of apportionment or forced participation.
(III) Principle of Risk Assumption
Plan holders shall bear their own profits and losses, assume their own risks, and enjoy rights equal to those of other investors.
Article 4 Participants and Determination Criteria
(I) Legal Basis for Determining Participants
The Company determines the list of participants based on the Company Law, the Securities Law, the Guiding Opinions, and the Articles of Association. All participants must be employed by the Company or its subsidiaries, receive remuneration, and have signed labor contracts or be appointed by the Company.
(II) Criteria for Determining Participants
Holders must meet one of the following criteria:
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Directors (excluding independent directors) and senior management of the Company and its subsidiaries;
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Core technical and business personnel of the Company and its subsidiaries;
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Other employees deemed by the Company to have a direct impact on the Company's operating performance and future development.
If a holder fails to pay the subscription funds on time and in full, they automatically forfeit their subscription rights.
Article 5 Funding Sources and Scale
The funding for the Plan comes from employees' legal remuneration, self-raised funds, and other methods permitted by law. The Company does not provide financial assistance such as advances, guarantees, or loans. The Plan does not involve leverage. The total capital shall not exceed RMB 40 million, with each share valued at RMB 1. The total number of shares shall not exceed 40 million.
Article 6 Stock Sources, Scale, and Price
(I) Stock Sources
The stock for the Plan consists of 1,804,400 A-share common shares repurchased by the Company between April 12, 2025, and July 11, 2025, held in the Company's dedicated repurchase account.
(II) Stock Scale
The underlying stock scale shall not exceed 1,804,400 shares, representing no more than 0.32% of the total share capital. The total number of shares held by all effective employee stock ownership plans shall not exceed 10% of the total share capital, and the shares held by a single employee shall not exceed 1% of the total share capital.
(III) Purchase Price
The transfer price is set at RMB 21.79 per share, which is not lower than the higher of:
(1) 50% of the average trading price of the Company's shares for the 1 trading day prior to the announcement of the draft Plan (RMB 38.53 per share);
(2) 50% of the average trading price of the Company's shares for the 120 trading days prior to the announcement of the draft Plan (RMB 43.57 per share).