Xiaofang Pharmaceutical 2026 Restricted Stock Incentive Plan (Draft)

Securities code: 603207 Securities abbreviation: Xiaofang Pharmaceutical

Shanghai Xiaofang Pharmaceutical Co., Ltd. Annual Restricted Stock Incentive Plan

2026

(draft)

Shanghai Xiaofang Pharmaceutical Co., Ltd.

June 2026

Statement

The company's board of directors and all directors guarantee that this incentive plan and its summary do not contain any false records, misleading statements or major omissions, and assume legal responsibility for its authenticity, accuracy and completeness.

All incentive recipients of the company promise that if the company does not comply with the arrangements for granting rights or exercising rights due to false records, misleading statements or major omissions in information disclosure documents, the incentive recipients shall return all the benefits obtained from this incentive plan to the company after the relevant information disclosure documents are confirmed to contain false records, misleading statements or major omissions.

Special reminder

1. This incentive plan is formulated in accordance with the "Company Law of the People's Republic of China", "Securities Law of the People's Republic of China", "Equity Incentive Management Measures for Listed Companies" and other relevant laws, regulations and normative documents, as well as the "Articles of Association of Shanghai Xiaofang Pharmaceutical Co., Ltd.".

2. The incentive tool used in this incentive plan is restricted stocks. The source of the stock is the company's targeted issuance of A shares of Shanghai Xiaofang Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company" or the "Company") to the incentive targets.

3. The total number of restricted stocks to be granted under this incentive plan shall not exceed 1.6 million shares, accounting for 1.00% of the company's total share capital of 160,673,262 shares at the time of the announcement of the draft incentive plan. Among them, no more than 1.28 million shares will be granted for the first time, accounting for 80.00% of the total equity to be granted by this incentive plan, accounting for 0.80% of the company's total equity of 160,673,262 shares at the time of the announcement of the draft incentive plan; 320,000 shares are reserved, accounting for 20.00% of the total equity to be granted by this incentive plan, accounting for 0.20% of the company's total equity of 160,673,262 shares at the time of the announcement of the draft incentive plan.

After the implementation of this incentive plan, the total number of subject stocks involved in all effective equity incentive plans of the company shall not exceed 10% of the company's total share capital. The cumulative number of shares of the company granted to any incentive subject in this incentive plan through all equity incentive plans within the validity period shall not exceed 1% of the company's total share capital at the time of the announcement of the draft incentive plan. The reserved ratio shall not exceed 20% of the total equity to be granted under this incentive plan.

4. The grant price for the first restricted stock grant under this incentive plan is 11.91 yuan per share.

During the period from the date of announcement of this incentive plan to the completion of registration of restricted stocks by the incentive objects, if the company undergoes matters such as converting capital reserves into equity capital, distributing stock dividends, splitting or reducing shares, allotment of shares, distribution of dividends, etc., the number of restricted stocks granted and/or the award price will be adjusted accordingly according to this incentive plan.

5. The number of incentive targets granted under this incentive plan for the first time shall not exceed 158, including directors, senior managers, middle and senior managers, and core key personnel who were working in the company (including branches and holding subsidiaries, the same below) when the company announced this incentive plan.

Reserved incentive objects refer to the incentive objects that have not yet been determined when the incentive plan is approved by the shareholders' meeting but will be included in the incentive plan during the duration of the incentive plan. They will be determined within 12 months after the incentive plan is reviewed and approved by the shareholders' meeting. Reservation incentives may include company directors, senior managers, and other employees deemed by the board of directors to be in need of incentives.

6. The validity period of this incentive plan starts from the date when the registration of the first grant of restricted stocks is completed and ends on the date when all restricted stocks granted to the incentive objects are released from sale restrictions or repurchased, and the maximum period shall not exceed 60 months.

7. The company does not have the following circumstances that prohibit the implementation of equity incentives as stipulated in Article 7 of the "Measures for the Administration of Equity Incentives for Listed Companies":

(1) The financial accounting report for the most recent fiscal year was issued a negative opinion or an audit report in which a certified public accountant was unable to express an opinion;

(2) An audit report in which a certified public accountant issued a negative opinion or was unable to express an opinion on the internal control of the financial report in the most recent fiscal year;

(3) There has been any failure to distribute profits in accordance with laws, regulations, articles of association, and public commitments within the last 36 months after listing;

(4) Equity incentives are prohibited under laws and regulations;

(5) Other circumstances determined by the China Securities Regulatory Commission.

8. The incentive objects participating in this incentive plan do not include the company’s independent directors. Shareholders or actual controllers who individually or collectively hold more than 5% of the company's shares and their spouses, parents, and children do not participate in this incentive plan. Incentive objects comply with the provisions of Article 8 of the "Measures for the Administration of Equity Incentives of Listed Companies" and do not have the following circumstances that prohibit them from becoming incentive objects:

(1) Determined as an unsuitable candidate by the stock exchange within the last 12 months;

(2) Has been deemed an unfit candidate by the China Securities Regulatory Commission and its dispatched offices within the last 12 months;

(3) In the past 12 months, he has been subject to administrative penalties or market ban measures by the China Securities Regulatory Commission and its dispatched agencies due to serious violations of laws and regulations;

(4) Those who are prohibited from serving as directors or senior managers of a company as stipulated in the Company Law;

(5) Not allowed to participate in equity incentives of listed companies according to laws and regulations;

(6) Other circumstances determined by the China Securities Regulatory Commission.

9. The company promises not to provide loans, loan guarantees or any other form of financial assistance for incentive targets to obtain relevant restricted stocks in accordance with this incentive plan.

10. The incentive recipients promise that if the company does not comply with the arrangements for granting rights or exercising rights due to false records, misleading statements, or major omissions in the information disclosure documents, the incentive recipients shall return all the benefits obtained from this incentive plan to the company after the relevant information disclosure documents are confirmed to contain false records, misleading statements, or major omissions.

The board of directors shall recover the income from the incentive objects in accordance with the provisions of the preceding paragraph and the relevant arrangements of this incentive plan.

11. This incentive plan can only be implemented after being reviewed and approved by the company’s shareholders’ meeting.

12. Within 60 days from the date of approval of this incentive plan by the shareholders' meeting, the company will convene a board of directors in accordance with relevant regulations to award the first incentive objects and complete registration, announcement and other relevant procedures. If the company fails to complete the above work within 60 days, it shall disclose the reasons for failure in a timely manner and declare the termination of the incentive plan, and the ungranted restricted stocks shall become invalid (according to the "Measures for the Administration of Equity Incentives for Listed Companies", the period during which listed companies are not allowed to grant restricted stocks shall not be counted within 60 days). The reserved portion must be awarded within 12 months after the incentive plan is reviewed and approved by the company's shareholders' meeting.

13. The implementation of this incentive plan will not cause the company’s equity distribution to fail to meet the requirements of listing conditions.

Directory

Chapter 1 Interpretation......................................................................................................7

Chapter 2 The purpose and principles of this incentive plan......................................................................8

Chapter 3 Management Organization of this Incentive Plan................................................................9

Chapter 4 Determination of Basis and Scope of Incentive Objects......................................................10

Chapter 5 Source, Quantity and Allocation of Restricted Stocks........................................12

Chapter 6 The validity period, grant date, sales restriction period, sales restriction release arrangement and lock-up period of this incentive plan....14

Chapter 7 Grant Price of Restricted Stocks and Method of Determination of Grant Price........................17

Chapter 8 Grant of Restricted Stocks and Release of Restriction Conditions........................18

Chapter 9 Adjustment Methods and Procedures for Restricted Stock Incentive Plans......................................22

Chapter 10 Accounting Treatment of Restricted Stocks......................................................................24

Chapter 11 Implementation Procedures for Restricted Stock Incentive Plans......................................25

Chapter 12 Respective Rights and Obligations of the Company/Incentive Objects......................................29

Chapter 13 Handling changes in the company/incentive objects......................................................31

Chapter 14 Restricted Stock Repurchase Principles............................................................................34

Chapter 15 Supplementary Provisions......................................................................................................37

Chapter 1 Interpretation

Unless otherwise specified, the following words have the following meanings in this article:

Xiaofang Pharmaceutical, the Company, the Company refers to Shanghai Xiaofang Pharmaceutical Co., Ltd. (including branches and holding subsidiaries). This incentive plan refers to the 2026 Restricted Stock Incentive Plan of Shanghai Xiaofang Pharmaceutical Co., Ltd. The company will grant a certain number of company restricted stocks to incentive targets according to the conditions and prices specified in this incentive plan. The company's stocks are set for a certain period of restricted sales, and can only be released from restricted circulation after meeting the conditions for lifting the restrictions stipulated in this incentive plan.

According to the provisions of this incentive plan, the directors, senior managers and incentive objects of the company who have obtained restricted stocks refer to

Middle and senior managers, core personnel

Grant date refers to the date when the company grants restricted stocks to incentive objects. The grant date must be the trading day. Grant price refers to the price of each restricted stock granted by the company to incentive objects.

The restricted stocks granted to the incentive targets under this incentive plan are prohibited from being transferred, used for guarantee, and restricted for sale.

debt repayment period

After the conditions for unlocking sales stipulated in this incentive plan are met, the restricted stocks held by the incentive objects will be unlocked.

The period during which sales restrictions can be lifted and put on the market

According to this incentive plan, the conditions for unlocking the restricted stocks obtained by the incentive objects that must be met to unlock the restricted stocks refer to

pieces

"Company Law" means "Company Law of the People's Republic of China"

“Securities Law” refers to the “Securities Law of the People’s Republic of China”

"Administrative Measures" refers to the "Administrative Measures for Equity Incentives of Listed Companies"

"Articles of Association" refers to "Articles of Association of Shanghai Xiaofang Pharmaceutical Co., Ltd."

China Securities Regulatory Commission refers to China Securities Regulatory Commission

Stock Exchange refers to Shanghai Stock Exchange

Securities registration and clearing institution refers to China Securities Depository and Clearing Co., Ltd. Shanghai Branch

Yuan, RMB 10,000 refers to RMB yuan, RMB 10,000

Note: 1. The financial data and financial indicators quoted in this draft refer to the financial data in the consolidated statement and the financial indicators calculated based on such financial data unless otherwise specified.

2. If there is any difference in the mantissa between some totals and the direct sum of each detailed number in this draft, it is due to rounding.

Chapter 2 The purpose and principles of this incentive plan

In order to further establish and improve the company's long-term incentive mechanism, attract and retain outstanding talents, fully mobilize the enthusiasm of the company's employees, effectively combine the interests of shareholders, the interests of the company and the personal interests of the core team, so that all parties can jointly pay attention to the long-term development of the company, on the premise of fully protecting the interests of shareholders, in accordance with the principle of equal returns and contributions, and in accordance with the provisions of the "Company Law", "Securities Law", "Administrative Measures" and other relevant laws, regulations and normative documents, as well as the provisions of the "Articles of Association".

As of the announcement date of this draft incentive plan, the 2025 restricted stock incentive plan reviewed and approved by the company's first extraordinary general meeting of shareholders in 2025 is still under implementation. The number of underlying shares involved in the company's 2025 restricted stock incentive plan is 1.6 million shares.

This incentive plan is independent of the company's 2025 restricted stock incentive plan and has no relevant connection.

Chapter 3 Management Organization of this Incentive Plan

1. As the company’s highest authority, the shareholders’ meeting is responsible for reviewing and approving the implementation, changes and termination of this incentive plan. The shareholders' meeting may authorize the board of directors to handle certain matters related to this incentive plan within the scope of its authority.

2. The board of directors is the executive management agency of this incentive plan and is responsible for the implementation of this incentive plan. The Remuneration and Assessment Committee under the Board of Directors is responsible for formulating and revising this incentive plan and submitting it to the Board of Directors for review. After the Board of Directors has reviewed and approved the incentive plan, it will be submitted to the shareholders' meeting for review. The board of directors may handle matters related to this incentive plan within the scope authorized by the shareholders' meeting.

3. The Remuneration and Appraisal Committee of the Board of Directors is the supervisory authority of this incentive plan and shall express its opinion on whether this incentive plan is conducive to the sustainable development of the company and whether there is any situation that obviously damages the interests of the company and all shareholders. The Remuneration and Assessment Committee of the Board of Directors supervises whether the implementation of this incentive plan complies with relevant laws, regulations, normative documents and stock exchange business rules, and is responsible for reviewing the list of incentive targets.

If the company changes the equity incentive plan before it is reviewed and approved by the shareholders' meeting, the remuneration and assessment committee of the board of directors shall express its opinion on whether the changed plan is conducive to the company's sustainable development and whether there is any situation that obviously damages the interests of the company and all shareholders.

Before the company grants rights and interests to the incentive objects, the remuneration and assessment committee of the board of directors should express a clear opinion on whether the conditions for the incentive objects to be granted rights set in this incentive plan have been met. If there is a discrepancy between the rights granted by the company to the incentive objects and the arrangement of this incentive plan, the remuneration and assessment committee of the board of directors (when the incentive objects change) should issue a clear opinion.

Before the incentive objects exercise their rights and interests, the remuneration and assessment committee of the board of directors should express a clear opinion on whether the conditions for the incentive objects to exercise their rights and interests set in this incentive plan have been met.

Chapter 4 Determination of Basis and Scope of Incentive Objects

1. Basis for determining incentive objects

(1) Legal basis for determining incentive objects

The incentive objects of this incentive plan are determined in accordance with the Company Law, Securities Law, Management Measures and other relevant laws, regulations, normative documents and the Articles of Association, based on the actual situation of the company, and comply with the requirements of relevant laws and regulations.

(2) Position basis for determining incentive targets

The incentive targets granted for the first time under this incentive plan are the company's directors, senior managers, middle and senior managers, and core key personnel (excluding independent directors). The basis for determining the incentive objects is consistent with the purpose of implementing this incentive plan.

2. Scope of incentive objects

This incentive plan will grant incentives to no more than 158 people for the first time, accounting for approximately 29.87% of the company's total employees at the end of 2025. Specifically include:

1. Directors and senior managers;

2. Middle and senior managers;

3. Core staff.

All incentive targets must be employed by the company or the company's holding subsidiaries or branches when the company grants restricted stocks and during the assessment period stipulated in this incentive plan, have signed a labor contract with the company or the company's holding subsidiaries, and receive remuneration.

The incentive objects granted for the first time under this incentive plan do not include independent directors and shareholders or actual controllers who individually or collectively hold more than 5% of the company's shares and their spouses, parents and children, nor do they include persons who are not allowed to be incentive objects according to Article 8 of the "Management Measures".

The incentive objects for the reserved grant portion will be determined within 12 months after the incentive plan is reviewed and approved by the shareholders' meeting. After the board of directors proposes, the remuneration and assessment committee of the board of directors issues clear opinions, and the lawyer expresses professional opinions and issues a legal opinion, the company will promptly and accurately disclose relevant information about the current incentive objects on the designated website as required. If the incentive target is not specified for more than 12 months, the reserved rights will become invalid. Reservation incentives may include company directors, senior managers, and other employees deemed by the board of directors to be in need of incentives.

3. Verification of incentive objects

(1) After this incentive plan is reviewed and approved by the board of directors and before the shareholders' meeting is held, the company will publicly announce the names and positions of the incentive targets internally through the company's website or other channels. The publicity period shall be no less than 10 days.

(2) The remuneration and assessment committee of the company's board of directors will review the list of incentive objects, fully listen to the public opinions, and disclose the explanation of the review and publicity of the list of incentive objects by the remuneration and assessment committee of the board of directors 5 days before the company's shareholders' meeting to review the incentive plan. The list of incentive targets adjusted by the company's board of directors should also be verified by the remuneration and assessment committee of the company's board of directors.

Chapter 5 Source, Quantity and Allocation of Restricted Stocks

1. Equity incentive method and source of underlying stocks of this incentive plan

The incentive tool used in this incentive plan is restricted stock. Source of underlying stocks involved in this incentive plan

Provided the company with targeted issuance of A shares of the company's ordinary shares to incentive targets.

2. Number of restricted stocks granted

The total number of restricted stocks planned to be granted under this incentive plan shall not exceed 1.6 million shares, accounting for 1.00% of the company's total share capital of 160,673,262 shares at the time of the announcement of the draft incentive plan. Among them, no more than 1.28 million shares will be granted for the first time, accounting for 80.00% of the total equity to be granted by this incentive plan, accounting for 0.80% of the company's total equity of 160,673,262 shares at the time of the announcement of the draft incentive plan; 320,000 shares are reserved, accounting for 20.00% of the total equity to be granted by this incentive plan, accounting for 0.2% of the company's total equity of 160,673,262 shares at the time of the announcement of the draft incentive plan.

After the implementation of this incentive plan, all the underlying stocks involved in the company’s equity incentive plans within the validity period

The total cumulative number does not exceed 10% of the company's total share capital. The cumulative number of the company's shares granted to any incentive object in this incentive plan through all equity incentive plans within the validity period does not exceed the number announced in this draft incentive plan.

1% of the company's total share capital at the time of reporting, and the reserved ratio does not exceed 20% of the total equity to be granted under this incentive plan.

3. Allocation of restricted stocks granted to incentive targets

The distribution of restricted stocks to be granted under this incentive plan among the incentive objects is as shown in the following table:

Restrictions on Grants of Accounting Incentive Plans Restrictions on Grants of Accounting

Company stock serial number on the announcement date Name Position Number of shares Ratio of total shares

Proportion of total capital (10,000 shares) Example (%)

(%) 1 Jiang Ai’e Deputy Director 4 2.50 0.02

2 Cao Ying Deputy General Manager 3 1.88 0.02

3 Jiang Lili Assistant to the Chairman, Securities Affairs Representative 3 1.88 0.02

4 Xu Juan Financial Manager 3 1.88 0.02

5 Jiang Chang Director 3 1.88 0.02

6 Yin Yufeng Director 2 1.25 0.01

7 Yao Zouqing Assistant to the Chairman 2 1.25 0.01

8 Zhang Changwei Factory Director 2 1.25 0.01

Middle and senior managers and key personnel

106 66.25 0.66

(150 people)

Reserved portion 32 20.00 0.20

Total 160 100.00 1.00

Note: 1. The shares of the company granted to any of the above incentive targets through all equity incentive plans within the validity period do not exceed 1.00% of the company's total share capital. The total number of underlying stocks involved in all the company's incentive plans within the validity period shall not exceed 10.00% of the company's total share capital at the time of the announcement of this incentive plan.

2. The incentive targets of this incentive plan do not include independent directors, nor shareholders or actual controllers who individually or collectively hold more than 5% of the company's shares and their spouses, parents, and children.

3. The reserved incentive objects will be determined within 12 months after the incentive plan is reviewed and approved by the shareholders' meeting. After the board of directors proposes, the board of directors' remuneration and assessment committee issues clear opinions, and the lawyer expresses professional opinions and issues a legal opinion, the company will promptly and accurately disclose the relevant information of the current incentive objects on the designated website as required.

4. If the total number of values ​​in the above table does not match the sum of each sub-item value, it is due to rounding.

Chapter 6 The validity period, grant date, sales restriction period, sales restriction release arrangement and lock-up period of this incentive plan

1. Validity period of this incentive plan

The validity period of this incentive plan starts from the date when the registration of the first grant of restricted stocks is completed and ends on the date when all restricted stocks granted to the incentive objects are released from sale restrictions or repurchased, and the maximum period shall not exceed 60 months.

2. Grant date of this incentive plan

The grant date will be determined by the board of directors after the incentive plan is reviewed and approved by the company's shareholders' meeting, and the grant date must be a trading day. The company needs to grant the incentive objects and complete the announcement and registration within 60 days after the approval of the shareholders' meeting; if there are conditions for granting rights, the company must grant the rights and complete the announcement and registration within 60 days after the conditions are met. If the company fails to complete the above work within 60 days, it must disclose the reasons for non-completion and terminate the implementation of this incentive plan. Ungranted restricted stocks will become invalid. The grant date for reserved restricted stocks shall be confirmed by the company's board of directors within 12 months after review and approval at the shareholders' meeting.

The company may not grant restricted stock during the following periods:

(1) Within fifteen days before the announcement of the annual report or semi-annual report of a listed company, if the announcement date of the annual report or semi-annual report is postponed due to special reasons, the period shall be calculated from the fifteen days before the original scheduled announcement date to the day before the announcement;

(2) Within five days before the announcement of quarterly reports, performance forecasts, and performance bulletins of listed companies;

(3) From the date of the occurrence of a major event that may have a greater impact on the trading price of the company's stocks and its derivatives, or during the decision-making process, to the date of disclosure in accordance with the law;

(4) Other periods specified by the China Securities Regulatory Commission and stock exchanges.

If relevant laws, administrative regulations, departmental rules, etc. otherwise stipulate the above-mentioned non-grantable period, the relevant provisions shall prevail.

The above period during which the Company may not grant restricted stock is not included in the 60-day period.

3. The sales restriction period and sales restriction lifting arrangements of this incentive plan

The restricted sales periods for the restricted stocks first granted under this incentive plan are 12 months, 24 months, and 36 months respectively from the date of completion of grant registration. If the reserved restricted stocks are granted before the disclosure of the company's third quarter report in 2026, the restricted stock sales period of the reserved grant will be 12 months, 24 months, and 36 months respectively from the date of completion of grant registration; if the reserved restricted stocks are granted after the disclosure of the company's third quarter report in 2026, the restricted sales period of the reserved restricted stocks will be 12 months and 24 months from the date of completion of grant registration. The restricted stocks granted to incentive targets under this incentive plan may not be transferred, used to guarantee or repay debts before the restrictions are lifted. The restricted stocks granted to the incentive recipients due to the transfer of capital reserve funds to share capital, stock dividends, and stock splits are also subject to sales restrictions and may not be sold or transferred in other ways on the secondary market. The unlocking period for these shares is the same as the unlocking period for restricted stocks. If the company repurchases restricted shares that have not been released from sale, these shares will be repurchased together.

If the conditions for lifting the restrictions in the current period are not met, the restricted stocks shall not be lifted or deferred to the next period to be lifted from the restrictions. After the lock-up period expires, the company will handle the lifting of sales restrictions for incentive targets who meet the conditions for lifting sales restrictions, and the restricted stocks held by incentive targets who do not meet the conditions for lifting sales restrictions will be repurchased by the company.

The unlocking period for the restricted stocks first granted under this incentive plan and the unlocking schedule for each period are as follows:

Arrangements for lifting sales restrictions. Time for lifting sales restrictions. Ratio of lifting sales restrictions.

From the first trading day 12 months after the date of completion of grant registration to the date of grant

The first unlocking period ends on the last trading day within 24 months from the date of completion of 40% registration

From the first trading day 24 months after the date of completion of grant registration to the date of grant

The second unlocking period ends on the last trading day within 36 months from the date of completion of 30% registration

From the first trading day 36 months after the date of completion of grant registration to the date of grant

The third unlocking period is 30%

Ending on the last trading day within 48 months from the date of completion of registration

If the reserved restricted stocks are granted before the disclosure of the third quarter report of 2026, the unlocking period and the unlocking time schedule for each period of the reserved restricted stocks will be consistent with the initial grant.

If some of the reserved restricted stocks are granted after the disclosure of the third quarter report of 2026, the unlocking period of the reserved restricted stocks and the unlocking time schedule for each period are as follows:

Arrangements for lifting sales restrictions. Time for lifting sales restrictions. Ratio of lifting sales restrictions.

From the first trading day 12 months after the date of completion of grant registration to the date of grant

The first unlocking period ends on the last trading day within 24 months from the date of completion of 50% registration

From the first trading day 24 months after the date of completion of grant registration to the date of grant

50% during the second lifting period

Ending on the last trading day within 36 months from the date of completion of registration

Restricted stocks that have not applied for lifting of sales restrictions within the above agreed period or corresponding restricted stocks that cannot apply for lifting of sales restrictions because they have not met the conditions for lifting sales restrictions will be repurchased by the company in accordance with the principles stipulated in this incentive plan.

4. Blackout period of this incentive plan

The lock-up period refers to the period of time during which the incentive objects are restricted from selling the shares obtained after the restrictions are lifted. The restrictions on sales of this restricted stock incentive plan shall be implemented in accordance with the provisions of the Company Law, Securities Law and other relevant laws, regulations, normative documents and the Articles of Association, including but not limited to:

(1) If the incentive targets are directors and senior managers of the company, the shares transferred each year during their tenure shall not exceed 25% of the total number of shares of the company held by them; within six months after leaving the company, the shares of the company held by them shall not be transferred.

(2) If the incentive targets are directors and senior managers of the company, if they sell the company's stocks held by them within 6 months after buying them, or buy them again within 6 months after selling them, the proceeds will belong to the company, and the company's board of directors will take back the proceeds (except for short-term trading exemptions stipulated by the China Securities Regulatory Commission).

During the validity period of this incentive plan, if the relevant provisions on the transfer of shares held by directors and senior managers of the company in the Company Law, Securities Law and other relevant laws, regulations, normative documents and the Articles of Association of the Company change, the transfer of the company stocks held by these incentive objects shall comply with the provisions of the revised Company Law, Securities Law and other relevant laws, regulations, normative documents and the Articles of Association.

Chapter 7 Grant Price of Restricted Stocks and Determination of Grant Price

1. Grant price of restricted stocks granted for the first time

The grant price of the first grant of restricted stock is 11.91 yuan per share, that is, after meeting the grant conditions, the incentive recipients can purchase the company's A shares of ordinary shares issued by the company to the incentive recipients at a price of 11.91 yuan per share.

2. Method for determining the grant price of restricted stocks granted for the first time

The grant price of the first grant of restricted stocks shall not be lower than the par value of the shares, and shall not be lower than the higher of the following prices:

(1) The average stock trading price of the company on the trading day before the announcement of this draft incentive plan (total stock trading volume on the previous trading day/total stock trading volume on the previous trading day) was 50% of 21.98 yuan per share, which was 10.99 yuan per share;

(2) The average trading price of the company’s stock in the 20 trading days before the announcement of this draft incentive plan (total stock trading volume in the previous 20 trading days/total stock trading volume in the previous 20 trading days) is 50% of 23.82 yuan per share, which is 11.91 yuan per share.

3. Method for determining the grant price of reserved restricted stocks

The grant price of the reserved restricted shares is the same as the first grant of restricted shares, which is RMB 11.91 per share. Before granting some reserved restricted stocks, the board of directors must convene to review and approve relevant proposals and disclose the grant status.

Chapter 8 Grant of Restricted Stocks and Release of Restriction Conditions

1. Grant conditions of restricted stocks

When the following grant conditions are met at the same time, the company shall grant restricted stocks to the incentive objects. On the contrary, if any of the following grant conditions is not met, the company shall not grant restricted stocks to the incentive objects.

(1) The company has not experienced any of the following situations:

1. The financial accounting report of the most recent fiscal year was issued a negative opinion or an audit report in which a certified public accountant was unable to express an opinion;

2. An audit report in which a certified public accountant issued a negative opinion or was unable to express an opinion on the internal control of the financial report in the most recent fiscal year;

3. In the last 36 months after listing, there has been any failure to distribute profits in accordance with laws, regulations, company articles of association, and public commitments;

4. Equity incentives are not allowed according to laws and regulations;

5. Other circumstances determined by the China Securities Regulatory Commission.

(2) None of the following circumstances have occurred to the incentive objects:

1. Determined as an unsuitable candidate by the stock exchange within the last 12 months;

2. Have been deemed as inappropriate candidates by the China Securities Regulatory Commission and its dispatched agencies within the last 12 months;

3. In the past 12 months, the company has been subject to administrative penalties or market ban measures by the China Securities Regulatory Commission and its dispatched agencies due to serious violations of laws and regulations;

4. Those who are prohibited from serving as company directors or senior managers as stipulated in the Company Law;

5. Not allowed to participate in equity incentives of listed companies according to laws and regulations;

6. Other circumstances determined by the China Securities Regulatory Commission.

2. Conditions for lifting restrictions on restricted stocks

During the unlocking period, the restricted stocks granted to the incentive targets can be unlocked only when the following conditions are met:

(1) The company has not experienced any of the following situations:

1. The financial accounting report of the most recent fiscal year was issued a negative opinion or an audit report in which a certified public accountant was unable to express an opinion;

2. An audit report in which a certified public accountant issued a negative opinion or was unable to express an opinion on the internal control of the financial report in the most recent fiscal year;

3. In the last 36 months after listing, there has been any failure to distribute profits in accordance with laws, regulations, company articles of association, and public commitments;

4. Equity incentives are not allowed according to laws and regulations;

5. Other circumstances determined by the China Securities Regulatory Commission.

(2) None of the following circumstances have occurred to the incentive objects:

1. Determined as an unsuitable candidate by the stock exchange within the last 12 months;

2. Have been deemed as inappropriate candidates by the China Securities Regulatory Commission and its dispatched agencies within the last 12 months;

3. In the past 12 months, the company has been subject to administrative penalties or market ban measures by the China Securities Regulatory Commission and its dispatched agencies due to serious violations of laws and regulations;

4. Those who are prohibited from serving as company directors or senior managers as stipulated in the Company Law;

5. Not allowed to participate in equity incentives of listed companies according to laws and regulations;

6. Other circumstances determined by the China Securities Regulatory Commission.

If one of the circumstances specified in Article (1) above occurs to the company, all restricted stocks that have been granted to the incentive targets but have not been released from sales restrictions under this incentive plan shall be repurchased by the company at the grant price; if one of the circumstances specified in Article (2) above occurs to an incentive target, the company will terminate its right to participate in this incentive plan. The restricted stocks that have been granted to the incentive target but have not been released from sales restrictions under this incentive plan shall be repurchased by the company at the grant price.

(3) Company-level performance appraisal requirements

The assessment year for the restricted stocks first granted under this incentive plan is the three fiscal years from 2026 to 2028, and the assessment is once for each fiscal year. The performance conditions for unlocking the restricted stocks for the first time granted under this incentive plan are as follows:

Lifting the restricted sales period and performance appraisal targets

The company needs to meet one of the following two conditions:

The first unlocking period 1. Based on the operating income in 2025, the operating income growth rate in 2026 shall not be less than 10%;

2. Taking the net profit in 2025 as the base, the net profit growth rate in 2026 will not be less than 10%. The company needs to meet one of the following two conditions:

The second unlocking period 1. Based on the operating income in 2025, the operating income growth rate in 2027 shall not be less than 20%;

2. Taking the net profit in 2025 as the base, the net profit growth rate in 2027 will not be less than 20%. The company needs to meet one of the following two conditions:

The third lifting period 1. Based on the operating income in 2025, the operating income growth rate in 2028 shall not be less than 30%;

2. Taking the net profit in 2025 as the base, the net profit growth rate in 2028 will not be less than 30%. Note (the same below):

3. The above-mentioned "net profit" refers to the net profit attributable to shareholders of listed companies.

4. The above "operating income" and "net profit" are calculated based on the data contained in the consolidated statements audited by the accounting firm hired by the company.

5. When calculating whether the net profit performance assessment target of this incentive plan is met, the share-based payment expenses incurred in the corresponding assessment year for all equity incentive plans or employee stock ownership plans implemented within the validity period of this incentive plan are excluded.

If some of the reserved restricted stocks are granted before the disclosure of the third quarter report of 2026, the performance assessment year and performance assessment indicators of each assessment year for the reserved restricted stocks will be consistent with the restricted stocks first granted. If some of the reserved restricted stocks are granted after the disclosure of the third quarter report of 2026, the assessment year for the reserved restricted stocks will be the two fiscal years of 2027-2028, and will be assessed once in each fiscal year. The performance conditions for unlocking the reserved restricted stocks are as follows:

Lifting the restricted sales period and performance appraisal targets

The company needs to meet one of the following two conditions:

The first lifting period of sales restrictions 1. Based on the operating income in 2025, the operating income growth rate in 2027 shall not be less than 20%;

2. Taking the net profit in 2025 as the base, the net profit growth rate in 2027 will not be less than 20%.

The company needs to meet one of the following two conditions:

The second unlocking period 1. Based on the operating income in 2025, the operating income growth rate in 2028 shall not be less than 30%;

2. Taking the net profit in 2025 as the base, the net profit growth rate in 2028 will not be less than 30%. If the company fails to meet the above performance assessment targets, all restricted stocks planned to be released by all incentive targets in the current year shall not be released from sale restrictions and will be repurchased by the company at the grant price.

(4) Individual level assessment requirements

The individual-level assessment of incentive targets is organized and implemented in accordance with the company's current regulations on salary and assessment. The individual-level sales restriction lifting ratio is determined by the assessment results in the following table:

Assessment Rating A B C D

The proportion of sales restrictions lifted at the individual level 100% 80% 50% 0

If the performance assessment indicators at the company level are achieved in the current year, the actual number of individual incentive targets that have been lifted from sales restrictions that year = the proportion of sales restrictions that are lifted at the individual level × the number of individuals who plan to lift sales restrictions that year.

Restricted stocks that cannot be lifted or completely lifted by incentive targets due to personal-level performance appraisal reasons cannot be deferred to the next year and will be repurchased by the company at the grant price.

3. Scientific and rational explanation of assessment indicators

The company's restricted stock assessment indicators are divided into two levels, namely company-level performance assessment and individual-level performance assessment.

The company-level performance evaluation indicator is operating income growth rate or net profit growth rate. The operating income growth rate indicator reflects the company's operating status and market size. It is one of the important indicators for predicting the company's business expansion trend and is also an effective indicator that reflects the company's growth. The net profit growth rate reflects the company's profitability and reflects the final results of the company's operations. It helps measure the expansion trend of the company's main business and establish a good capital market image. The determination of specific performance assessment goals takes into account factors such as the macroeconomic environment, industry development status, market competition, and the company's future development plan, as well as the possibility of implementation and the incentive effect for the company's employees. The indicator setting is reasonable and scientific.

In addition to company-level performance appraisals, the company also sets up strict performance appraisals for individual incentive targets, which can make a more accurate and comprehensive comprehensive evaluation of the work performance of the incentive targets. The company will determine whether individual incentive recipients meet the conditions for lifting sales restrictions based on the corresponding annual performance evaluation results of the incentive recipients.

In summary, the assessment system of this incentive plan is comprehensive, comprehensive and operable, and the setting of assessment indicators is scientific and rational. It also has a constraining effect on the incentive objects and can achieve the assessment purpose of this incentive plan.

Chapter 9 Adjustment Methods and Procedures for Restricted Stock Incentive Plans

1. Method for adjusting the number of restricted stocks

If between the announcement date of this incentive plan and the completion of registration of restricted stock shares by the incentive targets, the company has matters such as converting capital reserves to increase share capital, distributing stock dividends, subdividing shares, allotment, reduction of shares, etc., the number of restricted shares should be adjusted accordingly. The adjustment method is as follows:

(1) Conversion of capital reserve funds into share capital, distribution of stock dividends, and subdivision of shares

Q=Q × (1+n)

Among them: Q is the number of restricted stocks before adjustment; n is the ratio of capital reserve per share to increase share capital, distribution of stock dividends, and stock subdivision (that is, the number of shares increased after each share is transferred to increase, bonus shares, or subdivision); Q is the number of restricted stocks after adjustment.

(2) Allotment of shares

Q＝Q×P×(1+n)÷(P+P×n)

0 1 1 2

Among them: Q is the number of restricted shares before adjustment; P is the closing price on the equity registration date; P is the allotment

0 1 2

share price; n is the proportion of allotment shares (that is, the ratio of the number of allotment shares to the company's total share capital before the allotment); Q is the adjusted number of restricted shares.

(3) Stock reduction

Q＝Q×n

Among them: Q is the number of restricted stocks before adjustment; n is the stock reduction ratio (that is, 1 company stock is reduced to n shares); Q is the number of restricted stocks after adjustment.

(4) Dividend distribution and additional issuance (including public issuance and non-public issuance of shares)

When the company pays dividends or issues new shares (including public issuance and non-public issuance of shares), the number of restricted shares will not be adjusted.

2. Adjustment method for restricted stock grant price

If between the date of announcement of this incentive plan and the completion of registration of restricted stock shares by the incentive targets, the company has matters such as converting capital reserves to increase share capital, distributing stock dividends, subdividing shares, allotment, reduction of shares or payment of dividends, etc., the grant price of the restricted stocks should be adjusted accordingly. The adjustment method is as follows:

(1) Conversion of capital reserve funds into share capital, distribution of stock dividends, and subdivision of shares

P＝P÷（1＋n）

Among them: P is the grant price of restricted stock per share before adjustment; n is the ratio of capital reserve per share to increase share capital, distribution of stock dividends, and stock subdivision; P is the adjusted grant price of restricted stock per share.

(2) Allotment of shares

P＝P×（P＋P×n）÷[P×（1＋n）]

0 1 2 1

Among them: P is the grant price of each restricted stock before adjustment; P is the closing price on the equity registration date;

0 1

P is the price of the allotment; n is the proportion of the allotment (that is, the ratio of the number of shares of the allotment to the total share capital of the company before the allotment); P is the adjusted grant price of each restricted stock.

(3) Stock reduction

P＝P÷n

Among them: P is the grant price of each restricted stock before adjustment; n is the share reduction ratio (that is, 1 share of company stock is reduced to n shares); P is the adjusted grant price of restricted stock per share.

(4) Dividend payment

P=P-V

Among them: P is the grant price of restricted stock per share before adjustment; V is the dividend amount per share; P is the grant price of restricted stock per share after adjustment. After adjusting for dividends, P must still be greater than 1.

(5) Additional issuance (including public issuance and non-public issuance of shares)

When the company issues new shares (including public issuance and non-public issuance of shares), the grant price of restricted stocks will not be adjusted.

3. Procedure for adjustment of restricted stock incentive plan

When the above situation occurs, according to the authorization of the company's shareholders' meeting, the company's board of directors shall review and approve the proposal on adjusting the number of restricted stocks and the grant price. The company should hire a lawyer to provide professional opinions to the company's board of directors on whether the above adjustments are in compliance with the "Management Measures", the "Articles of Association" and the provisions of this incentive plan. After the adjustment proposal is reviewed and approved by the board of directors, the company shall promptly disclose the announcement of the board of directors' resolution and publish a legal opinion at the same time.

Chapter 10 Accounting Treatment of Restricted Stocks

In accordance with the provisions of "Accounting Standards for Business Enterprises No. 11 - Share-based Payment", on each balance sheet date of the restricted period, the company will revise the number of restricted stocks expected to be released based on the latest changes in the number of people who can be released from restrictions, the completion of performance indicators and other follow-up information, and include the services obtained in the current period into relevant costs or expenses and capital reserves based on the fair value of the restricted stock grant date.

In accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 11 - Share-based Payment" and "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments", the company's board of directors made a pre-calculation of the fair value of the restricted stocks initially granted on the trading day before the draft announcement (formal calculation was carried out at the time of grant). The fair value of each restricted stock = the market price of the company's stock (predicted based on the closing price on June 10, 2026) - the grant price, which is 10.28 yuan per share.

The company will ultimately recognize the share-based payment expenses of this incentive plan based on the fair value of the restricted stocks on the grant date, and these expenses will be amortized in the proportion of the release of restrictions during the implementation of this incentive plan. Incentive costs arising from this incentive plan will be charged to recurring profits and losses.

Assuming that the first grant is implemented in early July 2026, according to the requirements of Chinese accounting standards, the impact of the first grant of restricted stocks under this incentive plan on the accounting costs of each period is as follows:

Total amortization required for first grant of restricted shares 2026 2027 2028 Number of shares in 2029 (10,000 shares) Expenses (10,000 yuan) (10,000 yuan) (10,000 yuan) (10,000 yuan) (10,000 yuan) 128 1315.84 427.65 592.13 230.27 65.79 Note:

1. The above cost amortization forecast does not represent the final accounting cost. In addition to being related to the actual grant date, the closing price on the grant date and the number of grants, the actual accounting costs are also related to the actual effective and invalid amounts. At the same time, shareholders are reminded of the possible dilutive impact.

2. The final result of the impact of the above cost amortization forecast on the company's operating results will be based on the annual audit report issued by the accounting firm.

3. If this incentive plan is terminated, accounting treatment will be carried out in accordance with the relevant provisions of accounting standards.

The above calculation does not include the reserved equity of this incentive plan, and additional share-based payment expenses will be incurred when the reserved equity is granted.

The total expenses incurred under this incentive plan will be charged to recurring profit or loss. The company estimates based on the current situation that, without considering the stimulating effect of this incentive plan on the company's performance, the amortization of the expenses of this incentive plan will have an impact on the net profit in each year during the validity period. Considering the positive effect of this incentive plan on the development of the company, thereby stimulating the enthusiasm of employees and improving operating efficiency, the improvement in company performance brought by this incentive plan will be much higher than the increase in expenses it brings.

Chapter 11 Implementation Procedures for Restricted Stock Incentive Plans

1. Procedure for taking effect of this incentive plan

(1) The Remuneration and Assessment Committee of the company's board of directors is responsible for formulating the draft of this incentive plan, and the board of directors shall make a resolution on this incentive plan in accordance with the law. When the board of directors considers this incentive plan, directors who are the incentive targets or directors who are related to them shall abstain from voting. After reviewing and approving this incentive plan and performing the publicity and announcement procedures, the board of directors shall submit this incentive plan to the shareholders' meeting for review; at the same time, the board of directors shall request the shareholders' meeting to authorize the board of directors to be responsible for the granting, lifting of sales restrictions and repurchase of restricted stocks.

(2) The Remuneration and Appraisal Committee of the Board of Directors shall express its opinion on whether this incentive plan is conducive to the sustainable development of the company and whether there is any situation that obviously damages the interests of the company and all shareholders. The company should hire a law firm to issue a legal opinion on this incentive plan and issue professional opinions in accordance with the provisions of laws, administrative regulations and the "Administrative Measures". The company will hire an independent financial consultant to provide professional opinions on the feasibility of this incentive plan, whether it is conducive to the company's sustainable development, whether it will harm the company's interests, and its impact on the interests of shareholders.

(3) This incentive plan can only be implemented after being reviewed and approved by the company’s shareholders’ meeting. The company shall, before convening the shareholders' meeting, publicize the names and positions of the incentive targets within the company through the company's website or other channels (the publicity period shall not be less than 10 days). The remuneration and assessment committee of the board of directors should review the equity incentive list and fully listen to public opinions. The company shall disclose the explanation of the review and publicity of the incentive list by the remuneration and assessment committee of the board of directors 5 days before the shareholders' meeting to review the incentive plan.

The company shall conduct a self-examination on the insider trading of the company's stocks and its derivatives within 6 months before the announcement of this draft incentive plan, and explain whether there is any insider trading. Anyone who buys or sells the company's stocks after knowing inside information shall not become an incentive target, except for situations that are not considered insider trading according to laws, administrative regulations and relevant judicial interpretations. Anyone who leaks inside information and leads to insider trading shall not be the target of incentives.

(4) The shareholders' meeting shall vote on the content of the equity incentive plan stipulated in Article 9 of the "Administrative Measures" and pass it with more than 2/3 of the valid voting rights held by the shareholders present at the meeting. The shareholders' meeting shall separately count and disclose the voting status of other shareholders except the company's directors, senior managers, and shareholders who individually or collectively hold more than 5% of the company's shares.

When the company's shareholders meeting reviews this incentive plan, shareholders who are the incentive targets or shareholders who are related to the incentive targets should abstain from voting.

(5) When this incentive plan is reviewed and approved by the company's shareholders' meeting and meets the grant conditions stipulated in this incentive plan, the company will grant restricted stocks to the incentive targets within the specified time. After authorization from the shareholders' meeting, the board of directors is responsible for the granting, lifting and repurchase of restricted stocks.

2. Granting Procedure for Restricted Stocks

(1) After the shareholders' meeting reviews and approves this incentive plan, the company and the incentive targets will sign a "Restricted Stock Grant Agreement" to stipulate the rights and obligations of both parties.

(2) Before the company grants rights and interests to the incentive objects, the board of directors shall review and announce whether the conditions for the incentive objects to be granted rights set in this incentive plan have been met and make an announcement. The grant plan for reserved restricted stocks shall be determined, reviewed and approved by the board of directors.

The remuneration and appraisal committee of the board of directors should issue clear opinions. The law firm should issue a legal opinion on whether the conditions for the incentive target to be granted benefits have been met.

(3) The remuneration and assessment committee of the company's board of directors shall verify and issue opinions on the grant date of restricted stocks and the list of incentive targets.

(4) When there is a discrepancy between the rights granted by the company to the incentive objects and the arrangements of this incentive plan, the remuneration and assessment committee of the board of directors (when the incentive objects change) and the law firm shall issue clear opinions at the same time.

(5) After this incentive plan is reviewed and approved by the shareholders' meeting, the company shall grant the first incentive objects within 60 days and complete announcement and registration. The company's board of directors should promptly disclose relevant implementation announcements after the registration of the granted restricted stocks is completed. If the company fails to complete the above work within 60 days, the incentive plan will be terminated. The board of directors shall disclose the reasons for failure in a timely manner and shall not review the equity incentive plan again within 3 months (the period during which listed companies are not allowed to grant restricted stocks according to the "Administrative Measures" shall not be counted within 60 days).

The recipients of the reserved rights and interests shall be clarified within 12 months after the incentive plan is reviewed and approved by the shareholders' meeting. If the incentive recipients are not specified within 12 months, the reserved rights and interests shall become invalid.

(6) Before granting restricted stocks, the company shall submit an application to the stock exchange. After confirmation by the stock exchange, the securities registration and clearing agency will handle registration and settlement matters.

(7) After the company grants restricted stocks to the incentive objects, if the registered capital is changed, the company shall go through the change registration or filing procedures with the registration authority.

3. Procedure for lifting restrictions on restricted stocks

(1) Before lifting the sales restrictions, the company should confirm whether the incentive objects meet the conditions for lifting the sales restrictions. The board of directors shall review whether the conditions for lifting sales restrictions set in this incentive plan have been met, and the remuneration and assessment committee of the board of directors shall issue a clear opinion. Law firms should issue legal opinions on whether the conditions for the incentive objects to be lifted from sales restrictions have been met. For incentive objects that meet the conditions for lifting sales restrictions, the company will handle the lifting of sales restrictions in a unified manner. For incentive objects that do not meet the conditions, the company will repurchase the restricted stocks corresponding to the lifting of sales restrictions held by them. Companies should promptly disclose announcements on relevant implementation status.

(2) Incentive objects may transfer restricted stocks that have been lifted from sales restrictions, but the transfer of shares held by the company’s directors and senior managers shall comply with the provisions of relevant laws, regulations and normative documents.

(3) Before lifting the sales restrictions on the restricted stocks of the incentive targets, the company shall submit an application to the stock exchange. After confirmation by the stock exchange, the securities registration and clearing agency will handle registration and settlement matters.

4. Change procedures for this incentive plan

(1) If the company intends to change this incentive plan before the shareholders' meeting reviews the incentive plan, it must be reviewed and approved by the board of directors.

(2) If the company changes this incentive plan after the shareholders’ meeting has reviewed and approved the incentive plan, it shall be reviewed and decided by the shareholders’ meeting, and the following circumstances shall not be included:

1. Situations that lead to early lifting of sales restrictions;

2. The situation of reducing the award price.

The remuneration and assessment committee of the board of directors should express its opinion on whether the changed plan is conducive to the company's sustainable development and whether there is any situation that obviously damages the interests of the company and all shareholders. Law firms should issue professional opinions on whether the changed plan complies with the provisions of the "Administrative Measures" and relevant laws and regulations, and whether there are any circumstances that will obviously harm the interests of the company and all shareholders.

5. Termination procedure of this incentive plan

(1) If the company encounters one of the circumstances stipulated in Article 7 of the "Administration Measures", it will terminate the implementation of this incentive plan and shall not continue to grant new rights and interests to the incentive objects. The rights and interests that have been granted but have not been exercised under this incentive plan shall be terminated.

(2) If an incentive object is not allowed to become an incentive object under the circumstances stipulated in Article 8 of the "Administrative Measures", the company will no longer grant its rights and interests, and the rights and interests that have been granted but have not been exercised will be terminated.

(3) If the company intends to terminate the implementation of this incentive plan before the shareholders meeting reviews the incentive plan, it must be reviewed and approved by the board of directors.

(4) If the company terminates the implementation of this incentive plan after the shareholders' meeting has reviewed and approved the incentive plan, it shall be reviewed and decided by the shareholders' meeting.

(5) The law firm shall issue a professional opinion on whether the company's termination of the incentive plan complies with the provisions of the "Administrative Measures" and relevant laws and regulations, and whether there are circumstances that will obviously harm the interests of the company and all shareholders.

(6) When this incentive plan is terminated, the company shall repurchase the restricted stocks that have not been released from sale and handle them in accordance with the provisions of the Company Law.

(7) When the company needs to repurchase restricted stocks, it should promptly convene the board of directors to review the share repurchase plan and make a timely announcement. When the company implements repurchase in accordance with the provisions of this incentive plan, it shall submit an application to the stock exchange. After confirmation by the stock exchange, the securities registration and clearing agency will handle registration and settlement matters.

(8) The company terminates the implementation of this incentive plan and will no longer review and disclose the draft equity incentive plan within 3 months from the date of announcement of the resolution.

Chapter 12 The respective rights and obligations of the company/incentive objects

1. The company’s rights and obligations

(1) The company has the right to interpret and execute this incentive plan and evaluate the incentive targets in accordance with the provisions of this incentive plan. If the incentive targets do not meet the conditions for lifting sales restrictions determined in this incentive plan, the company will repurchase the corresponding restricted stocks from the incentive targets that have not been lifted from sales restrictions in accordance with the principles stipulated in this incentive plan.

(2) The company withholds and pays the personal income tax payable by the incentive recipients in accordance with the provisions of national tax regulations.

(3) The company promises not to provide loans, loan guarantees or any other form of financial assistance for incentive targets to obtain relevant restricted stocks in accordance with this incentive plan.

(4) The company should promptly perform its obligations such as declaration of restricted stock incentive plan and information disclosure in accordance with relevant regulations.

(5) The company shall, in accordance with this incentive plan and the relevant regulations of the China Securities Regulatory Commission, stock exchanges, securities registration and clearing institutions, etc., actively cooperate with incentive objects that meet the conditions for lifting sales restrictions to lift sales restrictions in accordance with regulations. However, if the incentive recipients fail to lift the sales restrictions as they wish due to the China Securities Regulatory Commission, stock exchanges, or securities registration and clearing institutions and cause losses to the incentive recipients, the company will not be held responsible.

(6) Participation in this incentive plan does not constitute the company’s commitment to the employment period of the incentive objects. The employment relationship or labor relationship between the company and the incentive objects is still governed by the employment agreement or labor contract signed between the company and the incentive objects.

(7) If the incentive recipients seriously damage the interests or reputation of the company due to violations of the law, violation of professional ethics, disclosure of company secrets, dereliction of duty or dereliction of duty, the company may repurchase the restricted stocks of the incentive recipients that have not been released from sale after review by the Remuneration and Assessment Committee of the Board of Directors and approval by the company's board of directors; if the circumstances are serious, the company may also seek compensation for the losses suffered by the company in accordance with relevant laws.

(8) Other relevant rights and obligations stipulated in laws and regulations.

2. Rights and obligations of incentive objects

(1) The incentive recipients should be diligent and responsible, abide by professional ethics, and make due contributions to the development of the company according to the requirements of the position employed by the company.

(2) Incentive objects shall be restricted from selling the restricted stocks they have been granted in accordance with the provisions of this incentive plan.

(3) The source of funds for the incentive recipients shall be self-raised funds by the incentive recipients, and the incentive recipients shall ensure that the sources of funds are legal and compliant.

(4) The restricted stocks granted to the incentive objects shall not be transferred, used for guarantee or debt repayment before the sales restrictions are lifted.

(5) When the company distributes cash dividends, the cash dividends that the incentive recipients should receive for the restricted stocks granted to them will be enjoyed by the incentive recipients after withholding and paying personal income tax; if the restricted shares cannot be released from sale, the company shall deduct the part of the cash dividends that the incentive recipients have enjoyed when repurchasing the restricted stocks in accordance with the provisions of this incentive plan, and make corresponding accounting treatments.

(6) Incentive objects shall pay personal income tax and other taxes in accordance with national tax regulations on the income derived from the incentive plan. If the incentive recipients resign before legally fulfilling their tax obligations arising from this incentive plan, they shall pay the unpaid personal income tax to the company before resigning, and the company shall perform the tax obligations on their behalf.

(7) The restricted stocks granted to the incentive objects will enjoy the rights due to their stocks after being registered and transferred by the registration and clearing company, including but not limited to dividend rights, allotment rights, etc. of such stocks. Before the restricted stocks are released from sale, the restricted stocks granted to the incentive targets under this incentive plan may not be transferred, used for guarantee or to repay debts. The restricted stocks granted to the incentive recipients due to the conversion of capital reserve funds into share capital, stock dividends, and stock splits are also subject to sales restrictions and may not be sold in the secondary market or transferred in other ways. The expiration date of the sales restriction period for these shares is the same as that of the restricted stocks.

(8) If restricted stocks are pledged, judicially frozen, withheld, or property is divided according to law (such as divorce, division of property) during the restricted period, in principle, restricted stocks that have not met the conditions for lifting the restriction may not be transferred to others through property division. As a result, property-related issues between the parties must be handled by the parties themselves in accordance with the law, and no rights claims may be made to the company.

(9) The incentive recipients promise that if the company does not comply with the arrangements for granting rights or exercising rights due to false records, misleading statements or major omissions in the information disclosure documents, the incentive recipients shall return all the benefits obtained from this incentive plan to the company after the relevant information disclosure documents are confirmed to contain false records, misleading statements or major omissions.

(10) After this incentive plan is reviewed and approved by the company's shareholders' meeting, the company will sign a "Restricted Stock Grant Agreement" with each incentive target to clearly stipulate their rights and obligations under this incentive plan and other related matters.

(11) Other relevant rights and obligations stipulated in laws, regulations and this incentive plan.

Chapter 13 Handling changes in the company/incentive objects

1. Handling of changes in the company

(1) If the company encounters any of the following circumstances, the implementation of this incentive plan will be terminated. The restricted stocks that have been granted to the incentive targets but have not yet been released from sale restrictions shall not be released from sale restrictions and will be repurchased by the company at the grant price:

1. The financial accounting report of the most recent fiscal year was issued a negative opinion or an audit report in which a certified public accountant was unable to express an opinion;

2. An audit report in which a certified public accountant issued a negative opinion or was unable to express an opinion on the internal control of the financial report in the most recent fiscal year;

3. In the last 36 months after listing, there has been any failure to distribute profits in accordance with laws, regulations, company articles of association, and public commitments;

4. Situations where equity incentives are not allowed to be implemented according to laws and regulations;

5. Other circumstances that require termination of the incentive plan as determined by the China Securities Regulatory Commission.

(2) If the company does not meet the grant conditions or release the restriction arrangement due to false records, misleading statements or major omissions in the information disclosure documents, the restricted shares that have not been released from the sale restrictions will be repurchased by the company at a unified price, and the repurchase price will be the grant price. If the restricted stocks granted to incentive objects have been released from sale, all incentive objects shall return the authorized benefits. If an incentive object that is not responsible for the above matters suffers losses due to the return of rights and interests, it can recover compensation from the company or the responsible object in accordance with the relevant arrangements of this incentive plan.

The board of directors shall recover the income from the incentive objects in accordance with the provisions of the preceding paragraph and the relevant arrangements of this incentive plan.

(3) When the company encounters any of the following circumstances, this incentive plan will not be changed and will continue to be implemented in accordance with the provisions of this incentive plan:

1. Change of control of the company;

2. The company undergoes mergers, divisions, etc.

(4) If the company/company stock changes due to factors such as economic situation, market conditions, etc., and it is difficult to achieve the incentive purpose by continuing to implement this incentive plan, the company's board of directors and/or shareholders' meeting may decide to cancel or terminate the incentive plan for a certain batch/batch of restricted stocks that have not been released from sales restrictions or terminate this incentive plan after review and confirmation by the company's board of directors and/or shareholders' meeting.

2. Changes in the personal circumstances of the incentive recipients

(1) If the incentive target has a change of position but is still working for the company or its affiliated branches or holding subsidiaries, the company has the right to adjust the restricted stocks that have been granted to them. If an incentive target is promoted, the restricted stock granted to him or her shall be carried out in full accordance with the procedures stipulated in this incentive plan before the change of position. If an incentive target is demoted and still meets the conditions of this incentive plan after being demoted, his restricted stocks that have been released from sales restrictions will not be affected. The restricted stocks that have not been released from sales restrictions will be adjusted according to the standards corresponding to his new position. The reduced restricted stocks will be repurchased by the company at the grant price. If an incentive target is demoted and does not meet the conditions of this incentive plan after being demoted, his restricted stocks that have been released from sales restrictions will not be affected. The restricted stocks that have not been released from sales restrictions will be repurchased by the company at the grant price.

However, if the incentive recipient changes his or her position due to incompetence, violation of the law, violation of professional ethics, leakage of company secrets, dereliction of duty or dereliction of duty or other behaviors that damage the company's interests or reputation, or the company terminates the labor relationship with the incentive recipient due to the preceding reasons, the restricted stock that has been granted to the incentive recipient but has not yet been released from sale restrictions shall not be lifted and will be repurchased by the company at the grant price.

(2) If the incentive target loses the qualification to participate in this incentive plan due to any of the following circumstances, the restricted stocks that have been granted to the incentive target but have not been released from sale will be repurchased by the company at the grant price:

1. Determined as an unsuitable candidate by the stock exchange within the last 12 months;

2. Have been deemed as inappropriate candidates by the China Securities Regulatory Commission and its dispatched agencies within the last 12 months;

3. In the past 12 months, the company has been subject to administrative penalties or market ban measures by the China Securities Regulatory Commission and its dispatched agencies due to serious violations of laws and regulations;

4. Those who are prohibited from serving as company directors or senior managers as stipulated in the Company Law;

5. Not allowed to participate in equity incentives of listed companies according to laws and regulations;

6. Other circumstances determined by the China Securities Regulatory Commission.

(3) If the incentive target resigns, voluntarily resigns due to personal reasons, the labor contract expires and he is unwilling to renew it, retires normally in accordance with national regulations and company regulations and will not be re-employed, etc., and does not hold relevant positions in the company, the board of directors may decide that the restricted stock that has been awarded to the incentive target but has not been released from sale restrictions on the date of occurrence of the incentive plan according to this incentive plan shall not be unlocked, and the company will repurchase it at the grant price.

(4) If the incentive target re-employs the company after retirement or continues to provide labor services to the company in other forms, abides by confidentiality obligations and does not engage in any behavior that harms the company's interests, the restricted stocks granted to him will continue to be valid and will still be unlocked in accordance with the procedures stipulated in this incentive plan. After the occurrence of the circumstances described in this paragraph, if the incentive target does not have a personal performance appraisal, its personal performance appraisal conditions will no longer be included in the conditions for unlocking the sales restrictions; if there is a personal performance appraisal, its personal performance appraisal will still be one of the conditions for unlocking the sales restrictions of the restricted stocks.

(5) If an incentive object resigns due to loss of working ability, it shall be handled in the following two situations:

1. When the incentive target resigns due to a work-related injury and loses the ability to work, the restricted stock will be carried out in full accordance with the procedures stipulated in the incentive plan before losing the ability to work, and its personal performance evaluation conditions will no longer be included in the conditions for lifting the restriction.

2. When the incentive target resigns other than due to a work-related injury and loss of working ability, the restricted stocks that have been granted to the incentive target but have not yet been released from sale restrictions shall not be released from sale and will be repurchased by the company based on the grant price plus bank deposit interest for the same period.

(6) If the incentive target dies, it should be handled in the following two situations:

1. If the incentive target dies due to performance of duties, the restricted stocks that have been granted to the incentive target but have not been released from sales restrictions will be held by the designated property heir or legal heir on his behalf, and will be carried out in accordance with the procedures stipulated in this incentive plan before his death, and his personal performance evaluation conditions will no longer be included in the conditions for lifting sales restrictions.

2. If the incentive target dies due to other reasons, the restricted stocks that have been granted to the incentive target but have not yet been released from sale restrictions will not be released and will be repurchased by the company based on the grant price plus bank deposit interest for the same period.

(7) Other unexplained situations shall be determined by the Remuneration and Appraisal Committee of the Board of Directors and how they will be handled.

3. Resolution mechanism for disputes or disputes between the company and incentive recipients

Any disputes or disputes between the company and the incentive recipients arising from the implementation of this incentive plan and/or the equity incentive agreement signed by both parties or related to this incentive plan and/or the equity incentive agreement shall be resolved by both parties through negotiation and communication, or through mediation by the remuneration and assessment committee of the company's board of directors. If the two parties fail to resolve the dispute or dispute through the above methods within 60 days from the date of occurrence or the relevant dispute or dispute cannot be resolved through the above methods, they should be submitted to the people's court with jurisdiction over the location of the company to file a lawsuit for resolution.

Chapter 14 Restricted Stock Repurchase Principles

1. Adjustment method of repurchase price

If the company repurchases restricted stocks in accordance with the provisions of this incentive plan, unless otherwise agreed in this incentive plan, the repurchase price shall be the grant price in other cases, except where the repurchase price needs to be adjusted according to this incentive plan. After the restricted stocks granted to the incentive objects have been registered, if the company encounters matters such as converting capital reserves into share capital, distributing stock dividends, subdividing shares, allotment or reduction of shares, distribution of dividends, etc. that affect the company's total share capital or the company's stock price, the company should make corresponding adjustments to the repurchase price of the restricted stocks that have not yet been released from sale restrictions:

(1) Conversion of capital reserve funds into share capital, distribution of stock dividends, and stock splits

P＝P÷(1＋n)

Among them: P is the adjusted repurchase price of each restricted stock, P is the grant price of each restricted stock before adjustment; n is the ratio of converting capital reserve per share into share capital, distributing stock dividends, and stock splits (i.e., the number of shares increased after each share is converted into shares, bonus shares, or stock splits).

(2) Allotment of shares

P＝P×（P＋P×n）÷[P×(1＋n)]

0 1 2 1

Among them: P is the adjusted repurchase price of each restricted stock, P is the grant price of each restricted stock before adjustment; P is the closing price on the equity registration date; P is the allotment price; n is the proportion of allotment (i.e. allotment

1 2

The ratio of the number of shares to the company’s total share capital before the rights issue).

(3) Stock reduction

P＝P÷n

Among them: P is the adjusted repurchase price of each restricted stock, P is the grant price of each restricted stock before adjustment; n is the reduction ratio of each share (that is, 1 share is reduced to n shares).

(4) Dividend payment

P=P-V

Among them: P is the adjusted repurchase price of restricted shares per share; P is the grant price of restricted shares per share before adjustment; V is the dividend amount per share. After adjusting for dividends, P must still be greater than 1.

(5) Additional issuance (including public issuance and non-public issuance of shares)

When the company issues new shares (including public issuance and non-public issuance of shares), the repurchase price of restricted shares will not be adjusted.

2. Adjustment method of repurchase quantity

After the restricted stocks granted to the incentive objects have been registered, if the company encounters matters such as converting capital reserves into share capital, distributing stock dividends, splitting shares, allotment or stock reduction, etc. that affect the company's total share capital or the number of company shares, the company should make corresponding adjustments to the repurchase quantity of restricted stocks that have not yet been released from sale restrictions:

(1) Conversion of capital reserve funds into share capital, distribution of stock dividends, and subdivision of shares

Q=Q × (1+n)

Among them: Q is the number of restricted stocks before adjustment; n is the ratio of capital reserve per share to increase share capital, distribution of stock dividends, and stock subdivision (that is, the number of shares increased after each share is transferred to increase, bonus shares, or subdivision); Q is the number of restricted stocks after adjustment.

(2) Allotment of shares

Q＝Q×P×(1+n)÷(P+P×n)

0 1 1 2

Among them: Q is the number of restricted shares before adjustment; P is the closing price on the equity registration date; P is the allotment

0 1 2

share price; n is the proportion of allotment shares (that is, the ratio of the number of allotment shares to the company's total share capital before the allotment); Q is the adjusted number of restricted shares.

(3) Stock reduction

Q＝Q×n

Among them: Q is the number of restricted stocks before adjustment; n is the stock reduction ratio (that is, 1 company stock is reduced to n shares); Q is the number of restricted stocks after adjustment.

(4) Dividend distribution and additional issuance (including public issuance and non-public issuance of shares)

When the company pays dividends or issues new shares (including public issuance and non-public issuance of shares), the number of restricted shares will not be adjusted.

3. Adjustment procedures for repurchase price and quantity

(1) The company's shareholders meeting authorizes the company's board of directors to adjust the repurchase price and quantity of restricted stocks based on the reasons listed above; after the board of directors adjusts the repurchase price and quantity in accordance with the above regulations, it shall make a timely announcement.

(2) If the price and quantity of restricted stock repurchase need to be adjusted due to other reasons, a resolution shall be made by the board of directors and reviewed and approved by the shareholders' meeting.

4. Repurchase Procedure

(1) The company shall promptly convene the board of directors to review the share repurchase plan and make a timely announcement.

(2) When the company implements repurchase in accordance with the provisions of this incentive plan, it shall handle it in accordance with the provisions of the Company Law.

(3) When the company implements repurchase in accordance with the provisions of this incentive plan, it shall submit an application to the stock exchange. After confirmation by the stock exchange, the securities registration and clearing agency will handle the relevant matters and make an announcement.

(4) During the validity period of this incentive plan, if the relevant provisions on the repurchase procedure in the "Management Measures" and other relevant laws and regulations, normative documents or the "Articles of Association" are changed, the changed provisions will be followed.

Chapter 15 Supplementary Provisions

1. This incentive plan will take effect after being reviewed and approved by the company’s shareholders’ meeting.

2. This incentive plan is explained by the company’s board of directors.

3. If there is a conflict between this incentive plan and the latest laws and regulations issued by regulatory agencies, the latest laws and regulations shall prevail.

Board of Directors of Shanghai Xiaofang Pharmaceutical Co., Ltd.

June 10, 2026