Shanghai Haohai Biological Technology : ACQUISITION OF EQUITY INTERESTS AND CAPITAL INJECTION IN TARGET COMPANY AND GRANT OF PUT OPTION

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Shanghai Haohai Biological Technology Co., Ltd.*

ɪऎ؀ऎ͛ي߅Ҧٰ΅Ϟࠢʮ̡

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

(Stock code: 6826)

DISCLOSEABLE TRANSACTION

ACQUISITION OF EQUITY INTERESTS AND CAPITAL INJECTION IN

TARGET COMPANY

AND

GRANT OF PUT OPTION

THE ACQUISITION AND THE CAPITAL INJECTION

The Board is pleased to announce that, on 21 February 2021, the Company entered into:

• (a) the Share Purchase Agreements with, among others, the Vendor Shareholders, under which the Company has conditionally agreed to purchase, and the Vendor Shareholders have conditionally agreed to sell, an aggregate of approximately 38.23% of the equity interests in the Target Company for RMB135,000,000 (the "Acquisition"); and

• (b) the Capital Injection Agreement with, among others, the Target Company, under which the Company has conditionally agreed to contribute RMB70,000,000 to the capital of the Target Company (the "Capital Injection") such that, following the Acquisition and the Capital Injection, the Company will hold 63.64% of the total equity interests in the Target Company.

Option Pool

It is contemplated that a limited partnership serving as an option pool ("Option Pool") will be established by the Founding Shareholders and the Company to provide equity incentive for the Founding Shareholders and other core management of the Target Company. 6.36% and 3.64% equity interests of the Target Company will be transfered from the Founding Shareholders and the Company respectively to the Option Pool (the "Transfer") at nil or the lowest consideration permissible by laws of the PRC. As one of the conditions precedent to Capital Injection Completion, the limited partnership serving as the Option Pool will have to be established and documents relating to the limited partnership (including agreements relating to the aforementioned transfers) will have to be signed before Capital Injection Completion.

Grant of Put Option

Pursuant to the Capital Injection Agreement, if the net profit of the Target Company in 2021, 2022 and 2023 is not less than RMB6 million, RMB18 million and RMB30 million (the "Performance Targets"), respectively, within three months from the date of issuance of the Target Company's 2023 audit report, the Founding Shareholders shall have the option (the "Put Option") to require the Company to acquire all the equity interests of the Target Company held by the Founding Shareholders in cash or by issuing consideration shares.

IMPLICATIONS UNDER THE HONG KONG LISTING RULES

Pursuant to Rule 14.73 of the Hong Kong Listing Rules, the grant of an option by a listed issuer is regarded as a transaction. Since the Put Option is regarded as an option granted to the Founding Shareholders and the exercise of which is not at the Company's discretion, pursuant to Rule 14.74(1) of the Hong Kong Listing Rules, the grant of the Put Option will be classified as if the Put Option had been exercised.

As one or more of the applicable percentage ratios in respect of the Share Purchase Agreements and the Capital Injection Agreement (in aggregate) exceed 5% but are all below 25%, the Acquisition, the Capital Injection and the grant of the Put Option collectively constitute a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Hong Kong Listing Rules.

INTRODUCTION

The Board is pleased to announce that, on 21 February 2021, the Company entered into:

• (a) the Share Purchase Agreements with, among others, the Vendor Shareholders, under which the Company has conditionally agreed to purchase, and the Vendor Shareholders have conditionally agreed to sell, an aggregate of approximately 38.23% of the equity interests in the Target Company for RMB135,000,000; and

• (b) the Capital Injection Agreement with, among others, the Target Company, under which the Company has conditionally agreed to contribute RMB70,000,000 to the capital of the Target Company such that, following the Acquisition and the Capital Injection, the Company will hold 63.64% of the total equity interests in the Target Company.

THE SHARE PURCHASE AGREEMENTS

Parties:

21 February 2021 the Company;

Vendor Shareholders; and

Founding Shareholders.

To the best of the Directors' knowledge, information and belief, and having made all reasonable enquiries, each of the Vendor Shareholders and the Founding Shareholders and their respective ultimate beneficial owners, are third parties independent of the Company and its connected persons.

Acquisition

Pursuant to the Share Purchase Agreements, the Company has conditionally agreed to purchase and the Vendor Shareholders have conditionally agreed to sell an aggregate of approximately 38.23% of the equity interests in the Target Company.

Acquisition Consideration

The Acquisition Consideration is RMB135,000,000 and is payable on the day of the Acquisition Completion.

The Acquisition Consideration was determined after arm's length negotiation among the parties to the Share Purchase Agreement with reference to the unaudited net asset value of the Target Group as at 31 December 2019. The Acquisition Consideration shall be payable in cash and the Company will use its internal resources to satisfy such consideration.

Completion and conditions precedent

The Acquisition Completion will take place within 10 business days following the satisfaction or waiver of the conditions precedent under the relevant Share Purchase Agreement.

The Acquisition Completion under the relevant Share Purchase Agreement is conditional upon, among other things,

• (a) the representations and warranties of all parties to the Share Purchase Agreement remaining true and accurate; and

• (b) the approval, consent, permission, registration and filing from or with the relevant and competent authority required to complete the transaction have been obtained or completed.

THE CAPITAL INJECTION AGREEMENT

Parties:

21 February 2021 the Company;

the Target Company; and the Founding Shareholders.

To the best of the Directors' knowledge, information and belief, and having made all reasonable enquiries, each of the Target Company and the Founding Shareholders and their respective ultimate beneficial owners, are third parties independent of the Company and its connected persons.

Capital Injection

Pursuant to the Capital Injection Agreement, the Company has conditionally agreed to contribute RMB70,000,000 (RMB52,025,944 of which will be accounted by the Target Company as registered capital) in the capital of the Target Company such that, following the Acquisition and the Capital Injection, the Company will hold 63.64% of the total equity interests in the Target Company.

The amount of Capital Injection

The amount of Capital Injection is RMB70,000,000 and is payable on the day of the Capital Injection Completion.

The amount of Capital Injection was determined after arm's length negotiation among the parties to the Capital Injection Agreement with reference to the unaudited net asset value of the Target Group as at 31 December 2019. The amount of Capital Injection shall be payable in cash and the Company will use its internal resources to satisfy such consideration.

Completion and conditions precedent

The Capital Injection Completion will take place on the fifth business days following the satisfaction or waiver of the conditions precedent under the Capital Injection Agreement.

The Capital Injection Completion under the Capital Injection Agreement is conditional upon, among other things:

• (a) the Share Purchase Agreements and the Capital Injection Agreement have been properly signed and became effective, and the Acquisition has been completed;

• (b) the Founding Shareholders have completed the acquisition of all the equity interests held by minority shareholders of all subsidiaries of the Target Company principally engaged in sales and have completed the industrial and commercial modification registration;