Shandong Lukang Pharmaceutical Co.,Ltd. and Shandong Lukang Pharmaceutical Co. Ltd. entered into supply of goods and service agreement in relation to the purchase of preparation products and bulk drugs, and the sale of pharmaceutical intermediaries and bulk drugs and provision of engineering design services for the period commencing from 11 March 2020 to 31 December 2020 on June 23, 2020. The term of the agreement will be from March 11, 2020 to December 31, 2020 (both dates inclusive), subject to early termination by either party giving the other party at least three months' prior written notice.

Shandong Lukang and/or its subsidiaries will supply preparation products and bulk drugs to the company and or its subsidiaries. The company and/or its subsidiaries will supply pharmaceutical intermediaries and bulk drugs as well as provide engineering design services to Shandong Lukang and/or its subsidiaries. By entering into the Shandong Lukang Agreement, the Company and/or its subsidiaries will be able to expand their sales channels by supplying pharmaceutical intermediaries and bulk drugs as well as provision of engineering design services to Shandong Lukang and/or its subsidiaries.

On the other hand, the Company and/or its subsidiaries will be able to carry out more structural distribution of pharmaceutical products to medical institutions in the Luzhong region and hence meeting the production needs of the Company by receiving supply of preparation products and bulk drugs from Shandong Lukang. The board of Directors of the Company (the "Board") and the independent non-executive Directors (excluding Mr. Zhang Daiming, Mr. Ren Fulong and Mr. Xu Lie, who are considered to have a material interest in the Shandong Lukang Agreement due to their respective directorships or capacities as a member of the management of a subsidiary of HHC and were therefore required to abstain from voting on the relevant Board resolutions in relation to the Shandong Lukang Agreement) have considered and reviewed the terms and provisions of the Shandong Lukang Agreement and are of the view that the Shandong Lukang Agreement has been entered into on an arm's length basis and in the ordinary and usual course of business, and that the transactions contemplated thereunder and the relevant annual cap is on normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole.