PW Medtech Group Limited entered into the Sales of Medical Devices Framework Agreement with Lepu Medical, pursuant to which the Group agreed to sell medical devices to Lepu Medical Group, including but not limited to dialyzers, infusion sets, intravenous cannulas and insulin injection needles and pens and also entered into the Medical Products Processing Services Framework Agreement with Lepu Medical, pursuant to which the Group agreed to provide processing services to Lepu Medical Group. The term of the Sales of Medical Devices Framework Agreement will commence from the Effective Date to December 31, 2024, subject to renewal for additional three years upon parties' mutual agreement and the Listing Rules. The prices of the medical devices purchased by Lepu Medical Group under the Sales of Medical Devices Framework Agreement shall be determined with reference to the quantity of orders, the brand of products (e.g. self-branded products or OEM products) and the prevailing market prices of comparable medical devices from at least two independent third parties.

The prices and other terms of the Group's sales of medical devices to Lepu Medical Group shall be no less favorable to the Group than those offered to other independent third-party purchasers by the Group at the relevant time. In order to ensure that the terms of the transaction under the Sales of Medical Devices Framework Agreement are fair and reasonable and in line with market practices, and that the terms of the transaction will be no less favorable to the Group than the terms of transactions between the Group and independent third parties, the Group has maintained regular contact with other medical devices companies in the market to keep abreast of market developments and the price trend of comparable products. In respect of dialyzers the Company will obtain the actual selling prices of comparable products from at least two market participants on a half-yearly basis and also periodically compare such prices with the prices offered to Lepu Medical Group.

In respect of infusion sets, intravenous cannulas and insulin injection needles and pens, the Company will review and compare the unit prices of the comparable products offered by the Group to Lepu Medical Group with at least two recent transaction records of comparable products offered by the Group to independent third-party customers before entering into individual sales of medical devices agreements with Lepu Medical Group under the Sales of Medical Devices Framework Agreement. The term of the Medical Products Processing Services Framework Agreement will commence from July 5, 2022 to December 31, 2024, subject to renewal for additional three years upon parties' mutual agreement and the Listing Rules. The prices of the processing service provided by the Group under the Medical Products Processing Services Framework Agreement are calculated on a ``per unit'' basis and are determined on a cost plus basis.

The Group estimated the cost primarily comprising (i) the labour costs; (ii) the number of work orders; and (iii) the rental and overhead of the requested work space in the relevant workshops and plants. After arriving at an estimated cost, the Group added a mark-up with reference to the then prevailing mark-ups charged by other independent market participants for comparable processing services. Where it is impracticable to refer to the prices offered by independent third parties for comparable services, the Group shall take into consideration the specifications of the services, cost structure, profit margin, transaction amount and market condition.

The prices and other terms of the Group's provision of processing service to the Lepu Medical Group shall be no less favorable to the Group than those offered to other independent third-party purchasers by the Group at the relevant time.