1.

Shanghai HUTCHMED Investment (HK) Limited, a company incorporated with limited liability under the laws of Hong Kong, China, with its business registration number 38418742 (“Seller” or “HUTCHMED Investment”)

2.

GP Health Service Capital Co., Ltd, a limited liability company incorporated under the laws of China, with its unified social credit code of 91310000MAIFLOCC1A, registered address at Room 319, No. 5, Lane 786, Xinzhong Road, Xinhe Town, Chongming District, Shanghai (“Purchaser”).

(A)

Shanghai Hutchison Pharmaceuticals Limited (“Company” or “SHPL”) is a limited liability company established under PRC law on April 30, 2001, with a unified social credit code of 91310000607429444D and a registered address at No. 388 Xiaoye Road, Fengxian District, Shanghai.

(B)

The registered capital of the Company is RMB 229 million. The basic information of the Company and its equity structure are shown in Annex 1 of this Agreement.

(C)

The Seller intends to sell the Target Shares (as defined below) to the Purchaser, and the Purchaser intends to purchase the Target Shares from the Seller, in accordance with the terms and conditions of this Agreement.

1.1

Where permitted in the context of this Agreement, the following words and expressions shall have the meanings set forth in the Appendix.

1.2

The headings of the clauses are for convenience only and do not affect the interpretation of this Agreement.

1.3

The “Seller” and the “Purchaser” include their respective successors and assignees.

1.4

Phrases like “including”, “comprising” and similar expressions are not limiting and should be interpreted as if followed by the words “but not limited to”.

1.5

If the date for exercising the rights or performing the obligations under this Agreement is not a Business Day, it shall be postponed to the nearest Business Day to exercise such rights or perform such obligations.

2.2

Purchase Price. The consideration for the Target Shares (“Purchase Price”) shall be equal to 35% of the value of the Company’s equity; the Parties agree that the Purchase Price for this Transaction shall be RMB 3,482,627,982.

2.4.1

If the Performance Commitment cannot be fulfilled, the Seller shall make performance compensation to the Purchaser in accordance with Article 2.4 and Articles 3 and 4 of Annex 7 (including Interim Period Profit compensation and Cumulative Net Profit Compensation).

2.4.2

Both Parties agree that the amount of performance compensation liability to be borne by the Seller, calculated in cash, shall be limited to RMB 696 million.

2.4.3

Interim Period Profit compensation: During the Performance Commitment Period, if in any year of 2024, 2025, 2026 and 2027, the annual net profit amount (“Actual Annual Net Profit”) is lower than the amount stipulated in Annex 2 (“Committed Annual Net Profit”), then within thirty (30) Business Days from the date when the Company’s Appointed Accounting Firm issues the Company’s annual audit report (“Interim Compensation Determination Date”), the Seller shall provide the Purchaser with Interim Period Profit compensation for that year.

2.4.4

The formula for calculating the Interim Period Profit compensation amount during that period is as follows:

2.4.5

Cumulative Net Profit Compensation: both Parties agree that the Cumulative Net Profit Compensation can be in the form of equity transfer or cash.

2.4.6

After the issuance of the 2027 annual audit report of the Company, if the actual cumulative net profit (“Actual Cumulative Net Profit”) during the Performance Commitment Period is lower than the committed cumulative net profit (“Committed Cumulative Net Profit”) committed by the Seller in accordance with Annex 2 of this Agreement, within thirty (30) Business Days after the date of issuance of the 2027 annual audit report (“Performance Compensation Determination Date”), the Seller shall be responsible for the cumulative net profit compensation (“Cumulative Net Profit Compensation”), and the specific calculation formula is as follows:

(1)

Cash compensation amount = Actual Purchase Price paid by the Purchaser in this Transaction (i.e. RMB 3,482,627,982) x (Committed Cumulative Net Profit / Actual Cumulative Net Profit - 1);

(2)

Compensation equity ratio = Percentage of Company equity purchased by the Purchaser in this Transaction x (Committed Cumulative Net Profit / Actual Cumulative Net Profit - 1).

2.4.7

For the avoidance of doubt, the Parties expressly agree that in calculating the Cumulative Net Profit Compensation amount for the Performance Commitment Period, the annual Interim Period Profit compensation (if any) paid by the Seller pursuant to Sections 2.4.3 and 2.4.4 shall be deducted.

(1)

Cash compensation amount = Purchaser’s actual Purchase Price paid in this Transaction (i.e. RMB 3,482,627,982) x (Committed Cumulative Net Profit / Actual Cumulative Net Profit - 1) — Interim Period Profit compensation amount paid by the Seller;

(2)

If as agreed by both Parties, the Seller compensates the Purchaser for performance by transferring the Company’s equity, then the proportion of equity to be compensated shall be calculated according to the following formula: Performance compensation equity ratio = the proportion of the Company’s equity purchased by the Purchaser in this Transaction x (Committed Cumulative Net Profit / Actual Cumulative Net Profit - 1) x (1 - the amount of compensation paid by the Seller in accordance with Section 2.4.4 and Section 2.4.7(1)/the amount of cash compensation calculated in accordance with Section 2.4.6(1)).

2.4.8

Both Parties agree that, with respect to the Seller’s Cumulative Net Profit Compensation liability or/and Interim Period Profit compensation liability (if any), the Seller or its designated entity shall fulfil the compensation payment obligation within thirty (30) Business Days from the Performance Compensation Determination Date or the Interim Compensation Determination Date in accordance with Section 2.4 and Sections 3 and 4 of Annex 7.

2.4.9

The Parties further agree to offset the cash compensation amounts under Sections 2.4.4, 2.4.6 and 2.4.7 with the Company’s undistributed profits, i.e., to require adjusting the dividend ratio during the Company’s dividend distribution process, and distribute the Company’s undistributed profits corresponding to the Seller’s equity holdings for the aforementioned cash compensation amounts to the Purchaser in the form of dividends to offset the payment of cash compensation. Both Parties and the directors nominated/appointed by both Parties shall vote in favor of the aforementioned procedures. For the specific implementation plan, please refer to Sections 3 and 4 of Annex 7 to this Agreement. The Parties further agree that if the performance compensation involves tax payment, the Seller shall only bear the tax obligations arising from the Seller’s direct receipt of the relevant dividends from the Company as an overseas shareholder (i.e., withholding tax on dividends), and any additional tax obligations shall be borne by the Purchaser.

2.4.10

The two Parties further agree that, subject to the Company Law, the Company shall be governed in accordance with this Agreement and the New Articles of Association/New Joint Venture Contract (including any amendments thereto from time to time). The Parties shall make their best efforts to maintain the Company’s operation and management model and management team unchanged during the Performance Commitment Period (except for changes due to management personnel not meeting qualifications required of directors or senior managers as stipulated in the Company Law). Given that the Purchaser is not the controlling shareholder of the Company, regardless of whether the Company’s operation and management model or management team changes during the commitment period, the Seller shall not claim a reduction or exemption from the obligation to compensate for performance or/and Interim Period Profit compensation against the Purchaser.

2.4.11

For the avoidance of doubt, if the Purchaser’s equity ratio is less than 35% due

2.4.12

The Parties further agree that if any Force Majeure Event occurs at any time during the Performance Commitment Period, which causes the Seller to fail to fulfil the Performance Commitment, the Seller shall not bear the performance compensation liability or/and the Interim Period Profit compensation liability to the extent impacted by the Force Majeure Event. Specific details shall be determined by the two Parties through friendly consultation based on the principle of fairness and reasonableness at that time.

3.1.1

The Purchaser shall, within two (2) business days after all Conditions Precedent (but excluding those conditions that can only be satisfied at Closing by their nature) have been satisfied or waived in writing, initiate the filing for Withholding and Remitting Taxes with the competent tax authority in accordance with Section 12.2 of this Agreement, and make its best efforts to complete the withholding and remittance within the shortest possible time. For the avoidance of doubt, the date on which the Purchaser pays the Withholding and Remitting Taxes shall be the same date as the date on which the withholding and remitting tax for the SPG Equity Transaction is paid.

3.1.2

After the tax authority issues the tax payment certificate as described in Section 12.2 of this Agreement: (1) on the third (3rd) Business Day at the Company; or (2) at any other time and place as agreed by the Purchaser and the Seller, the Closing shall take place. For the avoidance of doubt, the Closing Date designated by the Parties under this Agreement shall be the same as the Closing Date designated by the Seller and SPG under the SPG Equity Transaction Agreement.

3.3.1

The Seller shall and shall cause the Company to submit the application materials for the foreign exchange registration of changes within five (5) Business Days after the registration and filing of this Transaction with AMR, and the Purchaser shall use its best efforts to cooperate with the above matters.

3.3.2

From the Closing Date, the Seller shall have the right to unilaterally decide: (1) to transfer the Post-Tax Purchase Price paid by the Purchaser to the Seller’s designated Escrow Account in accordance with Annex 3 to the Purchaser’s Escrow Account in accordance with the Escrow Agreement; and (2) to transfer the Post-Tax Purchase Price from the Purchaser’s Escrow Account to the Seller’s designated offshore bank account (“Seller’s Designated Bank Account”). As of the date when the Seller’s Designated Bank Account receives the Purchase Price (“Seller’s Actual Receipt Date”), any interest accrued (if any) on the funds in the Seller’s designated Escrow Account shall belong to the Seller, and any interest accrued (if any) on the funds in the Purchaser’s Escrow Account shall belong to the Purchaser.

4.1.1

Governmental Authority approval and filing, etc. The Purchaser completes the necessary government approval and filing registration (the private equity investment fund filing of the Special Fund(s) (as defined in Section 6.7) with the Asset Management Association of China and the Special Fund(s) partners’ meeting resolve to approve this Transaction, state-owned assets management department’s prior reporting and filing, etc.) involved in this Transaction.

4.1.2

If the SPG Equity Transaction under Section 4.3.1 of this Agreement is subject

(1)

The competent AMR issues a document to the Purchaser indicating unconditional approval of the Antitrust Review for this Transaction;

(2)

The competent AMR issues a document to the Purchaser indicating that no further Antitrust Review is required; or

(3)

The Purchaser issues a written certificate (in which the Purchaser certifies that, after the competent AMR has accepted all Antitrust Review applications, the waiting period under Applicable Laws has expired, and during or after the waiting period, the Purchaser has not received any objection or opposition from the competent AMR).

4.1.3

Internal approval. The Purchaser’s internal decision-making body has approved this Transaction.

4.1.4

Execution of transaction documents. Both Parties have executed the transaction documents related to this Transaction, which are irrevocable and satisfactory to the Seller, namely this Agreement and the corporate governance documents described in Section 4.1.5 of this Agreement.

4.1.5

Execution of Company governance documents. New Joint Venture Contract, New Articles of Association have been signed by relevant parties.

4.1.6

Transition Period arrangement. The post-Closing shareholders of the Company have reached an agreement on the Transition Period arrangement, including but not limited to the Purchaser and the directors appointed by the Purchaser promising to pass the Closing Date Resolutions by reviewing the Closing Date Resolution Matters on the Closing Date.

4.1.7

Rollover Profit Distribution and Interim Period Profit/Loss Allocation Plan. The Company’s post-Closing shareholders have reached an agreement on the undistributed profits as of October 31, 2024 and the profit/loss from November 1, 2024 to the Closing Date, including but not limited to the Purchaser’s commitment to pass the undistributed profit declaration proposal and the Interim Period Profit/Loss allocation principle declaration proposal related to Annex 7 of this agreement at the shareholders’ meeting on the Closing Date.

4.1.8

Performance. The Purchaser shall have performed and complied with all covenants, agreements, obligations and conditions required by Annex 3 hereto to be performed or complied with by the Purchaser on or before the Closing Date

4.1.9

Proof of financial capability. The Purchaser has sufficient self-owned or self-raised funds to pay the purchase price and complete this Transaction.

4.1.10

Escrow Agreement and Escrow Account. The Purchaser, the Seller and/or their Affiliates shall enter into the Escrow Agreement listed in Annex 12 with the bank jointly designated by both Parties (i.e. HSBC Bank (China) Company Limited), and the Purchaser has completed the opening of the Purchaser’s funds monitoring account in accordance with the provisions of the Escrow Agreement.

4.1.11

Purchaser’s Closing certificate. The Purchaser shall have executed and delivered to the Seller a Closing certificate dated as of the Closing Date, certifying that each of the conditions set forth in Section 4.1 has been satisfied in full as of such date.

4.2.1

Internal approval. The Seller’s internal decision-making body has approved this Transaction, i.e., the Seller’s board of directors has approved this Transaction.

4.2.2

Execution of transaction documents. Both Parties have executed the transaction documents related to this Transaction, which are irrevocable and satisfactory to the Seller, namely this Agreement and the corporate governance documents described in Section 4.2.3 of this Agreement.

4.2.3

Execution of corporate governance documents. The Purchaser has obtained shareholder rights and arrangements satisfactory to it, namely the New Joint Venture Contract and New Articles of Association have been signed by the relevant Parties.

4.2.4

Transition Period arrangement. The Company’s post-Closing shareholders have reached an agreement on the Transition Period arrangement, including but not limited to the Seller and the directors appointed by the Seller undertaking to pass the Closing Date Resolutions by reviewing and approving the Closing Date Resolution Matters on the Closing Date.

4.2.5

Rollover Profit Distribution and Interim Period Profit/Loss Allocation Plan. The Company’s post-Closing shareholders have reached an agreement on the undistributed profits before October 31, 2024 and the profits and losses from November 1, 2024 to the Closing Date, including but not limited to the Purchaser’s commitment to pass the resolution of the shareholders’ meeting on the Closing Date to pass the Rollover Profit Distribution and Interim Period Profit/Loss Allocation Plan.

4.2.6

No material adverse change. No event has occurred that would have a material

4.2.7

Performance. The Seller shall have performed and complied with all covenants, agreements, obligations and conditions required by this Agreement to be performed or complied with by it on or before the Closing Date pursuant to Annex 3 (for the avoidance of doubt, this provision is a condition that by its nature can only be satisfied at Closing pursuant to Section 3.1.1); and

4.2.8

Seller’s Closing certificate. The Seller shall have executed and delivered to the Purchaser a Closing certificate dated as of the Closing Date certifying that each of the conditions listed in Section 4.2 has been satisfied in full as of such date.

4.3.1

At the same time as the Closing of this Transaction, the Seller shall sell its 10% equity interest in the Company to SPG (“SPG Equity Transaction”). For the avoidance of doubt, the SPG Equity Transaction and this Transaction are mutually conditions to each other’s Closing;

4.3.2

The internal decision-making body of HCM has approved this Transaction, i.e., the shareholders’ meeting of HCM has approved this Transaction.

4.4

The Seller and/or the Purchaser may, at any time on or prior to the Long Stop Date, give written notice to the other Party to fully or partially waive/forgo any of the Conditions Precedent set forth in Section 4.1 or Section 4.2 (as the case may be) in accordance with the provisions of this Agreement.

4.5

Both Parties shall use their reasonable best efforts to ensure that all Conditions Precedent are satisfied as soon as possible but in any event no later than the Long Stop Date. Such reasonable best efforts shall include taking all necessary and reasonable measures to satisfy the Conditions Precedent. If the satisfaction of any Condition Precedent requires the assistance or cooperation of the other Party, the Parties shall cooperate to facilitate the satisfaction of such Condition Precedent, including but not limited to executing and providing all documents, materials and instruments necessary for the satisfaction of the Conditions Precedent.

4.6

Both Parties shall immediately (and in any event within two (2) business days) notify the other Party upon becoming aware that the Conditions Precedent set forth in Sections 4.1, 4.2, and 4.3 of this Agreement have been satisfied, cannot be satisfied, or are not expected to be satisfied.

5.1

Except as disclosed in the Data Room and subject to the provisions of Annex 8, the Seller makes warranties to the Purchaser as of the Signing Date in accordance with the terms set forth in Annex 5; the terms set forth in the warranties regarding title, solvency and special representations under Annex 5 shall be deemed to be repeated immediately prior to the Closing by reference to the facts and circumstances existing at that time. For the avoidance of doubt, the Unrestricted Circumstances set forth in Section 2 of Annex 4 shall also apply to the terms set forth in Annex 5.

5.2

The Purchaser makes warranties to the Seller on the Signing Date in accordance with the terms set forth in Annex 6; the undertakings under Annex 6 shall be deemed to be repeated immediately prior to the Closing by reference to the facts and circumstances then existing.

5.3

Both Parties undertake to promptly notify the other Party in writing of any event or circumstance known to them that causes or may cause a breach or inconsistency with any of their warranties or other representations prior to the Closing.

6.1

The Seller undertakes that, during the period from the Signing Date to the Closing Date, except as otherwise provided in this Agreement, it shall comply with the relevant provisions set forth in Annex 4 hereto to the extent permitted by Applicable Laws.

6.2

The Purchaser undertakes that, during the period from the Signing Date to the Closing Date, the Purchaser shall use its best efforts to ensure that the Conditions Precedent for the Seller’s sale of equity as stipulated in Section 4.1 are satisfied as soon as possible after the Signing Date of this Agreement, and shall bear the costs incurred therefrom.

6.3

The Parties confirm and agree that, except for the commitments or warranties made by one Party to the other Party pursuant to this Agreement, any other statements, commitments or predictions made by either Party or any member of its Affiliates or Group Companies, whether on its own behalf or on behalf of others, shall not constitute the basis for any claims by the other Party under or in connection with this Agreement or any transaction document. In particular, neither Party has made any representations or warranties as to the accuracy of any projections, estimates, expectations, statements of intent or opinions provided to the other Party, its Affiliates or the advisors of the other Party or its Affiliates on or prior to the Signing Date of this Agreement.

6.4

The Purchaser agrees and covenants to the Seller (the Seller for itself and on behalf of each Affiliate referred to herein) that the Purchaser and/or its Affiliates shall have no claims and shall waive and not assert any claims against any of the following persons that the Purchaser may have relied upon prior to agreeing to any term of this Agreement or any other transaction document or prior to the execution of this Agreement or any other transaction document: (a) any employee, director, officer, advisor or agent of any Group Company; or (b) any employee, director, officer, advisor or agent of the Seller or any of its Affiliates. For the avoidance of doubt, notwithstanding the foregoing, the Purchaser may assert against the Seller any claim for breach of the relevant provisions of this Agreement by the Seller.

6.5.1

During the performance compensation period, both Parties shall make their best efforts to maintain the Company’s operation and management model unchanged, and ensure the stability of the Company’s operation and management.

6.5.2

During the Transition Period, both Parties shall use their best efforts to cause the Company and the directors appointed by both Parties to implement the Closing Date Resolutions; the Purchaser shall ensure that the directors appointed by the Purchaser shall not propose any shareholders’ meeting or/and board meeting resolutions to amend or conflict with the matters described in the Closing Date Resolutions.

6.5.3

During the Transition Period, both Parties shall make their best efforts to ensure that the Company and the directors appointed by both Parties implement the Rollover Profit Distribution and Interim Period Profit/Loss Allocation Resolution; the Seller shall ensure that the directors appointed by the Seller or the recommended management team shall not propose any shareholders’ meeting or/and board of directors’ proposals to amend or conflict with the matters described in the shareholders’ meeting resolutions on the Rollover Profit Distribution and Interim Period Profit/Loss Allocation Plan.

6.5.4

During the Transition Period, subject to the conditions and procedures for equity transfer stipulated in the Articles of Association and the Joint Venture Contract, the Purchaser has the right to transfer the Company’s equity to a third party, and the Seller needs to perform the obligations and commitments under this Agreement to the third party, provided that the Purchaser shall ensure that the third party performs all the commitments and obligations of the Purchaser under this Agreement to the Seller and/or the Company.

6.5.5

Within five (5) years after the Closing, unless giving the Seller one (1) month’s prior written notice and allowing the Seller reasonable time to remove and retain, the Purchaser shall not dispose of or destroy any records related to the preparation of any tax returns, external financial reports or regulatory filings by the Seller that are required for the Withholding and Remitting Taxes as described in Section 12.2 of this Agreement.

6.5.6

Neither Party or its Affiliates shall solicit or otherwise induce any employee of any Group Company to leave his/her employment, or hire, employ or engage any employee of any Group Company.

6.5.7

The Parties agree that, prior to [***], the Group Companies may use the words “ HUTCHISON” and “” and the “” logo (including any registered or unregistered trademarks with this logo) free of charge in its company name, products, advertising and promotional materials, and packaging; unless otherwise agreed by the Parties prior to [***], the Purchaser and its Affiliates shall ensure that the Group Companies and their Affiliates cease to use and immediately remove the words “HUTCHISON” and “” and the “” logo (including any registered or unregistered trademarks

6.6

After the Closing, the Seller promises that before the date of full compensation for performance compensation under Section 2.4 of this Agreement, without the prior written consent of the Purchaser, the Seller shall not create or/and promise to create any form of guarantee, mortgage or other Third Party Rights on such equity interests. After obtaining the prior written consent of the Purchaser, and in compliance with the conditions and procedures for equity transfer stipulated in the Articles of Association and Joint Venture Contract, the Seller may transfer (including direct or indirect transfer) the Company’s equity interests to a third party, but the transferee needs to perform the Seller’s commitments and obligations under this Agreement corresponding to the transfer of such equity interests.

6.7

The Seller agrees that, on or before January 17, 2025 (or such other date prior to the Closing of this Transaction as agreed by the Seller), the Purchaser shall have the right, subject to the prior written consent of the Seller at that time, to assign all or part of its rights and obligations to acquire the Target Shares under this Agreement to (1) the fund initiated by the Purchaser as a private fund manager and one of the general partners (“Purchaser Designee One”), and (2) another Purchaser designee (“Purchaser Designee Two”) ((1) and (2) hereinafter collectively referred to as the “Special Funds”). Purchaser Designee Two shall purchase no more than 10% of the equity interests corresponding to the Target Shares under this Agreement; the remaining Target Shares shall be acquired by Purchaser Designee One.

6.8.1

From the Signing Date to the date when the Seller actually receives the payment, the Escrow Agreement and the escrow arrangement stipulated in the Escrow Agreement shall not be modified in any form without the written consent of both Parties;

6.8.2

From the Closing Date to the date when the Seller actually receives the payment, without the written consent of the Seller, the Purchaser shall not: (1) release, use or dispose of any funds in the jointly managed account in any form; (2) directly or indirectly transfer or/and promise to transfer the Target Shares interest in any form; (3) create or/and promise to create any form of guarantee, mortgage or other Third Party Rights on the Target Shares interest in any form;

6.8.3

From the Closing Date, the Purchaser shall make its best efforts to assist the Seller in paying the Post-Tax Purchase Price to Seller’s Designated Bank Account.

7.1

If (a) any third party raises any claim regarding this Transaction or the shareholder responsibilities and obligations corresponding to the Target Shares interests that the Seller should bear, or any other matter or circumstance occurs, and (b) the aforementioned claim, circumstance or matter may cause the Purchaser to assert claims in respect of this Transaction (including but not limited to this Agreement) (such claims, circumstances or matters are collectively referred to as “Third-Party Claims”), the Purchaser shall:

7.1.1

Within five (5) Business Days from the date of becoming aware of the above Third-Party Claims, notify the Seller in writing, and provide the Seller and its representatives with all reasonable information and facilities to investigate such rights claims, except in cases where the third party has already claimed all rights against the Seller;

7.1.2

Without the prior written approval of the Seller, it shall not (and shall ensure that no member of the Purchaser’s Group shall) admit liability or reach any agreement or compromise with respect to any Third-Party Claim;

7.1.3

Provided that the Seller shall indemnify the Purchaser for all reasonable out-

7.1.4

The Seller shall have the right to decide at its own discretion to engage lawyers to represent and defend itself at its own expense and cost, including: (a) initiating or participating in any legal proceedings related to Third Party Rights claims, (b) hiring and engaging lawyers to represent the relevant Third Party Rights claim proceedings, and (c) compromising or settling Third Party Rights claims (without the prior consent of the Purchaser), provided that the Seller shall notify the Purchaser of its agreement to assume the Indemnified Losses within ten (10) business days after receiving the Purchaser’s Claim Request (provided that it does not affect the validity of other terms under this Section 9). For the avoidance of doubt, if a Third-Party Claim names both the Seller and the Purchaser as defendants/respondents, the Parties shall jointly consult on matters related to the Third-Party Claim, and shall cooperate in all reasonable aspects in defending against the Third-Party Claim to reduce the Indemnified Losses.

7.2

If the Purchaser fails to fully comply with its obligations under Sections 7.1.1 and 7.1.2, the Seller shall be relieved of any liability for indemnification in respect of any claims made by the Purchaser in relation to such matters or circumstances.

8.1.1

The Company’s undistributed profits as of October 31, 2024 shall be distributed in accordance with the contents of Annex 7 after being reviewed and approved by the Company’s decision-making body (bodies);

8.1.2

The profits and losses incurred by the Company from November 1, 2024 to the Closing Date (based on the special audit results of the Company’s Appointed Accounting Firm) shall be allocated after being reviewed and approved by the Company’s decision-making body (bodies) in accordance with the contents of Annex 7.

8.2

Both Parties agree and shall make their best efforts to ensure that the Company (including both Parties exercising their shareholder voting rights and ensuring that both Parties and their nominated directors take all necessary measures on the board of directors) implements the Rollover Profit Distribution and Interim Period Profit/Loss Allocation Plan as stipulated in Annex 7, and shall not take any action that may hinder or delay the aforementioned matters.

9.1

Without affecting any other rights of either Party under this Agreement, if either Party fails to pay or refund any overpaid amount in accordance with this Agreement, and fails to remedy such failure within ten (10) business days after the relevant amount becomes due and payable, the defaulting Party shall be liable to the non-defaulting Party for compensation at the rate of 0.05% of the unpaid amount for each day of delay (calculated from the expiration of the aforementioned cure period).

9.2

The defaulting Party shall fully indemnify the non-defaulting Party for any and all claims, suits, actions, demands, settlements, judgments, damages, losses, liabilities, obligations, costs and expenses (including but not limited to investigation fees and attorneys’ fees and costs, but excluding any indirect losses) (collectively referred to as “Losses”, and the Losses claimed by one Party against the other Parties to this Agreement are referred to as “Indemnified Losses”) directly resulting from the defaulting Party’s breach of any warranty, undertaking or covenant made by it under this Agreement, and shall hold such persons harmless and defend them.

9.3

The Purchaser’s claims for Indemnified Loss against the Seller under this Transaction (including but not limited to this Agreement) shall be subject to the conditions listed in Annex 8.

9.4

If the Purchaser becomes aware of any matter or circumstance that may give rise to a claim, the Purchaser shall notify the Seller as soon as reasonably practicable after becoming aware of such matter or circumstance, providing reasonable details thereof. Upon becoming aware of any event that would reasonably be expected to give rise to or result in Indemnified Losses, the Purchaser shall use commercially reasonable efforts to mitigate such Indemnified Losses. If the Purchaser fails to use commercially reasonable efforts to mitigate Indemnifiable Losses, and such failure results in the Seller incurring or increasing its indemnification obligations, then the Seller shall have no obligation to indemnify the Purchaser for such portion of the Indemnified Losses.

9.5

With respect to any third party claim for which the Purchaser can claim Indemnified Loss against Seller under this Agreement, Seller shall have the right, at its own expense and cost, to engage attorneys as legal representatives for the defense of any such claim, including: (a) initiating or otherwise participating in any proceedings related to such third party claim, (b) employing and engaging attorneys for any such third party claim proceedings, and (c) compromising or settling such third party claim (without Purchaser’s prior consent), provided that Seller shall notify Purchaser within ten (10) business days of receipt of Purchaser’s Indemnified Loss whether it agrees to assume the indemnification (without prejudice to any other terms of this Section 9). Purchaser shall promptly notify Seller of any such third party claim and related proceedings and cooperate with Seller in the defense thereof. The Parties shall cooperate in all reasonable respects in the defense of any such third party claim in order to minimize the Indemnified Losses.

10.1.1

If the failure to deliver on or before the Long Stop Date is caused or resulted from one Party’s failure to perform any of its obligations under this Agreement, such Party shall not be entitled to exercise the termination right under this Section 10.1, and such Party’s liability for breach to the other Party shall not be exempted;

10.1.2

If the Closing fails to occur due to any unsatisfied Condition Precedent for the Purchaser’s Acquisition of Equity (with respect to the Seller) or any unsatisfied Condition Precedent for the Seller’s Sale of Equity (with respect to the Purchaser), and the satisfaction of such conditions is within the control of the Seller or the Purchaser, respectively (for the avoidance of doubt, Section 4.1.1 of this Agreement shall not be deemed to be within the Purchaser’s control), then the defaulting Party shall not be entitled to terminate this Agreement, and the defaulting Party’s liability for breach shall not be exempted.

10.2.1

The Purchaser fails to pay the Post-Tax Purchase Price in accordance with Section 1 of Annex 3 on the Closing Date, and fails to remedy within ten (10) Business Days after the relevant amount becomes due and payable.

10.2.2

With respect to the Purchaser’s failure to complete withholding and remittance in accordance with Section 3.1.1 and 12.2, the Purchaser fails to remedy within ten (10) Business Days after the expiration of the time stipulated in Section 3.1.1;

10.2.3

Prior to the Closing Date, the defaulting party has breached any of its warranties, covenants, agreements or obligations under this Agreement, and has failed to remedy such breach or such breach is not capable of being remedied within thirty (30) days after receipt of written notice from the non-defaulting party requiring the same to be remedied.

11.2.1

The existence and content of this Agreement and other transaction documents, as well as information relating to the negotiations leading to this Agreement and other transaction documents;

11.2.2

With respect to the Purchaser’s obligations, Confidential Information refers to any information received or held by the Purchaser or any of its officers, employees or professional advisors relating to the Seller, the Seller’s Affiliates or any Group Company prior to the Closing;

11.3.1

Confidential Information that is now or hereafter enters the public domain not due to a breach of confidentiality undertaking;

11.3.2

Confidential Information that laws, government agencies, stock exchanges or other regulatory authorities having jurisdiction over the Disclosing Party require to be disclosed or publicly disclosed to any person authorized by law to receive such information;

11.3.3

In legal proceedings where the Disclosing Party is a Party, Confidential Information disclosed to the court, arbitrator or administrative tribunal as required by such proceedings; or

11.3.4

The Disclosing Party shall not disclose any Confidential Information disclosed by any professional advisor to the Disclosing Party to whom such advisor owes a duty of confidentiality with respect to any confidential information disclosed

11.5.1

Provide information and support in a timely manner

11.5.2

Communication with the Seller and HCM consultants

11.5.3

Supplement, correct or modify information

11.5.4

Accuracy and confidentiality of information

14.

Notice

14.4.1

A notice delivered by leaving it at the recipient’s address shall be deemed to have been delivered when it is delivered to that address;

14.4.2

For notices delivered by mail, they shall be deemed to have been delivered on the third (3rd) day after posting (or on the seventh (7th) day after posting if the address to which the mail is sent or from which it is posted is outside PRC);

14.4.3

For notices delivered by email, (a) they shall be deemed to have been delivered upon receipt of a confirmation of delivery by way of an automated response; or (b) unless the sender receives an automated message that the delivery failed, they shall be deemed to have been delivered thirty (30) minutes after the time of transmission (based on the record of the device from which the email was sent).

15.2.1

All arbitration proceedings shall be conducted in Chinese;

15.2.2

Three (3) arbitrators shall be appointed;

15.2.3

The arbitration award is final and binding on both Parties;

15.2.4

Except as otherwise terminated in accordance with the terms of this Agreement, during the pendency of any proceedings under this Section 15.2, this Agreement and the rights and obligations of the Parties hereunder shall remain in full force and effect.

(1)

Photocopies of the Purchaser’s internal decision-making procedures for approving this Transaction (if applicable);

(2)

Documentary evidence that the Purchaser has completed the Antitrust Review and obtained copies of other government approvals and filing documents as described in Sections 4.1.1 and 4.1.2 (if applicable);

(3)

A photocopy of the tax payment certificate (affixed with the Purchaser’s company seal) for the paid Withholding and Remitting Taxes as described in Section 12.2 of this Agreement;

(4)

Signature pages of the Closing Date Resolutions, Rollover Profit Distribution and Interim Period Profit/Loss Allocation Resolution signed by the Purchaser and the directors appointed by the Purchaser;

(5)

The original signed version of the Escrow Agreement;

(6)

The Purchaser has paid the Post-Tax Purchase Price to Seller’s Designated Escrow Account, as evidenced by the bank receipt;

(7)

The certificate of satisfaction of the Seller’s Closing Conditions proposed under Section 4.1.11 to be dated as the Closing Date duly executed by the authorized representative of the Purchaser.

(1)

The updated capital contribution certificate and shareholder register (affixed with the company seal) showing that the Purchaser has become the owner of the Target Shares on the Closing Date;

(2)

A copy of the resignation letter of Seller’s Resigning Directors resigning from his/her position as a director of the Company, and such resignation shall take effect on the Closing Date provided it does not violate Applicable Laws;

(3)

Photocopy of the Seller’s board resolution approving the Transaction under this Agreement;

(4)

Certified true copy of the shareholders’ resolution (affixed with the company seal) approving the following matters: this Transaction and the resignation of Seller’s Resigning Directors with the Purchaser appointing a replacement director;

(5)

Signature pages of the Closing Date Resolutions, Rollover Profit Distribution and Interim Period Profit/Loss Allocation Resolution signed by the Seller and the Seller’s appointed directors;

(6)

The satisfaction of the Purchaser’s Closing Conditions certificate proposed under Section 4.2.8 to be dated the Closing Date, duly executed by an authorized representative of the Seller.

1.

Subject to Section 2 of Annex 4, the Seller confirms that, during the period from the Financial Benchmark Date to the Signing Date, the Seller has used reasonable efforts to cause the following matters; the Seller further undertakes that, during the period from the Signing Date to the Closing Date, to the extent permitted by Applicable Laws and within the scope of its ability as a shareholder of the Company, the Seller shall use its best efforts to cause the following matters:

(1)

The businesses of the members of the Group Companies are operating normally in material aspects during the ordinary course of business;

(2)

The Group Companies and its member companies shall not increase or agree to increase the registered capital (except for the case where the Company increases capital to its subsidiaries);

(3)

Members of the Group Companies shall not reduce or agree to reduce their registered capital;

(4)

The Group Companies members shall not engage in any act that will cause the shareholding ratio of the Company held by the Purchaser after the Closing to be diluted (including but not limited to amending its articles of association or through restructuring, merger, sale of equity or assets, or other means);

(5)

Except for amending the articles of association of the Group Companies in accordance with the requirements of the Company Law and other Applicable Laws, no member of the Group Companies shall amend or agree to amend the Joint Venture Contract, Articles of Association or other organizational documents of the Company;

(6)

Members of the Group Company shall not change their main business;

(7)

The qualifications that have a significant impact on the business of each member of the Group Companies have not been revoked or suspended. If such qualifications need to be renewed upon expiration, the negotiations for such renewal shall be in progress;

(8)

To appoint or dismiss the general manager, president, deputy general manager, vice president, chief financial officer, or terminate the labor relationship with the aforementioned important personnel;

(9)

All transactions (if any) between the members of the Group Companies and the Seller are substantially consistent in manner and terms with the practice within 12 months prior to the date of signing this Agreement;

(10)

The members of the Group Companies shall not sell, lease, transfer, license or otherwise dispose of any assets, except in a manner and on terms substantially consistent with the practice in the normal course of business during the 12 months prior to the date of execution of this Agreement;

(11)

No member of the Group Companies shall incur or assume any liabilities, obligations, commitments or expenses in an aggregate amount exceeding RMB 5,000,000 (or its equivalent in other currencies), except those incurred in the ordinary course of business and those contemplated in the annual budget;

(12)

No member of the Group Companies shall make any capital expenditure exceeding RMB 5,000,000 (or its equivalent in other currencies), except those made in the ordinary course of business and planned in the annual budget;

(13)

Apart from normal business operations, no mortgage or other Encumbrance shall be created on any equity or assets of any member of the Group Companies;

(14)

Except as otherwise provided in this Agreement, and the Company’s declaration on October 23, 2024 of a dividend distribution of [***] and the paid payable dividend of [***] no member of the Group Companies shall declare any dividend distribution or distribute any dividend;

(15)

Members of the Group Companies shall not provide loans, advances or any financial support to any entity or individual (including but not limited to shareholders, directors, senior management, employees), with a single or cumulative amount exceeding RMB 1,000,000 (except for prepayments or employee advances in the normal course of business operations); or provide guarantees for the debts of any entity or individual (including but not limited to shareholders, directors, senior management, employees);

(16)

No member of the Group Companies shall formulate or pass any employee stock option incentive plan, or grant stock options to employees or make commitments to grant stock options;

(17)

Members of the Group Companies shall not cease operations, liquidate, dissolve or engage in other similar acts;

(18)

To settle any litigation, arbitration or other claims involving any member of the Group Companies having to pay compensation exceeding RMB 1,000,000 per case.

2.

During the period from the Signing Date to the Closing Date, the following circumstances of the Seller and/or the Company shall not be subject to the provisions of Section 1 of Annex 4 to this Agreement (“Unrestricted Circumstances”):

(1)

Fees or expenses related to the remuneration or arrangements of the members of the management of each member of the Group Companies that have been paid by each member of the Group Companies to the Seller or/and its Affiliates in the ordinary course of business;

(2)

Any action implemented as required by the Purchaser or/and its Affiliates;

(3)

Implement or take any action permitted by all documents related to this Transaction;

(4)

Any action required or permitted to be taken prior to any Closing contemplated by this Agreement;

(5)

Any act implemented to comply with any requirements of Applicable Laws or relevant accounting requirements;

(6)

Acts carried out for the purpose of entering into any contract with any customer or supplier of any member of the Group Companies or renewing or re-negotiating any contract in the ordinary course of business of any member of the Group Companies;

(7)

Any action taken by members of the Group Company in the event of an emergency, disaster or situation related to an epidemic, in order to minimize any adverse impact

(8)

Actions taken by members of the Group Company in accordance with legally binding commitments made prior to the Signing Date;

(9)

Relevant acts under Section 1 of Annex 4 of this Agreement of each member of the Group Company without the consent of the Seller or the Seller’s Board of Directors;

(10)

The Seller or the Seller’s directors do not have any veto rights or consent rights under the Company’s Joint Venture Contract, or the Seller or the Seller’s directors are unable to exercise any veto rights or consent rights under the Joint Venture Contract to prevent any matters relating to the joint venture company mentioned in Section 1 of Annex 4 to this Agreement;

(11)

Items that require obtaining the prior written consent of the Purchaser and may be approved, and such approval shall not be unreasonably conditioned, refused or delayed. For such purposes, the Seller shall submit in writing to the Purchaser at the Purchaser’s address stated in Section 14.2 an application for obtaining its consent, and shall reasonably explain in such application the items for which it intends to obtain consent. If the Purchaser does not respond in writing with consent or refusal within five (5) Business Days of any such request, for the purposes of Annex 4 to this Agreement, such items shall be deemed to have been approved in writing by the Purchaser. If the Purchaser refuses any such request, it must at the same time provide the Seller with a written explanation for such refusal; or

(12)

Any taxes paid, incurred or suffered by (or for which any Group Company Member is required to account) any Group Company Member in respect of, by reference to or by reason of any payment or matter mentioned in Section 2 of Annex 4 to this Agreement.

3.

The Seller agrees that from the Signing Date to the Closing Date, without the unanimous written consent of both Parties, it shall not modify the content and form of the New Articles of Association, the new Joint Venture Contract, and the resolutions related to the Closing Date.

(a)

The Seller has obtained all authorizations for it to execute and perform its obligations under this Agreement;

(b)

The execution and performance of this Agreement by the Seller will not violate any provisions of its organizational documents;

(c)

Once this Agreement and the transaction documents are signed, they will constitute valid and binding obligations of the Seller.

(a)

The Seller and the Company are duly incorporated, validly existing and officially registered under the laws of the place of their respective incorporation;

(b)

The Target Shares interests have been fully paid-in, and as of the Signing Date of this Agreement and the Closing Date, the Seller is: (i) the legal owner of the Target Shares interests, without any entrustment or similar arrangement, and without any pledge, mortgage or other security interest or any kind of Encumbrance, and without any Third Party Rights attached; and (ii) entitled to transfer or cause the transfer of the Sale Shares in accordance with the terms of this Agreement;

(c)

The Seller has not signed any enforceable agreement or made any commitment to any entity under which any entity (other than the Seller and the Group Companies) has the right to require the Group Companies to increase their registered capital;

(d)

The Company information disclosed in Annex 1 is accurate and does not contain any false records;

(e)

The Company’s equity held by the existing shareholders is the Company’s entire equity and corresponding entire registered capital. All existing shareholders have paid up their contributions and are the legal owners of the equity they hold. The Company’s equity held by the Seller is not subject to any entrustment or similar arrangement, and is not subject to any pledge, mortgage or other security interest or any kind of Encumbrance, nor does it carry any Third Party Rights;

(f)

The Company’s registered capital has been fully paid up in accordance with Applicable Laws and the Articles of Association.

(2)

Except as disclosed in the financial reports as of the Financial Benchmark Date and in the due diligence process, and to the reasonable knowledge of the Seller, no member of the Group Companies has made any material commitments relating to capital, nor has it participated in any plans or projects requiring substantial capital expenditures (except for the inputs required for production capacity requirements, pipeline product development, etc.);

(3)

Except as disclosed in the financial reports on the Financial Benchmark Date and outside the normal course of business, the Seller has not provided or committed to provide (conditionally or otherwise) any guarantee, mortgage or other Third Party Rights for any loans obtained or to be obtained by the Company, or debts owed by the Company;

(4)

Except for the contents disclosed in the financial reports on the Financial Benchmark Date and outside the normal course of business, the Company does not have any outstanding loans or debts owed to the Company by any shareholder or director or senior management of the Company;

(5)

As far as the Vendor is aware, the statutory books of each member of the Group Companies have been properly maintained in all material aspects in accordance with Applicable Laws.

(1)

All major licenses, approvals, permits and government authorizations (“Permits”) required by the members of the Group Company to carry out their principal business activities under the laws of China have been legally applied for and obtained; and all of these Permits are valid and subsisting;

(2)

Within the twelve (12) months prior to the Financial Benchmark Date of this Agreement, no member of the Group Companies has received any unresolved or unrevoked written notice from any Governmental Authority stating that any member of the Group Companies does not possess all material Permits necessary for its operations in the manner consistent with past practice as of the Signing Date;

(3)

In the two (2) years prior to the Financial Benchmark Date of this Agreement, the business conducted by any member of the Group Companies has complied with Applicable Laws in all material aspects.

(1)

Each member of the Group Company owns or has the right to use all the material assets necessary to operate its business as currently conducted in all material aspects. To the Seller’s knowledge, no Group Company has sold or agreed to sell any material assets relating to its business outside the ordinary course of business as of the Financial Benchmark Date.

(2)

The important assets related to the business of each member of the Group Company are legally owned, controlled and can be used normally.

(1)

Agreements signed with the Seller’s Affiliates that harm the interests of members of the Group Company, have unfair pricing, or violate fair trade terms; or

(2)

Joint ventures, joint operations, partnership agreements (excluding Joint Venture Contract of the Company) related to the business of each member of the Group Company.

(1)

The Group Company members comply with the provisions of applicable labor-related laws in all material aspects;

(2)

As of the Closing Date, none of the Group Companies or any of their members has any outstanding material labor dispute or conflict with any of its existing employees or former employees, nor is there any material labor dispute or conflict known to them;

(3)

As of the Closing Date, none of the Group Companies or their members has any outstanding material economic compensation or other similar compensation or indemnity expenses related to the termination of employment relationships that should have been paid but have not been paid, and such expenses have not been reflected in the financial statements of the Group Companies or their members.

(1)

The Group Company and its members legally own or are permitted to use all Intellectual Property rights of significant commercial value necessary for conducting

(2)

To the reasonable knowledge of the Seller, no member of the Group has infringed upon any Intellectual Property rights, trade secrets, proprietary information or other similar rights of others, and there are no pending claims, disputes or litigation proceedings demanding that any member of the Group be liable for infringement of any third party’s Intellectual Property rights, trade secrets, proprietary information or other similar rights, nor has any known infringement by a third party of the Group members’ legally owned Intellectual Property rights of material commercial value been discovered;

(3)

The members of the Group Company have paid and remitted the necessary fees (including application fees, examination fees, certificate fees, post-registration fees and maintenance fees, annual fees and similar fees) to maintain the legality and validity of such Intellectual Property assets. There is no known situation that will cause the members of the Group Company to lose such Intellectual Property rights of significant commercial value, and all reasonable measures have been taken to protect their rights in Intellectual Property in accordance with general industry practices. At the same time, the Company does not have the situation of being deprived of the existing high-tech enterprise qualification;

(4)

To the reasonable knowledge of the Seller, the existing employees of each member of the Group Company who are employed by and engaged in the business activities of each member of the Group Company have not violated any labor contracts or binding commitments (including but not limited to confidentiality obligations and non-competition obligations) signed by them.

(1)

The Group Company and each of its members have formally submitted to the competent tax authorities all tax returns, reports and notices required to be submitted, and have paid or will pay in a timely manner all taxes due and payable (excluding taxes for which reasonable objections have been made and appropriate

(2)

None of the members of the Group Companies has committed any material violation of tax laws or regulations, nor has there been any material tax dispute with its competent tax authority, within the three (3) years prior to the Financial Benchmark Date of this Agreement.

1.

The Purchaser is a limited partnership/limited liability company duly established, validly existing and officially registered under the laws of China, and has full power to engage in the business it is engaged in as of the Signing Date of this Agreement.

2.

Except as provided in Section 4.1.1 of this Agreement, the Purchaser has obtained all authorizations and all other consents, approvals and authorizations from Governmental Authorities required for it to enter into and perform its obligations under this Agreement, and failure to obtain such consents, approvals and authorizations will have a material adverse effect on the Purchaser’s ability to enter into and perform its obligations under this Agreement.

3.

Except as provided in Section 4.1.1 of this Agreement, the Purchaser’s execution, Closing and performance of this Agreement will not violate:

(1)

any provision of the organizational documents of the Purchaser, or conflict with the same, or

(2)

any Applicable Law, order, decree or judgment of any Governmental Authority applicable to the Purchaser in any material respect which would have a material adverse effect on its ability to execute or perform its obligations under this Agreement and the documents listed in the Annex hereto.

4.

This Agreement and the documents listed in the Appendices have been duly executed and delivered by the Purchaser, and upon due execution and Closing by the Seller, this Agreement shall constitute a valid and binding agreement of the Purchaser enforceable in accordance with its respective terms.

5.

The Purchaser has not become insolvent or bankrupt under Applicable Laws, has not been unable to pay its debts as they become due, has not proposed or become subject to any arrangement (whether by court process or otherwise) whereby its creditors (or any of them) would receive less than the amounts due to them.

6.

To the best of the Purchaser’s knowledge, the Purchaser is not subject to any order, judgment, directive, investigation or other proceeding of any Governmental Authority that would or might prevent or delay the satisfaction of the Condition Precedent for the Seller’s Sale of Equity under Section 4.1 of this Agreement.

7.

At the time of Closing, the Purchaser has sufficient self-owned or self-raised funds to pay

8.

The Purchaser agrees that from the Signing Date to the Closing Date, without the unanimous written consent of both Parties, it shall not modify the content and form of the New Articles of Association, the New Joint Venture Contract, and the Closing Date Resolutions.

(1)

On the Closing Date, the Seller and Shanghai Traditional Chinese Medicine Co. Ltd. resolve the following through the shareholders’ meeting:

A.

On the Closing Date, the Company passes a shareholders’ meeting resolution, declaring a profit distribution plan to allocate [***] to Shanghai Traditional Chinese Medicine Co. Ltd.;

B.

On the Closing Date, the Company passes a shareholders’ resolution, declaring a profit distribution plan that the remaining amount of [***] (“Remaining Undistributed Profits Prior to the Benchmark Date”) from the undistributed profits prior to October 31, 2024 shall be attributable to the Seller.

(2)

On the Closing Date, the post-Closing shareholders pass a shareholders’ resolution, declaring to distribute the undistributed profits of [***] in accordance with the respective equity ratios of the shareholders after the completion of this Transaction, and both Parties shall make their best efforts to ensure that the Company completes the above distribution no later than September 30, 2025.

(1)

On the Closing Date, the Seller and Shanghai Traditional Chinese Medicine Co. Ltd. resolve through the shareholders’ meeting (such resolutions shall be notified to the Purchaser in writing) as follows:

(2)

Both Parties agree that the Interim Period Profit/Loss from November 1, 2024 to the earlier of (i) the Closing Date (excluded) or (ii) March 31, 2025 (included) shall be borne or enjoyed by the pre-Closing shareholders of the Company in proportion to their shareholding ratio before the Closing; the Interim Period Profit/Loss of the Company (if any) from April 1, 2025 (included) to the Closing Date (included) shall be enjoyed by the post-Closing shareholders in proportion to their respective shareholding in the Company at that time.

(3)

If it is confirmed after the audit that a surplus (“Interim Period Profit”) was generated during the aforementioned period, the Parties shall make their best efforts to ensure that the Company declares the surplus no later than three (3) months after the issuance of the special audit report through a shareholders’ resolution in accordance with the aforementioned agreed period and proportion;

(4)

The portion of the above-mentioned Interim Period Profit attributable to the Seller (together with the unallocated profit before October 31, 2024 remaining in item 1 (1) B above, referred to as the “Adjustable Profit Attributable to the Seller”), shall be allocated to the Seller in accordance with Section 3 of this Annex.

(1)

Of the Adjustable Profit Attributable to the Seller, [***] shall be retained as adjustable retained dividends by the Company. If the adjustable retained dividends attributable to the Seller are less than [***], the Seller shall make up the shortfall in a manner satisfactory to the Purchaser.

(2)

After deducting the adjustable retained dividends from the Adjustable Profit Attributable to the Seller, the remaining balance (if any) shall be distributed to the Seller by the Company to the greatest extent possible without affecting the dividend distribution targets on the Closing Dates in 2025 and 2026 (i.e. [***] in 2025 and [***] in 2026).

(3)

If the Seller fails to meet the Performance Commitment, and according to Section 2.3 Performance Commitment and Section 2.4 Performance Compensation of this Agreement, the Seller shall bear the compensation liability to the Purchaser, if both Parties agree to bear the aforementioned compensation liability with adjustable retained dividends, then the ownership of the adjustable retained dividends shall be adjusted as follows:

-

The portion of adjustable retained dividends corresponding to the Seller’s performance compensation liability amount shall attribute to the Purchaser (“Purchaser’s Adjustable Retained Dividends”);

-

After deducting the aforementioned amount attributed to the Purchaser, the entire remaining amount of the adjustable retained dividends (“Remaining Adjustable Retained Dividends”) and all interest shall attribute to the Seller.

(1)

Both Parties agree that the vesting of Purchaser’s Adjustable Retained Dividends, and the Purchaser’s actual receipt of the corresponding amount shall be deemed as the completion of the Seller’s corresponding Interim Period Profit compensation or performance compensation obligations.

(2)

Provided that the Seller has fulfilled the performance compensation commitment stipulated in Section 2.4, the Remaining Adjustable Retained Dividends shall be distributed by the Company in the form of dividends as soon as possible and no later than December 31, 2028.

(3)

For the avoidance of doubt, in any case the distribution of adjustable retained dividends shall not affect the other dividend distribution rights enjoyed by both Parties as shareholders of the Company.

(4)

The Parties irrevocably undertake to take all necessary measures, such as exercising the right to convene shareholders’ meetings, exercising shareholders’ voting rights, authorizing directors to exercise voting rights, etc., to ensure that the Company

(1)

The amount of compensation claimed by the Purchaser under a single claim exceeds [***] (the portion exceeding this amount shall be deemed as the “Claimable Amount that Meets Condition (1)”);

(2)

The total Claimable Amount that Meets Condition (1) for all single claims that meet the condition (1) above exceeds [***]

(1)

For all claims relating to title warranties, the total amount of compensation paid by the Seller shall not exceed [***]

(2)

For all other claims of rights other than the aforementioned (1), the total amount of compensation paid by the Seller shall not exceed [***]

(1)

The breach is remediable, and the Seller has substantially remedied it within sixty (60) days after receiving the Purchaser’s relevant Claim Request, and completed the remedy within one hundred and eighty (180) days after receiving the Purchaser’s relevant Claim Request;

(2)

If the Purchaser or its relevant Group Companies have obtained compensation from a third party for losses, including but not limited to compensation obtained based on insurance, and if the Seller has paid compensation to the Purchaser for its breach, but the Purchaser subsequently obtains compensation from an insurance company or other third party for the same matter, then the Purchaser shall return a certain amount to the Seller, and the amount to be returned shall be equal to the compensation amount obtained by the Purchaser from the third party (but deducting all legal and reasonable expenses incurred by the Purchaser in obtaining such third-Party compensation);

(3)

The Seller shall not be liable to the Purchaser for any facts, matters, events or circumstances giving rise to any claim, of which the Purchaser, its directors, employees, agents, officers, consultants and representatives have been aware, including but not limited to: (i) those disclosed in the transaction documents, the Financial Statements as of the Financial Benchmark Date, the Data Room and/or the Purchaser’s due diligence process; (ii) those available for public inspection as of the Signing Date of this Agreement and the Closing Date on the websites of the listed company’s announcements, the Company’s asset registration authority, courts, industry and commerce registration authorities, other competent government authorities and the public websites of the aforesaid authorities; (iii) any matters contained or referred to in any emails or other written information sent by the Seller or its advisors to the Purchaser or its advisors for the purpose of the Purchaser’s proposed acquisition of the Company, as well as the contents of any attachments thereto.

(4)

If any claim is based solely on any contingent liability, then the Seller shall not be liable for any form of compensation before such contingent liability gives rise to an express payment obligation and before receiving the Purchaser’s Claim Request;

(5)

The Seller shall not be liable for any indemnification for any claims to the extent that the facts, matters, events or circumstances giving rise to such claims are disclosed, permitted, provided for or reserved against in the Financial Statements as of the Financial Benchmark Date, or are taken into account in any adjustment to the Purchase Price;

(6)

The Seller shall not be liable for any claims or losses arising from the following acts:

(a)

Any act, omission or transaction implemented by the Seller or the Company in accordance with the terms of Section 2 of Annex 4 prior to Closing, or any act, omission or transaction implemented at the instruction, request, consent or approval of the Purchaser or any Purchaser Affiliate (or any of their respective directors, employees or agents or successors or assigns or any of their affiliated

(b)

After the Closing, any actions taken by the Purchaser or its Affiliates (or their respective directors, employees, agents, successors or assigns, or any of their affiliated companies) outside the normal course of business of the Company as of the Closing. The Seller shall not be liable for any form of compensation, inaction or transaction for any indirect losses suffered by the Purchaser due to changes in Applicable Laws or tax rates, the Purchaser’s waiver of set-off rights, or the Purchaser’s anticipated financial gains.